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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 August 28, 1998
---------------
OR
[ ] Transition Report Pursuant To Section 13 or 15(d)
of
The Securities Exchange Act of 1934
For the transition period from to
---------------- ----------------
Commission File Number 1-4365
------
OXFORD INDUSTRIES, INC.
- -----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-0831862
- ------------------------------- ------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
222 Piedmont Avenue, N.E., Atlanta, Georgia 30308
--------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(404) 659-2424
----------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
- -----------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes 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 October 5, 1998
- --------------------------- ----------------------------
Common Stock, $1 par value 8,537,928
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
- ------------------------------
OXFORD INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
QUARTERS ENDED AUGUST 28, 1998 AND AUGUST 29, 1997
(UNAUDITED)
Quarter Ended
--------------------------
$ in thousands except share and per August 28, August 29,
share amounts 1998 1997
- ------------------------- ---------- ------------
Net Sales $198,606 $193,242
-------- --------
Costs and Expenses:
Cost of goods sold 158,574 156,597
Selling, general
and administrative 29,502 26,795
Interest 749 981
-------- --------
188,825 184,373
-------- --------
Earnings Before Income Taxes 9,781 8,869
Income Taxes 3,815 3,459
-------- --------
Net Earnings $ 5,966 $ 5,410
======== ========
Basic Earnings Per Common Share $.68 $.61
======== ========
Diluted Earnings Per Common Share $.67 $.61
======== ========
Basic Number of Shares Outstanding 8,774,152 8,807,891
========= =========
Diluted Numbers of Shares Outstanding 8,924,269 8,933,702
========= =========
Dividends Per Share $0.20 $0.20
====== ======
- -------------------------
See notes to consolidated financial statements.
OXFORD INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
AUGUST 28, 1998, MAY 29, 1998 AND AUGUST 29, 1997
(UNAUDITED EXCEPT FOR MAY 29, 1998)
August 28, May 29, August 29,
$ in thousands 1998 1998 1997
- -------------- ------------ -------- -----------
Assets
- ------
Current Assets:
Cash $ 4,172 $ 10,069 $ 4,266
Receivables 126,546 100,789 121,633
Inventories:
Finished goods 100,739 89,906 85,076
Work in process 22,679 24,330 23,996
Fabric, trim & supplies 26,651 32,472 34,902
-------- -------- --------
150,069 146,708 143,974
Prepaid expenses 14,911 13,621 14,317
-------- -------- --------
Total Current Assets 295,698 271,187 284,190
Property, Plant and Equipment 36,125 35,682 34,629
Other Assets 4,403 4,621 5,268
-------- -------- --------
$336,226 $311,490 $324,087
======== ======== ========
Liabilities and Stockholders' Equity
- ------------------------------------
Current Liabilities:
Notes payable $ 46,500 $ 11,500 $ 44,500
Trade accounts payable 49,963 57,105 48,462
Accrued compensation 9,123 12,020 9,096
Other accrued expenses 18,822 18,883 20,645
Dividends payable 1,727 1,765 1,765
Income taxes 4,670 - 2,340
Current maturities of
long-term debt 446 449 1,950
-------- -------- --------
Total Current Liabilities 131,251 101,722 128,758
Long-Term Debt,
less current maturities 41,351 41,428 41,790
Non-Current Liabilities 4,500 4,500 4,500
Deferred Income Taxes 3,944 4,071 3,028
Stockholders' Equity:
Common stock 8,536 8,824 8,825
Additional paid-in capital 11,521 11,554 10,590
Retained earnings 135,123 139,391 126,596
-------- -------- --------
Total Stockholders' Equity 155,180 159,769 146,011
-------- -------- --------
Total Liabilities and Stockholders'
Equity $336,226 $311,490 $324,087
======== ======== ========
- -------------------
See notes to consolidated financial statements.
OXFORD INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
QUARTERS ENDED AUGUST 28, 1998 AND AUGUST 29, 1997
(UNAUDITED)
Quarter Ended
-----------------------------
August 28, August 29,
$ in thousands 1998 1997
- -------------- ------------ ------------
Cash Flows from Operating Activities:
- -------------------------------------
Net earnings $ 5,966 $ 5,410
Adjustments to reconcile net earnings to
net cash used in operating activities:
Depreciation and amortization 1,901 1,917
(Gain) loss on sale of property, plant
and equipment (5) 4
Changes in working capital:
Receivables (25,757) (43,862)
Inventories (3,361) 5,807
Prepaid expenses (1,290) 1,763
Trade accounts payable (7,142) (11,062)
Accrued expenses and other current liabilities (2,958) 1,499
Income taxes payable 4,670 2,340
Deferred income taxes (127) 23
Other noncurrent assets 15 67
Net cash flows used in -------- --------
operating activities (28,088) (36,094)
Cash Flows from Investing Activities:
- -------------------------------------
Purchase of property, plant and equipment (2,224) (1,748)
Proceeds from sale of property, plant and
and equipment 87 37
-------- --------
Net cash used in investing activities (2,137) (1,711)
Cash Flows from Financing Activities:
- -------------------------------------
Short-term borrowings 35,000 40,500
Payments on long-term debt (80) (834)
Proceeds from exercise of stock options 287 847
Purchase and retirement of common stock (9,117) -
Dividends on common stock (1,762) (1,755)
-------- --------
Net cash provided by financing activities 24,328 38,758
Net Change in Cash and Cash Equivalents (5,897) 953
Cash and Cash Equivalents at Beginning of Period 10,069 3,313
-------- --------
Cash and Cash Equivalents at End of Period $ 4,172 $ 4,266
======== ========
Supplemental Disclosure of Cash Flow Information
- ------------------------------------------------
Cash (received) paid for:
Interest, net $ 818 $ 980
Income taxes (325) 200
See notes to consolidated financial statements.
OXFORD INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
QUARTERS ENDED AUGUST 28, 1998 AND AUGUST 29, 1997
(UNAUDITED)
1. The foregoing unaudited consolidated financial statements reflect
all adjustments which are, in the opinion of management, necessary
to a fair statement of the results for the interim periods. All
such adjustments are of a normal recurring nature. The results for
interim periods are not necessarily indicative of results to be
expected for the year.
2. The financial information presented herein should be read in
conjunction with the consolidated financial statements included in
the Registrant's Annual Report on Form 10-K for the fiscal year
ended May 29, 1998.
3. The Company is involved in certain legal matters primarily
arising in the normal course of business. In the opinion of
management, the Company's liability under any of these matters
would not materially affect its financial condition or results of
operations.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Results of Operations
NET SALES
Net sales for the first quarter of the 1999 fiscal year,
which ended August 28, 1998, increased 2.8% from net sales for
the same period of the prior year. The increase in first quarter
net sales was led by the Oxford Shirt Group, where increased
sales by Polo/Ralph Lauren for Boys, Ely & Walker, Tommy Hilfiger
Dress Shirts, and OxSport were slightly offset by decreased sales
in Tommy Hilfiger Golf and Oxford Shirtings. Lanier Clothes, the
Company's Tailored Clothing Group, produced increased sales in
Nautica, Geoffrey Beene, private label and initial shipments of
its Women's Tailored Clothing offset marginally by decreased
sales in Oscar de la Renta. The Womenswear Group generated a net
increase in sales with increases in its Collections and Separates
divisions somewhat offset by a decline in its Catalog & Special
Markets division. Oxford Slacks had a sales decline.
In the first quarter of the current year, the Company
experienced an overall net sales unit volume increase of 1.1%,
while experiencing a 2.0% increase in the weighted average net
sales price per unit.
COST OF GOODS SOLD
Cost of goods sold as a percentage of net sales decreased
from 81.0% in the first quarter of the prior year to 79.8% in the
current quarter. The decrease in cost of goods sold was due to
growth in higher margin designer licensed business, improved
manufacturing performance and increased offshore sourcing.
Markdowns, irregulars and other margin variances were lower.
During the first quarter, the Company announced the
forthcoming closure of its sewing facility in Camden, South
Carolina. Subsequent to the end of the first quarter, the Company
announced the forthcoming closure of its sewing facility in
Luverne, Alabama.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative (S G & A) expenses
increased by 10.1% from $26,795,000 or 13.9% of net sales in the
first quarter of the prior year to $29,502,000 or 14.9% of net
sales in the first quarter of fiscal 1999. The major contributor
to this increase was the increased licensed designer business,
which requires S G & A expense at more than twice the expense
levels of the Company's private label business.
INTEREST EXPENSE
Net interest expense declined by 23.6% from $981,000 or 0.5%
of sales in the first quarter of the prior year to $749,000 or
0.4% of sales in the current quarter. The reduction in interest
expense was due to improved asset management.
INTEREST TAXES
The Company's effective tax rate was 39.0% for the first
quarter of both the current year and the prior year and does not
differ significantly from the Company's statutory rate.
FUTURE OPERATING RESULTS
The Company's optimism is dampened somewhat by the current
political and economic uncertainties at home and abroad. The
Company should have sales and earnings exceeding those of the
prior year if current business conditions continue. The Company
will begin sewing operations in its new sewing facilities in
Honduras and Mexico in the second quarter.
Subsequent to the end of the first quarter, the Company
completed the acquisition of Next Day Apparel, Inc. Next day is
headquartered in Walhalla, South Carolina, with marketing offices
in New York City and manufacturing plants in Honduras. Sales for
Next Day's latest fiscal year were in excess of $100,000,000.
Next Day will operate as a division of the Company's Womenswear
Group.
YEAR 2000
The Company is working to resolve the effects of the Year
2000 issue on its information systems. The Year 2000 issue,
which is common to most businesses, concerns the inability of
information systems to properly recognize and process dates and
date sensitive information on and beyond January 1, 2000. In
1996, the Company began a Company-wide assessment of the
vulnerability of its systems to the Year 2000 issue. Based on
such assessment, the Company has developed a Year 2000 compliance
plan, under which all key information systems are being tested,
and non-compliant software or technology is being modified or
replaced. The Company is also surveying the Year 2000 compliance
status and compatibility of customers and suppliers systems which
interface with the Company's systems or could otherwise impact
the Company's operations.
While the Company currently believes it will be able to
modify or replace its affected systems in ample time to minimize
any detrimental effects on its operations, failure to do so, or
the failure of the Company's major customers and suppliers to
modify or replace their affected systems, could have a material
adverse impact on the Company's results of operations, liquidity
or consolidated financial positions in the future. The most
reasonably likely worst case scenario of failure by the Company
or its customers or suppliers to resolve the Year 2000 issue
would be a temporary slow down or cessation of manufacturing
operations at one or more of the Company's facilities and a
temporary inability on the part of the Company to timely process
orders and billings and to deliver finished product to customers.
The Company is considering various contingency options, including
identification of alternate suppliers, vendors and service
providers, and manual alternatives to systems operation, which
will allow them to minimize the risks of any unresolved Year 2000
problems on their operations, and to minimize the effect of any
unforeseen Year 2000 failures. The Company currently estimates
the incremental cost of the work needed to resolve the Year 2000
issue will not materially impact the Company's financial
condition or results of operations.
LIQUIDITY AND CAPITAL RESOURCES
OPERATING ACTIVITIES
Operating activities used $28,088,000 in the first quarter of the
current year and $36,094,000 in the same period of the prior
year. The primary factors contributing to this decreased used
funds in the current year was a smaller increase in receivables
than in the prior year offset by an increase in inventory in the
current year.
INVESTING ACTIVITIES
Investing activities used $2,137,000 in the first quarter of the
current year and $1,711,000 in the same period of the prior year.
The difference was a slight increase in the purchase of property,
plant, and equipment.
FINANCING ACTIVITIES
Financing activities generated $24,328,000 in the first quarter
of the current year and $38,758,000 in the first quarter of the
prior year. The primary difference was a smaller increase is
short-term borrowings offset by increased purchase and retirement
of common stock in the current year.
On October 5, 1998 the Company's Board of Directors declared a
cash dividend of $.20 per share payable on November 28, 1998 to
shareholders of record on November 13, 1998.
During the first quarter and through October 5, 1998, the Company
purchased and retired 325,000 shares of the Company's common
stock acquired on the open market.
During the first quarter and through October 5, 1998, the Company
issued 16,840 shares of the Company's common stock in conjunction
with Company's employee stock option plans.
WORKING CAPITAL
Working capital increased from $155,432,000 at the end of the
first quarter of the prior year to $169,465,000 at the end of the
1998 fiscal year and decreased to $164,447,000 at the end of the
first quarter of the current year. The ratio of current assets
to current liabilities was 2.2 at the end of the first quarter of
the prior year, 2.7 at the end of the prior fiscal year, and 2.3
at the end of the first quarter of the current year.
FUTURE LIQUIDITY AND CAPITAL RESOURCES
The Company believes it has the ability to generate cash
and/or has available borrowing capacity to meet its foreseeable
needs. The sources of funds primarily include funds provided by
operations and both short-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 August 28,
1998, 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
August 28, 1998, 52,000,000 was in use under these lines, of
which $40,000.00 was long-term. In addition, the Company has
$220,500,000 in uncommitted lines of credit, of which
$137,500,000 is reserved exclusively for letters of credit. The
Company pays no commitment fees for these available lines of
credit. On August 28, 1998, $34,500,000 was in use under these
lines of credit. Maximum borrowings from all these sources
during the current year were $86,500,000 of which $46,500,000 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 express 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 the
fiscal year ended May 29, 1998.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
- ------------------------------------------
(a) Exhibits.
---------
10(i) Note Agreement between the Company and SunTrust of Georgia dated
August 24, 1998 covering the Company's long term note due
February 23, 2000.
27 Financial Data Schedule.
(b) Reports on Form 8-K.
--------------------
The Registrant did not file any reports on Form 8-K during
the quarter ended August 28, 1998.
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.
-----------------------
(Registrant)
/s/Ben B. Blount, Jr.
--------------------------
Date: October 8, 1998 Ben B. Blount, Jr.
--------------- Chief Financial Officer
12
EXHIBIT 10(i)
SunTrust
Single Payment Note
(Nondisclosure)
Single Disbursement
Note
Multiple Disbursement
Master Note
X Multiple
Disbursement
Revolving Note
(For Explanation See
Reverse Side)
Date August 24, 1998
The "Bank' referred to in this Note is SunTrust Bank,
Atlanta, Center Code 126 One Park Place, N.E., Atlanta,
Georgia 30303.
547 days after date, the obligor
promises to pay to the order of Bank the principal sum
of $ 40,000,000.00. The obligor will also pay
interest upon the unpaid principal balance from date
until maturity at the Note Rate specified below.
Interest payments will
be due on DAILY OR END OF INTEREST PERIOD and upon
maturity. Should the obligor fail for any reason to pay
this note in full on the maturity date or on the date
of acceleration of payment, the obligor further promises
to pay (a) interest on the unpaid amount from such date
until the date of final payment at a Default Rate equal
to the Note Rate plus 4%, and (b) a late fee equal to
five percent (5%) of any amount that remains wholly or
partially unpaid for more than fifteen (15) days after
such amount was due and payable, not to exceed the sum
of fifty dollars ($50.00). Should legal action or an
attorney at law be utilized to collect any amount due
hereunder, the obligor further promises to pay all costs
of collection, including 15% of such unpaid amount as
attorneys' fees. All amounts due hereunder may be paid
at any office of Bank.
The Note Rate hereon shall be TO BE DETERMINED
----------------
If not stated above, the Note Rate in effect on the
date this note is executed is _______%
The amount of interest accruing and payable
hereunder shall be calculated by multiplying the
principal balance outstanding each day by 1/360th of
the Note Rate on such day and adding together the daily
interest amounts. The principal balance of this note
shall conclusively be deemed to be the unpaid principal
balance appearing on the Bank's records unless such
records are manifestly in error.
As security for the payment of this and any
other liability of any obligor to the holder, direct or
contingent, irrespective of the nature of such
liability or the time it arises, each obligor hereby
grants a security interest to the holder in all property
of such obligor in or coming into the possession,
control or custody of the holder, or in which the holder
has or hereafter acquires a lien, security interest, or
other right. Upon default, holder may, without notice,
immediately take possession of and then sell or
otherwise dispose of the collateral, signing any
necessary documents as obligor's attorney in fact, and
apply the proceeds against any liability of obligor to
holder. Upon demand, each obligor will furnish such
additional collateral, and execute any appropriate
documents related thereto, deemed necessary by the
holder for its security. Each obligor further authorizes
the holder, without notice, to set-off any deposit or
account and apply any indebtedness due or to become due
from the holder to the obligor in satisfaction of any
liability described in this paragraph, whether or not
matured. The holder may, without notice, transfer or
register any property constituting security for this
note into its or its nominee name with or without any
indication of its security interest therein.
This note shall immediately mature and become
due and payable, without notice or demand, upon the
filing of any petition or the commencement of any
proceeding by any Debtor for relief under bankruptcy or
insolvency laws, or any law relating to the relief of
debtors, readjustment of indebtedness, debtor
reorganization, or composition or extension of debt.
Furthermore, this note shall, at the option of the
holder, immediately mature and become due and payable,
without notice or demand, upon the happening of any one
or more of the following events: (1) nonpayment on the
due date of any amount due hereunder; (2) failure of
any Debtor to perform any other obligation to the
holder; (3) failure of any Debtor to pay when due any
amount owed another creditor under a written agreement
calling for the payment of money; (4) the death or
declaration of incompetence of any Debtor; (5) a
reasonable belief on the part of the holder that any
Debtor is unable to pay his obligations when due or is
otherwise insolvent; (6) the filing of any petition or
the commencement of any proceeding against any Debtor
for relief under bankruptcy or insolvency laws, or any
law relating to the relief of debtors, readjustment of
indebtedness, debtor reorganization, or composition or
extension of debt, which petition or proceeding is not
dismissed within 60 days of the date of filing thereof;
(7) the suspension of the transaction of the usual
business of any Debtor, or the dissolution, liquidation
or transfer to another party of a significant portion
of the assets of' any Debtor; (8) a reasonable belief on
the part of the holder that any Debtor has made a
false representation or warranty in connection with any
loan by or other transaction with any lender, lessor or
other creditor; (9) the issuance or filing of any levy,
attachment, garnishment, or lien against the property of
any Debtor which is not discharged within 15 days;
(10) the failure of any Debtor to satisfy immediately
any final judgment, penalty or fine imposed by a court
or administrative agency of any government; (11 )
failure of any Debtor, after demand, to furnish
financial information or to permit inspection of any
books or records; (12) any other act or circumstance
leading the holder to deem itself insecure.
The failure or forbearance of the holder to
exercise any right hereunder, or otherwise granted by
law or another agreement, shall not affect or release
the liability of any obligor, and shall not constitute a
waiver of such right unless so stated by the holder in
writing. The holder may enforce its rights against any
Debtor or any property securing this note without
enforcing its rights against any other Debtor, property,
or indebtedness due or to become due to any Debtor.
Each obligor agrees that the holder shall have no
responsibility for the collection or protection of any
property securing this note, and expressly consents
that the holder may from time to time, without notice,
extend the time for payment of this note, or any part
thereof, waive its rights with respect to any property
or indebtedness, and release any other Debtor from
liability, without releasing such obligor from any
liability to the holder. This note is governed By
Georgia law.
The term "obligor" means any party or other
person signing this note, whether as maker, endorser or
otherwise. The term "Prime Rate", if used herein,
shall mean that rate of interest designated by Bank from
time to time as its "Prime Rate" which rate is not
necessarily the Bank's best rate. Each obligor agrees
to be both jointly and severally liable hereon. The term
"holder" means Bank and any subsequent transferee or
endorsee hereof. The term "Debtor" means any obligor
or any guarantor of this note. The principal of this
note will be disbursed in accordance with the
disbursement provision identified above and further
described in the additional provisions set forth on the
reverse side hereof which are incorporated herein by
this reference.
PRESENTMENT AND NOTICE OF DISHONOR ARE HEREBY WAIVED BY
EACH OBLIGOR
ADDRESS
222 PIEDMONT AVENUE, N.E.
ATLANTA, GEORGIA 30308
NAME:/S/ JIM WOLD
OXFORD INDUSTRIES, INC.
NAME:
Credit To
February 23, 2000 126
Maturity Date Treasurer Check Number Center Code
Account Number Renewal Increase Reduction /S/Laura Kahn 148
Officer Name Officer Number
WHITE: Bank Copy YELLOW: Customer Copy PINK: File Copy
1984, 1987, SunTrust Banks of Georgia, Inc.
900362 (9/95)
EXHIBIT 99
INDEX OF EXHIBITS
INCLUDED HERIN, FORM 10-Q
AUGUST 28, 1998
SEQUENTIAL
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- -----------------------------------------------------------------
10(i) Note Agreement between the Company and Suntrust
of Georgia dated August 24, 1998 covering the
Company's long term note due February 23, 2000 12-14
27 Financial Data Schedule 15