Item 1. Business
General
The Stride Rite Corporation is the leading marketer of high quality children's footwear in the United States and a major marketer of athleisure and casual footwear for children and adults. The Company manufactures products in its own facilities in the United States and in the Dominican Republic and also imports a significant portion of its products from abroad. Footwear products are distributed through independent retail stores, Company-owned stores and footwear departments in department stores. Unless the context otherwise requires, references to the "Company" and "The Stride Rite Corporation" in this document are to The Stride Rite Corporation and all of its wholly owned subsidiaries.
Products
Children's footwear, designed primarily for consumers between the ages of six months and 12 years, encompasses a complete line of products, including dress and recreational shoes, boots, sandals and sneakers, in traditional and contemporary styles. Those products are marketed under the Company's STRIDE RITE(R), MUNCHKIN (TM), SPERRY(R) and STREET HOT(R) trademarks in medium to high price ranges.
Sneakers and casual footwear for adults and children are marketed under the KEDS(R), AHH...KEDS(R) and PRO-KEDS(R) trademarks and casual footwear for women under the GRASSHOPPERS(R) label.
Marine footwear and portions of the Company's outdoor recreational, hand-sewn, dress and casual footwear for adults and children are marketed under the Company's SPERRY TOP-SIDER(R) and SPERRY(R) trademarks. Products sold under the SPERRY TOP-SIDER(R) label also include sneakers and sandals for men and women.
Beginning in Spring 1997, dress casual, hand-sewn, sport casual, dress and athleisure footwear for men and boys will be marketed using the TOMMY HILFIGER(R) brand name under a license agreement with Tommy Hilfiger Licensing, Inc. by the Company's wholly owned subsidiary, Tommy Hilfiger Footwear, Inc.
Sales and Distribution
During the 1996 fiscal year, the Company sold its products nationwide to customers operating retail outlets, including department stores, sporting goods stores and marinas, as well as Stride Rite Bootery stores and other shoe stores operated by independent retailers. In addition, the Company sold footwear products to consumers through Company-owned stores, including bootery stores, manufacturers' outlet stores, Keds concept stores, concept stores called Great Feet(TM), and children's footwear departments in department stores. The Company's largest single customer accounted for less than 7% of consolidated net sales for the fiscal year ended November 29, 1996.
The Company provides assistance to a limited number of qualified specialty retailers to enable them to operate independent Stride Rite children's bootery stores. Such assistance sometimes includes the sublease of a desirable retail site by the Company to a dealer. There are approximately 32 independent dealers who currently sublease store locations from the Company.
The Company owns an automated distribution center located in Louisville, Kentucky providing 520,000 square feet of space and a warehouse in Boston, Massachusetts, providing 565,000 square feet of space. The Company expects to close the Boston facility in the fourth quarter of 1997 after transferring the distribution function for the Stride Rite brand to a facility which has been leased in Huntington, Indiana. Reference is hereby made to the section of the Company's annual report to stockholders entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations" and Note 2 to the Consolidated Financial Statements for additional information regarding these facilities.
The Company maintains an in-stock inventory of its various branded footwear in a wide range of sizes and widths for shipment to its wholesale customers. In accordance with practices in the footwear industry, the Company encourages early acceptance of merchandise by shipping some products to customers in advance of their seasonal requirements and permitting payment for such merchandise at specified later dates.
In fiscal 1996, in addition to the United States, KEDS(R) brand products were also sold in Austria, Belgium, France, Germany, Ireland and the United Kingdom through a representative office operated by its French subsidiary. KEDS(R) brand products were distributed through third parties in Brazil, Chile, Cyprus, Denmark, Egypt, Greece, Hong Kong, Indonesia, Israel, Japan, Portugal, Saudi Arabia, Singapore, South Africa, South Korea and Sweden, as well as in several other countries in Latin America and Asia, using local distributors. PRO-Keds(R) brand products are sold by a licensee in Japan under a trademark license agreement. Further, KEDS(R) products are sold in Central America under a distribution agreement. In 1996 the Company entered into licensing agreements covering the sale of KEDS(R) footwear in Australia, the Philippines and New Zealand.
In fiscal 1996, in addition to the United States, the Company sells SPERRY TOP-SIDER(R) products in Belgium, France, Germany, Ireland, the Netherlands and the United Kingdom through its French subsidiary. The Company distributed its SPERRY TOP-SIDER(R) brand products in Greece, Indonesia, Italy, Japan, Portugal, Singapore and Sweden, as well as other countries in the Middle East, Central and South America, Asia and Africa through local distributors. In 1996 the Company entered into licensing agreements covering the sale of SPERRY TOP-SIDER(R) footwear in Australia and New Zealand.
The Company is also a party to foreign license agreements in which independent companies operate Stride Rite retail stores outside the United States. An aggregate of 16 stores are currently operating in Canada, Costa Rica, El Salvador, Honduras, Mexico and Peru pursuant to such agreements. In addition, the Company also distributes STRIDE RITE(R) brand products to several retailers in the Caribbean, Latin America, Israel and South Korea.
The Company also distributes SPERRY TOP-SIDER(R), STRIDE RITE(R), KEDS(R) and TOMMY HILFIGER(R) (beginning in Spring 1997) products in Canada through its Canadian subsidiary.
International Sourcing
The Company purchases a significant portion of its product line overseas. It maintains a staff of approximately 86 professional and technical personnel in South Korea, Taiwan, Thailand and mainland China, to supervise a substantial portion of its canvas and leather footwear production. The Company is a party to a joint venture agreement with a foreign footwear manufacturer which operates a manufacturing facility in Thailand. The Company has a 49.5% interest in the Thai corporation operating this facility, which manufactures vulcanized canvas and leather footwear. During fiscal 1996, approximately 12% of the Company's total production requirements for footwear were fulfilled by the Thai facility. In addition, the Company uses the services of buying agents to source merchandise.
Having closed several of its manufacturing facilities in the United States and the Caribbean over the years, the Company has increased the volume of leather footwear and leather footwear components for which it contracts with independent offshore suppliers to approximately 95% in 1996. On February 19, 1997, the Company announced the closing of its two remaining domestic manufacturing facilities in Missouri. The footwear produced at these facilities, which are primarily STRIDE RITE(R) branded children's products, will be sourced through independent suppliers in Mexico and the Far East. It is anticipated that overseas resources will continue to be utilized in the future. The Company purchases certain raw materials (particularly leather) from overseas resources.
By virtue of its international activities, the Company is subject to the usual risks of doing business abroad, such as the risks of expropriation, acts of war, political disturbances and similar events, including trade sanctions, loss of most favored nation trading status and other trading restrictions. Management believes that over a period of time, it could arrange adequate alternative sources of supply for the products obtained from its present foreign suppliers. However, disruption of such sources of supply could, particularly on a short-term basis, have a material adverse impact on the Company's operations. The Company's contracts to procure finished goods and other materials are primarily denominated in United States dollars, thereby reducing short term risks attendant to foreign currency fluctuations.
Retail Operations
As of November 29, 1996, the Company operated 129 Stride Rite Bootery stores, 60 leased children's shoe departments in leading department stores, one retail store for KEDS(R) brand products, four concept stores operated under the name GREAT FEET(TM) and 19 manufacturers' outlet stores for STRIDE RITE(R), KEDS(R) and SPERRY TOP-SIDER(R) brand products. The product and merchandising formats of the Stride Rite Bootery stores are utilized in the 60 leased children's shoe departments which the Company operates in certain divisions of Federated Department Stores, including Macy's, Rich's and Lazarus department stores. The Stride Rite Bootery stores carry a significant portion of the lines of the Company's STRIDE RITE(R), SPERRY TOP-SIDER(R) and STREET HOT(R) children's footwear and a portion of the KEDS(R) children's product line. The TOMMY HILFIGER(R) boys' line will be sold in these stores beginning in the Fall 1997 season. The Keds store carries a complete line of KEDS(R) products. The GREAT FEET(TM) stores carry a full line of products for children aged 0 to 12, including STRIDE RITE(R), KEDS(R), SPERRY TOP-SIDER(R) and STREET HOT(R) brand products. Beginning in 1997, TOMMY HILFIGER(R) footwear products will also be sold in the GREAT FEET(TM) stores. The Company's stores are located primarily in larger regional shopping malls, clustered generally in the major marketing areas of the United States. Most of the Company's manufacturers' outlet stores are located in malls consisting only of outlet stores.
During the 1996 fiscal year, the Company opened four leased departments, one manufacturers' outlet store and one GREAT FEET(TM) store. In addition during fiscal 1996, the Company commenced operating four Stride Rite booteries, one of which was purchased from an independent dealer. During 1996, the Company also closed 51 retail stores in an effort to improve the profitability of the Retail division. The Company currently plans to open approximately ten retail stores in fiscal 1997. In 1997, the Company will continue its efforts to close or sell underperforming retail locations and expects to cease operations in 10 to 15 stores during the year. For more information on the proposed closure of such stores, reference is hereby made to the section of the Company's annual report to stockholders entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations".
Sales through the Company's retail operations accounted for approximately 20% of consolidated net sales for the fiscal year ended November 29, 1996.
Apparel Licensing Activities
The Company has a license agreement under which hosiery for men, women and children is marketed under the KEDS(R) and PRO-KEDS(R) trademarks for distribution in the United States and Canada. It has a license agreement under which underwear, day wear and related sleepwear for women and girls is marketed under the KEDS(R) and PRO-KEDS(R) trademarks for distribution in the United States and Canada. It has license agreements under which apparel, using the KEDS(R) and SPERRY TOP-SIDER(R) trademarks, is marketed in Japan. The Company terminated, in the first quarter of fiscal 1996, a license agreement under which handbags for women were marketed under the KEDS(R)
trademark in the United States. License royalties accounted for less than 1% of the Company's sales in fiscal year 1996. The Company continually evaluates new licensees, for both footwear and non-footwear products.
Raw Materials
The Company purchases its raw materials from a number of domestic and foreign sources. See "International Sourcing". The Company does not believe that any particular raw materials supplier is dominant.
Backlog
At November 29, 1996 and December 1, 1995, the Company had a backlog of orders amounting to approximately $168,600,000 and $150,500,000, respectively. To a significant extent, the backlog at the end of each fiscal year represents orders for the Company's spring footwear styles, and traditionally substantially all of such orders are delivered or canceled during the first two quarters of the next fiscal year.
In all of the Company's wholesale businesses, reorders from retail customers are an important source of revenue to supplement the orders taken in advance of the season. Over the years, the importance of reorder activity to a season's success has grown as customers, especially larger retailers, have placed increased reliance on orders transmitted via electronic data interchange (EDI) programs.
Competition
The Company competes with a number of suppliers of children's footwear, a few of which are divisions of companies which have substantially greater net worth and/or sales revenue than the Company. Management believes, however, that on the basis of sales, the Company is the largest supplier of nationally branded children's footwear.
In the highly fragmented sneaker, casual and recreational footwear industry, numerous domestic and foreign competitors, some of which have substantially greater net worth and/or sales revenue than the Company, produce and/or market goods which are comparable to, and compete with, the Company's products in terms of price and general level of quality. In addition, the domestic shoe industry has experienced substantial foreign competition, which is expected to continue.
Management believes that creation of attractive styles, together with specialized engineering for fit, durability and quality, and high service standards are significant factors in competing successfully in the marketing of all types of footwear. Management believes that the Company is competitive in all such respects.
In operating its own retail outlets, the Company competes in the children's retail shoe industry with numerous businesses, ranging from large retail chains to single store operators.
Employees
As of November 29, 1996, the Company employed approximately 3,500 full-time and part-time employees, approximately 370 of whom were represented by collective bargaining units. Management believes that its relations with its employees are good.
Environmental Matters
The Company has been named as a potentially responsible party under the Resource Conservation and Recovery Act of 1976, as amended, with respect to a hazardous waste site in Saco, Maine. The Company is investigating its potential responsibility with respect to this site and believes that its liability will be immaterial (not greater than $100,000) and that it will be accorded de minimus status. There can be no assurance, however, that this will be the case. The Company is vigorously defending itself with respect to this action. Except as specified above, compliance with federal, state, local and foreign regulations with respect to the environment have had, and are expected to have, no material effect on the capital expenditures, earnings or competitive position of the Company.
Patents, Trademarks and Licenses; Research and Development
The Company believes that its patents and trademarks are important to its business and are generally sufficient to permit the Company to carry on its business as presently conducted.
The Company depends principally upon its design, engineering, manufacturing and marketing skills and the quality of its products for its ability to compete successfully. The Company conducts research and development for footwear products; however, the level of expenditures with respect to such activity is not material.
Executive Officers of the Registrant
The information with respect to the executive officers of the Company listed below is as of February 25, 1997.
Executive Officers of the Registrant
Name Position with Company Age
Robert C. Siegel Chairman of the Board of Directors, 60 President and Chief Executive Officer of the Company since joining the Company in December 1993. Previously, Mr. Siegel was President of the Dockers division of Levi Strauss & Co., an apparel manufacturer and distributor from December 1986 to December 1993, having been employed by Levi Strauss & Co. since 1964.
Executive Officers of the Registrant
Name Position with Company Age
John R. Ranelli Executive Vice President of the Company 50 since joining the Company in September 1996. Prior to joining the Company, Mr. Ranelli was the Chief Operating Officer of Deckers Outdoor Corporation from January 1995 to September 1995, Executive Vice President and Chief Financial Officer of TLC Beatrice from June 1994 to December 1994, and General Manager - International and Europe of The Timberland Company from May 1991 to May 1994.
Joanna M. Jacobson President, The Keds Corporation since 36 joining the Company in April 1996. Prior to joining the Company, Ms. Jacobson was a partner of Core Strategy Group from January 1995 to April 1996 and prior to that was Senior Vice President of Marketing of Converse Inc. from November 1991 to September 1994. Ms. Jacobson was previously employed by the Company as Vice President of Marketing of Sperry Top-Sider, Inc. from October 1990 to June 1991.
Diane M. Sullivan President, Wholesale division, Stride Rite 41 Children's Group, Inc., since joining the Company in April 1995. Prior to joining the Company, Ms. Sullivan was Vice President, Marketing of The Rockport Co., a division of Reebok Ltd., a footwear company from May 1993 to April 1995; the President of The Comfort Food Co., a specialty foods firm from December 1991 to May 1993; and the Vice President, Marketing and Operations of Bright Horizons Children's Centers, Inc., a child care provider, from April 1989 to December 1991. Ms. Sullivan was previously employed by the Company as Vice President, Marketing of Stride Rite Children's Group, Inc. from October 1985 to April 1989.
Robert B. Moore, Jr. President, Sperry Top-Sider, Inc. since 46 joining the Company in October 1992. From October 1987 until he joined the Company, Mr. Moore was President of Bostonian Shoe Co., a division of C & J Clark, Inc.
Executive Officers of the Registrant
Name Position with Company Age
Howard B. Collins, Jr. President, Stride Rite Sourcing 50 International, Inc., since joining the Company in September 1996. Prior to joining the Company, Mr. Collins was Vice President of Sourcing for The Timberland Company from July 1991 to September 1996.
Dennis Garro President, Retail division, Stride 49 Rite Children's Group, Inc. since joining the Company in April 1994. Prior to joining the Company, Mr. Garro served as Senior Vice President and General Merchandise Manager for Mervyns division of Dayton Hudson Corp. from May 1992 to September 1993 and as Senior Vice President and General Merchandise Manager DFS Group, Ltd. from November 1989 to April 1992.
C. Madison Riley III Vice President and General Manager, 38 Stride Rite International Corp. since January 1996. Previous to this position, Mr. Riley served as Vice President of Stride Rite International Corp. from November 1995 to January 1996, as Vice President and General Manager, Boston Footwear Group, Inc. from November 1994 to November 1995, as Vice President, Strategic Planning of the Company from January 1994 to November 1994, as Vice President, Strategic Planning of The Keds Corporation from September 1993 to January 1994 and as Director, Strategic Planning of the Company from June 1993 to September 1993. Prior to joining the Company, Mr. Riley served as a partner and regional director of Kurt Salmon Associates, a consulting firm, from July 1985 to June 1993.
John M. Kelliher Vice President, Finance, Treasurer and 45 Controller of the Company since February 1993. Mr. Kelliher has been Corporate Controller of the Company since March 1982, having joined the Company in June 1981.
Executive Officers of the Registrant
Name Position with Company Age
Joseph T. Barrell Vice President of Global Logistics since 45 joining the Company in January 1995. Prior to joining the Company, Mr. Barrell Vice President, Distribution of The Timberland Company, a footwear company from June 1991 to January 1995 and the Director, Logistics of Thom McAn Shoe Co., a footwear retailer, from January 1976 to June 1991.
Gerrald B. Silverman Senior Vice President of Sales, The Keds 38 Corporation since January 1996, and prior to that President of Stride Rite International Corp. since joining the Company in April 1994. Prior to joining the Company, Mr. Silverman served as the national sales manager of the Dockers division of Levi Strauss & Co. from October 1992 to April 1994, as West Coast regional manager of the Dockers division of Levi Strauss & Co. from April 1991 to October 1992, and as East Coast district manager of the Dockers division of Levi Strauss & Co. from May 1990 to April 1991.
Lorie M. Karnath Vice President Licensing, Strategic 37 Planning, Mergers and Acquisitions, and Corporate Communications since joining the Company in March 1996. Prior to joining the Company, Ms. Karnath was a consultant with E.M.C. Group from 1991 1996, and an associate with Kidder, Peabody & Co., Inc. from 1987 to 1991.
Karen K. Crider General Counsel of the Company since 51 joining the Company in October 1992, Clerk of the Company since November 1992 and Secretary of the Company since April 1994. Ms. Crider was U.S. Counsel to British Airways, plc, from May 1988 to September 1992.
These executive officers are generally elected at the Board of Directors' meeting held in conjunction with the Company's Annual Meeting and serve at the pleasure of the Board.
Item 2.
Item 2. Properties
During fiscal 1996, the Company manufactured footwear and footwear components at two manufacturing and warehouse facilities it owns in Missouri, having closed one leased facility in Fulton, Missouri during February 1996. The Missouri facilities contain approximately 62,400 square feet of manufacturing and approximately 31,600 square feet of warehouse space. On February 19, 1997, the Company announced the closure of the two remaining manufacturing facilities in Missouri. Management expects that manufacturing activities at these facilities will cease during the third quarter of fiscal 1997. The Company also manufactures footwear and footwear components at a 47,000 square foot facility in the Dominican Republic. In addition, the Company owns a facility with approximately 20,000 square feet of space in Woburn, Massachusetts.
Present manufacturing space totals approximately 129,000 square feet. Approximately 82,000 square feet is owned by the Company and the balance is leased. Management believes that all leases are at commercially reasonable rates and terms.
The Company owns an automated distribution center located in Louisville, Kentucky providing 520,000 square feet of space and a warehouse in Boston, Massachusetts, which provides 565,000 square feet of space. In January 1997, the Company entered into a lease for a 263,000 square foot distribution facility in Huntington, Indiana. The move of the Stride Rite children's business, the last division remaining in the Company's Boston, Massachusetts facility, is planned for the fourth quarter of fiscal 1997 following the peak back-to-school shipping season. Reference is hereby made to the section of the Registrant's annual report to stockholders entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" for additional information concerning these facilities. The Company's Canadian subsidiary leases approximately 28,000 square feet for warehousing in Mississauga, Ontario.
The Company leases approximately 163,000 square feet for its headquarters and administrative offices in Lexington, Massachusetts in a single tenant, leased office building. The Company leases 5,000 square feet of space for sales offices and showrooms in New York City, New York; Dallas, Texas and St. Louis, Missouri and leases 15,000 square feet of space in Richmond, Indiana for its order processing and telemarketing functions. In addition, the Company leases approximately 1,700 square feet of office space in Paris, France for its Stride Rite Europe distribution subsidiary and 22,300 square feet of space for its liaison offices in Korea, mainland China, Taiwan and Thailand.
At November 29, 1996, the Company operated 129 retail stores throughout the country on leased premises which, in the aggregate, covered approximately 205,000 square feet of space. The Company also operates 60 children's footwear departments in certain divisions of Federated Department Stores. In addition, the Company is the lessee of 32 retail locations totaling approximately 37,000 square feet which are subleased to independent Stride Rite dealers and other tenants.
For further information concerning the Company's lease obligations, see Note 8 to the Company's consolidated financial statements, which are contained in the annual report to stockholders and are incorporated by reference herein. Management believes that, except as stated above, all properties and facilities of the Company are suitable, adequate and fit for their intended purposes.
Item 3.
Item 3. Legal Proceedings
On September 27, 1993, the Company announced that The Keds Corporation, a wholly owned subsidiary of the Company, entered into settlement agreements with the Attorneys General of all 50 states, the Corporation Counsel of the District of Columbia and the Federal Trade Commission, to resolve various investigations into Keds' adoption and enforcement of its suggested retail pricing policy. In entering into these settlements, Keds, without admitting any liability, fully settled suits brought by the Attorneys General in the United States District Court for the Southern District of New York, in their parens patriae capacity, on behalf of all consumers who purchased certain KEDS(R) shoes during the relevant period. The settlements required Keds to pay $5.7 million to several charities nationwide, as well as $1.5 million to provide nationwide notice to potential class members and other administrative expenses. Keds has agreed to the imposition of certain injunctive relief for a period of five years ending August 31, 1998. Following preliminary Court approval on September 27, 1993, Keds paid the administrative costs and part of the settlement amount. Following final court approval on March 28, 1994, Keds made the remaining payments.
Reference is hereby made to the discussion under Business Environmental Matters set forth in Item 1 of this Annual Report on Form 10-K.
The Company is a party to various litigations arising in the normal course of business. Having considered facts which have been ascertained and opinions of counsel handling these matters, management does not believe the ultimate resolution of such litigations will have a material adverse effect on the Company's financial position or results of operations.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
None
PART II
Item 5.
Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters
The information required by this item is included in the Registrant's 1996 Annual Report to Stockholders on pages 1, 26 and 33 and is incorporated herein by reference.
Item 6.
Item 6. Selected Financial Data
The information required by this item is included in the Registrant's 1996 Annual Report to Stockholders on pages 1, 13 and 26 and is incorporated herein by reference.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The information required by this item is included in the Registrant's 1996 Annual Report to Stockholders on pages 2 through 8 and is incorporated herein by reference.
Item 8.
Item 8. Financial Statements and Supplementary Data
The information required by this item is included in the Registrant's 1996 Annual Report to Stockholders on pages 9 through 26 and is incorporated herein 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
Reference is made to the information set forth under the caption "Executive Officers of the Registrant" in Item 1 of Part I of this report and to information under the captions "Information as to Directors and Nominees for Director", "Meetings of the Board of Directors and Committees" and "Compliance with Section 16(a) of the Securities and Exchange Act of 1934" in the Registrant's definitive proxy statement relating to its 1997 Annual Meeting of Stockholders, which will be filed with the Commission within 120 days after the close of the Registrant's fiscal year ended November 29, 1996, all of which information is incorporated herein by reference.
Item 11.
Item 11. Executive Compensation
Reference is made to the information set forth in the Registrant's definitive proxy statement relating to its 1997 Annual Meeting of Stockholders under the caption "Executive Compensation" and continuing through the caption "Certain Transactions with Management" (excluding the information set forth under the caption "Compensation Committee Report") which will be filed with the Commission within 120 days after the close of the Registrant's fiscal year ended November 29, 1996, which information is incorporated herein by reference.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Reference is made to the information set forth under the caption "Ownership of Equity Securities" in the Registrant's definitive proxy statement relating to its 1997 Annual Meeting of Stockholders, which will be filed with the Commission within 120 days after the close of the Registrant's fiscal year ended November 29, 1996, which information is incorporated herein by reference.
Item 13.
Item 13. Certain Relationships and Related Transactions
Reference is made to the information set forth under the caption "Certain Transactions with Management" in the Registrant's definitive proxy statement relating to its 1997 Annual Meeting of Stockholders, which will be filed with the Commission within 120 days after the close of the Registrant's fiscal year ended November 29, 1996, which information is incorporated herein by reference.
PART IV
Item 14.
Item 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K
(a) Financial Statements. The following financial statements and financial statement schedules are contained herein or are incorporated herein by reference:
Page in Form 10-K
Consolidated Balance Sheets as of November 29, 1996 and December 1, 1995 *
Consolidated Statements of Income for the fiscal years ended November 29, 1996, December 1, 1995 and December 2, 1994 *
Consolidated Statements of Cash Flows for the fiscal years ended November 29, 1996, December 1, 1995 and December 2, 1994 *
Consolidated Statements of Changes in Stockholders' Equity for the fiscal years ended November 29, 1996, December 1, 1995 and December 2, 1994 *
Notes to Consolidated Financial Statements *
Report of Independent Accountants *
Report of Independent Accountants on Financial Statement Schedules
Financial Statement Schedule for the fiscal years ended November 29, 1996, December 1, 1995 and December 2, 1994:
Schedule II - Valuation and Qualifying Accounts
Schedules other than those listed above are omitted because they are either not required or the information is otherwise included.
* Incorporated herein by reference. See Part II, Item 8 on page 14 of this Annual Report on Form 10-K.
Exhibits. The following exhibits are contained herein or are incorporated herein by reference:
Exhibit No. Description of Exhibit
3 (i) Restated Articles of Organization of the Registrant with amendments thereto through November 28, 1986 -- Such document was filed as Exhibit 3(i) to the Registrant's Form 10-K for the fiscal year ended November 28, 1986 and is incorporated herein by reference.
(ii) Articles of Amendment dated April 7, 1987 to Restated Articles of Organization -- Such document was filed as Exhibit 3 to Registrant's Form 10-Q for the fiscal period ended February 27, 1987 and is incorporated herein by reference.
(iii) Articles of Amendment dated December 16, 1987 to Restated Articles of Organization of the Registrant -- Such document was filed as Exhibit 3(iii) to Registrant's Form 10-K for the fiscal year ended November 27, 1987 and is incorporated herein by reference.
(iv) Articles of Amendment dated December 3, 1991 to the Restated Articles of Organization of the Registrant -- Such document was filed as Exhibit 3(iv) to Registrant's Form 10-K for the fiscal year ended November 29, 1991 and is incorporated herein by reference.
(v) Certificate of Vote of Directors establishing a series of a Class of Stock dated July 2, 1987 -- Such document was filed as Exhibit A to Exhibit 1 to Registrant's Form 8-K dated July 20, 1987 and is incorporated herein by reference.
(vi) By-laws of the Registrant, as amended -- Such document was filed as Exhibit 3 of the Registrant's Form 10-Q for the fiscal period ended June 1, 1990 and is incorporated herein by reference.
4 (i) Reference is made to Exhibit 3(i), (ii), (iii) and (iv) referred to above, which are expressly incorporated herein by reference.
(ii) Rights Agreement dated July 2, 1987, as amended on May 1, 1989, between the Registrant and The First National Bank of Boston -- Such document was filed as an exhibit to Registrant's Form 8 dated May 4, 1989 and its Form 8-K dated June 27, 1989 and is incorporated herein by reference.
(iii) Note Purchase Agreement dated September 23, 1977 -- Such document was filed as Exhibit 4(ii) to the Registrant's Form 10-K for the fiscal year ended November 28, 1986 and is incorporated herein by reference.
Exhibit No. Description of Exhibit
10 (i)* Supplemental Retirement Income Agreement dated as of January 29, 1988 between the Registrant and Arnold Hiatt -- Such document was filed as Exhibit 10 (i) to Registrant's Form 10-K for the fiscal year ended November 27, 1987 and is incorporated herein by reference.
(ii)* 1975 Executive Incentive Stock Purchase Plan of the Registrant -- Such document was filed as Appendix A to the Registrant's Prospectus relating to such Plan, dated April 18, 1986, which was filed with the Commission pursuant to Rule 424(b) promulgated under the Securities Act of 1933, as amended, and is incorporated herein by reference.
(iii)* Employee Stock Purchase Plan of the Registrant -- Such document was filed as Appendix A to the Registrant's Prospectus relating to such plan, dated October 25, 1996, which was filed with the Commission pursuant to Rule 424(b) promulgated under the Securities Act of 1933, as amended, and is incorporated herein by reference.
(iv)* 1995 Long-Term Growth Incentive Plan of the Registrant -- Such document was filed as Exhibit 10(vi) to the Registrant's Form 10-K for the year ended December 2, 1994 and is incorporated herein by reference.
(v)* Annual Executive Incentive Compensation Plan (dated as of December 4, 1994) -- Such document was filed as Exhibit 10(vii) to the Registrant's Form 10-K for the year ended December 2, 1994 and is incorporated herein by reference.
(vi)* Form of executive termination agreement, as amended and restated on February 17, 1995. -- Such document was filed as Exhibit 10(viii) to the Registrant's Form 10-K for the year ended December 2, 1994 and is incorporated herein by reference. All officers with whom the Registrant entered into such agreement and which are currently in effect and have not been terminated and the date of each such agreement are listed on Addendum 10(vi) attached hereto.
*Denotes a management contract or compensatory plan or arrangement.
Exhibit No. Description of Exhibit
(vii) 1994 Non-Employee Director Stock Ownership Plan -- Such Plan was filed as Appendix A to the Registrant's Proxy Statement for its 1994 annual meeting of stockholders, portions of which were filed with the Commission on March 1, 1994 and is incorporated herein by reference.
(viii)* Form of severance agreement dated February 22, 1995. All executive officers with whom the Registrant entered into such an agreement are listed on Addendum 10(viii) attached hereto.
(ix)* Employment Agreement between the Registrant and Robert C. Siegel dated as of December 11, 1996.
11 Calculation of Net Income Per Share
13 Selected Portions of Registrant's 1996 Annual Report to Stockholders
21 Subsidiaries of the Registrant
23 Consent of Independent Accountants
27 Financial Data Schedules
(b) Reports on Form 8-K
There were no reports filed on Form 8-K during the fourth quarter of fiscal 1996.
*Denotes a management contract or compensatory plan or arrangement.
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.
THE STRIDE RITE CORPORATION THE STRIDE RITE CORPORATION
/s/ John M. Kelliher /s/ Robert C. Siegel - ----------------------------------- --------------------------------- By: John M. Kelliher, Vice By: Robert C. Siegel, Chairman President, Finance of the Board, President and Treasurer and Controller Chief Executive Officer (Principal Accounting Officer)
Date: February 7, 1997 Date: February 7, 1997
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 and on the dates indicated.
/s/ Robert C. Siegel /s/ Donald R. Gant - ----------------------------------- --------------------------------- Robert C. Siegel, Chairman of the Donald R. Gant, Director Board of Directors, President and Chief Executive Officer
Date: February 7, 1997 Date: February 7, 1997
/s/ Margaret A. McKenna /s/ Frank R. Mori - ----------------------------------- --------------------------------- Margaret A. McKenna, Director Frank R. Mori, Director
Date: February 7, 1997 Date: February 7, 1997
/s/ Robert L. Seelert /s/ Myles J. Slosberg - ----------------------------------- --------------------------------- Robert L. Seelert, Director Myles J. Slosberg, Director
Date: February 7, 1997 Date: February 7, 1997
/s/ W. Paul Tippett, Jr. /s/ Jeanette S. Wagner - ----------------------------------- --------------------------------- W. Paul Tippett, Jr., Director Jeanette S. Wagner, Director
Date: February 7, 1997 Date: February 7, 1997
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Directors of The Stride Rite Corporation:
Our report on the consolidated financial statements of The Stride Rite Corporation has been incorporated by reference in this Annual Report on Form 10-K from the 1996 Annual Report to Stockholders of The Stride Rite Corporation and appears on page 28 therein. In connection with our audits of such financial statements, we have also audited the related financial statement schedules listed in the index on page 16 of this Annual Report on Form 10-K.
In our opinion, the financial statement schedules referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly, in all material respects, the information required to be included therein.
/s/ Coopers & Lybrand L.L.P. COOPERS & LYBRAND L.L.P.
Boston, Massachusetts January 7, 1997
THE STRIDE RITE CORPORATION Schedule II - VALUATION AND QUALIFYING ACCOUNTS (in thousands)
(a) Amounts written off as uncollectible.
(b) Amounts charged against the reserve.
THE STRIDE RITE CORPORATION ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 1, 1995
Index to Exhibits
Exhibit No. Description of Exhibit Page No. - ----------- ---------------------- --------
10 (vi)* Form of executive termination agreement, as 24 amended and restated on February 17, 1995. Such document was filed as Exhibit 10(viii) to the Registrant's Form 10-K for the fiscal year ended December 2, 1994 and is incorporated herein by reference. All officers with whom the Registrant entered into such agreement and which are currently in effect and have not been terminated and the date of each such agreement are listed on Addendum 10(vi) attached hereto.
(viii)* Form of severance agreement dated February 22, 25 1995. All executive officers with whom the Registrant entered into such an agreement are listed on Addendum 10(viii) attached hereto.
(ix)* Employment Agreement between the Registrant 26 and Robert C. Siegel, dated as of December 11,
11 Calculation of Net Income Per Share 34
13 Selected portions of Registrant's 1996 Annual Report to Stockholders 35
21 Subsidiaries of the Registrant 68
23 Consent of Independent Accountants 69
27 Financial Data Schedules 70
*Denotes a management contract or compensatory plan or arrangement.