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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] Quarterly Report Pursuant To Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the quarterly period ended November 28, 1997
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OR
[ ] Transition Report Pursuant To Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the transition period from to
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Commission File Number 1-4365
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OXFORD INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
Georgia 58-0831862
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
222 Piedmont Avenue, N.E., Atlanta, Georgia 30308
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(Address of principal executive offices)
(Zip Code)
(404) 659-2424
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year, if changed since
last report.)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Number of shares outstanding
Title of each class as of January 5, 1998
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Common Stock, $1 par value 8,855,572
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
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OXFORD INDUSTRIES, INC
CONSOLIDATED STATEMENT OF EARNINGS
SIX MONTHS AND QUARTERS ENDED NOVEMBER 28, 1997 AND NOVEMBER 29, 1996
(UNAUDITED)
Six Months Ended Quarter Ended
------------------------- ------------------------
$ in thousands except November 28, November 29, November 28, November 29,
per share amounts 1997 1996 1997 1996
------------ ----------- ------------ -----------
Net Sales $401,304 $375,751 $208,062 $203,234
Costs and Expenses:
Cost of goods sold 322,980 307,218 166,383 166,275
Selling, general and
administrative 54,701 49,576 27,906 24,890
Interest 1,999 2,167 1,018 1,071
------- ------- ------- -------
Total Costs and
Expenses 379,680 358,961 195,307 192,236
------- ------- ------- -------
Earnings Before Income
Taxes 21,624 16,790 12,755 10,998
Income Taxes 8,433 6,716 4,974 4,399
------- ------- ------- -------
Net Earnings $ 13,191 $10,074 $ 7,781 $ 6,599
======== ======= ======= =======
Net Earnings Per
Common Share $1.49 $1.15 $0.88 $0.75
======= ======= ======= =======
Average Number of Shares
Outstanding 8,826,844 8,741,465 8,845,774 8,707,924
========= ========= ========= =========
Dividends Per Share $0.40 $0.40 $0.20 $0.20
========= ========= ========= =========
See notes to consolidated financial statements.
OXFORD INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
NOVEMBER 28, 1997, MAY 30, 1997 AND NOVEMBER 29, 1996
(UNAUDITED EXCEPT FOR MAY 30, 1997)
$ in thousands November 28, May 30,November 29,
- -------------- 1997 1997 1996
----------- ------- -----------
Assets
- ------
Current Assets:
Cash $ 3,274 $ 3,313 $ 3,710
Receivables 112,458 77,771 107,786
Inventories:
Finished goods 78,520 87,368 66,956
Work in process 24,102 26,276 22,509
Fabric, trim & supplies 30,801 36,137 31,818
-------- -------- -------
133,423 149,781 121,283
Prepaid expenses 12,829 16,080 13,910
-------- -------- --------
Total Current Assets 261,984 246,945 246,689
Property Plant and Equipment 34,429 34,636 34,299
Other Assets 5,164 5,536 5,941
-------- -------- --------
Total Assets $301,577 $287,117 $286,929
======== ======== ========
Liabilities and Stockholders' Equity
- ------------------------------------
Current Liabilities
Notes payable $10,500 $ 4,000 $28,000
Trade accounts payable 52,539 59,524 39,644
Accrued compensation 10,891 11,278 8,715
Other accrued expenses 21,401 16,964 19,327
Dividends payable 1,771 1,755 1,743
Income taxes 296 - 3,224
Current maturities of long-
term debt 1,946 2,784 1,397
-------- -------- --------
Total Current Liabilities 99,344 96,305 102,050
Long-Term Debt, less
current maturities 41,680 41,790 44,284
Noncurrent Liabilities 4,500 4,500 4,500
Deferred Income Taxes 3,252 3,005 1,844
Stockholders' Equity:
Common stock 8,854 8,780 8,716
Additional paid in
capital 11,341 9,554 8,342
Retained earnings 132,606 123,183 117,193
-------- -------- --------
Total Stockholders'
Equity 152,801 141,517 134,251
-------- -------- --------
Total Liabilities and
Stockholders' Equity $301,577 $287,117 $286,929
======== ======== ========
See notes to consolidated financial statements.
OXFORD INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED NOVEMBER 28, 1997 AND NOVEMBER 29, 1996
(UNAUDITED)
November 28, November 29,
1997 1996
Cash Flows From Operating Activities ---------------------------------
- ------------------------------------
Net earnings $ 13,191 $ 10,074
Adjustments to reconcile net earnings to
net cash provided by (used in) operating activities:
Depreciation and amortization 3,895 4,130
Gain on sale of property, plant
and equipment (48) (380)
Changes in working capital:
Receivables (34,687) (23,193)
Inventories 16,358 15,506
Prepaid expenses 3,251 (163)
Trade accounts payable (6,985) (10,032)
Accrued expenses and other current liabilities 4,050 7,803
Income taxes payable 296 3,224
Deferred income taxes 247 58
Other noncurrent assets (33) (49)
Net cash flows (used in)provided by --------------------
operating activities (465) 6,978
Cash Flows From Investing Activities
- ------------------------------------
Purchase of property, plant and equipment (3,320) (2,764)
Proceeds from sale of property, plant and
and equipment 87 1,782
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Net cash used in investing activities (3,233) (982)
Cash Flows From Financing Activities
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Short-term borrowings 6,500 2,500
Payments on long-term debt (948) (1,002)
Proceeds from exercise of stock options 1,627 202
Purchase and retirement of common stock - (1,500)
Dividends on common stock (3,520) (3,501)
Net cash provided by(used in) ------ -------
financing activities 3,659 (3,301)
Net change in Cash and Cash Equivalents (39) 2,695
Cash and Cash Equivalents at Beginning of Period 3,313 1,015
-------- -------
Cash and Cash Equivalents at End of Period $ 3,274 $ 3,710
======== ========
Supplemental Disclosure of Cash Flow Information
- ------------------------------------------------
Cash paid for:
Interest $ 2,064 $ 2,010
Income taxes 6,427 4,007
See notes to consolidated financial statements.
OXFORD INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
QUARTERS ENDED NOVEMBER 28, 1997 AND NOVEMBER 29, 1996
1. The foregoing unaudited consolidated financial statements
reflect all adjustments which are, in the opinion of management,
necessary to a fair statement of the results for the interim
periods. All such adjustments are of a normal recurring nature.
The results for interim periods are not necessarily indicative
of results to be expected for the year.
2. The financial information presented herein should be read in
conjunction with the consolidated financial statements included
in the Registrant's Annual Report on Form 10-K for the fiscal
year ended May 30, 1997.
3. The Company is involved in certain legal matters primarily
arising in the normal course of business. In the opinion of
management, the Company's liability under any of these matters would
not materially affect its financial condition or results of
operations.
4. In February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards (SFAS No. 128)
"Earnings per Share." The new standard simplifies the computation of
earnings per share (EPS) and increases comparability to international
standards. Under SFAS No. 128, primary EPS is replaced by "Basic"
EPS, which excludes dilution and is computed by dividing income
available to common stockholders by the weighted-average number of
common shares outstanding for the period. "Diluted" EPS, which is
computed similarly to fully diluted EPS, reflects the potential
dilution that could occur if securities or other contracts to issue
common stock were exercised or converted to common stock.
The Company is required to adopt the new standard in its year-
end 1998 financial statements. All prior period EPS information
(including interim EPS) is required to be restated at that time.
Early adoption is not permitted. PRO forma EPS, as if the
Company adopted SFAS No. 128 for each period presented are as
follows:
For the Six months ended For the quarters ended
November 28, November 29, November 28, November 29,
1997 1996 1997 1996
Basic EPS $1.49 $1.15 $0.88 $0.75
Diluted EPS $1.47 $1.15 $0.87 $0.75
5. In February 1997, the Financial Accounting Standards Board
issued SFAS No. 129, "Disclosure of Information About Capital
Structure." SFAS No. 129 requires companies to disclose descriptive
information about an entity's capital structure. It also requires
disclosure of information about the liquidation preference of
preferred stock and redeemable stock. SFAS No. 129 is effective for
the Company's year-end 1998 financial statements. Management does not
expect that SFAS No. 129 will require significant revision of prior
disclosures.
6. In June 1997, the Financial Accounting Standards Board issued
SFAS No. 130, "Reporting Comprehensive Income." SFAS No. 130 is
designed to improve the reporting of changes in equity from period to
period. SFAS No. 130 is effective for the Company's year-end 1999
financial statements. Management does not expect SFAS No. 130 to have
a significant impact on the Company's financial statements.
7. In June 1997, the Financial Accounting Standards Board issued
SFAS No. 131, "Disclosures About Segments of an Enterprise and
Related Information." SFAS No. 131 requires that an enterprise
disclose certain information about operating segments. SFAS
No. 131 is effective for the Company's year-end 1999 financial
statement. Management has not yet determined the impact of
SFAS No. 131.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
NET SALES
Net sales for the second quarter of the 1998 fiscal year,
which ended November 28, 1997, increased 2.4% from net sales for the
same period of the prior year. Net sales for the first six months of
the current year increased 6.8% from net sales for the same period of
the prior year.
First half net sales for the Company's Slacks Group increased
3.3% most of which was in its Specialty Catalog division. Lanier
Clothes, the Company's Tailored Clothing Group, had a net sales
increase of 4.1%. Gains in Oscar de la Renta and initial Nautica
shipments were partially offset by a decline in private label
shipments. The decline in private label was primarily due to pipeline
filling, last year, of J.C. Penney's "Stafford Options" program. The
Shirt Group gain for the first half was 6.2%. Double-digit gains in
OxSport, Tommy Hilfiger Golf, Tommy Hilfiger Dress Shirts and
Polo/Ralph Lauren for Boys were partially offset by a decline in
Oxford Shirtings, the Company's private label dress shirt division and
Ely & Walker western wear. The Womenswear Group, which is all private
label, had a very solid 13.8% gain in the first half.
The Company experienced an overall net sales unit volume
increase of 2.1% while experiencing a weighted average 0.3% increase
in the sales price per unit during the second quarter of the current
year. For the first six months of the current year, the Company
experienced a 7.0% increase in overall net sales unit volume while
experiencing a 0.2% decrease in the weighted average sales price per
unit.
COST OF GOODS SOLD
Cost of goods sold as a percentage of net sales was 80.0% in
the second quarter of the current year as compared to 81.8% in the
second quarter of the prior year. For the first half of the current
fiscal year, cost of goods sold as a percentage of net sales was
80.5%, and 81.8% for the first half of the prior fiscal year. The
decrease in cost of goods sold as a percentage of net sales was due in
part to the increased sales of higher margin lines. Another factor
contributing to the decreased percentage was the continuation of the
shift from domestic production to offshore production yielding
comparatively lower costs per unit.
During the second quarter, the Company announced the closure
of its domestic sewing facility in Alma, Georgia. This facility
closing is the direct result of the continuing intense competitive
pressures that require the Company to utilize the most cost-effective
production resources.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased by
12.1% to $27,906,000 in the second quarter of fiscal 1998 from
$24,890,000 in the same period of fiscal 1997. Selling, general and
administrative expenses increased 10.3% to $54,701,000 for the first
six months of the current year from $49,576,000 for the first six
months of the prior year. As a percentage of net sales, selling,
general and administrative expenses increased to 13.4% for the second
quarter of the current year from 12.2% for the second quarter of the
prior year, and increased to 13.6% for the first half of the current
year from 13.2% for the first half of the prior year.
The major contributors to the increased selling, general and
administrative expenses were higher advertising, royalty and selling
expenses inherent in the licensed designer businesses and higher
employment costs. In addition to normal salary increases, the higher
employment costs are the result of increased group medical insurance
claims and increased management performance bonuses.
INTEREST EXPENSE
Net interest expense declined by $53,000 to $1,018,000 or
0.5% of net sales in the second quarter of the current year from
$1,071,000 or 0.5% of net sales in the second quarter of the prior
year. Net interest expense declined by $168,000 to $1,999,000 or 0.5%
of net sales in the first half of the current year from $2,167,000 or
0.6% of net sales in the first half of the prior year. The reduction
in interest expense was due to lower average short-term borrowings.
INCOME TAXES
The Company's effective tax rate was 39.0% in the first
quarter and first half of the current year and 40.0% in the first
quarter and first half of the previous year and does not differ
significantly from the Company's statutory rate.
FUTURE OPERATING RESULTS
At the current writing, the Christmas retail results appear
to have been mixed with less than robust sales being reported by many
of the Company's retail customers. While the Company is experiencing
below plan inventory call-out and slower order bookings in some market
sectors, the Company's order backlog is solidly ahead and the Company
is optimistic about its prospects for record sales and earnings for
the second half.
LIQUIDITY AND CAPITAL RESOURCES
OPERATING ACTIVITIES
Operating activities used $465,000 during the first quarter
of the current year and generated $6,978,000 in the first quarter of
the prior year. The primary factors contributing to this increased
use of funds was a larger increase in receivables than in the prior
year offset by increased net earnings in the current year.
INVESTING ACTIVITIES
Investing activities used $3,233,000 in the current period
and $982,000 in the comparable period of the prior year. The change
was the result of decreased proceeds from the sale of property, plant
and equipment in the prior year and slightly increased capital
expenditures in the current year.
FINANCING ACTIVITIES
Financing activities generated $3,659,000 in the current
period and used $3,301,000 in the comparable period of the prior year.
The primary factors contributing to this change were an increased
change in short-term borrowings and increased proceeds from the
exercise of employee stock options in the current year, and the
purchase and retirement of common stock in the prior year.
On October 6, 1997 the Company's stockholders approved an
employee stock option plan and also an employee restricted stock plan.
On January 5, 1998 the Company's Board of Directors declared
a cash dividend of $.20 per share payable on February 28, 1998 to
shareholders of record on February 13, 1998.
WORKING CAPITAL
Working capital increased from $144,639,000 at the end of the
second quarter of the prior year to $150,640,000 at the end of the
1997 fiscal year and increased to $162,640,000 at the end of the
second quarter of the current year. The ratio of current assets to
current liabilities was 2.4 at the end of the second quarter of the
prior year, 2.6 at the end of the prior fiscal year, and 2.6 at the
end of the second quarter of the current year.
FUTURE LIQUIDITY AND CAPITAL RESOURCES
The Company believes it has the ability to generate cash
and/or has available borrowing capacity to meet its foreseeable needs.
The sources of funds primarily include funds provided by operations
and both short-term and long-term borrowings. The uses of funds
primarily include working capital requirements, capital expenditures,
acquisitions, dividends and repayment of short-term and long-term
debt. The Company regularly utilizes committed bank lines of credit
and other uncommitted bank resources to meet working capital
requirements. On November 28, 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. On November 28, 1997, 48,000,000 was in use under these
lines. Of the $48,000,000, $40,000,000 is long-term. In addition,
the Company has $206,000,000 in uncommitted lines of credit, of which
$118,000,000 is reserved exclusively for letters of credit. The
Company pays no commitment fees for these available lines of credit.
At November 28, 1997, $2,500,000 was in use under these lines of
credit. Maximum borrowings from all these sources during the first
six months of the current year were $84,500,000 of which $44,500,000
was short-term. The Company anticipates continued use and
availability of both committed and uncommitted resources as working
capital needs may require.
The Company considers possible acquisitions of apparel-
related businesses that are compatible with its long-term strategies.
The Company's Board of Directors has authorized the Company to
purchase shares of the Company's common stock on the open market and
in negotiated trades as conditions and opportunities warrant. There
are no present plans to sell securities (other than through employee
stock option plans and other employee benefits)or enter into off-
balance sheet financing arrangements.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995
Certain statements included herein are "forward-looking
statements" within the meaning of the federal securities laws. This
includes any statements concerning plans and objectives of management
relating to the Company's operations or economic performance, and
assumptions related thereto. In addition, the Company and its
representatives may from time to time make other oral or written
statements that are also forward-looking statements.
These forward-looking statements are made based on
management's expectations and beliefs concerning future events
impacting the Company and therefore involve a number of risks and
uncertainties. Management cautions that forward-looking statements
are not guarantees and that actual results could differ materially
from those expressed or implied in the forward-looking statements.
Important factors that could cause the actual results of
operations or financial condition of the Company to differ include,
but are not necessarily limited to, general economic and apparel
business conditions, continued retailer and consumer acceptance of
company products, and global manufacturing costs.
ADDITIONAL INFORMATION
For additional information concerning the Company's operations,
cash flows, liquidity and capital resources, this analysis should be
read in conjunction with the Consolidated Financial Statements and the
Notes to Consolidated Financial Statements contained in the Company's
Annual Report for fiscal 1997.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
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(a) Exhibits.
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11 Statement re computation of per share earnings.
27 Financial Data Schedule.
(b) Reports on Form 8-K.
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The Registrant did not file any reports on Form 8-K during the
quarter ended November 28, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
OXFORD INDUSTRIES, INC.
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(Registrant)
/s/Ben B. Blount, Jr.
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Date: JANUARY 9, 1998 Ben B. Blount, Jr.
--------------- Chief Financial Officer
13
EXHIBIT 11
OXFORD INDUSTRIES, INC.
COMPUTATION OF PER SHARE EARNINGS
SIX MONTHS AND QUARTERS ENDED NOVEMBER 28, 1997
AND NOVEMBER 29, 1996
(UNAUDITED)
Six Months Ended Quarter Ended
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November 28, November 29, November 28, November 29,
1997 1996 1997 1996
-------------- ------------ ------------ ----------
Net Earnings $13,191,000 $10,074,000 $7,781,000 $6,599,000
Average Number of Shares
Outstanding:
Primary 8,953,429 8,745,029 8,964,559 8,709,136
Fully diluted 9,018,999 8,747,440 9,028,839 8,709,875
As reported* 8,826,844 8,741,465 8,845,774 8,707,924
Net Earnings per Common Share:
Primary $1.47 $1.15 $0.87 $0.75
Fully diluted $1.46 $1.15 $0.86 $0.75
As reported* $1.49 $1.15 $0.88 $0.75
* 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.
15
EXHIBIT 99
INDEX OF EXHIBITS
INCLUDED HERIN, FORM 10-Q
NOVEMBER 28, 1997
SEQUENTIAL
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
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11 Statement re computation of per share earnings 13
27 Financial Data Schedule 14