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 |
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For the quarterly period ended JULY 31, 2010 |
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or |
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o |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period from to |
Commission File Number: 1-4365
OXFORD INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Georgia |
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58-0831862 |
(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
222 Piedmont Avenue, N.E., Atlanta, Georgia 30308
(Address of principal executive offices) (Zip Code)
(404) 659-2424
(Registrants 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 £ |
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(Do not check if a smaller reporting company) |
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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 issuers classes of common stock, as of the latest practicable date.
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Number of shares outstanding |
Title of each class |
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as of August 27, 2010 |
Common Stock, $1 par value |
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16,560,787 |
OXFORD INDUSTRIES, INC.
For the second quarter of fiscal 2010
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 |
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52 weeks ending January 29, 2011 |
Fiscal 2009 |
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52 weeks ended January 30, 2010 |
First half fiscal 2010 |
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26 weeks ended July 31, 2010 |
First half fiscal 2009 |
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26 weeks ended August 1, 2009 |
Fourth quarter fiscal 2010 |
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13 weeks ending January 29, 2011 |
Third quarter fiscal 2010 |
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13 weeks ending October 30, 2010 |
Second quarter fiscal 2010 |
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13 weeks ended July 31, 2010 |
First quarter fiscal 2010 |
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13 weeks ended May 1, 2010 |
Fourth quarter fiscal 2009 |
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13 weeks ended January 30, 2010 |
Third quarter fiscal 2009 |
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13 weeks ended October 31, 2009 |
Second quarter fiscal 2009 |
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13 weeks ended August 1, 2009 |
First quarter fiscal 2009 |
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13 weeks ended May 2, 2009 |
OXFORD INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share amounts)
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Second |
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Second |
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First |
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First |
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Net sales |
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$186,531 |
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$192,887 |
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$404,281 |
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$ 409,618 |
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Cost of goods sold |
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98,701 |
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115,514 |
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214,869 |
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242,311 |
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Gross profit |
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87,830 |
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77,373 |
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189,412 |
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167,307 |
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SG&A |
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76,246 |
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73,637 |
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159,998 |
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152,320 |
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Amortization of intangible assets |
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249 |
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315 |
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499 |
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623 |
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76,495 |
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73,952 |
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160,497 |
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152,943 |
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Royalties and other operating income |
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4,031 |
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2,916 |
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7,872 |
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5,385 |
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Operating income |
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15,366 |
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6,337 |
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36,787 |
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19,749 |
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Interest expense, net |
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5,143 |
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6,245 |
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10,152 |
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10,810 |
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Earnings before income taxes |
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10,223 |
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92 |
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26,635 |
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8,939 |
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Income taxes |
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3,004 |
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272 |
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6,919 |
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2,508 |
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Net earnings (loss) |
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$ 7,219 |
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$ (180 |
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$ 19,716 |
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$ 6,431 |
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Net earnings (loss) per common share: |
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Basic |
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$ 0.44 |
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$ (0.01 |
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$ 1.19 |
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$ 0.40 |
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Diluted |
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$ 0.44 |
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$ (0.01 |
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$ 1.19 |
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$ 0.40 |
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Weighted average common shares outstanding: |
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Basic |
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16,540 |
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16,288 |
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16,515 |
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16,083 |
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Dilution |
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12 |
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12 |
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Diluted |
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16,552 |
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16,288 |
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16,527 |
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16,083 |
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Dividends declared per common share |
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$ 0.11 |
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$ 0.09 |
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$ 0.22 |
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$ 0.18 |
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See accompanying notes.
OXFORD INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except par amounts)
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July 31, |
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January 30, |
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August 1, |
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ASSETS |
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Current Assets: |
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Cash and cash equivalents |
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$ 28,171 |
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$ 8,288 |
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$ 5,461 |
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Receivables, net |
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74,611 |
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74,398 |
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78,467 |
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Inventories, net |
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76,330 |
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77,029 |
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86,828 |
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Prepaid expenses, net |
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15,484 |
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10,713 |
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13,312 |
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Deferred tax assets |
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15,384 |
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13,875 |
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10,208 |
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Total current assets |
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209,980 |
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184,303 |
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194,276 |
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Property, plant and equipment, net |
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73,919 |
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79,540 |
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86,365 |
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Intangible assets, net |
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136,233 |
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137,490 |
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138,880 |
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Other non-current assets, net |
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22,623 |
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23,841 |
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22,932 |
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Total Assets |
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$442,755 |
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$425,174 |
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$442,453 |
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LIABILITIES AND SHAREHOLDERS EQUITY |
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Current Liabilities: |
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Trade accounts payable and other accrued expenses |
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$ 79,105 |
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$ 81,831 |
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$ 75,827 |
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Accrued compensation |
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18,844 |
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11,514 |
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11,132 |
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Income taxes payable |
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2,517 |
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Short-term debt and current maturities of long-term debt |
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1,195 |
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20,417 |
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Total current liabilities |
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99,144 |
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95,862 |
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107,376 |
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Long-term debt, less current maturities |
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146,736 |
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146,408 |
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160,357 |
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Other non-current liabilities |
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46,965 |
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50,066 |
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46,804 |
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Non-current deferred income taxes |
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28,143 |
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28,421 |
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30,013 |
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Commitments and contingencies |
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Shareholders Equity: |
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Common stock, $1.00 par value per common share |
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16,561 |
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16,461 |
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16,520 |
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Additional paid-in capital |
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94,442 |
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91,840 |
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89,253 |
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Retained earnings |
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35,437 |
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19,356 |
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14,136 |
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Accumulated other comprehensive loss |
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(24,673 |
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(23,240 |
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(22,006 |
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Total shareholders equity |
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121,767 |
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104,417 |
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97,903 |
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Total Liabilities and Shareholders Equity |
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$442,755 |
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$425,174 |
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$442,453 |
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See accompanying notes.
OXFORD INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
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First Half |
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First Half |
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Cash Flows From Operating Activities: |
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Net earnings |
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$ 19,716 |
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$ 6,431 |
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Adjustments to reconcile net earnings to net cash provided by operating activities: |
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Depreciation |
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8,754 |
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9,259 |
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Amortization of intangible assets |
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499 |
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623 |
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Amortization/write-off of deferred financing costs and bond discount |
|
977 |
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2,392 |
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Stock compensation expense |
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2,767 |
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1,637 |
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(Gain) loss on sale of property, plant and equipment |
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(3 |
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42 |
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Deferred income taxes |
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(1,587 |
) |
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(3,043 |
) |
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Changes in working capital: |
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Receivables |
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(630 |
) |
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2,574 |
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Inventories |
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357 |
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35,396 |
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Prepaid expenses |
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(4,824 |
) |
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(2,255 |
) |
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Current liabilities |
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2,018 |
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(17,601 |
) |
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Other non-current assets |
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570 |
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157 |
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Other non-current liabilities |
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(3,078 |
) |
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(506 |
) |
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Net cash provided by operating activities |
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25,536 |
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35,106 |
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Cash Flows From Investing Activities: |
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Purchases of property, plant and equipment |
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(3,370 |
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(5,840 |
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Proceeds from sale of property, plant and equipment |
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78 |
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Net cash used in investing activities |
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(3,292 |
) |
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(5,840 |
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Cash Flows From Financing Activities: |
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Repayment of revolving credit arrangements |
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(33,925 |
) |
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(138,135 |
) |
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Proceeds from revolving credit arrangements |
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35,097 |
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138,859 |
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Repurchase of 8 7/8% Senior Unsecured Notes |
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(166,805 |
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Proceeds from the issuance of 11 3/8% Senior Secured Notes |
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146,029 |
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Deferred financing costs paid |
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(4,878 |
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Proceeds from issuance of common stock |
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230 |
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193 |
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Dividends on common stock |
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(3,638 |
) |
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(2,919 |
) |
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Net cash used in financing activities |
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(2,236 |
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(27,656 |
) |
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Net change in cash and cash equivalents |
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20,008 |
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1,610 |
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Effect of foreign currency translation on cash and cash equivalents |
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(125 |
) |
|
561 |
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Cash and cash equivalents at the beginning of year |
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8,288 |
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3,290 |
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Cash and cash equivalents at the end of period |
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$ 28,171 |
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$ 5,461 |
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Supplemental disclosure of cash flow information: |
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Cash paid for interest, net |
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$ 9,114 |
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$ 9,626 |
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Cash paid for income taxes |
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$ 14,762 |
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$ 7,088 |
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See accompanying notes.
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):
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July 31, |
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January 30, |
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August 1, |
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Finished goods |
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$111,220 |
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$108,788 |
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$121,306 |
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Work in process |
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6,466 |
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6,972 |
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5,677 |
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Fabric, trim and supplies |
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3,082 |
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5,707 |
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6,568 |
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LIFO reserve |
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(44,438 |
) |
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(44,438 |
) |
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(46,723 |
) |
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Total |
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$ 76,330 |
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$ 77,029 |
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$ 86,828 |
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3. Comprehensive Income: Comprehensive income is calculated as follows for the periods presented (in thousands):
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Second Quarter |
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Second Quarter |
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First Half |
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First Half |
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Net earnings (loss) |
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$7,219 |
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$ (180 |
) |
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$19,716 |
|
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$ 6,431 |
|
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Gain (loss) on foreign currency translation, net of tax |
|
686 |
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4,326 |
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(1,241 |
) |
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5,599 |
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Net unrealized gains (losses) on forward foreign exchange contracts, net of tax |
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(192 |
) |
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(192 |
) |
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Comprehensive income |
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$7,713 |
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$4,146 |
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$18,283 |
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$12,030 |
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4. Operating Group Information: Our business is operated through our four operating groups: Tommy Bahama, Ben Sherman, Lanier Clothes and Oxford Apparel. We identify our operating groups based on the way our management organizes the components of our business for purposes of allocating resources and assessing performance. Corporate and Other is a reconciling category for reporting purposes and includes our corporate offices, substantially all financing activities, elimination of inter-group sales, LIFO inventory accounting adjustments and other costs that are not allocated to the operating groups.
The table below presents certain information about our operating groups (in thousands).
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Second
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Second
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First |
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First |
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Net Sales |
|
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Tommy Bahama |
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$ 99,349 |
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$ 94,439 |
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$208,454 |
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$192,859 |
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Ben Sherman |
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18,346 |
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23,627 |
|
40,500 |
|
47,846 |
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Lanier Clothes |
|
22,736 |
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25,204 |
|
53,164 |
|
56,711 |
|
Oxford Apparel |
|
45,551 |
|
49,464 |
|
101,893 |
|
112,668 |
|
Corporate and Other |
|
549 |
|
153 |
|
270 |
|
(466) |
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Total |
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$186,531 |
|
$192,887 |
|
$404,281 |
|
$409,618 |
|
|
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Second
|
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Second
|
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First |
|
First |
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Depreciation |
|
|
|
|
|
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|
||||
Tommy Bahama |
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$ 3,289 |
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$ 3,643 |
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$ 6,563 |
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$ 7,305 |
|
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Ben Sherman |
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524 |
|
606 |
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1,060 |
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1,161 |
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Lanier Clothes |
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118 |
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135 |
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237 |
|
280 |
|
||||
Oxford Apparel |
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183 |
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195 |
|
365 |
|
399 |
|
||||
Corporate and Other |
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274 |
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57 |
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529 |
|
114 |
|
||||
Total |
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$ 4,388 |
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$ 4,636 |
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$ 8,754 |
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$ 9,259 |
|
||||
Amortization of Intangible Assets |
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|
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||||
Tommy Bahama |
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$ 173 |
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$ 222 |
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$ 346 |
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$ 444 |
|
||||
Ben Sherman |
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65 |
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84 |
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132 |
|
160 |
|
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Lanier Clothes |
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|
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Oxford Apparel |
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11 |
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9 |
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21 |
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19 |
|
||||
Corporate and Other |
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|
|
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|
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|
||||
Total |
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$ 249 |
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$ 315 |
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$ 499 |
|
$ 623 |
|
||||
Operating Income (Loss) |
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|
||||
Tommy Bahama |
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$14,172 |
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$13,379 |
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$ 32,033 |
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$ 25,629 |
|
||||
Ben Sherman |
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(598 |
) |
(6,308 |
) |
(76) |
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(8,284) |
|
||||
Lanier Clothes |
|
2,809 |
|
2,701 |
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7,168 |
|
5,438 |
|
||||
Oxford Apparel |
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3,358 |
|
4,129 |
|
9,329 |
|
9,322 |
|
||||
Corporate and Other |
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(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).
OXFORD INDUSTRIES, INC.
UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEETS
July 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oxford |
|
Subsidiary |
|
Subsidiary |
|
Consolidating |
|
Consolidated |
||||||
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 |
|
Subsidiary |
|
Subsidiary |
|
Consolidating |
|
Consolidated |
|
|||||
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 |
|
OXFORD INDUSTRIES, INC.
UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEETS
August 1, 2009
|
|
Oxford |
|
Subsidiary |
|
Subsidiary |
|
Consolidating |
|
Consolidated |
||
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 |
|
OXFORD INDUSTRIES, INC.
UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
Second Quarter Fiscal 2010
|
|
Oxford |
|
Subsidiary |
|
Subsidiary |
|
Consolidating |
|
Consolidated |
|
|||||
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 |
|
Subsidiary |
|
Subsidiary |
|
Consolidating |
|
Consolidated |
|
|||||
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 |
|
OXFORD INDUSTRIES, INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
Second Quarter Fiscal 2009
|
|
Oxford |
|
Subsidiary |
|
Subsidiary |
|
Consolidating |
|
Consolidated |
|
|||||
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 |
|
Subsidiary |
|
Subsidiary |
|
Consolidating |
|
Consolidated |
|
|||||
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 |
|
OXFORD INDUSTRIES, INC.
UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
First Half Fiscal 2010
|
|
Oxford |
|
Subsidiary |
|
Subsidiary |
|
Consolidating |
|
Consolidated |
|
||||||||
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
|
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Oxford |
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Subsidiary |
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Subsidiary |
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Consolidating |
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Consolidated |
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Cash Flows From Operating Activities: |
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|
|
|
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|
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|
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|
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Net cash (used in) provided by operating activities |
|
$ |
(97 |
) |
|
$ |
35,965 |
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|
$ |
(762 |
) |
|
$ |
|
$ |
35,106 |
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Cash Flows from Investing Activities: |
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|
|
|
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|
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Net cash (used in) provided by investing activities |
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|
(1,496 |
) |
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|
(3,212 |
) |
|
|
(1,132 |
) |
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|
|
|
(5,840 |
) |
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Cash Flows from Financing Activities: |
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Change in debt |
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|
(24,221 |
) |
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|
|
|
|
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4,169 |
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|
|
|
|
(20,052 |
) |
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Payments of debt issuance costs |
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|
(4,878 |
) |
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|
|
|
|
|
|
|
|
|
|
|
(4,878 |
) |
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Proceeds from issuance of common stock |
|
|
193 |
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|
|
|
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|
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|
|
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193 |
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Change in intercompany payable |
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33,566 |
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|
(33,290 |
) |
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|
(276 |
) |
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Dividends on common stock |
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|
(2,919 |
) |
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|
|
|
|
|
|
|
|
|
|
|
(2,919 |
) |
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Net cash (used in) provided by financing activities |
|
|
1,741 |
|
|
|
(33,290 |
) |
|
|
3,893 |
|
|
|
|
|
(27,656 |
) |
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Net change in cash and cash equivalents |
|
|
148 |
|
|
|
(537 |
) |
|
|
1,999 |
|
|
|
|
|
1,610 |
|
|
Effect of foreign currency translation |
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|
|
|
|
|
|
|
|
|
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 |
|
|
ITEM 2. MANAGEMENTS 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 Managements 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:
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First Half |
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Fiscal 2010 |
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Fiscal 2009 |
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$ Change |
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Net sales |
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$404,281 |
|
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$409,618 |
|
|
$ (5,337 |
) |
Net earnings |
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$ 19,716 |
|
|
$ 6,431 |
|
|
$13,285 |
|
Diluted net earnings per common share |
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$ 1.19 |
|
|
$ 0.40 |
|
|
$ 0.79 |
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Weighted average common shares outstandingdiluted |
|
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.
· 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 Shermans 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 mens and womens 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 mens, 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 mens 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 mens 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 Macys. 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
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.
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Second Quarter |
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Fiscal 2010 |
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