##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D. C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended October 2, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number: 001-08769
 R.G. BARRY CORPORATION
  OHIO
    
    31-4362899(State or other jurisdiction
    
    (I.R.S. Employerof incorporation or organization)
    
    Identification No.)13405 Yarmouth Road NW, Pickerington, Ohio
    
    43147(Address of principal executive offices)
    
    (Zip Code)
 (Registrants telephone number, including area code)
 (Former name, former address and former fiscal year, if changed since last report)
 Yes þ No o
 Yes
o No o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company
o(Do not check if a smaller reporting company)
 Yes o No þ




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##### 



PagePART I  FINANCIAL INFORMATIONITEM 1  Financial Statements
    
    
    4ITEM 2  Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    13ITEM 3  Quantitative and Qualitative Disclosures About Market Risk
    
    
    17ITEM 4  Controls and Procedures
    
    
    18PART II  OTHER INFORMATIONITEM 1  Legal Proceedings
    
    
    19ITEM 1A  Risk Factors
    
    
    19ITEM 2  Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    19ITEM 3  Defaults Upon Senior Securities
    
    
    19ITEM 4  [ Reserved ]
    
    
    19ITEM 5  Other Information
    
    
    19ITEM 6  Exhibits
    
    
    19SIGNATURES
    
    
    20INDEX TO EXHIBITS
    
    
    21Exhibit 3.2Exhibit 10.1Exhibit 31.1Exhibit 31.2Exhibit 32.1
   2




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Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
  Definitions
  Fiscal 2011
    
    52 weeks ending July 2, 2011Fiscal 2010
    
    53 weeks ended July 3, 2010First Quarter of Fiscal 2011
    
    13 weeks ended October 2, 2010First Quarter of Fiscal 2010
    
    13 weeks ended September 26, 2009
  3




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October 2, 2010
    
    
    July 3, 2010(unaudited)ASSETSCash and cash equivalents
    
    $
    6,969
    
    
    $
    16,988Short-term investments
    
    
    16,184
    
    
    
    27,954Accounts receivable (less allowances of $8,498 and $3,446, respectively)
    
    
    27,231
    
    
    
    8,302Inventory
    
    
    28,138
    
    
    
    13,486Deferred tax assets  current
    
    
    1,676
    
    
    
    1,676Prepaid expenses
    
    
    1,479
    
    
    
    999Total current assets
    
    
    81,677
    
    
    
    69,405Property, plant and equipment, at cost
    
    
    12,031
    
    
    
    11,669Less accumulated depreciation and amortization
    
    
    7,764
    
    
    
    7,544Net property, plant and equipment
    
    
    4,267
    
    
    
    4,125Deferred tax assets  noncurrent
    
    
    6,936
    
    
    
    6,936Other assets
    
    
    2,954
    
    
    
    2,903Total assets
    
    $
    95,834
    
    
    $
    83,369LIABILITIES AND SHAREHOLDERS EQUITYShort-term notes payable
    
    $
    1,750
    
    
    $
    1,750Current installments of long-term debt
    
    
    73
    
    
    
    97Accounts payable
    
    
    13,326
    
    
    
    3,598Accrued expenses
    
    
    4,378
    
    
    
    4,867Total current liabilities
    
    
    19,527
    
    
    
    10,312Accrued retirement costs and other
    
    
    18,191
    
    
    
    18,461Total liabilities
    
    
    37,718
    
    
    
    28,773Commitments and contingencies (note 12)
    
    
    
    
    
    
    Shareholders equity:Preferred shares, $1 par value per share: Authorized 3,775 Class A
shares, 225 Series I Junior Participating Class A Shares, and 1,000
Class B Shares; none issued
    
    
    
    
    
    
    Common shares, $1 par value per share: Authorized 22,500 shares;
issued and outstanding 10,985 and 10,930 shares, respectively
(excluding treasury shares of 1,045 and 1,025, respectively)
    
    
    10,985
    
    
    
    10,930Additional capital in excess of par value
    
    
    19,326
    
    
    
    19,195Accumulated other comprehensive loss
    
    
    (12,594
    )
    
    
    (12,594
    )Retained earnings
    
    
    40,399
    
    
    
    37,065Total shareholders equity
    
    
    58,116
    
    
    
    54,596Total liabilities and shareholders equity
    
    $
    95,834
    
    
    $
    83,369
   4




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First Quarter
    
    
    First QuarterFiscal 2011
    
    
    Fiscal 2010(unaudited)
    
    
    (unaudited)Net sales
    
    $
    36,269
    
    
    $
    29,449Cost of sales
    
    
    22,073
    
    
    
    17,158Gross profit
    
    
    14,196
    
    
    
    12,291Selling, general and administrative expenses
    
    
    7,772
    
    
    
    8,809Operating profit
    
    
    6,424
    
    
    
    3,482Other income
    
    
    109
    
    
    
    Interest income, net
    
    
    30
    
    
    
    148Earnings, before income taxes
    
    
    6,563
    
    
    
    3,630Income tax expense
    
    
    2,460
    
    
    
    1,365Net earnings
    
    $
    4,103
    
    
    $
    2,265Net earnings per common shareBasic
    
    $
    0.37
    
    
    $
    0.21Diluted
    
    $
    0.37
    
    
    $
    0.21Weighted average number of common shares outstandingBasic
    
    
    11,044
    
    
    
    10,803Diluted
    
    
    11,151
    
    
    
    10,948Common shares outstanding at end of period
    
    
    10,985
    
    
    
    10,770Cash dividends declared per common share
    
    $
    0.07
    
    
    $
    
   5




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First Quarter
    
    
    First QuarterFiscal 2011
    
    
    Fiscal 2010(unaudited)
    
    
    (unaudited)Operating activities:Net earnings
    
    $
    4,103
    
    
    $
    2,265Adjustments to reconcile net earnings to net cash used by operating activities:Depreciation and amortization
    
    
    220
    
    
    
    199Deferred income tax expense
    
    
    98
    
    
    
    1,188Gross excess tax benefit from exercise of stock options and vesting of
restricted stock units
    
    
    (98
    )
    
    
    Stock-based compensation expense
    
    
    299
    
    
    
    254Changes in:Accounts receivable, net
    
    
    (18,930
    )
    
    
    (14,996
    )Inventory
    
    
    (14,653
    )
    
    
    (15,192
    )Prepaid expenses and other assets
    
    
    (529
    )
    
    
    (497
    )Accounts payable
    
    
    9,728
    
    
    
    8,100Accrued expenses
    
    
    (1,506
    )
    
    
    (1,727
    )Accrued retirement costs and other
    
    
    (270
    )
    
    
    80Net cash used by operating activities
    
    
    (21,538
    )
    
    
    (20,326
    )Investing activities:Purchases of property, plant and equipment
    
    
    (362
    )
    
    
    (137
    )Proceeds from sale of short-term investments, net
    
    
    11,771
    
    
    
    9,677Net cash provided by investing activities
    
    
    11,409
    
    
    
    9,540Financing activities:Repayment of debt
    
    
    (24
    )
    
    
    (22
    )Proceeds from options exercised
    
    
    36
    
    
    
    39Gross excess tax benefit from exercise of stock options and vesting of
restricted stock units
    
    
    98
    
    
    
    Net cash provided by financing activities
    
    
    110
    
    
    
    17Net decrease in cash and cash equivalents
    
    
    (10,019
    )
    
    
    (10,769
    )Cash and cash equivalents at the beginning of the period
    
    
    16,988
    
    
    
    14,259Cash and cash equivalents at the end of the period
    
    $
    6,969
    
    
    $
    3,490
  
  6




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R.G. BARRY CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
for the First Quarter of Fiscal 2011 and the First Quarter of Fiscal 2010
(dollar amounts in thousands, except per share data)
 
     Item 8  Financial Statements and Supplementary Data.
    
    
    Level 1 inputs are quoted prices (unadjusted) in active markets for identical
assets or liabilities that the Company has the ability to access at the measurement
date.
    
    Level 2 inputs are inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly or indirectly.
    
    Level 3 inputs are unobservable inputs for the asset or liability.
   7




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R.G. BARRY CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
for the First Quarter of Fiscal 2011 and the First Quarter of Fiscal 2010
(dollar amounts in thousands, except per share data)
   Fair Value Measurements at Reporting Date Using:Quoted Prices
    
    
    Significantin Active
    
    
    Other
    
    
    SignificantMarkets for
    
    
    Observable
    
    
    UnobservableIdentical Assets
    
    
    Inputs
    
    
    InputsOctober 2, 2010
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Assets:Available-for-sale
securities
    
    $
    12,096
    
    
    
    
    
    
    $
    12,096
    
    
    
    Total
    
    $
    12,096
    
    
    
    
    
    
    $
    12,096
    
    
    
    
         8




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R.G. BARRY CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
for the First Quarter of Fiscal 2011 and the First Quarter of Fiscal 2010
(dollar amounts in thousands, except per share data)
  Number of
    
    
    Number of
    
    
    Weighted-common shares
    
    
    common shares
    
    
    Averagesubject to ISOs
    
    
    subject to NQs
    
    
    exercise priceOutstanding at July 3, 2010
    
    
    36,000
    
    
    
    105,500
    
    
    $
    6.11Granted
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    (5,000
    )
    
    
    
    
    
    
    7.25Expired/Cancelled
    
    
    
    
    
    
    
    
    
    
    Outstanding at October 2, 2010
    
    
    31,000
    
    
    
    105,500
    
    
    $
    6.07Options exercisable at October 2, 2010
    
    
    31,000
    
    
    
    105,500
  Number ofcommon shares
    
    
    Grant Dateunderlying RSUs
    
    
    Fair ValueNonvested at July 3, 2010
    
    
    314,000
    
    
    $
    7.49Granted
    
    
    124,500
    
    
    
    9.92Vested
    
    
    (71,500
    )
    
    
    7.29Forfeited/Cancelled
    
    
    (24,000
    )
    
    
    7.80Nonvested at October 2, 2010
    
    
    343,000
    
    
    $
    7.87
     October 2, 2010
    
    
    July 3, 2010Raw materials
    
    $
    253
    
    
    $
    73Finished goods
    
    
    27,885
    
    
    
    13,413Total inventory
    
    $
    28,138
    
    
    $
    13,486
    October 2, 2010
    
    
    July 3, 2010Salaries and wages
    
    $
    857
    
    
    $
    3,320Income taxes
    
    
    1,499
    
    
    
    14Current pension liabilities
    
    
    675
    
    
    
    675Other
    
    
    1,347
    
    
    
    858Total accrued expenses
    
    $
    4,378
    
    
    $
    4,867
  9




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R.G. BARRY CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
for the First Quarter of Fiscal 2011 and the First Quarter of Fiscal 2010
(dollar amounts in thousands, except per share data)
   First Quarter
    
    
    First QuarterFiscal 2011
    
    
    Fiscal 2010Computed expected tax expense
    
    $
    2,232
    
    
    $
    1,234State income tax expense, net of federal income tax benefit
    
    
    210
    
    
    
    117Other, net
    
    
    18
    
    
    
    14Total expense
    
    $
    2,460
    
    
    $
    1,365
   
    First Quarter
    
    
    First QuarterFiscal 2011
    
    
    Fiscal 2010Numerator:Net earnings
    
    $
    4,103
    
    
    $
    2,265Denominator:Weighted-average common shares outstanding
    
    
    11,044
    
    
    
    10,803Effect of potentially dilutive securities: stock options and RSUs
    
    
    107
    
    
    
    145Weighted-average common shares outstanding, assuming dilution
    
    
    11,151
    
    
    
    10,948Basic net earnings per common share
    
    $
    0.37
    
    
    $
    0.21Diluted net earnings per common share
    
    $
    0.37
    
    
    $
    0.21
   10




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R.G. BARRY CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
for the First Quarter of Fiscal 2011 and the First Quarter of Fiscal 2010
(dollar amounts in thousands, except per share data)
    First Quarter
    
    
    First QuarterFiscal 2011
    
    
    Fiscal 2010Service cost
    
    $
    
    
    
    $
    9Interest cost
    
    
    494
    
    
    
    571Expected return on plan assets
    
    
    (511
    )
    
    
    (493
    )Net amortization
    
    
    315
    
    
    
    173Settlement loss
    
    
    
    
    
    
    185Total pension expense
    
    $
    298
    
    
    $
    445
   First Quarter
    
    
    First QuarterFiscal 2011
    
    
    Fiscal 2010Net earnings
    
    $
    4,103
    
    
    $
    2,265Pension related adjustments, net of tax
    
    
    
    
    
    
    (99
    )Total comprehensive income
    
    $
    4,103
    
    
    $
    2,166
   The following table provides a summary of the changes in total equity for the quarter ended
October 2, 2010:
 Additional
    
    
    Accumulatedcapital in
    
    
    other
    
    
    
    
    
    NetCommon
    
    
    excess of par
    
    
    comprehensive
    
    
    Retained
    
    
    shareholdersshares
    
    
    value
    
    
    (loss)
    
    
    earnings
    
    
    equityBalance at July 3, 2010
    
    $
    10,930
    
    
    $
    19,195
    
    
    $
    (12,594
    )
    
    $
    37,065
    
    
    $
    54,596Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,103
    
    
    
    4,103Stock-based compensation expense
    
    
    
    
    
    
    299
    
    
    
    
    
    
    
    
    
    
    
    299Stock-based compensation tax benefit realized
    
    
    
    
    
    
    98
    
    
    
    
    
    
    
    
    
    
    
    98Restricted stock units vested and stock
options exercised
    
    
    55
    
    
    
    (266
    )
    
    
    
    
    
    
    
    
    
    
    (211
    )Dividends declared at $0.07 per common share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (769
    )
    
    
    (769
    )Balance at October 2, 2010
    
    $
    10,985
    
    
    $
    19,326
    
    
    $
    (12,594
    )
    
    $
    40,399
    
    
    $
    58,116
  11




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R.G. BARRY CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
for the First Quarter of Fiscal 2011 and the First Quarter of Fiscal 2010
(dollar amounts in thousands, except per share data)
         12




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Introduction
   Results of Operations
   ®
 ®
   Seasonality
   13




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Looking ahead to the remainder of fiscal 2011 and beyond
  Liquidity and Capital Resources
    Operating Activities
     
    
    Net accounts receivable increased by $18.9 million in the first quarter of fiscal 2011
and by $15.0 million in the first quarter of fiscal 2010. The change in net accounts
receivable during these reporting periods primarily reflected the timing of shipments to
our customers in line with the seasonal nature of our business, and the timing of customer
deductions for promotions and other allowances.
    
    Net inventories increased by $14.7 million and $15.2 million during the first quarter of
fiscal 2011 and 2010, respectively. The increases reflected the net effect of timing of
purchases of finished goods from third-party manufacturers and shipments to our customers
over the quarterly periods, in line with the seasonal nature of our business.
  14




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
    
    Accounts payable increased by $9.8 million and $8.1 million during the first quarter of
fiscal 2011 and 2010, respectively. These changes were due primarily to the timing of
purchases and payment for finished goods inventory in line with the seasonality of our
business.
    
    Accrued expenses decreased by $1.5 million and $1.7 million during the first quarter of
fiscal 2011 and 2010, respectively. The decreases in accrued expenses were primarily due
to the payment during these periods of annual incentive bonuses, which were accrued at the
end of fiscal 2010 and fiscal 2009, respectively.
 Investing Activities
  Financing Activities
  2011 Liquidity
  Bank Facility
  July to December
    
    
    January to JuneFiscal 2011
    
    $
    10 million
    
    
    $
    5 millionFiscal 2012
    
    $
    8 million
     15




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Other Long-Term Indebtedness and Current Installments of Long-Term Debt
 Item 8  Financial Statements and
Supplementary Data.
 Contractual Obligations
 Item 7  Managements Discussion and
Analysis of Financial Condition and Results of Operations
 Critical Accounting Policies and Use of Significant Estimates
  Item 8  Financial Statements
and Supplementary Data. Form 10-K.
  a)
    
    We recognize revenue when the following criteria are met:
 
    
    goods are shipped from our warehouses and other third-party distribution
locations, at which point our customerstake ownership and assume risk of loss;
    
    collection of the relevant receivable is probable;
    
    persuasive evidence of an arrangement exists; and
    
    the sales price is fixed or determinable.
    16




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b)
    
    We value inventories using the lower of cost or market, based upon the first-in,
first-out (FIFO) costing method. We evaluate our inventories for any reduction in
realizable value in light of the prior selling season, the overall economic environment
and our expectations for the upcoming selling seasons, and we record the appropriate
write-downs based on this evaluation. During the first quarter of fiscal 2011 and the
first quarter of fiscal 2010, there were no significant write-downs recorded to inventory.
 c)
    
    We make an assessment of the amount of income taxes that will become currently
payable or recoverable for the just concluded period, and the deferred tax costs or
benefits that will become realizable for income tax purposes in the future, as a
consequence of differences between results of operations as reported in conformity with
U.S. GAAP, and the requirements of the income tax codes existing in the various
jurisdictions where we operate. In evaluating the future benefits of deferred tax assets,
we examine our capacity for generating future taxable profit. In addition, we make
ongoing assessments of income tax exposures that may arise at the Federal, state or local
tax levels. As a result of these evaluations, any exposure deemed more likely than not
will be quantified and accrued as tax expense during the period and reported in a reserve
for uncertain tax positions. Any identified exposures will be subjected to continuing
assessment and estimates will be revised accordingly as information becomes available to
us. We had no tax reserve for uncertain tax positions at the end of the first quarter of
fiscal 2011, the end of the first quarter of fiscal 2010, or the end of fiscal 2010 at the
Federal, state or local tax levels.
 d)
    
    We make assumptions to measure our pension liabilities and project the long-term rate
of return expected on the invested pension assets in our qualified associates retirement
plan. Changes in assumptions, which may be caused by conditions in the debt and equity
markets, changes in asset mix, and plan experience, could have a material effect on our
pension obligations and expenses, and can affect our net income, assets, and shareholders
equity. Changes in assumptions may also result in voluntary or mandatory requirements to
make additional contributions to our qualified associates retirement plan. These
assumptions are reviewed and reset as appropriate at the pension measurement date
commensurate with the end of our fiscal year end, and we monitor these assumptions over
the course of the fiscal year.
 e)
    
    There are various other accounting policies that also require managements judgment.
For an additional discussion of all of our significant accounting policies, please see
Note (1) of the Notes to Consolidated Financial Statements in Item 8  Financial
Statements and Supplementary Data. of Part II of our 2010 Form 10-K.
  Recently Issued Accounting Standards
  
       17




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a.
    
    information required to be disclosed by the Company in this Quarterly Report on Form 10-Q
and the other reports that the Company files or submits under the Exchange Act would be
accumulated and communicated to the Companys management, including its principal executive
officer and its principal financial officer, as appropriate to allow timely decisions
regarding required disclosure;
 b.
    
    information required to be disclosed by the Company in this Quarterly Report on Form 10-Q
and the other reports that the Company files or submits under the Exchange Act would be
recorded, processed, summarized and reported within the time periods specified in the SECs
rules and forms; and
 c.
    
    the Companys disclosure controls and procedures were effective as of the end of the
quarterly period covered by this Quarterly Report on Form 10-Q.
    18




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19




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R.G. BARRY CORPORATION
RegistrantDate: November 10, 2010
    By:
    /s/ José G. IbarraJosé G. IbarraSenior Vice President  Finance
and Chief Financial
Officer
(Principal Financial Officer)

(Duly Authorized Officer)  20




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Exhibit No.
    
    Description
    
    Location3.1
    
    
    Certificate of Amendment by Shareholders to the Articles of
Incorporation of R.G. Barry Corporation (as filed with the Ohio
Secretary of State on November 5, 2010)
    
    Incorporated herein
by reference to
Exhibit 3.1 to the
Current Report on
Form 8-K of R.G.
Barry Corporation,
dated and filed
November 8, 2010
(SEC File No.
001-08769)3.2
    
    
    Articles of Incorporation of R.G. Barry Corporation (reflecting all
amendments filed with the Ohio Secretary of State) [for purposes of
SEC reporting compliance only  not filed in this form with Ohio
Secretary of State]
    
    Filed herewith10.1
    
    
    R.G. Barry Corporation Board of Directors Compensation Program
(adopted by Board of Directors approval at the September 2, 2010
meeting of the Board of Directors, to be in effect with the November
4, 2010 Annual Meeting of Shareholders)
    
    Filed herewith31.1
    
    
    Rule 13a-14(a)/15d-14(a) Certifications (Principal Executive Officer)
    
    Filed herewith31.2
    
    
    Rule 13a-14(a)/15d-14(a) Certifications (Principal Financial Officer)
    
    Filed herewith32.1
    
    
    Section 1350 Certifications (Principal Executive Officer and
Principal Financial Officer)
    
    Filed herewith
  21