Edgar Filing: OXFORD INDUSTRIES INC

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended JULY 31, 2010

	or

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from to

Commission File Number: 1-4365

OXFORD INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

Georgia		58-0831862
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

222 Piedmont Avenue, N.E., Atlanta, Georgia 30308

(Address of principal executive offices) (Zip Code)

(404) 659-2424

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer £	Accelerated filer þ		Non-accelerated filer £	Smaller reporting company £
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

		Number of shares outstanding
Title of each class		as of August 27, 2010
Common Stock, $1 par value		16,560,787

OXFORD INDUSTRIES, INC.

INDEX TO FORM 10-Q

For the second quarter of fiscal 2010

	Page
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements
Condensed Consolidated Statements of Operations (Unaudited)	4
Condensed Consolidated Balance Sheets (Unaudited)	5
Condensed Consolidated Statements of Cash Flows (Unaudited)	6
Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3. Quantitative and Qualitative Disclosures About Market Risk	28
Item 4. Controls and Procedures	28

PART II. OTHER INFORMATION

Item 1. Legal Proceedings	28
Item 1A. Risk Factors	28
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3. Defaults Upon Senior Securities	29
Item 4. Reserved	29
Item 5. Other Information	29
Item 6. Exhibits	29
Signatures	29

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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, demand for our products, timing and cost of shipments requested by our wholesale customers, expected pricing levels, competitive conditions, the timing and cost of planned capital expenditures, costs of products and raw materials we purchase, access to capital and/or credit markets, costs of labor, expected outcomes of pending or potential litigation and regulatory actions and disciplined execution by key management. Forward-looking statements reflect our current expectations, based on currently available information, and are not guarantees of performance. Although we believe that the expectations reflected in such forward-looking statements are reasonable, these expectations could prove inaccurate as such statements involve risks and uncertainties, many of which are beyond our ability to control or predict. Should one or more of these risks or uncertainties, or other risks or uncertainties not currently known to us or that we currently deem to be immaterial, materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. Important factors relating to these risks and uncertainties include, but are not limited to, those described in Part I, Item 1A. Risk Factors contained in our Annual Report on Form 10-K for fiscal 2009, as updated by Part II, Item 1A. Risk Factors in this report and those described from time to time in our future reports filed with the SEC.

We caution that one should not place undue reliance on forward-looking statements, which speak only as of the date on which they are made. We disclaim any intention, obligation or duty to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

DEFINITIONS

Unless the context requires otherwise, the following terms, or words of similar import, have the following meanings:

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

SG&A: Selling, general and administrative expenses

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

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

SEC: U.S. Securities and Exchange Commission

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

FASB: Financial Accounting Standards Board

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

ASC: FASB Accounting Standards Codification

Fiscal 2010		52 weeks ending January 29, 2011
Fiscal 2009		52 weeks ended January 30, 2010
First half fiscal 2010		26 weeks ended July 31, 2010
First half fiscal 2009		26 weeks ended August 1, 2009
Fourth quarter fiscal 2010		13 weeks ending January 29, 2011
Third quarter fiscal 2010		13 weeks ending October 30, 2010
Second quarter fiscal 2010		13 weeks ended July 31, 2010
First quarter fiscal 2010		13 weeks ended May 1, 2010
Fourth quarter fiscal 2009		13 weeks ended January 30, 2010
Third quarter fiscal 2009		13 weeks ended October 31, 2009
Second quarter fiscal 2009		13 weeks ended August 1, 2009
First quarter fiscal 2009		13 weeks ended May 2, 2009

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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)

	Second Quarter Fiscal 2010	Second Quarter Fiscal 2009		First Half Fiscal 2010	First Half Fiscal 2009
Net sales	$186,531	$192,887		$404,281	$ 409,618
Cost of goods sold	98,701	115,514		214,869	242,311
Gross profit	87,830	77,373		189,412	167,307
SG&A	76,246	73,637		159,998	152,320
Amortization of intangible assets	249	315		499	623
	76,495	73,952		160,497	152,943
Royalties and other operating income	4,031	2,916		7,872	5,385
Operating income	15,366	6,337		36,787	19,749
Interest expense, net	5,143	6,245		10,152	10,810
Earnings before income taxes	10,223	92		26,635	8,939
Income taxes	3,004	272		6,919	2,508
Net earnings (loss)	$ 7,219	$ (180	)	$ 19,716	$ 6,431

Net earnings (loss) per common share:
Basic	$ 0.44	$ (0.01	)	$ 1.19	$ 0.40
Diluted	$ 0.44	$ (0.01	)	$ 1.19	$ 0.40
Weighted average common shares outstanding:
Basic	16,540	16,288		16,515	16,083
Dilution	12	—		12	—
Diluted	16,552	16,288		16,527	16,083

Dividends declared per common share	$ 0.11	$ 0.09		$ 0.22	$ 0.18

See accompanying notes.

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OXFORD INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except par amounts)

	July 31, 2010		January 30, 2010		August 1, 2009
ASSETS
Current Assets:
Cash and cash equivalents	$ 28,171		$ 8,288		$ 5,461
Receivables, net	74,611		74,398		78,467
Inventories, net	76,330		77,029		86,828
Prepaid expenses, net	15,484		10,713		13,312
Deferred tax assets	15,384		13,875		10,208
Total current assets	209,980		184,303		194,276
Property, plant and equipment, net	73,919		79,540		86,365
Intangible assets, net	136,233		137,490		138,880
Other non-current assets, net	22,623		23,841		22,932
Total Assets	$442,755		$425,174		$442,453
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Trade accounts payable and other accrued expenses	$ 79,105		$ 81,831		$ 75,827
Accrued compensation	18,844		11,514		11,132
Income taxes payable	—		2,517		—
Short-term debt and current maturities of long-term debt	1,195		—		20,417
Total current liabilities	99,144		95,862		107,376
Long-term debt, less current maturities	146,736		146,408		160,357
Other non-current liabilities	46,965		50,066		46,804
Non-current deferred income taxes	28,143		28,421		30,013
Commitments and contingencies
Shareholders’ Equity:
Common stock, $1.00 par value per common share	16,561		16,461		16,520
Additional paid-in capital	94,442		91,840		89,253
Retained earnings	35,437		19,356		14,136
Accumulated other comprehensive loss	(24,673	)	(23,240	)	(22,006	)
Total shareholders’ equity	121,767		104,417		97,903
Total Liabilities and Shareholders’ Equity	$442,755		$425,174		$442,453

See accompanying notes.

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OXFORD INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

	First Half Fiscal 2010		First Half Fiscal 2009
Cash Flows From Operating Activities:
Net earnings	$ 19,716		$ 6,431
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation	8,754		9,259
Amortization of intangible assets	499		623
Amortization/write-off of deferred financing costs and bond discount	977		2,392
Stock compensation expense	2,767		1,637
(Gain) loss on sale of property, plant and equipment	(3	)	42
Deferred income taxes	(1,587	)	(3,043	)
Changes in working capital:
Receivables	(630	)	2,574
Inventories	357		35,396
Prepaid expenses	(4,824	)	(2,255	)
Current liabilities	2,018		(17,601	)
Other non-current assets	570		157
Other non-current liabilities	(3,078	)	(506	)
Net cash provided by operating activities	25,536		35,106
Cash Flows From Investing Activities:
Purchases of property, plant and equipment	(3,370	)	(5,840	)
Proceeds from sale of property, plant and equipment	78		—
Net cash used in investing activities	(3,292	)	(5,840	)
Cash Flows From Financing Activities:
Repayment of revolving credit arrangements	(33,925	)	(138,135	)
Proceeds from revolving credit arrangements	35,097		138,859
Repurchase of 8 7/8% Senior Unsecured Notes	—		(166,805	)
Proceeds from the issuance of 11 3/8% Senior Secured Notes	—		146,029
Deferred financing costs paid	—		(4,878	)
Proceeds from issuance of common stock	230		193
Dividends on common stock	(3,638	)	(2,919	)
Net cash used in financing activities	(2,236	)	(27,656	)
Net change in cash and cash equivalents	20,008		1,610
Effect of foreign currency translation on cash and cash equivalents	(125	)	561
Cash and cash equivalents at the beginning of year	8,288		3,290
Cash and cash equivalents at the end of period	$ 28,171		$ 5,461

Supplemental disclosure of cash flow information:
Cash paid for interest, net	$ 9,114		$ 9,626
Cash paid for income taxes	$ 14,762		$ 7,088

See accompanying notes.

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OXFORD INDUSTRIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SECOND QUARTER OF FISCAL 2010

1. Basis of Presentation: The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial reporting and the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP. We believe the accompanying unaudited condensed consolidated financial statements reflect all normal, recurring adjustments that are necessary for a fair presentation of our financial position and results of operations as of the dates and for the periods presented. Results of operations for the interim periods presented are not necessarily indicative of results to be expected for our full fiscal year. The accounting policies applied during the interim periods presented are consistent with the significant accounting policies described in our Annual Report on Form 10-K for fiscal 2009.

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

	July 31, 2010		January 30, 2010		August 1, 2009
Finished goods	$111,220		$108,788		$121,306
Work in process	6,466		6,972		5,677
Fabric, trim and supplies	3,082		5,707		6,568
LIFO reserve	(44,438	)	(44,438	)	(46,723	)
Total	$ 76,330		$ 77,029		$ 86,828

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

	Second Quarter Fiscal 2010		Second Quarter Fiscal 2009		First Half Fiscal 2010		First Half Fiscal 2009
Net earnings (loss)	$7,219		$ (180	)	$19,716		$ 6,431
Gain (loss) on foreign currency translation, net of tax	686		4,326		(1,241	)	5,599
Net unrealized gains (losses) on forward foreign exchange contracts, net of tax	(192	)	—		(192	)	—
Comprehensive income	$7,713		$4,146		$18,283		$12,030

4. Operating Group Information: Our business is operated through our four operating groups: Tommy Bahama, Ben Sherman, Lanier Clothes and Oxford Apparel. We identify our operating groups based on the way our management organizes the components of our business for purposes of allocating resources and assessing performance. Corporate and Other is a reconciling category for reporting purposes and includes our corporate offices, substantially all financing activities, elimination of inter-group sales, LIFO inventory accounting adjustments and other costs that are not allocated to the operating groups.

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

	Second Quarter Fiscal 2010	Second Quarter Fiscal 2009	First Half Fiscal 2010	First Half Fiscal 2009
Net Sales
Tommy Bahama	$ 99,349	$ 94,439	$208,454	$192,859
Ben Sherman	18,346	23,627	40,500	47,846
Lanier Clothes	22,736	25,204	53,164	56,711
Oxford Apparel	45,551	49,464	101,893	112,668
Corporate and Other	549	153	270	(466)
Total	$186,531	$192,887	$404,281	$409,618

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	Second Quarter Fiscal 2010		Second Quarter Fiscal 2009		First Half Fiscal 2010		First Half Fiscal 2009
Depreciation
Tommy Bahama	$ 3,289		$ 3,643		$ 6,563		$ 7,305
Ben Sherman	524		606		1,060		1,161
Lanier Clothes	118		135		237		280
Oxford Apparel	183		195		365		399
Corporate and Other	274		57		529		114
Total	$ 4,388		$ 4,636		$ 8,754		$ 9,259
Amortization of Intangible Assets
Tommy Bahama	$ 173		$ 222		$ 346		$ 444
Ben Sherman	65		84		132		160
Lanier Clothes	—		—		—		—
Oxford Apparel	11		9		21		19
Corporate and Other	—		—		—		—
Total	$ 249		$ 315		$ 499		$ 623
Operating Income (Loss)
Tommy Bahama	$14,172		$13,379		$ 32,033		$ 25,629
Ben Sherman	(598	)	(6,308	)	(76)		(8,284)
Lanier Clothes	2,809		2,701		7,168		5,438
Oxford Apparel	3,358		4,129		9,329		9,322
Corporate and Other	(4,375	)	(7,564	)	(11,667	)	(12,356	)
Total Operating Income	$15,366		$ 6,337		$ 36,787		$ 19,749
Interest Expense, net	5,143		6,245		10,152		10,810
Earnings Before Income Taxes	$10,223		$ 92		$ 26,635		$ 8,939

5. Consolidating Financial Data of Subsidiary Guarantors: Our 11 3/8% Senior Secured Notes due 2015 are guaranteed by substantially all of our wholly-owned domestic subsidiaries (“Subsidiary Guarantors”). All guarantees are full and unconditional. For consolidated financial reporting purposes, non-guarantors consist of our subsidiaries which are organized outside the United States and certain domestic subsidiaries. We use the equity method with respect to our investment in subsidiaries included in other non-current assets in our condensed consolidating financial statements. Set forth below are our condensed consolidating balance sheets as of July 31, 2010, January 30, 2010 and August 1, 2009 (in thousands) as well as our condensed consolidating statements of operations for the second quarter and first half of each of fiscal 2010 and fiscal 2009 (in thousands) and our condensed consolidating statements of cash flows for the first half of fiscal 2010 and fiscal 2009 (in thousands).

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OXFORD INDUSTRIES, INC.

UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEETS

July 31, 2010


	Oxford Industries (Parent)		Subsidiary Guarantors		Subsidiary Non- Guarantors		Consolidating Adjustments		Consolidated Total
ASSETS
Cash and cash equivalents	$ 25,251		$ 595		$ 2,325		$ —		$ 28,171
Receivables, net	32,537		6,860		44,879		(9,665	)	74,611
Inventories, net	10,744		52,677		13,632		(723	)	76,330
Prepaid expenses and deferred tax assets	19,038		9,086		4,457		(1,713	)	30,868
Total current assets	87,570		69,218		65,293		(12,101	)	209,980
Property, plant and equipment, net	13,014		55,786		5,119		—		73,919
Intangible assets, net	7		112,826		23,400		—		136,233
Other non-current assets, net	518,307		148,912		6,994		(651,590	)	22,623
Total Assets	$618,898		$386,742		$100,806		$(663,691	)	$442,755

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities	$ 17,886		$ 47,195		$ 41,370		$ (7,307	)	$ 99,144
Long-term debt, less current maturities	146,736		—		—		—		146,736
Other non-current liabilities	336,825		(325,463	)	144,157		(108,554	)	46,965
Non-current deferred income taxes	(4,316	)	26,005		6,454		—		28,143
Total shareholders’/invested equity	121,767		639,005		(91,175	)	(547,830	)	121,767
Total Liabilities and Shareholders’ Equity	$618,898		$ 386,742		$100,806		$(663,691	)	$442,755

OXFORD INDUSTRIES, INC.

CONDENSED CONSOLIDATING BALANCE SHEETS

January 30, 2010


	Oxford Industries (Parent)		Subsidiary Guarantors		Subsidiary Non- Guarantors		Consolidating Adjustments		Consolidated Total
ASSETS
Cash and cash equivalents	$ 5,954		$ 782		$ 1,552		$ —		$ 8,288
Receivables, net	35,943		2,412		45,958		(9,915	)	74,398
Inventories, net	14,218		51,911		11,897		(997	)	77,029
Prepaid expenses and deferred tax assets	17,292		8,111		3,103		(3,918	)	24,588
Total current assets	73,407		63,216		62,510		(14,830	)	184,303
Property, plant and equipment, net	13,997		59,939		5,604		—		79,540
Intangible assets, net	28		113,173		24,289		—		137,490
Other non-current assets, net	499,389		148,932		4,216		(628,696	)	23,841
Total Assets	$586,821		$385,260		$96,619		$(643,526	)	$425,174

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities	39,507		27,319		38,686		(9,650	)	95,862
Long-term debt, less current maturities	146,408		—		—		—		146,408
Other non-current liabilities	300,896		(288,230	)	145,195		(107,795	)	50,066
Non-current deferred income taxes	(4,407	)	27,000		6,794		(966	)	28,421
Total shareholders’/invested equity	104,417		619,171		(94,056	)	(525,115	)	104,417
Total Liabilities and Shareholders’ Equity	$586,821		$385,260		$96,619		$(643,526	)	$425,174

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OXFORD INDUSTRIES, INC.

UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEETS

August 1, 2009

	Oxford Industries (Parent)		Subsidiary Guarantors		Subsidiary Non- Guarantors		Consolidating Adjustments		Consolidated Total
ASSETS
Cash and cash equivalents	$ 1,675		$ —		$ 3,786		$ —		$ 5,461
Receivables, net	37,314		10,752		38,882		(8,481	)	78,467
Inventories, net	10,950		58,525		19,105		(1,752	)	86,828
Prepaid expenses and deferred tax assets	9,931		9,068		3,977		544		23,520
Total current assets	59,870		78,345		65,750		(9,689	)	194,276
Property, plant and equipment, net	9,793		70,320		6,252		—		86,365
Intangible assets, net	47		113,616		25,217		—		138,880
Other non-current assets, net	473,815		145,802		35,273		(631,958	)	22,932
Total Assets	$543,525		$ 408,083		$132,492		$(641,647	)	$442,453

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities	$ 37,644		$ 29,710		$ 47,518		$ (7,496	)	$107,376
Long-term debt, less current maturities	160,357		—		—		—		160,357
Other non-current liabilities	251,608		(205,878	)	110,229		(109,155	)	46,804
Non-current deferred income taxes	(3,987	)	27,305		6,695		—		30,013
Total shareholders’/invested equity	97,903		556,946		(31,950	)	(524,996	)	97,903
Total Liabilities and Shareholders’ Equity	$543,525		$ 408,083		$132,492		$(641,647	)	$442,453

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OXFORD INDUSTRIES, INC.

UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

Second Quarter Fiscal 2010

	Oxford Industries (Parent)			Subsidiary Guarantors			Subsidiary Non- Guarantors		Consolidating Adjustments			Consolidated Total
Net sales	$	74,164		$	100,899		$	20,366	$	(8,898	)	$	186,531
Cost of goods sold	55,564			38,637			8,424		(3,924		)	98,701
Gross profit	18,600			62,262			11,942		(4,974		)	87,830
SG&A including amortization of intangible assets	15,844			53,194			12,825		(5,368		)	76,495
Royalties and other operating income	27			2,503			1,800		(299		)	4,031
Operating income	2,783			11,571			917		95			15,366
Interest (income) expense, net	5,097			(1,078		)	717		407			5,143
Income from equity investment	8,549			—			—		(8,549		)	—
Earnings before income taxes	6,235			12,649			200		(8,861		)	10,223
Income taxes (benefit)	(1,186		)	4,294			5		(109		)	3,004
Net earnings	$	7,421		$	8,355		$	195	$	(8,752	)	$	7,219

OXFORD INDUSTRIES, INC.

UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

First Half Fiscal 2010

	Oxford Industries (Parent)			Subsidiary Guarantors			Subsidiary Non- Guarantors		Consolidating Adjustments			Consolidated Total
Net sales	$	166,840		$	211,856		$	42,698	$	(17,113	)	$	404,281
Cost of goods sold	124,184			81,375			16,907		(7,597		)	214,869
Gross profit	42,656			130,481			25,791		(9,516		)	189,412
SG&A including amortization of intangible assets	38,535			107,836			25,722		(11,596		)	160,497
Royalties and other operating income	64			5,433			3,368		(993		)	7,872
Operating income	4,185			28,078			3,437		1,087			36,787
Interest (income) expense, net	10,062			(2,119		)	1,399		810			10,152
Income from equity investment	21,359			—			—		(21,359		)	—
Earnings before income taxes	15,482			30,197			2,038		(21,082		)	26,635
Income taxes (benefit)	(4,052		)	10,360			514		97			6,919
Net earnings	$	19,534		$	19,837		$	1,524	$	(21,179	)	$	19,716

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OXFORD INDUSTRIES, INC.

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

Second Quarter Fiscal 2009

	Oxford Industries (Parent)			Subsidiary Guarantors			Subsidiary Non- Guarantors			Consolidating Adjustments			Consolidated Total
Net sales	$	74,081		$	102,239		$	25,848		$	(9,281	)	$	192,887
Cost of goods sold	62,270			42,965			14,596			(4,317		)	115,514
Gross profit	11,811			59,274			11,252			(4,964		)	77,373
SG&A including amortization of intangible assets	11,175			52,187			15,821			(5,231		)	73,952
Royalties and other operating income	22			2,057			1,203			(366		)	2,916
Operating income (loss)	658			9,144			(3,366		)	(99		)	6,337
Interest (income) expense, net	6,684			(1,370		)	931			—			6,245
Income from equity investment	4,594			—			—			(4,594		)	—
Earnings (loss) before income taxes	(1,432		)	10,514			(4,297		)	(4,693		)	92
Income taxes (benefit)	(1,316		)	2,821			(1,199		)	(34		)	272
Net earnings (loss)	$	(116	)	$	7,693		$	(3,098	)	$	(4,659	)	$	(180	)

First Half Fiscal 2009

	Oxford Industries (Parent)			Subsidiary Guarantors			Subsidiary Non- Guarantors			Consolidating Adjustments			Consolidated Total
Net sales	$	166,874		$	210,304		$	51,133		$	(18,693	)	$	409,618
Cost of goods sold	136,776			88,929			25,384			(8,778		)	242,311
Gross profit	30,098			121,375			25,749			(9,915		)	167,307
SG&A including amortization of intangible assets	25,162			109,221			29,800			(11,240		)	152,943
Royalties and other operating income	34			4,276			2,184			(1,109		)	5,385
Operating income (loss)	4,970			16,430			(1,867		)	216			19,749
Interest (income) expense, net	11,640			(2,717		)	1,887			—			10,810
Income from equity investment	11,550			—			—			(11,550		)	—
Earnings (loss) before income taxes	4,880			19,147			(3,754		)	(11,334		)	8,939
Income taxes (benefit)	(1,411		)	5,084			(1,241		)	76			2,508
Net earnings (loss)	$	6,291		$	14,063		$	(2,513	)	$	(11,410	)	$	6,431

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OXFORD INDUSTRIES, INC.

UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

First Half Fiscal 2010

	Oxford Industries (Parent)			Subsidiary Guarantors			Subsidiary Non- Guarantors		Consolidating Adjustments	Consolidated Total
Cash Flows From Operating Activities:
Net cash (used in) provided by operating activities	$	(14,632	)	$	39,115		$ 1,053		$ —	$25,536
Cash Flows from Investing Activities:
Net cash used in investing activities		(485	)		(2,430	)	(377	)	—	(3,292	)
Cash Flows from Financing Activities:
Change in debt		—			—		1,172		—	1,172
Proceeds from issuance of common stock		230			—		—		—	230
Change in intercompany payable		37,822			(36,872	)	(950	)	—	—
Dividends on common stock		(3,638	)		—		—		—	(3,638	)
Net cash (used in) provided by financing activities		34,414			(36,872	)	222		—	(2,236	)
Net change in cash and cash equivalents		19,297			(187	)	898		—	20,008
Effect of foreign currency translation		—			—		(125	)	—	(125	)
Cash and cash equivalents at the beginning of year		5,954			782		1,552		—	8,288
Cash and cash equivalents at the end of period	$	25,251		$	595		$ 2,325		$ —	$28,171

OXFORD INDUSTRIES, INC.

UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

First Half Fiscal 2009

	Oxford Industries (Parent)			Subsidiary Guarantors			Subsidiary Non- Guarantors			Consolidating Adjustments	Consolidated Total
Cash Flows From Operating Activities:
Net cash (used in) provided by operating activities	$	(97	)	$	35,965		$	(762	)	$ —	$	35,106
Cash Flows from Investing Activities:
Net cash (used in) provided by investing activities		(1,496	)		(3,212	)		(1,132	)	—		(5,840	)
Cash Flows from Financing Activities:
Change in debt		(24,221	)		—			4,169		—		(20,052	)
Payments of debt issuance costs		(4,878	)		—			—		—		(4,878	)
Proceeds from issuance of common stock		193			—			—		—		193
Change in intercompany payable		33,566			(33,290	)		(276	)	—		—
Dividends on common stock		(2,919	)		—			—		—		(2,919	)
Net cash (used in) provided by financing activities		1,741			(33,290	)		3,893		—		(27,656	)
Net change in cash and cash equivalents		148			(537	)		1,999		—		1,610
Effect of foreign currency translation		—			—			561		—		561
Cash and cash equivalents at the beginning of year		1,527			537			1,226		—		3,290
Cash and cash equivalents at the end of period	$	1,675		$	—		$	3,786		$ —	$	5,461

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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 through the end of fiscal 2010, or beyond. Thus, we have purchased inventory for fiscal 2010 at levels which we believe should mitigate inventory markdown risk and promotional pressure; however, these precautions may also limit our growth opportunities. In the current economic environment, we also believe it is important to continue to focus on maintaining a strong balance sheet and ample liquidity. We believe that the measures we have taken to reduce working capital requirements, moderate capital expenditures for retail stores, reduce our overhead and refinance our significant debt agreements have significantly enhanced our balance sheet and liquidity.

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

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

	First Half
	Fiscal 2010	Fiscal 2009	$ Change
Net sales	$404,281	$409,618	$ (5,337	)
Net earnings	$ 19,716	$ 6,431	$13,285
Diluted net earnings per common share	$ 1.19	$ 0.40	$ 0.79
Weighted average common shares outstanding—diluted	16,527	16,083	444

The primary reasons for the improvement in net earnings were:

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

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

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

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

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

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

OPERATING GROUPS

Our business is operated through our four operating groups: Tommy Bahama, Ben Sherman, Lanier Clothes and Oxford Apparel. We identify our operating groups based on the way our management organizes the components of our business for purposes of allocating resources and assessing performance.

Tommy Bahama designs, sources and markets collections of men’s and women’s sportswear and related products. The target consumers of Tommy Bahama are affluent men and women age 35 and older who embrace a relaxed and casual approach to daily living. Tommy Bahama® products can be found in our owned and licensed Tommy Bahama retail stores and on our e-commerce website, as well as in certain department stores and independent specialty stores throughout the United States. We also license the Tommy Bahama name for various product categories and operate Tommy Bahama restaurants.

Ben Sherman is a London-based designer, marketer and distributor of branded sportswear and related products. Ben Sherman® was established in 1963 as an edgy, young men’s, “Mod”-inspired shirt brand and has evolved into a British lifestyle brand of apparel targeted at youthful-thinking men age 19 to 35 throughout the world. We offer a Ben Sherman men’s sportswear collection, as well as tailored clothing and accessories. Our Ben Sherman products can be found in certain department stores, a variety of independent specialty stores and our owned and licensed Ben Sherman retail stores, as well as on our e-commerce websites. We also license the Ben Sherman name for various product categories.

Lanier Clothes designs and markets branded and private label men’s suits, sportcoats, suit separates and dress slacks across a wide range of price points. Certain Lanier Clothes products are sold using trademarks licensed to us by third parties, including Kenneth Cole®, Dockers®, and Geoffrey Beene®. We also offer branded tailored clothing products under our Billy London® and Arnold Brant® trademarks. In addition to our branded businesses, we design and source certain private label tailored clothing products. Significant private label brands include Stafford®, Lands’ End® and Alfani®. Our Lanier Clothes products are sold to national chains, department stores, mass merchants, specialty stores, specialty catalog retailers and discount retailers throughout the United States.

Oxford Apparel produces branded and private label dress shirts, suit separates, sport shirts, casual slacks, outerwear, sweaters, jeans, swimwear, westernwear and golf apparel. We design and source certain private label programs for several customers, including programs for Costco, Sears, Target and Macy’s. Significant owned brands of Oxford Apparel include Oxford Golf®, Ely®, Cattleman® and Cumberland Outfitters®. Oxford Apparel also owns a two-thirds interest in the entity that owns the Hathaway® trademark in the United States and several other countries. Additionally, Oxford Apparel licenses from third parties the right to use certain trademarks, including Dockers and United States Polo Association®, for certain apparel products. Our Oxford Apparel products are sold to a variety of department stores, mass merchants, specialty catalog retailers, discount retailers, specialty stores, “green grass” golf merchants and Internet retailers throughout the United States.

Corporate and Other is a reconciling category for reporting purposes and includes our corporate office, substantially all financing activities, elimination of inter-segment sales, LIFO inventory accounting adjustments and other costs that are not allocated to the operating groups. LIFO inventory calculations are made on a legal entity basis which does not correspond to our operating group definitions; therefore, LIFO inventory accounting adjustments are not allocated to operating groups.

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For further information regarding our operating groups, see Note 4 to our unaudited condensed consolidated financial statements included in this report and Part I, Item 1, Business in our Annual Report on Form 10-K for fiscal 2009.

RESULTS OF OPERATIONS

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

The following table sets forth the specified line items in our unaudited condensed consolidated statements of operations both in dollars (in thousands) and as a percentage of net sales. The table also sets forth the dollar change and the percentage change of the data as compared to the same period of the prior year. We have calculated all percentages based on actual data, but percentage columns may not add due to rounding. Individual line items of our consolidated statements of operations may not be directly comparable to those of our competitors, as classification of certain expenses may vary by company.

Second Quarter

Fiscal 2010