0000094887-01-500007.txt : 20011019
0000094887-01-500007.hdr.sgml : 20011019
ACCESSION NUMBER: 0000094887-01-500007
CONFORMED SUBMISSION TYPE: 10-Q
PUBLIC DOCUMENT COUNT: 2
CONFORMED PERIOD OF REPORT: 20010831
FILED AS OF DATE: 20011012
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: STRIDE RITE CORP
CENTRAL INDEX KEY: 0000094887
STANDARD INDUSTRIAL CLASSIFICATION: FOOTWEAR, (NO RUBBER) [3140]
IRS NUMBER: 041399290
STATE OF INCORPORATION: MA
FISCAL YEAR END: 1130
FILING VALUES:
FORM TYPE: 10-Q
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-04404
FILM NUMBER: 1758101
BUSINESS ADDRESS:
STREET 1: 191 SPRING STREET
CITY: LEXINGTON
STATE: MA
ZIP: 02421
BUSINESS PHONE: 6178246000
MAIL ADDRESS:
STREET 1: 191 SPRING STREET
CITY: LEXINGTON
STATE: MA
ZIP: 02421
FORMER COMPANY:
FORMER CONFORMED NAME: GREEN SHOE MANUFACTURING CO
DATE OF NAME CHANGE: 19720606
10-Q
1
test3qtr.txt
FORM 10-Q
1 of 19 pages
Exhibit Index
Appears on Page 15
-----------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 2001
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to .
Commission File Number: 1-4404
THE STRIDE RITE CORPORATION
(Exact name of registrant as specified in its charter)
Massachusetts 04-1399290
-------------------------
(State or other jurisdiction) (I.R.S. Employer Identified No.)
191 Spring Street, Lexington, Massachusetts 02421
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617)824-6000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
-------------------------------- ----------------------
Common stock, $.25 par value New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports
required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such report), and (2) has been subject to such filing
requirements for the past 90 days.
Yes (X) No ( )
As of October 10, 2001, 41,857,230 shares of the Registrant's common stock,
$.25 par value, and the accompanying Preferred Stock Purchase Rights were
outstanding.
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
THE STRIDE RITE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
August 31, September 1,
2001 December 1, 2000
(Unaudited) 2000 (Unaudited)
-------------- -------------- --------------
Assets
Current Assets:
Cash and cash equivalents $ 17,443 $ 62,976 $ 42,762
Accounts and notes
receivable, net 83,909 54,375 82,578
Inventories 107,607 105,917 78,766
Deferred income taxes 25,808 25,494 26,489
Other assets 3,169 6,365 4,587
-------- -------- --------
Total current assets 237,936 255,127 235,182
Property and equipment, net 73,686 76,240 75,326
Other assets 21,365 21,106 21,260
-------- -------- --------
Total assets $332,987 $352,473 $331,768
======== ======== ========
The accompanying notes are an integral part of the
condensed consolidated financial statements.
2
PART I - FINANCIAL INFORMATION (Continued)
THE STRIDE RITE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(Dollars in Thousands)
August 31, September 1,
2001 December 1, 2000
(Unaudited) 2000 (Unaudited)
-------------- ------------- ---------------
Liabilities and Stockholders' Equity
Current Liabilities:
Short-term debt - $ 24,000 -
Accounts payable $ 18,815 32,570 $ 20,716
Income taxes payable 19,592 18,716 23,828
Accrued expenses and other
liabilities 18,666 21,666 25,552
-------- -------- --------
Total current liabilities 57,073 96,952 70,096
Deferred income taxes 5,236 5,929 5,109
Stockholders' Equity:
Preferred stock,
$1 par value
Shares authorized -
1,000,000
Shares issued - None - - -
Common stock, $.25 par
value
Shares authorized -
135,000,000
Shares issued -
56,946,544 14,237 14,237 14,237
Capital in excess of par
value 19,002 20,276 20,275
Retained earnings 390,576 371,821 374,558
Less cost of 15,002,590
shares of common stock
held in treasury
(15,355,693 on December
1, 2000 and 14,512,359
on September 1, 2000) (153,137) (156,742) (152,507)
-------- -------- --------
Total stockholders' equity 270,678 249,592 256,563
-------- -------- --------
Total liabilities and $332,987 $352,473 $331,768
======== ======== ========
stockholders' equity
The accompanying notes are an integral part of the
condensed consolidated financial statements.
3
PART I - FINANCIAL INFORMATION (Continued)
THE STRIDE RITE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the periods ended August 31, 2001 and September 1, 2000
(In Thousands Except Per Share Data)
Three Months Ended Nine Months Ended
----------------------------- ----------------------------
August 31, September 1, August 31, September 1,
2001 2000 2001 2000
------------- -------------- ----------- -------------
Net sales $135,368 $144,760 $440,121 $452,956
Cost of sales 87,164 92,700 278,193 288,135
Selling and
administrative
expenses 39,038 40,242 125,317 124,361
Operating income 9,166 11,818 36,611 40,460
Other income
(expense):
Interest income 494 1,244 2,462 2,888
Interest expense (353) (394) (1,428) (1,548)
Other, net (86) (38) (639) (48)
-------- -------- --------- --------
55 812 395 1,292
-------- -------- --------- --------
Income before
income taxes 9,221 12,630 37,006 41,752
Provision for
income taxes 2,068 4,848 11,986 15,874
-------- -------- --------- --------
Net income $ 7,153 $ 7,782 $ 25,020 $ 25,878
======== ======== ========= ========
Net income per common share:
Diluted $ .17 $ .18 $ .59 $ .59
======== ======== ========= ========
Basic $ .17 $ .18 $ .60 $ .60
======== ======== ========= ========
Dividends per
common share $ .05 $ .05 $ .15 $ .15
======== ======== ========= ========
Average common
shares used in
per share
computations:
Diluted 42,372 43,167 42,126 43,582
======== ======== ========= ========
Basic 41,817 43,004 41,718 43,402
======== ======== ========= ========
The accompanying notes are an integral part of the
Condensed consolidated financial statements.
4
PART I - FINANCIAL INFORMATION (Continued)
THE STRIDE RITE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the nine months ended August 31, 2001 and
September 2, 2000 (Dollars in Thousands)
August 31, September 1,
2001 2000
-------------- ------------
Cash was provided from (used for)
Operations:
Net income $ 25,020 $ 25,878
Adjustments to reconcile to net cash provided
from (used for) operations:
Depreciation and amortization 10,777 9,067
Deferred income taxes, net (1,007) (296)
Compensation expense related to executive
stock plans 170 171
Gain related to long-term investments (451) -
Loss on disposal of property and
equipment 83 593
Changes in:
Accounts and notes receivable (29,534) (35,100)
Inventories (1,690) 42,401
Other current assets 3,196 308
Accounts payable, income taxes, accrued
expenses and other current liabilities (15,693) (20,391)
--------- --------
Net cash provided from(used for)operations (9,129) 22,631
--------- --------
Investments:
Additions to property and equipment (8,118) (17,362)
Distribution from long-term investments 451 -
Sales(purchases)of marketable securities, net (61) 7
Decrease (increase) in other assets (407) 273
--------- --------
Net cash used for investments (8,135) (17,082)
--------- --------
Financing:
Short-term debt repayments (24,000) -
Proceeds from sale of stock under stock plans 1,979 389
Cash dividends paid (6,248) (6,581)
Repurchase of common stock - (13,781)
-------- --------
Net cash used for financing (28,269) (19,973)
--------- --------
Net decrease in cash and cash equivalents (45,533) (14,424)
Cash and cash equivalents at beginning of the
period 62,976 57,186
-------- --------
Cash and cash equivalents at end of the period $ 17,443 $ 42,762
======== ========
The accompanying notes are an integral part of the
condensed consolidated financial statements.
5
PART I - FINANCIAL INFORMATION (Continued)
THE STRIDE RITE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1
The financial information included in this Form 10-Q of The Stride Rite
Corporation (the "Company") for the periods ended August 31, 2001 and September,
1, 2000 is unaudited and subject to year-end adjustments. However, such
information includes all adjustments (including all normal recurring
adjustments) which, in the opinion of management, are considered necessary for a
fair presentation of the consolidated results for those periods. The results of
operations for the periods ended August 31, 2001 and September 1, 2000 are not
necessarily indicative of the results of operations that may be expected for the
complete fiscal year. The year-end condensed balance sheet data was derived from
audited financial statements, but does not include all disclosures required by
generally accepted accounting principles. The Company filed audited consolidated
financial statements for the year ended December 1, 2000 on Form 10-K which
included all information and footnotes necessary for such presentation.
The Company's preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenues and expenses during the
respective periods. The most significant estimates included in these financial
statements include valuation allowances and reserves for accounts receivable,
inventory and income taxes. Actual results could differ from those estimates.
NOTE 2
On October 4, 2001 the Company announced a plan to restructure operations.
Accordingly, in the fourth quarter of fiscal 2001 the Company will record a
nonrecurring charge in connection with the Company's realignment of corporate
and divisional operations. The total amount of the charge of approximately $2.5
million, (amounting to $1.5 million after taxes or $.04 per share), is composed
of $1.7 million related to employee termination payments and other employee
related costs, $0.5 million of costs associated with the closing of one facility
and $0.3 million of other costs. As a result of the restructuring approximately
120 positions were eliminated from the Company's administrative staff.
6
PART I - FINANCIAL INFORMATION (Continued)
THE STRIDE RITE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3
Basic earnings per share excludes dilution and is computed by dividing net
earnings available to common stockholders by the weighted average number of
common shares outstanding for the period. Diluted earnings per share reflects
the potential dilution that could occur if options to issue common stock were
exercised.
The following is a reconciliation of the number of shares used in the basic
and diluted earnings per share computations (shares in thousands):
Three Months Ended Nine Months Ended
------------------ -----------------
Aug. 31, Sept. 1, Aug. 31, Sept. 1,
2001 2000 2001 2000
---- ---- ---- ----
Net income applicable to common
shares $ 7,153 $ 7,782 $ 25,020 $ 25,878
Calculation of shares:
Weighted average number of common
shares outstanding(basic) 41,817 43,004 41,718 43,402
Common shares attributable
to assumed exercise of dilutive
stock options and stock
purchase rights using the
treasury stock method 555 163 408 180
-------- -------- -------- --------
Average common shares and common
equivalents outstanding during
the period (diluted) 42,372 43,167 42,126 43,582
======== ======== ======== ========
Net income per common share (basic) $ .17 $ .18 $ .60 $ .60
======== ======== ======== ========
Net income per common share(diluted) $ .17 $ .18 $ .59 $ .59
======== ======== ======== ========
The following options were not included in the computation of diluted EPS
because the options' exercise price was greater than the average market price of
the common shares:
Third Quarter First Nine Months
---------------------------------------------
2001 2000 2001 2000
--------- --------- ---------- -----------
Options to purchase shares of
common stock (in thousands) 996 3,378 1,745 3,273
7
PART I - FINANCIAL INFORMATION (Continued)
THE STRIDE RITE CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This form 10-Q contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. We caution investors that any forward-looking statements
presented in this report and presented elsewhere by management from time to time
are based on management's beliefs and assumptions made by, and information
currently available to, management. When used, the words "anticipate",
"estimate", "project", "should", "expect" and similar expressions are intended
to identify forward-looking statements. Such statements are subject to risks,
uncertainties and assumptions and are not guarantees of future performance,
which may be affected by various trends and factors that are beyond our control.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those anticipated, estimated or projected. Accordingly, past results and trends
should not be used by investors to anticipate future results or trends. Some of
the key factors that may have a direct bearing on our results are presented in
the Company's Form 10-K for the fiscal year ended December 1, 2000 which was
filed with the Securities and Exchange Commission.
Results of Operations
The following table summarizes the Company's performance for the third
quarter and first nine months of fiscal 2001 as compared to the results for the
same periods in fiscal 2000:
Increase (Decrease) Percent vs. 2000 results:
Third Quarter Nine Months
Net sales (6.5)% (2.8)%
Gross profit (7.4)% (1.8)%
Selling and administrative expenses (3.0)% 0.8 %
Operating income (22.4)% (9.5)%
Income before income taxes (27.0)% (11.4)%
Net income (8.1)% (3.3)%
Operating Ratios as a Percent to Net Sales:
Third Quarter Nine Months
--------------------------------------
2001 2000 2001 2000
-------- -------- --------- ---------
Gross profit 35.6% 36.0% 36.8% 36.4%
Selling and administrative expenses 28.8% 27.8% 28.5% 27.5%
Operating income 6.8% 8.2% 8.3% 8.9%
Income before income taxes 6.8% 8.7% 8.4% 9.2%
Net income 5.3% 5.4% 5.7% 5.7%
8
PART I - FINANCIAL INFORMATION (Continued)
THE STRIDE RITE CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Net Sales
Net sales in the third quarter of fiscal 2001 decreased $9.4 million or
6.5% below the net sales level for the same period of fiscal 2000. The major
reason for the decline was the weak retail environment, particularly in the
department store sector, which resulted in a shortfall in reorders, an important
component of third quarter sales. In the third quarter of 2001, wholesale brand
revenues decreased 11%, while retail sales of Company-owned stores increased 10%
from the same period in 2000. Over the first nine months of 2001, consolidated
net sales decreased by $12.8 million, 2.8% below the sales for the comparable
period of 2000. Revenues related to the Company's wholesale brands declined 6%
during the first nine months of 2001, while retail sales increased 13%. Unit
shipments of current line merchandise for the wholesale brands during the first
nine months of 2001 were 4.0% below the comparable period in 2000. The Company's
average selling price was also lower in the first nine months of 2001,
decreasing 3% from last year. Sales of discontinued products decreased $1.6
million in the first nine months of 2001 as compared to the same period in 2000.
Sales of Stride Rite Children's Group increased 3% in the third quarter of
fiscal 2001, the result of a 10% increase in retail sales and a 3% decrease in
sales to independent accounts, as compared to the same period in 2000. During
the third quarter of 2001, sales at comparable, company-owned retail stores
increased 1.1% from 2000. For the first nine months of 2001, sales of the Stride
Rite Children's Group increased 8% from the same period in 2000, with the retail
revenues increasing 13% and the wholesale portion of the brand showing a 2%
sales gain. Sales of the Stride Rite brand in the first nine months of 2001 were
helped by the introduction of the Munchkin(R) product line in the mid tier
retail channel. During the third quarter, the Children's Group began shipping
Toddler Tech(TM) the next stage of footwear incorporating the Natural Motion
System(TM). At the end of the third quarter of 2001, the Children's Group
operated 212 stores, compared to 199 stores open at the end of the third quarter
in 2000. The Company opened 21 new stores and closed 10 underperforming
locations in the first nine months of 2001.
In the third quarter of fiscal 2001, sales of the Keds brand were 15% lower
than the comparable period of 2000. For the first nine months of 2001, Keds' net
sales decreased 9% as compared to 2000, with the sales of women's and children's
products decreasing 13% and 20%, respectively, from the first nine months of
2000. These decreases were partially offset by higher sales of Grasshopper's
products which were 47% above the level achieved in the first nine months of
2000. The third quarter sales decrease in the women's product line was
principally the result of lower initial shipments on new Fall product
introductions. The sales decline in the children's products is primarily due to
weak performance of Fall seasonal items. At the end of the third quarter three
Keds retail stores had been opened and two additional locations are scheduled to
open during the fourth quarter of fiscal 2001.
9
PART I - FINANCIAL INFORMATION (Continued)
THE STRIDE RITE CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Sales of Tommy Hilfiger footwear products in the third quarter of fiscal
2001 decreased 16% as compared to the same period in 2000. For the first nine
months of fiscal 2001, sales of Tommy Hilfiger footwear decreased 5% as compared
to the same period in 2000. The overall weakness in the department store sector
had a significant negative impact on the sales of Tommy Hilfiger footwear
products. The decrease in sales for the nine month period affected all segments
of the Tommy Hilfiger business.
Sales of the Sperry brand decreased 8% in the third quarter of fiscal 2001
to bring sales of the brand for the first nine months of this year to 12% below
the comparable period in 2000. With the exception of increases in sales of men's
and women's boat shoes, all other categories reported declines in sales during
the third quarter. International revenues in the third quarter of 2001 were
above the comparable period of 2000 by 3%. For the first nine months of 2001,
International revenues were flat to the comparable period of 2000.
Gross Profit
During the first nine months of fiscal 2001, gross profit decreased $2.9
million or 1.8% below the same period in 2000. This decrease compares to the net
sales decrease of 2.8% for the same period. The consolidated gross profit
percent in the first nine months of fiscal 2001 increased 0.4 percentage points,
finishing at 36.8% in 2001 compared to 36.4% in 2000. Gross profit performance
in the third quarter of 2001 deteriorated over the same period in 2000, 35.6% in
2001 compared to 36.0% in the 2000 third quarter. The Company's gross profit
performance for the quarter and the nine month period benefited from the sales
increases in company-owned retail stores which have a higher gross profit
percentage. The 2001 third quarter gross profit was negatively impacted by
higher obsolescence charges as these costs reduced gross profit by 5.9
percentage points compared to a reduction of 3.6 percentage points in the 2000
third quarter. The Company's LIFO provision had little impact on gross profit
comparisons for the first nine months of 2001, with LIFO decreasing gross profit
by $1.1 million (0.3% of net sales) in 2001 compared to a decrease of $1.4
million (0.3% of net sales) in 2000.
Operating Costs
Selling and administrative expenses in the first nine months of fiscal 2001
increased $1 million or 0.8% from the spending level in the first nine months of
fiscal 2000. Operating costs as a percentage of sales in the first nine months
of 2001 increased 1.0 percentage point from the same period in 2000 (28.5% in
2001 compared to 27.5% in 2000).
10
PART I - FINANCIAL INFORMATION (Continued)
THE STRIDE RITE CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Higher retail store expenses, primarily related to the start-up of new
stores, increased overall operating expenses by 0.8 percentage points during the
first nine months of 2000. Advertising expense represented 5.1% of net sales in
the first nine months of 2001, which was below the spending rate of 5.7% for
2000. Advertising costs in the first nine months of fiscal 2001 decreased $3.4
million or 13%, with most of the cost decrease occurring in the third quarter of
the year. This advertising cost decrease is largely due to reductions in Keds
and Tommy Hilfiger spending in the third quarter.
Other Income and Taxes
Other income (expense) increased pre-tax income by $0.4 million in the
first nine months of fiscal 2001 compared to an increase of $1.3 million in the
similar period of 2000. Interest income for the first nine months f 2001 was
$2.5 million, down from the $2.9 million for the first nine months of 2000.
Interest expense in the first nine months of 2001 decreased slightly to $1.4
million compared to $1.5 million in 2000. Higher average borrowing levels were
offset by a significant decrease in the Company's average interest rate, 5.8% in
the first nine months of 2001 compared to 7.5% in 2000. Average short-term
borrowings in the first nine months of 2000 were $27.6 million, 5% above the
average borrowings of $26.3 million in the comparable period of 2000.
The provision for income taxes decreased $3.9 million in the first nine
months of fiscal 2001 as compared to the similar period in 2000. The income tax
decrease was due to the lower pre-tax income earned in the period as well as a
reduction in the effective tax rate for the nine month period, 32.4% versus
38.0%, in the prior year. The lower tax rate is based on the year-end projected
tax rate and reflects a reduction in the need for certain tax accruals
established in prior periods.
Nonrecurring Charges
On October 4, 2001 the Company announced a plan to restructure operations.
Accordingly, in the fourth quarter of fiscal 2001, the Company will record a
$2.5 million nonrecurring charge in connection with the Company's realignment of
corporate and divisional operations. The Company expects cash payments will be
made through the third quarter of fiscal 2002.
Net Income
Net income for the first nine months of fiscal 2001 decreased $0.9 million,
down 3.3% from the income earned in the same period of fiscal 2000. Lower gross
profit and higher operating expenses were substantially offset by the lower
effective income tax rate. The Company's return on net sales of 5.7% in the
first nine months of 2001 was equal to the 5.7% return in the first nine months
of last year.
11
PART I - FINANCIAL INFORMATION (Continued)
THE STRIDE RITE CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Liquidity and Capital Resources
At August 31, 2001, the Company's balance sheet reflects a current ratio of
4.2 to 1 with no long-term debt. The Company's cash and cash equivalents totaled
$17.4 million at the end of the latest quarter, below the prior year's cash and
cash equivalents total of $42.8 million. When combined with intermediate-term
fixed income investments, which are included in other assets, total available
cash and investments amounted to $29.6 million at August 31, 2001 compared to
$54.0 million in 2000. The Company uses its $75 million revolving credit
facility to fund seasonal working capital needs. No borrowings under this line
of credit were outstanding as of August 31, 2001 or September 1, 2000.
During the first nine months of fiscal 2001, the Company used $9.1 million
of cash for operations. This negative cash flow amount was significantly below
the $22.6 million of cash provided from operations during the same period in
fiscal 2000. At August 31, 2001, accounts receivable and inventory levels
totaled $191.5 million, an increase of $30.2 million or 19% above the $161.3
million asset amount at the end of the third quarter of 2000. Accounts
receivable at the end of the third quarter of 2001 increased $1.3 million or up
1.6% compared to the prior year, contrary to the wholesale businesses' sales
decrease of 11% in the third quarter of 2001. Inventories were higher at the end
of the third quarter of 2001, up $28.8 million or 36.6% from the 2000 level, due
to higher inventory levels at the Children's Group and Keds divisions.
Additions to property and equipment totaled $8.1 million in the first nine
months of fiscal 2001 compared to $17.4 million for the same period in fiscal
2000. The lower capital expenditures were the result of reduced spending on
information technology in fiscal 2001 and not incurring building costs related
to the expansion of the Company's Huntington, Indiana distribution facility in
fiscal 2000. During the first nine months of 2001, the Company did not
repurchase any shares of its common stock. At August 31, 2001, the Company has
2.1 million shares remaining on the repurchase authorization approved by the
Board of Directors in December 1999. The Company did repurchase 90,000 shares of
its common stock in mid-September.
12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. The following exhibits are contained in this
--------
report:
Exhibit No. Description of Exhibit
10(i) Amended and Restated License
Agreement between Registrant and
Tommy Hilfiger Licensing, Inc.
(b) Reports on Form 8-K
There were no reports filed on Form 8-K during the most recent
quarterly period.
13
THE STRIDE RITE CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned duly authorized. THE STRIDE RITE CORPORATION (Registrant)
Date: October 11, 2001 By: /S/ Frank A. Caruso
--------------------------
Frank A. Caruso
Chief Financial Officer
14
THE STRIDE RITE CORPORATION
INDEX TO EXHIBITS
Exhibit Sequential Page No.
No. Description of Exhibit
10(i) Amended and Restated License Agreement 16
between Registrant and Tommy Hilfiger
Licensing, Inc.
15
EX-10
3
tommyamend.txt
AMENDMENT
Exhibit 10(i)
FIRST AMENDMENT TO AMENDED AND RESTATED LICENSE AGREEMENT
DATED FEBRUARY 2, 2000 BETWEEN
TOMMY HILFIGER LICENSING, INC. AND THE STRIDE RITE CORPORATION
AGREEMENT entered into this 20th day of June, 2001, by and between
TOMMY HILFIGER LICENSING, INC., having an address at 913 N. Market Street,
Wilmington, Delaware 19801 (hereinafter referred to as "Licensor") and THE
STRIDE RITE CORPORATION, a Massachusetts corporation, having its offices at
191 Spring Street, P.O. Box 9191, Lexington, Massachusetts 02173-9191
(hereinafter referred to as "Licensee").
WITNESSETH:
WHEREAS, Licensor and Licensee entered into an Amended and Restated
License Agreement dated February 2, 2000 (the Amended and Restated License
Agreement is hereinafter referred to as the "License Agreement"); and
WHEREAS, the parties have agreed to the amendments to said License
Agreement contained herein;
NOW, THEREFORE, the parties hereto, in consideration of the mutual
agreements herein contained and promises herein expressed, and for other good
consideration acknowledged by each of them to be satisfactory and adequate,
do hereby agree as follows:
1. Unless otherwise specified herein, all capitalized terms used
herein shall have the meanings ascribed to them in the License Agreement.
2. Paragraph 1.3 of the License Agreement is hereby amended by
adding the following to the end thereof:
"The period from January 1, 2001 to March 31, 2001 shall be
deemed to be a separate Annual Period. Thereafter, Annual Period
shall mean each twelve-month period commencing on April 1 and
ending on March 31."
3. Paragraph 2.7(c) of the License Agreement is hereby deleted in
its entirety and is replaced by the following:
"(c) Fixtures/Visual Enhancements. Licensee will, at Licensor's
option, participate in any in-store shop or main floor
fixturing/visual enhancement program with any of Licensee's
customers. Licensee will fixture/visually enhance or refixture
or update the visual enhancements in each in-store shop and area
dedicated to the sale of Licensed Products within sixty (60) days
after notice from Licensor or, without notice from Licensor, no
less often than every three (3) months for visual enhancements
and three (3) years for fixtures during the Term. Licensor and
Licensee shall, each six months during the Term, consult in good
faith regarding standards and specifications for such
fixturing/visual enhancement, however, such standards and
specifications ultimately shall be subject to Licensor's
approval, and Licensee shall be responsible for causing all
fixturing/visual enhancement to be undertaken in a manner
consistent with such plans and specifications, as modified from
time to time, during each three (3) month review. To the extent
that the same is not paid for by Licensee's customers, Licensee
shall pay for such fixturing/visual enhancement. Anything herein
to the contrary notwithstanding, during the last Annual Period of
the Term, if the Term has not been extended, Licensee shall not
be required to install any new fixtures or to refixture any
existing shops. Licensee acknowledges that Licensor has the
right to disapprove of Licensee supplying Licensed Products to
customers who do not have fixtured or visually enhanced shops or
areas if such customers permit products competitive with the
Licensed Products to be displayed in fixtured or visually
enhanced shops or areas."
4. Paragraph 2.10 of the License Agreement is, except for the
heading, hereby deleted in its entirety and is replaced by the following:
"Licensee will pay to Licensor $____________ per Annual Period
for its participation in Licensor's Merchandise Coordinator
Program. This amount will be paid in equal quarterly
installments of $_________ on each January 1, April 1, July 1 and
October 1 during the Term. Anything herein to the contrary
notwithstanding, Licensor's Merchandise Coordinator Program
payment for the period of January 1, 2001 - March 31, 2001 shall
be $_________ is due on execution hereof."
5. Paragraph 3.1 of the License Agreement is hereby amended by
changing "December 31, 2001" in the first sentence thereof to "March 31,
2004."
6. Paragraph 3.2 of the License Agreement is hereby deleted in its
entirety.
7. Paragraph 4.2 of the License Agreement is hereby deleted in its
entirety, except for the heading, and is replaced by the following:
"During each Annual Period, Licensee shall be required to meet
the following Minimum Sales Levels:
Annual Period Minimum Sales Level
1/1/01-3/31/01 $____________
4/1/01-3/31/02 $____________
4/1/02-3/31/03 $____________
4/1/03-3/31/04 $____________
In addition, during each Annual Period, except the period from
January 1, 2001 to March 31, 2001, Licensee shall be required to
meet the following annual category minimums:
Category Annual Minimum Sales Level
Mens $____________
Womens $____________
Childrens $____________
The Minimum Sales Level for each Annual Period shall be the
greater of the amounts set forth above for such Annual Periods
and ________ (____%) percent of the actual Net Sales for the
immediately preceding Annual Period, provided, however, that the
Minimum Sales Level for the Annual Period from April 1, 2001 to
March 31, 2002 shall be $____________. In no event may the
Minimum Sales Level for any Annual Period be less than the
Minimum Sales Level for the immediately preceding Annual Period.
Licensee shall receive no credit against the Minimum Sales Levels
for Net Sales outside of the Territory, and such sales shall not
be used in calculating the Minimum Sales Levels for each Annual
Period."
8. Paragraph 5.2 of the License Agreement is hereby amended to: (a)
changing "________ (____%) percent" in line 8 thereof to "______ (____)
percent"; and (b) adding the following at the end thereof:
"Anything herein to the contrary notwithstanding, the Guaranteed
Minimum Royalty for the period from January 1, 2001 to March 31,
2001 shall be $_______________, which shall be payable upon
execution hereof."
9. Paragraph 5.3 of the License Agreement is hereby amended by
deleting the first, second and third sentences thereof in their entirety and
replacing them with the following:
"Beginning January 1, 2001, Licensee shall pay to Licensor a
royalty of _______ (____%) percent of Net Sales. Anything herein
to the contrary notwithstanding, Percentage Royalty of _____
(___%) shall be due for the Net Sales of (a) Close-Outs, and (b)
Seconds to the extent that such Net Sales of (a) and (b) above do
not exceed twenty (20%) percent of the total Net Sales for the
relevant Annual Period. Any excess of such Net Sales over the
aforesaid twenty (20%) percent shall require the payment of the
full _______ (___%) percent Percentage Royalty. For the period
from January 1, 2001 to March 31, 2001, Licensee shall pay to
Licensor, upon execution hereof, a royalty payment of $__________
which shall be in addition to, and shall not be credited against,
any Guaranteed Minimum Royalty of Percentage Royalty payments due
hereunder."
10. Paragraph 7.1 of the License Agreement is hereby amended by
deleting the chart and all that follows and replacing the same with the
following:
"Annual Period Guaranteed Minimum Advertising
1/1/01-3/31/01 $__________
4/1/01-3/31/02 $__________
4/1/02-3/31/03 $__________
4/1/03-3/31/04 $__________
The Guaranteed Minimum Advertising Payments for each Annual
Period shall be equal to the greater of the amounts set forth
above and ______________ (_____%) percent of the Minimum Sales
Level for such Annual Period as provided in Paragraph 4.2 above."
11. Paragraph 7.2 of the License Agreement is hereby deleted in its
entirety, except for the heading, and is replaced by the following:
"Beginning January 1, 2001, Licensee shall pay to Licensor a
Percentage Advertising Payment equal to ______ (____%) percent of
Net Sales. Anything herein to the contrary notwithstanding, no
Percentage Advertising Payment shall be due for the Net Sales of
(a) Close-Outs, and (b) Seconds to the extent that such sales of
(a) and (b) above do not exceed twenty (20%) percent of the total
Net Sales for the relevant Annual Period. Any excess of such Net
Sales over the aforesaid twenty (20%) percent shall require the
payment of the full _____ (___%) percent Percentage Advertising
Payment, however, nothing herein shall be construed to permit
such sales. Percentage Advertising Payments shall be payable in
quarterly installments on January 15, April 15, July 15, and
October 15 for the immediately preceding quarter of sale, less
Guaranteed Minimum Advertising Payments for such Period."
12. Paragraph 8.5 of the License Agreement is hereby amended by
adding the following at the end thereof:
"In addition, Licensee shall pay Licensor $__________ per Annual
Period to cover all the travel expenses under this Agreement.
Such amount will be paid in equal quarterly installments of
$__________ in advance on the first day of each calendar quarter
during the Term."
13. Paragraph 20.1 of the License Agreement is hereby amended by
changing the address for Steven R. Gursky, Esq. to:
"Gursky & Ederer, LLP
1350 Broadway, 11th Floor
New York, New York 10018"
14. Except as modified hereby, all other paragraphs contained therein
shall remain in full force and effect and nothing contained herein shall
alter them in any way and are hereby in all respects ratified and confirmed.
IN WITNESS WHEREOF, Licensor and Licensee have respectively signed this
Amendment as of the date first written above.
TOMMY HILFIGER LICENSING, INC. THE STRIDE RITE CORPORATION
By: /s/Virginia M. Cleary By: /s/Frank A. Caruso
Title: Assistant Secretary Title: CFO
Date: June 20, 2001 Date: 6/18/01