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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 8-K
CURRENT REPORT |
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934 |
October 20, 2004 |
(Date of Report) |
Oshkosh B'Gosh, Inc.
Delaware |
0-13365 |
39-0519915 |
|
(State or other jurisdiction of |
Commission file number |
(IRS Employer |
|
112 Otter Avenue |
(920) 231-8800
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
□ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
□ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
□ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
□ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition
On October 20, 2004, Oshkosh B'Gosh, Inc. issued a press release announcing certain financial results for the third quarter ended October 2, 2004. A copy of the press release is attached hereto as Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits
The exhibit is furnished pursuant to Item 2.02. The information included in this Report, including exhibit 99.1, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liability of that section nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, regardless of any general incorporation language in such filing.
Exhibit No. |
Description |
99.1 |
Press Release of Oshkosh B'Gosh, Inc., dated October 20, 2004. |
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: October 20, 2004 |
By: /S/ MICHAEL L. HEIDER |
Michael L. Heider |
|
Vice President Finance, Treasurer and |
EXHIBIT INDEX
Exhibit No. |
Description of Exhibit |
99.1 |
Press Release of Oshkosh B'Gosh, Inc., dated October 20, 2004. |
Exhibit 99.1
FOR: |
OshKosh B'Gosh, Inc. |
||
CONTACT: |
David L. Omachinski |
||
OR |
|||
Michael L. Heider |
|||
For Immediate Release |
|||
CONTACT: |
Investor Relations |
OSHKOSH B'GOSH, INC. REPORTS THIRD QUARTER 2004 RESULTS
~ Gross Margin Increases 380 Basis Points ~
Oshkosh, WI -- October 20, 2004 -- Oshkosh B'Gosh, Inc. (NASDAQ:GOSHA), today reported financial results for its third quarter ended October 2, 2004.
For the third quarter, net sales were $115.2 million compared to $124.1 million last year. A 2.7% decline in comparable store sales was partially offset by seven additional stores compared to the year-ago period and resulted in retail sales of $72.9 million versus $73.3 million last year. Wholesale sales contributed $41.5 million compared to $50.0 million last year. The previously announced Kids "R" Us store closings as well as tighter targeted inventory levels at certain of the Company's wholesale customers resulted in reduced Fall 2004 bookings. During the quarter, the Company opened one Family Lifestyle store, ending the quarter with 169 total retail locations, including nine Family Lifestyle stores.
Gross margin increased 380 basis points to 39.8% from 36.0%. The improvement is a result of a sales mix shift towards higher margin retail sales, more efficient supply chain execution, and a lower level of "closeout" promotional sales. Selling, general and administrative expenses decreased by approximately $0.5 million to $36.9 million compared to $37.4 million despite the increased number of retail stores. This is primarily attributed to cost containment efforts in various corporate support functions. Net income increased 18.0% to $8.0 million, or $0.68 per diluted share, compared to net income of $6.8 million, or $0.57 per diluted share, last year.
For the first nine months, net sales were $277.8 million compared to $307.9 million last year. Net income for the first nine months totaled $5.2 million, or $0.44 per diluted share, reflecting the aggressive promotional strategy the Company implemented in the first quarter. Excluding the $1.2 million gain on the sale of the vacant OshKosh, Wisconsin distribution facility, net income for the nine-month period was $4.5 million, or $0.38 per diluted share, versus net income of $6.2 million, or $0.52 per diluted share, in the prior nine-month period.
Douglas W. Hyde, Chairman and Chief Executive Officer, said, "By staying focused on the things that we can control, we believe that we have now stabilized our core wholesale and outlet businesses and have begun to see signs of a turnaround in recent months. Through improvements in the design and marketing of our merchandise, we continue to strengthen our brand equity with our customers, which we believe in turn will help spur longer-term growth in our sales."
"We are encouraged by the improved results of the third quarter and believe that this year of transition will prove to be a successful one. We are also pleased with the consumer reaction to our nine family lifestyle stores, our newest growth vehicle, and remain on target to open six more by year-end. To support both existing and future lifestyle stores, we have developed a comprehensive marketing program that includes family-focused, interactive activities designed to drive traffic in the fourth quarter. On a broader scale, we believe these marketing initiatives will ultimately strengthen the long-term emotional connection between the OshKosh B'Gosh brand and our core consumer base, thus enhancing brand loyalty and fueling future growth of the OshKosh B'Gosh brand in all of our sales channels."
Given sales growth has taken somewhat longer than anticipated to return, the Company now expects annual net sales to be in the range of $383 million to $390 million, with retail sales accounting for approximately 65% of the total. Nevertheless, improvements in gross margin percentage over prior year levels are anticipated to continue to positively impact the bottom line. Taking both of these factors into account, diluted earnings per share for the full year are now expected to be $0.75 to $0.85, at the lower end of the Company's original estimate of $0.75 to $0.95 per diluted share.
OshKosh B'Gosh will host a webcast of its third quarter results conference call today at 10:00 a.m., Eastern Time. Investors and the media are invited to listen to the call at the Company's web site, www.oshkoshbgosh.com. An archive of the webcast will be available on the same site.
OshKosh B'Gosh, Inc. is best known as a premier marketer of quality children's apparel and accessories, available in over 50 countries around the world. The Company is headquartered in Oshkosh, Wisconsin.
Statements contained herein that relate to the Company's future performance including, without limitation, statements with respect to the Company's anticipated financial position, results of operations or level of businesses for 2004 or any other future period, are "forward-looking statements" within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements, which are generally indicated by words or phrases such as "plan", "estimate", "guidance", "project", "anticipate", "reaffirm","outlook", "the Company believes", "management expects", "currently anticipates", and similar phrases are based on current expectations only and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, projected, or estimated.
Among the factors that could cause actual results to materially differ include the level of consumer spending for apparel, particularly in the children's wear segment; risks associated with competition in the market place, including the financial condition of and consolidations, restructurings and other ownership changes in, the apparel and related products industry and the retail industry, the introduction of new products or pricing changes by the Company's competitors, price deflation in the apparel industry, and the Company's ability to remain competitive with respect to product, service and value; risks associated with the Company's dependence on sales to a limited number of large department and specialty store customers, including risks related to customer requirements for vendor margin support, as well as risks related to extending credit to large customers; risks associated with possible deterioration in the strength of the retail industry, including, but not limited to, business conditions and the economy, natural disasters, and the unanticipated loss of a major customer; risks related to the failure of Company suppliers to timely deliver needed raw materials, risks associated with importing its products into the United States under current and future customs and quota rules and regulations which are becoming more stressed, risks associated with importing its products using a global transportation matrix including a number of ports that are experiencing capacity constraints and the Company's ability to correctly balance the level of its commitments with actual orders; risks associated with terrorist activities as well as risks associated with foreign operations including global disease management; risks related to the Company's ability to defend and protect its trademarks and other proprietary rights and other risks related to managing intellectual property issues. In addition, the inability to ship Company products within agreed time frames due to unanticipated manufacturing, distribution system or freight carrier delays or the failure of Company contractors to deliver products within scheduled time frames 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, Africa, Mexico and Central America. If financial, political or other related difficulties were to adversely impact the Company's contractors in these regions, it could disrupt the supply of product contracted for by the Company.
The forward-looking statements included herein are only made as of the date of this press release. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
(tables to follow)
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
|
October 2, |
January 3, |
|||||||||
|
(unaudited) |
|
|
||||||||
ASSETS |
|
|
|||||||||
Current assets |
|
|
|||||||||
|
Cash and cash equivalents |
|
$ |
12,811 |
|
$ |
23,931 |
|
|||
|
Accounts receivable, net |
|
|
18,142 |
|
|
16,669 |
|
|||
|
Inventories |
|
|
72,604 |
|
|
61,358 |
|
|||
|
Prepaid expenses and other current assets |
|
|
9,929 |
|
|
8,316 |
|
|||
|
Deferred income taxes |
|
|
7,800 |
|
|
10,100 |
|
|||
Total current assets |
|
|
121,286 |
|
|
120,374 |
|
||||
Property, plant and equipment |
|
|
75,448 |
|
|
72,416 |
|
||||
|
Less accumulated depreciation and amortization |
|
|
52,079 |
|
|
48,720 |
|
|||
Net property, plant and equipment |
|
|
23,369 |
|
|
23,696 |
|
||||
Non-current deferred income taxes |
|
|
2,350 |
|
|
2,000 |
|
||||
Other assets |
|
|
5,333 |
|
|
5,855 |
|
||||
|
|
||||||||||
Total assets |
|
$ |
152,338 |
|
$ |
151,925 |
|
||||
|
|||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
||||||
Current liabilities |
|
|
|
|
|
||||||
|
Accounts payable |
|
$ |
16,741 |
$ |
16,961 |
|||||
|
Accrued liabilities |
|
|
32,641 |
33,552 |
||||||
Total current liabilities |
|
|
49,382 |
50,513 |
|||||||
Employee benefit plan liabilities |
|
|
12,789 |
13,647 |
|||||||
Shareholders' equity |
|
|
|||||||||
|
Preferred stock |
|
|
-- |
-- |
||||||
|
Common stock: |
|
|
||||||||
|
|
Class A |
|
|
96 |
94 |
|||||
|
|
Class B |
|
|
22 |
22 |
|||||
Additional paid-in capital |
3,616 |
-- |
|||||||||
|
Retained earnings |
|
|
89,062 |
87,649 |
||||||
|
Unearned compensation under restricted stock plan |
|
|
(2,629 |
) |
-- |
|||||
Total shareholders' equity |
|
|
90,167 |
87,765 |
|||||||
|
|
||||||||||
Total liabilities and shareholders' equity |
|
$ |
152,338 |
|
$ |
151,925 |
|
||||
|
|
||||||||||
*Condensed from audited financial statements. |
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
|
Three-Month Period Ended |
Nine-Month Period Ended |
|||||||||||||||||||||
|
October 2, |
October 4, |
October 2, |
October 4, |
|||||||||||||||||||
Net Sales |
|
$ |
115,187 |
$ |
124,097 |
$ |
277,775 |
$ |
307,930 |
||||||||||||||
|
|
|
|||||||||||||||||||||
Cost of products sold |
|
69,368 |
79,441 |
169,386 |
191,870 |
||||||||||||||||||
|
|
|
|||||||||||||||||||||
Gross profit |
|
45,819 |
44,656 |
108,389 |
116,060 |
||||||||||||||||||
|
|
|
|||||||||||||||||||||
Selling, general and administrative |
|
|
|
|
|
||||||||||||||||||
Royalty income, net |
|
(3,556 |
) |
(3,679 |
) |
(9,013 |
) |
(7,845 |
) |
||||||||||||||
(Gain) loss on sale of assets |
(60 |
) |
14 |
(1,161 |
) |
25 |
|||||||||||||||||
|
|
|
|||||||||||||||||||||
Operating income |
|
12,560 |
10,921 |
8,128 |
10,135 |
||||||||||||||||||
|
|
|
|
||||||||||||||||||||
Other income (expense): |
|
||||||||||||||||||||||
|
Interest expense |
|
(59 |
) |
(216 |
) |
(159 |
) |
(473 |
) |
|||||||||||||
|
Interest income |
|
|
24 |
|
60 |
137 |
156 |
|||||||||||||||
|
Miscellaneous |
|
|
1 |
|
2 |
10 |
8 |
|||||||||||||||
|
|
|
|
||||||||||||||||||||
Other income (expense) - net |
|
(34 |
) |
(154 |
) |
(12 |
) |
(309 |
) |
||||||||||||||
|
|
|
|||||||||||||||||||||
Income before income taxes |
|
12,526 |
10,767 |
8,116 |
9,826 |
||||||||||||||||||
|
|
|
|||||||||||||||||||||
Income taxes |
|
4,523 |
3,984 |
2,922 |
3,636 |
||||||||||||||||||
|
|
|
|||||||||||||||||||||
Net income |
|
$ |
8,003 |
$ |
6,783 |
$ |
5,194 |
$ |
6,190 |
||||||||||||||
|
|
|
|||||||||||||||||||||
Net income per common share |
|
||||||||||||||||||||||
|
Basic -- Class A |
|
$ |
0.70 |
$ |
0.59 |
$ |
0.45 |
$ |
0.53 |
|||||||||||||
Basic -- Class B |
$ |
0.61 |
$ |
0.51 |
$ |
0.39 |
$ |
0.46 |
|||||||||||||||
|
Diluted |
|
$ |
0.68 |
$ |
0.57 |
$ |
0.44 |
$ |
0.52 |
|||||||||||||
Weighted average common shares outstanding |
|
||||||||||||||||||||||
|
Basic -- Class A |
|
|
9,579 |
|
9,663 |
9,552 |
9,688 |
|||||||||||||||
Basic -- Class B |
2,183 |
2,193 |
2,184 |
2,193 |
|||||||||||||||||||
|
Diluted |
|
|
11,815 |
|
11,968 |
11,798 |
12,001 |
|||||||||||||||
|
|
|
|
||||||||||||||||||||
Cash dividends per common share |
|
||||||||||||||||||||||
|
Class A |
|
$ |
0.110 |
$ |
0.110 |
$ |
0.330 |
$ |
0.250 |
|||||||||||||
|
Class B |
|
$ |
0.095 |
$ |
0.095 |
$ |
0.285 |
$ |
0.215 |
|||||||||||||
|
|
||||||||||||||||||||||
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
|
Nine-Month Period Ended |
|||||||||||
|
October 2, |
October 4, |
||||||||||
Cash flows from operating activities |
|
|
||||||||||
|
Net income |
|
$ |
5,194 |
$ |
6,190 |
||||||
|
Depreciation and amortization |
|
|
4,803 |
|
5,266 |
||||||
|
Deferred income taxes |
|
|
1,950 |
|
(100 |
) |
|||||
|
Income tax benefit from stock options exercised |
|
|
42 |
|
302 |
||||||
|
Items in net income not affecting cash and cash |
|
|
|
|
|
|
|||||
|
Changes in current assets |
|
|
(14,332 |
) |
|
(34,553 |
) |
||||
|
Changes in current liabilities |
|
|
(1,131 |
) |
|
2,594 |
|||||
Net cash used in operating activities |
|
|
(4,958 |
) |
|
(19,975 |
) |
|||||
Cash flows from investing activities |
|
|
|
|||||||||
|
Additions to property, plant and equipment |
|
|
(4,521 |
) |
|
(2,780 |
) |
||||
|
Proceeds from disposal of assets |
|
|
2,133 |
|
129 |
|
|||||
|
Changes in other assets |
|
|
(405 |
) |
|
(445 |
) |
||||
|
|
|
|
|||||||||
Net cash used in investing activities |
|
|
(2,793 |
) |
|
(3,096 |
) |
|||||
Cash flows from financing activities |
|
|
|
|||||||||
|
Dividends paid |
|
|
(3,781 |
) |
|
(2,893 |
) |
||||
|
Net proceeds from issuance of common shares |
|
|
412 |
|
678 |
||||||
|
Repurchase of common shares |
|
|
-- |
|
(3,845 |
) |
|||||
|
||||||||||||
Net cash used in financing activities |
|
|
(3,369 |
) |
|
(6,060 |
) |
|||||
Net decrease in cash and cash equivalents |
|
|
(11,120 |
) |
|
(29,131 |
) |
|||||
Cash and cash equivalents at beginning of period |
|
|
23,931 |
|
|
36,198 |
||||||
Cash and cash equivalents at end of period |
|
$ |
12,811 |
|
$ |
7,067 |
||||||
See notes to condensed consolidated financial statements. |
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Summary of Net Sales
Net Sales |
||||||||||||||||||||||
Domestic |
||||||||||||||||||||||
|
Wholesale |
Retail |
Other |
Total |
||||||||||||||||||
Three months ended: |
|
|
|
|
|
|||||||||||||||||
October 2, 2004 |
$ |
41.5 |
$ |
72.9 |
$ |
0.8 |
$ |
115.2 |
||||||||||||||
October 4, 2003 |
50.0 |
73.3 |
0.8 |
124.1 |
||||||||||||||||||
Decrease |
$ |
(8.5 |
) |
$ |
(0.4 |
) |
$ |
-- |
$ |
(8.9 |
) |
|||||||||||
Percent decrease |
(17.0 |
%) |
(0.5 |
%) |
-- |
(7.2 |
%) |
|||||||||||||||
Nine months ended: |
|
|
|
|
|
|||||||||||||||||
October 2, 2004 |
$ |
102.6 |
$ |
172.9 |
$ |
2.3 |
$ |
277.8 |
||||||||||||||
October 4, 2003 |
133.2 |
172.4 |
2.3 |
307.9 |
||||||||||||||||||
Increase (decrease) |
$ |
(30.6 |
) |
$ |
0.5 |
$ |
-- |
$ |
(30.1 |
) |
||||||||||||
Percent increase (decrease) |
(23.0 |
%) |
0.3 |
% |
-- |
(9.8 |
%) |