<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 August 3, 1996
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 5,826,199
---------------------------------- ---------
<PAGE>
PART I -- FINANCIAL INFORMATION
<PAGE>
ITEM 1 - FINANCIAL STATEMENTS
OSHMAN'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AUGUST 3, 1996, FEBRUARY 3, 1996 AND JULY 29, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
AUGUST 3, FEBRUARY 3, JULY 29,
1996 1996 1995
----------- ------------ ------------
ASSETS (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
CURRENT ASSETS
CASH AND CASH EQUIVALENTS $ 361 $ 327 $ 240
ACCOUNTS RECEIVABLE, LESS ALLOWANCE OF
$391 AUG 96, $386 FEB 96 AND $393 JUL 95 2,663 3,452 3,480
MERCHANDISE INVENTORIES 126,629 110,630 103,585
PREPAID EXPENSES AND OTHER 8,042 7,819 7,555
-------- -------- --------
TOTAL CURRENT ASSETS 137,695 122,228 114,860
PROPERTY, PLANT AND EQUIPMENT, AT COST 96,189 93,807 82,498
LESS ACCUMULATED DEPRECIATION AND
AMORTIZATION 54,786 53,701 52,522
-------- -------- --------
NET PROPERTY, PLANT AND EQUIPMENT 41,403 40,106 29,976
OTHER ASSETS 541 589 605
-------- -------- --------
$179,639 $162,923 $145,441
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
CURRENT MATURITIES OF LONG-TERM OBLIGATIONS $ 882 $ 809 $ 396
TRADE ACCOUNTS PAYABLE 49,872 35,486 29,975
ACCRUED LIABILITIES 19,843 18,231 14,724
INCOME TAXES 4,365 4,382 206
RESTRUCTURING RESERVE 278 480 3,965
-------- -------- --------
TOTAL CURRENT LIABILITIES 75,240 59,388 49,266
DEFERRED FEDERAL INCOME TAXES 504 504 267
DEFERRED RENTAL ALLOWANCES 3,062 3,180 1,759
LONG-TERM OBLIGATIONS 46,805 36,681 32,245
STOCKHOLDERS' EQUITY
COMMON STOCK 5,829 5,822 5,811
ADDITIONAL CAPITAL 3,978 3,865 3,610
RETAINED EARNINGS 44,242 53,504 52,504
LESS TREASURY STOCK, AT COST (21) (21) (21)
-------- -------- --------
STOCKHOLDERS' EQUITY 54,028 63,170 61,904
-------- -------- --------
$179,639 $162,923 $145,441
======== ======== ========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
OSHMAN'S SPORTING GOODS, INC, AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED
AUGUST 3, 1996 AND JULY 29, 1995
(UNAUDITED)
(in thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
--------------------- --------------------
1996 1995 1996 1995
--------- ------- --------- ---------
<S> <C> <C> <C> <C>
NET SALES $92,000 $84,481 $174,720 $153,888
COST OF GOODS SOLD 65,647 56,251 118,188 99,519
------- ------- -------- --------
GROSS PROFIT 26,353 28,230 56,532 54,369
OPERATING EXPENSES
SELLING AND ADMINISTRATIVE EXPENSES 31,307 27,620 60,947 53,568
AMORTIZATION OF PRE-OPENING COSTS 1,013 261 1,979 577
STORE CLOSING PROVISION 1,227 35 1,324 214
MISCELLANEOUS INCOME (100) (1,604) (399) (1,940)
------- ------- -------- --------
OPERATING (LOSS) INCOME (7,094) 1,918 (7,319) 1,950
INTEREST EXPENSE, NET 913 423 1,847 888
------- ------- -------- --------
EARNINGS (LOSS) BEFORE INCOME TAXES (8,007) 1,495 (9,166) 1,062
INCOME TAXES 34 75 96 120
------- ------- -------- --------
NET EARNINGS (LOSS) $(8,041) $1,420 $(9,262) $942
======= ======= ======== ========
EARNINGS (LOSS) PER COMMON AND COMMON
EQUIVALENT SHARE $(1.38) $.24 $(1.59) $.16
======= ======= ======== ========
WEIGHTED AVERAGE NUMBER OF COMMON
AND COMMON EQUIVALENT SHARES 5,828 5,886 5,828 5,890
======= ======= ======== ========
DIVIDENDS PER SHARE $ - $ - $ - $ -
======= ======= ======== ========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
OSHMAN'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED AUGUST 3, 1996 AND JULY 29, 1995
(UNAUDITED)
(in thousands)
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
CASH FLOWS OF OPERATING ACTIVITIES:
NET EARNINGS(LOSS) $(9,262) $ 942
ADJUSTMENTS TO RECONCILE NET CASH (USED)PROVIDED BY OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 3,260 2,704
RECOVERIES OF LOSSES ON ACCOUNTS RECEIVABLE (5) (2)
CHARGE TO RESERVE FOR CORPORATE RESTRUCTURING, NET OF
DEPRECIATION AND AMORTIZATION (202) (2,803)
PROVISION FOR LOSSES ON STORE CLOSINGS 2,329 214
STOCK OPTION AND BONUS PLAN EXPENSE 76 176
(GAIN)LOSS ON DISPOSITION OF FIXED ASSETS (4) 99
DECREASE IN DEFERRED INCONE TAXES - (35)
AMORTIZATION OF DEFERRED RENTAL ALLOWANCES (118) (72)
CHANGES IN ASSETS AND LIABILITIES:
DECREASE(INCREASE) IN ACCOUNTS RECEIVABLE 794 (41)
INCREASE IN MERCHANDISE INVENTORIES (15,999) (5,291)
DECREASE(INCREASE) IN PREPAID EXPENSES AND OTHER 839 (1,267)
INCREASE(DECREASE) IN TRADE ACCOUNTS PAYABLE 14,386 (15,711)
(DECREASE)INCREASE IN ACCRUED LIABILITIES (632) 1,100
(DECREASE)INCREASE IN INCOME TAXES (17) 78
------- -------
NET CASH USED BY OPERATING ACTIVITIES (4,555) (19,909)
CASH FLOWS OF INVESTING ACTIVITIES:
PROCEEDS FROM SALE OF FIXED ASSETS 26 17
PURCHASE OF PROPERTY, PLANT AND EQUIPMENT (7,682) (5,867)
PROCEEDS FROM DISPOSITION OF REAL ESTATE AND LEASEHOLDS 1 6
PROCEEDS FROM NOTE RECEIVABLE 24 24
DEPOSITS FOR ACQUISITION OF LEASEHOLD INTERESTS - (2,000)
PROCEEDS FROM LANDLORDS 1,979 925
------- -------
NET CASH USED BY INVESTING ACTIVITIES (5,652) (6,895)
CASH FLOWS OF FINANCING ACTIVITIES:
PROCEEDS FROM STOCK ISSUANCE 44 -
PROCEEDS FROM ISSUANCE OF LONG-TERM OBLIGATIONS 258 676
PAYMENTS OF LONG-TERM OBLIGATIONS (423) (170)
PROCEEDS FROM REVOLVING CREDIT FACILITY, NET 10,362 26,284
------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES 10,241 26,790
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 34 (14)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 327 254
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 361 $ 240
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
CASH PAID DURING THE YEAR FOR
INCOME TAXES $ 98 $ 64
INTEREST 1,769 824
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
OSHMAN'S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 3, 1996 AND JULY 29, 1995
(UNAUDITED)
NOTE A
The financial statements are condensed and should be read in conjunction with
the 1995 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 six months ended August 3, 1996 are not necessarily indicative of the
results to be expected for the full year.
NOTE B
During the second quarter of fiscal 1996, the Company recorded a store closing
provision of $2,200,000 for inventory liquidation losses, lease termination
costs, leasehold and fixed asset write-offs and other incremental closing costs
in connection with certain underperforming traditional stores which the Company
expects to close by the end of fiscal 1996. Of the $2,200,000 recorded,
$1,000,000 is for inventory liquidation losses and is included in cost of goods
sold on the Company's Consolidated Statements Of Operations.
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Results of Operations
The following table sets forth selected statements of operations data of the
Company expressed as a percentage of net sales for the periods indicated:
<TABLE>
<CAPTION>
PERCENTAGE OF NET SALES
--------------------------------
2ND QUARTER SIX MONTHS
--------------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales 100.0 100.0 100.0 100.0
Cost of goods sold 71.4 66.6 67.6 64.7
----- ----- ----- -----
Gross profit 28.6 33.4 32.4 35.3
Operating expenses
Selling and administrative expenses 34.0 32.7 34.9 34.8
Amortization of pre-opening costs 1.1 .3 1.1 .4
Store closing provision 1.3 - .8 .1
Miscellaneous income (.1) (1.9) (.2) (1.3)
----- ----- ----- -----
Operating income (loss) (7.7) 2.3 (4.2) 1.3
Interest expense, net 1.0 .5 1.1 .6
----- ----- ----- -----
Earnings (loss) before income taxes (8.7) 1.8 (5.3) .7
Income taxes - .1 - .1
----- ----- ----- -----
Net earnings (loss) (8.7) 1.7 (5.3) .6
===== ===== ===== =====
</TABLE>
Net sales for the quarter and six months of fiscal 1996 increased 8.9% and 13.5%
respectively compared to the same periods in fiscal 1995. The increase in sales
is attributable to sales contributions from the 15 new SuperSports USA
megastores opened since the beginning of fiscal 1995. Sales from megastores
during the first half of fiscal 1996 increased 68.1% over the same period last
year and represented 61.6% of total retail sales compared to 42.1% in the first
half of fiscal 1995. The increase in megastore sales was partially offset by
reduced sales from the Company's traditional stores. The Company has closed 26
traditional stores since the beginning of fiscal 1995, including 13 which were a
part of the Company's restructure group. Sales declines in the first half of
fiscal 1996 attributable to closed stores totaled $12.2 million.
Comparable same store sales in the Company's SuperSports USA megastores declined
5.4% in the second quarter of fiscal 1996 while sales in comparable traditional
stores decreased 13.4% causing a 9.7% decline in overall same store sales
compared to the same period in 1995. In the first six months of fiscal 1996,
comparable same store sales in the
<PAGE>
megastores decreased 3.4% while same store sales in traditional stores decreased
by 12.6% resulting in an overall 8.2% decline.
Management attributes the decline in comparable traditional store sales
primarily to increased competition from megastores and secondly, to
cannibalization of sales resulting from the expansion of the Company's
megastores. Management believes that changing consumer preferences toward
sporting goods megastores has had a detrimental impact on the Company's existing
traditional stores and will continue to have a detrimental impact on these
stores in the future. Accordingly, the Company is currently evaluating more
aggressive strategies that could be implemented to reduce the number of
traditional stores in operation. The decline in overall comparable store sales
resulted primarily from hardlines, especially in-line skates. Additionally,
second quarter sales were unfavorable impacted by reduced team sports apparel
sales due to the increased second quarter 1995 sales associated with the Houston
Rockets winning the 1995 NBA championship.
Cost of goods sold as a percentage of net sales was 71.4% and 67.6% respectively
in the quarter and six months ended August 3, 1996 compared to 66.6% and 64.7%
respectively for the same periods in fiscal 1995. Cost of goods sold as a
percentage of net sales was negatively affected by aggressive markdowns and
other adjustments which reduced the carrying value of inventories. The Company
took additional markdowns in the second quarter of fiscal 1996 in an effort to
reduce excessive inventories resulting from lower than planned sales and from
stores closed and expected to close.
Also during the second quarter, the Company recorded additional adjustments to
the carrying value of inventory reflecting shrinkage in physical inventory.
Management attributes the increase in the inventory shrinkage rate as a
percentage of sales to comparable store sales declines and increased promotional
pricing activities. In an effort to reduce inventory shrinkage, management is
in the process of evaluating the implementation of more stringent operating
procedures.
Selling and administrative expenses as a percentage of net sales were 34.0% and
34.9% respectively for the quarter and six months ended August 3, 1996 compared
to 32.7% and 34.9% respectively in the same periods last year. Selling and
administrative expenses as a percentage of net sales increased due to lower than
expected net sales in the traditional stores and the addition of new stores that
have not yet grown to expected sales levels.
Pre-opening expenses of new SuperSports USA megastores are amortized over the
first 12 months of operation. Expenses of $1.0 million and $2.0 million in the
quarter and six months ending August 3, 1996 compared to $261,000 and $577,000
respectively in the same periods last year relate to the opening of 12
megastores in fiscal 1995 and three during the first half of fiscal 1996
compared to only five megastores openings in comparable periods in the prior
fiscal years.
Store closing provision expenses were $1.2 million and $1.3 million respectively
in the second quarter and first six months of fiscal 1996 compared to $35,000
and $214,000 respectively in the same periods last year. During the second
quarter of fiscal 1996, the Company recorded a provision of $2.2 million ($1.0
million of which is related to inventories and is included in cost of goods
sold) in connection with certain
<PAGE>
underperforming traditional stores which management expects to close by the end
of fiscal 1996. The provision was established primarily to cover inventory
liquidation losses, lease termination costs, leasehold and fixed asset write-
offs and other incremental store closing costs. Management intends to continue
to evaluate underperforming stores and assess alternatives with regard to these
locations.
The Company closed six traditional stores in the first half of fiscal 1996
compared to 17 (12 of which were included in the Company's restructure group)
during the first half of fiscal 1995. The Company expects it will close 19
traditional stores during fiscal 1996. In fiscal 1995, a total of 20
traditional stores were closed, including 12 which were included in the
restructure group.
Miscellaneous income was $100,000 and $399,000 respectively in the second
quarter and first six months of fiscal 1996 compared to $1.6 million and $1.9
million respectively in the same periods of fiscal 1995 which included a gain of
$1.6 million related to a condemnation award.
Net interest expense for the second quarter and first six months of fiscal 1996
was $913,000 and $1.8 million respectively compared to $423,000 and $888,000
respectively for the same periods last year. The increased interest expense is
related to increased average borrowings under the Company's credit facility.
Income taxes in fiscal 1996 and 1995 are related primarily to state income
taxes. There was no income tax benefit in fiscal 1996 or 1995 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 first half of fiscal 1996, the Company had a pretax loss of $9.2 million
compared to income of $1.1 million before income taxes in the same period last
year. The decline in results in fiscal 1996 compared to fiscal 1995 is
primarily attributable to reduced gross margin resulting from comparable store
sales declines and to increased markdowns and inventory adjustments as discussed
above. Additionally, the non-recurrence of the condemnation gain in 1995 and
the provision in fiscal 1996 for additional traditional store closings, along
with increased amortization of pre-opening expenses and interest expense further
contributed to the loss this year.
Liquidity and Capital Resources
Cash and equivalents at August 3, 1996 were $361,000 compared to $327,000 at
February 3, 1996. In the first half of fiscal 1996, cash totaling $4.6 million
was used by operating activities. The primary use of cash during this period
was related to an $16.0 million increase in merchandise inventories partially
offset by an increase in trade accounts payable of $14.4 million. The increase
in merchandise inventories and corresponding increase in trade accounts payable
are related to normal seasonal fluctuations and to inventory buildup for back to
school promotions which began in the last week of the second quarter.
<PAGE>
Additionally, a portion of the increase was related to inventory for three new
SuperSports USA megastores which opened in the first half of fiscal 1996.
Investing activities used cash totaling $5.7 million, primarily for the purchase
of property, plant and equipment, including the opening of three SuperSports USA
megastore in the first half of fiscal 1996 and the renovation of one of the
seven store locations acquired from SportsTown, Inc. in 1995. There currently
are four additional SuperSports USA megastores under construction in Texas and
California, and are expected to open in fiscal 1996.
Financing activities provided cash of $10.2 million as the Company utilized its
credit facility to meet its working capital needs during the first half of
fiscal 1996. Average borrowings under the Company's credit facility during the
first six months of fiscal 1996 were $39.0 million, and the highest amount of
borrowings and outstanding letters of credit was $47.3 million at July 1, 1996.
During the same period of fiscal 1995, average borrowings were $21.8 million,
and the highest amount of borrowings and outstanding letters of credit was $34.2
million at July 25, 1995. The increased level of borrowing in fiscal 1996 is
related primarily to the net inventory requirements and capital expenditures
related to the 15 SuperSports USA megastores opened since the beginning of
fiscal 1995. The Company's revolving credit facility with The CIT
Group/Business Credit, Inc. expires August 31, 1997. The Company is presently
engaged in discussions with CIT regarding a renewal of the credit facility and
an increase in its revolving line of credit.
As discussed above, the Company expects to close 19 traditional stores in fiscal
1996. At the end of the second quarter of fiscal 1996, the Company has
available reserves totaling $4.4 million related to stores it expects to close
and for stores previously closed, including one store in the restructure group,
for which lease obligations have not been terminated. The Company believes that
this amount is adequate to cover future costs associated with these locations.
During July 1996, William N. Anderson, formerly President, Chief Operating
Officer and Director, resigned from the Company. In light of Mr. Anderson's
resignation, Mr. Lindsay J. Rice, Executive Vice President, has reassumed
responsibility for merchandising and marketing under the supervision of Alvin N.
Lubetkin, Chief Executive Officer. In addition, Timothy L. Grady, Senior Vice
President and Chief Financial Officer has assumed responsibility for Information
Systems and Human Resource activities which were formerly coordinated by Mr.
Anderson.
<PAGE>
PART II -- OTHER INFORMATION
<PAGE>
ITEM 4 - SUBMISSION OF MATTERS TO A
VOTE OF SECURITY HOLDERS
(a) June 21, 1996 annual meeting of stockholders.
(c) Matters voted upon.
1. Election of six directors to serve as the Board of Directors until
the next annual meeting of stockholders and until their respective
successors are elected.
NUMBER OF VOTES
------------------------------
WITHHELD BROKER
NOMINEE FOR AUTHORITY NON-VOTES
- -------- ------ ---------- ----------
William N. Anderson 5,558,540 4,480 -
Marvin Aronowitz 5,558,540 4,480 -
Alvin N. Lubetkin 5,558,540 4,480 -
Marilyn Oshman 5,558,440 4,580 -
Manuel Sanchez, III. 5,558,540 4,480 -
Dolph B. H. Simon 5,558,340 4,680 -
<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: September 16, 1996 By: /s/ Timothy L. Grady
----------------- ---------------------------
Timothy L. Grady
Senior Vice President and
Chief Financial Officer
Date: September 16, 1996 By: /s/ A. Lynn Boerner
----------------- ---------------------------
A. Lynn Boerner
Vice President and
Chief Accounting Officer
<PAGE>
ITEM 6. EXHIBITS
Exhibit Index
4.1(a) Sixteenth Amendment Dated July 18, 1996 to the Financing Agreement
dated August 31, 1992 between the Company and The CIT Group/Business
Credit, Inc.
4.1(b) Seventeenth Amendment Dated August 2, 1996 to the 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
27 Financial Data Schedule
<PAGE>
EXHIBIT 4.1(a)
[THE CIT GROUP LOGO APPEARS HERE]
July 18, 1996
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
2302 Maxwell Lane
Houston, TX
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.
<PAGE>
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., and Oshman's Sporting Goods, Inc. Services, and The CIT
Group/Business Credit, Inc. Capitalized terms used and not otherwise defined
herein shall have the meanings assigned to them in the Financing Agreement.
You have advised us that Oshman's Sporting Goods, Inc. has formed three (3) new
subsidiaries: Oshman Sporting Goods, Co., Utah, Oshman Sporting Goods Co.,
Michigan, and Oshman Sporting Goods, Co., Colorado (the New Companies). Pursuant
to your request, the Financing Agreement and all of the other agreements and
documentation entered into in connection therewith, as appropriate, shall be,
and hereby are, amended to add the New Companies as borrowers and/or parties for
all intents and purposes thereunder, and the New Companies shall have all of the
rights and all of the obligations and liabilities of borrowers and/or parties
thereunder. The New Companies hereby agree, in accordance with the provisions of
the Financing Agreement, to inter alia, execute all financing statements that we
require in order to grant us valid and perfected first security interests in the
Collateral (subject only to the Permitted Encumbrances).
-2-
<PAGE>
Except as otherwise provided 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, 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: /s/ Pamela Wozniak
-------------------------
Title: Assistant Secretary
-3-
<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., COLORADO
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., MICHIGAN
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., UTAH
OSHMAN SPORTING GOODS CO., WASHINGTON
OSHMAN'S SKI SKOOL, INC.
OSHMAN SPORTING GOODS, INC.-SERVICES
By /s/A Lynn Boerner
------------------------
Title: VP-CAO
-4-
<PAGE>
EXHIBIT 4.1(b)
[THE CIT GROUP LOGO APPEARS HERE]
August 2, 1996
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., COLORADO
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., MICHIGAN
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., UTAH
OSHMAN SPORTING GOODS CO., WASHINGTON
OSHMAN'S SKI SKOOL, INC.
OSHMAN SPORTING GOODS, INC.-SERVICES
2302 Maxwell Lane
Houston, TX 77223
<PAGE>
Gentlemen:
We refer to the Financing Agreement among us, dated August 31, 1992, as amended
(herein the "Financing Agreement"). Capitalized terms used and not otherwise
defined herein shall have the meanings ascribed to such terms in the Financing
Agreement.
Pursuant to mutual understanding, the Financing Agreement is amended as follows:
1) Subparagraph I of Paragraph 10 of Section of Section 6 of the Financing
Agreement is hereby amended in its entirety to read as follows:
"I. Permit EBITDA, on a consolidated and cumulative fiscal year to date
basis, for Parent and its Subsidiaries, at the end of each fiscal quarter
below, to be:
Fiscal Quarter Ending EBITDA
--------------------- -------
August 3, 1996 more negative than
negative $4,500,000
For the last day in the first
fiscal quarter of each fiscal
year thereafter less than $750,000
For the last day in the second
fiscal quarter of each fiscal
year thereafter less than $4,000,000
November 2, 1996 and for the
last day in the third fiscal quarter
of each fiscal year thereafter less than $1,500,000
February 1, 1997 and for the last
day in the fourth fiscal quarter of
each fiscal year thereafter less than $12,000,000"
<PAGE>
Except as otherwise specifically provided 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, 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:/s/ John Hanley
------------------------
Title: Vice President
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., COLORADO
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., MICHIGAN
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., UTAH
OSHMAN SPORTING GOODS CO., WASHINGTON
OSHMAN'S SKI SKOOL, INC.
OSHMAN SPORTING GOODS, INC.- SERVICES
By /s/A Lynn Boerner
------------------------
Title: VP-CAO
<PAGE>
EXHIBIT 11.1
OSHMAN'S SPORTING GOODS, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
(UNAUDITED)
(in thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED SIX MONTHS ENDED SIX MONTHS ENDED
AUGUST 3, 1996 JULY 29, 1995 AUGUST 3, 1996 JULY 29, 1995
------------------ ------------------- ------------------- ---------------------
FULLY FULLY FULLY FULLY
PRIMARY DILUTED PRIMARY DILUTED PRIMARY DILUTED PRIMARY DILUTED
------- --------- ------- ---------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET EARNINGS (LOSS) $(8,041) $(8,041) $1,420 $1,420 $(9,262) $(9,262) $ 942 $ 942
======= ======= ====== ====== ======= ======= ====== ======
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 5,828 5,828 5,811 5,811 5,828 5,828 5,811 5,811
EXCESS OF SHARES ISSUABLE UPON
EXERCISE OF STOCK OPTIONS OVER
SHARES DEEMED RETIRED UNDER THE
"TREASURY STOCK" METHOD -- -- 75 216 -- -- 79 149
------- ------- ------ ------ ------- ------- ------ ------
WEIGHTED AVERAGE NUMBER OF COMMON
AND DILUTIVE COMMON EQUIVALENT
SHARES OUTSTANDING 5,828 5,828 5,886 6,027 5,828 5,828 5,890 5,960
======= ======= ====== ====== ======= ======= ====== ======
EARNINGS (LOSS) PER COMMON AND
COMMON EQUIVALENT SHARE ($1.38) ($1.38) $.24 $.24 ($1.59) ($1.59) $.16 $.16
======= ======= ====== ====== ======= ======= ====== ======
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-01-1997
<PERIOD-START> FEB-04-1996
<PERIOD-END> AUG-03-1996
<CASH> 361
<SECURITIES> 0
<RECEIVABLES> 2,663
<ALLOWANCES> 0
<INVENTORY> 126,629
<CURRENT-ASSETS> 137,695
<PP&E> 96,189
<DEPRECIATION> 54,786
<TOTAL-ASSETS> 179,639
<CURRENT-LIABILITIES> 75,240
<BONDS> 46,805
<COMMON> 5,829
0
0
<OTHER-SE> 48,199
<TOTAL-LIABILITY-AND-EQUITY> 179,639
<SALES> 174,720
<TOTAL-REVENUES> 174,720
<CGS> 118,188
<TOTAL-COSTS> 118,188
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,847
<INCOME-PRETAX> (9,166)
<INCOME-TAX> 96
<INCOME-CONTINUING> (9,262)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,262
<EPS-PRIMARY> $(1.59)
<EPS-DILUTED> $(1.59)
</TABLE>
