10-Q 1 0001.txt 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 July 1, 2000 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. A Delaware Corporation 39-0519915 (I.R.S. ID) 112 Otter Avenue Oshkosh, Wisconsin 54901 Telephone number: (920) 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 July 17, 2000, there were outstanding 9,935,001 shares of Class A Common Stock and 2,232,893 shares of Class B Common Stock. FORM 10-Q OSHKOSH B'GOSH, INC. AND SUBSIDIARIES INDEX Part I. Financial Information Item 1. Financial Statements Condensed Consolidated Balance Sheets-July 1, 2000 and January 1, 2000 Unaudited Condensed Consolidated Statements of Income- Three Month and Six Month Periods Ended July 1, 2000 and July 3, 1999 Unaudited Condensed Consolidated Statements of Cash Flow- Six Month Periods Ended July 1, 2000 and July 3, 1999 Notes to Condensed Consolidated Financial Statements Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition Item 3. Quantitative and Qualitative Disclosures About Market Risk Part II. Other Information Item 4. Submission of Matters to a Vote of Security Holders Item 6. Exhibits and Reports on Form 8-K Signatures Part I - FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS OSHKOSH B'GOSH, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands) July 1, 2000 January 1, 2000* (unaudited) Assets Current assets Cash and cash equivalents $ 307 $ 9,093 Investments 511 511 Accounts receivable 22,425 16,514 Inventories 61,502 48,495 Prepaid expenses & other current assets 4,139 774 Deferred income taxes 13,200 14,200 Total current assets 102,084 89,587 Property, plant & equipment 68,534 67,118 Less accumulated depreciation and amortization 37,393 35,470 Net property, plant & equipment 31,141 31,648 Non-current deferred income taxes 5,900 5,400 Other assets 2,581 3,064 Total assets $ 141,706 $ 129,699 Liabilities and shareholders'equity Current liabilities Borrowings under revolving credit agreement $ 14,500 $ -- Current portion of long-term debt -- 15,000 Accounts payable 8,357 10,269 Accrued liabilities 39,104 36,976 Total current liabilities 61,961 62,245 Long-term debt 44,000 29,000 Employee benefit plan liabilities 15,463 15,015 Shareholders' equity Preferred stock -- -- Common stock: Class A 99 104 Class B 22 23 Retained earnings 20,161 23,312 Total shareholders' equity 20,282 23,439 Total liabilities and shareholders' equity $ 141,706 $ 129,699 *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 Month Period Ended Six Month Period Ended July 1, July 3, July 1, July 3, 2000 1999 2000 1999 Net sales $ 87,500 $ 82,516 $182,551 $184,449 Cost of products sold 50,063 48,140 104,527 109,931 Gross profit 37,437 34,376 78,024 74,518 Selling, general and administrative expenses 34,249 31,509 68,246 62,974 Royalty income, net (1,599) (1,666) (3,676) (3,662) Operating income 4,787 4,533 13,454 15,206 Other income (expense): Interest expense (1,218) (145) (2,405) (378) Interest income 262 205 423 496 Miscellaneous 6 (22) 55 (79) Other income (expense) -- net (950) 38 (1,927) 39 Income before taxes 3,837 4,571 11,527 15,245 Income taxes 1,496 1,784 4,495 5,950 Net income $ 2,341 $ 2,787 $ 7,032 $ 9,295 Net income per common share Basic $ 0.19 $ 0.17 $ 0.56 $ 0.54 Diluted $ 0.19 $ 0.17 $ 0.56 $ 0.54 Weighted average common shares outstanding Basic 12,326 16,508 12,469 17,098 Diluted (including share equivalents) 12,496 16,753 12,636 17,309 Cash dividends per common share Class A $ 0.0500 $ 0.0500 $ 0.1000 $ 0.1000 Class B $ 0.0425 $ 0.0425 $ 0.0850 $ 0.0850 See notes to condensed consolidated financial statements. OSHKOSH B'GOSH, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flow (In thousands) (Unaudited) Six Month Period Ended July 1, 2000 July 3, 1999 Cash flows from operating activities Net income for the period $ 7,032 $ 9,295 Depreciation 3,481 3,407 Deferred income taxes 500 1,600 Items in net income not affecting cash and cash equivalents 976 732 Changes in current assets (22,283) 3,793 Changes in current liabilities 216 1,054 Net cash provided by (used in) operating activities (10,078) 19,881 Cash flows from investing activities Additions to property, plant and equipment (3,303) (3,001) Proceeds from disposal of assets 262 311 Sale of short-term investments, net -- 2,014 Changes in other assets 22 (255) Net cash used in investing activities (3,019) (931) Cash flows from financing activities Borrowings under revolving credit agreement 14,500 -- Dividends paid (1,216) (1,693) Net proceeds from issuance of common shares 891 1,165 Repurchase of common shares (9,864) (31,990) Net cash provided by (used in) financing activities 4,311 (32,518) Net decrease in cash and cash equivalents $ (8,786) $(13,568) See notes to condensed consolidated financial statements. OSHKOSH B'GOSH, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) Note 1. Basis of Preparation 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 July 1, 2000, the results of operations for the three-month and six-month periods ended July 1, 2000 and July 3, 1999, and cash flows for the six-month periods ended July 1, 2000 and July 3, 1999. 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 1999 Annual Report. Note 2. Inventories A summary of inventories follows: July 1, 2000 January 1, 2000 (Dollars in thousands) Finished goods $ 42,721 $ 37,262 Work in Process 17,790 9,352 Raw materials 991 1,881 Total $ 61,502 $ 48,495 The replacement cost of inventory exceeds the above LIFO costs by $11,681 and $11,381 at July 1, 2000 and January 1, 2000, respectively. Note 3. Credit Agreements In May 2000, the Company amended its credit agreement with a number of banks. As amended, the unsecured credit agreement provides a $60 million term loan for the repurchase of shares of its common stock and a three year $75 million revolving credit facility available for general corporate purposes, including cash borrowings, commercial paper and issuances of letters of credit. The revolving credit facility expires November 3, 2002. The Company had $58.5 million of outstanding debt at July 1, 2000, including $44 million on the term loan and $14.5 on the revolving credit facility. The revolving credit facility must be reduced to zero for at least thirty consecutive days each year, and the term loan requires an initial payment of $10 million in November 2001. Note 4. Segment Reporting The Company designs, sources, and markets apparel products using primarily the OshKosh B'Gosh brand. The apparel products are primarily marketed in two distinct distribution channels: domestic wholesale and through Company owned retail stores. The Company designs and sources product to meet the needs of these distribution channels through a single procurement business unit. In conjunction with a realignment of the Company's management reporting system at the beginning of 2000, certain operations have been segregated into segments as defined by Statement of Financial Accounting Standards, No. 131, "Disclosures about Segments of an Enterprise and Related Information". The Company manages its business operations by periodic analysis of business unit operating results. For this purpose, domestic wholesale, retail, and procurement are separately identified for management reporting and are considered segments as defined by SFAS #131. Management evaluates the operating performance of each of its business units based on income from operations as well as return on net assets. For this purpose, product is transferred to the domestic wholesale and retail business units at cost. However, procurement receives a markup on product transferred to the Company's marketing business units. Accounting policies used for segment reporting are consistent with the Company's overall accounting policies, except that inventories are valued on a first-in first-out basis. In addition, interest income, interest expense, certain corporate office expenses, and the effects of the last-in, first-out (LIFO) inventory valuation method are not allocated to individual business units, and are included in the All Other/Corporate column below. Segment assets include all assets used in the operation of each business unit, including accounts receivable, inventories, and property, plant and equipment. Certain other corporate assets that cannot be specifically identified with the operation of a business unit are not allocated. Financial information for the Company's reportable segments follows: All Domestic Other/ Wholesale Retail Procurement Corporate Total For the three months ended July 1, 2000 Net sales $ 37,930 $ 47,735 $ -- $ 1,835 $ 87,500 Segment income before taxes 670 2,885 (291) 573 3,837 Segment assets 57,439 39,219 31,518 13,530 141,706 Depreciation expense 401 758 355 227 1,741 For the three months ended July 3, 1999 Net sales $ 37,482 $ 43,350 $ -- $ 1,684 $ 82,516 Segment income before taxes (548) 1,757 2,609 753 4,571 Segment assets 70,210 35,139 22,558 12,883 140,790 Depreciation expense 391 684 306 305 1,686 For the six months ended July 1, 2000 Net sales $ 86,184 $ 92,075 $ -- $ 4,292 $182,551 Segment income before taxes 6,038 4,367 (175) 1,297 11,527 Segment assets 57,439 39,219 31,518 13,530 141,706 Depreciation expense 796 1,481 732 472 3,481 For the six months ended July 3, 1999 Net sales $ 97,766 $ 82,259 $ -- $ 4,424 $184,449 Segment income before taxes 5,833 2,244 4,941 2,227 15,245 Segment assets 70,210 35,139 22,558 12,883 140,790 Depreciation expense 762 1,377 628 640 3,407 For the twelve months ended January 1, 2000 Net sales $212,371 $210,350 $ -- $ 7,065 $429,786 Segment income before taxes 21,896 18,278 10,556 2,457 53,187 Segment assets 53,175 32,747 21,266 22,511 129,699 Depreciation expense 1,570 3,107 1,222 1,194 7,093 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS The following table sets forth, for the periods indicated, selected Company income statement data expressed as a percentage of net sales. As a Percentage of Net Sales for the Three Month Period Ended Six Month Period Ended July 1, 2000 July 3, 1999 July 1, 2000 July 3, 1999 Net sales 100.0% 100.0% 100.0% 100.0% Cost of products sold 57.2% 58.3% 57.3% 59.6% Gross profit 42.8% 41.7% 42.7% 40.4% Selling, general and administrative expenses 39.1% 38.2% 37.4% 34.2% Royalty income, net (1.8%) (2.0%) (2.0%) (2.0%) Operating income 5.5% 5.5% 7.3% 8.2% Other income, net (1.1%) -- (1.1%) -- Income before income taxes 4.4% 5.5% 6.2% 8.2% Income taxes 1.7% 2.1% 2.4% 3.2% Net income 2.7% 3.4% 3.8% 5.0% Net Sales Consolidated net sales for the three month period ended July 1, 2000 were $87.5 million, a $5.0 million increase (6.1%) over 1999 second quarter net sales of $82.5 million. Consolidated net sales for the six month period ended July 1, 2000 were $182.6 million, a $1.8 million decrease (1.0%) from net sales of $184.4 million for the first six months of 1999. The Company's net sales for the three month and six month periods ended July 1, 2000 and July 3, 1999 are summarized as follows: Net Sales (in millions) Domestic Wholesale Retail International Total Three month period ended: July 1, 2000 $ 37.9 $47.8 $ 1.8 $ 87.5 July 3, 1999 37.5 43.3 1.7 82.5 Increase $ .4 $ 4.5 $ .1 $ 5.0 Percent increase 1.1% 10.4% 5.9% 6.1% Six month period ended: July 1, 2000 $ 86.2 $92.1 $ 4.3 $182.6 July 3, 1999 97.8 82.2 4.4 184.4 Increase (decrease) $(11.6) $ 9.9 $ (.1) $ (1.8) Percent increase (decrease) (11.9%) 12.0% (2.3%) (1.0%) The Company's domestic wholesale unit shipments for the three month period ended July 1, 2000 increased approximately 11.6% as compared to the corresponding three month period of 1999, primarily due to timing of shipments of certain spring fashion items (shipment was delayed into early April, 2000). The Company's domestic wholesale unit shipments for the six month period ending July 1, 2000 decreased 5.8% as compared to 1999. The six month decrease in unit shipments resulted from a combination of slightly lower booked orders and a significant reduction in the number of "close-out" units sold (the Company's inventory levels of close-out merchandise at the beginning of 2000 were substantially lower). Net sales dollars for both periods in 2000 were also impacted by a combination of lower average selling prices and product mix (i.e. a higher mix of lighter weight, lower unit cost garments). The Company currently anticipates a wholesale unit sales increase in the low single digit range for the second half of 2000 as compared to 1999, with sales dollars relatively flat. The Company's second quarter 2000 retail sales increase resulted primarily from sales volume from stores opened subsequent to July 3, 1999. Second quarter 2000 comparable stores sales were up .1% as compared to 4.7% in the second quarter of 1999. The Company's increase in retail sales for the first six months of 2000 resulted from a combination of a 2.2% comparable store sales gain (as compared to 5.4% for the first half of 1999) and sales volume from newly opened stores. For the remainder of 2000, the Company currently anticipates comparable store sales gains in the low single digit range. At July 1, 2000 the Company operated 131 domestic OshKosh retail stores, including 125 outlet stores, four showcase stores, and two strip mall stores. During the second quarter of 2000, the Company opened four retail outlet stores and closed two retail outlet stores. At July 3, 1999 the Company operated a total of 124 domestic OshKosh retail stores. Current Company plans for the remainder of 2000 call for the addition of approximately seven retail stores including three strip mall stores. The Company is also currently planning to close two to three outlet stores and one showcase store. Gross Profit The Company's gross profit margin as a percent of net sales improved to 42.8% in the second quarter of 2000, compared to 41.7% in the second quarter of 1999. For the six month period ended July 1, 2000, gross profit margin as a percent of net sales improved to 42.7%, compared to 40.4% for the first six months of 1999. This gross profit margin improvement was due primarily to continued implementation and execution of the Company's global sourcing strategy, continuing focus on product design and development activities, and increasing proportion of sales from the Company's retail stores. The Company's current 2000 sourcing plan indicates that approximately 79% of units will be produced at off shore venues as compared to approximately 64% in 1999. The Company currently anticipates continued modest improvement in its gross margin for the remainder of 2000 compared to 1999. Selling, General, and Administrative Expenses (S,G&A) S,G&A expenses for the three month and six month periods ended July 1, 2000 increased $2.7 million and $5.3 million over the three and six month periods ended July 3, 1999, respectively. As a percentage of net sales, S,G,&A expenses were 39.1% and 37.4% for the three month and six month periods ended July 1, 2000 as compared to 38.2% and 34.2% in the comparable periods of 1999. The increase in S,G,&A expenses relates primarily to a combination of continued expansion of the Company's retail operations and higher product distribution expenses as the Company continues its transition to an updated distribution system and related processes. Second quarter and year-to-date distribution expenses were $1.0 million and $1.5 million higher, respectively, as compared to 1999. Royalty Income The Company licenses the use of its trade name to selected licensees in the U.S. and in foreign countries. Royalty income for the three month period ended July 1, 2000 was $1.6 million compared to $1.7 million in the second quarter of 1999. Royalty income for the six month period ended July 1, 2000 of $3.7 million was consistent with royalty income for the six month period ending July 3, 1999. Operating Income As a result of the factors described above, the Company's operating income for the three month and six month periods ended July 1, 2000 amounted to $4.8 million and $13.5 million as compared to $4.5 million and $15.2 million for the comparable periods in 1999. Other Income (Expense) - Net The Company's second quarter 2000 net other income (expense) was a $1.0 million expense compared to zero in 1999. Interest expense increased by approximately $1.1 million in the second quarter of 2000 and $2.0 in the six months ended July 1, 2000, primarily as a result of borrowings to help finance the Company's Dutch Auction tender offer in November 1999 and subsequent stock repurchase transactions. Income Taxes The Company's effective tax rate for the three month and six month periods ended July 1, 2000, as well as 1999, was approximately 39%. The Company currently anticipates an effective income tax rate of approximately 39% for the remainder of 2000. Net Income Net income for the three months ended July 1, 2000 of $2.3 was a $.5 million decrease compared to net income for the three months ended July 3, 1999 of $2.8 million. Net income for the six months ended July 1, 2000 of $7.0 million was a $2.3 million decrease compared to net income for the six months ended July 3, 1999. The Company's ongoing stock repurchase programs and November 1999 Dutch Auction tender offer resulted in a significant reduction in its weighted-average diluted shares outstanding for the first six months of 2000 compared to the first six months of 1999. Despite the reduction in net income, the decrease in weighted-average diluted shares outstanding resulted in a 3.7% increase in diluted earnings per share for the first six months of 2000 of $.56 as compared to $.54 in 1999. SEASONALITY OF BUSINESS The Company's business is seasonal, with highest sales and income in the third quarter, which is the Company's peak wholesale shipping period and a major 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 store sales during this period. The Company anticipates this seasonality trend to continue to impact 2000 quarterly sales and income. Second quarter 2000 operating results are not necessarily indicative of anticipated quarterly results throughout the balance of the year. FINANCIAL POSITION, CAPITAL RESOURCES AND LIQUIDITY At July 1, 2000, the Company's cash, cash equivalents and short- term investments were $.8 million, compared to $9.6 million at the end of 1999 and $1.2 million at July 3, 1999. This reduction is attributable to the Company's stock repurchases and increased inventory buildup offset in part by borrowings under the Company's revolving credit facility. Net working capital at July 1, 2000 was $40.1 million compared to $27.3 million at January 1,2000, and $54.9 million at July 3, 1999. Accounts receivable at July 1, 2000 were $22.4 million compared to $16.5 million at January 1, 2000, and $26.1 million at July 3, 1999. Cash used in operations amounted to approximately $10.1 million in the first six months of 2000, compared to cash provided of $19.9 million in the first six months of 1999. The change in cash provided by operating activities in the first six months of 2000 compared to 1999 is primarily attributable to substantially lower inventory levels at January 1, 2000, as compared to January 2, 1999. Inventories at July 1, 2000 were $61.5 million, compared to $48.5 million at January 1, 2000, $58.0 million at July 3, 1999 and $65.6 million at January 2, 1999. Management believes that July 1, 2000 inventory levels are generally appropriate for anticipated ongoing 2000 business activities. Investing activities used $3.0 million in the first six months of 2000, compared to $.9 million in 1999. Capital expenditures were $3.3 million in the first six months of 2000, compared with $3.0 million in 1999 and are currently budgeted at $9 million for all of 2000. Capital expenditures in both years relate primarily to expansions and upgrades of the Company's retail stores. Depreciation and amortization are currently budgeted at $8 million for 2000. Cash provided by financing activities totaled $4.3 million in the first six months of 2000, compared to a use of $32.5 million in the first six months of 1999. The Company's primary financing activities consisted of borrowings under the Company's revolving credit facility in 2000 in addition to stock repurchase transactions and cash dividends in both periods. On December 6, 1999, the Company's Board of Directors authorized a 1.5 million share repurchase program of the Company's Class A common stock. During the first six months of 2000, the Company repurchased 565,700 shares of its Class A common stock under this program for approximately $9.9 million. The Company has repurchased a total of 819,600 shares of its Class A common stock under its current repurchase programs for approximately $14.7 million. In May, 2000, the Company amended its credit agreement with a number of banks. As amended, the unsecured credit agreement provides a $60 million term loan for the repurchase of shares of its common stock and a three year $75 million revolving credit facility available for general corporate purposes, including cash borrowings, commercial paper and issuances of letters of credit. The revolving credit facility expires November 3, 2002. The term loan requires an initial repayment of $10.0 million in November 2001. The Company had $58.5 million of outstanding debt at July 1, 2000, including $44 million on the term loan and $14.5 on the revolving credit facility compared to $44 million on the term loan at January 1, 2000, and no outstanding debt at July 3, 1999. The Company believes that these credit facilities, along with cash generated from operations, will be sufficient to finance the Company's seasonal working capital needs as well as its capital expenditures, required debt payments and business development needs. INFLATION The effects of inflation on the Company's operating results and financial condition were not significant. FORWARD-LOOKING STATEMENTS This report contains certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding future unit shipments, planned store expansions and store closings, future comparable store net sales, future inventory levels and valuation implications, future growth in royalty income, future effective income tax rate, planned capital expenditures and depreciation and amortization expenses, and future cash needs. In addition, from time to time, the Company may issue press releases and other written communications, and representatives of the Company may make oral statements which contain forward-looking information. Except for historical information, matters discussed in such oral and written communications, including this report, are forward- looking statements. Such forward-looking statements are based on current assumptions and expectations that involve risks and uncertainties. Actual results may differ materially. The Company's future results of operations and financial position can be influenced by such factors as the level of consumer spending for apparel, particularly in the children's wear segment, overall consumer acceptance of the Company's product styling, the financial strength of the retail industry, including, but not limited to, business conditions and the general economy, natural disasters, competitive factors, risk of non-payment of accounts receivable, the unanticipated loss of a major customer, failure of Company suppliers to timely deliver needed raw materials, as well as risk associated with foreign operations. In addition, the inability to ship Company products within agreed timeframes due to unanticipated manufacturing and/or distribution system delays or the failure of Company contractors to deliver products within scheduled timeframes, are risk factors in ongoing business. As a part of the Company's product sourcing strategy, it routinely contracts for apparel products produced by contractors in Asia, Mexico and Central America. If financial, political or other difficulties were to adversely impact the Company's contractors in these regions, it could disrupt the supply of products contracted for by the Company. The forward-looking statements included herein are only made as of the date of this report. The Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. Item 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk The Company's credit agreement, as amended, provides for $60 million to finance repurchases of the Company's common stock and a $75 million revolving credit facility available for general corporate purposes. Borrowings under this agreement bear interest at a variable rate, based on the London Interbank Offered Rates. Accordingly, the Company is affected by interest rate changes on its long-term debt. Management monitors this risk by carefully analyzing the short-term rates on its long-term debt portfolio and comparable long-term interest rates. The Company does not presently hedge its interest rate risk. With respect to this debt, a 1% change in interest rates would not have a material impact on the Company's interest expense for fiscal 2000. Foreign Currency Risk The Company contracts for the manufacture of apparel with contractors in Asia, Central America, and Mexico. While these contracts are stated in terms of U.S. dollars, there can be no assurance that the cost for the production of the Company's products will not be affected by exchange fluctuations between the United States and the local currencies of these contractors. Due to the number of currencies involved, the Company cannot quantify the potential impact of future currency fluctuations on net income in future years. The Company does not hedge its exchange rate risk. Inflation Risk The Company manages its inflation risks by ongoing review of product selling prices and production costs. Management does not believe that inflation risks are material to the Company's business, its consolidated financial position, results of operations, or cash flows. Investment Risk The Company does not believe it has material exposure to market risk with respect to any of its investments as the Company does not utilize market rate sensitive instruments for trading or other purposes. Part II. OTHER INFORMATION Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. The registrant's annual meeting of stockholders was held on May 5, 2000 (the "2000 Annual Meeting"). A majority of the shares of each class of the registrant's Common Stock, represented in person or by proxy, was required to constitute a quorum for action to be taken by such class. A total of 9,700,976 shares of Class A Common Stock and 1,924,970 shares of Class B Common Stock were represented, in person or by proxy, at the 2000 Annual Meeting, constituting a quorum of each class. With respect to the election of Class A Directors, the following votes were cast in favor of and withheld with respect to the following management nominees: Nominee Votes in favor Votes withheld Broker non-votes Orren J. Bradley 9,405,417 295,559 0 Jerry M. Hiegel 9,405,867 295,109 0 With respect to the election of Class B Directors, the following votes were cast in favor of and withheld with respect to the following management nominees: Nominee Votes in favor Votes withheld Broker non-votes Douglas W. Hyde 1,921,950 3,020 0 Michael D. Wachtel 1,921,950 3,020 0 David L. Omachinski 1,921,950 3,020 0 Steve R. Duback 1,921,950 3,020 0 Shirley A. Dawe 1,921,950 3,020 0 William F. Wyman 1,921,950 3,020 0 Stig A. Kry 1,921,950 3,020 0 Directors are elected by a plurality of the votes of the shares of the class entitled to elect such directors, present in person or represented by proxy at the meeting. "Plurality" means that the individuals who receive the largest number of votes are elected as directors up to the maximum number of directors to be chosen at the meeting. There were no nominees for director other than management's nominees identified above. Accordingly, each such nominee received a plurality of the votes cast by shares of the class indicated and, therefore, was elected. With respect to the proposal to amend the 1994 OshKosh B' Gosh, Inc. Incentive Stock Plan, the following votes were cast: Votes in favor Votes against Abstentions Broker non-votes Class B Common Stock 1,917,228 5,222 2,520 0 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: 7/25/00 /S/DOUGLAS W. HYDE Chairman of the Board, President Chief Executive Officer and Director Date: 7/25/00 /S/DAVID L. OMACHINSKI Vice President-Finance, Treasurer and Chief Financial Officer Director