FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
|
|
|
þ |
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended MAY 2, 2009
or
|
|
|
o |
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 1-4365
OXFORD INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
|
|
|
Georgia
|
|
58-0831862 |
|
|
|
(State or other jurisdiction of incorporation or organization)
|
|
(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 ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files). Yes
¨ No ¨
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.
Large accelerated filer o |
Accelerated filer þ |
Non-accelerated filer o
(Do not check if a smaller reporting company) |
Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act). Yes ¨ No þ
Indicate the number of shares outstanding of each of the issuers classes of common stock, as
of the latest practicable date.
|
|
|
|
|
|
|
Number of shares outstanding |
|
Title of each class |
|
as of June 5, 2009 |
|
Common Stock, $1 par value |
|
|
16,053,414 |
|
OXFORD INDUSTRIES, INC.
INDEX TO FORM 10-Q
For the first quarter of fiscal 2009
2
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS
Our SEC 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, access to capital and/or credit markets,
particularly in light of recent conditions in those markets, 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
Annual Report on Form 10-K for fiscal 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 SEC.
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.
DEFINITIONS
Unless the context requires otherwise, the following terms have the following meanings:
Our, us or we: Oxford Industries, Inc. and its consolidated subsidiaries
SG&A: Selling, general and administrative expenses
SEC: U.S. Securities and Exchange Commission
FASB: Financial Accounting Standards Board
SFAS: Statement of Financial Accounting Standards
EITF: Emerging Issues Task Force
|
|
|
Fiscal 2010
|
|
52 weeks ending January 29, 2011 |
Fiscal 2009
|
|
52 weeks ending January 30, 2010 |
Fiscal 2008
|
|
52 weeks ended January 31, 2009 |
Fourth quarter fiscal 2009
|
|
13 weeks ending January 30, 2010 |
Third quarter fiscal 2009
|
|
13 weeks ending October 31, 2009 |
Second quarter fiscal 2009
|
|
13 weeks ending August 1, 2009 |
First quarter fiscal 2009
|
|
13 weeks ended May 2, 2009 |
Fourth quarter fiscal 2008
|
|
13 weeks ended January 31, 2009 |
Third quarter fiscal 2008
|
|
13 weeks ended November 1, 2008 |
Second quarter fiscal 2008
|
|
13 weeks ended August 2, 2008 |
First quarter fiscal 2008
|
|
13 weeks ended May 3, 2008 |
3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OXFORD INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
First Quarter |
|
|
First Quarter |
|
|
|
Fiscal 2009 |
|
|
Fiscal 2008 |
|
|
|
|
Net sales |
|
$ |
216,731 |
|
|
$ |
272,942 |
|
Cost of goods sold |
|
|
126,960 |
|
|
|
156,633 |
|
|
|
|
|
|
|
|
Gross profit |
|
|
89,771 |
|
|
|
116,309 |
|
SG&A |
|
|
78,683 |
|
|
|
99,634 |
|
Amortization of intangible assets |
|
|
308 |
|
|
|
788 |
|
|
|
|
|
|
|
|
|
|
|
78,991 |
|
|
|
100,422 |
|
|
|
|
|
|
|
|
|
|
Royalties and other operating income |
|
|
2,469 |
|
|
|
4,188 |
|
|
|
|
|
|
|
|
Operating income |
|
|
13,249 |
|
|
|
20,075 |
|
Interest expense, net |
|
|
4,565 |
|
|
|
6,332 |
|
|
|
|
|
|
|
|
Earnings before income taxes |
|
|
8,684 |
|
|
|
13,743 |
|
Income taxes |
|
|
2,172 |
|
|
|
4,226 |
|
|
|
|
|
|
|
|
Net earnings |
|
$ |
6,512 |
|
|
$ |
9,517 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per common share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.42 |
|
|
$ |
0.60 |
|
Diluted |
|
$ |
0.42 |
|
|
$ |
0.59 |
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
15,519 |
|
|
|
15,981 |
|
Dilution |
|
|
26 |
|
|
|
104 |
|
|
|
|
|
|
|
|
Diluted |
|
|
15,545 |
|
|
|
16,085 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per common share |
|
$ |
0.09 |
|
|
$ |
0.18 |
|
See accompanying notes.
4
OXFORD INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except par amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 2, |
|
|
January 31, |
|
|
May 3, |
|
|
|
2009 |
|
|
2009 |
|
|
2008 |
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
8,386 |
|
|
$ |
3,290 |
|
|
$ |
6,095 |
|
Receivables, net |
|
|
93,795 |
|
|
|
78,567 |
|
|
|
123,121 |
|
Inventories, net |
|
|
103,255 |
|
|
|
129,159 |
|
|
|
122,688 |
|
Prepaid expenses |
|
|
17,761 |
|
|
|
17,273 |
|
|
|
18,002 |
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
223,197 |
|
|
|
228,289 |
|
|
|
269,906 |
|
Property, plant and equipment, net |
|
|
88,311 |
|
|
|
89,026 |
|
|
|
96,255 |
|
Goodwill, net |
|
|
|
|
|
|
|
|
|
|
257,926 |
|
Intangible assets, net |
|
|
136,454 |
|
|
|
135,999 |
|
|
|
230,149 |
|
Other non-current assets, net |
|
|
19,970 |
|
|
|
20,180 |
|
|
|
30,492 |
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
467,932 |
|
|
$ |
473,494 |
|
|
$ |
884,728 |
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Trade accounts payable and other accrued expenses |
|
$ |
70,685 |
|
|
$ |
87,723 |
|
|
$ |
94,312 |
|
Accrued compensation |
|
|
9,907 |
|
|
|
14,027 |
|
|
|
14,501 |
|
Dividends payable |
|
|
|
|
|
|
|
|
|
|
2,954 |
|
Income taxes payable |
|
|
2,351 |
|
|
|
|
|
|
|
4,081 |
|
Short-term debt and current maturities of long-term debt |
|
|
25,479 |
|
|
|
5,083 |
|
|
|
14,614 |
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
108,422 |
|
|
|
106,833 |
|
|
|
130,462 |
|
Long-term debt, less current maturities |
|
|
181,501 |
|
|
|
194,187 |
|
|
|
224,459 |
|
Other non-current liabilities |
|
|
46,304 |
|
|
|
47,244 |
|
|
|
54,213 |
|
Non-current deferred income taxes |
|
|
31,423 |
|
|
|
32,111 |
|
|
|
60,570 |
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, $1.00 par value; 60,000 authorized and
16,057 issued and outstanding at May 2, 2009; 15,866
issued and outstanding at January 31, 2009; and 16,410
issued and outstanding at May 3, 2008 |
|
|
16,057 |
|
|
|
15,866 |
|
|
|
16,410 |
|
Additional paid-in capital |
|
|
89,041 |
|
|
|
88,425 |
|
|
|
85,760 |
|
Retained earnings |
|
|
21,516 |
|
|
|
16,433 |
|
|
|
299,773 |
|
Accumulated other comprehensive income (loss) |
|
|
(26,332 |
) |
|
|
(27,605 |
) |
|
|
13,081 |
|
|
|
|
|
|
|
|
|
|
|
Total shareholders equity |
|
|
100,282 |
|
|
|
93,119 |
|
|
|
415,024 |
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Shareholders Equity |
|
$ |
467,932 |
|
|
$ |
473,494 |
|
|
$ |
884,728 |
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
5
OXFORD INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
First Quarter |
|
|
First Quarter |
|
|
|
Fiscal 2009 |
|
|
Fiscal 2008 |
|
Cash Flows From Operating Activities: |
|
|
|
|
|
|
|
|
Net earnings |
|
$ |
6,512 |
|
|
$ |
9,517 |
|
Adjustments to reconcile net earnings to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
|
4,623 |
|
|
|
4,786 |
|
Amortization of intangible assets |
|
|
308 |
|
|
|
788 |
|
Amortization of deferred financing costs and bond discount |
|
|
335 |
|
|
|
654 |
|
Stock compensation expense |
|
|
671 |
|
|
|
639 |
|
Loss on sale of property, plant and equipment |
|
|
28 |
|
|
|
184 |
|
Equity method investment income |
|
|
(202 |
) |
|
|
(324 |
) |
Deferred income taxes |
|
|
(594 |
) |
|
|
(597 |
) |
Changes in working capital: |
|
|
|
|
|
|
|
|
Receivables |
|
|
(14,759 |
) |
|
|
(17,366 |
) |
Inventories |
|
|
26,359 |
|
|
|
36,257 |
|
Prepaid expenses |
|
|
(678 |
) |
|
|
879 |
|
Current liabilities |
|
|
(19,255 |
) |
|
|
(2,515 |
) |
Other non-current assets |
|
|
111 |
|
|
|
41 |
|
Other non-current liabilities |
|
|
(929 |
) |
|
|
3,303 |
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
2,530 |
|
|
|
36,246 |
|
Cash Flows From Investing Activities: |
|
|
|
|
|
|
|
|
Investments in unconsolidated entities |
|
|
|
|
|
|
(222 |
) |
Purchases of property, plant and equipment |
|
|
(3,771 |
) |
|
|
(8,722 |
) |
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(3,771 |
) |
|
|
(8,944 |
) |
Cash Flows From Financing Activities: |
|
|
|
|
|
|
|
|
Repayment of financing arrangements |
|
|
(63,373 |
) |
|
|
(76,228 |
) |
Proceeds from financing arrangements |
|
|
70,875 |
|
|
|
42,941 |
|
Proceeds from issuance of common stock |
|
|
137 |
|
|
|
257 |
|
Dividends on common stock |
|
|
(1,430 |
) |
|
|
(2,889 |
) |
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities |
|
|
6,209 |
|
|
|
(35,919 |
) |
|
|
|
|
|
|
|
Net change in cash and cash equivalents |
|
|
4,968 |
|
|
|
(8,617 |
) |
Effect of foreign currency translation on cash and cash equivalents |
|
|
128 |
|
|
|
(200 |
) |
Cash and cash equivalents at the beginning of year |
|
|
3,290 |
|
|
|
14,912 |
|
|
|
|
|
|
|
|
Cash and cash equivalents at the end of period |
|
$ |
8,386 |
|
|
$ |
6,095 |
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
|
Cash paid for interest, net |
|
$ |
514 |
|
|
$ |
1,525 |
|
Cash paid for income taxes |
|
$ |
580 |
|
|
$ |
734 |
|
See accompanying notes.
6
OXFORD INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FIRST QUARTER OF FISCAL 2009
1. |
|
Basis of Presentation: The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with accounting principles generally accepted in
the United States for interim financial reporting and the instructions of Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by accounting principles generally accepted in the United States. We
believe the accompanying unaudited condensed consolidated financial statements reflect all
normal, recurring adjustments that are necessary for a fair presentation of our financial
position and results of operations as of the date and for the periods presented. Results of
operations for the interim periods presented are not necessarily indicative of results to be
expected for our fiscal year. The accounting policies applied during the interim periods
presented are consistent with the significant accounting policies described in our Annual
Report on Form 10-K for fiscal 2008. |
|
|
|
Recently Adopted Standards: |
|
|
|
In December 2007, the FASB issued SFAS No. 141(Revised), Business Combinations (SFAS 141R).
SFAS 141R is required to be adopted in fiscal 2009. SFAS 141R provides guidance for accounting for
acquisitions subsequent to the date of adoption. SFAS 141R requires that (1) 100% of the fair value
of acquired assets and liabilities, with limited exceptions, be recognized even if the acquiror has
not acquired 100% of the acquired entity, (2) contingent consideration is recorded at estimated
fair value on the date of acquisition rather than being recognized as earned, (3) transaction costs
are expensed as incurred rather than being capitalized as part of the fair value of the acquired
entity, (4) pre-acquisition contingencies be recorded at the estimated fair value on the date of
acquisition, (5) the criteria for accruing for a restructuring plan must be met as of the date of
acquisition and (6) acquired research and development value is not expensed but instead is
capitalized as an indefinite-lived intangible asset, subject to periodic impairment testing. We
adopted SFAS 141R in the first quarter of fiscal 2009. As we did not complete any business
combinations in the first quarter of fiscal 2009, there was no impact on the financial statements
for that period. We expect that SFAS 141R will have an impact on our accounting for future business
combinations. |
|
|
|
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS 157), which
defines fair value, establishes a framework for measuring fair value in accordance with accounting
principles generally accepted in the United States, and expands disclosures about fair value
measurements. SFAS 157, as amended, was effective for us on February 3, 2008 for all financial
assets and liabilities and for nonfinancial assets and liabilities recognized or disclosed at fair
value in our condensed consolidated financial statements on a recurring basis (at least annually).
For all other nonfinancial assets and liabilities, SFAS 157 was effective for us on February 1,
2009. The adoption of SFAS 157 in the first quarter of fiscal 2009 did not have a material impact
on our condensed consolidated financial statements. |
|
|
|
In June 2008, the FASB issued FSP Emerging Issues Task Force (EITF) 03-6-1, Determining Whether
Instruments Granted in Share-Based Payment Transactions are Participating Securities (FSP EITF
03-6-1). FSP EITF 03-6-1 clarifies that unvested share-based payment awards that contain
nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are
participating securities and are to be included in the computation of earnings per share under the
two-class method described in SFAS No. 128, Earnings Per Share. FSP EITF 03-6-1 was effective for
us on February 1, 2009 and requires all prior-period earnings per share data that is presented to
be adjusted retrospectively. The adoption of FSP EITF 03-6-1 did not have a material impact on our
condensed consolidated financial statements in the first quarter of fiscal 2009. Less than $0.1
million of dividends related to unvested shares were paid in the first quarter of fiscal 2009 and
the first quarter of fiscal 2008. |
|
2. |
|
Inventories: The components of inventories as of the dates specified are summarized as
follows (in thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 2, |
|
January 31, |
|
May 3, |
|
|
2009 |
|
2009 |
|
2008 |
|
|
|
Finished goods |
|
$ |
124,651 |
|
|
$ |
146,200 |
|
|
$ |
139,671 |
|
Work in process |
|
|
4,283 |
|
|
|
6,440 |
|
|
|
8,322 |
|
Fabric, trim and supplies |
|
|
6,719 |
|
|
|
8,917 |
|
|
|
14,509 |
|
LIFO reserve |
|
|
(32,398 |
) |
|
|
(32,398 |
) |
|
|
(39,814 |
) |
|
|
|
Total |
|
$ |
103,255 |
|
|
$ |
129,159 |
|
|
$ |
122,688 |
|
|
|
|
7
3. |
|
Comprehensive Income: Comprehensive income, which reflects the effects of foreign currency
translation adjustments, is calculated as follows for the periods presented (in thousands): |
|
|
|
|
|
|
|
|
|
|
|
First Quarter |
|
First Quarter |
|
|
Fiscal 2009 |
|
Fiscal 2008 |
|
|
|
Net earnings |
|
$ |
6,512 |
|
|
$ |
9,517 |
|
Gain on foreign currency translation, net of tax |
|
|
1,273 |
|
|
|
18 |
|
|
|
|
Comprehensive income |
|
$ |
7,785 |
|
|
$ |
9,535 |
|
|
|
|
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 $32.4 million, $32.4 million and $39.8
million as of May 2, 2009, January 31, 2009 and May 3, 2008, respectively. |
|
|
|
The table below presents certain information about our operating groups (in thousands). |
|
|
|
|
|
|
|
|
|
|
|
First Quarter Fiscal 2009 |
|
First Quarter Fiscal 2008 |
|
|
|
Net Sales |
|
|
|
|
|
|
|
|
Tommy Bahama |
|
$ |
98,420 |
|
|
$ |
129,258 |
|
Ben Sherman |
|
|
24,219 |
|
|
|
36,587 |
|
Lanier Clothes |
|
|
31,507 |
|
|
|
38,687 |
|
Oxford Apparel |
|
|
63,204 |
|
|
|
68,684 |
|
Corporate and Other |
|
|
(619 |
) |
|
|
(274 |
) |
|
|
|
Total |
|
$ |
216,731 |
|
|
$ |
272,942 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
|
|
|
Tommy Bahama |
|
$ |
3,662 |
|
|
$ |
3,724 |
|
Ben Sherman |
|
|
555 |
|
|
|
592 |
|
Lanier Clothes |
|
|
145 |
|
|
|
189 |
|
Oxford Apparel |
|
|
204 |
|
|
|
227 |
|
Corporate and Other |
|
|
57 |
|
|
|
54 |
|
|
|
|
Total |
|
$ |
4,623 |
|
|
$ |
4,786 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of Intangible Assets |
|
|
|
|
|
|
|
|
Tommy Bahama |
|
$ |
222 |
|
|
$ |
355 |
|
Ben Sherman |
|
|
76 |
|
|
|
361 |
|
Lanier Clothes |
|
|
|
|
|
|
30 |
|
Oxford Apparel |
|
|
10 |
|
|
|
42 |
|
|
|
|
Total |
|
$ |
308 |
|
|
$ |
788 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income (loss) |
|
|
|
|
|
|
|
|
Tommy Bahama |
|
$ |
12,250 |
|
|
$ |
19,483 |
|
Ben Sherman |
|
|
(1,976 |
) |
|
|
255 |
|
Lanier Clothes |
|
|
2,737 |
|
|
|
(21 |
) |
Oxford Apparel |
|
|
5,193 |
|
|
|
5,325 |
|
Corporate and Other |
|
|
(4,955 |
) |
|
|
(4,967 |
) |
|
|
|
Total Operating Income (loss) |
|
$ |
13,249 |
|
|
$ |
20,075 |
|
Interest Expense, net |
|
|
4,565 |
|
|
|
6,332 |
|
|
|
|
Earnings Before Income Taxes |
|
$ |
8,684 |
|
|
$ |
13,743 |
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 2, 2009 |
|
January 31, 2009 |
|
May 3, 2008 |
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Tommy Bahama |
|
$ |
282,586 |
|
|
$ |
283,427 |
|
|
$ |
525,343 |
|
Ben Sherman |
|
|
72,052 |
|
|
|
74,114 |
|
|
|
202,511 |
|
Lanier Clothes |
|
|
48,938 |
|
|
|
49,988 |
|
|
|
80,016 |
|
Oxford Apparel |
|
|
74,568 |
|
|
|
72,731 |
|
|
|
92,363 |
|
Corporate and Other |
|
|
(10,212 |
) |
|
|
(6,766 |
) |
|
|
(15,505 |
) |
|
|
|
Total |
|
$ |
467,932 |
|
|
$ |
473,494 |
|
|
$ |
884,728 |
|
|
|
|
5. |
|
Consolidating Financial Data of Subsidiary Guarantors: Our Senior Unsecured Notes are
guaranteed by substantially all of 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 the United
States and certain domestic subsidiaries. We use the equity method of accounting with respect
to investment in subsidiaries included in other non-current assets in our condensed
consolidating financial statements. Set forth below are our condensed consolidating balance
sheets as of May 2, 2009, January 31, 2009 and May 3, 2008 (in thousands) as well as our
condensed consolidating statements of operations and statements of cash flows for the first
quarter of fiscal 2009 and the first quarter of fiscal 2008 (in thousands). |
OXFORD INDUSTRIES, INC.
UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEETS
May 2, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oxford |
|
|
|
|
|
|
|
|
|
|
Industries |
|
Subsidiary |
|
Subsidiary |
|
Consolidating |
|
Consolidated |
|
|
(Parent) |
|
Guarantors |
|
Non-Guarantors |
|
Adjustments |
|
Total |
|
|
|
ASSETS |
Cash and cash equivalents |
|
$ |
2,034 |
|
|
$ |
2,070 |
|
|
$ |
4,282 |
|
|
$ |
|
|
|
$ |
8,386 |
|
Receivables, net |
|
|
45,608 |
|
|
|
22,950 |
|
|
|
33,594 |
|
|
|
(8,357 |
) |
|
|
93,795 |
|
Inventories |
|
|
27,351 |
|
|
|
67,411 |
|
|
|
10,471 |
|
|
|
(1,978 |
) |
|
|
103,255 |
|
Prepaid expenses |
|
|
5,101 |
|
|
|
8,121 |
|
|
|
4,691 |
|
|
|
(152 |
) |
|
|
17,761 |
|
|
|
|
Total current assets |
|
|
80,094 |
|
|
|
100,552 |
|
|
|
53,038 |
|
|
|
(10,487 |
) |
|
|
223,197 |
|
Property, plant and equipment, net |
|
|
9,486 |
|
|
|
72,953 |
|
|
|
5,872 |
|
|
|
|
|
|
|
88,311 |
|
Intangible assets, net |
|
|
57 |
|
|
|
113,838 |
|
|
|
22,559 |
|
|
|
|
|
|
|
136,454 |
|
Other non-current assets, net |
|
|
461,904 |
|
|
|
145,896 |
|
|
|
35,271 |
|
|
|
(623,101 |
) |
|
|
19,970 |
|
|
|
|
Total Assets |
|
$ |
551,541 |
|
|
$ |
433,239 |
|
|
$ |
116,740 |
|
|
$ |
(633,588 |
) |
|
$ |
467,932 |
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY |
Current liabilities |
|
$ |
49,353 |
|
|
$ |
32,550 |
|
|
$ |
34,877 |
|
|
$ |
(8,358 |
) |
|
$ |
108,422 |
|
Long-term debt, less current portion |
|
|
181,501 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
181,501 |
|
Non-current liabilities |
|
|
223,892 |
|
|
|
(176,134 |
) |
|
|
107,701 |
|
|
|
(109,155 |
) |
|
|
46,304 |
|
Non-current deferred income taxes |
|
|
(3,487 |
) |
|
|
28,563 |
|
|
|
6,347 |
|
|
|
|
|
|
|
31,423 |
|
Total shareholders/invested equity |
|
|
100,282 |
|
|
|
548,260 |
|
|
|
(32,185 |
) |
|
|
(516,075 |
) |
|
|
100,282 |
|
|
|
|
Total Liabilities and Shareholders Equity |
|
$ |
551,541 |
|
|
$ |
433,239 |
|
|
$ |
116,740 |
|
|
$ |
(633,588 |
) |
|
$ |
467,932 |
|
|
|
|
9
OXFORD INDUSTRIES, INC.
CONDENSED CONSOLIDATING BALANCE SHEETS
January 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oxford |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industries |
|
|
Subsidiary |
|
|
Subsidiary |
|
|
Consolidating |
|
|
Consolidated |
|
|
|
(Parent) |
|
|
Guarantors |
|
|
Non-Guarantors |
|
|
Adjustments |
|
|
Total |
|
ASSETS |
Cash and cash equivalents |
|
$ |
1,527 |
|
|
$ |
104 |
|
|
$ |
1,659 |
|
|
$ |
|
|
|
$ |
3,290 |
|
Receivables, net |
|
|
28,842 |
|
|
|
11,407 |
|
|
|
45,529 |
|
|
|
(7,211 |
) |
|
|
78,567 |
|
Inventories |
|
|
44,469 |
|
|
|
71,509 |
|
|
|
15,475 |
|
|
|
(2,294 |
) |
|
|
129,159 |
|
Prepaid expenses |
|
|
6,009 |
|
|
|
8,735 |
|
|
|
2,529 |
|
|
|
|
|
|
|
17,273 |
|
|
|
|
Total current assets |
|
|
80,847 |
|
|
|
91,755 |
|
|
|
65,192 |
|
|
|
(9,505 |
) |
|
|
228,289 |
|
Property, plant and equipment, net |
|
|
9,025 |
|
|
|
74,804 |
|
|
|
5,197 |
|
|
|
|
|
|
|
89,026 |
|
Intangible assets, net |
|
|
67 |
|
|
|
114,060 |
|
|
|
21,872 |
|
|
|
|
|
|
|
135,999 |
|
Other non-current assets, net |
|
|
453,615 |
|
|
|
145,954 |
|
|
|
35,275 |
|
|
|
(614,664 |
) |
|
|
20,180 |
|
|
|
|
Total Assets |
|
$ |
543,554 |
|
|
$ |
426,573 |
|
|
$ |
127,536 |
|
|
$ |
(624,169 |
) |
|
$ |
473,494 |
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY |
Current liabilities |
|
|
41,793 |
|
|
|
23,027 |
|
|
|
49,185 |
|
|
|
(7,172 |
) |
|
|
106,833 |
|
Long-term debt, less current portion |
|
|
194,187 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
194,187 |
|
Non-current liabilities |
|
|
218,200 |
|
|
|
(167,950 |
) |
|
|
106,144 |
|
|
|
(109,150 |
) |
|
|
47,244 |
|
Deferred income taxes |
|
|
(3,745 |
) |
|
|
29,607 |
|
|
|
6,249 |
|
|
|
|
|
|
|
32,111 |
|
Total shareholders/invested equity |
|
|
93,119 |
|
|
|
541,889 |
|
|
|
(34,042 |
) |
|
|
(507,847 |
) |
|
|
93,119 |
|
|
|
|
Total Liabilities and Shareholders
Equity |
|
$ |
543,554 |
|
|
$ |
426,573 |
|
|
$ |
127,536 |
|
|
$ |
(624,169 |
) |
|
$ |
473,494 |
|
|
|
|
OXFORD INDUSTRIES, INC.
CONDENSED CONSOLIDATING BALANCE SHEETS
May 3, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oxford |
|
|
|
|
|
|
|
|
|
|
Industries |
|
Subsidiary |
|
Subsidiary |
|
Consolidating |
|
Consolidated |
|
|
(Parent) |
|
Guarantors |
|
Non-Guarantors |
|
Adjustments |
|
Total |
|
|
|
ASSETS |
Cash and cash equivalents |
|
$ |
759 |
|
|
$ |
1,229 |
|
|
$ |
4,108 |
|
|
$ |
(1 |
) |
|
$ |
6,095 |
Receivables, net |
|
|
55,847 |
|
|
|
51,387 |
|
|
|
24,800 |
|
|
|
(8,913 |
) |
|
|
123,121 |
Inventories |
|
|
46,103 |
|
|
|
64,861 |
|
|
|
13,054 |
|
|
|
(1,330 |
) |
|
|
122,688 |
Prepaid expenses |
|
|
5,702 |
|
|
|
7,578 |
|
|
|
4,722 |
|
|
|
|
|
|
|
18,002 |
|
|
|
Total current assets |
|
|
108,411 |
|
|
|
125,055 |
|
|
|
46,684 |
|
|
|
(10,244 |
) |
|
|
269,906 |
Property, plant and equipment, net |
|
|
8,569 |
|
|
|
80,991 |
|
|
|
6,695 |
|
|
|
|
|
|
|
96,255 |
Goodwill, net |
|
|
1,847 |
|
|
|
168,932 |
|
|
|
87,147 |
|
|
|
|
|
|
|
257,926 |
Intangible assets, net |
|
|
1,195 |
|
|
|
134,461 |
|
|
|
94,493 |
|
|
|
|
|
|
|
230,149 |
Other non-current assets, net |
|
|
831,972 |
|
|
|
150,244 |
|
|
|
70,663 |
|
|
|
(1,022,387 |
) |
|
|
30,492 |
|
|
|
Total Assets |
|
$ |
951,994 |
|
|
$ |
659,683 |
|
|
$ |
305,682 |
|
|
$ |
(1,032,631 |
) |
|
$ |
884,728 |
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY |
Current liabilities |
|
$ |
55,737 |
|
|
$ |
58,621 |
|
|
$ |
24,643 |
|
|
$ |
(8,539 |
) |
|
$ |
130,462 |
Long-term debt, less current portion |
|
|
224,459 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
224,459 |
Non-current liabilities |
|
|
261,129 |
|
|
|
(208,542 |
) |
|
|
111,061 |
|
|
|
(109,435 |
) |
|
|
54,213 |
Non-current deferred income taxes |
|
|
(4,355 |
) |
|
|
38,378 |
|
|
|
26,259 |
|
|
|
288 |
|
|
|
60,570 |
Total shareholders/invested equity |
|
|
415,024 |
|
|
|
771,226 |
|
|
|
143,719 |
|
|
|
(914,945 |
) |
|
|
415,024 |
|
|
|
Total Liabilities and Shareholders Equity |
|
$ |
951,994 |
|
|
$ |
659,683 |
|
|
$ |
305,682 |
|
|
$ |
(1,032,631 |
) |
|
$ |
884,728 |
|
|
|
10
OXFORD INDUSTRIES, INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
First Quarter Fiscal 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oxford |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industries |
|
|
Subsidiary |
|
|
Subsidiary |
|
|
Consolidating |
|
|
Consolidated |
|
|
|
(Parent) |
|
|
Guarantors |
|
|
Non-Guarantors |
|
|
Adjustments |
|
|
Total |
|
Net sales |
|
$ |
92,793 |
|
|
$ |
108,065 |
|
|
$ |
25,285 |
|
|
$ |
(9,412 |
) |
|
$ |
216,731 |
|
Cost of goods sold |
|
|
74,669 |
|
|
|
45,964 |
|
|
|
10,788 |
|
|
|
(4,461 |
) |
|
|
126,960 |
|
|
|
|
Gross profit |
|
|
18,124 |
|
|
|
62,101 |
|
|
|
14,497 |
|
|
|
(4,951 |
) |
|
|
89,771 |
|
SG&A including amortization of
intangible assets |
|
|
13,987 |
|
|
|
57,034 |
|
|
|
13,979 |
|
|
|
(6,009 |
) |
|
|
78,991 |
|
Royalties and other income |
|
|
13 |
|
|
|
2,219 |
|
|
|
980 |
|
|
|
(743 |
) |
|
|
2,469 |
|
|
|
|
Operating income |
|
|
4,150 |
|
|
|
7,286 |
|
|
|
1,498 |
|
|
|
315 |
|
|
|
13,249 |
|
Interest (income) expense, net |
|
|
4,956 |
|
|
|
(1,347 |
) |
|
|
956 |
|
|
|
|
|
|
|
4,565 |
|
Income (loss) from equity investment |
|
|
6,956 |
|
|
|
|
|
|
|
|
|
|
|
(6,956 |
) |
|
|
|
|
|
|
|
Earnings (loss) before income taxes |
|
|
6,150 |
|
|
|
8,633 |
|
|
|
542 |
|
|
|
(6,641 |
) |
|
|
8,684 |
|
Income taxes (benefit) |
|
|
(159 |
) |
|
|
2,263 |
|
|
|
(42 |
) |
|
|
110 |
|
|
|
2,172 |
|
|
|
|
Net earnings (loss) |
|
$ |
6,309 |
|
|
$ |
6,370 |
|
|
$ |
584 |
|
|
$ |
(6,751 |
) |
|
$ |
6,512 |
|
|
|
|
OXFORD INDUSTRIES, INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
First Quarter Fiscal 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oxford |
|
|
|
|
|
|
|
|
|
|
Industries |
|
Subsidiary |
|
Subsidiary |
|
Consolidating |
|
Consolidated |
|
|
(Parent) |
|
Guarantors |
|
Non-Guarantors |
|
Adjustments |
|
Total |
|
|
|
Net sales |
|
$ |
105,376 |
|
|
$ |
138,777 |
|
|
$ |
40,406 |
|
|
$ |
(11,617 |
) |
|
$ |
272,942 |
Cost of goods sold |
|
|
83,262 |
|
|
|
61,930 |
|
|
|
16,550 |
|
|
|
(5,109 |
) |
|
|
156,633 |
|
|
|
Gross profit |
|
|
22,114 |
|
|
|
76,847 |
|
|
|
23,856 |
|
|
|
(6,508 |
) |
|
|
116,309 |
SG&A including amortization of
intangible assets |
|
|
19,999 |
|
|
|
66,740 |
|
|
|
20,585 |
|
|
|
(6,902 |
) |
|
|
100,422 |
Royalties and other income |
|
|
29 |
|
|
|
2,911 |
|
|
|
1,710 |
|
|
|
(462 |
) |
|
|
4,188 |
|
|
|
Operating income |
|
|
2,144 |
|
|
|
13,018 |
|
|
|
4,981 |
|
|
|
(68 |
) |
|
|
20,075 |
Interest (income) expense, net |
|
|
7,016 |
|
|
|
(3,009 |
) |
|
|
2,325 |
|
|
|
|
|
|
|
6,332 |
Income (loss) from equity investment |
|
|
13,126 |
|
|
|
|
|
|
|
|
|
|
|
(13,126 |
) |
|
|
|
|
|
|
Earnings
(loss) before income taxes |
|
|
8,254 |
|
|
|
16,027 |
|
|
|
2,656 |
|
|
|
(13,194 |
) |
|
|
13,743 |
Income taxes (benefit) |
|
|
(1,306 |
) |
|
|
4,983 |
|
|
|
573 |
|
|
|
(24 |
) |
|
|
4,226 |
|
|
|
Net earnings (loss) |
|
$ |
9,560 |
|
|
$ |
11,044 |
|
|
$ |
2,083 |
|
|
$ |
(13,170 |
) |
|
$ |
9,517 |
|
|
|
11
OXFORD INDUSTRIES, INC.
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
First Quarter Fiscal 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oxford |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industries |
|
|
Subsidiary |
|
|
Subsidiary |
|
|
Consolidating |
|
|
Consolidated |
|
|
|
(Parent) |
|
|
Guarantors |
|
|
Non-Guarantors |
|
|
Adjustments |
|
|
Total |
|
Cash Flows From Operating Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by
operating activities |
|
$ |
(11,894 |
) |
|
$ |
12,187 |
|
|
$ |
2,241 |
|
|
$ |
(4 |
) |
|
$ |
2,530 |
|
Cash Flows from Investing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of property, plant and
equipment |
|
|
(835 |
) |
|
|
(2,007 |
) |
|
|
(929 |
) |
|
|
|
|
|
|
(3,771 |
) |
|
|
|
Net cash (used in) provided by
investing activities |
|
|
(835 |
) |
|
|
(2,007 |
) |
|
|
(929 |
) |
|
|
|
|
|
|
(3,771 |
) |
Cash Flows from Financing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in debt |
|
|
7,793 |
|
|
|
|
|
|
|
(291 |
) |
|
|
|
|
|
|
7,502 |
|
Proceeds from issuance of common stock |
|
|
137 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
137 |
|
Change in intercompany payable |
|
|
6,736 |
|
|
|
(8,214 |
) |
|
|
1,474 |
|
|
|
4 |
|
|
|
|
|
Dividends on common stock |
|
|
(1,430 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,430 |
) |
|
|
|
Net cash (used in) provided by
financing activities |
|
|
13,236 |
|
|
|
(8,214 |
) |
|
|
1,183 |
|
|
|
4 |
|
|
|
6,209 |
|
|
|
|
Net change in Cash and Cash Equivalents |
|
|
507 |
|
|
|
1,966 |
|
|
|
2,495 |
|
|
|
|
|
|
|
4,968 |
|
Effect of foreign currency translation |
|
|
|
|
|
|
|
|
|
|
128 |
|
|
|
|
|
|
|
128 |
|
Cash and Cash Equivalents at the
Beginning of Year |
|
|
1,527 |
|
|
|
104 |
|
|
|
1,659 |
|
|
|
|
|
|
|
3,290 |
|
|
|
|
Cash and Cash Equivalents at the End of
Period |
|
$ |
2,034 |
|
|
$ |
2,070 |
|
|
$ |
4,282 |
|
|
$ |
|
|
|
$ |
8,386 |
|
|
|
|
First Quarter Fiscal 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oxford |
|
|
|
|
|
|
|
|
|
|
Industries |
|
Subsidiary |
|
Subsidiary |
|
Consolidating |
|
Consolidated |
|
|
(Parent) |
|
Guarantors |
|
Non-Guarantors |
|
Adjustments |
|
Total |
|
|
|
Cash Flows From Operating Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by
operating activities |
|
$ |
15,096 |
|
|
$ |
21,851 |
|
|
$ |
(984 |
) |
|
$ |
283 |
|
|
$ |
36,246 |
|
Cash Flows from Investing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in unconsolidated entity |
|
|
|
|
|
|
(222 |
) |
|
|
|
|
|
|
|
|
|
|
(222 |
) |
Purchases of property, plant and
equipment |
|
|
(1,043 |
) |
|
|
(7,446 |
) |
|
|
(233 |
) |
|
|
|
|
|
|
(8,722 |
) |
|
|
|
Net cash (used in) provided by
investing activities |
|
|
(1,043 |
) |
|
|
(7,668 |
) |
|
|
(233 |
) |
|
|
|
|
|
|
(8,944 |
) |
Cash Flows from Financing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in debt |
|
|
(33,399 |
) |
|
|
(1 |
) |
|
|
113 |
|
|
|
|
|
|
|
(33,287 |
) |
Proceeds from issuance of common stock |
|
|
257 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
257 |
|
Change in inter-company payable |
|
|
14,679 |
|
|
|
(14,003 |
) |
|
|
(392 |
) |
|
|
(284 |
) |
|
|
|
|
Dividends on common stock |
|
|
3,069 |
|
|
|
|
|
|
|
(5,958 |
) |
|
|
|
|
|
|
(2,889 |
) |
|
|
|
Net cash (used in) provided by
financing activities |
|
|
(15,394 |
) |
|
|
(14,004 |
) |
|
|
(6,237 |
) |
|
|
(284 |
) |
|
|
(35,919 |
) |
|
|
|
Net change in Cash and Cash Equivalents |
|
|
(1,341 |
) |
|
|
179 |
|
|
|
(7,454 |
) |
|
|
(1 |
) |
|
|
(8,617 |
) |
Effect of
foreign currency translation |
|
|
|
|
|
|
|
|
|
|
(200 |
) |
|
|
|
|
|
|
(200 |
) |
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 |
|
$ |
759 |
|
|
$ |
1,229 |
|
|
$ |
4,108 |
|
|
$ |
(1 |
) |
|
$ |
6,095 |
|
|
|
|
12
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with our unaudited
condensed consolidated financial statements and the notes to the unaudited condensed consolidated
financial statements contained in this report and the consolidated financial statements, notes to
consolidated financial statements and Managements Discussion and Analysis of Financial Condition
and Results of Operations contained in our Annual Report on Form 10-K for fiscal 2008.
We generate revenues and cash flow primarily through the design, production, sale and
distribution of branded and private label consumer apparel 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 of 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.
As we anticipated, the challenging conditions impacting the retail and apparel industry in
fiscal 2008 have continued into fiscal 2009. We expect that these challenging economic conditions
will continue to impact each of our operating groups through fiscal 2009 and perhaps beyond. In the
current economic environment, we believe it is important that we continue to focus on maintaining a
healthy balance sheet and sufficient 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 $0.42 in the first quarter of fiscal 2009 compared
to diluted net earnings per common share of $0.59 in the first quarter of fiscal 2008. Net sales
across all operating groups declined from the first quarter of fiscal 2008 primarily due to the
impact of the current economic conditions. Additionally, for Ben Sherman, net sales were impacted
by the change in the average exchange rate between the British pound sterling and the United States
dollar and, for Lanier Clothes and Oxford Apparel, net sales were impacted by our exit from certain
businesses in the second half of fiscal 2008. The decrease in net sales was partially offset by
reductions in SG&A in all operating groups as we continue to focus on streamlining our ongoing
operations in all operating groups. See the discussion below for net sales and operating income
results for each operating group.
RESULTS OF OPERATIONS
The following tables set forth the specified line items in our unaudited condensed
consolidated statements of operations both in dollars (in thousands) and as a percentage of net
sales. The tables also set forth the percentage change of the data as compared to the same period
of the prior year. We have calculated all percentages based on actual data, but percentage columns
may not add due to rounding. Individual line items of our consolidated statements of operations may
not be directly comparable to those of our competitors, as statement of operations classification
of certain expenses may vary by company.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter |
|
|
First Quarter |
|
|
Percent |
|
|
|
Fiscal 2009 |
|
|
Fiscal 2008 |
|
|
Change |
|
|
Net sales |
|
$ |
216,731 |
|
|
$ |
272,942 |
|
|
|
(20.6 |
)% |
Cost of goods sold |
|
|
126,960 |
|
|
|
156,633 |
|
|
|
(18.9 |
)% |
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
89,771 |
|
|
|
116,309 |
|
|
|
(22.8 |
)% |
SG&A |
|
|
78,683 |
|
|
|
99,634 |
|
|
|
(21.0 |
)% |
Amortization of intangible assets |
|
|
308 |
|
|
|
788 |
|
|
|
(60.9 |
)% |
Royalties and other operating income |
|
|
2,469 |
|
|
|
4,188 |
|
|
|
(41.0 |
)% |
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
13,249 |
|
|
|
20,075 |
|
|
|
(34.0 |
)% |
Interest expense, net |
|
|
4,565 |
|
|
|
6,332 |
|
|
|
(27.9 |
)% |
|
|
|
|
|
|
|
|
|
|
Earnings before income taxes |
|
|
8,684 |
|
|
|
13,743 |
|
|
|
(36.8 |
)% |
Income taxes |
|
|
2,172 |
|
|
|
4,226 |
|
|
|
(48.6 |
)% |
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
$ |
6,512 |
|
|
$ |
9,517 |
|
|
|
(31.6 |
)% |
|
|
|
|
|
|
|
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
Percent of Net Sales |
|
|
First Quarter |
|
First Quarter |
|
|
Fiscal 2009 |
|
Fiscal 2008 |
Net sales |
|
|
100.0 |
% |
|
|
100.0 |
% |
Cost of goods sold |
|
|
58.6 |
% |
|
|
57.4 |
% |
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
41.4 |
% |
|
|
42.6 |
% |
SG&A |
|
|
36.3 |
% |
|
|
36.5 |
% |
Amortization of intangible assets |
|
|
0.1 |
% |
|
|
0.3 |
% |
Royalties and other operating income |
|
|
1.1 |
% |
|
|
1.5 |
% |
|
|
|
|
|
|
|
|
|
Operating income |
|
|
6.1 |
% |
|
|
7.4 |
% |
Interest expense, net |
|
|
2.1 |
% |
|
|
2.3 |
% |
|
|
|
|
|
|
|
|
|
Earnings before income taxes |
|
|
4.0 |
% |
|
|
5.0 |
% |
Income taxes |
|
|
1.0 |
% |
|
|
1.5 |
% |
|
|
|
|
|
|
|
|
|
Net earnings |
|
|
3.0 |
% |
|
|
3.5 |
% |
|
|
|
|
|
|
|
|
|
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 owned and licensed Tommy Bahama retail
stores and on our e-commerce website as well as in certain department stores and independent
specialty stores throughout the United States. The target consumers of Tommy Bahama are affluent
men and women age 35 and older who embrace a relaxed and casual approach to daily living. We also
license the Tommy Bahama name for a wide variety of product categories and operate Tommy Bahama
restaurants.
Ben Sherman is a London-based designer, marketer and distributor of branded sportswear and
related products. 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 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 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 e-commerce websites. We also license the Ben Sherman
name 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®, and
Geoffrey Beene®. We also offer branded tailored clothing products under owned Arnold Brant® and
Billy London® trademarks. In addition to our branded businesses, we design and source certain
private label tailored clothing products, which are products sold exclusively to one customer under
a brand name that is owned by or licensed by such customer. 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 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 also licenses from third parties the right
to use certain trademarks including Dockers and United States Polo Association® 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 office, substantially all financing activities, LIFO inventory accounting adjustments and
other costs that are not allocated to
14
the operating groups. LIFO inventory calculations are made on a legal entity basis which does not correspond
to our operating group definitions, as portions of Lanier Clothes and Oxford Apparel are on the
LIFO basis of accounting. Therefore, LIFO inventory accounting adjustments are not allocated to
operating groups.
The tables below present certain information about our operating groups (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter |
|
|
First Quarter |
|
|
Percent |
|
|
|
Fiscal 2009 |
|
|
Fiscal 2008 |
|
|
Change |
|
Net Sales |
|
|
|
|
|
|
|
|
|
|
|
|
Tommy Bahama |
|
$ |
98,420 |
|
|
$ |
129,258 |
|
|
|
(23.9 |
)% |
Ben Sherman |
|
|
24,219 |
|
|
|
36,587 |
|
|
|
(33.8 |
)% |
Lanier Clothes |
|
|
31,507 |
|
|
|
38,687 |
|
|
|
(18.6 |
)% |
Oxford Apparel |
|
|
63,204 |
|
|
|
68,684 |
|
|
|
(8.0 |
)% |
Corporate and Other |
|
|
(619 |
) |
|
|
(274 |
) |
|
|
(125.9 |
)% |
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
216,731 |
|
|
$ |
272,942 |
|
|
|
(20.6 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
Tommy Bahama |
|
$ |
12,250 |
|
|
$ |
19,483 |
|
|
|
(37.1 |
)% |
Ben Sherman |
|
|
(1,976 |
) |
|
|
255 |
|
|
NM |
Lanier Clothes |
|
|
2,737 |
|
|
|
(21 |
) |
|
NM |
Oxford Apparel |
|
|
5,193 |
|
|
|
5,325 |
|
|
|
(2.5 |
)% |
Corporate and Other |
|
|
(4,955 |
) |
|
|
(4,967 |
) |
|
|
0.2 |
% |
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
13,249 |
|
|
$ |
20,075 |
|
|
|
(34.0 |
)% |
|
|
|
|
|
|
|
|
|
|
For further information regarding our operating groups, see Note 4 to our unaudited condensed
consolidated financial statements included in this report and Part I, Item 1, Business in our
Annual Report on Form 10-K for fiscal 2008.
FIRST QUARTER FISCAL 2009 COMPARED TO FIRST QUARTER OF FISCAL 2008
The discussion below compares our operating results for the first quarter of fiscal 2009 to
the first quarter of fiscal 2008. Each percentage change provided below reflects the change between
these periods unless indicated otherwise.
Net sales decreased $56.2 million, or 20.6%, in the first quarter of fiscal 2009 compared to
the first quarter of fiscal 2008 primarily as a result of the changes discussed below.
Tommy Bahamas net sales decreased $30.8 million, or 23.9%. 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. This decrease in wholesale sales and existing store retail sales was
partially offset by sales at our retail stores opened after the beginning of the first quarter of
fiscal 2008. Unit sales decreased 32.2% due to the difficult retail environment. The average
selling price per unit increased by 9.6%, as sales at our retail stores and our e-commerce sales,
both of which have higher sales prices than wholesale sales, represented a greater proportion of
total Tommy Bahama sales. As of May 2, 2009 and May 3, 2008, we operated 84 and 77 Tommy Bahama
retail stores, respectively.
Ben Shermans net sales decreased $12.4 million, or 33.8%. The decrease in net sales was
primarily due to the 26% reduction in the average exchange rate of the British pound sterling
versus the United States dollar in the first quarter of fiscal 2009 compared to the first quarter
of fiscal 2008, as well as the impact of the challenging economic environment on our United Kingdom
business. During the first quarter, unit sales for Ben Sherman declined by 20.5% due primarily to
the decline in the United Kingdom business. The average selling price per unit decreased 16.8%,
resulting primarily from the impact of the weaker British pound which was partially offset by a
larger percentage of total Ben Sherman sales being sales at our own retail stores, which generally
have a higher sales price than wholesale sales.
Lanier Clothes net sales decreased $7.2 million, or 18.6%. The decrease was primarily due to
(1) the general economic conditions, (2) our exit from the Oscar de la Renta® and Nautica® licensed
businesses, with fiscal 2009 sales consisting of close out sales, and (3) the restructuring of the
Arnold Brant business in fiscal 2008. These factors resulted in a decrease in unit sales of 15.0%
and a decrease in the average selling price per unit of 4.2% for Lanier Clothes.
15
Oxford Apparels net sales decreased $5.5 million, or 8.0%. 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 difficult economic conditions.
Unit sales decreased by 8.6% as a result of our exit from certain lines of business and economic
conditions, and the average selling price per unit increased by 0.7% due to changes in product mix.
Gross profit decreased $26.5 million, or 22.8%, in the first quarter of fiscal 2009. The
decrease was primarily due to lower sales in each operating group, as described above. Gross
margins decreased to 41.4% of net sales during the first quarter of fiscal 2009 from 42.6% in the
first quarter of fiscal 2008. The decrease in gross margin was primarily due to sales mix as our
Tommy Bahama and Ben Sherman businesses, which generally have higher margins than our Lanier
Clothes and Oxford Apparel businesses, represented a lower percentage of our overall sales for the
quarter as the economic conditions had a greater impact on our Tommy Bahama and Ben Sherman branded
businesses. Additionally, the first quarter of fiscal 2009 included a LIFO accounting charge of
$1.6 million compared to a LIFO accounting charge of $0.5 million in the first quarter of fiscal
2008. Our gross profit may not be directly comparable to those of our competitors, as statement of
operations classification of certain expenses may vary by company.
SG&A decreased $21.0 million, or 21.0%, in the first quarter of fiscal 2009. SG&A was 36.3% of
net sales in the first quarter of fiscal 2009 and 36.5% in the first quarter of fiscal 2008. The
decrease in SG&A was primarily due to significant reductions in our overhead cost structure, cost
reductions associated with our exit from certain businesses, the impact on Ben Sherman of the 26%
reduction in the average value of the British pound sterling versus the United States dollar,
reductions in pre-opening expenses for Tommy Bahama stores and restaurants and reductions in
advertising expenses. These cost savings were partially offset by expenses associated with the
operation of additional retail stores which opened subsequent to the beginning of the first quarter
of fiscal 2008.
Amortization of intangible assets decreased $0.5 million to $0.3 million in the first quarter
of fiscal 2009. The decrease was primarily the result of amortization typically being greater in
the earlier periods following an acquisition. Amortization of intangible assets is expected to be
approximately $1.2 million in fiscal 2009, including the $0.3 million recognized in the first
quarter.
Royalties and other operating income decreased $1.7 million, or 41.0%, in the first quarter of
fiscal 2009. The decrease was primarily due to the termination of the license agreement for
footwear in Tommy Bahama, the 26% decline in the average value of the British pound versus the
United States dollar, which impacted Ben Sherman royalty income, and the difficult economic
conditions.
Operating income decreased to $13.2 million in the first quarter of fiscal 2009 from $20.1
million in the first quarter of fiscal 2008. The $6.8 million decrease in operating income was
primarily due to the decreases in sales and royalty income, which was partially offset by decreases
in SG&A.
Tommy Bahamas operating income decreased $7.2 million. The decrease was primarily due to the
sales reduction discussed above and decreased royalty income due to the termination of the footwear
license agreement. These items were partially offset by higher gross margins and decreased
employment, advertising, store pre-opening and other variable operating costs.
Ben Shermans operating income (loss) decreased $2.2 million to a loss of $2.0 million. The
decrease was primarily due to lower sales in our United Kingdom wholesale business as discussed
above, the unfavorable impact on inventory purchases denominated in United States dollars but sold
in other currencies due to the decline in the average value of the British pound versus the United
States dollar and lower royalty income. These items were partially offset by reduced SG&A.
Lanier Clothes operating income increased $2.8 million despite the $7.2 million reduction in
net sales discussed above. The increase in operating income was primarily due to reduced SG&A as a
result of our exit from the Nautica and Oscar de la Renta licensed businesses and restructuring of
our Arnold Brant business during fiscal 2008 and other initiatives to reduce overhead.
Oxford Apparels operating income was relatively flat compared to the first quarter of fiscal
2008, despite the $5.5 million reduction in net sales discussed above. The decrease in net sales
and corresponding decrease in gross profit were offset by decreased SG&A in the form of reduced
employment costs and variable operating expenses. The operating results of Oxford Apparel reflect
the impact of our decision to exit the Solitude business and certain other
16
private label programs in fiscal 2008 as we continue to focus on our businesses that provide
an opportunity for a higher return.
The Corporate and Other operating loss was flat compared with the first quarter of fiscal
2008. The first quarter of fiscal 2009 included a charge of $1.6 million related to LIFO accounting
adjustments compared to a charge of $0.5 million in the first quarter of fiscal 2008. This
additional LIFO charge was offset by decreased SG&A, primarily consisting of reduced employment
costs.
Interest expense, net decreased $1.8 million, or 27.9%, in the first quarter of fiscal 2009.
The decrease in interest expense was primarily due to lower average daily borrowings and lower
effective interest rates in the first quarter of fiscal 2009.
Income taxes had an effective rate of 25.0% and 30.8% for the first quarter of fiscal 2009 and
2008, respectively. The lower effective tax rate for fiscal 2009 resulted from lower estimated earnings for fiscal 2009 compared to fiscal 2008 based on projections made at the end of the first quarter of each fiscal year. Certain permanent differences do not necessarily
fluctuate with earnings and therefore have a greater impact on income tax expense at lower earnings
levels.
Diluted net earnings per common share decreased to $0.42 in the first quarter of fiscal 2009
from $0.59 in the first quarter of fiscal 2008. This change was primarily due to the sales declines
resulting from the current economic conditions, partially offset by the reductions in operating
expenses, as discussed above. Weighted average shares outstanding for the first quarter of fiscal
2009 were also less than the first quarter of fiscal 2008 as we received the final 0.6 million
shares repurchased under our $60 million accelerated share repurchase program initiated in November
2007 in May 2008.
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 and U.K.
Revolving Credit Agreement, each of which is 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 and accounts receivable, other operating expenses, funding of capital expenditures,
payment of quarterly dividends, periodic interest payments related to our financing arrangements
and repayment of our indebtedness. Our product purchases are often facilitated by 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.
The table below provides summary cash flow information (in thousands).
|
|
|
|
|
|
|
|
|
|
|
First Quarter |
|
First Quarter |
|
|
Fiscal 2009 |
|
Fiscal 2008 |
|
Net cash provided by operating activities |
|
$ |
2,530 |
|
|
$ |
36,246 |
|
Net cash used in investing activities |
|
|
(3,771 |
) |
|
|
(8,944 |
) |
Net cash provided by (used in) financing activities |
|
|
6,209 |
|
|
|
(35,919 |
) |
Cash and cash equivalents on hand was $8.4 million and $6.1 million at May 2, 2009 and May 3,
2008, respectively.
Operating Activities
During the first quarter of fiscal 2009 and the first quarter of fiscal 2008, our operations
generated $2.5 million and $36.2 million of cash, respectively. The operating cash flows for both
periods were primarily the result of earnings for the period, adjusted for non-cash activities such
as depreciation, amortization and stock compensation expense as well as changes in our working
capital accounts. In the first quarter of fiscal 2009, the significant changes in working capital
from January 31, 2009 were a decrease in current liabilities and an increase in accounts receivable
which were partially offset by a decrease in inventory, each of which is discussed below. In the
first quarter of fiscal 2008, the
17
significant changes in working capital from February 2, 2008 included a decrease in inventory, partially
offset by an increase in accounts receivable, each as discussed below.
Our working capital ratio, which is calculated by dividing total current assets by total
current liabilities, was 2.06:1, 2.14:1 and 2.07:1 at May 2, 2009, January 31, 2009 and May 3,
2008, respectively.
Receivables were $93.8 million and $123.1 million at May 2, 2009 and May 3, 2008,
respectively, representing a decrease of 23.8% which was primarily due to lower wholesale sales in
the last two months of the first quarter of fiscal 2009 compared to the last two months of the
first quarter of fiscal 2008.
Inventories were $103.3 million and $122.7 million at May 2, 2009 and May 3, 2008,
respectively, representing a decrease of 15.8%. Inventory levels in Ben Sherman, Lanier Clothes and
Oxford Apparel have each decreased as we have focused on mitigating inventory markdown risk and
promotional pressure and have exited certain lines of businesses. Inventory levels in Tommy Bahama
increased slightly in order to support the additional retail stores we are operating at May 2,
2009. Our days supply of inventory on hand, using a FIFO basis, was 106 days and 103 days as of
May 2, 2009 and May 3, 2008, respectively.
Prepaid expenses were $17.8 million and $18.0 million at May 2, 2009 and May 3, 2008,
respectively.
Current liabilities were $108.4 million and $130.5 million at May 2, 2009 and May 3, 2008,
respectively. The decrease in current liabilities was primarily due to reductions in payables
related to inventory due to lower inventory levels, reductions in payables related to employment
and other overhead costs and a reduction in interest payable due to our reduced debt levels at May
2, 2009, partially offset by an increase in current maturities of long-term debt.
Other non-current liabilities, which primarily consist of deferred rent and deferred
compensation amounts, were $46.3 million and $54.2 million at May 2, 2009 and May 3, 2008,
respectively. The decrease was primarily due to the decline in the market values of deferred
compensation investments.
Non-current deferred income taxes were $31.4 million and $60.6 million at May 2, 2009 and May
3, 2008, respectively. The change primarily resulted from (1) the impact of the impairment and
amortization of certain intangible assets recognized in the fourth quarter of fiscal 2008, (2) the
change in foreign currency exchange rates subsequent to May 3, 2008 and (3) changes in book to tax
differences for depreciation and deferred compensation subsequent to May 3, 2008.
Investing Activities
During the first quarter of fiscal 2009, investing activities used $3.8 million of cash,
consisting of capital expenditures related to new retail stores and costs associated with our
implementation of a new integrated financial system, which is currently in process. During the
first quarter of fiscal 2008, investing activities used $8.9 million of cash. These investing
activities included $8.7 million of capital expenditures primarily related to new retail stores and
restaurants.
Non-current assets, including property, plant and equipment, goodwill, intangible assets and
other non-current assets, decreased from May 3, 2008 to May 2, 2009 primarily due to (1) the fiscal
2008 impairment and amortization of certain goodwill, intangible assets and investment in joint
venture amounts, (2) depreciation related to our property, plant and equipment, (3) decreases in
the market values of deferred compensation investments and (4) amortization of deferred financing
costs. These decreases were partially offset by capital expenditures subsequent to May 3, 2008, as
discussed above.
Financing Activities
During the first quarter of fiscal 2009, financing activities provided $6.2 million of cash.
As cash flow from investing activities and the payment of the dividend for the first quarter of
fiscal 2009 exceeded cash flow generated from operating activities, it was necessary to borrow
additional funds under our revolving credit agreements during the first quarter of 2009.
During the first quarter of fiscal 2008, financing activities used $35.9 million of cash as
excess cash flow from operations was used to repay amounts outstanding under our credit facilities.
Additionally, $2.9 million of dividends were paid during the first quarter of fiscal 2008.
18
Debt, including short-term debt, was $207.0 million and $239.1 million as of May 2, 2009 and
May 3, 2008, respectively. The decrease in debt from the prior year was primarily due to cash flow
from operating activities resulting from lower working capital positions subsequent to May 3, 2008,
which exceeded cash requirements for investing and financing activities.
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 May 2, 2009:
|
|
|
|
|
|
|
May 2, 2009 |
|
$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 (2.57% at May 2,
2009), 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 2013) and is secured by a first priority
security interest in the 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, intercompany obligations, equipment, goods,
documents, contracts, books and records and other personal
property of Oxford Industries, Inc. and its consolidated
domestic subsidiaries (1)(2) |
|
$ |
35,515 |
|
£12 million Senior Secured Revolving Credit Facility (U.K.
Revolving Credit Agreement), which accrues interest at the
banks base rate plus 1.35% (1.85% at May 2, 2009), requires
interest payments monthly with principal payable on demand
and is collateralized by substantially all of the United
Kingdom assets of Ben Sherman |
|
|
4,964 |
|
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 as discussed below and are guaranteed by certain of
our domestic subsidiaries |
|
|
166,805 |
|
Unamortized discount on Senior Unsecured Notes |
|
|
(304 |
) |
|
|
|
|
Total debt |
|
|
206,980 |
|
Short-term debt and current maturities of long-term debt |
|
|
(25,479 |
) |
|
|
|
|
Long-term debt, less current maturities |
|
$ |
181,501 |
|
|
|
|
|
|
|
|
(1) |
|
$15.0 million of the $35.5 million outstanding under the U.S. Revolving Credit Agreement at May
2, 2009 was classified as long-term debt as this amount represents the minimum amount we anticipate
to be outstanding under the U.S. Revolving Credit Agreement during fiscal 2009. |
|
(2) |
|
The U.S. Revolving Credit Agreement generally is scheduled to mature on August 15, 2013, unless
the Senior Unsecured Notes are not paid or refinanced in full on or prior to November 16, 2010, in
which case the U.S. Revolving Credit Agreement will be due and payable in December 2010. |
Our credit facilities are used to finance trade letters of credit, as well to provide funding
for other operating activities, capital expenditures and acquisitions. As of May 2, 2009,
approximately $19.5 million of trade letters of credit and other limitations on availability in
aggregate were outstanding against the U.S. Revolving Credit Agreement and the U.K. Revolving
Credit Agreement. On May 2, 2009 we had approximately $122.8 million and $9.1 million in unused
availability under the U.S. Revolving Credit Agreement and the U.K. Revolving Credit Agreement,
respectively, subject to the respective limitations on borrowings set forth in the U.S. Revolving
Credit Agreement, U.K. Revolving Credit Agreement and the indenture for the Senior Unsecured Notes.
Covenants and Other Restrictions
Our credit facilities and Senior Unsecured Notes are subject to a number of affirmative
covenants regarding the delivery of financial information, compliance with law, maintenance of
property, insurance and conduct of business. Also, our credit facilities and Senior Unsecured Notes
are subject to certain negative covenants or other restrictions including, among other things,
limitations on our ability to (i) incur debt, (ii) guaranty certain obligations, (iii) incur liens,
(iv) pay dividends to shareholders, (v) repurchase shares of our common stock, (vi) make
investments, (vii) sell assets or stock of subsidiaries, (viii) acquire assets or businesses, (ix)
merge or consolidate with other companies, or (x) prepay, retire, repurchase or redeem debt.
Pursuant to the indenture governing the Senior Unsecured Notes, our ability to incur certain
indebtedness or to make certain restricted payments, as defined in the indenture, is subject to our
meeting certain conditions, including in each case the condition that our fixed charge coverage
ratio, as defined in the indenture, not be less than 2.25 to 1.0
19
for the preceding four fiscal quarters on a pro forma basis after giving effect to the proposed
indebtedness or restricted payment and, in the case of a restricted payment, the condition that the
aggregate total of all restricted payments not exceed a certain allowable amount calculated
pursuant to a formula set forth in the indenture. Restricted payments under the indenture include,
without limitation, cash dividends to shareholders, repurchases of our capital stock, and certain
investments.
Additionally, the U.S. Revolving Credit Agreement 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.
We believe that the affirmative covenants, negative covenants, financial covenants and other
restrictions are customary for, or more favorable than, those included in similar facilities and
notes. As of May 2, 2009, no financial covenant testing was required pursuant to our U.S. Revolving
Credit Agreement as the minimum availability threshold was met during the quarter. As of May 2,
2009, we were compliant with all covenants related to our credit facilities and Senior Unsecured
Notes.
Other Liquidity Items
Our debt-to-total-capitalization ratio was 67%, 68% and 37% at May 2, 2009, January 31, 2009
and May 3, 2008, respectively. The change in this ratio from May 3, 2008 to May 2, 2009 is
primarily a result of impairment of certain goodwill and intangible assets during fiscal 2008 which
reduced equity by a significant amount. Our debt levels 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 or
refinance Senior Unsecured Notes or (5) make other changes impacting our capital structure. Such
transactions, if any, will depend on prevailing market conditions, our liquidity requirements,
contractual restrictions and other factors. The amounts involved may be material.
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
retail stores and the implementation of a new integrated financial system) and interest payments on
our debt during fiscal 2009, primarily from positive 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
and the Senior Unsecured Notes or if the U.K. Revolving Credit Agreement was required to be paid,
we anticipate that we will be 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 May 2, 2009 have not changed significantly from the
contractual obligations outstanding at January 31, 2009 other than changes in the amounts
outstanding under our credit facilities and amounts outstanding pursuant to letters of credit (each
as discussed above), none of which occurred outside the ordinary course of business.
Our anticipated capital expenditures for fiscal 2009, including $3.8 million incurred during
the first quarter of fiscal 2009, are expected to be approximately $12 million. These expenditures
will consist primarily of additional Tommy Bahama and Ben Sherman retail stores and the cost
associated with the implementation of a new integrated financial system.
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.
20
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The discussion and analysis of our financial condition and results of operations are based
upon our unaudited condensed consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States. The preparation of
these financial statements requires us to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues, and expenses and related disclosures of contingent assets
and liabilities. On an ongoing basis, we evaluate our estimates, including those related to bad
debts, inventories, intangible assets, income taxes, stock compensation expense, contingencies and
litigation and certain other accrued expenses. We base our estimates on historical experience and
on various other assumptions that are believed to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions. Our critical accounting policies and estimates
are discussed in Part II, Item 7, Managements Discussion and Analysis of Financial Condition and
Results of Operations in our Annual Report on Form 10-K for fiscal 2008. There have not been any
significant changes to the application of our critical accounting policies and estimates during the
first quarter of fiscal 2009, except that we no longer have any goodwill recognized in our balance
sheet after the impairment charge which was recognized in the fourth quarter of fiscal 2008.
A detailed summary of significant accounting policies is included in Note 1 to our
consolidated financial statements contained in our Annual Report on Form 10-K for fiscal 2008.
SEASONALITY
Although our various product lines are sold on a year-round basis, the demand for specific
products or styles may be seasonal. For example, the demand for Tommy Bahama and golf products is
higher in the spring and summer seasons. Generally, our wholesale products are sold prior to each
of the retail selling seasons, including spring, summer, fall and holiday. As the timing of product
shipments and other events affecting the retail business may vary, results for any particular
quarter may not be indicative of results for the full year. The percentage of net sales by quarter
(unaudited) for fiscal 2008 was 29%, 24%, 26% and 21%, respectively, and the percentage of earnings
(loss) before income taxes by quarter (unaudited) for fiscal 2008 was 5%, 1%, 2% and (108%),
respectively. We do not believe the fiscal 2008 distribution of earnings (loss) before income taxes
is indicative of the distribution in future years, in particular because certain of the quarters in
fiscal 2008 were impacted to varying degrees by restructuring charges, asset impairment charges,
other unusual items, a gain on the repurchase of a portion of our Senior Unsecured Notes and the
difficult economic environment.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to certain trade policy, interest rate, foreign currency, commodity and
inflation risks as discussed in Part II, Item 7A, Quantitative and Qualitative Disclosures About
Market Risk in our Annual Report on Form 10-K for fiscal 2008. There have not been any significant
changes in our exposure to these risks during fiscal 2009.
ITEM 4. CONTROLS AND PROCEDURES
Our Principal Executive Officer and Principal Financial Officer have evaluated the
effectiveness of the design and operation of our disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act) as of the end of the period
covered by this report. Based upon that evaluation, our Principal Executive Officer and Principal
Financial Officer concluded that, as of the end of the period covered by this report, our
disclosure controls and procedures were effective in ensuring that information required to be
disclosed by us in our Securities Exchange Act reports is recorded, processed, summarized and
reported within the time periods specified in the SECs rules and forms, and that such information
is accumulated and communicated to our management, including our Principal Executive Officer and
Principal Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure.
There have not been any changes in our internal control over financial reporting (as such term
is defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act) during the first
quarter of fiscal 2009 that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
21
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In the ordinary course of business, we may become subject to litigation or claims. We are not
currently a party to any litigation or regulatory action that we believe could reasonably be
expected to have a material adverse effect on our financial position, results of operations or cash
flows.
ITEM 1A. RISK FACTORS
We believe that an investor should carefully consider the factors discussed in Part I, Item
1A, Risk Factors in our Annual Report on Form 10-K for fiscal 2008, which are not the only risks
facing our company. We do not believe there have been any material changes to the risk factors
described in our Annual Report on Form 10-K for fiscal 2008. If any of the risks described in our
Annual Report on Form 10-K, or other risks or uncertainties not currently known to us or that we
currently deem to be immaterial, actually occur, our business, financial condition or operating
results could suffer.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
(a) |
|
During the first quarter of fiscal 2009, we did not make any unregistered sales of our
securities. |
|
|
(c) |
|
We have certain stock incentive plans as described in Note 7 to our consolidated
financial statements included in our Annual Report on Form 10-K for fiscal 2008, all of
which are publicly announced plans. Under the plans, we can repurchase shares from
employees to cover employee tax liabilities related to the exercise of stock options or the
vesting of previously restricted shares. We did not repurchase any shares of our common
stock pursuant to these plans during the first quarter of fiscal 2009. |
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 May 2, 2009, no shares had 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
None
ITEM 6. EXHIBITS
|
3(a) |
|
Restated Articles of Incorporation of Oxford Industries, Inc. Incorporated by reference
to Exhibit 3.1 to the Oxford Industries, Inc. Form 10-Q for the fiscal quarter ended August
29, 2003. |
|
|
3(b) |
|
Bylaws of Oxford Industries, Inc., as amended. Incorporated by reference to Exhibit
3(b) to the Oxford Industries, Inc. Form 10-Q for the fiscal quarter ended November 1,
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.* |
22
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.
|
|
|
|
|
June 10, 2009 |
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) |
|
23
EX-31.1
Exhibit 31.1
CERTIFICATION
I, J. Hicks Lanier, certify that:
1. |
|
I have reviewed this report on Form 10-Q of Oxford Industries, Inc.; |
|
2. |
|
Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this report; |
|
3. |
|
Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this
report; |
|
4. |
|
The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have: |
|
a) |
|
Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this report is being prepared; |
|
|
b) |
|
Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles; |
|
|
c) |
|
Evaluated the effectiveness of the registrants disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and |
|
|
d) |
|
Disclosed in this report any change in the registrants internal
control over financial reporting that occurred during the registrants
most recent fiscal quarter (the registrants fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrants internal
control over financial reporting; and |
5. |
|
The registrants other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrants auditors and the audit committee of the
registrants board of directors (or persons performing the equivalent
functions): |
|
a) |
|
All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrants ability to
record, process, summarize and report financial information; and |
|
|
b) |
|
Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
control over financial reporting. |
|
|
|
|
|
|
|
|
Date: June 10, 2009 |
/s/ J. Hicks Lanier
|
|
|
J. Hicks Lanier |
|
|
Chairman and Chief Executive Officer
(Principal Executive Officer) |
|
EX-31.2
Exhibit 31.2
CERTIFICATION
I, K. Scott Grassmyer, certify that:
1. |
|
I have reviewed this report on Form 10-Q of Oxford Industries, Inc.; |
|
2. |
|
Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this report; |
|
3. |
|
Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this
report; |
|
4. |
|
The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have: |
|
a) |
|
Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this report is being prepared; |
|
|
b) |
|
Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles; |
|
|
c) |
|
Evaluated the effectiveness of the registrants disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and |
|
|
d) |
|
Disclosed in this report any change in the registrants internal
control over financial reporting that occurred during the registrants
most recent fiscal quarter (the registrants fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrants internal
control over financial reporting; and |
5. |
|
The registrants other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrants auditors and the audit committee of the
registrants board of directors (or persons performing the equivalent
functions): |
|
a) |
|
All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrants ability to
record, process, summarize and report financial information; and |
|
|
b) |
|
Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
control over financial reporting. |
|
|
|
|
|
|
|
|
Date: June 10, 2009 |
/s/ K. Scott Grassmyer
|
|
|
K. Scott Grassmyer |
|
|
Senior Vice President, Chief Financial Officer and
Controller
(Principal Financial Officer) |
|
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 May 2, 2009 as filed with the Securities and Exchange
Commission on the date hereof, I, J. Hicks Lanier, Chairman and Chief Executive Officer of the
Company, and I, K. Scott Grassmyer, Senior Vice President, Chief Financial Officer and Controller
of the Company, each certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
(1) |
|
The Form 10-Q fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and |
|
(2) |
|
The information contained in the Form 10-Q fairly presents, in all
material respects, the financial condition and results of operations
of the Company. |
|
|
|
|
|
|
|
|
/s/ J. Hicks Lanier
|
|
J. Hicks Lanier |
|
Chairman and Chief Executive Officer
(Principal Executive Officer) |
|
June 10, 2009 |
|
|
|
|
|
|
/s/ K. Scott Grassmyer
|
|
K. Scott Grassmyer |
|
Senior Vice President, Chief Financial Officer and Controller
(Principal Financial Officer) |
|
June 10, 2009 |
|
|
|