<PAGE>
Form 10-Q
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 April 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 0-5648
OSHMAN'S SPORTING GOODS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 74-1031691
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2302 MAXWELL LANE, HOUSTON, TEXAS
77023
(Address of principal executive offices)
(Zip Code)
(713) 928-3171
(Registrant's telephone number, including area code)
NO CHANGE
(Former name, former address and former fiscal year, if changed since
last report)
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
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common stock, $1.00 par value 5,804,624
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PART I -- FINANCIAL INFORMATION
<PAGE>
ITEM 1 - FINANCIAL STATEMENTS
OSHMAN'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ARPIL 30, 1994 AND JANUARY 29, 1994
(IN THOUSANDS)
APRIL 30 JAN 29
1994 1994
ASSETS ---------- --------
(UNAUDITED)
CURRENT ASSETS
CASH AND EQUIVALENTS $ 264 $ 44
ACCOUNTS RECEIVABLE, LESS ALLOWANCE OF
$245 APRIL 94, $242 JAN 94 3,239 3,492
MERCHANDISE INVENTORIES 102,327 88,699
PREPAID EXPENSES AND OTHER 5,164 4,549
-------- --------
TOTAL CURRENT ASSETS 110,994 96,784
PROPERTY, PLANT AND EQUIPMENT-AT COST 80,040 80,811
LESS ACCUMULATED DEPRECIATION AND
AMORTIZATION 53,884 52,066
-------- --------
NET PROPERTY, PLANT AND EQUIPMENT 26,156 28,745
OTHER ASSETS 851 903
-------- --------
$138,001 $126,432
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
CURRENT MATURITIES OF LONG-TERM OBLIGATIONS $ 332 $ 373
TRADE ACCOUNTS PAYABLE 35,554 32,866
ACCRUED LIABILITIES 13,214 13,892
INCOME TAXES 128 154
RESTRUCTURING RESERVE 8,843 10,971
-------- --------
TOTAL CURRENT LIABILITIES 58,071 58,256
DEFERRED FEDERAL INCOME TAXES 313 313
LONG-TERM OBLIGATIONS 17,368 3,712
LONG-TERM RESTRUCTURING RESERVE 2,867 3,822
STOCKHOLDERS' EQUITY
COMMON STOCK 5,805 5,805
ADDITIONAL CAPITAL 3,253 3,252
RETAINED EARNINGS 50,324 51,272
-------- --------
STOCKHOLDERS' EQUITY 59,382 60,329
-------- --------
$138,001 $126,432
======== ========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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OSHMAN'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED
APRIL 30, 1994 AND MAY 1, 1993
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
1994 1993
--------- ---------
(RESTATED)
NET SALES $ 66,125 $ 64,166
COSTS AND EXPENSES:
COST OF GOODS SOLD 41,514 40,829
SELLING AND ADMINISTRATIVE EXPENSES 25,751 26,912
INTEREST EXPENSE 343 291
MISCELLANEOUS EXPENSE (INCOME) (535) 19
--------- ---------
67,073 68,051
--------- ---------
LOSS BEFORE INCOME TAXES (948) (3,885)
INCOME TAX BENEFIT - (1,574)
--------- ---------
NET LOSS $ (948) $ (2,311)
========= =========
EARNINGS (LOSS) PER COMMON AND COMMON
EQUIVALENT SHARE $ (0.16) $ (0.40)
========= =========
WEIGHTED AVERAGE NUMBER OF COMMON
AND COMMON EQUIVALENT SHARES 5,805 5,805
========= =========
DIVIDENDS PER SHARE $ 0.00 $ 0.00
========= =========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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OSHMAN'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS
ENDED APRIL 30, 1994 AND MAY 1, 1993
(UNAUDITED)
(IN THOUSANDS)
1994 1993
--------- ----------
(RESTATED)
CASH FLOWS OF OPERATING ACTIVITIES:
NET LOSS $ (948) $ (2,311)
ADJUSTMENTS TO RECONCILE NET CASH USED IN
OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 1,506 1,544
RESERVE FOR CORPORATE RESTRUCTURING,
NET OF DEPRECIATION AND AMORTIZATION (1,610) -
STOCK OPTION AND BONUS PLAN EXPENSE 1 -
LOSS ON DISPOSITION OF FIXED ASSETS 116 14
INCREASE IN DEFERRED INCOME TAXES - 123
CHANGES IN ASSETS AND LIABILITIES:
DECREASE IN ACCOUNTS RECEIVABLE 253 605
INCREASE IN MERCHANDISE INVENTORIES (13,628) (14,485)
INCREASE IN PREPAID EXPENSES AND OTHER (627) (1,745)
INCREASE (DECREASE)IN TRADE ACCOUNTS PAYABLE 2,688 (2,323)
DECREASE IN ACCRUED LIABILITIES (678) (2,662)
(DECREASE) INCREASE IN INCOME TAXES (26) 24
--------- ----------
NET CASH USED IN OPERATING ACTIVITIES (12,953) (21,216)
--------- ----------
CASH FLOWS OF INVESTING ACTIVITIES:
PROCEEDS FROM SALE OF FIXED ASSETS 10 24
PURCHASE OF PROPERTY, PLANT AND EQUIPMENT (465) (1,894)
PROCEEDS FROM NOTE RECEIVABLE 13 13
--------- ----------
NET CASH USED BY INVESTING ACTIVITIES (442) (1,857)
--------- ----------
CASH FLOWS OF FINANCING ACTIVITIES:
INCREASE IN LONG-TERM OBLIGATIONS 13,615 17,879
--------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 13,615 17,879
--------- ----------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 220 (5,194)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 44 5,443
--------- ----------
CASH AND EQUIVALENTS AT END OF PERIOD $ 264 $ 249
========= ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
CASH PAID
INCOME TAXES $ 6 $ 49
INTEREST $ 256 $ 199
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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OSHMAN'S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 1994 AND MAY 1, 1993
(UNAUDITED)
NOTE A
THE FINANCIAL STATEMENTS ARE CONDENSED AND SHOULD BE READ IN
CONJUNCTION WITH THE 1993 ANNUAL REPORT. THE FINANCIAL
INFORMATION CONTAINED HEREIN IS UNAUDITED, BUT IN THE OPINION
OF THE MANAGEMENT OF THE COMPANY, INCLUDES ALL ADJUSTMENTS
(CONSISTING OF NORMAL RECURRING ADJUSTMENTS) FOR A FAIR
PRESENTATION OF THE RESULTS OF OPERATIONS FOR THE PERIODS
INDICATED. THE RESULTS FOR THE THREE MONTHS ENDED APRIL 30,
1994 ARE NOT NECESSARILY INDICATIVE OF THE RESULTS TO BE
EXPECTED FOR THE FULL YEAR.
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Liquidity and Capital Resources
Cash and equivalents at April 30, 1994 were $264,000 compared to
$44,000 at January 29, 1994. In the first quarter of 1994, cash
totaling $12,953,000 was used in operating activities. The primary
use of cash was related to a $13,628,000 increase in merchandise
inventories, in preparation for the Company's Once a Year Sale which
begins in May, and charges to the Company's restructuring reserve,
discussed below, offset by a related increase in trade accounts
payable of $2,688,000. Cash of $442,000 was used in investing
activities, primarily for the purchase of property, plant and
equipment. Financing activities provided cash of $13,615,000 as the
Company utilized its credit facility to meet its working capital
needs.
Average borrowings under the Company's credit facility during the
first quarter of 1994 were $12,839,000 and the highest amount of
borrowings and outstanding letters of credit was $20,077,000 at April
25, 1994. During the first quarter of 1993, average borrowings were
$11,107,000 and the highest amount of borrowings and outstanding
letters of credit was $23,730,000 at April 26, 1993. The increased
level of average borrowings in 1994 was related primarily to losses
incurred by the stores included in the restructure group.
On December 27, 1993, the Company announced a restructuring plan to
accelerate the closing of 34 underperforming traditional stores over
the next two years. As of the end of the first quarter of 1994, six
of the 34 stores had been closed and commitments obtained for the
closure of four additional stores by the end of June 1994. In the
first quarter of 1994, these stores as a group used cash of
approximately $1,610,000 to cover losses before depreciation and
amortization. Approximately $540,000 of this amount was for lease
terminations related to stores closed or expected to be closed by the
end of June 1994.
Sales volumes from all stores included in the restructure group were
$6,658,000 in the quarter ended April 30, 1994 compared to $7,258,000
in the first quarter of 1993. Operating results for these stores
during the first quarter of 1994 was a loss of $2,503,000, which
included accelerated depreciation of approximately $1,286,000 and
estimated liquidation markdowns in excess of "normal" markdown levels
totaling approximately $695,000, compared to a loss of $740,000 in the
first quarter of 1993. During the quarter ended April 30, 1994, the
Company charged its restructuring reserve $3,083,000 for the operating
losses, liquidation markdowns, lease termination costs and write-off
of fixed assets which have been incurred for the stores included in
the restructure group.
Results of Operations
Net sales for the quarter ended April 30, 1994 increased 3.1% over the
same period in 1993. Excluding stores included in the restructure
group, net sales increased 4.5% and comparable same store sales
increased 2.7% over the same period last year.
Net sales from the Company's eight SuperSports USA megastores, which
equalled 25.1% of total net sales in the first quarter of 1994,
increased 41% to $16,612,000, from $11,784,000 in the same period last
year and SuperSports USA megastore same store sales increased 10.6%.
At the end of the first quarter of 1994, the Company was operating 154
stores, including eight megastores, compared to 170 stores, including
five megastores, at the same time a year ago. On May 4, 1994, the
Company opened its ninth SuperSports USA megastore in Webster, Texas
and plans now call for the opening of three additional stores in 1994,
including the conversion of a traditional store to a megastore.
Cost of goods sold was 62.8% in the quarter ended April 30, 1994
compared to 63.6% for the same period in 1993. The improved rate in
1994 as a percentage of sales is related primarily to reduced
markdowns.
Selling and administrative expenses as a percentage of sales were
38.9% for the quarter ended April 30, 1994, compared to 41.9% in the
same period last year. Selling and administrative expenses includes
a net credit of $522,000 related to the 34 stores included in the
restructure group. Excluding this adjustment, selling and
administrative expenses as a percentage of sales were 39.7% for the
quarter ended April 30, 1994. This improvement as a percentage of
sales is related primarily to reduced payroll costs and occupancy
costs, caused both by the effect of same store sales increases and
reductions in absolute dollars expended, offset somewhat by increased
promotional expenses.
Interest expense for the quarter ended April 30, 1994 was $343,000
compared to $291,000 for the same period last year. The increase in
interest expense is primarily related to the increased average
borrowings under the Company's credit facility in the first quarter
of 1994.
The variations in miscellaneous (income) expense are set out in the
table below:
1st Quarter
----------------
1994 1993
------ -------
(In thousands)
License fees $(389) $(244)
Provision for stores closed in the
normal course of operations and
write off of other assets ( 44) 184
Insurance recovery (105) -
Other - net 3 79
------ -----
$(535) $ 19
====== =====
There was no income tax benefit in the first quarter of 1994 as a
result of the Company's inability to recognize the tax benefits of its
net operating loss and future deductible temporary differences in the
calculation of its tax expense under SFAS 109. However, these amounts
will be available to reduce future tax liabilities in years in which
the Company has taxable earnings.
In the quarter ended April 30, 1994, the Company's results were a loss
of $948,000 before income taxes compared to a pretax loss of
$3,885,000 in the same quarter the previous year. The improved
results are primarily due to improved sales volumes, decreased costs
of goods sold as a percentage of sales, reduced selling and
administrative expense and increased miscellaneous income.
Additionally, the non-recurrence of pretax losses of approximately
$740,000 in the first quarter of 1993, attributable to the 34 stores
included in the restructure group, further contributed to the improved
comparative results.
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PART II -- OTHER INFORMATION
<PAGE>
<TABLE>
ITEM 6 - EXHIBITS EXHIBIT 11.1
OSHMAN'S SPORTING GOODS, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
FOR THE THREE MONTHS ENDED APRIL 30, 1994 AND MAY 1, 1993
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<CAPTION>
1994 1993
--------------------- ---------------------
FULLY FULLY
PRIMARY DILUTED PRIMARY DILUTED
--------- --------- --------- ---------
(RESTATED) (RESTATED)
<S> <S> <S> <S> <S>
NET LOSS $ (948) $ (948) $ (2,311) $ (2,311)
========= ========= ========= =========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 5,805 5,805 5,805 5,805
EXCESS OF SHARES ISSUABLE UPON
EXERCISE OF STOCK OPTIONS OVER
SHARES DEEMED RETIRED UNDER THE
"TREASURY STOCK" METHOD - - - -
--------- --------- --------- ---------
WEIGHTED AVERAGE NUMBER OF COMMON
AND DILUTIVE COMMON EQUIVALENT
SHARES OUTSTANDING 5,805 5,805 5,805 5,805
========= ========= ========= =========
LOSS PER COMMON AND
COMMON EQUIVALENT SHARE $ (0.16) $ (0.16) $ (0.40) $ (0.40)
========= ========= ========= =========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<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.
OSHMAN'S SPORTING GOODS, INC.
Date: By:
Edward R. Carlin
Executive Vice-President
and Chief Financial Officer
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