OXFORD INDUSTRIES, INC.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended AUGUST 31, 2007
or
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o |
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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)
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Georgia
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58-0831862 |
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.) |
222 Piedmont Avenue, N.E., Atlanta, Georgia 30308
(Address of principal executive offices) (Zip Code)
(404) 659-2424
(Registrants 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 þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer or a non-accelerated filer. See definition of accelerated filer and large accelerated filer
in Rule 12b-2 of the Exchange Act.
Large accelerated filer þ Accelerated filer o Non-accelerated filer o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act).
Yes o No þ
Indicate the number of shares outstanding of each of the issuers classes of common stock, as
of the latest practicable date.
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Number of shares outstanding |
Title of each class |
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as of October 5, 2007 |
Common Stock, $1 par value
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17,892,252 |
OXFORD INDUSTRIES, INC.
INDEX TO FORM 10-Q
For the first quarter of Transition Period 2008
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS
Our Securities and Exchange Commission filings and public announcements often include
forward-looking statements about future events. Generally, the words believe, expect, intend,
estimate, anticipate, project, will and similar expressions identify forward-looking
statements, which generally are not historical in nature. We intend for all such forward-looking
statements contained herein, the entire contents of our website, and all subsequent written and
oral forward-looking statements attributable to us or persons acting on our behalf, to be covered
by the safe harbor provisions for forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of
1933 (which Sections were adopted as part of the Private Securities Litigation Reform Act of 1995).
Important assumptions relating to these forward-looking statements include, among others,
assumptions regarding demand for our products, expected pricing levels, raw material costs, the
timing and cost of planned capital expenditures, expected outcomes of pending litigation and
regulatory actions, competitive conditions, general economic conditions and expected synergies in
connection with acquisitions and joint ventures. Forward-looking statements reflect our current
expectations, based on currently available information, and are not guarantees of performance.
Although we believe that the expectations reflected in such forward-looking statements are
reasonable, these expectations could prove inaccurate as such statements involve risks and
uncertainties, many of which are beyond our ability to control or predict. Should one or more of
these risks or uncertainties, or other risks or uncertainties not
currently known to us or that we currently deem to be immaterial, materialize, or should underlying assumptions prove incorrect, actual
results may vary materially from those anticipated, estimated or projected. Important factors
relating to these risks and uncertainties include, but are not limited to, those described in
Part I, Item 1A. Risk Factors contained in our fiscal 2007 Form 10-K, as updated by Part II, Item
1A. Risk Factors in this report and those described from time to time in our future reports filed
with the Securities and Exchange Commission.
We caution that one should not place undue reliance on forward-looking statements, which speak
only as of the date this report is filed with the Securities and Exchange Commission. We disclaim
any intention, obligation or duty to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as required by law.
DEFINITIONS
As used in this report, unless the context requires otherwise, our, us and we mean
Oxford Industries, Inc. and its consolidated subsidiaries. Also, the terms FASB, SFAS and SEC
mean the Financial Accounting Standards Board, Statement of Financial Accounting Standards and the
U.S. Securities and Exchange Commission, respectively.
CHANGE IN FISCAL YEAR
On October 8, 2007, our board of directors approved a change to our fiscal year end. Effective
with our fiscal year which commenced on June 2, 2007, our fiscal year shall end at the end of the
Saturday closest to January 31 and shall, in each case, begin at the beginning of the day next
succeeding the last day of the preceding fiscal year. Accordingly, there will be a transition
period from June 2, 2007 through February 2, 2008. We will file a Form 10-Q for the quarter ending
August 31, 2007, a Form 10-Q for the quarter ending November 30, 2007 and a Form 10-K for the
transition period from June 2, 2007 through February 2, 2008. Additionally, the terms listed below
(or words of similar import) reflect the respective period noted:
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Transition period 2008
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35 weeks ending February 2, 2008 |
Fiscal 2007
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52 weeks ended June 1, 2007 |
Fiscal 2006
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52 weeks ended June 2, 2006 |
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Third quarter of transition period 2008
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9 weeks ending February 2, 2008 |
Second quarter of transition period 2008
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13 weeks ending November 30, 2007 |
First quarter of transition period 2008
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13 weeks ended August 31, 2007 |
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Fourth quarter of fiscal 2007
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13 weeks ended June 1, 2007 |
Third quarter of fiscal 2007
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13 weeks ended March 2, 2007 |
Second quarter of fiscal 2007
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13 weeks ended December 1, 2006 |
First quarter of fiscal 2007
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13 weeks ended September 1, 2006 |
1
PART I. FINANCIAL INFORMATION
ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
OXFORD INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
(in thousands, except per share amounts)
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First Quarter |
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Transition |
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Period 2008 |
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Fiscal 2007 |
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Net sales |
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$ |
237,947 |
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$ |
284,078 |
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Cost of goods sold |
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140,496 |
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175,967 |
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Gross profit |
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97,451 |
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108,111 |
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Selling, general and administrative expenses |
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88,861 |
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86,446 |
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Amortization of intangible assets |
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1,190 |
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1,547 |
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90,051 |
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87,993 |
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Royalties and other operating income |
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3,784 |
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2,892 |
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Operating income |
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11,184 |
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23,010 |
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Interest expense, net |
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4,996 |
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5,492 |
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Earnings before income taxes |
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6,188 |
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17,518 |
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Income taxes |
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1,412 |
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6,363 |
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Net earnings from continuing operations |
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4,776 |
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11,155 |
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Earnings (loss) from discontinued operations, net of taxes |
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(205 |
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Net earnings |
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$ |
4,776 |
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$ |
10,950 |
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Net earnings from continuing operations per common share: |
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Basic |
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$ |
0.27 |
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$ |
0.63 |
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Diluted |
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$ |
0.27 |
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$ |
0.63 |
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Earnings (loss) from discontinued operations per common share: |
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Basic |
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$ |
0.00 |
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$ |
(0.01 |
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Diluted |
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$ |
0.00 |
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$ |
(0.01 |
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Net earnings per common share: |
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Basic |
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$ |
0.27 |
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$ |
0.62 |
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Diluted |
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$ |
0.27 |
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$ |
0.62 |
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Weighted average common shares outstanding: |
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Basic |
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17,782 |
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17,594 |
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Dilutive impact of options and restricted shares |
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158 |
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184 |
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Diluted |
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17,940 |
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17,778 |
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Dividends per common share |
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$ |
0.18 |
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$ |
0.15 |
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See accompanying notes.
2
OXFORD INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except par amounts)
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August 31, |
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June 1, |
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September 1, |
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2007 |
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2007 |
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2006 |
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ASSETS
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Current Assets: |
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Cash and cash equivalents |
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$ |
15,737 |
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$ |
36,882 |
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$ |
10,742 |
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Receivables, net |
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123,020 |
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138,035 |
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157,592 |
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Inventories |
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155,135 |
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137,333 |
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139,444 |
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Prepaid expenses |
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22,550 |
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21,991 |
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23,857 |
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Current assets related to discontinued operations, net |
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18,132 |
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Total current assets |
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316,442 |
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334,241 |
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349,767 |
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Property, plant and equipment, net |
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89,058 |
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87,323 |
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73,527 |
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Goodwill, net |
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223,474 |
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222,430 |
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200,228 |
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Intangible assets, net |
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234,835 |
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234,081 |
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234,390 |
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Other non-current assets, net |
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29,833 |
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30,663 |
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27,896 |
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Total Assets |
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$ |
893,642 |
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$ |
908,738 |
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$ |
885,808 |
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LIABILITIES AND SHAREHOLDERS EQUITY
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Current Liabilities: |
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Trade accounts payable and other accrued expenses |
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$ |
90,402 |
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$ |
84,385 |
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$ |
102,428 |
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Accrued compensation |
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14,592 |
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26,254 |
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16,367 |
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Additional acquisition cost payable |
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320 |
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22,575 |
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Income taxes payable |
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1,671 |
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8,827 |
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8,468 |
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Short-term debt and current maturities of long-term debt |
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407 |
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403 |
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122 |
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Current liabilities related to discontinued operations |
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11,488 |
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Total current liabilities |
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107,392 |
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142,444 |
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138,873 |
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Long-term debt, less current maturities |
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209,139 |
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199,294 |
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226,864 |
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Other non-current liabilities |
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49,522 |
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40,947 |
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32,433 |
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Non-current deferred income taxes |
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71,288 |
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75,108 |
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78,404 |
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Commitments and contingencies |
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Shareholders Equity: |
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Preferred stock, $1.00 par value; 30,000 authorized and
none issued and outstanding at August 31, 2007; June 1,
2007; and September 1, 2007 |
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Common stock, $1.00 par value; 60,000 authorized and
17,872 issued and outstanding at August 31, 2007;
17,843 issued and outstanding at June 1, 2007; and
17,723 issued and outstanding at September 1, 2006 |
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17,872 |
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17,843 |
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|
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17,723 |
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Additional paid-in capital |
|
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82,829 |
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81,611 |
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76,461 |
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Retained earnings |
|
|
343,019 |
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341,369 |
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309,261 |
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Accumulated other comprehensive income (loss) |
|
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12,581 |
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|
|
10,122 |
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|
5,789 |
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Total shareholders equity |
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|
456,301 |
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450,945 |
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|
|
409,234 |
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Total Liabilities and Shareholders Equity |
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$ |
893,642 |
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|
$ |
908,738 |
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$ |
885,808 |
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See accompanying notes.
3
OXFORD INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
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First Quarter |
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Transition |
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Period 2008 |
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Fiscal 2007 |
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Cash Flows From Operating Activities: |
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Net earnings from continuing operations |
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$ |
4,776 |
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$ |
11,155 |
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Adjustments to reconcile earnings from continuing operations to net cash
provided by (used in) operating activities: |
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Depreciation |
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4,257 |
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3,747 |
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Amortization of intangible assets |
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1,190 |
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|
1,547 |
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Amortization of deferred financing costs and bond discount |
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|
617 |
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|
617 |
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Stock compensation expense |
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|
641 |
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|
840 |
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Loss on sale of property, plant and equipment and impairment loss |
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|
893 |
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18 |
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Equity loss (income) from unconsolidated entities |
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(392 |
) |
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(97 |
) |
Deferred income taxes |
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(901 |
) |
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|
(47 |
) |
Changes in working capital: |
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Receivables |
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|
15,487 |
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(12,973 |
) |
Inventories |
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(17,513 |
) |
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|
(15,614 |
) |
Prepaid expenses |
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|
(750 |
) |
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(4,132 |
) |
Current liabilities |
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|
(11,513 |
) |
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|
(7,975 |
) |
Other non-current assets |
|
|
654 |
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|
1,356 |
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Other non-current liabilities |
|
|
2,500 |
|
|
|
2,440 |
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Net cash provided by (used in) operating activities |
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(54 |
) |
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(19,118 |
) |
Cash Flows From Investing Activities: |
|
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Acquisitions, net of cash acquired |
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(21,562 |
) |
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(12,111 |
) |
Investment in unconsolidated entity |
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|
(162 |
) |
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(9,063 |
) |
Purchases of property, plant and equipment |
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(6,896 |
) |
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(3,556 |
) |
Proceeds from sale of property, plant and equipment |
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|
122 |
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|
|
|
|
|
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Net cash provided by (used in) investing activities |
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|
(28,498 |
) |
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|
(24,730 |
) |
Cash Flows From Financing Activities: |
|
|
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|
|
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Repayment of financing arrangements |
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(3,683 |
) |
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|
(27,048 |
) |
Proceeds from financing arrangements |
|
|
13,479 |
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|
|
53,835 |
|
Proceeds from issuance of common stock including tax benefits |
|
|
604 |
|
|
|
886 |
|
Dividends on common stock |
|
|
(3,216 |
) |
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|
(5,304 |
) |
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Net cash provided by (used in) financing activities |
|
|
7,184 |
|
|
|
22,369 |
|
Cash Flows From Discontinued Operations: |
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|
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|
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Net operating cash flows provided by (used in) discontinued operations |
|
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|
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21,650 |
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Net cash provided by (used in) discontinued operations |
|
|
|
|
|
|
21,650 |
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Net change in cash and cash equivalents |
|
|
(21,368 |
) |
|
|
171 |
|
Effect of foreign currency translation on cash and cash equivalents |
|
|
223 |
|
|
|
92 |
|
Cash and cash equivalents at the beginning of period |
|
|
36,882 |
|
|
|
10,479 |
|
|
|
|
Cash and cash equivalents at the end of period |
|
$ |
15,737 |
|
|
$ |
10,742 |
|
|
|
|
Supplemental disclosure of cash flow information: |
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|
|
|
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|
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|
Cash paid for interest, net |
|
$ |
456 |
|
|
$ |
801 |
|
Cash paid for income taxes |
|
$ |
7,408 |
|
|
$ |
6,959 |
|
See accompanying notes.
4
OXFORD INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FIRST QUARTER OF TRANSITION PERIOD 2008
1. |
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Basis of Presentation: The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with accounting principles generally accepted in
the United States for interim financial reporting and the instructions of Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by accounting principles generally accepted in the United States. We
believe the accompanying unaudited condensed consolidated financial statements reflect all
normal, recurring adjustments that are necessary for a fair presentation of our financial
position and results of operations for the periods presented. Results of operations for the
interim periods presented are not necessarily indicative of results to be expected for our
fiscal year primarily due to the impact of seasonality on our business. The accounting
policies applied during the interim periods presented are consistent with the significant and
critical accounting policies as described in our fiscal 2007 Form 10-K. The information
included in this Form 10-Q should be read in conjunction with Managements Discussion and
Analysis of Financial Condition and Results of Operations and the financial statements and
notes thereto included in our fiscal 2007 Form 10-K. |
In July 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in
Income Taxes (FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes
recognized in a companys financial statements in accordance with FASB Statement No. 109
Accounting for Income Taxes. FIN 48 utilizes a two-step approach for evaluating tax positions.
Recognition occurs when we conclude that a tax position, based solely on its technical merits, is
more-likely-than-not to be sustained upon examination. Measurement is only addressed if step one
has been satisfied. The tax benefit recorded is measured as the largest amount of benefit,
determined on a cumulative probability basis that is more-likely-than-not to be realized upon
ultimate settlement. Those tax positions failing to qualify for initial recognition are recognized
in the first subsequent interim period they meet the more-likely-than-not standard, or are resolved
through negotiation or litigation with the taxing authority, or upon expiration of the statute of
limitations. De-recognition of a tax position that was previously recognized occurs when we
subsequently determine that a tax position no longer meets the more-likely-than-not threshold of
being sustained. We adopted FIN 48 during the first quarter of transition period 2008 resulting in
an immaterial increase in retained earnings. Additionally, the adoption of FIN 48 resulted in the
reclassification of certain amounts totaling approximately $5.3 million from income taxes payable
and non-current deferred income taxes to other non-current liabilities. This reclassification is
reflected as a non-cash operating item in our statement of cash flows. FIN 48 also requires
expanded disclosure requirements, which are included in Note 5 below.
In September 2006, the FASB issued FASB Statement No. 157 Fair Value Measurements
(FAS 157). FAS 157 is applicable in our next fiscal year. FAS 157 provides enhanced guidance for
using fair value measurements for assets and liabilities. The standard also requires additional
disclosures about the extent to which companies measure assets and liabilities at fair value, the
information used to measure fair value and the effect of fair value measurements on earnings. We do
not anticipate that the adoption of FAS 157 will have a material impact upon adoption.
In February 2007, the FASB issued FASB Statement No. 159 The Fair Value Option for Financial
Assets and Financial Liabilities (FAS 159). FAS 159 is applicable in our next fiscal year.
FAS 159 permits entities to choose to measure eligible items in the balance sheet at fair value at
specified election dates with the unrealized gains and losses recognized in earnings. We do not
anticipate that the adoption of FAS 159 will have a material impact upon adoption.
EITF 06-4 Endorsement Split-Dollar Life Insurance Arrangements (EITF 06-4) was ratified in
September 2006. EITF 06-4 requires that the post-retirement benefit portion of an endorsement-type
split-dollar life insurance policy should be recognized as a liability because the obligation is
not effectively settled by the purchase of the life insurance policy. The liability for future
benefits is recognized based on the substantive agreement with the employee (which provides a
future death benefit). We adopted EITF 06-4 during the first quarter of transition period 2008,
resulting in the recognition of an immaterial current liability and a reduction to retained
earnings to reflect the cumulative-effect adjustment.
5
2. |
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Inventories: The components of inventories as of the dates specified are summarized as
follows (in thousands): |
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|
August 31, 2007 |
|
June 1, 2007 |
|
September 1, 2006 |
|
|
|
Finished goods |
|
$ |
159,681 |
|
|
$ |
139,087 |
|
|
$ |
136,688 |
|
Work in process |
|
|
12,605 |
|
|
|
12,031 |
|
|
|
12,381 |
|
Fabric, trim and supplies |
|
|
22,132 |
|
|
|
25,498 |
|
|
|
28,329 |
|
LIFO reserve |
|
|
(39,283 |
) |
|
|
(39,283 |
) |
|
|
(37,954 |
) |
|
|
|
Total |
|
$ |
155,135 |
|
|
$ |
137,333 |
|
|
$ |
139,444 |
|
|
|
|
3. |
|
Comprehensive Income: Comprehensive income, which reflects the effects of foreign currency
translation adjustments, is calculated as follows for the periods presented (in thousands): |
|
|
|
|
|
|
|
|
|
|
|
First Quarter |
|
|
Transition |
|
|
|
|
Period 2008 |
|
Fiscal 2007 |
|
|
|
Net earnings |
|
$ |
4,776 |
|
|
$ |
10,950 |
|
Gain (loss) on foreign currency translation, net of tax |
|
|
2,459 |
|
|
|
519 |
|
|
|
|
Comprehensive income |
|
$ |
7,235 |
|
|
$ |
11,469 |
|
|
|
|
4. |
|
Operating Group Information: Our business is operated through our four operating groups:
Tommy Bahama, Ben Sherman, Lanier Clothes and Oxford Apparel. We identify our operating groups
based on the way our management organizes the components of our business for purposes of
allocating resources and assessing performance. Corporate and Other is a
reconciling category for reporting purposes and includes our corporate offices, substantially
all financing activities, LIFO inventory accounting adjustments and other costs that are not
allocated to the operating groups. In connection with the close of fiscal 2007 and due to
changes in our management reporting structure, we reassessed and changed our operating groups
for reporting purposes. All fiscal 2007 amounts below have been restated to reflect the
revised operating groups. Leaders of the operating groups report directly to our Chief
Executive Officer. For further information on our operating groups, see Item 2. Managements
Discussion and Analysis of Financial Condition and Results of Operations included in this
report and Item 1. Business in our fiscal 2007 Form 10-K. |
|
|
|
The information below presents certain information about our operating groups (in thousands). |
|
|
|
|
|
|
|
|
|
|
|
First Quarter |
|
|
Transition |
|
|
|
|
Period 2008 |
|
Fiscal 2007 |
|
|
|
Net Sales |
|
|
|
|
|
|
|
|
Tommy Bahama |
|
$ |
99,198 |
|
|
$ |
104,148 |
|
Ben Sherman |
|
|
37,557 |
|
|
|
39,092 |
|
Lanier Clothes |
|
|
35,581 |
|
|
|
40,682 |
|
Oxford Apparel |
|
|
65,335 |
|
|
|
99,037 |
|
Corporate and Other |
|
|
276 |
|
|
|
1,119 |
|
|
|
|
Total |
|
$ |
237,947 |
|
|
$ |
284,078 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
|
|
|
Tommy Bahama |
|
$ |
3,118 |
|
|
$ |
2,672 |
|
Ben Sherman |
|
|
616 |
|
|
|
457 |
|
Lanier Clothes |
|
|
203 |
|
|
|
224 |
|
Oxford Apparel |
|
|
260 |
|
|
|
293 |
|
Corporate and Other |
|
|
60 |
|
|
|
101 |
|
|
|
|
Total |
|
$ |
4,257 |
|
|
$ |
3,747 |
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
First Quarter |
|
|
Transition |
|
|
|
|
Period 2008 |
|
Fiscal 2007 |
|
|
|
Amortization of Intangible Assets |
|
|
|
|
|
|
|
|
Tommy Bahama |
|
$ |
542 |
|
|
$ |
744 |
|
Ben Sherman |
|
|
577 |
|
|
|
794 |
|
Lanier Clothes |
|
|
30 |
|
|
|
|
|
Oxford Apparel |
|
|
32 |
|
|
|
|
|
Corporate and Other |
|
|
9 |
|
|
|
9 |
|
|
|
|
Total |
|
$ |
1,190 |
|
|
$ |
1,547 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income |
|
|
|
|
|
|
|
|
Tommy Bahama |
|
$ |
13,067 |
|
|
$ |
16,835 |
|
Ben Sherman |
|
|
742 |
|
|
|
1,920 |
|
Lanier Clothes |
|
|
307 |
|
|
|
2,496 |
|
Oxford Apparel |
|
|
3,601 |
|
|
|
6,195 |
|
Corporate and Other |
|
|
(6,533 |
) |
|
|
(4,436 |
) |
|
|
|
Total Operating Income |
|
$ |
11,184 |
|
|
$ |
23,010 |
|
Interest Expense, net |
|
|
4,996 |
|
|
|
5,492 |
|
|
|
|
Earnings Before Income Taxes |
|
$ |
6,188 |
|
|
$ |
17,518 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 31, |
|
June 1, |
|
September 1, |
|
|
2007 |
|
2007 |
|
2006 |
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Tommy Bahama |
|
$ |
461,924 |
|
|
$ |
469,414 |
|
|
$ |
426,577 |
|
Ben Sherman |
|
|
227,841 |
|
|
|
223,779 |
|
|
|
219,097 |
|
Lanier Clothes |
|
|
98,730 |
|
|
|
95,184 |
|
|
|
85,976 |
|
Oxford Apparel |
|
|
102,784 |
|
|
|
96,627 |
|
|
|
134,284 |
|
Corporate and Other |
|
|
2,363 |
|
|
|
23,734 |
|
|
|
1,742 |
|
Womenswear Group (discontinued) |
|
|
|
|
|
|
|
|
|
|
18,132 |
|
|
|
|
Total |
|
$ |
893,642 |
|
|
$ |
908,738 |
|
|
$ |
885,808 |
|
|
|
|
5. |
|
Income Taxes: We file income tax returns in the United States and various state and foreign
jurisdictions. Our federal, state, local and foreign income tax returns filed for years ended
on or before May 30, 2003, with limited exceptions, are no longer subject to examination by
tax authorities. |
As discussed in Note 1 above, we adopted FIN 48 in the first quarter of transition period
2008. Upon adoption, the gross amount of unrecognized tax benefits was approximately $5.3 million.
Additionally, we have accrued $0.6 million of related interest and penalties. If we were to prevail
on all unrecognized tax benefits recorded, approximately $4.7 million of the reserve for
unrecognized tax benefits recorded and the full amount of related interest and penalties would
benefit the effective tax rate. The remaining $0.6 million of unrecognized tax benefits would be
offset by benefits available in a different taxing jurisdiction.
Interest and penalties associated with unrecognized tax positions are recorded within income
tax expense in our consolidated statements of earnings.
It is reasonably possible that the amount of unrecognized benefit with respect to certain of
our unrecognized tax positions will increase or decrease within the next twelve months. Events that
may cause these changes include the settlement of issues with taxing authorities or expiration of
statutes. We do not expect these changes to have a significant effect on our results of operations
or our financial position. The amount of unrecognized tax benefits did not change materially during
the first quarter of transition period 2008.
7
6. |
|
Consolidating Financial Data of Subsidiary Guarantors: Our Senior Unsecured Notes are
guaranteed by our wholly owned domestic subsidiaries (Subsidiary Guarantors). All
guarantees are full and unconditional. Non-guarantors consist of our subsidiaries which are
organized outside of the United States and any subsidiaries which are not wholly-owned. We
use the equity method with respect to investment in subsidiaries included in other non-current
assets in our condensed consolidating financial statements. Set forth below are our unaudited
condensed consolidating balance sheets as of August 31, 2007, June 1, 2007, and September 1,
2006, our unaudited condensed consolidating statements of earnings for the first quarter of
transition period 2008 and fiscal 2007 and our unaudited condensed consolidating statements of
cash flows for the first quarter of transition period 2008 and fiscal 2007 (in thousands). |
OXFORD INDUSTRIES, INC.
UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEETS
August 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oxford |
|
|
|
|
|
Subsidiary |
|
|
|
|
|
|
Industries |
|
Subsidiary |
|
Non- |
|
Consolidating |
|
Consolidated |
|
|
(Parent) |
|
Guarantors |
|
Guarantors |
|
Adjustments |
|
Total |
|
|
|
ASSETS
|
Cash and cash equivalents |
|
$ |
3,375 |
|
|
$ |
861 |
|
|
$ |
11,501 |
|
|
$ |
|
|
|
$ |
15,737 |
|
Receivables, net |
|
|
53,657 |
|
|
|
42,964 |
|
|
|
34,201 |
|
|
|
(7,802 |
) |
|
|
123,020 |
|
Inventories |
|
|
77,670 |
|
|
|
60,313 |
|
|
|
18,551 |
|
|
|
(1,399 |
) |
|
|
155,135 |
|
Prepaid expenses |
|
|
9,405 |
|
|
|
9,198 |
|
|
|
3,947 |
|
|
|
|
|
|
|
22,550 |
|
|
|
|
Total current assets |
|
|
144,107 |
|
|
|
113,336 |
|
|
|
68,200 |
|
|
|
(9,201 |
) |
|
|
316,422 |
|
Property, plant and equipment, net |
|
|
8,082 |
|
|
|
71,970 |
|
|
|
9,006 |
|
|
|
|
|
|
|
89,058 |
|
Goodwill, net |
|
|
1,847 |
|
|
|
168,932 |
|
|
|
52,695 |
|
|
|
|
|
|
|
223,474 |
|
Intangible assets, net |
|
|
1,305 |
|
|
|
135,799 |
|
|
|
97,731 |
|
|
|
|
|
|
|
234,835 |
|
Other non-current assets, net |
|
|
778,868 |
|
|
|
150,594 |
|
|
|
1,354 |
|
|
|
(900,983 |
) |
|
|
29,833 |
|
|
|
|
Total Assets |
|
$ |
934,209 |
|
|
$ |
640,631 |
|
|
$ |
228,986 |
|
|
$ |
(910,184 |
) |
|
$ |
893,642 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY
|
Current liabilities |
|
$ |
33,967 |
|
|
$ |
51,031 |
|
|
$ |
29,845 |
|
|
$ |
(7,451 |
) |
|
$ |
107,392 |
|
Long-term debt, less current portion |
|
|
209,139 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
209,139 |
|
Non-current liabilities |
|
|
238,976 |
|
|
|
(194,542 |
) |
|
|
114,237 |
|
|
|
(109,149 |
) |
|
|
49,522 |
|
Non-current deferred income taxes |
|
|
(4,174 |
) |
|
|
43,104 |
|
|
|
32,358 |
|
|
|
|
|
|
|
71,288 |
|
Total shareholders/invested equity |
|
|
456,301 |
|
|
|
741,038 |
|
|
|
52,546 |
|
|
|
(793,584 |
) |
|
|
456,301 |
|
|
|
|
Total Liabilities and Shareholders/Invested
Equity |
|
$ |
934,209 |
|
|
$ |
640,631 |
|
|
$ |
228,986 |
|
|
$ |
(910,184 |
) |
|
$ |
893,642 |
|
|
|
|
8
OXFORD INDUSTRIES, INC.
UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEETS
June 1, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oxford |
|
|
|
|
|
Subsidiary |
|
|
|
|
|
|
Industries |
|
Subsidiary |
|
Non- |
|
Consolidating |
|
Consolidated |
|
|
(Parent) |
|
Guarantors |
|
Guarantors |
|
Adjustments |
|
Total |
|
|
|
ASSETS
|
Cash and cash equivalents |
|
$ |
22,863 |
|
|
$ |
1,212 |
|
|
$ |
12,807 |
|
|
$ |
|
|
|
$ |
36,882 |
|
Receivables, net |
|
|
52,226 |
|
|
|
61,076 |
|
|
|
31,184 |
|
|
|
(6,451 |
) |
|
|
138,035 |
|
Inventories |
|
|
70,273 |
|
|
|
52,644 |
|
|
|
15,114 |
|
|
|
(698 |
) |
|
|
137,333 |
|
Prepaid expenses |
|
|
8,808 |
|
|
|
8,293 |
|
|
|
4,890 |
|
|
|
|
|
|
|
21,991 |
|
|
|
|
Total current assets |
|
|
154,170 |
|
|
|
123,225 |
|
|
|
63,995 |
|
|
|
(7,149 |
) |
|
|
334,241 |
|
Property, plant and equipment, net |
|
|
9,221 |
|
|
|
68,932 |
|
|
|
9,170 |
|
|
|
|
|
|
|
87,323 |
|
Goodwill, net |
|
|
1,847 |
|
|
|
168,932 |
|
|
|
51,651 |
|
|
|
|
|
|
|
222,430 |
|
Intangible assets, net |
|
|
1,349 |
|
|
|
136,370 |
|
|
|
96,362 |
|
|
|
|
|
|
|
234,081 |
|
Other non-current assets, net |
|
|
767,701 |
|
|
|
150,496 |
|
|
|
1,346 |
|
|
|
(888,880 |
) |
|
|
30,663 |
|
|
|
|
Total Assets |
|
$ |
934,288 |
|
|
$ |
647,955 |
|
|
$ |
222,524 |
|
|
$ |
(896,029 |
) |
|
$ |
908,738 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY
|
Current liabilities |
|
|
62,163 |
|
|
|
56,811 |
|
|
|
29,325 |
|
|
|
(5,855 |
) |
|
|
142,444 |
|
Long-term debt, less current portion |
|
|
199,294 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
199,294 |
|
Non-current liabilities |
|
|
222,114 |
|
|
|
(184,807 |
) |
|
|
112,789 |
|
|
|
(109,149 |
) |
|
|
40,947 |
|
Non-current deferred income taxes |
|
|
(228 |
) |
|
|
43,604 |
|
|
|
31,732 |
|
|
|
|
|
|
|
75,108 |
|
Total shareholders/invested equity |
|
|
450,945 |
|
|
|
732,347 |
|
|
|
48,678 |
|
|
|
(781,025 |
) |
|
|
450,945 |
|
|
|
|
Total Liabilities and Shareholders
Equity |
|
$ |
934,288 |
|
|
$ |
647,955 |
|
|
$ |
222,524 |
|
|
$ |
(896,029 |
) |
|
$ |
908,738 |
|
|
|
|
9
OXFORD INDUSTRIES, INC.
UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEETS
September 1, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oxford |
|
|
|
|
|
Subsidiary |
|
|
|
|
|
|
Industries |
|
Subsidiary |
|
Non- |
|
Consolidating |
|
Consolidated |
|
|
(Parent) |
|
Guarantors |
|
Guarantors |
|
Adjustments |
|
Total |
|
|
|
ASSETS
|
Cash and cash equivalents |
|
$ |
3,499 |
|
|
$ |
840 |
|
|
$ |
6,402 |
|
|
$ |
1 |
|
|
$ |
10,742 |
|
Receivables, net |
|
|
79,389 |
|
|
|
53,825 |
|
|
|
31,374 |
|
|
|
(6,996 |
) |
|
|
157,592 |
|
Inventories |
|
|
65,106 |
|
|
|
57,626 |
|
|
|
17,438 |
|
|
|
(726 |
) |
|
|
139,444 |
|
Prepaid expenses |
|
|
11,061 |
|
|
|
9,631 |
|
|
|
3,165 |
|
|
|
|
|
|
|
23,857 |
|
Current assets related to
discontinued operations, net |
|
|
2,323 |
|
|
|
31 |
|
|
|
15,778 |
|
|
|
|
|
|
|
18,132 |
|
|
|
|
Total current assets |
|
|
161,378 |
|
|
|
121,953 |
|
|
|
74,157 |
|
|
|
(7,721 |
) |
|
|
349,767 |
|
Property, plant and equipment, net |
|
|
10,668 |
|
|
|
54,167 |
|
|
|
8,692 |
|
|
|
|
|
|
|
73,527 |
|
Goodwill, net |
|
|
1,847 |
|
|
|
148,556 |
|
|
|
49,825 |
|
|
|
|
|
|
|
200,228 |
|
Intangible assets, net |
|
|
1,441 |
|
|
|
138,662 |
|
|
|
94,287 |
|
|
|
|
|
|
|
234,390 |
|
Other non-current assets, net |
|
|
688,329 |
|
|
|
152,795 |
|
|
|
1,394 |
|
|
|
(814,622 |
) |
|
|
27,896 |
|
|
|
|
Total Assets |
|
$ |
863,663 |
|
|
$ |
616,133 |
|
|
$ |
228,355 |
|
|
$ |
(822,343 |
) |
|
$ |
885,808 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY
|
Current liabilities related to
continuing operations |
|
$ |
50,698 |
|
|
$ |
49,952 |
|
|
$ |
33,142 |
|
|
$ |
(6,407 |
) |
|
$ |
127,385 |
|
Current liabilities related to
discontinued operations |
|
|
60 |
|
|
|
67 |
|
|
|
11,361 |
|
|
|
|
|
|
|
11,488 |
|
Long-term debt, less current portion |
|
|
226,861 |
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
226,864 |
|
Non-current liabilities |
|
|
177,325 |
|
|
|
(148,016 |
) |
|
|
112,273 |
|
|
|
(109,149 |
) |
|
|
32,433 |
|
Non-current deferred income taxes |
|
|
(515 |
) |
|
|
46,652 |
|
|
|
32,267 |
|
|
|
|
|
|
|
78,404 |
|
Total shareholders/invested equity |
|
|
409,234 |
|
|
|
667,475 |
|
|
|
39,312 |
|
|
|
(706,787 |
) |
|
|
409,234 |
|
|
|
|
Total Liabilities and Shareholders
Equity |
|
$ |
863,663 |
|
|
$ |
616,133 |
|
|
$ |
228,355 |
|
|
$ |
(822,343 |
) |
|
$ |
885,808 |
|
|
|
|
10
OXFORD INDUSTRIES, INC.
UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF EARNINGS
First Quarter of Transition Period 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oxford |
|
|
|
|
|
Subsidiary |
|
|
|
|
|
|
Industries |
|
Subsidiary |
|
Non- |
|
Consolidating |
|
Consolidated |
|
|
(Parent) |
|
Guarantors |
|
Guarantors |
|
Adjustments |
|
Total |
|
|
|
Net sales |
|
$ |
99,415 |
|
|
$ |
107,033 |
|
|
$ |
39,939 |
|
|
$ |
(8,440 |
) |
|
$ |
237,947 |
|
Cost of goods sold |
|
|
78,562 |
|
|
|
45,138 |
|
|
|
17,384 |
|
|
|
(588 |
) |
|
|
140,496 |
|
|
|
|
Gross profit |
|
|
20,853 |
|
|
|
61,895 |
|
|
|
22,555 |
|
|
|
(7,852 |
) |
|
|
97,451 |
|
Selling, general and administrative |
|
|
21,764 |
|
|
|
55,634 |
|
|
|
20,145 |
|
|
|
(7,492 |
) |
|
|
90,051 |
|
Royalties and other income |
|
|
58 |
|
|
|
2,652 |
|
|
|
1,396 |
|
|
|
(322 |
) |
|
|
3,784 |
|
|
|
|
Operating income |
|
|
(853 |
) |
|
|
8,913 |
|
|
|
3,806 |
|
|
|
(682 |
) |
|
|
11,184 |
|
Interest (income) expense, net |
|
|
6,144 |
|
|
|
(3,469 |
) |
|
|
2,299 |
|
|
|
22 |
|
|
|
4,996 |
|
Income from equity investment |
|
|
10,102 |
|
|
|
|
|
|
|
|
|
|
|
(10,102 |
) |
|
|
|
|
|
|
|
Earnings before income taxes |
|
|
3,105 |
|
|
|
12,382 |
|
|
|
1,507 |
|
|
|
(10,806 |
) |
|
|
6,188 |
|
Income taxes |
|
|
(2,128 |
) |
|
|
3,690 |
|
|
|
95 |
|
|
|
(245 |
) |
|
|
1,412 |
|
|
|
|
Net earnings from continuing operations |
|
|
5,233 |
|
|
|
8,692 |
|
|
|
1,412 |
|
|
|
(10,561 |
) |
|
|
4,776 |
|
Earnings from discontinued operations,
net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
$ |
5,233 |
|
|
$ |
8,692 |
|
|
$ |
1,412 |
|
|
$ |
(10,561 |
) |
|
$ |
4,776 |
|
|
|
|
UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
First Quarter of Transition Period 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oxford |
|
|
|
|
|
Subsidiary |
|
|
|
|
|
|
Industries |
|
Subsidiary |
|
Non- |
|
Consolidating |
|
Consolidated |
|
|
(Parent) |
|
Guarantors |
|
Guarantors |
|
Adjustments |
|
Total |
|
|
|
Cash Flows From Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by operating
activities |
|
$ |
(18,023 |
) |
|
$ |
20,697 |
|
|
$ |
(2,728 |
) |
|
$ |
|
|
|
$ |
(54 |
) |
Cash Flows from Investing Activities
Acquisitions |
|
|
(21,562 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(21,562 |
) |
Investment in unconsolidated entity |
|
|
|
|
|
|
(162 |
) |
|
|
|
|
|
|
|
|
|
|
(162 |
) |
Purchases of property, plant and equipment |
|
|
(203 |
) |
|
|
(6,493 |
) |
|
|
(200 |
) |
|
|
|
|
|
|
(6,896 |
) |
Proceeds from sale of property, plant and
equipment |
|
|
75 |
|
|
|
47 |
|
|
|
|
|
|
|
|
|
|
|
122 |
|
|
|
|
Net cash (used in) provided by investing
activities |
|
|
(21,690 |
) |
|
|
(6,608 |
) |
|
|
(200 |
) |
|
|
|
|
|
|
(28,498 |
) |
Cash Flows from Financing Activities
Change in debt |
|
|
9,799 |
|
|
|
(3 |
) |
|
|
|
|
|
|
|
|
|
|
9,796 |
|
Proceeds from issuance of common stock |
|
|
604 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
604 |
|
Change in inter-company payable |
|
|
13,038 |
|
|
|
(14,437 |
) |
|
|
1,399 |
|
|
|
|
|
|
|
|
|
Dividends on common stock |
|
|
(3,216 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,216 |
) |
|
|
|
Net cash (used in) provided by financing
activities |
|
|
20,225 |
|
|
|
(14,440 |
) |
|
|
1,399 |
|
|
|
|
|
|
|
7,184 |
|
Net change in Cash and Cash Equivalents |
|
|
(19,488 |
) |
|
|
(351 |
) |
|
|
(1,529 |
) |
|
|
|
|
|
|
(21,368 |
) |
Effect of foreign currency translation |
|
|
|
|
|
|
|
|
|
|
223 |
|
|
|
|
|
|
|
223 |
|
Cash and Cash Equivalents at the
Beginning of Period |
|
|
22,863 |
|
|
|
1,212 |
|
|
|
12,807 |
|
|
|
|
|
|
|
36,882 |
|
|
|
|
Cash and Cash Equivalents at the End of
Period |
|
$ |
3,375 |
|
|
$ |
861 |
|
|
$ |
11,501 |
|
|
$ |
|
|
|
$ |
15,737 |
|
|
|
|
11
OXFORD INDUSTRIES, INC.
UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF EARNINGS
First Quarter of Fiscal 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oxford |
|
|
|
|
|
Subsidiary |
|
|
|
|
|
|
Industries |
|
Subsidiary |
|
Non- |
|
Consolidating |
|
Consolidated |
|
|
(Parent) |
|
Guarantors |
|
Guarantors |
|
Adjustments |
|
Total |
|
|
|
Net sales |
|
$ |
135,870 |
|
|
$ |
120,622 |
|
|
$ |
38,653 |
|
|
$ |
(11,067 |
) |
|
$ |
284,078 |
|
Cost of goods sold |
|
|
105,985 |
|
|
|
54,586 |
|
|
|
18,604 |
|
|
|
(3,208 |
) |
|
|
175,967 |
|
|
|
|
Gross profit |
|
|
29,885 |
|
|
|
66,036 |
|
|
|
20,049 |
|
|
|
(7,859 |
) |
|
|
108,111 |
|
Selling, general and administrative |
|
|
26,865 |
|
|
|
53,480 |
|
|
|
18,198 |
|
|
|
(10,550 |
) |
|
|
87,993 |
|
Royalties and other income |
|
|
|
|
|
|
1,495 |
|
|
|
1,473 |
|
|
|
(76 |
) |
|
|
2,892 |
|
|
|
|
Operating income |
|
|
3,020 |
|
|
|
14,051 |
|
|
|
3,324 |
|
|
|
2,615 |
|
|
|
23,010 |
|
Interest (income) expense, net |
|
|
3,840 |
|
|
|
(2,843 |
) |
|
|
1,912 |
|
|
|
2,583 |
|
|
|
5,492 |
|
Income from equity investment |
|
|
11,924 |
|
|
|
3 |
|
|
|
|
|
|
|
(11,927 |
) |
|
|
|
|
|
|
|
Earnings before income taxes |
|
|
11,104 |
|
|
|
16,897 |
|
|
|
1,412 |
|
|
|
(11,895 |
) |
|
|
17,518 |
|
Income taxes |
|
|
(28 |
) |
|
|
6,066 |
|
|
|
315 |
|
|
|
10 |
|
|
|
6,363 |
|
|
|
|
Net earnings from continuing operations |
|
|
11,132 |
|
|
|
10,831 |
|
|
|
1,097 |
|
|
|
(11,905 |
) |
|
|
11,155 |
|
Earnings from discontinued operations,
net of tax |
|
|
(205 |
) |
|
|
(36 |
) |
|
|
|
|
|
|
36 |
|
|
|
(205 |
) |
|
|
|
Net earnings |
|
$ |
10,927 |
|
|
$ |
10,795 |
|
|
$ |
1,097 |
|
|
$ |
(11,869 |
) |
|
$ |
10,950 |
|
|
|
|
UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
First Quarter of Fiscal 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oxford |
|
|
|
|
|
Subsidiary |
|
|
|
|
|
|
Industries |
|
Subsidiary |
|
Non- |
|
Consolidating |
|
Consolidated |
|
|
(Parent) |
|
Guarantors |
|
Guarantors |
|
Adjustments |
|
Total |
|
|
|
Cash Flows From Operating Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by operating
activities |
|
$ |
(24,568 |
) |
|
$ |
3,597 |
|
|
$ |
1,843 |
|
|
$ |
10 |
|
|
$ |
(19,118 |
) |
Cash Flows from Investing Activities
Acquisitions |
|
|
(12,111 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12,111 |
) |
Investment in unconsolidated entity |
|
|
|
|
|
|
(9,063 |
) |
|
|
|
|
|
|
|
|
|
|
(9,063 |
) |
Purchases of property, plant and equipment |
|
|
(82 |
) |
|
|
(3,360 |
) |
|
|
(114 |
) |
|
|
|
|
|
|
(3,556 |
) |
|
|
|
Net cash (used in) provided by investing
activities |
|
|
(12,193 |
) |
|
|
(12,423 |
) |
|
|
(114 |
) |
|
|
|
|
|
|
(24,730 |
) |
Cash Flows from Financing Activities Change in debt |
|
|
26,793 |
|
|
|
(4 |
) |
|
|
(2 |
) |
|
|
|
|
|
|
26,787 |
|
Proceeds from issuance of common stock |
|
|
886 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
886 |
|
Change in inter-company payable |
|
|
(5,138 |
) |
|
|
4,734 |
|
|
|
402 |
|
|
|
2 |
|
|
|
|
|
Dividends on common stock |
|
|
(5,304 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,304 |
) |
|
|
|
Net cash (used in) provided by financing
activities |
|
|
17,237 |
|
|
|
4,730 |
|
|
|
400 |
|
|
|
2 |
|
|
|
22,369 |
|
Cash Flows from Discontinued Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating cash flows provided by
discontinued operations |
|
|
17,848 |
|
|
|
3,802 |
|
|
|
|
|
|
|
|
|
|
|
21,650 |
|
Net change in Cash and Cash Equivalents |
|
|
(1,676 |
) |
|
|
(294 |
) |
|
|
2,129 |
|
|
|
12 |
|
|
|
171 |
|
Effect of foreign currency translation |
|
|
|
|
|
|
|
|
|
|
92 |
|
|
|
|
|
|
|
92 |
|
Cash and Cash Equivalents at the
Beginning of Period |
|
|
5,175 |
|
|
|
1,134 |
|
|
|
4,181 |
|
|
|
(11 |
) |
|
|
10,479 |
|
|
|
|
Cash and Cash Equivalents at the End of
Period |
|
$ |
3,499 |
|
|
$ |
840 |
|
|
$ |
6,402 |
|
|
$ |
1 |
|
|
$ |
10,742 |
|
|
|
|
12
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with our unaudited
condensed consolidated financial statements and the notes to the unaudited condensed consolidated
financial statements contained in this report and the consolidated financial statements, notes to
consolidated financial statements and Managements Discussion and Analysis of Financial Condition
and Results of Operations contained in our fiscal 2007 Form 10-K.
OVERVIEW
We generate revenues and cash flow through the design, sale, production and distribution of
branded and private label consumer apparel and footwear for men, women and children and the
licensing of company-owned trademarks. Our principal markets and customers are located in
the United States and, to a lesser extent, the United Kingdom. We source substantially all of our
products through third party producers in foreign countries. We distribute our products
through our wholesale customers, which include chain stores, department stores, specialty stores,
specialty catalog retailers, mass merchants and Internet retailers. We also sell certain products
of our owned brands through our own retail stores.
We operate in an industry that is highly competitive. We believe our ability to continuously
evaluate and respond to changing consumer demands and tastes across multiple market segments,
distribution channels and geographic regions is critical to our success. Although our approach is
aimed at diversifying our risks, misjudging shifts in consumer preferences could have a negative
effect on future operating results. Other key aspects of competition include brand image, quality,
distribution method, price, customer service and intellectual property protection. We believe our
size and global operating strategies help us to compete successfully by providing opportunities for
operating synergies. Our success in the future will depend on our ability to continue to design
products that are acceptable to the markets we serve and to source our products on a competitive
basis while still earning appropriate margins.
We are executing a strategy to move towards a business model that is more focused on brands
owned or controlled by us. Our decision to follow this strategy is driven in part by the continued
consolidation in the retail industry and the increasing concentration of apparel manufacturing in a
relatively limited number of offshore markets, trends which make the private label business more
competitively challenging. Significant steps in our execution of this strategy include our June
2003 acquisition of the Tommy Bahama brand and operations; our July 2004 acquisition of the Ben
Sherman brand and operations; the divestiture of our private label Womenswear Group operations in
June 2006; the closure of certain of our manufacturing facilities located in Latin America and the
associated shifts in our Oxford Apparel and Lanier Clothes operating groups towards package
purchases from third party manufacturers in the Far East; and the acquisition of several
other trademarks and related operations including Solitude, Arnold Brant and Hathaway. In the
future, we will continue to look for opportunities by which we can make further progress with this
strategy, including through organic growth in our owned brands, the acquisition of additional
brands, and further streamlining or diposition of portions of our private label businesses that do not have the
potential to meet our operating income expectations.
The most significant factors impacting our results and contributing to the change in diluted
net earnings from continuing operations per common share of $0.27 in the first quarter of
transition period 2008 from $0.63 in the first quarter of fiscal 2007 are discussed by operating
group below:
|
|
|
The Tommy Bahama Group experienced a $3.8 million, or 22%, decrease in operating
income, primarily due to certain wholesale customers deferring the shipment of certain
products until the second quarter of transition period 2008 as well as the difficult
retail environment in the first quarter of transition period 2008 at our own retail
stores and our customers stores, particularly in Florida,
California, Nevada and Arizona. |
|
|
|
|
The Ben Sherman Group experienced a $1.2 million, or 61%, decrease in operating
income, primarily due to a reduction in net sales and operating income in the United
States as a result of our continuing efforts to restrict distribution of our Ben Sherman
products and the termination of the Evisu denim distribution agreement in the United
States. |
|
|
|
|
The Lanier Clothes Group experienced a $2.2 million, or 88%, decrease in operating
income primarily due to the continuing sluggish demand in the tailored clothing market. |
13
|
|
|
The Oxford Apparel Group experienced a $2.6 million, or 42%, decrease in operating
income primarily due to a decrease in net sales as we exited certain lines of business
as well as charges totaling $1.0 million that we incurred for asset impairment and
operating losses at our Tegucigalpa, Honduras manufacturing facility which we plan to
sell during transition period 2008. These items were partially offset by a reduction in
selling, general and administrative expenses from lines that we exited during the second
half of fiscal 2007 and the benefit of a full quarter of equity income from the
unconsolidated entity that owns the Hathaway trademark which was acquired during the
first quarter of fiscal 2007. |
|
|
|
|
Our effective tax rate was 22.8% and 36.3% in the first quarter of transition period
2008 and the first quarter of fiscal 2007, respectively. The decrease in our effective
tax rate was a result of (1) a change in the enacted tax rate in the United Kingdom in the
current quarter resulting in a decrease in deferred tax liabilities and income tax
expense, (2) the impact of the statute of limitations expiring on certain contingency
reserves during the first quarter of transition period 2008 and (3) the change in our
assertion regarding our initial investment in a foreign subsidiary in the fourth quarter
of fiscal 2007. |
On October 8, 2007, our board of directors approved a change to our fiscal year end. Effective
with our fiscal year which commenced on June 2, 2007, our fiscal year shall end at the end of the
Saturday closest to January 31 and shall, in each case, begin at the beginning of the day next
succeeding the last day of the preceding fiscal year. Accordingly, there will be a transition
period from June 2, 2007 through February 2, 2008. We will file a Form 10-Q for the quarter ending
August 31, 2007, a Form 10-Q for the quarter ending November 30, 2007 and a Form 10-K for the
transition period from June 2, 2007 through February 2, 2008.
RESULTS OF OPERATIONS
The following table sets forth the line items in our consolidated statements of earnings both
in dollars (in thousands) and the percentage change as compared to the comparable period in the
prior year. Individual line items of our consolidated statements of earnings may not be directly
comparable to those of our competitors, as statement of earnings classification of certain expenses
may vary by company.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter |
|
|
|
|
Transition Period |
|
Fiscal |
|
Percent |
|
|
2008 |
|
2007 |
|
Change |
|
|
|
Net sales |
|
$ |
237,947 |
|
|
$ |
284,078 |
|
|
|
(16.2 |
%) |
Cost of goods sold |
|
|
140,496 |
|
|
|
175,967 |
|
|
|
(20.2 |
%) |
|
|
|
Gross profit |
|
|
97,451 |
|
|
|
108,111 |
|
|
|
(9.9 |
%) |
Selling, general and administrative expenses |
|
|
88,861 |
|
|
|
86,446 |
|
|
|
2.8 |
% |
Amortization of intangible assets |
|
|
1,190 |
|
|
|
1,547 |
|
|
|
(23.1 |
%) |
Royalties and other operating income |
|
|
3,784 |
|
|
|
2,892 |
|
|
|
30.8 |
% |
|
|
|
Operating income |
|
|
11,184 |
|
|
|
23,010 |
|
|
|
(51.4 |
%) |
Interest expense, net |
|
|
4,996 |
|
|
|
5,492 |
|
|
|
(9.0 |
%) |
|
|
|
Earnings before income taxes |
|
|
6,188 |
|
|
|
17,518 |
|
|
|
(64.7 |
%) |
Income taxes |
|
|
1,412 |
|
|
|
6,363 |
|
|
|
(77.8 |
%) |
|
|
|
Net earnings from continuing operations |
|
|
4,776 |
|
|
|
11,155 |
|
|
|
(57.2 |
%) |
Earnings (loss) from discontinued
operations, net of taxes |
|
|
|
|
|
|
(205 |
) |
|
|
(100.0 |
%) |
|
|
|
Net earnings |
|
$ |
4,776 |
|
|
$ |
10,950 |
|
|
|
(56.4 |
%) |
|
|
|
14
The following table sets forth the line items in our consolidated statements of earnings as a
percentage of net sales. We have calculated all percentages based on actual data, but columns may
not add due to rounding.
|
|
|
|
|
|
|
|
|
|
|
Percent of Net Sales |
|
|
First Quarter |
|
|
Transition Period 2008 |
|
Fiscal 2007 |
|
|
|
Net sales |
|
|
100.0 |
% |
|
|
100.0 |
% |
Cost of goods sold |
|
|
59.0 |
% |
|
|
61.9 |
% |
|
|
|
Gross profit |
|
|
41.0 |
% |
|
|
38.1 |
% |
Selling, general and administrative expenses |
|
|
37.3 |
% |
|
|
30.4 |
% |
Amortization of intangible assets, net |
|
|
0.5 |
% |
|
|
0.5 |
% |
Royalties and other operating income |
|
|
1.6 |
% |
|
|
1.0 |
% |
|
|
|
Operating income |
|
|
4.7 |
% |
|
|
8.1 |
% |
Interest expense, net |
|
|
2.1 |
% |
|
|
1.9 |
% |
|
|
|
Earnings before income taxes |
|
|
2.6 |
% |
|
|
6.2 |
% |
Income taxes |
|
|
0.6 |
% |
|
|
2.2 |
% |
|
|
|
Net earnings from continuing operations |
|
|
2.0 |
% |
|
|
3.9 |
% |
|
|
|
Earnings (loss) from discontinued operations, net of taxes |
|
|
0.0 |
% |
|
|
(0.1 |
%) |
|
|
|
Net earnings |
|
|
2.0 |
% |
|
|
3.9 |
% |
|
|
|
OPERATING GROUP DEFINITION
Our business is operated through our four operating groups: Tommy Bahama, Ben Sherman, Lanier
Clothes and Oxford Apparel. We identify our operating groups based on the way our management
organizes the components of our business for purposes of allocating resources and assessing
performance. In connection with the close of fiscal 2007 and due to changes in our management
reporting structure, we reassessed and changed our operating groups for reporting purposes. All
fiscal 2007 amounts below have been restated to reflect the revised operating groups. Leaders of
the operating groups report directly to our Chief Executive Officer.
In Tommy Bahama, we design, source and market collections of mens and womens sportswear and
related products under brands that include Tommy Bahama, Indigo Palms and Island Soft. Tommy Bahamas
products can be found in our own retail stores as well as certain department stores and independent
specialty stores throughout the United States. The target consumers of Tommy Bahama are affluent 35
and older men and women who embrace a relaxed and casual approach to daily living. We also license
the Tommy Bahama name for a wide variety of product categories.
Ben Sherman is a London-based designer, marketer and distributor of branded sportswear and
footwear. We also license the Ben Sherman name to third parties for various product categories. Ben
Sherman was established in 1963 as an edgy, young mens, Mod-inspired shirt brand and has evolved
into a global lifestyle brand of apparel and footwear targeted at youthful-thinking men and women
ages 19 to 35. We offer a full Ben Sherman sportswear collection as well as tailored clothing,
footwear and accessories. Our Ben Sherman products can be found in certain department stores and a
variety of independent specialty stores, as well as in our own Ben Sherman retail stores.
Lanier Clothes designs and markets branded and private label mens suits, sportcoats, suit
separates and dress slacks across a wide range of price points. Our Lanier Clothes branded products
include Nautica, Kenneth Cole, Dockers, O Oscar and Geoffrey Beene, all of which are licensed to us
by third parties. In fiscal 2006, we acquired the Arnold Brant brand, which is an upscale tailored
brand that is intended to blend modern elements of style with affordable luxury. In addition to the
branded businesses, we design and source certain private label tailored clothing products.
Significant private label brands include Stafford, Alfani, Tasso Elba and Lands End. Our Lanier
Clothes products are sold to national chains, department stores, mass merchants, specialty stores,
specialty catalog retailers and discount retailers throughout the United States.
15
Oxford Apparel produces branded and private label dress shirts, suited separates, sport
shirts, dress slacks, casual slacks, outerwear, sweaters, jeans, swimwear, westernwear and golf
apparel. We design and source certain private label programs for several customers including
programs for Lands End, LL Bean and Eddie Bauer. Owned brands of Oxford Apparel include Oxford
Golf, Solitude, Wedge, Kona Wind, Tranquility Bay, Ely, Cattleman and Cumberland Outfitters. Oxford
Apparel also owns a two-thirds interest in the entity that owns the Hathaway trademark in the
United States and several other countries. Oxford Apparel also licenses from third parties the
right to use the Tommy Hilfiger, Dockers and United States Polo Association trademarks for certain
apparel products. Our Oxford Apparel products are sold to a variety of department stores, mass
merchants, specialty catalog retailers, discount retailers, specialty retailers, green grass golf
merchants and Internet retailers throughout the United States.
Corporate and Other is a reconciling category for reporting purposes and includes our
corporate offices, substantially all financing activities, LIFO inventory accounting adjustments
and other costs that are not allocated to the operating groups. LIFO inventory calculations are
made on a legal entity basis which does not correspond to our operating group definitions as
portions of Lanier Clothes and Oxford Apparel are on the LIFO basis of accounting. Therefore, LIFO
inventory accounting adjustments are not allocated to operating groups.
The information below presents certain information about our operating groups (in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter |
|
|
|
|
Transition Period |
|
Fiscal |
|
Percent |
|
|
2008 |
|
2007 |
|
Change |
|
|
|
Net Sales |
|
|
|
|
|
|
|
|
|
|
|
|
Tommy Bahama |
|
$ |
99,198 |
|
|
$ |
104,148 |
|
|
|
(4.8 |
%) |
Ben Sherman |
|
|
37,557 |
|
|
|
39,092 |
|
|
|
(3.9 |
%) |
Lanier Clothes |
|
|
35,581 |
|
|
|
40,682 |
|
|
|
(12.5 |
%) |
Oxford Apparel |
|
|
65,335 |
|
|
|
99,037 |
|
|
|
(34.0 |
%) |
Corporate and Other |
|
|
276 |
|
|
|
1,119 |
|
|
|
(75.3 |
%) |
|
|
|
Total Net Sales |
|
$ |
237,947 |
|
|
$ |
284,078 |
|
|
|
(16.2 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter |
|
|
|
|
Transition Period |
|
Fiscal |
|
Percent |
|
|
2008 |
|
2007 |
|
Change |
|
|
|
Operating Income |
|
|
|
|
|
|
|
|
|
|
|
|
Tommy Bahama |
|
$ |
13,067 |
|
|
$ |
16,835 |
|
|
|
(22.4 |
%) |
Ben Sherman |
|
|
742 |
|
|
|
1,920 |
|
|
|
(61.4 |
%) |
Lanier Clothes |
|
|
307 |
|
|
|
2,496 |
|
|
|
(87.7 |
%) |
Oxford Apparel |
|
|
3,601 |
|
|
|
6,195 |
|
|
|
(41.9 |
%) |
Corporate and Other |
|
|
(6,533 |
) |
|
|
(4,436 |
) |
|
|
(47.3 |
%) |
|
|
|
Total Operating Income |
|
$ |
11,184 |
|
|
$ |
23,010 |
|
|
|
(51.4 |
%) |
|
|
|
For further information regarding our operating groups, see Note 4 to our unaudited condensed
consolidated financial statements included in this report and Item 1. Business in our fiscal 2007
Form 10-K.
FIRST QUARTER OF TRANSITION PERIOD 2008 COMPARED TO FIRST QUARTER OF FISCAL 2007
The discussion below compares our operating results for the first quarter of transition period
2008 to the first quarter of fiscal 2007. Each percentage change provided below reflects the change
between these periods unless indicated otherwise.
Net sales decreased $46.1 million, or 16.2%, in the first quarter of transition period 2008 as
a result of the changes in sales as discussed below.
16
Tommy Bahama reported a decrease in net sales of $5.0 million, or 4.8%. The decrease was
primarily due to a decrease in unit sales of 10.3% resulting from:
|
|
|
some larger wholesale customers deferring the receipt of certain fall shipments until
the second quarter of transition period 2008 which we expect to
continue in future quarters; and |
|
|
|
|
the difficult retail environment in the first quarter of transition period 2008 at our
own retail stores and our customers stores, particularly
Florida, California, Nevada, and Arizona. |
These factors were partially offset by an increase in sales due to the total number of Tommy
Bahama retail stores, excluding licensed stores, increasing to 69 at August 31, 2007 from 62 at
September 1, 2006 and an increase in the average selling price per unit of 4.1%. The increase in
the average selling price per unit was primarily due to our sales of Tommy Bahama products at
retail representing a larger portion of total Tommy Bahama sales in the first quarter of transition
period 2008.
Ben Sherman reported a decrease in net sales of $1.5 million, or 3.9%. The decrease in net
sales was primarily due to a decrease in unit sales of 8.9% resulting from a unit sales decrease in
the Ben Sherman United States business. The decline in the United States Ben Sherman operations was
primarily due to our continuing efforts to restrict distribution of Ben Sherman products, decrease
inventory levels at retail and the termination of the Evisu denim distribution agreement. The
decrease in unit sales was partially offset by an increase in the average selling price per unit of
5.4%, which was primarily due to a 5% increase in the average exchange rate between the United
States dollar and the British pound sterling.
Lanier Clothes reported a decrease in net sales of $5.1 million, or 12.5%. The decrease was
primarily due to a decline in the average selling price per unit of 11.4% in addition to a unit
sales decrease of 1.3%. The decrease in the average selling price per unit and the unit sales were
primarily due to the continued sluggish demand in the tailored clothing market at retail.
Oxford Apparel reported a decrease in net sales of $33.7 million, or 34.0%. The decrease was
primarily due to a decrease in unit sales of 34.7% partially offset by an increase in the average
selling price per unit of 1.0%. The decrease in net sales and unit sales was anticipated in
connection with our strategy in the latter part of fiscal 2007 to exit certain lines of business
which we believe lacked the ability to meet our profitability goals.
Gross profit decreased 9.9% in the first quarter of transition period 2008. The decrease was
due to lower sales, as described above, partially offset by higher gross margins. Gross margins
increased to 41.0% during the first quarter of transition period 2008 from 38.1% during the first
quarter of fiscal 2007. The increase was primarily due to the increased proportion of Tommy Bahama
retail sales, which have higher gross margins, and decreased sales in
our wholesale businesses,
including the exit of certain lower margin businesses in our Oxford Apparel Group.
Our gross profit may not be directly comparable to those of our competitors, as income
statement classifications of certain expenses may vary by company.
Selling, general and administrative expenses, or SG&A, increased 2.8% in the first quarter of
transition period 2008. SG&A was 37.3% of net sales in the first quarter of transition period 2008
compared to 30.4% in the first quarter of fiscal 2007. The increase in SG&A was primarily due to
the expenses associated with operating additional Tommy Bahama and Ben Sherman retail stores. These
increases in SG&A were partially offset by reductions of
SG&A in our Oxford Apparel Group
related to businesses that we exited. The increase as a percentage of net sales was primarily due
to the reduction in net sales for the first quarter of transition period 2008 compared to the first
quarter of fiscal 2007.
Amortization of intangible assets decreased 23.1% in the first quarter of transition period
2008. The change was primarily due to certain intangible assets acquired as part of our previous
acquisitions, which generally have a greater amount of amortization in the earlier periods
following the acquisition than later periods. We expect that amortization expense will decrease in
future years unless we acquire additional intangible assets with definite lives.
Royalties and other operating income increased 30.8% in the first quarter of transition period
2008. The increase was primarily due to increased royalty income from the Tommy Bahama brand and
our share of equity income received from an unconsolidated entity that owns the Hathaway trademark
in the United States and several other countries, which we acquired in the first quarter of fiscal
2007.
17
Operating income decreased 51.4% in the first quarter of transition period 2008 due to the
changes discussed below.
Tommy Bahama reported a $3.8 million, or 22.4%, decrease in operating income in the first
quarter of transition period 2008. The net decrease was primarily due to lower net sales, as
discussed above, and higher SG&A due to the additional Tommy Bahama retail stores which we opened
subsequent to September 1, 2006. This was partially offset by a decrease in amortization of
intangible assets and an increase in royalty income.
Ben Sherman reported a $1.2 million, or 61.4%, decrease in operating income in the first
quarter of transition period 2008. The net decrease was primarily due to the decrease in sales in
the United States wholesale business, as discussed above, and increased SG&A due to additional
retail stores which we opened subsequent to September 1, 2006.
Lanier Clothes reported a $2.2 million, or 87.7%, decrease in operating income in the first
quarter of transition period 2008. The net decrease was primarily due to the continuing sluggish
demand in the tailored clothing market, as discussed above, that resulted in decreased sales and
gross margins.
Oxford Apparel reported a $2.6 million, or 41.9%, decrease in operating income in the first
quarter of transition period 2008. The net decrease was primarily due to reduced net sales and $1.0
million of losses relating to impairment charges and operating losses resulting from our
manufacturing facility in Tegucigalpa, Honduras, which we plan to sell during transition period
2008. These items were partially offset by reduced infrastructure costs associated with the lines
of business that we exited, as discussed above, and increased equity income from the unconsolidated
entity that owns the Hathaway trademark, which we acquired in the first quarter of fiscal 2007.
The Corporate and Other operating loss increased 47.3% in the first quarter of transition
period 2008. The increase in the operating loss was primarily due to the impact of LIFO accounting
adjustments in the two periods and the non-recurring reimbursement for corporate administrative
services to the purchaser of the assets of the Womenswear Group pursuant to a transition services
agreement, which ceased in fiscal 2007.
Interest expense, net decreased 9.0% in the first quarter of transition period 2008. The
decrease in interest expense was primarily due to lower levels of debt during the first quarter of
transition period 2008.
Income taxes were at an effective tax rate of 22.8% for the first quarter of transition period
2008 as compared to 36.3% for the first quarter of fiscal 2007. The decrease in the effective rate
reflects:
|
|
|
the impact on our deferred tax balances as a result of a change in the enacted tax
rate in the United Kingdom; |
|
|
|
|
the impact of the statute of limitations expiring for certain contingency reserves
during the first quarter of transition period 2008; and |
|
|
|
|
the change, during the fourth quarter of fiscal 2007, in our assertion regarding our
initial investment in a foreign subsidiary, which is now considered permanently
reinvested. |
We believe our annual effective tax rate on current year earnings, before the impact of any
discrete events, including but not limited to changes in enacted rates or resolution of contingency
reserves during the year is approximately 34.0% to 34.5%.
Discontinued operations in fiscal 2007 includes incidental items related to the operations of
our Womenswear Group, which was disposed of on June 2, 2006.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Our primary source of revenue and cash flow is our operating activities in the United States
and to some extent the United Kingdom. When cash inflows are less than cash outflows, subject to
their terms, we also have access to amounts under our U.S. Revolver and U.K. Revolver, each of
which are described below. We may seek to finance future capital investment programs through
various methods, including, but not limited to, cash flow from operations, borrowings under our
current or additional credit facilities and sales of debt or equity securities.
18
Our liquidity requirements arise from the funding of our working capital needs, which include
inventory, other operating expenses and accounts receivable, funding of capital expenditures,
payment of quarterly dividends, repayment of our indebtedness and acquisitions, if any. Generally,
our product purchases are acquired through trade letters of credit which are drawn against our
lines of credit at the time of shipment of the products and reduce the amounts available under our
lines of credit when issued.
Cash and cash equivalents on hand was $15.7 million at August 31, 2007 and $10.7 million at
September 1, 2006, respectively.
Operating Activities
During the first quarter of transition period 2008 and the first quarter of fiscal 2007, our
continuing operations used $0.1 million and $19.1 million of cash, respectively. The operating cash
flows were primarily the result of earnings from continuing operations for the period adjusted for
non-cash activities such as depreciation and amortization and changes in our working capital
accounts. In the first quarter of transition period 2008, the significant changes in working
capital included higher amounts of inventories and lower current liabilities partially offset by
lower receivables, each as discussed below. In the first quarter of fiscal 2007, the significant
changes in working capital included significant increases in receivables, inventories and prepaid
expenses and reductions in current liabilities.
Our working capital ratio, which is calculated by dividing total current assets by total
current liabilities, was 2.95:1, 2.35:1 and 2.52:1 at August 31, 2007, June 1, 2007 and September
1, 2006, respectively. The change in our working capital ratio between August 31, 2007 and
September 1, 2006 was due to the 21% decrease in current liabilities partially offset by the 9%
reduction in current assets, as discussed below.
Receivables, net were $123.0 million and $157.6 million at August 31, 2007 and September 1,
2006, respectively, representing a decrease of 22%. The decrease was primarily due to the lower
wholesale sales in the first quarter of transition period 2008. Days sales outstanding for our
wholesale accounts receivable was 50 days and 52 days at August 31, 2007 and September 1, 2006,
respectively.
Inventories were $155.1 million and $139.4 million at August 31, 2007 and September 1, 2006,
respectively, an increase of 11%. Inventory for the Tommy Bahama operating group increased to
support additional retail stores. Tommy Bahama inventory levels were also impacted by the deferral
of certain shipments by some of our larger customers and the difficult retail environment during
the first quarter of transition period 2008. Inventory for Lanier Clothes increased due to lower
than planned sales during the latter part of fiscal 2007 and the first quarter of transition period
2008 which resulted in higher than optimal levels in our replenishment programs and seasonal
inventories at August 31, 2007. We expect the inventory levels in Lanier Clothes to decrease to a
more optimal level within the next nine months. Inventory for Ben Sherman remained relatively
consistent with the prior year. Inventory levels for Oxford Apparel decreased as we have refocused
the operations of Oxford Apparel towards higher-margin products and discontinued certain programs
that previously required a significant inventory investment. Our days supply of inventory on hand,
using a FIFO basis, was 116 days and 99 days as of August 31, 2007 and September 1, 2006,
respectively, due to the changes by operating group discussed above.
Prepaid expenses were $22.6 million and $23.9 million at August 31, 2007 and September 1,
2006, respectively. The decrease in prepaid expenses was primarily due to a decrease in prepaid
advertising as the timing of the payment for certain advertising events was delayed in the first
quarter of transition period 2008.
Current assets related to discontinued operations and current liabilities related to
discontinued operations were $18.1 million and $11.5 million, respectively at September 1, 2006.
The net assets related to discontinued operations at September 1, 2006 were converted to cash
during fiscal 2007. Therefore, there were no assets or liabilities related to discontinued
operations at August 31, 2007 or June 1, 2007.
Current liabilities, excluding current liabilities related to discontinued operations of $11.5
million at September 1, 2006, were $107.4 million and $127.4 million at August 31, 2007 and
September 1, 2006, respectively. The decrease in current liabilities was primarily due to the
timing of payments for inventory, accrued compensation and income taxes and the reclassification of
approximately $2.2 million from income taxes payable upon the adoption of FIN 48 in the first
quarter of transition period 2008.
19
Non-current deferred income taxes were $71.3 million and $78.4 million at August 31, 2007 and
September 1, 2006, respectively. The change resulted primarily from the reclassification of
approximately $3.7 million from non-current deferred income taxes as a result of the adoption of
FIN 48 in the first quarter of transition period 2008, the impact of the change in foreign currency
exchange rates on deferred income tax balances and changes in property, plant and equipment basis
differences.
Other non-current liabilities, which primarily consist of deferred rent and deferred
compensation amounts, were $49.5 million and $32.4 million at August 31, 2007 and September 1,
2006, respectively. The increase was primarily due to the recognition of additional deferred rent
and deferred compensation during the twelve months subsequent to September 1, 2006 and the
reclassification of approximately $5.3 million to other non-current liabilities from income taxes
payable and non-current deferred income taxes as a result of the adoption of FIN 48 in the first
quarter of transition period 2008.
Investing Activities
During the first quarter of transition period 2008, investing activities used $28.5 million in
cash. We paid approximately $21.7 million related to acquisitions and investments in an
unconsolidated entity, primarily consisting of the final Tommy Bahama earn-out payment.
Additionally, we incurred $6.9 million of capital expenditures, primarily related to new Tommy
Bahama retail stores.
During the first quarter of fiscal 2007, investing activities used $24.7 million in cash. We
paid approximately $21.2 million related to acquisitions, consisting of the fiscal 2006 Tommy
Bahama earn-out payment and the acquisition of an ownership interest in an unconsolidated entity
that owns the Hathaway trademark in the United States and certain other countries. Additionally, we
incurred capital expenditures of $3.6 million, primarily related to new Tommy Bahama and Ben
Sherman retail stores.
Non-current assets, including property, plant and equipment, goodwill, intangible assets and
other non-current assets, increased primarily as a result of the fiscal 2007 earn-out related to
the Tommy Bahama acquisition, capital expenditures for our retail stores and the impact of changes
in foreign currency exchange rates. These increases were partially offset by depreciation related
to our property, plant and equipment and amortization of our intangible assets.
Financing Activities
During the first quarter of transition period 2008, financing activities provided $7.2 million
in cash. The cash flow used in our investing activities and to pay dividends on our common shares
resulted in the need to borrow additional amounts under our U.S. Revolver during the first quarter
of transition period 2008. We also received $0.6 million of cash from the exercise of employee
stock options. We paid an aggregate of $3.2 million during the first quarter of transition period
2008 for dividends on our common shares declared for such period.
During the first quarter of fiscal 2007, financing activities provided $22.4 million in cash,
primarily from additional borrowings, net of repayments, under our U.S. Revolver to fund our
investments and working capital needs during the period. We also received $0.9 million of cash from
the exercise of employee stock options. These cash proceeds were partially offset by the use of
cash to pay $5.3 million of dividends on our common shares declared in the fourth quarter of fiscal
2006 and first quarter of fiscal 2007.
On August 31, 2007, we paid a cash dividend of $0.18 per share to shareholders of record as of
August 15, 2007. That dividend is the 189th consecutive quarterly dividend we have paid since we
became a public company in July 1960. We expect to pay dividends in future quarters. However, we
may decide to discontinue or modify the dividend payment at any time if we determine that other
uses of our capital, including, but not limited to, payment of debt outstanding, stock repurchases
or funding of future acquisitions, may be in our best interest; if our expectations of future cash
flows and future cash needs outweigh the ability to pay a dividend; or if the terms of our credit
facilities or indentures limit our ability to pay dividends. We may borrow to fund dividends in the
short term based on our expectations of operating cash flows in future periods. All cash flow from
operations will not necessarily be paid out as dividends in all periods.
20
Debt, including short term debt, was $209.5 million and $227.0 million as of August 31, 2007
and September 1, 2006, respectively. The decrease resulted primarily from the cash generated by our
operating activities and the proceeds from the remaining net assets related to our disposition of
substantially all of the assets of our Womenswear Group operations. These amounts less amounts used
in our investing activities, discussed above, were used to reduce outstanding debt.
Cash Flows from Discontinued Operations
Our Womenswear Group generated cash flow of $21.7 million during the first quarter of fiscal
2007. The cash flows from discontinued operations for the first quarter of fiscal 2007 reflects the
realization and disposition of retained assets and liabilities after the transaction date, June 2,
2006. We do not anticipate significant cash flows from discontinued operations in future periods.
Liquidity and Capital Resources
The table below provides a description of our significant financing arrangements and the
amounts outstanding under these financing arrangements (in thousands) at August 31, 2007, June 1,
2007 and September 1, 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 31, |
|
June 1, |
|
September |
|
|
2007 |
|
2007 |
|
1, 2006 |
|
$280 million U.S. Secured Revolving Credit Facility
(U.S. Revolver), which accrues interest (8.25% at
August 31, 2007), unused line fees and letter of credit
fees based upon a pricing grid which is tied to certain
debt ratios, requires interest payments monthly with
principal due at maturity (July 2009), and is
collateralized by substantially all the assets of
Oxford Industries, Inc. and our consolidated domestic
subsidiaries |
|
$ |
9,800 |
|
|
$ |
|
|
|
$ |
27,700 |
|
|
£12 million Senior Secured Revolving Credit Facility
(U.K. Revolver), which accrues interest at the banks
base rate plus 1.0%, requires interest payments monthly
with principal payable on demand or at maturity (July
2008), and is collateralized by substantially all the
United Kingdom assets of Ben Sherman |
|
|
|
|
|
|
|
|
|
|
101 |
|
|
$200 million Senior Unsecured Notes (Senior Unsecured
Notes), which accrue interest at 8.875% (effective
interest rate of 9.0%) and require interest payments
semi-annually on June 1 and December 1 of each year,
require payment of principal at maturity (June 2011),
are subject to certain prepayment penalties and are
guaranteed by our consolidated domestic subsidiaries |
|
|
200,000 |
|
|
|
200,000 |
|
|
|
200,000 |
|
|
Other debt |
|
|
407 |
|
|
|
403 |
|
|
|
24 |
|
|
Total debt |
|
|
210,207 |
|
|
|
200,403 |
|
|
|
227,825 |
|
|
Unamortized discount on Senior Unsecured Notes |
|
|
(661 |
) |
|
|
(706 |
) |
|
|
(839 |
) |
|
Short-term debt and current maturities of long-term debt |
|
|
(407 |
) |
|
|
(403 |
) |
|
|
(122 |
) |
|
Long-term debt, less current maturities |
|
$ |
209,139 |
|
|
$ |
199,294 |
|
|
$ |
226,864 |
|
|
Our U.S. Revolver, U.K. Revolver and Senior Unsecured Notes each include certain debt covenant
restrictions that require us or our subsidiaries to maintain certain financial ratios that we
believe are customary for similar facilities. As of August 31, 2007, we were compliant with all
financial covenants and restricted payment provisions related to our debt agreements.
Our U.S. Revolver also includes limitations on certain restricted payments, including payment
of dividends. Pursuant to the U.S. Revolver agreement, we may pay dividends if our Total Debt to
EBITDA ratio, as defined in the U.S. Revolver agreement, for the four preceding quarters would have
been not more than 3.00:1.00 after giving effect to the dividend
payment. Additionally, our Senior Unsecured Notes include limitations on the
payment of dividends. Pursuant to the indenture governing our Senior Unsecured Notes, we may make
certain Restricted Payments, as defined in the indenture, to the extent that the sum of the
Restricted Payments do not exceed the allowable amount. Restricted Payments include the payment of
dividends, the repurchase of our common shares, repayment of certain debt, the payment of amounts
pursuant to earn-out agreements and certain investments. The allowable amount includes 50% of GAAP
net income, as adjusted, cash proceeds from the issuance of shares of our common stock including
stock options and restricted stock awards and certain other items. We were compliant with these
limitations as of August 31, 2007 and do not anticipate that our U.S. Revolver or Senior Unsecured
Notes will limit our ability to pay dividends during transition period 2008.
21
Our U.S. Revolver and U.K. Revolver are used to finance trade letters of credit and standby
letters of credit, as well as provide funding for other operating activities and acquisitions. As
of August 31, 2007, approximately $60.8 million of trade letters of credit and other limitations on
availability were outstanding against our U.S. Revolver and the U.K. Revolver. The aggregate net
availability under our U.S. Revolver and U.K. Revolver agreements was approximately $243.4 million
as of August 31, 2007.
The Senior Unsecured Notes are subject to redemption at any time after June 1, 2007, at our
option, in whole or in part, on not less than 30 nor more than 60 days prior notice. During the
period from June 1, 2007 through May 31, 2008, the amount paid at redemption would be equal to
104.438% of the aggregate principal amount of the Senior Unsecured Notes to be redeemed together
with accrued and unpaid interest, if any, to the date of redemption. During the period from June 1,
2008 through May 31, 2009, the amount paid at redemption would be equal to 102.219% of the
aggregate principal amount of the Senior Unsecured Notes to be redeemed together with accrued and
unpaid interest, if any, to the date of redemption. Subsequent to June 1, 2009, the amount paid at
redemption would be equal to 100.000% of the aggregate principal amount of the Senior Unsecured
Notes to be redeemed together with accrued and unpaid interest, if any, to the date of redemption.
Our debt to total capitalization ratio was 31%, 31% and 36% at August 31, 2007, June 1, 2007
and September 1, 2006, respectively. The change in this ratio from September 1, 2006 was primarily
a result of the reduction in our debt levels and the increase in retained earnings during the
periods subsequent to September 1, 2006. Our debt level, as well as the ratio of debt to total
capitalization, in future years may not be comparable to historical amounts as we continuously
assess and periodically make changes to our capital structure and may make additional acquisitions
or investments in the future.
We anticipate that we will be able to satisfy our ongoing cash requirements, which generally
consist of working capital needs, capital expenditures (primarily for the opening of retail stores)
and interest payments on our debt during transition period 2008, primarily from cash on hand and
cash flow from operations supplemented by borrowings under our lines of credit, as necessary. Our
need for working capital is typically seasonal with greatest requirements generally existing from
October through March as we build inventory for the spring/summer season. Our capital needs will
depend on many factors, including our growth rate, the need to finance increased inventory levels
and the success of our various products.
If appropriate investment opportunities arise that exceed the availability under our existing
credit facilities, we believe that we will be able to fund such acquisitions through additional or
refinanced debt facilities or the issuance of additional equity. However, our ability to obtain
additional borrowings or refinance our credit facilities will depend on many factors, including the
prevailing market conditions, our financial condition and our ability to negotiate favorable terms
and conditions. There is no assurance that financing would be available on terms that are
acceptable or favorable to us, if at all. At maturity of our U.K. Revolver, U.S. Revolver and
Senior Unsecured Notes, we anticipate that we will be able to refinance the facilities and debt
with terms available in the market at that time.
Our contractual obligations as of August 31, 2007 have not changed significantly from the
contractual obligations outstanding at June 1, 2007 other than changes in the amounts outstanding
under the U.S. Revolver and U.K. Revolver, amounts outstanding pursuant to letters of credit (both
as discussed above) and new leases for our recently opened retail stores, none of which occurred
outside the ordinary course of business.
Our anticipated capital expenditures for the eight months of transition period 2008 are
expected to approximate $25 million, including $6.9 million incurred during the first quarter of
transition period 2008. These expenditures primarily relate to the continued expansion of our Tommy
Bahama and Ben Sherman retail operations.
Off Balance Sheet Arrangements
We have not entered into agreements which meet the Securities and Exchange Commissions
definition of an off balance sheet financing arrangement, other than operating leases, and have
made no financial commitments to or guarantees with respect to any unconsolidated subsidiaries or
special purpose entities.
22
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The discussion and analysis of our financial condition and results of operations are based
upon our unaudited condensed consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States. The preparation of
these financial statements requires us to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses and related disclosures. On a periodic basis,
we evaluate our estimates, including those related to receivables, inventories, goodwill,
intangible assets, income taxes, contingencies and other accrued expenses. We base our estimates on
historical experience and on various other assumptions. Actual results may differ from these
estimates under different assumptions or conditions. We believe that we have appropriately applied
our critical accounting policies. However, in the event that inappropriate assumptions or methods
were used relating to the critical accounting policies below, our consolidated statements of
earnings could be misstated.
The detailed summary of significant accounting policies is included in Note 1 to our
consolidated financial statements contained in our fiscal 2007 Form 10-K. The following is a brief
discussion of the more significant accounting policies, estimates and methods we use.
Revenue Recognition and Accounts Receivable
Our revenue consists of wholesale, retail store and restaurant sales. We consider revenue
realized or realizable and earned when the following criteria are met: (1) persuasive evidence of
an agreement exists, (2) delivery has occurred, (3) our price to the buyer is fixed and
determinable, and (4) collectibility is reasonably assured.
In the normal course of business we offer certain discounts or allowances to our wholesale
customers. Wholesale operations sales are recorded net of such discounts, allowances, advertising
support not specifically relating to the reimbursement for actual advertising expenses by our
customers and provisions for estimated returns. As certain allowances and other deductions are not
finalized until the end of a season, program or other event which may not have occurred yet, we
estimate such discounts and allowances on an ongoing basis. Significant considerations in
determining our estimates for discounts and allowances to wholesale customers include historical
and current trends, projected seasonal results, an evaluation of current economic conditions and
retailer performance. Actual discounts and allowances to our wholesale customers have not differed
materially from our estimates in prior periods. As of August 31, 2007 our total reserves for
discounts and allowances were approximately $15.6 million, thus a hypothetical change in our
allowances of 10% would have a pre-tax impact of $1.6 million on net earnings.
In circumstances where we become aware of a specific customers inability to meet its
financial obligations, a specific reserve for bad debts is taken as a reduction to accounts
receivable to reduce the net recognized receivable to the amount reasonably expected to be
collected. For all other customers, we recognize estimated reserves for bad debts and uncollectible
chargebacks based on our historical collection experience, the financial condition of our
customers, an evaluation of current economic conditions and anticipated trends, each of which are
subjective and require certain assumptions. Actual charges for uncollectible amounts have not
differed materially from our estimates in prior periods. As of August 31, 2007 our allowance for
doubtful accounts was approximately $1.6 million, thus a change in our reserves of 10% would have a
minimal impact on our consolidated statement of net earnings.
Inventories
We
continually evaluate the composition of our inventories for identification of distressed inventory.
In performing this evaluation we consider slow-turning products, prior seasons fashion products
and current levels of replenishment program products as compared to future sales estimates. For
wholesale inventory, we estimate the amount of goods that we will not be able to sell in the normal
course of business and write down the value of these goods as necessary. For retail inventory, we
provide an allowance for shrinkage and goods expected to be sold below cost. As the amount to be
ultimately realized for the goods is not necessarily known at period end, we must utilize certain
assumptions considering historical experience, the age of the inventory, inventory quantity,
quality and mix, historical sales trends, future sales projections, consumer and retailer
preferences, market trends and general economic conditions.
23
For
operating group reporting all inventory is carried at the lower of
FIFO cost or market. However, for consolidated financial reporting, approximately 60% of our inventories are valued at the
lower of LIFO cost or market. LIFO inventory calculations are made on a legal entity basis which
does not correspond to our operating group definitions. Therefore, LIFO inventory accounting
adjustments are not allocated to the respective operating groups. LIFO reserves are based on the
Producer Price Index as published by the United States Department of Labor. As part of LIFO
accounting, markdowns for inventory valued at LIFO cost are deferred until the period in which the
goods are sold to the extent that the markdowns are less than the
LIFO reserve. Markdowns greater than the allocated LIFO reserve are
taken immediately and are not deferred. Both the LIFO reserve and the markdown deferral are reflected in Corporate and
Other for operating group reporting purposes included in Note 4 to our consolidated financial
statements and in the results of operations in our Managements Discussion and Analysis of
Financial Condition and Results of Operations included in this report.
A change in the markdowns of our inventory valued at the lower of LIFO cost or market method
would not be expected to have a material impact on our consolidated financial statements due to the
existence of our LIFO reserve of $39.3 million. A hypothetical 10% change in the amount of
markdowns for inventory valued on the lower of FIFO cost or market method would have a pre-tax
impact of approximately $0.2 million on net earnings.
Goodwill, net
Goodwill is recognized as the amount by which the cost to acquire a company or group of assets
exceeds the fair value of assets acquired less any liabilities assumed at acquisition. Such
goodwill is allocated to the respective reporting unit at the time of acquisition. Goodwill is not
amortized but instead evaluated for impairment annually or more frequently if events or
circumstances indicate that the goodwill might be impaired. The evaluation of the recoverability of
goodwill includes valuations of each applicable underlying business using fair value techniques and
market comparables which may include a discounted cash flow analysis or an independent appraisal.
Significant estimates included in such a valuation include future cash flow projections of the
business, which are based on our future expectations for the business. Additionally, the discount
rate used in this analysis is an estimate of the risk adjusted market-based cost of capital. If
this analysis indicates an impairment of goodwill balances, the impairment is recognized in the
consolidated financial statements. Such estimates of future operating results and discount rates
involve significant uncertainty, and if our plans or anticipated results change, the impact on our
financial statements could be significant.
Intangible Assets, net
At acquisition, we estimate and record the fair value of purchased intangible assets, which
primarily consist of trademarks and trade names, license agreements and customer relationships. The
fair values and useful lives of these intangible assets are estimated based on managements
assessment as well as independent third party appraisals in some cases. Such valuation may include
a discounted cash flow analysis of anticipated revenues or cost savings resulting from the acquired
intangible asset using an estimate of a risk-adjusted market-based cost of capital as the discount
rate.
Amortization of intangible assets with finite lives, which consist of license agreements,
certain trademarks, customer relationships and covenants not to compete, is recognized over their
estimated useful lives using a method of amortization that reflects the pattern in which the
economic benefits of the intangible assets are consumed or otherwise realized. We amortize our
intangible assets with finite lives for periods of up to 20 years. The determination of an
appropriate useful life for amortization is based on our plans for the intangible asset as well as
factors outside of our control. Intangible assets with finite lives are reviewed for impairment
periodically if events or changes in circumstances indicate that the carrying amount may not be
recoverable. If expected future undiscounted cash flows from operations are less than their
carrying amounts, an asset is determined to be impaired and a loss is recorded for the amount by
which the carrying value of the asset exceeds its fair value. During fiscal 2007, we recognized
approximately $6.4 million of expense for the amortization of intangible assets. If the useful
lives assigned to these intangible assets with finite lives had been reduced by 10% at acquisition,
the amount of additional amortization expense would have been approximately $0.6 million during fiscal
2007.
24
Trademarks with indefinite lives are not amortized but instead evaluated for impairment
annually or more frequently if events or circumstances indicate that the intangible asset might be
impaired. The evaluation of the recoverability of trademarks with indefinite lives includes
valuations based on a discounted cash flow analysis utilizing the relief from royalty method. This
approach is dependent upon a number of uncertain factors including estimates of future net sales,
growth rates, royalty rates for the trademarks and discount rates. Such estimates involve
significant uncertainty, and if our plans or anticipated results change, the impact on our financial
statements could be significant. If this analysis indicates an impairment of a trademark with an
indefinite useful life, the amount of the impairment is recognized in the consolidated financial
statements based on the amount that the carrying value exceeds the estimated fair value of the
asset.
Income Taxes
Significant judgment is required in determining the provision for income taxes for a company
with global operations. The ultimate tax outcome may be uncertain for many transactions. Our provisions
are based on federal and projected state statutory rates and take
into account our quarterly assessment of permanent book/tax
differences, income tax credits and uncertain tax positions. We estimate the effective tax
rate for the full fiscal year and record a quarterly income tax provision in accordance with the
anticipated annual rate. As the fiscal year progresses the estimate is refined based upon actual
events and earnings by jurisdiction and to reflect changes in our
judgment of the likely outcome of uncertain tax positions. This estimation process periodically results
in a change to the expected effective tax rate for the fiscal year. When this occurs, we adjust the
income tax provision during the quarter in which the change in estimate occurs so that the
year-to-date provision reflects the expected annual rate. Income tax expense may also be adjusted
for discrete events occurring during the year, such as the enactment
of tax rate changes or changes in reserves for uncertain tax
positions, which are reflected in the quarter that the changes occur. In
fiscal 2007, a 1% increase in the effective tax rate percentage would have impacted net earnings by
less than $1.0 million
SEASONALITY
Although our various product lines are sold on a year-round basis, the demand for specific
products or styles may be highly seasonal. For example, the demand for golf and Tommy Bahama
products is higher in the spring and summer seasons. Products are sold prior to each of the retail
selling seasons, including spring, summer, fall and holiday. As the timing of product shipments and
other events affecting the retail business may vary, results for any particular quarter may not be
indicative of results for the full year. The percentage of our net sales by quarter for fiscal 2007
was 25%, 26%, 24% and 25%, respectively, and the percentage of our operating income by quarter for
fiscal 2007 was 23%, 25%, 19% and 33%, respectively, which may not be indicative of the
distribution in future years.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Trade Policy Risk
Pursuant to the 1994 Agreement on Textiles and Clothing, quotas among World Trade
Organization, or WTO, member countries, including the United States, were eliminated on January 1,
2005. As a result, the international textile and apparel trade is undergoing a significant
realignment which is changing our sourcing patterns, could disrupt our supply chain and could put
us at a disadvantage to our competitors.
25
In addition, notwithstanding quota elimination, under the terms of Chinas WTO accession
agreement, the United States and other WTO members may re-impose quotas on specific categories of
products in the event it is determined that imports from China have surged or may surge and are
threatening to create a market disruption for such categories of products (so called safeguard
quota). Pursuant to this authority, both the United States and the European Union re-imposed
quotas on several important product categories from China during calendar 2005. Subsequent to the
imposition of safeguard quotas, both the United States and China negotiated bilateral quota
agreements that cover a number of important product categories and will remain in place until
December 31, 2008 in the case of the U.S.-China bilateral agreement and until December 31, 2007 in
the case of the European Union-China bilateral agreement. The establishment of these quotas could
cause disruption in our supply chain. Also, until December 2013, the EU and any other WTO country,
can invoke a product specific safeguard mechanism on any such products, including textile and
apparel products, that are being imported from China in such increased quantities and under such
conditions as to cause or threaten to cause market disruption to the domestic producers as a whole
of like or directly competitive products. Relief may come in the form of additional duties or a
quota and may remain in place for either two years or three years depending on whether the increase
in imports is absolute, or relative, compared to world imports. Any such additional duties or quota
could cause disruption in our supply chain as well. During fiscal 2007, we sourced approximately
40% of our product purchases from China. We believe that alternative supply sources at comparable
prices would be readily available if quotas were to limit our supply from China.
We benefit from duty-free treatment under international trade agreements and regulations such
as the North American Free Trade Agreement and the Andean Trade Preference and Drug Eradication
Act. The elimination of such treatment or our inability to qualify for such benefits would
adversely impact our business and by increasing our cost of goods sold.
Furthermore, under long-standing statutory authority applicable to imported goods in general,
the United States may unilaterally impose additional duties: (i) when imported merchandise is sold
at less than fair value and causes material injury, or threatens to cause material injury, to the
domestic industry producing a comparable product (generally known as anti-dumping duties); or
(ii) when foreign producers receive certain types of governmental subsidies, and when the
importation of their subsidized goods causes material injury, or threatens to cause material
injury, to the domestic industry producing a comparable product (generally known as
countervailing duties). The imposition of anti-dumping or countervailing duties on products we
import would increase the cost of those products to us. We may not be able to pass on any such cost
increase to our customers.
Interest Rate Risk
We are exposed to market risk from changes in interest rates on our indebtedness, which could
impact our financial condition and results of operations in future periods. Our objective is to
limit the impact of interest rate changes on earnings and cash flow, primarily through a mix of
fixed and variable rate debt. This assessment also considers our need for flexibility in our
borrowing arrangements resulting from the seasonality of our business, among other factors. We
continuously monitor interest rates to consider the sources and terms of our borrowing facilities
in order to determine whether we have achieved our interest rate management objectives.
As of August 31, 2007, we did not have any debt outstanding subject to variable interest
rates. Our average variable rate borrowings for fiscal 2007 were $8.1 million, with an average
interest rate of 8.1% during the period. Our lines of credit are based on variable interest rates
in order to provide the necessary borrowing flexibility we require. To the extent that the amounts
outstanding under our variable rate lines of credit change, our exposure to changes in interest
rates would also change. If our average interest rate for fiscal 2007 increased by 100 basis
points, our interest expense would have been approximately $0.1 million higher during the fiscal
year. Interest expense in fiscal 2007 may not be indicative of interest expense in future years,
particularly if we acquire additional businesses or change our capital structure.
As of August 31, 2007, we had approximately $199.3 million of fixed rate debt and capital
lease obligations outstanding with substantially all the debt, consisting of our Senior Unsecured
Notes, having an effective interest rate of 9.0% and maturing in June 2011. Such agreements may
result in higher interest expense than could be obtained under variable interest rate arrangements
in certain periods, but are primarily intended to provide long-term financing of our capital
structure and minimize our exposure to increases in interest rates. A change in the market interest
rate impacts the fair value of our fixed rate debt but has no impact on interest incurred or cash
flows.
26
None of our debt was entered into for speculative purposes. We generally do not engage in
hedging activities with respect to our interest rate risk and do not enter into such transactions
on a speculative basis.
Foreign Currency Risk
To the extent that we have assets and liabilities, as well as operations, denominated in
foreign currencies that are not hedged, we are subject to foreign currency transaction and
translation gains and losses. We view our foreign investments as long-term and as a result we
generally do not hedge such foreign investments. We do not hold or issue any derivative financial
instruments related to foreign currency exposure for speculative purposes.
We receive United States dollars for most of our product sales. Less than 15% of our net sales
during fiscal 2007 were denominated in currencies other than the United States dollar. These sales
primarily relate to Ben Sherman sales in the United Kingdom and Europe. With the United States
dollar trading at a weaker position than it has historically traded versus the pound sterling and
the Canadian dollar, a strengthening United States dollar could result in lower levels of sales and
earnings in our consolidated statements of earnings in future periods, although the sales in
foreign currencies could be equal to or greater than amounts as previously reported. Based on our
fiscal 2007 sales denominated in foreign currencies, if the dollar had strengthened by 5% in fiscal
2007, we would have experienced a decrease in sales of approximately $6.0 million.
Substantially all of our inventory purchases from contract manufacturers throughout the world
are denominated in United States dollars. Purchase prices for our products may be impacted by
fluctuations in the exchange rate between the United States dollar and the local currencies of the
contract manufacturers, which may have the effect of increasing our cost of goods sold in the
future. Due to the number of currencies involved and the fact that not all foreign currencies react
in the same manner against the United States dollar, we cannot quantify in any meaningful way the
potential effect of such fluctuations on future costs. However, we do not believe that exchange
rate fluctuations will have a material impact on our inventory costs in future periods.
We may from time to time purchase short-term foreign currency forward exchange contracts to
hedge against changes in foreign currency exchange rates. During fiscal 2007, foreign currency
forward exchange contracts outstanding did not exceed $30 million at any time. When such contracts
are outstanding, the contracts are marked to market with the offset being recognized in our
consolidated statement of earnings or other comprehensive income if the transaction does not or
does, respectively, qualify as a hedge in accordance with accounting principles generally accepted
in the United States. As of August 31, 2007, we had entered into such contracts which have not been
settled totaling approximately $7.0 million, all with settlement dates within the next twelve
months. The impact of these contracts on our consolidated financial statements was not material as
of August 31, 2007.
Commodity and Inflation Risk
We are affected by inflation and changing prices primarily through the purchase of raw
materials and finished goods and increased operating costs to the extent that any such fluctuations
are not reflected by adjustments in the selling prices of our products. Also, in recent years,
there has been deflationary pressure on selling prices, particularly in our private label
businesses. While we have been successful to some extent in offsetting such deflationary pressures
through product improvements and lower costs, if deflationary price trends outpace our ability to
obtain further price reductions, our profitability may be adversely affected. Inflation/deflation
risks are managed by each operating group through selective price increases when possible,
productivity improvements and cost containment initiatives. We do not enter into significant
long-term sales or purchase contracts and we do not engage in hedging activities with respect to
such risk.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure controls are procedures that are designed to ensure that information required to be
disclosed in our reports under the Securities Exchange Act of 1934, such as this quarterly report
on Form 10-Q, is reported in accordance with the rules of the SEC. Disclosure controls are also
designed to ensure that such information is accumulated and communicated to management, including
our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure.
27
Our Principal Executive Officer and Principal Financial Officer have evaluated the
effectiveness of the design and operation of our disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act) as of the end of the period
covered by this report. Based upon that evaluation, our Principal Executive Officer and Principal
Financial Officer concluded that, as of the end of the period covered by this report, our
disclosure controls and procedures were effective in ensuring that information required to be
disclosed by us in our Securities Exchange Act reports is recorded, processed, summarized and
reported within the time periods specified in the SECs rules and forms, and that such information
is accumulated and communicated to our management, including our Principal Executive Officer and
Principal Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure.
There have not been any changes in our internal control over financial reporting (as such term
is defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act) during the first
quarter of transition period 2008 that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In the ordinary course of business, we may become subject to litigation or claims. We are not
currently a party to any litigation or regulatory actions that we believe could reasonably be
expected to have a material adverse effect on our financial position, results of operations or cash
flows.
ITEM 1A. RISK FACTORS
We believe that an investor should carefully consider the factors discussed in Part I. Item
1A. Risk Factors in our fiscal 2007 Form 10-K, which are not the only risks facing our company.
There have been no material changes to the risk factors described in our fiscal 2007 Form 10-K. If
any of the risks described in our Form 10-K, or other risks or uncertainties not currently known to
us or that we currently deem to be immaterial, actually occur, our business, financial condition or
operating results could suffer.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The table below summarizes our stock repurchases during the first quarter of transition period
2008.
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|
|
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|
|
|
|
|
|
Total Number of |
|
Maximum |
|
|
|
|
|
|
|
|
|
|
Shares Purchased |
|
Number of Shares |
|
|
|
|
|
|
Average |
|
as Part of |
|
That May Yet be |
|
|
Total Number |
|
Price |
|
Publicly |
|
Purchased Under |
|
|
of Shares |
|
Paid per |
|
Announced Plans |
|
the Plans or |
Fiscal Month |
|
Purchased (1) |
|
Share |
|
or Programs (2) |
|
Programs (2) |
|
June (6/2/07-6/29/07) |
|
|
2,611 |
|
|
$ |
45.72 |
|
|
|
|
|
|
|
|
|
July (6/30/07-8/3/07) |
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
August (8/4/07-8/31/07) |
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|
|
|
Total |
|
|
2,611 |
|
|
$ |
45.72 |
|
|
|
|
|
|
|
1,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Represents shares purchased from employees to pay taxes related to the vesting of
restricted shares. |
|
(2) |
|
On August 3, 2006, our board of directors approved a stock repurchase authorization for up
to one million shares of our common stock. As of August 31, 2007, no shares have been
repurchased by us pursuant to this authorization. |
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
28
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS
3(a) |
|
Restated Articles of Incorporation of Oxford Industries, Inc. Incorporated by reference to
Exhibit 3.1 from the Oxford Industries, Inc. Form 10-Q for the fiscal quarter ended August 29,
2003. |
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3(b) |
|
Bylaws of Oxford Industries, Inc., as amended. Incorporated by reference to Exhibit 3.1 from
the Oxford Industries, Inc. Form 10-Q for the fiscal quarter ended March 2, 2007. |
|
10.1 |
|
Ben Sherman Group Long Term Incentive Plan, adopted as of October 1, 2007.* |
|
10.2 |
|
Participant Award Letter, dated September 26, 2007, to Miles Gray pursuant to the Ben Sherman
Group Long Term Incentive Plan.* |
|
31.1 |
|
Section 302 Certification by Principal Executive Officer.* |
|
31.2 |
|
Section 302 Certification by Principal Financial Officer.* |
|
32 |
|
Section 906 Certification by Principal Executive Officer and Principal Financial Officer.* |
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* |
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Filed herewith. |
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Exhibit is a management contract or compensatory plan or arrangement. |
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 hereunto duly authorized.
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October 10, 2007
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OXFORD INDUSTRIES, INC.
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(Registrant) |
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/s/ Thomas Caldecot Chubb III |
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Thomas Caldecot Chubb III |
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Executive Vice President |
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(Authorized Signatory and Principal Financial Officer) |
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29
EX-10.1 BEN SHERMAN GROUP LONG TERM INCENTIVE PLAN
Exhibit 10.1
Ben Sherman Group
Long Term Incentive Plan
Purpose
The purpose of the Ben Sherman Group Long Term Incentive Plan (the Plan) is to aid in the
retention of highly-qualified executives by providing a long term award to individuals who may
contribute materially to the growth, development and future business success of Oxford Industries,
Inc.s Ben Sherman Group.
Definitions
As used in the Plan, the following words and phrases will have the following meanings:
(a) |
|
Bonus means any award granted under the Plan. |
|
(b) |
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Parent means Oxford Industries, Inc., a corporation organized under the laws of the State
of Georgia, United States, or any successor corporation. |
|
(c) |
|
Participant means an employee of a Participating Company who has been designated by the Ben
Sherman Group Ltd. Chief Executive Officer (Participating Company CEO) and approved by the
Parents Chief Executive Officer (Parent CEO) to participate in the Plan and for whom a
Bonus opportunity is established with respect to the Performance Cycle. |
|
(d) |
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Participating Companies means those subsidiaries of Oxford Industries, Inc. listed on
Exhibit A to the Plan. Exhibit A may be amended by the Parent from time to
time. |
|
(e) |
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Performance Cycle means with respect to a Bonus opportunity for an individual Participant,
the period set forth in such individuals Participant award letter delivered pursuant to this
Plan. |
Eligibility for Participation
In determining the individuals who will be Participants in the Plan, the Participating Company CEO
and the Parent CEO may take into account such factors that they deem relevant in connection with
accomplishing the purpose of the Plan.
No Stock Subject To Plan.
No shares nor any stock will be reserved for or issued under the Plan.
Bonuses
(a) |
|
A Participants Bonus opportunity for the applicable Performance Cycle is an amount as
defined in each Participants individual Bonus letter. Upon approval of a Participants Bonus
opportunity for a particular period, the Parent and the Participating Company will deliver a
letter setting forth the terms of the Bonus opportunity to each applicable Participant. |
|
(b) |
|
Unless otherwise provided by the Parent, in its sole discretion, payment of a Bonus for the
Performance Cycle will be made only if the Participant: |
|
i. |
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is employed by a Participating Company on the last day of the
Performance Cycle; |
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ii. |
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has not, during the Performance Cycle, given notice to terminate his or
her employment; and |
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iii. |
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is an employee in good standing and, to the extent such Participant is
a party to a written employment contract or arrangement with the applicable
Participating Company, is not then, and has not been during the Performance Cycle,
in material breach of any of his or her obligations pursuant to such contract or
arrangement, as the case may be. |
(c) |
|
The Bonus for any Participant will be pro-rated to the period worked if a Participant was on
a leave of absence or maternity leave (but with no pro rata reduction for any compulsory
maternity leave period provided by law) for a period greater than 90 days during the
Performance Cycle. |
Timing and Form of Payment
A Participants Bonus, if any, will be paid in cash (less applicable payroll taxes and deductions)
within three months following the end of the applicable Performance Cycle.
Administration and General Provisions
(a) |
|
The program is administered through the Parents Corporate Human Resources department. The
Parent has the authority, in its sole discretion, subject to and not inconsistent with the
express provisions of the Plan, to administer the Plan and to exercise all the powers and
authorities either specifically granted to it under the Plan or necessary or advisable in the
administration of the Plan, including, without limitation, the authority to grant Bonuses, to
approve the Participants in the Plan, to determine the terms, conditions, restrictions and
criteria relating to any Bonus, to construe and interpret the Plan and any Bonus, to
prescribe, amend and rescind the Plan and/or the rules and regulations relating to the Plan,
and to make all other determinations deemed necessary or advisable by the Parent for the
administration of the Plan. All determinations, decisions and interpretations of the Parent
will be final and binding on all persons, including the Participating Companies and any
Participant (or any person claiming any rights under the Plan from or through any
Participant). |
|
(b) |
|
The Plan and the granting and payment of Bonuses and the other obligations of a Participating
Company under the Plan are subject to all applicable laws, rules and regulations, and to the
receipt of such approvals by any regulatory or governmental agency as may be required. |
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(c) |
|
Nothing in the Plan or in any Bonus granted under the Plan provides any Participant the right
to continue in the employ of a Participating Company or the Parent or to be entitled to any
remuneration or benefits not set forth in the Plan or to interfere with or limit in any way
the right of the applicable Participating Company or the Parent to terminate a Participants
employment. |
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(d) |
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Income tax under PAYE, National Insurance contributions and other deductions required to be
made by law (and all applicable payroll deductions and taxes required by law for employees
based outside the United Kingdom) will be withheld from the bonus award in accordance with
applicable law. |
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(e) |
|
The Parent may, from time to time, change the terms of this program or alter, amend, suspend
or discontinue the Plan (including changes to a Participants Bonus opportunity), with or
without notice and without any obligation to pay a Bonus to Participants in connection with
the Plan. The Parent may also make such amendments to the Plan as it deems necessary to comply
with all applicable laws, rules and regulations. |
|
(f) |
|
The Plan is intended to constitute an unfunded plan for incentive compensation and, as
such, falls outside the scope and jurisdiction of the U.S. Employee Retirement Income Security
Act of 1974, as amended. With respect to any payments which at any time are not yet made to a
Participant pursuant to a Bonus, nothing contained in the Plan or any Bonus opportunity shall
give any Participant any rights that are greater than those of a general creditor of the
applicable Participating Company or the Parent. |
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(g) |
|
There is no, and there will not be or construed to be any, obligation for uniformity of
treatment of Participants under the Plan. |
|
(h) |
|
Any award made under the Plan does not constitute a commitment to make any future awards of
Bonuses under the Plan or to include the Participant in the same or any other bonus plans. |
|
(i) |
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The Plan and the rights of all persons claiming hereunder will be construed and determined in
accordance with the laws of the State of Georgia, United States, without giving effect to the
choice of law principles thereof. |
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(j) |
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The captions in the Plan are for convenience only and will not control or affect the meaning
or construction of any of its provisions. |
|
(k) |
|
The provisions of the Plan will bind and inure to the benefit of each Participating Company
and its successors and assigns and each Participant. |
(l) |
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The Plan shall become effective with respect to a Participating Company upon its adoption by
the Parent with respect to such Participating Company. |
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IN WITNESS WHEREOF, the Parent has adopted the Plan as of the 1st day of October, 2007. |
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OXFORD INDUSTRIES, INC. |
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Name |
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Title |
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Acknowledged and accepted by:
EXHIBIT A
Participating Companies
Ben Sherman Group Limited
Ben Sherman Clothing, Inc.
EX-10.2 PARTICIPANT AWARD LETTER
Exhibit 10.2
September 26, 2007
Miles Gray
Ben Sherman Group
Dear Miles:
It gives me great pleasure to advise you that you have been selected to participate in the Ben
Sherman Group Long Term Incentive Plan (Plan).
Your inclusion in the Plan affirms my belief in the impact your position and performance will have
on Ben Shermans success in implementing its strategic plans over the next three years.
The performance cycle for your long-term incentive bonus opportunity begins on October 1, 2007 and
ends on Spetember 30, 2010. Your total bonus opportunity is £250,000.
Your bonus will be paid in cash within three months following the end of the performance cycle.
You should know that any bonus paid under the Plan does not constitute part of your salary for
pension contribution or other purposes and that your participation is subject to the terms and
conditions of the Plan document.
Attached are two copies of the Plan document which sets forth the specific terms and conditions
governing the Plan. The Plan document and this letter together should provide you with all the
information concerning the operation of the Plan and your participation in it. Please acknowledge
your acceptance of the terms and conditions of the plan by signing one copy and return it to Allan
Reid by October 31, 2007.
Thank you in advance for your contribution to our success during the coming years. Please feel free
to contact me should you have any questions about the Plan or your award opportunity.
Yours sincerely,
J. Hicks Lanier
Chairman & CEO
Attachment
EX-31.1 SECTION 302 CERTIFICATION OF THE PEO
Exhibit 31.1
CERTIFICATION
I, J. Hicks Lanier, certify that:
1. |
|
I have reviewed this report on Form 10-Q of Oxford Industries, Inc.; |
|
2. |
|
Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this report; |
|
3. |
|
Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this
report; |
|
4. |
|
The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have: |
|
a) |
|
Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this report is being prepared; |
|
|
b) |
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Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles; |
|
|
c) |
|
Evaluated the effectiveness of the registrants disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and |
|
|
d) |
|
Disclosed in this report any change in the registrants internal
control over financial reporting that occurred during the registrants
most recent fiscal quarter (the registrants fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrants internal
control over financial reporting; and |
5. |
|
The registrants other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrants auditors and the audit committee of the
registrants board of directors (or persons performing the equivalent
functions): |
|
a) |
|
All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrants ability to
record, process, summarize and report financial information; and |
|
|
b) |
|
Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
control over financial reporting. |
|
|
|
|
|
|
|
|
Date: October 10, 2007 |
/s/ J. Hicks Lanier
|
|
|
J. Hicks Lanier |
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Chairman and Chief Executive Officer
(Principal Executive Officer) |
|
EX-31.2 SECTION 302 CERTIFICATION OF THE PFO
Exhibit 31.2
CERTIFICATION
I, Thomas Caldecot Chubb III, certify that:
1. |
|
I have reviewed this report on Form 10-Q of Oxford Industries, Inc.; |
|
2. |
|
Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this report; |
|
3. |
|
Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this
report; |
|
4. |
|
The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have: |
|
a) |
|
Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this report is being prepared; |
|
|
b) |
|
Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles; |
|
|
c) |
|
Evaluated the effectiveness of the registrants disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and |
|
|
d) |
|
Disclosed in this report any change in the registrants internal
control over financial reporting that occurred during the registrants
most recent fiscal quarter (the registrants fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrants internal
control over financial reporting; and |
5. |
|
The registrants other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrants auditors and the audit committee of the
registrants board of directors (or persons performing the equivalent
functions): |
|
a) |
|
All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrants ability to
record, process, summarize and report financial information; and |
|
|
b) |
|
Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
control over financial reporting. |
|
|
|
|
|
|
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|
Date: October 10, 2007 |
/s/ Thomas Caldecot Chubb III
|
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|
Thomas Caldecot Chubb III |
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Executive Vice President
(Principal Financial Officer) |
|
|
EX-32 SECTION 906 CERTIFICATIONS OF THE PEO/PFO
Exhibit 32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Oxford Industries, Inc. (the Company) on Form 10-Q
(Form 10-Q) for the quarter ended August 31, 2007 as filed with the Securities and Exchange
Commission on the date hereof, I, J. Hicks Lanier, Chairman and Chief Executive Officer of the
Company, and I, Thomas Caldecot Chubb III, Executive Vice President of the Company, each certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that, to my knowledge:
(1) |
|
The Form 10-Q fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and |
|
(2) |
|
The information contained in the Form 10-Q fairly presents, in all
material respects, the financial condition and results of operations
of the Company. |
|
|
|
/s/ J. Hicks Lanier |
|
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Chairman and Chief Executive Officer |
|
|
(Principal Executive Officer) |
|
|
October 10, 2007 |
|
|
|
/s/ Thomas Caldecot Chubb III |
|
|
Thomas Caldecot Chubb III |
|
|
Executive Vice President |
|
|
(Principal Financial Officer) |
|
|
October 10, 2007 |
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