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 July 1, 2000
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.
A Delaware Corporation 39-0519915
(I.R.S. ID)
112 Otter Avenue
Oshkosh, Wisconsin 54901
Telephone number: (920) 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 July 17, 2000, there were outstanding 9,935,001 shares of
Class A Common Stock and 2,232,893 shares of Class B Common
Stock.
FORM 10-Q
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
INDEX
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets-July 1, 2000
and January 1, 2000
Unaudited Condensed Consolidated Statements of Income-
Three Month and Six Month Periods Ended July 1, 2000
and July 3, 1999
Unaudited Condensed Consolidated Statements of Cash Flow-
Six Month Periods Ended July 1, 2000 and July 3, 1999
Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K
Signatures
Part I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
July 1, 2000 January 1, 2000*
(unaudited)
Assets
Current assets
Cash and cash equivalents $ 307 $ 9,093
Investments 511 511
Accounts receivable 22,425 16,514
Inventories 61,502 48,495
Prepaid expenses & other current assets 4,139 774
Deferred income taxes 13,200 14,200
Total current assets 102,084 89,587
Property, plant & equipment 68,534 67,118
Less accumulated depreciation and
amortization 37,393 35,470
Net property, plant & equipment 31,141 31,648
Non-current deferred income taxes 5,900 5,400
Other assets 2,581 3,064
Total assets $ 141,706 $ 129,699
Liabilities and shareholders'equity
Current liabilities
Borrowings under revolving credit
agreement $ 14,500 $ --
Current portion of long-term debt -- 15,000
Accounts payable 8,357 10,269
Accrued liabilities 39,104 36,976
Total current liabilities 61,961 62,245
Long-term debt 44,000 29,000
Employee benefit plan liabilities 15,463 15,015
Shareholders' equity
Preferred stock -- --
Common stock: Class A 99 104
Class B 22 23
Retained earnings 20,161 23,312
Total shareholders' equity 20,282 23,439
Total liabilities and shareholders' equity $ 141,706 $ 129,699
*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 Month Period Ended Six Month Period Ended
July 1, July 3, July 1, July 3,
2000 1999 2000 1999
Net sales $ 87,500 $ 82,516 $182,551 $184,449
Cost of products sold 50,063 48,140 104,527 109,931
Gross profit 37,437 34,376 78,024 74,518
Selling, general and
administrative expenses 34,249 31,509 68,246 62,974
Royalty income, net (1,599) (1,666) (3,676) (3,662)
Operating income 4,787 4,533 13,454 15,206
Other income (expense):
Interest expense (1,218) (145) (2,405) (378)
Interest income 262 205 423 496
Miscellaneous 6 (22) 55 (79)
Other income (expense) -- net (950) 38 (1,927) 39
Income before taxes 3,837 4,571 11,527 15,245
Income taxes 1,496 1,784 4,495 5,950
Net income $ 2,341 $ 2,787 $ 7,032 $ 9,295
Net income per common share
Basic $ 0.19 $ 0.17 $ 0.56 $ 0.54
Diluted $ 0.19 $ 0.17 $ 0.56 $ 0.54
Weighted average common
shares outstanding
Basic 12,326 16,508 12,469 17,098
Diluted (including share
equivalents) 12,496 16,753 12,636 17,309
Cash dividends per
common share
Class A $ 0.0500 $ 0.0500 $ 0.1000 $ 0.1000
Class B $ 0.0425 $ 0.0425 $ 0.0850 $ 0.0850
See notes to condensed consolidated financial statements.
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flow
(In thousands)
(Unaudited)
Six Month Period Ended
July 1, 2000 July 3, 1999
Cash flows from operating activities
Net income for the period $ 7,032 $ 9,295
Depreciation 3,481 3,407
Deferred income taxes 500 1,600
Items in net income not affecting cash and
cash equivalents 976 732
Changes in current assets (22,283) 3,793
Changes in current liabilities 216 1,054
Net cash provided by (used in)
operating activities (10,078) 19,881
Cash flows from investing activities
Additions to property, plant and equipment (3,303) (3,001)
Proceeds from disposal of assets 262 311
Sale of short-term investments, net -- 2,014
Changes in other assets 22 (255)
Net cash used in investing activities (3,019) (931)
Cash flows from financing activities
Borrowings under revolving credit agreement 14,500 --
Dividends paid (1,216) (1,693)
Net proceeds from issuance of common shares 891 1,165
Repurchase of common shares (9,864) (31,990)
Net cash provided by (used in)
financing activities 4,311 (32,518)
Net decrease in cash and cash equivalents $ (8,786) $(13,568)
See notes to condensed consolidated financial statements.
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1. Basis of Preparation
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 July 1, 2000, the results of operations for the three-month
and six-month periods ended July 1, 2000 and July 3, 1999, and
cash flows for the six-month periods ended July 1, 2000 and July
3, 1999.
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 1999
Annual Report.
Note 2. Inventories
A summary of inventories follows:
July 1, 2000 January 1, 2000
(Dollars in thousands)
Finished goods $ 42,721 $ 37,262
Work in Process 17,790 9,352
Raw materials 991 1,881
Total $ 61,502 $ 48,495
The replacement cost of inventory exceeds the above LIFO costs by
$11,681 and $11,381 at July 1, 2000 and January 1, 2000,
respectively.
Note 3. Credit Agreements
In May 2000, the Company amended its credit agreement with a
number of banks. As amended, the unsecured credit agreement
provides a $60 million term loan for the repurchase of shares of
its common stock and a three year $75 million revolving credit
facility available for general corporate purposes, including cash
borrowings, commercial paper and issuances of letters of credit.
The revolving credit facility expires November 3, 2002.
The Company had $58.5 million of outstanding debt at July 1,
2000, including $44 million on the term loan and $14.5 on the
revolving credit facility. The revolving credit facility must be
reduced to zero for at least thirty consecutive days each year,
and the term loan requires an initial payment of $10 million in
November 2001.
Note 4. Segment Reporting
The Company designs, sources, and markets apparel products using
primarily the OshKosh B'Gosh brand. The apparel products are
primarily marketed in two distinct distribution channels:
domestic wholesale and through Company owned retail stores. The
Company designs and sources product to meet the needs of these
distribution channels through a single procurement business unit.
In conjunction with a realignment of the Company's management
reporting system at the beginning of 2000, certain operations
have been segregated into segments as defined by Statement of
Financial Accounting Standards, No. 131, "Disclosures about
Segments of an Enterprise and Related Information". The Company
manages its business operations by periodic analysis of business
unit operating results. For this purpose, domestic wholesale,
retail, and procurement are separately identified for management
reporting and are considered segments as defined by SFAS #131.
Management evaluates the operating performance of each of its
business units based on income from operations as well as return
on net assets. For this purpose, product is transferred to the
domestic wholesale and retail business units at cost. However,
procurement receives a markup on product transferred to the
Company's marketing business units. Accounting policies used for
segment reporting are consistent with the Company's overall
accounting policies, except that inventories are valued on a
first-in first-out basis. In addition, interest income, interest
expense, certain corporate office expenses, and the effects of
the last-in, first-out (LIFO) inventory valuation method are not
allocated to individual business units, and are included in the
All Other/Corporate column below.
Segment assets include all assets used in the operation of each
business unit, including accounts receivable, inventories, and
property, plant and equipment. Certain other corporate assets
that cannot be specifically identified with the operation of a
business unit are not allocated. Financial information for the
Company's reportable segments follows:
All
Domestic Other/
Wholesale Retail Procurement Corporate Total
For the three months
ended July 1, 2000
Net sales $ 37,930 $ 47,735 $ -- $ 1,835 $ 87,500
Segment income
before taxes 670 2,885 (291) 573 3,837
Segment assets 57,439 39,219 31,518 13,530 141,706
Depreciation expense 401 758 355 227 1,741
For the three months
ended July 3, 1999
Net sales $ 37,482 $ 43,350 $ -- $ 1,684 $ 82,516
Segment income
before taxes (548) 1,757 2,609 753 4,571
Segment assets 70,210 35,139 22,558 12,883 140,790
Depreciation expense 391 684 306 305 1,686
For the six months
ended July 1, 2000
Net sales $ 86,184 $ 92,075 $ -- $ 4,292 $182,551
Segment income
before taxes 6,038 4,367 (175) 1,297 11,527
Segment assets 57,439 39,219 31,518 13,530 141,706
Depreciation expense 796 1,481 732 472 3,481
For the six months
ended July 3, 1999
Net sales $ 97,766 $ 82,259 $ -- $ 4,424 $184,449
Segment income
before taxes 5,833 2,244 4,941 2,227 15,245
Segment assets 70,210 35,139 22,558 12,883 140,790
Depreciation expense 762 1,377 628 640 3,407
For the twelve months
ended January 1, 2000
Net sales $212,371 $210,350 $ -- $ 7,065 $429,786
Segment income
before taxes 21,896 18,278 10,556 2,457 53,187
Segment assets 53,175 32,747 21,266 22,511 129,699
Depreciation expense 1,570 3,107 1,222 1,194 7,093
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated,
selected Company income statement data expressed as a percentage
of net sales.
As a Percentage of Net Sales for the
Three Month Period Ended Six Month Period Ended
July 1, 2000 July 3, 1999 July 1, 2000 July 3, 1999
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of products sold 57.2% 58.3% 57.3% 59.6%
Gross profit 42.8% 41.7% 42.7% 40.4%
Selling, general and
administrative expenses 39.1% 38.2% 37.4% 34.2%
Royalty income, net (1.8%) (2.0%) (2.0%) (2.0%)
Operating income 5.5% 5.5% 7.3% 8.2%
Other income, net (1.1%) -- (1.1%) --
Income before income
taxes 4.4% 5.5% 6.2% 8.2%
Income taxes 1.7% 2.1% 2.4% 3.2%
Net income 2.7% 3.4% 3.8% 5.0%
Net Sales
Consolidated net sales for the three month period ended July 1,
2000 were $87.5 million, a $5.0 million increase (6.1%) over 1999
second quarter net sales of $82.5 million. Consolidated net sales
for the six month period ended July 1, 2000 were $182.6 million,
a $1.8 million decrease (1.0%) from net sales of $184.4 million
for the first six months of 1999. The Company's net sales for
the three month and six month periods ended July 1, 2000 and
July 3, 1999 are summarized as follows:
Net Sales
(in millions)
Domestic
Wholesale Retail International Total
Three month period ended:
July 1, 2000 $ 37.9 $47.8 $ 1.8 $ 87.5
July 3, 1999 37.5 43.3 1.7 82.5
Increase $ .4 $ 4.5 $ .1 $ 5.0
Percent increase 1.1% 10.4% 5.9% 6.1%
Six month period ended:
July 1, 2000 $ 86.2 $92.1 $ 4.3 $182.6
July 3, 1999 97.8 82.2 4.4 184.4
Increase (decrease) $(11.6) $ 9.9 $ (.1) $ (1.8)
Percent increase (decrease) (11.9%) 12.0% (2.3%) (1.0%)
The Company's domestic wholesale unit shipments for the three
month period ended July 1, 2000 increased approximately 11.6% as
compared to the corresponding three month period of 1999,
primarily due to timing of shipments of certain spring fashion
items (shipment was delayed into early April, 2000). The
Company's domestic wholesale unit shipments for the six month
period ending July 1, 2000 decreased 5.8% as compared to 1999.
The six month decrease in unit shipments resulted from a
combination of slightly lower booked orders and a significant
reduction in the number of "close-out" units sold (the Company's
inventory levels of close-out merchandise at the beginning of
2000 were substantially lower). Net sales dollars for both
periods in 2000 were also impacted by a combination of lower
average selling prices and product mix (i.e. a higher mix of
lighter weight, lower unit cost garments). The Company currently
anticipates a wholesale unit sales increase in the low single
digit range for the second half of 2000 as compared to 1999, with
sales dollars relatively flat.
The Company's second quarter 2000 retail sales increase resulted
primarily from sales volume from stores opened subsequent to July
3, 1999. Second quarter 2000 comparable stores sales were up .1%
as compared to 4.7% in the second quarter of 1999. The Company's
increase in retail sales for the first six months of 2000
resulted from a combination of a 2.2% comparable store sales gain
(as compared to 5.4% for the first half of 1999) and sales volume
from newly opened stores. For the remainder of 2000, the Company
currently anticipates comparable store sales gains in the low
single digit range.
At July 1, 2000 the Company operated 131 domestic OshKosh retail
stores, including 125 outlet stores, four showcase stores, and
two strip mall stores. During the second quarter of 2000, the
Company opened four retail outlet stores and closed two retail
outlet stores. At July 3, 1999 the Company operated a total of
124 domestic OshKosh retail stores. Current Company plans for
the remainder of 2000 call for the addition of approximately
seven retail stores including three strip mall stores. The
Company is also currently planning to close two to three outlet
stores and one showcase store.
Gross Profit
The Company's gross profit margin as a percent of net sales
improved to 42.8% in the second quarter of 2000, compared to
41.7% in the second quarter of 1999. For the six month period
ended July 1, 2000, gross profit margin as a percent of net sales
improved to 42.7%, compared to 40.4% for the first six months of
1999. This gross profit margin improvement was due primarily to
continued implementation and execution of the Company's global
sourcing strategy, continuing focus on product design and
development activities, and increasing proportion of sales from
the Company's retail stores. The Company's current 2000 sourcing
plan indicates that approximately 79% of units will be produced
at off shore venues as compared to approximately 64% in 1999.
The Company currently anticipates continued modest improvement in
its gross margin for the remainder of 2000 compared to 1999.
Selling, General, and Administrative Expenses (S,G&A)
S,G&A expenses for the three month and six month periods ended
July 1, 2000 increased $2.7 million and $5.3 million over the
three and six month periods ended July 3, 1999, respectively. As
a percentage of net sales, S,G,&A expenses were 39.1% and 37.4%
for the three month and six month periods ended July 1, 2000 as
compared to 38.2% and 34.2% in the comparable periods of 1999.
The increase in S,G,&A expenses relates primarily to a
combination of continued expansion of the Company's retail
operations and higher product distribution expenses as the
Company continues its transition to an updated distribution
system and related processes. Second quarter and year-to-date
distribution expenses were $1.0 million and $1.5 million higher,
respectively, as compared to 1999.
Royalty Income
The Company licenses the use of its trade name to selected
licensees in the U.S. and in foreign countries. Royalty income
for the three month period ended July 1, 2000 was $1.6 million
compared to $1.7 million in the second quarter of 1999. Royalty
income for the six month period ended July 1, 2000 of $3.7
million was consistent with royalty income for the six month
period ending July 3, 1999.
Operating Income
As a result of the factors described above, the Company's
operating income for the three month and six month periods ended
July 1, 2000 amounted to $4.8 million and $13.5 million as
compared to $4.5 million and $15.2 million for the comparable
periods in 1999.
Other Income (Expense) - Net
The Company's second quarter 2000 net other income (expense) was
a $1.0 million expense compared to zero in 1999. Interest
expense increased by approximately $1.1 million in the second
quarter of 2000 and $2.0 in the six months ended July 1, 2000,
primarily as a result of borrowings to help finance the Company's
Dutch Auction tender offer in November 1999 and subsequent stock
repurchase transactions.
Income Taxes
The Company's effective tax rate for the three month and six
month periods ended July 1, 2000, as well as 1999, was
approximately 39%. The Company currently anticipates an
effective income tax rate of approximately 39% for the remainder
of 2000.
Net Income
Net income for the three months ended July 1, 2000 of $2.3 was a
$.5 million decrease compared to net income for the three months
ended July 3, 1999 of $2.8 million. Net income for the six months
ended July 1, 2000 of $7.0 million was a $2.3 million decrease
compared to net income for the six months ended July 3, 1999.
The Company's ongoing stock repurchase programs and November 1999
Dutch Auction tender offer resulted in a significant reduction in
its weighted-average diluted shares outstanding for the first six
months of 2000 compared to the first six months of 1999. Despite
the reduction in net income, the decrease in weighted-average
diluted shares outstanding resulted in a 3.7% increase in diluted
earnings per share for the first six months of 2000 of $.56 as
compared to $.54 in 1999.
SEASONALITY OF BUSINESS
The Company's business is seasonal, with highest sales and income
in the third quarter, which is the Company's peak wholesale
shipping period and a major retail selling season at its retail
outlet stores. The Company's second quarter sales and income are
the lowest, both because of relatively low domestic wholesale
unit shipments and relatively modest retail store sales during
this period. The Company anticipates this seasonality trend to
continue to impact 2000 quarterly sales and income. Second
quarter 2000 operating results are not necessarily indicative of
anticipated quarterly results throughout the balance of the year.
FINANCIAL POSITION, CAPITAL RESOURCES AND LIQUIDITY
At July 1, 2000, the Company's cash, cash equivalents and short-
term investments were $.8 million, compared to $9.6 million at
the end of 1999 and $1.2 million at July 3, 1999. This reduction
is attributable to the Company's stock repurchases and increased
inventory buildup offset in part by borrowings under the
Company's revolving credit facility. Net working capital at July
1, 2000 was $40.1 million compared to $27.3 million at January
1,2000, and $54.9 million at July 3, 1999. Accounts receivable
at July 1, 2000 were $22.4 million compared to $16.5 million at
January 1, 2000, and $26.1 million at July 3, 1999.
Cash used in operations amounted to approximately $10.1 million
in the first six months of 2000, compared to cash provided of
$19.9 million in the first six months of 1999. The change in
cash provided by operating activities in the first six months of
2000 compared to 1999 is primarily attributable to substantially
lower inventory levels at January 1, 2000, as compared to January
2, 1999. Inventories at July 1, 2000 were $61.5 million,
compared to $48.5 million at January 1, 2000, $58.0 million at
July 3, 1999 and $65.6 million at January 2, 1999. Management
believes that July 1, 2000 inventory levels are generally
appropriate for anticipated ongoing 2000 business activities.
Investing activities used $3.0 million in the first six months of
2000, compared to $.9 million in 1999. Capital expenditures were
$3.3 million in the first six months of 2000, compared with $3.0
million in 1999 and are currently budgeted at $9 million for all
of 2000. Capital expenditures in both years relate primarily to
expansions and upgrades of the Company's retail stores.
Depreciation and amortization are currently budgeted at $8
million for 2000.
Cash provided by financing activities totaled $4.3 million in the
first six months of 2000, compared to a use of $32.5 million in
the first six months of 1999. The Company's primary financing
activities consisted of borrowings under the Company's revolving
credit facility in 2000 in addition to stock repurchase
transactions and cash dividends in both periods.
On December 6, 1999, the Company's Board of Directors authorized
a 1.5 million share repurchase program of the Company's Class A
common stock. During the first six months of 2000, the Company
repurchased 565,700 shares of its Class A common stock under this
program for approximately $9.9 million. The Company has
repurchased a total of 819,600 shares of its Class A common stock
under its current repurchase programs for approximately $14.7
million.
In May, 2000, the Company amended its credit agreement with a
number of banks. As amended, the unsecured credit agreement
provides a $60 million term loan for the repurchase of shares of
its common stock and a three year $75 million revolving credit
facility available for general corporate purposes, including cash
borrowings, commercial paper and issuances of letters of credit.
The revolving credit facility expires November 3, 2002. The term
loan requires an initial repayment of $10.0 million in November
2001.
The Company had $58.5 million of outstanding debt at July 1,
2000, including $44 million on the term loan and $14.5 on the
revolving credit facility compared to $44 million on the term
loan at January 1, 2000, and no outstanding debt at July 3, 1999.
The Company believes that these credit facilities, along with
cash generated from operations, will be sufficient to finance the
Company's seasonal working capital needs as well as its capital
expenditures, required debt payments and business development
needs.
INFLATION
The effects of inflation on the Company's operating results and
financial condition were not significant.
FORWARD-LOOKING STATEMENTS
This report contains certain "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934,
as amended, including statements regarding future unit shipments,
planned store expansions and store closings, future comparable
store net sales, future inventory levels and valuation
implications, future growth in royalty income, future effective
income tax rate, planned capital expenditures and depreciation
and amortization expenses, and future cash needs. In addition,
from time to time, the Company may issue press releases and other
written communications, and representatives of the Company may
make oral statements which contain forward-looking information.
Except for historical information, matters discussed in such oral
and written communications, including this report, are forward-
looking statements. Such forward-looking statements are based on
current assumptions and expectations that involve risks and
uncertainties. Actual results may differ materially.
The Company's future results of operations and financial position
can be influenced by such factors as the level of consumer
spending for apparel, particularly in the children's wear
segment, overall consumer acceptance of the Company's product
styling, the financial strength of the retail industry,
including, but not limited to, business conditions and the
general economy, natural disasters, competitive factors, risk of
non-payment of accounts receivable, the unanticipated loss of a
major customer, failure of Company suppliers to timely deliver
needed raw materials, as well as risk associated with foreign
operations. In addition, the inability to ship Company products
within agreed timeframes due to unanticipated manufacturing
and/or distribution system delays or the failure of Company
contractors to deliver products within scheduled timeframes, 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, Mexico and Central
America. If financial, political or other difficulties were to
adversely impact the Company's contractors in these regions, it
could disrupt the supply of products contracted for by the
Company.
The forward-looking statements included herein are only made as
of the date of this report. The Company undertakes no obligation
to publicly update such forward-looking statements to reflect
subsequent events or circumstances.
Item 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
The Company's credit agreement, as amended, provides for $60
million to finance repurchases of the Company's common stock and
a $75 million revolving credit facility available for general
corporate purposes. Borrowings under this agreement bear
interest at a variable rate, based on the London Interbank
Offered Rates. Accordingly, the Company is affected by interest
rate changes on its long-term debt. Management monitors this
risk by carefully analyzing the short-term rates on its long-term
debt portfolio and comparable long-term interest rates. The
Company does not presently hedge its interest rate risk. With
respect to this debt, a 1% change in interest rates would not
have a material impact on the Company's interest expense for
fiscal 2000.
Foreign Currency Risk
The Company contracts for the manufacture of apparel with
contractors in Asia, Central America, and Mexico. While these
contracts are stated in terms of U.S. dollars, there can be no
assurance that the cost for the production of the Company's
products will not be affected by exchange fluctuations between
the United States and the local currencies of these contractors.
Due to the number of currencies involved, the Company cannot
quantify the potential impact of future currency fluctuations on
net income in future years. The Company does not hedge its
exchange rate risk.
Inflation Risk
The Company manages its inflation risks by ongoing review of
product selling prices and production costs. Management does not
believe that inflation risks are material to the Company's
business, its consolidated financial position, results of
operations, or cash flows.
Investment Risk
The Company does not believe it has material exposure to market
risk with respect to any of its investments as the Company does
not utilize market rate sensitive instruments for trading or
other purposes.
Part II. OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The registrant's annual meeting of stockholders was held on May
5, 2000 (the "2000 Annual Meeting"). A majority of the shares of
each class of the registrant's Common Stock, represented in
person or by proxy, was required to constitute a quorum for
action to be taken by such class. A total of 9,700,976 shares of
Class A Common Stock and 1,924,970 shares of Class B Common Stock
were represented, in person or by proxy, at the 2000 Annual
Meeting, constituting a quorum of each class.
With respect to the election of Class A Directors, the following
votes were cast in favor of and withheld with respect to the
following management nominees:
Nominee Votes in favor Votes withheld Broker non-votes
Orren J. Bradley 9,405,417 295,559 0
Jerry M. Hiegel 9,405,867 295,109 0
With respect to the election of Class B Directors, the following
votes were cast in favor of and withheld with respect to the
following management nominees:
Nominee Votes in favor Votes withheld Broker non-votes
Douglas W. Hyde 1,921,950 3,020 0
Michael D. Wachtel 1,921,950 3,020 0
David L. Omachinski 1,921,950 3,020 0
Steve R. Duback 1,921,950 3,020 0
Shirley A. Dawe 1,921,950 3,020 0
William F. Wyman 1,921,950 3,020 0
Stig A. Kry 1,921,950 3,020 0
Directors are elected by a plurality of the votes of the shares
of the class entitled to elect such directors, present in person
or represented by proxy at the meeting. "Plurality" means that
the individuals who receive the largest number of votes are
elected as directors up to the maximum number of directors to be
chosen at the meeting. There were no nominees for director other
than management's nominees identified above. Accordingly, each
such nominee received a plurality of the votes cast by shares of
the class indicated and, therefore, was elected.
With respect to the proposal to amend the 1994 OshKosh B' Gosh,
Inc. Incentive Stock Plan, the following votes were cast:
Votes in favor Votes against Abstentions Broker non-votes
Class B
Common Stock 1,917,228 5,222 2,520 0
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: 7/25/00 /S/DOUGLAS W. HYDE
Chairman of the Board, President
Chief Executive Officer and Director
Date: 7/25/00 /S/DAVID L. OMACHINSKI
Vice President-Finance, Treasurer
and Chief Financial Officer Director
