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 September 30, 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 requirements for the past 90 days.
Yes X No
As of September 30, 1994, there were outstanding 12,482,067 shares of Class
A Common Stock and 1,282,933 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 -
September 30, 1994 and December 31, 1993 3
Unaudited Condensed Consolidated Statements
of Income - Three Months and Nine Months
Ended September 30, 1994 and 1993 4
Unaudited Condensed Consolidated Statements
of Cash Flow - Nine Months Ended September 30, 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)
September 30, December 31,
1994 1993
(Unaudited) *
ASSETS
Current assets
Cash and cash equivalents $ 2,884 $ 17,853
Accounts receivable 43,968 19,477
Inventories 96,882 99,999
Prepaid expenses and other current assets 2,377 3,810
Deferred income taxes 11,034 10,716
Total current assets 157,145 151,855
Property, plant and equipment 118,419 114,397
Less accumulated depreciation and
amortization 47,678 42,642
Net property, plant and equipment 70,741 71,755
Other assets 6,149 5,521
Total assets $234,035 $229,131
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt $ 239 $ 536
Accounts payable 6,491 9,720
Accrued expenses 33,183 29,805
Total current liabilities 39,913 40,061
Long-term debt 13,621 757
Other liabilities 18,042 16,315
Shareholders' equity
Preferred stock -- --
Common stock:
Class A 125 133
Class B 13 13
Additional paid-in capital -- 2,971
Retained earnings 161,918 169,182
Cumulative foreign currency translation adjustments 403 (301)
Total shareholders' equity 162,459 171,998
Total liabilities and shareholders' equity $234,035 $229,131
* Condensed from audited financial statements.
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
Net sales $ 118,397 $ 103,114 $271,949 $259,654
Cost of products sold 83,363 73,617 195,070 186,531
Gross profit 35,034 29,497 76,879 73,123
Selling, general and
administrative expenses 27,154 21,451 69,999 57,896
Operating income 7,880 8,046 6,880 15,227
Other income (expense):
Interest expense (433) (235) (758) (468)
Interest income 253 165 721 642
Royalty income 1,295 1,106 2,399 2,820
Other 255 (72) 276 (153)
Net other income (expense) 1,370 964 2,638 2,841
Income before taxes 9,250 9,010 9,518 18,068
Income taxes 3,978 3,616 4,093 7,390
Net income $ 5,272 $ 5,394 $ 5,425 $ 10,678
Average number of
shares outstanding 13,887 14,586 14,338 14,586
Net income per common share $ .38 $ .37 $ .38 $ .73
Cash dividends per common share
Class A $ .1025 $ .1025 $ .3075 $ .3075
Class B $ .09 $ .09 $ .27 $ .27
See notes to condensed consolidated financial statements.
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flow
(Dollars in thousands)
(Unaudited)
Nine Months Ended
September 30,
1994 1993
Cash flows from operating activities
Net income for the period $ 5,425 $ 10,678
Items in income not affecting cash 9,451 6,164
Changes in current assets (19,941) (12,648)
Changes in current liabilities 149 4,280
Net cash provided by (used in)
operating activities (4,916) 8,474
Cash flows from investing activities
Property, plant and equipment additions (8,030) (6,732)
Other (243) (517)
Proceeds from disposal of assets 1,321 1,088
Net cash used in investing activities (6,952) (6,161)
Cash flows from financing activities
Proceeds from long-term debt 12,872 --
Payments of long-term debt (305) (7,335)
Cash dividends paid (4,366) (4,422)
Repurchase of common stock (11,302) --
Net cash used in financing activities (3,101) (11,757)
Net decrease in cash and cash equivalents $(14,969) $ (9,444)
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 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 September 30, 1994, the results of operations for the three-
month and nine-month periods ended September 30, 1994 and 1993 and cash flows
for the nine-month periods ended September 30, 1994 and 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:
September 30, December 31,
1994 1993
(Dollars in thousands)
Finished goods $77,161 $82,737
Work in process 6,839 5,008
Raw materials 12,882 12,254
Total $ 96,882 $99,999
The replacement cost of inventory exceeds the above LIFO costs by $15,689 and
$14,716 at September 30, 1994 and December 31, 1993, respectively.
MANAGEMENTS' DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Net sales for the three months ended September 30, 1994 were $118.4 million,
an increase of approximately $15.3 million (14.8%) from the $103.1 million in
sales for the same period in 1993. Net sales for the nine months ended
September 30, 1994 were $272 million, an increase of $12.3 million over the
same nine month period in 1993. The Company's domestic wholesale business of
approximately $74 million for the third quarter of 1994 was approximately .7%
less than the 1993 third quarter domestic wholesale sales. For the nine month
period ended September 30, 1994, sales of domestic wholesale products were
$183.5 million, an 8.5% decrease from the comparable period sales in 1993.
The Company's 1994 third quarter and year to date unit shipments were down
1.0% and 7.2%, respectively, from comparable periods in 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 moderately in comparison with unit
shipments for the same time period in 1993. The Company's spring, 1995
children's offering has been well received. The Company currently anticipates
that unit shipments of its spring, 1995 wholesale product offering will exceed
spring, 1994 by over 10%.
Company retail sales at its Oshkosh B'Gosh branded outlet stores and Genuine
Kids stores were approximately $33.5 million for the third quarter of 1994, a
48.2% increase over 1993 third quarter retail sales of approximately $22.6
million. For the nine month period ended September 30, 1994, Company retail
sales were approximately $64.4 million, a 48.4% increase over the first nine
months of 1993 retail sales of approximately $43.4 million. Retail sales
increases resulted primarily from the opening of additional retail stores
during 1993 and 1994. The Company's comparable store sales for the first nine
months of 1994 were up 1.2%. During the first nine months of 1994, the
Company has opened 37 additional retail outlets (both Oshkosh B'Gosh and
Genuine Kids stores) and anticipates opening an additional 9 retail stores
during the remainder of 1994. The Company currently anticipates that
increased retail sales through the remainder of 1994 will more than offset the
reduction anticipated in the domestic wholesale business.
Gross profit margin as a percent of sales was 29.6% for the three months ended
September 30, 1994 compared to 28.6% for the same period in 1993. For the
nine months ended September 30, 1994, gross margin as a percent of sales was
28.3% compared to 28.2% for the first nine months of 1993. The Company's
third quarter and year to date 1994 gross margin improvement was due primarily
to the impact of the Company's increased retail sales at higher gross margins
relative to its domestic wholesale business. The favorable impact of the
Company's retail gross margins was offset in part by the domestic wholesale
gross margin, which was down for both the third quarter and year to date 1994,
primarily as a result of reduced unit sales and slightly lower pricing to
wholesale customers. The Company currently anticipates that its fourth
quarter, 1994 gross margins will exceed fourth quarter, 1993 gross margins,
primarily as a result of increased retail sales activity.
Selling, general and administrative expenses for the third quarter of 1994
increased $5.7 million over the third quarter of 1993. Selling, general and
administrative expenses for third quarter of 1994 and year to date 1994 as a
percent of sales were 22.9% and 25.7%, respectively, as compared to 20.8% and
22.3% in the same periods of 1993. The Company's catalog division, initiated
in the second half of 1993, added approximately $.5 million and $1.7 million
to its third quarter and year to date 1994 selling, general and administrative
expenses, respectively. In addition, the Company's increasing focus on its
international operations resulted in increases in third quarter and year to
date 1994 selling, general and administrative expenses of approximately $.8
million and $2.1 million, respectively. The primary reason for the remaining
increases in selling, general and administrative expenses is the Company's
growth in its retail business.
Net other income for the third quarter of 1994 was $1.4 million, compared to
$1.0 million in the third quarter of 1993. This increase relates in part to
additional royalty income earned in the third quarter.
Financial Condition and Liquidity
The Company's financial condition remains strong. Net working capital at
September 30, 1994 was $117.2 million, as compared to $111.8 million at the
end of 1993 and $118.9 million at September 30, 1993. The Company's current
ratio was 3.9 to 1 at September 30, 1994, compared to 3.8 to 1 at the end of
1993 and 4.7 to 1 at September 30, 1993.
On June 14, 1994, the Company announced a stock repurchase program for up to
1,500,000 shares of its Class A Common Stock in open market transactions at
prevailing prices. Through September 30, 1994, the Company has repurchased
approximately 820,000 shares of its Class A Common Stock.
At September 30, 1994, the Company had $13.6 million of long-term debt
outstanding as compared with $.8 million at the end of 1993 and $1 million at
September 30, 1993. The increase is due primarily to the repurchase of Class
A Common Stock during 1994, which is being financed under the Company's three
year unsecured revolving credit line, which was finalized in June, 1994. The
Company's long-term debt as a percentage of total capitalization (long-term
debt plus shareholders' equity) was 7.7% and .5% at September 30, 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
undersigned thereunto duly authorized.
OSHKOSH B'GOSH, INC.
Date: 11/2/94 /s/Douglas W. Hyde
President, Chief Executive Officer and Director
Date: 11/2/94 /s/David L. Omachinski
Vice President-Finance, Chief Financial Officer and
Treasurer
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