-----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, UFKeGEx/GVPiaiE8AQ9d5Dkg8uMnwAyqh7AIGebOb1tb+NY5Q6s0VYk5shX0s4gA ddDzlegNWPs1Os0ntATGwQ== 0000075042-95-000005.txt : 19950425 0000075042-95-000005.hdr.sgml : 19950425 ACCESSION NUMBER: 0000075042-95-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950424 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: OSHKOSH B GOSH INC CENTRAL INDEX KEY: 0000075042 STANDARD INDUSTRIAL CLASSIFICATION: APPAREL & OTHER FINISHED PRODS OF FABRICS & SIMILAR MATERIAL [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: 95530718 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 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, 1995 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 requirements for the past 90 days. Yes X No As of March 31, 1995, there were outstanding 11,895,787 shares of Class A Common Stock and 1,267,513 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, 1995 and December 31, 1994 3 Unaudited Condensed Consolidated Statements of Income - Three Months Ended March 31, 1995 and 1994 4 Unaudited Condensed Consolidated Statements of Cash Flow - Three Months Ended March 31, 1995 and 1994 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 10 Signatures 10 OSHKOSH B'GOSH, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (Dollars in thousands) March 31,December 31, 1995 1994 (Unaudited) * ASSETS Current assets Cash and cash equivalents $ 1,370 $ 10,514 Accounts receivable 42,808 23,857 Inventories 81,544 93,916 Prepaid expenses and other current assets 9,823 2,510 Deferred income taxes 10,782 11,510 Total current assets 146,327 142,307 Property, plant and equipment 115,733 119,950 Less accumulated depreciation and amortization 48,691 50,121 Net property, plant and equipment 67,042 69,829 Other assets 5,778 5,075 Total assets $219,147 $217,211 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Current maturities of long-term debt $ 229 240 Accounts payable 7,699 9,436 Accrued expenses 29,068 30,168 Total current liabilities 36,996 39,844 Long-term debt 7,744 517 Deferred income taxes 2,141 2,869 Employee benefit plan liabilities 16,132 15,167 Shareholders' equity Preferred stock -- -- Common stock: Class A 119 122 Class B 13 13 Retained earnings 155,875 158,933 Cumulative foreign currency translation adjustments 127 (254) Total shareholders' equity 156,134 158,814 Total liabilities and shareholders' equity $219,147 $217,211 * 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, 1995 1994 Net sales $ 108,486 $ 87,394 Cost of products sold 76,882 64,987 Gross profit 31,604 22,407 Selling, general and administrative expenses 28,154 21,983 Operating income 3,450 424 Other income (expense): Interest expense (205) (158) Interest income 326 235 Royalty income 1,044 919 Other 174 150 Net other income 1,339 1,146 Income before taxes 4,789 1,570 Income taxes 2,069 675 Net income $ 2,720 $ 895 Average number of shares outstanding 13,314 14,586 Net income per common share $ .20 $ .06 Cash dividends per common share Class A $ .07 $ .1025 Class B $ .06 $ .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, 1995 1994 Cash flows from operating activities Net income for the period $ 2,720 $ 895 Items in income not affecting cash 3,377 2,490 Changes in current assets (13,892) (9,315) Changes in current liabilities (2,150) 578 Net cash used in operating activities (9,945) (5,352) Cash flows from investing activities Property, plant and equipment additions (1,613) (1,876) Other (444) (376) Proceeds from disposal of assets 1,423 976 Net cash used by investing activities (634) (1,276) Cash flows from financing activities Net increase in long-term borrowings 7,400 -- Net increase in short-term borrowings -- 6,500 Payments of long-term debt (184) (34) Cash dividends paid (923) (1,478) Repurchase of common stock (4,858) -- Net cash provided by financing activities 1,435 4,988 Net decrease in cash and cash equivalents $(9,144) $(1,640) 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 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, 1995 and December 31, 1994, the results of operations for the three-month periods ended March 31, 1995 and 1994 and cash flows for the three-month periods ended March 31, 1995 and 1994. 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 1994 Annual Report. Note 2. Inventories A summary of inventories follows: March 31, December 31, 1995 1994 (Dollars in thousands) Finished goods $62,393 $75,187 Work in process 6,411 7,410 Raw materials 12,740 11,319 Total $81,544 $93,916 The replacement cost of inventory exceeds the above LIFO costs by $16,632 and $16,122 at March 31, 1995 and December 31, 1994. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS Consolidated net sales for the three months ended March 31, 1995 were $108.5 million, an increase of $21.1 million (24.1%) over 1994 first quarter sales of $87.4 million. The Company's domestic wholesale business of approximately $74.8 million for the first quarter of 1995 was 15.4% more than 1994 first quarter sales of approximately $64.8 million, with a corresponding increase in unit shipments of approximately 17.7%. The increase in domestic wholesale unit shipments was a result of a number of factors. Improved product design during 1994 contributed to better "sell-thrus" and margins for a majority of our wholesale customers, and resulted in our Spring 1995 children's fashion offering being well received. In addition, Company initiatives undertaken during 1994 resulted in significantly improved shipping performance to customers. The Company currently anticipates that unit shipments of its Fall 1995 wholesale product offering, shipped primarily during the third quarter of 1995 will exceed Fall 1994 by over 10%. Early indications of acceptance of the Company's Holiday 1995 children's fashion offering have also been promising. Accordingly, the Company anticipates that its domestic wholesale unit shipments for the remaining three quarters of 1995 (primarily the second half of 1995) will exceed units shipped for the same period in 1994. Company retail sales at its Oshkosh B'Gosh branded outlet stores and Genuine Kids stores were approximately $22.7 million for the first quarter of 1995, a 58.7% increase over 1994 first quarter sales of approximately $14.3 million. This retail sales increase was primarily driven by the opening of an additional 46 retail stores during 1994 and 8 store openings during the first quarter of 1995. The Company's comparable store sales for the first quarter of 1995 were up approximately 1%. The Company anticipates continued expansion in its retail business during 1995 and is currently on target with its planned opening of an additional 35 retail stores in all of 1995. Accordingly, the Company anticipates further increases in its retail sales through the balance of 1995 as compared to 1994. The Company's gross profit margin as a percent of sales improved to 29.1% in the first quarter of 1995, compared with 25.6% in the first quarter of 1994. This gross margin improvement was due primarily to both the impact of the Company's increased retail sales at higher gross margins relative to its domestic wholesale business along with modest improvement in the domestic wholesale business gross profit margin. In addition, the Company's gross margin during the first quarter of 1994 was adversely affected by poor weather conditions during the months of January and February which were disruptive to production schedules. With the anticipated continued growth of the Company's retail business during 1995, capacity reduction initiatives implemented during 1994 and early 1995 combined with increased utilization of contracted manufacturing resources outside of the United States, the Company anticipates further improvement in its gross profit margins for the remainder of 1995 as compared to the last three quarters of 1994. Selling, general and administrative expenses for the first quarter of 1995 increased $6.2 million over the first quarter, 1994. As a percent of net sales, selling, general and administrative expenses were 26.0% in the first quarter of 1995, up from 25.2% in the first quarter of 1994. The primary reason for the increased selling, general and administrative expenses is the Company's continuing expansion of its retail business. In addition, the Company's increasing focus on its international operations and development of its catalog division have added selling, general and administrative costs. Continued expansion of the Company's retail business, along with further development of its foreign operations and catalog division, will result in higher selling, general and administrative expenses in relation to its net sales for the remainder of 1995 as compared to the last three quarters of 1994. The Company's net other income for the first quarter of 1995 was $1.3 million, compared to $1.1 million in the first quarter of 1994. This increase resulted primarily from increased royalty income, net of expenses, related primarily to higher royalty payments from foreign licensees. The Company's effective tax rate was 43.2% for the first quarter of 1995 and 43.0% for the comparable period in 1994. SEASONALITY The Company's business is increasingly seasonal, with highest sales and income in the third quarter which is the Company's peak retail selling season at its retail outlet stores. The Company's second quarter sales and income are the lowest both because of relatively low domestic wholesale unit shipments and relatively modest retail outlet store sales during this period. The Company anticipates this seasonality trend to continue to impact the remaining three quarters of 1995 sales and income. As a result of this increased seasonality of business, the Company currently anticipates incurring a net loss in the second quarter of 1995 in excess of the net loss incurred during the second quarter of 1994. Results of operations of the first quarter of 1995 are not necessarily indicative of anticipated quarterly results through the balance of the year. FINANCIAL CONDITION AND LIQUIDITY The Company's financial condition remains strong. Net working capital at March 31, 1995 was $109.3 million, as compared to $102.5 million at the end of 1994 and $113.2 million at March 31, 1994. The Company's current ratio was 4.0 to 1 at March 31, 1995, compared to 3.6 to 1 at the end of 1994 and 3.4 to 1 at March 31, 1994. In June 1994, the Company announced a stock repurchase program for up to 1,500,000 shares of its Class A common stock in open market transactions at prevailing prices. Through March 31, 1995, the Company has repurchased 1,442,500 shares of its Class A common stock for approximately $20 million. At March 31, 1995, the Company had approximately $7.7 million of long-term debt outstanding as compared to $.5 million at year end 1994 and $.8 million at March 31, 1994. The increase in long-term indebtedness outstanding at March 31, 1995 is the result of Company borrowings under its revolving credit arrangement being used primarily for the stock repurchase program. The Company's long-term debt as a percentage of total capitalization (long-term debt plus shareholders' equity) was 4.7% and 0.4% at March 31, 1995 and 1994, 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 undersigned thereunto duly authorized. OSHKOSH B'GOSH, INC. Date: 4/24/95 /S/DOUGLAS W. HYDE Chairman of the Board, President, Chief Executive Officer, and Director Date: 4/24/95 /S/DAVID L. OMACHINSKI Vice President-Finance, Treasurer, Chief Financial Officer, and Director EX-27 2
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