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11
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 November 29, 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
----- -----
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 January 6, 1997
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Common Stock, $1 par value 8,727,561
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
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OXFORD INDUSTRIES, INC
CONSOLIDATED STATEMENT OF EARNINGS
SIX MONTHS AND QUARTERS ENDED NOVEMBER 29, 1996 AND DECEMBER 1, 1995
(UNAUDITED)
Six months Ended Quarter Ended
------------------------- ------------------------
$in thousands except November 29, December 1, November 29, December 1,
per share amounts 1996 1995 1996 1995
------------ ----------- ------------ -----------
Net Sales $375,751 $376,320 $203,234 $187,066
Costs and Expenses:
Cost of Goods Sold 307,218 312,353 166,275 155,222
Selling, general and
administrative 49,576 50,914 24,890 25,596
Provision for environmental
remediation - 4,500 - -
Interest 2,167 3,717 1,071 1,876
------- ------- ------- -------
Total Costs and Expenses 358,961 371,484 192,236 182,694
------- ------- ------- -------
Earnings Before
Income Taxes 16,790 4,836 10,998 4,372
Income Taxes 6,716 1,935 4,399 1,749
------- ------- ------- -------
Net Earnings $ 10,074 $ 2,901 $ 6,599 $ 2,623
======== ======= ======= =======
Net earnings Per
Common share $1.15 $0.33 $0.75 $0.30
======= ======= ======= =======
Average Number of Shares
Outstanding 8,741,465 8,707,324 8,707,924 8,714,170
========= ========= ========= =========
Dividends Per Share $0.40 $0.40 $0.20 $0.20
========= ========= ========= =========
See notes to consolidated financial statements.
OXFORD INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
NOVEMBER 29, 1996, MAY 31, 1996 AND DECEMBER 1, 1995
(UNAUDITED EXCEPT FOR MAY 31, 1996)
$ in thousands November 29, May 31, December 1,
- -------------- 1996 1996 1995
----------- ------- -----------
Assets
- ------
Current Assets:
Cash $ 3,710 $ 1,015 $ 4,254
Receivables 107,786 84,593 95,674
Inventories:
Finished goods 66,956 75,787 81,981
Work in process 22,509 24,717 17,493
Fabric, trim & supplies 31,818 36,285 30,896
-------- -------- --------
121,283 136,789 130,370
Prepaid expenses 13,910 13,747 14,565
-------- -------- --------
Total Current Assets 246,689 236,144 244,863
Property Plant and Equipment 34,299 36,659 38,961
Other Assets 5,941 6,300 7,600
-------- -------- --------
Total Assets $286,929 $279,103 $291,424
======== ======== ========
Liabilities and Stockholders' Equity
- ------------------------------------
Current Liabilities
Notes payable $28,000 $25,500 $38,000
Trade accounts payable 39,644 49,676 36,022
Accrued compensation 8,715 7,225 7,784
Other accrued expenses 19,327 13,014 13,580
Dividends payable 1,743 1,760 1,745
Income taxes 3,224 - -
Current maturities of long-
term debt 1,397 1,632 4,625
-------- -------- --------
Total Current Liabilities 102,050 98,807 101,756
Long-Term Debt, less
current maturities 44,284 45,051 48,953
Noncurrent Liabilities 4,500 4,500 4,500
Deferred Income Taxes 1,844 1,786 3,825
Stockholders' Equity:
Common stock 8,716 8,803 8,730
Additional paid in capital 8,342 8,211 7,419
Retained earnings 117,193 111,945 116,241
-------- -------- --------
Total Stockholders' Equity 134,251 128,959 132,390
-------- -------- --------
Total Liabilities and
Stockholders' Equity $286,929 $279,103 $291,424
======== ======== ========
See notes to consolidated financial statements.
OXFORD INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED NOVEMBER 29, 1996 AND DECEMBER 1, 1995
(UNAUDITED)
November 29, December 1,
1996 1995
Cash Flows From Operating Activities ---------------------------------
- ------------------------------------
Net earnings $ 10,074 $ 2,901
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 4,130 3,972
Provision for environmental remediation - 4,500
(Gain) on sale of property, plant
and equipment (380) (47)
Changes in working capital:
Receivables (23,193) (9,626)
Inventories 15,506 40,639
Prepaid expenses (163) (1,535)
Trade accounts payable (10,032) (19,135)
Accrued expenses and other current
liabilities 7,803 90
Income taxes payable 3,224 -
Deferred income taxes 58 (37)
Other noncurrent assets (49) (1,193)
Net cash flows provided by ----------- ---------
operating activities 6,978 20,529
Cash Flows From Investing Activities
- ------------------------------------
Acquisitions - (8,763)
Proceeds from sale of business - 1,273
Purchase of property, plant and equipment (2,764) (4,760)
Proceeds from sale of property, plant and
and equipment 1,782 500
-------- ----------
Net cash used in investing activities (982) (11,750)
Cash Flows From Financing Activities
- ------------------------------------
Short-term borrowings 2,500 (5,500)
Payments on long-term debt (1,002) 1,835
Proceeds from exercise of stock options 202 395
Purchase and retirement of common stock (1,500) -
Dividends on common stock (3,501) (3,480)
Net cash (used in) ------ -------
financing activities (3,301) (6,750)
Net change in Cash and Cash Equivalents 2,695 2,029
Cash and Cash equivalents at Beginning of Period 1,015 2,225
-------- --------
Cash and Cash Equivalents at End of Period $ 3,710 $ 4,254
======== ========
Supplemental Disclosure of Cash Flow Information
- ------------------------------------------------
Cash paid for:
Interest $ 2,010 $ 3,513
Income taxes 4,007 44
See notes to consolidated financial statements.
OXFORD INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
QUARTERS ENDED NOVEMBER 29, 1996 AND DECEMBER 1, 1995
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 Condition and
Results of Operations
NET SALES
Net sales for the second quarter of the 1997 fiscal year, which
ended November 29, 1996, increased 8.6% from net sales for the same
period of the prior year. Net sales for the first six months of the
current year decreased by 0.2% from net sales for the same period of
the prior year.
Second quarter net sales increases in the Company's Men's Slacks
Group, Tailored Clothing Group and Womenswear Group were slightly
offset by decreases in the Men's Shirt Group and last year's
divestiture (B.J. Designs) and closure (RENNY(r)). Within the Company's
Men's Shirt Group, increased sales for Tommy Hilfiger(r) Golf, Tommy
Hilfiger Dress shirts and Polo(r) for Boys were offset by declines in
the private label lines while Ely & Walker net sales were flat with
last year. The decline in the Men's Shirt Group private label net
sales is attributable to the Company's exit from the wet process
"wrinkle-free" product.
The Company experienced an overall net sales unit volume increase
of 7.6% while experiencing an overall 1.0% increase in the averages
sales price per unit during the second quarter of the current year.
Second quarter net sales included greater increased sales in the
Company's licensed designer divisions (with higher average sales per
unit) than in the private label divisions. For the first six months
of the current year the Company experienced a 5.6% decrease in overall
net sales unit volume while managing a 5.7% increase in the average
sales price per unit.
COST OF GOODS SOLD
Cost of goods sold as a percentage of net sales, was 81.8% in the
second quarter of the current year as compared to 83.0% in the second
quarter of the prior year. For the first half of the current fiscal
year, cost of goods sold as a percentage of net sales was 81.8% and
83.0% for the first half of the prior fiscal 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 the continuation of the shift from
domestic production to offshore production yielding relative decreased
costs per unit.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses decreased by 2.8% to
$24,890,000 in the second quarter of fiscal 1997 from $25,596,000 in
the same period of fiscal 1996. Selling, general and administrative
expenses decreased by 2.6% to $49,576,000 for the first six months of
the current year from $50,914,000 for the first six months of the
prior year. As a percentage of net sales, selling general and
administrative expenses decreased to 12.2% for the second quarter of
the current year from 13.7% for the second quarter of the prior year,
and decreased to 13.2% for the first half of the current year from
13.5% for the first half of the prior year. The decrease in selling,
general and administrative expenses are predominantly the result of
last year's divisional divestiture (B.J. Designs) and closure (RENNY).
INTEREST EXPENSE
Net interest expense declined by $805,000 to $1,071,000 or 0.5%
of net sales in the second quarter of the current year from $1,876,000
or 1.0% of net sales in the second quarter of the prior year. Net
interest expense declined by $1,550,000 to $2,167,000 or 0.6% of net
sales in the first half of the current year from $3,717,000 or 1.0% of
net sales in the first half 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 second quarter
of both the current and previous year and for the first half of both
the current and previous year and does not differ significantly from
the Company's statutory rate.
FUTURE OPERATING RESULTS
At the current writing, the Christmas retail results appear to
have been mixed with most retailers expecting only modest single-digit
percentage sales gains. The Company expects the continuation of
highly competitive market conditions at wholesale and at retail. The
Company expects to produce a solid single-digit sales gain in the
second half. If the Company's sales expectations are achieved, the
Company expects a solidly profitable second half.
LIQUIDITY AND CAPITAL RESOURCES
OPERATING ACTIVITIES
Operating activities generated $6,978,000 during the first six
months of the current year and $20,529,000 in the first six months of
the prior year. The primary factors contributing to this reduced
generation of funds was a smaller decrease in trade payables offset by
increased receivables and a smaller decrease in inventory than from
the prior year.
INVESTING ACTIVITIES
Investing activities used $982,000 in the first half of the
current year and $11,750,000 in the first half of the prior year. The
primary factor contributing to this change was the acquisition of Ely
& Walker in the first quarter of the prior year.
FINANCING ACTIVITIES
Financing activities used $3,301,000 in the first half of the
current year and $6,750,000 in the first half of the prior year. The
primary factors contributing to this change were the change in short-
term borrowings and long-term debt.
The Company purchased and retired 100,000 shares of its common
stock during the six months ended November 29, 1996. During the
period after the end of the second quarter through January 6,1997, no
shares have been purchased and retired. Due to the exercise of
employee stock options a net of 12,240 shares of the Company's common
stock were issued during the first six months and 15,000 shares were
issued since November 29,1996 through January 6, 1997.
On January 6, 1997, the Company's Board of Directors declared a
cash dividend of $.20 per share payable March 1, 1997 to shareholders
of record on February 14, 1997.
WORKING CAPITAL
Working capital decreased from $143,107,000 at the end of the
second quarter of the prior year to $137,337,000 at the end of the
1996 fiscal year and increased to $144,639,000 at the end of the
second quarter of the current fiscal year. The ratio of current
assets to current liabilities was 2.4 at the end of the second quarter
of the prior year, 2.4 at the end of the prior fiscal year, and 2.4 at
the end of the second 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
November 29, 1996, the Company had available for its use lines of
credit with several lenders aggregating $52,000,000. The Company has
agreed to pay commitment fees for these available lines of credit. At
November 29, 1996, $50,000,000 was in use under these lines. Of the
$50,000,000, $40,000,000 is long-term. In addition, the Company has
$186,000,000 in uncommitted lines of credit, of which $98,000,000 is
reserved exclusively for letters of credit. The Company pays no
commitment fees for these available lines of credit. At November 29,
1996, $18,000,000 was in use under these lines of credit. Maximum
borrowings from all these sources during the first six 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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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 November 29, 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.
--------------------------
Date: JANUARY 9, 1997 Ben B. Blount, Jr.
--------------- Chief Financial Officer
12
EXHIBIT 11
OXFORD INDUSTRIES, INC.
COMPUTATION OF PER SHARE EARNINGS
SIX MONTHS AND QUARTERS ENDED NOVEMBER 29, 1996
AND DECEMBER 1, 1995
(UNAUDITED)
Six Months Ended Quarter Ended
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November 29, December 1, November 29, December 1,
1996 1995 1996 1995
--------------- ------------ ------------ ----------
Net Earnings $10,074,000 $2,901,000 $6,599,000 $2,623,000
Average Number of Shares
Outstanding:
Primary 8,745,029 8,802,440 8,709,136 8,793,512
Fully diluted 8,747,440 8,808,214 8,709,875 8,805,171
As reported* 8,741,465 8,707,324 8,707,924 8,714,170
Net Earnings per Common Share:
Primary $1.15 $0.33 $0.75 $0.30
Fully diluted $1.15 $0.33 $0.75 $0.30
As reported* $1.15 $0.33 $0.75 $0.30
* Common stock equivalents (which arise solely from outstanding stock options)
are not materially dilutive and, accordingly, have not been considered
in the computation of reported net earnings per common share.
14
EXHIBIT 99
INDEX OF EXHIBITS
INCLUDED HERIN, FORM 10-Q
NOVEMBER 29, 1996
SEQUENTIAL
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
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11 Statement re computation of per share earnings 12
27 Financial Data Schedule 13