<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 OCTOBER 28, 1995
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 INCORPORATION (I.R.S. EMPLOYER
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 5,818,049
----------------------------- ---------
<PAGE>
PART I -- FINANCIAL INFORMATION
<PAGE>
ITEM 1 -- FINANCIAL STATEMENTS
OSHMAN'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
OCTOBER 28, 1995 AND JANUARY 28, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
OCTOBER 28, JANUARY 28,
ASSETS 1995 1995
-------- ----------- -----------
(UNAUDITED)
<S> <C> <C>
Current Assets
Cash and equivalents.............................. $ 408 $ 254
Accounts receivable, less allowance of $395....... 2,742 3,437
Merchandise inventories........................... 129,699 98,294
Prepaid expenses and other........................ 7,281 4,976
-------- --------
Total current assets............................ 140,130 106,961
Property, plant and equipment-at cost............... 90,892 80,374
Less accumulated depreciation and amortization.... 52,757 52,964
-------- --------
Net property, plant and equipment............... 38,135 27,410
Other assets........................................ 581 706
-------- --------
$178,846 $135,077
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities
Current maturities of long-term obligations........ $ 403 $ 186
Trade accounts payable............................ 55,138 45,686
Accrued liabilities............................... 16,802 13,458
Income taxes...................................... 4,641 128
Restructuring reserve............................. 3,210 7,128
-------- --------
Total current liabilities........................ 80,194 66,586
Deferred federal income taxes....................... 290 302
Deferred rental allowances.......................... 1,725 1,738
Long-term obligations............................... 37,704 5,665
Stockholders' equity
Common stock...................................... 5,821 5,811
Additional capital................................ 3,770 3,434
Retained earnings................................. 49,363 51,562
Less treasury stock, at cost...................... (21) (21)
-------- --------
Stockholders' equity............................ 58,933 60,786
-------- --------
$178,846 $135,077
-------- --------
</TABLE>
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 28, 1995 AND OCTOBER 29, 1994
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
-------------------------- --------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 71,739 $ 66,472 $225,627 $212,692
Costs and Expenses:
Cost of goods sold................................ 46,356 43,387 145,875 138,120
Selling and administrative expenses............... 28,276 26,409 82,421 79,506
Interest expense.................................. 675 391 1,777 1,180
Miscellaneous (income)/expense.................... (462) (77) (2,402) (2,611)
-------- -------- -------- --------
74,845 70,110 227,671 216,195
-------- -------- -------- --------
Loss before income taxes............................ (3,106) (3,638) (2,044) (3,503)
Income tax.......................................... 35 52 155 87
-------- -------- -------- --------
Net loss........................................ $ (3,141) $ (3,690) $ (2,199) $ (3,590)
======== ======== ======== ========
Earnings (loss) per common and common equivalent
share.............................................. $ (0.54) $ (0.64) $ (0.38) $ (0.62)
======== ======== ======== ========
Weighted average number of common and common
equivalent shares.................................. 5,815 5,810 5,814 5,806
======== ======== ======== ========
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 28, 1995 AND OCTOBER 29, 1994
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Cash flows of operating activities:
Net income........................................ $ (2,199) $ (3,590)
Adjustments to reconcile net cash used by
operating activities:
Depreciation and amortization.................. 4,111 4,247
Provision for losses on accounts receivable.... -- 44
Charge to reserve for corporate restructuring,
net of depreciation and amortization.......... (3,551) (3,747)
Stock option and bonus plan expense, net of
stock retained for income taxes............... 336 68
Loss (gain) on disposition of fixed assets..... 164 (84)
Gain on disposition of real estate and
leaseholds.................................... -- (1,654)
Decrease in deferred income taxes.............. (12) (16)
Amortization of deferred rental allowances..... (106) --
Changes in assets and liabilities:
Decrease in accounts receivable.............. 695 124
Increase in merchandise inventories.......... (31,405) (17,473)
(Increase) decrease in prepaid expenses
and other................................... (2,326) 132
Increase in trade accounts payable........... 9,452 4,674
Increase in accrued liabilities.............. 3,337 2,353
Increase (decrease) in income taxes.......... 4,513 (47)
-------- --------
Net cash used by operating activities....... (16,991) (14,969)
-------- --------
Cash flows of investing activities:
Proceeds from sale of fixed assets................ 22 18
Purchase of property, plant and equipment......... (15,287) (4,270)
Proceeds from disposition of real estate
and leaseholds................................... 10 1,921
Proceeds from note receivable..................... 34 34
Proceeds from rental allowances................... 100 --
-------- --------
Net cash used by investing activities........... (15,121) (2,297)
-------- --------
Cash flows of financing activities:
Proceeds of long-term obligations, net............ 32,256 17,678
Proceeds from stock issuance...................... 10 27
Acquisition of treasury stock..................... -- (21)
-------- --------
Net cash provided by financing activities....... 32,266 17,684
-------- --------
Net increase in cash and equivalents................ 154 418
Cash and equivalents at beginning of period......... 254 44
-------- --------
Cash and equivalents at end of period............... $ 408 $ 462
======== ========
Supplemental disclosures of cash flow information:
Cash paid
Income taxes.................................... $ 434 $ 126
Interest........................................ $ 1,488 $ 1,072
</TABLE>
See notes to consolidated financial statements.
<PAGE>
OSHMAN'S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 28, 1995 AND OCTOBER 29, 1994
(UNAUDITED)
NOTE A
THE FINANCIAL STATEMENTS ARE CONDENSED AND SHOULD BE READ IN CONJUNCTION WITH
THE 1994 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 28, 1995 ARE NOT NECESSARILY
INDICATIVE OF THE RESULTS TO BE EXPECTED FOR THE FULL YEAR.
NOTE B
THE COMPANY RECEIVED FEDERAL INCOME TAX REFUNDS OF $4,142,000 PLUS INTEREST OF
$662,000 DURING THE THIRD QUARTER OF 1995 AS A RESULT OF APPLYING NET OPERATING
LOSS CARRYBACKS TO EARLIER TAX YEARS. THESE AMOUNTS ARE CURRENTLY REFLECTED ON
THE COMPANY'S BALANCE SHEET AND WILL RESULT IN TAX BENEFITS RECORDABLE IN THE
COMPANY'S STATEMENT OF OPERATIONS AT THE EARLIEST OF THE EXPIRATION OF THE
STATUTE OF LIMITATIONS (TWO YEARS) FOR REVIEW OF THE REFUNDS; THE RECEIPT OF
NOTIFICATION OF COMPLETION OF THE REVIEW PROCESS; OR SUCH DATE AS THE COMPANY
BELIEVES THE NET OPERATING LOSS BENEFIT COULD BE REALIZED THROUGH THE
CARRYFORWARD OF THE BENEFIT SHOULD THE CARRYBACK BE DISALLOWED, IN WHICH CASE
AMOUNTS RECOGNIZED WILL BE LIMITED TO AMOUNTS EXCLUSIVE OF ANY INTEREST AND
CARRYBACK RATE DIFFERENCES.
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Liquidity and Capital Resources
Cash and equivalents at October 28, 1995 were $408,000 compared to $254,000 at
January 28, 1995. In the first nine months of 1995, cash totaling $16,991,000
was used in operating activities. The primary use of cash during this period
was related to a $31,405,000 increase in merchandise inventories, charges of
$3,551,000 to the Company's restructuring reserve, discussed below, and a
$2,326,000 increase in prepaid expenses. These amounts were partially offset by
increases in trade accounts payable of $9,452,000, a $4,513,000 increase in
income taxes payable, including the receipt of an income tax refund, discussed
below, and a $3,337,000 increase in accrued liabilities.
The increase in merchandise inventories and corresponding increase in trade
accounts payable are related to inventories in the five new SuperSports USA
megastores opened this year plus the initial inventory buildup in the seven new
megastores opened on November 4, 1995 at locations acquired from Sportstown,
Inc., in addition to normal seasonal increases in preparation for the Christmas
selling season.
The increase in prepaid expenses is related to preopening costs related to the
five new SuperSports USA megastores opened during the first nine months of
fiscal 1995 and the seven megastores opened in November. The increase in
accrued liabilities is primarily related to normal increases in items such as
sales and property taxes, payrolls and also to amounts received from real estate
developers in connection with new stores.
Cash totaling $15,121,000 was used by investing activities, primarily for the
purchase of property, plant and equipment, including the opening of five
SuperSports USA megastores during the first nine months of fiscal 1995 and the
purchase of seven store locations from SportsTown, Inc. on October 6, 1995 at a
cost of approximately $5,500,000.
Financing activities provided cash of $32,266,000 as the Company utilized its
credit facility to meet its working capital needs during the first nine months
of 1995. Average borrowings under the Company's credit facility during the
first nine months of 1995 were $24,354,000, and the highest amount of borrowings
and outstanding letters of credit was $39,733,000 at October 23, 1995. During
the first nine months of 1994, average borrowings were $14,508,000, and the
highest amount of borrowings and outstanding letters of credit was $25,325,000
at May 16, 1994.
In the third quarter of fiscal 1995, the Company received Federal income tax
refunds of $4,142,000 plus interest of $662,000 resulting from the application
of net operating loss carrybacks. Approximately
7
<PAGE>
$1,652,000 of the tax refunds relate to the benefit of carrying back net
operating losses to periods for which the tax rates exceeded the current 34%
Federal income tax rate. Recognition of this refund as a tax benefit in the
Company's statement of operations will be deferred until a later date, as more
fully discussed in Note B to the financial statements.
Effective October 27, 1995, the Company amended its financing agreement with The
CIT Group/Business Credit, Inc. This amendment increased the Company's line of
credit by $5,000,000 to a total of $55,000,000 with an additional seasonal
increase of $15,000,000 during the period between September 15 and December 15
each year. Other terms of the financing agreement such as the formula for
calculating the Company's borrowing base remain unchanged.
In the fourth quarter of fiscal 1993, the Company implemented a restructuring
plan to accelerate the closing of 34 underperforming traditional stores during
1994 and 1995. As of October 28, 1995, the Company had closed 28 of the 34
stores and obtained rent concessions on an additional two stores which were
converted back to regular operation and removed from the restructure group.
Four stores remain in operation, lease terminations have been obtained for 24 of
the closed locations, one location has been subleased and three have been closed
without lease terminations. At October 28, 1995, the Company's restructure
reserve had a remaining balance of $3,210,000. The Company believes this
balance to be adequate to cover future operating losses and costs associated
with the restructure locations.
There were 16 restructure stores in operation at the beginning of the fiscal
1995 compared to 32 at the beginning of fiscal 1994. The Company closed 12
restructure stores during the first nine months of fiscal 1995 and 11 during the
same period in fiscal 1994. Sales from the restructure stores in operation were
$474,000 and $7,804,000, respectively, in the quarter and nine months ended
October 28, 1995 compared to $3,524,000 and $16,489,000, respectively, in the
same periods of 1994. During the nine months ended October 28, 1995 and October
29, 1994, respectively, the Company charged its restructuring reserve $3,918,000
and $6,816,000 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. In the first nine months of 1995, the
restructure stores as a group used cash of approximately $3,551,000 to cover
losses before depreciation and amortization. Approximately $608,000 of this
amount was for lease terminations related to stores closed as of October 28,
1995.
8
<PAGE>
Results of Operations
Net sales for the quarter ended October 28, 1995 increased $5,267,000 or 7.9%,
while sales for the nine months then ended increased $12,935,000 or 6.1%,
compared to the same periods in fiscal 1994. The increase in sales is primarily
attributable to sales contributions from the nine new SuperSports USA megastores
opened in fiscal 1994 and fiscal 1995, and also to same store sales increases in
existing megastores of 17.4% and 18.2% respectively in the quarter and nine
months ended October 28, 1995. Sales from all megastores during the first nine
months of fiscal 1995 increased 49.5% over the same period last year and
represented 43.4% of total retail sales compared to 28.5% in the first nine
months of fiscal 1994. These megastore sales increases were offset by reduced
sales from the Company's traditional stores as the Company continues to close
marginally performing traditional stores while transforming itself to primarily
a megastore operator. Since the beginning of fiscal 1994, the Company has
closed 43 traditional stores, 26 of which were a part of its restructure group.
Sales reductions attributable to all closed stores were $5,918,000 and
$16,196,000, respectively, in the third quarter and first nine months of fiscal
1995. Excluding sales from the stores in the restructure group, sales increased
13.9% and 10.8%, respectively, for the quarter and nine months ended October 28,
1995.
Comparable same store sales, excluding the stores in the restructure group,
increased 5.6% in the third quarter and 5.0% in the first nine months of 1995
compared to the same periods last year. At October 28, 1995, the Company was
operating 126 stores, including 17 megastores, compared to 145 stores, including
11 megastores, at the same time a year ago. In early November 1995, the Company
opened seven new megastores at locations acquired from SportsTown, Inc.,
bringing the total number of megastores in operation to 24.
Management of the Company believes that the superior sales performance of the
SuperSports USA megastores is attributable to two major factors: (1) as the
SuperSports USA megastores have become a more significant portion of the
Company's business, they are receiving significantly more merchandising
attention which has resulted in improved assortments and in-stock positions,
putting these stores in a better position to achieve their true sales potential;
and (2) these stores offer the customer a unique shopping experience with their
play before you pay areas, upscaled decor and merchandise assortments.
Cost of goods sold was 64.6% and 64.7%, respectively, in the quarter and nine
months ended October 28, 1995 compared to 65.3% and 64.9%, respectively, for the
same periods in fiscal 1994. The slightly improved rate in 1995 as a percentage
of sales is due primarily to reduced freight costs in the third quarter of
fiscal 1995.
Selling and administrative expenses as a percentage of sales were 39.4% and
36.5%, respectively, for the quarter and nine months ended October 28, 1995,
compared to 39.7% and 37.4%, respectively, in the
9
<PAGE>
same periods last year. This improvement as a percentage of sales is related
primarily to increased same store sales and an overall reduction, as a
percentage of sales, in occupancy costs as the more productive SuperSports USA
megastores continue to increase their proportionate contribution to overall
Company results.
Interest expense for the quarter and nine months ended October 29, 1995 was
$675,000 and $1,777,000, respectively, compared to $391,000 and $1,180,000,
respectively, for the same periods last year. The increased interest expense is
related to increased average borrowings under the Company's credit facility and
to increases in the prime interest rate.
The variations in miscellaneous income (expense) are set out in the table below:
<TABLE>
<CAPTION>
3RD QUARTER NINE MONTHS
------------- -------------
1995 1994 1995 1994
----- ------ ------ -----
(Amounts in thousands)
<S> <C> <C> <C> <C>
Gain on sales of real estate
and leasehold interest $ - $ - $1,550 $1,830
License fees 371 378 1,010 1,143
Provision for stores closed in
the normal course of operations
and write off of other assets 68 (307) (275) (462)
Other - net 23 6 117 100
----- ----- ------ ------
$ 462 $ 77 $2,402 $2,611
===== ===== ====== ======
</TABLE>
Income taxes in the first nine months of 1995 and 1994 are related primarily to
state income taxes. There was no income tax benefit in the first nine months of
1995 or 1994 as a result of the Company's inability to fully recognize the tax
benefits of net operating losses and future deductible temporary differences in
the calculation of its tax expense under SFAS 109.
In the quarter ended October 28, 1995, the Company had a pretax loss of
$3,106,000 compared to a loss of $3,638,000 before income taxes in the same
quarter last year. For the nine months ended October 28, 1995, the Company had
a loss of $2,044,000 before income taxes compared to a pretax loss of $3,503,000
in the first nine months of 1994. The improved results are primarily due to
increased sales volumes and reduced cost of goods sold and selling and
administrative expenses, as a percentage of sales, as the Company continues to
increase the number of SuperSports USA megastores in operation and to
selectively close traditional stores which do not meet the Company's current
criteria for profitability.
10
<PAGE>
PART II -- OTHER INFORMATION
<PAGE>
ITEM 6. EXHIBITS
EXHIBIT INDEX
4.1 THIRTEENTH AMENDMENT DATED OCTOBER 27, 1995 TO THE FINANCING
AGREEMENT DATED AUGUST 31, 1992 BETWEEN THE COMPANY AND THE CIT
GROUP/BUSINESS CREDIT, INC.
10.10(b) SECOND AMENDMENT TO OSHMAN EMPLOYEES' PROFIT-SHARING PLAN DATED
OCTOBER 25, 1994.
10.10(c) THIRD AMENDMENT TO OSHMAN EMPLOYEES' PROFIT-SHARING PLAN DATED
SEPTEMBER 22, 1995.
10.16 1995 INCENTIVE COMPENSATION PLAN FOR SENIOR MANAGEMENT DATED
SEPTEMBER 22, 1995.
11.1 STATEMENT RE: COMPUTATION OF PER SHARE
EARNINGS.
27 FINANCIAL DATA SCHEDULE
<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: December 12, 1995 BY: /s/ A. LYNN BOERNER
_____________________________
A. LYNN BOERNER
VICE-PRESIDENT AND
CHIEF ACCOUNTING OFFICER
<PAGE>
EXHIBIT 4.1
[LOGO OF THE CIT GROUP APPEARS HERE] The CIT Group/
Business Credit, Inc.
Two Lincoln Centre
Suite 200
5420 LBJ Freeway
Dallas, TX 75240
Tel: 214-455-1600
Fax: 214-455-1690
As of October 27, 1995
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., Kansas
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., Oregon
Oshman Sporting Goods Co., South Carolina
Oshman Sporting Goods Co., Tennessee
Oshman Sporting Goods Co., Texas
Oshman Sporting Goods Co., Washington
Oshman's Ski School, Inc.
Oshman's Sporting Goods, Inc.-Services
2302 Maxwell Lane
Houston, TX
Dear Sirs:
We refer to the a) Financing Agreement among us, dated August 31, 1992, as
amended, (herein "the Agreement"), inter alia, by that i) letter among us, dated
October 29, 1993 (the "October 1993 Amendment"); ii) letter among us, dated
December 23, 1993 (the "December 1993 I Amendment"); iii) letter among us, dated
as of December 23, 1993 (the "December 1993
<PAGE>
II Amendment"); iv) letter among us, dated January 27, 1994 (the "January 1994
Amendment"); v) letter among us, dated November 4, 1994 (the "November 1994
Amendment"); vi) letter among us, dated January 27, 1995 (the "January 1995
Amendment"); and vi) letter among us, dated April 28, 1995 (the "April 1995
Amendment") and the Financing Agreement together with the October 1993
Amendment, the December 1993 I Amendment, the December 1993 II Amendment, the
January 1994 Amendment, the November 1994 Amendment, the January 1995 Amendment
and the April 1995 Amendment are hereinafter referred to as the "Agreement");
and b) commitment letter among us, dated July 18, 1995 (the "Commitment
Letter"). Capitalized terms used herein but not otherwise defined herein shall
have the meanings ascribed to such terms in the Agreement.
Pursuant to mutual agreement, effective October 27, 1995, the Agreement is
hereby amended as follows:
1) the figure "$50,000,000.00" in the definitions of "Availability" and
"Revolving Line of Credit" in Section 1 of the Agreement is hereby deleted
and the figure "$55,000,000.00" is hereby substituted in lieu thereof;
2) the figure "$50,000,000.00" in the November 1994 Amendment is hereby
deleted and the figure "$55,000,000.00" is hereby substituted in lieu
thereof;
3) the figure "$65,000,000.00" in the November 1994 Amendment is hereby
deleted and the figure "$70,000,000.00" is hereby substituted in lieu
thereof;
4) the date "October 15th" in the November 1994 Amendment is hereby
deleted and the date "September 15th" is hereby substituted in lieu
thereof;
5) the date "October 14th" in the November 1994 Amendment is hereby
deleted and the date "September 14th" is hereby substituted in lieu
thereof;
6) the figure "$60,000.00" in the definition of "Collateral
Management Fee" in Section 1 of the Agreement is hereby deleted and the
figure "$70,000.00" hereby substituted in lieu thereof;
7) the phrase "the third or any subsequent Anniversary Date" in the last
line of the definition of "Early Termination Date" in Section 1 of the
Agreement is hereby deleted and the phrase "an Anniversary Date" is hereby
substituted in lieu thereof;
-2-
<PAGE>
8) the phrase "the initial or any subsequent" in the fourth line of the
definition of "Early Termination Fee" in Section 1 of the Agreement is
hereby deleted and the word "an" is hereby substituted in lieu thereof;
9) the phrase "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" in the definition of 'Libor' in the
November 4, 1994 Amendment is hereby deleted and the phrase "quoted by
Chemical Bank or if there is no quotation" is hereby substituted in lieu
thereof;
10) between the definitions of "Libor" and "Libor Loan" in Section 1 of
the Agreement, the following is hereby inserted:
"LIBOR PROCESSING FEE shall mean the sum of $500.00 which CITBC
shall be entitled to charge the Companies in accordance with, but
subject to, the provisions of Section 7 of this Financing Agreement upon
the election of a Libor Loan.";
11) the definition of "Permitted Indebtedness" in Section 1 of the
Agreement is hereby amended to add the following to the end of such
definition:
x) indebtedness in the form of a ten year promissory note secured by
the real estate located at FM 1960 at Mills Road in Houston, Texas
in the approximate principal sum of $4,000,000."
The amendment set forth in paragraph 11 is conditioned upon the proceeds of the
mortgage financing evidenced by the promissory note being applied to reduce the
Companies' revolving loan account.
12) paragraph 9 of Section 6 of the Agreement is hereby deleted and the
following is hereby substituted in lieu thereof:
"9. The Parent and its Subsidiaries shall maintain, as of the end of
each fiscal year on a consolidated basis, as of the end of each
fiscal year below, a Net Worth of not less than:
-3-
<PAGE>
<TABLE>
<CAPTION>
FISCAL YEAR ENDING NET WORTH
------------------ ---------
<S> <C>
February 3, 1996 $60,000,000.00
February 1, 1997 and at the end of each
fiscal year thereafter. $62,000,000.00"
</TABLE>
13) sub-paragraph I of paragraph 10 of Section 6 of the Agreement is hereby
deleted and the following is hereby substituted in lieu thereof:
"I. Permit EBITDA, on a consolidated and cumulative fiscal
year to date basis, for the Parent and its Subsidiaries, at the
end of each fiscal quarter, to be:
<TABLE>
<CAPTION>
FISCAL QUARTER ENDING EBITDA
--------------------- ------
<S> <C>
October 28, 1995 more negative than negative
$2,000,000.00
February 3, 1996 less than $7,200,000.00
May 4, 1996 and for the last day less than $ 750,000.00
in the first quarter of each fiscal
year thereafter
August 3, 1996 and for the last day less than $4,000,000.00
in the second quarter of each fiscal
year thereafter
November 2, 1996 and for the last day less than $1,500,000.00
in the third quarter of each fiscal
year thereafter
February 1, 1997 and for the last day less than $12,000,000.00"
in the fourth quarter of each fiscal
year thereafter.
</TABLE>
14) paragraph 11 of Section 6 of the Agreement is hereby deleted in its
entirety, and the following is substituted in lieu thereof.
"Without the prior written consent of CITBC, the Companies, on a
consolidated basis, will not contract for, purchase, make expenditures
for, lease pursuant to a Capital Lease or otherwise incur obligations
with respect to Capital Expenditures (whether subject to a security
interest or otherwise) during any fiscal year in an aggregate amount in
excess of:
-4-
<PAGE>
i) $20,000,000.00 for the fiscal year ended February 3, 1996;
ii) $12,000,000.00 for the fiscal year ended February 1, 1997 and for
each fiscal year thereafter."
15) paragraph 14 of Section 6 of the Agreement is hereby added as follows:
"14. The Parent and its Subsidiaries shall maintain, as of
the end of each fiscal quarter, on a consolidated basis, a
ratio of Trade Accounts Payable plus the amount of any
"book overdraft" of the Parent and its Subsidiaries to
Inventory, valued on a first in, first out method, in
accordance with GAAP, of not less than:
<TABLE>
<CAPTION>
FISCAL QUARTER RATIO
-------------- -----
<S> <C>
October 28, 1995 35%
February 3, 1996 30%
May 4, 1996 and for the last day 25%
in the first quarter of each fiscal
year thereafter
August 3, 1996 and for the last day 30%
in the second quarter of each fiscal
year thereafter
November 2, 1996 and for the last day 35%
in the third quarter of each fiscal
year thereafter
February 1, 1997 and for the last day 30%
in the fourth quarter of each fiscal
year thereafter
</TABLE>
Notwithstanding the foregoing and anything to the contrary contained herein, the
above Trade Accounts Payable to Inventory Ratio Covenant shall not become
effective until the quarter end following the failure of the Companies to
maintain a Minimum Availability (as defined below) for more than fifteen
consecutive business days.
The Minimum Availability for any month commencing January 1, 1996 shall mean an
amount equal to the sum of (x) fifty percent (50%) of the month end
availability as set forth in the Companies' cash flow projections for the
Companies' fiscal year in which such month occurs
-5-
<PAGE>
(herein "Projections") for such month plus (y) fifty percent (50%) of such month
end availability for the next succeeding month thereafter, averaged for such two
consecutive months. All Projections shall be satisfactory to CITBC and shall be
delivered to CITBC within a reasonable time following its request as provided in
Section 6 paragraph 7 of the Agreement but in no event later than forty-five
(45) days prior to the commencement of each fiscal year hereafter. In the event
any projections are not timely received by CITBC or are not satisfactory to
CITBC, the above Trade Accounts Payment to Inventory Ratio Covenant shall be
effective.
For example and for purposes of illustration only: if the Companies' Projections
provide for $16,000,000.00 in month end availability at the end of February and
$18,000,000.00 in month end availability at the end of March, the Minimum
Availability would equal $8,500,000.00; therefore, as long as the Companies'
availability did not fall below $8,500,000.00 for fifteen consecutive business
days in February, the Companies would not be required to meet the above Trade
Accounts Payable to Inventory Ratio Covenant. In March, the Minimum Availability
would be calculated as fifty percent (50%) of the Companies' projected month end
availability for March and April.
16) the third sentence in paragraph 1(A) of Section 7 of the Agreement is
hereby deleted and the following is hereby substituted in lieu thereof: "The
Libor elections must be for integral multiples of $1,000,000.00 and the
Companies shall pay CITBC a non-refundable Libor Processing Fee upon the
effective date of each Libor Loan provided, however, that there shall be no
Libor Processing Fee for the first four (4) Libor Loans in any calendar year
which have a three (3) month Libor Period.";
17) the phrase "three (3) business days" in the second sentence in paragraph
1(A) of Section 7 of the Agreement is hereby deleted and the phrase "two (2)
business days" is hereby substituted in lieu thereof;
18) the phrase "the fourth business day" in the second sentence in paragraph
1(A) of Section 7 of the Agreement is hereby deleted and the phrase "the third
business day" is hereby substituted in lieu thereof;
19) the period (.) at the end of paragraph 4 of Section 7 of the Agreement
is hereby deleted and the following is hereby substituted in lieu thereof "and
Libor Processing Fees."; and
-6-
<PAGE>
20) the following is hereby inserted as paragraph 11 in Section 7 of the
Agreement:
"11. Prior to the effective date of this amendment, the
Collateral Management Fee was $60,000.00. If this amendment
becomes effective after the Companies have paid CITBC the
old Collateral Management Fee pursuant to paragraph 7 above,
then the Companies shall, on the date this amendment is
effective, immediately pay to CITBC the sum of $10,000.00"
21) subparagraph (v) of paragraph 1(B) of Section 7 of the Financing
Agreement appearing in the November 1994 Amendment is hereby amended by deleting
"three-quarters of one percent (.75%)" and substituting "one-half of one percent
(.50%)" in lieu thereof.
Except as otherwise hereinabove specifically provided, no other amendment or
change in any of the terms or provisions of the Agreement is intended or
implied. If the foregoing is in accordance with your understanding, please so
indicate by signing and returning to us the enclosed copy of this letter.
Very truly yours,
THE CIT GROUP/BUSINESS CREDIT, INC.
By: [Signature appears here]
--------------------------------
Title: V.P.
-7-
<PAGE>
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., KANSAS
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., OREGON
OSHMAN SPORTING GOODS CO., SOUTH CAROLINA
OSHMAN SPORTING GOODS CO., TENNESSEE
OSHMAN SPORTING GOODS CO., TEXAS
OSHMAN SPORTING GOODS CO., WASHINGTON
OSHMAN'S SKI SKOOL, INC.
OSHMAN'S SPORTING GOODS, INC.-SERVICES
BY: [Signature appears here]
-----------------------------
Title: VP-CAO
of each of the above companies
-8-
<PAGE>
EXHIBIT 10.10(b)
SECOND AMENDMENT TO
OSHMAN EMPLOYEES'
PROFIT-SHARING PLAN
ADOPTION OF MODEL AMENDMENTS
PURSUANT TO
INTERNAL REVENUE SERVICE
REVENUE PROCEDURES 93-47 AND 94-13
WHEREAS, OSHMAN'S SPORTING GOODS, INC. (the "Company") and other employers
have heretofore adopted and maintain the OSHMAN EMPLOYEES' PROFIT-SHARING PLAN
(the "Plan"); and
WHEREAS, the Company desires to amend the Plan in accordance with Internal
Revenue Service Revenue Procedures 93-47 and 94-13 and in other respects on
behalf of itself and the other employers;
NOW, THEREFORE, the Plan shall be and hereby is amended as follows:
I. Effective as of January 1, 1993:
1. The following shall be added to the end of Paragraph (b) of Section 9.01
of the Plan:
"WAIVER OF 30-DAY NOTICE REQUIREMENT MODEL AMENDMENT
----------------------------------------------------
If a distribution is one to which sections 401(a)(11) and 417 of the
Internal Revenue Code do not apply, such distribution may commence less than
30 days after the notice required under section 1.411(a)-11(c) of the Income
Tax Regulations is given, provided that:
(1) the plan administrator clearly informs the participant that the
participant has a right to a period of at least 30 days after receiving
the notice to consider the decision of whether or not to elect a
distribution (and, if applicable, a particular distribution option), and
(2) the participant, after receiving the notice, affirmatively
elects a distribution."
II. Effective as of February 1, 1994:
1. The following shall be added to the end of Paragraph (9) of Section 1.01
of the Plan:
<PAGE>
"SECTION 401(a)(17) MODEL AMENDMENT
-----------------------------------
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for Plan
Years beginning on or after January 1, 1994, the annual compensation of each
employee taken into account under the Plan shall not exceed the OBRA '93
annual compensation limit. The OBRA '93 annual compensation limit is
$150,000, as adjusted by the Commissioner for increases in the cost of
living in accordance with section 401(a)(17)(B) of the Internal Revenue
Code. The cost-of-living adjustment in effect for a calendar year applies to
any period, not exceeding 12 months, over which compensation is determined
(determination period) beginning in such calendar year. If a determination
period consists of fewer than 12 months, the OBRA '93 annual compensation
limit will be multiplied by a fraction, the numerator of which is the number
of months in the determination period, and the denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any reference in
this Plan to the limitation under section 401(a)(17) of the Code shall mean
the OBRA '93 annual compensation limit set forth in this provision.
If compensation for any prior determination period is taken into account
in determining an employee's benefits accruing in the current Plan Year, the
compensation for that prior determination period is subject to the OBRA '93
annual compensation limit in effect for that prior determination period. For
this purpose, for determination periods beginning before the first day of
the first Plan Year beginning on or after January 1, 1994, the OBRA '93
annual compensation limit is $150,000."
2. The reference to "Company" in the last two sentences of Article XV and
the third sentence of Section 16.01 of the Plan shall be deleted and "Directors"
shall be substituted therefore.
III. As amended hereby, the Plan is specifically ratified and reaffirmed.
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed on this 28th day of October, 1994.
OSHMAN'S SPORTING GOODS, INC.
By: /s/ R.L. Bockart
Name: R.L. Bockart
Title: Vice President
-2-
<PAGE>
EXHIBIT 10.10(c)
THIRD AMENDMENT TO
OSHMAN EMPLOYEES'
PROFIT-SHARING PLAN
WHEREAS, OSHMAN'S SPORTING GOODS, INC. (the "Company") and other Employing
Companies have heretofore adopted and maintain the OSHMAN EMPLOYEES' PROFIT-
SHARING PLAN (the "Plan"); and
WHEREAS, the Plan was amended and restated, effective February 1, 1989,
except as otherwise indicated therein; and
WHEREAS, the Company desires to further amend the Plan on behalf of itself
and the other Employing Companies;
NOW, THEREFORE, the Plan is hereby amended as follows, effective as of
September 1, 1995:
The penultimate sentence of Section 13.04 of the Plan shall be deleted and
the following shall be substituted therefore:
"The Trustees may, however, acquire "qualifying Company securities" as
an investment provided that immediately after such acquisition the aggregate
fair market value of "qualifying Company securities" held in the Trust Fund
does not exceed 25% of the then fair market value of the assets of the Trust
Fund."
As amended hereby, the Plan is specifically ratified and affirmed.
EXECUTED, this 22nd day of September, 1995.
OSHMAN'S SPORTING GOODS, INC.
By: /s/ Alvin N. Lubetkin
Name: Alvin N. Lubetkin
Title: Chief Executive Officer
<PAGE>
EXHIBIT 10.16
OSHMAN'S SPORTING GOODS, INC.
1995 INCENTIVE COMPENSATION PLAN FOR SENIOR MANAGEMENT
(I) THE PLAN Oshman's Sporting Goods, Inc. (the "Company") wishes to promote the
financial success of the Company by rewarding certain key executive officers
based upon the performance of the Company. Therefore, at the direction of the
Compensation Committee of the Board of Directors, the Company has established
this 1995 Incentive Compensation Plan for Senior Management (the "Bonus Plan")
for 1995 performance-based cash bonuses. Pursuant to the Bonus Plan, certain
executive officers of the Company will be eligible to receive cash bonuses from
two pools, the Primary Compensation Pool and the Secondary Compensation Pool, if
certain criteria are met.
(II) PAYMENT OF BONUSES
(A) Primary Compensation Pool.
(1) The amount of money available for distribution from the Primary
Compensation Pool to eligible corporate executive officers shall be 25
percent of the consolidated contribution to overhead in excess of
$3,500,000, as recorded on the Company's financial statements for the
fiscal year ended February 3, 1996; provided, however, that in no event
shall such amount be greater than $250,000.
(2) (a) In the event $250,000 is available for distribution from the
Primary Compensation Pool, such amount shall be distributed among the
following individuals in the manner set forth below:
<TABLE>
<S> <C>
Marilyn Oshman $50,001
Alvin N. Lubetkin $50,000
William Anderson* $50,000*
Will Clark* $33,333*
Lindsay Rice* $33,333*
Steve Rath* $33,333*
</TABLE>
provided, however, that for the individuals and amounts indicated with an
asterisk (*), 50 percent of any payment to be received pursuant to this
section II(A)(2) shall be subject further to certain specified
performance criteria to be developed by Mr. Alvin Lubetkin and agreed to
by the respective individuals.
(b) In the event the amount available for distribution from the
Primary Compensation Pool is less than $250,000, such available amount
shall be allocated among the six officers indicated in paragraph
II(A)(2)(a) above, pro rata, based upon the foregoing allocations in such
paragraph II(A)(2)(a) and in accordance with the other provisions
thereof.
<PAGE>
B. Secondary Compensation Pool.
(1) The amount payable under the Secondary Compensation Pool shall
be a total of $250,000.
(2) The Secondary Compensation Pool shall be payable as follows:
(a) In the event the net earnings per share of the Company for
Fiscal Year 1995 equals or exceeds $0.50, the following individuals
shall receive the amount set forth opposite their respective names:
Alvin N. Lubetkin, CEO $75,000
William Anderson, COO $50,000
(b) In the event the average closing price of the Company's
common stock, as reported by the American Stock Exchange Inc.,
during the period beginning January 2, 1996 and ending February 29,
1996 is greater than or equal to $10.50 per share, the following
individuals shall receive the following amounts:
Alvin N. Lubektin $75,000
William Anderson $50,000
Bonuses payable from the Secondary Compensation Pool shall be payable whether
or not bonuses are paid from the Primary Compensation Pool and any amount
payable pursuant paragraph II(B)(2)(a) above shall be in addition to, and
not in lieu of amounts payable under paragraph II(B)(2)(a); provided, however,
that no amounts shall be payable from the Secondary Compensation Pool if the
Company reports a deficit for the year ending February 3, 1996.
IN WITNESS WHEREOF, this Plan has been executed this 22 day of SEPTEMBER,
1995.
OSHMAN'S SPORTING GOODS, INC.
By: /s/ ALVIN N. LUBETKIN
Name: ALVIN N. LUBETKIN
Title: C.E.O.
<PAGE>
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 AND NINE MONTHS
ENDED OCTOBER 28, 1995 AND OCTOBER 29, 1994
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED NINE MONTHS ENDED NINE MONTHS ENDED
1995 1994 1995 1994
------------------ ------------------ ----------------- -----------------
FULLY FULLY FULLY FULLY
PRIMARY DILUTED PRIMARY DILUTED PRIMARY DILUTED PRIMARY DILUTED
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net loss.............................. $(3,141) $(3,141) $(3,690) $(3,690) $(2,199) $(2,199) $(3,590) $(3,590)
======= ======= ======= ======= ======= ======= ======= =======
Weighted average number of common
shares outstanding................... 5,815 5,815 5,810 5,810 5,814 5,814 5,806 5,806
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................... 5,815 5,815 5,810 5,810 5,814 5,814 5,806 5,806
======= ======= ======= ======= ======= ======= ======= =======
Earnings (loss) per common and
common equivalent share............ $ (0.54) $ (0.54) $ (0.64) $ (0.64) $ (0.38) $ (0.38) $ (0.62) $ (0.62)
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
See notes to consolidated financial statements.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-03-1996
<PERIOD-START> JAN-29-1995
<PERIOD-END> OCT-28-1995
<CASH> 408
<SECURITIES> 0
<RECEIVABLES> 2,742
<ALLOWANCES> 395
<INVENTORY> 129,699
<CURRENT-ASSETS> 140,130
<PP&E> 90,892
<DEPRECIATION> 52,757
<TOTAL-ASSETS> 178,846
<CURRENT-LIABILITIES> 80,194
<BONDS> 0
<COMMON> 0
0
5,821
<OTHER-SE> 53,112
<TOTAL-LIABILITY-AND-EQUITY> 178,846
<SALES> 225,627
<TOTAL-REVENUES> 225,627
<CGS> 145,875
<TOTAL-COSTS> 145,875
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,777
<INCOME-PRETAX> (2,044)
<INCOME-TAX> 155
<INCOME-CONTINUING> (2,199)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,199)
<EPS-PRIMARY> (0.38)
<EPS-DILUTED> (0.38)
</TABLE>
