13 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 February 28, 1997 ----------------- 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, 1997 - --------------------------- ---------------------------- Common Stock, $1 par value 8,746,694
PART I. FINANCIAL INFORMATION Item 1. Financial Statements. - ----------------------------- OXFORD INDUSTRIES, INC CONSOLIDATED STATEMENT OF EARNINGS NINE MONTHS AND QUARTERS ENDED FEBRUARY 28, 1997 AND MARCH 1, 1996 (UNAUDITED) Nine months Ended Quarter Ended ------------------------- ------------------------ $in thousands except February 28, March 1, February 28, March 1, per share amounts 1997 1996 1997 1996 ------------ ----------- ------------ ----------- Net Sales $543,221 $514,920 $167,470 $138,600 Costs and Expenses: Cost of goods sold 441,091 428,488 133,873 116,135 Selling, general and administrative 74,700 75,547 25,124 24,633 Provision for environmental remediation - 4,500 - - Interest 3,309 4,916 1,142 1,199 ------- ------- ------- ------- Total Costs and Expenses 519,100 513,451 160,139 141,967 ------- ------- ------- ------- Earnings Before Income Taxes 24,121 1,469 7,331 (3,367) Income Taxes 9,648 588 2,932 (1,347) ------- ------- ------- ------- Net Earnings $ 14,473 $ 881 $ 4,399 ($ 2,020) ======== ======= ======= ======= Net earnings Per Common share $1.66 $0.10 $0.51 ($0.23) ======= ======= ======= ======= Average Number of Shares Outstanding 8,738,400 8,731,074 8,732,054 8,779,344 ========= ========= ========= ======== Dividends Per Share $0.60 $0.60 $0.20 $0.20 ========= ========= ========= ========= See notes to consolidated financial statements.
OXFORD INDUSTRIES, INC. CONSOLIDATED BALANCE SHEETS FEBRUARY 28, 1997, MAY 31, 1996 AND MARCH 1, 1996 (UNAUDITED EXCEPT FOR MAY 31, 1996) $ in thousands February 28, May 31, March 1, - -------------- 1997 1996 1996 ----------- ------- ----------- Assets - ------ Current Assets: Cash $ 3,058 $ 1,015 $ 2,408 Receivables 105,561 84,593 89,201 Inventories: Finished goods 70,152 75,787 79,844 Work in process 23,734 24,717 18,190 Fabric, trim & supplies 29,285 36,285 31,472 -------- -------- -------- 123,171 136,789 129,506 Prepaid expenses 14,306 13,747 16,378 -------- -------- -------- Total Current Assets 246,096 236,144 237,493 Property Plant and Equipment 33,948 36,659 38,865 Other Assets 6,163 6,300 6,505 -------- -------- -------- Total Assets $286,207 $279,103 $282,863 ======== ======== ======== Liabilities and Stockholders' Equity - ------------------------------------ Current Liabilities Notes payable $26,500 $25,500 $36,000 Trade accounts payable 40,163 49,676 32,600 Accrued compensation 9,760 7,225 6,938 Other accrued expenses 19,205 13,014 16,968 Dividends payable 1,749 1,760 1,760 Current maturities of long- term debt 1,243 1,632 4,625 -------- -------- -------- Total Current Liabilities 98,620 98,807 98,891 Long-Term Debt, less current maturities 43,487 45,051 46,230 Noncurrent Liabilities 4,500 4,500 4,500 Deferred Income Taxes 2,155 1,786 3,868 Stockholders' Equity: Common stock 8,745 8,803 8,801 Additional paid in capital 8,874 8,211 8,180 Retained earnings 119,826 111,945 112,393 -------- -------- -------- Total Stockholders' Equity 137,445 128,959 129,374 -------- -------- -------- Total Liabilities and Stockholders' Equity $286,207 $279,103 $282,863 ======== ======== ======== See notes to consolidated financial statements.
OXFORD INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED FEBRUARY 28, 1997 AND MARCH 1, 1996 (UNAUDITED) February 28, March 1, 1997 1996 Cash Flows From Operating Activities --------------------------------- - ------------------------------------ Net earnings $ 14,473 $ 881 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 6,880 6,185 Provision for environmental remediation - 4,500 (Gain) loss on sale of property, plant and equipment (284) 9 Changes in working capital: Receivables (20,968) (3,076) Inventories 13,618 42,839 Prepaid expenses (559) (1,720) Trade accounts payable (9,513) (21,873) Accrued expenses and other current liabilities 8,726 2,462 Deferred income taxes 369 6 Other noncurrent assets (472) (1,330) Net cash flows provided by ----------- --------- operating activities 12,270 28,883 Cash Flows From Investing Activities - ------------------------------------ Acquisitions - (11,488) Proceeds from sale of business - 1,273 Purchase of property, plant and equipment (4,980) (7,002) Proceeds from sale of property, plant and equipment 1,703 973 -------- ---------- Net cash (used in) investing activities (3,277) (16,244) Cash Flows From Financing Activities - ------------------------------------ Short-term borrowings 1,000 (7,500) Payments on long-term debt (1,953) (888) Proceeds from exercise of stock options 747 1,157 Purchase and retirement of common stock (1,500) - Dividends on common stock (5,244) (5,225) Net cash (used in) ------ ------- financing activities (6,950) (12,456) Net change in Cash and Cash Equivalents 2,043 183 Cash and Cash Equivalents at Beginning of Period 1,015 2,225 -------- -------- Cash and Cash Equivalents at End of Period $ 3,058 $ 2,408 ======== ======== Supplemental Disclosure of Cash Flow Information - ------------------------------------------------ Cash paid for: Interest $ 3,286 $ 4,926 Income taxes 10,832 1,628 See notes to consolidated financial statements.
OXFORD INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS QUARTERS ENDED FEBRUARY 28, 1997 AND MARCH 1, 1996 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 31, 1996. 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 NET SALES Net sales for the third quarter of the 1997 fiscal year, which ended February 28, 1997, increased 20.8% from net sales for the same period of the prior year. Net sales for the first nine months of the current year increased 5.5% from net sales for the same period of the prior year. Third quarter net sales increased in all of the Company's major groups and all groups achieved double digit sales increases. The Men's Slacks Group posted a 19.8% sales increase primarily due to its Specialty Catalog business unit. The Men's Tailored Clothing Group posted a 24.0% increase primarily due to its Oscar de la Renta line. Shipments of its new Nautica line began in the last month of the quarter, but were not significant in the current reporting period. The Womenswear Group experienced a 30.6% increase in net sales for the quarter primarily from sales to Wal-Mart and Target. The Men's Shirt Group achieved an 11.6% increase in net sales for the quarter. The group had strong sales gains in Tommy Hilfiger Golf, Tommy Hilfiger Dress Shirts, Polo for Boys and its OxSport private label sport shirt division. Oxford Shirtings, the Company's private label dress shirt division, had a sales decrease due to its exit from wet processed wrinkle-free production. The Company experienced a overall unit sales volume increase of 23.0% and a 1.8% decrease in the average sales price during the third quarter. Third quarter net sales included increased unit sales in the Company's licensed designer divisions (with higher average sales per unit) and increased unit sales in the Womenswear Group (with lower average sales per unit). For the first nine months of the current year, the Company experienced a 2.5% increase unit volume and a 2.8% increase in the average sales price per unit. COST OF GOODS SOLD Cost of goods sold as a percentage of net sales was 79.9% in the third quarter of the current year as compared to 83.8% in the third quarter of the prior year. For the first nine months of the current fiscal year, cost of goods sold as a percentage of net sales was 81.2% and 83.2% for the same period of the prior year. The decrease in cost of goods sold as a percentage of net sales was due in part to the increased sales of higher margin lines. Other factors contributing to the deceased percentage were more efficient manufacturing and the continuation of the shift from domestic production to offshore production yielding relative decreased costs per unit. During the third quarter, the Company's Mens Shirt Groups manufacturing facility, Oxford Philippines, Inc. located in Marilao, Blacan, Philippines continued to increase production levels.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses increased by 2.0% to $25,124,000 in the third quarter of the current year from $24,633,000 in the same period of the prior year. Selling general and administrative expenses decreased by 1.1% to $74,700,000 for the first nine months of the current year from $75,547,000 in the same period of the prior year. As a percentage of net sales, selling, general and administrative expenses decreased to 15.0% for the third quarter of the current year from 17.8% for the third quarter of the prior year, and decreased to 13.8% for the first nine months of the current year from 14.7% for the first nine months of the prior year. The increase in selling, general and administrative expenses for the quarter are primarily due to start up costs of the Nautica and Geoffrey Beene tailored clothing lines. The decrease in selling, general and administrative expenses for the nine months are the result of cost containment initiatives and divestiture of the B.J. Designs division. INTEREST EXPENSE Net interest expense declined by $57,000 to $1,142,000 or 0.7% of net sales in the third quarter of the current year from $1,199,000 or 0.9% of net sales in the third quarter of the prior year. Net interest expense declined by $1,607,000 to $3,309,000 or 0.6% of net sales in the first nine months of the current year from $4,916,000 or 1.0% of net sales in the same period of the prior year. The reduction in net interest expense was due primarily to the reduced inventory from the prior year. INCOME TAXES The Company's effective tax rate was 40.0% in the third quarter of both the current and previous years and for the first nine months of both the current and previous years and does not differ significantly from the Company's statutory rate. FUTURE OPERATING RESULTS The Company expects to maintain its year-to-date performance levels through the fourth quarter. The Company anticipates a record year in sales with continued strong earnings improvements. During the third quarter, the Company signed a licensing agreement with Geoffrey Beene, Inc. The agreement is for the manufacture and sale of the Geoffrey Beene tailored clothing collection of suits, sportcoats, slacks and vests. The collection will be launched for Spring 1998, and is targeted to major department and better specialty stores. During the fourth quarter, the Company's Men's Slacks Group will bring Manufacturera de Sonora, S.A. de C.V. on line. This manufacturing facility located in Sonora, Mexico will be the latest addition to the Company's foreign facilities and is expected to further lower the cost of goods sold. LIQUIDITY AND CAPITAL RESOURCES OPERATING ACTIVITIES Operating activities generated $12,270,000 in the first nine months of the current year and $28,883,000 in the first nine months of the prior year. The primary factors contributing to this reduced generation of funds were increased receivables, smaller decreases in inventory and trade payables partially offset by increased earnings.
INVESTING ACTIVITIES Investing activities used $3,277,000 in the first nine months of the current year and $16,244,000 in the first nine months of the prior year. The primary factors contributing to this change were the acquisition of Ely & Walker in the first quarter of the prior year and Confecciones Monzini, S.A. in the third quarter of the prior year. FINANCING ACTIVITIES Financing activities used $6,950,000 in the first nine months of the current year and $12,456,000 in the first nine months of the prior year. The primary factor was the change in short-term borrowings. The Company purchased and retired 100,000 shares of its common stock during the nine months ended February 28, 1997. During the period after the end of the third quarter through April 7, 1997, no shares have been purchased and retired. Due to the exercise of employee stock options a net of 42,900 shares of the Company's common stock were issued during the first nine months and 1,200 shares were issued since February 28, 1997 through April 7, 1997. On April 7, 1997, the Company's Board of Directors declared a cash dividend of $.20 per share payable May 31, 1997 to shareholders of record on May 15, 1997. WORKING CAPITAL Working capital increased from $138,602,000 at the end of the third quarter of the prior year to $147,476,000 at the end of the third quarter of the current fiscal year. The ratio of current assets to current liabilities was 2.4 at the end of the third quarter of the prior year and 2.5 at the end of the third quarter of the current year. FUTURE LIQUIDITY AND CAPITAL RESOURCES The Company believes it has the ability to generate cash and/or has available borrowing capacity to meet its foreseeable needs. The sources of funds primarily include funds provided by operations and both short- and long-term borrowings. The uses of funds primarily include working capital requirements, capital expenditures, acquisitions, 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 February 28, 1997, the Company had available for its use committed lines of credit with several lenders aggregating $52,000,000, of which $40,000,000 is long-term. The Company pays commitment fees for these lines of credit. At February 28, 1997, $52,000,000 was in use under these lines. Of the $52,000,000, $40,000,000 is long-term. In addition, the Company has $186,000,000 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 lines of credit. At February 28, 1997, $14,500,000 was in use under these lines of credit. Maximum borrowings from all these sources during the first nine months of the current year were $96,000,000 of which $56,000,000 was short-term. The Company anticipates continued use and availability of both committed and uncommitted 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 1996.
PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. - ------------------------------------------ (a) Exhibits. --------- 10i Amendment dated February 28, 1997 to Note Agreement between the Company and Sun Trust of Georgia. Incorporated by reference to the Company's Form 10-K for fiscal year ended June 2, 1995. 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 February 28, 1997.
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/Ben B. Blount, Jr. -------------------------- Date: April 11, 1997 Ben B. Blount, Jr. --------------- Chief Financial Officer