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 OCTOBER 29, 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 OF (I.R.S. EMPLOYER
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 5,807,149
<PAGE>
PART I -- FINANCIAL INFORMATION
<PAGE>
ITEM 1 - FINANCIAL STATEMENTS
OSHMAN'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
OCTOBER 29, 1994 AND JANUARY 29, 1994
(IN THOUSANDS)
OCT 29, JAN 29,
1994 1994
ASSETS ----------- ---------
(UNAUDITED)
CURRENT ASSETS
CASH AND EQUIVALENTS ............................. $ 462 $ 44
ACCOUNTS RECEIVABLE, LESS ALLOWANCE OF
$286 OCT 94, $242 JAN 94 ....................... 3,412 3,492
MERCHANDISE INVENTORIES .......................... 106,172 88,699
PREPAID EXPENSES AND OTHER ....................... 4,312 4,549
---------- ---------
TOTAL CURRENT ASSETS .................... 114,358 96,784
PROPERTY, PLANT AND EQUIPMENT-AT COST .............. 78,484 80,811
LESS ACCUMULATED DEPRECIATION AND
AMORTIZATION ................................... 52,789 52,066
---------- ---------
NET PROPERTY, PLANT AND EQUIPMENT ............ 25,695 28,745
OTHER ASSETS ....................................... 755 903
---------- ---------
$ 140,808 $ 126,432
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
CURRENT MATURITIES OF LONG-TERM OBLIGATIONS ...... $ 221 $ 373
TRADE ACCOUNTS PAYABLE ........................... 37,540 32,866
ACCRUED LIABILITIES .............................. 16,311 13,892
INCOME TAXES ..................................... 107 154
RESTRUCTURING RESERVE ............................ 7,020 10,971
---------- ---------
TOTAL CURRENT LIABILITIES ............... 61,199 58,256
DEFERRED FEDERAL INCOME TAXES ...................... 297 313
LONG-TERM OBLIGATIONS .............................. 21,542 3,712
LONG-TERM RESTRUCTURING RESERVE .................... 957 3,822
STOCKHOLDERS' EQUITY
COMMON STOCK ..................................... 5,810 5,805
ADDITIONAL CAPITAL ............................... 3,342 3,252
RETAINED EARNINGS ................................ 47,682 51,272
LESS TREASURY STOCK, AT COST ..................... (21)
---------- ---------
STOCKHOLDERS' EQUITY .................... 56,813 60,329
---------- ---------
$ 140,808 $ 126,432
========== =========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
OSHMAN'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS
ENDED OCTOBER 29, 1994 AND OCTOBER 30, 1993
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
---------------------------- -----------------------------
1994 1993 1994 1993
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
NET SALES .............................................. $ 66,472 $ 66,563 $ 212,692 $ 212,019
COSTS AND EXPENSES:
COST OF GOODS SOLD ................................... 43,387 43,449 138,120 139,262
SELLING AND ADMINISTRATIVE EXPENSES .................. 26,409 28,410 79,506 84,080
INTEREST EXPENSE ..................................... 391 407 1,180 1,072
MISCELLANEOUS INCOME ................................. (77) (696) (2,611) (1,417)
-------- --------- ---------- ---------
70,110 71,570 216,195 222,997
-------- --------- ---------- ---------
LOSS BEFORE INCOME TAXES ............................... (3,638) (5,007) (3,503) (10,978)
INCOME TAX (BENEFIT) ................................... 52 (1,674) 87 (3,765)
-------- --------- ---------- ---------
NET LOSS .......................... $ (3,690) $ (3,333) $ (3,590) $ (7,213)
======== ========= ========== =========
LOSS PER COMMON AND COMMON
EQUIVALENT SHARE ..................................... $ (0.64) $ (0.57) $ (0.62) $ (1.24)
======== ========= ========== =========
WEIGHTED AVERAGE NUMBER OF COMMON
AND COMMON EQUIVALENT SHARES ......................... 5,810 5,805 5,806 5,805
======== ========= ========== =========
DIVIDENDS PER SHARE .................................... $ 0.00 $ 0.00 $ 0.00 $ 0.00
======== ========= ========== =========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
OSHMAN'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED OCTOBER 29, 1994 AND OCTOBER 30, 1993
(UNAUDITED)
(IN THOUSANDS)
NINE MONTHS ENDED
--------------------
1994 1993
--------- ---------
CASH FLOWS OF OPERATING ACTIVITIES:
NET LOSS ............................................... $ (3,590) $ (7,213)
ADJUSTMENTS TO RECONCILE NET CASH (USED) PROVIDED IN
OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION ........................ 4,247 4,612
RESERVE FOR CORPORATE RESTRUCTURING,
NET OF DEPRECIATION AND AMORTIZATION ................ (3,747) --
PROVISION FOR LOSSES ON ACCOUNTS RECEIVABLE .......... 44 8
STOCK OPTION AND BONUS PLAN EXPENSE .................. 68 --
GAIN ON DISPOSITION OF FIXED ASSETS .................. (84) (168)
DECREASE IN DEFERRED INCOME TAXES .................... (16) (2,675)
GAIN ON SALE OF REAL ESTATE AND LEASEHOLDS ........... (1,654) (687)
CHANGES IN ASSETS AND LIABILITIES:
DECREASE (INCREASE) IN ACCOUNTS RECEIVABLE ......... 124 (290)
INCREASE IN MERCHANDISE INVENTORIES ................ (17,473) (16,356)
DECREASE (INCREASE) IN PREPAID EXPENSES AND OTHER .. 132 (497)
INCREASE IN TRADE ACCOUNTS PAYABLE ................. 4,674 293
INCREASE (DECREASE) IN ACCRUED LIABILITIES ......... 2,353 (550)
DECREASE IN INCOME TAXES ........................... (47) (912)
-------- --------
NET CASH USED IN OPERATING ACTIVITIES ........... (14,969) (24,435)
CASH FLOWS OF INVESTING ACTIVITIES:
PROCEEDS FROM SALE OF FIXED ASSETS ..................... 18 131
PURCHASE OF PROPERTY, PLANT AND EQUIPMENT .............. (4,270) (3,662)
PROCEEDS FROM NOTE RECEIVABLE .......................... 34 34
PROCEEDS FROM SALE OF REAL ESTATE AND LEASEHOLDS ....... 1,921 1,259
-------- --------
NET CASH USED BY INVESTING ACTIVITIES ........... (2,297) (2,238)
CASH FLOWS OF FINANCING ACTIVITIES:
PROCEEDS FROM STOCK ISSUANCE ........................... 27 --
ACQUISITION OF TREASURY STOCK .......................... (21) --
INCREASE IN LONG-TERM OBLIGATIONS ...................... 17,678 21,529
INCREASE IN LOAN ACQUISITION COSTS ..................... -- (34)
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES ....... 17,684 21,495
-------- --------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS .......... 418 (5,178)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD .............. 44 5,443
-------- --------
CASH AND EQUIVALENTS AT END OF PERIOD .................... $ 462 $ 265
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
CASH PAID
INCOME TAXES ......................................... $ 126 $ 129
INTEREST ............................................. $ 1,072 $ 951
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
OSHMAN'S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 29, 1994 AND OCTOBER 30, 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 AND NINE MONTHS ENDED
OCTOBER 29, 1994 ARE NOT NECESSARILY INDICATIVE OF THE RESULTS TO BE
EXPECTED FOR THE FULL YEAR.
NOTE B - SUBSEQUENT EVENT
ON NOVEMBER 4, 1994, THE COMPANY AMENDED ITS FINANCING AGREEMENT WITH
THE CIT GROUP/BUSINESS CREDIT, INC. THE AMENDMENT EXTENDS THE TERMS OF
THE AGREEMENT UNTIL AUGUST 31, 1997 AND PROVIDES FOR AN IMMEDIATE
REDUCTION IN THE INTEREST RATE. BEGINNING IN AUGUST, 1995, THE REVOLVING
CREDIT FACILITY WILL INCREASE FROM $40,000,000 TO $50,000,000 AND
PROVIDE FOR A FURTHER SEASONAL INCREASE TO $65,000,000 FROM MID-OCTOBER
THROUGH MID-DECEMBER.
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Liquidity and Capital Resources
Cash and equivalents at October 29, 1994 were $462,000 compared to $44,000 at
January 29, 1994. In the first nine months of 1994, cash totaling $14,969,000
was used in operating activities. The primary use of cash was related to a
$17,473,000 increase in merchandise inventories and charges to the Company's
restructuring reserve, discussed below, offset by an increase in trade accounts
payable of $4,674,000 and a $2,353,000 increase in accrued liabilities. The
increase in merchandise inventories and corresponding increase in trade accounts
payable are related to normal seasonal increases in preparation for the
Christmas selling season. The increase in accrued liabilities is primarily
related to amounts received from real estate developers in connection with new
stores.
Cash totaling $2,297,000 was used by investing activities, primarily for
purchases of property, plant and equipment of $4,270,000 offset by $1,921,000 in
proceeds from the sale of real estate and leasehold interests. Financing
activities provided cash of $17,684,000 as the Company utilized its credit
facility to meet its working capital needs during the first nine months of 1994.
Property, plant and equipment at cost decreased a net of $2,327,000 as a result
of the closure of 18 stores during the first nine months of 1994, including the
sale of real estate where one of the Company's retail stores was located.
Average borrowings under the Company's credit facility during the first nine
months of 1994 were $14,508,000, and the highest amount of borrowings and
outstanding letters of credit was $25,325,000 at May 16,1994. During the first
nine months of 1993, average borrowings were $14,209,000, and the highest amount
of borrowings and outstanding letters of credit was $25,136,000 at May 21, 1993.
Effective November 4, 1994, the Company amended its financing agreement with The
CIT Group/Business Credit, Inc. The amendment extends the term of the agreement
until August 31, 1997 and provides for an immediate reduction in the interest
rate. Additionally, effective in August, 1995, the revolving credit facility
will increase from $40,000,000 to $50,000,000, with a further seasonal increase
to $65,000,000 from mid-October through mid-December. Other terms of the
financing agreement such as borrowing base formula and certain loan reserves
remain unchanged.
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 October 29, 1994, the Company had closed 13 of the 34 stores, obtained rent
concessions on two stores and expects to close three additional stores prior to
the end of fiscal 1994. In the first nine months of 1994, the stores included in
the restructure group used cash of approximately $4,291,000 to cover losses
before depreciation and amortization and writeoff of fixed assets. Approximately
$552,000 of this amount was for lease terminations related to stores closed as
of October 29, 1994. Sales volumes from all stores included in the restructure
group were $16,489,000 in the nine months ended October 29, 1994 compared to
$22,656,000 in the same period last year. During the first nine months of 1994,
these stores incurred a loss of $6,799,000, which included accelerated
depreciation of approximately $1,981,000 and estimated liquidation markdowns in
excess of "normal" markdowns totaling approximately $2,355,000, compared to a
loss of $2,710,000 during the same period in 1993. During the nine months ended
October 29, 1994, the Company charged its restructuring reserve $6,816,000 for
the operating losses, liquidation markdowns, lease termination costs and
write-off of fixed assets for the stores included in the restructure group.
Results of Operations
Net sales for the quarter ended October 29, 1994 decreased .1%, while sales for
the nine months then ended increased .3%, compared to the same periods in 1993.
Excluding sales from the stores in the restructure group, net sales increased
4.6% and 3.6%, respectively, for the quarter and nine months ended October 29,
1994. Comparable same store sales, excluding the stores in the restructure
group, increased 3.7% in the third quarter and .7% in the first nine months of
1994 compared to the same periods in 1993. Sales for the nine month period ended
October 29, 1994 were adversely impacted in the second quarter as a result of
reduced promotional advertising.
During the third quarter of 1994, the Company increased the number of
SuperSports USA megastores in operation to eleven with the September opening of
a new megastore in Milpitas, California and the conversion of a traditional
store in Houston, Texas in mid-October. On November 11, 1994, the Company opened
its twelfth and final megastore for 1994 in Ft. Worth, Texas. Net sales from the
Company's SuperSports USA megastores, which equalled 27.7% of total net sales in
the first nine months of 1994, increased 38% to $58,855,000, from $42,636,000 in
the same period last year. SuperSports USA megastore same store sales increased
8.3% and 6.0%, respectively, in the quarter and nine months ended October 29,
1994 compared to the same periods last year. At the end of the third quarter of
1994, the Company was operating 145 stores, including eleven megastores,
compared to 166 stores, including eight megastores, at the same time a year ago.
Cost of goods sold was 65.3% and 64.9%, respectively, in the quarter and nine
months ended October 29, 1994 compared to 65.3% and 65.7%, respectively, for the
same periods in 1993. The improved rate in 1994 as a percentage of sales is due
primarily to reduced markdowns and an improvement in the initial rates of markon
related to the Company's strategy to improve gross profit margins.
Selling and administrative expenses as a percentage of sales were 39.7% and
37.4%, respectively, for the quarter and nine months ended October 29, 1994,
compared to 42.7% and 39.7%, respectively, in the same periods last year.
Selling and administrative expenses includes a net credit of $780,000 in the
third quarter and $1,888,000 in the nine months ended October 29, 1994, related
to the 34 stores included in the restructure group. Excluding this adjustment,
selling and administrative expenses as a percentage of sales were 40.9% and
38.3%, respectively, for the quarter and nine months ended October 29, 1994.
This improvement as a percentage of sales is related primarily to reduced
payroll and occupancy costs during the first nine months of 1994, and reduced
promotional advertising expense in the second and third quarters of 1994,
compared to the same periods in 1993.
Interest expense for the quarter and nine months ended October 29, 1994 was
$391,000 and $1,180,000, respectively, compared to $407,000 and $1,072,000,
respectively, for the same periods last year. The slight decrease in interest
expense in the third quarter of 1994 compared to 1993 is related primarily to
the retirement of a mortgage note on real estate sold during the second quarter
of 1994. The increase in interest expense for the nine months ended October 29,
1994 is primarily related to increased interest rates, primarily in the second
and third quarters of 1994.
The variations in miscellaneous (income) expense are set out in the table below:
3rd Quarter Nine Months
------------------------------------
1994 1993 1994 1993
---- ---- ----- -----
(Amounts in thousands)
Gain on sales of real estate
and leasehold interest ........ $ -- $(299) $(1,830) $ (905)
License fees .................... (378) (265) (1,143) (834)
Provision for stores closed in
the normal course of operations
and write off of other assets . 307 147 462 553
Accrual for legal settlement .... -- (246) -- (307)
Insurance recovery .............. -- -- (105) --
Other - net ..................... (6) (33) 5 76
----- ----- ------- -------
$ (77) $(696) $(2,611) $(1,417)
===== ===== ======= =======
Income tax expense results from state and foreign income taxes only. There is no
income tax benefit available in 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 October 29, 1994, the Company had pretax losses of
$3,638,000 compared to $5,007,000 in the same quarter last year. For the nine
months then ended, the Company improved its results to a loss of $3,503,000
before income taxes compared to $10,978,000 in the first nine months of 1993.
The improved results are related primarily to increased contributions from the
Company's SuperSports USA megastores, as the number of these stores in operation
increases, and the non-recurrence of pretax losses of approximately $1,106,000
and $2,710,000, respectively, in the third quarter and first nine months of 1993
attributable to the 34 stores included in the restructure group. In addition,
improved performance in the Company's traditional stores and increased
miscellaneous income as shown above further contributed to the Company's 1994
results.
<PAGE>
PART II -- OTHER INFORMATION
<PAGE>
ITEM 6. EXHIBITS
EXHIBIT INDEX
4.1 TENTH AMENDMENT DATED NOVEMBER 4, 1994 TO FINANCING AGREEMENT
DATED AUGUST 31, 1992 BETWEEN THE COMPANY AND THE CIT
GROUP/BUSINESS CREDIT, INC.
11.1 STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS.
<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: A. LYNN BOERNER
VICE PRESIDENT AND
CHIEF ACCOUNTING OFFICER
<PAGE>
EXHIBIT 4.1
November 4, 1994
Oshman's Sporting Goods, Inc.
2302 Maxwell Lane
Houston, TX 77223
Gentlemen:
Reference is made to the Financing Agreement dated August 31, 1992 (as amended
or otherwise modified from time to time, the "Financing Agreement") among J. S.
Oshman and Co., Inc., Oshman Sporting Goods Co., Alabama, Oshman Sporting Goods
Co., Arizona, Oshman Sporting Goods Co., Arkansas, Oshman Sporting Goods, Co.,
California, Oshman Sporting Goods Co., Florida, Oshman Sporting Goods Co.,
Georgia, Oshman Sporting Goods Co., Hawaii, Oshman Sporting Goods Co.,
Louisiana, Oshman Sporting Goods, Co., Minnesota, Oshman Sporting Goods, Co.,
Missouri, Oshman Sporting Goods Co., Nevada, Oshman Sporting Goods Co., New
Jersey, Oshman Sporting Goods Co., New Mexico, Oshman Sporting Goods Co., New
York, Oshman Sporting Goods Co., Ohio, Oshman Sporting Goods Co., Oklahoma,
Oshman Sporting Goods Co., Tennessee, Oshman Sporting Goods Co., Washington,
Oshman's Ski Skool, Inc., Oshman Sporting Goods Co., Texas, Oshman's Sporting
Goods, Inc. - Services, and Oshman Sporting Goods Co., Oregon (collectively the
"Companies"), and The CIT Group/Business Credit, Inc. (the "CITBC"). Capitalized
terms used and not otherwise defined herein shall have the meanings assigned to
them in the Financing Agreement.
1) The following definitions are hereby inserted into Section 1 of the Financing
Agreement in their proper alphabetical order:
"LIBOR shall mean, at any time of determination, and subject to
availability, the London Interbank Offered Rate paid on one month, two
month or three month dollar deposits from other banks as published,
under "Money Rates", in the New York City edition of the Wall Street
Journal or if there is no such publication or statement therein as to
Libor, then in any publication used in the New York City financial
community."
"LIBOR LOAN shall mean the loans for which the Companies have elected to
use Libor for interest rate computations."
"LIBOR PERIOD shall mean the Libor for one month, two month, or three
month dollar deposits, as selected by the Companies."
2) Section 1 of the Financing Agreement is hereby further amended by amending
the definitions of "Anniversary Date" and "Capital Expenditures".
(a) The definition of "Anniversary Date" is hereby amended by deleting
it in its entirety and the following is substituted in lieu thereof:
"ANNIVERSARY DATE shall mean the date occurring five (5) years from the
date of execution hereof and the same date in every year thereafter,
provided however, that if the Companies give notice, in accordance with
Section 10 of this Financing Agreement, to terminate, on an Anniversary
Date, and such date is not a business day, then the Anniversary Date
shall be the next succeeding business day."
(b) The definition of "Capital Expenditures" is hereby amended by
deleting the period and adding the following to the end of the
definition:
"and such expenditures shall be reduced by any amounts received as
landlord's construction rebates not included or reflected by the
property, plant or equipment or similar asset account reflected on the
balance sheet of the Companies or any one of them."
3) Effective August 1, 1995 the dollar amount "$40,000,000.00" as it appears in
the definition of Revolving Line of Credit and Availability is hereby amended to
read: "$50,000,000.00." Notwithstanding such increase in the Revolving Line of
Credit, all loans, advances and extensions of credit to you pursuant to Section
3 and 4 of the Financing Agreement shall be within the Borrowing Base.
4) At your request, we have, as an accommodation to the Companies, granted to
the Companies a seasonal overline facility (herein the "Seasonal Overline") in
excess of the limitations set forth under the Financing Agreement effective
October 15th through December 15th of each year commencing October 15, 1995 so
long as the Financing Agreement is in full force and effect, subject to the
absence of any Default or Event of Default (herein "Seasonal Overline Period").
During such Seasonal Overline Period, the Seasonal Overline pursuant to such
facility shall not exceed the amount of $15,000,000.00 in the aggregate at any
one time.
In furtherance of the foregoing, effective October 15, 1995 the dollar amount of
$50,000,000.00 as it appears in the definitions of Revolving Line of Credit and
Availability is amended to read "$65,000,000.00" solely and exclusively from
October 15, 1995 through December 15, 1995 and for each Seasonal Overline Period
in each year thereafter, provided that:
(i) notwithstanding such increase in the Revolving Line of Credit for
such month, all loans, advances and extensions of credit to you pursuant
to Section 3 and 4 of the Financing Agreement shall be within the
Borrowing Base;
(ii) prior to October 15, 1995 such dollar amounts in the definitions of
Revolving Line of Credit and Availability shall remain $50,000,000.00;
and
(iii) effective December 16, 1995 and December 16th of each year
thereafter through and including the following October 14th such dollar
amounts in the definitions of Revolving Line of Credit and Availability
shall automatically revert back to $50,000,000".
(iv) such Seasonal Overline facility shall (a) be made subject to, and
in accordance with, all of the terms, provisions and conditions of the
Financing Agreement; (b) bear interest at the rate set forth in
Paragraph 1 of Section 7 of the Financing Agreement; (c) be secured by
all liens upon, and security interest in, all Accounts and other
Collateral under the Financing Agreement and any other of the Companies'
assets or property now or hereafter subject to a lien or security
interest in our favor or for our benefit, including without limitation
the assets pledged to us by the Guarantors; (d) be made available absent
the occurrence of a Default or an Event of Default.
It is hereby understood and agreed that if said Seasonal Overline facility is
not paid in full on or prior to December 16th following such Seasonal Overline
Period it will be deemed an Event of Default as defined in the Financing
Agreement.
5) Paragraph 11 of Section 6 of the Financing Agreement is hereby amended by
deleting the amount "$4,500,000.00" appearing in subparagraph iii) and
substituting the amount "$6,500,000.00" for the fiscal year ending January 28,
1995;"
6) Section 7 of the Financing Agreement is hereby amended by deleting paragraph
1 and substituting the following in lieu thereof:
"1. (A) Interest on the Revolving Loans shall be payable monthly as of
the end of each month and shall be an amount equal to a) the sum of
one-half of one percent (.5%) and the Chemical Bank Rate, on a per annum
basis, on the average of the net balances owing by all of the Companies
to CITBC in the Collective Account at the close of each day during such
month on balances other than Libor Loans and b) three percent (3%) plus
Libor on any Libor Loan as to any then outstanding Revolving Loans which
are Libor Loans, on a per annum basis, on the average of the net
balances of such Libor Loans owing by the Companies to CITBC in the
Collective Account at the close of each day during such month for the
Libor Period; but in no event shall the interest charged hereunder
exceed the Maximum Legal Rate. The Companies may elect to use Libor as
to any then outstanding Revolving Loans provided x) there is then no
Event of Default, y) the Companies have so advised CITBC of their
election to use Libor and the Libor Period selected no later than three
(3) business days preceding the first day of a Libor Period and z) the
election and Libor shall be effective, provided, there is then no Event
of Default, on the fourth business day following said notice. The Libor
elections must be for $1,000,000.00 or more and there shall be no more
than three (3) elections to use Libor to compute interest at any one
time under paragraph 1 of this Section 7. If no such election is timely
made or can be made or Libor can not be determined, then CITBC shall use
the Chemical Bank Rate to compute interest. In the event of any changes
in said Chemical Bank Rate, the rate under clause "a)" above shall
change, as of the first of the month following any change, so as to
remain one-half of one percent (1/2 of 1%) above the Chemical Bank Rate.
The rates hereunder shall be calculated based on a 360 day year. CITBC
shall be entitled to charge the Companies Collective Account at the rate
provided for herein until all Obligations have been paid in full."
1. (B) Subject to compliance with the conditions set forth in this
subparagraph (B), the Companies shall be entitled to interest rate
reductions (each an "Interest Rate Reduction") as outlined below.
If the ratio of all of the Companies' Average Loan Balances to EBITDA
meets or exceeds the Companies' financial projections with respect
thereto for a fiscal year as indicated in such projections delivered to
CITBC, which projections must be satisfactory to CITBC (herein
"Financial Projections") then the spread over the (a) Chemical Bank Rate
shall be reduced by one-quarter of one percent (1/4 of 1%) and (b) Libor
rate shall be reduced by one-quarter of one percent (1/4 of 1%). If the
Companies fail to meet their Financial Projections for a fiscal year
then the spread over the (a) Chemical Bank Rate shall be increased by
one-quarter of one percent (1/4 of 1%) and (b) Libor rate shall be
increased by one-quarter of one percent (1/4 of 1%) (each an "Interest
Rate Increase"). "Average Loan Balances" as used herein shall mean the
average of the net balances owing by all the twelve (12) months in the
fiscal year then ended.
In addition to the foregoing requirements, each Interest Rate Reduction
is subject to the Companies' compliance with each of the following
conditions in (i) through (v) below and the effective date of each
Interest Rate Increase is governed by (iii) and (iv) below:
(i) Timely receipt by CITBC of the Companies' audited Consolidated
Balance Sheet and income statement (the "Financial Statements") in
accordance with the provisions of paragraph 7 of Section 6;
(ii) The absence of any Default or Event of Default;
(iii) As to the spread over the Chemical Bank Rate, and any Interest
Rate Reduction or the Interest Rate Increase with respect thereto, as
the case may be, any such decreases or increases, will be effective on
the first day of the month following CITBC's receipt of the Financial
Statements with respect to the fiscal year in which the Companies are
determined to be eligible for such Interest Rate Reduction or such
Interest Rate Increase; and
(iv) As to the spread over the Libor rate, and any Interest Rate
Reduction or Interest Rate Increase with respect thereto, as the case
may be, any such decreases or increases will be effective on the first
day of a Libor Period and shall only be applicable to a Libor Period
commencing on or after CITBC's receipt of the applicable Financial
Statements; and
(v) In no event shall the total of all Interest Rate Reductions or
Interest Rate Increases hereunder on the Revolving Loan reduce or
increase the applicable rates by more than three-quarters of one percent
(.75%) from those rates in effect on the date hereof.
Notwithstanding the foregoing, nothing contained in this subparagraph
(v) is intended to modify the provisions of paragraph 2 of Section 9
providing for the right of CITBC to charge the Default Rate of Interest
as set forth therein.
7) Section 7 of the Financing Agreement is hereby amended by the addition
thereto of the following new paragraph:
"10. The Companies shall pay to CITBC, upon the request of CITBC, such
amount or amounts as shall compensate CITBC for any loss, costs or
expenses incurred by CITBC (as reasonably determined by CITBC) as a
result of: (i) any payment or prepayment on a date other than the last
day of a Libor Period for such Libor Loan, or (ii) any failure of the
Companies to borrow a Libor Loan on the date for such borrowing
specified in the relevant notice; such compensation to include, without
limitations, an amount equal to any loss or expense suffered by CITBC
during the period from the date of receipt of such payment or prepayment
or the date of such failure to borrow to the last day of such Libor
Period if the rate of interest obtained by CITBC upon the reemployment
of an amount of funds equal to the amount of such payment, prepayment or
failure to borrow is less than the rate of interest applicable to such
Libor Period. The determination by CITBC of the amount of any such loss
or expense, when set forth in a written notice to the Companies,
contained CITBC's calculations hereof in reasonable detail, shall be
conclusive on the Companies, in the absence of manifest error."
In consideration of (i) the preparation of this amendment by the Legal
Department of CITBC, you hereby agree to pay us a Documentation Fee equal to
$800.00 and (ii) our execution of this agreement you hereby agree to pay us an
Accommodation Fee equal to $50,000.00, and you authorize us to charge your loan
account with such fee on the date hereof.
Except to the extent set forth herein, no other change in any of the terms or
provisions of the Financing Agreement is intended or implied.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed copy of this letter to so indicate.
Very truly yours,
THE CIT GROUP/BUSINESS CREDIT, INC.
By_________________________________
Title:
Read and Agreed to:
J. S. Oshman and Co., Inc.
Oshman Sporting Goods Co., Alabama
Oshman Sporting Goods Co., Arizona
Oshman Sporting Goods Co., Arkansas
Oshman Sporting Goods, Co., California
Oshman Sporting Goods Co., Florida
Oshman Sporting Goods Co., Georgia
Oshman Sporting Goods Co., Hawaii
Oshman Sporting Goods Co., Louisiana
Oshman Sporting Goods, Co., Minnesota
Oshman Sporting Goods, Co., Missouri
Oshman Sporting Goods Co., Nevada
Oshman Sporting Goods Co., New Jersey
Oshman Sporting Goods Co., New Mexico
Oshman Sporting Goods Co., New York
Oshman Sporting Goods Co., Ohio
Oshman Sporting Goods Co., Oklahoma
Oshman Sporting Goods Co., Tennessee
Oshman Sporting Goods Co., Washington
Oshman's Ski Skool, Inc.
Oshman Sporting Goods Co., Texas
Oshman's Sporting Goods, Inc. - Services
Oshman Sporting Goods Co., Oregon
By______________________________________
Title:
<PAGE>
EXHIBIT 11.1
OSHMAN'S SPORTING GOODS, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
FOR THE THREE AND NINE MONTHS
ENDED OCTOBER 29, 1994 AND OCTOBER 30, 1993
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED NINE MONTHS ENDED NINE MONTHS ENDED
----------------- ------------------ ------------------ ------------------
1994 1993 1994 1993
----------------- ------------------ ------------------ ------------------
FULLY FULLY FULLY FULLY
PRIMARY DILUTED PRIMARY DILUTED PRIMARY DILUTED PRIMARY DILUTED
------- ------- ------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET LOSS ........................................... $(3,690) $(3,690) $(3,333) $(3,333) $(3,590) $(3,590) $(7,213) $(7,213)
======= ======= ======= ======= ======= ======= ======= =======
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING ............................... 5,810 5,810 5,805 5,805 5,806 5,806 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 ............................... 5,810 5,810 5,805 5,805 5,806 5,806 5,805 5,805
======= ======= ======= ======= ======= ======= ======= =======
EARNINGS (LOSS) PER COMMON AND
COMMON EQUIVALENT SHARE ..................... $ (0.64) $ (0.64) $ (0.57) $ (0.57) $ (0.62) $ (0.62) $ (1.24) $ (1.24)
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-28-1995
<PERIOD-END> OCT-29-1994
<CASH> 462
<SECURITIES> 0
<RECEIVABLES> 3,412
<ALLOWANCES> 286
<INVENTORY> 106,172
<CURRENT-ASSETS> 114,358
<PP&E> 78,484
<DEPRECIATION> 52,789
<TOTAL-ASSETS> 140,808
<CURRENT-LIABILITIES> 61,199
<BONDS> 0
<COMMON> 5,810
0
0
<OTHER-SE> 51,003
<TOTAL-LIABILITY-AND-EQUITY> 140,808
<SALES> 212,692
<TOTAL-REVENUES> 212,692
<CGS> 138,120
<TOTAL-COSTS> 138,120
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,180
<INCOME-PRETAX> (3,503)
<INCOME-TAX> 87
<INCOME-CONTINUING> (3,590)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,590)
<EPS-PRIMARY> (0.62)
<EPS-DILUTED> (0.62)
</TABLE>
