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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 September 1, 1995
---------------
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
- ------------------------------- ------------------------------
(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
----- -----
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 October 6, 1995
- --------------------------- ----------------------------
Common Stock, $1 par value 8,705,079
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
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OXFORD INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
QUARTERS ENDED SEPTEMBER 1, 1995 AND SEPTEMBER 2, 1994
(UNAUDITED)
Quarter Ended
--------------------------
$ in thousands except per September 1, September 2,
share amounts 1995 1994
- ------------------------- ---------- ------------
Net Sales $189,254 $165,304
-------- --------
Costs and Expenses:
Cost of goods sold 157,131 133,432
Selling, general
and administrative 25,318 23,048
Provision for environmental
remediation 4,500 -
Interest 1,841 664
-------- --------
188,790 157,144
-------- --------
Earnings Before Income Taxes 464 8,160
Income Taxes 186 3,304
-------- --------
Net Earnings $ 278 $ 4,856
======== ========
Net Earnings Per Common Share $.03 $.56
======== ========
Average Number of Shares
Outstanding 8,700,450 8,645,562
========= =========
Dividends Per Share $0.20 $0.18
====== ======
- -------------------------
See notes to consolidated financial statements.
OXFORD INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 1, 1995, JUNE 2, 1995 AND SEPTEMBER 2, 1994
(UNAUDITED EXCEPT FOR JUNE 2, 1995)
September 1, June 2, September 2,
$ in thousands 1995 1995 1994
- -------------- ------------ -------- -----------
Assets
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Current Assets:
Cash $ 10,274 $ 2,225 $ 2,275
Receivables 109,459 83,962 109,036
Inventories:
Finished goods 94,973 96,013 65,704
Work in process 29,209 31,014 29,001
Fabric, trim & supplies 35,325 42,951 32,148
-------- -------- --------
159,507 169,978 126,853
Prepaid expenses 14,355 13,023 11,557
-------- -------- --------
Total Current Assets 293,595 269,188 249,721
Property, Plant and Equipment 40,004 38,650 33,754
Other Assets 5,171 1,190 1,346
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$338,770 $309,028 $284,821
======== ======== ========
Liabilities and Stockholders' Equity
- ------------------------------------
Current Liabilities:
Notes payable $ 82,500 $ 43,500 $ 65,500
Trade accounts payable 40,517 54,331 39,699
Accrued compensation 8,390 8,235 9,516
Other accrued expenses 14,489 13,039 14,119
Dividends payable 1,741 1,739 1,557
Income taxes - - 2,311
Current maturities of
long-term debt 4,732 4,732 4,932
-------- -------- --------
Total Current Liabilities 152,369 125,576 137,634
Long-Term Debt,
less current maturities 46,830 47,011 12,189
Non-Current Liabilities 4,500 - -
Deferred Income Taxes 3,825 3,862 3,724
Stockholders' Equity:
Common stock 8,705 8,694 8,650
Additional paid-in capital 7,145 7,020 6,401
Retained earnings 115,396 116,865 116,223
-------- -------- --------
Total Stockholders' Equity 131,246 132,579 131,274
-------- -------- --------
Total Liabilities and Stockholders'
Equity $338,770 $309,028 $284,821
======== ======== ========
- -------------------
See notes to consolidated financial statements.
OXFORD INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
QUARTERS ENDED SEPTEMBER 1, 1995 AND SEPTEMBER 2, 1994
(UNAUDITED)
Quarter Ended
-----------------------------
September 1, September 2,
$ in thousands 1995 1994
- -------------- ------------ ------------
Cash Flows from Operating Activities:
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Net earnings $ 278 $ 4,856
Adjustments to reconcile net earnings to
net cash provided by (used in) operating activities:
Depreciation and amortization 1,939 1,790
(Gain) on sale of property, plant
and equipment (6) (26)
Changes in working capital:
Receivables (24,448) (33,871)
Inventories 13,631 (12,388)
Prepaid expenses (1,325) 845
Trade accounts payable (14,640) (5,324)
Accrued expenses and other current liabilities 1,605 (1,027)
Income taxes payable - 2,311
Non-Current Liabilities 4,500 -
Deferred income taxes (37) (6)
Other noncurrent assets 1,331 125
Net cash flows (used in) -------- --------
operating activities (17,172) (42,715)
Cash Flows from Investing Activities:
- -------------------------------------
Acquisitions (8,763) -
Purchase of property, plant and equipment (3,334) (2,344)
Proceeds from sale of property, plant and
and equipment 109 45
-------- --------
Net cash (used in) investing activities (11,988) (2,299)
Cash Flows from Financing Activities:
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Short-term borrowings 39,000 46,000
Payments on long-term debt (181) (619)
Proceeds from exercise of stock options 129 238
Dividends on common stock (1,739) (1,557)
-------- --------
Net cash provided by financing activities 37,209 44,062
Net Change in Cash and Cash Equivalents 8,049 (952)
Cash and Cash Equivalents at Beginning of Period 2,225 3,227
-------- --------
Cash and Cash Equivalents at End of Period $ 10,274 $ 2,275
======== ========
Supplemental Disclosure of Cash Flow Information
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Cash paid (received) for:
Interest, net $ 1,798 $ 420
Income taxes (2,934) 316
See notes to consolidated financial statements.
OXFORD INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
QUARTERS ENDED SEPTEMBER 1, 1995 AND SEPTEMBER 2, 1994
(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
2, 1995.
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.
4. The Company discovered a past unauthorized disposal of a substance
believed to be dry cleaning fluid on one of its properties.
The Company is currently conducting an investigation of the
property. The Company believes that remedial action will be
required, including continued investigation, monitoring and
treatment of ground water and soil. Based on advice from
its environmental experts, the Company has provided $4,500,000
for this remediation.
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 first quarter of the 1996 fiscal year, which
ended September 1, 1995, increased by 14.5% from net sales for the
first quarter of the previous year. The Company's Mens Shirt Group
posted a sales increase of $20,630,000 with increases in every
sector-private label, Savane Tommy Hilfiger Dress, Polo for
Boys, and the Company's newly acquired Ely & Walker division(Ely &
Walker markets western wear). The Company's Mens Slacks Group had
a $7,509,000 increase fueled by its Everpress proprietary wrinkle-
free process. Tailored Clothing sales were up $1,285,000 with
increases in Oscar de la Renta and department stores being offset
by a decline in chain stores. Overall sales in the Company's
Womenswear Group were down $2,178,000 with a strong increase at
Wal-Mart being offset by a decline in the restructured RENNY
division.
The Company continued to strengthen strategic alliances with its
larger more financially stable customers. Sales to the Company's
fifty largest customers increased by 19.9% while sales to all
remaining customers declined 40.6%.
The Company experienced an overall net sales unit volume
increase of approximately 19.4% while experiencing an overall 4.2%
reduction in average sales price per unit. The reduction in the
average sales price per unit was the result of product mix and
reduced selling prices in response to an intensely competitive
business environment.
COST OF GOODS SOLD
Cost of goods sold, as a percentage of net sales, was 83.0% in
the first quarter of the current year as compared to 80.7% in the
first quarter of the prior year. This increase was primarily the
result of the 4.2% reduction in the average sales price per unit
mentioned above.
The Company's largest division, Oxford Shirtings experienced
depressed gross margins from the same period in the prior year, but
showed improvement over results in the second half of the last
fiscal year.
During the first quarter, the Company announced the impending
closing of two domestic manufacturing facilities (Alamo, GA; and
Decherd, TN). These closings are a direct result of the intensely
competitive pressures that require the Company to utilize more cost
effective offshore production sources. A provision of $700,000 was
included in the current year's first quarter operations to provide
for these facility closings.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
The Company has discovered a past unauthorized disposal of a
substance believed to be dry cleaning fluid on one of its
properties. The Company is currently conducting an investigation
of the property. The Company believes that remedial action will
be required, including continued investigation, monitoring and
treatment of ground water and soil. Based on advice from its
environmental experts, the Company expects the maximum
expenditures for remediation to be approximately $4,500,000 over
the next thirty years. In the first quarter of fiscal 1996, the
Company recorded a provision of $4,500,000 in connection with
this matter. Management believes that any required additional
expenses, if any, will not have a material adverse effect on the
Company's results of operations or financial position.
Selling, general and administrative expenses (excluding the
environmental charge) increased by 9.8% to $25,318,000 in the
first quarter of fiscal 1996 from $23,048,000 in the first
quarter of the previous year. As a percentage of net sales,
selling, general and administrative expenses (excluding the
environmental charge) decreased to 13.4% in the first quarter of
the current year from 13.9% in the first quarter of the prior
year. Also included in selling general and administrative
expenses are start-up costs for the new Tommy Hilfiger Golf line
which will begin shipments in the second fiscal quarter.
INTEREST EXPENSE
Net interest expense as a percentage of net sales increased
to 1.0% in the first quarter of fiscal 1996 from 0.4% in the
first quarter of the prior year due to an increase in average
short-term borrowing and long-term debt from the prior year.
INCOME TAXES
The Company's effective income tax rate was 40.1% for the
first quarter of fiscal 1996 and 40.5 for the first quarter of
the prior year.
FUTURE OPERATING RESULTS
The Company does not expect the widely publicized weaknesses
in apparel retailing to improve dramatically in the near term.
August sales were disappointing for most retailers and initial
fall and back-to-school sales at retail have not been good. At
this time, the Company does not expect to match last year's
record second quarter sales or last year's second quarter
earnings. The Company does, however, expect second half results
to improve over that of last year.
LIQUIDITY AND CAPITAL RESOURCES
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OPERATING ACTIVITIES
Operating Activities used $17,172,000 during the first
quarter of the current year and used $42,715,000 in the first
quarter of the prior year. The primary factors contributing to
this decreased use of cash were a smaller increase in receivables
and a decrease in inventory offset by a larger decrease in trade
payables as compared to the first quarter of the previous year.
Receivables increased for the quarter slightly faster than sales
due principally to the timing of shipments. The inventory
reduction came as a result of shipments to some of the Company's
larger customers who had deferred shipments in the fourth quarter
of the last fiscal year. The decrease in trade payables were due
to seasonal fluctuation.
INVESTING ACTIVITIES
Investing activities used $11,988,000 in the first quarter of
the current year and $2,299,000 in the same period of the prior
year. During the first quarter of the current year the Company
completed the purchase of assets of Ely & Walker. The Company
also continued the enlargement and renovation of the distribution
center in Lyons, GA.
FINANCING ACTIVITIES
Financing activities provided $37,209,000 in the first
quarter of the current year and $44,062,000 in the same period of
the prior year. The primary factor contributing to this change
was decreased short-term borrowing activity, due to the operating
and investing activities described above.
Due to the exercise of employee stock options a net of 10,760
shares of the Company's common stock have been issued during the
three months ended September 1,1995 and 280 shares have been
issued since September 1, 1995 through October 6, 1995.
WORKING CAPITAL
Working capital increased from $112,087,000 at the end of the
first quarter of the previous year to $143,612,000 at the end of
the 1995 fiscal year, and decreased to $141,226,000 at the end of
the first quarter of the current year. The ratio of current
assets to current liabilities was 1.8 at the end of the first
quarter of the prior fiscal year, 2.1 at the end of the prior
fiscal year and 1.9 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 or
has available borrowing capacity 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 September 1, 1995, the Company had available
for its use lines of credit with several lenders aggregating
$50,000,000. The Company has agreed to pay commitment fees for
these available lines of credit. At September, 1, 1995,
$50,000,000 was in use under these lines. Of the $50,000,000,
$40,000,000 is long-term. In addition, the Company has
$193,000,000 in uncommitted lines of credit, of which $98,000,000
is reserved exclusively for letters of credit. The Company pays
no commitment fees for these available lines of credit. At
September 1, 1995, $72,500,000 was in use under these lines of
credit. Maximum short-term borrowings from all sources during
the first three months of the current year were $125,500,000.
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 sell securities or
enter into off-balance sheet financing arrangements.
ADDITIONAL INFORMATION
For additional information concerning the Company's
operations, cash flows, liquidity and capital resources, this
analysis should be read in conjunction with the Consolidated
Financial statements and the Notes to Consolidated Financial
statements contained in the Company's Annual Report for fiscal
1995.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
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(a) Exhibits.
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4(e) Amendment dated June 1, 1995 to Note Agreement between
the Company and The Prudential Insurance Company of
America dated May 26, 1988 covering the Company's 8.62%
promissory note due May 24, 1996.
11 Statement re computation of per share earnings.
27 Financial Data Schedule.
(b) Reports on Form 8-K.
--------------------
The Registrant did not file any reports on Form 8-K during
the quarter ended September 1, 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.
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(Registrant)
/s/Ben B. Blount, Jr.
--------------------------
Date: October 13, 1995 Ben B. Blount, Jr.
--------------- Chief Financial Officer
EXHIBIT 4(e)
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
c/o Prudential Capital Group
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07102
October 3, 1995
Oxford Industries, Inc.
222 Piedmont Avenue, N.E.
Atlanta, Georgia 30308
Attention: Chief Financial Officer
Gentlemen:
This letter is to amend that certain Note Agreement between Oxford Industries,
Inc. (the "Company") and the Prudential Insurance Company of America
("Prudential"), dated May 26, 1988, as amended previously the ("Note
Agreement") pursuant to which the Company issued and sold and Prudential
purchased the Company's 8.62% promissory note due May 26, 1996, in the
original principal amount of $30,000,000.
Pursuant to Paragraph 11C of the Note Agreement, and subject to the written
acceptance of the Company as hereinafter provided, Prudential and the Company
hereby agree to amend the Note Agreement as follows:
1. Paragraph 6C(2)(a) is hereby amended and restated in its entirety as
follows:
" (a) the sum of (1) the aggregate amount of all outstanding Debt
(including Secured Debt) of the Company and its Subsidiaries determined on
a consolidated basis, plus (2) the aggregate amount of all outstanding
unsecured Current Debt of the Company permitted by clause (v) of this
paragraph 6C(2), to exceed an amount equal to 110% of Consolidated
Tangible Net Worth, or "
Except as modified hereby, the terms and conditions of the Note Agreement
remain in full force and effect.
If you are in agreement with the foregoing, please sign the enclosed
counterparts of this letter and return them to Prudential, whereupon this
letter shall become a binding agreement between the Company and
Prudential as of June 1, 1995.
Very Truly yours,
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By:/S/ Thomas Cecka
Vice President
The foregoing amendment is agreed to
and accepted this 6 day of October, 1995
OXFORD INDUSTRIES, INC.
By:/S/ James W. Wold
Title: Treasurer
EXHIBIT 11
OXFORD INDUSTRIES, INC.
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
QUARTERS ENDED SEPTEMBER 1, 1995 AND SEPTEMBER 2, 1994
(UNAUDITED)
Quarter Ended
-----------------------------------
September 1, 1995 September 2, 1994
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Net earnings $278,000 $4,856,000
Average Number of Shares
Outstanding
Primary 8,795,999 8,838,142
Fully diluted 8,795,999 8,838,142
As reported 8,700,450 8,645,562
Net Earnings per Common Share
Primary $0.03 $0.55
Fully diluted $0.03 $0.55
As reported* $0.03 $0.56
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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.
EXHIBIT 99
INDEX OF EXHIBITS
INCLUDED HERIN, FORM 10-Q
SEPTEMBER 1, 1995
SEQUENTIAL
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
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4(e) Amendment dated June 1, 1995 to Note Agreement
between the Company and The Prudential Insurance
Company of America dated May 26, 1988 covering
the Company's 8.62% promissory note due
May 24, 1996. 12-13
11 Statement re computation of per share earnings 14
27 Financial Data Schedule 15