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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 |
Date of Report (Date of earliest event reported): February 2, 2005 |
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 February 2, 2005, Oshkosh B'Gosh, Inc. issued a press release announcing certain financial results for the fourth quarter ended January 1, 2005. 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 February 2, 2005. |
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: February 2, 2005 |
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 February 2, 2005. |
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 FOURTH QUARTER 2004 RESULTS
~ Fourth Quarter Sales Increased 10.6% ~
~ Gross Margin Improved 940 Basis Points ~
Oshkosh, WI -- February 2, 2005 -- Oshkosh B'Gosh, Inc. (NASDAQ:GOSHA), today reported financial results for its fourth quarter and year ended January 1, 2005.
Fourth Quarter Results
For the fourth quarter, net sales increased 10.6% to $120.9 million compared to $109.3 million last year. The Company's retail comparable store sales increased 10.5% primarily due to strong sell-through and improved inventory management. As a result, retail net sales for the fourth quarter were $85.3 million versus $76.3 million last year. Wholesale sales contributed $35.2 million compared to $32.5 million last year. During the quarter, the Company opened six lifestyle stores, ending the quarter with 175 total retail locations.
Gross margin increased a significant 940 basis points to 41.5% from 32.1%. The improvement is a result of a considerably lower level of "closeout" promotional sales, more efficient supply chain execution, a continued sales mix shift towards higher margin retail sales, and a comparison to a particularly disappointing gross margin performance in the fourth quarter of 2003. Selling, general and administrative expenses increased to $40.8 million from $37.5 million primarily due to investments in the lifestyle store concept. Net income increased to $8.6 million, or $0.73 per diluted share, compared to net income of $1.0 million, or $0.08 per diluted share, last year.
Year End Results
For the full year, net sales were $398.7 million compared to $417.3 million last year. Gross margin for the year increased 360 basis points to 39.8% from 36.2% last year. Net income for the full year was $13.8 million, or $1.17 per diluted share, versus net income of $7.2 million, or $0.60 per diluted share, for the full year last year.
Douglas W. Hyde, Chairman and Chief Executive Officer, said, "We are very pleased with our financial results for the fourth quarter, a period in which we generated year-over-year improvements in almost every aspect of our business, including our top line, gross margin and net income. Over the course of the year we achieved our objectives to stabilize our core wholesale and outlet store businesses and further revitalize the OshKosh B'Gosh brand. Additionally, our updated product offering was well received by consumers resulting in higher unit average selling prices and improved sell-through, particularly in our outlet stores."
Lifestyle Store Strategy
After closely reviewing the results of the Company's adult apparel offering as well as conducting numerous market studies, the Company has decided to revise its lifestyle store concept to include only children's apparel and accessories. Previously, the Company positioned its retail concept as a family lifestyle store where consumers could shop for adult and children's apparel and home accessories.
By Fall 2005 the Company's 15 existing family lifestyle stores will be converted to offer exclusively children's apparel and accessories. The Company anticipates that any related markdowns and costs will not significantly impact margins due to the limited number of current lifestyle stores. The Company will refine the children's only format in its existing lifestyle stores before entering into new markets. As such, the previously planned Mall of America location will be the only lifestyle store to open in calendar 2005.
Mr. Hyde continued, "While we are revising the lifestyle store concept to target only children, our fundamental strategy and plans for long-term future growth of our retail concept are still intact. Over time, we found that our sales and margins have been significantly stronger in our children's department, and we are confident that in shifting our focus exclusively to kids, we will be able to grow the lifestyle store concept successfully. We see the children's lifestyle store as a viable channel for future growth and will ensure its success by leveraging our core values and rich heritage in the children's business."
Fiscal 2005 Outlook
The momentum gained during the fourth quarter in the outlet division continued into January. Based upon these early results and current visibility into other areas of the business, the Company anticipates that first quarter net sales will increase approximately 3% to 6% over last year. Additionally, the Company expects a modest year-over-year improvement in the bottom line, excluding the impact of the gain on sale of the distribution facility that was sold in the first quarter of 2004.
"While our lifestyle store concept will be growing slower than we initially planned, we are encouraged by the significant improvement in our results for the year. We are pleased with our progress in our core business and are excited about the prospects of our children's only lifestyle store concept. Finally, we are optimistic that the ongoing momentum in our business will result in a productive and profitable year in 2005." Mr. Hyde concluded.
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 2005 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.
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Summary of Net Sales
(In millions)
Net Sales |
||||||||||||||||||||||
Domestic |
||||||||||||||||||||||
|
Wholesale |
Retail |
Other |
Total |
||||||||||||||||||
Three month period ended: |
|
|
|
|
|
|||||||||||||||||
January 1, 2005 |
$ |
35.2 |
$ |
85.3 |
$ |
0.4 |
$ |
120.9 |
||||||||||||||
January 3, 2004 |
32.5 |
76.3 |
0.5 |
109.3 |
||||||||||||||||||
Increase (decrease) |
$ |
2.7 |
$ |
9.0 |
$ |
(0.1 |
) |
$ |
11.6 |
|||||||||||||
Percent increase (decrease) |
8.3 |
% |
11.8 |
% |
(20.0 |
%) |
10.6 |
% |
||||||||||||||
Twelve month period ended: |
|
|
|
|
|
|||||||||||||||||
January 1, 2005 |
$ |
137.8 |
$ |
258.2 |
$ |
2.7 |
$ |
398.7 |
||||||||||||||
January 3, 2004 |
165.7 |
248.7 |
2.9 |
417.3 |
||||||||||||||||||
Increase (decrease) |
$ |
(27.9 |
) |
$ |
9.5 |
$ |
(0.2 |
) |
$ |
(18.6 |
) |
|||||||||||
Percent increase (decrease) |
(16.8 |
%) |
3.8 |
% |
(6.9 |
%) |
(4.5 |
%) |
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands)
|
January 1, |
January 3, |
||||||||||
ASSETS |
|
|
||||||||||
Current assets |
|
|
||||||||||
|
Cash and cash equivalents |
|
$ |
37,678 |
|
$ |
23,931 |
|
||||
|
Accounts receivable, net |
|
|
12,428 |
|
|
16,669 |
|
||||
|
Inventories |
|
|
61,044 |
|
|
61,358 |
|
||||
|
Prepaid expenses and other current assets |
|
|
10,242 |
|
|
8,316 |
|
||||
|
Deferred income taxes |
|
|
7,750 |
|
|
10,100 |
|
||||
Total current assets |
|
|
129,142 |
|
|
120,374 |
|
|||||
Property, plant and equipment, net |
|
|
25,768 |
|
|
23,696 |
|
|||||
Deferred income taxes |
950 |
2,000 |
||||||||||
Other assets |
|
|
5,168 |
|
|
5,855 |
|
|||||
|
|
|||||||||||
Total assets |
|
$ |
161,028 |
|
$ |
151,925 |
|
|||||
|
||||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|||||||
Current liabilities |
|
|
|
|
|
|||||||
|
Accounts payable |
|
$ |
18,169 |
$ |
16,961 |
||||||
|
Accrued liabilities |
|
|
33,197 |
32,827 |
|||||||
Total current liabilities |
|
|
51,366 |
49,788 |
||||||||
Non-current liabilities |
675 |
725 |
||||||||||
Employee benefit plan liabilities |
|
|
11,253 |
13,647 |
||||||||
Shareholders' equity |
|
|
||||||||||
|
Preferred stock |
|
|
-- |
-- |
|||||||
|
Common stock: |
|
|
|||||||||
|
|
Class A |
|
|
95 |
94 |
||||||
|
|
Class B |
|
|
22 |
22 |
||||||
Additional paid-in capital |
3,726 |
-- |
||||||||||
|
Retained earnings |
|
|
96,426 |
87,649 |
|||||||
|
Unearned compensation under restricted stock plan |
|
|
(2,535 |
) |
-- |
||||||
Total shareholders' equity |
|
|
97,734 |
87,765 |
||||||||
|
|
|||||||||||
Total liabilities and shareholders' equity |
|
$ |
161,028 |
|
$ |
151,925 |
|
|||||
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
(Unaudited)
|
Three Month Period Ended |
Twelve Month Period Ended |
|||||||||||||||||
|
January 1, |
January 3, |
January 1, |
January 3, |
|||||||||||||||
Net Sales |
|
$ |
120,965 |
$ |
109,342 |
$ |
398,740 |
$ |
417,272 |
||||||||||
Cost of products sold |
|
70,794 |
74,249 |
240,180 |
266,119 |
||||||||||||||
|
|
|
|
||||||||||||||||
Gross profit |
|
50,171 |
35,093 |
158,560 |
151,153 |
||||||||||||||
|
|
|
|||||||||||||||||
Selling, general and administrative |
|
|
|
|
|
||||||||||||||
Royalty income, net |
|
(3,959 |
) |
(3,843 |
) |
(12,972 |
) |
(11,688 |
) |
||||||||||
(Gain) loss on sale of assets |
21 |
(182 |
) |
(1,140 |
) |
(158 |
) |
||||||||||||
|
|
|
|
||||||||||||||||
Operating income |
|
13,359 |
1,612 |
21,487 |
11,748 |
||||||||||||||
|
|
|
|
||||||||||||||||
Other income (expense): |
|
||||||||||||||||||
|
Interest expense |
|
(63 |
) |
(245 |
) |
(222 |
) |
(718 |
) |
|||||||||
|
Interest income |
|
|
171 |
|
44 |
308 |
200 |
|||||||||||
|
Miscellaneous |
|
|
12 |
|
(3 |
) |
22 |
4 |
||||||||||
|
|
|
|
||||||||||||||||
Other income (expense) -- net |
|
120 |
(204 |
) |
108 |
(514 |
) |
||||||||||||
|
|
|
|
||||||||||||||||
Income before income taxes |
|
13,479 |
1,408 |
21,595 |
11,234 |
||||||||||||||
|
|
|
|||||||||||||||||
Income taxes |
|
4,854 |
409 |
7,776 |
4,045 |
||||||||||||||
|
|
|
|||||||||||||||||
Net income |
|
$ |
8,625 |
$ |
999 |
$ |
13,819 |
$ |
7,189 |
||||||||||
|
|
|
|
||||||||||||||||
Net income per common share |
|
||||||||||||||||||
Basic - Class A |
$ |
0.75 |
$ |
0.09 |
$ |
1.21 |
$ |
0.62 |
|||||||||||
|
Basic - Class B |
|
$ |
0.65 |
$ |
0.08 |
$ |
1.05 |
$ |
0.54 |
|||||||||
|
Diluted - If Converted Method |
|
$ |
0.73 |
$ |
0.08 |
$ |
1.17 |
$ |
0.60 |
|||||||||
|
|
|
|
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Dollars in thousands)
|
Twelve Month Period Ended |
|||||||||||||
|
January 1, |
January 3, |
||||||||||||
Cash flows from operating activities |
|
|
||||||||||||
|
Net income |
|
$ |
13,819 |
$ |
7,189 |
||||||||
Adjustments to reconcile net income to net |
||||||||||||||
|
Depreciation |
|
|
6,136 |
6,774 |
|||||||||
Amortization |
531 |
598 |
||||||||||||
Gain on disposal of assets |
(1,140 |
) |
(158 |
) |
||||||||||
|
Deferred income taxes |
|
|
3,400 |
(200 |
) |
||||||||
Compensation earned under restricted stock plan |
629 |
87 |
||||||||||||
Income tax benefit from stock option exercises |
50 |
321 |
||||||||||||
Benefit plan expense, net of contributions |
(2,394 |
) |
(446 |
) |
||||||||||
Changes in operating assets and liabilities: |
||||||||||||||
Accounts receivable |
4,241 |
60 |
||||||||||||
|
Inventories |
|
|
314 |
(4,244 |
) |
||||||||
|
Prepaid expenses and other current assets |
|
|
(1,926 |
) |
(6,631 |
) |
|||||||
|
Accounts payable |
|
|
1,208 |
5,054 |
|||||||||
|
Accrued liabilities and other non-current liabilities |
|
|
320 |
(4,844 |
) |
||||||||
Net cash provided by operating activities |
|
|
25,188 |
3,560 |
||||||||||
Cash flows from investing activities |
|
|
||||||||||||
|
Additions to property, plant and equipment |
|
|
(8,641 |
) |
(3,695 |
) |
|||||||
|
Proceeds from disposal of assets |
|
|
2,115 |
510 |
|||||||||
|
Changes in other assets |
|
|
(386 |
) |
(421 |
) |
|||||||
Net cash used in investing activities |
|
|
(6,912 |
) |
(3,606 |
) |
||||||||
Cash flows from financing activities |
|
|
||||||||||||
|
Dividends paid |
|
|
(5,042 |
) |
(4,139 |
) |
|||||||
|
Net proceeds from issuance of common shares |
|
|
513 |
868 |
|||||||||
|
Repurchase of common shares |
|
|
-- |
(8,950 |
) |
||||||||
Net cash used in financing activities |
|
|
(4,529 |
) |
(12,221 |
) |
||||||||
Net increase (decrease) in cash and cash equivalents |
|
|
13,747 |
(12,267 |
) |
|||||||||
Cash and cash equivalents at beginning of year |
|
|
23,931 |
36,198 |
||||||||||
Cash and cash equivalents at end of year |
|
$ |
37,678 |
$ |
23,931 |
|||||||||