UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-13365
OSHKOSH B'GOSH, INC.
(Exact name of registrant as specified in charter)
Delaware 39-0519915
State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
112 Otter Avenue Oshkosh, Wisconsin 54901
(Address of principal executive offices) (Zip code)
(414)231-8800
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing require-
ments for the past 90 days.
Yes X No
As of March 31, 1994, there were outstanding 13,294,752 shares of Class A Common
Stock and 1,291,048 shares of Class B Common Stock.
FORM 10-Q
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
INDEX
Page
PART I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
March 31, 1994 and December 31, 1993 3
Unaudited Condensed Consolidated Statements
of Income - Three Months Ended March 31, 1994
and 1993 4
Unaudited Condensed Consolidated Statements
of Cash Flow - Three Months Ended March 31, 1994
and 1993 5
Notes to Condensed Consolidated
Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
Part II. Other Information 9
Signatures 9
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Dollars in thousands)
March 31, December 31,
1994 1993
(Unaudited) *
ASSETS
Current assets
Cash and cash equivalents $ 16,213 $ 17,853
Accounts receivable 35,812 19,477
Inventories 94,204 99,999
Prepaid expenses and other current assets 2,585 3,810
Deferred income taxes 11,458 10,716
Total current assets 160,272 151,855
Property, plant and equipment 114,432 114,397
Less accumulated depreciation and
amortization 43,962 42,642
Net property, plant and equipment 70,470 71,755
Other assets 5,815 5,521
Total assets $236,557 $229,131
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short-term borrowing $ 6,500 $ --
Current maturities of long-term debt 505 536
Accounts payable 6,143 9,720
Accrued expenses 33,960 29,805
Total current liabilities 47,108 40,061
Long-term debt 754 757
Other liabilities 17,186 16,315
Shareholders' equity
Preferred stock -- --
Common stock:
Class A 133 133
Class B 13 13
Additional paid-in capital 2,971 2,971
Retained earnings 168,599 169,182
Cumulative foreign currency translation adjustments (207) (301)
Total shareholders' equity 171,509 171,998
Total liabilities and shareholders' equity $236,557 $229,131
* Condensed from audited financial statements.
See notes to condensed consolidated financial statements.
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
March 31,
1994 1993
Net sales $ 87,394 $ 93,234
Cost of products sold 64,987 67,539
Gross profit 22,407 25,695
Selling, general and
administrative expenses 21,983 19,904
Operating income 424 5,791
Other income (expense):
Interest expense (158) (108)
Interest income 235 237
Royalty income 919 630
Other 150 32
Net other income (expense) 1,146 791
Income before taxes 1,570 6,582
Income taxes 675 2,645
Net income $ 895 $ 3,937
Average number of shares outstanding 14,586 14,586
Net income per common share $ .06 $ .27
Cash dividends per common share
Class A $ .1025 $ .1025
Class B $ .09 $ .09
See notes to condensed consolidated financial statements.
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flow
(Dollars in thousands)
(Unaudited)
Three Months Ended
March 31,
1994 1993
Cash flows from operating activities
Net income for the period $ 895 $ 3,937
Items in income not affecting cash 2,490 1,362
Changes in current assets (9,315) (10,872)
Changes in current liabilities 578 3,879
Net cash used in operating activities (5,352) (1,694)
Cash flows from investing activities
Property, plant and equipment additions (1,876) (2,032)
Other (376) (117)
Proceeds from disposal of assets 976 99
Net cash used in investing activities (1,276) (2,050)
Cash flows from financing activities
Net increase in short-term borrowings 6,500 --
Payments of long-term debt (34) (7,042)
Cash dividends paid (1,478) (1,472)
Net cash provided by (used in) financing activities 4,988 (8,514)
Net decrease in cash and cash equivalents $(1,640) $(12,258)
See notes to condensed consolidated financial statements.
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1. Basis of Presentation
The condensed consolidated financial statements included herein have been
prepared by the Company without audit. However, the foregoing statements
contain all adjustments (consisting only of normal recurring adjustments) which
are, in the opinion of Company management, necessary to present fairly the
financial position as of March 31, 1994 and December 31, 1993, the results of
operations for the three-month periods ended March 31, 1994 and 1993 and cash
flows for the three-month periods ended March 31, 1993.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission. It is suggested that these condensed
financial statements be read in conjunction with the financial statements and
notes thereto included in the Company's 1993 Annual Report.
Note 2. Inventories
A summary of inventories follows:
March 31, December 31,
1994 1993
(Dollars in thousands)
Finished goods $75,027 $82,737
Work in process 5,787 5,008
Raw materials 13,390 12,254
Total $94,204 $99,999
The replacement cost of inventory exceeds the above LIFO costs by $15,066 and
$14,716 at March 31, 1994 and December 31, 1993, respectively.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Consolidated net sales for the three months ended March 31, 1994 were $87.4
million, a 6.2% decrease from consolidated net sales of $93.2 million for the
first quarter of 1993. The Company's domestic wholesale business of
approximately $64.8 million for the first quarter of 1994 was 16.5% less than
1993 first quarter sales, due primarily to a decline in unit shipments of
approximately 14.5% in 1994 from 1993. The decrease in domestic wholesale unit
shipments related primarily to the effects of the competitive environment in
the children's wear business with decreased wholesale sales of both fashion and
basic product offerings. The Company currently anticipates its domestic
wholesale unit shipments for the remainder of 1994 will be down slightly in
comparison with unit shipments for the same time period in 1993.
Company retail sales at its Oshkosh B'Gosh branded outlet stores and its wholly-
owned subsidiary Essex Outfitters Trader Kids stores were approximately $14.3
million for the first quarter of 1994, a 60.7% increase over 1993 first quarter
retail sales of approximately $8.9 million. Retail sales increases resulted
primarily from the opening of additional retail stores during 1993 and early
1994 as well as moderate comparable store sales increases. The Company
anticipates continued expansion in its retail business during 1994 and is
currently on target with its planned opening of an additional 35 to 45 retail
stores in all of 1994. The Company anticipates that increased retail sales
through the balance of 1994 will offset the reduction in the domestic wholesale
business.
Gross margin as a percent of sales was 25.6% in the first quarter of 1994,
compared with 27.6% in the first quarter of 1993. The Company's gross margin
during 1994 was adversely affected by poor weather conditions during the months
of January and February which were disruptive to production schedules, less than
fully efficient operations and the impact of slightly lower wholesale pricing in
a highly competitive environment. The Company currently anticipates improvement
in its gross margins in the second half of 1994.
Selling, general and administrative expenses for the first quarter of 1994
increased $2.1 million over the first quarter, 1993 selling, general and
administrative expenses. The primary reason for increasing selling, general and
administrative expenses is the Company's increasing focus on its retail
business. In addition, the Company's catalog division, initiated in the second
half of 1993, added approximately $.6 million to its selling, general and
administrative expense. The first quarter, 1994 selling, general and
administrative expense also includes approximately $.3 million of costs
associated with the Company's proposed acquisition of Rio Sportswear, Inc. and
affiliated companies ("Rio"). Negotiations with Rio terminated in March, 1994.
Net other income for the first quarter of 1994 was $1.1 million, compared to $.8
million in the first quarter of 1993. This increase resulted primarily from
increasing royalty income, net of expenses, which is primarily the result of
additional license agreements entered into during 1993. The Company's effective
tax rate was 43.0% for the quarter and 41.3% for the comparable period in 1992.
Financial Condition and Liquidity
The Company's financial condition remains strong. Net working capital at March
31, 1994 was $113.2 million, as compared to $111.8 million at the end of 1993
and $114.4 million at March 31, 1993. The Company's current ratio was 3.4 to 1
at March 31, 1994, compared to 3.8 to 1 at the end of 1993 and 4.6 to 1 at March
31, 1993.
Inventories at March 31, 1994 were $94.2 million, up $4.3 million from March 31,
1993. This increase in inventories relates primarily to the Company's expanding
retail business.
At March 31, 1994, the Company had short-term borrowings outstanding of $6.5
million, as compared with no outstanding short-term indebtedness at March 31,
1993.
The Company's long-term debt as a percentage of total capitalization (long-term
debt plus shareholders' equity) was 0.4% and 0.7% at March 31, 1994 and 1993,
respectively.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the under-
signed thereunto duly authorized.
OSHKOSH B'GOSH, INC.
Date: 5/10/94 /S/DOUGLAS W. HYDE
Chairman of the Board, President,
Chief Executive Officer and Director
Date: 5/10/94 /S/DAVID L. OMACHINSKI
Vice President-Finance,
Chief Financial Officer and Treasurer
