FORM 10-Q
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 NOVEMBER 1, 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):
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Large accelerated filer þ
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Accelerated filer o
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Non-accelerated filer o
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Smaller reporting company o |
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(Do not check if a smaller reporting company) |
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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 December 5, 2008 |
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Common Stock, $1 par value
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15,848,216 |
OXFORD INDUSTRIES, INC.
INDEX TO FORM 10-Q
For the third 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 the
duration and severity of the current economic conditions and the impact on 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 |
12 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 ended 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 nine months of fiscal 2008
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39 weeks ended November 1, 2008 |
Nine months ended November 2, 2007
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39 weeks ended November 2, 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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Third |
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Three Months |
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First Nine |
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Nine Months |
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Quarter |
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Ended |
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Months |
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Ended |
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Fiscal 2008 |
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November 2, |
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Fiscal 2008 |
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November 2, |
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2007 |
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2007 |
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Net sales |
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$ |
244,186 |
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$ |
286,325 |
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$ |
747,648 |
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$ |
823,332 |
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Cost of goods sold |
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150,557 |
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174,078 |
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441,039 |
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487,514 |
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Gross profit |
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93,629 |
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112,247 |
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306,609 |
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335,818 |
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Selling, general and administrative expenses |
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84,637 |
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92,843 |
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273,243 |
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275,340 |
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Amortization of intangible assets |
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692 |
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1,227 |
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5,538 |
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4,240 |
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85,329 |
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94,070 |
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278,781 |
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279,580 |
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Royalties and other operating income |
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4,584 |
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4,999 |
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13,123 |
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14,476 |
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Operating income |
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12,884 |
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23,176 |
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40,951 |
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70,714 |
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Interest expense, net |
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6,437 |
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5,521 |
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18,754 |
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15,997 |
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Earnings before income taxes |
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6,447 |
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17,655 |
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22,197 |
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54,717 |
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Income taxes |
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1,672 |
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3,984 |
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6,432 |
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15,215 |
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Net earnings |
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$ |
4,775 |
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$ |
13,671 |
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$ |
15,765 |
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$ |
39,502 |
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Net earnings per common share: |
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Basic |
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$ |
0.31 |
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$ |
0.77 |
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$ |
1.01 |
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$ |
2.22 |
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Diluted |
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$ |
0.31 |
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$ |
0.76 |
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$ |
1.00 |
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$ |
2.20 |
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Weighted average common shares outstanding: |
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Basic |
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15,489 |
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17,820 |
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15,682 |
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17,777 |
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Dilutive impact of options and restricted shares |
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92 |
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125 |
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91 |
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182 |
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Diluted |
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15,581 |
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17,945 |
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15,773 |
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17,959 |
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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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$ |
0.54 |
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$ |
0.54 |
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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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November 1, |
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February 2, |
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November 2, |
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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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$ |
8,034 |
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$ |
14,912 |
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$ |
11,959 |
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Receivables, net |
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119,960 |
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105,561 |
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156,424 |
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Inventories, net |
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108,622 |
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158,925 |
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155,762 |
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Prepaid expenses |
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21,120 |
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18,701 |
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21,979 |
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Total current assets |
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257,736 |
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298,099 |
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346,124 |
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Property, plant and equipment, net |
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93,348 |
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92,502 |
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90,190 |
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Goodwill, net |
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248,569 |
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257,921 |
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225,039 |
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Intangible assets, net |
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208,315 |
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230,933 |
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236,932 |
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Other non-current assets, net |
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26,928 |
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30,817 |
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32,004 |
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Total Assets |
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$ |
834,896 |
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$ |
910,272 |
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$ |
930,289 |
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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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$ |
89,242 |
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$ |
101,123 |
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$ |
95,357 |
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Accrued compensation |
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14,972 |
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14,485 |
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16,359 |
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Income taxes payable |
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20 |
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2,656 |
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Dividends payable |
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2,889 |
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3,236 |
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Short-term debt and current maturities of long-term debt |
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16,038 |
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37,900 |
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416 |
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Total current liabilities |
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120,252 |
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156,417 |
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118,024 |
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Long-term debt, less current maturities |
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219,548 |
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234,414 |
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221,570 |
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Other non-current liabilities |
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50,562 |
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50,909 |
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51,671 |
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Non-current deferred income taxes |
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54,416 |
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60,984 |
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66,699 |
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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 November 1, 2008;
February 2, 2008; and November 2, 2007 |
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Common stock, $1.00 par value; 60,000 authorized and
15,866 issued and outstanding at November 1, 2008;
16,049 issued and outstanding at February 2, 2008; and
17,978 issued and outstanding at November 2, 2007 |
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15,866 |
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16,049 |
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17,978 |
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Additional paid-in capital |
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87,465 |
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85,224 |
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84,651 |
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Retained earnings |
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300,867 |
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293,212 |
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348,311 |
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Accumulated other comprehensive (loss) income |
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(14,080 |
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13,063 |
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21,385 |
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Total shareholders equity |
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390,118 |
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407,548 |
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472,325 |
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Total Liabilities and Shareholders Equity |
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$ |
834,896 |
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$ |
910,272 |
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$ |
930,289 |
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See accompanying notes.
6
OXFORD INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
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Nine Months |
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First Nine |
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Ended |
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Months |
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November 2, |
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Fiscal 2008 |
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2007 |
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Cash Flows From Operating Activities: |
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Net earnings |
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$ |
15,765 |
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$ |
39,502 |
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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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15,006 |
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13,322 |
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Amortization of intangible assets |
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5,538 |
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4,240 |
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Amortization of deferred financing costs and bond discount |
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2,572 |
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1,859 |
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Stock compensation expense |
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2,629 |
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1,212 |
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Loss on sale of property, plant and equipment |
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416 |
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|
701 |
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Equity income from unconsolidated entities |
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(875 |
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(476 |
) |
Deferred income taxes |
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(1,556 |
) |
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(6,548 |
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Changes in working capital: |
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Receivables |
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(17,779 |
) |
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(47,633 |
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Inventories |
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47,086 |
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11,355 |
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Prepaid expenses |
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(3,490 |
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1,459 |
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Current liabilities |
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(7,781 |
) |
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(17,132 |
) |
Other non-current assets |
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3,997 |
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(1,933 |
) |
Other non-current liabilities |
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(242 |
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9,272 |
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Net cash provided by (used in) operating activities |
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61,286 |
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9,200 |
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Cash Flows From Investing Activities: |
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Acquisitions, net of cash acquired, and investment in unconsolidated entity |
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(666 |
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(22,081 |
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Purchases of property, plant and equipment |
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(17,280 |
) |
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(25,378 |
) |
Proceeds from sale of property, plant and equipment |
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16 |
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2,956 |
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Net cash provided by (used in) investing activities |
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(17,930 |
) |
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(44,503 |
) |
Cash Flows From Financing Activities: |
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Repayment of financing arrangements |
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(266,952 |
) |
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(71,997 |
) |
Proceeds from financing arrangements |
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230,430 |
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|
94,185 |
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Deferred financing costs paid |
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(1,665 |
) |
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Proceeds from issuance of common stock including tax benefits |
|
|
264 |
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|
3,924 |
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Dividends on common stock |
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(11,557 |
) |
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(9,632 |
) |
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Net cash provided by (used in) financing activities |
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(49,480 |
) |
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|
16,480 |
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Net change in cash and cash equivalents |
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(6,124 |
) |
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(18,823 |
) |
Effect of foreign currency translation on cash and cash equivalents |
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(754 |
) |
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320 |
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Cash and cash equivalents at the beginning of period |
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14,912 |
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30,462 |
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Cash and cash equivalents at the end of period |
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$ |
8,034 |
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$ |
11,959 |
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See accompanying notes.
7
OXFORD INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THIRD QUARTER OF FISCAL 2008
1. |
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Basis of Presentation: The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with accounting principles generally accepted in
the United States for interim financial reporting and the instructions of Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by accounting principles generally accepted in the United States. We
believe the accompanying unaudited condensed consolidated financial statements reflect all
normal, recurring adjustments that are necessary for a fair presentation of our financial
position and results of operations 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 which do not occur evenly throughout the year and the
seasonality of our business. The accounting policies applied during the interim periods
presented are consistent with the significant accounting policies 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. |
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Recently Adopted Standards |
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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 certain foreign currency exchange contracts are the only financial
assets and liabilities measured at fair value on a recurring basis (at least annually) within the
scope of SFAS 157 that are included in our consolidated financial statements. Although we have had
forward foreign currency exchange contracts outstanding at certain times during fiscal 2008, as of
November 1, 2008 we had no forward foreign currency exchange contracts outstanding. 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 practices relating to 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): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November 1, |
|
February 2, |
|
November 2, |
|
|
2008 |
|
2008 |
|
2007 |
|
|
|
Finished goods |
|
$ |
129,339 |
|
|
$ |
171,685 |
|
|
$ |
168,868 |
|
Work in process |
|
|
7,187 |
|
|
|
10,142 |
|
|
|
7,268 |
|
Fabric, trim and supplies |
|
|
11,146 |
|
|
|
16,912 |
|
|
|
18,910 |
|
LIFO reserve |
|
|
(39,050 |
) |
|
|
(39,814 |
) |
|
|
(39,284 |
) |
|
|
|
Total |
|
$ |
108,622 |
|
|
$ |
158,925 |
|
|
$ |
155,762 |
|
|
|
|
3. |
|
Comprehensive Income: Comprehensive income, which reflects the effects of foreign currency
translation adjustments, is calculated as follows for the periods presented (in thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months |
|
|
|
|
|
Nine Months |
|
|
|
|
|
|
Ended |
|
First Nine |
|
Ended |
|
|
Third Quarter |
|
November 2, |
|
Months Fiscal |
|
November 2, |
|
|
Fiscal 2008 |
|
2007 |
|
2008 |
|
2007 |
|
|
|
Net earnings |
|
$ |
4,775 |
|
|
$ |
13,671 |
|
|
$ |
15,765 |
|
|
$ |
39,502 |
|
Gain (loss) on foreign currency translation, net of tax |
|
|
(26,418 |
) |
|
|
3,306 |
|
|
|
(27,143 |
) |
|
|
11,961 |
|
|
|
|
Comprehensive income |
|
$ |
(21,643 |
) |
|
$ |
16,977 |
|
|
$ |
(11,378 |
) |
|
$ |
51,463 |
|
|
|
|
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 $39.1 million, $39.8 million and $39.3
million as of November 1, 2008, February 2, 2008 and November 2, 2007, respectively. 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 |
|
Nine Months |
|
|
Third Quarter |
|
Ended |
|
Nine Months |
|
Ended |
|
|
Fiscal 2008 |
|
November 2, |
|
Fiscal 2008 |
|
November 2, |
|
|
|
|
2007 |
|
|
|
2007 |
|
|
|
Net Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tommy Bahama |
|
$ |
83,726 |
|
|
$ |
102,960 |
|
|
$ |
324,991 |
|
|
$ |
349,086 |
|
Ben Sherman |
|
|
38,235 |
|
|
|
46,668 |
|
|
|
107,317 |
|
|
|
122,418 |
|
Lanier Clothes |
|
|
44,314 |
|
|
|
52,861 |
|
|
|
111,185 |
|
|
|
127,079 |
|
Oxford Apparel |
|
|
78,082 |
|
|
|
83,348 |
|
|
|
204,790 |
|
|
|
222,801 |
|
Corporate and Other |
|
|
(171 |
) |
|
|
488 |
|
|
|
(635 |
) |
|
|
1,948 |
|
|
|
|
Total |
|
$ |
244,186 |
|
|
$ |
286,325 |
|
|
$ |
747,648 |
|
|
$ |
823,332 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tommy Bahama |
|
$ |
4,009 |
|
|
$ |
3,181 |
|
|
$ |
11,677 |
|
|
$ |
9,686 |
|
Ben Sherman |
|
|
584 |
|
|
|
664 |
|
|
|
1,760 |
|
|
|
1,902 |
|
Lanier Clothes |
|
|
138 |
|
|
|
200 |
|
|
|
712 |
|
|
|
627 |
|
Oxford Apparel |
|
|
226 |
|
|
|
255 |
|
|
|
682 |
|
|
|
816 |
|
Corporate and Other |
|
|
66 |
|
|
|
89 |
|
|
|
175 |
|
|
|
291 |
|
|
|
|
Total |
|
$ |
5,023 |
|
|
$ |
4,389 |
|
|
$ |
15,006 |
|
|
$ |
13,322 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of Intangible Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tommy Bahama |
|
$ |
355 |
|
|
$ |
542 |
|
|
$ |
1,064 |
|
|
$ |
1,895 |
|
Ben Sherman |
|
|
327 |
|
|
|
614 |
|
|
|
1,047 |
|
|
|
2,130 |
|
Lanier Clothes |
|
|
|
|
|
|
30 |
|
|
|
2,267 |
|
|
|
90 |
|
Oxford Apparel |
|
|
10 |
|
|
|
41 |
|
|
|
1,160 |
|
|
|
125 |
|
|
|
|
Total |
|
$ |
692 |
|
|
$ |
1,227 |
|
|
$ |
5,538 |
|
|
$ |
4,240 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tommy Bahama |
|
$ |
689 |
|
|
$ |
11,310 |
|
|
$ |
38,315 |
|
|
$ |
58,750 |
|
Ben Sherman |
|
|
3,242 |
|
|
|
5,595 |
|
|
|
1,495 |
|
|
|
5,825 |
|
Lanier Clothes |
|
|
4,482 |
|
|
|
2,618 |
|
|
|
(6,894 |
) |
|
|
1,865 |
|
Oxford Apparel |
|
|
7,346 |
|
|
|
7,376 |
|
|
|
16,409 |
|
|
|
17,710 |
|
Corporate and Other |
|
|
(2,875 |
) |
|
|
(3,723 |
) |
|
|
(8,374 |
) |
|
|
(13,436 |
) |
|
|
|
Total Operating Income |
|
$ |
12,884 |
|
|
$ |
23,176 |
|
|
$ |
40,951 |
|
|
$ |
70,714 |
|
Interest Expense, net |
|
|
6,437 |
|
|
|
5,521 |
|
|
|
18,754 |
|
|
|
15,997 |
|
|
|
|
Earnings Before Income Taxes |
|
$ |
6,447 |
|
|
$ |
17,655 |
|
|
$ |
22,197 |
|
|
$ |
54,717 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November 1, |
|
February 2, |
|
November 2, |
|
|
2008 |
|
2008 |
|
2007 |
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Tommy Bahama |
|
$ |
509,769 |
|
|
$ |
519,291 |
|
|
$ |
483,631 |
|
Ben Sherman |
|
|
172,765 |
|
|
|
208,829 |
|
|
|
226,076 |
|
Lanier Clothes |
|
|
70,750 |
|
|
|
83,208 |
|
|
|
101,514 |
|
Oxford Apparel |
|
|
86,916 |
|
|
|
102,253 |
|
|
|
112,390 |
|
Corporate and Other |
|
|
(5,304 |
) |
|
|
(3,309 |
) |
|
|
6,678 |
|
|
|
|
Total |
|
$ |
834,896 |
|
|
$ |
910,272 |
|
|
$ |
930,289 |
|
|
|
|
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-Qs for the first and second quarters
of fiscal 2008, on November 8, 2007, we entered into a $60 million accelerated share
repurchase agreement with Bank of America, N.A. 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 during May 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. In addition to these restructuring charges
recognized in the second quarter of fiscal 2008, we recognized other unusual items totaling a
charge of $0.3 million in Lanier Clothes and a net benefit of $1.2 million in Oxford Apparel,
substantially all of which charge and benefit is reflected in selling, general and
administrative expenses, or SG&A. |
|
|
|
Lanier Clothes incurred restructuring charges totaling approximately $9.2 million primarily
associated with our decision to exit from 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. |
|
|
|
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. |
|
|
|
During the third quarter of fiscal 2008, we incurred an additional $0.6 million of restructuring
charges, primarily consisting of severance costs as we continue to focus on reducing overhead
within all operating groups and a write-off of approximately $0.9 million of unamortized financing
costs as discussed in Note 7 below. We anticipate incurring approximately $1.0 million of
additional restructuring charges in the fourth quarter of fiscal 2008. |
|
7. |
|
U.S. Revolving Credit Agreement: 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 amended and restated our Amended and Restated Credit Agreement
dated as of July 28, 2004, as previously 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 must not be less than 1.0 to
1.0 for the immediately preceding 12 fiscal months for which financial statements have been
delivered. 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, 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 U.S. Revolving Credit Agreement during the third
quarter of fiscal 2008, we wrote 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
November 1, 2008, February 2, 2008, and November 2, 2007; our unaudited condensed
consolidating statements of earnings for the third quarter of fiscal 2008, the first nine
months of fiscal 2008, the three months ended November 2, 2007 and the nine months ended
November 2, 2007; and our unaudited condensed consolidating statements of cash flows for the
first nine months of fiscal 2008 and the nine months ended November 2, 2007 (in thousands). |
OXFORD INDUSTRIES, INC.
UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEETS
November 1, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oxford |
|
|
|
|
|
Subsidiary |
|
|
|
|
|
|
Industries |
|
Subsidiary |
|
Non- |
|
Consolidating |
|
Consolidated |
|
|
(Parent) |
|
Guarantors |
|
Guarantors |
|
Adjustments |
|
Total |
|
|
|
ASSETS
|
Cash and cash equivalents |
|
$ |
6,400 |
|
|
$ |
892 |
|
|
$ |
742 |
|
|
$ |
|
|
|
$ |
8,034 |
|
Receivables, net |
|
|
60,813 |
|
|
|
38,009 |
|
|
|
30,315 |
|
|
|
(9,177 |
) |
|
|
119,960 |
|
Inventories |
|
|
33,432 |
|
|
|
62,812 |
|
|
|
14,097 |
|
|
|
(1,719 |
) |
|
|
108,622 |
|
Prepaid expenses |
|
|
8,195 |
|
|
|
8,844 |
|
|
|
4,081 |
|
|
|
|
|
|
|
21,120 |
|
|
|
|
Total current assets |
|
|
108,840 |
|
|
|
110,557 |
|
|
|
49,235 |
|
|
|
(10,896 |
) |
|
|
257,736 |
|
Property, plant and equipment, net |
|
|
9,181 |
|
|
|
78,640 |
|
|
|
5,527 |
|
|
|
|
|
|
|
93,348 |
|
Goodwill, net |
|
|
1,847 |
|
|
|
168,932 |
|
|
|
77,790 |
|
|
|
|
|
|
|
248,569 |
|
Intangible assets, net |
|
|
76 |
|
|
|
131,515 |
|
|
|
76,724 |
|
|
|
|
|
|
|
208,315 |
|
Other non-current assets, net |
|
|
813,500 |
|
|
|
150,406 |
|
|
|
35,277 |
|
|
|
(972,255 |
) |
|
|
26,928 |
|
|
|
|
Total Assets |
|
$ |
933,444 |
|
|
$ |
640,050 |
|
|
$ |
244,553 |
|
|
$ |
(983,151 |
) |
|
$ |
834,896 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY
|
Current liabilities |
|
$ |
52,041 |
|
|
$ |
46,357 |
|
|
$ |
30,793 |
|
|
$ |
(8,939 |
) |
|
$ |
120,252 |
|
Long-term debt, less current portion |
|
|
219,548 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
219,548 |
|
Non-current liabilities |
|
|
275,153 |
|
|
|
(223,522 |
) |
|
|
108,077 |
|
|
|
(109,146 |
) |
|
|
50,562 |
|
Non-current deferred income taxes |
|
|
(3,416 |
) |
|
|
36,411 |
|
|
|
21,421 |
|
|
|
|
|
|
|
54,416 |
|
Total shareholders/invested equity |
|
|
390,118 |
|
|
|
780,804 |
|
|
|
84,262 |
|
|
|
(865,066 |
) |
|
|
390,118 |
|
|
|
|
Total Liabilities and Shareholders Equity |
|
$ |
933,444 |
|
|
$ |
640,050 |
|
|
$ |
244,553 |
|
|
$ |
(983,151 |
) |
|
$ |
834,896 |
|
|
|
|
13
OXFORD INDUSTRIES, INC.
UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEETS
February 2, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oxford |
|
|
|
|
|
Subsidiary |
|
|
|
|
|
|
Industries |
|
Subsidiary |
|
Non- |
|
Consolidating |
|
Consolidated |
|
|
(Parent) |
|
Guarantors |
|
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
November 2, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oxford |
|
|
|
|
|
Subsidiary |
|
|
|
|
|
|
Industries |
|
Subsidiary |
|
Non- |
|
Consolidating |
|
Consolidated |
|
|
(Parent) |
|
Guarantors |
|
Guarantors |
|
Adjustments |
|
Total |
|
|
|
ASSETS
|
Cash and cash equivalents |
|
$ |
3,718 |
|
|
$ |
1,145 |
|
|
$ |
7,096 |
|
|
$ |
|
|
|
$ |
11,959 |
|
Receivables, net |
|
|
78,309 |
|
|
|
50,791 |
|
|
|
33,395 |
|
|
|
(6,071 |
) |
|
|
156,424 |
|
Inventories |
|
|
68,503 |
|
|
|
71,222 |
|
|
|
17,378 |
|
|
|
(1,341 |
) |
|
|
155,762 |
|
Prepaid expenses |
|
|
7,492 |
|
|
|
9,299 |
|
|
|
5,188 |
|
|
|
|
|
|
|
21,979 |
|
|
|
|
Total current assets |
|
|
158,022 |
|
|
|
132,457 |
|
|
|
63,057 |
|
|
|
(7,412 |
) |
|
|
346,124 |
|
Property, plant and equipment, net |
|
|
8,592 |
|
|
|
74,655 |
|
|
|
6,943 |
|
|
|
|
|
|
|
90,190 |
|
Goodwill, net |
|
|
1,847 |
|
|
|
168,932 |
|
|
|
54,260 |
|
|
|
|
|
|
|
225,039 |
|
Intangible assets, net |
|
|
1,278 |
|
|
|
135,417 |
|
|
|
100,237 |
|
|
|
|
|
|
|
236,932 |
|
Other non-current assets, net |
|
|
795,589 |
|
|
|
149,981 |
|
|
|
1,355 |
|
|
|
(914,921 |
) |
|
|
32,004 |
|
|
|
|
Total Assets |
|
$ |
965,328 |
|
|
$ |
661,442 |
|
|
$ |
225,852 |
|
|
$ |
(922,333 |
) |
|
$ |
930,289 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY
|
Current liabilities |
|
$ |
41,053 |
|
|
$ |
55,471 |
|
|
$ |
27,201 |
|
|
$ |
(5,701 |
) |
|
$ |
118,024 |
|
Long-term debt, less current portion |
|
|
221,570 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
221,570 |
|
Non-current liabilities |
|
|
234,554 |
|
|
|
(182,186 |
) |
|
|
108,451 |
|
|
|
(109,148 |
) |
|
|
51,671 |
|
Non-current deferred income taxes |
|
|
(4,174 |
) |
|
|
43,104 |
|
|
|
27,769 |
|
|
|
|
|
|
|
66,699 |
|
Total shareholders/invested equity |
|
|
472,325 |
|
|
|
745,053 |
|
|
|
62,431 |
|
|
|
(807,484 |
) |
|
|
472,325 |
|
|
|
|
Total Liabilities and Shareholders Equity |
|
$ |
965,328 |
|
|
$ |
661,442 |
|
|
$ |
225,852 |
|
|
$ |
(922,333 |
) |
|
$ |
930,289 |
|
|
|
|
15
OXFORD INDUSTRIES, INC.
UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF EARNINGS
Third Quarter Fiscal 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oxford |
|
|
|
|
|
Subsidiary |
|
|
|
|
|
|
Industries |
|
Subsidiary |
|
Non- |
|
Consolidating |
|
Consolidated |
|
|
(Parent) |
|
Guarantors |
|
Guarantors |
|
Adjustments |
|
Total |
|
|
|
Net sales |
|
$ |
120,087 |
|
|
$ |
96,584 |
|
|
$ |
42,153 |
|
|
$ |
(14,638 |
) |
|
$ |
244,186 |
|
Cost of goods sold |
|
|
94,253 |
|
|
|
46,819 |
|
|
|
18,117 |
|
|
|
(8,632 |
) |
|
|
150,557 |
|
|
|
|
Gross profit |
|
|
25,834 |
|
|
|
49,765 |
|
|
|
24,036 |
|
|
|
(6,006 |
) |
|
|
93,629 |
|
Selling, general and administrative |
|
|
16,590 |
|
|
|
56,607 |
|
|
|
18,224 |
|
|
|
(6,092 |
) |
|
|
85,329 |
|
Royalties and other income |
|
|
2 |
|
|
|
3,119 |
|
|
|
1,723 |
|
|
|
(260 |
) |
|
|
4,584 |
|
|
|
|
Operating income |
|
|
9,246 |
|
|
|
(3,723 |
) |
|
|
7,535 |
|
|
|
(174 |
) |
|
|
12,884 |
|
Interest (income) expense, net |
|
|
6,935 |
|
|
|
(2,814 |
) |
|
|
2,316 |
|
|
|
|
|
|
|
6,437 |
|
Income from equity investment |
|
|
4,494 |
|
|
|
|
|
|
|
|
|
|
|
(4,494 |
) |
|
|
|
|
|
|
|
Earnings before income taxes |
|
|
6,805 |
|
|
|
(909 |
) |
|
|
5,219 |
|
|
|
(4,668 |
) |
|
|
6,447 |
|
Income taxes (benefit) |
|
|
1,917 |
|
|
|
(1,131 |
) |
|
|
947 |
|
|
|
(61 |
) |
|
|
1,672 |
|
|
|
|
Net earnings |
|
$ |
4,888 |
|
|
$ |
222 |
|
|
$ |
4,272 |
|
|
$ |
(4,607 |
) |
|
$ |
4,775 |
|
|
|
|
First Nine Months Fiscal 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oxford |
|
|
|
|
|
Subsidiary |
|
|
|
|
|
|
Industries |
|
Subsidiary |
|
Non- |
|
Consolidating |
|
Consolidated |
|
|
(Parent) |
|
Guarantors |
|
Guarantors |
|
Adjustments |
|
Total |
|
|
|
Net sales |
|
$ |
310,481 |
|
|
$ |
355,692 |
|
|
$ |
116,406 |
|
|
$ |
(34,931 |
) |
|
$ |
747,648 |
|
Cost of goods sold |
|
|
245,934 |
|
|
|
161,670 |
|
|
|
50,226 |
|
|
|
(16,791 |
) |
|
|
441,039 |
|
|
|
|
Gross profit |
|
|
64,547 |
|
|
|
194,022 |
|
|
|
66,180 |
|
|
|
(18,140 |
) |
|
|
306,609 |
|
Selling, general and administrative |
|
|
55,266 |
|
|
|
184,449 |
|
|
|
58,128 |
|
|
|
(19,062 |
) |
|
|
278,781 |
|
Royalties and other income |
|
|
539 |
|
|
|
9,053 |
|
|
|
4,912 |
|
|
|
(1,381 |
) |
|
|
13,123 |
|
|
|
|
Operating income |
|
|
9,820 |
|
|
|
18,626 |
|
|
|
12,964 |
|
|
|
(459 |
) |
|
|
40,951 |
|
Interest (income) expense, net |
|
|
20,453 |
|
|
|
(8,875 |
) |
|
|
7,176 |
|
|
|
|
|
|
|
18,754 |
|
Income from equity investment |
|
|
25,015 |
|
|
|
|
|
|
|
|
|
|
|
(25,015 |
) |
|
|
|
|
|
|
|
Earnings before income taxes |
|
|
14,382 |
|
|
|
27,501 |
|
|
|
5,788 |
|
|
|
(25,474 |
) |
|
|
22,197 |
|
Income taxes (benefit) |
|
|
(1,681 |
) |
|
|
6,862 |
|
|
|
1,412 |
|
|
|
(161 |
) |
|
|
6,432 |
|
|
|
|
Net earnings |
|
$ |
16,063 |
|
|
$ |
20,639 |
|
|
$ |
4,376 |
|
|
$ |
(25,313 |
) |
|
$ |
15,765 |
|
|
|
|
16
OXFORD INDUSTRIES, INC.
UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF EARNINGS
Three Months Ended November 2, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oxford |
|
|
|
|
|
Subsidiary |
|
|
|
|
|
|
Industries |
|
Subsidiary |
|
Non- |
|
Consolidating |
|
Consolidated |
|
|
(Parent) |
|
Guarantors |
|
Guarantors |
|
Adjustments |
|
Total |
|
|
|
Net sales |
|
$ |
132,930 |
|
|
$ |
115,548 |
|
|
$ |
48,968 |
|
|
$ |
(11,121 |
) |
|
$ |
286,325 |
|
Cost of goods sold |
|
|
102,081 |
|
|
|
53,346 |
|
|
|
21,743 |
|
|
|
(3,092 |
) |
|
|
174,078 |
|
|
|
|
Gross profit |
|
|
30,849 |
|
|
|
62,202 |
|
|
|
27,225 |
|
|
|
(8,029 |
) |
|
|
112,247 |
|
Selling, general and administrative |
|
|
23,785 |
|
|
|
56,370 |
|
|
|
22,228 |
|
|
|
(8,313 |
) |
|
|
94,070 |
|
Royalties and other income |
|
|
|
|
|
|
2,788 |
|
|
|
2,727 |
|
|
|
(516 |
) |
|
|
4,999 |
|
|
|
|
Operating income |
|
|
7,064 |
|
|
|
8,620 |
|
|
|
7,724 |
|
|
|
(232 |
) |
|
|
23,176 |
|
Interest (income) expense, net |
|
|
6,640 |
|
|
|
(3,574 |
) |
|
|
2,433 |
|
|
|
22 |
|
|
|
5,521 |
|
Income from equity investment |
|
|
14,647 |
|
|
|
1 |
|
|
|
|
|
|
|
(14,648 |
) |
|
|
|
|
|
|
|
Earnings before income taxes |
|
|
15,071 |
|
|
|
12,195 |
|
|
|
5,291 |
|
|
|
(14,902 |
) |
|
|
17,655 |
|
Income taxes (benefit) |
|
|
1,238 |
|
|
|
2,890 |
|
|
|
(53 |
) |
|
|
(91 |
) |
|
|
3,984 |
|
|
|
|
Net earnings |
|
$ |
13,833 |
|
|
$ |
9,305 |
|
|
$ |
5,344 |
|
|
$ |
(14,811 |
) |
|
$ |
13,671 |
|
|
|
|
Nine Months Ended November 2, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oxford |
|
|
|
|
|
Subsidiary |
|
|
|
|
|
|
Industries |
|
Subsidiary |
|
Non- |
|
Consolidating |
|
Consolidated |
|
|
(Parent) |
|
Guarantors |
|
Guarantors |
|
Adjustments |
|
Total |
|
|
|
Net sales |
|
$ |
342,212 |
|
|
$ |
386,707 |
|
|
$ |
124,854 |
|
|
$ |
(30,441 |
) |
|
$ |
823,332 |
|
Cost of goods sold |
|
|
264,247 |
|
|
|
175,375 |
|
|
|
55,222 |
|
|
|
(7,330 |
) |
|
|
487,514 |
|
|
|
|
Gross profit |
|
|
77,965 |
|
|
|
211,332 |
|
|
|
69,632 |
|
|
|
(23,111 |
) |
|
|
335,818 |
|
Selling, general and administrative |
|
|
68,819 |
|
|
|
170,620 |
|
|
|
63,952 |
|
|
|
(23,811 |
) |
|
|
279,580 |
|
Royalties and other income |
|
|
2,148 |
|
|
|
8,452 |
|
|
|
5,237 |
|
|
|
(1,361 |
) |
|
|
14,476 |
|
|
|
|
Operating income |
|
|
11,294 |
|
|
|
49,164 |
|
|
|
10,917 |
|
|
|
(661 |
) |
|
|
70,714 |
|
Interest (income) expense, net |
|
|
19,085 |
|
|
|
(10,039 |
) |
|
|
6,883 |
|
|
|
68 |
|
|
|
15,997 |
|
Income from equity investment |
|
|
47,819 |
|
|
|
(1 |
) |
|
|
|
|
|
|
(47,818 |
) |
|
|
|
|
|
|
|
Earnings before income taxes |
|
|
40,028 |
|
|
|
59,202 |
|
|
|
4,034 |
|
|
|
(48,547 |
) |
|
|
54,717 |
|
Income taxes (benefit) |
|
|
49 |
|
|
|
17,435 |
|
|
|
(2,017 |
) |
|
|
(252 |
) |
|
|
15,215 |
|
|
|
|
Net earnings |
|
$ |
39,979 |
|
|
$ |
41,767 |
|
|
$ |
6,051 |
|
|
$ |
(48,295 |
) |
|
$ |
39,502 |
|
|
|
|
17
OXFORD INDUSTRIES, INC.
UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
First Nine Months Fiscal 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oxford |
|
|
|
|
|
Subsidiary |
|
|
|
|
|
|
Industries |
|
Subsidiary |
|
Non- |
|
Consolidating |
|
Consolidated |
|
|
(Parent) |
|
Guarantors |
|
Guarantors |
|
Adjustments |
|
Total |
|
|
|
Cash Flows From Operating Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by
operating activities |
|
$ |
20,801 |
|
|
$ |
42,844 |
|
|
$ |
(2,144 |
) |
|
$ |
(215 |
) |
|
$ |
61,286 |
|
Cash Flows from Investing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in unconsolidated entity |
|
|
|
|
|
|
(628 |
) |
|
|
(38 |
) |
|
|
|
|
|
|
(666 |
) |
Purchases of property, plant and
equipment |
|
|
(2,656 |
) |
|
|
(13,680 |
) |
|
|
(944 |
) |
|
|
|
|
|
|
(17,280 |
) |
Proceeds from sale of property, plant
and equipment |
|
|
16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16 |
|
|
|
|
Net cash (used in) provided by
investing activities |
|
|
(2,640 |
) |
|
|
(14,308 |
) |
|
|
(982 |
) |
|
|
|
|
|
|
(17,930 |
) |
Cash Flows from Financing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in debt |
|
|
(38,762 |
) |
|
|
(1 |
) |
|
|
2,241 |
|
|
|
|
|
|
|
(36,522 |
) |
Deferred financing costs paid |
|
|
(1,665 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,665 |
) |
Proceeds from issuance of common stock |
|
|
281 |
|
|
|
(17 |
) |
|
|
|
|
|
|
|
|
|
|
264 |
|
Change in inter-company payable |
|
|
31,884 |
|
|
|
(28,676 |
) |
|
|
(3,423 |
) |
|
|
215 |
|
|
|
|
|
Dividends on common stock |
|
|
(5,599 |
) |
|
|
|
|
|
|
(5,958 |
) |
|
|
|
|
|
|
(11,557 |
) |
|
|
|
Net cash (used in) provided by
financing activities |
|
|
(13,861 |
) |
|
|
(28,694 |
) |
|
|
(7,140 |
) |
|
|
215 |
|
|
|
(49,480 |
) |
|
|
|
Net change in Cash and Cash Equivalents |
|
|
4,300 |
|
|
|
(158 |
) |
|
|
(10,266 |
) |
|
|
|
|
|
|
(6,124 |
) |
Effect of foreign currency translation |
|
|
|
|
|
|
|
|
|
|
(754 |
) |
|
|
|
|
|
|
(754 |
) |
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 |
|
$ |
6,400 |
|
|
$ |
892 |
|
|
$ |
742 |
|
|
$ |
|
|
|
$ |
8,034 |
|
|
|
|
18
OXFORD INDUSTRIES, INC.
UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Nine Months Ended November 2, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oxford |
|
|
|
|
|
Subsidiary |
|
|
|
|
|
|
Industries |
|
Subsidiary |
|
Non- |
|
Consolidating |
|
Consolidated |
|
|
(Parent) |
|
Guarantors |
|
Guarantors |
|
Adjustments |
|
Total |
|
|
|
Cash Flows From Operating Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by
operating activities |
|
$ |
(34,217 |
) |
|
$ |
47,002 |
|
|
$ |
(2,704 |
) |
|
$ |
(881 |
) |
|
$ |
9,200 |
|
Cash Flows from Investing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions, net of cash acquired, and investment in unconsolidated entity |
|
|
(21,562 |
) |
|
|
(519 |
) |
|
|
|
|
|
|
|
|
|
|
(22,081 |
) |
Purchases of property, plant and
equipment |
|
|
(590 |
) |
|
|
(23,032 |
) |
|
|
(1,756 |
) |
|
|
|
|
|
|
(25,378 |
) |
Proceeds from sale of property, plant
and equipment |
|
|
2,956 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,956 |
|
|
|
|
Net cash (used in) provided by
investing activities |
|
|
(19,196 |
) |
|
|
(23,551 |
) |
|
|
(1,756 |
) |
|
|
|
|
|
|
(44,503 |
) |
Cash Flows from Financing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in debt |
|
|
22,200 |
|
|
|
(12 |
) |
|
|
|
|
|
|
|
|
|
|
22,188 |
|
Proceeds from issuance of common stock |
|
|
3,924 |
|
|
|
|
|
|
|
(613 |
) |
|
|
613 |
|
|
|
3,924 |
|
Change in inter-company payable |
|
|
15,957 |
|
|
|
(22,992 |
) |
|
|
4,678 |
|
|
|
2,357 |
|
|
|
|
|
Dividends on common stock |
|
|
(9,632 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9,632 |
) |
|
|
|
Net cash (used in) provided by
financing activities |
|
|
32,449 |
|
|
|
(23,004 |
) |
|
|
4,065 |
|
|
|
2,970 |
|
|
|
16,480 |
|
|
|
|
Net change in Cash and Cash Equivalents |
|
|
(20,964 |
) |
|
|
447 |
|
|
|
(395 |
) |
|
|
2,089 |
|
|
|
(18,823 |
) |
Effect of foreign currency translation |
|
|
|
|
|
|
|
|
|
|
320 |
|
|
|
|
|
|
|
320 |
|
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 |
|
$ |
3,718 |
|
|
$ |
1,145 |
|
|
$ |
7,096 |
|
|
$ |
|
|
|
$ |
11,959 |
|
|
|
|
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.
Fiscal 2008 has been a challenging time for the retail and apparel industry as a result of the
weak economic conditions which began in the second half of calendar year 2007 and significantly
deteriorated further in the third quarter of fiscal 2008. These conditions impacted each of our
operating groups, and we expect that challenging economic conditions will continue into fiscal
2009. Therefore, we have continued to plan inventory purchases conservatively, which will limit our
sales growth opportunities for the remainder of fiscal 2008 and fiscal 2009. This strategy,
however, will also mitigate inventory markdown risk and promotional pressures, while also
protecting the integrity of our brands. In the current economic environment, it is important that
we continue to focus on maintaining our balance sheet and liquidity by reducing working capital
requirements, moderating our capital expenditures for future retail stores and reducing our
overhead.
Diluted net earnings per common share were $0.31 in the third quarter of fiscal 2008 and $0.76
in the three months ended November 2, 2007. The most significant factors impacting our results
during the third quarter of fiscal 2008 are discussed below:
|
|
|
Tommy Bahamas operating income decreased $10.6 million, or 93.9%, during the third
quarter of fiscal 2008 compared to the three months ended November 2, 2007. The decrease
was primarily due to the impact of the current economic environment on sales at our
owned retail stores and in our wholesale business and higher SG&A expenses associated
with operating additional retail stores. These factors were partially offset by
reductions in overhead during the third quarter of fiscal 2008. The third quarter
historically has been Tommy Bahamas weakest quarter at our owned retail stores, but the
third quarter of fiscal 2008 was particularly weak as a result of significantly
diminished traffic during September and October. |
|
|
|
|
Ben Shermans operating income decreased $2.4 million, or 42.1%, during the third
quarter of fiscal 2008 compared to the three months ended November 2, 2007. The decrease
in operating income was primarily due to lower sales in our United Kingdom business as
we exited certain lower tier customer accounts that were still active in the three
months ended November 2, 2007 as part of our efforts to reposition the brand, the
current economic conditions and the impact of the weaker British pound versus the U.S.
dollar during the third quarter of fiscal 2008. The impact of the sales decrease in the
United Kingdom was partially offset by increased sales in other markets and reductions
in overhead. |
|
|
|
|
Lanier Clothes operating income increased $1.9 million, or 71.2%, during the third
quarter of fiscal 2008 compared to the three months ended November 2, 2007. This
increase in operating income was primarily attributable to reductions in SG&A. Net sales
declined during the third quarter of fiscal 2008 compared to the three months ended
November 2, 2007 primarily due to the winding down of the Oscar de la Renta and Nautica
licensed businesses, the restructuring of the Arnold Brant business and
the impact of the weak demand in the tailored clothing market. The sales decline resulted
in a decline in gross profit which was more than offset by the reductions in overhead. |
20
|
|
|
Oxford Apparels operating income was flat during the third quarter of fiscal 2008
compared to the three months ended November 2, 2007. The third quarter of fiscal 2008
provided lower sales levels due to the current economic conditions and our continued
focus on key product categories and lines of business. The impact of the lower sales was
offset by a significant reduction in SG&A in the third quarter of fiscal 2008. Also, the
same period of the prior year included charges totaling $1.0 million associated with the sale
of Oxford Apparels last owned manufacturing facility. |
|
|
|
|
Corporate and Others operating loss decreased $0.8 million, or 22.8%, in the third
quarter of fiscal 2008 compared to the three months ended November 2, 2007. This
decrease in operating loss was primarily due to the impact of lower corporate SG&A. |
ACCELERATED SHARE REPURCHASE PROGRAM
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.
U.S. REVOLVING CREDIT AGREEMENT
On August 15, 2008, we amended and restated the Prior Credit Agreement. 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 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, and
is scheduled to mature August 15, 2013. The Prior Credit Agreement provided for a revolving credit
facility of up to $280 million and was scheduled to mature in July 2009. See Note 7 to our
unaudited condensed consolidated financial statements included in this report for further
information regarding our U.S. Revolving Credit Agreement including limitations on the borrowing
base, interest rates on advances, security for the facility, and financial, affirmative and
negative covenants. As a result of amending and restating the U.S. Revolving Credit Agreement
during the third quarter of fiscal 2008 we wrote off approximately $0.9 million of unamortized
financing costs incurred in connection with the Prior Credit Agreement.
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 third quarter of fiscal 2008 as compared to the
three months ended November 2, 2007 and the first nine months of fiscal 2008 compared to the nine
months ended November 2, 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.
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three |
|
|
|
|
|
|
|
|
|
Nine |
|
|
|
|
|
|
|
|
Months |
|
|
|
|
|
|
|
|
|
Months |
|
|
|
|
Third |
|
Ended |
|
|
|
|
|
First Nine |
|
Ended |
|
|
|
|
Quarter |
|
November 2, |
|
Percent |
|
Months |
|
November 2, |
|
Percent |
|
|
Fiscal 2008 |
|
2007 |
|
Change |
|
Fiscal 2008 |
|
2007 |
|
Change |
|
|
|
Net sales |
|
$ |
244,186 |
|
|
$ |
286,325 |
|
|
|
(14.7 |
%) |
|
$ |
747,648 |
|
|
$ |
823,332 |
|
|
|
(9.2 |
%) |
Cost of goods sold |
|
|
150,557 |
|
|
|
174,078 |
|
|
|
(13.5 |
%) |
|
|
441,039 |
|
|
|
487,514 |
|
|
|
(9.5 |
%) |
|
|
|
Gross profit |
|
|
93,629 |
|
|
|
112,247 |
|
|
|
(16.6 |
%) |
|
|
306,609 |
|
|
|
335,818 |
|
|
|
(8.7 |
%) |
Selling, general and
administrative
expenses |
|
|
84,637 |
|
|
|
92,843 |
|
|
|
(8.8 |
%) |
|
|
273,243 |
|
|
|
275,340 |
|
|
|
(0.8 |
%) |
Amortization of
intangible assets |
|
|
692 |
|
|
|
1,227 |
|
|
|
(43.6 |
%) |
|
|
5,538 |
|
|
|
4,240 |
|
|
|
30.6 |
% |
Royalties and other
operating income |
|
|
4,584 |
|
|
|
4,999 |
|
|
|
(8.3 |
%) |
|
|
13,123 |
|
|
|
14,476 |
|
|
|
(9.3 |
%) |
|
|
|
Operating income |
|
|
12,884 |
|
|
|
23,176 |
|
|
|
(44.4 |
%) |
|
|
40,951 |
|
|
|
70,714 |
|
|
|
(42.1 |
%) |
Interest expense, net |
|
|
6,437 |
|
|
|
5,521 |
|
|
|
16.6 |
% |
|
|
18,754 |
|
|
|
15,997 |
|
|
|
17.2 |
% |
|
|
|
Earnings before
income taxes |
|
|
6,447 |
|
|
|
17,655 |
|
|
|
(63.5 |
%) |
|
|
22,197 |
|
|
|
54,717 |
|
|
|
(59.4 |
%) |
Income taxes |
|
|
1,672 |
|
|
|
3,984 |
|
|
|
(58.0 |
%) |
|
|
6,432 |
|
|
|
15,215 |
|
|
|
(57.7 |
%) |
|
|
|
Net earnings |
|
$ |
4,775 |
|
|
$ |
13,671 |
|
|
|
(65.1 |
%) |
|
$ |
15,765 |
|
|
$ |
39,502 |
|
|
|
(60.1 |
%) |
|
|
|
The following table sets forth the line items in our consolidated statements of earnings as a
percentage of net sales. We have calculated all percentages based on actual data, but columns may
not add due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent of Net Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three |
|
|
|
|
|
|
|
|
|
Nine |
|
|
|
|
|
|
Months |
|
|
|
|
|
|
|
|
|
Months |
|
|
Third |
|
Ended |
|
|
|
|
|
First Nine |
|
Ended |
|
|
Quarter |
|
November 2, |
|
|
|
|
|
Months |
|
November 2, |
|
|
Fiscal 2008 |
|
2007 |
|
|
|
|
|
Fiscal 2008 |
|
2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
|
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
|
|
Cost of goods sold |
|
|
61.7 |
% |
|
|
60.8 |
% |
|
|
|
|
|
|
59.0 |
% |
|
|
59.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
38.3 |
% |
|
|
39.2 |
% |
|
|
|
|
|
|
41.0 |
% |
|
|
40.8 |
% |
|
|
|
|
Selling, general and
administrative
expenses |
|
|
34.7 |
% |
|
|
32.4 |
% |
|
|
|
|
|
|
36.5 |
% |
|
|
33.4 |
% |
|
|
|
|
Amortization of
intangible assets |
|
|
0.3 |
% |
|
|
0.4 |
% |
|
|
|
|
|
|
0.7 |
% |
|
|
0.5 |
% |
|
|
|
|
Royalties
and other operating income |
|
|
1.9 |
% |
|
|
1.7 |
% |
|
|
|
|
|
|
1.8 |
% |
|
|
1.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
5.3 |
% |
|
|
8.1 |
% |
|
|
|
|
|
|
5.5 |
% |
|
|
8.6 |
% |
|
|
|
|
Interest expense, net |
|
|
2.6 |
% |
|
|
1.9 |
% |
|
|
|
|
|
|
2.5 |
% |
|
|
1.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before
income taxes |
|
|
2.6 |
% |
|
|
6.2 |
% |
|
|
|
|
|
|
3.0 |
% |
|
|
6.6 |
% |
|
|
|
|
Income taxes |
|
|
0.7 |
% |
|
|
1.4 |
% |
|
|
|
|
|
|
0.9 |
% |
|
|
1.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
|
2.0 |
% |
|
|
4.8 |
% |
|
|
|
|
|
|
2.1 |
% |
|
|
4.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22
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 Tommy
Bahama 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. 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 our Ben Sherman e-commerce
websites. We also license the Ben Sherman name to third parties for various product categories.
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® and Nautica, although we are exiting the Nautica business as discussed elsewhere in this
report. We also offer tailored clothing 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.
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 Dockers, United States Polo Association® and Tommy Hilfiger® 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.
23
The tables below present net sales and operating income information about our operating groups
(dollars in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Months |
|
|
|
|
|
|
|
|
|
Nine Months |
|
|
|
|
Third |
|
Ended |
|
|
|
|
|
First |
|
Ended |
|
|
|
|
Quarter |
|
November 2, |
|
Percent |
|
Nine Months |
|
November 2, |
|
Percent |
|
|
Fiscal 2008 |
|
2007 |
|
Change |
|
Fiscal 2008 |
|
2007 |
|
Change |
|
|
|
Net Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tommy Bahama |
|
$ |
83,726 |
|
|
$ |
102,960 |
|
|
|
(18.7 |
%) |
|
$ |
324,991 |
|
|
$ |
349,086 |
|
|
|
(6.9 |
%) |
Ben Sherman |
|
|
38,235 |
|
|
|
46,668 |
|
|
|
(18.1 |
%) |
|
|
107,317 |
|
|
|
122,418 |
|
|
|
(12.3 |
%) |
Lanier Clothes |
|
|
44,314 |
|
|
|
52,861 |
|
|
|
(16.2 |
%) |
|
|
111,185 |
|
|
|
127,079 |
|
|
|
(12.5 |
%) |
Oxford Apparel |
|
|
78,082 |
|
|
|
83,348 |
|
|
|
(6.3 |
%) |
|
|
204,790 |
|
|
|
222,801 |
|
|
|
(8.1 |
%) |
Corporate and Other |
|
|
(171 |
) |
|
|
488 |
|
|
|
(135.0 |
%) |
|
|
(635 |
) |
|
|
1,948 |
|
|
|
(132.6 |
%) |
|
|
|
Total |
|
$ |
244,186 |
|
|
$ |
286,325 |
|
|
|
(14.7 |
%) |
|
$ |
747,648 |
|
|
$ |
823,332 |
|
|
|
(9.2 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tommy Bahama |
|
$ |
689 |
|
|
$ |
11,310 |
|
|
|
(93.9 |
%) |
|
$ |
38,315 |
|
|
$ |
58,750 |
|
|
|
(34.8 |
%) |
Ben Sherman |
|
|
3,242 |
|
|
|
5,595 |
|
|
|
(42.1 |
%) |
|
|
1,495 |
|
|
|
5,825 |
|
|
|
(74.3 |
%) |
Lanier Clothes |
|
|
4,482 |
|
|
|
2,618 |
|
|
|
71.2 |
% |
|
|
(6,894 |
) |
|
|
1,865 |
|
|
|
(469.7 |
%) |
Oxford Apparel |
|
|
7,346 |
|
|
|
7,376 |
|
|
|
(0.4 |
%) |
|
|
16,409 |
|
|
|
17,710 |
|
|
|
(7.3 |
%) |
Corporate and Other |
|
|
(2,875 |
) |
|
|
(3,723 |
) |
|
|
22.8 |
% |
|
|
(8,374 |
) |
|
|
(13,436 |
) |
|
|
37.7 |
% |
|
|
|
Total |
|
$ |
12,884 |
|
|
$ |
23,176 |
|
|
|
(44.4 |
%) |
|
$ |
40,951 |
|
|
$ |
70,714 |
|
|
|
(42.1 |
%) |
|
|
|
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.
THIRD QUARTER OF FISCAL 2008 COMPARED TO THREE MONTHS ENDED NOVEMBER 2, 2007
The discussion below compares our operating results for the third quarter of fiscal 2008 to
the three months ended November 2, 2007. Each percentage change provided below reflects the change
between these periods unless indicated otherwise.
Net sales decreased $42.1 million, or 14.7%, in the third quarter of fiscal 2008 compared to
the three months ended November 2, 2007 primarily as a result of the changes discussed below.
Tommy Bahamas net sales decreased by $19.2 million, or 18.7%. The decrease was primarily due
to the diminished traffic at our owned retail stores during the third
quarter of fiscal 2008 due to the
difficult retail environment.
Tommy Bahamas wholesale business was also impacted by the
difficult retail environment. This decrease in sales in our existing owned
retail stores and in our wholesale business was partially offset by retail sales at our 10 retail
stores opened after August 4, 2007, which was the first day of the three months ended November 2,
2007, and e-commerce sales which commenced in October 2007. We operated 79 Tommy Bahama retail
stores on November 1, 2008 compared to 72 retail stores on November 2, 2007. Unit sales decreased
23.1% due to the difficult retail environment at our own retail stores and our wholesale customers
stores during the third quarter of fiscal 2008. The average selling price per unit increased by
3.8%, 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 in
the current year.
Ben Shermans net sales decreased $8.4 million, or 18.1%. The decrease in net sales was
primarily due to lower sales in our United Kingdom wholesale business. The lower sales in the
United Kingdom were primarily due to our exit from certain lower tier customer accounts that were
still active in the three months ended November 2, 2007 as
part of our efforts to reposition the brand, the impact of the British pound being 12% weaker
compared to the U.S. dollar during the third quarter of fiscal 2008 compared to the prior year and
the impact of the current economic
24
environment. These declines were partially offset by increased
sales in other markets. During the third quarter of fiscal 2008, unit sales for Ben Sherman
declined 19.6% due primarily to the decline in the United Kingdom wholesale business noted above.
The average selling price per unit increased 1.9%, primarily due to obtaining higher price points
in the current year, partially offset by the impact of the weaker British pound.
Lanier Clothes net sales decreased $8.5 million, or 16.2%. The decrease was primarily due to
the winding down of the Oscar de la Renta and Nautica licensed businesses, the restructuring of the
Arnold Brant business and the impact of the weak demand in the tailored clothing market. These
items resulted in lower unit sales of 8.8% and lower average selling price per unit of 8.1%.
Oxford Apparels net sales decreased $5.3 million, or 6.3%. The decrease in net sales was
anticipated in connection with our strategy to focus on key product categories and exit
underperforming lines of business, but was also impacted by the current economic conditions. Unit
sales decreased by 3.8% primarily due to our exit from certain product categories and the current
economic conditions, and the average selling price per unit decreased by 2.6% due to changes in
product mix.
Gross profit decreased $18.6 million, or 16.6%, in the third quarter of fiscal 2008. The
decrease was due to lower sales in each operating group as described above, and lower gross
margins. Gross margins decreased to 38.3% of net sales during the third quarter of fiscal 2008 from
39.2% in the same period of the prior year. The decrease in gross margins was primarily due to the
decreased proportion of Tommy Bahama and Ben Sherman sales in the current year, which generally
have higher gross margins than our Lanier Clothes and Oxford Apparel businesses. Gross margins for
both the Tommy Bahama and Ben Sherman businesses were flat compared to the same period in the prior
year.
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 decreased $8.2 million, or 8.8%, in the third quarter of fiscal 2008. SG&A was
34.7% of net sales in the third quarter of fiscal 2008 compared to 32.4% in the three months ended
November 2, 2007. Reductions in employment and other costs in each operating group were partially
offset by increased expenses associated with operating additional Tommy Bahama retail stores and
approximately $0.6 million of severance costs in the third quarter of fiscal 2008. 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 decreased $0.5 million, or 43.6%, in the third quarter of
fiscal 2008. Intangible assets generally have a greater amount of amortization in the earlier
periods following an acquisition than in later periods and therefore decrease over time, which is
the primary reason for our lower amortization expense.
Royalties and other operating income decreased $0.4 million, or 8.3%, in the third quarter of
fiscal 2008. The decrease was due to decreased royalty income in Ben Sherman partially due to the
impact of the weaker British pound during the third quarter of fiscal 2008.
Operating income decreased $10.3 million, or 44.4%, in the third quarter of fiscal 2008
primarily due to the changes discussed below.
Tommy Bahamas operating income decreased $10.6 million, or 93.9%. The decrease was primarily
due to the decreased net sales resulting from the difficult retail environment described above.
Higher SG&A expenses associated with operating additional retail stores in the third quarter of
fiscal 2008 were partially offset by reductions in overhead in other areas, including employee
compensation costs.
Ben Shermans operating income decreased $2.4 million, or 42.1%. The decrease in operating
income was primarily due to lower sales in our United Kingdom wholesale business, lower royalty
income in the third quarter of fiscal 2008 and the weaker British pound during the third quarter of
fiscal 2008, each as discussed above. These declines were partially offset by the higher sales in
our United States wholesale business and reductions in overhead costs during the third quarter of
fiscal 2008.
25
Lanier Clothes operating income increased $1.9 million, or 71.2%. The increase in operating
income was primarily due to reductions to SG&A including reductions in royalty, selling,
advertising and employment costs partially offset by the reduction in gross profit from the lower
reported sales, as discussed above.
Oxford Apparels operating income was flat in the third quarter of fiscal 2008. The third
quarter of fiscal 2008 provided lower sales levels, as discussed above. The impact of the lower
sales was offset by a significant reduction in SG&A in the third quarter of fiscal 2008. The same
period of the prior year included charges totaling $1.0 million associated with the sale of Oxford
Apparels last owned manufacturing facility.
Corporate and Others operating loss decreased $0.8 million, or 22.8%. The decrease in the
operating loss was primarily due to the impact of lower corporate SG&A.
Interest expense, net increased $0.9 million, or 16.6%, in the third quarter of fiscal 2008.
The increase in interest expense was primarily due to the write off of $0.9 million of unamortized
financing costs during the third quarter of fiscal 2008 as a result of our amendment and
restatement of our U.S. Revolving Credit Agreement and higher average debt outstanding during the period.
The higher average debt outstanding was primarily a result of our $60 million accelerated share
repurchase program in November 2007 and our acquisition of Tommy Bahamas third-party buying agent
on February 1, 2008, both of which were initially funded through borrowings under our Prior Credit
Agreement. The additional borrowings to fund these two transactions were partially offset by positive
cash flow from operating activities and reductions in working capital subsequent to November 2,
2007. The impact on interest expense of the write off of unamortized financing costs and higher
average debt outstanding were partially offset by lower interest rates in the third quarter of
fiscal 2008.
Income Taxes were at an effective rate of 26% for the third quarter of fiscal 2008 compared to
23% for the three months ended November 2, 2007. The rates for both periods were impacted by
certain items which may not be present in future periods. The third quarter of fiscal 2008 was
impacted by lower projected earnings for fiscal 2008 which resulted in favorable permanent
differences having a greater impact on the overall tax rate. The three months ended November 2,
2007 benefitted from the change in the enacted tax rate in the United Kingdom. Based on current
year earnings projections, we believe that the annual effective tax rate, before the impact of any
discrete items, will be approximately 30%. 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 $0.31 in the third quarter of fiscal 2008
from $0.76 in the three months ended November 2, 2007, due to the changes in the operating results
discussed above, 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.
FIRST NINE MONTHS OF FISCAL 2008 COMPARED TO NINE MONTHS ENDED NOVEMBER 2, 2007
The discussion below compares our operating results for the first nine months of fiscal 2008
to the nine months ended November 2, 2007. Each percentage change provided below reflects the
change between these periods unless indicated otherwise.
Net sales decreased $75.7 million, or 9.2%, in the first nine months of fiscal 2008 compared
to the nine months ended November 2, 2007 primarily as a result of the changes discussed below.
Tommy Bahamas net sales decreased $24.1 million, or 6.9%. 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, particularly in the third quarter of fiscal 2008. This decrease in
wholesale sales and existing store retail sales was partially offset by increased retail sales at
our retail stores opened after February 3, 2007, which was the first day of the nine months ended
November 2, 2007, and sales on Tommy Bahamas e-commerce website which commenced in October 2007.
Unit sales decreased 11.5% due to the difficult retail environment at our own retail stores and our
wholesale customers stores during the first nine months of fiscal 2008. The average selling price
per unit increased
26
by 3.9%, 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 Shermans net sales decreased $15.1 million, or 12.3%. The decrease in net sales was
primarily due to lower sales in our United Kingdom wholesale business and our United States
wholesale business. The lower sales in the United Kingdom were primarily due to our exit from
certain lower tier customer accounts that were still active in the
nine months ended November 2,
2007 as part of our efforts to reposition the brand, the impact of the British pound being 5%
weaker during fiscal 2008 compared to the prior year and the impact of the current economic
environment. The decrease in our United States wholesale business was partially due to reduced
off-price sales in the current year and our exit from the Evisu apparel business during calendar
year 2007. These declines were partially offset by increased sales at our owned retail stores and
increased sales in markets outside of the United Kingdom and United States. During the first nine
months of fiscal 2008, unit sales for Ben Sherman declined by 12.9% due primarily to the decline in
the United Kingdom and United States wholesale businesses. The average selling price per unit
increased 0.6%, resulting primarily from a larger percentage of total Ben Sherman sales being sales
at our retail stores and obtaining higher price points in the current year, which were partially
offset by the impact of the weaker British pound.
Lanier Clothes net sales decreased $15.9 million, or 12.5%. The decrease was primarily due to
continuing weak demand in the tailored clothing market, the winding down of the Oscar de la Renta
and Nautica licensed businesses and the restructuring of the Arnold Brant business in fiscal 2008.
These factors resulted in a decrease in unit sales of 8.7% and a decrease in the average selling
price per unit of 4.1% during the first nine months of fiscal 2008.
Oxford Apparels net sales decreased $18.0 million, or 8.1%. The decrease in net sales was
generally anticipated in connection with our strategy to focus on key product categories and exit
underperforming lines of business, but was also impacted by the current economic conditions. Unit
sales decreased by 5.4% as a result of the exit of certain lines of business, and the average
selling price per unit decreased by 2.8% due to changes in product mix.
Gross profit decreased $29.2 million, or 8.7%, in the first nine months of fiscal 2008. The
decrease was due to lower sales in each operating group, as described above. Gross margins
increased to 41.0% of net sales during the first nine months of fiscal 2008 from 40.8% in the nine
months ended November 2, 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. Gross margins for both Tommy Bahama and Ben Sherman improved compared to
the nine months ended November 2, 2007, which was partially due to a greater proportion of retail
sales in the current year.
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 decreased $2.1 million, or 0.8%, in the first nine months of fiscal 2008. SG&A was 36.5%
of net sales in the first nine months of fiscal 2008 compared to 33.4% in the nine months ended
November 2, 2007. The decrease in SG&A was primarily due to reductions in employment costs and the
resolution of a contingent liability during fiscal 2008. These reductions were partially offset by
expenses associated with operating additional Tommy Bahama retail stores in fiscal 2008 and certain
restructuring charges incurred in the second quarter and third quarter of fiscal 2008. 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 $1.3 million, or 30.6%, in the first nine months of
fiscal 2008. The increase was primarily due to $3.3 million of impairment charges, taken in the
second quarter of fiscal 2008, 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 $1.4 million, or 9.3%, in the first nine months
of fiscal 2008. The decrease was primarily due to the nine months ended November 2, 2007 including
a $2.0 million gain related to
27
the sale of our Monroe, Georgia facility by the Oxford Apparel
Group. This decrease was partially offset by the sale of a trademark in the second quarter of
fiscal 2008.
Operating income decreased $29.8 million, or 42.1%, in the first nine months of fiscal 2008
primarily due to the changes discussed below.
Tommy Bahamas operating income decreased $20.4 million, or 34.8%. The decrease was primarily
due to reduced sales, as discussed above, and higher SG&A expenses due to operating costs of
additional retail stores which were partially offset by reductions in other overhead costs during
fiscal 2008.
Ben Shermans operating income decreased $4.3 million, or 74.3%. The decrease was primarily
due to lower sales in our United Kingdom and United States wholesale businesses, as discussed
above.
Lanier Clothes operating results declined $8.8 million. The decline in operating results was
primarily due to restructuring charges incurred in the second quarter of fiscal 2008 and lower
sales during fiscal 2008, as discussed above. In the second quarter of fiscal 2008, we incurred
restructuring charges totaling $9.2 million associated with our exit from 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.
Oxford Apparels operating income decreased $1.3 million, or 7.3%. The decrease was primarily
attributable to (1) a $2.0 million gain related to the sale of our Monroe, Georgia facility in
April 2007 and (2) the second quarter fiscal 2008 impairment of the Solitude trademark and certain
other costs associated with exiting the Solitude business. These items were partially offset by (1)
a significant reduction in overhead in fiscal 2008, (2) the resolution of a contingent liability in
the second quarter of fiscal 2008 and (3) charges totaling $1.0 million associated with the sale of
Oxford Apparels last owned manufacturing facility in the same period of the prior year.
The Corporate and Other operating loss decreased 37.7%. The decrease in the operating loss was
primarily due to the impact of LIFO accounting and lower employee compensation costs in the current
year.
Interest expense, net increased $2.8 million, or 17.2%, in the first nine months of fiscal
2008. The increase in interest expense was primarily due to a higher average debt outstanding
during the period and the write off of $0.9 million of unamortized financing costs as a result of
our amendment and restatement of our U.S. Revolving Credit Agreement in August 2008. The higher average debt
outstanding was primarily a result of our $60 million accelerated share repurchase program in
November 2007 and our acquisition of Tommy Bahamas third-party buying agent on February 1, 2008,
both of which were funded through borrowings under our Prior Credit Agreement. The additional
borrowings to fund these two transactions were partially offset by positive cash flow from operating
activities and reductions in working capital subsequent to November 2, 2007. The impact on interest
expense of the higher average debt outstanding and the write off of unamortized financing costs
were partially offset by lower interest rates in the third quarter of fiscal 2008.
Income Taxes were at an effective rate of 29% for the first nine months of fiscal 2008 and 28%
for the nine months ended November 2, 2007. The rates for both periods were impacted by certain
items which may not be present in future periods. The first nine months of fiscal 2008 benefitted
from lower operating income, which resulted in favorable permanent differences having a greater
impact on the overall tax rate. The nine months ended
November 2, 2007 benefitted 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 and a change in the enacted tax rate in the United Kingdom.
Diluted net earnings per common share decreased to $1.00 in the first nine months of fiscal
2008 from $2.20 in the nine months ended November 2, 2007, primarily due to the sales declines
resulting from the current economic conditions discussed above, and restructuring charges taken in
the second and third quarters of fiscal 2008. This decline in net earnings was partially offset by
the reduction in the weighted average shares outstanding during the
28
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, periodic interest payments related to our financing arrangements,
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 $8.0 million at November 1, 2008 and $12.0 million at
November 2, 2007.
Operating Activities
During the first nine months of fiscal 2008 and the nine months ended November 2, 2007, our
operations generated $61.3 million and $9.2 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 nine months of fiscal 2008 the significant changes in working capital from
February 2, 2008 were a decrease in inventory levels and an increase in accounts receivable, as
discussed below. In the nine months ended November 2, 2007, the significant changes in working
capital from February 2, 2007 were a decrease in inventory, an increase in accounts receivables, a
decrease in accounts payable and an increase in other non-current liabilities, each as discussed
below.
Our working capital ratio, which is calculated by dividing total current assets by total
current liabilities, was 2.14:1 and 2.93:1 at November 1, 2008 and November 2, 2007, respectively.
The change from November 2, 2007 was primarily due to the significant reductions in accounts
receivable and inventory and higher debt levels included in total current liabilities at November
1, 2008.
Receivables were $120.0 million and $156.4 million at November 1, 2008 and November 2, 2007,
respectively, representing a decrease of 23% which was primarily due to lower wholesale sales in
the last two months of the third quarter of fiscal 2008 compared to the months of September and
October of 2007.
Inventories were $108.6 million and $155.8 million at November 1, 2008 and November 2, 2007,
respectively, representing a decrease of 30%. Inventory for Tommy Bahama was comparable to the
prior year, primarily due to a tighter inventory buy in the current year, which offset the
inventory necessary to support additional retail stores. Ben Sherman inventory was lower in the
current year primarily due to the impact of the weaker British pound.
Lanier Clothes inventory levels decreased significantly in the current year as we have reduced
the amount of excess inventories from prior year levels and due to the impact of exiting certain
business lines, as discussed above. 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. Our days supply of inventory on hand, using FIFO basis, was 98 days and 118 days as of
November 1, 2008 and November 2, 2007, respectively, primarily due to the changes in the operating
group inventories discussed above.
Prepaid expenses were $21.1 million and $22.0 million at November 1, 2008 and November 2,
2007, respectively. The decrease in prepaid expenses was primarily due to the timing of payments
for certain operating
29
expenses and changes in deferred income taxes resulting from certain timing
differences related to employee compensation amounts.
Current liabilities were $120.3 million and $118.0 million at November 1, 2008 and November 2,
2007, respectively. The increase in current liabilities was primarily due to certain outstanding
debt being classified as current at November 1, 2008 partially offset by the reductions in payables
accounts primarily due to lower inventory levels.
Other non-current liabilities, which primarily consist of deferred rent and deferred
compensation amounts, were $50.6 million and $51.7 million at November 1, 2008 and November 2,
2007, respectively. The decrease was primarily due to the decline in the market values of certain
deferred compensation plans, which was partially offset by recognition of additional deferred rent
amounts during the 12 months subsequent to November 2, 2007.
Non-current deferred income taxes were $54.4 million and $66.7 million at November 1, 2008 and
November 2, 2007, respectively. The change resulted from the impact of changes in book to tax
differences for depreciation, deferred compensation and amortization of intangible assets, a
distribution from a foreign subsidiary in January 2008 and the weaker British pound at November 1,
2008 compared to the exchange rate on November 2, 2007.
Investing Activities
During the first nine months of fiscal 2008 investing activities used $17.9 million of cash
including $17.3 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 nine months ended November 1, 2007, investing activities used $44.5 million of
cash. These investing activities included $25.4 million of capital expenditures primarily related
to new retail stores and the payment of $22.1 million for the final earn-out payment for the 2003
Tommy Bahama acquisition in August 2007, 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, decreased from November 2, 2007 to November 1, 2008 primarily due to the
impact of the weaker British pound at November 1, 2008 compared to the prior year, depreciation
related to our property, plant and equipment, impairment and amortization of certain intangible
assets, changes in market values of deferred compensation investments and amortization of deferred
financing costs subsequent to November 1, 2007. These decreases were partially offset by the
increase in goodwill resulting from 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.
Financing Activities
During the first nine months of fiscal 2008, financing activities used $49.5 million of cash.
The cash flow provided by our operating activities in excess of cash flows used in investing
activities and the four quarterly dividends paid totaling $11.6 million were used to repay amounts
outstanding under our U.S. Revolver. During the third quarter of fiscal 2008, we paid $1.7 million
of financing costs associated with the amendment and restatement of our U.S. Revolving Credit
Agreement.
During the nine months ended November 1, 2007, financing activities provided $16.5 million of
cash as we borrowed additional funds to supplement cash flows from operating activities and to pay
three quarterly dividends totaling $9.6 million during the nine month period. Financing activities
for the period also included cash received related to the exercise of employee stock options during
the nine month period ended November 2, 2007 totaling $3.9 million.
On December 8, 2008, our board of directors approved a cash dividend of $0.18 per share
payable on January 30, 2009 to shareholders of record as of the close of business on January 15,
2009. 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,
30
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 $235.6 million and $222.0 million as of November 1, 2008
and November 2, 2007, respectively. The increase was primarily due to the borrowings under our
Prior Credit Agreement to fund our $60 million share repurchase program 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
November 2, 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 November 1, 2008:
|
|
|
|
|
|
|
November 1, 2008 |
|
|
$175 million U.S. Secured Revolving Credit Facility (U.S. Revolving Credit
Agreement), which is limited to a borrowing base consisting of specified
percentages of eligible categories of assets, accrues interest (4.0% at
November 1, 2008), unused line fees and letter of credit fees based upon a
pricing grid which is tied to average unused availability, requires interest
payments monthly with principal due at maturity (August 15, 2013) and is
secured by a first priority security interest in the accounts receivable
(other than royalty payments in respective 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
of Oxford Industries, Inc. and its consolidated domestic subsidiaries(1) |
|
$ |
34,138 |
|
|
£12 million Senior Secured Revolving Credit Facility (U.K. Revolving Credit
Agreement), which accrues interest at the banks base rate plus 1.35% (5.5%
at November 1, 2008), requires interest payments monthly with principal
payable on demand or at maturity (August 2009) and is collateralized by
substantially all of the United Kingdom assets of Ben Sherman |
|
|
1,900 |
|
|
$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 |
|
|
(452 |
) |
|
Total debt |
|
|
235,586 |
|
|
Short-term debt and current maturities of long-term debt |
|
|
(16,038 |
) |
|
Long-term debt, less short-term debt and current maturities of long-term debt |
|
$ |
219,548 |
|
|
|
|
|
(1) |
|
$20.0 million of the amount outstanding under the U.S. Revolving Credit Agreement at
November 1, 2008 was classified as long-term debt. The amount classified as long-term debt
represents the minimum amount we anticipate being outstanding under the U.S. Revolving
Credit Agreement in fiscal 2008. |
U.S. Revolving Credit Agreement
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 previously 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.
31
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 must not be less than 1.0 to
1.0 for the immediately preceding 12 fiscal months for which financial statements have been
delivered. 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, 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.
32
Availability, Restrictions and Covenants
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
November 1, 2008, approximately $27 million of trade letters of credit and other limitations on
availability were outstanding against the U.S. Revolving Credit Agreement and the U.K. Revolving
Credit Agreement. On November 1, 2008, we had approximately $117 million and $14 million in unused
availability under the U.S. Revolving Credit Agreement and the U.K. Revolving Credit Agreement,
respectively.
Our U.S. Revolving Credit Agreement and our Senior Unsecured Notes include certain debt
covenant restrictions, some of which are not triggered unless certain availability thresholds are
not met, including covenants requiring us or our subsidiaries to maintain certain financial ratios
that we believe are customary for similar facilities. During the third quarter of fiscal 2008, no
financial covenant testing was required pursuant to our U.S. Revolving Credit Agreement as the
minimum availability threshold was not met during the quarter. As of November 1, 2008, we were
compliant with all covenants related to our U.S. Revolving Credit Agreement and our Senior
Unsecured Notes.
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, fair market value of shares of our common stock issued as
consideration for certain permitted acquisitions and certain other items, all subject to the terms
and conditions of the indenture.
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 May 31, 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, we may from time to time seek to retire or purchase all
or some portion of our outstanding Senior Unsecured Notes through
open market purchases, privately negotiated transactions or
otherwise. Such repurchases, if any, will depend on prevailing market
conditions, our liquidity requirements, contractual restrictions and
other factors. The amounts involved may be material.
Our debt-to-total-capitalization ratio was 38%, 40%, and 32% at November 1, 2008, February 2,
2008 and November 2, 2007, respectively. The change in this ratio from November 2, 2007 was
primarily a result of the reduction in capital as a result of our $60 million share repurchase
program. Our debt level and ratio of debt-to-total-capitalization in future periods may not be
comparable to historical amounts as we continuously assess and periodically make changes to our
capital structure. In the future, we may (1) make additional investments, (2) make changes to our
debt facilities, (3) repurchase shares, (4) repurchase Senior Unsecured Notes or (5) make other
changes impacting our capital structure. On September 8, 2008, our board of directors authorized
the repurchase by us of up to 0.5 million shares of our common stock. No shares have been
repurchased pursuant to this authorization as of November 1, 2008.
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 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. 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
33
able to refinance the facilities and debt with terms available in the market at that time,
which may not be as favorable as the terms of the current agreements.
Our contractual obligations as of November 1, 2008 have not changed significantly from the
contractual obligations outstanding at February 2, 2008 other than the amendment and restatement of
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 $22
million, including $17.3 million incurred during the first nine months of fiscal 2008. These
expenditures primarily relate to the continued expansion of our Tommy Bahama retail operations and
the implementation of new integrated financial systems. We anticipate that our capital expenditures
for fiscal 2009 will be less than $10 million.
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.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The discussion and analysis of our financial condition and results of operations are based
upon our unaudited condensed consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States. The preparation of
these financial statements requires us to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses and related disclosures. On an ongoing basis,
we evaluate our estimates, including those related to receivables, inventories, goodwill,
intangible assets, income taxes, contingencies and other accrued expenses. We base our estimates on
historical experience and on various other assumptions 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. We believe that we have
appropriately applied our critical accounting policies. However, in the event that inappropriate
assumptions or methods were used relating to the critical accounting policies below, our
consolidated statements of earnings could be misstated. There have not been any significant changes
to the application of our critical accounting policies and estimates during fiscal 2008.
The detailed summary of significant accounting policies is included in Note 1 to our
consolidated financial statements contained in our Form 10-KT for the eight-month transition period
ended February 2, 2008. The following is a brief discussion of the more significant accounting
policies, estimates and methods we use.
Revenue Recognition and Accounts Receivable
Our revenue consists of wholesale, retail store, e-commerce and restaurant sales. We consider
revenue realized or realizable and earned when the following criteria are met: (1) persuasive
evidence of an agreement exists, (2) delivery has occurred, (3) our price to the buyer is fixed and
determinable, and (4) collectibility is reasonably assured.
In the normal course of business we offer certain discounts or allowances to our wholesale
customers. Wholesale operations sales are recorded net of such discounts, allowances, advertising
support not specifically relating to the reimbursement for actual advertising expenses by our
customers and provisions for estimated returns. As certain allowances and other deductions are not
finalized until the end of a season, program or other event which may not have occurred yet, we
estimate such discounts and allowances on an ongoing basis. Significant considerations in
determining our estimates for discounts, returns and allowances for wholesale customers include
historical and current trends, projected seasonal results, an evaluation of current economic
conditions and retailer performance.
Actual discounts and allowances to our wholesale customers have not differed materially from
our estimates in prior
34
periods. As of November 1, 2008, our total reserves for discounts and
allowances were approximately $17.6 million, and therefore, if the allowances changed by 10% it
would have a pre-tax impact of $1.8 million on net earnings.
In circumstances where we become aware of a specific customers inability to meet its
financial obligations, a specific reserve for bad debts is taken as a reduction to accounts
receivable to reduce the net recognized receivable to the amount reasonably expected to be
collected. For all other customers, we recognize estimated reserves for bad debts based on our
historical collection experience, the financial condition of our customers, an evaluation of
current economic conditions and anticipated trends, each of which are subjective and require
certain assumptions. Actual charges for uncollectible amounts have not differed materially from our
estimates in prior periods. As of November 1, 2008, our allowance for doubtful accounts was
approximately $1.5 million, and therefore, if the allowance for doubtful accounts changed by 10% it
would have a pre-tax impact of approximately $0.2 million on net earnings.
Inventories
For operating group reporting, inventory is carried at the lower of FIFO cost or market. We
continually evaluate the composition of our inventories for identification of distressed inventory.
In performing this evaluation we consider slow-turning products, prior seasons fashion products
and current levels of replenishment program products as compared to future sales estimates. For
wholesale inventory, we estimate the amount of goods that we will not be able to sell in the normal
course of business and write down the value of these goods as necessary. For retail inventory, we
provide an allowance for shrinkage and goods expected to be sold below cost. As the amount to be
ultimately realized for the goods is not necessarily known at period end, we must utilize certain
assumptions considering historical experience, the age of the inventory, inventory quantity,
quality and mix, historical sales trends, future sales projections, consumer and retailer
preferences, market trends and general economic conditions.
For consolidated financial reporting, approximately $32.9 million of our inventories are
valued at the lower of LIFO cost or market after deducting the $39.1 million LIFO reserve as of
November 1, 2008. Approximately $75.7 million of our inventories are valued at the lower of FIFO
cost or market as of November 1, 2008. LIFO inventory calculations are made on a legal entity basis
which does not correspond to our operating group definitions, but generally our inventories valued
at the lower of LIFO cost or market relate to our historical businesses included in the Lanier
Clothes and Oxford Apparel groups and our inventories valued at the lower of FIFO cost or market
relate to recently acquired businesses. LIFO inventory accounting adjustments are not allocated to
the respective operating groups. LIFO reserves are based on the Producer Price Index as published
by the United States Department of Labor. We write down inventories valued at the lower of LIFO
cost or market when LIFO exceeds market value. The impact of accounting for inventories on the LIFO
method is reflected in Corporate and Other for operating group reporting purposes included in
Note 4 to our unaudited condensed consolidated financial statements and in the results of
operations in our Managements Discussion and Analysis of Financial Condition and Results of
Operations included in this report.
A 10% change in the amount of markdowns for inventory valued on the lower of FIFO cost or
market method would have a pre-tax impact of approximately $0.4 million on net earnings. A change
in the markdowns of our inventory valued at the lower of LIFO cost or market method would not be
expected to have a material impact on our consolidated financial statements due to the existence of
our LIFO reserve of $39.1 million as of November 1, 2008. A decrease in inventory levels at the end
of fiscal 2008 compared to inventory balances as of February 2, 2008 could result in a material
impact on our consolidated financial statements as such a change may erode portions of our earliest
base year layer for purposes of making our annual LIFO computation.
Goodwill, net
Goodwill is recognized as the amount by which the cost to acquire a company or group of assets
exceeds the fair value of assets acquired less any liabilities assumed at acquisition. Such
goodwill is allocated to the respective reporting unit at the time of acquisition. Goodwill is not
amortized but instead is evaluated for impairment
annually or more frequently if events or circumstances indicate that the goodwill might be
impaired. The evaluation of the recoverability of goodwill includes valuations of each applicable
underlying business using fair value techniques
35
and market comparables which may include a
discounted cash flow analysis or an independent appraisal. Significant estimates, some of which
require subjective judgment, included in such a valuation include future cash flow projections of
the business, which are based on our future expectations for the business. Additionally, the
discount rate used in this analysis is an estimate of the risk-adjusted market-based cost of
capital.
In addition to the annual impairment test, we use certain indicators to evaluate whether the
carrying value of goodwill and other intangible assets (see Intangible Assets, net below) may not
be recoverable, such as (i) negative operating cash flow or a forecast that demonstrates declines
in the operating cash flow of a reporting unit or the inability of a reporting unit to improve its
operations to appropriate levels, (ii) a significant adverse change in the business climate that
could affect the value of an entity or (iii) whether the book value of our shareholders equity
continues to be in excess of our market capitalization. A decrease in our market capitalization
resulting from a decrease in our stock price, or a negative long-term performance outlook, could
cause the carrying value of our reporting units to exceed their fair values, which may result in an
impairment loss.
As of November 1, 2008, the carrying value of our net assets exceeded the market
capitalization of our outstanding common stock. As of November 1, 2008, we do not believe that
there have been changes in events or circumstances which would more likely than not reduce the
carrying value of a reporting unit below its carrying amount. Further, we believe the decline in
market capitalization as of November 1, 2008 does not necessarily indicate impairment, as the
decline has been relatively short in duration.
If our analysis indicates an impairment of goodwill and other intangible assets (see
Intangible Assets, net below) balances, the impairment is recognized in the consolidated financial
statements. Such estimates of future operating results, discount rates and other factors involve
significant uncertainty, and if our plans or anticipated results change, the estimates and
assumptions used in our analysis could change which could result in an impairment charge. The
impact of a goodwill or other intangible asset impairment charge on our financial statements could
be significant.
Intangible Assets, net
At acquisition, we estimate and record the fair value of purchased intangible assets, which
primarily consist of trademarks and trade names, license agreements and customer relationships. The
fair values and useful lives of these intangible assets are estimated based on managements
assessment as well as independent third party appraisals in some cases. Such valuation may include
a discounted cash flow analysis of anticipated revenues or cost savings resulting from the acquired
intangible asset using an estimate of a risk-adjusted market-based cost of capital as the discount
rate.
Amortization of intangible assets with finite lives, which consist of license agreements,
certain trademarks, customer relationships and covenants not to compete, is recognized over their
estimated useful lives using a method of amortization that reflects the pattern in which the
economic benefits of the intangible assets are consumed or otherwise realized. We amortize our
intangible assets with finite lives for periods of up to 20 years. The determination of an
appropriate useful life for amortization is based on our plans for the intangible asset as well as
factors outside of our control. Intangible assets with finite lives are reviewed for impairment
periodically if events or changes in circumstances indicate that the carrying amount may not be
recoverable. If expected future undiscounted cash flows from operations are less than their
carrying amounts, an asset is determined to be impaired and a loss is recorded for the amount by
which the carrying value of the asset exceeds its fair value. During the first nine months of
fiscal 2008, we recognized approximately $2.2 million of expense for the amortization of intangible
assets, excluding the $3.3 million of intangible asset impairment charges recognized in the second
quarter of fiscal 2008. If the useful lives assigned to these intangible assets with finite lives
had been reduced by 10% at acquisition, the amount of additional amortization expense would have
been approximately $0.2 million during the first nine months of fiscal 2008.
Trademarks with indefinite lives are not amortized but instead evaluated for impairment
annually or more frequently if events or circumstances indicate that the intangible asset might be
impaired. The evaluation of the recoverability of trademarks with indefinite lives includes
valuations based on a discounted cash flow analysis utilizing the relief from royalty method. This
approach is dependent upon a number of uncertain factors including
36
estimates of future net sales,
growth rates, royalty rates for the trademarks and discount rates. Such estimates involve
significant uncertainty, and if our plans or anticipated results change, the impact on our
financial statements could be significant. If this analysis indicates an impairment of a trademark
with an indefinite useful life, the amount of the impairment is recognized in the consolidated
financial statements based on the amount that the carrying value exceeds the estimated fair value
of the asset.
Income Taxes
Significant judgment is required in determining the provision for income taxes for a company
with global operations. The ultimate tax outcome may be uncertain for many transactions. Our
provisions are based on federal and projected state statutory rates and take into account our
quarterly assessment of permanent book/tax differences, income tax credits and uncertain tax
positions. We estimate the effective tax rate for the full fiscal year and record a quarterly
income tax provision in accordance with the anticipated annual rate. As the fiscal year progresses,
the estimate is refined based upon actual events and earnings by jurisdiction and to reflect
changes in our judgment of the likely outcome of uncertain tax positions. This estimation process
periodically results in a change to the expected effective tax rate for the fiscal year. When this
occurs, we adjust the income tax provision during the quarter in which the change in estimate
occurs so that the year-to-date provision reflects the expected annual rate. Income tax expense
may also be adjusted for discrete events occurring during the year, such as the enactment of tax
rate changes or changes in reserves for uncertain tax positions, which are reflected in the quarter
that the changes occur. In the twelve months ended February 2, 2008, an increase in the effective
tax rate percentage from 28% to 29% would have reduced net earnings by approximately $0.6 million.
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 12 months ended February 2, 2008 was 27%, 23%, 26% and 24%,
respectively, and the percentage of earnings before income taxes by quarter for the 12 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 12 months ended
February 2, 2008 were impacted by the weak economic environment which has continued and worsened 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.
37
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 third
quarter of fiscal 2008 that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In the ordinary course of business, we may become subject to litigation or claims. We are not
currently a party to any litigation or regulatory 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
In addition to the other information set forth in this report, investors 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 could materially affect our business,
financial condition or operating results. The risks described in our Form 10-KT for the eight-month
transition period ended February 2, 2008 are not the only risks facing our company.
Due to the current global economic crisis, our business has been, and may continue to be,
adversely impacted.
The recent deterioration of the general economic environment, distress in the financial
markets and general uncertainty about the economy is having a significant negative impact on
businesses and consumers around the world, including our own business. The impact of the economy on
the operations or liquidity of any party with which we conduct our business, including suppliers,
customers, trademark licensees and lenders, among others, has adversely impacted, and may continue
to adversely impact, our business. Significant changes in the operations or liquidity for any of
the parties with which we conduct our business, now or in the future, or in the access to capital
markets for us or any such parties, could result in lower demand for our products, lower sales,
higher costs or other disruptions in our business. In addition, weak economic conditions have
reduced, and may continue to reduce, discretionary consumer spending, which may adversely impact
the demand for our products and reduce operating leverage.
We are unsure of the duration and severity of this economic crisis. However, if the crisis
persists or worsens and economic conditions remain weak over a long period, the likelihood of the
crisis having a significant impact on our business increases.
If any of the risks described in this report or in our Form 10-KT for the eight-month
transition period ended February 2, 2008 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 third quarter of fiscal 2008, we did not make any unregistered sales of our
securities. |
38
|
(c) |
|
The table below summarizes our stock repurchases during the third quarter of fiscal
2008. |
|
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|
|
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|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Number of |
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Maximum |
|
|
|
|
|
|
|
|
|
|
Shares |
|
Number of Shares |
|
|
|
|
|
|
Average |
|
Purchased as |
|
That May Yet be |
|
|
Total Number |
|
Price |
|
Part of Publicly |
|
Purchased Under |
|
|
of Shares |
|
Paid per |
|
Announced Plans |
|
the Plans or |
Fiscal Month |
|
Purchased |
|
Share |
|
or Programs |
|
Programs |
|
August (8/3/08-8/30/08) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September (8/31/08-10/4/08) (1) |
|
|
113 |
|
|
$ |
24.00 |
|
|
|
|
|
|
|
|
|
October (10/5/08-11/1/08) |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
113 |
|
|
$ |
24.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
(1) |
|
We have certain stock incentive plans as described in Note 7 to our consolidated financial
statements included in our 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 the third quarter
of fiscal 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. As of November 1, 2008, no shares have been repurchased
pursuant to this authorization.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
On December 8, 2008, our Board of Directors amended the Bylaws of Oxford Industries, Inc. to
generally enhance the advance notice provisions of the By-Laws of Oxford Industries, Inc. for
shareholders seeking to nominate directors or propose other business at an annual meeting to ensure
that such provisions are clear and unambiguous in light of recent developments in corporate law.
The amendments became effective as of December 8, 2008. The amendments, among other things:
|
|
|
Explicitly provide that the procedures relating to all shareholder nominations and
other proposals of business are the exclusive means for a shareholder to submit such
business other than proposals governed by Rule 14a-8 under the Securities Exchange Act,
which provides its own procedural requirements. |
|
|
|
|
Simplify the advance notice deadlines establishing when a shareholder must notify us
that it intends to nominate directors or propose other business at an annual meeting.
The By-Laws of Oxford Industries, Inc., as now in effect, provide that any such notice
must be delivered to our Secretary at our principal executive offices not less than 90
days and not more than 120 days prior to the anniversary of the previous years annual
meeting. Our 2008 annual meeting of shareholders took place on June 16, 2008. Under the
By-Laws of Oxford Industries, Inc., as now in effect, for a shareholders notice to be
timely for our 2009 annual meeting of shareholders, expected to be held in June 2009,
the shareholders notice must be delivered not earlier than February 16, 2009 and not
later than March 18, 2009. |
|
|
|
|
Require that, if the date of an annual meeting is more than 30 days earlier or 30
days later than the anniversary of the previous years annual meeting, in order to be
timely, notice by a shareholder |
39
|
|
|
seeking to nominate directors or propose other business
at an annual meeting must be delivered not later than the later of (1) the 10th day
following public announcement of the date of the annual meeting or (2) 90 days prior to
the annual meeting. |
|
|
|
|
Provide that a shareholder making a director nomination or other proposal of business
at an annual meeting of shareholders pursuant to the By-Laws of Oxford Industries, Inc.
must be a shareholder of record at the time of giving the required notice, as well as at
the time of the annual meeting, and must be eligible to vote at the annual meeting. |
|
|
|
|
Expand the required disclosure in the shareholders advance notice to include, among
other things, all ownership interests, such as derivatives, hedged positions and other
economic and voting interests, and other relevant information with respect to persons or
entities affiliated with the shareholder. The By-Laws of Oxford Industries, Inc., as now
in effect, also require that a shareholder update and supplement any such information as
of the record date of the meeting and shortly before the meeting. |
|
|
|
|
Clarify that the business to be transacted at a special meeting of shareholders is
limited to the purpose(s) stated in our notice of meeting to shareholders. |
The foregoing summary of the amendments to the By-Laws of Oxford Industries, Inc. is qualified
in its entirety by reference to the By-Laws of Oxford Industries, Inc., as amended, which are filed
with this report on Form 10-Q as Exhibit 3(b) and are incorporated in this Item 5 by reference.
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.* |
|
|
10.1 |
|
Second Amended and Restated Credit Agreement, dated as of August 15, 2008, by and among
Oxford Industries, Inc., Tommy Bahama Group, Inc., the Persons party thereto from time to
time as Guarantors, the financial institutions party thereto from time to time as lenders,
the financial institutions party thereto from time to time as Issuing Banks and SunTrust
Bank, as administrative agent. Incorporated by reference to Exhibit 10.1 to the Oxford
Industries, Inc. Form 8-K filed on August 19, 2008. |
|
|
10.2 |
|
Amended and Restated Pledge and Security Agreement, dated as of August 15, 2008, among
Oxford Industries, Inc., Tommy Bahama Group, Inc., Ben Sherman Clothing, Inc., Lionshead
Clothing Company, Oxford Caribbean, Inc., Oxford Garment, Inc., Oxford International, Inc.,
Oxford of South Carolina, Inc., Piedmont Apparel Corporation, SFI of Oxford Acquisition
Corporation, Tommy Bahama Beverages, LLC, Tommy Bahama R&R Holdings, Inc., Tommy Bahama
Texas Beverages, LLC, Viewpoint Marketing, Inc., Oxford Lockbox, Inc. and those additional
entities grantor thereto from time to time, as Grantors, and SunTrust Bank, as
administrative agent. Incorporated by reference to Exhibit 10.2 to the Oxford Industries,
Inc. Form 8-K filed on August 19, 2008. |
|
|
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. |
40
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.
|
|
|
|
|
December 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) |
|
|
41
EX-3.(B)
Exhibit 3(b)
As Amended
Through December 8, 2008
BYLAWS
OF
OXFORD INDUSTRIES, INC.
ARTICLE I
STOCKHOLDERS
Section 1. Annual Meetings. The Annual Meeting of the stockholders for the election of
Directors and for the transaction of such other business as may properly come before the meeting
shall be held at such place, either within or without the State of Georgia, on such date, and at
such time, as the Board of Directors may by resolution provide, or if the Board of Directors fails
to provide for such meeting by action by November 1 of any year, then such meeting shall be held at
the principal office of the Company in Atlanta, Georgia, at 11 a.m. on the third Wednesday in
November of each year, if not a legal holiday under the laws of the State of Georgia, and if a
legal holiday, on the next succeeding business day.
Section 2. Special Meetings. Special meetings of the stockholders may be called by the
persons specified in the Companys Articles of Incorporation. Such meetings may be held at such
place, either within or without the State of Georgia, as is stated in the call and notice thereof.
Business transacted at any special meeting of stockholders shall be limited to the purposes stated
in the notice of such meeting delivered or mailed by the Secretary of the Company.
Section 3. Notice of Meeting. A written or printed notice stating the place, day and hour
of the meeting, and in case of a special meeting, the purpose or purposes for which the meeting is
called, shall be delivered or mailed by the Secretary of the Company to each holder of record of
stock of the Company at the time entitled to vote, at his address as appears upon the record of the
Company, not less than 10 nor more than 50 days prior to such meeting. If the Secretary fails to
give such notice within 20 days after the call of a meeting the person or persons calling such
meeting, or any person designated by them, may give such notice. Notice of such meeting may be
waived in writing by any stockholder. Attendance at any meeting, in person or by proxy, shall
constitute a waiver of notice of such meeting. Notice of any adjourned meeting of the stockholders
shall not be required.
Section 4. Quorum. A majority in interest of the outstanding capital stock of the Company
represented either in person or by proxy shall constitute a quorum for the transaction of business
at any annual or special meeting of the stockholders. If a quorum shall not be present, the
holders of a majority of the stock represented may adjourn the meeting to some later time. When a
quorum is present, a vote of a majority of the stock represented in person or by proxy shall
determine any question, except as otherwise provided by the Articles of Incorporation, these
Bylaws, or by law.
Section 5. Proxies. A stockholder may vote, either in person or by proxy duly executed in
writing by the stockholder. A proxy for any meeting shall be valid for any adjournment of such
meeting.
Section 6. Record Date. The Board of Directors shall have power to close the stock
transfer books of the Company for a period not exceeding seventy days preceding the date of any
meeting of stockholders or the date for payment of any
dividend or the date for allotment of rights or the date when any change or conversion or exchange
of capital stock shall go
into effect; provided, however, that in lieu of closing the stock
transfer books as aforesaid, the Board of Directors may fix in advance a date, not exceeding
seventy days preceding the date of any meeting of stockholders or the date for the payment of any
dividend, or the date for allotment of rights, or the date when any change or conversion or
exchange of capital stock shall go into effect, as a record date for the determination of the
stockholders entitled to such notice of, and to vote at, any such meeting, or entitled to receive
payment of any such dividend or to any such allotment of rights, or to exercise the rights in
respect of any such change, conversion or exchange of capital stock, and in such case only such
stockholders as shall be stockholders of record on the date so fixed shall be entitled to such
notice of, and to vote at, such meeting, or to receive payment of such dividend, or to receive such
allotment of rights, or to exercise such rights, as the case may be, notwithstanding any transfer
of any stock on the books of the Company after any such record date fixed as aforesaid.
Section 7. Business at Annual Meetings of Stockholders.
(a) Only such business (other than nominations of persons for election to the Board of
Directors, which must be made in compliance with and is governed exclusively by Section 8 of
Article II of these Bylaws) shall be conducted at an Annual Meeting of the stockholders as shall
have been brought before the meeting (i) specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the Board of Directors, (ii) by or at the direction of the
Board of Directors, or (iii) by any stockholder of the Company who (A) was a stockholder of record
at the time of giving of notice provided for in this Section 7 and at the time of the meeting, (B)
is entitled to vote at the meeting, and (C) complies with the notice procedures set forth in this
Section 7. For the avoidance of doubt, the foregoing clause (iii) of this Section 7(a) shall be
the exclusive means for a stockholder to propose such business (other than business included in the
Companys proxy materials pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as
amended) before an Annual Meeting of the stockholders.
(b) For business (other than nominations of persons for election to the Board of Directors,
which must be made in compliance with and is governed exclusively by Section 8 of Article II of
these Bylaws) to be properly brought before an Annual Meeting of the stockholders by a stockholder,
the stockholder must have given timely notice thereof in proper written form as described in
Section 7(c) of Article I of these Bylaws to the Secretary of the Company and such business must
otherwise be appropriate for stockholder action under the provisions of the Georgia Business
Corporation Code (the Code). To be timely, a stockholders notice for such business must be
delivered to the Secretary of the Company at the principal executive offices of the Company in
proper written form not less than ninety (90) days and not more than one hundred twenty (120) days
prior to the first anniversary of the preceding years Annual Meeting of the stockholders;
provided, however, that if and only if the Annual Meeting of the stockholders is not scheduled to
be held within a period that commences thirty (30) days before such anniversary date and ends
thirty (30) days after such anniversary date, such stockholders notice must be delivered by the
later of (i) the tenth (10th) day following the day of the Public Announcement (as
defined in Section 7(g) of Article I of these Bylaws) of the date of the Annual Meeting of the
stockholders or (ii) the date which is ninety (90) days prior to the date of the Annual Meeting of
the stockholders. In no event shall any adjournment, deferral or postponement of an Annual Meeting
of the stockholders or the announcement thereof commence a new time period for the giving of a
stockholders notice as described above.
(c) To be in proper written form, a stockholders notice to the Secretary of the Company shall
set forth as to each matter of business the stockholder proposes to bring before the Annual Meeting
of the stockholders (i) a brief description of the business desired to be brought before the annual
meeting (including the specific text of any resolutions or actions proposed for consideration and
if such business includes a proposal to amend the Companys Articles of Incorporation or these
Bylaws, the specific language of the proposed amendment) and the reasons for conducting such
business at the annual meeting, (ii) the name and address of the stockholder proposing such
business, as they appear on the Companys books, the name and residential address (if different
from the Companys books) of such proposing stockholder, and the name and address of any
Stockholder Associated Person (as defined in Section 7(g) of
Article I of these Bylaws) covered by
clauses (iii), (iv) and (v) below, (iii) the class and number of shares of stock of the Company
which are directly or indirectly held of record or beneficially owned by such stockholder or by any
Stockholder Associated Person with respect to the Companys securities, a description of any
Derivative Positions (as defined in Section 7(g) of Article I of these Bylaws) directly or
indirectly held or beneficially held by the stockholder or any Stockholder Associated Person, and
whether and the extent to which a Hedging Transaction (as defined in Section 7(g) of Article I of
these Bylaws) has been entered into by or on behalf of such stockholder or any Stockholder
Associated Person, (iv) a description of all arrangements or understandings between such
stockholder or any Stockholder Associated Person and any other person or entity (including their
names) in connection with the proposal of such business by such stockholder and any material
interest of such stockholder, any Stockholder Associated Person or such other person or entity in
such business, (v) a representation as to whether such stockholder or any Stockholder Associated
Person intends to deliver a proxy statement or form of proxy to holders of at least the percentage
of the Companys outstanding shares required to approve the proposal or otherwise to solicit
proxies from stockholders in support of the proposal, and (vi) such other information as the Board
of Directors reasonably determines is necessary to consider the proposal. In addition, any
stockholder who submits a notice pursuant to this Section 7 is required to update and supplement
the information disclosed in such notice, if necessary, in accordance with Section 7(e) of Article
I of these Bylaws.
(d) Notwithstanding anything in these Bylaws to the contrary, no business (other than
nominations of persons for election to the Board of Directors, which must be made in compliance
with and is governed exclusively by Section 8 of Article II of these Bylaws) shall be conducted at
an Annual Meeting of the stockholders except in accordance with the procedures set forth in this
Section 7. At an Annual Meeting of the stockholders, the presiding officer of the meeting shall
determine, if the facts warrant, that business was not properly brought before the meeting and in
accordance with the provisions prescribed by these Bylaws, and if such officer should so determine,
the such officer shall so declare to the meeting, and any such business not properly brought before
the meeting shall not be transacted.
(e) Any stockholder who submits a notice of proposal for business pursuant to this Section 7
is required to update and supplement the information disclosed in such notice, if necessary, so
that the information provided or required to be provided in such notice shall be true and correct
as of the record date for the Annual Meeting of the stockholders and as of the date that is ten
(10) business days prior to such annual meeting or any adjournment or postponement thereof, and
such update and supplement shall be delivered to the Secretary of the Company at the principal
executive offices of the Company not later than five (5) business days after the record date for
the Annual Meeting of the stockholders (in the case of the update and supplement required to be
made as of the record date), and not later than eight (8) business days prior to the date for the
meeting of stockholders or any adjournment or postponement thereof (in the case of the update and
supplement required to be made as of ten (10) business days prior to the meeting of stockholders or
any adjournment or postponement thereof).
(f) In addition to the foregoing provisions of this Section 7, a stockholder shall also comply
with all applicable requirements of the Securities Exchange Act of 1934, as amended, and the rules
and regulations thereunder with respect to the matters set forth in these Bylaws; provided,
however, that any references in these Bylaws to the Securities Exchange Act of 1934, as amended, or
the rules and regulations promulgated thereunder are not intended to and shall not limit the
requirements of these Bylaws applicable to proposals as to any other business to be considered
pursuant to these Bylaws regardless of the stockholders intent to utilize Rule 14a-8 promulgated
under the Securities Exchange Act of 1934, as amended. Nothing in this Section 7 shall be deemed
to affect any rights of stockholders to request inclusion of proposals in the Companys proxy
statement pursuant to Rule 14a-8 promulgated under the Securities Exchange Act of 1934, as amended.
(g) For purposes of Sections 7 of Article I of these Bylaws and Section 8 of Article II of
these Bylaws, the term:
(i) Derivative Positions means, with respect to a stockholder or any Stockholder
Associated Person, any derivative positions including, without limitation, any short
position, profits interest, option, warrant, convertible security, stock appreciation right,
or similar right with an exercise or conversion privilege or a
settlement payment or mechanism at a price related to any class or series of shares of
the Company
or with a value derived in whole or in part from the value of any class or
series of shares of the Company, whether or not such instrument or right shall be subject to
settlement in the underlying class or series of capital stock of the Company
or otherwise
and any performance-related fees to which such stockholder or any Stockholder Associated
Person is entitled based, directly or indirectly, on any increase or decrease in the value
of shares of capital stock of the Company;
(ii) Hedging Transaction means, with respect to a stockholder or any Stockholder
Associated Person, any hedging or other transaction (such as borrowed or loaned shares) or
series of transactions, or any other agreement, arrangement or understanding, the effect or
intent of which is to increase or decrease the voting power of such stockholder or any
Stockholder Associated Person with respect to the Companys securities;
(iii) Public Announcement means disclosure in a press release reported by the Dow
Jones News Service, Associated Press, Business Wire, PR Newswire or comparable news service
or in a document publicly filed by the Company with the Securities and Exchange Commission
pursuant to Sections 13, 14 or 15(d) of the Securities Exchange Act of 1934, as amended; and
(iv) Stockholder Associated Person of any stockholder means (A) any person
controlling, directly or indirectly, or acting in concert with, such stockholder, (B) any
beneficial owner of shares of stock of the Company owned of record or beneficially by such
stockholder, or (C) any person directly or indirectly controlling, controlled by or under
common control with such Stockholder Associated Person.
ARTICLE II
DIRECTORS
Section 1. Powers of Directors. The Board of Directors shall have the management of
business of the Company, and, subject to any restriction imposed by law, by the charter, or by
these Bylaws, may exercise all the powers of the corporation.
Section 2. Number of Directors. Effective March 27, 2008, the Board of Directors shall
consist of 10 members.
Section 3. Meeting of Directors. The Board may by resolution provide for the time and
place of regular meetings, and no notice need be given of such regular meetings. Special Meetings
of the Directors may be called by the Chairman of the Board or by the President or by at least 30
percent of the Directors.
Section 4. Notice of Meeting. Notice of each meeting of the Directors shall be given by
the Secretary mailing the same at least five days before the meeting or by telephone or telegraph
or in person at least three days before the meeting, to each Director, except that no notice need
be given of regular meetings fixed by the resolution of the Board or of the meeting of the Board
held at the place of and immediately following the Annual Meeting of the stockholders.
Section 5. Executive Committee. The Board may by resolution provide for an Executive
Committee consisting of such Directors as are designated by the Board. Any vacancy in such
Committee may be filled by the Board. Except as otherwise provided by the law, by these Bylaws, or
by resolution of the full Board, such Executive Committee shall have and may exercise the full
powers of the Board of Directors during the interval between the meetings of the Board and wherever
by these Bylaws, or by resolution of the stockholders, the Board of Directors is authorized to take
action or to make a determination, such action or determination may be taken or made by such
Executive Committee, unless these Bylaws or such resolution expressly require that such action or
determination be taken or made by the full Board of Directors. The Executive Committee shall by
resolution fix its own rules of procedure, and the time and place of its
meetings, and the person or persons who may call, and the method of call, of its meetings. The
Chairman of the Board of Directors shall be a member of the Executive Committee and shall act as
Chairman thereof.
Section 6. Compensation. A fee and reimbursement for expenses for attendance at meetings
of the Board of Directors or any Committee thereof may be fixed by resolution of the full Board.
Section 7. Retirement of Directors. Any person who has concurrently served, or would
concurrently serve, as a Director and as an employee of the Company, other than a person who is
serving or has served as the Chief Executive Officer, shall be ineligible for election or
appointment as a Director after the Companys fiscal year during which such person reaches
sixty-five (65) years of age. Except for those individuals described in the preceding sentence, all
other persons shall be ineligible for election or appointment as a Director after the Companys
fiscal year during which such person reaches seventy-two (72) years of age.
Section 8. Nominations of Directors.
(a) Subject to the rights of holders of any class or series of capital stock of the Company
then outstanding, only persons who are nominated in accordance and compliance with the procedures
set forth in this Section 8 shall be eligible for election to the Board of Directors at an Annual
Meeting of the stockholders. Any stockholder of record entitled to vote generally in the election
of Directors may nominate one or more persons for election as directors at a meeting only in
accordance and compliance with the procedures set forth in this Section 8.
(b) Nominations of persons for election to the Board of Directors of the Company at an Annual
Meeting of the stockholders may be made only (i) by or at the direction of the Board of Directors
or (ii) by any stockholder of the Company who (A) was a stockholder of record at the time of giving
of notice provided for in this Section 8(b) and at the time of the meeting, (B) is entitled to vote
at the meeting and (C) complies with the notice procedures set forth in this Section 8. For the
avoidance of doubt, clause (ii) of this Section 8(b) shall be the exclusive means for a stockholder
to make nominations of persons for election to the Board of Directors at an Annual Meeting of the
stockholders. Any nominations by stockholders at an Annual Meeting of stockholders shall be made
pursuant to timely notice in proper written form as described in Section 8(c) of Article II of
these Bylaws to the Secretary of the Company. To be timely, a stockholders notice for the
nomination of persons for election to the Board of Directors must be delivered to the Secretary of
the Company at the principal executive offices of the Company in proper written form not less than
ninety (90) days and not more than one hundred twenty (120) days prior to the first anniversary of
the preceding years Annual Meeting of the stockholders; provided, however, that if and only if the
Annual Meeting of the stockholders is not scheduled to be held within a period that commences
thirty (30) days before such anniversary date and ends thirty (30) days after such anniversary
date, such stockholders notice must be delivered by the later of (1) the tenth (10th)
day following the day of the Public Announcement of the date of the Annual Meeting of the
stockholders or (2) the date which is ninety (90) days prior to the date of the Annual Meeting of
the stockholders. In no event shall any adjournment, deferral or postponement of an Annual Meeting
of the stockholders or the announcement thereof commence a new time period for the giving of a
stockholders notice as described above.
(c) To be in proper written form, a stockholders notice to the Secretary of the Company shall
set forth: (i) as to each person whom the stockholder proposes to nominate for election or
re-election as a director of the Company, (A) the name, age, business address and residential
address of the person, (B) the principal occupation or employment of the person, (C) the class or
series and number of shares of capital stock of the Company which are directly or indirectly owned
beneficially or of record by the person, (D) the date such shares were acquired and the investment
intent of such acquisition and (E) any other information relating to the person that would be
required to be disclosed in a proxy statement or other filings required to be made in connection
with solicitations of proxies for a contested election of directors (even if an election contest or
proxy solicitation is not involved), or is otherwise required, pursuant to Section 14 of the
Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder
(including such persons written consent to being named in the proxy statement as a nominee, if
applicable, and to serving if
elected); and (ii) as to the stockholder giving the notice (A) the name and address of such
stockholder, as they appear on the Companys books, the name and residential address (if different
from the Companys books) of such proposing stockholder, and the name and address of any
Stockholder Associated Person covered by clauses (B), (C), (D) and (E) below, (B) the class and
number of shares of stock of the Company which are directly or indirectly held of record or
beneficially owned by such stockholder or
by any Stockholder Associated Person with respect to the
Companys securities, a description of any Derivative Positions directly or indirectly held or
beneficially held by the stockholder or any Stockholder Associated Person, and whether and the
extent to which a Hedging Transaction has been entered into by or on behalf of such stockholder or
any Stockholder Associated Person, (C) a description of all arrangements or understandings
(including financial transactions and direct or indirect compensation) between such stockholder or
any Stockholder Associated Person and each proposed nominee and any other person or entity
(including their names) pursuant to which the nomination(s) are to be made by such stockholder, (D)
any other information relating to such stockholder or any Stockholder Associated Person that would
be required to be disclosed in a proxy statement or other filings required to be made in connection
with solicitations of proxies for a contested election of directors (even if an election contest or
proxy solicitation is not involved), or otherwise required, pursuant to Section 14 of the
Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder,
(E) a representation as to whether such stockholder or any Stockholder Associated Person intends to
deliver a proxy statement or form of proxy to the holders of any of the Companys outstanding
shares to elect such nominee or otherwise to solicit proxies from stockholders in support of the
nomination, and (F) such other information as may reasonably be required by the Company to
determine the eligibility of such proposed nominee to serve as a Director. In addition, any
stockholder who submits a notice pursuant to this Section 8 is required to update and supplement
the information disclosed in such notice, if necessary, in accordance with Section 8(e) of Article
II of these Bylaws. At an Annual Meeting of the stockholders, the presiding officer of the meeting
shall determine, if the facts warrant, that a nomination was not made in accordance with the
procedures prescribed by these Bylaws, and if such officer should so determine, such officer shall
so declare to the meeting, and the defective nomination shall be disregarded.
(d) Notwithstanding anything in the fourth sentence of Section 8(b) of Article II of these
Bylaws to the contrary, if the number of directors to be elected to the Board of Directors is
increased and there is no Public Announcement naming all of the nominees for director or specifying
the size of the increased Board of Directors made by the Company at least 100 days prior to the
first anniversary of the preceding years Annual Meeting of the stockholders, a stockholders
notice required by Section 8(b) of Article II of these Bylaws shall also be considered timely, but
only with respect to nominees for any new positions created by such increase, if it shall be
delivered to the Secretary of the Company at the principal executive offices of the Company not
later than the close of business on the tenth (10th) day following the day on which such
Public Announcement is first made by the Company.
(e) Any shareholder who submits a nomination for election pursuant to this Section 8 is
required to update and supplement the information disclosed in such notice, if necessary, so that
the information provided or required to be provided in such notice shall be true and correct as of
the record date for the Annual Meeting of the stockholders and as of the date that is ten (10)
business days prior to such annual meeting or any adjournment or postponement thereof, and such
update and supplement shall be delivered to the Secretary of the Company at the principal executive
offices of the Company not later than five (5) business days after the record date for the Annual
Meeting of the stockholders (in the case of the update and supplement required to be made as of the
record date), and not later than eight (8) business days prior to the date for the meeting of
stockholders or any adjournment or postponement thereof (in the case of the update and supplement
required to be made as of ten (10) business days prior to the meeting of stockholders or any
adjournment or postponement thereof).
(f) In addition to the foregoing provisions of this Section 8, a stockholder shall also comply
with all applicable requirements of the Securities Exchange Act of 1934, as amended, and the rules
and regulations thereunder with respect to the matters set forth in these Bylaws; provided,
however, that any references in these Bylaws to the Securities Exchange Act of 1934, as amended, or
the rules and regulations promulgated thereunder are not intended to and shall not limit the
requirements of these Bylaws applicable to proposals as to any other business to be considered
pursuant to these Bylaws regardless of the stockholders intent to utilize Rule 14a-8 promulgated
under the Securities Exchange Act of 1934, as amended. Nothing in this Section 8 shall be deemed
to affect any rights of stockholders to request inclusion of proposals in the Companys proxy
statement pursuant to Rule 14a-8 promulgated under the Securities Exchange Act of 1934, as amended.
Section 9. Election of Directors. Except as provided in the Companys Articles of
Incorporation with respect to filling vacancies on the Board of Directors, each Director shall be
elected to serve on the Board of Directors by the vote of the majority of the votes cast with
respect to the Director at any meeting of the stockholders for the election of Directors at which a
quorum is present, provided that if the number of nominees exceeds the number of Directors to be
elected at such meeting, the Directors shall be elected by the vote of a plurality of the shares
represented in person or by proxy at any such meeting and entitled to vote on the election of
Directors. For purposes of this Section, a majority of the votes cast means that the number of
shares voted for a Director must exceed the number of votes cast against that Director. If a
Director standing for election is not elected, the Director shall offer to tender his or her
resignation to the Board of Directors. The Board of Directors, in consultation with any committee
thereof so designated, shall determine whether to accept or reject the resignation, or whether
other action should be taken. The Board of Directors will publicly disclose its decision and the
rationale behind it within 90 days from the date of the certification of the election results.
ARTICLE III
OFFICERS
Section 1. Officers. The officers of the Company shall consist of a Chairman of the Board
of Directors, a Chief Executive Officer, a President, one or more Vice Presidents, a Secretary and
Treasurer, and such other officers or assistant officers as may be elected by the Board of
Directors. Any two offices may be held by the same person, except that the same person shall not
be Chief Executive Officer or President and Secretary. The Board may designate a Vice President as
an Executive Vice President, and may designate the order in which the other Vice Presidents may
act.
Section 2. Chairman of the Board of Directors. The Chairman of the Board of Directors
shall preside at all meetings of the stockholders, of the Board of Directors and of the Executive
Committee, unless he designates another officer to preside. He shall act in a consultative
capacity and perform such other duties as the Board of Directors may from time to time direct.
Section 3. Chief Executive Officer. Subject to the directions of the Board of Directors,
the Chief Executive Officer shall give general supervision and direction to the affairs of the
Company. The Chief Executive Officer shall have authority to conduct all ordinary business on
behalf of the Company and may execute and deliver on behalf of the company any contract,
conveyance, or similar document not requiring approval by the Board of Directors or stockholders.
The Chief Executive Officer shall preside at meetings in case of the absence or disability of the
Chairman of the Board.
Section 4. President. Subject to the directions of the Chief Executive Officer, the
President shall assist the Chief Executive Officer in giving general supervision and direction to
the affairs of the Company.
Section 5. Vice President. The Vice President shall act in case of the absence or
disability of the Chairman of the Board and the Chief Executive Officer. If there is more than one
Vice President such Vice Presidents shall act in the order of precedence as set out by the Board of
Directors, or in the absence of such designation, the Executive Vice President shall be first in
order of precedence.
Section 6. Treasurer. The Treasurer shall be responsible for the maintenance of proper
financial books and records of the Company.
Section 7. Secretary. The Secretary shall keep the minutes of the meetings of the
stockholders, the Directors, and the Executive Committee and shall have custody of the seal of the
corporation.
Section 8. Other Duties and Authorities. Each officer, employee, and agent shall have
such other duties and authorities as may be conferred on him by the Board of Directors and, subject
to any directions of the Board, by the Chairman of the Board.
Section 9. Removal. Any officer may be removed at any time by the Board of Directors. A
contract of employment for a definite term shall not prevent the removal of any officer; but this
provision shall not prevent the making of a contract of employment with any officer and any officer
removed in breach of his contract of employment shall have cause of action therefor.
ARTICLE IV
DEPOSITORIES, SIGNATURES AND SEAL
Section 1. Form and Execution of Certificates. The certificates of shares of capital
stock of the Company shall be in such form as may be approved by the Board of Directors and shall
be signed by the Chief Executive Officer, the President, or Vice President and by the Secretary or
any Assistant Secretary or the Treasurer or any Assistant Treasurer, provided that any such
certificate may be signed by the facsimile of the signature of either or both of such officers
imprinted thereon if the same is countersigned by a transfer agent of the Company, and provided
further that certificates bearing a facsimile of the signature of such officers imprinted thereon
shall be valid in all respects as if such person or persons were still in office, even though such
officer or officers shall have died or otherwise ceased to be officers.
Section 2. Contracts. All contracts and other instruments shall be signed on behalf of
the Company by such officer, officers, agent or agents, as the Board may from time to time by
resolution provide.
Section 3. Seal. The corporate seal of the Company shall be as follows:
(Imprint Seal)
The seal may be affixed to any instrument by any officer of the Company and may be lithographed or
otherwise printed on any document with the same force and effect as if it had been imprinted
manually.
ARTICLE V
STOCK TRANSFERS
Section 1. Form and Execution of Certificates. The certificates of shares of capital
stock of the Company shall be in such form as may be approved by the Board of Directors and shall
be signed by the Chief Executive Officer, the President or a Vice President and by the Secretary
or any Assistant Secretary or the Treasurer or any Assistant Treasurer, provided that any such
certificate may be signed by the facsimile of the signature of either or both of such officers
imprinted thereon if the same is countersigned by a transfer agent of the Company, and provided
further that certificates bearing a facsimile of the signature of such officers imprinted thereon
shall be valid in all respects as if such person or persons were still in office, even though such
officer or officers shall have died or otherwise ceased to be officers.
Section 2. Transfer of Shares. Shares of stock in the Company shall be transferable only
on the books of the Company by proper transfer signed by the holder of record thereof or by a
person duly authorized to sign for such holder of record. The Company or its transfer agent shall
be authorized to refuse any transfer unless and until it is furnished such evidence as it may
reasonable require showing that the requested transfer is proper.
Section 3. Lost, Destroyed or Mutilated Certificates. The Board may by resolution provide
for the issuance of certificates in lieu of lost, destroyed or mutilated certificates and may
authorize such officer or agent as it may designate to determine the sufficiency of the evidence of
such loss, destruction or mutilation and the sufficiency of any security furnished to the Company
and to determine whether such duplicate certificate should be issued.
Section 4. Transfer Agent and Registrar. The Board may appoint a transfer agent or agents
and a registrar or registrars of transfer, and may require that all stock certificates bear the
signature of such transfer agent or such transfer agent and registrar.
ARTICLE VI
INDEMNITY
Section 1. Indemnity. Each person who is now, has been, or who shall hereafter become a
Director or officer of the Company, whether or not then in office, shall be indemnified by the
Company against all costs and expenses reasonably incurred by or imposed upon him in connection
with or resulting from any demand, action, suit or proceedings or threat thereof, to which he may
be made a party as a result or by reason of his being or having been a Director or officer of the
Company or of any other corporation which he serves as a Director or officer at the request of the
Company, except in relation to matters as to which a recovery shall be had against him or penalty
imposed upon him by reason of his having been finally adjudged in such action, suit or proceedings
to have been derelict in the performance of his duties as such Director or officer. The foregoing
right to indemnify shall include reimbursement of the amounts and expenses paid in settling any
such demand, suit or proceedings or threat thereof when settling the same appears to the Board of
Directors or the Executive Committee to be in the best interest of the Company, and shall not be
exclusive of other rights to which such Director or officer may be entitled as a matter of law.
ARTICLE VII
AMENDMENTS
Section 1. Amendments. Except as otherwise provided in the Articles of Incorporation or
in resolutions of the Board of Directors pursuant to which preferred stock is issued, the Board of
Directors or the stockholders shall have the
power to alter, amend or repeal the Bylaws or to adopt
new Bylaws. The stockholders may prescribe that any Bylaw or Bylaws adopted by them shall not be
altered, amended or repealed by the Board of Directors. Except as otherwise provided in the
Articles of Incorporation or in resolutions of the Board of Directors pursuant to which preferred
stock is issued, action by the Board of Directors with respect to the Bylaws shall be taken by the
affirmative vote of a majority of all Directors then holding office, and action by the stockholders
with respect to the Bylaws shall be taken by the affirmative vote of the holders of a majority of
all shares of common stock.
ARTICLE VIII
BUSINESS COMBINATIONS
Section 1. Business Combinations. All the requirements of Article 11A of the Code, which
includes Sections 14-2-1131, 14-2-1132 and 14-2-1133 of the Code, shall be applicable to the
Company.
ARTICLE IX
FISCAL YEAR
Section 1. Fiscal Year. Effective with the Companys fiscal year which commenced on June 2,
2007, the fiscal year of the Company shall end at the end of the Saturday closest to January 31 and
shall, in each case, begin at the beginning of the day next succeeding the last day of the
preceding fiscal year.
EX-31.1
Exhibit 31.1
CERTIFICATION
I, J. Hicks Lanier, certify that:
1. |
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I have reviewed this report on Form 10-Q of Oxford Industries, Inc.; |
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2. |
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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; |
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3. |
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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; |
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4. |
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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: |
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a) |
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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; |
|
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b) |
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Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles; |
|
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c) |
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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 |
|
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d) |
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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): |
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a) |
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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 |
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b) |
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Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
control over financial reporting. |
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Date: December 10, 2008 |
/s/ J. Hicks Lanier
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J. Hicks Lanier |
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Chairman and Chief Executive Officer
(Principal Executive Officer) |
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EX-31.2
Exhibit 31.2
CERTIFICATION
I, K. Scott Grassmyer, certify that:
1. |
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I have reviewed this report on Form 10-Q of Oxford Industries, Inc.; |
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2. |
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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. |
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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) |
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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) |
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Disclosed in this report any change in the registrants internal
control over financial reporting that occurred during the registrants
most recent fiscal quarter (the registrants fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrants internal
control over financial reporting; and |
5. |
|
The registrants other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrants auditors and the audit committee of the
registrants board of directors (or persons performing the equivalent
functions): |
|
a) |
|
All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrants ability to
record, process, summarize and report financial information; and |
|
|
b) |
|
Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
control over financial reporting. |
|
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|
|
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Date: December 10, 2008 |
/s/ K. Scott Grassmyer
|
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K. Scott Grassmyer |
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Senior Vice President, Chief Financial Officer and
Controller
(Principal Financial Officer) |
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EX-32
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 November 1, 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) |
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The Form 10-Q fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and |
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(2) |
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The information contained in the Form 10-Q fairly presents, in all
material respects, the financial condition and results of operations
of the Company. |
|
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/s/ J. Hicks Lanier
J. Hicks Lanier
|
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Chairman and Chief Executive Officer |
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(Principal Executive Officer) |
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December 10, 2008 |
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K. Scott Grassmyer |
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Senior Vice President, Chief Financial Officer and Controller |
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(Principal Financial Officer) |
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December 10, 2008 |
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