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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended May 30, 1997
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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Commission file number 1-4365
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 No.)
222 Piedmont Avenue, N.E., Atlanta, Georgia 30308
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (404) 659-2424
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of exchange on
which registered
Common Stock, $1 par value New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act:
NONE
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(Title of Class)
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 by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (Section 229.405 of this
chapter) is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or
any amendment to this Form 10-K. [ ]
State the aggregate market value of the voting stock held by
non-affiliates of the Registrant: As of August 15, 1997, the aggregate
market value of the voting stock held by non-affiliates of the
Registrant (based upon the closing price for the common stock on the
New York Stock Exchange on that date) was approximately $190,164,848.
Indicate the number of shares outstanding of each of the
Registrant's classes of common stock, as of the last practicable date.
Number of shares outstanding
Title of each class as of August 15, 1997
Common Stock, $1 par value 8,824,722
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Documents Incorporated by Reference
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(1) Sections of 1997 Annual Report to Stockholders (Incorporated in
Parts II and IV of this Report).
(2) Sections of Proxy Statement, which will be filed with the
Securities and Exchange Commission not later than 120 days after
May 30, 1997. (Incorporated in Part III of this Report).
PART I
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Item 1. Business.
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BUSINESS AND PRODUCTS
Introduction and Background
Oxford Industries, Inc. (the "Company") was incorporated
under the laws of the State of Georgia as Oxford Manufacturing
Company, Inc. on April 27, 1960. In 1967, its name was changed
to Oxford Industries, Inc. Its principal office is in Atlanta,
Georgia.
The Company's primary business, which comprises a single
industry segment, is the design, manufacture, marketing and sale
of consumer apparel products in the popular to better price
ranges. Substantially all of the Company's distribution
facilities, offices and customers are located in the United
States. Company-owned manufacturing facilities are located in
the southeastern United States, Mexico, the Caribbean Central
America and Asia.
The Company is in a single line of business with two classes
of similar products, menswear and womenswear. The table below
sets forth, for each of the last three fiscal years, the
percentage of net sales attributable to each such class of
similar products:
Fiscal Year Ended:
May 30, May 31, June 2,
1997 1996 1995
------ ------- -------
Menswear 77% 78% 74%
Womenswear 23% 22% 26%
------ ------- -------
100% 100% 100%
====== ======= =======
Menswear
Primary menswear products sold include men's suits, vests,
dress slacks and golfwear and men's and boys' sportswear,
sportscoats, dress shirts, woven and knitted sport shirts,
sweaters, slacks, shorts and jeans.
Womenswear
Primary womenswear products sold include women's sportswear,
dresses, suits, sweaters, shirts, blouses, t-shirts, sweatshirts,
vests, jackets, skirts, shorts and pants. Sportswear products
are marketed as coordinates, which include wardrobe items in
styles and colors designed to be worn together and or as
separates.
DISTRIBUTION
The Company's customers include national and regional chain
stores, mail order and catalog firms, discount stores, department
stores and chain and independent specialty stores. Net sales to
the Company's fifty largest customers increased by 1.9% while net
sales to all other customers declined 23.5%. This is due to the
Company's continuing focus on large, financially stable
retailers.
Customer Distribution Analysis
May 30, May 31, June 2,
1997 1996 1995
Total Sales % Total Sales % Total Sales %
Customers Customers Customers
--------- ------- --------- ------- --------- -------
Top 50 50 92.70% 50 92.37% 50 91.46%
All Other 2,895 7.30% 3,146 7.63% 3,431 8.54%
----- ----- ----- ------ ----- ------
Total 2,945 100% 3,196 100% 3,481 100%
Several product lines are designed and manufactured in
anticipation of orders for sale to department and specialty
stores and certain specialty chain and mail order customers. The
Company must make commitments for fabric and production in
connection with these lines. In the case of imports, these
commitments can be up to several months prior to the receipt of
firm orders from customers. These lines include both popular and
better price merchandise sold under brand and designer names or
customers' private labels.
The Company works closely with many customers to develop
large-volume product programs prior to commencement of
production, enabling the Company to take advantage of relative
efficiencies in planning, raw materials purchasing and
utilization of production facilities. Products sold under these
programs are in the popular price range and usually carry the
customers' trademarks, although the Company offers some branded
and designer programs for this customer market.
The Company employs a sales force consisting of salaried and
commissioned sales employees and independent commissioned sales
representatives. Apparel sales offices and showrooms are
maintained by the Company in Atlanta, Chicago, New York and in
Dallas and Plano, Texas. Other showrooms are maintained by
independent commissioned sales representatives. A majority of
the Company's business is conducted by direct contacts between
the Company's salaried executives and buyers and other executives
of the Company's customers.
MANUFACTURING, RAW MATERIALS AND SOURCES OF SUPPLY
Manufacturing and Raw Materials
Apparel products are manufactured from cotton, linen, wool,
silk, other natural fibers, synthetics and blends of these
materials. Materials used by the Company in its manufacturing
operations are purchased from numerous domestic and foreign
textile mills and converters in the form of woven or knitted
finished fabrics. Buttons, zippers, thread and other trim items
are purchased from both domestic and foreign suppliers. The
Company's manufacturing facilities perform cutting, sewing and
related operations to produce finished apparel products from
these materials. At the end of the 1997 fiscal year, domestic
production for the Company accounted for 27% of the Company's
business, of which approximately 14% came from the Company's
United States manufacturing facilities, and approximately 13%
came from United States contractors.
The Company also purchases fabric and places it with
domestic and foreign independent contractors for production of
goods conforming to the Company's patterns, specifications and
quality standards. The Company also performs independent
contracting services for other companies to ensure maximum
utilization of its production facilities.
The Company imports finished apparel products meeting its
quality standards from suppliers in the Caribbean, Central
America, the Far East and other areas. Imported goods are
generally manufactured according to designs and specifications
furnished or approved in advance of production by the Company.
In order to place orders and monitor production, the Company
maintains buying offices in Hong Kong and Singapore. The Company
also retains unaffiliated buying agents in several other
countries.
The Company also uses its own facilities in Mexico, the
Dominican Republic, Costa Rica, Honduras, and the Philippines.
Except for the Philippines, these facilities generally assemble
apparel products from components made primarily in the United
States.
Sources of Supply
The Company regards its domestic and foreign sources of raw
materials, finished goods and outside production as adequate, and
is not dependent on any single source or contractor. No single
supplier or contractor accounts for a material portion of the
Company's purchases or business. Alternative competitive sources
are available, and the Company does not anticipate significant
difficulty in meeting its supply and outside production
requirements. There are occasions, however, where the Company is
unable to take customer orders on short notice because of the
minimum lead time required to produce a garment that is
acceptable to the customer in regards to cost, quantity, quality
and service.
The Company's import business could be adversely affected by
currency exchange fluctuations, changes in United States import
duties and trade restraints, political unrest in exporting
countries, and other factors normally associated with imports.
The Company believes it has diminished potential risks in its
import business by placing import programs with suppliers in many
different countries. The Company continues to expand assembly
operations in the Mexico to take greater advantage of incentives
implicit in United States trade policy.
TRADEMARKS, LICENSES AND PATENTS
Trademarks
Principal menswear trademarks owned by the Company are
"Lanier Clothes" for men's suits and sportcoats; "Oxford
Shirtings" for men's shirts; "Travelers Worsted" for mens suits;
"Everpress" for men's slacks; "928" for young men's suited
separates; and "Ely Cattleman" and "Plains" for men's western
wear.
The Company licenses its trademark "Merona" to the Target
Stores and Mervyn's divisions of the Dayton Hudson Corporation.
The license agreement calls for these divisions to pay minimum
royalties and additional royalties for sales above certain
levels. The minimum royalties due in the future have been reduced
by actual royalties paid in preceding years. If certain levels
of royalty payments have been made and renewal options exercised,
Target Stores will have the option to purchase the trademark in
1999.
Although the Company is not dependent on any single
trademark, it believes its trademarks in the aggregate are of
significant value to its business.
If an attractive opportunity were to present itself the
Company would seriously consider the acquisition of significant
brands and related businesses.
Licenses
The Company also has the right to use trademarks under
license and design agreements with the trademarks' owners.
Principal menswear trademarks the Company has the right to use
are "Polo/Ralph Lauren" for Boys, including boy's shirts, suits,
shorts, sweat suits, woven and knitted sportswear, pants,
sweaters, outerwear, jackets, denim jeans and caps; "Robert
Stock" for men's suits, sportcoats and dress slacks; "Oscar de la
Renta" for men's suits, sportcoats, vests, and dress slacks;
"Tommy Hilfiger" for men's dress shirts and golf apparel;
"Nautica" for men's tailored suits, sports coat and dresses
slacks. Additionally, the Company entered into a new license
agreement which will allow the Company to use "Geoffrey Beene"
for men's tailored suits, sports coats, vests and dress slacks.
The above mentioned license and design agreements will expire
at various dates through 2000. Many of the Company's licensing
agreements are eligible for renewal to extend the licenses
through various dates from 1998 through 2006.
Although the Company is not dependent on any single license
and design agreement, it believes its license and design
agreements in the aggregate are of significant value to its
business.
Patents
The Company owns several patents covering apparel
manufacturing processes and devices, but competitive processes
and devices are available to others, and these are not material
to the Company's business.
SEASONAL ASPECTS OF BUSINESS AND ORDER BACKLOG
Seasonal Aspects of Business
The Company's business is generally divided among four
retail selling seasons: Spring, Summer, Fall and Holiday.
Seasonal factors can cause some variance in production and sales
levels among fiscal quarters in any fiscal year, but the Company
does not regard its overall business as highly seasonal.
Order Backlog
A large portion of sales are booked in advance of each
season, and it is therefore normal for the Company to maintain a
significant order backlog. As of May 30, 1997 and May 31, 1996,
the Company had booked orders amounting to approximately
$193,950,000 and $163,047,000, respectively, all of which will be
shipped within six months after each such date. These numbers
represent only store orders on hand and do not include private-
label contract balances. The Company is experiencing a greater
percentage of at-once EDI "Quick response" programs with large
retailers. Replenishment shipments under these programs
generally possess such an abbreviated order life as to exclude
them from the order backlog completely. The Company does not
believe that this backlog information is indicative of sales to
be expected for the following year, because order backlog at the
end of May primarily represents only Fall season business.
WORKING CAPITAL
Working capital needs are affected primarily by inventory
levels, outstanding receivables and trade payables. The Company
had available for its use committed lines of credit with several
lenders aggregating $52,000,000 at May 30, 1997. These lines of
credit are used by the Company to cover fluctuations in working
capital needs. The Company had $40,000,000 outstanding under
these lines of credit at the end of the 1997 fiscal year, and
$45,000,000 outstanding at the end of the 1996 fiscal year. In
addition, at the end of fiscal 1997, the Company had $186,000,000
in uncommitted lines of credit of which $98,000,000 was reserved
for the issuance of letters of credit. At May 30, 1997,
$4,000,000 was outstanding under these lines of credit. At the
end of fiscal 1996 the Company had $188,000,000 in uncommitted
lines of credit of which $98,000,000 was reserved for the
issuance of letters of credit. At May 31, 1996 $20,500,000 was
outstanding under these uncommitted lines of credit. The total
amount of letters of credit outstanding totaled approximately
$67,400,000 at the end of fiscal 1997, and approximately
$66,000,000 at the end of fiscal 1996. The Company had cash of
$3,313,000 and $1,015,000 at the end of the 1997 and 1996 fiscal
years. The average interest rate on all short-term borrowings for
the 1997 fiscal year was 5.72%. The Company anticipates
continued use and availability of short-term borrowings as
working capital needs may require.
Inventory levels are affected by order backlog and
anticipated sales. It is general practice of the Company to
offer payment terms of net 30 to the majority of its customers,
from date of shipment.
The Company believes that its working capital requirements
and financing resources are comparable with those of other major,
financially sound apparel manufacturers.
MAJOR CUSTOMERS
The Company's ten largest customers accounted for
approximately 72 percent of the Company's net sales in fiscal
1997 and approximately 70 percent in fiscal 1996. JCPenney
Company, Inc. accounted for 21 percent and 22 percent of net
sales in the 1997 and 1996 fiscal years, respectively. Lands'
End, Inc. accounted for 10 percent and 9 percent of net sales in
the 1997 and 1996 fiscal years, respectively. The Company
believes that its relationships with all of its major customers,
including JCPenney Company, Inc., and Lands' End, Inc., are
excellent.
COMPETITION
The Company's products are sold in a highly competitive
domestic market in which numerous domestic and foreign
manufacturers compete. No single manufacturer or small group of
manufacturers dominates the apparel industry. The Company
believes it is a major apparel manufacturing and marketing
company, but there are other apparel firms with greater sales and
financial resources.
Competition within the apparel industry is based upon
styling, marketing, price, quality, customer service and, with
respect to branded and designer product lines, consumer
recognition and preference. The Company believes it competes
effectively with other members of its industry with regard to all
of these factors. Successful competition in styling and marketing
is related to the Company's ability to foresee changes and trends
in fashion and consumer preference and to present appealing
product programs to its customers. Successful competition in
price, quality and customer service is related to its ability to
maintain efficiency in production, sourcing and distribution.
Growth in apparel imports and direct importing by retailers
present competitive risks to domestic apparel manufacturers. The
United States has implemented restrictive quotas on the
importation of many classifications of textiles and textile
products from certain countries and has adopted restrictive
regulations governing textile and apparel imports. Through
December of 1994, these restraints were permitted pursuant to the
Multi-Fiber Arrangement (MFA), an international textile trade
agreement to which the United States was a party. During the
Uruguay Round of the General Agreement on Tariffs and Trade, the
United States and other countries negotiated a successor
agreement to the MFA known as the Agreement on Textiles and
Clothing (ATC). The ATC became effective on January 1, 1995.
The ATC requires that importing countries remove product
classifications comprising approximately half of their 1990
imports of textile and apparel products from coverage under their
quota systems in three stages over a ten year period. The
remaining classification are to be removed from coverage under
the importing countries' quota systems on January 1, 2005.
However, the ATC allows importing countries such as the United
States significant discretion in determining when during the ten
year period particular product classifications are removed from
quota coverage. The United States has announced a plan that will
keep quotas on the products deemed most sensitive to import
competition in place until the latter stages of the ten year
period. In addition, the ATC requires importing countries to
increase the rate of growth of existing quota levels by a
specified amount each year. Finally, the ATC permits importing
countries, under certain conditions, to impose new quotas on the
importation of textile and apparel products during the ten year
phase out period. Thus, the extent to which the ATC will
liberalize trade in textile and apparel products over the next
ten years is unclear. Reduced restrictions on the importation of
textiles and textile products could increase competitive import
pressure on the Company's domestic manufacturing operations, but
could also positively affect its sourcing activities in some
countries.
Another source of competition is the increasing use of
buying offices by certain of the Company's customers and other
retailers. These buying offices permit the retailer to source
directly from (primarily) foreign manufacturers, by-passing
intermediate apparel manufacturing companies. The Company is
unable to quantify the effect of this trend on its sales and
profits but believes that the use of buying offices adversely
affects both. The Company believes that the relative price
advantage to retailers of direct sourcing is offset to an extent
by the Company's ownership of or long term relationships with
foreign facilities and by services provided to its customers such
as delivery flexibility and manufacturing expertise.
EMPLOYEES
As of May 30, 1997, the Company employed 8,413 persons,
approximately 89% of whom were hourly and incentive paid
production workers. The Company believes its employee relations
are excellent.
Item 2. Properties.
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At May 30, 1997 the Company operated a total of 22
production plants. Domestic plants, of which nine plants are
owned and three plants are leased, are located in Alabama,
Georgia, Mississippi, North Carolina, South Carolina and
Virginia. Foreign plants, of which four are owned and six are
leased, are located in Mexico, the Dominican Republic, Costa
Rica, Honduras, and the Philippines.
The Company also maintains separate warehousing and
distribution facilities (in addition to space allocated for these
purposes in or adjacent to manufacturing plants) in Arizona,
Georgia, Mississippi, Tennessee and South Carolina.
Certain of the manufacturing, warehousing and distribution
facilities deemed owned by the Company are held pursuant to
long-term capital leases or lease purchase agreements, some of
which have been entered into by the Company in connection with
industrial revenue bond financing arrangements. Under this type
of financing, the facilities are subject to trust indentures or
security agreements securing the interests of the bondholders.
See Notes C and D in the Notes to Consolidated Financial
Statements forming a part of the financial statements included
under Item 8 of this Report.
General offices are maintained in a facility owned by the
Company in Atlanta, GA. The Company leases sales, purchasing and
administrative offices in Atlanta, Chicago, Hong Kong, New York,
Singapore, Bangladesh, the Philippines, Sri Lanka, and in both
Dallas and Plano, Texas.
The Company owns substantially all of its machinery and
equipment. Current facilities are adequately covered by
insurance, generally well maintained and provide adequate
production capacity for current and anticipated future
operations.
Item 3. Legal Proceedings.
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Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
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Not applicable.
Item 4A. Executive Officers of the Registrant.
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Name Age Office Held
- --------------------- --- -------------------------
J. Hicks Lanier 57 Chairman of the Board,
President and Chief
Executive Officer
Ben B. Blount, Jr 58 Executive Vice President -
Finance, Planning and
Development and Chief
Financial Officer
Knowlton J. O'Reilly 57 Group Vice President
Messrs. J. Hicks Lanier, Ben B. Blount, Jr. and Knowlton J.
O'Reilly are also directors of the Company. The Board of
Directors of the Company elects executive officers annually.
Mr. J. Hicks Lanier has served as President of the Company
since 1977. In 1981 he was elected as Chairman of the Board.
Mr. Ben B. Blount, Jr. was Executive Vice President --
Planning and Development from 1986 - 1995. Mr. Blount was
President of Kayser Roth Apparel, an apparel manufacturer and
marketer, from 1982 to 1986. Prior to 1982 he was Group Vice
President of the Company. In 1995 he was elected to serve in his
present position as Executive Vice President of Finance, Planning
and Administration and Chief Financial Officer.
Mr. Knowlton J. O'Reilly has served as Group Vice
President of the Company since 1978.
PART II
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Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
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Incorporated by reference to the table presented under the
heading "Common Stock Information" on page 23 through 24 of the
Company's 1997 Annual Report to Stockholders (Exhibit 13 hereto).
On August 15, 1997, there were 812 holders of record of the
Company's common stock.
Item 6. Selected Financial Data.
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Incorporated by reference to page 14 of the Company's 1997
Annual Report to Stockholders (Exhibit 13 hereto).
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
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Incorporated by reference to page 15 through 17 of the
Company's 1997 Annual Report to Stockholders (Exhibit 13 hereto).
8. Financial Statements and Supplementary Data.
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Financial statements, including selected quarterly financial
data, are incorporated by reference to pages 18 through 26 of the
Company's 1997 Annual Report to Stockholders (Exhibit 13 hereto).
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
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Not applicable.
PART III
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Item 10. Directors and Executive Officers of the Registrant.
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Information required by this item covering directors of the
Company is incorporated by reference to the information presented
under the heading "Election of Directors - Directors and
Nominees" in the Company's Proxy Statement, which will be filed
with the Securities and Exchange Commission not later than 120
days after May 30, 1997. Information required by this Item
covering executive officers of the Company is set forth under
Item 4A of this Report.
Item 11. Executive Compensation.
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Incorporated by reference to the information presented under
the heading "Executive Compensation and Other Information" in the
Company's Proxy Statement, which will be filed with the
Securities and Exchange Commission not later than 120 days after
May 30, 1997.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
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Incorporated by reference to the information presented under
the heading "Beneficial Ownership of Common Stock" in the
Company's Proxy Statement, which will be filed with the
Securities and Exchange Commission not later than 120 days after
May 30, 1997.
Item 13. Certain Relationships and Related Transactions.
- ---------------------------------------------------------
Incorporated by reference to the information presented under
the heading "Executive Compensation and Other Information -
Compensation Committee Interlocks and Insider Participation" in
the Company's Proxy Statement, which will be filed with the
Securities
and Exchange Commission not later than 120 days after May 30,
1997.
PART IV
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Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K.
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(a) 1. Financial Statements
--------------------
Included on pages 18 through 26 of the 1997 Annual Report to
Stockholders (Exhibit 13 hereto) and incorporated by reference in
this Form 10-K:
Report of Independent Public Accountants.
Consolidated Balance Sheets at May 30, 1997 and
May 31, 1996
Consolidated Statements of Earnings for years ended
May 30, 1997, May 31, 1996 and June 2, 1995.
Consolidated Statements of Stockholders' Equity for
years ended May 30, 1997, May 31, 1996 and June 2,
1995.
Consolidated Statements of Cash Flows for years ended
May 30, 1997, May 31, 1996 and June 2, 1995.
Notes to Consolidated Financial Statements for years
ended May 30, 1997, May 31, 1996 and June 2, 1995.
2. Financial Statement Schedules
-----------------------------
Included herein:
Report of Independent Public Accountants on
Financial Statement Schedule.
Schedule II - Valuation and Qualifying Accounts.
3. Exhibits
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3(a) Articles of Incorporation of the Company. Incorporated by
reference to Exhibit 3(a) to the Company's Form 10-Q for
the fiscal quarter ended August 28, 1992.
3(b) Bylaws of the Company. Incorporated by reference to
Exhibit 3(b) to the Company's Form 10-K for fiscal year
ended June 3, 1994.
10(a) Split-Dollar Life Insurance Agreement.
10(b) Group Life Insurance Plan, effective January 1, 1993.
Incorporated by reference to Exhibit 10(b) to the
Company's Form 10-K for the fiscal year ended May 28,
1993.
10(c) 1984 Stock Option Plan. Incorporated by reference to
Exhibit 10(c) to the Company's Form 10-Q for the fiscal
quarter ended December 1, 1995.
10(d) Long Range Incentive Plan, as amended through July 31,
1992. Incorporated by reference to Exhibit 10(d) to the
Company's Form 10-K for the fiscal year ended May 28,
1993.
10(e) Summary of Executive Medical Reimbursement Plan.
Incorporated by reference to Exhibit 10(e) to the
Company's Form 10-K for the fiscal year ended June 3,
1994.
10(f) Management Incentive Bonus Program, as amended through
June 1, 1991. Incorporated by reference to Exhibit 10(f)
to the Company's Form 10-K for the fiscal year ended May
31, 1996.
10(g) Executive Officers' Long Range Incentive Plan.
Incorporated by reference to Exhibit 10(g) to the
Company's Form 10-K for the fiscal year ended May 28, 1993.
10(h) 1992 Stock Option Plan. Incorporated by reference to
Exhibit 10(h) to the Company's Form 10-Q for the fiscal
quarter ended August 30, 1996.
10(j) Note Agreement between the Company and SunTrust Bank dated
December 1, 1995 covering the Company's long term note due
June 30, 1997. Incorporated by reference to Exhibit 10(j)
to the Company's Form 10-Q for the fiscal quarter ended
February 28, 1997.
11 Statement re computation of per share earnings.
13 1997 Annual Report to Stockholders (furnished for the
information of the Commission and not deemed "filed" or
part of this Form 10-K except for those portions expressly
incorporated herein by reference).
24 Consent of Arthur Andersen LLP
25 Powers of Attorney.
27 Financial Data Schedule.
The Company agrees to file upon request of the Securities
and Exchange Commission a copy of all agreements
evidencing long-term debt of the Company and its
subsidiaries omitted from this report pursuant to Item
601(b)(4)(iii) of Regulation S-K.
Shareholders may obtain copies of Exhibits without charge
upon written request to the Corporate Secretary, Oxford
Industries, Inc., 222 Piedmont Avenue, N.E., Atlanta,
Georgia 30308.
(b) No reports on Form 8-K were filed during the last quarter of
the period covered by this report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused this
report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Oxford Industries, Inc.
/s/Thomas Caldecot Chubb, III
-----------------------------
J. Hicks Lanier*
Chairman and President
Date: August 26, 1997
---------------
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of the Company in the capacities and on the
dates indicated.
Signature Capacity Date
- -------------------------- ----------------- --------
/s/Thomas Caledcot Chubb, III Chairman and 08/26/97
- -------------------------- President, Chief --------
J. Hicks Lanier Executive Officer
and Director
/s/Ben B. Blount Jr. Executive 08/26/97
- -------------------------- Vice President, -------
Ben B. Blount Jr. Chief Financial
Officer and
Director
/s/Thomas Caldecot Chubb, III Director 08/26/97
- -------------------------- --------
Cecil D. Conlee*
/s/Thomas Caldecot Chubb, III Director 08/26/97
- -------------------------- --------
John B. Ellis*
*by power of attorney
/s/Thomas Caldecot Chubb, III Director 08/26/97
- -------------------------- --------
Thomas Gallagher*
/s/Thomas Caldecot Chubb, III Director 08/26/97
- -------------------------- --------
J. Reese Lanier*
/s/Thomas Caldecot Chubb, III Director 08/26/97
- -------------------------- --------
Knowlton J. O'Reilly*
/s/Thomas Caldecot Chubb, III Director 08/26/97
- -------------------------- --------
Clarence B. Rogers, Jr.*
/s/Thomas Caldecot Chubb, III Director 08/26/97
- -------------------------- --------
Robert E. Shaw*
/s/Thomas Caldecot Chubb, III Director 08/26/97
- -------------------------- --------
E. Jenner Wood*
*by power of attorney
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
To Oxford Industries, Inc.:
We have audited, in accordance with generally accepted
auditing standards, the consolidated financial statements
included in Oxford Industries, Inc.'s 1997 Annual Report to
Stockholders incorporated by reference in this Form 10-K, and
have issued our report thereon, dated July 11, 1997. Our audits
were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in
Item 14(a)2 is the responsibility of the Company's management and
is presented for purposes of complying with the Securities and
Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the
auditing procedures applied in the audits of the basic financial
statements and, in our opinion, fairly states in all material
respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
July 11, 1997
Exhibit 10(a)
SPLIT-DOLLAR LIFE INSURANCE AGREEMENT
THIS AGREEMENT, executed on the_______day of______19__
by and between OXFORD INDUSTRIES, INC., a Georgia
corporation
(hereinafter referred to as "Oxford"), and _________, an
employee of Oxford (hereinafter referred to as "Employee");
W I T N E S S E T H:
--------------------
WHEREAS, Oxford has purchased from the Northwestern
Mutual Life
Insurance Company Policy Number_________on the Employee's
life
(the "Policy");
NOW THEREFORE, the parties hereby covenant and agree as
follows:
Section 1. Cancellation of Prior Agreement
Oxford and Employee hereby cancel and terminate the
Split-Dollar Insurance and Employee Death Benefit Agreement
dated (NOT APPLICABLE) entered into by and between the
parties, in consideration for the execution of this
Agreement.
Section 2. Ownership of Split-Dollar Life Insurance Policy
Oxford shall own the Policy during the course of
Employee's employment and shall have the exclusive right to
surrender, exchange, cancel, amend or otherwise deal with
the Policy; provided, however, that upon cancellation,
surrender or other termination of the Policy, Oxford shall
refund to Employee the portion of the unearned premium paid
by Employee pursuant to Section 4(b) hereof. Oxford shall
have the exclusive right to elect to borrow against any cash
value of the Policy, and shall have the exclusive right to
receive, deal with, and make any elections regarding the use
of any policy dividends. Except as provided in Sections
3(a) and 3(b) below, Oxford shall have the full and
exclusive right upon Employee's death to all proceeds of the
Policy, including any refund of unearned premiums.
Section 3. Employee's Rights in the Insurance Policy
(a) Employee's Portion of Policy Proceeds.
Subject to the provisions of Section 3(c) for the
termination of Employee's rights to the Policy proceeds, the
portion of the Policy proceeds to which Employee's
beneficiary shall be entitled upon Employee's death shall be
the term portion of the Policy proceeds, determined by
reference to the following schedule:
Beginning
December 31st Employee's Portion
in Year Shown- of Policy Proceeds
1988 $140,000
1989 140,000
1990 140,000
1991 140,000
1992 140,000
1993 150,000
1994 150,000
1995 150,000
1996 150,000
1997 150,000
1998 150,000
1999 150,000
2000 150,000
2001 150,000
2002 150,000
2003 152,000
2004 153,000
2005 154,000
2006 156,000
2007 158,000
2008 160,000
2009 162,000
2010 164,000
2011 167,000
2012 171,000
2013 175,000
2014 180,000
2015 185,000
2016 192,000
2017 200,000
(b) Employee's Rights with Respect to Employee's
Portion of Policy Proceeds. Until such time as Employee's
interest and right in the term portion of the Policy
proceeds terminate pursuant to Section 3(c) hereof, Employee
shall have the right with regard to such proceeds to
designate and change the beneficiary or beneficiaries and to
elect any optional mode of settlement permitted. Employee
shall have no other interest or right in the Policy.
Employee shall provide to Oxford written notice of any
designation or change of the beneficiary or beneficiaries
who are entitled to receive payment of the Employee's
portion of the Policy proceeds, and Oxford shall upon
receipt of such written designation or change of beneficiary
or beneficiaries take all action necessary to effect the
desired designation or change of beneficiary or
beneficiaries. Employee shall have the right to assign any
and all of his interest and right in the Policy by providing
written notice of such assignment to Oxford and to
Confederation Life Insurance Company.
(c) Termination of Employee's Rights to the Term
Portion of the Policy Proceeds. Notwithstanding any
provision herein to the contrary, all of Employee's interest
and right in the Policy proceeds shall terminate upon the
occurrence of any of the following events: (i) Employee's
receipt of written notice from Oxford that Employee's
interest and right in the policy is terminated; (ii)
Oxford's cancellation, surrender or other termination of the
Policy; (iii) the termination of Employee's employment with
Oxford; (iv) Employee's retirement after attaining age 65;
(v) Employee's retirement after attaining age 55 but before
attaining age 65 (which event shall be referred to in this
Agreement as "Early Retirement"); (vi) Employee's failure to
pay his portion of the premium as required in Section 4(b).
Section 4. Payment of Premium
(a) Oxford's Payment of Premiums. Except as
provided in Section 4(b) below and until such time as Oxford
cancels, surrenders or otherwise terminates the Policy,
Oxford shall pay to Northwestern Mutual Life Insurance
Company all premiums on the Policy not paid by Employee as
they become due.
(b) Employee's Payment of Premiums. Employee
shall pay the portion of the annual Policy premium which is
attributable to the value of the term portion of the Policy
proceeds for that year. The value of the term portion of
the Policy proceeds shall be determined by reference to the
lower of (i) the current published premium rates per $1,000
of insurance protection charged by the insurer for
individual one-year term life insurance available to all
standard risks, or (ii) the values set forth in P.S. No. 58
Table incorporated in Revenue Ruling 55-747 or such other
table as the Internal Revenue Service may subsequently adopt
for establishing the value of the term portion of similar
policies.
Employee hereby authorizes Oxford to deduct from
his compensation the amount of the annual Policy premium payable
by the Employee. Oxford shall pay any such withheld amount
to Northwestern Mutual Insurance Company as soon as
practicable and shall be responsible for any loss of such
withheld amounts prior to their receipt by Northwestern
Mutual Insurance Company.
Section 5. Employee's Disability
In the event Employee becomes and remains permanently or
totally disabled (as defined in Oxford's Long Term
Disability Insurance Plan) and Employee's right and interest
in the Policy proceeds shall not have sooner terminated
under Section 3(c), Oxford shall pay to Employee until such
time as Employee chooses Early Retirement or attains age 65
an amount equal to the portion of the annual Policy premium
payable by Employee under Section 4(b).
Section 6. Death Benefit if Post-Retirement Group Life
Insurance Protection not Provided
It is Oxford's intention to provide a post-
retirement group life insurance policy (in no less than the
amounts referred to in subsections (a) and (b) below) for
Employee and certain other of its employees. If, however,
Employee's coverage under any such policy is terminated or
canceled for any reason, or if such coverage is not
available, or if Oxford for any reason satisfactory to
itself decides not to provide such coverage, then, and only
in such event, the following provisions regarding an
employer-provided post-retirement death benefit shall apply:
(a) If Employee retires after attaining age 65,
and if Employee's right and interest in the term portion of
the Policy proceeds shall not have sooner terminated under
Section 3(c), Oxford agrees that upon Employee's death
following retirement it will pay from its own funds and
resources to Employee's named beneficiary or beneficiaries a
death benefit in the total amount of________.
(b) If Employee chooses Early Retirement (e.g.,
retirement after attaining age 55 but before attaining age
65), and if Employee's right and interest in the term
portion of the Policy proceeds shall not have sooner
terminated under Section 3(c) and shall have remained in
effect for twelve (12) years or more prior to the date of
such Early Retirement, Oxford agrees that upon Employee's
death following Early Retirement it will pay from its own
funds and resources to Employee's named beneficiary or
beneficiaries a death benefit in the total amount of______
reduced by five (5%) percent for each year or portion
thereof by which the date of Employee's Early Retirement
precedes his sixty-fifth (65th) birthday.
(c) Oxford shall pay the total amount of any such
death benefit in five (5) equal annual installments, or such
larger number of equal annual installments as Employee may
elect at any time prior to retirement or Early Retirement.
The first such installment shall be paid on or prior to the
date which is six (6) months after the date of Employee's
death. Each subsequent installment shall be paid on the
anniversary of the date of the first installment in each
succeeding year until the aggregate of all installments
equals the total death benefit payable by Oxford.
(d) The employer-provided benefit payable under
this Section 6, if any, shall be paid solely from the
general assets of Oxford, subject to Oxford's general
creditors, and the employer and his beneficiary or
beneficiaries shall have no right or claim against the
assets of Oxford for the payment of such benefits as other
than a general creditor of the company. In no event shall
the Employee or any beneficiary or beneficiaries acquire a
beneficial ownership interest in any assets of Oxford as a
result of this Section 6 or shall any portion of the assets
of Oxford be segregated in a manner that it can be used
solely to provide benefits under this Section 6 or that it
can constitute the only source of benefit payments under
this Section 6.
Section 7. Miscellaneous
(a) Amendment or Modification. This Agreement
shall not be amended or modified in any way except by
written instrument signed
by Oxford and Employee.
(b) Binding Effect. This Agreement shall be
binding upon the parties hereto and their successors,
assigns, administrators or executors and their
beneficiaries.
(c) Applicable Law. This Agreement shall be
construed in accordance with the laws of the State of
Georgia.
(d) Not a Contract of Employment. This Agreement
is not a contract of employment and shall not give any
Employee the right to be retained in the employ of Oxford,
nor, upon termination of employment, to have any interest in
the proceeds of any policies other than any interest herein
provided.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the day and year first above written.
OXFORD INDUSTRIES, INC.
_______________________
EMPLOYEE
_______________________
Rev. 12/88
EXHIBIT-11
OXFORD INDUSTRIES, INC.
COMPUTATION OF PER SHARE EARNINGS
---------------------------------
Year Ended
-------------------------------
May 30, 1997 May 31, 1996
------------ ------------
Net earnings $19,647,000 $2,194,000
Average number of shares
outstanding:
Primary 8,816,229 8,838,438
Fully diluted 8,799,982 8,841,730
As reported (1) 8,743,557 8,748,625
Net earnings per
common share:
Primary $2.23 $.25
Fully Diluted $2.23 $.25
As Reported (1) $2.25 $.25
- -------------------
(1) Common stock equivalents (which arise solely from outstanding
stock options) are not materially dilutive and, accordingly, have
not been considered in the computation of reported net earnings per
common share.
Weighted Average Shares O/S 8,774,608
Weighted Average Shares O/S 8,707,924
Weighted Average Shares O/S 8,732,054
Weighted Average Shares O/S 8,758,939
- --------------------------- ---------
12 Months Average 8,743,557
=========
EXHIBIT 13
FINANCIAL HIGHLIGHTS FOR ANNUAL REPORTOXFORD INDUSTRIES, INC.Financial
Highlights$ in thousands, except per share
amounts Year Ended: May 30, 1997 May 31, 1996 % CHANGE
Net sales $703,195 $664,443 5.83%
Net earnings 19,647 2,194 795.49%
Earnings per share 2.25 0.25 800.00%
Dividends per share 0.80 0.80 0.00%
Stockholders' equity 141,517 128,959 9.74%
Book value per share at year-end 16.12 14.65 10.03%
Return on average stockholders'
equity 14.5% 1.7% 752.94%
The $.20 per share dividend paid on May 31, 1997 was the 148th consecutive
quarterly dividend paid by the Company since it became publicly owned in
July 1960.
To Our Shareholders:
Fiscal 1997 was a record year for your Company. Sales increased 5.8%
to a record $703,195,000 from $664,443,000 in fiscal 1996. Net earnings
increased ninefold to $19,647,000 from $2,194,000 last year. Earnings per
share increased to a record $2.25 from $.25 per share in fiscal 1996.
Return on equity increased to 14.5% from last year's 1.7%.
The shareholder dividend declared in July 1997 was our 149th
consecutive quarterly cash dividend since Oxford became publicly owned in
1960. We are proud of this 37-year record.
Our profit improvement came from improved operations. Our fiscal 1996
initiatives produced results in fiscal 1997. We reestablished a
respectable growth trajectory in our established business sectors and were
successful in our new ventures. We increased our gross margin from 17.4%
last year to 19.5% this year through growth in our higher margin business,
better internal control and lower manufacturing costs. Total selling,
general and administrative expenses were reduced from 15.3% of sales to
14.3% of sales. Interest expense was reduced by 32.1% through better
management of inventory and receivables. The combination of these factors
produced the dramatically improved results.
Our backlog of unshipped orders at year-end was up 19.0% to $194
million compared to $163 million a year ago. Inventories at year-end were
up 9.5% to $150 million compared to $137 million last year. Accounts
receivables were down 8.1% from $85 million to $78 million due to strong
collections. Long-term debt was reduced from $45 million to $42 million.
Short-term debt was lowered from $26 million to $4 million. Our year-end
book value increased to $16.12 per share from $14.65. Overall, our already
strong financial condition was further strengthened in fiscal 1997. We are
proud of these accomplishments.
Fiscal 1997 was a recovery year for the Oxford Shirt Group, our
largest operating group. Although total sales were flat, the Shirt Group
returned to profitability after two years of losses. The Tommy Hilfiger
Dress Shirts division had a strong sales increase and now occupies the
number one position in all-cotton designer dress shirts. Tommy Hilfiger
Golf, introduced last year, more than doubled its sales and market share.
Our Polo/Ralph Lauren for Boys division also had a strong sales gain.
Sales at Ely & Walker were flat. Sales in Oxford Shirtings, our private
label dress shirt division, and OxSport, our private label sport shirt
division, were down, but profitability in both was significantly improved.
A signal event in the Shirt Group in fiscal 1997 was the successful start-
up of our first wholly-owned production facility in the Far East.
Lanier Clothes achieved record sales and improved operating profits in
fiscal 1997. The Oscar de la Renta division posted its twelfth consecutive
year of increased sales. Sales in our private label business also
improved. The National Accounts division had a sales gain of more than $10
million along with a strong profit improvement. The launch of our new
Nautica Tailored Clothing division in the Spring 1997 season was highly
successful. We anticipate strong growth in Nautica in fiscal 1998 and
beyond. During the third quarter, we signed a licensing agreement to
manufacture and market a Geoffrey Beene mens tailored clothing line.
Lanier also expanded its offshore production base in both owned and
contractor facilities in fiscal 1997.
Oxford Slacks had another record year. Sales and operating profits
were significantly higher. Increases were posted in the Specialty Catalog,
Mature Mens and Young Mens divisions. Our EverPress wrinkle-resistant
products continue to enjoy strong market acceptance. In the fourth
quarter, we began production in our new manufacturing facility in Mexico.
Our Oxford Womenswear Group also had an excellent year. Our
Sportswear Collections division had a strong sales increase and a greater
improvement in operating profits. The Sportswear Separates division also
had solid sales growth and improved profitability. The Dress division had
a disappointing year in sales and profitability. In the fourth quarter, we
began expansion of one of our Mexican factories which will lead to doubling
its production capacity.
For the fourth consecutive year, the consumer continues to enjoy a
wide choice of virtually inflation-free apparel. This consumer benefit is
the result of the highly competitive market at wholesale and retail. We
expect this market condition to continue. Our six-point competitive
strategy is designed to compete successfully in this environment.
Meet or Exceed Customers' Expectations
We continually strive to build partnerships with our customers which
provide high value to the consumer and profits to the retailer. We will
continue to invest heavily in manufacturing and information technology to
reduce in-process cycle time and improve delivery performance.
Reduce Product Costs Through Global Sourcing
We are dedicated to globally competitive manufacturing and raw
material sourcing. This year, we invested in new and expanded production
facilities in Latin America and Asia. We will continue this investment
strategy and are currently searching for additional acquisitions and start-
up opportunities.
Progressively Reduce Expenses
Productivity improvement is our way of life at Oxford. We made solid
progress this year in reducing expenses in relation to sales. We will
continue to invest both domestically and offshore to achieve this goal.
Pursue Higher Margin Opportunities
We will continue to pursue higher profit margin opportunities through
licensing or acquisition of important brand or designer names. This year,
we expanded our Polo/Ralph Lauren for Boys, Oscar de la Renta and Tommy
Hilfiger licensed divisions at a faster pace than our overall sales growth.
We also launched Nautica Tailored Clothing. In fiscal 1998, we will launch
Geoffrey Beene Tailored Clothing and continue to seek other opportunities.
Focus on Asset Management
Asset management, particularly management of inventory and
receivables, will continue to be a high priority. Our investments in
information systems should enable continued improvement in customer service
and asset management.
The Best People
We are committed to attracting, developing and maintaining the
industry's best team of people. We will continue to invest heavily in
training and development at all levels. Toward this aim, we will add new
enhancements to our incentive compensation programs for fiscal 1998.
We look to the coming year with excitement. Our success this year has
raised our confidence and our commitment to these strategies for succeeding
in a highly competitive environment. We expect continued progress and
improvement in fiscal 1998.
To our customers, we thank you for your business. Meeting or
exceeding your needs will continue to be our number one priority. To our
suppliers, we thank you for continued support. To all Oxford associates,
thank you for your effort and dedication. Finally, we thank our
shareholders for your continued support.
Respectfully,
J. Hicks Lanier
LANIER CLOTHES Lanier Clothes concluded fiscal 1997 with a 9.3% sales
increase and positioned itself for continued growth in the future.
Profits improved but did not reach target levels. Expenses in relation to
sales were reduced and manufacturing costs were lowered by expanding our
production base in Mexico, Eastern Europe, China and the Caribbean Basin.
During the third quarter, we signed a licensing agreement with the designer
Geoffrey Beene to manufacture and market a mens tailored clothing line.
Nautica Tailored Clothing for men was successfully launched in the Spring
1997 season. Retailer and consumer response has far exceeded our
expectations.
Our Oscar de la Renta division posted another strong sales increase and
continues to gain market share. We believe that Oscar de la Renta is now
the leading designer label in the mens tailored clothing market.
Our private label business also experienced solid growth in fiscal 1997.
The National Accounts division enjoyed a strong sales increase. The year's
highlight was being J.C. Penney's partner in the launch of its successful
"Options by Stafford" collection. Sales were higher in Special Programs
and essentially even in Specialty Catalog.
As we look to fiscal 1998, Lanier remains committed to exceeding our
customers' expectations. Our mission is to deliver a quality product with
exceptional price-value and superior service. Our goal is to be distinctly
better than our competitors.
In fiscal 1998, we plan to:
Complete the expansion and upgrading of our Merida, Mexico
facility and aggressively search for our next offshore plant
location.
Maximize the explosive growth of Nautica Tailored Clothing with
upscale department and specialty stores.
Aggressively build on the strong market position of Oscar de la
Renta.
Continue the steady growth of our private label business in
National Accounts, Specialty Catalog and Special Programs.
Post a solid sales gain in Robert Stock.
Launch the Geoffrey Beene line for Spring 1998, leveraging off
this designer's strong market position in dress shirts, neckties
and hosiery.
Continuously strengthen our position by investing in people,
technology and systems in our domestic and offshore facilities.
Move progressively closer toward our 1999 goal of 50%
designer/branded and 50% private label/private brand.
We look forward to fiscal 1998 and beyond. Lanier Clothes is well
positioned to achieve its vision of becoming the best tailored clothing
company in the world.
OXFORD SLACKS Oxford Slacks strengthened its position as the nation's
leading manufacturer of private label slacks in fiscal 1997. Sales
increased 14.5% for the second year in a row. We had increases with 16 of
our top 20 customers and in 3 of our 4 marketing divisions. Profits more
than kept pace, due primarily to lower cost manufacturing and tight expense
control. In fiscal 1997, we also improved our product quality, reduced in-
process time, increased our offshore production capacity and started a new
factory in Mexico.
Of equal importance, we strengthened our ability to achieve our primary
mission of exceeding our customers' expectations in quality, delivery and
price-value relationships. We meet our customers' varied needs and
different value equations through continual improvements in:
Merchandising and product development
Fabric knowledge and sourcing
Worldwide manufacturing
Technology
Our Specialty Catalog division's customers are Quality-Driven. Continued
improvements in manufacturing technology and systems enable Oxford Slacks
to meet their demanding quality standards at competitive prices.
Our Mature Mens division's customers are Price-Value Driven. Our strengths
in product development and sourcing enable us to meet their value
equations. Our proprietary wrinkle-free EverPress dress and casual slacks
are particularly important to this market.
Our Young Mens division's customers are Fashion-Driven. Our merchandising
and product development expertise coupled with our manufacturing and
sourcing capabilities enable this division to market designer styling at
moderate prices.
Our Mass Market division's customers are Price-Driven. Global sourcing
combined with tight expense control enable Oxford Slacks to be competitive
in this price-sensitive market while providing quality products.
We look to fiscal 1998 as a continuum of our mission and established
strategies to provide products that exceed our customers' expectations. We
believe that providing quality products with the best price-value
relationship and superior service will continue to fuel our growth.
OXFORD SHIRT GROUP The Oxford Shirt Group successfully recovered in
fiscal 1997. Sales were flat, but we returned to respectable profitability
from losses in the previous two years. Strong sales gains in our licensed
designer divisions were offset by sales declines in our private label
divisions.
Our Polo/Ralph Lauren for Boys division had a strong sales gain. During
the year, we began a major multi-year program to upgrade in-store
Polo/Ralph Lauren for Boys shops across the U.S.
Tommy Hilfiger Dress Shirts continues to increase market share. Our new
"Flag Collection" of more relaxed dress shirts was successfully introduced
in more than 100 major department stores and strongly complements our more
elegant "Crest Collection."
Tommy Hilfiger Golf continues to gain position in the growing "green grass"
golf pro shop apparel market. Our account base and shipments increased
dramatically.
Our private label divisions, Oxford Shirtings for dress shirts and OxSport
for sport shirts, had sales declines resulting from the two previous years'
problems. The profitability, however, of both divisions was significantly
improved.
Our Ely & Walker western shirt division had flat sales. Its new Cumberland
Outfitters and knit lines, however, are expected to produce growth next
year.
Fiscal 1997 was also a year of significant operational accomplishments:
On time and complete shipment was significantly improved.
Total business cycle time was reduced.
We opened a wholly-owned sport shirt factory in the Philippines
which is currently producing over 25,000 units per week.
We strengthened our management team via outside hires and a new
performance management/personal accountability program.
We enter fiscal 1998 in a much stronger position than we began fiscal 1997.
Key action plans include:
Further improving delivery performance.
Continued strong emphasis on development of our management team
through our performance management/personal accountability
program.
A major new initiative on product quality.
Further expansion of our owned offshore manufacturing capability.
Pursuit of additional marketing opportunities such as our current
partnerships with highly successful designers.
We are grateful to our major customers for staying the course with us
through a very challenging period. We are confident we will be able to
provide them and Oxford's shareholders with improved levels of performance
in fiscal 1998 and beyond.
OXFORD WOMENSWEAR The Oxford Womenswear Group improved its position as a
leading supplier of private label womenswear to major national retailers in
fiscal 1997. Sales increased by 17.9% in a difficult market environment.
Profits improved at a faster rate due primarily to improved sourcing and
program execution.
Our Sportswear Collections division paced the Womenswear Group with a
strong sales increase, primarily with its two largest customers, Wal-Mart
and Target Stores.
Our Sportswear Separates division also experienced healthy growth,
especially with its largest customer, J.C. Penney Company.
Our Dress division had a sales decline due to softness in its market
sector. To offset this, the division began exploring opportunities in
other market sectors.
Operationally, the Womenswear Group experienced a very good year in fiscal
1997. Program execution was excellent. Quality levels were high.
Overall cost effectiveness was good.
Strategically, the Oxford Womenswear Group offers large national retailers
powerful reasons to select Oxford as a major producer of their diverse
private label women's apparel needs. Our strategy is based on four
essentials:
People Oxford specialists are dedicated exclusively to each
customer's specific programs. Customer satisfaction is
their total focus.
Product Fashion right product is customized to each customer's
particular needs through worldwide research and designer
creativity.
Sourcing Oxford's global sourcing network enables us to reliably
deliver a wide range of products in large volume at low cost
with consistently high quality.
Service Our constant focus on customer service and communication
enables us to manage large, complicated replenishment
programs and to meet our customers' rapidly changing needs
on short notice.
Looking ahead to fiscal 1998 and beyond, we will continue to update our
product styling, strengthen our global sourcing network, manage our
expenses carefully and offer products of superior competitive value and
appeal to our national retail customers. We are confident this strategy
will yield benefits to our customers, associates and shareholders.
SELECTED FINANCIAL DATA FOR ANNUAL REPORTOXFORD INDUSTRIES, INC.Selected
Financial Data$ and shares in thousands, expect
per share amounts
Year Ended: MAY 30, MAY 31, JUNE 2, JUNE 3, May 28,
1997 1996 1995 1994 1993
Net sales $703,195 $664,443 $656,987 $624,568 $572,869
Cost of goods sold 566,182 548,612 543,624 498,790 459,968
Selling, general and
administrative expenses 100,691 101,617 91,601 91,209 86,098
Provision for environmental
remediation - 4,500 - - -
Interest 4,114 6,057 4,136 2,297 2,263
Earnings before
income taxes 32,208 3,657 17,626 32,272 24,540
Income taxes 12,561 1,463 7,051 13,071 9,754
Net earnings 19,647 2,194 10,575 19,201 14,786
Net earnings per common
share 2.25 0.25 1.22 2.23 1.70
Average number of share
outstanding 8,744 8,749 8,670 8,607 8,688
Dividends 6,988 7,007 6,594 5,938 5,470
Dividends per share 0.80 0.80 0.76 0.69 0.63
Total assets 287,117 279,103 309,028 239,947 218,227
Long-term obligations 41,790 45,051 47,011 12,388 17,788
Stockholders' equity 141,517 128,959 132,579 127,735 115,332
Capital expenditures 7,622 8,192 14,790 9,395 8,050
Book value per share at
year-end 16.12 14.65 15.25 14.79 13.28
Return on average
stockholders'equity 14.5% 1.7% 8.1% 15.8% 13.2%
Return on average total
assets 6.9% 0.7% 3.9% 8.4% 7.1%
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND OPERATIONS
RESULTS OF OPERATIONS
FISCAL 1997
Net sales increased 5.8% from fiscal 1996. Oxford Slacks posted a sales
increase of 14.5% primarily due to an expanded customer base and more cost
effective sourcing. The Oxford Womenswear Group achieved a 17.9% sales
increase, based mainly on increased sales to two major customers. Lanier
Clothes, the Companys men's tailored clothing group, experienced a 9.3%
sales increase. Increased sales in this group were balanced between Oscar
de la Renta tailored clothing and private label and also included the
launch of the new Nautica tailored clothing line in the Spring 1997 season.
The Oxford Shirt Group posted an overall net sales decline of 2.1%.
Increased sales in Polo/Ralph Lauren for Boys, Tommy Hilfiger Golf and
Tommy Hilfiger Dress Shirts essentially offset the decline in private label
sport shirts and dress shirts. Sales for Ely & Walker were flat.
The Company experienced an overall unit sales volume increase of
approximately 4.2% while experiencing an overall 1.5% increase in the
average sales price per unit. The change in the average sales price was
primarily due to product mix.
The Company continued to strengthen strategic alliances with its larger
customers. Sales to the Company's 50 largest customers increased by 7.2%,
and now represent approximately 92.7% of total sales, while sales to all
other customers declined by 10.3%.
Cost of goods sold as a percentage of net sales decreased to 80.5% in
fiscal 1997 from 82.6% in fiscal 1996. The decrease in cost of goods sold
as a percentage of net sales reflects the exit of the Oxford Shirt Group
from the wet processed wrinkle-free shirts which impacted fiscal 1996. The
decrease also reflects increased sales of higher margin lines, more
efficient manufacturing and the continuation of the shift from domestic
production to off-shore production yielding relatively decreased costs per
unit. During the year, the Oxford Shirt Group manufacturing base expanded
with the opening of a new facility in the Philippines. Oxford Slacks also
opened a new manufacturing facility located in Mexico. The Oxford
Womenswear Group began expansion of one of its manufacturing facilities in
Mexico.
Selling, general and administrative expenses decreased by $926,000 or 0.9%
from $101,617,000 or 15.3% of net sales in fiscal 1996 to $100,691,000 or
14.3% of net sales in fiscal 1997. The decrease in selling, general and
administrative expenses are the net result of cost containment initiatives
in fiscal 1997 and the divestiture of the B.J. Design Concepts division in
fiscal 1996, partially offset by the start up costs for the Nautica and
Geoffrey Been tailored clothing lines, in fiscal 1997.
Net interest expense decreased by $1,943,000 or 32.1% from $6,057,000 or
0.9% of net sales in fiscal 1996 to $4,114,000 or 0.6% of net sales in
fiscal 1997. The reduction in interest expense was due to lower short-term
borrowings, which was due primarily to lower average inventory.
The Company's effective tax rate was 39.0% in fiscal 1997 reduced from
40.0% in fiscal 1996 and does not differ significantly from the Company's
combined statutory rate.
FISCAL 1996
Net sales increased 1.1% from fiscal 1995. The Oxford Shirt Group posted a
sales increase of 16.9% due to increased sales in Polo/Ralph Lauren for
Boys, and Tommy Hilfiger dress shirts. Also contributing to the Oxford
Shirt Group sales increase were the introduction of the Tommy Hilfiger Golf
line which began initial shipments in the second quarter and the
acquisition of Ely & Walker (Ely & Walker markets westernwear) completed in
the first quarter. Oxford Slacks posted a sales increase of 14.9%
primarily due to the continued success of Everpress wrinkle-resistant 100%
cotton slacks. Lanier Clothes, the Companys men's tailored clothing group,
experienced a decline of 4.8%. Increased sales in Oscar de la Renta
tailored clothing did not offset decreased sales in the private label
sector. The Oxford Womenswear Group experienced a sales decline of 16.7%
due to the closure of the RENNY division and the divestiture of the B.J.
Design Concepts division.
The Company experienced an overall unit sales volume decrease of
approximately 2.7% while experiencing an overall 3.7% increase in average
sales price per unit. The change in the average sales price per unit was
primarily due to product mix.
The Company continued to strengthen strategic alliances with its largest
customers. Sales to the Company's 50 largest customers increased 1.9%, and
represented approximately 92.4% of total sales, while sales to all other
customers declined by 23.5%.
Cost of goods sold as a percentage of net sales decreased to 82.6% in
fiscal 1996 from 82.7% in fiscal 1995. The decline in gross margins from
historical percentages continued from 1995, the primary reason for this
increase in cost of goods sold was in the Oxford Shirt Group. The most
significant event of fiscal 1996 was the Company's decision to end its
Savane brand and Process 2000r licensing agreements with Farahr and to
discontinue the wet processing of wrinkle-free shirts. The difficulties
associated with wet processing wrinkle-free shirts were never resolved
sufficiently to warrant continuation of this product line. The Company
completed its obligations to Farah when it completed shipping the fall 1996
season. The Company closed the Vidalia, Georgia wet processing facility in
the third quarter and closed the Juarez, Mexico facility upon completion of
production in September 1996. Future wrinkle-free shirts will be made from
precured or postcured fabrics treated at the fabric mill. In fiscal 1996,
the Company provided amounts for the anticipated costs and expenses
associated with this exit.
The Company succeeded in reducing its inventory by $33,000,000 in fiscal
1996. The production curtailment associated with this inventory reduction
negatively impacted manufacturing efficiencies and overhead absorption.
During fiscal 1996, the Company closed or announced the forthcoming closure
of six domestic sewing facilities (Alamo, GA; Decherd, TN; Bowman, GA;
Monticello, GA; Burgaw, NC; Lyons, GA,), and one cutting facility (Decherd,
TN). These closings are the direct result of the continuing intense
competitive pressures that require the Company to utilize the most cost-
effective production resources.
During fiscal 1996, the Company continued expansion of its offshore
manufacturing capacity with the purchase of Confecciones Monzini, S.A.,
located in Tegucigalpa, Honduras. Monzini produces dress shirts and became
a part of the Oxford Shirt Group. The Oxford Shirt Group also began work
on a new sewing facility in the Philippines. Lanier Clothes, the Company's
men's tailored clothing group completed the expansion of its Merida,
Mexico, sewing facility. Oxford Slacks completed plans for its new plant in
Moctezuma, Mexico.
Selling, general and administrative expenses (excluding the environmental
charge described below) increased by 10.9% to $101,617,000 in fiscal 1996
from $91,601,000 in the prior year. As a percentage of net sales, selling,
general and administrative expenses increased to 15.3% in fiscal 1996 from
13.9% in fiscal 1995. Included in selling, general and administrative
expenses are start-up costs for the Tommy Hilfiger Golf line, which began
shipments in the second quarter; costs associated with the completed
expansion and reengineering of two distribution centers; and amounts
provided for exiting the merchandising of wrinkle-free wet processing as
described previously.
During the first quarter of fiscal 1996, the Company reported that it had
discovered a past unauthorized disposal of a substance believed to be dry
cleaning fluid on one of its properties. The Company believes that
remedial action will be required, including continued investigation,
monitoring, and treatment of ground water and soil. Based on advice from
its environmental experts, the Company expects the maximum expenditures for
remediation to be approximately $4,500,000 over the next 30 years. In the
first quarter of fiscal 1996, the Company recorded a provision of
$4,500,000 in connection with this matter. Management believes that any
required additional expenses, if any, will not have a material adverse
effect on the Company's results of operations or financial position.
Net interest expense as a percentage of net sales increased to 0.9% in
fiscal 1996 from 0.6% in fiscal 1995. This increase was due to an increase
in average short-term borrowing and long-term debt and higher weighted
average interest rates.
The Company's effective tax rate was 40.0% in fiscal 1996 and fiscal 1995
and does not differ significantly from the Company's combined statutory
rate.
FUTURE OPERATING RESULTS
The Company expects no material changes to the current business
environment. The consumer continues to enjoy a wide choice of virtually
inflation-free apparel prices. This consumer benefit is the result of the
highly competitive market at wholesale and retail. The Company expects
this year's highly competitive apparel market to continue indefinitely.
Many of the current uncertainties regarding the future economic environment
that may affect the Company are rooted in future developments in the area
of international trade agreements. "U.S.- Caribbean Trade Partnership Act"
legislation is currently pending in Congress. This legislation would
provide preferential duty and quota treatment to garments produced in
designated Caribbean Basin countries similar to the treatment garments from
Mexico receive under NAFTA. Passage of this bill would likely enhance the
competitiveness of the Company's owned and contract plants in the Caribbean
Basin, but may also increase competitive pressure on domestic plants.
The Executive Branch of the U.S. Government has announced plans to ask
Congress for "Fast Track" authority to negotiate trade agreements. If
granted, Fast Track authority may result in future trade agreements that
will affect the apparel industry.
Uncertainties regarding the future retail environment that may affect the
Company includes excessive retail floor space per consumer, constant heavy
discounting at the retail level, continuing consolidation of retailers, and
the resulting deflationary prices of apparel at retail.
The Company's backlog of unshipped orders at the end of fiscal 1997 was
$193,950,000, a 19.0% increase from $163,047,000 at the end of fiscal 1996.
These numbers represent store orders on hand and do not include private-
label contract balances. During the year, the Company signed a licensing
agreement with Geoffrey Beene, Inc. The agreement is for the manufacture
and sale of the Geoffrey Beene tailored clothing collection of suits,
sportcoats, slacks and vests. The collection will be launched for the
Spring 1998 season and is targeted to major department and better specialty
stores.
The Company expects to continue its progress and have another record year
in fiscal 1998. Strict adherence to sourcing effectiveness, expense
control and continued favorable business conditions should generate
improved earnings from the record fiscal 1997 results.
LIQUIDITY AND CAPITAL RESOURCES
FISCAL 1997
Operating activities generated $38,947,000 in fiscal 1997 and $43,273,000
in fiscal 1996. While net income (adjusted for the non-cash environmental
charge in fiscal 1996) increased by $12,953,000, the primary factors
contributing to the decrease in cash from operations were increased
inventory levels partially offset by decreased receivables, increased trade
payables and accrued expenses.
Investing activities used $5,946,000 in fiscal 1997 and $15,631,000 in
fiscal 1996. The greater use of cash in fiscal 1996 was due to the
acquisitions of Ely & Walker and Confecciones Monzini, S.A.
Financing activities used $30,703,000 in fiscal 1997 and $28,852,000 in
fiscal 1996. The primary factors contributing to this change were
increased payments on short-term borrowings primarily due to lower average
inventory.
The Company owns foreign manufacturing facilities, and may acquire or build
others in the future. The functional currency for these facilities is
generally the U.S. dollar, as most production is imported by the Company
for domestic resale. Consequently, the amount of monetary assets and
liabilities subject to exchange rate risk is immaterial.
FISCAL 1996
Operating activities generated $43,273,000 in fiscal 1996 and used
$41,387,000 in fiscal 1995. While net income adjusted for the non-cash
environmental charge decreased by $5,681,000, the primary factors
contributing to the increase in cash from operations were decreases in
receivables and the dramatic reduction in inventory.
Investing activities used $15,631,000 in fiscal 1996 and $12,069,000 in
fiscal 1995. The primary factors contributing to this change were the
acquisitions of Ely & Walker and Confecciones Monzini, S.A. and reduced
expenditures for property, plant and equipment. The majority of the
property, plant, and equipment change was due to the continued expansion
and reengineering of two distribution centers originating in fiscal 1995.
Financing activities used $28,852,000 in fiscal 1996 and generated
$52,454,000 in fiscal 1995. The primary differences were reduced short-
term borrowings and scheduled reductions of long-term debt.
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 short-term
borrowings. The uses of funds primarily include working capital
requirements, capital expenditures, acquisitions, dividends and repayment
of short-term and long-term debt. The Company regularly utilizes committed
bank lines of credit and other uncommitted bank resources to meet working
capital requirements. On May 30, 1997, 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 May 30, 1997, $40,000,000 was in use under these lines and is
long-term debt. 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 May 30, 1997, $4,000,000 was in use under these lines of
credit. Maximum borrowings from all these sources during the current year
were $96,000,000 of which $56,000,000 was short-term. The Company
anticipates continued availability and use of both committed and
uncommitted resources as working capital needs may require.
The Company considers possible acquisitions of apparel-related businesses
that are compatible with its long-term strategies. The Company's Board of
Directors has authorized the Company to purchase shares of the Company's
common stock on the open market and in negotiated trades as conditions and
opportunities warrant. There are no present plans to sell securities
(other than through employee stock option plans and other employee
benefits) or enter into off-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 of this Annual Report.
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING
AND REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
The management of Oxford Industries, Inc. is responsible for the
integrity and objectivity of the consolidated financial statements and
other financial information presented in this report. These statements
have been prepared in conformity with generally accepted accounting
principles consistently applied and include amounts based on the best
estimates and judgements of management.
Oxford maintains a system of internal accounting controls designed to
provide reasonable assurance, at a reasonable cost, that assets are
safeguarded against loss or unauthorized use and that the financial records
are adequate and can be relied upon to produce financial statements in
accordance with generally accepted accounting principles. The internal
control system is augmented by written policies and procedures, an internal
audit program and the selection and training of qualified personnel. This
system includes policies that require adherence to ethical business
standards and compliance with all applicable laws and regulations.
The consolidated financial statements for the years ended May 30,
1997, May 31, 1996 and June 2, 1995 have been audited by Arthur Andersen
LLP, independent public accountants. In connection with its audits, Arthur
Andersen LLP, develops and maintains an understanding of Oxford's
accounting and financial controls and conducts tests of Oxford's accounting
systems and other related procedures as it considers necessary to render an
opinion on the financial statements.
The Audit Committee of the Board of Directors, composed solely of
outside directors, meets periodically with Oxford's management, internal
auditors and independent public accountants to review matters relating to
the quality of financial reporting and internal accounting controls, and
the independent nature, extent and results of the audit effort. The
Committee recommends to the Board appointment of the independent public
accountants. Both the internal auditors and the independent public
accountants have access to the Audit Committee, with or without the
presence of management.
Ben B. Blount, Jr.
Executive Vice President-
Finance, Planning and Administration
and Chief Financial Officer
To the Board of Directors
and the Stockholders of
Oxford Industries, Inc.
We have audited the accompanying consolidated balance sheets of Oxford
Industries, Inc. (a Georgia corporation) and Subsidiaries as of May 30,
1997 and May 31, 1996 and the related consolidated statements of earnings,
stockholders' equity, and cash flows for each of the three years in the
period ended May 30, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Oxford
Industries, Inc. and subsidiaries as of May 30, 1997 and May 31, 1996 and
the results of their operations and their cash flows for each of the three
years in the period ended May 30, 1997 in conformity with generally
accepted accounting principles.
Arthur Andersen LLP
Atlanta, Georgia
July 11, 1997
Oxford Industries, Inc. and Subsidiaries
Consolidated Balance Sheets
$ in thousands, except share amounts
Year ended: May 30, 1997 May 31,1996
Assets
Current Assets:
Cash and cash equivalents $ 3,313 $1,015
Receivables, less allowance for
doubtful accounts of $2,800 in 1997
and 1996 77,771 84,593
Inventories 149,781 136,789
Prepaid expenses 16,080 13,747
------- -------
Total Current Assets 246,945 236,144
Property, Plant and Equipment, Net 34,636 36,659
Other Assets, Net 5,536 6,300
-------- --------
Total Assets $287,117 $279,103
======== ========
Liabilities and Stockholders' Equity
Current Liabilities:
Notes payable $ 4,000 $25,500
Trade accounts payable 59,524 49,676
Accrued compensation 11,278 7,225
Other accrued expenses 16,964 13,014
Dividends payable 1,755 1,760
Current maturities of long-term debt 2,784 1,632
------ ------
Total Current Liabilities 96,305 98,807
Long-Term Debt, less current maturities 41,790 45,051
Noncurrent Liabilities 4,500 4,500
Deferred Income Taxes 3,005 1,786
Commitments and Contingencies (Note E)
Stockholders' Equity:
Common stock* 8,780 8,803
Additional paid-in capital 9,554 8,211
Retained earnings 123,183 111,945
------- -------
Total Stockholders' Equity 141,517 128,959
------- -------
Total Liabilities and Stockholders' Equity $287,117 $279,103
======== ========
* Par value $1 per share; authorized 30,000,000 shares; issued and
outstanding shares: 8,779,814 in 1997 and 8,803,321 in 1996.
See notes to consolidated financial statements.
Oxford Industries, Inc. and Subsidiaries
Consolidated Statements of Earnings
$ in thousands, except per share
amounts Year ended: May 30, 1997 May 31, 1996 June 2, 1995
------------ ------------ ------------
Net Sales $703,195 $664,443 $656,987
Costs and Expenses:
Cost of goods sold 566,182 548,612 543,624
Selling, general and administrative 100,691 101,617 91,601
Provision for environmental
remediation - 4,500 -
Interest, net 4,114 6,057 4,136
-------- -------- -------
670,987 660,786 639,361
Earnings Before Income Taxes 32,208 3,657 17,626
Income Taxes 12,561 1,463 7,051
--------- -------- --------
Net Earnings $ 19,647 $ 2,194 $ 10,575
========= ======== ========
Net Earnings Per Common Share $2.25 $0.25 $1.22
========= ======== =======
See notes to consolidated financial statements.
Oxford Industries, Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity
Additional
$ in thousands, Common Paid-In Retained
except per share amounts Stock Capital Earnings Total
Balance, June 3, 1994 $8,638 $6,153 $112,944 $127,735
Net earnings - - 10,575 10,575
Exercise of stock options 56 867 (60) 863
Cash dividends, $.76
per share - - (6,594) (6,594)
------------------ --------- ---------
Balance, June 2, 1995 $ 8,694 $ 7,020 $116,865 $132,579
Net earnings - - 2,194 2,194
Exercise of stock options 109 1,191 (107) 1,193
Cash dividends, $.80
per share - - (7,007) (7,007)
------------------ --------- ---------
Balance, May 31, 1996 $8,803 $8,211 $111,945 $128,959
Net earnings - - 19,647 19,647
Exercise of stock options 77 1,402 (80) 1,399
Purchase and Retirement
of common stock (100) (59) (1,341) (1,500)
Cash dividends, $.80
Per share - - (6,988) (6,988)
-------- -------- --------- ---------
Balance, May 30, 1997 $8,780 $9,554 $123,183 $141,517
======== ======= ======== ========
See notes to consolidated financial statements.
Oxford Industries, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
May 30, May 31, June 2,
$ in thousands Year ended: 1997 1996 1995
------- ------- -------
Cash Flows from Operating Activities:
Net earnings $19,647 $2,194 $10,575
Adjustments to reconcile net earnings
to net cash provided by (used in) operating
activities:
Depreciation and amortization 9,078 8,851 7,804
Provision for environmental
remediation - 4,500 -
Gain on sale of property, plant
and equipment (285) (108) (1,169)
Loss on sale of business - 338 -
Changes in working capital:
Receivables 6,822 476 (8,797)
Inventories (12,992) 35,556 (55,513)
Prepaid expenses (2,333) 911 (621)
Trade accounts payable 9,848 (4,797) 9,308
Accrued expenses and other
current liabilities 8,003 (1,050) (3,390)
Deferred income taxes 1,219 (2,076) 132
Other noncurrent assets (60) (1,522) 284
------- ------- ------
Net cash provided by (used in)
operating activities 38,947 43,273 (41,387)
Cash Flows from Investing Activities:
Acquisitions - (11,644) -
Proceeds from sale of business - 1,991 -
Purchase of property, plant
and equipment (7,622) (7,582) (14,790)
Proceeds from sale of property,
plant and equipment 1,676 1,604 2,721
------- ------ -------
Net cash (used in) investing
activities (5,946) (15,631) (12,069)
Cash Flows from Financing Activities:
Short-term (repayment) borrowings (21,500) (18,000) 24,000
Long-term debt (repayment) borrowings (2,109) (5,060) 34,003
Proceeds from exercise of stock
options 1,399 1,193 861
Purchase and retirement of
common stock (1,500) - -
Dividends on common stock (6,993) (6,985) (6,410)
------- ------- -------
Net cash (used in) provided by
financing activities (30,703) (28,852) 52,454
Net change in cash and cash equivalents 2,298 (1,210) (1,002)
Cash and cash equivalents at beginning
of period 1,015 2,225 3,227
------- ------- -------
Cash and cash equivalents at end
of period $ 3,313 $ 1,015 $ 2,225
======= ======= =======
Supplemental Disclosure of Cash Flow Information
Cash Paid for:
Interest $4,072 $5,883 $4,103
Income taxes 12,423 1,879 10,397
See notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OXFORD INDUSTRIES, INC. AND SUBSIDIARIES
Years Ended May 30, 1997, May 31, 1996 and June 2, 1995
A. Summary of Significant Accounting Policies:
1. Principal Business Activity--Oxford Industries, Inc. (the "Company") is
engaged in the design, manufacture and sale of consumer apparel for men,
women and children. Principal markets for the Company are customers
located primarily in the United States. Company owned manufacturing
facilities are located primarily in the southeastern United States, Central
America and Asia. In addition the Company uses foreign contractors for
other sources of production.
2. Principles of Consolidation--The consolidated financial statements
include the accounts of the Company and all of its subsidiaries. All
material intercompany balances, transactions and profits have been
eliminated.
3. Fiscal Period--The Company's fiscal closing date is the Friday nearest
May 31. The fiscal year includes operations for a 52-week period in 1997,
1996 and 1995.
4. Revenue Recognition--Revenue is recognized when goods are shipped.
5. Statement of Cash Flows--The Company considers cash equivalents to be
short-term investments with original maturities of three months or less.
6. Inventories--Inventories are principally stated at the lower of cost
(last-in, first-out method, "LIFO") or market.
7. Property, Plant and Equipment--Depreciation and amortization of
property, plant and equipment are provided on both straight-line (primarily
buildings) and accelerated methods over the estimated useful lives of the
assets as follows:
Buildings and improvements 7-40 years
Machinery and equipment 3-15 years
Office fixtures and equipment 3-10 years
Autos and trucks 2- 6 years
Leasehold improvements Lesser of remaining life of the asset or
life of lease
8. Income Taxes-- The Company recognizes deferred tax liabilities and
assets based on the difference between financial and tax bases of assets
and liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.
9. Financial Instruments--The fair values of financial instruments closely
approximate their carrying values.
10. Use of Estimates--The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions. These estimates and
assumptions affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements as well as reported amounts of revenues and expenses
during the reporting period. Actual results could differ from these
estimates.
11. In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS" No. 128) "Earnings per
Share." The new standard simplifies the computation of earnings per share
(EPS) and increases comparability to international standards. Under "SFAS"
No. 128, primary EPS is replaced by "Basic" EPS, which excludes dilution
and is computed by dividing income available to common stockholders by the
weighted-average number of common shares outstanding for the period.
"Diluted" EPS, which is computed similarly to fully diluted EPS, reflects
the potential dilution that could occur if securities or other contracts to
issue common stock were exercised or converted to common stock.
The Company is required to adopt the new standard in its year-end 1998
financial statements. All prior period EPS information (including interim
EPS) is required to be restated at that time. Early adoption is not
permitted. Pro forma EPS, as if the Company adopted "SFAS" No. 128 for
each period presented are as follows:
For the year ended
May 30, 1997 May 31, 1996 June 2, 1995
Basic EPS $2.25 $0.25 $1.22
Diluted EPS $2.23 $0.25 $1.20
B. Inventories:
The components of inventories are summarized as follows:
$ in thousands May 30, 1997 May 31, 1996
Finished goods $ 87,368 $75,787
Work in process 26,276 24,717
Fabric 29,370 29,889
Trim and supplies 6,767 6,396
-------- --------
$149,781 $136,789
======== =======
The excess of replacement cost over the value of inventories based
upon the LIFO method was $38,308,000 at May 30, 1997 and $38,899,000 at May
31, 1996.
C. Property, Plant and Equipment:
Property, plant and equipment, carried at cost, is summarized as follows:
$ in thousands May 30, 1997 May 31, 1996
Land $ 1,130 $ 1,231
Buildings 32,486 33,617
Machinery and equipment 70,666 72,117
Leasehold improvements 4,181 3,844
------- -------
108,463 110,809
Less accumulated depreciation
and amortization 73,827 74,150
-------- -------
$ 34,636 $ 36,659
======== ========
D. Notes Payable and Long-Term Debt:
The Company had available for its use lines of credit with several lenders
aggregating $52,000,000 at May 30, 1997. The Company has agreed to pay
commitment fees for these available lines of credit. At May 30, 1997,
$40,000,000 was borrowed under these lines at 5.94% and is long-term debt.
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
May 30, 1997, $4,000,000 was borrowed under these lines of credit at 5.94%.
The weighted average interest rate on short term borrowings during fiscal
1997 was 5.72%.
A summary of long-term debt is as follows:
$ in thousands May 30, 1997 May 31, 1996
Note payable to bank, the rate is a
margin above bank's cost of funds,
which may fluctuate during the life
of the loan (at May 30, 1997 the
rate was 5.94%); due in June 1998 $ 40,000 $ 40,000
Industrial revenue bonds and mortgage
notes at fixed rates of 6.1% to 7.0%
and varying rates of 79.5% to 86% of
prime rate (prime was 8.50% at
May 30, 1997); due in varying
installments to 2006 4,574 6,683
------- ------
44,574 46,683
Less current maturities 2,784 1,632
------- ------
$41,790 $45,051
======= =======
Property, plant and equipment with an aggregate carrying amount at May
30, 1997 of approximately $3,715,000 is pledged as collateral on the
industrial revenue bonds.
The aggregate maturities of long-term debt are as follows:
$ in thousands
Fiscal year
1998 $ 2,784
1999 40,447
2000 368
2001 285
2002 285
Thereafter 405
-------
$44,574
=======
E. Commitments and Contingencies:
The Company has operating lease agreements for buildings, sales offices and
equipment with varying terms to 2006. The total rent expense under all
leases was approximately $4,323,000 in 1997, $4,455,000 in 1996 and
$4,787,000 in 1995.
The aggregate minimum rental commitments for all noncancellable
operating leases with terms of more than one year are as follows:
$ in thousands
Fiscal year:
1998 $ 3,200
1999 1,898
2000 1,146
2001 449
2002 447
Thereafter 620
------
$7,760
======
The Company is also obligated under certain apparel license and design
agreements to make future minimum payments as follows:
$ in thousands
Fiscal Year:
1998 $ 4,661
1999 5,047
2000 2,336
2001 331
-------
$12,375
=======
The Company uses letters of credit to facilitate certain apparel
purchases. The total amount of letters of credit outstanding at May 30,
1997 was approximately $67,400,000.
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.
The Company discovered a past unauthorized disposal of a substance
believed to be dry cleaning fluid on one of its properties. The Company
believes that remedial action will be required, including continued
investigation, monitoring and treatment of groundwater and soil. Based on
advice from its environmental experts, the Company provided $4,500,000 for
this remediation in the fiscal year ended May 31, 1996.
F. Stock Options:
The Company has stock based compensation plans adopted in 1984 and
1992(the " Plans"), which are described below. The Company applies APB
Opinion No. 25 in accounting for its Plans, accordingly, no compensation
cost has been recognized. The total value of the options granted during
the 2 years ended May 30, 1997 was computed as approximately $1,005,000
which would be amortized over the vesting period of the options. Had
compensation cost for the Company's Plans been recorded consistent with
SFAS No. 123, the Company's net income and earnings per share would have
been reduced to the pro forma amounts indicated below:
1997 1996
Net earnings As Reported $19,647 $2,194
Pro Forma $19,555 $2,192
Net earnings per
common share As Reported $2.25 $0.25
Pro Forma $2.24 $0.25
Under the Plans, the Company may grant options to its employees for up to
1,000,000 shares of common stock. The exercise price of each option may be
more or less than the fair market value of the Company's stock on the date
of grant, and an option's maximum term may be ten years. (All options have
been issued at exercise prices equal to the fair market value on the date
of grant with a maximum term of five years.)
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following assumptions used
for grants in 1997 and 1996 respectively: dividend yields of 4.5 percent
for both years, expected volatility of 31 percent for both years; risk free
interest rate of 6.51 and 5.98 percent; and expected lives of 5 years for
both years. The weighted-average fair value of options granted was $4.37
and $4.30 for the years ended May 30, 1997 and May 31, 1996, respectively.
A summary of the status of the Company's stock option plan and changes
during the years ended is presented below.
1997 1996 1995
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
Outstanding, beginning of year 327,740 $22 467,110 $19 329,580 $11
Granted 302,500 18 5,000 18 204,000 28
Exercised (80,020) 15 (115,690) 7 (59,390) 10
Forfeited (8,250) 25 (28,680) 23 (7,080) 12
-------- -------- -------
Outstanding, end of year 541,970 $21 327,740 $22 467,110 $19
Options exercisable, end of
year 125,800 178,140 234,670
Date of Number of Exericse Number Expiration
Option Grant Shares Price Exercisable Date
- ---------------------------------------------------------------------------
Jul. 13, 1992 49,520 $15.38 49,520 Jul. 13, 1997
Jul. 12, 1993 5,000 15.94 3,000 Jul. 12, 1998
Sep. 9, 1993 500 20.38 300 Sep. 9, 1998
Nov. 10, 1993 1,000 22.88 600 Nov. 10, 1998
Aug. 4, 1994 178,450 27.56 71,380 Aug. 4, 1999
Jul. 17, 1995 5,000 17.94 1,000 Jul. 17, 2000
Sep. 16, 1996 302,500 17.75 0 Sep. 16, 2001
------- -------
541,970 125,800
======= =======
As of May 30, 1997, 123 employees held stock options. At May 30, 1997,
options for 125,800 shares were exercisable and an additional 14,050 shares
were reserved for issuance pursuant to options that could be granted in the
future.
G. Significant Customers:
Approximately 21% in 1997, 22% in 1996 and 20% in 1995 of the Company's
revenues were derived from sales to a national retail chain. Approximately
10% in 1997, 9% in 1996 and 10% in 1995 of the Company's revenues were
derived from sales to another national retail chain.
The Company provides credit, in the normal course of business, to a large
number of retailers in the apparel industry. The Company's ten largest
customers accounted for approximately 72% of net sales in fiscal 1997 and
70% in fiscal 1996 and 69% in fiscal 1995. Approximately 58% of gross
accounts receivable at May 30, 1997 and 60% May 31, 1996 and June 2, 1995
were attributed to the Company's ten largest customers. The Company
performs ongoing credit evaluations of its customers and maintains
allowances for potential credit losses.
H. Retirement Programs:
The Company has retirement savings programs covering substantially all
full-time U.S. employees. If a participant decides to contribute, a
portion of the contribution is matched by the Company. Total expense under
these programs was $1,301,000 in 1997, $1,326,000 in 1996 and $1,488,000 in
1995.
I. Income Taxes:
The provision (benefit) for income taxes includes the following:
$ in thousands 1997 1996 1995
---- ----- ----
Current:
Federal $10,769 $3,258 $6,613
State 1,635 520 1,134
------- ------ ------
12,404 3,778 7,747
Deferred 157 (2,315) (696)
------- ------ ------
$12,561 $1,463 $7,051
======= ====== ======
Reconciliations of the U.S. federal statutory income tax rates and the
Company's effective tax rates are summarized as follows:
1997 1996 1995
----- ----- -----
Statutory rate 35.0% 35.0% 35.0%
State income taxes - net of
federal income tax benefit 3.3 3.9 3.9
Tax credits (0.3) (4.2) (0.4)
Nondeductible expenses and other, net 1.0 5.3 1.5
----- ----- ------
Effective rate 39.0% 40.0% 40.0%
===== ===== =====
Deferred tax assets and liabilities as of May 30, 1997 and May 31,
1996, are comprised of the following ($ in thousands):
Deferred Tax Assets: May 30, 1997 May 31, 1996
------------ ------------
Inventory $ 3,222 $ 3,189
Compensation 1,340 1,128
Group insurance 283 517
Allowance for bad debts 1,075 1,100
Environmental 1,721 1,751
Other, net 2,518 2,153
------ ------
Deferred Tax Assets 10,159 9,838
Deferred Tax Liabilities:
Depreciation - property, plant and
equipment 1,249 1,308
Foreign 1,371 913
Other, net 1,066 987
------ ------
Deferred Tax Liabilities 3,686 3,208
Net Deferred Tax Asset $ 6,473 $ 6,630
======= =======
J. Equity and Earnings Per Share:
Earnings per share is computed based on the weighted average number of
shares of common stock outstanding of 8,743,557 in 1997; 8,748,625 in 1996
and 8,669,888 in 1995. The dilutive effect of stock options outstanding in
1997, 1996 and 1995 was not material for purposes of this calculation.
K. Summarized Quarterly Data (Unaudited):
Following is a summary of the quarterly results of operations for the years
ended May 30, 1997, May 31, 1996 and June 2, 1995:
Fiscal Quarter
$ in thousands, except
per share amounts First Second Third Fourth Total
- ---------------------------------------------------------------------------
1997*
Net sales $172,517 $203,234 $167,470 $159,974 $703,195
Gross profit 31,574 36,959 33,597 34,883 137,013
Net earnings 3,475 6,599 4,399 5,174 19,647
Earnings per share .40 .75 .51 .59 2.25
1996**
Net sales $189,254 $187,066 $138,600 $149,523 $664,443
Gross profit 32,123 31,844 22,465 29,399 115,831
Net earnings (loss) 278 2,623 (2,020) 1,313 2,194
Earnings (loss) per share 0.03 0.30 (0.23) 0.15 0.25
1995*
Net sales $165,304 $192,167 $153,101 $146,415 $656,987
Gross profit 31,872 37,109 25,149 19,233 113,363
Net earnings (loss) 4,856 6,067 1,824 (2,172) 10,575
Earnings (loss) per share 0.56 0.70 0.21 (0.25) 1.22
* Includes an after-tax LIFO adjustment in the fourth quarter of
$1,266,088, or $.09 per share favorable in 1997, $419,000, or $.05 per
share unfavorable in 1995.
** Includes an after-tax adjustment in the first quarter of $2,700,000 or
$.31 per share unfavorable for a provision for environmental remediation.
===========================================================================
Net Sales by Product Class
The following table sets forth separately in percentages net sales by class
of similar products for each of the last three fiscal years:
1997 1996 1995
---- ---- ----
Net Sales:
Menswear 77% 78% 74%
Womenswear 23% 22% 26%
---- ---- ----
100% 100% 100%
==== ==== ====
Common Stock Information:
Market Price on the Quarterly Cash Dividend
New York Stock Exchange Per Share
Fiscal 1997 Fiscal 1996 Fiscal 1997 Fiscal 1996
High Low High Low
1st Quarter 18 1/4 14 3/8 19 1/8 17 1/4 .20 .20
2nd Quarter 19 1/4 16 3/8 18 7/8 16 .20 .20
3rd Quarter 27 3/4 17 7/8 19 1/4 16 1/8 .20 .20
4th Quarter 28 1/2 23 19 1/4 16 1/2 .20 .20
At the close of fiscal 1997, there were 831 stockholders of record.
EXHIBIT-24
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in Oxford Industries, Inc.'s
previously filed Registration Statements No. 2-76870, No. 33-7231
and No. 33-64097 of (1) our report dated July 11, 1997 appearing
on page 18 of the Corporation's 1997 Annual Report to
Stockholders which is incorporated by reference in the
Corporation's Annual Report on Form 10-K for the year ended May
30, 1997, and (2) the inclusion of our report on the schedule
dated July 11, 1997 appearing on page 19 of the Corporation's
Annual Report on Form 10-K for the year ended May 30, 1997.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
August 21, 1997
EXHIBIT 25
ELECTRONIC SUMMARY - POWER OF ATTORNEY
Each of the undersigned, a director of Oxford Industries,
Inc. (the "Company"), does hereby constitute and appoint David K.
Ginn and Thomas Caldecort Chubb, III, his true and lawful
attorney-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, to sign
the Company's Form 10-K Annual Report pursuant to Section 13 of
the Securities Exchange Act of 1934 for the fiscal year ended May
30, 1997 and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and
Exchange Commission, granting unto the attorneys-in-fact full
power and authority to sign such documents on behalf of the
undersigned and to make such filing, as fully to all intents and
purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that the attorneys-in-fact, or his
substitutes, may lawfully do or cause to be done by virtue
hereof.
Dated: July 14, 1997
Oxford Industries, Inc.
CECIL D. CONLEE CLARANCE B. ROGERS, JR.
- ------------------------------ ----------------------------
Cecil D. Conlee Clarance B. Rogers, Jr.
Director Director
TOM GALLAGHER KNOWLTON J. O'REILLY
- ------------------------------ ----------------------------
Tom Gallagher Knowlton J. O'Reilly
Director Director
E. JENNER WOOD JOHN B. ELLIS
- ------------------------------ ----------------------------
E. Jenner Wood John B. Ellis
Director Director
J. REESE LANIER ROBERT E. SHAW
- ------------------------------ -----------------------------
J. Reese Lanier Robert E. Shaw
Director Director
J. HICKS LANIER
- ------------------------------
J. Hicks Lanier
Chairman and president, Chief
Executive Officer and
Director
EXHIBIT 99
INDEX OF EXHIBITS
INCLUDED HERIN, FORM 10-K
May 30, 1997
SEQUENTIAL
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- -----------------------------------------------------------------
- --
10(a) Split-Dollar Life Insurance Agreement. 20-24
11 Statement re computation of per share earnings 25
13 1997 Annual Report to stockholders (furnished
for the information of the Commission and not
deemed "filed" or part of this Form 10-K except
for those portions expressly incorporated herein
by reference). 26-52
24 Consent of Arthur Andersen LLP 53
25 Powers of Attorney 54
27 Statement of Financial Data 55