UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant To Section 13 or 15(d) of The Securities Exchange Act of 1934 |
For the quarterly period ended NOVEMBER 26, 2004
OR
For the quarterly period ended FEBRUARY 25, 2005 | |
OR | |
o | Transition Report Pursuant To Section 13 or 15(d) of The Securities Exchange Act of 1934 |
For the transition period from to |
For the transition period fromto
Commission File Number 1-4365
OXFORD INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Georgia | ||
incorporation or organization) | 58-0831862 Identification number) | |
222 Piedmont Avenue, N.E., Atlanta, Georgia 30308 (Address of principal executive offices, including zip code) | ||
(404) 659-2424 (Registrant's telephone number, including area code) | ||
Not Applicable (Former name, former address and former fiscal year, if changed since last report.) |
222 Piedmont Avenue, N.E., Atlanta, Georgia 30308
(Address of principal executive offices, including zip code)
(404) 659-2424
(Registrant’s telephone number, including area code)
Not Applicable
(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 xý No o¨
Indicate by check mark whether the registrant is an accelerated filer as defined in rule 12b-2 of the Exchange Act. Yes xý No o¨
Indicate the number of shares outstanding of each of the issuer’sissuer's classes of common stock, as of the latest practicable date.
Title of each class | Number of shares outstanding
| ||||
---|---|---|---|---|---|
Common Stock, $1 par value |
INDEX TO FORM 10-Q
For quarter ended November 26, 2004
February 25, 2005
Page | ||||||
---|---|---|---|---|---|---|
PART I.FINANCIAL INFORMATION | ||||||
| ||||||
(Unaudited) | ||||||
Condensed Consolidated Balance Sheets (Unaudited) | ||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) | ||||||
Notes to Unaudited Condensed Consolidated Financial Statements | ||||||
Item 2. | ||||||
Item 3.Quantitative and Qualitative Disclosures About Market Risk | ||||||
| 35 | |||||
| 37 | |||||
PART II. OTHER INFORMATION | ||||||
| 38 | |||||
Item 2.Unregistered | ||||||
Item 5.Other Information | ||||||
Item 6.Exhibits | ||||||
CAUTIONARY STATEMENTS REGARDING FORWARD LOOKING STATEMENTS
Our Securities and Exchange Commission filings and public announcements often include forward-looking statements about future events. We intend for all such forward-looking statements to be covered by the safe harbor provisions for forward looking statements contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Important assumptions relating to these forward looking statements include, among others, assumptions regarding demand for our products, expected pricing levels, raw material costs, the timing and cost of planned capital expenditures, expected outcomes of pending litigation, competitive conditions, general economic conditions and expected synergies in connection with acquisitions and joint ventures, including the acquisition of Ben Sherman. Forward-looking statements reflect our current expectations and are not guarantees of performance. These statements are based on our management's beliefs and assumptions, which in turn are based on currently available information. These beliefs and assumptions could prove inaccurate. Forward-looking statements involve risks and uncertainties. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. Many of these risks and uncertainties are beyond our ability to control or predict. Such risks and uncertainties include, but are not limited to, all of the risks discussed under "Risk Factors" in our fiscal 2004 Form 10-K, including the following:
Other risks or uncertainties may be detailed from time to time in our future Securities and Exchange Commission filings.
Readers are cautioned not to place undue reliance on these forward looking statements, which speak only as of the date this report is filed with the Securities and Exchange Commission. We disclaim any intention, obligation or duty to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
(UNAUDITED)
Quarters Ended | Six Months Ended | |||||||||||
November 26, 2004 | November 28, 2003 | November 26, 2004 | November 28, 2003 | |||||||||
($ in thousands except per share amounts) | ||||||||||||
Net Sales | $ | 312,869 | $ | 253,883 | $ | 577,659 | $ | 495,988 | ||||
Cost of goods sold | 212,766 | 177,051 | 392,634 | 348,265 | ||||||||
Gross Profit | 100,103 | 76,832 | 185,025 | 147,723 | ||||||||
Selling, general and administrative | 80,169 | 59,249 | 147,723 | 112,861 | ||||||||
Amortization of intangibles | 2,424 | 1,677 | 4,136 | 3,355 | ||||||||
82,593 | 60,926 | 151,859 | 116,216 | |||||||||
Royalties and other operating income | 3,301 | 1,140 | 5,054 | 2,320 | ||||||||
Operating Income | 20,811 | 17,046 | 38,220 | 33,827 | ||||||||
Interest expense, net | 6,855 | 6,098 | 14,776 | 11,844 | ||||||||
Earnings Before Income Taxes | 13,956 | 10,948 | 23,444 | 21,983 | ||||||||
Income taxes | 4,884 | 4,108 | 8,204 | 8,301 | ||||||||
Net Earnings | $ | 9,072 | $ | 6,840 | $ | 15,240 | $ | 13,682 | ||||
Basic Earnings Per Share | $ | 0.54 | $ | 0.43 | $ | 0.91 | $ | 0.86 | ||||
Diluted Earnings Per Share | $ | 0.53 | $ | 0.41 | $ | 0.89 | $ | 0.83 | ||||
Basic Weighted Average Shares Outstanding | 16,761,159 | 16,170,814 | 16,736,873 | 15,994,443 | ||||||||
Diluted Weighted Average Shares Outstanding | 17,215,771 | 16,605,400 | 17,216,546 | 16,452,738 | ||||||||
Dividends Declared Per Share | $ | 0.12 | $ | 0.105 | $ | 0.24 | $ | 0.21 | ||||
| Quarter Ended | Nine Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
| February 25, 2005 | February 27, 2004 | February 25, 2005 | February 27, 2004 | ||||||||
| (in thousands except per share amounts) | |||||||||||
Net Sales | $ | 349,095 | $ | 281,418 | $ | 926,754 | $ | 777,406 | ||||
Cost of goods sold | 235,542 | 194,350 | 628,176 | 542,615 | ||||||||
Gross Profit | 113,553 | 87,068 | 298,578 | 234,791 | ||||||||
Selling, general and administrative | 86,458 | 64,802 | 234,181 | 177,663 | ||||||||
Amortization of intangible assets | 2,265 | 1,678 | 6,401 | 5,033 | ||||||||
88,723 | 66,480 | 240,582 | 182,696 | |||||||||
Other operating income | 3,909 | 931 | 8,963 | 3,251 | ||||||||
Operating Income | 28,739 | 21,519 | 66,959 | 55,346 | ||||||||
Interest expense, net | 7,007 | 6,255 | 21,783 | 18,099 | ||||||||
Earnings Before Income Taxes | 21,732 | 15,264 | 45,176 | 37,247 | ||||||||
Income taxes | 7,744 | 5,724 | 15,948 | 14,025 | ||||||||
Net Earnings | $ | 13,988 | $ | 9,540 | $ | 29,228 | $ | 23,222 | ||||
Earnings Per Share—Basic | $ | 0.83 | $ | 0.59 | $ | 1.74 | $ | 1.45 | ||||
Earnings Per Share—Diluted | $ | 0.80 | $ | 0.58 | $ | 1.69 | $ | 1.41 | ||||
Weighted Average Shares Outstanding—Basic | 16,816 | 16,197 | 16,763 | 16,062 | ||||||||
Dilutive effect of options and restricted shares | 399 | 473 | 491 | 455 | ||||||||
Weighted Average Shares Outstanding—Diluted | 17,215 | 16,670 | 17,254 | 16,517 | ||||||||
Dividends Declared Per Share | $ | 0.135 | $ | 0.12 | $ | 0.375 | $ | 0.33 | ||||
See notes to consolidated financial statements.accompanying notes.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED EXCEPT FOR MAY 28, 2004)
| February 25, 2005 | May 28, 2004 | February 27, 2004 | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | ||||||||||
Assets | |||||||||||
Current Assets: | |||||||||||
Cash and cash equivalents | $ | 17,249 | $ | 47,569 | $ | 6,416 | |||||
Receivables | 209,001 | 176,367 | 167,172 | ||||||||
Inventories | 186,222 | 116,410 | 133,693 | ||||||||
Prepaid expenses | 18,141 | 16,475 | 19,325 | ||||||||
Total current assets | 430,613 | 356,821 | 326,606 | ||||||||
Property, plant and equipment, net | 57,575 | 51,826 | 51,624 | ||||||||
Goodwill | 167,870 | 115,426 | 93,642 | ||||||||
Intangible assets, net | 237,435 | 147,333 | 149,011 | ||||||||
Other non-current assets, net | 24,523 | 23,411 | 22,034 | ||||||||
Total Assets | $ | 918,016 | $ | 694,817 | $ | 642,917 | |||||
Liabilities and Shareholders' Equity | |||||||||||
Current Liabilities: | |||||||||||
Trade accounts payable | $ | 112,401 | $ | 100,813 | $ | 85,670 | |||||
Accrued compensation | 26,226 | 33,113 | 23,489 | ||||||||
Additional acquisition cost payable | — | 22,779 | — | ||||||||
Other accrued expenses | 42,977 | 30,440 | 28,891 | ||||||||
Dividends payable | 2,274 | 1,946 | 1,945 | ||||||||
Income taxes payable | 7,316 | 4,294 | 2,646 | ||||||||
Short-term debt | 4,873 | 98 | 13,698 | ||||||||
Total current liabilities | 196,067 | 193,483 | 156,339 | ||||||||
Long-term debt, less current maturities | 336,241 | 198,814 | 198,783 | ||||||||
Other non-current liabilities | 15,627 | 11,124 | 10,765 | ||||||||
Deferred income taxes | 78,738 | 52,419 | 52,650 | ||||||||
Shareholders' Equity: | |||||||||||
Common stock | 16,850 | 16,215 | 16,213 | ||||||||
Additional paid-in capital | 44,482 | 23,673 | 23,627 | ||||||||
Retained earnings | 230,011 | 199,089 | 184,540 | ||||||||
Total shareholders' equity | 291,343 | 238,977 | 224,380 | ||||||||
Total Liabilities and Shareholders' Equity | $ | 918,016 | $ | 694,817 | $ | 642,917 | |||||
See accompanying notes.
November 26, 2004 | May 28, 2004 | November 28, 2003 | |||||||
($ in thousands) | |||||||||
Assets | |||||||||
Current Assets: | |||||||||
Cash and cash equivalents | $ | 19,414 | $ | 47,569 | $ | 5,499 | |||
Receivables | 175,053 | 176,367 | 135,794 | ||||||
Inventories | 161,832 | 116,410 | 127,437 | ||||||
Prepaid expenses | 17,817 | 16,475 | 19,978 | ||||||
Total current assets | 374,116 | 356,821 | 288,708 | ||||||
Property, plant and equipment, net | 55,431 | 51,826 | 51,421 | ||||||
Goodwill | 165,650 | 115,426 | 92,761 | ||||||
Intangibles, net | 239,698 | 147,333 | 150,687 | ||||||
Other noncurrent assets, net | 24,657 | 23,411 | 22,025 | ||||||
Total Assets | $ | 859,552 | $ | 694,817 | $ | 605,602 | |||
Liabilities and Shareholders’ Equity | |||||||||
Current Liabilities: | |||||||||
Trade accounts payable | $ | 96,595 | $ | 100,813 | $ | 72,184 | |||
Accrued compensation | 22,027 | 33,113 | 19,648 | ||||||
Additional acquisition cost payable | — | 22,779 | — | ||||||
Other accrued expenses | 45,495 | 30,440 | 34,007 | ||||||
Dividends payable | 2,013 | 1,946 | 1,700 | ||||||
Income taxes payable | 1,555 | 4,294 | 99 | ||||||
Short-term debt | 6,973 | 98 | 97 | ||||||
Total current liabilities | 174,658 | 193,483 | 127,735 | ||||||
Long-term debt, less current maturities | 315,608 | 198,814 | 198,764 | ||||||
Other noncurrent liabilities | 13,665 | 11,124 | 10,177 | ||||||
Deferred income taxes | 79,754 | 52,419 | 52,676 | ||||||
Shareholders’ Equity: | |||||||||
Common stock | 16,778 | 16,215 | 16,190 | ||||||
Additional paid-in capital | 42,709 | 23,673 | 23,115 | ||||||
Retained earnings | 216,380 | 199,089 | 176,945 | ||||||
Total Shareholders’ Equity | 275,867 | 238,977 | 216,250 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 859,552 | $ | 694,817 | $ | 605,602 | |||
See notes to consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(UNAUDITED)
Six Months Ended | ||||||||
November 26, 2004 | November 28, 2003 | |||||||
($ in thousands) | ||||||||
Cash Flows from Operating Activities | ||||||||
Net earnings | $ | 15,240 | $ | 13,682 | ||||
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: | ||||||||
Depreciation | 6,305 | 5,183 | ||||||
Amortization of intangible assets | 4,136 | 3,355 | ||||||
Amortization of deferred financing costs and bond discount | 3,118 | 1,289 | ||||||
Gain on the sale of assets | (106 | ) | (207 | ) | ||||
Equity income | (323 | ) | (105 | ) | ||||
Deferred income taxes | (3,333 | ) | (964 | ) | ||||
Changes in working capital: | ||||||||
Receivables | 25,241 | 4,105 | ||||||
Inventories | (18,703 | ) | 5,266 | |||||
Prepaid expenses | 1,900 | (2,091 | ) | |||||
Trade accounts payable | (9,352 | ) | (10,401 | ) | ||||
Accrued expenses and other current liabilities | (8,888 | ) | (5,487 | ) | ||||
Stock options income tax benefit | 965 | 1,641 | ||||||
Income taxes payable | (2,852 | ) | (3,316 | ) | ||||
Other noncurrent assets | (1,181 | ) | (3,215 | ) | ||||
Other noncurrent liabilities | 2,541 | 4,553 | ||||||
Net cash provided by operating activities | 14,708 | 13,288 | ||||||
Cash Flows from Investing Activities | ||||||||
Acquisition, net of cash acquired | (139,814 | ) | (222,370 | ) | ||||
Decrease in restricted cash | — | 204,986 | ||||||
Investment in deferred compensation plan | (593 | ) | (1,439 | ) | ||||
Purchases of property, plant and equipment | (6,508 | ) | (7,266 | ) | ||||
Proceeds from sale of property, plant and equipment | 413 | 72 | ||||||
Net cash used in investing activities | (146,502 | ) | (26,017 | ) | ||||
Cash Flows from Financing Activities | ||||||||
Payments of short-term debt | (7,555 | ) | — | |||||
Proceeds from (payments of) long-term debt | 116,693 | (172 | ) | |||||
Payments of debt issuance costs | (2,766 | ) | (7,374 | ) | ||||
Proceeds from issuance of common shares | 752 | 4,956 | ||||||
Dividends paid on common shares | (3,896 | ) | (3,273 | ) | ||||
Net cash provided by (used in) financing activities | 103,228 | (5,863 | ) | |||||
Net change in cash and cash equivalents | (28,566 | ) | (18,592 | ) | ||||
Effect of foreign currency translation on cash and cash equivalents | 411 | — | ||||||
Cash and cash equivalents at the beginning of period | 47,569 | 24,091 | ||||||
Cash and cash equivalents at the end of period | $ | 19,414 | $ | 5,499 | ||||
| Nine Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|
| February 25, 2005 | February 27, 2004 | |||||||
| (in thousands) | ||||||||
Cash Flows from Operating Activities | |||||||||
Net earnings | $ | 29,228 | $ | 23,222 | |||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||||
Depreciation | 9,696 | 8,088 | |||||||
Amortization of intangible assets | 6,401 | 5,033 | |||||||
Amortization of deferred financing costs and bond discount | 3,779 | 1,974 | |||||||
Gain on the sale of assets | (240 | ) | (749 | ) | |||||
Equity income | (378 | ) | (105 | ) | |||||
Deferred income taxes | (4,356 | ) | (1,652 | ) | |||||
Changes in working capital: | |||||||||
Receivables | (10,581 | ) | (27,273 | ) | |||||
Inventories | (42,667 | ) | (990 | ) | |||||
Prepaid expenses | 1,467 | (776 | ) | ||||||
Trade accounts payable | 6,255 | 3,085 | |||||||
Accrued expenses and other current liabilities | (5,730 | ) | (6,762 | ) | |||||
Stock options income tax benefit | 1,336 | 1,875 | |||||||
Income taxes payable | 2,905 | (769 | ) | ||||||
Other non-current assets | (1,182 | ) | (4,171 | ) | |||||
Other non-current liabilities | 4,503 | 5,141 | |||||||
Net cash provided by operating activities | 436 | 5,171 | |||||||
Cash Flows from Investing Activities | |||||||||
Acquisition, net of cash acquired | (142,929 | ) | (222,737 | ) | |||||
Decrease in restricted cash | — | 204,986 | |||||||
Investment in deferred compensation plan | (770 | ) | (1,656 | ) | |||||
Purchases of property, plant and equipment | (12,000 | ) | (10,823 | ) | |||||
Proceeds from sale of property, plant and equipment | 425 | 1,111 | |||||||
Net cash used in investing activities | (155,274 | ) | (29,119 | ) | |||||
Cash Flows from Financing Activities | |||||||||
Proceeds from (payments of) short-term debt | (7,086 | ) | 13,600 | ||||||
Proceeds from (payments of) long-term debt | 137,263 | (196 | ) | ||||||
Payments of debt issuance costs | (2,766 | ) | (7,415 | ) | |||||
Proceeds from issuance of common shares | 2,226 | 5,257 | |||||||
Dividends paid on common shares | (5,909 | ) | (4,973 | ) | |||||
Net cash provided by financing activities | 123,728 | 6,273 | |||||||
Net change in cash and cash equivalents | (31,110 | ) | (17,675 | ) | |||||
Effect of foreign currency translation on cash and cash equivalents | 790 | — | |||||||
Cash and cash equivalents at the beginning of period | 47,569 | 24,091 | |||||||
Cash and cash equivalents at the end of period | �� | $ | 17,249 | $ | 6,416 | ||||
Supplemental schedule of noncashnon-cash investing and financing activities:
As of November 26, 2004,February 25, 2005, approximately $6.9$4.2 million of the Ben Sherman acquisition has been financed through the Seller Notes, as discussed in Note 5.
See notes to consolidated financial statements.accompanying notes.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
QUARTER ENDED NOVEMBER 26,FEBRUARY 25, 2005
OurThe accounting policies applied during the interim periods presented are consistent with the accounting policies as described in our Fiscalfiscal 2004 Form 10-K.
Certain amounts in the prior periods’periods' financial statements have been reclassified to conform to the current year’syear's presentation. These reclassifications have no impact on net earnings as previously reported.
| February 25, 2005 | May 28, 2004 | February 27, 2004 | ||||||
---|---|---|---|---|---|---|---|---|---|
| (in thousands) | ||||||||
Finished goods | $ | 155,055 | $ | 85,492 | $ | 105,660 | |||
Work in process | 8,007 | 9,925 | 10,697 | ||||||
Fabric, trim and supplies | 23,160 | 20,993 | 17,336 | ||||||
Total | $ | 186,222 | $ | 116,410 | $ | 133,693 | |||
| Intangibles at cost | Accumulated amortization | Intangibles, net | ||||||
---|---|---|---|---|---|---|---|---|---|
| (in thousands) | ||||||||
Trademarks | $ | 210,378 | $ | 358 | $ | 210,020 | |||
License agreements | 20,683 | 6,461 | 14,222 | ||||||
Customer relationships | 19,500 | 6,564 | 12,936 | ||||||
Covenant not to compete | 460 | 203 | 257 | ||||||
Total | $ | 251,021 | $ | 13,586 | $ | 237,435 | |||
borrowings from our senior revolving credit facility and unsecured notes payable to the management shareholders of Ben Sherman, both as described in Note 5.
Nov. 26, 2004 | May 28, 2004 | Nov. 28, 2003 | |||||||
($ in thousands) | |||||||||
Finished goods | $ | 128,680 | $ | 85,492 | $ | 91,979 | |||
Work in process | 9,539 | 9,925 | 11,645 | ||||||
Fabric, trim and supplies | 23,613 | 20,993 | 23,813 | ||||||
�� | |||||||||
Total | $ | 161,832 | $ | 116,410 | $ | 127,437 | |||
Intangibles at cost | Accumulated amortization | Intangibles, net | |||||||
($ in thousands) | |||||||||
Trademarks | $ | 210,378 | $ | 349 | $ | 210,029 | |||
License agreements | 20,683 | 5,092 | 15,591 | ||||||
Customer relationships | 19,500 | 5,708 | 13,792 | ||||||
Covenant not to compete | 460 | 174 | 286 | ||||||
Total | $ | 251,021 | $ | 11,323 | $ | 239,698 | |||
OXFORD INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
QUARTER ENDED NOVEMBER 26, 2004
The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed at the date of acquisition for Ben Sherman. The purchase price allocation will be finalized uponis subject to finalization of certain preliminary estimates.
($ in thousands) | ||||
Total purchase price | $ | 148,882 | ||
Cash | $ | 7,656 | ||
Accounts receivable | 25,637 | |||
Inventories | 26,053 | |||
Other current assets | 2,841 | |||
Goodwill | 44,982 | |||
Intangibles | 96,500 | |||
Property, plant and equipment | 3,765 | |||
Current liabilities | (29,602 | ) | ||
Deferred taxes | (28,950 | ) | ||
Fair value of net assets acquired | $ | 148,882 | ||
| (in thousands) | |||
---|---|---|---|---|
Total purchase price | $ | 148,974 | ||
Cash | $ | 7,656 | ||
Accounts receivable | 25,637 | |||
Inventories | 26,053 | |||
Other current assets | 2,841 | |||
Goodwill | 45,074 | |||
Intangibles | 96,500 | |||
Property, plant and equipment | 3,765 | |||
Current liabilities | (29,602 | ) | ||
Deferred taxes | (28,950 | ) | ||
Fair value of net assets acquired | $ | 148,974 | ||
The components of the Intangibles listed in the above table are as follows:
Amount | Life | ||||
($ in thousands) | |||||
Trademarks | $ | 82,000 | Indefinite | ||
License agreements | 11,700 | 4-8 years | |||
Customer relationships | 2,800 | 15 years | |||
Total | $ | 96,500 | |||
OXFORD INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
QUARTER ENDED NOVEMBER 26, 2004
| Amount | Life | |||
---|---|---|---|---|---|
| (in thousands) | | |||
Trademarks | $ | 82,000 | Indefinite | ||
License agreements | 11,700 | 4-8 years | |||
Customer relationships | 2,800 | 15 years | |||
Total | $ | 96,500 | |||
On June 13, 2003, we acquired all of the capital stock of Viewpoint International, Inc., which we operate as the Tommy Bahama Group. The purchase price for the Tommy Bahama Group could be up to $325 million, consisting of $240 million in cash at closing, $10 million in our common stock (776,400 shares), approximately $3.4 million in transaction costs, and up to $75 million in contingent payments, subject to the Tommy Bahama Group achieving certain performance targets. Such performance targets are based on earnings before interest and taxes after deduction of a capital charge based on net tangible assets.
For each of the four years following the acquisition, the selling stockholders of the Tommy Bahama Group will receive an annual basic contingent payment if the Tommy Bahama Group’sGroup's earnings are greater than 90% of the applicable target and will receive the maximum annual basic contingent payment of $12.5 million if the Tommy Bahama Group’sGroup's earnings are 100% or greater than the applicable target. If the Tommy Bahama Group’sGroup's earnings are between 90% and 100% of the applicable target, the annual basic contingent payment will be calculated on a straight line basis from $0 to $12.5 million. Up to 50% of any annual basic contingent payment may be paid in shares of our common stock at our option, and in the case of payments in the first two years, at the option of the selling stockholders of the Tommy Bahama Group. Shares of our common stock issued at our option will be valued at the average price on the New York Stock Exchange (or other applicable exchange) for the ten full trading days prior to the applicable payment date. Shares of our common stock issued at the option of the selling stockholders will be valued at $12.88 per share.
All earnoutcontingent payments to be paid to selling stockholders will be treated as additional purchase price and recorded as goodwill. Approximately 5% of the total value of all consideration that becomes due and payable under the earnout agreement has been designated to be paid toward an Employee Cash Bonus Plan to be distributed to employees of the Tommy Bahama Group under the terms of the plan. The earnoutcontingent payments designated toward the Employee Cash Bonus Plan are charged to selling, general and administrative expense.
Additionally, if, at the end of the four year period, cumulative earnings exceed the cumulative targets, the selling stockholders will receive 33.33% of the cumulative excess up to a maximum cumulative additional contingent payment of $25.0 million. Any cumulative additional contingent payment will be paid in cash.
The Year 1 contingent payment was earned in full and was paid during the first quarter of fiscal 2005 in the form of approximately $6.2 million in cash and the remainder in our common stock valued at $12.88 per share for total consideration of approximately $24.6 million. Of this amount approximately $23.4 million was recognized as goodwill with the remainder recognized as selling, general and administrative expense.
OXFORD INDUSTRIES, INC
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
QUARTER ENDED NOVEMBER 26, 2004
The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition for the Tommy Bahama Group.Group including any contingent payments made to date.
($ in thousands) | ||||
Total purchase price | $ | 278,419 | ||
Cash | $ | 22,145 | ||
Accounts receivable | 29,521 | |||
Inventories | 27,697 | |||
Other current assets | 6,015 | |||
Goodwill | 110,164 | |||
Intangibles | 153,360 | |||
Property, plant and equipment | 28,087 | |||
Other assets | 2,470 | |||
Current liabilities | (45,626 | ) | ||
Noncurrent liabilities | (1,253 | ) | ||
Deferred taxes | (54,161 | ) | ||
Fair value of net assets acquired | $ | 278,419 | ||
| (in thousands) | |||
---|---|---|---|---|
Total purchase price | $ | 278,419 | ||
Cash | $ | 22,145 | ||
Accounts receivable | 29,521 | |||
Inventories | 27,697 | |||
Other current assets | 6,015 | |||
Goodwill | 110,164 | |||
Intangibles | 153,360 | |||
Property, plant and equipment | 28,087 | |||
Other assets | 2,470 | |||
Current liabilities | (45,626 | ) | ||
Non-current liabilities | (1,253 | ) | ||
Deferred taxes | (54,161 | ) | ||
Fair value of net assets acquired | $ | 278,419 | ||
These acquisitions helped us achieve one of our key strategic objectives of owning major lifestyle brands. The acquisitions provide strategic benefits through growth opportunities and further diversification of our business over distribution channels, price points, product categories and target customers. The results of operations of Ben Sherman and the Tommy Bahama Group are included in our consolidated statements of earnings from the respective dates of the acquisition.
Pro-Forma financial information:
The pro forma financial information presented below gives effect to the Ben Sherman acquisition (July 30, 2004) and the Tommy Bahama Group acquisition (June 13, 2003) as if itthe acquisitions had occurred as of the beginning of fiscal 2005 and fiscal 2004 and the Tommy Bahama acquisition as if it had occurred as of the beginning of fiscal 2004.respective periods. The information presented below is for illustrative purposes only and is not indicative of results that would have been achieved if the
acquisitions had occurred as of the beginning of fiscal 2005 and 2004 or results which may be achieved in the future.
| Quarter Ended | Nine Months Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| February 25, 2005 | February 27, 2004 | February 25, 2005 | February 27, 2004 | |||||||||
| (in thousands except per share amounts) | ||||||||||||
Net sales | $ | 349,095 | $ | 312,132 | $ | 957,234 | $ | 900,013 | |||||
Net earnings | $ | 13,988 | $ | 9,078 | $ | 32,012 | $ | 26,769 | |||||
Net earnings per share | |||||||||||||
Basic | $ | 0.83 | $ | 0.56 | $ | 1.91 | $ | 1.66 | |||||
Diluted | $ | 0.80 | $ | 0.54 | $ | 1.86 | $ | 1.62 |
| February 25, 2005 | May 28, 2004 | February 27, 2004 | ||||||
---|---|---|---|---|---|---|---|---|---|
| (in thousands) | ||||||||
$280 million U.S. Secured Revolving Credit Facility ("U.S. Revolver"), which accrues interest, unused line fees and letter of credit fees based upon a pricing grid which is tied to certain financial ratios (4.82% at February 25, 2005), requires interest payments monthly with principal due at maturity (July 2009), and is collateralized by substantially all the assets of the Company and its guarantor subsidiaries(1) | $ | 137,300 | $ | — | $ | 13,600 | |||
12 million Pounds Sterling Senior Secured Revolving Credit Facility ("U.K. Revolver"), which accrues interest at the bank's base rate plus 1.2%, (5.95% at February 25, 2005) requires interest payments monthly with principal payable on demand, and is collateralized by substantially all the United Kingdom assets of Ben Sherman(2) | 634 | — | — | ||||||
$200 million Senior Unsecured Notes ("Senior Unsecured Notes"), which accrue interest at 8.875% and require interest payments semiannually on June 1 and December 1 of each year, with principal due at maturity (June 2011)(3) | 198,893 | 198,760 | 198,715 | ||||||
Unsecured Seller Notes ("Seller Notes"), which accrue interest at LIBOR plus 1.2% (6.52% at February 25, 2005), and require interest payments quarterly with principal payable on demand(2) | 4,172 | — | — | ||||||
Other debt, including capital lease obligations with varying terms and conditions, collateralized by the respective assets | 115 | 152 | 166 | ||||||
Total Debt | 341,114 | 198,912 | 212,481 | ||||||
Short-term Debt | 4,873 | 98 | 13,698 | ||||||
Long-term Debt | 336,241 | 198,814 | 198,783 | ||||||
outstanding under the facility requiring classification as long-term debt subsequent to the modification.
Quarters Ended | Six Months Ended | |||||||||||
Nov. 26, 2004 | Nov. 28, 2003 | Nov. 26, 2004 | Nov. 28, 2003 | |||||||||
($ in thousands except per share amounts) | ||||||||||||
Net sales | $ | 312,869 | $ | 297,161 | $ | 608,139 | $ | 587,881 | ||||
Net earnings | $ | 9,072 | $ | 9,267 | $ | 18,024 | $ | 18,687 | ||||
Net earnings per share | ||||||||||||
Basic | $ | 0.54 | $ | 0.58 | $ | 1.08 | $ | 1.16 | ||||
Diluted | $ | 0.53 | $ | 0.56 | $ | 1.05 | $ | 1.13 |
OXFORD INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
QUARTER ENDED NOVEMBER 26, 2004
November 26, 2004 | May 28, 2004 | November 28, 2003 | |||||||
($ in thousands) | |||||||||
$280 million U.S. Secured Revolving Credit Facility (“U.S. Revolver”), which accrues interest and letter of credit fees based upon a pricing grid which is tied to certain debt ratios (4.27% at November 26, 2004), requires interest payments monthly with principal due at maturity (July 2009), and is collateralized by substantially all the assets of the Company and Guarantor Subsidiaries (1) | $ | 116,700 | $ | — | $ | — | |||
12 million Pounds Sterling Senior Secured Revolving Credit Facility (“U.K. Revolver”), which accrues interest at the lender’s prime rate plus 1.2%, requires interest payments monthly with principal payable on demand, and is collateralized by substantially all the United Kingdom assets of Ben Sherman (2) | — | — | — | ||||||
$200 million Senior Unsecured Notes (“Senior Unsecured Notes”), which accrue interest at 8.875% and require interest payments semiannually with principal due at maturity (June 2011) (3) | 198,849 | 198,760 | 198,671 | ||||||
Unsecured Seller Notes (“Seller Notes”), which accrue interest at LIBOR plus 1.2% (6.55% at November 26, 2004), and require interest payments quarterly with principal payable on demand after January 30, 2005 (2) | 6,887 | — | — | ||||||
Other debt, including capital lease obligations with varying terms and conditions, collateralized by the respective assets | 145 | 152 | 190 | ||||||
Total Debt | 322,581 | 198,912 | 198,861 | ||||||
Short-term Debt | 6,973 | 98 | 97 | ||||||
Total Long-term Debt | 315,608 | 198,814 | 198,764 |
The U.S. Revolver, the U.K. Revolver and the Senior Unsecured Notes each include certain debt covenant restrictions that require us or our subsidiaries to maintain certain financial ratios that are customary for similar facilities. OnThe facilities also include limitations on certain restricted payments such as dividends, earn-out payments, and asprepayment of November 26, 2004debt. To ensure compliance with the minimum availability requirement of our U.S. Revolver, we sought and obtained the consent of our U.S. Revolver bank group to pay our third and fourth quarter fiscal 2005 dividends without regard to the availability requirement. We currently do not anticipate the need for a consent to pay dividends in subsequent quarters. As of February 25, 2005, we were compliant with all debt covenant restrictionsrestrictive financial covenants related to allour debt agreements.
OXFORD INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
QUARTER ENDED NOVEMBER 26, 2004
Quarters Ended | Six Months Ended | |||||||||||||||
Nov. 26, 2004 | Nov. 28, 2003 | Nov. 26, 2004 | Nov 28. 2003 | |||||||||||||
($ in thousands) | ||||||||||||||||
Net earnings as reported | $ | 9,072 | $ | 6,840 | $ | 15,240 | $ | 13,682 | ||||||||
Deduct: Employee compensation expense, net of related tax effects | (209 | ) | (137 | ) | (418 | ) | (228 | ) | ||||||||
Pro forma net earnings | $ | 8,863 | $ | 6,703 | $ | 14,822 | $ | 13,454 | ||||||||
Basic earnings per share as reported | $ | 0.54 | $ | 0.43 | $ | 0.91 | $ | 0.86 | ||||||||
Pro forma basic earnings per share | $ | 0.53 | $ | 0.41 | $ | 0.89 | $ | 0.84 | ||||||||
Diluted earnings per share as reported | $ | 0.53 | $ | 0.41 | $ | 0.89 | $ | 0.83 | ||||||||
Pro forma diluted earnings per share | $ | 0.51 | $ | 0.40 | $ | 0.86 | $ | 0.82 |
Quarters Ended | Six Months Ended | |||||||||||
Nov. 26, 2004 | Nov. 28, 2003 | Nov. 26, 2004 | Nov. 28, 2003 | |||||||||
($ in thousands) | ||||||||||||
Basic and diluted earnings available to shareholders (numerator): | $ | 9,072 | $ | 6,840 | $ | 15,240 | $ | 13,682 | ||||
Shares (denominator): | ||||||||||||
Weighted average shares outstanding | 16,761,159 | 16,170,814 | 16,736,873 | 15,994,443 | ||||||||
Dilutive securities: | ||||||||||||
Options | 454,612 | 434,586 | 479,673 | 458,295 | ||||||||
Total assuming conversion | 17,215,771 | 16,605,400 | 17,216,546 | 16,452,738 | ||||||||
Per share amounts: | ||||||||||||
Basic earnings per common share | $ | 0.54 | $ | 0.43 | $ | 0.91 | $ | 0.86 | ||||
Diluted earnings per common share | $ | 0.53 | $ | 0.41 | $ | 0.89 | $ | 0.83 |
DuringAs of February 25, 2005, approximately $100.5 million and $2.2 million of trade letters of credit were outstanding against the first six monthsU.S. Revolver and the second quarterU.K. Revolver, respectively. The net availability under our U.S. Revolver and U.K. Revolver was approximately $42.2 million and $20.2 million, respectively as of fiscal 2005February 25, 2005.
| Quarter Ended | Nine Months Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| February 25, 2005 | February 27, 2004 | February 25, 2005 | February 27, 2004 | |||||||||
| (in thousands, except per share amounts) | ||||||||||||
Net earnings as reported | $ | 13,988 | $ | 9,540 | $ | 29,228 | $ | 23,222 | |||||
Add: Stock-based employee compensation recognized in reported net income, net of related tax effects(1) | 246 | — | 246 | — | |||||||||
Deduct: Employee compensation expense, net of related tax effects | (230 | ) | (193 | ) | (647 | ) | (421 | ) | |||||
Pro forma net earnings | $ | 14,004 | $ | 9,347 | $ | 28,827 | $ | 22,801 | |||||
Basic earnings per share—as reported | $ | 0.83 | $ | 0.59 | $ | 1.74 | $ | 1.45 | |||||
Basic earnings per share—pro forma | $ | 0.83 | $ | 0.58 | $ | 1.72 | $ | 1.42 | |||||
Diluted earnings per share—as reported | $ | 0.80 | $ | 0.58 | $ | 1.69 | $ | 1.41 | |||||
Diluted earnings per share—pro forma | $ | 0.80 | $ | 0.56 | $ | 1.67 | $ | 1.38 | |||||
We effected a two-for-one share split in the form of a 100% stock dividend, payable December 1, 2003, to shareholders of record on November 17, 2003. All share and per share data appearing in the consolidated financial statements and related notes reflect this stock split.
During the nine months ended February 25, 2005, we issued 0.6 million shares with respect to the acquisition of the Tommy Bahama Group and the exercise of stock options by employees. We have not repurchased any shares during the current year.
OXFORD INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
QUARTER ENDED NOVEMBER 26, 2004
Accumulated otherOther comprehensive income of $7.0 million and $6.0 million for the quarter and six months ended November 26, 2004which is comprised of the effects of foreign currency translation gains (loss),adjustments for the quarter and nine months ended February 25, 2005 was $1.9 million and $7.9 million, respectively, net of income taxes of $2.1$1.0 million and $1.8$4.3 million, respectively which is included as a component of retained earnings in the condensed consolidated balance sheet. Comprehensive income forrespectively. For the quarter and sixnine months ended November 26, 2004February 25, 2005, total comprehensive income consisting of net earnings as reported in our statement of earnings and the effect of foreign currency translation adjustments was $16.1$15.9 million and $21.3$37.2 million, respectively.respectively, net of income taxes. Net earnings and comprehensive income were equivalent for all prior periods. Accumulated other periods.comprehensive income was $7.9 million as of February 25, 2005, which is included in retained earnings in the condensed consolidated balance sheet.
The business segments results exclude corporate overhead costs, LIFO inventory accounting adjustments and other costs which are not allocated to the operating groups. LIFO inventory calculations are made on a legal entity basis, which do not necessarily correspond to our segment definitions. Therefore, LIFO inventory accounting adjustments are not allocated to the operating segments. Total assets for Corporate and Other include the LIFO inventory reserve of $37.1 million, $35.5 million and $35.5 million at February 25, 2005, May 28, 2004 and February 27, 2004, respectively. Segment results are as follows:
| Quarter Ended | Nine Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
| February 25, 2005 | February 27, 2004 | February 25, 2005 | February 27, 2004 | ||||||||
| (in thousands) | |||||||||||
Net Sales | ||||||||||||
Menswear Group | $ | 168,816 | $ | 99,828 | $ | 468,609 | $ | 330,935 | ||||
Womenswear Group | 78,853 | 78,052 | 176,408 | 202,846 | ||||||||
Tommy Bahama Group | 101,399 | 103,438 | 281,351 | 243,105 | ||||||||
Corporate and Other | 27 | 100 | 386 | 520 | ||||||||
Total | $ | 349,095 | $ | 281,418 | $ | 926,754 | $ | 777,406 |
| Quarter Ended | Nine Months Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| February 25, 2005 | February 27, 2004 | February 25, 2005 | February 27, 2004 | |||||||||
| (in thousands) | ||||||||||||
Depreciation and amortization | |||||||||||||
Menswear Group | $ | 1,922 | $ | 832 | $ | 4,951 | $ | 2,643 | |||||
Womenswear Group | 42 | 82 | 172 | 364 | |||||||||
Tommy Bahama Group | 3,590 | 3,554 | 10,680 | 9,734 | |||||||||
Corporate and Other | 102 | 114 | 294 | 380 | |||||||||
Total | $ | 5,656 | $ | 4,582 | $ | 16,097 | $ | 13,121 | |||||
Operating Income | |||||||||||||
Menswear Group | $ | 14,114 | $ | 7,016 | $ | 41,083 | $ | 26,712 | |||||
Womenswear Group | 5,218 | 3,341 | 4,460 | 8,458 | |||||||||
Tommy Bahama Group | 13,524 | 14,822 | 31,335 | 29,331 | |||||||||
Corporate and Other | (4,117 | ) | (3,660 | ) | (9,919 | ) | (9,155 | ) | |||||
Total | $ | 28,739 | $ | 21,519 | $ | 66,959 | $ | 55,346 | |||||
Interest expense, net | 7,007 | 6,255 | 21,783 | 18,099 | |||||||||
Earnings before taxes | $ | 21,732 | $ | 15,264 | $ | 45,176 | $ | 37,247 |
Quarters Ended | Six Months Ended | |||||||||||
($ in thousands) | ||||||||||||
November 26, 2004 | November 28, 2003 | November 26, 2004 | November 28, 2003 | |||||||||
Net Sales | ||||||||||||
Menswear Group | $ | 181,088 | $ | 115,353 | $ | 299,793 | $ | 231,107 | ||||
Womenswear Group | 45,097 | 61,841 | 97,555 | 124,794 | ||||||||
Tommy Bahama Group | 86,490 | 76,389 | 179,952 | 139,667 | ||||||||
Corporate and Other | 194 | 300 | 359 | 420 | ||||||||
Total | $ | 312,869 | $ | 253,883 | $ | 577,659 | $ | 495,988 | ||||
February 25,
2005 May 28,
2004 February 27,
2004 (in thousands) Assets Menswear Group $ 427,209 $ 171,718 $ 174,607 Womenswear Group 89,656 95,866 94,364 Tommy Bahama Group 397,059 390,961 365,807 Corporate and Other 4,092 36,272 8,139 Total $ 918,016 $ 694,817 $ 642,917
QUARTER ENDED NOVEMBER 26, In November 2004, the Financial Accounting Standards Board, or FASB issued FASB Statement No. 151 "Inventory Costs, an Amendment of ARB No. 43 Chapter 4" ("FAS 151"). FAS 151 is applicable for inventory costs incurred during fiscal years beginning after June 15, 2005. FAS 151 requires that items such as idle facility expense, excessive spoilage, double freight, and re-handling be recognized as current-period charges rather than being included in inventory regardless of whether the costs meet the criterion of abnormal as defined in ARB 43. We do not believe the adoption of FAS 151 will have a material impact on us upon adoption in fiscal 2006 as we have historically expensed such costs as incurred.
Quarters Ended | Six Months Ended | |||||||||||||||
($ in thousands) | ||||||||||||||||
November 26, 2004 | November 28, 2003 | November 26, 2004 | November 28, 2003 | |||||||||||||
Depreciation and amortization | ||||||||||||||||
Menswear Group | $ | 1,892 | $ | 899 | $ | 3,029 | $ | 1,811 | ||||||||
Womenswear Group | 65 | 83 | 130 | 282 | ||||||||||||
Tommy Bahama Group | 3,646 | 3,402 | 7,090 | 6,180 | ||||||||||||
Corporate and Other | 90 | 789 | 192 | 265 | ||||||||||||
Total | $ | 5,693 | $ | 5,173 | $ | 10,441 | $ | 8,538 | ||||||||
Operating Income | ||||||||||||||||
Menswear Group | $ | 18,048 | $ | 10,221 | $ | 26,969 | $ | 19,696 | ||||||||
Womenswear Group | 208 | 1,893 | (758 | ) | 5,117 | |||||||||||
Tommy Bahama Group | 5,895 | 7,550 | 17,811 | 14,509 | ||||||||||||
Corporate and Other | (3,340 | ) | (2,618 | ) | (5,802 | ) | (5,495 | ) | ||||||||
Total | $ | 20,811 | $ | 17,046 | $ | 38,220 | $ | 33,827 | ||||||||
Interest expense, net | 6,855 | 6,098 | 14,776 | 11,844 | ||||||||||||
Earnings before taxes | $ | 13,956 | $ | 10,948 | $ | 23,444 | $ | 21,983 | ||||||||
November 26, 2004 |
May 28, 2004 | November 28, 2003 | ||||||||||||||
($ in thousands) | ||||||||||||||||
Assets | ||||||||||||||||
Menswear Group | $ | 405,010 | $ | 171,718 | $ | 177,109 | ||||||||||
Womenswear Group | 71,170 | 95,866 | 73,072 | |||||||||||||
Tommy Bahama Group | 386,396 | 390,961 | 349,293 | |||||||||||||
Corporate and Other | (3,024 | ) | 36,272 | 6,128 | ||||||||||||
Total | $ | 859,552 | $ | 694,817 | $ | 605,602 |
OXFORD INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
QUARTER ENDED NOVEMBER 26, 2004
In December 2004, the FASB issued FASB Statement No. 123 (Revised 2004) “Share-Based"Share-Based Payment: an Amendment of FASB Statements No. 123 and 95” (“95" ("FAS 123R”123R"). FAS 123R is applicable for all interim and fiscal periods beginning after June 15, 2005. Therefore, we will adopt it during fiscal 2006. FAS 123R sets accounting requirements for “share-based”"share-based" compensation to employees, requires companies to recognize in the income statement the grant-date fair value of stock options and other equity-based compensation issued to employees and disallows the use of the intrinsic value method of accounting for stock compensation. We are currently evaluating the impact that this statement will have on our results of operations.operations upon adoption in fiscal 2006.
In October 2004, the American Jobs Creation Act of 2004 (the "Act") was signed into law by the President. Among other provisions, the Act provides for a special one-time tax deduction of 85 percent of certain foreign earnings that are repatriated in either an enterprise's last tax year that began before the enactment date or the first tax year that begins during the one-year period beginning on the date of enactment. As a result of execution of the Act, the accounting treatment of such unremitted earnings that are expected to be repatriated must be considered in evaluating an entity's tax provision. We are currently evaluating the appropriate action with respect to the repatriation provision, including, but not limited to, an assessment of the amount of foreign earnings eligible for repatriation. No impact has been recognized in the current period's tax provision or financial statements as we have not completed our assessment of unremitted earnings available for repatriation or the income tax effect, if any, of repatriation of such earnings at this time. We expect to have this evaluation completed prior to the end of the second quarter of fiscal 2006.
OXFORD INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
QUARTER ENDED NOVEMBER 26, 2004
Oxford Industries, Inc.
Unaudited
Condensed Consolidated Balance Sheet
February 25, 2005
| Oxford Industries (Parent) | Subsidiary Guarantors | Subsidiary Non- Guarantors | Consolidating Adjustments | Consolidated Total | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | ||||||||||||||
Assets | |||||||||||||||
Current Assets: | |||||||||||||||
Cash and cash equivalents | $ | 4,549 | $ | 2,738 | $ | 9,978 | $ | (16 | ) | $ | 17,249 | ||||
Receivables | 111,925 | 69,947 | 70,849 | (43,720 | ) | 209,001 | |||||||||
Inventories | 103,354 | 63,055 | 20,081 | (268 | ) | 186,222 | |||||||||
Prepaid expenses | 7,733 | 5,573 | 4,835 | — | 18,141 | ||||||||||
Total current assets | 227,561 | 141,313 | 105,743 | (44,004 | ) | 430,613 | |||||||||
Property, plant and equipment, net | 12,191 | 37,567 | 7,817 | — | 57,575 | ||||||||||
Goodwill | 1,847 | 114,156 | 51,867 | — | 167,870 | ||||||||||
Intangibles, net | 221 | 142,829 | 94,385 | — | 237,435 | ||||||||||
Other non-current assets, net | 570,464 | 149,697 | 1,323 | (696,961 | ) | 24,523 | |||||||||
Total Assets | $ | 812,284 | $ | 585,562 | $ | 261,135 | $ | (740,965 | ) | $ | 918,016 | ||||
Liabilities and Shareholders' Equity | |||||||||||||||
Current Liabilities: | |||||||||||||||
Trade accounts payable | $ | 92,752 | $ | 31,894 | $ | 26,758 | $ | (39,003 | ) | $ | 112,401 | ||||
Accrued compensation | 13,567 | 8,932 | 3,727 | — | 26,226 | ||||||||||
Other accrued expenses | 15,358 | 14,340 | 18,003 | (4,724 | ) | 42,977 | |||||||||
Dividends payable | 2,274 | — | — | — | 2,274 | ||||||||||
Income taxes payable | (10,892 | ) | 13,140 | 4,902 | 166 | 7,316 | |||||||||
Short-term debt | 29 | 38 | 4,806 | — | 4,873 | ||||||||||
Total current liabilities | 113,088 | 68,344 | 58,196 | (43,561 | ) | 196,067 | |||||||||
Long term debt, less current maturities | 336,215 | 26 | — | — | 336,241 | ||||||||||
Other non-current liabilities | 91,484 | (78,949 | ) | 112,261 | (109,169 | ) | 15,627 | ||||||||
Deferred income taxes | 3,999 | 45,764 | 28,984 | (9 | ) | 78,738 | |||||||||
Total Shareholders'/invested equity | 267,498 | 550,377 | 61,694 | (588,226 | ) | 291,343 | |||||||||
Total Liabilities and Shareholders' Equity | $ | 812,284 | $ | 585,562 | $ | 261,135 | $ | (740,965 | ) | $ | 918,016 | ||||
November 26, 2004
Oxford Industries (Parent) | Subsidiary Guarantors | Subsidiary Non- Guarantors | Consolidating Adjustments | Consolidated Total | ||||||||||||||
($ in thousands) | ||||||||||||||||||
Assets | ||||||||||||||||||
Current Assets: | ||||||||||||||||||
Cash and cash equivalents | $ | 7,918 | $ | 2,396 | $ | 9,099 | $ | 1 | $ | 19,414 | ||||||||
Receivables | 89,604 | 60,794 | 66,712 | (42,057 | ) | 175,053 | ||||||||||||
Inventories | 87,550 | 57,218 | 17,411 | (347 | ) | 161,832 | ||||||||||||
Prepaid expenses | 7,891 | 6,157 | 3,769 | — | 17,817 | |||||||||||||
Total current assets | 192,963 | 126,565 | 96,991 | (42,403 | ) | 374,116 | ||||||||||||
Property, plant and equipment, net | 12,822 | 34,895 | 7,714 | — | 55,431 | |||||||||||||
Goodwill | 1,847 | 114,156 | 49,647 | — | 165,650 | |||||||||||||
Intangibles, net | 230 | 144,176 | 95,292 | — | 239,698 | |||||||||||||
Other assets net | 557,418 | 149,833 | 1,369 | (683,963 | ) | 24,657 | ||||||||||||
Total Assets | $ | 765,280 | $ | 569,625 | $ | 251,013 | $ | (726,366 | ) | $ | 859,552 | |||||||
Liabilities and Shareholders’ Equity | ||||||||||||||||||
Current Liabilities: | ||||||||||||||||||
Trade accounts payable | $ | 86,544 | $ | 34,636 | $ | 14,945 | $ | (39,530 | ) | $ | 96,595 | |||||||
Accrued compensation | 11,017 | 6,720 | 4,290 | — | 22,027 | |||||||||||||
Other accrued expenses | 19,793 | 12,494 | 15,907 | (2,699 | ) | 45,495 | ||||||||||||
Dividends payable | 2,013 | — | — | — | 2,013 | |||||||||||||
Income taxes payable | (14,813 | ) | 12,298 | 4,070 | — | 1,555 | ||||||||||||
Short-terrm debt | 28 | 58 | 6,887 | — | 6,973 | |||||||||||||
Total current liabilities | 104,582 | 66,206 | 46,099 | (42,229 | ) | 174,658 | ||||||||||||
Long term debt, less current maturities | 315,578 | 30 | — | — | 315,608 | |||||||||||||
Noncurrent liabilities | 87,380 | (70,305 | ) | 113,620 | (117,030 | ) | 13,665 | |||||||||||
Deferred income taxes | 3,879 | 46,899 | 28,985 | (9 | ) | 79,754 | ||||||||||||
Total Shareholders’/invested equity | 253,861 | 526,795 | 62,309 | (567,098 | ) | 275,867 | ||||||||||||
Total Liabilities and Shareholders’ Equity | $ | 765,280 | $ | 569,625 | $ | 251,013 | $ | (726,366 | ) | $ | 859,552 | |||||||
OXFORD INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
QUARTER ENDED NOVEMBER 26, 2004
Oxford Industries, Inc
Inc.
Condensed Consolidated Balance Sheet
May 28, 2004
Oxford Industries (Parent) | Subsidiary Guarantors | Subsidiary Non- Guarantors | Consolidating Adjustments | Consolidated Total | ||||||||||||||
($ in thousands) | ||||||||||||||||||
Assets | ||||||||||||||||||
Current Assets: | ||||||||||||||||||
Cash and cash equivalents | $ | 45,405 | $ | 1,438 | $ | 724 | $ | 2 | $ | 47,569 | ||||||||
Receivables | 110,092 | 69,989 | 36,192 | (39,906 | ) | 176,367 | ||||||||||||
Inventories | 75,699 | 38,412 | 2,299 | — | 116,410 | |||||||||||||
Prepaid expenses | 10,377 | 5,716 | 382 | — | 16,475 | |||||||||||||
Total current assets | 241,573 | 115,555 | 39,597 | (39,904 | ) | 356,821 | ||||||||||||
Property, plant and equipment, net | 13,839 | 33,186 | 4,801 | — | 51,826 | |||||||||||||
Goodwill | 1,847 | 113,579 | — | 115,426 | ||||||||||||||
Intangibles, net | 249 | 147,084 | — | 147,333 | ||||||||||||||
Other assets net | 382,738 | 7,053 | 1,604 | (367,984 | ) | 23,411 | ||||||||||||
Total Assets | $ | 640,246 | $ | 416,457 | $ | 46,002 | $ | (407,888 | ) | $ | 694,817 | |||||||
Liabilities and Shareholders’ Equity | ||||||||||||||||||
Current Liabilities: | ||||||||||||||||||
Trade accounts payable | $ | 92,517 | $ | 34,647 | $ | 13,562 | $ | (39,913 | ) | $ | 100,813 | |||||||
Accrued compensation | 19,339 | 11,357 | 2,417 | — | 33,113 | |||||||||||||
Additional acquisition cost payable | 22,779 | — | — | — | 22,779 | |||||||||||||
Other accrued expenses | 20,056 | 10,028 | 356 | — | 30,440 | |||||||||||||
Dividends payable | 1,946 | — | — | — | 1,946 | |||||||||||||
Income taxes payable | (16,847 | ) | 19,533 | 1,607 | 1 | 4,294 | ||||||||||||
Short-term debt | — | 98 | — | — | 98 | |||||||||||||
Total current liabilities | 139,790 | 75,663 | 17,942 | (39,912 | ) | 193,483 | ||||||||||||
Long term debt, less current maturities | 198,760 | 54 | — | — | 198,814 | |||||||||||||
Noncurrent liabilities | 82,943 | (74,847 | ) | 3,031 | (3 | ) | 11,124 | |||||||||||
Deferred income taxes | 4,130 | 48,249 | 40 | — | 52,419 | |||||||||||||
Total Shareholders’/invested equity | 214,623 | 367,338 | 24,989 | (367,973 | ) | 238,977 | ||||||||||||
Total Liabilities and Shareholders’ Equity | $ | 640,246 | $ | 416,457 | $ | 46,002 | $ | (407,888 | ) | $ | 694,817 | |||||||
Oxford Industries
(Parent) Subsidiary
Guarantors Subsidiary Non-
Guarantors Consolidating
Adjustments Consolidated
Total (in thousands) Assets Current Assets: Cash and cash equivalents $ 45,405 $ 1,438 $ 724 $ 2 $ 47,569 Receivables 110,092 69,989 36,192 (39,906 ) 176,367 Inventories 75,699 38,412 2,299 — 116,410 Prepaid expenses 10,377 5,716 382 — 16,475 Total current assets 241,573 115,555 39,597 (39,904 ) 356,821 Property, plant and equipment, net 13,839 33,186 4,801 — 51,826 Goodwill 1,847 113,579 — 115,426 Intangibles, net 249 147,084 — 147,333 Other non-current assets, net 382,738 7,053 1,604 (367,984 ) 23,411 Total Assets $ 640,246 $ 416,457 $ 46,002 $ (407,888 ) $ 694,817 Liabilities and Shareholders' Equity Current Liabilities: Trade accounts payable $ 92,517 $ 34,647 $ 13,562 $ (39,913 ) $ 100,813 Accrued compensation 19,339 11,357 2,417 — 33,113 Additional acquisition cost payable 22,779 — — — 22,779 Other accrued expenses 20,056 10,028 356 — 30,440 Dividends payable 1,946 — — — 1,946 Income taxes payable (16,847 ) 19,533 1,607 1 4,294 Short-term debt — 98 — — 98 Total current liabilities 139,790 75,663 17,942 (39,912 ) 193,483 Long term debt, less current maturities 198,760 54 — — 198,814 Other non-current liabilities 82,943 (74,847 ) 3,031 (3 ) 11,124 Deferred income taxes 4,130 48,249 40 — 52,419 Total Shareholders'/invested equity 214,623 367,338 24,989 (367,973 ) 238,977 Total Liabilities and Shareholders' Equity $ 640,246 $ 416,457 $ 46,002 $ (407,888 ) $ 694,817
OXFORD INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
QUARTER ENDED NOVEMBER 26, 2004
Oxford Industries, Inc.
Unaudited
Condensed Consolidated Balance Sheet
February 27, 2004
| Oxford Industries (Parent) | Subsidiary Guarantors | Subsidiary Non- Guarantors | Consolidating Adjustments | Consolidated Total | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | ||||||||||||||
Assets | |||||||||||||||
Current Assets: | |||||||||||||||
Cash and cash equivalents | $ | 3,888 | $ | 417 | $ | 2,082 | $ | 29 | $ | 6,416 | |||||
Receivables | 98,028 | 64,232 | 37,769 | (32,857 | ) | 167,172 | |||||||||
Inventories | 87,182 | 45,342 | 1,169 | — | 133,693 | ||||||||||
Prepaid expenses | 10,595 | 8,341 | 389 | — | 19,325 | ||||||||||
Total current assets | 199,693 | 118,332 | 41,409 | (32,828 | ) | 326,606 | |||||||||
Property, plant and equipment, net | 14,577 | 32,200 | 4,847 | — | 51,624 | ||||||||||
Goodwill | 1,847 | 91,795 | — | — | 93,642 | ||||||||||
Intangibles, net | 259 | 148,752 | — | — | 149,011 | ||||||||||
Other non-current assets, net | 344,755 | 5,410 | 1,555 | (329,686 | ) | 22,034 | |||||||||
Total Assets | $ | 561,131 | $ | 396,489 | $ | 47,811 | $ | (362,514 | ) | $ | 642,917 | ||||
Liabilities and Shareholders' Equity | |||||||||||||||
Current Liabilities: | |||||||||||||||
Trade accounts payable | $ | 65,430 | $ | 35,467 | $ | 17,616 | $ | (32,843 | ) | $ | 85,670 | ||||
Accrued compensation | 17,516 | 3,348 | 2,625 | — | 23,489 | ||||||||||
Other accrued expenses | 17,563 | 11,247 | 81 | — | 28,891 | ||||||||||
Dividends payable | 1,945 | — | — | — | 1,945 | ||||||||||
Income taxes payable | (7,974 | ) | 9,145 | 1,475 | — | 2,646 | |||||||||
Short-term debt | 13,600 | 98 | — | — | 13,698 | ||||||||||
Total current liabilities | 108,080 | 59,305 | 21,797 | (32,843 | ) | 156,339 | |||||||||
Long term debt, less current maturities | 198,720 | 63 | — | — | 198,783 | ||||||||||
Other non-current liabilities | 51,507 | (43,746 | ) | 3,004 | — | 10,765 | |||||||||
Deferred taxes | 2,638 | 49,971 | 41 | — | 52,650 | ||||||||||
Total Shareholders'/invested equity | 200,186 | 330,896 | 22,969 | (329,671 | ) | 224,380 | |||||||||
Total Liabilities and Shareholders' Equity | $ | 561,131 | $ | 396,489 | $ | 47,811 | $ | (362,514 | ) | $ | 642,917 | ||||
November 28, 2003
Oxford Industries (Parent) | Subsidiary Guarantors | Subsidiary Non- Guarantors | Consolidating Adjustments | Consolidated Total | ||||||||||||||
($ in thousands) | ||||||||||||||||||
Assets | ||||||||||||||||||
Current Assets: | ||||||||||||||||||
Cash and cash equivalents | $ | 2,659 | $ | 883 | $ | 1,936 | $ | 21 | $ | 5,499 | ||||||||
Receivables | 88,043 | 43,804 | 32,827 | (28,880 | ) | 135,794 | ||||||||||||
Inventories | 84,296 | 40,555 | 2,586 | — | 127,437 | |||||||||||||
Prepaid expenses | 10,337 | 9,129 | 512 | — | 19,978 | |||||||||||||
Total current assets | 185,335 | 94,371 | 37,861 | (28,859 | ) | 288,708 | ||||||||||||
Property, plant and equipment, net | 15,049 | 31,058 | 5,314 | — | 51,421 | |||||||||||||
Goodwill | 1,847 | 90,914 | — | — | 92,761 | |||||||||||||
Intangibles, net | 268 | 150,419 | — | — | 150,687 | |||||||||||||
Other assets, net | 332,095 | 5,163 | 1,570 | (316,803 | ) | 22,025 | ||||||||||||
Total Assets | $ | 534,594 | $ | 371,925 | 44,745 | $ | (345,662 | ) | $ | 605,602 | ||||||||
Liabilities and Shareholders’ Equity | ||||||||||||||||||
Current Liabilities: | ||||||||||||||||||
Trade accounts payable | $ | 57,214 | $ | 29,393 | $ | 14,343 | $ | (28,766 | ) | $ | 72,184 | |||||||
Accrued compensation | 11,743 | 4,676 | 3,229 | — | 19,648 | |||||||||||||
Other accrued expenses | 24,313 | 9,424 | 381 | (111 | ) | 34,007 | ||||||||||||
Dividends payable | 1,700 | — | — | — | 1,700 | |||||||||||||
Income taxes payable | (11,634 | ) | 10,601 | 1,132 | — | 99 | ||||||||||||
Short-term debt | — | 97 | — | — | 97 | |||||||||||||
Total current liabilities | 83,336 | 54,191 | 19,085 | (28,877 | ) | 127,735 | ||||||||||||
Long term debt, less current maturities | 198,676 | 88 | — | — | 198,764 | |||||||||||||
Noncurrent liabilities | 58,125 | (52,554 | ) | 4,589 | 17 | 10,177 | ||||||||||||
Deferred taxes | 2,403 | 50,232 | 41 | 52,676 | ||||||||||||||
Total Shareholders’/invested equity | 192,054 | 319,968 | 21,030 | (316,802 | ) | 216,250 | ||||||||||||
Total Liabilities and Shareholders’ Equity | $ | 534,594 | $ | 371,925 | $ | 44,745 | $ | (345,662 | ) | $ | 605,602 | |||||||
OXFORD INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
QUARTER ENDED NOVEMBER 26, 2004
Oxford Industries, Inc.
Unaudited
Condensed Consolidated Statement of Earnings
Quarter Ended November 26, 2004February 25, 2005
| Oxford Industries (Parent) | Subsidiary Guarantors | Subsidiary Non- Guarantors | Consolidating Adjustments | Consolidated Total | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | ||||||||||||||
Net Sales | $ | 191,560 | $ | 132,382 | $ | 44,228 | $ | (19,075 | ) | $ | 349,095 | ||||
Cost of goods sold | 150,582 | 68,105 | 23,184 | (6,329 | ) | 235,542 | |||||||||
Gross Profit | 40,978 | 64,277 | 21,044 | (12,746 | ) | 113,553 | |||||||||
Selling, general and administrative | 37,856 | 49,839 | 16,524 | (15,496 | ) | 88,723 | |||||||||
Royalties and other income | — | 1,622 | 2,287 | — | 3,909 | ||||||||||
Operating Income | 3,122 | 16,060 | 6,807 | 2,750 | 28,739 | ||||||||||
Interest expense (income), net | 4,871 | (2,580 | ) | 2,047 | 2,669 | 7,007 | |||||||||
Income from equity investment | 16,340 | 25 | — | (16,365 | ) | — | |||||||||
Earnings Before Income Taxes | 14,591 | 18,665 | 4,760 | (16,284 | ) | 21,732 | |||||||||
Income taxes | 513 | 5,712 | 1,348 | 171 | 7,744 | ||||||||||
Net Earnings | $ | 14,078 | $ | 12,953 | $ | 3,412 | $ | (16,455 | ) | $ | 13,988 | ||||
Oxford Industries (Parent) | Subsidiary Guarantors | Subsidiary Non- Guarantors | Consolidating Adjustments | Consolidated Total | ||||||||||||||
($ in thousands) | ||||||||||||||||||
Net Sales | $ | 163,529 | $ | 112,522 | $ | 55,897 | $ | (19,079 | ) | $ | 312,869 | |||||||
Cost of goods sold | 128,798 | 59,431 | 27,784 | (3,247 | ) | 212,766 | ||||||||||||
Gross Profit | 34,731 | 53,091 | 28,113 | (15,832 | ) | 100,103 | ||||||||||||
Selling, general and administrative | 33,035 | 46,461 | 21,042 | (17,945 | ) | 82,593 | ||||||||||||
Royalties and other income | — | 1,960 | 1,341 | — | 3,301 | |||||||||||||
Operating Income | 1,696 | 8,590 | 8,412 | 2,113 | 20,811 | |||||||||||||
Interest expense (income), net | 4,895 | (2,443 | ) | 2,087 | 2,316 | 6,855 | ||||||||||||
Income from equity investment | 10,787 | (1 | ) | — | (10,786 | ) | — | |||||||||||
Earnings Before Income Taxes | 7,588 | 11,032 | 6,325 | (10,989 | ) | 13,956 | ||||||||||||
Income taxes | (1,688 | ) | 4,590 | 1,982 | — | 4,884 | ||||||||||||
Net Earnings | $ | 9,276 | $ | 6,442 | $ | 4,343 | $ | (10,989 | ) | $ | 9,072 | |||||||
Oxford Industries, Inc.
Unaudited
Condensed Consolidated Statement of Earnings
Quarter Ended November 28, 2003February 27, 2004
Oxford Industries (Parent) | Subsidiary Guarantors | Subsidiary Non- Guarantors | Consolidating Adjustments | Consolidated Total | ||||||||||||||
($ in thousands) | ||||||||||||||||||
Net Sales | $ | 167,116 | $ | 90,314 | $ | 9,810 | $ | (13,357 | ) | $ | 253,883 | |||||||
Cost of goods sold | 129,962 | 46,422 | 264 | 403 | 177,051 | |||||||||||||
Gross Profit | 37,154 | 43,892 | 9,546 | (13,760 | ) | 76,832 | ||||||||||||
Selling, general and administrative | 32,418 | 36,362 | 8,035 | (15,889 | ) | 60,926 | ||||||||||||
Royalties and other income | — | 1,140 | — | — | 1,140 | |||||||||||||
Operating Income | 4,736 | 8,670 | 1,511 | 2,129 | 17,046 | |||||||||||||
Interest (income) expense, net | 4,351 | (360 | ) | (24 | ) | 2,131 | 6,098 | |||||||||||
Income from equity investment | 6,749 | 5 | — | (6,754 | ) | — | ||||||||||||
Earnings Before Income Taxes | 7,134 | 9,035 | 1,535 | (6,756 | ) | 10,948 | ||||||||||||
Income taxes | 293 | 3,360 | 455 | — | 4,108 | |||||||||||||
Net Earnings | $ | 6,841 | $ | 5,675 | $ | 1,080 | $ | (6,756 | ) | $ | 6,840 | |||||||
Oxford Industries
(Parent) Subsidiary
Guarantors Subsidiary Non-
Guarantors Consolidating
Adjustments Consolidated
Total (in thousands) Net Sales $ 162,221 $ 122,330 $ 9,642 $ (12,775 ) $ 281,418 Cost of goods sold 129,942 64,849 358 (799 ) 194,350 Gross Profit 32,279 57,481 9,284 (11,976 ) 87,068 Selling, general and administrative 32,063 41,261 6,964 (13,808 ) 66,480 Royalties and other income — 931 — — 931 Operating Income 216 17,151 2,320 1,832 21,519 Interest expense (income), net 4,090 354 (24 ) 1,835 6,255 Income from equity investment 12,486 29 — (12,515 ) — Earnings Before Income Taxes 8,612 16,826 2,344 (12,518 ) 15,264 Income taxes (928 ) 6,260 392 — 5,724 Net Earnings $ 9,540 $ 10,566 $ 1,952 $ (12,518 ) $ 9,540
OXFORD INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
QUARTER ENDED NOVEMBER 26, 2004
Oxford Industries, Inc.
Unaudited
Condensed Consolidated Statement of Earnings
Six
Nine Months Ended November 26, 2004February 25, 2005
| Oxford Industries (Parent) | Subsidiary Guarantors | Subsidiary Non- Guarantors | Consolidating Adjustments | Consolidated Total | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | ||||||||||||||
Net Sales | $ | 502,067 | $ | 353,607 | $ | 124,638 | $ | (53,558 | ) | $ | 926,754 | ||||
Cost of goods sold | 397,175 | 181,852 | 61,097 | (11,948 | ) | 628,176 | |||||||||
Gross Profit | 104,892 | 171,755 | 63,541 | (41,610 | ) | 298,578 | |||||||||
Selling, general and administrative | 99,276 | 138,748 | 48,635 | (46,077 | ) | 240,582 | |||||||||
Royalties and other income | — | 4,951 | 4,012 | — | 8,963 | ||||||||||
Operating Income | 5,616 | 37,958 | 18,918 | 4,467 | 66,959 | ||||||||||
Interest expense (income), net | 18,288 | (6,110 | ) | 4,871 | 4,734 | 21,783 | |||||||||
Income from equity investment | 39,900 | 68 | — | (39,968 | ) | — | |||||||||
Earnings Before Income Taxes | 27,228 | 44,136 | 14,047 | (40,235 | ) | 45,176 | |||||||||
Income taxes | (2,439 | ) | 14,112 | 4,104 | 171 | 15,948 | |||||||||
Net Earnings | $ | 29,667 | $ | 30,024 | $ | 9,943 | (40,406 | ) | $ | 29,228 | |||||
Oxford Industries (Parent) | Subsidiary Guarantors | Subsidiary Non- Guarantors | Consolidating Adjustments | Consolidated Total | ||||||||||||||
($ in thousands) | ||||||||||||||||||
Net Sales | $ | 310,507 | $ | 221,225 | $ | 80,410 | $ | (34,483 | ) | $ | 577,659 | |||||||
Cost of goods sold | 246,593 | 113,747 | 37,913 | (5,619 | ) | 392,634 | ||||||||||||
Gross Profit | 63,914 | 107,478 | 42,497 | (28,864 | ) | 185,025 | ||||||||||||
Selling, general and administrative | 61,420 | 88,909 | 32,111 | (30,581 | ) | 151,859 | ||||||||||||
Royalties and other income | — | 3,329 | 1,725 | — | 5,054 | |||||||||||||
Operating Income | 2,494 | 21,898 | 12,111 | 1,717 | 38,220 | |||||||||||||
Interest expense (income), net | 13,417 | (3,530 | ) | 2,824 | 2,065 | 14,776 | ||||||||||||
Income from equity investment | 23,560 | 43 | — | (23,603 | ) | — | ||||||||||||
Earnings Before Income Taxes | 12,637 | 25,471 | 9,287 | (23,951 | ) | 23,444 | ||||||||||||
Income taxes | (2,952 | ) | 8,400 | 2,756 | — | 8,204 | ||||||||||||
Net Earnings | $ | 15,589 | $ | 17,071 | $ | 6,531 | $ | (23,951 | ) | $ | 15,240 | |||||||
Oxford Industries, Inc.
Unaudited
Condensed Consolidated Statement of Earnings
Six
Nine Months Ended November 28, 2003February 27, 2004
Oxford Industries (Parent) | Subsidiary Guarantors | Subsidiary Non- Guarantors | Consolidating Adjustments | Consolidated Total | ||||||||||||||
($ in thousands) | ||||||||||||||||||
Net Sales | $ | 335,462 | $ | 168,262 | $ | 18,511 | $ | (26,247 | ) | $ | 495,988 | |||||||
Cost of goods sold | 261,763 | 85,681 | (132 | ) | 953 | 348,265 | ||||||||||||
Gross Profit | 73,699 | 82,581 | 18,643 | (27,200 | ) | 147,723 | ||||||||||||
Selling, general and administrative | 61,582 | 67,201 | 16,342 | (28,909 | ) | 116,216 | ||||||||||||
Royalties and other income | — | 2,320 | — | — | 2,320 | |||||||||||||
Operating Income | 12,117 | 17,700 | 2,301 | 1,709 | 33,827 | |||||||||||||
Interest (income) expense, net | 10,866 | (687 | ) | (47 | ) | 1,712 | 11,844 | |||||||||||
Income from equity investment | 14,520 | 19 | — | (14,539 | ) | — | ||||||||||||
Earnings Before Income Taxes | 15,771 | 18,406 | 2,348 | (14,542 | ) | 21,983 | ||||||||||||
Income taxes | 2,088 | 5,513 | 700 | — | 8,301 | |||||||||||||
Net Earnings | $ | 13,683 | $ | 12,893 | $ | 1,648 | $ | (14,542 | ) | $ | 13,682 | |||||||
Oxford Industries
(Parent) Subsidiary
Guarantors Subsidiary Non-
Guarantors Consolidating
Adjustments Consolidated
Total (in thousands) Net Sales $ 497,683 $ 290,592 $ 28,153 $ (39,022 ) $ 777,406 Cost of goods sold 391,705 150,530 226 154 542,615 Gross Profit 105,978 140,062 27,927 (39,176 ) 234,791 Selling, general and administrative 93,645 108,462 23,306 (42,717 ) 182,696 Royalties and other income — 3,251 — — 3,251 Operating Income 12,333 34,851 4,621 3,541 55,346 Interest expense (income), net 14,956 (334 ) (71 ) 3,548 18,099 Income from equity investment 27,005 48 — (27,053 ) — Earnings Before Income Taxes 24,382 35,233 4,692 (27,060 ) 37,247 Income taxes 1,160 11,772 1,093 — 14,025 Net Earnings $ 23,222 $ 23,461 $ 3,599 $ (27,060 ) $ 23,222
OXFORD INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
QUARTER ENDED NOVEMBER 26, 2004
Oxford Industries, Inc.
Unaudited
Condensed Consolidated Statement of Cash Flow
Six
Nine Months Ended November 26, 2004February 25, 2005
Oxford Industries (Parent) | Subsidiary Guarantors | Subsidiary Non- Guarantors | Consolidating Adjustments | Consolidated Total | ||||||||||||||||
($ in thousands) | ||||||||||||||||||||
Cash Flows From Operating Activities | ||||||||||||||||||||
Net earnings | $ | 15,589 | $ | 17,071 | $ | 6,531 | $ | (23,951 | ) | $ | 15,240 | |||||||||
Adjustments to reconcile net earnings to net cash (used in) provided by operating activities: | ||||||||||||||||||||
Depreciation and amortization | 4,677 | 7,193 | 1,689 | — | 13,559 | |||||||||||||||
Equity income | — | (323 | ) | — | — | (323 | ) | |||||||||||||
Loss (gain) on sale of assets | 84 | (594 | ) | 404 | (106 | ) | ||||||||||||||
Deferred income taxes | (252 | ) | (1,349 | ) | (1,532 | ) | (200 | ) | (3,333 | ) | ||||||||||
Changes in working capital | (442 | ) | (19,500 | ) | (67 | ) | 8,320 | (11,689 | ) | |||||||||||
Income for equity investment in subsidiaries | (23,560 | ) | (43 | ) | — | 23,603 | — | |||||||||||||
Other noncurrent assets | (1,001 | ) | 13 | (192 | ) | (1 | ) | (1,181 | ) | |||||||||||
Other noncurrent liabilities | 1,299 | 1,242 | — | — | 2,541 | |||||||||||||||
Net cash (used in) provided by operating activities | (3,606 | ) | 3,710 | 6,833 | 7,771 | 14,708 | ||||||||||||||
Cash Flows from Investing Activities | ||||||||||||||||||||
Acquisitions net of cash acquired | (5,475 | ) | 4 | (134,343 | ) | �� | — | (139,814 | ) | |||||||||||
Investment in subsidiaries | (141,807 | ) | (32,616 | ) | — | 174,423 | — | |||||||||||||
Investment in deferred comp plan | — | (593 | ) | — | — | (593 | ) | |||||||||||||
Purchases of property, plant and equipment | (618 | ) | (5,804 | ) | (86 | ) | — | (6,508 | ) | |||||||||||
Proceeds from sale of property, plant and equipment | 7 | 406 | — | — | 413 | |||||||||||||||
Net cash (used in) provided by investing activities | (147,893 | ) | (38,603 | ) | (134,429 | ) | 174,423 | (146,502 | ) | |||||||||||
Cash Flows from Financing Activities | ||||||||||||||||||||
Payments of short-term debt | — | — | (7,555 | ) | — | (7,555 | ) | |||||||||||||
Proceeds (payments) of long-term debt | 116,757 | (64 | ) | 116,693 | ||||||||||||||||
Equity contribution received | — | 141,807 | 32,616 | (174,423 | ) | — | ||||||||||||||
(Payments) proceeds of loan to subsidiaries | — | (109,191 | ) | 109,191 | — | — | ||||||||||||||
Proceeds from issuance of common stock | 752 | — | — | — | 752 | |||||||||||||||
Debt issue costs | (2,766 | ) | — | — | — | (2,766 | ) | |||||||||||||
Change in intercompany payable | (4,855 | ) | 3,299 | 9,301 | (7,745 | ) | — | |||||||||||||
Dividends on common stock | 4,124 | — | (7,993 | ) | (27 | ) | (3,896 | ) | ||||||||||||
Net cash provided by (used in) financing activities | 114,012 | 35,851 | 135,560 | (182,195 | ) | 103,228 | ||||||||||||||
Net change in Cash and Cash Equivalents | (37,487 | ) | 958 | 7,964 | (1 | ) | (28,566 | ) | ||||||||||||
Effect of foreign currency translation on cash and cash equivalents | — | — | 411 | — | 411 | |||||||||||||||
Cash and cash equivalents at the beginning of period | 45,405 | 1,438 | 724 | 2 | 47,569 | |||||||||||||||
Cash and cash equivalents at the end of period | $ | 7,918 | $ | 2,396 | $ | 9,099 | $ | 1 | $ | 19,414 | ||||||||||
Oxford Industries
(Parent) Subsidiary
Guarantors Subsidiary Non-
Guarantors Consolidating
Adjustments Consolidated
Total (in thousands) Cash Flows from Operating Activities Net earnings $ 29,667 $ 30,024 $ 9,943 $ (40,406 ) $ 29,228 Adjustments to reconcile net earnings to net cash (used in) provided by operating activities: Depreciation and amortization 6,102 10,886 2,888 — 19,876 Equity income — (378 ) — — (378 ) Loss (gain) on sale of assets 118 (746 ) 388 — (240 ) Deferred income taxes (131 ) (2,484 ) (2,006 ) 265 (4,356 ) Changes in working capital (29,771 ) (31,745 ) 3,604 10,897 (47,015 ) Income for equity investment in subsidiaries (39,900 ) (68 ) — 39,968 — Other non-current assets 1,636 372 (3,192 ) 2 (1,182 ) Other non-current liabilities 1,804 2,700 — (1 ) 4,503 Net cash (used in) provided by operating activities (30,475 ) 8,561 11,625 10,725 436
Cash Flows from Investing Activities
Acquisitions net of cash acquired (5,475 ) 4 (137,458 ) — (142,929 ) Investment in subsidiaries (141,807 ) (32,616 ) — 174,423 — Investment in deferred comp plan — (770 ) — — (770 ) Purchases of property, plant and equipment (784 ) (10,824 ) (392 ) — (12,000 ) Proceeds from sale of property, plant and equipment 19 406 — — 425 Net cash (used in) provided by investing activities (148,047 ) (43,800 ) (137,850 ) 174,423 (155,274 )
Cash Flows from Financing Activities
Payments of short-term debt — — (7,085 ) (1 ) (7,086 ) Proceeds (payments) of) long-term debt 137,351 (90 ) — 2 137,263 Equity contribution received — 141,807 32,616 (174,423 ) — (Payments) proceeds of loan to subsidiaries — (109,191 ) 109,191 — — Proceeds from issuance of common stock 2,226 — — — 2,226 Debt issue costs (2,766 ) — — — (2,766 ) Change in intercompany payable (1,254 ) 1,197 10,680 (10,623 ) — Dividends on common stock 2,109 2,816 (10,713 ) (121 ) (5,909 ) Net cash provided by (used in) financing activities 137,666 36,539 134,689 (185,166 ) 123,728
Net Change in Cash and Cash Equivalents
(40,856
)
1,300
8,464
(18
)
(31,110
)Effect of foreign currency translation on cash and cash equivalents — — 790 — 790 Cash and cash equivalents at the beginning of period 45,405 1,438 724 2 47,569 Cash and cash equivalents at the end of period $ 4,549 $ 2,738 $ 9,978 $ (16 ) $ 17,249
OXFORD INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
QUARTER ENDED NOVEMBER 26, 2004
Oxford Industries, Inc.
Unaudited
Condensed Consolidated Statement of Cash Flow
Six
Nine Months Ended November 28, 2003February 27, 2004
| Oxford Industries (Parent) | Subsidiary Guarantors | Subsidiary Non- Guarantors | Consolidating Adjustments | Consolidated Total | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | |||||||||||||||||
Cash Flows from Operating Activities | ||||||||||||||||||
Net earnings | $ | 23,222 | $ | 23,461 | $ | 3,599 | $ | (27,060 | ) | $ | 23,222 | |||||||
Adjustments to reconcile net earnings to net cash (used in) provided by operating activities: | ||||||||||||||||||
Depreciation and amortization | 4,769 | 9,958 | 368 | — | 15,095 | |||||||||||||
Equity income | — | (105 | ) | — | — | (105 | ) | |||||||||||
Loss (gain) on sale of assets | 30 | (163 | ) | (616 | ) | — | (749 | ) | ||||||||||
Deferred income taxes | (441 | ) | (1,527 | ) | 26 | 290 | (1,652 | ) | ||||||||||
Changes in working capital | (105,848 | ) | 76,496 | (2,075 | ) | (183 | ) | (31,610 | ) | |||||||||
Income for equity investment in subsidiaries | (27,005 | ) | (48 | ) | — | 27,053 | — | |||||||||||
Other non-current assets | (2,717 | ) | (1,572 | ) | 313 | (195 | ) | (4,171 | ) | |||||||||
Other non-current liabilities | 2,834 | 2,307 | — | — | 5,141 | |||||||||||||
Net cash (used in) provided by operating activities | (105,156 | ) | 108,807 | 1,615 | (95 | ) | 5,171 | |||||||||||
Cash Flows from Investing Activities | ||||||||||||||||||
Acquisitions | (245,062 | ) | 22,325 | — | — | (222,737 | ) | |||||||||||
Decrease in restricted cash | 204,986 | — | — | — | 204,986 | |||||||||||||
Investment in deferred comp plan | — | (1,656 | ) | — | — | (1,656 | ) | |||||||||||
Purchases of property, plant and equipment | (2,107 | ) | (8,622 | ) | (94 | ) | — | (10,823 | ) | |||||||||
Proceeds from sale of property, plant and equipment | 480 | (378 | ) | 1,009 | — | 1,111 | ||||||||||||
Net cash (used in) provided by investing activities | (41,703 | ) | 11,669 | 915 | — | (29,119 | ) | |||||||||||
Cash Flows from Financing Activities | ||||||||||||||||||
Principal payments of long-term debt | 13,476 | (72 | ) | — | — | 13,404 | ||||||||||||
Proceeds from issuance of common stock | 5,257 | — | — | — | 5,257 | |||||||||||||
Debt issue costs | (7,415 | ) | — | — | — | (7,415 | ) | |||||||||||
Change in intercompany payable | 121,380 | (120,205 | ) | (1,168 | ) | (7 | ) | — | ||||||||||
Dividends on common stock | (4,973 | ) | — | — | — | (4,973 | ) | |||||||||||
Net cash provided by (used in) financing activities | 127,725 | (120,277 | ) | (1,168 | ) | (7 | ) | 6,273 | ||||||||||
Net Change in Cash and Cash Equivalents | (19,134 | ) | 199 | 1,362 | (102 | ) | (17,675 | ) | ||||||||||
Cash and cash equivalents at the beginning of period | 23,022 | 218 | 720 | 131 | 24,091 | |||||||||||||
Cash and cash equivalents at the end of period | $ | 3,888 | $ | 417 | $ | 2,082 | $ | 29 | $ | 6,416 | ||||||||
Oxford Industries (Parent) | Subsidiary Guarantors | Subsidiary Non- Guarantors | Consolidating Adjustments | Consolidated Total | ||||||||||||||||
($ in thousands) | ||||||||||||||||||||
Cash Flows From Operating Activities | ||||||||||||||||||||
Net earnings | $ | 13,683 | $ | 12,893 | $ | 1,648 | $ | (14,542 | ) | $ | 13,682 | |||||||||
Adjustments to reconcile net earnings to net cash (used in) provided by operating activities: | ||||||||||||||||||||
Depreciation and amortization | 3,204 | 6,376 | 247 | — | 9,827 | |||||||||||||||
Equity income | — | (105 | ) | — | — | (105 | ) | |||||||||||||
Loss (gain) on sale of assets | 12 | (213 | ) | (6 | ) | — | (207 | ) | ||||||||||||
Deferred income taxes | (676 | ) | (1,266 | ) | 26 | 952 | (964 | ) | ||||||||||||
Changes in working capital | (103,853 | ) | 95,813 | (1,387 | ) | (856 | ) | (10,283 | ) | |||||||||||
Income for equity investment in subsidiaries | (14,520 | ) | (19 | ) | — | 14,539 | — | |||||||||||||
Other noncurrent assets | (2,331 | ) | (984 | ) | 300 | (200 | ) | (3,215 | ) | |||||||||||
Other noncurrent liabilities | 2,505 | 2,048 | — | — | 4,553 | |||||||||||||||
Net cash (used in) provided by operating activities | (101,976 | ) | 114,543 | 828 | (107 | ) | 13,288 | |||||||||||||
Cash Flows from Investing Activities | ||||||||||||||||||||
Acquisitions | (244,695 | ) | 22,325 | — | — | (222,370 | ) | |||||||||||||
Decrease in restricted cash | 204,986 | — | — | — | 204,986 | |||||||||||||||
Investment in deferred comp plan | — | (1,439 | ) | — | — | (1,439 | ) | |||||||||||||
Purchases of property, plant and equipment | (1,212 | ) | (6,025 | ) | (29 | ) | — | (7,266 | ) | |||||||||||
Proceeds from sale of property, plant and equipment | 21 | 63 | (12 | ) | — | 72 | ||||||||||||||
Net cash (used in) provided by investing activities | (40,900 | ) | 14,924 | (41 | ) | — | (26,017 | ) | ||||||||||||
Cash Flows from Financing Activities | ||||||||||||||||||||
Principal payments of long-term debt | (124 | ) | (48 | ) | — | — | (172 | ) | ||||||||||||
Proceeds from issuance of common stock | 4,956 | — | — | — | 4,956 | |||||||||||||||
Debt issue costs | (7,374 | ) | — | — | — | (7,374 | ) | |||||||||||||
Change in intercompany payable | 128,328 | (128,754 | ) | 429 | (3 | ) | — | |||||||||||||
Dividends on common stock | (3,273 | ) | — | — | — | (3,273 | ) | |||||||||||||
Net cash provided by (used in) financing activities | 122,513 | (128,802 | ) | 429 | (3 | ) | (5,863 | ) | ||||||||||||
Net change in Cash and Cash Equivalents | (20,363 | ) | 665 | 1,216 | (110 | ) | (18,592 | ) | ||||||||||||
Cash and cash equivalents at the beginning of period | 23,022 | 218 | 720 | 131 | 24,091 | |||||||||||||||
Cash and cash equivalents at the end of period | $ | 2,659 | $ | 883 | $ | 1,936 | $ | 21 | $ | 5,499 | ||||||||||
ITEM 2. MANAGEMENT’SMANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with our “"Unaudited Condensed Consolidated Financial StatementsStatements"” and the “Unaudited "Notes to Unaudited Condensed Consolidated Financial StatementsStatements"” contained in this report and the “"Consolidated Financial Statements,,” “Notes" "Notes to Consolidated Financial StatementsStatements"” and “Management’s"Management's Discussion and Analysis of Financial Condition and Results of OperationsOperations"” contained in our fiscal 2004 Form 10-K.
OVERVIEW
We are engaged ingenerate revenues and cash flow through the design, production, distribution and sale of branded and private label consumer apparel for men, women, and children.children and the licensing of company owned trademarks. Our principal markets and customers are located primarily in the United States. We source thesemore than 90% of our products fromthrough third party producers, but also manufacture certain of our ownedproducts in manufacturing facilities owned directly by us and through our joint venture partners.arrangements. We primarily distribute our products primarily through our wholesale customers including chain stores, department stores, specialty stores, mail order, mass merchandising and also through our own retail stores.stores for some brands.
We operate in an industry that is highly competitive. Our ability to continuously evaluate and respond to changing consumer demands and tastes, across multiple market segments, distribution channels and geographic regions is critical to our success. Although our approach is aimed at diversifying our risks, misjudging shifts in consumer preferences could have a negative effect on future operating results. Other key aspects of competition include quality, brand image, distribution methods, price, customer service and intellectual property protection. Our size and global operating strategies help us to successfully compete by positioning us to take advantage of synergies in product design, development, sourcing and distribution of our products. Our success in the future will depend on our ability to continue to design products that are acceptable to the markets that we serve and to source our products on a competitive basis while still earning appropriate margins.
The most significant factor impacting our results of operationsevent for the current year was the completion of theJuly 30, 2004 acquisition of Ben Sherman, which we operate as part of our Menswear Group. We acquired Ben Sherman for approximately $145 million, plus associated expenses, as discussed in Note 4 of our condensed consolidated financial statements contained in this report. Ben Sherman is a London-based designer, distributor and marketer of branded sportswear, accessories, and footwear.
The transaction was financed with cash on hand, borrowings under our U.S. Revolver and certain Seller Notes (each described in Note 5 of our condensed consolidated financial statements contained in this report). In conjunctionconnection with thethis acquisition, of Ben Sherman, our U.S. Revolver was amended and restated to provide the necessary flexibility to finance the acquisition. This acquisition has resulted in significant increases in substantially all balance sheet accounts and has had and is expected to continue to have a positive impact on July 28, 2004 and increased to $280 million with a syndicatethe amount of eight financial institutions.cash flows generated from operating activities.
During fiscal 2005, we have continued to see increases in sales and operating results. We generated diluted earnings per share of $0.80 and $1.69, during the quarter and nine months ended February 25, 2005, respectively compared to $0.58 and $1.41 during the quarter and nine months ended February 27, 2004. The increases in sales and earnings per share were primarily a result of the acquisition of Ben Sherman, growth in the Tommy Bahama Group's branded business, growth in the historical Menswear business and a higher percentage of our sales being branded rather than private label.
RESULTS OF OPERATIONS
The following tables set forth: (1) the line items in the “"Unaudited Condensed Consolidated Statements of Earnings” (Unaudited),"the dollar amounts of each for the periods indicated and the percentage change
relative to the comparable period of the prior year, and (2) the line items in the "Condensed Consolidated Statements of Earnings (Unaudited)" as a percentage of net sales. We have calculated all percentages based on actual data, but percentage columns may not add due to rounding. Individual line items of our“Unaudited "Condensed Consolidated Statements of Earnings (Unaudited)”" may not be directly comparable to those of our competitors, as income statement classification of certain expenses may vary by company. The results of operations of Ben Sherman and the Tommy Bahama Group are included in our consolidated statements of earnings from the respective dates of the acquisition.
Quarters Ended | Six Months Ended | Quarter Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 26, 2004 | Nov. 28, 2003 | % Change | Nov. 26, 2004 | Nov. 28, 2003 | % Change | Feb. 25, 2005 | Feb. 27, 2004 | % Change | Feb. 25, 2005 | Feb. 27, 2004 | % Change | ||||||||||||||||||||||||
($ in thousands) | (in thousands) | ||||||||||||||||||||||||||||||||||
Net sales | $ | 312,869 | $ | 253,883 | 23.2 | % | $ | 577,659 | $ | 495,988 | 16.5 | % | $ | 349,095 | $ | 281,418 | 24.0 | % | $ | 926,754 | $ | 777,406 | 19.2 | % | |||||||||||
Cost of goods sold | 212,766 | 177,051 | 20.2 | % | 392,634 | 348,265 | 12.7 | % | 235,542 | 194,350 | 21.2 | % | 628,176 | 542,615 | 15.8 | % | |||||||||||||||||||
Gross profit | 100,103 | 76,832 | 30.3 | % | 185,025 | 147,723 | 25.3 | % | 113,553 | 87,068 | 30.4 | % | 298,578 | 234,791 | 27.2 | % | |||||||||||||||||||
Selling, general and administrative | 80,169 | 59,249 | 35.3 | % | 147,723 | 112,861 | 30.9 | % | 86,458 | 64,802 | 33.4 | % | 234,181 | 177,663 | 31.8 | % | |||||||||||||||||||
Amortization of intangibles | 2,424 | 1,677 | 44.5 | % | 4,136 | 3,355 | 23.3 | % | 2,265 | 1,678 | 35.0 | % | 6,401 | 5,033 | 27.2 | % | |||||||||||||||||||
Royalties and other operating income | 3,301 | 1,140 | 189.6 | % | 5,054 | 2,320 | 117.8 | % | 3,909 | 931 | 319.9 | % | 8,963 | 3,251 | 175.7 | % | |||||||||||||||||||
Operating income | 20,811 | 17,046 | 22.1 | % | 38,220 | 33,827 | 13.0 | % | 28,739 | 21,519 | 33.6 | % | 66,959 | 55,346 | 21.0 | % | |||||||||||||||||||
Interest expense, net | 6,855 | 6,098 | 12.4 | % | 14,776 | 11,844 | 24.8 | % | 7,007 | 6,255 | 12.0 | % | 21,783 | 18,099 | 20.4 | % | |||||||||||||||||||
Earnings before income taxes | 13,956 | 10,948 | 27.5 | % | 23,444 | 21,983 | 6.6 | % | 21,732 | 15,264 | 42.4 | % | 45,176 | 37,247 | 21.3 | % | |||||||||||||||||||
Income taxes | 4,884 | 4,108 | 18.9 | % | 8,204 | 8,301 | (1.2 | )% | 7,744 | 5,724 | 35.3 | % | 15,948 | 14,025 | 13.7 | % | |||||||||||||||||||
Net earnings | $ | 9,072 | $ | 6,840 | 32.6 | % | $ | 15,240 | $ | 13,682 | 11.4 | % | $ | 13,988 | $ | 9,540 | 46.6 | % | $ | 29,228 | $ | 23,222 | 25.9 | % | |||||||||||
Quarters Ended | Six Months Ended | |||||||||||
Nov. 26, 2004 | Nov. 28, 2003 | Nov. 26, 2004 | Nov. 28, 2003 | |||||||||
(As a percentage of net sales) | ||||||||||||
Net sales | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||
Cost of goods sold | 68.0 | % | 69.7 | % | 68.0 | % | 70.2 | % | ||||
Gross profit | 32.0 | % | 30.3 | % | 32.0 | % | 29.8 | % | ||||
Selling, general and administrative | 25.6 | % | 23.3 | % | 25.6 | % | 22.8 | % | ||||
Amortization of intangibles | 0.8 | % | 0.7 | % | 0.7 | % | 0.7 | % | ||||
Royalties and other operating income | 1.1 | % | 0.4 | % | 0.9 | % | 0.5 | % | ||||
Operating income | 6.7 | % | 6.7 | % | 6.6 | % | 6.8 | % | ||||
Interest expense, net | 2.2 | % | 2.4 | % | 2.6 | % | 2.4 | % | ||||
Earnings before income taxes | 4.5 | % | 4.3 | % | 4.1 | % | 4.4 | % | ||||
Income taxes | 1.6 | % | 1.6 | % | 1.4 | % | 1.7 | % | ||||
Net earnings | 2.9 | % | 2.7 | % | 2.6 | % | 2.8 | % | ||||
ACQUISITION
On July 30, 2004, we acquired Ben Sherman. Ben Sherman is a London-based designer, distributor and marketer of branded sportswear, accessories, and footwear. The purchase price for Ben Sherman was £80 million, or approximately $145 million, plus associated expenses. The transaction was financed with cash on hand and borrowings under our U.S. Revolver and Seller Notes payable to the management shareholders of Ben Sherman.
In conjunction with the acquisition of Ben Sherman, our U.S. Revolver was amended and restated on July 28, 2004 and increased to $280 million with a syndicate of eight financial institutions. The maturity date was extended to July 28, 2009.
On July 30, 2004, Ben Sherman entered into a £12 million U.K. Revolver to provide for seasonal working capital requirements and general corporate purposes.
For further discussion of the acquisition, see Note 4 of “Unaudited Notes to Condensed Consolidated Financial Statements.”For further discussion of financing arrangements, see the section below titled “Financing Arrangements” and Note 5 of “Unaudited Notes to Condensed Consolidated Financial Statements.”
Quarter Ended Nine Months Ended Feb. 25,
2005 Feb. 27,
2004 Feb. 25,
2005 Feb. 27,
2004 (as a percentage of net sales) Net sales 100.0 % 100.0 % 100.0 % 100.0 % Cost of goods sold 67.5 % 69.1 % 67.8 % 69.8 % Gross profit 32.5 % 30.9 % 32.2 % 30.2 % Selling, general and administrative 24.8 % 23.0 % 25.3 % 22.9 % Amortization of intangibles 0.6 % 0.6 % 0.7 % 0.6 % Royalties and other operating income 1.1 % 0.3 % 1.0 % 0.4 % Operating income 8.2 % 7.6 % 7.2 % 7.1 % Interest expense, net 2.0 % 2.2 % 2.4 % 2.3 % Earnings before income taxes 6.2 % 5.4 % 4.9 % 4.8 % Income taxes 2.2 % 2.0 % 1.7 % 1.8 % Net earnings 4.0 % 3.4 % 3.2 % 3.0 %
TOTAL COMPANY
SecondThird Quarter
The discussion below compares our results of operations for the third quarter of fiscal 2005 compared to our results of operations for the third quarter of fiscal 2004. Each percentage change provided below reflects the change between these periods.
Net salesincreased 23.2% from $253.9 million24.0% in the second quarter of fiscal 2004 to $312.9 million in the secondthird quarter of fiscal 2005. The increase was primarily due to:
Gross profit increased 30.4% in Womenswear sales, which have a lower average selling price per unit.
Cost of goods soldfor the secondthird quarter of fiscal 2005 was $212.8 million or 68.0% of net2005. The increase is due to higher sales compared to $177.0 million or 69.7% of net sales inand higher gross margins. Gross margins increased from 30.9% during the secondthird quarter of fiscal 2004.2004 to 32.5% during the third quarter of fiscal 2005. The decline in cost of goods sold, as a percentage of net sales,increase was primarily due to:
Gross profit and gross margins.
Selling, general and administrative expenses(“ ("SG&A”&A") increased from $59.2 million or 23.3%33.4% during the third quarter of fiscal 2005. SG&A was 24.8% of net sales in the secondthird quarter of fiscal 20042005 compared to $80.2 million or 25.6%23.0% of net sales in the secondthird quarter of fiscal 2005.2004. The increase in SG&A was primarily due to:
SG&A expense structure.
Amortization of intangiblesincreased from $1.7 million35.0% in the second quarter of fiscal 2004 to $2.4 million in the secondthird quarter of fiscal 2005. The increase was primarily due to $0.9 million of amortization of intangibles acquired as part of the Ben Sherman acquisition partially offset by lower amortization amounts related to the Tommy Bahama Group acquisition. We expect that amortization of intangibles will decrease slightly in future years as some shorter lived intangible assets become fully amortized.
Royalties and other operating incomeincreased from $1.1 million319.9% in the secondthird quarter of fiscal 20042005. We derive licensing income through licensing our trademarks across a range of categories that complement our current product offerings. The increase was due to $3.3 million in the second quarter of fiscal 2005 primarily due to:
Interest expense, netincreased from $6.1 million12.0% in the second quarter of fiscal 2004 to $6.9 million in the secondthird quarter of fiscal 2005. The increase in interest expense was primarily due to the interest on debt incurred to finance the acquisition of Ben Sherman.
Interest expense in future periods will be dependent upon the interest rate during the period as well as the total amount of debt outstanding during the period.
Income taxes.taxesThe were at an effective tax rate was approximately 37.5% inof 35.6% for the secondthird quarter of fiscal 2004 and 35.0% in2005 compared to 37.5% for the secondthird quarter of fiscal 2005.2004. Variations in the effective tax rate were primarily attributable to:
First HalfNine Months
The discussion below compares our results of operations for the nine months of fiscal 2005 compared to our results of operations for the nine months of fiscal 2004. Each percentage change provided below reflects the change between these periods.
Net salesincreased 16.5% from $496.0 million19.2% in the first half of fiscal 2004 to $577.7 million in the first halfnine months of fiscal 2005. The increase was primarily due to:
SG&A increased 31.8% in the growth in Tommy Bahama.
Cost of goods soldfor the first halfnine months of fiscal 20052005. SG&A was $392.6 million or 68.0% of net sales, compared to $348.3 million or 70.2%25.3% of net sales in the first halfnine months of fiscal 2004. The decline in cost of goods sold, as a percentage of net sales, was primarily due2005 compared to the reasons stated above for the second quarter.
SG&A increased from $112.9 million or 22.8% of net sales22.9% in the first halfnine months of fiscal 2004 to $147.7 million or 25.6% of net sales in the first half of fiscal 2005.2004. The increase in SG&A was primarily due to the reasons stated above forhigher SG&A expense structure associated with our recently acquired branded businesses and expenses associated with the second quarter.start-up of new marketing initiatives.
Amortization of intangiblesincreased from $3.4 million27.2% in the first halfnine months of fiscal 2004 to $4.1 million in the first half of fiscal 20052005. The change was primarily as a result of the amortization of intangibles acquired as part of the Ben Sherman acquisition partially offset by lower amortization amounts related to the Tommy Bahama Group acquisition.
Royalties and other operating incomeincreased from $2.3 million175.7% in the first halfnine months of fiscal 2004 to $5.1 million in the first half of fiscal 2005 primarily2005. The increase was due to the reasons stated abovehigher licensing income from existing and additional licenses for the second quarter.Tommy Bahama and Ben Sherman brands.
Interest expense, netincreased from $11.8 million20.4% in the first half of fiscal 2004 to $14.8 million in the first halfnine months of fiscal 2005. The increase in interest expense was due to:
Income taxes.taxesThe were at an effective tax rate was approximately 37.8% inof 35.3% for the first halfnine months of fiscal 2004 and 35.0% in2005 compared to 37.7% for the first halfnine months of fiscal 2005.2004. Variations in the effective tax rate were primarily due attributable
to the reasons stated above foracquisition of Ben Sherman which is subject to lower statutory income tax rates and the second quarter.relative distribution of pre-tax earnings among the various taxing jurisdictions in which we operate.
SEGMENT RESULTS OF OPERATIONS
OUR SEGMENTS
We organize the components of our business into segments for purposes of allocating resources and assessing performance. Our reportable segments are the Menswear Group, the Womenswear Group and the Tommy Bahama Group. The Menswear Group produces a variety of branded and private label sportswear, tailored clothing, dress shirts and golf apparel. The Menswear Group also operates one Ben Sherman retail store and licenses the Ben Sherman brand for other product categories. The Womenswear Group produces private label women’swomen's sportswear separates, coordinated sportswear, outerwear, dresses and swimwear. The Tommy Bahama Group produces lifestyle branded casual attire, operates retail stores and restaurants, and licenses the Tommy Bahama brand for other product categories. Corporate and Other is a reconciling category for reporting purposes and includes our corporate offices, LIFO inventory accounting adjustments and other costs that are
not allocated to the operating groups. LIFO inventory calculations are made on a legal entity basis, which do not correspond to our segment definitions. Therefore, LIFO inventory accounting adjustments are not allocated to the operating segments. Segment results are as follows:
| Quarter Ended | Nine Months Ended | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Feb. 25, 2005 | Feb. 27, 2004 | % Change | Feb. 25, 2005 | Feb. 27, 2004 | % Change | |||||||||||
| (in thousands) | ||||||||||||||||
Net Sales | |||||||||||||||||
Menswear Group | $ | 168,816 | $ | 99,828 | 69.1 | % | $ | 468,609 | $ | 330,935 | 41.6 | % | |||||
Womenswear Group | 78,853 | 78,052 | 1.0 | % | 176,408 | 202,846 | (13.0 | )% | |||||||||
Tommy Bahama Group | 101,399 | 103,438 | (2.0 | )% | 281,351 | 243,105 | 15.7 | % | |||||||||
Corporate and Other | 27 | 100 | (73.0 | )% | 386 | 520 | (25.8 | )% | |||||||||
Total Net Sales | $ | 349,095 | $ | 281,418 | 24.0 | % | $ | 926,754 | $ | 777,406 | 19.2 | % | |||||
Quarter Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Quarters Ended | Six Months Ended | Feb. 25, 2005 | Feb. 27, 2004 | % Change | Feb. 25, 2005 | Feb. 27, 2004 | % Change | ||||||||||||||||||||||||||||
Nov. 26, 2004 | Nov. 28, 2003 | % Change | Nov. 26, 2004 | Nov. 28, 2003 | % Change | (in thousands) | |||||||||||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||||||||||||||
Net Sales | |||||||||||||||||||||||||||||||||||
Operating Income | |||||||||||||||||||||||||||||||||||
Menswear Group | $ | 181,088 | $ | 115,353 | 57.0 | % | $ | 299,793 | $ | 231,107 | 29.7 | % | $ | 14,114 | $ | 7,016 | 101.2 | % | $ | 41,083 | $ | 26,712 | 53.8 | % | |||||||||||
Womenswear Group | 45,097 | 61,841 | (27.1 | )% | 97,555 | 124,794 | (21.8 | )% | 5,218 | 3,341 | 56.2 | % | 4,460 | 8,458 | (47.3 | )% | |||||||||||||||||||
Tommy Bahama Group | 86,490 | 76,389 | 13.2 | % | 179,952 | 139,667 | 28.8 | % | 13,524 | 14,822 | (8.8 | )% | 31,335 | 29,331 | 6.8 | % | |||||||||||||||||||
Corporate and Other | 194 | 300 | (35.3 | )% | 359 | 420 | (14.5 | )% | (4,117 | ) | (3,660 | ) | 12.5 | % | (9,919 | ) | (9,155 | ) | 8.3 | % | |||||||||||||||
Total Net Sales | $ | 312,869 | $ | 253,883 | 23.2 | % | $ | 577,659 | $ | 495,988 | 16.5 | % | |||||||||||||||||||||||
Total Operating Income | $ | 28,739 | $ | 21,519 | 33.6 | % | $ | 66,959 | $ | 55,346 | 21.0 | % | |||||||||||||||||||||||
The discussion below compares our results of operations for the third quarter of fiscal 2005 compared to our results of operations for the third quarter of fiscal 2004 and also the nine months of fiscal 2005 compared to our results of operations for the nine months of fiscal 2004. Each percentage change provided below reflects the change for the quarter or nine months between fiscal 2005 and fiscal 2004 as identified in the respective heading.
Quarters Ended | Six Months Ended | |||||||||||||||||||||
Nov. 26, 2004 | Nov. 28, 2003 | % Change | Nov. 26, 2004 | Nov. 28, 2003 | % Change | |||||||||||||||||
($ in thousands) | ||||||||||||||||||||||
Operating Income | ||||||||||||||||||||||
Menswear Group | $ | 18,048 | $ | 10,221 | 76.6 | % | $ | 26,969 | $ | 19,696 | 36.9 | % | ||||||||||
Womenswear Group | 208 | 1,893 | (89.0 | )% | (758 | ) | 5,117 | (114.8 | )% | |||||||||||||
Tommy Bahama Group | 5,895 | 7,550 | (21.9 | )% | 17,811 | 14,509 | 22.8 | % | ||||||||||||||
Corporate and Other | (3,340 | ) | (2,618 | ) | (27.6 | )% | (5,802 | ) | (5,495 | ) | (5.6 | )% | ||||||||||
Total Operating Income | $ | 20,811 | $ | 17,046 | 22.1 | % | $ | 38,220 | $ | 33,827 | 13.0 | % | ||||||||||
SEGMENT RESULTS
Menswear Group
SecondThird Quarter
The Menswear Group reported a 57.0%69.1% increase in net sales from $115.3 million in the second quarter of fiscal 2004 to $181.1 million in the secondthird quarter of fiscal 2005. The increase was primarily due to:
The Menswear Group reported a 76.6%101.2% increase in operating income from $10.2 million in the second quarter of fiscal 2004 to $18.0 million in the secondthird quarter of fiscal 2005. The increase in operating income was primarily due to the addition of Ben Sherman which has higher grossoperating profit margins and the increase in sales volume in our Ben Shermanhistorical menswear business.
First HalfNine Months
The Menswear Group reported a 29.7%41.6% increase in net sales from $231.1 million in the first half of fiscal 2004 to $299.8 million in the first halfnine months of fiscal 2005. The change was primarily due to:
The Menswear Group reported a 36.9%53.8% increase in operating income from $19.7 million in the first half of fiscal 2004 to $27.0 million in the first halfnine months of fiscal 2005. The increase in operating income was primarily due to the higher grossaddition of Ben Sherman partially offset by lower operating margins in our Ben Shermanhistorical menswear business.
Womenswear Group
SecondThird Quarter
The Womenswear Group reported a 27.1% decline1.0% increase in net sales from $61.8 million in the second quarter of fiscal 2004 to $45.1 million in the secondthird quarter of fiscal 2005. The change was primarily due to the unit sales decline of 28.7%, primarily in the discount distribution channel, notably with Wal-Mart which has narrowed its womenswear assortment, reduced rack space devoted to women’s apparel and placed greater emphasis on direct sourcing. The decline in unit sales was partially offset by ana 3.5% increase of 1.3% in the average selling price per unit, primarily due to product mix within the discount distribution channel. The increase in the average selling price per unit was partially offset by a unit sales decline of 1.7% due to a change in product mix.
The Womenswear Group reported an 89.0% declinea 56.2% increase in operating profit from $1.9 millionincome in the second quarter of fiscal 2004 to $0.2 million in the secondthird quarter of fiscal 2005. The change was primarily due to the significant decreasean improved sourcing structure resulting in sales, which was slightly offset by operating expense reductions.
improved gross margins on comparable sales.
First HalfNine Months
The Womenswear Group reported a 21.8%13.0% decline in net sales from $124.8 million in the first half of fiscal 2004 to $97.6 million in the first halfnine months of fiscal 2005. The change was primarily due to the unit sales decline of 25.0% due to15.9%, primarily in the same reasons as described above for the second quarter.discount distribution channel. The decline in unit sales was partially offset by an increase of 2.6% in the average selling price per unit. The reasons for the increase3.0% in the average selling price per unit were the same as described above for the second quarter.primarily due to a change in product mix.
The Womenswear Group reported a 114.8%47.3% decline in operating income from a profit of $5.1 million in the first half of fiscal 2004 to a loss of $0.8 million in the first halfnine months of fiscal 2005. The decrease was primarily due to:
pressures, particularly during the first two quarters of fiscal 2005.
Tommy Bahama Group
SecondThird Quarter
The Tommy Bahama Group reported a 13.2% increase2.0% decline in net sales from $76.4 million in the second quarter of fiscal 2004 to $86.5 million in the secondthird quarter of fiscal 2005. The increasedecline was primarily due to:to exiting the private label business which is not aligned with the ongoing strategy of growing the lifestyle branded businesses of the Tommy Bahama Group. The private label business provided revenues totaling $13.5 million during the third quarter of fiscal 2004 compared to $2.5 million during the third quarter of fiscal 2005. This decline is partially offset by:
The Tommy Bahama Group reported a 21.9%an 8.8% decline in operating income from $7.6 million in the second quarter of fiscal 2004 to $5.9 million in the secondthird quarter of fiscal 2005. The decline in operating income was primarily due to:
The decline in operating income was partially offset by a favorable change in product mix from the lower margin private label business to the higher margin branded business and a higher proportion of sales through our retail stores as opposed to our wholesale distribution channel.
First HalfNine Months
The Tommy Bahama Group reported a 28.8%15.7% increase in net sales from $139.7 million in the first halfnine months of fiscal 20042005 despite a reduction in net sales of $15.2 million due to $180.0 million inexiting the first half of fiscal 2005.private label business. The increase was primarily due to:
The Tommy Bahama Group reported a 22.8%6.8% increase in operating income from $14.5 million in the first half of fiscal 2004 to $17.8 million in the second halfnine months of fiscal 2005. The benefit of the increase in sales resulting fromduring the year as compared to the prior year and the impact of owning Tommy Bahama for the entire period noted above was partially offset by the increaseincreases in operating expenses during the nine months for the same reasons as described above for the secondthird quarter.
Corporate and Other
SecondThird Quarter
The Corporate and Other operating loss increased from $2.6 million12.5% in the second quarter of fiscal 2004 to $3.3 million in the secondthird quarter of fiscal 2005. The increase in the operating loss was primarily due to increased employment costs.
parent company expenses partially offset by LIFO inventory accounting.
First HalfNine Months
The Corporate and Other operating loss increased from $5.5 million8.3% in the first half of fiscal 2004 to $5.8 million in the first halfnine months of fiscal 2005. The increase in the operating loss was primarily due to increased employment costsparent company expenses partially offset by LIFO inventory accounting.
EARNINGS OUTLOOK
While our profitability for the third quarter was stronger than expected, spring bookings in certain sectors of the business remain softer than anticipated. For the fourth quarter of fiscal 2005, we anticipate sales in the range of $350 million to $365 million and earnings per diluted share in the range of $1.00 to $1.10. These results would provide fiscal 2005 sales in the range of $1.278 billion to $1.292 billion and earnings per diluted share in the range of $2.69 to $2.79.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Financing Arrangements
U.S. Revolver
In connection withOur primary source of revenue and cash flow is our operating activities in the Ben Sherman acquisition on July 30, 2004,United States. Additionally, we also have access to amounts under our U.S. Revolver was amended on July 28, 2004 and increasedU.K. Revolver as necessary when cash inflows are less than cash outflows. We may seek to $280 million with a syndicate of eight financial institutions. The maturity date was extended to July 28, 2009. Under the amended U.S. Revolver, borrowing spreads and letter of credit fees are based upon a pricing grid, which is tied to a ratio of total debt to EBITDA, calculated as applicable on a pro forma basis. The credit agreement also requires us to maintain certain financial ratios. Our borrowings under the amended U.S. Revolver are no longer subject to a borrowing base calculation based on our accounts receivable, inventories and real property. The amendment of our U.S. Revolver resulted in a write-off of deferred financing costs of $1.8 million in the first quarter of fiscal 2005. We are in compliance with the covenants as of November 26, 2004. At November 26, 2004, gross availability under the U.S. Revolver totaled $280.0 million, against which approximately $129.8 million in letters of credit and $116.7 million in direct borrowings were outstanding.
On November 19, 2004, we amended the agreements governing our lockbox activities associated with the U.S. Revolver. In accordance with accounting principles generally accepted in the United States, the terms of the new agreements resulted in the reclassification of all debt outstanding under our $280 million U.S. Revolver from a current liability to a non-current obligation on our balance sheet as of November 26, 2004. As a result of these agreements and the resulting reclassification, certain of our financial ratios,finance future capital investment programs through various methods, including but not limited to, borrowings under our current credit facilities, issuance of additional long-term debt, sales of equity securities and leases. However, we do not currently have any plans with respect to significant changes in our capital structure or financing arrangements.
Our liquidity requirements arise from the funding of our working capital needs, which include inventory, other operating expenses and accounts receivable, funding of capital expenditures, payment of quarterly dividends and repayment of our indebtedness. Generally, our product purchases are acquired through trade letters of credit which are drawn against our lines of credit at the time of shipment of the products.
Operating Activities
Cash flow from operations was $0.4 million during the nine months ended February 25, 2005 compared to $5.1 million during the nine months ended February 27, 2004. This cash was generated primarily from revenues from the sale of our products net of cash paid for cost of goods sold, general and administrative operating expenses, interest expense and inventory. The decrease in operating cash flows was primarily due to a substantial amount of inventory purchases during the third quarter to build seasonal inventory levels for the fourth quarter partially offset by the results of operations of Ben Sherman. Cash flows from operations in future periods should be greater than those in the current ratio, in currentperiod as we sell the inventory currently on hand and obtain the benefit of a full period of operations from Ben Sherman. The cash flows for the period are not necessarily indicative of the cash flows anticipated for future periods may not necessarily be comparableand are subject to prior periods.seasonality.
U.K. RevolverInventories
On July 30, were $186.2 million and $133.7 million at February 25, 2005 and February 27, 2004, Ben Sherman entered intorespectively. The increase in inventories is primarily a £12result of approximately $25.0 million U.K. Revolver to provide for seasonal working capital requirements and general corporate purposes. The facility is secured by substantially all of the United Kingdom assetsinventories of Ben Sherman on hand at February 25, 2005 and bears interest at the lender’s prime or base rate plus 1.2%. The facility is payable on demand and requires the borrower to maintain certain financial ratios. Ben Sherman isseasonal inventory build-ups for anticipated fourth quarter sales in compliance with these covenants as of November 26, 2004.
Senior Unsecured Notes
On May 16, 2003, we completed a $200 million private placement of our Senior Unsecured Notes to finance the acquisitionother Menswear businesses. Also, inventory levels of the Tommy Bahama Group. The notes bear interestGroup increased due to recently opened retail stores and earlier deliveries of Spring inventory. Our days supply inventory on hand, calculated using a FIFO basis, was 76 days at 8.875%, have an 8-year life and were soldFebruary 25, 2005 compared to 79 days at a discount of 0.713%, or $1.4 million, to yield an effective interest rate of 9.0%. Interest is payable semi-annually with the principal amount due at maturity on June 1, 2011. The notes are guaranteed by all of our existing and future direct and indirect domestic wholly owned restricted subsidiaries. Among other restrictions, the indenture restricts our ability to incur additional indebtedness or liens, to enter into lease or hedging arrangements, to make investments and acquisitions, to sell assets, to pay dividends and to pay amounts due under the earnout agreement with the selling shareholders of the Tommy Bahama Group. The indenture also requires us to maintain certain financial ratios and covenants. We are in compliance with these covenants as of November 26,February 27, 2004.
Seller Notes
In conjunction with our acquisitionReceivables were $209.0 million and $167.2 million at February 25, 2005 and February 27, 2004, respectively. The increase in receivables is primarily a result of approximately $33.0 million of receivables of Ben Sherman on July 30, 2004, we entered into Seller Notes withat February 25, 2005 as well as the management shareholders of Ben Sherman. The Seller Notes total approximately $6.9 million and are payable on demand beginning six months after July 30, 2004. The Seller Notes bear interest athigher sales in the annual rate of LIBOR plus 1.2% payable on the last day of September, December, March and June until the principal has been paid in full.
Operating Activities
During the first halfthird quarter of fiscal 2005 we generated cashcompared to the third quarter of fiscal 2004. Days sales outstanding for our accounts receivable balances increased from 49 days at February 27, 2004 to 52 days at February 25, 2005.
Current liabilities, which primarily consist of payables arising out of our operating activities, were $196.1 million and $156.3 million at February 25, 2005 and February 27, 2004, respectively. The $39.7 million increase was primarily the result of $14.7approximately $39.6 million primarily from net earnings and non-cash charges offset by a net increase inof current liabilities at February 25, 2005 related to Ben Sherman.
Our working capital after giving effectratio was 2.20:1 and 2.09:1 at February 25, 2005 and February 27, 2004, respectively. The improvement is due to the acquisition of Ben Sherman.
Duringchanges in the first half of fiscal 2004, we generated cash from operating activities of $13.3 million primarily from net earningsindividual asset and non-cash charges offset by a net increase in working capital after giving effect to the acquisition of Tommy Bahama.liability categories specified above.
Investing Activities
During the first halfnine months of fiscal 2005, investing activities used $146.5$155.3 million in cash, principallyconsisting of approximately $137.5 million (net of cash acquired) for the acquisition of Ben Sherman as well as payments in the first quarter of fiscal 2005 of approximately $5.4 million related to the Tommy Bahama earn-out agreement. CapitalGroup acquisition. Additionally, approximately $12.0 million of capital expenditures of $6.5 million were incurred primarily related to new Tommy Bahama retail stores as well as leasehold improvements and office equipmentcapital expenditures associated with our recently leased headquarters for the Tommy Bahama corporate offices.Group in Seattle, Washington.
During the first halfnine months of fiscal 2004, investing activities used $26.0$29.1 million in cash, principally for the acquisition of the Tommy Bahama Group on June 13, 2003 net of the reduction in restricted proceeds from the sale of the Senior Unsecured Notes. CapitalNotes during the fourth quarter of fiscal 2003. Additionally, we incurred capital expenditures of $7.3$10.8 million were primarily related to new Tommy Bahama retail stores and capital expenditures for computer equipment and software.
Non-current assets including property, plant and equipment, goodwill, intangible assets and other non-current assets increased as a result of the fiscal 2005 acquisition of Ben Sherman as well as current period capital expenditures at February 25, 2005 compared to February 27, 2004.
Financing Activities
During the first halfnine months of fiscal 2005, financing activities generated $103.2provided approximately $123.7 million in cash. Substantially all of these proceeds represent the funding from the U.S. Revolver to finance the Ben Sherman acquisition in the current period partially offset by the amounts paid in the current period related to the refinancing of the U.S. Revolver. Additionally, certain amounts of cash were provided by the issuance of common stock upon the exercise of employee stock options, and cash was used to repay certain short-term debt and for the payment of quarterly dividends on our common shares.
During the nine months of fiscal 2004, financing activities provided approximately $6.3 million in cash. This primarily represents the proceeds from increased U.S. Revolvershort-term borrowings from our short-term debt facilities and proceeds from the issuance of common stock upon the exercise of employee stock options, which were partially offset by payments on the U.K. Revolver during the period, deferred financing paid to amend our U.S. Revolver and dividends on our common shares.
During the first half of fiscal 2004, financing activities used $5.9 million in cash. This represents payments on debt issuance costs paid related to the issuance of our Senior Unsecured Notes and the payment of quarterly dividends partially offseton our common shares.
On January 10, 2005, our board of directors declared the third quarter cash dividend of $0.135 per common share payable on February 28, 2005 to shareholders of record on February 14, 2005. On March 28, 2005, our board of directors declared the fourth quarter cash dividend of $0.135 per common share payable on June 6, 2005 to shareholders of record of May 23, 2005. We expect to pay dividends in future quarters, however, we may decide to discontinue or modify the dividend payment at any time if we determine that other uses of our capital, including but not limited to payment of debt outstanding or funding of future acquisitions, may be in our best interest or if our expectations of future cash flows and future cash needs outweigh the ability to pay a dividend. Additionally, we may borrow to fund dividends in the short term based on our expectations of operating cash flows in future periods. All cash flow from operations will not necessarily be paid out in all periods.
Debt increased by proceeds$137.5 million at February 25, 2005 compared to February 27, 2004 primarily as a result of the borrowings under the U.S. Revolver to finance the acquisition of Ben Sherman. Additionally, the increase in deferred income taxes is primarily the result of the acquisition of Ben Sherman and the increase in other non-current liabilities is primarily a result of additional deferred compensation recognized in the current year.
Liquidity and Capital Resources
The table below provides a description of our significant financing arrangements:
| February 25, 2005 | ||
---|---|---|---|
$280 million U.S. Secured Revolving Credit Facility ("U.S. Revolver"), which accrues interest and letter of credit fees based upon a pricing grid which is tied to certain debt ratios (4.82% at February 25, 2005), requires interest payments monthly with principal due at maturity (July 2009), and is collateralized by substantially all the assets of the Company and Guarantor Subsidiaries | $ | 137,300 | |
12 million Pounds Sterling Senior Secured Revolving Credit Facility ("U.K. Revolver"), which accrues interest at the bank's base rate plus 1.2% (5.95% at February 25, 2005), requires interest payments monthly with principal payable on demand, and is collateralized by substantially all the United Kingdom assets of Ben Sherman | 634 | ||
$200 million Senior Unsecured Notes ("Senior Unsecured Notes"), which accrue interest at 8.875% and require interest payments semiannually with principal due at maturity (June 2011)(1) | 198,893 | ||
Unsecured Seller Notes ("Seller Notes"), which accrue interest at LIBOR plus 1.2% (6.52% at February 25, 2005), and require interest payments quarterly with principal payable on demand after January 30, 2005 | 4,172 | ||
Other debt, including capital lease obligations with varying terms and conditions, collateralized by the respective assets | 115 | ||
Total Debt | 341,114 | ||
Short-term Debt | 4,873 | ||
Total Long-term Debt | 336,241 | ||
Our lines of credit under the U.S. Revolver and U.K. Revolver are used to finance trade letters of credit and standby letters of credit as well as provide funding for other operating activities and acquisitions. Trade letters of credit of $100.5 million and $2.2 million were outstanding under our U.S. Revolver and U.K. Revolver, respectively as of February 25, 2005. The net availability under our U.S. Revolver and U.K. Revolver was approximately $42.2 million and $20.2 million, respectively as of February 25, 2005.
The U.S. Revolver, the U.K. Revolver and the Senior Unsecured Notes each include certain debt covenant restrictions that require us or our subsidiaries to maintain certain financial ratios that are customary for similar facilities. The facilities also include limitations on certain restricted payments such as dividends, earn-out payments, and prepayment of debt. To ensure compliance with the minimum availability requirement of our U.S. Revolver, we sought and obtained the consent of our U.S. Revolver bank group to pay our third and fourth quarter fiscal 2005 dividends without regard to the availability requirement. We currently do not anticipate the need for a consent to pay dividends in subsequent quarters. As of February 25, 2005, we were compliant with all restrictive financial covenants related to our debt agreements.
We expect to fund the payment of the Seller Notes, which are due upon demand and expected to be redeemed for payment in the next twelve months with borrowings from the U.K. Revolver. Additionally, the U.K. Revolver is also due upon demand and expires in July 2005. At expiration, we
anticipate that we will be able to refinance the U.K. Revolver either with the same lender, other lenders or under our U.S. Revolver.
We anticipate that we will be able to satisfy our ongoing cash requirements which generally consists of working capital needs, capital expenditures (primarily for the opening of Tommy Bahama retail stores) and interest and principal payments on our debt during the remainder of fiscal 2005 and fiscal 2006, primarily from cash on hand and cash flow from operations supplemented by borrowings under our lines of credit, as necessary. Our need for working capital is typically seasonal with the greatest requirements generally existing from the late second quarter to early fourth quarter of each year as we build inventory for the spring/summer season. Our capital needs will depend on many factors including our growth rate, the need to finance increased inventory levels and the success of our various products.
If appropriate investment opportunities arise that exceed the availability under our existing credit facilities, we believe that we will be able to fund such acquisitions through additional or refinanced debt facilities or the issuance of common shares uponadditional equity. However, our ability to obtain additional borrowings or refinance our credit facilities will depend on many factors, including the exerciseprevailing market conditions, our financial condition and our ability to negotiate favorable terms and conditions. There is no assurance that financing would be available on terms that are acceptable or favorable to us, if at all.
Our debt to shareholders' equity ratio was 1.17:1 and 0.95:1 at February 25, 2005 and February 27, 2004, respectively. The change was primarily a result of employee stock options.the additional debt incurred to finance the acquisition of Ben Sherman on July 30, 2004. We anticipate that the amount of debt as well as the ratio of debt to shareholders' equity will decrease in future periods as a result of anticipated cash flow from operations.
Our contractual obligations as of February 25, 2005 have not changed significantly from the contractual obligations outstanding at May 28, 2004, other than the increase in debt outstanding under our U.S. Revolver and the Seller Notes, amounts outstanding pursuant to letters of credit (both as discussed above) and leases for our recently opened retail stores and our Tommy Bahama Group offices in Seattle, Washington, none of which occurred outside the ordinary course of business.
Our anticipated capital expenditures for fiscal 2005 are expected to approximate $19 million with a similar amount currently anticipated for fiscal 2006. These expenditures will consist primarily of the continued expansion of our retail operations of the Tommy Bahama Group including the opening of additional retail stores.
Off Balance Sheet Arrangements
We have no off-balancenot entered into agreements which meet the definition of an off balance sheet financing arrangements.
arrangement, other than operating leases, and have made no financial commitments to or guarantees with any unconsolidated subsidiaries or special purpose entities.
CRITICAL ACCOUNTING POLICIES
The discussion and analysis of our financial condition and results of operations are based upon ourUnaudited Condensed Consolidated Financial Statements,, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses and related disclosuredisclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to bad debts, inventories, intangible assets, income taxes, contingencies and litigation and certain other
accrued expenses. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of
assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
The Securities and Exchange Commission’s Financial Reporting Release No. 60 requires all companies to include a discussion of the significant estimates, assumptions and judgments that underlie their critical accounting policies or methods used in the preparation of financial statements. See the “"Summary of Critical Accounting Policies”" contained in our fiscal 2004 Form 10-K. ThereDuring fiscal 2005, there have been no significant changes in our critical accounting policies as disclosed in our fiscal 2004 Form 10-K.
SEASONALITY
Although our various product lines are sold on a year-round basis, the demand for specific products or styles may be highly seasonal. For example, the demand for golf and Tommy Bahama products is higher in the spring and summer seasons. Products are sold prior to each of our retail selling seasons, including spring, summer, fall and holiday. Because the timing of product shipments and other events affecting the retail business may vary, results for any particular quarter may not be indicative of results for the full year. The percentage of net sales distribution by quarter for fiscal 2004 were 22%, 23%, 25% and 30%, respectively, and the percentage of net earnings by quarter for fiscal 2004 were 17%, 17%, 24% and 42%, respectively.
FUTURE LIQUIDITY, CAPITAL RESOURCES AND RESULTS OF OPERATIONS
Cash flow from operations is our primary source of liquidity. Our projected capital expenditures for all of fiscal 2005 are approximately $18 million. We anticipate that cash flows from operations supplemented However, with borrowings as necessary under our amended U.S. Revolver and U.K. Revolver will be sufficient to fund our liquidity requirements for the remainder of fiscal 2005.
We anticipate Fiscal 2005 sales in the range of $1.285 billion to $1.310 billion and earnings per diluted share in the range of $2.60 to $2.75. For the third quarter of Fiscal 2005, we anticipate sales in the range of $350 million to $365 million and earnings per diluted share in the range of $0.65 to $0.71. For the fourth quarter of Fiscal 2005, we anticipate sales in the range of $355 million to $370 million and earnings per diluted share in the range of $1.06 to $1.15.
The statements in this section are forward-looking statements subject to the risks and uncertainties described below in “Cautionary Statements Regarding Forward-Looking Statements.”
CAUTIONARY STATEMENTS REGARDING FORWARD LOOKING STATEMENTS
Our Securities and Exchange Commission filings and public announcements often include forward-looking statements about future events. Important assumptions relating to these forward looking statements include, among others, assumptions regarding demand for our products, expected pricing levels, raw material costs, the timing and cost of planned capital expenditures, expected outcomes of pending litigation, competitive conditions, general economic conditions and expected synergies in connection with acquisitions and joint ventures, including the acquisition of Ben Sherman. Forward-looking statements reflect our current expectations and areSherman, the distribution for fiscal 2005 may not guaranteesbe consistent with that of performance. These statements are based on our management’s beliefs and assumptions, which in turn are based on currently available information. These beliefs and assumptions could prove inaccurate. Forward-looking statements involve risks and uncertainties. Should one or more of
these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. Many of these risks and uncertainties are beyond our ability to control or predict. Such risks and uncertainties include, but are not limited to, all of the risks discussed under “Risk Factors” in our fiscal 2004 Form 10-K, including the following:
Other risks or uncertainties may be detailed from time to time in our future Securities and Exchange Commission filings.
We disclaim any intention, obligation or duty to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.RISK
INTEREST RATE RISK
We are exposed to market risk from changes in interest rates on our indebtedness, which could impact our financial condition and results of operations in future periods. Our objective is to limit the impact of interest rate changes on earnings and cash flow, primarily through a mix of fixed and variable rate debt. This assessment also considers our need for flexibility in our borrowing arrangements resulting from the seasonality of our business, among other factors. We continuously monitor interest rates to consider the sources and terms of our borrowing facilities in order to determine whether we have achieved our interest rate management objectives. We do not anticipate any significant changes in management of our exposure to interest rate fluctuations or the related exposure, as we do not have any plans to significantly alter our capital structure in the near term.
Interest Approximately $142.1 million of debt outstanding (or 42% of our total debt) is subject to variable interest rates, with a weighted average rate risk is managed throughof approximately 4.87% at February 25, 2005. Our average variable rate borrowings for the maintenancenine months ended February 25, 2005 were $97.7 million, with an average interest rate of a portfolio4.4% during the nine month period. Our lines of credit are based on variable interest rates in order to take advantage of the lower rates available in the current interest rate environment and to provide the necessary borrowing flexibility required. To the extent that the amounts outstanding under our variable rate lines of credit change, our exposure to changes in interest rates would also change. If the nine month average interest rate increased by 100 basis points, our interest expense would have been approximately $0.3 million higher during the period.
At February 25, 2005, we had approximately $199.0 million of fixed rate debt composedand capital lease obligations outstanding with substantially all the debt having an effective interest rate of short9.0% and maturing in June 2011. Such agreements may result in higher fixed interest rates in certain periods of lower variable interest rates, but are primarily intended to provide long-term instruments. The objective isfinancing of our capital structure and minimize our exposure to maintain a cost-effective mix that management deems appropriate.increases in interest rates. A change in the market interest rate impacts the net financial instrument position of our fixed rate debt but has no impact on interest incurred or cash flows.
None of our debt was entered into for trading purposes. We generally do not engage in hedging activities with respect to suchour interest rate risk and do not enter into such transactions on a speculative basis.
We finance our capital needs through available cash, operating cash flow, letters of credit and bank revolving credit facilities.
At November 26, 2004, we had variable rate debt of $123.6 million. Our average variable rate borrowings for the six months ended November 26, 2004 were $78.5 million, with an average interest rate of 4.4%. If the six-month average interest rate increased by 10%, our interest expense would have changed by $163,711.
FOREIGN CURRENCY RISK
To the extent that we have assets and liabilities as well as operations denominated in foreign currencies that are not hedged, we are subject to foreign currency transaction gains and losses. We do not hold or issue any derivative financial instruments for trading or speculative purposes.
We receive United States dollars for substantially all of our product sales except for Ben Sherman. Sales generated bySherman sales in the United Kingdom and Europe and certain licensing fees earned in other foreign countries. We view our net investment in the Ben Sherman’s U.K. operations areSherman United Kingdom subsidiary, which has a functional currency of pounds sterling, as long-term. As a result, we generally do not hedge our investment. Ben Sherman sales that were not denominated in United States dollars totaled $30.3 million during the three months ended February 25, 2005, which represented approximately 9% of our total sales for the quarter ended February 25, 2005. Ben Sherman sales that were not denominated in United States dollars totaled $83.5 million during the period from the date of acquisition through February 25, 2005, which represents approximately 9% of our total sales for the nine months ended February 25, 2005. With the dollar trading at a weaker position than it has historically traded (average rate of 1.90 for the quarter ended February 25, 2005), a strengthening United States dollar could result in lower levels of sales in the consolidated statements of earnings in future periods, although the sales in pounds sterling and euros.could be equal to or greater than amounts as previously reported.
Substantially all inventory purchases from contract manufacturers throughout the world are also denominated in United States dollars. However, purchaseCertain purchases of our Ben Sherman subsidiary in the United Kingdom, totaling less than 5% of our total inventory purchases, are based on other currencies. Purchase prices for our products may be impacted by fluctuations in the exchange rate between the United States dollar and the local currencies of the contract manufacturers, which may have the effect of increasing our cost of goods sold in the future. ExchangeWe do not believe that exchange rate fluctuations have not had a material impact on our inventory costs; however, duecosts, nor do we expect that such fluctuations will have a significant impact in future periods. Due to the number of currencies involved and the fact that not all foreign currencies react in the same manner against the United States dollar, we cannot quantify in any meaningful way the potential effect of such fluctuations on future income.
Ben Sherman engages inWe may from time to time purchase foreign currency forward exchange contracts forto hedge against changes in foreign currency exchange rates, but at February 25, 2005 we have not entered into any such agreements that have not been settled. When such contracts are outstanding, the purchase of finished products from production sources in Asia where the currency denomination of choice is the United States dollar. These contracts are marked to market and are not material.
with the offset being recognized in the statement of earnings or other comprehensive income depending upon whether the transaction qualifies as a hedge in accordance with accounting principles generally accepted in the United States.
TRADE POLICY RISK
UnderPursuant to the terms of bilateral agreements between most of the major apparel exporting countries and the United States, most categories of our products are subject to quotas limiting the quantity of such products that may be imported into the United States. Utilization of these quotas is typically controlled at origin by an export license or visa system administered by the exporting country and is monitored and enforced by United States Customs and Border Protection at the time of importation. Since we own or directly control only a small portion of the quota we need, we rely on our suppliers and vendors to secure the visas or licenses required to ship our products. If our suppliers and vendors fail to secure the necessary visas or licenses as agreed with us, our supply chain could be disrupted. The requirement for visas or licenses was eliminated effective for goods exported from their country of origin on or after January 1, 2005. Thus, the requirement only applies to goods exported on or before December 31, 2004, some of which might still be in transit.
If an exporting country fails to properly administer its quota and issues visas or export licenses in excess of the quantity permitted under the terms of its bilateral agreement with the United States, entry of the goods covered by such export license or visa could be delayed. The United States has announced that any goods exported during 2004 in excess of the applicable quota limit will not be permitted entry into the United States until February 1, 2005 at which time a “staged entry” process will begin. The staged entry process could, depending on the extent of any overshipment, take several months to complete. Such a delay could disrupt our supply chain.
Since the quotas under the bilateral agreements described above are country-specific, the United States has established detailed country of origin criteria that a product must meet to be eligible to use a particular country’s quota. If we, or our vendors or suppliers, fail to comply with these country of origin requirements or fail to be able to document our compliance with such requirements, our products may be denied entry into the United States. Such a denial could disrupt our supply chain.
The 1994 Agreement on Textiles and Clothing, quotas among World Trade Organization (“WTO”("WTO") countries mandated the elimination of textile and apparel product quotas for WTOmember countries, including the United States, were eliminated on January 1, 2005. As a result, the international textile and apparel trade is undergoing a significant realignment which is changing our sourcing patterns, could disrupt our supply chain and could put us at a disadvantage to our competitors.
The elimination of quota could impact some shipments during the first part of calendar 2005. Historically, exporting countries have been permitted under the terms of their bilateral agreements with the United States to borrow a limited amount of quota from the following year. Since there is no quota in calendar 2005, none was available for this type of borrowing in calendar 2004. The unavailability of this type of quota borrowing may have created quota shortages in the latter part of calendar 2004, which could have caused exporting countries to ship goods in excess of their 2004 limit. Any such overshipment would be subject to the staged entry process described above which could cause disruption in our supply chain.
In addition, notwithstanding quota elimination, under the terms of China’sChina's WTO accession agreement, the United States and other WTO members may re-impose quotas on specific categories of products in the event it is determined that imports from China have surged or may surge and are threatening to create a market disruption for such categories of products (so called “safeguard quota”"safeguard quota"). Data released by the U.S. government in March indicates that there were significant increases in the level of imports from China is a major source of production for us, andin several important product categories during January 2005. These increases may result in the re-impositionimposition of safeguard quotas on China following the elimination of the existing quota regime on January 1, 2005which could cause disruption in our supply chain.
Furthermore, under long-standing statutory authority applicable to imported goods in general, the United States may unilaterally impose additional duties: (i) when imported merchandise is sold at less than fair value and causes material injury, or threatens to cause material injury, to the domestic industry producing a comparable product (generally known as “anti-dumping”"anti-dumping" duties); or (ii) when foreign producers receive certain types of governmental subsidies, and when the importation of their subsidized goods causes material injury, or threatens to cause material injury, to the domestic industry producing a comparable product (generally known as “countervailing”"countervailing" duties). The imposition of anti-dumping or countervailing duties on products we import would increase the cost of those products to us. We may not be able to pass on any such cost increase to our customers. There are numerous free trade agreements pending, including the United States-Central American Free Trade Agreement that, if adopted, could put us as a disadvantage to some of our competitors.
ITEM 4. CONTROLS AND PROCEDURES
The Company’sCompany's Principal Executive Officer and Principal Financial Officer have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, our Principal Executive Officer and the Principal Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in our Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’sCommission's rules and forms, and that such information is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
There have not been any significant changes in the our internal controls over financial reporting (as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act) during the fiscal quarter ended November 26, 2004February 25, 2005 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
In the ordinary course of business, we may become subject to litigation or claims. There are no material pending legal proceedings, proceedings known to be contemplated by governmental authorities or changes in items previously disclosed involving us during the quarter ended November 26, 2004,February 25, 2005, requiring disclosure under Item 103 of Regulation S-K.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company’s Annual Meeting of Shareholders held on October 4, 2004, the shareholders:
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(a) Exhibits.
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) | ||
Thomas Caldecot Chubb III | ||
Executive Vice President | ||
(Principal Financial Officer) |
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