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 2, 2008
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, a non-accelerated filer or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company 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 September 5, 2008 |
Common Stock, $1 par value
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15,857,049 |
OXFORD INDUSTRIES, INC.
INDEX TO FORM 10-Q
For the second quarter of fiscal 2008
2
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS
Our Securities and Exchange Commission filings and public announcements may 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 forward-looking
statements contained herein, in our press releases or on 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 and Section 21E of the Securities Exchange Act of 1934 (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 general
and regional economic conditions, including those that affect consumer demand and spending, demand
for our products, timing of shipments requested by our wholesale customers, expected pricing
levels, competitive conditions, the timing and cost of planned capital expenditures, expected
synergies in connection with acquisitions and joint ventures, costs of products and raw materials
we purchase, expected outcomes of pending or potential litigation and regulatory actions, and
disciplined execution by key management. 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 Form 10-KT for the eight-month transition period
ended February 2, 2008, 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 on which they are made. 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.
3
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, EITF
and SEC mean the Financial Accounting Standards Board, Statement of Financial Accounting
Standards, Emerging Issues Task Force and the U.S. Securities and Exchange Commission,
respectively.
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 ends at the end of the
Saturday closest to January 31 and will, in each case, begin at the beginning of the day next
following the last day of the preceding fiscal year. Accordingly, there was a transition period
from June 2, 2007 through February 2, 2008, and we filed a transition report on Form 10-KT for that
period. Accordingly, some of the periods presented in this report for comparative purposes have not
previously been publicly reported. The terms listed below (or words of similar import) reflect the
respective period noted:
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Fiscal 2009
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52 weeks ending January 30, 2010 |
Fiscal 2008
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52 weeks ending January 31, 2009 |
Eight-month transition period ended February 2, 2008
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35 weeks and one day ended February 2, 2008 |
Twelve months ended February 2, 2008
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52 weeks and one day ended February 2, 2008 |
Fiscal 2007
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52 weeks ended June 1, 2007 |
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Fourth quarter of fiscal 2008
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13 weeks ending January 31, 2009 |
Third quarter of fiscal 2008
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13 weeks ending November 1, 2008 |
Second quarter of fiscal 2008
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13 weeks ended August 2, 2008 |
First quarter of fiscal 2008
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13 weeks ended May 3, 2008 |
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Three months ended February 2, 2008
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13 weeks and one day ended February 2, 2008 |
Three months ended November 2, 2007
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13 weeks ended November 2, 2007 |
Three months ended August 3, 2007
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13 weeks ended August 3, 2007 |
Three months ended May 4, 2007
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13 weeks ended May 4, 2007 |
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First six months of fiscal 2008
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26 weeks ended August 2, 2008 |
Six months ended August 3, 2007
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26 weeks ended August 3, 2007 |
4
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OXFORD INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
(in thousands, except per share amounts)
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Second Quarter |
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Three Months Ended |
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First Six Months |
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Six Months Ended |
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Fiscal 2008 |
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August 3, 2007 |
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Fiscal 2008 |
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August 3, 2007 |
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Net sales |
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$ |
230,520 |
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$ |
244,610 |
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$ |
503,462 |
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$ |
537,007 |
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Cost of goods sold |
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133,849 |
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141,565 |
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290,482 |
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313,436 |
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Gross profit |
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96,671 |
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103,045 |
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212,980 |
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223,571 |
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Selling, general and administrative expenses |
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88,972 |
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88,959 |
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188,606 |
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182,497 |
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Amortization of intangible assets |
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4,058 |
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1,318 |
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4,846 |
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3,013 |
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93,030 |
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90,277 |
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193,452 |
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185,510 |
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Royalties and other operating income |
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4,351 |
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3,829 |
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8,539 |
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9,477 |
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Operating income |
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7,992 |
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16,597 |
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28,067 |
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47,538 |
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Interest expense, net |
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5,985 |
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5,078 |
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12,317 |
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10,476 |
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Earnings before income taxes |
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2,007 |
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11,519 |
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15,750 |
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37,062 |
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Income taxes |
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534 |
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2,781 |
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4,760 |
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11,231 |
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Net earnings |
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$ |
1,473 |
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$ |
8,738 |
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$ |
10,990 |
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$ |
25,831 |
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Net earnings per common share: |
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Basic |
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$ |
0.09 |
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$ |
0.49 |
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$ |
0.70 |
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$ |
1.45 |
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Diluted |
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$ |
0.09 |
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$ |
0.49 |
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$ |
0.69 |
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$ |
1.44 |
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Weighted average common shares outstanding: |
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Basic |
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15,578 |
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17,772 |
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15,778 |
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17,756 |
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Dilutive impact of options and restricted
shares |
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75 |
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163 |
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90 |
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175 |
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Diluted |
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15,653 |
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17,935 |
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15,868 |
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17,931 |
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Dividends declared per common share |
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$ |
0.18 |
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$ |
0.18 |
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$ |
0.36 |
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$ |
0.36 |
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See accompanying notes.
5
OXFORD INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except par amounts)
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August 2, |
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February 2, |
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August 3, |
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2008 |
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2008 |
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2007 |
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ASSETS |
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Current Assets: |
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Cash and cash equivalents |
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$ |
5,243 |
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$ |
14,912 |
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$ |
57,012 |
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Receivables, net |
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96,463 |
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105,561 |
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99,203 |
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Inventories, net |
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129,904 |
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158,925 |
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156,858 |
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Prepaid expenses |
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22,026 |
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18,701 |
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24,282 |
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Total current assets |
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253,636 |
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298,099 |
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337,355 |
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Property, plant and equipment, net |
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94,471 |
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92,502 |
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89,094 |
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Goodwill, net |
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257,699 |
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257,921 |
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223,996 |
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Intangible assets, net |
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225,612 |
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230,933 |
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236,231 |
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Other non-current assets, net |
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27,866 |
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30,817 |
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29,898 |
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Total Assets |
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$ |
859,284 |
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$ |
910,272 |
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$ |
916,574 |
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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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$ |
97,638 |
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$ |
101,123 |
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$ |
91,858 |
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Accrued compensation |
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|
14,802 |
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14,485 |
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18,807 |
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Income taxes payable |
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20 |
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5,571 |
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Additional acquisition cost payable |
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22,424 |
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Dividends payable |
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2,889 |
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3,216 |
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Short-term debt and current maturities of long-term debt |
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3,027 |
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37,900 |
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|
412 |
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Total current liabilities |
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115,467 |
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156,417 |
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142,288 |
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Long-term debt, less current maturities |
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218,604 |
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234,414 |
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199,325 |
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Other non-current liabilities |
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52,724 |
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50,909 |
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49,716 |
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Non-current deferred income taxes |
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59,046 |
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60,984 |
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68,776 |
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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 2, 2008; February
2, 2008; and August 3, 2007 |
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Common stock, $1.00 par value; 60,000 authorized and
15,858 issued and outstanding at August 2, 2008; 16,049
issued and outstanding at February 2, 2008; and 17,867
issued and outstanding at August 3, 2007 |
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15,858 |
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16,049 |
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17,867 |
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Additional paid-in capital |
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86,300 |
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85,224 |
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82,644 |
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Retained earnings |
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298,947 |
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293,212 |
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337,879 |
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Accumulated other comprehensive income |
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12,338 |
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13,063 |
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18,079 |
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Total shareholders equity |
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413,443 |
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407,548 |
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456,469 |
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Total Liabilities and Shareholders Equity |
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$ |
859,284 |
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$ |
910,272 |
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$ |
916,574 |
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See accompanying notes.
6
OXFORD INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
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First Six Months |
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Six Months Ended |
|
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Fiscal 2008 |
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August 3, 2007 |
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Cash Flows From Operating Activities: |
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Net earnings |
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$ |
10,990 |
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$ |
25,831 |
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Adjustments to reconcile net earnings to net cash provided by (used in)
operating activities: |
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Depreciation |
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9,983 |
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|
8,933 |
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Amortization of intangible assets |
|
|
4,846 |
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|
3,013 |
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Amortization of deferred financing costs and bond discount |
|
|
1,307 |
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|
|
1,232 |
|
Stock compensation expense |
|
|
1,667 |
|
|
|
410 |
|
Loss (gain) on sale of property, plant and equipment |
|
|
294 |
|
|
|
(2,118 |
) |
Equity loss (income) from unconsolidated entities |
|
|
(329 |
) |
|
|
(83 |
) |
Deferred income taxes |
|
|
(1,596 |
) |
|
|
(4,255 |
) |
Changes in working capital: |
|
|
|
|
|
|
|
|
Receivables |
|
|
8,983 |
|
|
|
8,962 |
|
Inventories |
|
|
28,907 |
|
|
|
9,901 |
|
Prepaid expenses |
|
|
(3,555 |
) |
|
|
(667 |
) |
Current liabilities |
|
|
(3,246 |
) |
|
|
(15,318 |
) |
Other non-current assets |
|
|
2,070 |
|
|
|
1,302 |
|
Other non-current liabilities |
|
|
1,823 |
|
|
|
7,337 |
|
|
|
|
Net cash provided by (used in) operating activities |
|
|
62,144 |
|
|
|
44,480 |
|
Cash Flows From Investing Activities: |
|
|
|
|
|
|
|
|
Acquisitions, net of cash acquired, and investment in unconsolidated entity |
|
|
(446 |
) |
|
|
(356 |
) |
Purchases of property, plant and equipment |
|
|
(12,280 |
) |
|
|
(17,129 |
) |
Proceeds from sale of property, plant and equipment |
|
|
4 |
|
|
|
2,906 |
|
|
|
|
Net cash provided by (used in) investing activities |
|
|
(12,722 |
) |
|
|
(14,579 |
) |
Cash Flows From Financing Activities: |
|
|
|
|
|
|
|
|
Repayment of financing arrangements |
|
|
(161,870 |
) |
|
|
(32,966 |
) |
Proceeds from financing arrangements |
|
|
111,115 |
|
|
|
32,958 |
|
Proceeds from issuance of common stock including tax benefits |
|
|
53 |
|
|
|
2,609 |
|
Dividends on common stock |
|
|
(8,701 |
) |
|
|
(6,416 |
) |
|
|
|
Net cash provided by (used in) financing activities |
|
|
(59,403 |
) |
|
|
(3,815 |
) |
|
|
|
Net change in cash and cash equivalents |
|
|
(9,981 |
) |
|
|
26,086 |
|
Effect of foreign currency translation on cash and cash equivalents |
|
|
312 |
|
|
|
464 |
|
Cash and cash equivalents at the beginning of period |
|
|
14,912 |
|
|
|
30,462 |
|
|
|
|
Cash and cash equivalents at the end of period |
|
$ |
5,243 |
|
|
$ |
57,012 |
|
|
|
|
See accompanying notes.
7
OXFORD INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SECOND QUARTER OF FISCAL 2008
1. |
|
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 as of the date and 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 the restructuring charges and
other unusual items described in note 6 and the seasonality of our business. The accounting
policies applied during the interim periods presented are consistent with the significant
accounting policies as described in our Form 10-KT for the eight-month transition period
ended February 2, 2008. 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 Form 10-KT for the
eight-month transition period ended February 2, 2008. |
Recently Adopted Standards
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS 157). In
February 2008, the FASB released FASB Staff Position 157-2 Effective Date of FASB Statement No.
157, which delayed the effective date of SFAS 157 for all non-financial assets and non-financial
liabilities, except those that are recognized or disclosed at fair value in the financial
statements on a recurring basis (at least annually). We adopted SFAS 157 for financial assets and
liabilities during the first quarter of fiscal 2008. SFAS 157 provides enhanced guidance for using
fair value measurements for assets and liabilities which are required or permitted to be recorded
at fair value under another standard and does not extend the use of fair value beyond what is
currently required or permitted by other standards. SFAS 157 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. The adoption of
SFAS 157 for our financial assets and liabilities in fiscal 2008 did not have a material impact on
our consolidated financial statements. We are still in the process of evaluating the impact that
SFAS 157 will have on our non-financial assets and non-financial liabilities upon adoption in
fiscal 2009.
SFAS 157 defines fair value as the exchange price that would be received for an asset or paid
to transfer a liability (an exit price) in the principal or most advantageous market for the asset
or liability in an orderly transaction between market participants at the measurement date. SFAS
157 establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair
value. This hierarchy requires that we maximize the use of observable inputs and minimize the use
of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
|
|
|
Level 1 Quoted prices in active markets for identical assets or liabilities. |
|
|
|
|
Level 2 Observable inputs other than quoted prices included in Level 1, such as
quoted prices for similar assets and liabilities in active markets; quoted prices for
identical or similar assets and liabilities in markets that are not active; or other inputs
that are observable or can be corroborated by observable market data. |
|
|
|
|
Level 3 Unobservable inputs that are supported by little or no market activity and
that are significant to the fair value of the assets or liabilities, which includes certain
pricing models, discounted cash flow methodologies and similar techniques that use
significant unobservable inputs. |
8
We have determined that approximately $3.0 million of forward foreign currency exchange
contracts are the only financial assets and liabilities measured at fair value within the scope of
SFAS 157 that are included in our consolidated financial statements as of August 2, 2008. The fair
value of the forward foreign exchange contracts, which is included in prepaid expenses in our
consolidated financial statements, is based on dealer quotes of market forward rates and reflects
the amount that we would receive or pay at the short-term maturity dates for contracts involving
the same currencies and maturity dates. Based on these circumstances, we believe that these forward
foreign currency exchange contracts are most appropriately included within level 2 of the fair
value hierarchy. Refer to Note 1 included in our Form 10-KT for the eight-month transition period
ended February 2, 2008 for additional information about our forward foreign currency exchange
contracts.
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets
and Financial Liabilities Including an Amendment of FASB Statement No. 115 (SFAS 159). We
adopted SFAS 159 in the first quarter of fiscal 2008. SFAS 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 net earnings. We did not elect to change the measurement
of any items in our balance sheet to fair value upon adoption; therefore the adoption of SFAS 159
did not have an impact on our financial statements.
2. |
|
Inventories: The components of inventories as of the dates specified are summarized as
follows (in thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 2, |
|
February 2, |
|
August 3, |
|
|
2008 |
|
2008 |
|
2007 |
|
|
|
Finished goods |
|
$ |
145,453 |
|
|
$ |
171,685 |
|
|
$ |
159,937 |
|
Work in process |
|
|
11,126 |
|
|
|
10,142 |
|
|
|
9,742 |
|
Fabric, trim and supplies |
|
|
13,139 |
|
|
|
16,912 |
|
|
|
26,463 |
|
LIFO reserve |
|
|
(39,814 |
) |
|
|
(39,814 |
) |
|
|
(39,284 |
) |
|
|
|
Total |
|
$ |
129,904 |
|
|
$ |
158,925 |
|
|
$ |
156,858 |
|
|
|
|
3. |
|
Comprehensive Income: Comprehensive income, which reflects the effects of foreign currency
translation adjustments, is calculated as follows for the periods presented (in thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second |
|
Three Months |
|
First Six |
|
Six Months |
|
|
Quarter Fiscal |
|
Ended August |
|
Months Fiscal |
|
Ended August |
|
|
2008 |
|
3, 2007 |
|
2008 |
|
3, 2007 |
|
|
|
Net earnings |
|
$ |
1,473 |
|
|
$ |
8,738 |
|
|
$ |
10,990 |
|
|
$ |
25,831 |
|
Gain (loss) on
foreign currency
translation, net of
tax |
|
|
(743 |
) |
|
|
7,441 |
|
|
|
(725 |
) |
|
|
8,655 |
|
|
|
|
Comprehensive income |
|
$ |
730 |
|
|
$ |
16,179 |
|
|
$ |
10,265 |
|
|
$ |
34,486 |
|
|
|
|
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. The leader of each operating group reports
directly to our Chief Executive Officer. 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. Corporate and Other includes a LIFO reserve of $39.8 million, $39.8 million and $39.3
million as of August 2, 2008, February 2, 2008 and August 3, 2007, respectively. The decrease
in total assets for Corporate and Other from August 3, 2007 is primarily due to the cash
on-hand at August 3, 2007, which was primarily included in the balance sheet of Corporate and
Other. For further information on our operating groups, see Part I, Item 2. Managements
Discussion and Analysis of Financial Condition and Results of Operations included in this
report and Part I, Item 1. Business in our Form 10-KT for the eight-month transition period
ended February 2, 2008. |
9
The table below presents certain information about our operating groups (in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months |
|
First |
|
Six Months |
|
|
Second Quarter |
|
Ended |
|
Six Months |
|
Ended |
|
|
Fiscal 2008 |
|
August 3, 2007 |
|
Fiscal 2008 |
|
August 3, 2007 |
|
|
|
Net Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tommy Bahama |
|
$ |
112,007 |
|
|
$ |
114,361 |
|
|
$ |
241,265 |
|
|
$ |
246,126 |
|
Ben Sherman |
|
|
32,495 |
|
|
|
36,493 |
|
|
|
69,082 |
|
|
|
75,750 |
|
Lanier Clothes |
|
|
28,184 |
|
|
|
31,558 |
|
|
|
66,871 |
|
|
|
74,218 |
|
Oxford Apparel |
|
|
58,024 |
|
|
|
61,047 |
|
|
|
126,708 |
|
|
|
139,453 |
|
Corporate and Other |
|
|
(190 |
) |
|
|
1,151 |
|
|
|
(464 |
) |
|
|
1,460 |
|
|
|
|
Total |
|
$ |
230,520 |
|
|
$ |
244,610 |
|
|
$ |
503,462 |
|
|
$ |
537,007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tommy Bahama |
|
$ |
3,944 |
|
|
$ |
3,090 |
|
|
$ |
7,668 |
|
|
$ |
6,505 |
|
Ben Sherman |
|
|
584 |
|
|
|
640 |
|
|
|
1,176 |
|
|
|
1,238 |
|
Lanier Clothes |
|
|
385 |
|
|
|
210 |
|
|
|
574 |
|
|
|
427 |
|
Oxford Apparel |
|
|
229 |
|
|
|
267 |
|
|
|
456 |
|
|
|
561 |
|
Corporate and Other |
|
|
55 |
|
|
|
74 |
|
|
|
109 |
|
|
|
202 |
|
|
|
|
Total |
|
$ |
5,197 |
|
|
$ |
4,281 |
|
|
$ |
9,983 |
|
|
$ |
8,933 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
Intangible Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tommy Bahama |
|
$ |
354 |
|
|
$ |
609 |
|
|
$ |
709 |
|
|
$ |
1,353 |
|
Ben Sherman |
|
|
359 |
|
|
|
637 |
|
|
|
720 |
|
|
|
1,516 |
|
Lanier Clothes |
|
|
2,237 |
|
|
|
30 |
|
|
|
2,267 |
|
|
|
60 |
|
Oxford Apparel |
|
|
1,108 |
|
|
|
42 |
|
|
|
1,150 |
|
|
|
84 |
|
|
|
|
Total |
|
$ |
4,058 |
|
|
$ |
1,318 |
|
|
$ |
4,846 |
|
|
$ |
3,013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tommy Bahama |
|
$ |
18,143 |
|
|
$ |
20,945 |
|
|
$ |
37,626 |
|
|
$ |
47,440 |
|
Ben Sherman |
|
|
(2,002 |
) |
|
|
(1,452 |
) |
|
|
(1,747 |
) |
|
|
230 |
|
Lanier Clothes |
|
|
(11,355 |
) |
|
|
(2,190 |
) |
|
|
(11,376 |
) |
|
|
(753 |
) |
Oxford Apparel |
|
|
3,738 |
|
|
|
3,072 |
|
|
|
9,063 |
|
|
|
10,334 |
|
Corporate and Other |
|
|
(532 |
) |
|
|
(3,778 |
) |
|
|
(5,499 |
) |
|
|
(9,713 |
) |
|
|
|
Total Operating
Income |
|
$ |
7,992 |
|
|
$ |
16,597 |
|
|
$ |
28,067 |
|
|
$ |
47,538 |
|
Interest Expense, net |
|
|
5,985 |
|
|
|
5,078 |
|
|
|
12,317 |
|
|
|
10,476 |
|
|
|
|
Earnings Before
Income Taxes |
|
$ |
2,007 |
|
|
$ |
11,519 |
|
|
$ |
15,750 |
|
|
$ |
37,062 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 2, |
|
February 2, |
|
August 3, |
|
|
2008 |
|
2008 |
|
2007 |
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Tommy Bahama |
|
$ |
497,042 |
|
|
$ |
519,291 |
|
|
$ |
459,876 |
|
Ben Sherman |
|
|
210,019 |
|
|
|
208,829 |
|
|
|
224,340 |
|
Lanier Clothes |
|
|
69,324 |
|
|
|
83,208 |
|
|
|
100,363 |
|
Oxford Apparel |
|
|
91,093 |
|
|
|
102,253 |
|
|
|
96,219 |
|
Corporate and Other |
|
|
(8,194 |
) |
|
|
(3,309 |
) |
|
|
35,776 |
|
|
|
|
Total |
|
$ |
859,284 |
|
|
$ |
910,272 |
|
|
$ |
916,574 |
|
|
|
|
10
5. |
|
Accelerated Share Repurchase Program: As discussed in our Form 10-KT for the eight-month
transition period ended February 2, 2008 and our Form 10-Q for the first quarter of fiscal
2008, on November 8, 2007, we entered into a $60 million capped accelerated share repurchase
agreement with Bank of America, N.A., an unrelated third party. On November 8, 2007, we made a
payment of $60 million to Bank of America that was funded by borrowings under our Prior Credit
Agreement, (as defined in Note 7 below). Bank of America made an initial delivery to us of
approximately 1.9 million shares during November 2007 and a final delivery on May 22, 2008 of
approximately 0.6 million shares upon completion of the program. We acquired approximately 2.5 million
shares at a price of $24.03 per share. |
6. |
|
Restructuring Charges and Other Unusual Items: During the second quarter of fiscal 2008, we
incurred approximately $8.9 million of charges related to the impact of restructuring in our
Lanier Clothes and Oxford Apparel operating groups. We anticipate an additional $0.6 million
of restructuring charges in the third quarter of fiscal 2008. In addition to these restructuring charges, we recognized
other unusual items totaling a charge of $0.3 million and a net benefit of $1.2 million in Lanier
Clothes and Oxford Apparel respectively substantially all of which is reflected in selling, general and administrative
expenses or SG&A. |
|
|
|
Lanier Clothes incurred restructuring charges totaling approximately $9.2 million
associated with the decision to exit certain license agreements relating to the Nautica®
and O OscarTM brands and the restructuring of our Arnold Brant® business. These charges
include costs associated with the disposal of the inventory, payments related to license
termination, the impairment of intangible assets associated with the Arnold Brant business,
severance costs and the impairment of certain property, plant and equipment. Approximately $2.5
million and $2.2 million of these charges were recorded in SG&A, and amortization
of intangible assets, respectively, with the remaining charges
being recognized in net sales and cost of goods sold. Substantially all cash charges are anticipated to be paid
prior to the end of fiscal 2008. Approximately $1.9 million of the $9.2 million of charges for Lanier
Clothes were reversed in cost of goods sold in Corporate & Other as part of LIFO accounting. |
|
|
|
Additionally, our Oxford Apparel operating group incurred certain restructuring charges totaling
approximately $1.6 million during the second quarter of fiscal 2008 associated with the decision to
exit the Solitude business. These charges include costs associated with the disposal of inventory
which are classified as a reduction to net sales and the impairment of intangible assets of $1.1
million associated with the Solitude business which is included in amortization of intangible
assets. |
|
|
|
The net benefit of $1.2 million in Oxford Apparel was primarily related to the resolution of a contingent
liability and the sale of a trademark partially offset by an increase in our bad debt reserve due
to certain customers bankruptcy filings. |
|
7. |
|
Subsequent Event: Subsequent to the end of the second quarter of fiscal 2008, on August 15,
2008, we entered into a Second Amended and Restated Credit Agreement (the U.S. Revolving
Credit Agreement). The parties to the U.S. Revolving Credit Agreement are Oxford Industries,
Inc. and Tommy Bahama Group, Inc., as the borrowers (the Borrowers), certain of our
subsidiaries as guarantors (the Guarantors), the financial institutions party thereto as
lenders, the financial institutions party thereto as issuing banks, and SunTrust Bank as
administrative agent (the Administrative Agent). The U.S. Revolving Credit Agreement amends
and restates our Amended and Restated Credit Agreement, dated as of July 28, 2004, as amended
(the Prior Credit Agreement), among Oxford Industries, Inc., certain of our domestic
subsidiaries as borrowers or guarantors, certain financial institutions party thereto as
lenders, certain financial institutions party thereto as the issuing banks and SunTrust Bank,
as administrative agent. |
|
|
|
The U.S. Revolving Credit Agreement provides for a revolving credit facility which may be used to
refinance existing funded debt, to fund working capital, to fund future acquisitions and for
general corporate purposes. The material terms of the U.S. Revolving Credit Agreement are as
follows: |
|
|
|
The U.S. Revolving Credit Agreement provides for a revolving credit facility of up to
$175 million, which may be increased by up to $100 million by us subject to certain
conditions. The Prior Credit Agreement provided for a revolving credit facility of up to
$280 million. |
11
|
|
|
The total amount of availability under the U.S. Revolving Credit Agreement is limited to
a borrowing base consisting of specified percentages of eligible categories of assets. The
Administrative Agent has certain
discretion to determine eligibility and to establish reserves with respect to the
calculation of borrowing base availability. |
|
|
|
We may request base rate advances or LIBOR advances. Base rate advances accrue interest
at floating rates equal to the higher of (i) SunTrust Banks prime lending rate or (ii) the
federal funds rate plus 50 basis points. LIBOR advances accrue interest at LIBOR plus an
applicable margin. We are also charged fees for letters of credit which are issued under
the U.S. Revolving Credit Agreement. The applicable margin on LIBOR advances and the letter
of credit fees are determined from a pricing grid which is based on the average unused
availability under the U.S. Revolving Credit Agreement. Interest rate margins on LIBOR
advances and standby letter of credit fees range from 175 basis points to 225 basis points,
while the letter of credit fees for trade letters of credit range from 100 basis points to
150 basis points. Unused line fees are calculated at a per annum rate of 30 basis points. |
|
|
|
|
Our obligations under the U.S. Revolving Credit Agreement are secured by a first
priority security interest in the Borrowers and the Guarantors accounts receivable (other
than royalty payments in respect of trademark licenses), inventory, investment property
(including the equity interests of certain subsidiaries), general intangibles (other than
trademarks, trade names and related rights), deposit accounts, inter-company obligations,
equipment, goods, documents, contracts, books and records and other personal property. |
|
|
|
|
The U.S. Revolving Credit Facility contains a financial covenant that applies only if
unused availability under the U.S. Revolving Credit Agreement is less than the greater of
(i) $26.25 million or (ii) 15% of the total revolving commitments for three consecutive
business days. In such case, our fixed charge coverage ratio for the immediately preceding
twelve fiscal months for which financial statements have been delivered may not be less
than 1.0 to 1.0. This financial covenant continues to apply until we have maintained
unused availability under the U.S. Revolving Credit Agreement of more than the greater of
(i) $26.25 million or (ii) 15% of the total revolving commitments for thirty consecutive
days. |
|
|
|
|
The U.S. Revolving Credit Agreement contains a number of customary affirmative covenants
regarding, among other things, the delivery of financial and other information to the
Administrative Agent and other lenders, maintenance of records, compliance with law,
maintenance of property and insurance and conduct of business. |
|
|
|
|
The U.S. Revolving Credit Agreement also contains certain negative covenants, including,
among other things, covenants that limit our ability to (i) incur debt, (ii) guaranty
certain obligations, (iii) incur liens, (iv) pay dividends to shareholders or repurchase
shares of our common stock, (v) make investments, (vi) sell assets or stock of
subsidiaries, (vii) acquire assets or businesses, (viii) merge or consolidate with other
companies, or (ix) prepay, retire, repurchase or redeem debt. |
|
|
|
|
The U.S. Revolving Credit Agreement generally is scheduled to mature on August 15, 2013
as compared to the Prior Credit Agreement which had a maturity date of July 28, 2009. |
The above description of the U.S. Revolving Credit Agreement is not complete and is qualified
in its entirety by the actual terms of the U.S. Revolving Credit Agreement and the related Amended
and Restated Pledge and Security Agreement, attached as Exhibits 10.1 and 10.2, respectively, to
our Form 8-K filed with the SEC on August 19, 2008. As a result of amending and restating the Prior
Credit Agreement, during the third quarter of fiscal 2008 we anticipate writing off approximately
$0.9 million of unamortized financing costs incurred in connection with the Prior Credit Agreement.
12
8. |
|
Consolidating Financial Data of Subsidiary Guarantors: Our $200 million Senior Unsecured
Notes (Senior Unsecured Notes) are guaranteed by our wholly owned domestic subsidiaries
(Subsidiary Guarantors). All guarantees are full and unconditional. For consolidated
financial reporting purposes, non-guarantors consist of our subsidiaries which are organized
outside of the United States. We use the equity method with respect to investments 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 2, 2008, February 2, 2008, and August 3, 2007; our unaudited condensed consolidating
statements of earnings for the second quarter of fiscal 2008, the first six months of fiscal
2008, the three months ended August 3, 2007 and the six months ended August 3, 2007; and our
unaudited condensed consolidating statements of cash flows for the first six months of fiscal
2008 and the six months ended August 3, 2007 (in thousands). |
OXFORD INDUSTRIES, INC.
UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEETS
August 2, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oxford |
|
|
|
|
|
|
|
|
|
|
Industries |
|
Subsidiary |
|
Subsidiary |
|
Consolidating |
|
Consolidated |
|
|
(Parent) |
|
Guarantors |
|
Non-Guarantors |
|
Adjustments |
|
Total |
|
|
|
ASSETS
|
Cash and cash equivalents |
|
$ |
2,640 |
|
|
$ |
1,373 |
|
|
$ |
1,230 |
|
|
$ |
|
|
|
$ |
5,243 |
|
Receivables, net |
|
|
39,955 |
|
|
|
31,826 |
|
|
|
33,262 |
|
|
|
(8,580 |
) |
|
|
96,463 |
|
Inventories |
|
|
56,114 |
|
|
|
54,002 |
|
|
|
21,333 |
|
|
|
(1,545 |
) |
|
|
129,904 |
|
Prepaid expenses |
|
|
9,185 |
|
|
|
8,560 |
|
|
|
4,281 |
|
|
|
|
|
|
|
22,026 |
|
|
|
|
Total current assets |
|
|
107,894 |
|
|
|
95,761 |
|
|
|
60,106 |
|
|
|
(10,125 |
) |
|
|
253,636 |
|
Property, plant and equipment, net |
|
|
8,580 |
|
|
|
79,579 |
|
|
|
6,312 |
|
|
|
|
|
|
|
94,471 |
|
Goodwill, net |
|
|
1,847 |
|
|
|
168,932 |
|
|
|
86,920 |
|
|
|
|
|
|
|
257,699 |
|
Intangible assets, net |
|
|
85 |
|
|
|
131,869 |
|
|
|
93,658 |
|
|
|
|
|
|
|
225,612 |
|
Other non-current assets, net |
|
|
836,301 |
|
|
|
150,366 |
|
|
|
35,507 |
|
|
|
(994,308 |
) |
|
|
27,866 |
|
|
|
|
Total Assets |
|
$ |
954,707 |
|
|
$ |
626,507 |
|
|
$ |
282,503 |
|
|
$ |
(1,004,433 |
) |
|
$ |
859,284 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY
|
Current liabilities |
|
$ |
41,424 |
|
|
$ |
43,492 |
|
|
$ |
38,843 |
|
|
$ |
(8,292 |
) |
|
$ |
115,467 |
|
Long-term debt, less current portion |
|
|
218,604 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
218,604 |
|
Non-current liabilities |
|
|
285,500 |
|
|
|
(233,353 |
) |
|
|
110,001 |
|
|
|
(109,424 |
) |
|
|
52,724 |
|
Non-current deferred income taxes |
|
|
(4,264 |
) |
|
|
37,010 |
|
|
|
26,012 |
|
|
|
288 |
|
|
|
59,046 |
|
Total shareholders/invested equity |
|
|
413,443 |
|
|
|
779,358 |
|
|
|
107,647 |
|
|
|
(887,005 |
) |
|
|
413,443 |
|
|
|
|
Total Liabilities and Shareholders Equity |
|
$ |
954,707 |
|
|
$ |
626,507 |
|
|
$ |
282,503 |
|
|
$ |
(1,004,433 |
) |
|
$ |
859,284 |
|
|
|
|
13
OXFORD INDUSTRIES, INC.
UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEETS
February 2, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oxford |
|
|
|
|
|
|
|
|
|
|
Industries |
|
Subsidiary |
|
Subsidiary |
|
Consolidating |
|
Consolidated |
|
|
(Parent) |
|
Guarantors |
|
Non-Guarantors |
|
Adjustments |
|
Total |
|
|
|
ASSETS
|
Cash and cash equivalents |
|
$ |
2,100 |
|
|
$ |
1,050 |
|
|
$ |
11,762 |
|
|
$ |
|
|
|
$ |
14,912 |
|
Receivables, net |
|
|
52,599 |
|
|
|
38,244 |
|
|
|
20,763 |
|
|
|
(6,045 |
) |
|
|
105,561 |
|
Inventories |
|
|
64,896 |
|
|
|
76,462 |
|
|
|
18,826 |
|
|
|
(1,259 |
) |
|
|
158,925 |
|
Prepaid expenses |
|
|
6,595 |
|
|
|
8,475 |
|
|
|
3,631 |
|
|
|
|
|
|
|
18,701 |
|
|
|
|
Total current assets |
|
|
126,190 |
|
|
|
124,231 |
|
|
|
54,982 |
|
|
|
(7,304 |
) |
|
|
298,099 |
|
Property, plant and equipment, net |
|
|
7,933 |
|
|
|
77,652 |
|
|
|
6,917 |
|
|
|
|
|
|
|
92,502 |
|
Goodwill, net |
|
|
1,847 |
|
|
|
168,932 |
|
|
|
87,142 |
|
|
|
|
|
|
|
257,921 |
|
Intangible assets, net |
|
|
1,235 |
|
|
|
134,846 |
|
|
|
94,852 |
|
|
|
|
|
|
|
230,933 |
|
Other non-current assets, net |
|
|
825,252 |
|
|
|
150,142 |
|
|
|
70,673 |
|
|
|
(1,015,250 |
) |
|
|
30,817 |
|
|
|
|
Total Assets |
|
$ |
962,457 |
|
|
$ |
655,803 |
|
|
$ |
314,566 |
|
|
$ |
(1,022,554 |
) |
|
$ |
910,272 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY
|
Current liabilities |
|
$ |
78,518 |
|
|
$ |
54,268 |
|
|
$ |
29,066 |
|
|
$ |
(5,435 |
) |
|
$ |
156,417 |
|
Long-term debt, less current portion |
|
|
234,414 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
234,414 |
|
Non-current liabilities |
|
|
246,261 |
|
|
|
(197,557 |
) |
|
|
111,564 |
|
|
|
(109,359 |
) |
|
|
50,909 |
|
Non-current deferred income taxes |
|
|
(4,284 |
) |
|
|
38,910 |
|
|
|
26,358 |
|
|
|
|
|
|
|
60,984 |
|
Total shareholders/invested equity |
|
|
407,548 |
|
|
|
760,182 |
|
|
|
147,578 |
|
|
|
(907,760 |
) |
|
|
407,548 |
|
|
|
|
Total Liabilities and Shareholders
Equity |
|
$ |
962,457 |
|
|
$ |
655,803 |
|
|
$ |
314,566 |
|
|
$ |
(1,022,554 |
) |
|
$ |
910,272 |
|
|
|
|
14
OXFORD INDUSTRIES, INC.
UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEETS
August 3, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oxford |
|
|
|
|
|
|
|
|
|
|
Industries |
|
Subsidiary |
|
Subsidiary |
|
Consolidating |
|
Consolidated |
|
|
(Parent) |
|
Guarantors |
|
Non-Guarantors |
|
Adjustments |
|
Total |
|
|
|
ASSETS
|
Cash and cash equivalents |
|
$ |
37,016 |
|
|
$ |
1,077 |
|
|
$ |
18,920 |
|
|
$ |
(1 |
) |
|
$ |
57,012 |
|
Receivables, net |
|
|
42,071 |
|
|
|
38,263 |
|
|
|
25,596 |
|
|
|
(6,727 |
) |
|
|
99,203 |
|
Inventories |
|
|
81,210 |
|
|
|
59,449 |
|
|
|
17,282 |
|
|
|
(1,083 |
) |
|
|
156,858 |
|
Prepaid expenses |
|
|
10,107 |
|
|
|
9,559 |
|
|
|
4,616 |
|
|
|
|
|
|
|
24,282 |
|
|
|
|
Total current assets |
|
|
170,404 |
|
|
|
108,348 |
|
|
|
66,414 |
|
|
|
(7,811 |
) |
|
|
337,355 |
|
Property, plant and equipment, net |
|
|
9,040 |
|
|
|
70,873 |
|
|
|
9,181 |
|
|
|
|
|
|
|
89,094 |
|
Goodwill, net |
|
|
1,847 |
|
|
|
168,932 |
|
|
|
53,217 |
|
|
|
|
|
|
|
223,996 |
|
Intangible assets, net |
|
|
1,320 |
|
|
|
135,989 |
|
|
|
98,922 |
|
|
|
|
|
|
|
236,231 |
|
Other non-current assets, net |
|
|
775,808 |
|
|
|
150,463 |
|
|
|
1,374 |
|
|
|
(897,747 |
) |
|
|
29,898 |
|
|
|
|
Total Assets |
|
$ |
958,419 |
|
|
$ |
634,605 |
|
|
$ |
229,108 |
|
|
$ |
(905,558 |
) |
|
$ |
916,574 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY
|
Current liabilities |
|
$ |
59,854 |
|
|
$ |
56,770 |
|
|
$ |
31,933 |
|
|
$ |
(6,269 |
) |
|
$ |
142,288 |
|
Long-term debt, less current portion |
|
|
199,325 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
199,325 |
|
Non-current liabilities |
|
|
246,970 |
|
|
|
(201,516 |
) |
|
|
113,410 |
|
|
|
(109,148 |
) |
|
|
49,716 |
|
Non-current deferred income taxes |
|
|
(4,199 |
) |
|
|
43,604 |
|
|
|
29,371 |
|
|
|
|
|
|
|
68,776 |
|
Total shareholders/invested equity |
|
|
456,469 |
|
|
|
735,747 |
|
|
|
54,394 |
|
|
|
(790,141 |
) |
|
|
456,469 |
|
|
|
|
Total Liabilities and Shareholders Equity |
|
$ |
958,419 |
|
|
$ |
634,605 |
|
|
$ |
229,108 |
|
|
$ |
(905,558 |
) |
|
$ |
916,574 |
|
|
|
|
15
OXFORD INDUSTRIES, INC.
UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF EARNINGS
Second Quarter Fiscal 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oxford |
|
|
|
|
|
|
|
|
|
|
Industries |
|
Subsidiary |
|
Subsidiary |
|
Consolidating |
|
Consolidated |
|
|
(Parent) |
|
Guarantors |
|
Non-Guarantors |
|
Adjustments |
|
Total |
|
|
|
Net sales |
|
$ |
85,018 |
|
|
$ |
120,331 |
|
|
$ |
33,847 |
|
|
$ |
(8,676 |
) |
|
$ |
230,520 |
|
Cost of goods sold |
|
|
68,419 |
|
|
|
52,921 |
|
|
|
15,559 |
|
|
|
(3,050 |
) |
|
|
133,849 |
|
|
|
|
Gross profit |
|
|
16,599 |
|
|
|
67,410 |
|
|
|
18,288 |
|
|
|
(5,626 |
) |
|
|
96,671 |
|
Selling, general and administrative |
|
|
18,677 |
|
|
|
61,102 |
|
|
|
19,319 |
|
|
|
(6,068 |
) |
|
|
93,030 |
|
Royalties and other income |
|
|
508 |
|
|
|
3,023 |
|
|
|
1,479 |
|
|
|
(659 |
) |
|
|
4,351 |
|
|
|
|
Operating income |
|
|
(1,570 |
) |
|
|
9,331 |
|
|
|
448 |
|
|
|
(217 |
) |
|
|
7,992 |
|
Interest (income) expense, net |
|
|
6,502 |
|
|
|
(3,052 |
) |
|
|
2,535 |
|
|
|
|
|
|
|
5,985 |
|
Income from equity investment |
|
|
7,395 |
|
|
|
|
|
|
|
|
|
|
|
(7,395 |
) |
|
|
|
|
|
|
|
Earnings before income taxes |
|
|
(677 |
) |
|
|
12,383 |
|
|
|
(2,087 |
) |
|
|
(7,612 |
) |
|
|
2,007 |
|
Income taxes (benefit) |
|
|
(2,292 |
) |
|
|
3,010 |
|
|
|
(108 |
) |
|
|
(76 |
) |
|
|
534 |
|
|
|
|
Net earnings |
|
$ |
1,615 |
|
|
$ |
9,373 |
|
|
$ |
(1,979 |
) |
|
$ |
(7,536 |
) |
|
$ |
1,473 |
|
|
|
|
First Six Months Fiscal 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oxford |
|
|
|
|
|
|
|
|
|
|
Industries |
|
Subsidiary |
|
Subsidiary |
|
Consolidating |
|
Consolidated |
|
|
(Parent) |
|
Guarantors |
|
Non-Guarantors |
|
Adjustments |
|
Total |
|
|
|
Net sales |
|
$ |
190,394 |
|
|
$ |
259,108 |
|
|
$ |
74,253 |
|
|
$ |
(20,293 |
) |
|
$ |
503,462 |
|
Cost of goods sold |
|
|
151,681 |
|
|
|
114,851 |
|
|
|
32,109 |
|
|
|
(8,159 |
) |
|
|
290,482 |
|
|
|
|
Gross profit |
|
|
38,713 |
|
|
|
144,257 |
|
|
|
42,144 |
|
|
|
(12,134 |
) |
|
|
212,980 |
|
Selling, general and administrative |
|
|
38,676 |
|
|
|
127,842 |
|
|
|
39,904 |
|
|
|
(12,970 |
) |
|
|
193,452 |
|
Royalties and other income |
|
|
537 |
|
|
|
5,934 |
|
|
|
3,189 |
|
|
|
(1,121 |
) |
|
|
8,539 |
|
|
|
|
Operating income |
|
|
574 |
|
|
|
22,349 |
|
|
|
5,429 |
|
|
|
(285 |
) |
|
|
28,067 |
|
Interest (income) expense, net |
|
|
13,518 |
|
|
|
(6,061 |
) |
|
|
4,860 |
|
|
|
|
|
|
|
12,317 |
|
Income from equity investment |
|
|
20,521 |
|
|
|
|
|
|
|
|
|
|
|
(20,521 |
) |
|
|
|
|
|
|
|
Earnings before income taxes |
|
|
7,577 |
|
|
|
28,410 |
|
|
|
569 |
|
|
|
(20,806 |
) |
|
|
15,750 |
|
Income taxes (benefit) |
|
|
(3,598 |
) |
|
|
7,993 |
|
|
|
465 |
|
|
|
(100 |
) |
|
|
4,760 |
|
|
|
|
Net earnings |
|
$ |
11,175 |
|
|
$ |
20,417 |
|
|
$ |
104 |
|
|
$ |
(20,706 |
) |
|
$ |
10,990 |
|
|
|
|
16
OXFORD INDUSTRIES, INC.
UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF EARNINGS
Three Months Ended August 3, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oxford |
|
|
|
|
|
|
|
|
|
|
Industries |
|
Subsidiary |
|
Subsidiary |
|
Consolidating |
|
Consolidated |
|
|
(Parent) |
|
Guarantors |
|
Non-Guarantors |
|
Adjustments |
|
Total |
|
|
|
Net sales |
|
$ |
91,734 |
|
|
$ |
126,021 |
|
|
$ |
37,077 |
|
|
$ |
(10,222 |
) |
|
$ |
244,610 |
|
Cost of goods sold |
|
|
71,082 |
|
|
|
57,051 |
|
|
|
15,845 |
|
|
|
(2,413 |
) |
|
|
141,565 |
|
|
|
|
Gross profit |
|
|
20,652 |
|
|
|
68,970 |
|
|
|
21,232 |
|
|
|
(7,809 |
) |
|
|
103,045 |
|
Selling, general and administrative |
|
|
21,549 |
|
|
|
54,244 |
|
|
|
22,254 |
|
|
|
(7,770 |
) |
|
|
90,277 |
|
Royalties and other income |
|
|
38 |
|
|
|
2,970 |
|
|
|
1,239 |
|
|
|
(418 |
) |
|
|
3,829 |
|
|
|
|
Operating income |
|
|
(859 |
) |
|
|
17,696 |
|
|
|
217 |
|
|
|
(457 |
) |
|
|
16,597 |
|
Interest (income) expense, net |
|
|
6,098 |
|
|
|
(3,320 |
) |
|
|
2,277 |
|
|
|
23 |
|
|
|
5,078 |
|
Income from equity investment |
|
|
15,304 |
|
|
|
(2 |
) |
|
|
|
|
|
|
(15,302 |
) |
|
|
|
|
|
|
|
Earnings before income taxes |
|
|
8,347 |
|
|
|
21,014 |
|
|
|
(2,060 |
) |
|
|
(15,782 |
) |
|
|
11,519 |
|
Income taxes (benefit) |
|
|
(707 |
) |
|
|
6,153 |
|
|
|
(2,500 |
) |
|
|
(165 |
) |
|
|
2,781 |
|
|
|
|
Net earnings |
|
$ |
9,054 |
|
|
$ |
14,861 |
|
|
$ |
440 |
|
|
$ |
(15,617 |
) |
|
$ |
8,738 |
|
|
|
|
Six Months Ended August 3, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oxford |
|
|
|
|
|
|
|
|
|
|
Industries |
|
Subsidiary |
|
Subsidiary |
|
Consolidating |
|
Consolidated |
|
|
(Parent) |
|
Guarantors |
|
Non-Guarantors |
|
Adjustments |
|
Total |
|
|
|
Net sales |
|
$ |
209,282 |
|
|
$ |
271,159 |
|
|
$ |
75,886 |
|
|
$ |
(19,320 |
) |
|
$ |
537,007 |
|
Cost of goods sold |
|
|
162,166 |
|
|
|
122,029 |
|
|
|
33,479 |
|
|
|
(4,238 |
) |
|
|
313,436 |
|
|
|
|
Gross profit |
|
|
47,116 |
|
|
|
149,130 |
|
|
|
42,407 |
|
|
|
(15,082 |
) |
|
|
223,571 |
|
Selling, general and administrative |
|
|
45,034 |
|
|
|
114,250 |
|
|
|
41,724 |
|
|
|
(15,498 |
) |
|
|
185,510 |
|
Royalties and other income |
|
|
2,147 |
|
|
|
5,664 |
|
|
|
2,510 |
|
|
|
(844 |
) |
|
|
9,477 |
|
|
|
|
Operating income |
|
|
4,229 |
|
|
|
40,544 |
|
|
|
3,193 |
|
|
|
(428 |
) |
|
|
47,538 |
|
Interest (income) expense, net |
|
|
12,445 |
|
|
|
(6,465 |
) |
|
|
4,450 |
|
|
|
46 |
|
|
|
10,476 |
|
Income from equity investment |
|
|
33,172 |
|
|
|
(2 |
) |
|
|
|
|
|
|
(33,170 |
) |
|
|
|
|
|
|
|
Earnings before income taxes |
|
|
24,956 |
|
|
|
47,007 |
|
|
|
(1,257 |
) |
|
|
(33,644 |
) |
|
|
37,062 |
|
Income taxes (benefit) |
|
|
(1,189 |
) |
|
|
14,545 |
|
|
|
(1,964 |
) |
|
|
(161 |
) |
|
|
11,231 |
|
|
|
|
Net earnings |
|
$ |
26,145 |
|
|
$ |
32,462 |
|
|
$ |
707 |
|
|
$ |
(33,483 |
) |
|
$ |
25,831 |
|
|
|
|
17
OXFORD INDUSTRIES, INC.
UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
First Six Months Fiscal 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oxford |
|
|
|
|
|
|
|
|
|
|
Industries |
|
Subsidiary |
|
Subsidiary |
|
Consolidating |
|
Consolidated |
|
|
(Parent) |
|
Guarantors |
|
Non-Guarantors |
|
Adjustments |
|
Total |
|
|
|
Cash Flows From Operating Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by
operating activities |
|
$ |
18,446 |
|
|
$ |
49,576 |
|
|
$ |
(5,942 |
) |
|
$ |
64 |
|
|
$ |
62,144 |
|
Cash Flows from Investing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in unconsolidated entity |
|
|
|
|
|
|
(408 |
) |
|
|
(38 |
) |
|
|
|
|
|
|
(446 |
) |
Purchases of property, plant and
equipment |
|
|
(1,658 |
) |
|
|
(10,297 |
) |
|
|
(325 |
) |
|
|
|
|
|
|
(12,280 |
) |
Proceeds from sale of property, plant
and equipment |
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4 |
|
|
|
|
Net cash (used in) provided by
investing activities |
|
|
(1,654 |
) |
|
|
(10,705 |
) |
|
|
(363 |
) |
|
|
|
|
|
|
(12,722 |
) |
Cash Flows from Financing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in debt |
|
|
(53,799 |
) |
|
|
(1 |
) |
|
|
3,045 |
|
|
|
|
|
|
|
(50,755 |
) |
Proceeds from issuance of common stock |
|
|
53 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53 |
|
Change in inter-company payable |
|
|
40,237 |
|
|
|
(38,547 |
) |
|
|
(1,626 |
) |
|
|
(64 |
) |
|
|
|
|
Dividends on common stock |
|
|
(2,743 |
) |
|
|
|
|
|
|
(5,958 |
) |
|
|
|
|
|
|
(8,701 |
) |
|
|
|
Net cash (used in) provided by
financing activities |
|
|
(16,252 |
) |
|
|
(38,548 |
) |
|
|
(4,539 |
) |
|
|
(64 |
) |
|
|
(59,403 |
) |
|
|
|
Net change in Cash and Cash Equivalents |
|
|
540 |
|
|
|
323 |
|
|
|
(10,844 |
) |
|
|
|
|
|
|
(9,981 |
) |
Effect of foreign currency translation |
|
|
|
|
|
|
|
|
|
|
312 |
|
|
|
|
|
|
|
312 |
|
Cash and Cash Equivalents at the
Beginning of Period |
|
|
2,100 |
|
|
|
1,050 |
|
|
|
11,762 |
|
|
|
|
|
|
|
14,912 |
|
|
|
|
Cash and Cash Equivalents at the End
of Period |
|
$ |
2,640 |
|
|
$ |
1,373 |
|
|
$ |
1,230 |
|
|
$ |
|
|
|
$ |
5,243 |
|
|
|
|
18
OXFORD INDUSTRIES, INC.
UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Six Months Ended August 3, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oxford |
|
|
|
|
|
|
|
|
|
|
Industries |
|
Subsidiary |
|
Subsidiary |
|
Consolidating |
|
Consolidated |
|
|
(Parent) |
|
Guarantors |
|
Non-Guarantors |
|
Adjustments |
|
Total |
|
|
|
Cash Flows From Operating Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by
operating activities |
|
$ |
(12,574 |
) |
|
$ |
54,799 |
|
|
$ |
2,521 |
|
|
$ |
(266 |
) |
|
$ |
44,480 |
|
Cash Flows from Investing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in unconsolidated entity |
|
|
|
|
|
|
(356 |
) |
|
|
|
|
|
|
|
|
|
|
(356 |
) |
Purchases of property, plant and
equipment |
|
|
(471 |
) |
|
|
(15,798 |
) |
|
|
(860 |
) |
|
|
|
|
|
|
(17,129 |
) |
Proceeds from sale of property, plant
and equipment |
|
|
2,906 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,906 |
|
|
|
|
Net cash (used in) provided by
investing activities |
|
|
2,435 |
|
|
|
(16,154 |
) |
|
|
(860 |
) |
|
|
|
|
|
|
(14,579 |
) |
Cash Flows from Financing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in debt |
|
|
|
|
|
|
(8 |
) |
|
|
|
|
|
|
|
|
|
|
(8 |
) |
Proceeds from issuance of common stock |
|
|
2,609 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,609 |
|
Change in inter-company payable |
|
|
26,280 |
|
|
|
(38,258 |
) |
|
|
9,624 |
|
|
|
2,354 |
|
|
|
|
|
Dividends on common stock |
|
|
(6,416 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,416 |
) |
|
|
|
Net cash (used in) provided by
financing activities |
|
|
22,473 |
|
|
|
(38,266 |
) |
|
|
9,624 |
|
|
|
2,354 |
|
|
|
(3,815 |
) |
|
|
|
Net change in Cash and Cash Equivalents |
|
|
12,334 |
|
|
|
379 |
|
|
|
11,285 |
|
|
|
2,088 |
|
|
|
26,086 |
|
Effect of foreign currency translation |
|
|
|
|
|
|
|
|
|
|
464 |
|
|
|
|
|
|
|
464 |
|
Cash and Cash Equivalents at the
Beginning of Period |
|
|
24,682 |
|
|
|
698 |
|
|
|
7,171 |
|
|
|
(2,089 |
) |
|
|
30,462 |
|
|
|
|
Cash and Cash Equivalents at the End
of Period |
|
$ |
37,016 |
|
|
$ |
1,077 |
|
|
$ |
18,920 |
|
|
$ |
(1 |
) |
|
$ |
57,012 |
|
|
|
|
19
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 Form 10-KT for the eight-month transition period ended
February 2, 2008.
OVERVIEW
We generate revenues and cash flow through the design, production, sale 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 located outside the United States and United Kingdom. We
distribute the majority of 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 products of certain owned brands through our owned and licensed
retail stores and e-commerce websites.
The first six months of fiscal 2008 was a challenging time for the retail and apparel
industry as a result of the weak economic conditions which began in the second half of the 2007
calendar year and have continued through the second quarter of fiscal 2008. These conditions
impacted each of our operating groups, and we expect that these challenging economic conditions
will continue in the near-term. Therefore, we have continued to plan inventory purchases
conservatively, which will limit our sales growth opportunities for the remainder of fiscal 2008.
This strategy, however, will also mitigate inventory markdown risk and promotional pressures. At
the same time, we continue to invest in our Tommy Bahama® and Ben Sherman® brands through store
openings and new marketing initiatives and focus our Lanier Clothes and Oxford Apparel businesses
on key product categories and lines of business.
During the second quarter of fiscal 2008, we incurred approximately $8.9 million of charges
related to the impact of restructuring in our Lanier Clothes and Oxford Apparel operating groups,
as discussed below. We anticipate an additional $0.6 million of restructuring charges in the third
quarter of fiscal 2008. Diluted net earnings per common share were $0.09 in the second quarter of
fiscal 2008 and $0.49 in the three months ended August 3, 2007. The most significant factors
impacting our results during the second quarter of fiscal 2008 were the restructuring charges and
other items discussed below:
|
|
|
Tommy Bahama reported a $2.8 million, or 13.4%, decrease in operating income during
the second quarter of fiscal 2008, compared to the three months ended August 3, 2007.
The decrease was primarily due to higher selling, general and administrative expenses
associated with operating additional retail stores as well as the impact of the current
economic conditions on sales at our existing retail stores and in our wholesale
business, which was partially offset by the sales at the 11 retail stores opened on or
after May 5, 2007, which was the first day of the three months ended August 3, 2007. |
|
|
|
|
Ben Sherman reported a $0.6 million, or 37.9%, increase in operating loss during the
second quarter of fiscal 2008, compared to the three months ended August 3, 2007. The
increase in operating loss was primarily due to lower sales in our United Kingdom
wholesale business as we continued our efforts to reposition the brand and our United
States wholesale business as the three months ended August 3, 2007 included higher
levels of off-price sales. These planned decreases were partially offset by increased
sales at our retail stores, which are located in the United Kingdom and United States,
and in wholesale operations in markets outside of the United Kingdom and United States. |
|
|
|
|
Lanier Clothes reported a $9.2 million, or 418.5%, increase in operating loss during
the second quarter of fiscal 2008, compared to the three months ended August 3, 2007.
This increase in operating loss is primarily attributable to approximately $9.2 million
of restructuring charges associated with our decision to exit the Nautica and O Oscar
licensed businesses and the restructuring of our Arnold Brant business. The
restructuring charges included costs associated with the disposal of inventory, payments
related to license termination, impairment of intangible assets associated with the
Arnold Brant business,
severance costs and the impairment of certain fixed assets. Lanier Clothes continued to
feel |
20
|
|
|
the impact of weak demand in the branded tailored clothing market during the second
quarter of fiscal 2008. |
|
|
|
Oxford Apparel reported a $0.7 million, or 21.7%, increase in operating income during
the second quarter of fiscal 2008, compared to the three months ended August 3, 2007. As
we continue to focus on key product categories and lines of business, net sales
decreased during the quarter. However, SG&A declined by an amount greater than the
decrease in gross profit caused by the lower sales. During the second quarter of fiscal
2008, we recognized approximately $1.6 million of charges associated with our decision
to exit the Solitude business. The operating results for the quarter also included the
benefit of approximately $1.2 million attributable to the resolution of a contingent
liability and the sale of a trademark, which were partially offset by an increase in our
bad debt reserve due to certain customers bankruptcy filings. |
|
|
|
|
Corporate and Other reported a $3.2 million, or 85.9%, decrease in operating loss in
the second quarter of fiscal 2008, compared to the three months ended August 3, 2007.
This decrease in operating loss was primarily due to the impact of LIFO accounting,
including a $1.9 million reversal of certain restructuring charges recognized in Lanier
Clothes, and lower SG&A during the second quarter of fiscal 2008. |
On May 22, 2008, at the conclusion of our accelerated share repurchase program which we
entered into in November 2007, we received an additional 0.6 million shares of our common stock,
bringing the total number of shares received pursuant to the program to 2.5 million. This
accelerated share repurchase program is complete and we will not receive any additional shares in
the future pursuant to this program. For further information regarding our $60 million accelerated
share repurchase program, see Note 5 to our unaudited condensed consolidated financial statements
included in this report.
RESULTS OF OPERATIONS
The following table sets forth the line items in our consolidated statements of earnings (in
thousands) and the percentage change during the second quarter of fiscal 2008 as compared to the
three months ended August 3, 2007 and the first six months of fiscal 2008 compared to the six
months ended August 3, 2007. 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Months |
|
|
|
|
|
|
|
|
|
Six Months |
|
|
|
|
Second |
|
Ended |
|
|
|
|
|
First Six |
|
Ended |
|
|
|
|
Quarter |
|
August 3, |
|
Percent |
|
Months |
|
August 3, |
|
Percent |
|
|
Fiscal 2008 |
|
2007 |
|
Change |
|
Fiscal 2008 |
|
2007 |
|
Change |
|
|
|
Net sales |
|
$ |
230,520 |
|
|
$ |
244,610 |
|
|
|
(5.8 |
%) |
|
$ |
503,462 |
|
|
$ |
537,007 |
|
|
|
(6.2 |
%) |
Cost of goods sold |
|
|
133,849 |
|
|
|
141,565 |
|
|
|
(5.5 |
%) |
|
|
290,482 |
|
|
|
313,436 |
|
|
|
(7.3 |
%) |
|
|
|
Gross profit |
|
|
96,671 |
|
|
|
103,045 |
|
|
|
(6.2 |
%) |
|
|
212,980 |
|
|
|
223,571 |
|
|
|
(4.7 |
%) |
Selling, general and
administrative
expenses |
|
|
88,972 |
|
|
|
88,959 |
|
|
|
0.0 |
% |
|
|
188,606 |
|
|
|
182,497 |
|
|
|
3.3 |
% |
Amortization of
intangible assets |
|
|
4,058 |
|
|
|
1,318 |
|
|
|
207.9 |
% |
|
|
4,846 |
|
|
|
3,013 |
|
|
|
60.8 |
% |
Royalties and other
operating income |
|
|
4,351 |
|
|
|
3,829 |
|
|
|
13.6 |
% |
|
|
8,539 |
|
|
|
9,477 |
|
|
|
(9.9 |
%) |
|
|
|
Operating income |
|
|
7,992 |
|
|
|
16,597 |
|
|
|
(51.8 |
%) |
|
|
28,067 |
|
|
|
47,538 |
|
|
|
(41.0 |
%) |
Interest expense, net |
|
|
5,985 |
|
|
|
5,078 |
|
|
|
17.9 |
% |
|
|
12,317 |
|
|
|
10,476 |
|
|
|
17.6 |
% |
|
|
|
Earnings before
income taxes |
|
|
2,007 |
|
|
|
11,519 |
|
|
|
(82.6 |
%) |
|
|
15,750 |
|
|
|
37,062 |
|
|
|
(57.5 |
%) |
Income taxes |
|
|
534 |
|
|
|
2,781 |
|
|
|
(80.8 |
%) |
|
|
4,760 |
|
|
|
11,231 |
|
|
|
(57.6 |
%) |
|
|
|
Net earnings |
|
$ |
1,473 |
|
|
$ |
8,738 |
|
|
|
(83.1 |
%) |
|
$ |
10,990 |
|
|
$ |
25,831 |
|
|
|
(57.5 |
%) |
|
|
|
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.
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent of Net Sales |
|
|
|
|
|
|
Three |
|
|
|
|
|
|
|
|
|
|
|
|
Months |
|
|
|
|
|
Six Months |
|
|
Second |
|
Ended |
|
First Six |
|
Ended |
|
|
Quarter |
|
August 3, |
|
Months |
|
August 3, |
|
|
Fiscal 2008 |
|
2007 |
|
Fiscal 2008 |
|
2007 |
|
|
|
Net sales |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
Cost of goods sold |
|
|
58.1 |
% |
|
|
57.9 |
% |
|
|
57.7 |
% |
|
|
58.4 |
% |
|
|
|
Gross profit |
|
|
41.9 |
% |
|
|
42.1 |
% |
|
|
42.3 |
% |
|
|
41.6 |
% |
Selling, general and
administrative
expenses |
|
|
38.6 |
% |
|
|
36.4 |
% |
|
|
37.5 |
% |
|
|
34.0 |
% |
Amortization of
intangible assets |
|
|
1.8 |
% |
|
|
0.5 |
% |
|
|
1.0 |
% |
|
|
0.6 |
% |
Royalties and other
operating income |
|
|
1.9 |
% |
|
|
1.6 |
% |
|
|
1.7 |
% |
|
|
1.8 |
% |
|
|
|
Operating income |
|
|
3.5 |
% |
|
|
6.8 |
% |
|
|
5.6 |
% |
|
|
8.9 |
% |
Interest expense, net |
|
|
2.6 |
% |
|
|
2.1 |
% |
|
|
2.4 |
% |
|
|
2.0 |
% |
|
|
|
Earnings before
income taxes |
|
|
0.9 |
% |
|
|
4.7 |
% |
|
|
3.1 |
% |
|
|
6.9 |
% |
Income taxes |
|
|
0.2 |
% |
|
|
1.1 |
% |
|
|
0.9 |
% |
|
|
2.1 |
% |
|
|
|
Net earnings |
|
|
0.6 |
% |
|
|
3.6 |
% |
|
|
2.2 |
% |
|
|
4.8 |
% |
|
|
|
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. The leader of each operating group reports directly to our Chief Executive Officer.
Tommy Bahama designs, sources and markets collections of mens and womens sportswear and
related products. Tommy Bahama products can be found in our own retail stores and on our e-commerce
website as well as in 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 British lifestyle brand of apparel and footwear targeted at youthful-thinking men and women
ages 19 to 35 throughout the world. 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 owned and
licensed Ben Sherman retail stores and on Ben Sherman e-commerce websites.
Lanier Clothes designs and markets branded and private label mens suits, sportcoats, suit
separates and dress slacks across a wide range of price points. Certain Lanier Clothes products are
sold using trademarks licensed to us by third parties, including Kenneth Cole®, Dockers®, Geoffrey
Beene®, Nautica and O Oscar, although we are exiting the Nautica and O Oscar businesses as
discussed elsewhere in this report. We also offer products under the Arnold Brant® and Billy
London® trademarks, both of which are brands owned by us. In addition to our 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.
22
Oxford Apparel produces branded and private label dress shirts, suited separates, sport
shirts, casual slacks, outerwear, sweaters, jeans, swimwear, westernwear and golf apparel. We
design and source certain private label programs for several customers, including programs for
Mens Wearhouse, Lands End, Target, Macys Inc. and Sears. Significant owned brands of Oxford
Apparel include Oxford Golf®, 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. Additionally, Oxford Apparel 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 stores, 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 tables below present net sales and operating income information about our operating groups
(dollars in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Months |
|
|
|
|
|
|
|
|
|
Six Months |
|
|
|
|
Second |
|
Ended |
|
|
|
|
|
First |
|
Ended |
|
|
|
|
Quarter |
|
August 3, |
|
Percent |
|
Six Months |
|
August 3, |
|
Percent |
|
|
Fiscal 2008 |
|
2007 |
|
Change |
|
Fiscal 2008 |
|
2007 |
|
Change |
|
|
|
Net Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tommy Bahama |
|
$ |
112,007 |
|
|
$ |
114,361 |
|
|
|
(2.1 |
%) |
|
$ |
241,265 |
|
|
$ |
246,126 |
|
|
|
(2.0 |
%) |
Ben Sherman |
|
|
32,495 |
|
|
|
36,493 |
|
|
|
(11.0 |
%) |
|
|
69,082 |
|
|
|
75,750 |
|
|
|
(8.8 |
%) |
Lanier Clothes |
|
|
28,184 |
|
|
|
31,558 |
|
|
|
(10.7 |
%) |
|
|
66,871 |
|
|
|
74,218 |
|
|
|
(9.9 |
%) |
Oxford Apparel |
|
|
58,024 |
|
|
|
61,047 |
|
|
|
(5.0 |
%) |
|
|
126,708 |
|
|
|
139,453 |
|
|
|
(9.1 |
%) |
Corporate and Other |
|
|
(190 |
) |
|
|
1,151 |
|
|
|
(116.5 |
%) |
|
|
(464 |
) |
|
|
1,460 |
|
|
|
(131.8 |
%) |
|
|
|
Total |
|
$ |
230,520 |
|
|
$ |
244,610 |
|
|
|
(5.8 |
%) |
|
$ |
503,462 |
|
|
$ |
537,007 |
|
|
|
(6.2 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tommy Bahama |
|
$ |
18,143 |
|
|
$ |
20,945 |
|
|
|
(13.4 |
%) |
|
$ |
37,626 |
|
|
$ |
47,440 |
|
|
|
(20.7 |
%) |
Ben Sherman |
|
|
(2,002 |
) |
|
|
(1,452 |
) |
|
|
(37.9 |
%) |
|
|
(1,747 |
) |
|
|
230 |
|
|
|
(859.6 |
%) |
Lanier Clothes |
|
|
(11,355 |
) |
|
|
(2,190 |
) |
|
|
(418.5 |
%) |
|
|
(11,376 |
) |
|
|
(753 |
) |
|
|
(1410.8 |
%) |
Oxford Apparel |
|
|
3,738 |
|
|
|
3,072 |
|
|
|
21.7 |
% |
|
|
9,063 |
|
|
|
10,334 |
|
|
|
(12.3 |
%) |
Corporate and Other |
|
|
(532 |
) |
|
|
(3,778 |
) |
|
|
85.9 |
% |
|
|
(5,499 |
) |
|
|
(9,713 |
) |
|
|
43.4 |
% |
|
|
|
Total |
|
$ |
7,992 |
|
|
$ |
16,597 |
|
|
|
(51.8 |
%) |
|
$ |
28,067 |
|
|
$ |
47,538 |
|
|
|
(41.0 |
%) |
|
|
|
For further information regarding our operating groups, see Note 4 to our unaudited condensed
consolidated financial statements included in this report and Part I, Item 1. Business in our Form
10-KT for the eight-month transition period ended February 2, 2008.
SECOND QUARTER OF FISCAL 2008 COMPARED TO THREE MONTHS ENDED AUGUST 3, 2007
The discussion below compares our operating results for the second quarter of fiscal 2008 to
the three months ended August 3, 2007. Each percentage change provided below reflects the change
between these periods unless indicated otherwise.
Net sales decreased $14.1 million, or 5.8%, in the second quarter of fiscal 2008 compared to
the three months ended August 3, 2007 primarily as a result of the changes discussed below.
23
Tommy Bahama reported a decrease in net sales of $2.4 million, or 2.1%. The decrease was
primarily due to a reduction in net sales at wholesale and in our existing owned retail stores
resulting from the difficult retail environment. This decrease in wholesale sales and our existing
store retail sales was partially offset by retail sales at our 11 retail stores opened on or after
May 5, 2007, which was the first day of the three months ended August 3, 2007, and e-commerce sales
which commenced in October 2007. We operated 78 Tommy Bahama retail stores on August 2, 2008
compared to 69 retail stores on August 3, 2007. Unit sales decreased 6.0% due to the difficult
retail environment at our own retail stores and our wholesale customers stores during the second
quarter of fiscal 2008. The average selling price per unit increased by 2.6%, as sales at our
retail stores and our e-commerce sales, both of which have higher average sales prices than
wholesale sales, represented a greater proportion of total Tommy Bahama sales. We expect the
difficult retail environment to continue through the end of fiscal 2008.
Ben Sherman reported a decrease in net sales of $4.0 million, or 11.0%. The decrease in net
sales was primarily due to lower sales in our United Kingdom wholesale business as we continue to
reposition the brand in fiscal 2008 and lower sales in our United States wholesale business due to
reduced off-price sales and our exit from the Evisu apparel business in the prior year. These
declines were partially offset by increased sales at our retail stores, which are located in the
United Kingdom and United States, and increased sales in markets outside of the United Kingdom and
United States. During the second quarter of fiscal 2008, unit sales for Ben Sherman declined 16.2%
due primarily to the decline in the United Kingdom and United States wholesale businesses partially
offset by increased sales in our retail operations and in markets outside of the United Kingdom and
United States. The average selling price per unit increased 6.3%, primarily due to a larger
percentage of total Ben Sherman sales being sales at our retail stores rather than wholesale sales,
a lower level of off-price sales in the current year and higher price points in the United Kingdom
business. For the remainder of fiscal 2008, we anticipate that sales in our Ben Sherman wholesale
business in the United Kingdom will decline compared to the same periods in the prior year as we
continue to reposition the brand, but we expect that this decline will be partially offset by sales
increases in our retail operations and in our operations outside of the United Kingdom and United
States.
Lanier Clothes reported a decrease in net sales of $3.4 million, or 10.7%. The decrease was
primarily due to the weak demand in the tailored clothing market. This weak demand resulted in
lower unit sales and lower average selling price per unit in the second quarter of fiscal 2008. We
expect that this sluggish market will continue through the end of fiscal 2008.
Oxford Apparel reported a decrease in net sales of $3.0 million, or 5.0%. The decrease in net
sales was anticipated in connection with the strategy we implemented in the latter part of fiscal
2007 to focus on key product categories and exit underperforming lines of business. Unit sales
increased by 0.9% and the average selling price per unit decreased by 5.8% due to changes in
product mix as we focused on key product categories. We anticipate that sales in the remainder of
fiscal 2008 will be lower than the prior year as we continue to focus on key product categories and
exit certain lines of business.
Gross profit decreased 6.2% in the second quarter of fiscal 2008. The decrease was due to
lower sales, as described above and lower gross margins. Gross margins decreased to 41.9% of net
sales during the second quarter of fiscal 2008 from 42.1% in the prior period. The decrease in
gross margins was primarily due to the restructuring charges impacting net sales and cost of goods
sold in Lanier Clothes, Oxford Apparel and Corporate and Other totaling approximately $3.1 million,
partially offset by the increased proportion of Tommy Bahama and Ben Sherman sales, which generally
have higher gross margins than our Lanier Clothes and Oxford Apparel businesses. Gross margins for
Tommy Bahama and Ben Sherman improved compared to the three months ended August 3, 2007.
Our gross profit may not be directly comparable to those of our competitors, as
statement of earnings classifications of certain expenses may vary by company.
SG&A, expenses were flat in the second quarter of
fiscal 2008. SG&A was 38.6% of net sales in the second quarter of fiscal 2008 compared to 36.4% in
the three months ended August 3, 2007. Restructuring charges included in SG&A of approximately $2.5
million in Lanier Clothes and increased expenses associated with operating additional Tommy Bahama
and Ben Sherman retail stores were offset by
24
reductions in employment and other costs and the resolution of a contingent liability. The increase
in SG&A as a percentage of net sales was due to the reduction in net sales, as discussed above.
Amortization of intangible assets increased $2.7 million or 207.9% in the second quarter of
fiscal 2008. The increase was due to $3.3 million of impairment charges related to the Arnold Brant
and Solitude intangible assets in Lanier Clothes and Oxford Apparel, respectively. These charges
were partially offset by a decrease in amortization expense as amortization is typically greater in
the earlier periods following an acquisition.
Royalties and other operating income increased 13.6% in the second quarter of fiscal 2008. The
increase was primarily due to the sale of a trademark by Oxford Apparel during the second quarter
of fiscal 2008.
Operating income decreased 51.8% in the second quarter of fiscal 2008 primarily due to the
changes discussed below.
Tommy Bahama reported a $2.8 million, or 13.4%, decrease in operating income. The decrease was
primarily due to the higher SG&A expenses associated with operating additional retail stores in the
second quarter of fiscal 2008 and an increase in marketing and advertising costs of approximately
$0.7 million as well as the lower sales resulting from the impact of the current economic
conditions.
Ben Sherman reported a $0.6 million, or 37.9%, increase in operating loss. The increase in
operating loss was primarily due to lower sales in our United Kingdom and United States wholesale
businesses in the second quarter of fiscal 2008, as discussed above. The decline in sales in the
United Kingdom and the United States wholesale businesses were partially offset by increased
earnings in markets outside of the United Kingdom and United States.
Lanier Clothes reported a $9.2 million, or 418.5%, increase in operating loss. The increase in
operating loss was primarily due to the $9.2 million of restructuring charges associated with our
decision to exit the Nautica and O Oscar licensed businesses and the restructuring of our Arnold
Brant business. These charges include costs associated with the disposal of inventory, payments
related to license termination, the impairment of the intangible assets associated with the Arnold
Brant business, severance costs and the impairment of certain property, plant and equipment.
Approximately $1.9 million of inventory charges for Lanier Clothes were reversed in Corporate &
Other as part of LIFO accounting.
Oxford Apparel reported a $0.7 million, or 21.7%, increase in operating income. The increase
was attributable to decreased employment costs and the resolution of a contingent liability
partially offset by decreased gross profit and the impairment charge for the Solitude intangible
assets and certain inventory disposal costs associated with exiting the Solitude business. The
decrease in gross profit was due to the decrease in sales as we continue to focus on key product
categories and exit certain lines of business.
The Corporate and Other operating loss decreased 85.9%. The decrease in the operating loss was
primarily due to the impact of LIFO accounting, including a $1.9 million reversal of certain
restructuring charges recognized in Lanier Clothes, and lower corporate SG&A.
Interest expense, net increased 17.9% in the second quarter of fiscal 2008. The increase in
interest expense was primarily due to a higher average debt outstanding during the period. The
higher average debt outstanding was primarily a result of our $60 million accelerated share
repurchase program which was funded in November 2007, our final earn-out payment in August 2007 for
the Tommy Bahama acquisition and our acquisition of Tommy Bahamas third-party buying agent on
February 1, 2008, each of which was funded through borrowings under our Prior Credit Agreement.
These borrowings were partially offset by cash flow from operating activities and reductions in
working capital subsequent to August 3, 2007.
Income taxes were at an effective tax rate of 27% for the second quarter of fiscal 2008
compared to 24% for the three months ended August 3, 2007. The rates for both periods were impacted
by certain discrete items which may not be present in future periods. The second quarter of fiscal
2008 was impacted by lower projected earnings for the year resulting from the restructuring charges
recognized in the second quarter of fiscal 2008 while the three months
25
ended August 3, 2007 benefited from the reversal of a deferred tax liability in association with a
change in our assertion regarding our initial investment in a foreign subsidiary which is now
considered permanently reinvested. We believe that our annual effective tax rate for fiscal 2008,
before the impact of any discrete items, will be approximately 32%. However, that rate may change
as the impact of certain permanent items on our tax rate will change if net earnings vary from our
expectations.
Diluted net earnings per common share decreased to $0.09 in the second quarter of fiscal 2008
from $0.49, primarily due to the restructuring charges and other unusual items discussed above and
the continued impact of the current economic conditions. Diluted net earnings per common share was
also impacted by the reduction in the weighted average shares outstanding during the period as a
result of our receipt of approximately 1.9 million and 0.6 million shares of our common stock in
November 2007 and May 2008, respectively.
FIRST SIX MONTHS OF FISCAL 2008 COMPARED TO SIX MONTHS ENDED AUGUST 3, 2007
The discussion below compares our operating results for the first six months of fiscal 2008 to
the six months ended August 3, 2007. Each percentage change provided below reflects the change
between these periods unless indicated otherwise.
Net sales decreased $33.5 million, or 6.2%, in the first six months of fiscal 2008 compared to
the six months ended August 3, 2007 primarily as a result of the changes discussed below.
Tommy Bahama reported a decrease in net sales of $4.9 million, or 2.0%. The decrease was
primarily due to a reduction in net sales at wholesale and in our existing owned retail stores
resulting from the difficult retail environment. This decrease in wholesale sales and existing
store retail sales was partially offset by increased retail sales at our retail stores opened on or
after February 3, 2007, which was the first day of the six months ended August 3, 2007, and sales
through Tommy Bahamas e-commerce website which commenced in October 2007. Unit sales decreased
7.1% due to the difficult retail environment at our own retail stores and our wholesale customers
stores during the first half of fiscal 2008. The average selling price per unit increased by 4.5%,
as sales at our retail stores and our e-commerce sales, both of which have higher sales prices than
wholesale, represented a greater proportion of total Tommy Bahama sales.
Ben Sherman reported a decrease in net sales of $6.7 million, or 8.8%. The decrease in net
sales was primarily due to lower sales in our United Kingdom wholesale business as we continue to
reposition the brand in fiscal 2008 and in our United States wholesale business partially due to
reduced off-price sales and our exit from the Evisu apparel business. These declines were partially
offset by increased sales at our retail stores and increased sales in markets outside of the United
Kingdom and United States. During the first half of fiscal 2008, unit sales for Ben Sherman
declined by 9.3% due primarily to the decline in the United Kingdom and United States wholesale
businesses. The average selling price per unit increased 0.5%, resulting primarily from a larger
percentage of total Ben Sherman sales being sales at our retail stores partially offset by a
decrease in the average selling price per unit in the United States wholesale business due to the
three months ended August 3, 2007 including higher average price per unit Evisu sales.
Lanier Clothes reported a decrease in net sales of $7.3 million, or 9.9%. The decrease was
primarily due to weak demand in the tailored clothing market. This weak demand resulted in a
decrease in unit sales of 8.7% and a decrease in the average selling price per unit of 1.3% during
the first half of fiscal 2008.
Oxford Apparel reported a decrease in net sales of $12.7 million, or 9.1%. The decrease in net
sales was anticipated in connection with the strategy we implemented in the latter part of fiscal
2007 to focus on key product categories and exit underperforming lines of business. Unit sales
decreased by 6.3% as a result of the exit of certain lines of business, and the average selling
price per unit decreased by 3.1% due to changes in product mix.
Gross profit decreased 4.7% in the first six months of fiscal 2008. The decrease was due to
lower sales, as described above, partially offset by higher gross margins. Gross margins increased
to 42.3% of net sales during the first half of fiscal 2008 from 41.6% in the six months ended
August 3, 2007. The increase was primarily due to the increased proportion of Tommy Bahama and Ben
Sherman sales, which generally have higher gross margins than our Lanier Clothes and Oxford Apparel
businesses partially offset by the $3.1 million of restructuring charges in
26
Lanier Clothes, Oxford Apparel and Corporate and Other. Gross margins for Tommy Bahama and Ben
Sherman improved compared to the six months ended August 3, 2007.
Our gross profit may not be directly comparable to those of our competitors, as income
statement of earnings classifications of certain expenses may vary by company.
SG&A, increased 3.3% in the first six months of fiscal 2008. SG&A was 37.5% of net sales in
the first six months of fiscal 2008 compared to 34.0% in the six months ended August 3, 2007. The
increase in SG&A was primarily due to the expenses associated with operating additional Tommy
Bahama and Ben Sherman retail stores, approximately $3.0 million of additional marketing costs in
Tommy Bahama, approximately $0.8 million of additional pre-opening costs primarily related to two
new Tommy Bahama café emporiums, and restructuring charges of approximately $2.5 million in Lanier
Clothes. These increased costs were partially offset by reductions in employment costs and the
resolution of a contingent liability. The increase in SG&A as a percentage of net sales was due to
the increase in total SG&A and the reduction in net sales, as discussed above.
Amortization of intangible assets increased 60.8% in the first six months of fiscal 2008. The
increase was due to $3.3 million of impairment charges related to the Arnold Brant and Solitude
intangible assets in Lanier Clothes and Oxford Apparel, respectively. These charges were partially
offset by a decrease in amortization expense as amortization is typically greater in the earlier
periods following an acquisition.
Royalties and other operating income decreased 9.9% in the first six months of fiscal 2008.
The decrease was primarily due to the six months ended August 3, 2007 including a $2.0 million gain
related to the sale of our Monroe, Georgia facility by the Oxford Apparel Group. This decrease was
partially offset by an increase in royalty income for our brands during the first six months of
fiscal 2008 and the sale of a trademark in the second quarter of fiscal 2008.
Operating income decreased 41.0% in the first six months of fiscal 2008 primarily due to the
changes discussed below.
Tommy Bahama reported a $9.8 million, or 20.7%, decrease in operating income. The decrease was
primarily due to reduced sales, as discussed above, and higher SG&A expenses due to operating costs
of additional retail stores, additional marketing costs and additional pre-opening costs primarily
associated with two new Tommy Bahama café emporiums.
Ben Sherman reported a $2.0 million, or 859.6%, decrease in operating income. The decrease was
primarily due to lower sales in our United Kingdom and United States wholesale businesses, as
discussed above. These lower sales in the United Kingdom and the United States wholesale businesses
were partially offset by increased earnings in markets
outside of the United Kingdom and United States.
Lanier Clothes reported a $10.6 million increase in operating loss. The increase in operating
loss was primarily due to restructuring charges and lower sales. The $9.2 million of restructuring
charges were associated with the decision to exit the Nautica and O Oscar licensed businesses and
the restructuring of our Arnold Brant business. The restructuring charges include costs associated
with disposal of inventory, license termination fees, the impairment of the intangible assets
associated with the Arnold Brant business, severance costs and the impairment of certain property,
plant and equipment. Approximately $1.9 million of inventory charges for Lanier Clothes were
reversed in Corporate & Other as part of LIFO accounting. The lower sales were primarily due to the weak
demand for tailored clothing.
Oxford Apparel reported a $1.3 million, or 12.3%, decrease in operating income. The decrease
was primarily attributable to the six months ended August 3, 2007 including a $2.0 million gain
related to the sale of our Monroe, Georgia facility by the Oxford Apparel Group in April 2007 and
the fiscal 2008 impairment of the Solitude trademark and certain other costs associated with
exiting the Solitude business. The current year charges were partially offset by lower employment
cost and the resolution of a contingent liability.
27
The Corporate and Other operating loss decreased 43.4%. The decrease in the operating loss was
primarily due to the impact of LIFO accounting, including a $1.9 million reversal of certain
restructuring charges recognized in Lanier Clothes, and lower compensation costs in the current
year.
Interest expense, net increased 17.6% in the first six months of fiscal 2008. The increase in
interest expense was primarily due to a higher average debt outstanding during the period. The
higher average debt outstanding was primarily a result of our $60 million accelerated share
repurchase program which was funded in November 2007, our final earn-out payment in August 2007 for
the Tommy Bahama acquisition and our acquisition of Tommy Bahamas third-party buying agent on
February 1, 2008, each of which was funded through borrowings under our Prior Credit Agreement.
These borrowings were partially offset by cash flow from operating activities and reductions in
working capital subsequent to August 3, 2007.
Income taxes were at an effective tax rate of 30% for the first six months of fiscal 2008 and
for the six months ended August 3, 2007. The rates for both periods were impacted by certain
discrete items which may not be present in future periods. The first six months of fiscal 2008
benefited from changes in certain contingency reserves while the six months ended August 3, 2007
benefited from the reversal of a deferred tax liability in association with a change in our
assertion regarding our initial investment in a foreign subsidiary which is now considered
permanently reinvested. We believe our annual effective tax rate for fiscal 2008, before the impact
of any discrete events, will be approximately 32%. However, that rate may change as the impact of
certain permanent items on our tax rate will change if net earnings vary from our expectations.
Diluted net earnings per common share decreased to $0.69 in the first six months of fiscal
2008 from $1.44 in the six months ended August 3, 2007, primarily due to the restructuring charges
discussed above and the continued impact of the current economic conditions. This decline in net
earnings was partially offset by the reduction in the weighted average shares outstanding during
the period as a result of our receipt of approximately 1.9 million and 0.6 million shares of our
common stock in November 2007 and May 2008, respectively.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Our primary source of revenue and cash flow is our operating activities in the United States
and, to a lesser 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. Revolving Credit Agreement (or the
Prior Credit Agreement before August 15, 2008) and U.K. Revolving Credit Agreement, 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.
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. Our product
purchases are often acquired through trade letters of credit which are drawn against our lines of
credit at the time of shipment of the products and which reduce the amounts available under our
lines of credit when issued.
Cash and cash equivalents on hand was $5.2 million at August 2, 2008 and $57.0 million at
August 3, 2007.
Operating Activities
During the first six months of fiscal 2008 and the six months ended August 3, 2007, our
operations generated $62.1 million and $44.5 million of cash, respectively. The operating cash
flows were primarily the result of earnings for the period, adjusted for non-cash activities such
as depreciation, amortization and stock compensation expense and changes in our working capital
accounts. In the first six months of fiscal 2008 the significant changes in working capital from
February 2, 2008 were a decrease in inventory levels and accounts receivable, as discussed below.
In the six months ended August 3, 2007, the significant changes in working capital from February 2,
2007 were decreases in inventory and accounts receivables and an increase in other non-current
liabilities which were partially offset by a decrease in current liabilities, each as discussed
below.
28
Our working capital ratio, which is calculated by dividing total current assets by total
current liabilities, was 2.2:1 and 2.4:1 at August 2, 2008 and August 3, 2007, respectively. The
change from August 3, 2007 was primarily due to the significant reductions in cash and inventory,
which was partially offset by the lack of an earn-out being payable at August 2, 2008.
Receivables were $96.5 million and $99.2 million at August 2, 2008 and August 3, 2007,
respectively, representing a decrease of 3%. Days sales outstanding for our wholesale accounts
receivable was 53 days and 54 days at August 2, 2008 and August 3, 2007, respectively.
Inventories were $129.9 million and $156.9 million at August 2, 2008 and August 3, 2007,
respectively, representing a decrease of 17%. Inventory for Tommy Bahama was comparable to the
prior year, even with the additional owned retail stores. Ben Sherman inventory increased due to
the timing of in-transit inventory for the fall season. Lanier Clothes inventory decreased
significantly in the current year as we have reduced the amount of excess inventories from prior
year levels. Inventory levels for Oxford Apparel decreased compared to the prior year, primarily
due to inventory reductions in replenishment programs and the exit of certain programs which were
partially offset by inventory increases due to new initiatives in our dress shirt business and
other key product categories. Our days supply of inventory on hand, using FIFO basis, was 105 days and 114 days as of August 2, 2008 and
August 3, 2007, respectively, primarily due to the changes in the operating group inventories
discussed above.
Prepaid expenses were $22.0 million and $24.3 million at August 2, 2008 and August 3, 2007,
respectively. The decrease in prepaid expenses was primarily due to the timing of payments for
certain operating expenses and changes in deferred income taxes resulting from certain timing
differences related to employee compensation amounts.
Current liabilities were $115.5 million and $142.3 million at August 2, 2008 and August 3,
2007, respectively. The decrease in current liabilities was primarily due to August 3, 2007
including an accrual for additional acquisition cost payable of $22.4 million related to the 2003
Tommy Bahama acquisition which was paid in August 2007 as well as decreases in income taxes
payable, dividends payable and incentive compensation.
Other non-current liabilities, which primarily consist of deferred rent and deferred
compensation amounts, were $52.7 million and $49.7 million at August 2, 2008 and August 3, 2007,
respectively. The increase was primarily due to recognition of additional deferred rent amounts
during the 12 months subsequent to August 3, 2007.
Non-current deferred income taxes were $59.0 million and $69.8 million at August 2, 2008 and
August 3, 2007, respectively. The change resulted from the impact of changes in book to tax
differences for depreciation, deferred compensation and amortization of intangible assets, the
impact of a change in the enacted tax rate in the United Kingdom in 2007 and a distribution from a
foreign subsidiary in January 2008.
Investing Activities
During the first six months of fiscal 2008 investing activities used $12.7 million of cash
including $12.3 million for capital expenditures, primarily related to new retail stores and costs
associated with our implementation of new integrated financial systems which is currently in
process. During the six months ended August 3, 2007, investing activities used $14.6 million of
cash. These investing activities included $17.1 million of capital expenditures primarily related
to new retail stores, which were partially offset by $2.5 million of proceeds from the sale of our
Monroe, Georgia facility in April 2007.
Non-current assets, including property, plant and equipment, goodwill, intangible assets and
other non-current assets, increased from August 3, 2007 to August 2, 2008 primarily as a result of
our acquisition of Tommy Bahamas third-party buying agent on February 1, 2008 for approximately
$35 million and capital expenditures for our new retail stores. These increases were partially
offset by depreciation related to our property, plant and equipment, impairment, amortization of
certain intangible assets and amortization of deferred financing costs subsequent to August 3,
2007.
29
Financing Activities
During the first six months of fiscal 2008, financing activities used $59.4 million of cash.
The cash flow provided by our operating activities in excess of cash flows used in investing
activities and the three quarterly dividends paid totaling $8.7 million were used to repay amounts
outstanding under our U.S. Revolver.
During the six months ended August 3, 2007, financing activities used $3.8 million of cash. We
paid two quarterly dividends totaling $6.4 million during the six month period which was partially
offset by cash received related to the exercise of employee stock options during the six month
period totaling $2.6 million.
On September 8, 2008, our board of directors approved a cash dividend of $0.18 per share
payable on October 31, 2008 to shareholders of record as of the close of business on October 15,
2008. As we have for each quarter since we became a public company in July 1960, we expect to pay
dividends in future quarters. However, we may discontinue or modify dividend payments at any time
if we determine that other uses of our capital, including but not limited to, payment of
outstanding debt, repurchases of outstanding shares 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 other debt instruments limit
our ability to pay dividends. We may borrow to fund dividends in the short-term based on our
expectation of operating cash flows in future periods subject to the terms and conditions of our
credit facilities and other debt instruments. All cash flow from operations will not necessarily be
paid out as dividends in all periods.
Debt, including short term debt was $221.6 million and $199.7 million as of August 2, 2008 and
August 3, 2007, respectively. The increase was primarily due to the borrowings under our Prior
Credit Agreement to fund our $60 million share repurchase program, the payment in August 2007 of
the final earn-out payment of approximately $22 million related to the 2003 Tommy Bahama
acquisition and our acquisition of Tommy Bahamas third-party buying agent on February 1, 2008 for
approximately $35 million. These increases in borrowings were partially offset by cash flow from
operating activities subsequent to August 3, 2007.
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) as of August 2, 2008:
|
|
|
|
|
|
|
August 2, 2008 |
|
$280 million U.S. Secured Revolving Credit Facility (Prior Credit
Agreement), which accrues interest (5.0% at August 2, 2008), 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 of the
assets of Oxford Industries, Inc. and its consolidated domestic
subsidiaries(1) |
|
$ |
19,100 |
|
|
£12 million Senior Secured Revolving Credit Facility (U.K. Revolving Credit
Agreement), which accrues interest at the banks base rate plus 1.00%
(6.00% at August 2, 2008), requires interest payments monthly with principal
payable on demand or at maturity (July 2008) and is collateralized by
substantially all of the United Kingdom assets of Ben Sherman (2) |
|
|
3,027 |
|
|
$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 |
|
|
Unamortized discount on Senior Unsecured Notes |
|
|
(496 |
) |
|
Total debt |
|
|
221,631 |
|
|
Short-term debt and current maturities of long-term debt |
|
|
(3,027 |
) |
|
Long-term debt, less short-term debt and current maturities of long-term debt |
|
$ |
218,604 |
|
|
|
|
|
(1) |
|
$19.1 million of the amount outstanding under the Prior Credit Agreement was classified
as long-term debt. The amount classified as long-term debt represents the minimum amount we
anticipate being |
30
|
|
|
|
|
outstanding under the Prior Credit Agreement or subsequent to August 15, 2008 the U.S.
Revolving Credit Agreement during fiscal 2008. |
|
(2) |
|
In August 2008, the U.K. Revolving Credit Agreement was extended until August 2009,
which increased the interest rate to base rate plus 1.35% with all other terms remaining
consistent with the previous agreement. |
U.S. Revolving Credit Agreement
Subsequent to the end of the second quarter of fiscal 2008, on August 15, 2008, we entered
into a Second Amended and Restated Credit Agreement (the U.S. Revolving Credit Agreement). The
parties to the U.S. Revolving Credit Agreement are Oxford Industries, Inc. and Tommy Bahama Group,
Inc., as the borrowers (the Borrowers), certain of our subsidiaries as guarantors (the
Guarantors), the financial institutions party thereto as lenders, the financial institutions
party thereto as issuing banks, and SunTrust Bank as administrative agent (the Administrative
Agent). The U.S. Revolving Credit Agreement amends and restates our Amended and Restated Credit
Agreement, dated as of July 28, 2004, as amended (the Prior Credit Agreement), among Oxford
Industries, Inc., certain of our domestic subsidiaries as borrowers or guarantors, certain
financial institutions party thereto as lenders, certain financial institutions party thereto as
the issuing banks and SunTrust Bank, as administrative agent.
The U.S. Revolving Credit Agreement provides for a revolving credit facility which may be used
to refinance existing funded debt, to fund working capital, to fund future acquisitions and for
general corporate purposes. The material terms of the U.S. Revolving Credit Agreement are as
follows:
|
|
|
The U.S. Revolving Credit Agreement provides for a revolving credit facility of up to
$175 million, which may be increased by up to $100 million by us subject to certain
conditions. The Prior Credit Agreement provided for a revolving credit facility of up to
$280 million. |
|
|
|
|
The total amount of availability under the U.S. Revolving Credit Agreement is limited to
a borrowing base consisting of specified percentages of eligible categories of assets. The
Administrative Agent has certain discretion to determine eligibility and to establish
reserves with respect to the calculation of borrowing base availability. |
|
|
|
|
We may request base rate advances or LIBOR advances. Base rate advances accrue interest
at floating rates equal to the higher of (i) SunTrust Banks prime lending rate or (ii) the
federal funds rate plus 50 basis points. LIBOR advances accrue interest at LIBOR plus an
applicable margin. We are also charged fees for letters of credit which are issued under
the U.S. Revolving Credit Agreement. The applicable margin on LIBOR advances and the letter
of credit fees are determined from a pricing grid which is based on the average unused
availability under the U.S. Revolving Credit Agreement. Interest rate margins on LIBOR
advances and standby letter of credit fees range from 175 basis points to 225 basis points,
while the letter of credit fees for trade letters of credit range from 100 basis points to
150 basis points. Unused line fees are calculated at a per annum rate of 30 basis points. |
|
|
|
|
Our obligations under the U.S. Revolving Credit Agreement are secured by a first
priority security interest in the Borrowers and the Guarantors accounts receivable (other
than royalty payments in respect of trademark licenses), inventory, investment property
(including the equity interests of certain subsidiaries), general intangibles (other than
trademarks, trade names and related rights), deposit accounts, inter-company obligations,
equipment, goods, documents, contracts, books and records and other personal property. |
|
|
|
|
The U.S. Revolving Credit Facility contains a financial covenant that applies only if
unused availability under the U.S. Revolving Credit Agreement is less than the greater of
(i) $26.25 million or (ii) 15% of the total revolving commitments for three consecutive
business days. In such case, our fixed charge coverage ratio for the immediately preceding
twelve fiscal months for which financial statements have been delivered may not be less
than 1.0 to 1.0. This financial covenant continues to apply until we have maintained
unused availability under the U.S. Revolving Credit Agreement of more than the greater of
(i) $26.25 million or (ii) 15% of the total revolving commitments for thirty consecutive
days. |
|
|
|
|
The U.S. Revolving Credit Agreement contains a number of customary affirmative covenants
regarding, among other things, the delivery of financial and other information to the
Administrative Agent and other |
31
|
|
|
lenders, maintenance of records, compliance with law, maintenance of property and insurance
and conduct of business. |
|
|
|
|
The U.S. Revolving Credit Agreement also contains certain negative covenants, including,
among other things, covenants that limit our ability to (i) incur debt, (ii) guaranty
certain obligations, (iii) incur liens, (iv) pay dividends to shareholders or repurchase
shares of our common stock, (v) make investments, (vi) sell assets or stock of
subsidiaries, (vii) acquire assets or businesses, (viii) merge or consolidate with other
companies, or (ix) prepay, retire, repurchase or redeem debt. |
|
|
|
|
The U.S. Revolving Credit Agreement generally is scheduled to mature on August 15, 2013
as compared to the Prior Credit Agreement which had a maturity date of July 28, 2009. |
The above description of the U.S. Revolving Credit Agreement is not complete and is qualified
in its entirety by the actual terms of the U.S. Revolving Credit Agreement and the related Amended
and Restated Pledge and Security Agreement, attached as Exhibits 10.1 and 10.2, respectively, to
our Form 8-K filed with the SEC on August 19, 2008.
On August 15, 2008, we had approximately $102 million in unused availability under the U.S.
Revolving Credit Agreement. As a result of amending and restating the Prior Credit Agreement,
during the third quarter of fiscal 2008 we anticipate writing off approximately $0.9 million of
unamortized financing costs incurred in connection with the Prior Credit Agreement.
Our credit facilities are used to finance trade letters of credit and standby letters of
credit, as well as to provide funding for other operating activities and acquisitions. As of August
2, 2008, approximately $28.4 million of trade letters of credit and other limitations on
availability were outstanding against our Prior Credit Agreement and U.K. Revolving Credit
Agreement.
Our Prior Credit Agreement included and our Senior Unsecured Notes include certain debt
covenant restrictions requiring us or our subsidiaries to maintain certain financial ratios that we
believe are customary for similar facilities. As of August 2, 2008, we were compliant with all
financial covenants related to our debt agreements.
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 does
not exceed the allowable amount described in the indenture. 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.
The Senior Unsecured Notes are subject to redemption at any time, 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,
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.
Additionally, if we determine that the market price of the Senior Unsecured Notes is appropriate
and we have sufficient availability under our U.S. Revolving Credit Agreement, we may repurchase a
portion of the Senior Unsecured Notes on the open market.
32
Our debt-to-total-capitalization ratio was 35%, 40% and 30% at August 2, 2008, February 2,
2008 and August 3, 2007, respectively. The change in this ratio from August 3, 2007 was primarily a
result of increased borrowings to fund our $60 million share repurchase program, the payment of the
final earn-out for the 2003 Tommy Bahama acquisition in August 2007 and our acquisition of Tommy
Bahamas third-party buying agent on February 1, 2008 as well as the reduction in total capital as
a result of the $60 million share repurchase program. Our debt level and 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, investments, changes to our debt facilities or repurchases of shares in the future.
On September 8, 2008, our board of directors authorized the repurchase by us of up to 0.5 million
shares of our common stock.
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 additional
Tommy Bahama and Ben Sherman retail stores and the implementation of new integrated financial
systems) and interest payments on our debt during the remainder of fiscal 2008, primarily from cash
flow from operations supplemented by borrowings under our lines of credit, if necessary. Our need
for working capital is typically seasonal with the greatest requirements generally existing in the
fall and spring of each year. Our capital needs will depend on many factors including our growth
rate, the need to finance 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 the U.S. Revolving Credit Agreement, the
U.K. Revolving Credit Agreement and the 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 2, 2008 have not changed significantly from the
contractual obligations outstanding at February 2, 2008 other than the amendment to the Prior
Credit Agreement, changes in the amounts outstanding under our credit facilities, amounts
outstanding pursuant to letters of credit (each as discussed above) and new leases entered into for
additional retail stores, none of which occurred outside the ordinary course of business.
Our anticipated capital expenditures for fiscal 2008 are expected to be approximately $25
million, including $12.3 million incurred during the first six months of fiscal 2008. These
expenditures primarily relate to the continued expansion of our Tommy Bahama and Ben Sherman retail
operations and the implementation of new integrated financial systems.
Off Balance Sheet Arrangements
We have not entered into agreements which meet the SECs 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.
33
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 of contingent assets
and liabilities. On an ongoing basis, we evaluate our estimates, including those related to bad
debts, inventories, intangible assets, income taxes, stock compensation expense, contingencies and
litigation and certain other accrued expenses. We base our estimates on historical experience and
on various other assumptions that are believed to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions. Our critical accounting policies and estimates
are discussed in Part II, Item 7, Managements Discussion and Analysis of Financial Condition and
Results of Operations in our Form 10-KT for the eight-month transition period ended February 2,
2008. There have not been any significant changes to the application of our critical accounting
policies and estimates during fiscal 2008.
SEASONALITY
Although our various product lines are sold on a year-round basis, the demand for specific
products or styles may be seasonal. For example, the demand for Tommy Bahama and golf products is
higher in the spring and summer seasons. Generally, our products are sold to our wholesale
customers prior to each of the retail selling seasons, including spring, summer, fall and holiday.
As the timing of product shipments and other events affecting retail businesses may vary, results
for any particular quarter may not be indicative of results for the full year. The percentage of
net sales by quarter for the twelve months ended February 2, 2008 was 27%, 23%, 26% and 24%,
respectively, and the percentage of earnings before income taxes by quarter for the twelve months
ended February 2, 2008 was 40%, 18%, 28% and 14%, respectively. We do not believe this distribution
is indicative of the distribution in future years, as the last three quarters of the twelve months
ended February 2, 2008 were impacted by the weak economic environment which has continued in fiscal
2008.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to certain interest rate, foreign currency, trade policy, commodity and
inflation risks as discussed in Part II. Item 7A. Quantitative and Qualitative Disclosures About
Market Risk in our Form 10-KT for the eight-month transition period ended February 2, 2008. There
have not been any significant changes in our exposure to these risks during fiscal 2008.
ITEM 4. CONTROLS AND PROCEDURES
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 second
quarter of fiscal 2008 that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
34
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 action 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 Form 10-KT for the eight-month transition period ended February 2, 2008,
which are not the only risks facing our company. During fiscal 2008, there have been no material
changes to the risk factors described in our Form 10-KT for the eight-month transition period ended
February 2, 2008. If any of the risks described in our Form 10-KT, 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
|
(a) |
|
During the second quarter of fiscal 2008, we did not make any unregistered sales of our
securities. |
|
|
(c) |
|
The table below summarizes our stock repurchases during the second quarter of fiscal
2008. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Number of |
|
Maximum Number of |
|
|
|
|
|
|
|
|
|
|
Shares Purchased as |
|
Shares That May Yet |
|
|
|
|
|
|
|
|
|
|
Part of Publicly |
|
be Purchased Under |
|
|
Total Number of |
|
Average Price |
|
Announced Plans or |
|
the Plans or |
Fiscal Month |
|
Shares Purchased |
|
Paid per Share |
|
Programs |
|
Programs |
|
May (5/4/08-5/31/08) (1) |
|
|
558,400 |
|
|
$ |
24.03 |
|
|
|
|
|
|
|
|
|
June (6/1/08-7/5/08) (2) |
|
|
14,875 |
|
|
$ |
25.76 |
|
|
|
|
|
|
|
|
|
July (7/6/08-8/2/08) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
573,275 |
|
|
$ |
24.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
On November 8, 2007, we entered into a $60 million capped accelerated share repurchase
agreement with Bank of America, N.A., an unrelated third party. On November 8, 2007 we made a
payment of $60 million to Bank of America that was funded by borrowings under our U.S.
Revolver. We received an initial delivery of approximately 1.9 million shares in November
2007 pursuant to the repurchase agreement. We received an additional 558,000 shares in May
2007 pursuant to the repurchase agreement upon completion of the program. The average price
paid per shares for the 2.5 million shares purchased pursuant to the program was $24.03. We
will not receive any additional shares in the future pursuant to this share repurchase
program. |
|
(2) |
|
We have certain stock incentive plans as described in Note 7 to our consolidated financial
statements included Form 10-KT for the eight month transition period ended February 2, 2008,
all of which are publicly announced plans. Under the plans, we can repurchase shares from
employees to cover the employee tax liabilities related to the exercise of stock options or
the vesting of previously restricted shares. All shares repurchased in June 2008 were
purchased pursuant to these stock incentive plans. |
On September 8, 2008, our board of directors authorized the repurchase by us of up to 0.5
million shares of our common stock.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
35
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Our 2008 annual meeting of shareholders was held on June 16, 2008. A total of 14,888,295 of
our shares were represented in person or by proxy at the meeting. This represented 90.74% of our
16,408,324 shares issued, outstanding and entitled to vote at such meeting. At our 2008 annual
meeting of shareholders:
|
a. |
|
The shareholders elected each of Cecil D. Conlee, J. Reese Lanier and Dennis M. Love as
a Class I director to hold office until the annual meeting of shareholders held in 2011 and
until his successor is elected and qualified. The vote tabulation for individual directors
was as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Director |
|
For |
|
|
Against |
|
|
Abstain |
|
Cecil D. Conlee |
|
|
14,565,480 |
|
|
|
314,400 |
|
|
|
8,415 |
|
J. Reese Lanier |
|
|
14,524,301 |
|
|
|
357,789 |
|
|
|
6,205 |
|
Dennis M. Love |
|
|
14,654,040 |
|
|
|
225,320 |
|
|
|
8,935 |
|
|
|
|
In addition to the Class I directors noted above, J. Hicks Lanier and Clarence H. Smith will
continue as Class II directors who will hold office until our annual meeting of shareholders
in 2009 and until their respective successors are elected and qualified and George C. Guynn,
Helen B. Weeks and E. Jenner Wood III will continue as Class III directors who will hold
office until our annual meeting of shareholders in 2010 and until their respective
successors are elected and qualified. |
|
|
b. |
|
The shareholders re-approved the Oxford Industries, Inc. Executive Performance
Incentive Plan and ratified the appointment of Ernst & Young LLP as our independent
registered public accounting firm. The vote tabulation for each of these proposals was as
follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proposal |
|
For |
|
Against |
|
Abstain |
|
Broker Non-Vote |
|
2
|
|
Re-Approval of the
Oxford Industries,
Inc. Executive
Performance
Incentive Plan
|
|
|
14,600,677 |
|
|
|
259,906 |
|
|
|
27,712 |
|
|
N/A |
|
3
|
|
Ratification of
Appointment of
Independent
Registered Public
Accounting Firm
|
|
|
14,849,712 |
|
|
|
21,070 |
|
|
|
17,513 |
|
|
N/A |
The text of the above proposals is incorporated by reference to Proposals 2 and 3,
respectively, of our definitive proxy statement, dated May 9, 2008, filed with the SEC on
May 13, 2008.
ITEM 5. OTHER INFORMATION
None
36
ITEM 6. EXHIBITS
|
3(a) |
|
Restated Articles of Incorporation of Oxford Industries, Inc. Incorporated by reference
to Exhibit 3.1 to the Oxford Industries, Inc. Form 10-Q for the fiscal quarter ended August
29, 2003. |
|
|
3(b) |
|
Bylaws of Oxford Industries, Inc., as amended. Incorporated by reference to Exhibit
3(b) to the Oxford Industries, Inc. Form 10-KT filed on April 1, 2008. |
|
|
10(a) |
|
Employment Offer Letter to Terry R. Pillow.* + |
|
|
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.* |
|
|
|
* |
|
Filed herewith.
|
|
+ |
|
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.
|
|
|
|
|
September 10, 2008 |
OXFORD INDUSTRIES, INC.
(Registrant)
|
|
|
/s/ K. Scott Grassmyer
|
|
|
K. Scott Grassmyer |
|
|
Senior Vice President, Chief Financial Officer and Controller
(Authorized Signatory and Principal Financial Officer) |
|
|
37
EX-10(A) EMPLOYMENT OFFER LETTER
Exhibit 10(a)
March 10, 2008
Terry R. Pillow
150 West 11th Street
New York, NY 10011
Dear Terry:
We are pleased to offer you the position of Chief Executive Officer (CEO) of Oxfords Tommy
Bahama Group, Inc. We would like for you to start on a mutually convenient date on which we can
agree.
Your responsibilities will include overseeing the operation and management of Oxfords Tommy
Bahama Group division and such other duties and responsibilities as may be assigned from time to
time. You will report directly to me.
Your beginning base salary will be $750,000.00 annually, which is earned and paid on a
bi-weekly basis, subject to deductions for taxes and other withholdings as required by
law or the policies of the company. Your overall performance and achievement of your predetermined
goals are generally reviewed at the end of each fiscal year. The review process assists in
determining a salary increase and bonus payout. Salary increases, if warranted, are expected to be
effective at the beginning of April each year. Your first salary review will come in April 2009
after completion of our 2008 fiscal year.
You will be eligible to participate in Oxfords bonus program for fiscal 2008. Under the bonus
program, you will be eligible to earn and receive a cash bonus in an amount equal to 60% of your
annual base salary at target and 100% of your base salary at maximum. For fiscal 2008 only, your
bonus will be equal to the greater of 75% of your annualized base salary for fiscal 2008 (pro-rated
for the portion of fiscal 2008 during which you are employed by the company) or the amount earned
under the terms of the bonus program. Your bonus is expected to be paid in April 2009 and is
subject to the terms and conditions of the bonus program. For future years, the terms and
conditions of the bonus program may be modified. Information about this program will be sent to
you shortly after you join the company.
You are eligible to participate in the Oxford Deferred Compensation Plan (DCP). The DCP
offers you the opportunity to defer up to 50% of your base salary plus 100% of your performance
based annual bonus. You will have 30 days from your date of employment to enroll in the plan. The
plan summary and enrollment information will be sent to you by the plan administrator shortly after
you join the company. Please note that the guaranteed portion of your fiscal 2008 bonus will not
be eligible for deferral due to the federal regulations governing this plan. However, to the
extent your bonus
actually earned for fiscal 2008 exceeds the 75% of your base salary which is guaranteed for
fiscal 2008, you may elect to defer part or all of such excess pursuant to the DCP.
Upon employment, you will be nominated for a restricted stock grant of 50,000 shares of
Oxfords common stock, all of which will be scheduled to vest on the third anniversary of the grant
date. This grant is subject to review and approval by Oxfords Board of Directors or
Nominating, Compensation and Governance Committee and will be subject to the terms and conditions
of Oxfords Long-Term Stock Incentive Plan and your continued employment with the company for the
duration of the vesting period.
As an active, full-time employee, you will be eligible to elect coverage and participate in a
wide range of benefit programs as outlined in the 2008 Benefits brochures. The benefit plans will
be discussed with you in detail during new employee orientation. Please note that a few of these
programs have specified waiting periods before eligibility commences. You will also
receive four weeks of paid vacation per year, pro-rated for partial years. You will not be
entitled to any cash or other compensation for vacation time not taken during your employment.
Should it be mutually determined that a relocation from New York to Seattle is in the best
interests of the business, Oxford will provide financial assistance that will include home sale
closing costs, home purchase closing costs, movement of household goods, and a miscellaneous
allowance. Additionally, we will provide you with transitional mortgage interest assistance on your
new Seattle residence by temporarily increasing your bi-weekly salary for the duration of the
period during which you own both your Woodstock, New York and Seattle residence or 18 months,
whichever is less, by an amount equal to:
A. (i) the lesser of $2 million or the amount of the purchase price of your Seattle
residence multiplied by (ii) the lesser of the actual annual interest rate
you pay for a mortgage on your Seattle residence or the market interest rate published in
the Wall Street Journal for 30-year fixed rate jumbo mortgages on the date that you close
on your Seattle residence;
divided by
B. 26.
Details of this interest assistance will be determined in advance of such a move.
In order to comply with US immigration laws, all persons employed by the company must provide
evidence of US citizenship or their right to work in the United States. You would be asked to
supply such proof on the first day of your employment. Acceptable evidence would include a US
drivers license and a social security card or a US passport.
This offer is contingent upon your passing a drug test and a background check which may
include work background, credit history, criminal history and verification of your academic record
including educational degrees. The drug screen form is enclosed. The drug screen must be completed
prior to commencement of your employment with Oxford.
We look forward to developing our relationship with you and hope you will view this
opportunity as a chance to have a positive impact on our business. Nonetheless, please understand
that Oxford is an at-will employer. This means either you or Oxford are free to end the employment
relationship at any time, with or without notice, cause or justification. Nothing in this letter
or our policies or procedures either now or in the future are intended to change the at-will nature
of our relationship. The at-will nature of your employment cannot be altered or modified except in
writing by the Chief Executive Officer of Oxford Industries, Inc.
If you have any questions at all, please do not hesitate to call Chris Cole, Human Resources
Vice President for Oxford, at 404-653-1358 or me at 404-653-1443.
It is a dynamic, exciting time at Oxford, and we look forward to having you on our team.
|
|
|
|
|
|
Very truly yours,
|
|
|
/s/ J. Hicks Lanier
|
|
|
J. Hicks Lanier |
|
|
Chairman and Chief Executive Officer
Oxford Industries, Inc. |
|
|
I hereby accept employment on the conditions set forth in this letter.
|
|
|
|
|
|
|
|
/s/ Terry R. Pillow
|
|
|
Signature of Candidate |
|
|
|
|
|
|
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) |
|
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: September 10, 2008 |
/s/ J. Hicks Lanier
|
|
|
J. Hicks Lanier |
|
|
Chairman and Chief Executive Officer
(Principal Executive Officer) |
|
EX-31.2 SECTION 302 CERTIFICATION OF THE PFO
Exhibit 31.2
CERTIFICATION
I, K. Scott Grassmyer, 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. |
|
|
|
|
|
|
|
|
Date: September 10, 2008 |
/s/ K. Scott Grassmyer
|
|
|
K. Scott Grassmyer |
|
|
Senior Vice President, Chief Financial Officer
and Controller
(Principal Financial Officer) |
|
EX-32 SECTION 906 CERTIFICATION 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 2, 2008 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, K. Scott Grassmyer, Senior Vice President, Chief Financial Officer and Controller
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
|
|
|
J. Hicks Lanier |
|
|
Chairman and Chief Executive Officer
(Principal Executive Officer) |
|
|
September 10, 2008 |
|
|
|
|
|
|
/s/ K. Scott Grassmyer
|
|
|
K. Scott Grassmyer |
|
|
Senior Vice President, Chief Financial Officer and Controller
(Principal Financial Officer) |
|
|
September 10, 2008 |
|
|
|