UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

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): June 11, 2013

 

Oxford Industries, Inc.

(Exact name of registrant as specified in its charter)

 

Georgia

 

001-04365

 

58-0831862

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

999 Peachtree Street, N.E., Suite 688, Atlanta, GA

 

30309

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code (404) 659-2424

 

Not Applicable

(Former name or former address, 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:

 

o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o            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 June 11, 2013, Oxford Industries, Inc. issued a press release announcing, among other things, its financial results for the first quarter of fiscal 2013, which ended on May 4, 2013. The press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

 

The information contained in this Form 8-K (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise be subject to the liabilities of that section, nor shall it be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 

Item 9.01              Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit
Number

 

 

99.1

 

Press Release of Oxford Industries, Inc., dated June 11, 2013.

 

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.

 

 

 

 OXFORD INDUSTRIES, INC.

 

 

 

 

June 11, 2013

/s/ Thomas E. Campbell

 

Name:

Thomas E. Campbell

 

Title:

Senior Vice President - Law & Administration, General Counsel and Secretary

 

2



Exhibit 99.1

 

Oxford Industries, Inc. Press Release

 

999 Peachtree Street, N.E.  Suite 688 · Atlanta, Georgia 30309

 

Contact:

 

Anne M. Shoemaker

Telephone:

 

(404) 653-1455

Fax:

 

(404) 653-1545

E-mail:

 

InvestorRelations@oxfordinc.com

 

FOR IMMEDIATE RELEASE

June 11, 2013

 

Oxford Industries Reports First Quarter Results

 

Top-line Growth Continues at Tommy Bahama and Lilly Pulitzer —

— First Quarter EPS of $0.82; Top End of Guidance—

— Expects Q2 EPS of $0.92 - $1.02 Compared to Adjusted EPS of $0.65 and GAAP EPS of $0.30 Last Year —

— Reaffirms Full Year EPS Guidance of $3.00 - $3.15 —

 

ATLANTA, GA – Oxford Industries, Inc. (NYSE:OXM) today announced financial results for its fiscal 2013 first quarter ended May 4, 2013. Consolidated net sales were $234.2 million compared to $231.0 million in the first quarter of fiscal 2012. Earnings per share were $0.82 in the first quarter of fiscal 2013, at the top end of previously issued guidance and as compared to $1.09 in the same period of the prior year.

 

Thomas C. Chubb III, CEO and President, commented, “We are pleased with what we accomplished in the first quarter of fiscal 2013.  We delivered excellent financial results driven by strength at Tommy Bahama and Lilly Pulitzer.  In addition, our commitment to growing long-term shareholder value is evident in the continuing investment we are making in these two businesses.  We continue to make significant capital and operating expense investments in these businesses and believe that they will pay off by supporting sustained, profitable growth.

 

“During the quarter we made steady progress with respect to Tommy Bahama’s Asia-Pacific store roll-out with the opening of our first two stores in Japan.  In addition, early in the second quarter we expanded our presence in North America with the acquisition of nine stores in Canada, previously operated by a licensee.  Combined with a good pace of new Lilly Pulitzer store openings, we are looking forward to leveraging a significant increase in our overall retail presence.

 

Mr. Chubb continued, “The balance of our business is performing to plan.  Our Lanier Clothes division is continuing to generate strong levels of free cash flow and demonstrate stability in the challenging tailored clothing market.  With respect to Ben Sherman, we have realigned the leadership team and are pleased with the progress they are making on cost control as well as on the quality of our assortments and distribution.  We remain optimistic that the actions taken will result in tangible improvements in the second half of fiscal 2013.

 

Mr. Chubb concluded, “We are excited by the strong start to fiscal 2013 and believe that we have an excellent opportunity to drive our growth, increase our profitability and, in the process, build an enduring business that will generate significant value for our shareholders.”

 

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Operating Results

 

Tommy Bahama  Tommy Bahama reported a 7% increase in net sales to $150.4 million for the first quarter of fiscal 2013. The increase in sales was driven by strength in the direct to consumer business, including a 10% comparable store sales increase and sales from additional retail stores.  These increases were partially offset by a decline in wholesale sales, which included a shift in the timing of shipments, in part due to the impact of the 53rd week in fiscal 2012.

 

As of quarter end on May 4, 2013, Tommy Bahama operated 121 retail stores globally, including 80 full-price stores, 15 restaurant-retail locations and 26 outlet stores, compared to 96 retail stores as of April 28, 2012.  On May 6, 2013, Tommy Bahama acquired nine additional retail stores in Canada.

 

Tommy Bahama’s operating income was $21.4 million compared to $25.6 million in the first quarter of fiscal 2012. While sales were strong and gross margins expanded, SG&A increased primarily due to the costs of operating additional domestic retail stores, investment in infrastructure for Asia-Pacific operations and higher store pre-opening expenses. Tommy Bahama opened eight new stores in the first quarter of fiscal 2013 compared to two new stores opened in the first quarter of fiscal 2012.  SG&A also increased due to higher employment and advertising costs to support the growing business and transaction costs associated with the Canadian acquisition.

 

In the first quarter of fiscal 2013, Tommy Bahama’s Asia-Pacific operations reported an operating loss of $4.4 million compared to an operating loss of $1.8 million in the first quarter of fiscal 2012.  The Company expects these losses to moderate as the year progresses, with the total operating losses for the year to approximate the fiscal 2012 level of $10.4 million.

 

Lilly Pulitzer  Lilly Pulitzer’s sales in the first quarter of fiscal 2013 rose 11% to $39.4 million, reflecting increases in wholesale sales, the impact of operating additional stores and a 3% comparable store sales increase.  While the first quarter was negatively impacted by unseasonably cold weather, Lilly Pulitzer has seen improvement in the second quarter.  As of May 4, 2013, Lilly Pulitzer operated 21 retail stores, including two stores opened in the first quarter, compared to 17 retail stores as of April 28, 2012.

 

Operating income was flat with last year at $11.0 million.  As planned, SG&A increased due to spending to support growth initiatives at Lilly Pulitzer, as well as costs associated with operating additional retail stores. The first quarter of fiscal 2013 included $0.1 million of change in fair value of contingent consideration compared to $0.6 million in the first quarter of fiscal 2012.

 

Lanier Clothes  Net sales in the first quarter of fiscal 2013 decreased to $27.3 million from $33.0 million in the first quarter of fiscal 2012, as expected.  The decline in sales was primarily due to the timing of wholesale orders and the exit of certain programs.  Operating income also fell to $2.5 million in the quarter compared to $4.0 million in the prior year, primarily due to the sales decline.

 

Ben Sherman  As planned, Ben Sherman reported net sales of $12.2 million for the first quarter of fiscal 2013 compared to $17.4 million in the first quarter of 2012. The operating loss for the first quarter was $4.8 million compared to an operating loss of $2.7 million in the first quarter of fiscal 2012. Ben Sherman sales decreased primarily due to its exit from certain wholesale accounts.

 

Gross margin at Ben Sherman decreased due to heavy promotions and higher off-price sales, which were necessary measures to manage inventory levels appropriately.  The factors that negatively impacted operating income were partially offset by reductions in SG&A.

 

Corporate and Other  The Corporate and Other operating loss for the first quarter of fiscal 2013 was $4.0 million compared to an operating loss of $5.1 million in the first quarter of fiscal 2012, with the difference

 

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primarily due to the impact of higher sales in the Oxford Golf and Lyons, Georgia distribution center operations, reduced SG&A in our corporate operations and lower LIFO accounting charges.

 

Consolidated Operating Results

 

Net Sales  For the first quarter of fiscal 2013, consolidated net sales were $234.2 million compared to $231.0 million in the first quarter of fiscal 2012. Sales increases at Tommy Bahama and Lilly Pulitzer were partially offset by expected decreases at Lanier Clothes and Ben Sherman.

 

Gross Profit and Margins  For the first quarter of fiscal 2013, consolidated gross margins increased 130 basis points to 57.2%, primarily due to the change in sales mix towards direct to consumer sales.  Gross profit for the first quarter of fiscal 2013 increased to $134.1 million from $129.2 million in the first quarter of fiscal 2012.

 

SG&A   For the first quarter of fiscal 2013, SG&A was $113.0 million, or 48.3% of net sales, compared to $100.8 million, or 43.6% of net sales, in the first quarter of fiscal 2012. The increase in SG&A was primarily due to $5.7 million of incremental SG&A associated with operating additional Tommy Bahama and Lilly Pulitzer retail stores, $4.3 million of incremental SG&A associated with the Tommy Bahama Asia-Pacific expansion and higher employment and marketing expense to support the growing Tommy Bahama and Lilly Pulitzer businesses.  These increases were partially offset by modest SG&A reductions in Lanier Clothes, Ben Sherman and Corporate and Other.

 

Change in Fair Value of Contingent Consideration  The first quarter of fiscal 2013 included $0.1 million of change in fair value of contingent consideration compared to $0.6 million in the first quarter of fiscal 2012.

 

Royalties and Other Income   Royalties and other income were $5.1 million in the first quarter of fiscal 2013, comparable to the first quarter of fiscal 2012.

 

Operating Income   For the first quarter of fiscal 2013, consolidated operating income was $26.1 million compared to $32.8 million in the first quarter of fiscal 2012.

 

Interest Expense   For the first quarter of fiscal 2013, interest expense declined 74% to $0.9 million from $3.6 million in fiscal 2012. The decrease was primarily due to the utilization of the Company’s U.S. Revolving Credit Agreement, which bears substantially lower interest rates than its senior secured notes, which were fully redeemed in July 2012.

 

Income Taxes  The effective tax rate for the first quarter was 45.8% compared to 38.3% in the first quarter of fiscal 2012.  The rate in the first quarter of fiscal 2013 was unfavorably impacted by the Company’s inability to recognize a tax benefit for losses in foreign jurisdictions.

 

Balance Sheet & Liquidity

 

As of May 4, 2013, Cash and Cash Equivalents included $18.7 million for the purchase price, transaction expenses and working capital associated with the acquisition of the Tommy Bahama business of our Canadian licensee, which was completed on May 6, 2013.

 

Inventory increased to $95.8 million at May 4, 2013 from $86.0 million at the end of the first quarter of fiscal 2012. The increase was primarily to support anticipated sales growth and additional retail stores at Tommy Bahama and Lilly Pulitzer.  Inventory levels decreased at both Lanier Clothes and Ben Sherman.

 

As of May 4, 2013, the Company had $165.1 million of borrowings outstanding and approximately $71.6 million of unused availability under its U.S. and U.K revolving credit facilities.

 

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The Company’s anticipated capital expenditures for fiscal 2013, including $13.9 million incurred during the first quarter, are expected to be approximately $45 million. These expenditures are expected to consist primarily of costs of opening new retail stores, retail store and restaurant remodeling and information technology investments, including e-commerce enhancements.

 

Outlook for Fiscal 2013

 

For the second quarter, ending on August 3, 2013, the Company anticipates net sales in a range from $240 to $250 million compared to net sales of $206.9 million in the second quarter of fiscal 2012. Earnings per share are expected to be in a range of $0.92 to $1.02 compared to earnings per share of $0.30 on a GAAP basis and $0.65 on an adjusted basis in the second quarter of fiscal 2012.  The expected improvement over last year’s adjusted EPS reflects the benefit of operating additional retail stores and the anticipated growth in e-commerce in a historically strong direct to consumer quarter for Tommy Bahama and Lilly Pulitzer.

 

For fiscal 2013, the Company continues to expect earnings per share in a range of $3.00 to $3.15 and net sales in the $930 to $940 million range. This compares with fiscal 2012 earnings per share of $1.89 on a GAAP basis and $2.61 on an adjusted basis.

 

The effective tax rate is expected to be approximately 39.5% and 41% for the second quarter and fiscal year, respectively.

 

For reference, tables reconciling GAAP to adjusted measures are included at the end of this release.

 

Conference Call

 

The Company will hold a conference call with senior management to discuss its financial results at 4:30 p.m. ET today. A live web cast of the conference call will be available on the Company’s website at www.oxfordinc.com. Please visit the website at least 15 minutes before the call to register for the teleconference web cast and download any necessary software. A replay of the call will be available through June 25, 2013. To access the telephone replay, participants should dial 858-384-5517. The access code for the replay is 5109851. A replay of the web cast will also be available following the teleconference on the Company’s website at www.oxfordinc.com.

 

About Oxford

 

Oxford Industries, Inc. is a global apparel company which designs, sources, markets and distributes products bearing the trademarks of its owned and licensed brands through direct to consumer and wholesale channels of distribution. Oxford’s brands include Tommy Bahama®, Lilly Pulitzer®, Ben Sherman®, Oxford Golf®, Arnold Brant® and Billy London®. The Company operates retail stores, internet websites and restaurants. The Company also has license arrangements with select third parties to produce and sell certain product categories under its Tommy Bahama, Lilly Pulitzer and Ben Sherman brands. The Company holds exclusive licenses to produce and sell certain product categories under the Kenneth Cole®, Geoffrey Beene®, Dockers® and Ike Behar® labels. Oxford’s wholesale customers include department stores, specialty stores, national chains, specialty catalogs and Internet retailers. Oxford’s stock has traded on the New York Stock Exchange since 1964 under the symbol OXM. For more information, please visit Oxford’s website at www.oxfordinc.com.

 

Comparable Store Sales

 

The Company’s disclosures about comparable store sales include sales from its full-price stores and e-commerce sites, excluding sales associated with e-commerce flash clearance sales and sales from the

 

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Company’s restaurants. Definitions and calculations of comparable store sales differ among companies in the retail industry, and therefore comparable store metrics disclosed by the Company may not be comparable to the metrics disclosed by other companies.

 

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS

 

This press release may include statements that are forward-looking statements within the meaning of the federal securities laws. Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will” and similar expressions identify forward-looking statements, which generally are not historical in nature. We intend for all forward-looking statements contained herein or on our website, and all subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf, to be covered by the safe harbor provisions for forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (which Sections were adopted as part of the Private Securities Litigation Reform Act of 1995). Important assumptions relating to these forward-looking statements include, among others, assumptions regarding the impact of economic conditions on consumer demand and spending, particularly in light of general economic uncertainty that continues to prevail, demand for our products, timing of shipments requested by our wholesale customers, expected pricing levels, competitive conditions, retention of and disciplined execution by key management, the timing and cost of store openings and of planned capital expenditures, costs of products as well as the raw materials used in those products, costs of labor, acquisition and disposition activities, expected outcomes of pending or potential litigation and regulatory actions, access to capital and/or credit markets and the impact of foreign losses on our effective tax rate. Forward-looking statements reflect our current expectations, based on currently available information, and are not guarantees of performance. Although we believe that the expectations reflected in such forward-looking statements are reasonable, these expectations could prove inaccurate as such statements involve risks and uncertainties, many of which are beyond our ability to control or predict. Should one or more of these risks or uncertainties, or other risks or uncertainties not currently known to us or that we currently deem to be immaterial, materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. Important factors relating to these risks and uncertainties include, but are not limited to, those described in Part I, Item 1A. contained in our Annual Report on Form 10-K for the period ended February 2, 2013 under the heading “Risk Factors” and those described from time to time in our future reports filed with the SEC.

 

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OXFORD INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except par amounts)

 

 

 

May 4,
2013

 

April 28,
2012

 

ASSETS

 

 

 

 

 

Current Assets:

 

 

 

 

 

Cash and cash equivalents

 

$

28,325

 

$

5,679

 

Receivables, net

 

82,196

 

86,705

 

Inventories, net

 

95,798

 

85,996

 

Prepaid expenses, net

 

21,508

 

15,530

 

Deferred tax assets

 

20,686

 

19,339

 

Total current assets

 

248,513

 

213,249

 

Property and equipment, net

 

135,613

 

97,270

 

Intangible assets, net

 

163,813

 

165,673

 

Goodwill

 

17,267

 

16,495

 

Other non-current assets, net

 

23,209

 

22,302

 

Total Assets

 

$

588,415

 

$

514,989

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

Accounts payable and other accrued expenses

 

$

77,783

 

$

76,377

 

Accrued compensation

 

14,651

 

16,703

 

Contingent consideration current liability

 

 

2,500

 

Short-term debt

 

5,825

 

6,023

 

Total current liabilities

 

98,259

 

101,603

 

Long-term debt

 

159,294

 

106,991

 

Non-current contingent consideration

 

14,519

 

11,245

 

Other non-current liabilities

 

46,340

 

39,446

 

Non-current deferred income taxes

 

35,498

 

33,614

 

Commitments and contingencies

 

 

 

 

 

Shareholders’ Equity:

 

 

 

 

 

Common stock, $1.00 par value per share

 

16,387

 

16,541

 

Additional paid-in capital

 

111,882

 

101,090

 

Retained earnings

 

131,120

 

127,079

 

Accumulated other comprehensive loss

 

(24,884

)

(22,620

)

Total shareholders’ equity

 

234,505

 

222,090

 

Total Liabilities and Shareholders’ Equity

 

$

588,415

 

$

514,989

 

 

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OXFORD INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(UNAUDITED)

(in thousands, except per share amounts)

 

 

 

First Quarter
Fiscal 2013

 

First Quarter
Fiscal 2012

 

Net sales

 

$

234,203

 

$

230,953

 

Cost of goods sold

 

100,128

 

101,739

 

Gross profit

 

134,075

 

129,214

 

SG&A

 

113,025

 

100,808

 

Change in fair value of contingent consideration

 

69

 

600

 

Royalties and other operating income

 

5,080

 

4,982

 

Operating income

 

26,061

 

32,788

 

Interest expense, net

 

936

 

3,603

 

Net earnings before income taxes

 

25,125

 

29,185

 

Income taxes

 

11,502

 

11,183

 

Net earnings

 

$

13,623

 

$

18,002

 

 

 

 

 

 

 

Net earnings per share:

 

 

 

 

 

Basic

 

$

0.82

 

$

1.09

 

Diluted

 

$

0.82

 

$

1.09

 

Weighted average common shares outstanding:

 

 

 

 

 

Basic

 

16,586

 

16,531

 

Diluted

 

16,611

 

16,552

 

Dividends declared per common share

 

$

0.18

 

$

0.15

 

 

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OXFORD INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 (in thousands)

 

 

 

First Quarter
Fiscal 2013

 

First Quarter
Fiscal 2012

 

Cash Flows From Operating Activities:

 

 

 

 

 

Net earnings

 

$

13,623

 

$

18,002

 

Adjustments to reconcile net earnings to net cash used in operating activities:

 

 

 

 

 

Depreciation

 

7,015

 

5,772

 

Amortization of intangible assets

 

211

 

256

 

Change in fair value of contingent consideration

 

69

 

600

 

Amortization of deferred financing costs and bond discount

 

108

 

376

 

Stock compensation expense

 

782

 

761

 

Deferred income taxes

 

3,443

 

(1,050

)

Changes in working capital, net of acquisitions and dispositions:

 

 

 

 

 

Receivables

 

(19,707

)

(26,638

)

Inventories

 

13,600

 

17,889

 

Prepaid expenses

 

(2,002

)

2,263

 

Current liabilities

 

(17,376

)

(19,798

)

Other non-current assets

 

(124

)

(2,326

)

Other non-current liabilities

 

1,772

 

781

 

Excess tax benefits related to stock-based compensation

 

(5,994

)

 

Net cash used in operating activities

 

(4,580

)

(3,112

)

Cash Flows From Investing Activities:

 

 

 

 

 

Purchases of property and equipment

 

(13,860

)

(9,633

)

Net cash used in investing activities

 

(13,860

)

(9,633

)

Cash Flows From Financing Activities:

 

 

 

 

 

Repayment of revolving credit arrangements

 

(67,428

)

(64,886

)

Proceeds from revolving credit arrangements

 

116,171

 

71,670

 

Proceeds from issuance of common stock, including excess tax benefits

 

6,214

 

680

 

Repurchase of restricted stock for employee tax withholding liabilities

 

(12,637

)

 

Dividends on common stock

 

(3,024

)

(2,475

)

Net cash provided by financing activities

 

39,296

 

4,989

 

Net change in cash and cash equivalents

 

20,856

 

(7,756

)

Effect of foreign currency translation on cash and cash equivalents

 

(48

)

62

 

Cash and cash equivalents at the beginning of year

 

7,517

 

13,373

 

Cash and cash equivalents at the end of the period

 

$

28,325

 

$

5,679

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

Cash paid for interest, net

 

$

860

 

$

82

 

Cash paid (refunded) for income taxes

 

$

1,113

 

$

(351

)

 

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OXFORD INDUSTRIES, INC.

OPERATING GROUP INFORMATION

(UNAUDITED)

(in thousands)

 

 

 

First Quarter
Fiscal 2013

 

First Quarter
Fiscal 2012

 

Net Sales

 

 

 

 

 

Tommy Bahama

 

$

150,426

 

$

141,134

 

Lilly Pulitzer

 

39,449

 

35,633

 

Lanier Clothes

 

27,260

 

33,007

 

Ben Sherman

 

12,236

 

17,352

 

Corporate and Other

 

4,832

 

3,827

 

Total

 

$

234,203

 

$

230,953

 

Operating Income (Loss)

 

 

 

 

 

Tommy Bahama

 

$

21,381

 

$

25,564

 

Lilly Pulitzer

 

11,033

 

11,012

 

Lanier Clothes

 

2,461

 

4,046

 

Ben Sherman

 

(4,824

)

(2,740

)

Corporate and Other

 

(3,990

)

(5,094

)

Total Operating Income

 

$

26,061

 

$

32,788

 

 

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RECONCILIATION OF CERTAIN OPERATING RESULTS INFORMATION PRESENTED IN ACCORDANCE WITH GAAP TO CERTAIN OPERATING RESULTS INFORMATION, AS ADJUSTED (UNAUDITED)

 

Set forth below is the reconciliation, in thousands except per share amounts, of certain operating results information, presented in accordance with generally accepted accounting principles, or GAAP, to the operating results information, as adjusted, for certain historical periods. The Company believes that investors often look at ongoing operations as a measure of assessing performance and as a basis for comparing past results against future results. Therefore, the Company believes that presenting operating results, as adjusted, provides useful information to investors because this allows investors to make decisions based on ongoing operations. The Company uses the operating results, as adjusted, to discuss its business with investment institutions, its board of directors and others. Further, the Company believes that presenting operating results, as adjusted, provides useful information to investors because this allows investors to compare the Company’s operating results for the periods presented to other periods.

 

 

 

First Quarter
Fiscal 2013

 

First Quarter
Fiscal 2012

 

As reported

 

 

 

 

 

Net sales

 

$

234,203

 

$

230,953

 

Gross profit

 

$

134,075

 

$

129,214

 

Gross margin (1)

 

57.2

%

55.9

%

Operating income

 

$

26,061

 

$

32,788

 

Operating margin (2)

 

11.1

%

14.2

%

Net earnings before income taxes

 

$

25,125

 

$

29,185

 

Net earnings

 

$

13,623

 

$

18,002

 

Diluted net earnings per share

 

$

0.82

 

$

1.09

 

Weighted average shares outstanding — diluted

 

16,611

 

16,552

 

Increase (decrease) in net earnings

 

 

 

 

 

LIFO accounting adjustment (3)

 

$

28

 

$

223

 

Change in fair value of contingent consideration (4)

 

$

69

 

$

600

 

Impact of income taxes on adjustments above (5)

 

$

(45

)

$

(313

)

Adjustment to earnings from continuing operations

 

$

52

 

$

510

 

As adjusted

 

 

 

 

 

Gross profit

 

$

134,103

 

$

129,437

 

Gross margin (1)

 

57.3

%

56.0

%

Operating income

 

$

26,158

 

$

33,611

 

Operating margin (2)

 

11.2

%

14.6

%

Net earnings before income taxes

 

$

25,222

 

$

30,008

 

Net earnings

 

$

13,675

 

$

18,512

 

Diluted net earnings per share

 

$

0.82

 

$

1.12

 

 

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(1)        Gross margin reflects gross profit divided by net sales.

(2)        Operating margin reflects operating income divided by net sales.

(3)        LIFO accounting adjustment reflects the impact on cost of goods sold in our consolidated statements of earnings resulting from LIFO accounting adjustments in each period. LIFO accounting adjustments are included in Corporate and Other for operating group reporting purposes.

(4)        Change in fair value of contingent consideration reflects the statement of earnings impact resulting from the change in fair value of contingent consideration pursuant to the earnout agreement with the sellers of the Lilly Pulitzer brand and operations. The change in fair value of contingent consideration is reflected in the Lilly Pulitzer operating group results of operations.

(5)        Impact of income taxes reflects the estimated net earnings tax impact of the above adjustments based on the applicable estimated effective tax rate on current year earnings, before any discrete items.

 

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RECONCILIATION OF OPERATING INCOME (LOSS) IN ACCORDANCE WITH GAAP

TO OPERATING INCOME (LOSS), AS ADJUSTED (UNAUDITED)

 

Set forth below is the reconciliation, in thousands, of operating income (loss) for each operating group and in total, calculated in accordance with GAAP, to operating income (loss), as adjusted, for certain historical periods. The Company believes that investors often look at ongoing operating group operating results as a measure of assessing performance and as a basis for comparing past results against future results. Therefore, the Company believes that presenting our operating income (loss), as adjusted, provides useful information to investors because this allows investors to make decisions based on ongoing operating group results. The Company uses the operating income (loss), as adjusted, to discuss its operating groups with investment institutions, its board of directors and others. Further, the Company believes that presenting its operating results, as adjusted, provides useful information to investors because this allows investors to compare the Company’s operating group operating income (loss) for the periods presented to other periods.

 

 

 

First Quarter of Fiscal 2013

 

 

 

Operating
income (loss),
as reported

 

LIFO
accounting
adjustment

 

Change in fair
value of
contingent
consideration

 

Operating
income (loss),
as adjusted

 

Tommy Bahama

 

$

21,381

 

$

 

$

 

$

21,381

 

Lilly Pulitzer (1)

 

11,033

 

 

69

 

11,102

 

Lanier Clothes

 

2,461

 

 

 

2,461

 

Ben Sherman

 

(4,824

)

 

 

(4,824

)

Corporate and Other (2)

 

(3,990

)

28

 

 

(3,962

)

Total

 

$

26,061

 

$

28

 

$

69

 

$

26,158

 

 

 

 

First Quarter of Fiscal 2012

 

 

 

Operating
income (loss),
as reported

 

LIFO
accounting
adjustment

 

Change in fair
value of
contingent
consideration

 

Operating
income (loss),
as adjusted

 

Tommy Bahama

 

$

25,564

 

$

 

$

 

$

25,564

 

Lilly Pulitzer (1)

 

11,012

 

 

600

 

11,612

 

Lanier Clothes

 

4,046

 

 

 

4,046

 

Ben Sherman

 

(2,740

)

 

 

(2,740

)

Corporate and Other (2)

 

(5,094

)

223

 

 

(4,871

)

Total

 

$

32,788

 

$

223

 

$

600

 

$

33,611

 

 


(1)         Change in fair value of contingent consideration reflects the statement of earnings impact resulting from the change in fair value of contingent consideration pursuant to the earnout agreement with the sellers of the Lilly Pulitzer brand and operations.

(2)         LIFO accounting adjustment reflects the impact on cost of goods sold in our consolidated statements of earnings resulting from LIFO accounting adjustments in each period.

 

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RECONCILIATION OF NET EARNINGS PER DILUTED SHARE PRESENTED IN ACCORDANCE WITH GAAP

TO NET EARNINGS PER DILUTED SHARE, AS ADJUSTED (UNAUDITED)

 

Set forth below is the reconciliation of reported or reportable earnings per diluted share for certain historical and future periods, each presented in accordance with GAAP, to the earnings per diluted share, as adjusted, for each respective period. The Company believes that investors often look at ongoing operations as a measure of assessing performance and as a basis for comparing past results against future results. Therefore, the Company believes that presenting its earnings per diluted share, as adjusted, provides useful information to investors because this allows investors to make decisions based on ongoing operations. The Company uses the earnings per diluted share, as adjusted, to discuss its business with investment institutions, its board of directors and others. Further, the Company believes that presenting earnings per diluted share, as adjusted, provides useful information to investors because this allows investors to compare the Company’s results for the periods presented to other periods. Note that columns may not add due to rounding.

 

 

 

First
Quarter
Fiscal 2013

 

First
Quarter
Fiscal 2013

 

First
Quarter
Fiscal 2012

 

 

 

Actual

 

Guidance (1)

 

Actual

 

Net earnings per diluted share:

 

 

 

 

 

 

 

GAAP basis

 

$

0.82

 

$0.72 - $0.82

 

$

1.09

 

LIFO accounting adjustment (2)

 

 

 

$

0.01

 

Change in fair value of contingent consideration (3)

 

 

 

$

0.02

 

As adjusted

 

$

0.82

 

$0.72 - $0.82

 

$

1.12

 

 

 

 

Second Quarter
Fiscal 2013

 

Second Quarter
Fiscal 2012

 

Full Year
Fiscal 2013

 

Full Year
Fiscal 2012

 

 

 

Guidance (5)

 

Actual

 

Guidance (5)

 

Actual

 

Net earnings per diluted share:

 

 

 

 

 

 

 

 

 

GAAP basis

 

$0.92 - $1.02

 

$

0.30

 

$3.00 - $3.15

 

$

1.89

 

LIFO accounting adjustment (2)

 

 

$

(0.01

)

 

$

0.15

 

Change in fair value of contingent consideration (3)

 

 

$

0.02

 

 

$

0.23

 

Loss on repurchase of senior secured notes (4)

 

 

$

0.34

 

 

$

0.34

 

As adjusted

 

$0.92 - $1.02

 

$

0.65

 

$3.00 - $3.15

 

$

2.61

 

 


(1)         Guidance as issued on April 2, 2013.

(2)         LIFO accounting adjustment reflects the impact, net of income taxes, on net earnings per diluted share resulting from LIFO accounting adjustments in each period. No estimate for future LIFO accounting adjustments are reflected in the guidance for any period presented.

(3)         Change in fair value of contingent consideration reflects the statement of earnings impact resulting from the change in fair value of contingent consideration pursuant to the earnout agreement with the sellers of the Lilly Pulitzer brand and operations.

(4)         Loss on repurchase of senior notes reflects the impact, net of income taxes, on net earnings per diluted share resulting from the loss attributable to the redemption of our senior secured notes.

(5)         Guidance as issued on June 11, 2013.

 

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