PICKERINGTON, Ohio,
May 2, 2014 /PRNewswire/
-- Accessories marketer R.G. Barry Corporation (Nasdaq:
DFZ) and Mill Road Capital, a private equity firm, announced
today the signing of a merger agreement pursuant to which Mill Road
will acquire all of the outstanding shares of R.G. Barry
Corporation for $19.00 per share in
cash, reflecting an equity value of approximately $215 million. The merger will result in
R.G. Barry becoming a wholly-owned
subsidiary of a newly-formed corporation controlled by Mill
Road.
The $19.00 per share cash merger
price represents a premium of 18% compared to the 30-day average
price of the stock prior to the announcement of Mill Road's initial
proposal on September 11, 2013, and
is 67% higher than the 52-week low and 6% higher than the 52-week
high, prior to the announcement.
The R.G. Barry Board of Directors unanimously approved the
merger agreement and the merger, consummation of which is subject
to customary closing conditions, including adoption of the merger
agreement by R.G. Barry's
shareholders and the expiration of the waiting period or other
approval under the Hart-Scott-Rodino Antitrust Improvements
Act. Concurrently with entering into the merger agreement,
Mill Road also entered into a voting agreement to vote its 9.8%
stake in R.G. Barry in favor of the
transaction. The merger is expected to close during the third
calendar quarter of 2014, barring unforeseen circumstances and
assuming that no other bidders present themselves.
"After careful consideration, the Board of Directors believes
the merger serves the best interests of R.G. Barry and its shareholders," said Lead
Director David Lauer.
Greg Tunney, R.G. Barry chief executive officer and
president, added, "Mill Road has a clear understanding of our
vision for the business. As a privately-held company, we expect to
continue to invest in the long-term growth and acquisition
strategies that we believe will propel RG Barry Brands into a true
leader in the accessories marketplace. We look forward to this
partnership."
Scott Scharfman, Managing
Director of Mill Road added, "We have been a shareholder of
R.G. Barry for many years and are
pleased to increase our existing 9.8% stake in this great
company. We have great confidence in the outstanding senior
management team led by Greg Tunney
and believe in their ability to successfully implement the long
term strategic plan."
The merger agreement permits R.G.
Barry to solicit alternative acquisition proposals from
third parties through May 31, 2014,
and R.G. Barry intends to do so
under the direction of the Board and with the assistance of its
financial advisor.
R.G. Barry is being advised by
Peter J. Solomon Company, L.P., its financial advisor, and Vorys,
Sater, Seymour and Pease LLP, its legal counsel. Mill Road is
being advised by Foley Hoag LLP, its legal counsel.
R.G. Barry also announced that
its Board of Directors, as required by the merger agreement, has
suspended the payment of the regular quarterly dividend so long as
the merger agreement is in effect.
Third Quarter and Year-to-Date Results
The Company
also reported operating results for its fiscal 2014 third quarter
and nine months, ended March 29.
On a consolidated quarterly basis, the Company reported:
- Net sales of $26.1 million, up
slightly from $25.8 million for the
third quarter of fiscal 2013;
- Net earnings of $2.6 million,
including a $2.4 million non-taxable
gain related to the death benefit of insurance policies on the life
of former Chairman, Gordon Zacks,
who died Feb. 1, 2014, compared with
net earnings of $1.5 million for the
third quarter of fiscal 2013.
- Net earnings per diluted share of $0.22, including the death benefit non-taxable
gain, versus $0.13 per diluted share
in the comparable period last year.
- Gross profit as a percent of net sales at 44.1% compared to
45.9% one year ago; and
- Selling, general and administrative (SG&A) expenses of
$11.4 million, up nearly 19% from the
equivalent period last year primarily as a result of the Company's
continuing investment in long-term growth initiatives and costs
related to the merger transaction.
For the nine months, the Company's consolidated results
included:
- A 4.5% decline in net sales to $116.0
million versus $121.5 million
one year ago;
- Net earnings of $13.4 million,
including the aforementioned non-taxable gain of $2.4 million, compared to $13.0 million in 2013;
- Net earnings per diluted share of $1.16, including the non-taxable gain, compared
to $1.13 per diluted share, in the
corresponding nine months of fiscal 2013;
- Gross profit as a percent of net sales at 44.4% compared to
43.9% in the equivalent nine-months last year; and
- Selling, general and administrative expenses up nearly 5.0% to
$34.0 million from the comparable
nine-month period last year, also reflects the company's continuing
investment in future growth and costs related to the merger
transaction.
In the Footwear segment, quarterly net sales were $16.6 million compared with $16.4 million one year ago. Nine-month net sales
of $88.5 million reflected a 6.0%
year-over-year decrease in net sales compared to $94.2 million.
Quarterly gross profit as a percentage of net sales in the
Footwear segment decreased by 60 basis points (bps) to 39.4%; and
remained relatively flat on a year-over-year dollar basis at
$6.5 million. Third quarter operating
profit decreased $0.3 million,
reflecting fluctuations in a broad range of expenses.
For the nine months, Footwear segment gross profit as a
percentage of net sales rose 60 bps to 41.0%, although gross profit
dollars decreased 4.7% to $36.3
million versus one year ago. Nine-month operating
profit in the segment decreased by $0.7
million to $21.7 million.
In the Accessories segment, quarterly net sales rose 1.2% to
$9.5 million. Nine-month net
sales were relatively flat versus last year at $27.5 million.
Third quarter gross profit as a percentage of net sales in the
Accessories segment decreased 390 bps to 52.4% while gross profit
dollars decreased $0.3 million to
$5.0 million versus one year ago.
Quarterly operating profit decreased by $1.6
million versus last year to $0.2
million and nine-month operating profit decreased by
$3.0 million to $1.9 million.
Consolidated other income increased to $2.7 million from $0.4
million in the quarter primarily due to the non-taxable
$2.4 million gain related to the
death benefit of insurance policies on the life of former Chairman,
Gordon Zacks, who died Feb. 1, 2014. For the nine-month period,
consolidated other income increased to $3.4
million from $0.8 million one
year ago.
The Company's balance sheet as of March
29 reflected:
- Cash and short-term investments of $43.1
million;
- Consolidated inventory at $23.6
million; and
- Net shareholders' equity of $96.4
million, up from $85.5 million
one year ago.
Management Comments
Greg
Tunney, R.G. Barry President
and Chief Executive Officer, commented, "The greatest test our
business faces continues to be identifying and retaining profitable
top-line growth in existing segments while adding new,
category-appropriate drivers in other parts of the accessories
universe. We remain committed to investing for the long-term in the
people, platforms and strategies that will make that growth
possible at a faster and more sustainable rate than we currently
are achieving.
"In view of today's announcement regarding the signing of a
definitive merger agreement with Mill Road Capital, we will not be
holding a conference call/webcast related to today's earnings
announcement," he added.
The Company expects to file the Form 10-Q for the period ended
March 29, 2014, on or about
May 7, 2014.
About RG Barry
RG Barry creates and markets great
accessories brands and fashionable, solution-oriented products that
make life better. Our primary brands include: Dearfoams slippers
dearfoams.com; baggallini handbags, totes and travel accessories
baggallini.com; and Foot Petals premium insoles and comfort
products footpetals.com. To learn more, visit us at
rgbarry.com.
About Mill Road
Mill Road Capital is a private
investment firm focused on investing in and partnering with
publicly traded micro-cap companies in the U.S. and Canada.
The firm has flexible, long-term capital with the ability to
purchase shares in the open market, buy large block positions from
existing shareholders, provide capital for growth or acquisition
opportunities, or execute going-private transactions. The
firm currently has over $600 million
of assets under management. More information can be found at
http://www.millroadcapital.com.
Cautionary Statement concerning Forward Looking
Statements
Statements in this press release that are not descriptions of
historical facts may be "forward-looking" statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, as
amended, and as defined in the U.S. Private Securities Litigation
Reform Act of 1995. In some cases, these forward-looking statements
may be identified by the use of words such as "may", "will",
"expect", "plan", "anticipate", "believe", or "project", or the
negative of those words or other comparable words. Any
forward-looking statements included in this communication are made
as of the date hereof only, based on information available to
R.G. Barry as of the date hereof,
and subject to applicable law to the contrary. R.G. Barry undertakes no obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise. Such
forward-looking statements are subject to a number of risks,
assumptions and uncertainties that could cause R.G. Barry's actual results to differ materially
from those suggested by the projected information in such
forward-looking statements. Such risks and uncertainties
include, among others: any conditions imposed on the
parties in connection with the consummation of the merger
transactions described herein; adoption of the merger agreement by
R.G. Barry's shareholders (or the
failure to obtain such adoption); the ability to obtain regulatory
approvals of the merger and the other transactions contemplated by
the merger agreement on the proposed terms and schedule;
R.G. Barry's ability to maintain
relationships with customers, employees or suppliers following the
announcement of the merger agreement and the transactions
contemplated thereby; the ability of third parties to fulfill their
obligations relating to the proposed transactions, including
providing financing under current financial market conditions; the
ability of the parties to satisfy the conditions to closing of the
proposed transactions; the risk that the merger and the other
transactions contemplated by the merger agreement may not be
completed in the time frame expected by the parties or at all; and
the risks that are described from time to time in R.G. Barry's reports filed with the Securities
and Exchange Commission, including the Annual Report on Form 10-K
for the fiscal year ended June 29,
2013, filed with the Securities and Exchange Commission on
September 11, 2013, in other of
R.G. Barry's filings with the
Securities and Exchange Commission from time to time, including
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and
on general industry and economic conditions. Readers are
cautioned not to place undue reliance on the forward-looking
statements.
Additional Information and Where to Find It
R.G. Barry expects to file with
the Securities and Exchange Commission a proxy statement
(in preliminary and definitive forms) and other supporting
documents in connection with the solicitation of proxies for the
special meeting of shareholders that will be held to vote on a
proposal to adopt the merger agreement. The shareholders
of R.G. Barry are advised to read carefully the proxy
statement and other documents filed with the Securities and
Exchange Commission when they become available because they will
contain important information about the proposed merger and other
transactions. The proxy statement will be mailed to
shareholders of R.G. Barry as of the record date to be
established for voting on the merger agreement Shareholders
will be able to obtain a free-of-charge copy of the proxy statement
and other relevant documents (when available) filed with the SEC
from the SEC's website at www.sec.gov. Shareholders will also
be able to obtain a free-of-charge copy of the proxy statement and
other relevant documents (when available) by directing a request by
mail or telephone to R. G. Barry Corporation, 13405 Yarmouth Road
N.W., Pickerington, Ohio 43147,
(614) 729-7275, Attention: Investor Relations; or via email to
ryoust@rgbarry.com.
Participants in the Solicitation
R.G. Barry and its executive
officers, directors, other members of management and employees and
Mill Road and its affiliates may be deemed, under Securities and
Exchange Commission rules, to be participants in the solicitation
of proxies from R.G. Barry's
shareholders with respect to the proposed transaction. Information
regarding the executive officers and directors of R.G. Barry is set forth in its definitive proxy
statement for its 2013 annual meeting filed with the Securities and
Exchange Commission on September 19,
2013. More detailed information regarding the identity of
potential participants, and their direct or indirect interests, by
securities holdings or otherwise, will be set forth in the proxy
statement and other materials to be filed with the Securities and
Exchange Commission in connection with the proposed
transaction. The interests of these participants in the
transactions contemplated by the merger agreement may be different
than those of R.G. Barry's
shareholders generally. Investors should read the proxy
statement carefully when it becomes available before making any
voting or investment decisions.
—financial charts follow—
R.G. BARRY
CORPORATION AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF INCOME
|
(in thousands of
dollars, except for per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks
Ended
|
|
|
|
Thirty-Nine Weeks
Ended
|
|
|
|
|
(unaudited)
|
|
(unaudited)
|
|
%
Increase
|
|
(unaudited)
|
|
(unaudited)
|
|
%
Increase
|
|
|
March 29,
2014
|
|
March 30,
2013
|
|
Decrease
|
|
March 29,
2014
|
|
March 30,
2013
|
|
Decrease
|
|
Net sales
|
$
26,133
|
|
$
25,803
|
|
1.3%
|
|
$
116,041
|
|
$
121,540
|
|
-4.5%
|
|
Cost of
Sales
|
14,597
|
|
13,951
|
|
4.6%
|
|
64,550
|
|
68,217
|
|
-5.4%
|
|
Gross
profit
|
11,536
|
|
11,852
|
|
-2.7%
|
|
51,491
|
|
53,323
|
|
-3.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit (as percent of
net sales)
|
44.1%
|
|
45.9%
|
|
|
|
44.4%
|
|
43.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
11,362
|
|
9,573
|
|
18.7%
|
|
34,043
|
|
32,493
|
|
4.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
174
|
|
2,279
|
|
-92.4%
|
|
17,448
|
|
20,830
|
|
-16.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income
|
2,703
|
|
357
|
|
|
|
3,429
|
|
821
|
|
|
|
Interest income,
net
|
(100)
|
|
(131)
|
|
-23.7%
|
|
(375)
|
|
(483)
|
|
-22.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings, before income
taxes
|
2,777
|
|
2,505
|
|
10.9%
|
|
20,502
|
|
21,168
|
|
-3.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
216
|
|
964
|
|
-77.6%
|
|
7,064
|
|
8,193
|
|
-13.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
$
2,561
|
|
$
1,541
|
|
66.2%
|
|
$
13,438
|
|
$
12,975
|
|
3.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
0.22
|
|
$
0.14
|
|
57.1%
|
|
$
1.17
|
|
$
1.14
|
|
2.6%
|
|
Diluted
|
$
0.22
|
|
$
0.13
|
|
69.2%
|
|
$
1.16
|
|
$
1.13
|
|
2.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
11,450
|
|
11,377
|
|
|
|
11,443
|
|
11,344
|
|
|
|
Diluted
|
11,554
|
|
11,532
|
|
|
|
11,561
|
|
11,510
|
|
|
CONSOLIDATED
BALANCE SHEETS
|
(in thousands
of dollars)
|
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
(audited)
|
|
|
|
March 29,
2014
|
|
March 30,
2013
|
|
|
|
June 29,
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Cash &
Short term investments
|
$
43,129
|
|
$
44,753
|
|
|
|
$
39,500
|
|
|
Accounts Receivable,
net
|
18,110
|
|
15,686
|
|
|
|
16,755
|
|
|
Inventory
|
23,571
|
|
17,291
|
|
|
|
24,239
|
|
|
Prepaid expenses and
other current assets
|
3,375
|
|
2,859
|
|
|
|
3,670
|
|
|
Total
current assets
|
88,185
|
|
80,589
|
|
|
|
84,164
|
|
|
|
|
|
|
|
|
|
|
|
|
Net property, plant
and equipment
|
4,137
|
|
4,091
|
|
|
|
4,178
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
assets
|
35,894
|
|
44,055
|
|
|
|
41,911
|
|
|
Total
Assets
|
$
128,216
|
|
$
128,735
|
|
|
|
$
130,253
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES &
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
Short-term notes
payable
|
4,286
|
|
4,286
|
|
|
|
-
|
|
|
Accounts
payable
|
7,072
|
|
3,950
|
|
|
|
10,655
|
|
|
Other current
liabilities
|
4,378
|
|
7,099
|
|
|
|
9,185
|
|
|
Total current liabilities
|
15,736
|
|
15,335
|
|
|
|
19,840
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term
debt
|
12,857
|
|
17,143
|
|
|
|
16,071
|
|
|
Accrued retirement
costs and other
|
3,217
|
|
10,807
|
|
|
|
7,165
|
|
|
Shareholders' equity,
net
|
96,406
|
|
85,450
|
|
|
|
87,177
|
|
|
Total
liabilities & shareholders' equity
|
$
128,216
|
|
$
128,735
|
|
|
|
$
130,253
|
|
SOURCE R.G. Barry Corporation