SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] Quarterly Report Pursuant To Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the quarterly period ended August 30, 1996
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OR
[ ] Transition Report Pursuant To Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the transition period from to
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Commission File Number 1-4365
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OXFORD INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
Georgia 58-0831862
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
222 Piedmont Avenue, N.E., Atlanta, Georgia 30308
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(Address of principal executive offices)
(Zip Code)
(404) 659-2424
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
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Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Number of shares outstanding
Title of each class as of October 7, 1996
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Common Stock, $1 par value 8,705,721
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
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OXFORD INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
QUARTERS ENDED AUGUST 30, 1996 AND SEPTEMBER 1, 1995
(UNAUDITED)
Quarter Ended
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$ in thousands except per August 30, September 1,
share amounts 1996 1995
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Net Sales $172,517 $189,254
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Costs and Expenses:
Cost of goods sold 140,943 157,131
Selling, general
and administrative 24,686 25,318
Provision for environmental
remediation - 4,500
Interest 1,096 1,841
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166,725 188,790
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Earnings Before Income Taxes 5,792 464
Income Taxes 2,317 186
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Net Earnings $ 3,475 $ 278
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Net Earnings Per Common Share $.40 $.03
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Average Number of Shares
Outstanding 8,774,608 8,700,450
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Dividends Per Share $0.20 $0.20
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See notes to consolidated financial statements.
OXFORD INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
AUGUST 30, 1996, MAY 31, 1996 AND SEPTEMBER 1, 1995
(UNAUDITED EXCEPT FOR MAY 31, 1996)
August 30, May 31, September 1,
$ in thousands 1996 1996 1995
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Assets
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Current Assets:
Cash $ 3,857 $ 1,015 $ 10,274
Receivables 108,249 84,593 109,459
Inventories:
Finished goods 81,411 75,787 94,973
Work in process 23,109 24,717 29,209
Fabric, trim & supplies 32,762 36,285 35,325
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137,282 136,789 159,507
Prepaid expenses 12,710 13,747 14,355
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Total Current Assets 262,098 236,144 293,595
Property, Plant and Equipment 35,727 36,659 40,004
Other Assets 6,105 6,300 5,171
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$303,930 $279,103 $338,770
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Liabilities and Stockholders' Equity
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Current Liabilities:
Notes payable $ 56,000 $ 25,500 $ 82,500
Trade accounts payable 37,517 49,676 40,517
Accrued compensation 8,910 7,225 8,390
Other accrued expenses 15,359 13,014 14,489
Dividends payable 1,755 1,760 1,741
Income taxes 2,771 - -
Current maturities of
long-term debt 1,631 1,632 4,732
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Total Current Liabilities 123,943 98,807 152,369
Long-Term Debt,
less current maturities 44,394 45,051 46,830
Non-Current Liabilities 4,500 4,500 4,500
Deferred Income Taxes 1,890 1,786 3,825
Stockholders' Equity:
Common stock 8,705 8,803 8,705
Additional paid-in capital 8,174 8,211 7,145
Retained earnings 112,324 111,945 115,396
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Total Stockholders' Equity 129,203 128,959 131,246
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Total Liabilities and Stockholders'
Equity $303,930 $279,103 $338,770
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See notes to consolidated financial statements.
OXFORD INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
QUARTERS ENDED AUGUST 30, 1996 AND SEPTEMBER 1, 1995
(UNAUDITED)
Quarter Ended
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August 30, September 1,
$ in thousands 1996 1995
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Cash Flows from Operating Activities:
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Net earnings $ 3,475 $ 278
Adjustments to reconcile net earnings to
net cash provided by (used in) operating activities:
Depreciation and amortization 2,047 1,939
Provision for environmental remediation - 4,500
(Gain) on sale of property, plant
and equipment (38) (6)
Changes in working capital:
Receivables (23,656) (24,448)
Inventories (493) 13,631
Prepaid expenses 1,037 (1,325)
Trade accounts payable (12,159) (14,640)
Accrued expenses and other current liabilities 4,030 1,605
Income taxes payable 2,771 -
Deferred income taxes 104 (37)
Other noncurrent assets (9) 1,331
Net cash flows (used in) -------- --------
operating activities (22,891) (17,172)
Cash Flows from Investing Activities:
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Acquisitions - (8,763)
Purchase of property, plant and equipment (987) (3,334)
Proceeds from sale of property, plant and
and equipment 114 109
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Net cash (used in) investing activities (873) (11,988)
Cash Flows from Financing Activities:
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Short-term borrowings 30,500 39,000
Payments on long-term debt (658) (181)
Proceeds from exercise of stock options 24 129
Purchase and retirement of common stock (1,500) -
Dividends on common stock (1,760) (1,739)
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Net cash provided by financing activities 26,606 37,209
Net Change in Cash and Cash Equivalents 2,842 8,049
Cash and Cash Equivalents at Beginning of Period 1,015 2,225
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Cash and Cash Equivalents at End of Period $ 3,857 $ 10,274
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Supplemental Disclosure of Cash Flow Information
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Cash paid (received) for:
Interest, net 1,080 $ 1,798
Income taxes (1,581) (2,934)
See notes to consolidated financial statements.
OXFORD INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
QUARTERS ENDED AUGUST 30, 1996 AND SEPTEMBER 1, 1995
(UNAUDITED)
1. The foregoing unaudited consolidated financial statements reflect all
adjustments which are, in the opinion of management, necessary to a fair
statement of the results for the interim periods. All such adjustments are
of a normal recurring nature. The results for interim periods are not
necessarily indicative of results to be expected for the year.
2. The financial information presented herein should be read in conjunction
with the consolidated financial statements included in the Registrant's
Annual Report on Form 10-K for the fiscal year ended May 31, 1996.
3. The Company is involved in certain legal matters primarily arising in the
normal course of business. In the opinion of management, the Company's
liability under any of these matters would not materially affect its
financial condition or results of operations.
Item 2. Management's Discussion and Analysis of Financial
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Condition and Results of Operations.
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Results of Operations
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NET SALES
Net sales for the first quarter of the 1997 fiscal year, which ended
August 30, 1996, declined by 8.8% from net sales for the first quarter of the
previous year. Men's Shirt Group sales declined by $11,716,000. The
increased sales in Polo7 for Boys, Tommy Hilfiger7 Dress Shirts and Tommy
Hilfiger Golf did not offset declines in private label dress and sport shirts,
Ely & Walker and the discontinued Savane7 license. Some of the private label
decline was due to the Company's wrinkle-free, wet-processing exit and was
therefore favorable to earnings. Tailored Clothing sales increased $2,594,000
with increases in Oscar de la Renta7 and private label. Men's Slacks sales
declined slightly. Ongoing Womenswear sales declined $3,142,000 with a
further decline of $3,964,000 due to last year's divestiture (B.J. Designs)
and closure (RENNY).
The Company experienced an overall net sales unit volume decrease of
approximately 17.5% and an overall 10.2% increase in the average net sales
price per unit. The increase in the average sales price per unit was due to
increased sales in the Company's higher margin lines, and decreased sales in
private label, lower margin lines.
COST OF GOODS SOLD
Cost of goods sold as a percentage of net sales, was 81.7% in the first
quarter of the current year as compared to 83.0% in the first quarter of the
prior year. The decrease in cost of goods sold as a percentage of net sales
was due in part to the increased sales of higher margin lines. Another factor
contributing to the decreased percentage was a 30% reduction in the Company's
domestic production capacity and a 35% increase in the Company's offshore
production capacity from the same period in the prior year.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses (excluding the
environmental charge in the first quarter of the prior year) declined by
$632,000 to $24,686,000 or 14.3% of net sales in the first quarter of the
current year from $25,318,000 or 13.4% of net sales in the first quarter of
the prior year. The decrease in selling, general and administrative expenses
are predominantly the result of last year's divestiture (B.J Designs) and
closure (RENNY).
INTEREST EXPENSE
Net interest expense declined by $745,000 to $1,096,000 or 0.6% of net
sales in the first quarter of the current year from $1,841,000 or 1.0% of net
sales in the first quarter of the prior year. The reduction in interest
expense was due primarily to the reduced inventory from the prior year.
INCOME TAXES
The Company's effective tax rate was 40.0% in the first quarter of the
current year and 40.1% in the first quarter of the previous year and does not
differ significantly from the Company's statutory rate.
FUTURE OPERATING RESULTS
The Company views the improvement in apparel sales at retail in August
as encouraging, however the Company expects the continuation of highly
competitive market conditions at wholesale and retail. The Company expects
sales in the second quarter to be approximately even with last year and sales
for the year to be equal to or slightly higher than the last fiscal year. The
Company expects improved profitability to continue throughout the remainder of
the year.
LIQUIDITY AND CAPITAL RESOURCES
OPERATING ACTIVITIES
Operating activities used $22,891,000 during the first quarter of the
current year and used $17,172,000 in the first quarter of the prior year. The
primary factors contributing to this increased use of funds were decreased
inventory offset by increased net earnings and a smaller decrease in trade
payables from the prior year.
INVESTING ACTIVITIES
Investing activities used $873,000 in the current quarter and used
$11,988,000 in the comparable quarter of the prior year. The primary factors
contributing to this change were the acquisition of Ely & Walker in the first
quarter of the prior year and the completion of several facility expansions
which were in progress in the first quarter of the prior year.
FINANCING ACTIVITIES
Financing activities generated $26,606,000 in the current period and
$37,209,000 in the comparable period of the prior year. The primary factor
contributing to this decrease was decreased short-term borrowings, due to the
operating and investing activities described above.
The Company purchased and retired 100,000 shares of its common stock
during the three months ended August 30, 1996. During the period after the
end of the first quarter through October 7, 1996, no shares have been
purchased and retired. Due to the exercise of employee stock options a net of
1,400 shares of the Company's common stock were issued during the quarter
ended August 30, 1996 and 1,240 shares were issued since August 30, 1996
through October 7, 1996.
On October 7, 1996 the Company's Board of Directors declared a cash
dividend of $.20 per share payable November 30, 1996 to shareholders of record
on November 15, 1996.
WORKING CAPITAL
Working capital decreased from $141,226,000 at the end of the first
quarter of the prior year to $137,337,000 at the end of the 1996 fiscal year
and increased to $138,155,000 at the end of the first quarter of the current
fiscal year. The ratio of current assets to current liabilities was 1.9 at
the end of the first quarter of the prior year, 2.4 at the end of the prior
fiscal year, and 2.1 at the end of the first quarter of the current year.
FUTURE LIQUIDITY AND CAPITAL RESOURCES
The Company believes it has the ability to generate cash and/or has
available borrowing capacity to meet its foreseeable needs. The sources of
funds primarily include funds provided by operations and both short and long-
term borrowings. The uses of funds primarily include working capital
requirements, capital expenditures, acquisitions, dividends and repayment of
long-term debt. The Company regularly utilizes committed bank lines of credit
and other uncommitted bank resources to meet working capital requirements. On
August 30, 1996, the Company had available for its use lines of credit with
several lenders aggregating $50,000,000. The Company has agreed to pay
commitment fees for these available lines of credit. At August 30, 1996,
$45,000,000 was in use under these lines. Of the $45,000,000, $40,000,000 is
long-term. In addition, the Company has $188,000,000 in uncommitted lines of
credit, of which $98,000,000 is reserved exclusively for letters of credit.
The Company pays no commitment fees for these available lines of credit. At
August 30, 1996, $51,000,000 was in use under these lines of credit. Maximum
borrowings from all these sources during the first three months of the current
year were $96,000,000 of which $56,000,000 was short-term. The Company
anticipates continued use and availability of both committed and uncommitted
resources as working capital needs may require.
The Company considers possible acquisitions of apparel-related
businesses that are compatible with its long-term strategies. There are no
present plans to sell securities or enter into off-balance sheet financing
arrangements.
ADDITIONAL INFORMATION
For additional information concerning the Company's operations, cash
flows, liquidity and capital resources, this analysis should be read in
conjunction with the Consolidated Financial Statements and the Notes to
Consolidated Financial Statements contained in the Company's Annual Report for
fiscal 1996.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
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(a) Exhibits.
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10(h) 1992 Stock Option Plan.
10(i) Note Agreement between the Company and SunTrust of Georgia dated
August 30, 1996 covering the Company's long term note due
December 31, 1997.
11 Statement re computation of per share earnings.
27 Financial Data Schedule.
(b) Reports on Form 8-K.
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The Registrant did not file any reports on Form 8-K during the quarter
ended August 30, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OXFORD INDUSTRIES, INC.
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(Registrant)
/s/Ben B. Blount, Jr.
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Date: October 11, 1996 Ben B. Blount, Jr.
--------------- Chief Financial Officer