1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] Quarterly Report Pursuant To Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the quarterly period ended November 26, 1993
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OR
[ ] Transition Report Pursuant To Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the transition period from to
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Commission File Number 1-4365
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OXFORD INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
Georgia 58-0831862
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
222 Piedmont Avenue, N.E., Atlanta, Georgia 30308
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(Address of principal executive offices)
(Zip Code)
(404) 659-2424
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Number of shares outstanding
Title of each class as of January 3, 1994
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Common Stock, $1 par value 8,594,502
2
OXFORD INDUSTRIES, INC.
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INDEX
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PAGE NO.
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PART I. FINANCIAL INFORMATION
Consolidated Statements of Earnings 3
Consolidated Balance Sheets 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-9
PART II. OTHER INFORMATION 10
3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
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OXFORD INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF EARNINGS
SIX MONTHS AND QUARTERS ENDED NOVEMBER 26, 1993 AND NOVEMBER 27, 1992
Six Months Ended Quarter Ended
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$ in thousands except November 26, November 27, November 26, November 27,
per share amounts 1993 1992 1993 1992
- --------------------- ------------ ------------ ------------ ------------
Net Sales $327,448 $297,865 $178,737 $163,565
-------- -------- -------- --------
Costs and Expenses:
Cost of Goods Sold 263,045 239,626 143,671 131,755
Selling, General and
Administrative 46,685 44,301 24,572 23,494
Interest 1,229 1,160 697 643
-------- -------- -------- --------
Total Costs and Expenses 310,959 285,087 168,940 155,892
-------- -------- -------- --------
Earnings Before
Income Taxes 16,489 12,778 9,797 7,673
Income Taxes 6,678 5,047 3,968 3,056
-------- -------- -------- --------
Net Earnings $9,811 $7,731 $5,829 $4,617
======== ======== ======== ========
Net Earnings
Per Common Share $1.14 $0.89 $0.68 $0.53
===== ===== ===== =====
Average Number of Shares
Outstanding 8,592,722 8,697,766 8,581,949 8,664,276
========= ========= ========= =========
Dividends Per Share $0.330 $0.300 $0.165 $0.150
====== ====== ====== ======
- -------------------------
See notes to consolidated financial statements.
4
OXFORD INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
NOVEMBER 26, 1993, MAY 28, 1993 AND NOVEMBER 27, 1992
(UNAUDITED EXCEPT FOR MAY 28, 1993)
November 26, May 28, November 27,
$ in thousands 1993 1993 1992
- -------------- ------------ ------------ ------------
Assets
- ------
Current Assets:
Cash $ 5,295 $ 3,254 $ 4,448
Receivables 91,724 68,093 86,598
Inventories:
Finished Goods 51,399 55,733 41,783
Work in Process 19,783 19,931 18,586
Fabric, Trim & Supplies 24,494 26,929 23,609
-------- -------- --------
95,676 102,593 83,978
Prepaid expenses 11,871 11,698 10,600
-------- -------- --------
Total Current Assets 204,566 185,638 185,624
Property, Plant & Equipment 31,618 31,027 30,079
Other Assets 1,614 1,562 1,737
-------- -------- --------
$237,798 $218,227 $217,440
======== ======== ========
Liabilities and Stockholders' Equity
- ------------------------------------
Current Liabilities:
Notes Payable $ 28,000 $ 18,500 $ 16,500
Trade Accounts Payable 31,781 34,629 35,544
Accrued Compensation 11,810 11,304 10,260
Other Accrued Expenses 15,811 11,072 11,961
Dividends Payable 1,417 1,433 1,299
Income Taxes 2,429 - 1,769
Current maturities of
long-term debt 4,864 4,865 4,691
-------- -------- --------
Total Current Liabilities 96,112 81,803 82,024
-------- -------- --------
Long-Term Debt,
less current maturities 17,341 17,788 22,212
-------- -------- --------
Deferred Income Taxes 3,620 3,304 2,204
-------- -------- --------
Stockholders' Equity:
Common Stock 8,586 8,685 8,663
Additional paid-in capital 5,408 5,193 5,054
Retained Earnings 106,731 101,454 97,283
-------- -------- --------
120,725 115,332 111,000
-------- -------- --------
$237,798 $218,227 $217,440
======== ======== ========
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See notes to consolidated financial statements.
5
OXFORD INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED NOVEMBER 26, 1993 AND NOVEMBER 27, 1992
(UNAUDITED)
Six Months Ended
------------------------------
November 26, November 27,
$ in thousands 1993 1992
- -------------- ------------ ------------
Cash Flows From Operating Activities
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Net earnings $ 9,811 $ 7,731
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 3,309 3,047
Gain on sale of property, plant and equipment (37) (243)
Changes in working capital:
Receivables (23,631) (19,440)
Inventories 6,917 (1,957)
Prepaid expenses (173) (753)
Trade accounts payable (2,848) (2,819)
Accrued expenses and other current liabilities 5,247 789
Income taxes payable 2,429 1,367
Deferred income taxes 316 62
Other noncurrent assets (70) (681)
Net cash flows provided by (used in) -------- --------
operating activities 1,270 (12,897)
Cash Flows From Investing Activities
- ------------------------------------
Purchase of property, plant and equipment (3,931) (3,123)
Proceeds from sale of property, plant and
and equipment 87 1,003
-------- --------
Net cash used in investing activities (3,844) (2,120)
Cash Flows From Financing Activities
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Short-term borrowings 9,500 16,500
Payments on long-term debt (447) (483)
Proceeds from exercise of stock options 298 109
Purchase and retirement of common stock (1,886) (2,449)
Dividends on common stock (2,850) (2,621)
-------- --------
Net cash provided by financing activities 4,615 11,056
Net change in Cash and Cash Equivalents 2,041 (3,961)
Cash and Cash equivalents at Beginning of Period 3,254 8,409
-------- --------
Cash and Cash Equivalents at End of Period $ 5,295 $ 4,448
======== ========
Supplemental Disclosure of Cash Flow Information
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Cash paid (received) for:
Interest $ 1,135 $ 1,082
Income taxes 4,336 4,569
See notes to consolidated financial statements.
6
OXFORD INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS AND QUARTERS ENDED NOVEMBER 26, 1993
AND NOVEMBER 27, 1992
(UNAUDITED)
1. The foregoing unaudited consolidated financial statements reflect all
adjustments which are, in the opinion of management, necessary to a fair
statement of the results for the interim periods. All such adjustments
are of a normal recurring nature. The results for interim periods are
not necessarily indicative of results to be expected for the year.
2. The financial information presented herein should be read in conjunction
with the consolidated financial statements included in the Registrant's
Annual Report on Form 10-K for the fiscal year ended May 28, 1993.
3. The Company is involved in certain legal matters primarily arising in
the normal course of business. In the opinion of management, the
Company's liability under any of these matters would not materially
affect its financial condition or results of operations.
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Item 2. Management's Discussion and Analysis of Financial
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Condition and Results of Operations.
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Results of Operations
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NET SALES
Net sales for the second quarter of the 1994 fiscal year, which ended
November 26, 1993, increased by 9.3% from net sales for the second quarter of
the previous year. Net sales for the first six months of the current year
increased by 9.9% from net sales for the comparable period of the prior year.
Led by strong performances by both the Oxford Shirtings and Lanier Clothes
divisions, the Company set a new record high in sales for both the second
quarter and the first half. The Company's strategy of sales concentration
continued to yield benefits. Increased sales to the fifty largest customers
accounted for an amount in excess of the Company's total sales increase as
sales to other customers declined. Sales in the first half of fiscal 1993
included approximately $10,000,000 to the now-discontinued catalog division
of Sears, Roebuck and Company, of which approximately $4,000,000 occurred in
the second quarter. The sales increase continued primarily with the
Company's better catalog tier and mass merchants.
COST OF GOODS SOLD
Cost of goods sold as a percentage of net sales was 80.4% for the second
quarter of the current year and 80.6% for the second quarter of the previous
year. For the first six months of the current year, cost of goods sold as a
percentage of net sales was 80.3% compared to 80.4% for the same period in
the previous year. These continued consistent results represent stabilizing
gross margins. During the second quarter, the Company announced the closure
of one domestic manufacturing facility. The expected cost of this closure
has been included in the second quarter results.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased by 4.6% to
$24,572,000 in the second quarter of fiscal 1994 from $23,494,000 in the same
period of fiscal 1993. Selling, general and administrative expenses
increased by 5.4% to $46,685,000 in the first half of fiscal 1994 from
$44,301,000 in the same period of fiscal 1993. Combined with the increase in
net sales, selling, general and administrative expenses as a percentage of
net sales declined to 13.7% for the second quarter of fiscal 1994 from 14.4%
for the second quarter of the prior year, and to 14.3% for the first six
months of fiscal 1994 from 14.9% for the first six months of the previous
year.
In early August 1993, one of the Company's retail catalog customers, New
Hampton, Inc., filed for bankruptcy. A provision of $1,000,000 for bad debts
is included in the current year first quarter operations to provide for this
bankruptcy. Had this provision for bad debts not been required, the selling,
general and administrative expense increase would have been 3.1% for the
first half of fiscal 1994. This $1,000,000 represents less than 1% of net
sales for the first half of fiscal 1994.
INTEREST EXPENSE
Net interest expense as a percentage of net sales was 0.4% in both
fiscal 1994 and fiscal 1993 for both the second quarter and the first six
months. Average short-term borrowings increased over the prior year, while
the weighted average interest rate declined.
8
INCOME TAXES
The Company's effective income tax rate was 40.5% for the second quarter
of the current year and 39.8% for the second quarter of the previous year.
For the first six months of the current and previous years, the Company's
effective income tax rate was 40.5% and 39.5%, respectively. The income tax
rate has been increased to reflect enacted tax rates. In the first quarter
of fiscal 1994, the Company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes." The effect of this
adoption was not material.
FUTURE OPERATING RESULTS
The Company is optimistic about the second half of fiscal 1994, although
the rate of both sales and earnings increases are expected to moderate.
Percentage earnings gains should continue to outpace percentage sales gains.
The Oxford Shirtings division of the Company has been licensed to
produce and market dress shirts under the Tommy Hilfiger label. The first
line will be fall 1994 and will afford the Company the opportunity to expand
in the better branded dress shirt market. While the Company has and will
continue to incur in fiscal 1994 expenses related to the start-up of this
line, it will not realize revenues until fiscal 1995.
The Company has also entered into license agreements with Farah,
Incorporated, allowing the Company to license the Savane and PROCESS 2000
names for shirt sales. Under the terms of the agreement, Farah will furnish
the Company with its proprietary PROCESS 2000 no wrinkle technology for use
on shirts. Current plans call for the introduction of a small number of
shirts for the Father's Day selling period, to be followed by a larger volume
in the second half of calendar 1994.
Liquidity and Capital Resources
--------------------------------
OPERATING ACTIVITIES
During the first six months of the current year, operating activities
generated $1,270,000 as compared to $12,897,000 used in the first six months
of the prior year. The primary factors contributing to this increase were
increased net earnings, decreased inventories, and increased accrued expenses
coupled with increased receivables. The decreased inventories is a return to
a more normal level necessary to support anticipated sales. The increased
accrued expenses represent various accruals associated with current
operations. The increased receivables represent the increase in sales in the
last two months of the quarter.
INVESTING ACTIVITIES
Investing activities used $3,844,000 in the first six months of the
current year and $2,120,000 in the same period of the prior year. Purchases
consisted primarily of replacement of worn or obsolete machinery and
equipment and upgrading management information systems. Proceeds from the
sale of property, plant and equipment for the first six months of the prior
year of $1,003,000 were generated primarily from the sale of two previously
idled facilities.
FINANCING ACTIVITIES
Financing activities generated $4,615,000 in the first six months of the
current year and $11,056,000 in the prior year. The primary difference was
decreased short-term borrowings in fiscal 1994.
The Company purchased and retired 125,700 shares of its common stock
during the six months ended November 26, 1993. During the period after the
end of the second quarter through January 3, 1994, no shares have been
purchased and retired. Due to the exercise of employee stock options, a net
9
of 26,384 shares of the Company's common stock have been issued during the
six months ended November 26, 1993, and 8,890 shares have been issued during
the period after the end of the second quarter through January 3, 1994.
On January 3, 1994, the Company's Board of Directors declared a cash
dividend of $.18 per share payable February 26, 1994 to shareholders of
record on February 11, 1994. This is an increase of 1.5 cents per share from
prior quarterly dividends.
WORKING CAPITAL
Working capital increased from $103,600,000 at the end of the second
quarter of the previous year to $103,835,000 at the end of the 1993 fiscal
year, and increased to $108,454,000 at the end of the second quarter of the
current year. The ratio of current assets to current liabilities was 2.3 at
the end of the second quarter of the previous year, 2.3 at the end of the
previous fiscal year and 2.1 at the end of the first quarter of the current
year.
FUTURE LIQUIDITY AND CAPITAL RESOURCES
The Company believes it has the ability to generate cash to meet its
foreseeable needs. The sources of funds primarily include funds provided by
operations and short-term borrowings. The uses of funds primarily include
working capital requirements, capital expenditures, dividends and repayment
of long-term debt. The Company regularly utilizes committed bank lines of
credit and other uncommitted bank resources to meet working capital
requirements. On November 26, 1993, the Company had committed bank lines of
credit of $20,000,000 and uncommitted lines totalling $75,000,000. The
Company pays commitment fees for these committed lines of credit, but no
commitment fees are associated with the uncommitted lines. Of the committed
lines, $20,000,000 was in use at November 26, 1993, and of the uncommitted
lines, $8,000,000 was in use at that date. Maximum short-term borrowings
from all sources during the first six months of the current year were
$50,000,000. The Company anticipates continued use and availability of both
committed and uncommitted short-term borrowing resources as working capital
needs may require.
The Company expects to continue to purchase shares of its common stock
on the open market and in negotiated trades as conditions and opportunities
warrant. The Company will also consider possible acquisitions of apparel-
related businesses that are compatible with its long-term strategies. There
are no present plans to borrow additional long-term funds, sell securities,
or enter into off-balance sheet financing arrangements.
10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
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(a) Exhibits.
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11 Statement re computation of per share earnings.
(b) Reports on Form 8-K.
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The Registrant did not file any reports on Form 8-K during the
quarter ended November 26, 1993.
11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OXFORD INDUSTRIES, INC.
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(Registrant)
/s/R. William Lee, Jr.
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Date: January 7, 1994 R. William Lee, Jr.
--------------- Executive Vice President
/s/Debra A. Pauli
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Date: January 7, 1994 Debra A. Pauli
--------------- Controller
(Chief Accounting Officer)
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INDEX OF EXHIBITS
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NUMBER
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11 Statement re computation of per share earnings 13
1
EXHIBIT 11
OXFORD INDUSTRIES, INC.
COMPUTATION OF PER SHARE EARNINGS
SIX MONTHS AND QUARTERS ENDED NOVEMBER 26, 1993
AND NOVEMBER 27, 1992
(UNAUDITED)
Six Months Ended Quarter Ended
-------------------------- --------------------------
November 26, November 27, November 26, November 27,
1993 1992 1993 1992
- --------------------- ----------- ----------- ----------- -----------
Net Earnings $9,811,000 $7,731,000 $5,829,000 $4,617,000
Average Number of Shares
Outstanding:
Primary 8,763,105 8,868,125 8,775,967 8,828,820
Fully diluted 8,784,420 8,883,518 8,783,006 8,859,595
As reported* 8,592,722 8,697,766 8,581,949 8,664,276
Net Earnings per Common Share:
Primary $1.12 $0.87 $0.66 $0.52
Fully diluted $1.12 $0.87 $0.66 $0.52
As reported* $1.14 $0.89 $0.68 $0.53
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* Common stock equivalents (which arise solely from outstanding stock options)
are not materially dilutive and, accordingly, have not been considered in the
computation of reported net earnings per common share.
