-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, ppgZI7LdgS8w2E4e6EIpLid0nsCXrJ5wh42gXh1vHnDUZKFbrg28aqZGV/TOIlsG N4hqeS2dG97uTUl81uojzA== 0000075042-94-000006.txt : 19940518 0000075042-94-000006.hdr.sgml : 19940518 ACCESSION NUMBER: 0000075042-94-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940516 DATE AS OF CHANGE: 19940517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OSHKOSH B GOSH INC CENTRAL INDEX KEY: 0000075042 STANDARD INDUSTRIAL CLASSIFICATION: 2300 IRS NUMBER: 390519915 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-13365 FILM NUMBER: 94527062 BUSINESS ADDRESS: STREET 1: 112 OTTER AVE STREET 2: P O BOX 300 CITY: OSHKOSH STATE: WI ZIP: 54901 BUSINESS PHONE: 4142318800 10-Q 1 1ST QTR 94 10Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1994 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 0-13365 OSHKOSH B'GOSH, INC. (Exact name of registrant as specified in charter) Delaware 39-0519915 State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 112 Otter Avenue Oshkosh, Wisconsin 54901 (Address of principal executive offices) (Zip code) (414)231-8800 (Registrant's telephone number) 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 require- ments for the past 90 days. Yes X No As of March 31, 1994, there were outstanding 13,294,752 shares of Class A Common Stock and 1,291,048 shares of Class B Common Stock. FORM 10-Q OSHKOSH B'GOSH, INC. AND SUBSIDIARIES INDEX Page PART I. Financial Information Item 1. Financial Statements Condensed Consolidated Balance Sheets - March 31, 1994 and December 31, 1993 3 Unaudited Condensed Consolidated Statements of Income - Three Months Ended March 31, 1994 and 1993 4 Unaudited Condensed Consolidated Statements of Cash Flow - Three Months Ended March 31, 1994 and 1993 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 Part II. Other Information 9 Signatures 9 OSHKOSH B'GOSH, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (Dollars in thousands) March 31, December 31, 1994 1993 (Unaudited) * ASSETS Current assets Cash and cash equivalents $ 16,213 $ 17,853 Accounts receivable 35,812 19,477 Inventories 94,204 99,999 Prepaid expenses and other current assets 2,585 3,810 Deferred income taxes 11,458 10,716 Total current assets 160,272 151,855 Property, plant and equipment 114,432 114,397 Less accumulated depreciation and amortization 43,962 42,642 Net property, plant and equipment 70,470 71,755 Other assets 5,815 5,521 Total assets $236,557 $229,131 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Short-term borrowing $ 6,500 $ -- Current maturities of long-term debt 505 536 Accounts payable 6,143 9,720 Accrued expenses 33,960 29,805 Total current liabilities 47,108 40,061 Long-term debt 754 757 Other liabilities 17,186 16,315 Shareholders' equity Preferred stock -- -- Common stock: Class A 133 133 Class B 13 13 Additional paid-in capital 2,971 2,971 Retained earnings 168,599 169,182 Cumulative foreign currency translation adjustments (207) (301) Total shareholders' equity 171,509 171,998 Total liabilities and shareholders' equity $236,557 $229,131 * Condensed from audited financial statements. See notes to condensed consolidated financial statements. OSHKOSH B'GOSH, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Income (In thousands, except per share amounts) (Unaudited) Three Months Ended March 31, 1994 1993 Net sales $ 87,394 $ 93,234 Cost of products sold 64,987 67,539 Gross profit 22,407 25,695 Selling, general and administrative expenses 21,983 19,904 Operating income 424 5,791 Other income (expense): Interest expense (158) (108) Interest income 235 237 Royalty income 919 630 Other 150 32 Net other income (expense) 1,146 791 Income before taxes 1,570 6,582 Income taxes 675 2,645 Net income $ 895 $ 3,937 Average number of shares outstanding 14,586 14,586 Net income per common share $ .06 $ .27 Cash dividends per common share Class A $ .1025 $ .1025 Class B $ .09 $ .09 See notes to condensed consolidated financial statements. OSHKOSH B'GOSH, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flow (Dollars in thousands) (Unaudited) Three Months Ended March 31, 1994 1993 Cash flows from operating activities Net income for the period $ 895 $ 3,937 Items in income not affecting cash 2,490 1,362 Changes in current assets (9,315) (10,872) Changes in current liabilities 578 3,879 Net cash used in operating activities (5,352) (1,694) Cash flows from investing activities Property, plant and equipment additions (1,876) (2,032) Other (376) (117) Proceeds from disposal of assets 976 99 Net cash used in investing activities (1,276) (2,050) Cash flows from financing activities Net increase in short-term borrowings 6,500 -- Payments of long-term debt (34) (7,042) Cash dividends paid (1,478) (1,472) Net cash provided by (used in) financing activities 4,988 (8,514) Net decrease in cash and cash equivalents $(1,640) $(12,258) See notes to condensed consolidated financial statements. OSHKOSH B'GOSH, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) Note 1. Basis of Presentation The condensed consolidated financial statements included herein have been prepared by the Company without audit. However, the foregoing statements contain all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of Company management, necessary to present fairly the financial position as of March 31, 1994 and December 31, 1993, the results of operations for the three-month periods ended March 31, 1994 and 1993 and cash flows for the three-month periods ended March 31, 1993. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's 1993 Annual Report. Note 2. Inventories A summary of inventories follows: March 31, December 31, 1994 1993 (Dollars in thousands) Finished goods $75,027 $82,737 Work in process 5,787 5,008 Raw materials 13,390 12,254 Total $94,204 $99,999 The replacement cost of inventory exceeds the above LIFO costs by $15,066 and $14,716 at March 31, 1994 and December 31, 1993, respectively. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Consolidated net sales for the three months ended March 31, 1994 were $87.4 million, a 6.2% decrease from consolidated net sales of $93.2 million for the first quarter of 1993. The Company's domestic wholesale business of approximately $64.8 million for the first quarter of 1994 was 16.5% less than 1993 first quarter sales, due primarily to a decline in unit shipments of approximately 14.5% in 1994 from 1993. The decrease in domestic wholesale unit shipments related primarily to the effects of the competitive environment in the children's wear business with decreased wholesale sales of both fashion and basic product offerings. The Company currently anticipates its domestic wholesale unit shipments for the remainder of 1994 will be down slightly in comparison with unit shipments for the same time period in 1993. Company retail sales at its Oshkosh B'Gosh branded outlet stores and its wholly- owned subsidiary Essex Outfitters Trader Kids stores were approximately $14.3 million for the first quarter of 1994, a 60.7% increase over 1993 first quarter retail sales of approximately $8.9 million. Retail sales increases resulted primarily from the opening of additional retail stores during 1993 and early 1994 as well as moderate comparable store sales increases. The Company anticipates continued expansion in its retail business during 1994 and is currently on target with its planned opening of an additional 35 to 45 retail stores in all of 1994. The Company anticipates that increased retail sales through the balance of 1994 will offset the reduction in the domestic wholesale business. Gross margin as a percent of sales was 25.6% in the first quarter of 1994, compared with 27.6% in the first quarter of 1993. The Company's gross margin during 1994 was adversely affected by poor weather conditions during the months of January and February which were disruptive to production schedules, less than fully efficient operations and the impact of slightly lower wholesale pricing in a highly competitive environment. The Company currently anticipates improvement in its gross margins in the second half of 1994. Selling, general and administrative expenses for the first quarter of 1994 increased $2.1 million over the first quarter, 1993 selling, general and administrative expenses. The primary reason for increasing selling, general and administrative expenses is the Company's increasing focus on its retail business. In addition, the Company's catalog division, initiated in the second half of 1993, added approximately $.6 million to its selling, general and administrative expense. The first quarter, 1994 selling, general and administrative expense also includes approximately $.3 million of costs associated with the Company's proposed acquisition of Rio Sportswear, Inc. and affiliated companies ("Rio"). Negotiations with Rio terminated in March, 1994. Net other income for the first quarter of 1994 was $1.1 million, compared to $.8 million in the first quarter of 1993. This increase resulted primarily from increasing royalty income, net of expenses, which is primarily the result of additional license agreements entered into during 1993. The Company's effective tax rate was 43.0% for the quarter and 41.3% for the comparable period in 1992. Financial Condition and Liquidity The Company's financial condition remains strong. Net working capital at March 31, 1994 was $113.2 million, as compared to $111.8 million at the end of 1993 and $114.4 million at March 31, 1993. The Company's current ratio was 3.4 to 1 at March 31, 1994, compared to 3.8 to 1 at the end of 1993 and 4.6 to 1 at March 31, 1993. Inventories at March 31, 1994 were $94.2 million, up $4.3 million from March 31, 1993. This increase in inventories relates primarily to the Company's expanding retail business. At March 31, 1994, the Company had short-term borrowings outstanding of $6.5 million, as compared with no outstanding short-term indebtedness at March 31, 1993. The Company's long-term debt as a percentage of total capitalization (long-term debt plus shareholders' equity) was 0.4% and 0.7% at March 31, 1994 and 1993, respectively. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits None (b) Reports on Form 8-K None SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the under- signed thereunto duly authorized. OSHKOSH B'GOSH, INC. Date: 5/10/94 /S/DOUGLAS W. HYDE Chairman of the Board, President, Chief Executive Officer and Director Date: 5/10/94 /S/DAVID L. OMACHINSKI Vice President-Finance, Chief Financial Officer and Treasurer -----END PRIVACY-ENHANCED MESSAGE-----