Edgar Filing: OXFORD INDUSTRIES INC

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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 MAY 1, 2010

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 June 4, 2010
Common Stock, $1 par value		16,525,517

OXFORD INDUSTRIES, INC.

INDEX TO FORM 10-Q

For the first 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	13
Item 3. Quantitative and Qualitative Disclosures About Market Risk	22
Item 4. Controls and Procedures	22

PART II. OTHER INFORMATION

Item 1. Legal Proceedings	23
Item 1A. Risk Factors	23
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 3. Defaults Upon Senior Securities	23
Item 4. Reserved	23
Item 5. Other Information	23
Item 6. Exhibits	24
Signatures	24

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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, the impact of natural or man-made disasters in any of the regions in which our retail stores or wholesale customers are concentrated, demand for our products, timing 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, 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 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

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 2011	52 weeks ending January 28, 2012
Fiscal 2010	52 weeks ending January 29, 2011
Fiscal 2009	52 weeks ended January 30, 2010
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 ending 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

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

OXFORD INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except per share amounts)

	First Quarter Fiscal 2010	First Quarter Fiscal 2009
Net sales	$217,750	$216,731
Cost of goods sold	116,168	126,797
Gross profit	101,582	89,934
SG&A	83,752	78,683
Amortization of intangible assets	250	308
	84,002	78,991
Royalties and other operating income	3,841	2,469
Operating income	21,421	13,412
Interest expense, net	5,009	4,565
Earnings before income taxes	16,412	8,847
Income taxes	3,915	2,236
Net earnings	$ 12,497	$ 6,611

Net earnings per common share:
Basic	$ 0.76	$ 0.42
Diluted	$ 0.76	$ 0.42
Weighted average common shares outstanding:
Basic	16,490	15,876
Dilution	13	—
Diluted	16,503	15,876

Dividends declared per common share	$ 0.11	$ 0.09

See accompanying notes.

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OXFORD INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except par amounts)

	May 1, 2010		January 30, 2010		May 2, 2009
ASSETS
Current Assets:
Cash and cash equivalents	$ 18,823		$ 8,288		$ 8,386
Receivables, net	94,481		74,398		93,795
Inventories, net	56,319		77,029		93,875
Prepaid expenses, net	12,286		10,713		11,629
Deferred tax assets	15,397		13,875		9,863
Total current assets	197,306		184,303		217,548
Property, plant and equipment, net	76,474		79,540		88,311
Intangible assets, net	136,033		137,490		136,454
Other non-current assets, net	23,821		23,841		19,970
Total Assets	$433,634		$425,174		$462,283
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Trade accounts payable and other accrued expenses	$ 69,254		$ 81,831		$ 70,685
Accrued compensation	17,810		11,514		9,907
Income taxes payable	6,023		2,517		2,414
Short-term debt and current maturities of long-term debt	2,856		—		25,479
Total current liabilities	95,943		95,862		108,485
Long-term debt, less current maturities	146,572		146,408		181,501
Other non-current liabilities	48,401		50,066		46,304
Non-current deferred income taxes	28,192		28,421		31,423
Commitments and contingencies
Shareholders’ Equity:
Common stock, $1.00 par value per common share	16,526		16,461		16,057
Additional paid-in capital	93,131		91,840		89,040
Retained earnings	30,036		19,356		15,805
Accumulated other comprehensive loss	(25,167	)	(23,240	)	(26,332	)
Total shareholders’ equity	114,526		104,417		94,570
Total Liabilities and Shareholders’ Equity	$433,634		$425,174		$462,283

See accompanying notes.

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OXFORD INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

	First Quarter Fiscal 2010		First Quarter Fiscal 2009
Cash Flows From Operating Activities:
Net earnings	$ 12,497		$ 6,611
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation	4,366		4,623
Amortization of intangible assets	250		308
Amortization of deferred financing costs and bond discount	488		335
Stock compensation expense	1,657		671
Loss on sale of property, plant and equipment	12		28
Deferred income taxes	(1,433	)	(594	)
Changes in working capital:
Receivables	(20,690	)	(14,759	)
Inventories	20,144		26,196
Prepaid expenses	(1,719	)	(678	)
Current liabilities	(2,524	)	(19,192	)
Other non-current assets	(301	)	(90	)
Other non-current liabilities	(1,630	)	(929	)
Net cash provided by operating activities	11,117		2,530
Cash Flows From Investing Activities:
Purchases of property, plant and equipment	(1,561	)	(3,771	)
Net cash used in investing activities	(1,561	)	(3,771	)
Cash Flows From Financing Activities:
Repayment of revolving credit arrangements	(22,350	)	(63,373	)
Proceeds from revolving credit arrangements	25,233		70,875
Proceeds from issuance of common stock	115		137
Dividends on common stock	(1,821	)	(1,430	)
Net cash provided by financing activities	1,177		6,209
Net change in cash and cash equivalents	10,733		4,968
Effect of foreign currency translation on cash and cash equivalents	(198	)	128
Cash and cash equivalents at the beginning of year	8,288		3,290
Cash and cash equivalents at the end of period	$ 18,823		$ 8,386

Supplemental disclosure of cash flow information:
Cash paid for interest, net	$ 286		$ 514
Cash paid for income taxes	$ 3,404		$ 580

See accompanying notes.

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OXFORD INDUSTRIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FIRST 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 date 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):

	May 1, 2010		January 30, 2010		May 2, 2009
Finished goods	$ 92,288		$108,788		$129,597
Work in process	5,001		6,972		4,283
Fabric, trim and supplies	3,468		5,707		6,719
LIFO reserve	(44,438	)	(44,438	)	(46,724	)
Total	$ 56,319		$ 77,029		$ 93,875

3. Comprehensive Income: Comprehensive income, which reflects the effects of foreign currency translation adjustments, is calculated as follows for the periods presented (in thousands):

	First Quarter Fiscal 2010		First Quarter Fiscal 2009
Net earnings	$12,497		$6,611
Gain (loss) on foreign currency translation, net of tax	(1,927	)	1,273
Comprehensive income	$10,570		$7,884

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).

	First Quarter Fiscal 2010		First Quarter Fiscal 2009
Net Sales
Tommy Bahama	$109,105		$ 98,420
Ben Sherman	22,154		24,219
Lanier Clothes	30,428		31,507
Oxford Apparel	56,342		63,204
Corporate and Other	(279	)	(619	)
Total	$217,750		$216,731

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	First Quarter Fiscal 2010		First Quarter Fiscal 2009
Depreciation
Tommy Bahama	$ 3,274		$ 3,662
Ben Sherman	536		555
Lanier Clothes	119		145
Oxford Apparel	182		204
Corporate and Other	255		57
Total	$ 4,366		$ 4,623
Amortization of Intangible Assets
Tommy Bahama	$ 173		$ 222
Ben Sherman	67		76
Lanier Clothes	—		—
Oxford Apparel	10		10
Corporate and Other	—		—
Total	$ 250		$ 308
Operating Income (Loss)
Tommy Bahama	$17,861		$12,250
Ben Sherman	522		(1,976	)
Lanier Clothes	4,359		2,737
Oxford Apparel	5,971		5,193
Corporate and Other	(7,292	)	(4,792	)
Total Operating Income	$21,421		$13,412
Interest Expense, net	5,009		4,565
Earnings Before Income Taxes	$16,412		$ 8,847

5. Consolidating Financial Data of Subsidiary Guarantors: Our 113/8% 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 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 May 1, 2010, January 30, 2010 and May 2, 2009 (in thousands) as well as our condensed consolidating statements of operations and statements of cash flows for the first quarter of fiscal 2010 and fiscal 2009 (in thousands).

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OXFORD INDUSTRIES, INC.

UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEETS

May 1, 2010


	Oxford Industries (Parent)		Subsidiary Guarantors			Subsidiary Non- Guarantors			Consolidating Adjustments			Consolidated Total
ASSETS
Cash and cash equivalents	$ 13,581		$ 562			$ 4,680			$ —			$ 18,823
Receivables, net	44,199			16,525			41,447			(7,690	)		94,481
Inventories, net	(2,025	)		52,467			6,543			(666	)		56,319
Prepaid expenses and deferred tax assets	19,016			7,886			4,663			(3,882	)		27,683
Total current assets	74,771			77,440			57,333			(12,238	)		197,306
Property, plant and equipment, net	13,543			57,660			5,271			—			76,474
Intangible assets, net	18			112,999			23,016			—			136,033
Other non-current assets, net	510,663			148,913			4,208			(639,963	)		23,821
Total Assets	$598,995		$ 397,012			$ 89,828			$(652,201		)	$433,634

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities	$ 31,017		$ 38,651			$ 33,948			$ (7,673		)	$ 95,943
Long-term debt, less current portion	146,572			—			—			—			146,572
Non-current liabilities	311,526			(298,549	)		143,954			(108,530	)		48,401
Non-current deferred income taxes	(4,646	)		26,258			6,580			—			28,192
Total shareholders’/invested equity	114,526			630,652			(94,654	)		(535,998	)		114,526
Total Liabilities and Shareholders’ Equity	$598,995		$ 397,012			$ 89,828			$(652,201		)	$433,634

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	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 portion	146,408		—			—			—			146,408
Non-current liabilities	300,896		(288,230		)	145,195			(107,795		)	50,066
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

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OXFORD INDUSTRIES, INC.

UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEETS

May 2, 2009


	Oxford Industries (Parent)		Subsidiary Guarantors			Subsidiary Non- Guarantors		Consolidating Adjustments		Consolidated Total
ASSETS
Cash and cash equivalents	$	2,034		$	2,070		$ 4,282		$ —	$ 8,386
Receivables, net	45,608			22,950			33,594		(8,357)	93,795
Inventories	17,971			67,411			10,471		(1,978)	93,875
Prepaid expenses and deferred tax assets	8,832			8,121			4,691		(152)	21,492
Total current assets	74,445			100,552			53,038		(10,487)	217,548
Property, plant and equipment, net	9,486			72,953			5,872		—	88,311
Intangible assets, net	57			113,838			22,559		—	136,454
Other non-current assets, net	461,904			145,896			35,271		(623,101)	19,970
Total Assets	$	545,892		$	433,239		$116,740		$(633,588)	$462,283

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities	$	49,416		$	32,550		$ 34,877		$ (8,358)	$108,485
Long-term debt, less current portion	181,501			—			—		—	181,501
Non-current liabilities	223,892			(176,134)			107,701		(109,155)	46,304
Non-current deferred income taxes	(3,487)			28,563			6,347		—	31,423
Total shareholders’/invested equity	94,570			548,260			(32,185)		(516,075)	94,570
Total Liabilities and Shareholders’ Equity	$	545,892		$	433,239		$116,740		$(633,588)	$462,283

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OXFORD INDUSTRIES, INC.

UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

First Quarter Fiscal 2010

	Oxford Industries (Parent)			Subsidiary Guarantors			Subsidiary Non- Guarantors		Consolidating Adjustments			Consolidated Total
Net sales	$	92,676		$	110,957		$	22,332	$	(8,215	)	$	217,750
Cost of goods sold	68,620			42,738			8,483		(3,673		)	116,168
Gross profit	24,056			68,219			13,849		(4,542		)	101,582
SG&A including amortization of intangible assets	22,691			54,642			12,897		(6,228		)	84,002
Royalties and other operating income	37			2,930			1,568		(694		)	3,841
Operating income	1,402			16,507			2,520		992			21,421
Interest (income) expense, net	4,965			(1,041		)	682		403			5,009
Income from equity investment	12,810			—			—		(12,810		)	—
Earnings before income taxes	9,247			17,548			1,838		(12,221		)	16,412
Income taxes (benefit)	(2,866		)	6,066			509		206			3,915
Net earnings	$	12,113		$	11,482		$	1,329	$	(12,427	)	$	12,497

OXFORD INDUSTRIES, INC.

UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

First Quarter Fiscal 2009

	Oxford Industries (Parent)			Subsidiary Guarantors			Subsidiary Non- Guarantors			Consolidating Adjustments			Consolidated Total
Net sales	$	92,793		$	108,065		$	25,285		$	(9,412	)	$	216,731
Cost of goods sold	74,506			45,964			10,788			(4,461		)	126,797
Gross profit	18,287			62,101			14,497			(4,951		)	89,934
SG&A including amortization of intangible assets	13,987			57,034			13,979			(6,009		)	78,991
Royalties and other operating income	13			2,219			980			(743		)	2,469
Operating income	4,313			7,286			1,498			315			13,412
Interest (income) expense, net	4,956			(1,347		)	956			—			4,565
Income from equity investment	6,956			—			—			(6,956		)	—
Earnings before income taxes	6,313			8,633			542			(6,641		)	8,847
Income taxes (benefit)	(95		)	2,263			(42		)	110			2,236
Net earnings	$	6,408		$	6,370		$	584		$	(6,751	)	$	6,611

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OXFORD INDUSTRIES, INC.

UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

First Quarter 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	$	(1,963	)	$	11,166		$ 1,914		$—	$11,117
Cash Flows from Investing Activities:
Net cash used in investing activities		(287	)		(983	)	(291	)	—	(1,561	)
Cash Flows from Financing Activities:
Change in debt		—			—		2,883		—	2,883
Proceeds from issuance of common stock		115			—		—		—	115
Change in intercompany payable		11,583			(10,403	)	(1,180	)	—	—
Dividends on common stock		(1,821	)		—		—		—	(1,821	)
Net cash (used in) provided by financing activities		9,877			(10,403	)	1,703		—	1,177
Net change in cash and cash equivalents		7,627			(220	)	3,326		—	10,733
Effect of foreign currency translation		—			—		(198	)	—	(198	)
Cash and cash equivalents at the beginning of period		5,954			782		1,552		—	8,288
Cash and cash equivalents at the end of period	$	13,581		$	562		$ 4,680		$—	$18,823

OXFORD INDUSTRIES, INC.

UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

First Quarter 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	$	(11,894	)	$	12,187		$	2,241		$ (4)	$	2,530
Cash Flows from Investing Activities:
Net cash used in investing activities		(835	)		(2,007	)		(929	)	—		(3,771	)
Cash Flows from Financing Activities:
Change in debt		7,793			—			(291	)	—		7,502
Proceeds from issuance of common stock		137			—			—		—		137
Change in intercompany payable		6,736			(8,214	)		1,474		4		—
Dividends on common stock		(1,430	)		—			—		—		(1,430	)
Net cash (used in) provided by financing activities		13,236			(8,214	)		1,183		4		6,209
Net change in cash and cash equivalents		507			1,966			2,495		—		4,968
Effect of foreign currency translation		—			—			128		—		128
Cash and cash equivalents at the beginning of period		1,527			104			1,659		—		3,290
Cash and cash equivalents at the end of period	$	2,034		$	2,070		$	4,282		$—	$	8,386

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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 in fiscal 2010. Thus, we have purchased inventory for fiscal 2010 at levels which we believe will mitigate inventory markdown risk and promotional pressure, but also may 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 would 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 quarter of fiscal 2010 compared to the first quarter of fiscal 2009:

	First Quarter
	Fiscal 2010	Fiscal 2009	$ Change
Net sales	$217,750	$216,731	$1,019
Net earnings	$ 12,497	$ 6,611	$5,886
Diluted net earnings per common share	$ 0.76	$ 0.42	$ 0.34
Weighted average common shares outstanding—diluted	16,503	15,876

The primary reasons for the improvement in net earnings were:

· Improved gross margins in each operating group in the first quarter of fiscal 2010 primarily due to product mix within each group and the lack of sales related to certain exited businesses in the first quarter of fiscal 2010.

· A change in our consolidated 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 during the first quarter of fiscal 2010.

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

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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 and a variety of independent specialty stores and in 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, Lands’ End, Target, Macy’s and Sears. 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.

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

FIRST QUARTER OF FISCAL 2010 COMPARED TO FIRST 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

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consolidated statements of operations may not be directly comparable to those of our competitors, as classification of certain expenses may vary by company.

	First Quarter
	Fiscal 2010		Fiscal 2009		$ Change		% Change
Net sales	$217,750	100.0%	$216,731	100.0%	$ 1,019		0.5%
Cost of goods sold	116,168	53.3%	126,797	58.5%	(10,629	)	(8.4%	)
Gross profit	101,582	46.7%	89,934	41.5%	11,648		13.0%
SG&A	83,752	38.5%	78,683	36.3%	5,069		6.4%
Amortization of intangible assets	250	0.1%	308	0.1%	(58	)	(18.8%	)
Royalties and other operating income	3,841	1.8%	2,469	1.1%	1,372		55.6%
Operating income	21,421	9.8%	13,412	6.2%	8,009		59.7%
Interest expense, net	5,009	2.3%	4,565	2.1%	444		9.7%
Earnings before income taxes	16,412	7.5%	8,847	4.1%	7,565		85.5%
Income taxes	3,915	1.8%	2,236	1.0%	1,679		75.1%
Net earnings	$ 12,497	5.7%	$ 6,611	3.1%	$ 5,886		89.0%

The discussion and tables below compare certain line items included in our statements of operations for the first quarter of fiscal 2010 to the first 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


	First Quarter
	Fiscal 2010		Fiscal 2009		$ Change		% Change
Tommy Bahama	$109,105		$ 98,420		$10,685		10.9%
Ben Sherman	22,154		24,219		(2,065	)	(8.5%	)
Lanier Clothes	30,428		31,507		(1,079	)	(3.4%	)
Oxford Apparel	56,342		63,204		(6,862	)	(10.9%	)
Corporate and Other	(279	)	(619	)	340		54.9%
Total net sales	$217,750		$216,731		$ 1,019		0.5%

Consolidated net sales increased $1.0 million, or 0.5%, in the first quarter of fiscal 2010 compared to the first quarter of fiscal 2009 primarily as a result of the improved retail environment, resulting in certain customers requesting the shipment of product in the first quarter of fiscal 2010 which we had planned to ship in the second quarter of fiscal 2010 and the other changes in each operating group discussed below.

Tommy Bahama:

The increase in net sales for Tommy Bahama was due to increases in both the direct to consumer and wholesale channels of distribution as the retail environment improved. Apparel unit sales increased 19.5% while the average selling price per unit for apparel decreased by 5.9%. As of May 1, 2010 and May 2, 2009, we operated 84 Tommy Bahama retail stores.

Ben Sherman:

The decrease in net sales for Ben Sherman was primarily due to an 8.9% reduction in unit sales primarily resulting from our exit and subsequent licensing of our footwear and kids’ businesses and the exit from the women’s operations. The decrease was partially offset by a 5.6% increase in the average exchange rate of the British pound sterling versus the United States dollar during the first quarter of fiscal 2010 compared to the average exchange rate during the first quarter of fiscal 2009 and higher sales at our own retail stores. The average selling price per unit for Ben Sherman remained relatively flat compared to the first quarter of fiscal 2009.

Lanier Clothes:

The decrease in net sales for Lanier Clothes was primarily due to our exit from certain businesses as the first quarter of fiscal 2009 included close-out sales associated with these businesses. This decrease in net sales was partially offset by higher sales levels in our owned and licensed branded businesses primarily resulting from the improved retail environment. Unit sales declined 1.4% and the average selling price per unit decreased 2.0%.

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Oxford Apparel:

The decrease in net sales for Oxford Apparel was primarily due to the first quarter of fiscal 2009 including close-out sales related to certain businesses that we previously exited, partially offset by the positive impact of the improved retail environment. Unit sales declined 11.2% and the average selling price per unit was relatively flat between the two periods.

Gross Profit