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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 March 3, 1995
OR
[ ] 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 (I.R.S. Employer
incorporation or organization) Identification Number)
222 Piedmont Avenue, N.E., Atlanta, Georgia 30308
(Address of principal executive offices)
(Zip Code)
(404) 659-2424
(Registrant's 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 X No
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 April 7, 1995
Common Stock, $1 par value 8,689,265
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
- ------------------------------
OXFORD INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF EARNINGS
NINE MONTHS AND QUARTERS ENDED MARCH 3, 1995 AND FEBRUARY 25, 1994
Nine Months Ended Quarter Ended
--------------------------- --------------------------
$ in thousands except March 3, February 25, March 3, February 25,
per share amounts 1995 1994 1995 1994
- --------------------- ------------ ------------ ------------ ------------
Net Sales $510,572 $470,589 $153,101 $143,141
-------- -------- -------- --------
Costs and Expenses:
Cost of goods sold 416,442 376,957 127,952 113,912
Selling, general and
administrative 70,016 67,885 21,098 21,200
Interest 2,715 1,739 1,010 510
-------- -------- -------- --------
Total Costs and Expenses 489,173 446,581 150,060 135,622
-------- -------- -------- --------
Earnings Before
Income Taxes 21,399 24,008 3,041 7,519
Income Taxes 8,652 9,723 1,217 3,045
-------- -------- -------- --------
Net Earnings $12,747 $14,285 $1,824 $4,474
======== ======== ======== ========
Net Earnings
Per Common Share $1.47 $1.66 $0.21 $0.52
===== ===== ===== =====
Average Number of Shares
Outstanding 8,663,153 8,596,912 8,678,243 8,605,122
========= ========= ========= =========
Dividends Per Share $0.560 $0.510 $0.200 $0.180
====== ====== ====== ======
- -------------------------
See notes to consolidated financial statements.
OXFORD INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
MARCH 3, 1995, JUNE 3, 1994 AND FEBRUARY 25, 1994
(UNAUDITED EXCEPT FOR JUNE 3, 1994)
March 3, June 3, February 25,
$ in thousands 1995 1994 1994
- -------------- ------------ ------------ ------------
Assets
- ------
Current Assets:
Cash $ 3,851 $ 3,227 $ 1,057
Receivables 104,079 75,165 89,494
Inventories:
Finished goods 73,018 59,783 53,820
Work in process 29,706 22,549 17,375
Fabric, trim & supplies 34,748 32,133 23,284
-------- -------- --------
137,472 114,465 94,479
Prepaid expenses 9,493 12,402 12,903
-------- -------- --------
Total Current Assets 254,895 205,259 197,933
Property, Plant & Equipment 35,203 33,217 31,445
Other Assets 1,262 1,471 1,558
-------- -------- --------
$291,360 $239,947 $230,936
======== ======== ========
Liabilities and Stockholders' Equity
- ------------------------------------
Current Liabilities:
Notes payable $ 67,000 $ 19,500 $ 25,500
Trade accounts payable 43,743 45,023 29,740
Accrued compensation 10,042 11,687 9,710
Other accrued expenses 12,387 12,977 14,832
Dividends payable 1,737 1,555 1,552
Income taxes - - -
Current maturities of
long-term debt 4,932 5,352 4,864
-------- -------- --------
Total Current Liabilities 139,841 96,094 86,198
-------- -------- --------
Long-Term Debt,
less current maturities 10,996 12,388 16,882
-------- -------- --------
Deferred Income Taxes 4,134 3,730 3,702
-------- -------- --------
Stockholders' Equity:
Common stock 8,686 8,638 8,625
Additional paid-in capital 6,928 6,153 5,944
Retained earnings 120,775 112,944 109,585
-------- -------- --------
136,389 127,735 124,154
-------- -------- --------
$291,360 $239,947 $230,936
======== ======== ========
- -------------------------
See notes to consolidated financial statements.
OXFORD INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED MARCH 3, 1995 AND FEBRUARY 25, 1994
(UNAUDITED)
Nine Months Ended
------------------------------
March 3, February 25,
$ in thousands 1995 1994
- -------------- ------------ ------------
Cash Flows From Operating Activities
- ------------------------------------
Net earnings $ 12,747 $ 14,285
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 5,644 5,122
(Gain) on sale of property, plant and equipment (1,065) (102)
Changes in working capital:
Receivables (28,914) (21,401)
Inventories (23,007) 8,114
Prepaid expenses 2,909 (1,205)
Trade accounts payable (1,280) (4,889)
Accrued expenses and other current liabilities (2,235) 2,303
Income taxes payable - -
Deferred income taxes 404 398
Other noncurrent assets 207 (26)
Net cash flows (used in) provided by -------- --------
operating activities (34,590) 2,599
Cash Flows From Investing Activities
- ------------------------------------
Purchase of property, plant and equipment (8,569) (5,610)
Proceeds from sale of property, plant and
and equipment 2,008 204
-------- --------
Net cash used in investing activities (6,561) (5,406)
Cash Flows From Financing Activities
- ------------------------------------
Short-term borrowings 47,500 7,000
Payments on long-term debt (1,812) (907)
Proceeds from exercise of stock options 760 805
Purchase and retirement of common stock - (1,886)
Dividends on common stock (4,673) (4,402)
-------- --------
Net cash provided by financing activities 41,775 610
Net change in Cash and Cash Equivalents 624 (2,197)
Cash and Cash equivalents at Beginning of Period 3,227 3,254
-------- --------
Cash and Cash Equivalents at End of Period $ 3,851 $ 1,057
======== ========
Supplemental Disclosure of Cash Flow Information
- ------------------------------------------------
Cash paid for:
Interest $ 2,635 $ 1,639
Income taxes 10,378 10,599
See notes to consolidated financial statements.
OXFORD INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS AND QUARTERS ENDED FEBRUARY 25, 1994
AND FEBRUARY 26, 1993
(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 June
3, 1994.
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.
Item 2. Management's Discussion and Analysis of Financial
- ----------------------------------------------------------
Condition and Results of Operations.
- ------------------------------------
Results of Operations
---------------------
NET SALES
Net sales for the third quarter of the 1995 fiscal year, which ended
March 3, 1995, increased by 7.0% from net sales for the third quarter of
the previous year. Net sales for the first nine months of the current year
increased by 8.5% from net sales for the comparable period of the prior
year. The Oxford Slacks division repeated its contribution of the second
quarter with heavy shipments of its Everpress wrinkle-free 100% cotton
slacks and shorts. The Company's women's sportswear group again
experienced a strong percentage increase from net sales for the comparable
period of the prior year. The Company's largest division, Oxford
Shirtings, contributed to the increase with continued shipments of its
Tommy Hilfiger dress shirt line and Savane wrinkle-free shirt lines.
While the Oxford Shirtings division produced a respectable sales increase
for the quarter, the division did experience order cancellations and
returns due to late deliveries which were in turn caused by production
capacity being inadequate for the greatly increased demand.
COST OF GOODS SOLD
Cost of goods sold as a percentage of net sales was 83.6% for the
third quarter of the current year and 79.6% in the same period of the
previous year. For the first nine months of the current year, cost of
goods sold as a percentage of net sales was 81.6% compared to 80.1% for the
same period in the previous year. The Company's increased cost of goods
sold was primarily the result of problems in the Oxford Shirtings division.
The division's plan for this fiscal year called for simultaneously
increasing production, and increasing capacity of the wrinkle-free
processing, and launching two new major product lines (Tommy Hilfiger dress
and Savane wrinkle-free). The division was not successful at increasing
production capacity to planned levels while maintaining its quality
standards. Nor was the division successful at synchronizing the increased
production requirements with the new wet processing capacity and
maintaining "on time" delivery. As a result, the division incurred
unexpectedly high levels of irregular production and significant processing
cost overruns. The diminished actual capacity compared to plan led to late
deliveries, order cancellations and returns as well as a build up of in-
process inventories. The combination of these factors adversely affected
the division's gross profit margins and the profit margins of the company
as a whole.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses decreased by 0.5% to
$21,098,000 in the third quarter of fiscal 1995 from $21,200,000 in the
same period of fiscal 1994. Selling, general and administrative expenses
increased by 3.1% to $70,016,000 in the first nine months of fiscal 1995
from $67,885,000 for the same period of fiscal 1994. Selling, general and
administrative expenses for the third fiscal quarter included a gain on the
sale of a previously idled distribution center (Atlanta) of approximately
$818,000. This gain accounts for the decrease in selling, general and
administrative expenses for the quarter. The increase for the nine months
primarily relates to the start up of Savane wrinkle-free shirts and Tommy
Hilfiger dress and golf shirts. As a percentage of net sales, selling,
general and administrative expenses declined to 13.8% for the third quarter
of fiscal 1995 from 14.8% for the third quarter of the prior year, and to
13.7% for the first nine months of fiscal 1995 from 14.4% for the first
nine months of the previous year.
INTEREST EXPENSE
Net interest expense as a percentage of net sales increased to 0.7% in
the third quarter of fiscal 1995 from 0.4% for the third quarter of the
previous year. Net interest expense as a percentage of net sales for the
first nine months of fiscal 1995 increased to 0.5% from 0.4% for the
comparable period of the prior year. Average short-term borrowings and the
weighted average interest rate increased over the prior year.
INCOME TAXES
The Company's effective income tax rate was 40.0% for the third
quarter of fiscal 1995 and 40.5% for the third quarter of the prior year.
The effective income tax rate was 40.4% for the first nine months of fiscal
1995 and 40.5% for the first nine months of the previous year.
FUTURE OPERATING RESULTS
The Oxford Shirtings division has taken a number of steps to improve
its future operating results. The division has more conservatively aligned
its fall plan with its proven capacity. The division has opened a second
wet processing facility in Juarez, Mexico and expanded shift production at
its wet processing facility in Vidalia, Georgia. In addition, the division
has obtained contract production for its wet processing lines. The
division has also expanded its foreign contract sourcing to include regions
and contractors not previously engaged in order to provide the required
capacity while maintaining its quality standards. While these steps should
set the stage for entering fiscal 1996 in a position to meet the greatly
increased demand for its products, the fourth quarter will involve
continuation of the problems experienced in the third quarter.
During the third quarter, the company announced the closing of three
domestic manufacturing facilities associated with the womenswear group
(Belton, SC; Royston, GA; and Hamlet, NC). After the end of the third
quarter, the womenswear group announced the future closing of its Hickory
Grove, SC manufacturing facility. These closings are the direct result of
the intense competitive pressures that require the Company to utilize the
most cost effective sources. The Company does not anticipate any material
costs associated with these closings.
The Company expects the level of sales and earnings in this year's
fourth quarter to be similar to the just completed third quarter. The
Company does expect to enter fiscal 1996 in a position to resume growth in
both sales and earnings.
Liquidity and Capital Resources
--------------------------------
OPERATING ACTIVITIES
Operating activities used $34,590,000 during the first nine months of
the current year and provided $2,599,000 in the first nine months of the
prior year. The primary factors contributing to this increased use of cash
were increased receivables and increased inventory. The increased
receivables represent increased sales in the last two months of the
quarter. The increased inventory levels were in part due to support for
increased sales and in part due to the problems in the Oxford Shirtings
division.
INVESTING ACTIVITIES
Investing activities used $6,561,000 in the first nine months of the
current year and $5,406,000 in the same period of the prior year.
Purchases in the current year consisted primarily of modernizing machinery
and equipment, expenditures for renovating and expanding a distribution
facility (scheduled to be completed in August, 1995), and completion of a
wet processing facility in Juarez, Mexico. These expenditures were
somewhat offset by the sale of a previously idled distribution center in
Atlanta in the third quarter.
FINANCING ACTIVITIES
Financing activities provided $41,775,000 in the first nine months of
the current year and $610,000 in the first nine months of the prior year.
The primary factor contributing to this increase was increased short-term
borrowings in the current year to support the increased receivables and
inventory.
The Company has not purchased any of its common stock in the first
nine months of the current year, or in the period after the end of the
third quarter of the current year. Due to the exercise of employee stock
options, a net of 51,250 shares of the Company's common stock have been
issued during the nine months ended March 3, 1995, and 3,020 shares have
been issued since March 3, 1995 through April 7, 1995.
WORKING CAPITAL
Working capital decreased from $111,735,000 at the end of the third
quarter of the previous year to $109,165,000 at the end of the 1994 fiscal
year, and increased to $115,054,000 at the end of the third quarter of the
current year. The ratio of current assets to current liabilities was 2.3
at the end of the third quarter of the previous year, 2.1 at the end of the
previous fiscal year and 1.8 at the end of the of the third quarter of the
current year. The major differences related to changes in the receivables,
inventories and short-term borrowings as discussed above.
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 March 3, 1995, the Company had available for its
use lines of credit with several lenders aggregating $20,000,000. The
Company has agreed to pay commitment fees for these available lines of
credit. At March 3, 1994, $15,000,000 was in use under these lines. In
addition, the Company has $132,000,000 in uncommitted lines of credit, of
which $47,000,000 is reserved exclusively for letters of credit. The
Company pays no commitment fees for these available lines of credit. At
March 3, 1995, $52,000,000 was in use under these lines of credit. Maximum
short-term borrowings from all sources during the first nine months of the
current year were $67,000,000. The Company anticipates continued use and
availability of both committed and uncommitted short-term borrowing
resources as working capital needs may require.
The Company considers 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.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
- ------------------------------------------
(a) Exhibits.
---------
11 Statement re computation of per share earnings.
(b) Reports on Form 8-K.
--------------------
The Registrant did not file any reports on Form 8-K during the
quarter ended March 3, 1995.
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.
-----------------------
(Registrant)
/s/R. William Lee, Jr.
--------------------------
Date: April 14, 1995 R. William Lee, Jr.
--------------- Executive Vice President
/s/Debra A. Pauli
--------------------------
Date: April 14, 1995 Debra A. Pauli
--------------- Controller
(Chief Accounting Officer)
EXHIBIT 11
OXFORD INDUSTRIES, INC.
COMPUTATION OF PER SHARE EARNINGS
NINE MONTHS AND QUARTERS ENDED MARCH 3, 1995
AND FEBRUARY 25, 1994
(UNAUDITED)
Nine Months Ended Quarter Ended
---------------------------- --------------------------
March 3, February 25, March 3, February 25,
1995 1994 1995 1994
------------ ------------ ------------ ------------
Net Earnings $12,747,000 $14,285,000 $1,824,000 $4,474,000
Average Number of Shares
Outstanding:
Primary 8,838,854 8,791,693 8,808,590 8,806,881
Fully Diluted 8,842,178 8,815,537 8,809,466 8,832,192
As Reported* 8,663,153 8,596,912 8,678,243 8,605,122
Net Earnings per Common Share:
Primary $1.44 $1.62 $0.21 $0.50
Fully Diluted $1.44 $1.62 $0.21 $0.50
As Reported* $1.47 $1.66 $0.21 $0.52
- -----------------------------
* Common stock equivalents (which arise solely from outstanding stock
options) are not materially dilutive and, accordingly, have not been
considered in the computation of net earnings per common share.
EXHIBIT 99
INDEX OF EXHIBITS
INCLUDED HERIN, FORM 10-Q
March 3, 1995
SEQUENTIAL
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- -------------------------------------------------------------------
11 Statement re computation of per share earnings 11
27 Financial Data Schedule 12