13
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] Quarterly Report Pursuant To Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the quarterly period ended February 28,August 29, 1997
--------------------------------
OR
[ ] Transition Report Pursuant To Section 13 or 15(d)
of
The Securities Exchange Act of 1934
For the transition period from to
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Commission File Number 1-4365
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OXFORD INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
Georgia 58-0831862
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
222 Piedmont Avenue, N.E., Atlanta, Georgia 30308
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(Address of principal executive offices)
(Zip Code)
(404) 659-2424
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Number of shares outstanding
Title of each class as of April 7,October 6, 1997
- --------------------------- ----------------------------
Common Stock, $1 par value 8,746,694
8,848,622
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
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OXFORD INDUSTRIES, INCINC.
CONSOLIDATED STATEMENTSTATEMENTS OF EARNINGS
NINE MONTHS AND QUARTERS ENDED FEBRUARY 28,AUGUST 29, 1997 AND MARCH 1,AUGUST 30, 1996
(UNAUDITED)
Nine months Ended Quarter Ended
------------------------- ------------------------
$in--------------------------
$ in thousands except February 28, March 1, February 28, March 1,
per August 29, August 30,
share amounts 1997 1996
1997 1996- ------------------------- ---------- ------------ ----------- ------------ -----------
Net Sales $543,221 $514,920 $167,470 $138,600$193,242 $172,517
-------- --------
Costs and Expenses:
Cost of goods sold 441,091 428,488 133,873 116,135156,597 140,943
Selling, general
and administrative 74,700 75,547 25,124 24,633
Provision for environmental
remediation - 4,500 - -
Interest 3,309 4,916 1,142 1,199
------- ------- ------- -------
Total Costs and Expenses 519,100 513,451 160,139 141,967
------- ------- ------- -------26,795 24,686
Interes t 981 1,096
-------- --------
184,373 166,725
-------- --------
Earnings Before Income Taxes 24,121 1,469 7,331 (3,367)8,869 5,792
Income Taxes 9,648 588 2,932 (1,347)
------- ------- ------- -------3,459 2,317
-------- --------
Net Earnings $ 14,4735,410 $ 881 $ 4,399 ($ 2,020)3,475
======== ======= ======= ===============
Net earningsEarnings Per Common share $1.66 $0.10 $0.51 ($0.23)
======= ======= ======= =======Share $.61 $.40
======== ========
Average Number of Shares
Outstanding 8,738,400 8,731,074 8,732,054 8,779,3448,807,891 8,774,608
========= ========= ========= ========
Dividends Per Share $0.60 $0.60 $0.20 $0.20
========= ========= ========= =============== ======
- -------------------------
See notes to consolidated financial statements.
OXFORD INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
FEBRUARY 28,AUGUST 29, 1997, MAY 31, 199630, 1997 AND MARCH 1,AUGUST 30, 1996
(UNAUDITED EXCEPT FOR MAY 31, 1996)30, 1997)
August 29, May 30, August 30,
$ in thousands February 28, May 31, March 1,1997 1997 1996
- -------------- 1997 1996 1996
----------- ------------------- -------- -----------
Assets
- ------
Current Assets:
Cash $ 3,0584,266 $ 1,0153,313 $ 2,4083,857
Receivables 105,561 84,593 89,201121,633 77,771 108,249
Inventories:
Finished goods 70,152 75,787 79,84485,076 87,368 81,411
Work in process 23,734 24,717 18,19023,996 26,276 23,109
Fabric, trim & supplies 29,285 36,285 31,47234,902 36,137 32,762
-------- -------- --------
123,171 136,789 129,506143,974 149,781 137,282
Prepaid expenses 14,306 13,747 16,37814,317 16,080 12,710
-------- -------- --------
Total Current Assets 246,096 236,144 237,493284,190 246,945 262,098
Property, Plant and Equipment 33,948 36,659 38,86534,629 34,636 35,727
Other Assets 6,163 6,300 6,5055,268 5,536 6,105
-------- -------- --------
Total Assets $286,207 $279,103 $282,863$324,087 $287,117 $303,930
======== ======== ========
Liabilities and Stockholders' Equity
- ------------------------------------
Current LiabilitiesLiabilities:
Notes payable $26,500 $25,500 $36,000$ 44,500 $ 4,000 $ 56,000
Trade accounts payable 40,163 49,676 32,60048,462 59,524 37,517
Accrued compensation 9,760 7,225 6,9389,096 11,278 8,910
Other accrued expenses 19,205 13,014 16,96820,645 16,964 15,359
Dividends payable 1,749 1,760 1,7601,765 1,755 1,755
Income taxes 2,340 - 2,771
Current maturities of
long-
termlong-term debt 1,243 1,632 4,6251,950 2,784 1,631
-------- -------- --------
Total Current Liabilities 98,620 98,807 98,891128,758 96,305 123,943
Long-Term Debt,
less current maturities 43,487 45,051 46,230
Noncurrent41,790 41,790 44,394
Non-Current Liabilities 4,500 4,500 4,500
Deferred Income Taxes 2,155 1,786 3,8683,028 3,005 1,890
Stockholders' Equity:
Common stock 8,745 8,803 8,8018,825 8,780 8,705
Additional paid inpaid-in capital 8,874 8,211 8,18010,590 9,554 8,174
Retained earnings 119,826 111,945 112,393126,596 123,183 112,324
-------- -------- --------
Total Stockholders' Equity 137,445 128,959 129,374146,011 141,517 129,203
-------- -------- --------
Total Liabilities and Stockholders'
Equity $286,207 $279,103 $282,863$324,087 $287,117 $303,930
======== ======== ========
- -------------------
See notes to consolidated financial statements.
OXFORD INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHSQUARTERS ENDED FEBRUARY 28,AUGUST 29, 1997 AND MARCH 1,AUGUST 30, 1996
(UNAUDITED)
February 28, March 1,Quarter Ended
-----------------------------
August 29, August 30,
$ in thousands 1997 1996
- -------------- ------------ ------------
Cash Flows Fromfrom Operating Activities ---------------------------------Activities:
- -------------------------------------------------------------------------
Net earnings $ 14,4735,410 $ 8813,475
Adjustments to reconcile net earnings to
net cash provided by (used in) operating activities:
Depreciation and amortization 6,880 6,185
Provision for environmental remediation - 4,5001,917 2,047
Loss (Gain) loss on sale of property, plant
and equipment (284) 94 (38)
Changes in working capital:
Receivables (20,968) (3,076)(43,862) (23,656)
Inventories 13,618 42,8395,807 (493)
Prepaid expenses (559) (1,720)1,763 1,037
Trade accounts payable (9,513) (21,873)(11,062) (12,159)
Accrued expenses and other current liabilities 8,726 2,4621,499 4,030
Income taxes payable 2,340 2,771
Deferred income taxes 369 623 104
Other noncurrent assets (472) (1,330)67 (9)
Net cash flows provided by ----------- ---------(used in) -------- --------
operating activities 12,270 28,883(36,094) (22,891)
Cash Flows Fromfrom Investing ActivitiesActivities:
- ------------------------------------
Acquisitions - (11,488)
Proceeds from sale of business - 1,273-------------------------------------
Purchase of property, plant and equipment (4,980) (7,002)(1,748) (987)
Proceeds from sale of property, plant and
and equipment 1,703 97337 114
-------- ------------------
Net cash (used in) investing activities (3,277) (16,244)(1,711) (873)
Cash Flows Fromfrom Financing ActivitiesActivities:
- -------------------------------------------------------------------------
Short-term borrowings 1,000 (7,500)40,500 30,500
Payments on long-term debt (1,953) (888)(834) (658)
Proceeds from exercise of stock options 747 1,157847 24
Purchase and retirement of common stock - (1,500) -
Dividends on common stock (5,244) (5,225)(1,755) (1,760)
-------- --------
Net cash (used in) ------ -------provided by financing activities (6,950) (12,456)38,758 26,606
Net changeChange in Cash and Cash Equivalents 2,043 183953 2,842
Cash and Cash Equivalents at Beginning of Period 3,313 1,015 2,225
-------- --------
Cash and Cash Equivalents at End of Period $ 3,0584,266 $ 2,4083,857
======== ========
Supplemental Disclosure of Cash Flow Information
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Cash paid (received) for:
Interest, net 980 $ 3,286 $ 4,9261,080
Income taxes 10,832 1,628200 (1,581)
See notes to consolidated financial statements.
OXFORD INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
QUARTERS ENDED FEBRUARY 28,AUGUST 29, 1997 AND MARCH 1,AUGUST 30, 1996
(UNAUDITED)
1. The foregoing unaudited consolidated financial statements reflect
all adjustments which are, in the opinion of management, necessary
to a fair statement of the results for the interim periods. All
such adjustments are of a normal recurring nature. The results for
interim periods are not necessarily indicative of results to be
expected for the year.
2. The financial information presented herein should be read in
conjunction with the consolidated financial statements included in
the Registrant's Annual Report on Form 10-K for the fiscal year
ended May 31, 1996.30, 1997.
3. The Company is involved in certain legal matters primarily
arising in the normal course of business. In the opinion of
management, the Company's liability under any of these matters
would not materially affect its financial condition or results of
operations.
4. In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS No. 128) "Earnings
per Share." The new standard simplifies the computation of earnings
per share (EPS) and increases comparability to international
standards. Under SFAS No. 128, primary EPS is replaced by "Basic"
EPS, which excludes dilution and is computed by dividing income
available to common stockholders by the weighted-average number of
common shares outstanding for the period. "Diluted" EPS, which is
computed similarly to fully diluted EPS, reflects the potential
dilution that could occur if securities or other contracts to issue
common stock were exercised or converted to common stock.
The Company is required to adopt the new standard in its year-end
1998 financial statements. All prior period EPS information
(including interim EPS) is required to be restated at that time.
Early adoption is not permitted. Pro forma EPS, as if the Company
adopted SFAS No. 128 for each period presented are as follows:
For the quarters ended
August 29, 1997 August 30, 1996
Basic EPS $0.61 $0.40
Diluted EPS $0.61 $0.40
Item 22. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Results of Operations
NET SALES
Net sales for the thirdfirst quarter of the 19971998 fiscal year,
which ended February 28,August 29, 1997, increased 20.8%12.0% from net sales for
the same periodfirst quarter of the priorprevious year. Net sales for the first nine months of the current
year increased 5.5% from net sales for the same period of the prior
year. Third quarter netOxford Shirt Group sales
increased in allby 12.2%, the result of the Company's major
groups and all groups achieved double digitincreased sales increases.
The Men's Slacks Group posted a 19.8% sales increase primarily due to
its Specialty Catalog business unit.
The Men's Tailored Clothing Group posted a 24.0% increase primarily
due to its Oscar de la Renta line. Shipments of its new Nautica line
began in the last month of the quarter, but were not significant in
the current reporting period.
The Womenswear Group experienced a 30.6% increase in net sales for the
quarter primarily from sales to Wal-Mart and Target.
The Men's Shirt Group achieved an 11.6% increase in net sales for the
quarter. The group had strong sales gains in Tommy
Hilfiger Golf, Tommy Hilfiger Dress Shirts, PoloOxsport and
Polo/Ralph Lauren for Boys and its OxSport private
label sport shirt division. Oxford Shirtings, the Company'soffset by decreased sales in private
label dress shirt division, hadshirts. Lanier Clothes sales increased by 6.9%, the
result of increased sales in Oscar de la Renta and the initial
first quarter sales of Nautica offsetting decreased sales in
private label. Oxford Slacks posted a sales decrease due to its exit from
wet processed wrinkle-free production.increase of 16.3%,
primarily in specialty catalog. The Oxford Womenswear Group
posted a sales increase of 13.7% primarily in the Sportswear
Collections division.
The Company experienced aan overall net sales unit sales volume
increase of 23.0%12.8% and a 1.8%an overall 0.6% decrease in the average net
sales price during the third
quarter. Third quarter net sales included increased unitper unit. Increased sales in the Company'sOxford Womenswear
Group with a decreased average net sales price per unit slightly
offset increased sales in the licensed designer divisions (with higherwith
increased average sales per
unit) and increased unit sales in the Womenswear Group (with lower
average sales per unit). For the first nine months of the current
year, the Company experienced a 2.5% increase unit volume and a 2.8%
increase in the averagenet sales price per unit.
COST OF GOODS SOLD
Cost of goods sold as a percentage of net sales was 79.9%81.0% in
the thirdfirst quarter of the current year as compared to 83.8%81.7% in the
thirdfirst quarter
of the prior year. For the first nine months of the current fiscal
year, cost of goods sold as a percentage of net sales was 81.2% and
83.2% for the same period of the prior year. The decrease in cost of goods
sold as a percentage of net sales was due in part to the
increased
sales of higher margin lines. Other factorsAnother factor contributing to
the deceaseddecreased percentage were more efficient manufacturing andof cost of goods sold was a 13.2%
reduction in the continuation of the shift fromCompany's domestic production tocapacity and a
9.4% increase in the Company's offshore production yielding relative decreased costs per unit.
Duringcapacity from
the third quarter,same period in the Company's Mens Shirt Groups
manufacturing facility, Oxford Philippines, Inc. located in Marilao,
Blacan, Philippines continued to increase production levels.
prior year.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased by
2.0%$2,109,000 to $25,124,000$26,795,000 or 13.9% of net sales in the thirdfirst
quarter of the current year from $24,633,000$24,686,000 or 14.3% of net
sales in the same periodfirst quarter of the prior year. Selling general and
administrative expenses decreased by 1.1%The two major
contributors to $74,700,000 for the first
nine months of the current year from $75,547,000 in the same period of
the prior year.
As a percentage of net sales,this increase were increased selling, general and
administrative expenses decreasedassociated with the start-up of Geoffrey
Beene and Nautica tailored clothing and increased advertising
associated with licensed designer divisions. Subsequent to 15.0% for the
third quarterend of the current year
from 17.8% for the thirdfirst quarter, one of the prior year, and decreased to
13.8%Company's customers, Bedford
Fair, filed for bankruptcy protection. In the first nine months ofquarter, the
current year from 14.7%Company had adequately provided for the
first nine months of the prior year. The increase in selling, general
and administrative expenses for the quarter are primarily due to start
up costs of the Nautica and Geoffrey Beene tailored clothing lines.
The decrease in selling, general and administrative expenses for the
nine months are the result of cost containment initiatives and
divestiture of the B.J. Designs division.this subsequent event.
INTEREST EXPENSE
Net interest expense declined by $57,000$115,000 to $1,142,000$981,000 or
0.7%0.5% of net sales in the thirdfirst quarter of the current year from
$1,199,000 or 0.9%
of net sales in the third quarter of the prior year. Net interest
expense declined by $1,607,000 to $3,309,000$1,096,000 or 0.6% of net sales in the first nine months of the current year from $4,916,000 or 1.0% of
net sales in the same periodquarter of the prior
year. The slight reduction in net
interest expense wasis due primarily to the reduced inventory from the
prior year.lower
average short-term borrowings.
INCOME TAXES
The Company's effective tax rate was 39.0% in the first
quarter of the current year and 40.0% in the thirdfirst quarter of both the
current and previous years and for the first nine months of
both the current and previous yearsyear and does not differ significantly from the
Company's statutory rate.
FUTURE OPERATING RESULTS
Although apparel sales at retail have improved during the
quarter, the Company has experienced a slowdown in wholesale
booking in some groups. The Company expectscontinues to maintain its year-to-date performance levels
through the fourth quarter. The Company anticipates aexpect another
record year in sales with continued strongand earnings, improvements.
Duringbut will not maintain the third quarter, the Company signed a licensing agreement
with Geoffrey Beene, Inc. The agreement is for the manufacture and
salehigh
percentage increases of the Geoffrey Beene tailored clothing collection of suits,
sportcoats, slacks and vests. The collection will be launched for
Spring 1998, and is targeted to major department and better specialty
stores.
During the fourth quarter, the Company's Men's Slacks Group will bring
Manufacturera de Sonora, S.A. de C.V. on line. This manufacturing
facility located in Sonora, Mexico will be the latest addition to the
Company's foreign facilities and is expected to further lower the cost
of goods sold.first quarter.
LIQUIDITY AND CAPITAL RESOURCES
OPERATING ACTIVITIES
Operating activities generated $12,270,000 inused $36,094,000 during the first
nine monthsquarter of the current year and $28,883,000used $22,891,000 in the first
nine monthsquarter of the prior year. The primary factors contributing to
this reduced generationincreased use of funds were increased receivables, smaller decreasesa larger increase in accounts
receivable than in the prior year offset by a decrease in
inventory in the current quarter compared to a slight increase in
inventory in the prior year. The increase in receivables and trade payables partially offset by increased earnings.
the
decrease in inventory are both functions of normal seasonal
activity.
INVESTING ACTIVITIES
Investing activities used $3,277,000$1,711,000 in the first nine months of the
current yearperiod
and $16,244,000$873,000 in the first nine monthscomparable period of the prior year. The
primary factors contributing to this change werewas the acquisitionresult of Ely & Walkerincreased spending for capital
expenditures, primarily for the new Oxford Slacks manufacturing
facility in Mexico.
FINANCING ACTIVITIES
Financing activities generated $38,758,000 in the first
quarter of the priorcurrent year and Confecciones Monzini, S.A.generated $26,606,000 in the thirdsame
quarter of the prior year.
FINANCING ACTIVITIES
Financing activities used $6,950,000 in the first nine months of the
current year and $12,456,000 in the first nine months of the priorprevious year. The primary factordifference was
increased short-term borrowing activity in the change in short-term borrowings.
The Company purchased and retired 100,000 shares of its common stock
duringcurrent year.
On October 6, 1997 the nine months ended February 28, 1997. During the period
after the end of the third quarter through April 7, 1997, no shares
have been purchased and retired. Due to the exercise ofCompany's stockholders approved two
employee stock options a net of 42,900 shares of the Company's common stock
were issued during the first nine monthsoption plans, one restricted and 1,200 shares were issued
since February 28, 1997 through April 7, 1997.one non-
restricted.
On April 7,October 6, 1997 the Company's Board of Directors declared
a cash dividend of $.20 per share payable May 31, 1997 to shareholders of
record on May 15,November 14, 1997.
WORKING CAPITAL
Working capital increased from $138,602,000$138,155,000 at the end of
the thirdfirst quarter of the prior year to $147,476,000$150,640,000 at the end of
the third1997 fiscal year and increased to $155,432,000 at the end of
the first quarter of the current fiscal year. The ratio of current
assets to current liabilities was 2.42.1 at the end of the thirdfirst
quarter of the prior year, and 2.52.6 at the end of the thirdprior fiscal
year, and 2.2 at the end of the first quarter of the current
year.
FUTURE LIQUIDITY AND CAPITAL RESOURCES
The Company believes it has the ability to generate cash
and/or has available borrowing capacity to meet its foreseeable
needs. The sources of funds primarily include funds provided by
operations and both short-short-term and long-term borrowings. The
uses of funds primarily include working capital requirements,
capital expenditures, acquisitions, dividends and repayment of
short-term and long-term debt. The Company regularly utilizes
committed bank lines of credit and other uncommitted bank
resources to meet working capital requirements. On February 28,August 29,
1997, the Company had available for its use committed
lines of credit with
several lenders aggregating $52,000,000, of which
$40,000,000 is long-term.$52,000,000. The Company payshas agreed
to pay commitment fees for these available lines of credit. At February 28,On
August 29, 1997, $52,000,000 was in use under these lines. Of
the $52,000,000, $40,000,000 is long-term. In addition, the
Company has $186,000,000 in uncommitted lines of credit, of which
$98,000,000 is reserved exclusively for letters of credit. The
Company pays no commitment fees for these available lines of
credit. At February 28,August 29, 1997, $14,500,000$32,500,000 was in use under these
lines of credit. Maximum borrowings from all these sources
during the first ninethree months of the current year were
$96,000,000$84,500,000 of which $56,000,000$44,500,000 was short-term. The Company
anticipates continued use and availability of both committed and
uncommitted resources as working capital needs may require.
The Company considers possible acquisitions of apparel-
related businesses that are compatible with its long-term
strategies. The Company's Board of Directors has authorized the
Company to purchase shares of the Company's common stock on the
open market and in negotiated trades as conditions and
opportunities warrant. There are no present plans to sell
securities (other than through employee stock option plans and
other employee benefits)or enter into off-
balanceoff-balance sheet financing
arrangements.
ADDITIONAL INFORMATION
For additional information concerning the Company's
operations, cash flows, liquidity and capital resources, this
analysis should be read in conjunction with the Consolidated
Financial Statements and the Notes to Consolidated Financial
Statements contained in the Company's Annual Report for fiscal
1996.
1997.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
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(a) Exhibits.
---------
10i Amendment dated February 28, 1997 to3(a) Articles of Incorporation of the Company.
10(i) Note Agreement between the Company and Sun TrustSunTrust of
Georgia.Georgia dated August 15, 1997 covering the Company's
long term note due February 11, 1999.
10(j) 1997 Stock Option Plan. Incorporated by reference to
Exhibit A to the Company's Form 10-KProxy Statement for the fiscal year
ended June 2, 1995.May 30, 1997.
10(k) 1997 Restricted Stock Plan. Incorporated by reference
to Exhibit B to the Company's Proxy Statement for the fiscal year
ended May 30, 1997.
11 Statement re computation of per share earnings.
27 Financial Data Schedule.
(b) Reports on Form 8-K.
--------------------
The Registrant did not file any reports on Form 8-K during
the quarter ended February 28,August 29, 1997.
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 thereunto duly authorized.
OXFORD INDUSTRIES, INC.
-----------------------
(Registrant)
/s/Ben B. Blount, Jr.
--------------------------
Date: April 11,October 9, 1997 Ben B. Blount, Jr.
--------------- Chief Financial Officer