<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
X OF THE SECURITIES EXCHANGE ACT OF 1934
-----
For quarterly period ended May 31, 1999
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 1-8501
HARTMARX CORPORATION
--------------------
(Exact name of registrant as specified in its charter)
Delaware 36-3217140
-------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
101 North Wacker Drive
Chicago, Illinois 60606
-----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code 312/372-6300
------------
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, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
----- -----
At June 30, 1999 there were 32,371,385 shares of the Company's common stock
outstanding.
<PAGE>
HARTMARX CORPORATION
INDEX
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statement of Earnings for the
three months and six months ended May 31, 1999
and May 31, 1998. 3
Consolidated Balance Sheet as of May 31 1999,
November 30, 1998 and May 31, 1998. 4
Condensed Consolidated Statement of Cash Flows
for the six months ended May 31, 1999 and
May 31, 1998. 6
Notes to Consolidated Financial Statements. 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. 11
Part II - OTHER INFORMATION
Item 4. Results of Votes of Security Holders 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
</TABLE>
2
<PAGE>
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
HARTMARX CORPORATION
CONSOLIDATED STATEMENT OF EARNINGS
(000's Omitted)
<TABLE>
<CAPTION>
Three Months Ended May 31, Six Months Ended May 31,
-------------------------- ------------------------
1999 1998 1999 1998
----------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $ 172,680 $167,492 $349,082 $346,816
Licensing and other income 262 398 1,174 824
----------- -------- -------- --------
172,942 167,890 350,256 347,640
----------- -------- -------- --------
Cost of goods sold 127,798 124,862 260,620 260,110
Selling, general and administrative expenses 38,806 36,574 76,845 72,583
----------- -------- -------- --------
166,604 161,436 337,465 332,693
----------- -------- -------- --------
Earnings before non-cash charge, interest and taxes 6,338 6,454 12,791 14,947
Non-cash charge re: systems project termination (11,195) - (11,195) -
----------- -------- -------- --------
Earnings (loss) before interest and taxes (4,857) 6,454 1,596 14,947
Interest expense 4,518 4,799 8,706 9,252
----------- -------- -------- --------
Earnings (loss) before taxes (9,375) 1,655 (7,110) 5,695
Tax (provision) benefit 3,565 (630) 2,705 (2,165)
----------- -------- -------- --------
Net earnings (loss) $ (5,810) $ 1,025 $ (4,405) $ 3,530
=========== ======== ======== ========
Earnings (loss) per share:
Basic $ (.17) $ .03 $ (.13) $ .10
=========== ======== ======== ========
Diluted $ (.17) $ .03 $ (.13) $ .10
=========== ======== ======== ========
Dividends per common share $ - $ - $ - $ -
=========== ======== ======== ========
Average shares outstanding:
Basic 33,675 34,335 34,230 34,295
=========== ======== ======== ========
Diluted 33,741 34,903 34,286 34,807
=========== ======== ======== ========
</TABLE>
(See accompanying notes to consolidated financial statements)
3
<PAGE>
HARTMARX CORPORATION
CONSOLIDATED BALANCE SHEET
ASSETS
(000's Omitted)
<TABLE>
<CAPTION>
May 31, Nov. 30, May 31,
1999 1998 1998
------- --------- --------
<S> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 1,905 $ 5,292 $ 1,241
Accounts receivable, less allowance of
$9,504, $8,210 and $9,221 for
doubtful accounts 128,895 131,342 121,370
Inventories 209,644 207,679 215,680
Prepaid expenses 9,460 3,234 5,227
Recoverable and deferred income taxes 15,881 15,881 20,152
--------- -------- ---------
Total current assets 365,785 363,428 363,670
--------- -------- ---------
INVESTMENTS AND OTHER ASSETS 30,999 31,174 26,801
--------- -------- ---------
DEFERRED INCOME TAXES 42,955 39,086 41,525
--------- -------- ---------
PROPERTIES
Land 2,650 2,638 2,645
Buildings and building improvements 48,864 48,873 49,223
Furniture, fixtures and equipment 114,765 118,521 115,879
Leasehold improvements 18,861 18,020 17,613
--------- -------- ---------
185,140 188,052 185,360
Accumulated depreciation and amortization (145,096) (137,018) (136,548)
--------- -------- ---------
Net properties 40,044 51,034 48,812
--------- -------- ---------
TOTAL ASSETS $ 479,783 $ 484,722 $ 480,808
========= ========= =========
</TABLE>
(See accompanying notes to consolidated financial statements)
4
<PAGE>
HARTMARX CORPORATION
CONSOLIDATED BALANCE SHEET
LIABILITIES AND SHAREHOLDERS' EQUITY
(000's Omitted)
<TABLE>
<CAPTION>
May 31, Nov. 30, May 31,
1999 1998 1998
-------- -------- --------
<S> <C> <C> <C>
CURRENT LIABILITIES
Notes payable $ 10,000 $ 10,000 $ 20,000
Current maturities of long term debt 71 67 65
Accounts payable and accrued expenses 90,194 93,768 84,094
-------- -------- --------
Total current liabilities 100,265 103,835 104,159
-------- -------- --------
LONG TERM DEBT, less current maturities 184,854 169,927 179,143
-------- -------- --------
SHAREHOLDERS' EQUITY
Preferred shares, $1 par value;
2,500,000 authorized and unissued - - -
Common shares, $2.50 par value; authorized
75,000,000; issued 35,856,103 in
May 1999; 34,839,431 in November 1998
and 34,377,724 in May 1998. 89,640 87,099 85,944
Capital surplus 83,856 81,994 80,296
Retained earnings 45,926 50,331 39,241
Unearned employee benefits (8,320) (8,464) (7,975)
Common shares in treasury, at cost,
3,500,000 at May 31, 1999,
-0- at November 30, 1998 and
May 31, 1998. (16,438) - -
-------- -------- --------
Total shareholders' equity 194,664 210,960 197,506
-------- -------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $479,783 $484,722 $480,808
======== ======== ========
</TABLE>
(See accompanying notes to consolidated financial statements)
5
<PAGE>
HARTMARX CORPORATION
CONDENSED CONSOLIDATED STATEMENT
OF CASH FLOWS
(000's Omitted)
<TABLE>
<CAPTION>
Six Months Ended May 31,
-------------------------
Increase (Decrease) in Cash and Cash Equivalents 1999 1998
---------- ----------
<S> <C> <C>
Cash Flows from Operating Activities:
Net earnings (loss) $ (4,405) $ 3,530
Reconciling items to adjust net earnings
to net cash used in operating activities:
Non-cash charge 11,195
Depreciation and amortization 3,923 4,438
Changes in:
Receivables, inventories, prepaids and other assets 10,480 (9,447)
Accounts payable and accrued expenses (17,561) (16,004)
Taxes and deferred taxes on earnings (4,451) 1,102
-------- --------
Net cash used in operating activities (819) (16,381)
-------- --------
Cash Flows from Investing Activities:
Capital expenditures (4,344) (6,866)
Cash paid for acquisition (658) -
-------- --------
Net cash used in investing activities (5,002) (6,866)
-------- --------
Cash Flows from Financing Activities:
Increase in notes payable 14,200 21,200
Increase (decrease) in other long term debt, including
purchase of 10 7/8% Senior Subordinated Notes 124 (30)
Purchase of treasury shares (16,438) -
Other equity transactions 4,548 1,692
-------- --------
Net cash provided by financing activities 2,434 22,862
-------- --------
Net decrease in cash and cash equivalents (3,387) (385)
Cash and cash equivalents at beginning of period 5,292 1,626
-------- --------
Cash and cash equivalents at end of period $ 1,905 $ 1,241
======== ========
Supplemental Cash Flow Information
Net cash paid (received) during period for:
Interest expense $ 8,100 $ 9,100
Income taxes 1,100 1,000
</TABLE>
(See accompanying notes to consolidated financial statements)
6
<PAGE>
HARTMARX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1
The accompanying financial statements are unaudited, but in the opinion of
management include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the results of operations and
financial position for the applicable period. Results of operations for any
interim period are not necessarily indicative of results for any other periods
or for the full year. These interim financial statements should be read in
conjunction with the financial statements and related notes contained in the
Annual Report on Form 10-K for the year ended November 30, 1998.
Effective December 1, 1998, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 131, "Disclosures About Segments of an
Enterprise and Related Information" (See Note 6). Also, effective December 1,
1998, the Company adopted the provisions of Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income", which requires disclosure
of transactions from non-owner sources which affect shareholders' equity in a
separate financial statement for the period in which they are recognized.
Adoption of this statement had no effect on the Company's reported financial
position, results of operations, cash flows or financial statement disclosures
for the periods ended May 31, 1999, as these transactions were nominal.
Note 2
The calculation of basic earnings per share for each period is based on the
weighted average number of common shares outstanding. The calculation of diluted
earnings per share reflects the potential dilution that would occur if
securities or other contracts to issue common stock were exercised or converted
into common stock using the treasury stock method. None of the 2,500,000
authorized preferred shares for Hartmarx Corporation have been issued.
Note 3
Results for the second quarter and six months of 1999 include a non-cash pre-tax
charge of $11.2 million ($6.9 million or $.21 per share net of tax) to reflect a
writedown of capitalized development costs related to the termination of an
enterprise resource planning system project which had been anticipated to be
implemented company-wide ("the non-cash charge"). The project software had been
installed at one operating company representing less than 5% of consolidated
sales and after extensive evaluation, the Company, in consultation with its
advisors, concluded that company-wide implementation would not be appropriate.
Although legal action has been initiated against the principal software provider
to recover damages incurred, no recovery has been assumed in determining the
reported non-cash charge. The decision to terminate the project is not expected
to adversely affect the Company's ongoing operations, including Year 2000
remediation, as further described in the Year 2000 Disclosure section of
Management's Discussion and Analysis of this Form 10-Q.
7
<PAGE>
Note 4
Long-term debt comprised the following (000's omitted):
<TABLE>
<CAPTION>
May 31, Nov. 30, May 31,
1999 1998 1998
-------- -------- --------
<S> <C> <C> <C>
Notes payable $ 89,300 $ 75,100 $ 94,100
10 7/8% Senior Subordinated Notes, net 84,782 84,837 85,019
Industrial development bonds 17,357 17,371 17,383
Other debt 3,486 2,686 2,706
-------- -------- --------
194,925 179,994 199,208
Less - current 10,071 10,067 20,065
-------- -------- --------
Long-term debt $184,854 $169,927 $179,143
======== ======== ========
</TABLE>
During fiscal 1994, the Company issued $100 million principal amount of 10 7/8%
Senior Subordinated Notes due January 15, 2002 ("Notes") in a public offering,
and also entered into a then three year financing agreement ("Credit Facility")
with a group of lenders providing for maximum borrowings of $175 million
(including a $25 million letter of credit facility) secured by eligible
inventories, accounts receivable and the intangibles of the Company and its
subsidiaries. Credit Facility amendments in July 1995, November 1995, January
1996 and October 1997, among other things, resulted in a reduction in the fees,
administrative charges and effective borrowing rates, adjustment or elimination
of certain covenants and the extension of the term from March 1997 to July 2000.
The Notes and Credit Facility contain various restrictive covenants covering
ratios relating to maximum funded debt to EBITDA and minimum fixed charge
coverage, additional debt incurrence, capital expenditures, asset sales,
operating leases, as well as other customary covenants, representations and
warranties, funding conditions and events of default. The Company was in
compliance with the above noted covenants.
Note 5
Inventories at each date consisted of (000's omitted):
<TABLE>
<CAPTION>
May 31, Nov. 30, May 31,
1999 1998 1998
-------- -------- --------
<S> <C> <C> <C>
Raw materials $ 52,236 $ 48,969 $ 54,646
Work-in-process 28,057 30,904 36,113
Finished goods 129,351 127,806 124,921
-------- -------- --------
$209,644 $207,679 $215,680
======== ======== ========
</TABLE>
8
<PAGE>
Inventories are stated at the lower of cost or market. At May 31, 1999, November
30, 1998 and May 31, 1998, approximately 40%, 41% and 40% of the Company's total
inventories, respectively, are valued using the last-in, first-out (LIFO) method
representing certain work-in-process and finished goods. The first-in, first-out
(FIFO) method is used for substantially all raw materials and the remaining
inventories.
Note 6
The Company operates in one reportable business segment: the manufacturing and
marketing of apparel. The Company's customers comprise major department and
specialty stores, value oriented retailers and direct mail companies. The
Company's Men's Apparel Group designs, manufactures and markets tailored
clothing, slacks, sportswear and dress furnishings; the Women's Apparel Group
markets women's career apparel, sportswear and accessories to both retailers and
to individuals who purchase women's apparel through a direct mail catalog.
Information on the Company's operations for the periods ended May 31, 1999 and
1998 is summarized as follows (in millions):
<TABLE>
<CAPTION>
Men's Women's
Apparel Apparel
Three Months Ended May 31 Group Group Adj. Consol.
------ ------ ------ -------
<S> <C> <C> <C> <C>
1999
Sales $160.6 $12.1 - $172.7
Earnings (loss) before taxes 8.5 1.1 (19.0) (9.4)
1998
Sales $153.5 $14.0 - $167.5
Earnings (loss) before taxes 8.1 1.1 (7.5) 1.7
Six Months Ended May 31
1999
Sales $324.2 $24.9 - $349.1
Earnings (loss) before taxes 16.4 2.3 (25.8) (7.1)
Gross assets 355.3 28.4 96.1 479.8
1998
Sales $318.4 $28.4 - $346.8
Earnings (loss) before taxes 18.7 2.1 (15.1) 5.7
Gross assets 354.5 29.6 96.7 480.8
</TABLE>
9
<PAGE>
During the periods ended May 31, 1999 and 1998, there were no intergroup sales
and there was no change in the basis of measurement of group earnings or loss.
Operating expenses incurred by the Company in generating sales are charged
against the respective group's sales; indirect operating expenses are allocated
to the groups benefited. Group results exclude any allocation of general
corporate expense, interest expense or income taxes.
Amounts included in the "adjustment" column for earnings (loss) before taxes
consist principally of interest expense and general corporate expenses; the 1999
amounts also include the pre-tax non-cash charge of $11.2 million. Adjustments
of gross assets are for cash, recoverable and deferred income taxes,
investments, other assets and corporate properties, including amounts related to
the now terminated systems project.
10
<PAGE>
HARTMARX CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
As disclosed in Note 3 to the Consolidated Financial Statements of this Form
10-Q, results for the second quarter and six months of 1999 include a non-cash
pre-tax charge of $11.2 million ($6.9 million or $.21 per share net of tax) to
reflect the writedown of capitalized development costs related to the
termination of an enterprise resource planning system which had been anticipated
to be implemented company wide ("the non-cash charge").
The Company's Board of Directors authorized the purchase of up to 3,500,000
shares of the Company's common stock in open market transactions pursuant to
authorizations for 1,500,000 shares in December 1998 and 2,000,000 shares in
March 1999. A total of 3,500,000 shares have been repurchased pursuant to these
authorizations at an average price of $4.70 per share.
Effective December 1, 1998, the Company acquired 100% of the capital stock of
The Coppley, Noyes and Randall Limited ("Coppley"), a Canadian based
manufacturer and marketer of men's apparel. Aggregate consideration associated
with the acquisition, including cash payable in the future and debt assumed, is
approximately $11.6 million. In November 1998, the Company completed the
acquisition of the wholesale apparel business of Pusser's, Ltd. ("Pusser's"),
primarily an operator of restaurants, pubs and retail stores carrying tropical
and nautical sportswear apparel as well as other products marketed under the
Pusser's name. Assets acquired include the trademarks associated with all
apparel products along with inventories related to the wholesale business.
Amounts paid for the trademarks and inventories aggregated $2.7 million;
additional amounts may be payable in future years based on revenues or operating
earnings associated with the trademarks. The results of Coppley and Pusser's
since the date of their respective acquisition are included in the accompanying
financial statements.
Liquidity and Capital Resources
November 30, 1998 to May 31, 1999
Since November 30, 1998, net accounts receivable decreased $2.4 million or 1.9%
to $128.9 million reflecting the normal seasonal fluctuations from tailored
clothing shipments in the Men's Apparel Group, offset by approximately $8.4
million applicable to the Coppley and Pusser's acquisitions. Inventories of
$209.6 million increased $2.0 million or .9% and included $6.8 million
associated with Coppley and Pusser's. Net properties of $40.0 million decreased
$11.0 million primarily attributable to the write-off of capitalized development
costs related to the non-cash charge. Total debt, including current maturities,
increased $14.9 million to $194.9 million, reflecting the treasury stock
purchases, and represented 50% of total capitalization compared to 46% at
November 30, 1998.
May 31, 1998 to May 31, 1999
Net accounts receivable of $128.9 million increased $7.5 million compared to
last year's $121.4 million, reflecting amounts attributable to Coppley and
Pusser's and the higher sales compared to the prior period. Inventories of
$209.6 million decreased $6.0 million, as inventory levels declined in the men's
moderate tailored clothing and women's lines, which more than offset the $6.8
million attributable to the Coppley and Pusser's businesses. Net properties of
$40.0 million decreased $8.8 million, attributable to the write-off of
11
<PAGE>
capitalized development costs related to the non-cash charge, partially offset
by amounts related to Coppley and capital additions exceeding depreciation
expense. Total debt of $194.9 million, which includes amounts expended for the
Coppley and Pusser's acquisitions and treasury stock purchases, declined $4.3
million; debt represented 50% of total capitalization at May 31, 1999 compared
to 52% at May 31, 1998.
Results of Operations
Second Quarter 1999 Compared to Second Quarter 1998
Consolidated sales increased 3.1% to $172.7 million and included $9.3 million
related to the Coppley and Pusser's acquisitions. The premium priced tailored
clothing product lines, including the acquired Coppley brands, increased 10%,
while the moderate tailored clothing lines declined, reflecting previously
stated plans to reduce revenues in lower profit potential product categories.
Sportswear sales, which included Pusser's, increased 7%. Women's Apparel Group
revenues, which represented 7% and 8% of consolidated sales in 1999 and 1998,
respectively, declined approximately $2.0 million.
The consolidated gross margin percentage to sales improved to 26.0% compared to
25.5% last year, reflecting a reduction in lower margin businesses.
Consolidated selling, general and administrative expenses were $38.8 million
compared to $36.6 million last year and represented 22.5% of sales in 1999
compared to 21.8% of sales in 1998. The dollar increase was principally
attributable to Coppley and Pusser's.
Earnings before the non-cash charge, interest and taxes were $6.3 million in
1999 compared to $6.5 million in 1998. Interest expense of $4.5 million
declined $.3 million, principally from lower rates. Consolidated pre-tax
earnings before the charge were $1.8 million compared to $1.6 million last year.
The pre-tax loss after the non-cash charge was $9.4 million. Consolidated net
earnings excluding the non-cash charge were $1.1 million compared to $1.0
million in 1998. Basic and diluted earnings per share before the non-cash
charge were $.03 in each period. The net loss after the charge was $5.8 million
or $.17 per share.
Six Months 1999 Compared to Six Months 1998
Consolidated sales increased $2.3 million or .7% to $349.1 million from $346.8
million in 1998. First half revenues this year included $16.3 million related
to the Coppley and Pusser's acquisitions. In general, revenues for the six
months reflected lower orders from retailers, several of whom experienced
comparable store sales declines in Fall 1998 which created a conservative buying
environment for the first half of 1999. The premium priced tailored clothing
product lines experienced a small increase, while the moderate tailored clothing
lines declined, reflecting previously stated plans to reduce revenues in lower
profit potential product categories. Women's Apparel Group revenues, which
represented 7% and 8% of consolidated sales in 1999 and 1998, respectively,
declined approximately $3.6 million.
The consolidated gross margin percentage to sales was 25.3% compared to 25.0%
last year. Consolidated selling, general and administrative expenses were $76.8
million in the current period compared to $72.6 million in 1998, and represented
22.0% of sales in 1999 compared to 20.9% of sales in 1998. The dollar increase
was principally applicable to Coppley and Pusser's. Licensing income of $1.2
million increased $.4 million compared to the previous period and included
higher royalty receipts from licensees.
Earnings before the non-cash charge, interest and taxes were $12.8 million in
1999 compared to $14.9 million last year and represented 3.7% of sales in 1999
compared to 4.3% of sales in 1998. The decline reflected the relatively even
sales and higher operating expense ratio compared to the prior year. Interest
expense decreased
12
<PAGE>
to $8.7 million from $9.3 million last year, principally due to a decline in
average borrowing rates. Consolidated pre-tax earnings before the non-cash
charge were $4.1 million compared to $5.7 million last year. The pre-tax loss
after the charge was $7.1 million. Consolidated net earnings before the non-cash
charge were $2.5 million compared to $3.5 million a year ago. Basic and diluted
earnings per share before the charge were $.07 in 1999 compared to $.10 in 1998.
The net loss after the charge was $4.4 million or $.13 per share.
Year 2000 Disclosure
The Company is addressing Year 2000 issues for its computer systems, operations
systems, microprocessors and other significant computer-based devices and
applications. As previously reported, the Company is currently implementing its
primary contingency plan to address Year 2000 issues with respect to its
existing systems, software and compatibility with various third-party
applications, which encompasses testing, upgrading, enhancing and remediating
when necessary. This process of addressing Year 2000 issues is expected to be
completed by the end of September 1999.
The Company has also established formal communications with significant
suppliers and customers to determine the extent to which the Company is
vulnerable to those third parties' failure to remediate their own Year 2000
issues. To date, the Company has surveyed approximately 200 of its customers,
vendors and suppliers. The customers surveyed accounted for over 67% of 1998
sales and inventory suppliers surveyed represented over 60% of 1998 inventory
purchases. Additionally, the Company has identified the critical systems
provided by other third party service providers (e.g., financial institutions
and utilities suppliers). While the Company must necessarily rely to some extent
on the representations of these third parties and their statements or
certifications of compliance to certain government agencies regarding Year 2000
capabilities, the Company is also in various stages of Year 2000 testing and
implementation of the systems and/or upgrades provided by third parties.
The costs to be incurred which relate to ensuring compliance and remediation of
the current systems, which includes both internal costs of existing employees as
well as external contractor and software remediation costs, are estimated to be
approximately $2 million, of which $.9 million has been expensed to date,
including $.7 million in fiscal 1999. The remaining estimated amount will be
expensed as incurred during the remainder of 1999.
The most reasonably likely worst case scenario is difficult to identify.
However, a reasonable worst case scenario could be a failure by a significant
third party in the Company's supply chain to remediate its Year 2000
deficiencies, which could impair the Company's ability to manufacture products,
process customer orders or ship goods to its customers. Additionally, failure
by the Company to fully remediate its systems could impair the Company's ability
to take customer orders, manufacture and ship products, invoice customers or
collect payments.
The Company recognizes that issues related to Year 2000 remediation constitute a
known uncertainty and the importance of ensuring its operations will not be
adversely affected by Year 2000 issues. Its procedures are anticipated to be
effective to identify and manage the risks associated with Year 2000 compliance.
However, there can be no assurance that the process can be completed as
described above or that the remediation process will be fully effective. The
failure to identify and remediate the Company's systems or the failure of key
third parties who do business with the Company or governmental agencies to
timely remediate their systems that interface with the Company's systems could
result in system failures or errors or business interruptions, which could have
a material adverse effect on the Company's results of operations and financial
condition.
13
<PAGE>
Part II - OTHER INFORMATION
Item 4. Results of Votes of Security Holders
The annual meeting of the stockholders of the Registrant was held on April
14, 1999. The Directors listed in the Registrant's Proxy Statement for the
Annual Meeting of Stockholders dated February 25, 1999 were elected for one year
terms with voting for each as follows:
<TABLE>
<CAPTION>
Director For Abstentions
- -------- --- -----------
<S> <C> <C>
A. Robert Abboud 31,556,089 948,546
Samawal A. Bakhsh 28,309,247 4,195,388
Jeffrey A. Cole 31,715,534 789,101
Raymond F. Farley 31,805,728 698,907
Elbert O. Hand 31,708,935 795,700
Donald P. Jacobs 31,822,842 681,793
Charles Marshall 31,830,980 673,655
Homi B. Patel 31,742,233 762,402
Michael B. Rohlfs 31,800,084 704,551
Stuart L. Scott 31,869,467 635,168
Ella D. Strubel 31,877,678 626,957
</TABLE>
The Management Incentive Plan was ratified with 30,549,342 shares for,
1,803,201 shares opposed and 152,092 shares abstaining.
The reappointment of PricewaterhouseCoopers LLP as independent auditors was
ratified with 32,241,884 shares for, 187,939 shares opposed and 74,812 shares
abstaining.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 Financial Data Schedules
(b) No reports on Form 8-K were filed in the second quarter of 1999.
14
<PAGE>
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 thereunto duly authorized.
HARTMARX CORPORATION
July 14, 1999 By: /s/ GLENN R. MORGAN
-------------------
Glenn R. Morgan
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
July 14, 1999 By: /s/ ANDREW A. ZAHR
------------------
Andrew A. Zahr
Vice President and Controller
(Principal Accounting Officer)
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1999
<PERIOD-START> NOV-30-1998
<PERIOD-END> MAY-31-1999
<CASH> 1,905
<SECURITIES> 0
<RECEIVABLES> 128,895
<ALLOWANCES> (9,504)
<INVENTORY> 209,644
<CURRENT-ASSETS> 365,785
<PP&E> 185,140
<DEPRECIATION> (145,096)
<TOTAL-ASSETS> 479,783
<CURRENT-LIABILITIES> 100,265
<BONDS> 184,854
0
0
<COMMON> 89,640
<OTHER-SE> 105,024
<TOTAL-LIABILITY-AND-EQUITY> 479,783
<SALES> 349,082
<TOTAL-REVENUES> 350,256
<CGS> 260,620
<TOTAL-COSTS> 260,620
<OTHER-EXPENSES> 76,845
<LOSS-PROVISION> 11,195
<INTEREST-EXPENSE> 8,706
<INCOME-PRETAX> (7,110)
<INCOME-TAX> 2,705
<INCOME-CONTINUING> (4,405)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,405)
<EPS-BASIC> (.13)
<EPS-DILUTED> (.13)
</TABLE>
