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OXFORD INDUSTRIES INC - Quarter Report: 2010 July (Form 10-Q)

Table of Contents

 

 

 

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 JULY 31, 2010

 

 

 

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                              

(Registrant’s telephone number, including area code)

 

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 £

Accelerated filer þ

Non-accelerated filer £

Smaller reporting company £

 

 

(Do not check if a smaller reporting company)

 

 

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 issuer’s classes of common stock, as of the latest practicable date.

 

 

 

Number of shares outstanding

Title of each class

 

as of August 27, 2010

Common Stock, $1 par value

 

16,560,787

 

 

 



 

OXFORD INDUSTRIES, INC.

INDEX TO FORM 10-Q

For the second quarter of fiscal 2010

 

 

Page

PART I. FINANCIAL INFORMATION

 

 

 

Item 1. Financial Statements

 

Condensed Consolidated Statements of Operations (Unaudited)

4

Condensed Consolidated Balance Sheets (Unaudited)

5

Condensed Consolidated Statements of Cash Flows (Unaudited)

6

Notes to Unaudited Condensed Consolidated Financial Statements

7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

14

Item 3. Quantitative and Qualitative Disclosures About Market Risk

28

Item 4. Controls and Procedures

28

 

 

PART II. OTHER INFORMATION

 

 

 

Item 1. Legal Proceedings

28

Item 1A. Risk Factors

28

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

29

Item 3. Defaults Upon Senior Securities

29

Item 4. Reserved

29

Item 5. Other Information

29

Item 6. Exhibits

29

Signatures

29

 

2



Table of Contents

 

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 impact of economic conditions on consumer demand and spending, demand for our products, timing and cost of shipments requested by our wholesale customers, expected pricing levels, competitive conditions, the timing and cost of planned capital expenditures, costs of products and raw materials we purchase, access to capital and/or credit markets, costs of labor, 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 2009, 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, or words of similar import, have the following meanings:

 

Our, us or we: Oxford Industries, Inc. and its consolidated subsidiaries

 

SG&A: Selling, general and administrative expenses

 

11 3/8% Senior Secured Notes: Our 11.375% senior secured notes due 2015.

 

8 7/8% Senior Unsecured Notes: Our 8.875% senior unsecured notes due 2011, which were satisfied and discharged in June 2009.

 

SEC: U.S. Securities and Exchange Commission

 

Securities Exchange Act: the Securities Exchange Act of 1934, as amended

 

FASB: Financial Accounting Standards Board

 

U.S. GAAP: Generally accepted accounting principles in the United States

 

ASC: FASB Accounting Standards Codification

 

Fiscal 2010

 

52 weeks ending January 29, 2011

Fiscal 2009

 

52 weeks ended January 30, 2010

First half fiscal 2010

 

26 weeks ended July 31, 2010

First half fiscal 2009

 

26 weeks ended August 1, 2009

Fourth quarter fiscal 2010

 

13 weeks ending January 29, 2011

Third quarter fiscal 2010

 

13 weeks ending October 30, 2010

Second quarter fiscal 2010

 

13 weeks ended July 31, 2010

First quarter fiscal 2010

 

13 weeks ended May 1, 2010

Fourth quarter fiscal 2009

 

13 weeks ended January 30, 2010

Third quarter fiscal 2009

 

13 weeks ended October 31, 2009

Second quarter fiscal 2009

 

13 weeks ended August 1, 2009

First quarter fiscal 2009

 

13 weeks ended May 2, 2009

 

3



Table of Contents

 

PART I. FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

OXFORD INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except per share amounts)

 

 

 

Second
Quarter

Fiscal 2010

 

Second
Quarter

Fiscal 2009

 

First
Half
Fiscal 2010

 

First
Half
Fiscal 2009

 

Net sales

 

$186,531

 

 

$192,887

 

 

$404,281

 

 

$ 409,618

 

 

Cost of goods sold

 

98,701

 

 

115,514

 

 

214,869

 

 

242,311

 

 

Gross profit

 

87,830

 

 

77,373

 

 

189,412

 

 

167,307

 

 

SG&A

 

76,246

 

 

73,637

 

 

159,998

 

 

152,320

 

 

Amortization of intangible assets

 

249

 

 

315

 

 

499

 

 

623

 

 

 

 

76,495

 

 

73,952

 

 

160,497

 

 

152,943

 

 

Royalties and other operating income

 

4,031

 

 

2,916

 

 

7,872

 

 

5,385

 

 

Operating income

 

15,366

 

 

6,337

 

 

36,787

 

 

19,749

 

 

Interest expense, net

 

5,143

 

 

6,245

 

 

10,152

 

 

10,810

 

 

Earnings before income taxes

 

10,223

 

 

92

 

 

26,635

 

 

8,939

 

 

Income taxes

 

3,004

 

 

272

 

 

6,919

 

 

2,508

 

 

Net earnings (loss)

 

$    7,219

 

 

$      (180

)

 

$  19,716

 

 

$     6,431

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings (loss) per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$      0.44

 

 

$     (0.01

)

 

$      1.19

 

 

$       0.40

 

 

Diluted

 

$      0.44

 

 

$     (0.01

)

 

$      1.19

 

 

$       0.40

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

16,540

 

 

16,288

 

 

16,515

 

 

16,083

 

 

Dilution

 

12

 

 

 

 

12

 

 

 

 

Diluted

 

16,552

 

 

16,288

 

 

16,527

 

 

16,083

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$      0.11

 

 

$      0.09

 

 

$     0.22

 

 

$      0.18

 

 

 

See accompanying notes.

 

4



Table of Contents

 

OXFORD INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except par amounts)

 

 

 

July 31,
2010

 

January 30,
2010

 

August 1,
2009

 

ASSETS

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$  28,171

 

 

$    8,288

 

 

$    5,461

 

 

Receivables, net

 

74,611

 

 

74,398

 

 

78,467

 

 

Inventories, net

 

76,330

 

 

77,029

 

 

86,828

 

 

Prepaid expenses, net

 

15,484

 

 

10,713

 

 

13,312

 

 

Deferred tax assets

 

15,384

 

 

13,875

 

 

10,208

 

 

Total current assets

 

209,980

 

 

184,303

 

 

194,276

 

 

Property, plant and equipment, net

 

73,919

 

 

79,540

 

 

86,365

 

 

Intangible assets, net

 

136,233

 

 

137,490

 

 

138,880

 

 

Other non-current assets, net

 

22,623

 

 

23,841

 

 

22,932

 

 

Total Assets

 

$442,755

 

 

$425,174

 

 

$442,453

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

 

 

Trade accounts payable and other accrued expenses

 

$  79,105

 

 

$  81,831

 

 

$  75,827

 

 

Accrued compensation

 

18,844

 

 

11,514

 

 

11,132

 

 

Income taxes payable

 

 

 

2,517

 

 

 

 

Short-term debt and current maturities of long-term debt

 

1,195

 

 

 

 

20,417

 

 

Total current liabilities

 

99,144

 

 

95,862

 

 

107,376

 

 

Long-term debt, less current maturities

 

146,736

 

 

146,408

 

 

160,357

 

 

Other non-current liabilities

 

46,965

 

 

50,066

 

 

46,804

 

 

Non-current deferred income taxes

 

28,143

 

 

28,421

 

 

30,013

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

Shareholders’ Equity:

 

 

 

 

 

 

 

 

 

 

Common stock, $1.00 par value per common share

 

16,561

 

 

16,461

 

 

16,520

 

 

Additional paid-in capital

 

94,442

 

 

91,840

 

 

89,253

 

 

Retained earnings

 

35,437

 

 

19,356

 

 

14,136

 

 

Accumulated other comprehensive loss

 

(24,673

)

 

(23,240

)

 

(22,006

)

 

Total shareholders’ equity

 

121,767

 

 

104,417

 

 

97,903

 

 

Total Liabilities and Shareholders’ Equity

 

$442,755

 

 

$425,174

 

 

$442,453

 

 

 

See accompanying notes.

 

5



Table of Contents

 

OXFORD INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

 

 

 

First Half
Fiscal 2010

 

First Half
Fiscal 2009

 

Cash Flows From Operating Activities:

 

 

 

 

 

Net earnings

 

$ 19,716

 

 

$    6,431

 

 

Adjustments to reconcile net earnings to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation

 

8,754

 

 

9,259

 

 

Amortization of intangible assets

 

499

 

 

623

 

 

Amortization/write-off of deferred financing costs and bond discount

 

977

 

 

2,392

 

 

Stock compensation expense

 

2,767

 

 

1,637

 

 

(Gain) loss on sale of property, plant and equipment

 

(3

)

 

42

 

 

Deferred income taxes

 

(1,587

)

 

(3,043

)

 

Changes in working capital:

 

 

 

 

 

 

 

Receivables

 

(630

)

 

2,574

 

 

Inventories

 

357

 

 

35,396

 

 

Prepaid expenses

 

(4,824

)

 

(2,255

)

 

Current liabilities

 

2,018

 

 

(17,601

)

 

Other non-current assets

 

570

 

 

157

 

 

Other non-current liabilities

 

(3,078

)

 

(506

)

 

Net cash provided by operating activities

 

25,536

 

 

35,106

 

 

Cash Flows From Investing Activities:

 

 

 

 

 

 

 

Purchases of property, plant and equipment

 

(3,370

)

 

(5,840

)

 

Proceeds from sale of property, plant and equipment

 

78

 

 

 

 

Net cash used in investing activities

 

(3,292

)

 

(5,840

)

 

Cash Flows From Financing Activities:

 

 

 

 

 

 

 

Repayment of revolving credit arrangements

 

(33,925

)

 

(138,135

)

 

Proceeds from revolving credit arrangements

 

35,097

 

 

138,859

 

 

Repurchase of 8 7/8% Senior Unsecured Notes

 

 

 

(166,805

)

 

Proceeds from the issuance of 11 3/8% Senior Secured Notes

 

 

 

146,029

 

 

Deferred financing costs paid

 

 

 

(4,878

)

 

Proceeds from issuance of common stock

 

230

 

 

193

 

 

Dividends on common stock

 

(3,638

)

 

(2,919

)

 

Net cash used in financing activities

 

(2,236

)

 

(27,656

)

 

Net change in cash and cash equivalents

 

20,008

 

 

1,610

 

 

Effect of foreign currency translation on cash and cash equivalents

 

(125

)

 

561

 

 

Cash and cash equivalents at the beginning of year

 

8,288

 

 

3,290

 

 

Cash and cash equivalents at the end of period

 

$ 28,171

 

 

$    5,461

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

Cash paid for interest, net

 

$   9,114

 

 

$    9,626

 

 

Cash paid for income taxes

 

$ 14,762

 

 

$    7,088

 

 

 

See accompanying notes.

 

6



Table of Contents

 

OXFORD INDUSTRIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SECOND QUARTER OF FISCAL 2010

 

1.                                Basis of Presentation:  The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP 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 U.S. GAAP.  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 dates and for the periods presented.  Results of operations for the interim periods presented are not necessarily indicative of results to be expected for our full 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 2009.

 

2.                                Inventories:  The components of inventories as of the dates specified are summarized as follows (in thousands):

 

 

 

July 31,
2010

 

January 30,
2010

 

August 1,
2009

 

Finished goods

 

$111,220

 

 

$108,788

 

 

$121,306

 

 

Work in process

 

6,466

 

 

6,972

 

 

5,677

 

 

Fabric, trim and supplies

 

3,082

 

 

5,707

 

 

6,568

 

 

LIFO reserve

 

(44,438

)

 

(44,438

)

 

(46,723

)

 

Total

 

 76,330

 

 

 77,029

 

 

 86,828

 

 

 

3.                                Comprehensive Income:  Comprehensive income is calculated as follows for the periods presented (in thousands):

 

 

 

Second Quarter
Fiscal 2010

 

Second Quarter
Fiscal 2009

 

First Half
Fiscal 2010

 

First Half
Fiscal 2009

 

Net earnings (loss)

 

$7,219

 

 

$  (180

)

 

$19,716

 

 

 6,431

 

 

Gain (loss) on foreign currency translation, net of tax

 

686

 

 

4,326

 

 

(1,241

)

 

5,599

 

 

Net unrealized gains (losses) on forward foreign exchange contracts, net of tax

 

(192

)

 

 

 

(192

)

 

 

 

Comprehensive income

 

$7,713

 

 

$4,146

 

 

$18,283

 

 

$12,030

 

 

 

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. Corporate and Other is a reconciling category for reporting purposes and includes our corporate offices, substantially all financing activities, elimination of inter-group sales,  LIFO inventory accounting adjustments and other costs that are not allocated to the operating groups.

 

The table below presents certain information about our operating groups (in thousands).

 

 

 

Second
Quarter
Fiscal 2010

 

Second
Quarter
Fiscal 2009

 

First
Half
Fiscal 2010

 

First
Half
Fiscal 2009

 

Net Sales

 

 

 

 

 

 

 

 

 

Tommy Bahama

 

$  99,349

 

$  94,439

 

$208,454

 

$192,859

 

Ben Sherman

 

18,346

 

23,627

 

40,500

 

47,846

 

Lanier Clothes

 

22,736

 

25,204

 

53,164

 

56,711

 

Oxford Apparel

 

45,551

 

49,464

 

101,893

 

112,668

 

Corporate and Other

 

549

 

153

 

270

 

(466)

 

Total

 

$186,531

 

$192,887

 

$404,281

 

$409,618

 

 

7



Table of Contents

 

 

 

Second
Quarter
Fiscal 2010

 

Second
Quarter
Fiscal 2009

 

First
Half
Fiscal 2010

 

First
Half
Fiscal 2009

 

Depreciation

 

 

 

 

 

 

 

 

 

Tommy Bahama

 

$  3,289

 

 3,643

 

$   6,563

 

$   7,305

 

Ben Sherman

 

524

 

606

 

1,060

 

1,161

 

Lanier Clothes

 

118

 

135

 

237

 

280

 

Oxford Apparel

 

183

 

195

 

365

 

399

 

Corporate and Other

 

274

 

57

 

529

 

114

 

Total

 

$  4,388

 

 4,636

 

$   8,754

 

$   9,259

 

Amortization of Intangible Assets

 

 

 

 

 

 

 

 

 

Tommy Bahama

 

$     173

 

$     222

 

$      346

 

$      444

 

Ben Sherman

 

65

 

84

 

132

 

160

 

Lanier Clothes

 

 

 

 

 

Oxford Apparel

 

11

 

9

 

21

 

19

 

Corporate and Other

 

 

 

 

 

Total

 

$     249

 

$     315

 

$      499

 

$      623

 

Operating Income (Loss)

 

 

 

 

 

 

 

 

 

Tommy Bahama

 

$14,172

 

$13,379

 

$ 32,033

 

$ 25,629

 

Ben Sherman

 

(598

)

(6,308

)

(76)

 

(8,284)

 

Lanier Clothes

 

2,809

 

2,701

 

7,168

 

5,438

 

Oxford Apparel

 

3,358

 

4,129

 

9,329

 

9,322

 

Corporate and Other

 

(4,375

)

(7,564

)

(11,667

)

(12,356

)

Total Operating Income

 

$15,366

 

$  6,337

 

$ 36,787

 

$ 19,749

 

Interest Expense, net

 

5,143

 

6,245

 

10,152

 

10,810

 

Earnings Before Income Taxes

 

$10,223

 

$       92

 

$ 26,635

 

$   8,939

 

 

5.                                Consolidating Financial Data of Subsidiary Guarantors:  Our 11 3/8% Senior Secured Notes due 2015 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 with respect to our 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 July 31, 2010, January 30, 2010 and August 1, 2009 (in thousands) as well as our condensed consolidating statements of operations for the second quarter and first half of each of fiscal 2010 and fiscal 2009 (in thousands) and our condensed consolidating statements of cash flows for the first half of fiscal 2010 and fiscal 2009 (in thousands).

 

8



Table of Contents

 

OXFORD INDUSTRIES, INC.

UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEETS

July 31, 2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oxford
Industries
(Parent)

 

Subsidiary
Guarantors

 

Subsidiary
Non-
Guarantors

 

Consolidating
Adjustments

 

Consolidated
Total

ASSETS

 

Cash and cash equivalents

 

$  25,251

 

$       595

 

$    2,325

 

$          —

 

 28,171

 

Receivables, net

 

32,537

 

6,860

 

44,879

 

(9,665

)

74,611

 

Inventories, net

 

10,744

 

52,677

 

13,632

 

(723

)

76,330

 

Prepaid expenses and deferred tax assets

 

19,038

 

9,086

 

4,457

 

(1,713

)

30,868

 

Total current assets

 

87,570

 

69,218

 

65,293

 

(12,101

)

209,980

 

Property, plant and equipment, net

 

13,014

 

55,786

 

5,119

 

 

73,919

 

Intangible assets, net

 

7

 

112,826

 

23,400

 

 

136,233

 

Other non-current assets, net

 

518,307

 

148,912

 

6,994

 

(651,590

)

22,623

 

Total Assets

 

$618,898

 

$386,742

 

$100,806

 

$(663,691

)

$442,755

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

Current liabilities

 

$  17,886

 

$   47,195

 

$  41,370

 

$    (7,307

)

 99,144

 

Long-term debt, less current maturities

 

146,736

 

 

 

 

146,736

 

Other non-current liabilities

 

336,825

 

(325,463

)

144,157

 

(108,554

)

46,965

 

Non-current deferred income taxes

 

(4,316

)

26,005

 

6,454

 

 

28,143

 

Total shareholders’/invested equity

 

121,767

 

639,005

 

(91,175

)

(547,830

)

121,767

 

Total Liabilities and Shareholders’ Equity

 

$618,898

 

$ 386,742

 

$100,806

 

$(663,691

)

$442,755

 

 

OXFORD INDUSTRIES, INC.

CONDENSED CONSOLIDATING BALANCE SHEETS

January 30, 2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oxford
Industries
(Parent)

 

Subsidiary
Guarantors

 

Subsidiary
Non-
Guarantors

 

Consolidating
Adjustments

 

Consolidated
Total

 

ASSETS

 

Cash and cash equivalents

 

$    5,954

 

$      782

 

 1,552

 

$          —

 

$   8,288

 

Receivables, net

 

35,943

 

2,412

 

45,958

 

(9,915

)

74,398

 

Inventories, net

 

14,218

 

51,911

 

11,897

 

(997

)

77,029

 

Prepaid expenses and deferred tax assets

 

17,292

 

8,111

 

3,103

 

(3,918

)

24,588

 

Total current assets

 

73,407

 

63,216

 

62,510

 

(14,830

)

184,303

 

Property, plant and equipment, net

 

13,997

 

59,939

 

5,604

 

 

79,540

 

Intangible assets, net

 

28

 

113,173

 

24,289

 

 

137,490

 

Other non-current assets, net

 

499,389

 

148,932

 

4,216

 

(628,696

)

23,841

 

Total Assets

 

$586,821

 

$385,260

 

$96,619

 

$(643,526

)

$425,174

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

Current liabilities

 

39,507

 

27,319

 

38,686

 

(9,650

)

95,862

 

Long-term debt, less current maturities

 

146,408

 

 

 

 

146,408

 

Other non-current liabilities

 

300,896

 

(288,230

)

145,195

 

(107,795

)

50,066

 

Non-current deferred income taxes

 

(4,407

)

27,000

 

6,794

 

(966

)

28,421

 

Total shareholders’/invested equity

 

104,417

 

619,171

 

(94,056

)

(525,115

)

104,417

 

Total Liabilities and Shareholders’ Equity

 

$586,821

 

$385,260

 

$96,619

 

$(643,526

)

$425,174

 

 

9



Table of Contents

 

OXFORD INDUSTRIES, INC.

UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEETS

August 1, 2009

 

 

 

Oxford
Industries
(Parent)

 

Subsidiary
Guarantors

 

Subsidiary
Non-
Guarantors

 

Consolidating
Adjustments

 

Consolidated
Total

ASSETS

Cash and cash equivalents

 

$    1,675

 

$         —

 

$    3,786

 

$         —

 

 

$    5,461

 

Receivables, net

 

37,314

 

10,752

 

38,882

 

(8,481

)

 

78,467

 

Inventories, net

 

10,950

 

58,525

 

19,105

 

(1,752

)

 

86,828

 

Prepaid expenses and deferred tax assets

 

9,931

 

9,068

 

3,977

 

544

 

 

23,520

 

Total current assets

 

59,870

 

78,345

 

65,750

 

(9,689

)

 

194,276

 

Property, plant and equipment, net

 

9,793

 

70,320

 

6,252

 

 

 

86,365

 

Intangible assets, net

 

47

 

113,616

 

25,217

 

 

 

138,880

 

Other non-current assets, net

 

473,815

 

145,802

 

35,273

 

(631,958

)

 

22,932

 

Total Assets

 

$543,525

 

$ 408,083

 

$132,492

 

$(641,647

)

 

$442,453

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities

 

$  37,644

 

$   29,710

 

$  47,518

 

$    (7,496

)

 

$107,376

 

Long-term debt, less current maturities

 

160,357

 

 

 

 

 

160,357

 

Other non-current liabilities

 

251,608

 

(205,878

)

110,229

 

(109,155

)

 

46,804

 

Non-current deferred income taxes

 

(3,987

)

27,305

 

6,695

 

 

 

30,013

 

Total shareholders’/invested equity

 

97,903

 

556,946

 

(31,950

)

(524,996

)

 

97,903

 

Total Liabilities and Shareholders’ Equity

 

$543,525

 

$ 408,083

 

$132,492

 

$(641,647

)

 

$442,453

 

 

10



Table of Contents

 

OXFORD INDUSTRIES, INC.

UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

Second Quarter Fiscal 2010

 

 

 

Oxford
Industries
(Parent)

 

Subsidiary
Guarantors

 

Subsidiary
Non-
Guarantors

 

Consolidating
Adjustments

 

Consolidated
Total

 

Net sales

 

$

74,164

 

$

100,899

 

$

20,366

 

$

(8,898

)

$

186,531

 

Cost of goods sold

 

55,564

 

38,637

 

8,424

 

(3,924

)

98,701

 

Gross profit

 

18,600

 

62,262

 

11,942

 

(4,974

)

87,830

 

SG&A including amortization of intangible assets

 

15,844

 

53,194

 

12,825

 

(5,368

)

76,495

 

Royalties and other operating income

 

27

 

2,503

 

1,800

 

(299

)

4,031

 

Operating income

 

2,783

 

11,571

 

917

 

95

 

15,366

 

Interest (income) expense, net

 

5,097

 

(1,078

)

717

 

407

 

5,143

 

Income from equity investment

 

8,549

 

 

 

(8,549

)

 

Earnings before income taxes

 

6,235

 

12,649

 

200

 

(8,861

)

10,223

 

Income taxes (benefit)

 

(1,186

)

4,294

 

5

 

(109

)

3,004

 

Net earnings

 

$

7,421

 

$

8,355

 

$

195

 

$

(8,752

)

$

7,219

 

 

OXFORD INDUSTRIES, INC.

UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

First Half Fiscal 2010

 

 

 

Oxford
Industries
(Parent)

 

Subsidiary
Guarantors

 

Subsidiary
Non-
Guarantors

 

Consolidating
Adjustments

 

Consolidated
Total

 

Net sales

 

$

166,840

 

$

211,856

 

$

42,698

 

$

(17,113

)

$

404,281

 

Cost of goods sold

 

124,184

 

81,375

 

16,907

 

(7,597

)

214,869

 

Gross profit

 

42,656

 

130,481

 

25,791

 

(9,516

)

189,412

 

SG&A including amortization of intangible assets

 

38,535

 

107,836

 

25,722

 

(11,596

)

160,497

 

Royalties and other operating income

 

64

 

5,433

 

3,368

 

(993

)

7,872

 

Operating income

 

4,185

 

28,078

 

3,437

 

1,087

 

36,787

 

Interest (income) expense, net

 

10,062

 

(2,119

)

1,399

 

810

 

10,152

 

Income from equity investment

 

21,359

 

 

 

(21,359

)

 

Earnings before income taxes

 

15,482

 

30,197

 

2,038

 

(21,082

)

26,635

 

Income taxes (benefit)

 

(4,052

)

10,360

 

514

 

97

 

6,919

 

Net earnings

 

$

19,534

 

$

19,837

 

$

1,524

 

$

(21,179

)

$

19,716

 

 

11



Table of Contents

 

OXFORD INDUSTRIES, INC.

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

Second Quarter Fiscal 2009

 

 

 

Oxford
Industries
(Parent)

 

Subsidiary
Guarantors

 

Subsidiary
Non-
Guarantors

 

Consolidating
Adjustments

 

Consolidated
Total

 

Net sales

 

$

74,081

 

$

102,239

 

$

25,848

 

$

(9,281

)

$

192,887

 

Cost of goods sold

 

62,270

 

42,965

 

14,596

 

(4,317

)

115,514

 

Gross profit

 

11,811

 

59,274

 

11,252

 

(4,964

)

77,373

 

SG&A including amortization of intangible assets

 

11,175

 

52,187

 

15,821

 

(5,231

)

73,952

 

Royalties and other operating income

 

22

 

2,057

 

1,203

 

(366

)

2,916

 

Operating income (loss)

 

658

 

9,144

 

(3,366

)

(99

)

6,337

 

Interest (income) expense, net

 

6,684

 

(1,370

)

931

 

 

6,245

 

Income from equity investment

 

4,594

 

 

 

(4,594

)

 

Earnings (loss) before income taxes

 

(1,432

)

10,514

 

(4,297

)

(4,693

)

92

 

Income taxes (benefit)

 

(1,316

)

2,821

 

(1,199

)

(34

)

272

 

Net earnings (loss)

 

$

(116

)

$

7,693

 

$

(3,098

)

$

(4,659

)

$

(180

)

 

First Half Fiscal 2009

 

 

 

Oxford
Industries
(Parent)

 

Subsidiary
Guarantors

 

Subsidiary
Non-
Guarantors

 

Consolidating
Adjustments

 

Consolidated
Total

 

Net sales

 

$

166,874

 

$

210,304

 

$

51,133

 

$

(18,693

)

$

409,618

 

Cost of goods sold

 

136,776

 

88,929

 

25,384

 

(8,778

)

242,311

 

Gross profit

 

30,098

 

121,375

 

25,749

 

(9,915

)

167,307

 

SG&A including amortization of intangible assets

 

25,162

 

109,221

 

29,800

 

(11,240

)

152,943

 

Royalties and other operating income

 

34

 

4,276

 

2,184

 

(1,109

)

5,385

 

Operating income (loss)

 

4,970

 

16,430

 

(1,867

)

216

 

19,749

 

Interest (income) expense, net

 

11,640

 

(2,717

)

1,887

 

 

10,810

 

Income from equity investment

 

11,550

 

 

 

(11,550

)

 

Earnings (loss) before income taxes

 

4,880

 

19,147

 

(3,754

)

(11,334

)

8,939

 

Income taxes (benefit)

 

(1,411

)

5,084

 

(1,241

)

76

 

2,508

 

Net earnings (loss)

 

$

6,291

 

$

14,063

 

$

(2,513

)

$

(11,410

)

$

6,431

 

 

12



Table of Contents

 

OXFORD INDUSTRIES, INC.

UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

First Half Fiscal 2010

 

 

 

Oxford
Industries
(Parent)

 

Subsidiary
Guarantors

 

Subsidiary
Non-
Guarantors

 

Consolidating
Adjustments

 

Consolidated
Total

 

Cash Flows From Operating Activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash (used in) provided by operating activities

 

$

(14,632

)

 

$

39,115

 

 

$ 1,053

 

 

$ —

 

$25,536

 

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash used in investing activities

 

 

(485

)

 

 

(2,430

)

 

(377

)

 

 

(3,292

)

 

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in debt

 

 

 

 

 

 

 

1,172

 

 

 

1,172

 

 

Proceeds from issuance of common stock

 

 

230

 

 

 

 

 

 

 

 

230

 

 

Change in intercompany payable

 

 

37,822

 

 

 

(36,872

)

 

(950

)

 

 

 

 

Dividends on common stock

 

 

(3,638

)

 

 

 

 

 

 

 

(3,638

)

 

Net cash (used in) provided by financing activities

 

 

34,414

 

 

 

(36,872

)

 

222

 

 

 

(2,236

)

 

Net change in cash and cash equivalents

 

 

19,297

 

 

 

(187

)

 

898

 

 

 

20,008

 

 

Effect of foreign currency translation

 

 

 

 

 

 

 

(125

)

 

 

(125

)

 

Cash and cash equivalents at the beginning of year

 

 

5,954

 

 

 

782

 

 

1,552

 

 

 

8,288

 

 

Cash and cash equivalents at the end of period

 

$

25,251

 

 

$

595

 

 

$ 2,325

 

 

$ —

 

$28,171

 

 

 

OXFORD INDUSTRIES, INC.

UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

First Half Fiscal 2009

 

 

 

Oxford
Industries
(Parent)

 

Subsidiary
Guarantors

 

Subsidiary
Non-
Guarantors

 

Consolidating
Adjustments

 

Consolidated
Total

 

Cash Flows From Operating Activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash (used in) provided by operating activities

 

$

(97

)

 

$

35,965

 

 

$

(762

)

 

$ —

 

$

35,106

 

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash (used in) provided by investing activities

 

 

(1,496

)

 

 

(3,212

)

 

 

(1,132

)

 

 

 

(5,840

)

 

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in debt

 

 

(24,221

)

 

 

 

 

 

4,169

 

 

 

 

(20,052

)

 

Payments of debt issuance costs

 

 

(4,878

)

 

 

 

 

 

 

 

 

 

(4,878

)

 

Proceeds from issuance of common stock

 

 

193

 

 

 

 

 

 

 

 

 

 

193

 

 

Change in intercompany payable

 

 

33,566

 

 

 

(33,290

)

 

 

(276

)

 

 

 

 

 

Dividends on common stock

 

 

(2,919

)

 

 

 

 

 

 

 

 

 

(2,919

)

 

Net cash (used in) provided by financing activities

 

 

1,741

 

 

 

(33,290

)

 

 

3,893

 

 

 

 

(27,656

)

 

Net change in cash and cash equivalents

 

 

148

 

 

 

(537

)

 

 

1,999

 

 

 

 

1,610

 

 

Effect of foreign currency translation

 

 

 

 

 

 

 

 

561

 

 

 

 

561

 

 

Cash and cash equivalents at the beginning of year

 

 

1,527

 

 

 

537

 

 

 

1,226

 

 

 

 

3,290

 

 

Cash and cash equivalents at the end of period

 

$

1,675

 

 

$

 

 

$

3,786

 

 

$ —

 

$

5,461

 

 

 

13



Table of Contents

 

ITEM 2. MANAGEMENT’S 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 Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for fiscal 2009.

 

OVERVIEW

 

We generate revenues and cash flow primarily through the design, production, sale and distribution of branded and private label consumer apparel for men and women 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 manufacturers 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. Our products for certain owned brands are also sold through our owned and licensed retail stores and e-commerce websites.

 

As a result of the weak global economic conditions, fiscal 2009 was a particularly challenging year for each of our operating groups. While we have seen some signs of recovery, we believe these challenging economic conditions will continue to persist and impact each of our operating groups through the end of fiscal 2010, or beyond. Thus, we have purchased inventory for fiscal 2010 at levels which we believe should mitigate inventory markdown risk and promotional pressure; however, these precautions may also limit our growth opportunities. In the current economic environment, we also believe it is important to continue to focus on maintaining a strong balance sheet and ample liquidity. We believe that the measures we have taken to reduce working capital requirements, moderate capital expenditures for retail stores, reduce our overhead and refinance our significant debt agreements have significantly enhanced our balance sheet and liquidity.

 

The apparel and retail industry is cyclical and dependent upon the overall level of discretionary consumer spending, which changes as regional, domestic and international economic conditions change. The impact of negative economic conditions may have a longer and more severe impact on the apparel and retail industry than the same conditions have on other industries. Therefore, even if conditions improve in the general economy, the negative impact on the apparel and retail industry may continue.

 

The following table sets forth our consolidated operating results (in thousands, except per share amounts) for the first half of fiscal 2010 compared to the first half of fiscal 2009:

 

 

 

First Half

 

 

 

 

 

 

Fiscal 2010

 

 

Fiscal 2009

 

 

$ Change

 

Net sales

 

$404,281

 

 

$409,618

 

 

$ (5,337

)

Net earnings

 

$  19,716

 

 

$    6,431

 

 

$13,285

 

Diluted net earnings per common share

 

$      1.19

 

 

$      0.40

 

 

$    0.79

 

Weighted average common shares outstanding—diluted

 

16,527

 

 

16,083

 

 

444

 

 

The primary reasons for the improvement in net earnings were:

 

·                  A change in our net sales mix, with Tommy Bahama sales, which generally have higher gross margins than our other operating groups, representing a higher proportion of consolidated net sales and sales related to certain exited businesses representing a lower proportion of consolidated net sales during the first half of fiscal 2010. The first half of fiscal 2009 included $26.4 million of net sales associated with businesses that we have exited.

 

·                  Improved gross margins, which benefitted from the first half of fiscal 2010 including a LIFO charge of $1.6 million compared to the first half of fiscal 2009 including a LIFO charge of $5.5 million.

 

14



Table of Contents

 

·                  Increased royalty income in both Tommy Bahama and Ben Sherman resulting from increased sales during the first half of fiscal 2010 by existing licensees, as well as the addition of new licensees.

 

·                  The first half of fiscal 2009 included $1.4 million of restructuring charges related to Ben Sherman’s exit from and subsequent licensing of its footwear and kids operations and other streamlining initiatives.

 

·                  The first half of fiscal 2009 included a $1.8 million write-off of unamortized deferred financing costs related to the satisfaction and discharge of the remaining 8 7/8% Senior Unsecured Notes, which was included in interest expense.

 

These items were partially offset by increased SG&A primarily due to increased incentive compensation amounts resulting from the resumption of our incentive compensation program, which was suspended in fiscal 2009 and is tied to our financial performance.

 

OPERATING GROUPS

 

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.

 

Tommy Bahama designs, sources and markets collections of men’s and women’s sportswear and related products. 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. 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. We also license the Tommy Bahama name for various 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 men’s, “Mod”-inspired shirt brand and has evolved into a British lifestyle brand of apparel targeted at youthful-thinking men age 19 to 35 throughout the world. We offer a Ben Sherman men’s sportswear collection, as well as tailored clothing and accessories. Our Ben Sherman products can be found in certain department stores, a variety of independent specialty stores and our owned and licensed Ben Sherman retail stores, as well as 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 men’s 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 our Billy London® and Arnold Brant® trademarks. In addition to our branded businesses, we design and source certain private label tailored clothing products. Significant private label brands include Stafford®, Lands’ End® and Alfani®. 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, suit 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 Costco, Sears, Target and Macy’s. 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 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, elimination of inter-segment sales, LIFO inventory accounting adjustments and other costs that are not allocated to the operating groups. LIFO inventory calculations are made on a legal entity basis which does not correspond to our operating group definitions; therefore, LIFO inventory accounting adjustments are not allocated to operating groups.

 

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Table of Contents

 

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 2009.

 

RESULTS OF OPERATIONS

 

SECOND QUARTER OF FISCAL 2010 COMPARED TO SECOND QUARTER OF FISCAL 2009

 

The following table sets 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 table also sets forth the dollar change and 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 classification of certain expenses may vary by company.

 

 

 

Second Quarter

 

 

 

 

 

 

 

Fiscal 2010

 

Fiscal 2009

 

$ Change

 

% Change

 

Net sales

 

$186,531

 

100.0%

 

$192,887

 

100.0%

 

$  (6,356

)

(3.3%

)

Cost of goods sold

 

98,701

 

52.9%

 

115,514

 

59.9%

 

(16,813

)

(14.6%

)

Gross profit

 

87,830

 

47.1%

 

77,373

 

40.1%

 

10,457

 

13.5%

 

SG&A

 

76,246

 

40.9%

 

73,637

 

38.2%

 

2,609

 

3.5%

 

Amortization of intangible assets

 

249

 

0.1%

 

315

 

0.2%

 

(66

)

(21.0%

)

Royalties and other operating income

 

4,031

 

2.2%

 

2,916

 

1.5%

 

1,115

 

38.2%

 

Operating income

 

15,366

 

8.2%

 

6,337

 

3.3%

 

9,029

 

142.5%

 

Interest expense, net

 

5,143

 

2.8%

 

6,245

 

3.2%

 

(1,102

)

(17.6%

)

Earnings before income taxes

 

10,223

 

5.5%

 

92

 

0.0%

 

10,131

 

NM

 

Income taxes

 

3,004

 

1.6%

 

272

 

0.1%

 

2,732

 

NM

 

Net earnings (loss)

 

$   7,219

 

3.9%

 

     (180

)

(0.1%

)

   7,399

 

NM

 

 

The discussion and tables below compare certain line items included in our statements of operations for the second quarter of fiscal 2010 to the second quarter of fiscal 2009. Each dollar and percentage change provided reflects the change between these periods unless indicated otherwise. Each dollar and share amount included in the tables is in thousands except for per share amounts.

 

Net Sales

 

 

 

 

 

 

 

Second Quarter

 

 

 

 

 

 

 

 

 

 

 

Fiscal 2010

 

Fiscal 2009

 

$ Change

 

% Change

 

Tommy Bahama

 

 

 

 

 

$  99,349

 

 

$  94,439

 

 

$  4,910

 

 

5.2%

 

Ben Sherman

 

 

 

 

 

18,346

 

 

23,627

 

 

(5,281

)

 

(22.4%

)

Lanier Clothes

 

 

 

 

 

22,736

 

 

25,204

 

 

(2,468

)

 

(9.8%

)

Oxford Apparel

 

 

 

 

 

45,551

 

 

49,464

 

 

(3,913

)

 

(7.9%

)

Corporate and Other

 

 

 

 

 

549

 

 

153

 

 

396

 

 

NM

 

Total net sales

 

 

 

 

 

$186,531

 

 

$192,887

 

 

$(6,356

)

 

(3.3%

)

 

Consolidated net sales decreased $6.4 million, or 3.3%, in the second quarter of fiscal 2010 compared to the second quarter of fiscal 2009 primarily due to $13.4 million of sales related to businesses that we have exited being included in the second quarter of fiscal 2009 and the other changes in each operating group discussed below.

 

Tommy Bahama:

 

The increase in net sales for Tommy Bahama was primarily due to improved comparable retail store sales and higher e-commerce sales. Tommy Bahama unit sales increased 8.5%, which was primarily a result of the improvement in the direct to consumer channels, while the average selling price per unit decreased by 2.9%. The decrease in the average selling price per unit for apparel was primarily due to a change in product mix. As of July 31, 2010 and August 1, 2009, we operated 86 and 84 Tommy Bahama retail stores, respectively.

 

Ben Sherman:

 

The decrease in net sales for Ben Sherman was primarily due to a 23.0% reduction in unit sales primarily resulting from our exit from and subsequent licensing of our footwear and kids’ businesses and our exit from the women’s operations. Net sales in the second quarter of fiscal 2009 related to these exited businesses totaled approximately $5.4

 

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Table of Contents

 

million. The decrease in unit sales was compounded by a 6.3% decrease in the average exchange rate of the British pound sterling versus the United States dollar during the second quarter of fiscal 2010 compared to the average exchange rate during the second quarter of fiscal 2009 resulting in a reduction in net sales of $1.2 million. These items that reduced net sales were partially offset by an increase in comparable retail store sales and increases in Ben Sherman’s men’s sportswear business. The average selling price per unit for Ben Sherman increased 0.8% compared to the second quarter of fiscal 2009 due to the increased proportion of retail sales, which has a higher average selling price, as a percentage of total Ben Sherman sales, as well as the second quarter of fiscal 2009’s wholesale sales including a larger proportion of close-out sales.

 

Lanier Clothes:

 

The decrease in net sales for Lanier Clothes was primarily due to $1.8 million of close-out sales associated with exited businesses during the second quarter of fiscal 2009. Unit sales declined 14.1% and the average selling price per unit increased 5.1%, both primarily as a result of the second quarter of fiscal 2010 not including any close-out sales associated with the exited businesses.

 

Oxford Apparel:

 

The decrease in net sales for Oxford Apparel was primarily due to the second quarter of fiscal 2009 including $6.2 million of close-out sales related to certain businesses that we previously exited. Unit sales declined 7.9%, as a result of the inclusion of the close-out sales in the second quarter of fiscal 2009, and the average selling price per unit was relatively flat between the two periods.

 

Gross Profit

 

 

 

Second Quarter

 

 

 

 

 

 

 

Fiscal 2010

 

Fiscal 2009

 

$ Change

 

% Change

 

Gross profit

 

$ 87,830

 

$ 77,373

 

$ 10,457

 

13.5%

 

Gross margin (gross profit as a % of net sales)

 

47.1

%

40.1

%

 

 

 

 

LIFO charges included in cost of goods sold

 

$      976

 

$   4,043

 

 

 

 

 

 

The increase in gross profit was primarily due to (1) improved gross margins in each operating group resulting from changes in product mix as a result of the prior year including a greater proportion of close-out sales, (2) the increase in Tommy Bahama’s net sales, which generally have higher gross margins than our other operating groups, both in total and as a proportion of consolidated net sales and (3) the impact of LIFO accounting charges.  Gross margins increased to 47.1% of net sales during the second quarter of fiscal 2010 from 40.1% in the second quarter of fiscal 2009. Gross profit included charges for LIFO accounting of $1.0 million in the second quarter of fiscal 2010 and $4.0 million in the second quarter of fiscal 2009. We anticipate that consolidated gross margins in fiscal 2010 will continue to increase compared to the prior year as our consolidated sales mix is more heavily weighted towards Tommy Bahama; however, this change is expected to be partially offset by increases in cotton prices, wages in Asia and ocean shipping costs. 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

 

 

 

Second Quarter

 

 

 

 

 

 

 

Fiscal 2010

 

Fiscal 2009

 

$ Change

 

% Change

 

SG&A

 

$ 76,246

 

$ 73,637

 

$ 2,609

 

3.5%

 

SG&A (as % of net sales)

 

40.9

%

38.2

%

 

 

 

 

Restructuring charges included in SG&A

 

$        —

 

$   1,362

 

 

 

 

 

 

The increase in SG&A was primarily due to costs associated with the resumption of our incentive compensation program, which was suspended in fiscal 2009 and is tied to our financial performance. The resumption of our incentive compensation program impacted SG&A for each operating group.  The second quarter of fiscal 2009 included $1.4 million of restructuring charges in Ben Sherman related to its exit from and subsequent licensing of its footwear and kids’ businesses and other streamlining initiatives.

 

Royalties and other operating income

 

 

 

Second Quarter

 

 

 

 

 

 

 

Fiscal 2010

 

Fiscal 2009

 

$ Change

 

% Change

 

Royalties and other operating income

 

$ 4,031

 

$ 2,916

 

$ 1,115

 

38.2%

 

 

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The increase in royalties and other operating income was primarily due to increased royalty income in both Tommy Bahama and Ben Sherman, as sales reported by certain licensees increased and new licensees were added.

 

Operating income (loss)

 

 

 

Second Quarter

 

 

 

 

 

 

 

Fiscal 2010

 

Fiscal 2009

 

$ Change

 

% Change   

Tommy Bahama

 

$14,172

 

$13,379

 

  793

 

5.9

%

Ben Sherman

 

(598

)

(6,308

)

5,710

 

90.5

%

Lanier Clothes

 

2,809

 

2,701

 

108

 

4.0

%

Oxford Apparel

 

3,358

 

4,129

 

(771

)

(18.7

%)

Corporate and Other

 

(4,375

)

(7,564

)

3,189

 

42.2

%

Total operating income

 

$15,366

 

$  6,337

 

$9,029

 

142.5

%

LIFO charges included in operating income

 

$     976

 

$  4,043

 

 

 

 

 

Restructuring charges included in operating income

 

$       —

 

$  1,362

 

 

 

 

 

 

Operating income, on a consolidated basis, increased to $15.4 million in the second quarter of fiscal 2010 from $6.3 million in the second quarter of fiscal 2009. The $9.0 million increase in operating income was primarily due to the improved gross margins in each operating group and higher royalty income, which was partially offset by decreased net sales and increased SG&A, each as described above. Operating income included charges for LIFO accounting of $1.0 million in the second quarter of fiscal 2010 and $4.0 million in the second quarter of fiscal 2009. The second quarter of fiscal 2009 also included restructuring charges of $1.4 million in Ben Sherman. Changes in operating income by operating group are discussed below.

 

Tommy Bahama:

 

 

 

Second Quarter

 

 

 

 

 

 

 

Fiscal 2010

 

Fiscal 2009

 

$ Change

 

% Change

 

Net sales

 

$99,349

 

$94,439

 

$4,910

 

5.2%

 

Operating income

 

$14,172

 

$13,379

 

$   793

 

5.9%

 

Operating income as % of net sales

 

14.3

%

14.2

%

 

 

 

 

 

The increase in operating income for Tommy Bahama was primarily due to the increased net sales, improved gross margins due to a greater proportion of direct to consumer sales as a percentage of total Tommy Bahama sales and higher royalty income. These items were partially offset by increased SG&A.

 

Ben Sherman:

 

 

 

Second Quarter

 

 

 

 

 

 

 

Fiscal 2010

 

Fiscal 2009

 

$ Change

 

% Change

 

Net sales

 

$18,346

 

$23,627

 

$(5,281

)

(22.4%

)

Operating income (loss)

 

   (598

)

$ (6,308

)

 5,710

 

90.5%

 

Operating income (loss) as % of net sales

 

(3.3

%)

(26.7

%)

 

 

 

 

Restructuring charges included in operating income (loss)

 

$       —

 

$  1,362

 

 

 

 

 

 

The improved operating results for Ben Sherman were primarily due to improved gross margins and reduced SG&A, both of which were primarily a result of our exit from and subsequent licensing of the footwear and kids’ businesses, our exit from the women’s operations and increased royalty income. The second quarter of fiscal 2009 SG&A for Ben Sherman also included $1.4 million of restructuring charges primarily related to our exit from and subsequent licensing of the footwear and kids’ businesses and other streamlining initiatives.

 

Lanier Clothes:

 

 

 

Second Quarter

 

 

 

 

 

 

 

Fiscal 2010

 

Fiscal 2009

 

$ Change

 

% Change

 

Net sales

 

$22,736

 

$25,204

 

$(2,468

)

(9.8%

)

Operating income

 

$  2,809

 

$  2,701

 

$    108

 

4.0%

 

Operating income as % of net sales

 

12.4

%

10.7

%

 

 

 

 

 

The increase in operating income for Lanier Clothes, despite a decrease in net sales, was primarily due to improved gross margins resulting from sales mix, with branded sales representing a greater proportion of Lanier Clothes’ sales in the second quarter of fiscal 2010, and close-out sales associated with exited businesses included in the prior year.

 

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Table of Contents

 

Oxford Apparel:

 

 

 

Second Quarter

 

 

 

 

 

 

 

Fiscal 2010

 

Fiscal 2009

 

$ Change

 

% Change

 

Net sales

 

$45,551

 

$49,464

 

$(3,913

)

(7.9%

)

Operating income

 

$  3,358

 

$  4,129

 

$   (771

)

(18.7%

)

Operating income as % of net sales

 

7.4

%

8.3

%

 

 

 

 

 

The decrease in operating income was primarily due to decreased sales and increased SG&A, which were partially offset by higher gross margins resulting from a greater proportion of close-out sales included in the second quarter of fiscal 2009.

 

Corporate and Other:

 

 

 

Second Quarter

 

 

 

 

 

 

 

Fiscal 2010

 

Fiscal 2009

 

$ Change

 

% Change

 

Operating income (loss)

 

$(4,375

)

$(7,564

)

$3,189

 

42.2%

 

LIFO charges included in operating income (loss)

 

$    976

 

 4,043

 

 

 

 

 

 

The Corporate and Other operating loss decreased by $3.2 million from a loss of $7.6 million in the second quarter of fiscal 2009 to a loss of $4.4 million in the second quarter of fiscal 2010. The decrease in the operating loss was primarily due to LIFO accounting charges of $1.0 million in the second quarter of fiscal 2010 and $4.0 million in the second quarter of fiscal 2009.

 

Interest expense, net

 

 

 

Second Quarter

 

 

 

 

 

 

 

Fiscal 2010

 

Fiscal 2009

 

$ Change

 

% Change

 

Interest expense, net

 

$5,143

 

$6,245

 

$(1,102

)

(17.6%

)

Write-off of deferred financing costs included in interest expense

 

$     —

 

$1,759

 

 

 

 

 

 

The decrease in interest expense was primarily due to the $1.8 million write-off of unamortized deferred financing costs and discount related to the 8 7/8% Senior Unsecured Notes, which were satisfied and discharged in June 2009, as well as a lower level of borrowings in the second quarter of fiscal 2010 resulting from the cash flow from operations generated subsequent to the second quarter of fiscal 2009. These items were partially offset by the higher interest rate associated with our 11 3/8% Senior Secured Notes.

 

Income taxes

 

 

 

Second Quarter

 

 

 

 

 

 

 

Fiscal 2010

 

Fiscal 2009

 

$ Change

 

% Change

 

Income taxes

 

$3,004

 

$   272

 

$2,732

 

NM

 

Effective tax rate

 

29.4

%

295.7

%

 

 

 

 

 

The rates for both periods reflect the impact of permanent differences which do not necessarily fluctuate with earnings, as well as the impact of certain discrete items. Also, the second quarter of fiscal 2009 was impacted by a reduction in the anticipated benefit of favorable permanent differences expected for the year, as compared to our estimates as of the first quarter of fiscal 2009, resulting from changes in the mix of earnings between taxing jurisdictions, which had a significant impact on the effective tax rate due to the low earnings in the second quarter of fiscal 2009.

 

Net earnings (loss)

 

 

 

Second Quarter

 

 

 

 

 

 

 

Fiscal 2010

 

Fiscal 2009

 

Change

 

% Change

 

Net earnings (loss)

 

$  7,219

 

   (180

)

$7,399

 

NM

 

Diluted net earnings (loss) per common share

 

   0.44

 

  (0.01

)

$  0.45

 

NM

 

Weighted average common shares outstanding-diluted

 

16,552

 

16,288

 

264

 

1.6

%

 

The increase in diluted net earnings per common share was primarily due to (1) the change in consolidated sales mix with a greater proportion of net sales being sales of Tommy Bahama products and a lower proportion of net sales being related to exited businesses, (2) the impact of LIFO accounting in each period, (3) higher royalty income, (4) the $1.4 million of restructuring charges incurred in the second quarter of fiscal 2009 related to Ben Sherman’s exit from and

 

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Table of Contents

 

subsequent licensing of its footwear and kids’ businesses and other streamlining initiatives and (5) the $1.8 million write-off of unamortized deferred financing costs in the second quarter of fiscal 2009 related to the satisfaction and discharge of the remaining 8 7/8% Senior Unsecured Notes, which was included in interest expense. These items were partially offset by increased SG&A primarily due to higher incentive compensation amounts resulting from the resumption of our incentive compensation program which was suspended in fiscal 2009 and is tied to our financial performance.

 

FIRST HALF OF FISCAL 2010 COMPARED TO FIRST HALF OF FISCAL 2009

 

The following table sets 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 table also sets forth the dollar change and 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 classification of certain expenses may vary by company.

 

 

 

First Half

 

 

 

 

 

 

 

Fiscal 2010

 

Fiscal 2009

 

$ Change

 

% Change

 

Net sales

 

$ 404,281

 

100.0%

 

$ 409,618

 

100.0%

 

$   (5,337

)

(1.3%

)

Cost of goods sold

 

214,869

 

53.1%

 

242,311

 

59.2%

 

(27,442

)

(11.3%

)

Gross profit

 

189,412

 

46.9%

 

167,307

 

40.8%

 

22,105

 

13.2%

 

SG&A

 

159,998

 

39.6%

 

152,320

 

37.2%

 

7,678

 

5.0%

 

Amortization of intangible assets

 

499

 

0.1%

 

623

 

0.2%

 

(124

)

(19.9%

)

Royalties and other operating income

 

7,872

 

1.9%

 

5,385

 

1.3%

 

2,487

 

46.2%

 

Operating income

 

36,787

 

9.1%

 

19,749

 

4.8%

 

17,038

 

86.3%

 

Interest expense, net

 

10,152

 

2.5%

 

10,810

 

2.6%

 

(658

)

(6.1%

)

Earnings before income taxes

 

26,635

 

6.6%

 

8,939

 

2.2%

 

17,696

 

198.0%

 

Income taxes

 

6,919

 

1.7%

 

2,508

 

0.6%

 

4,411

 

175.9%

 

Net earnings

 

$   19,716

 

4.9%

 

$     6,431

 

1.6%

 

$    13,285

 

206.6%

 

 

The discussion and tables below compare certain line items included in our statements of operations for the first half of fiscal 2010 to the first half of fiscal 2009. Each dollar and percentage change provided reflects the change between these periods unless indicated otherwise. Each dollar and share amount included in the tables is in thousands except for per share amounts.

 

Net Sales

 

 

 

First Half

 

 

 

 

 

 

 

Fiscal 2010

 

Fiscal 2009

 

$ Change

 

% Change

 

Tommy Bahama

 

$ 208,454

 

$ 192,859

 

$ 15,595

 

8.1%

 

Ben Sherman

 

40,500

 

47,846

 

(7,346

)

(15.4%

)

Lanier Clothes

 

53,164

 

56,711

 

(3,547

)

(6.3%

)

Oxford Apparel

 

101,893

 

112,668

 

(10,775

)

(9.6%

)

Corporate and Other

 

270

 

(466

)

736

 

NM

 

Total net sales

 

$ 404,281

 

$ 409,618

 

$ (5,337

)

(1.3%

)

 

Consolidated net sales decreased $5.3 million, or 1.3%, in the first half of fiscal 2010 compared to the first half of fiscal 2009 primarily as a result of the first half of fiscal 2009 including $26.4 million of net sales related to businesses that we have exited and the other changes in each operating group discussed below.

 

Tommy Bahama:

 

The increase in net sales for Tommy Bahama was primarily due to improved comparable retail store sales and higher e-commerce sales. Tommy Bahama unit sales increased 14.1%, which was primarily a result of the improvement in the direct to consumer channels, while the average selling price per unit decreased by 4.6% due to a change in product mix.

 

Ben Sherman:

 

The decrease in net sales for Ben Sherman was primarily due to a 15.6% reduction in unit sales primarily resulting from our exit from and subsequent licensing of our footwear and kids’ businesses and our exit from our women’s

 

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Table of Contents

 

operations. Net sales related to the footwear, kids’ and women’s businesses totaled approximately $10.1 million in the first half of fiscal 2009 compared to $2.0 million in the first half of fiscal 2010. The decrease related to these exited businesses was partially offset by an increase in comparable retail store sales and increases in wholesale sales in Ben Sherman’s men’s sportswear business. The average selling price per unit for Ben Sherman was relatively flat between the two periods.

 

Lanier Clothes:

 

The decrease in net sales for Lanier Clothes was primarily due to our exit from certain businesses as the first half of fiscal 2009 included $3.6 million of close-out sales associated with these businesses. Unit sales declined 7.5% and the average selling price per unit increased 1.4%, in both cases as a result of the first half of fiscal 2010 not including any close-out sales associated with the exited businesses.

 

Oxford Apparel:

 

The decrease in net sales for Oxford Apparel was primarily due to the first half of fiscal 2009 including $12.5 million of close-out sales related to certain businesses that we exited. Unit sales declined 9.4% and the average selling price per unit was relatively flat between the two periods.

 

Gross Profit

 

 

 

First Half

 

 

 

 

 

 

 

Fiscal 2010

 

Fiscal 2009

 

$ Change

 

% Change

 

Gross profit

 

$189,412

 

$167,307

 

$22,105

 

13.2%

 

Gross margin (gross profit as a % of net sales)

 

46.9

%

40.8

%

 

 

 

 

LIFO charges included in cost of goods sold

 

$    1,627

 

$    5,491

 

 

 

 

 

 

The increase in gross profit was primarily due to (1) improved gross margins in each operating group resulting from changes in product mix in each operating group as a result of the prior year including a greater proportion of close-out sales, (2) the increase in Tommy Bahama’s net sales, which generally have higher gross margins than our other operating groups, both in total and as a proportion of consolidated net sales and (3) the impact of LIFO accounting charges.  Gross margins increased to 46.9% of net sales during the first half of fiscal 2010 from 40.8% in the first half of fiscal 2009. Gross profit included charges for LIFO accounting of $1.6 million in the first half of fiscal 2010 and $5.5 million in the first half of fiscal 2009. We anticipate that consolidated gross margins in fiscal 2010 will continue to increase compared to the prior year as our consolidated sales mix is more heavily weighted towards Tommy Bahama; however, this change is expected to be partially offset by increases in cotton prices, wages in Asia and ocean shipping costs. 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

 

 

 

First Half

 

 

 

 

 

 

 

Fiscal 2010

 

Fiscal 2009

 

$ Change

 

% Change

 

SG&A

 

$159,998

 

$152,320

 

$7,678

 

5.0%

 

SG&A (as % of net sales)

 

39.6

%

37.2

%

 

 

 

 

Restructuring charges included in SG&A

 

$         —

 

$    1,362

 

 

 

 

 

 

The increase in SG&A was primarily due to costs associated with the resumption of our incentive compensation program, which was suspended in fiscal 2009 and is tied to our financial performance. The resumption of our incentive compensation program impacted SG&A for each of our operating groups.  The first half of fiscal 2009 included $1.4 million of restructuring charges related to Ben Sherman’s exit from and subsequent licensing of its footwear and kids’ businesses and other streamlining initiatives.

 

Royalties and other operating income

 

 

 

First Half

 

 

 

 

 

 

 

Fiscal 2010

 

Fiscal 2009

 

$ Change

 

% Change

 

Royalties and other operating income

 

$7,872

 

$5,385

 

$2,487

 

46.2%

 

 

The increase in royalties and other operating income was primarily due to increased royalty income in both Tommy Bahama and Ben Sherman, as sales reported by certain licensees increased and new licensees were added.

 

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Operating income (loss)

 

 

 

First Half

 

 

 

 

 

 

 

Fiscal 2010

 

Fiscal 2009

 

$ Change

 

% Change

 

Tommy Bahama

 

$ 32,033

 

$  25,629

 

$  6,404

 

25.0%

 

Ben Sherman

 

(76

)

(8,284

)

8,208

 

99.1%

 

Lanier Clothes

 

7,168

 

5,438

 

1,730

 

31.8%

 

Oxford Apparel

 

9,329

 

9,322

 

7

 

0.1%

 

Corporate and Other

 

(11,667

)

(12,356

)

689

 

5.6%

 

Total operating income

 

$ 36,787

 

$  19,749

 

$17,038

 

86.3%

 

LIFO charges included in operating income

 

$  1,627

 

$    5,491

 

 

 

 

 

Restructuring charges included in operating income

 

$        

 

$    1,362

 

 

 

 

 

 

Operating income, on a consolidated basis, increased to $36.8 million in the first half of fiscal 2010 from $19.7 million in the first half of fiscal 2009. The $17.0 million increase in operating income was primarily due to the improved gross margins in each operating group and higher royalty income, which was partially offset by increased SG&A, each as described above. Operating income included charges for LIFO accounting of $1.6 million in the first half of fiscal 2010 and $5.5 million in the first half of fiscal 2009. The first half of fiscal 2009 also included restructuring charges of $1.4 million in Ben Sherman. Changes in operating income by operating group are discussed below.

 

Tommy Bahama:

 

 

 

First Half

 

 

 

 

 

 

 

Fiscal 2010

 

Fiscal 2009

 

$ Change

 

% Change

 

Net sales

 

$208,454

 

$192,859

 

$15,595

 

8.1%

 

Operating income

 

$  32,033

 

$  25,629

 

$  6,404

 

25.0%

 

Operating income as % of net sales

 

15.4

%

13.3

%

 

 

 

 

 

The increase in operating income for Tommy Bahama was primarily due to the increased net sales, improved gross margins due to a greater proportion of direct to consumer sales as a percentage of total Tommy Bahama sales and higher royalty income, partially offset by increased SG&A.

 

Ben Sherman:

 

 

 

First Half

 

 

 

 

 

 

 

Fiscal 2010

 

Fiscal 2009

 

$ Change

 

% Change

 

Net sales

 

$40,500

 

$47,846

 

$(7,346

)

(15.4%

)

Operating income (loss)

 

$     (76

)

$ (8,284

)

$ 8,208

 

99.1%

 

Operating income (loss) as % of net sales

 

(0.2

%)

(17.3

%)

 

 

 

 

Restructuring charges included in operating income (loss)

$      —

 

$  1,362

 

 

 

 

 

 

The improved operating results for Ben Sherman were primarily due to increased gross margins and reduced SG&A, both of which were a result of our exit from and subsequent licensing of the footwear and kids’ business, our exit from the women’s operations and increased royalty income. The first half of fiscal 2009 SG&A for Ben Sherman also included $1.4 million of restructuring charges primarily related to our exit from and subsequent licensing of the footwear and kids’ businesses and other streamlining initiatives.

 

Lanier Clothes:

 

 

 

First Half

 

 

 

 

 

 

 

Fiscal 2010

 

Fiscal 2009

 

$ Change

 

% Change

 

Net sales

 

$53,164

 

$56,711

 

$(3,547

)

(6.3%

)

Operating income

 

$ 7,168

 

$ 5,438

 

$ 1,730

 

31.8%

 

Operating income as % of net sales

 

13.5

%

9.6

%

 

 

 

 

 

The increase in operating income for Lanier Clothes was primarily a result of improved gross margins due to sales mix, with branded sales representing a greater proportion of Lanier Clothes’ sales in the second quarter of fiscal 2010, and close-out sales associated with exited businesses included in the prior year. The improved gross margins were partially offset by increased SG&A.

 

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Oxford Apparel:

 

 

 

First Half

 

 

 

 

 

 

 

Fiscal 2010

 

Fiscal 2009

 

$ Change

 

 

% Change

 

Net sales

 

$101,893

 

 

$112,668

 

 

$(10,775

)

 

(9.6%

)

Operating income

 

$    9,329

 

 

$    9,322

 

 

$          7

 

 

0.1%

 

Operating income as % of net sales

 

9.2

%

 

8.3

%

 

 

 

 

 

 

 

Despite the decrease in net sales, operating income for Oxford Apparel for the two periods was comparable as the reduction in net sales was offset by improved gross margins due to the prior year including certain close-out sales associated with exited businesses.

 

Corporate and Other:

 

 

 

First Half

 

 

 

 

 

 

Fiscal 2010

 

Fiscal 2009

 

$ Change

 

 

% Change

 

Operating income (loss)

 

$(11,667

)

 

$(12,356

)

 

$(689

)

 

(5.6%

)

LIFO charges included in operating income (loss)

 

$   1,627

 

 

$   5,491

 

 

 

 

 

 

 

 

The Corporate and Other operating loss decreased $0.7 million from a loss of $12.4 million in the first half of fiscal 2009 to a loss of $11.7 million in the first half of fiscal 2010. The decrease in the operating loss was primarily due to LIFO accounting charges of $1.6 million in the first half of fiscal 2010 and $5.5 million in the first half of fiscal 2009. After removing the impact of LIFO accounting charges, the increase in operating loss is primarily due to higher incentive compensation costs resulting from the resumption of our incentive compensation program, which was suspended in fiscal 2009 and is tied to our financial performance.

 

Interest expense, net

 

 

 

First Half

 

 

 

 

 

 

 

Fiscal 2010

 

Fiscal 2009

 

$ Change

 

% Change

 

Interest expense, net

 

$10,152

 

 

$10,810

 

     $658

 

6.1%

 

Write-off of deferred financing costs included in interest expense

 

$       —

 

 

$  1,759

 

 

 

 

 

 

The decrease in interest expense was primarily due to the first half of fiscal 2009 including a $1.8 million write-off of unamortized deferred financing costs and discount related to the 8 7/8% Senior Unsecured Notes, which were satisfied and discharged in June 2009, as well as a lower level of borrowings in the first half of fiscal 2010. These items were partially offset by the higher interest rate associated with our 11 3/8% Senior Secured Notes.

 

Income taxes

 

 

 

First Half

 

 

 

 

 

 

 

Fiscal 2010

 

Fiscal 2009

 

$ Change

 

% Change

 

Income taxes

 

$6,919

 

$2,508

 

$4,411

 

175.9%

 

Effective tax rate

 

26.0%

 

28.1%

 

 

 

 

 

 

The rates for both periods reflect the favorable impact of permanent differences which do not necessarily fluctuate with earnings as well as the impact of certain discrete items, including the decrease in certain income tax contingency reserves upon the expiration of the corresponding statute of limitations.

 

Net earnings

 

 

 

First Half

 

 

 

 

 

 

 

Fiscal 2010

 

Fiscal 2009

 

Change

 

% Change

 

Net earnings

 

$19,716

 

$  6,431

 

$13,285

 

206.6%

 

Diluted net earnings per common share

 

$    1.19

 

$    0.40

 

$    0.79

 

197.5%

 

Weighted average common shares outstanding-diluted

 

16,527

 

16,083

 

444

 

2.8%

 

 

The increase in diluted net earnings per common share was primarily due to (1) the change in consolidated sales mix with a greater proportion of net sales being sales of Tommy Bahama products and a lower proportion of net sales being related to exited businesses, (2) the impact of LIFO accounting in each period, (3) higher royalty income, (4) the $1.4 million of restructuring charges incurred in the second quarter of fiscal 2009 related to Ben Sherman’s exit from and subsequent licensing of its footwear and kids’ businesses and other streamlining initiatives and (5) the $1.8 million write-off of unamortized deferred financing costs in the second quarter of fiscal 2009 related to the satisfaction and

 

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discharge of the remaining 8 7/8% Senior Unsecured Notes, which was included in interest expense. These items were partially offset by increased SG&A primarily due to higher incentive compensation costs.

 

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, we also have access to amounts under our U.S. Revolving Credit Agreement and U.K. Revolving Credit Agreement (each as described below), subject to their terms, 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. Some of our product purchases are facilitated by trade letters of credit which are drawn against our lines of credit at the time of shipment of the products and reduce the amounts available under our lines of credit and borrowing capacity under our credit facilities when issued.

 

Key Liquidity Measures

 

($ in thousands)

 

July 31, 2010

 

January 30, 2010

 

August 1, 2009

 

January 31, 2009

 

Current assets

 

$209,980

 

 

$184,303

 

 

$194,276

 

 

$222,477

 

 

Current liabilities

 

99,144

 

 

95,862

 

 

107,376

 

 

106,833

 

 

Working capital

 

$110,836

 

 

$  88,441

 

 

$  86,900

 

 

$115,644

 

 

Working capital ratio

 

2.12

 

 

1.92

 

 

1.81

 

 

2.08

 

 

Debt to total capital ratio

 

55

%

 

58

%

 

65

%

 

70

%

 

 

Our working capital ratio is calculated by dividing total current assets by total current liabilities. Current assets increased and current liabilities decreased from August 1, 2009 to July 31, 2010, as described below, resulting in the higher working capital ratio. For the ratio of debt to total capital, debt is defined as short-term and long-term debt, and total capital is defined as debt plus shareholders’ equity. The change in the debt to total capital ratio from August 1, 2009 to July 31, 2010 was primarily a result of the $32.8 million reduction in debt since August 1, 2009 due to cash flows from operations, as well as increased shareholders’ equity due to our net earnings subsequent to August 1, 2009. Our debt levels and ratio of debt to total capital in future periods may not be comparable to historical amounts as we continue to assess and may periodically make changes to our capital structure. Changes in our capital structure, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.

 

Balance Sheet

 

The following tables set forth certain information included in our consolidated balance sheets (in thousands). Below each table are explanations for any significant changes in the balances from August 1, 2009 to July 31, 2010.

 

Current Assets:

 

 

 

July 31, 2010

 

January 30, 2010

 

August 1, 2009

 

January 31, 2009

 

Cash and cash equivalents

 

$  28,171

 

$    8,288

 

$   5,461

 

$    3,290

 

Receivables, net

 

74,611

 

74,398

 

78,467

 

78,567

 

Inventories, net

 

76,330

 

77,029

 

86,828

 

119,616

 

Prepaid expenses, net

 

15,484

 

10,713

 

13,312

 

10,845

 

Deferred tax assets

 

15,384

 

13,875

 

10,208

 

10,159

 

Total current assets

 

$209,980

 

$184,303

 

$194,276

 

$222,477

 

 

Cash and cash equivalents increased at July 31, 2010 primarily due to our positive cash flows from operating activities subsequent to August 1, 2009. Receivables, net decreased due to the lower wholesale sales in the last two months of the second quarter of fiscal 2010 compared to the last two months of the second quarter of fiscal 2009.  Inventories, net decreased primarily due to the significant decline at Ben Sherman resulting from our exit from and subsequent licensing of our footwear and kids’ businesses and our exit from the Ben Sherman women’s operations. Prepaid expenses have increased from August 1, 2009 primarily as a result of the timing of payment of income taxes and certain other operating expenses. The increase in deferred tax assets was primarily related to the tax impact associated with inventory levels at July 31, 2010 and August 1, 2009.

 

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Table of Contents

 

Non-current Assets:

 

 

 

July 31, 2010

 

January 30, 2010

 

August 1, 2009

 

January 31, 2009

 

Property, plant and equipment, net

 

$  73,919

 

$  79,540

 

$  86,365

 

$  89,026

 

Intangible assets, net

 

136,233

 

137,490

 

138,880

 

135,999

 

Other non-current assets, net

 

22,623

 

23,841

 

22,932

 

20,180

 

Total non-current assets, net

 

$232,775

 

$240,871

 

$248,177

 

$245,205

 

 

The decrease in property, plant and equipment, net was primarily due to depreciation expense exceeding capital expenditures during the twelve months subsequent to August 31, 2009, as we reduced our investments in new retail stores during the challenging economic environment. The decrease in intangible assets, net is primarily due to the amortization of intangible assets subsequent to August 1, 2009 and the decrease in the period-end exchange rate for the British pound sterling versus the U.S. dollar from August 1, 2009 to July 31, 2010.

 

Liabilities:

 

 

 

July 31, 2010

 

January 30, 2010

 

August 1, 2009

 

January 31, 2009

 

Current liabilities

 

$  99,144

 

$  95,862

 

$107,376

 

$106,833

 

Long-term debt, less current maturities

 

146,736

 

146,408

 

160,357

 

194,187

 

Other non-current liabilities

 

46,965

 

50,066

 

46,804

 

47,244

 

Non-current deferred income taxes

 

28,143

 

28,421

 

30,013

 

32,111

 

Total liabilities

 

$320,988

 

$320,757

 

$344,550

 

$380,375

 

 

The decrease in current liabilities was primarily due to the $19.2 million reduction in the current maturities of long-term debt from the prior year. This decrease was partially offset by an increase in accrued compensation and trade accounts payable and other accrued expenses compared to August 1, 2009. The decrease in long-term debt less current maturities and current maturities of long-term debt are primarily due to cash flow from operating activities for the twelve months preceding July 31, 2010. The cash flow from operating activities was a result of net earnings and improved working capital positions. The change in non-current deferred income taxes primarily resulted from (1) changes in book/tax differences for depreciation and deferred compensation, (2) changes in tax accrued on undistributed foreign earnings, (3) the indirect federal benefit of certain reserves for uncertain tax positions and (4) adjustments to reflect changes in the effective tax rate at which certain deferred items are expected to be realized, which are partially offset by changes in foreign currency rates.

 

Statement of Cash Flows

 

The following table sets forth the net cash flows resulting in the change in our cash and cash equivalents (in thousands):

 

 

 

First Half

 

 

 

Fiscal 2010

 

Fiscal 2009

 

Net cash provided by operating activities

 

$25,536 

 

$ 35,106 

 

Net cash used in investing activities

 

(3,292)

 

(5,840)

 

Net cash used in financing activities

 

(2,236)

 

(27,656)

 

Net change in cash and cash equivalents

 

$20,008 

 

$   1,610 

 

 

Operating Activities:

 

The operating cash flows for the first half of fiscal 2010 and the first half of fiscal 2009 were primarily the result of net earnings for the relevant 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 half of fiscal 2010, the significant changes in working capital were increases in prepaid expenses and decreases in other non-current liabilities, whereas the first half of fiscal 2009 reflected a significant reduction in inventories, partially offset by a reduction in current liabilities.

 

Investing Activities:

 

During the first half of fiscal 2010 and the first half of fiscal 2009, investing activities used $3.3 million and $5.8 million, respectively, of cash. In each of the applicable periods, these investing activities primarily consisted of

 

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Table of Contents

 

capital expenditures related to new retail stores and costs associated with investment in certain technology initiatives, including the continuing implementation of our new integrated financial systems.

 

Financing Activities:

 

During the first half of fiscal 2010 and fiscal 2009, financing activities used $2.2 million and $27.7 million, respectively, of cash. In the first half of fiscal 2010, the primary use of cash for financing purposes was the payment of dividends, partially offset by short-term borrowings under our U.K. Revolving Credit Agreement. In the first half of fiscal 2009, cash flow from operations, borrowings under our U.S. Revolving Credit Agreement and the proceeds from the issuance of $150.0 million aggregate principal amount of our 11 3/8% Senior Secured Notes were used to repurchase $166.8 million aggregate principal amount of our 8 7/8% Senior Unsecured Notes, to pay $2.9 million of dividends and to pay $4.9 million of financing costs associated with the issuance of our 11 3/8% Senior Secured Notes in June 2009.

 

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 July 31, 2010:

 

$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, 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 substantially all of its domestic subsidiaries and a second priority interest in those assets in which the holders of the 113/8% Senior Secured Notes have a first priority interest

 

$

 —

 

£10 million Senior Secured Revolving Credit Facility (“U.K. Revolving Credit Agreement”), which accrues interest at the bank’s base rate plus 3.5% (4.0% as of July 31, 2010), requires interest payments monthly with principal payable on demand and is collateralized by substantially all of the United Kingdom assets of Ben Sherman

 

1,195

 

11.375% Senior Secured Notes (“113/8% Senior Secured Notes”), which accrue interest at an annual rate of 11.375% (effective interest rate of 12%) and require interest payments semi-annually in January and July of each year, require payment of principal at maturity (July 2015), are subject to certain prepayment penalties, are secured by a first priority interest in all U.S. registered trademarks and certain related rights and certain future acquired real property owned in fee simple of Oxford Industries, Inc. and substantially all of its consolidated domestic subsidiaries and a second priority interest in those assets in which the lenders under the U.S. Revolving Credit Agreement have a first priority interest, and are guaranteed by certain of our domestic subsidiaries

 

150,000

 

Unamortized discount

 

(3,264

)

Total debt

 

$

147,931

 

Short-term debt and current maturities of long-term debt

 

(1,195

)

Long-term debt, less current maturities

 

$

146,736

 

 

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 July 31, 2010, approximately $38.3 million of trade letters of credit and other limitations on availability in the aggregate were outstanding against the U.S. Revolving Credit Agreement and the U.K. Revolving Credit Agreement. On July 31, 2010, we had approximately $120.1 million and $10.5 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 113/8% Senior Secured Notes.

 

Covenants, Other Restrictions and Prepayment Penalties:

 

Our credit facilities and 113/8% Senior Secured Notes are subject to a number of affirmative covenants, negative covenants, financial covenants and other restrictions as discussed in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 5 in our consolidated financial statements, both

 

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Table of Contents

 

included in our Annual Report on Form 10-K for fiscal 2009. We believe the affirmative covenants, negative covenants, financial covenants and other restrictions are customary for those included in similar facilities and notes entered into at the time we entered into our agreements. As of July 31, 2010, we were compliant with all covenants related to our credit facilities and 113/8% Senior Secured Notes. If we were to redeem any of our 113/8% Senior Secured Notes prior to July 15, 2014 pursuant to the indenture governing the notes, we would be required to pay certain premiums above the principal amount, which are also discussed in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 5 in our consolidated financial statements, both included in our Annual Report on Form 10-K for fiscal 2009.

 

Other Liquidity Items:

 

We anticipate that we will be able to satisfy our ongoing cash requirements during fiscal 2010 which generally consist of working capital needs, capital expenditures and interest payments on our debt, primarily from cash on hand, positive cash flow from operations and 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 113/8% Senior Secured 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 or may not be as favorable as the terms of the current agreements.

 

Our contractual obligations as of July 31, 2010 have not changed significantly from the contractual obligations outstanding at January 30, 2010 other than changes in the amounts outstanding under our U.K. Revolving Credit Agreement and pursuant to letters of credit (each as discussed above).

 

Our anticipated capital expenditures for fiscal 2010, including $3.4 million incurred during the first half of fiscal 2010, are expected to be approximately $13 million. These expenditures are expected to consist primarily of additional retail stores and costs associated with investment in certain technology initiatives, including the continuing implementation of new integrated financial systems.

 

Off Balance Sheet Arrangements

 

We have not entered into agreements which meet the SEC’s 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.

 

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 U.S. GAAP. 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, Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for fiscal 2009. There have not been any significant changes to the application of our critical accounting policies and estimates during the first half of fiscal 2010.

 

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 2009.

 

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 in our principal markets is higher in the spring season.

 

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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, we do not believe that results for any particular quarter are necessarily indicative of results for the full fiscal year. The following table presents the percentage of net sales and operating income by quarter (unaudited) for fiscal 2009.

 

 

 

First
Quarter

 

Second
Quarter

 

Third
Quarter

 

Fourth
Quarter

 

Net sales

 

27%

 

24%

 

25%

 

24%

 

Operating income

 

33%

 

15%

 

27%

 

25%

 

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

We are exposed to certain 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 2009. There have not been any significant changes in our exposure to these risks during the first half of fiscal 2010.

 

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 SEC’s 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.

 

During the second quarter of fiscal 2010, we converted our accounts receivable system in our United States operations, to a new integrated financial system. After this conversion our accounts receivable, general ledger, payables and fixed assets systems for our United States operations are all on one integrated financial system. As a result of this conversion, certain controls were modified, as necessary, to supplement and complement our existing internal controls over financial reporting. We anticipate converting certain foreign regions and other of our financial systems to the new integrated financial system in future periods. The conversion of certain of our financial systems to an integrated financial system was undertaken to provide a more integrated financial system across our operating groups, more timely management reporting, efficiencies in our operations and enhanced customer service, and not in response to any actual or perceived deficiencies in our internal control over financial reporting.

 

Except for the conversion of our accounts receivable system to a new integrated financial system as discussed above, there were no 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) that occurred during the second quarter of fiscal 2010 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

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 2009, 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 2009. If any of the risks described in such Annual Report, 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.

 

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ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

(a)          During the second quarter of fiscal 2010, we did not make any unregistered sales of our equity 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 2009, 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.  No shares were purchased during the second quarter of fiscal 2010.

 

In the second quarter of fiscal 2010, our Board of Directors authorized us to spend up to $50 million to repurchase shares of our common stock and/or 11 3/8% Senior Secured Notes. This authorization superseded and replaced all previously existing authorizations to repurchase shares of our common stock and/or our 11 3/8% Senior Secured Notes. As of July 31, 2010, no shares of our common stock nor any of our 11 3/8% Senior Secured Notes had been repurchased pursuant to this authorization, which has no automatic expiration.

 

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

 

None

 

ITEM 4. RESERVED

 

None

 

ITEM 5.  OTHER INFORMATION

 

None

 

ITEM 6.  EXHIBITS

 

3.1           Restated Articles of Incorporation of Oxford Industries, Inc. Incorporated by reference to Exhibit 3.1 to the Company’s Form 10-Q for the fiscal quarter ended August 29, 2003.

3.2           Bylaws of Oxford Industries, Inc., as amended. Incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed on June 17, 2009.

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.*

 


* Filed herewith.

 

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.

 

September 2, 2010

OXFORD INDUSTRIES, INC.

 

 

(Registrant)

 

 

 

 

 

/s/ K. Scott Grassmyer

 

 

K. Scott Grassmyer

 

 

Senior Vice President, Chief Financial Officer and Controller

 

 

(Authorized Signatory)

 

 

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