<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 2, 1997
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 5,827,249
--------------------------------- ---------
<PAGE>
PART I -- FINANCIAL INFORMATION
<PAGE>
ITEM 1 - FINANCIAL STATEMENTS
OSHMAN'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AUGUST 2, 1997, FEBRUARY 1, 1997 AND AUGUST 3, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
AUGUST 2, FEBRUARY 1, AUGUST 3,
1997 1997 1996
----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
CASH AND CASH EQUIVALENTS $ 489 $ 437 $ 361
ACCOUNTS RECEIVABLE, LESS ALLOWANCE OF
$225 AUG 97, $225 FEB 97 AND $391 AUG 96 2,970 3,771 2,663
MERCHANDISE INVENTORIES 101,340 107,609 126,629
PREPAID EXPENSES AND OTHER 5,521 4,143 8,042
----------- ----------- -----------
TOTAL CURRENT ASSETS 110,320 115,960 137,695
PROPERTY, PLANT AND EQUIPMENT, AT COST 92,951 98,446 96,189
LESS ACCUMULATED DEPRECIATION AND AMORTIZATION 49,262 54,073 54,786
----------- ----------- -----------
NET PROPERTY, PLANT AND EQUIPMENT 43,689 44,373 41,403
OTHER ASSETS 373 401 541
----------- ----------- -----------
$ 154,382 $ 160,734 $ 179,639
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
CURRENT MATURITIES OF LONG-TERM OBLIGATIONS $ 731 $ 776 $ 882
TRADE ACCOUNTS PAYABLE 39,200 45,704 49,872
ACCRUED LIABILITIES 15,727 18,231 19,843
INCOME TAXES 4,506 4,529 4,365
STORE CLOSING RESERVE 5,116 7,311 278
----------- ----------- -----------
TOTAL CURRENT LIABILITIES 65,280 76,551 75,240
LONG-TERM OBLIGATIONS 48,707 42,397 46,805
OTHER NONCURRENT LIABILITIES 5,476 5,655 3,566
STOCKHOLDER'S EQUITY
COMMON STOCK 5,830 5,830 5,829
ADDITIONAL CAPITAL 4,125 4,068 3,978
RETAINED EARNINGS 24,985 26,254 44,242
LESS TREASURY STOCK, AT COST (21) (21) (21)
----------- ----------- -----------
STOCKHOLDERS' EQUITY 34,919 36,131 54,028
----------- ----------- -----------
$ 154,382 $ 160,734 $ 179,639
=========== =========== ===========
</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 2, 1997 AND AUGUST 3, 1996
(UNAUDITED)
(in thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
NET SALES $ 82,913 $ 92,000 $ 171,345 $ 174,720
COST OF GOODS SOLD 54,545 65,647 113,015 118,188
---------- ---------- ---------- ----------
GROSS PROFIT 28,368 26,353 58,330 56,532
OPERATING EXPENSES
SELLING AND ADMINISTRATIVE EXPENSES 29,977 31,307 60,031 60,947
PRE-OPENING EXPENSES 462 1,013 1,010 1,979
STORE CLOSING PROVISION (713) 1,227 (688) 1,324
MISCELLANEOUS INCOME (748) (100) (3,006) (399)
---------- ---------- ---------- ----------
OPERATING INCOME (LOSS) (610) (7,094) 983 (7,319)
INTEREST EXPENSE, NET 1,144 913 2,173 1,847
---------- ---------- ---------- ----------
LOSS BEFORE INCOME TAXES (1,754) (8,007) (1,190) (9,166)
INCOME TAXES 56 34 79 96
---------- ---------- ---------- ----------
NET LOSS $ (1,810) $ (8,041) $ (1,269) $ (9,262)
========== ========== ========== ==========
EARNINGS (LOSS) PER COMMON AND COMMON
EQUIVALENT SHARE $ (.31) $ (1.38) $ (.22) $ (1.59)
========== ========== ========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON
AND COMMON EQUIVALENT SHARES $ 5,830 $ 5,828 $ 5,830 $ 5,828
========== ========== ========== ==========
</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 2, 1997 AND AUGUST 3, 1996
(UNAUDITED)
(in thousands)
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
CASH FLOWS OF OPERATING ACTIVITIES:
NET LOSS $ (1,269) $ (9,262)
ADJUSTMENTS TO RECONCILE NET CASH (USED) PROVIDED BY
OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 3,494 3,260
RECOVERIES OF LOSSES ON ACCOUNTS RECEIVABLE - (5)
CHARGE TO RESERVE FOR CORPORATE RESTRUCTURING, NET OF
DEPRECIATION AND AMORTIZATION (1) (202)
CHARGE TO RESERVE FOR STORE CLOSINGS (6,783) -
(RECOVERY) PROVISION FOR STORE CLOSINGS, NET (609) 2,329
STOCK OPTION AND BONUS PLAN EXPENSE 57 76
GAIN ON DISPOSITION OF FIXED ASSETS (2,294) (4)
AMORTIZATION OF DEFERRED RENTAL ALLOWANCES (179) (118)
CHANGES IN ASSETS AND LIABILITIES:
DECREASE IN ACCOUNTS RECEIVABLE 801 794
DECREASE (INCREASE) IN MERCHANDISE INVENTORIES 10,945 (15,999)
(INCREASE) DECREASE IN PREPAID EXPENSES AND OTHER (1,521) 839
(DECREASE) INCREASE IN TRADE ACCOUNTS PAYABLE (6,504) 14,386
DECREASE IN ACCRUED LIABILITIES (2,503) (632)
DECREASE IN INCOME TAXES (23) (17)
---------- ----------
NET CASH USED BY OPERATING ACTIVITIES (6,389) (4,555)
CASH FLOWS OF INVESTING ACTIVITIES:
PROCEEDS FROM SALE OF FIXED ASSETS 19 26
PURCHASE OF PROPERTY, PLANT AND EQUIPMENT (2,896) (7,682)
PROCEEDS FROM DISPOSITION OF REAL ESTATE AND LEASEHOLDS 2,681 1
PROCEEDS FROM NOTE RECEIVABLE 25 24
PROCEEDS FROM LANDLORDS 347 1,979
---------- ----------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES 176 (5,652)
CASH FLOWS OF FINANCING ACTIVITIES:
PROCEEDS FROM STOCK ISSUANCE - 44
PROCEEDS FROM ISSUANCE OF LONG-TERM OBLIGATIONS - 258
PAYMENTS OF LONG-TERM OBLIGATIONS (423) (423)
PROCEEDS FROM REVOLVING CREDIT FACILITY, NET 6,688 10,362
---------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 6,265 10,241
NET INCREASE IN CASH AND CASH EQUIVALENTS 52 34
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 437 327
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 489 $ 361
========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
CASH PAID DURING THE YEAR FOR
INCOME TAXES $ 30 $ 98
INTEREST 2,251 1,769
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
OSHMAN'S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 2, 1997 AND AUGUST 3, 1996
(UNAUDITED)
NOTE A
The financial statements are condensed and should be read in conjunction with
the 1996 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 six
months ended August 2, 1997 are not necessarily indicative of the results to be
expected for the full year.
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
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:
PERCENTAGE OF NET SALES
------------------------------
2ND QUARTER Six Months
------------- ---------------
1997 1996 1997 1996
---- ---- ---- ----
Net sales 100.0 100.0 100.0 100.0
Cost of goods sold 65.8 71.4 66.0 67.6
----- ----- ----- -----
Gross profit 34.2 28.6 34.0 32.4
Operating expenses
Selling and administrative expenses 36.1 34.0 35.0 34.9
Pre-opening expenses .6 1.1 .6 1.1
Store closing provision (.9) 1.3 (.4) .8
Miscellaneous income (.9) (.1) (1.8) (.2)
----- ----- ----- -----
Operating income (loss) (.7) (7.7) .6 (4.2)
Interest expense, net 1.4 1.0 1.3 1.1
----- ----- ----- -----
Earnings (loss) before income taxes (2.1) (8.7) (.7) (5.3)
Income taxes .1 - - -
----- ----- ----- -----
Net earnings (loss) (2.2) (8.7) (.7) (5.3)
===== ===== ===== =====
Net sales for the second quarter of fiscal 1997 decreased 9.9% to $82.9 million
compared to $92.0 million in the second quarter of fiscal 1996. The reduction
in sales for the quarter is attributable to decreased sales of $14.9 million
from stores closed or targeted to be closed and a comparable store sales
decrease of 5.1%, or $3.5 million, offset by $9.3 in sales increases from new
megastores opened in 1996 and 1997. Net sales for the first six months
decreased 1.9% to $171.3 million compared to $174.7 million in the first half of
fiscal 1996. The reduction in sales in the first half is attributable to
decreased sales of $16.5 million from stores closed or targeted to be closed and
a comparable store sales decrease of 5.5%, or $7.2 million, offset by $20.3 in
sales increases from new megastores opened since the beginning of fiscal 1996.
Management attributes the decline in same store sales to several factors
including, the impact of our own liquidation sales in closing stores,
particularly in the first quarter of fiscal 1997, lower inventory levels and
reduced advertising expenditures.
<PAGE>
As previously announced, the Company intends to close approximately 53 of its 84
traditional stores in fiscal 1997. At the end of the second quarter of fiscal
1997, 36 traditional stores and one megastore had been closed and an additional
six traditional stores were closed by the end of August. The Company expects to
end fiscal 1997 with a total of 62 stores in operation, consisting of 36
SuperSports USA megastores, ranging in size from approximately 40,000 to 85,000
square feet, six mini-SuperSports USA stores, ranging in size from approximately
19,000 to 32,000 square feet and 20 traditional sporting goods stores.
Cost of goods sold as a percentage of net sales was 65.8% and 66.0% respectively
in the quarter and six months ending August 2, 1997 compared to 71.4% and 67.6%
respectively in the same periods of fiscal 1996. In the second quarter of
fiscal 1997, the Company recorded inventory adjustments (approximately .3% as a
percentage of sales) for additional markdowns taken relative to closing stores
and certain clearance merchandise. In the second quarter of fiscal 1996, the
Company also recorded adjustments to its inventory carrying value (approximately
4.5% as a percentage of sales) related to additional markdowns taken to reduce
excessive inventories resulting from lower than planned sales and store closings
and to increased physical inventory shrinkage. The reduced rates of cost of
goods sold as a percentage of net sales in the second quarter and first six
months of fiscal 1997 are primarily due to the nonrecurrence in fiscal 1997 of
the significant inventory adjustments recorded in the second quarter of fiscal
1996 and to a reduced level of markdowns as a percentage of sales in fiscal
1997.
Selling and administrative expenses as a percentage of net sales were 36.1% and
35.0% respectively for the quarter and six months ended August 2, 1997 compared
to 34.0% and 34.9% respectively in the same periods of fiscal 1996. In the
second quarter of fiscal 1997, selling and administrative expenses as a
percentage of sales in continuing stores increased as a result of lower sales in
existing stores as discussed above and due to the impact of new stores that have
not yet grown to expected sales levels. In addition, selling and administrative
expenses in discontinued stores increased as a percentage of sales as certain of
these stores experienced reduced sales volumes during final stages of
liquidation. For the first six months of fiscal 1997, selling and
administrative expenses as a percentage of sales in continuing stores increased
as a result of lower than planned sales, however the increased rate was largely
offset by reduced corporate overhead and distribution costs as a percentage of
sales and increased sales volumes in discontinued stores during the first
quarter of fiscal 1997. The Company has implemented expense reductions at the
beginning of fiscal 1997 which are expected to reduce store and overhead costs
in fiscal 1997 by approximately $4.0 million.
Pre-opening expenses of new SuperSports USA megastores are amortized over the
first 12 months of operation. The decline in pre-opening expenses in the second
quarter and first six months of fiscal 1997 is related to the reduced number of
stores opened in the last 12 months compared to the previous 12 month period.
Store closing provision was a benefit of $713,000 and $688,000 respectively in
the second quarter and first six months of fiscal 1997 compared to an expense of
$1.2 million and $1.3 million respectively in the same periods of fiscal 1996.
During the second
<PAGE>
quarter of fiscal 1997, the Company reevaluated and accordingly reduced its
store closing reserves for lease termination costs, leasehold and other asset
writeoffs and other incremental store closing costs. In 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) for
stores to be closed in fiscal 1996.
Miscellaneous income increased in fiscal 1997 primarily as a result of gains
from the sale of leasehold interests of $389,000 in the second quarter and $1.9
million in the first quarter. In addition, in the second quarter of fiscal 1997
the Company recognized a fee related to a new foreign license agreement.
The increased interest expense for the second quarter and first six months of
fiscal 1997 is primarily related to increased average borrowings in fiscal 1997
and an interest rate increase under the Company's credit facility.
Income taxes in fiscal 1997 and 1996 are related primarily to state income
taxes. In fiscal 1997, net operating loss carryforwards are anticipated to be
realized, resulting in no Federal income tax expense.
In the first six months of fiscal 1997, the Company had a pretax loss of $1.2
million compared to a loss of $9.2 million before income taxes in the same
period last year. The improved results in fiscal 1997 compared to fiscal 1996
are primarily attributable to (i) the nonreccurence in 1997 of certain inventory
adjustments and store closing provisions recorded in the second quarter of 1996
as discussed above, (ii) gains from sale of leasehold interests in fiscal 1997,
(iii) reduced operating losses from stores closed in 1997 and 1996 and (iv) the
benefit of a reduction of store closing reserves. These improvements were
somewhat offset by reduced gross profit contributions from the Company's
continuing stores as a result of sales declines as discussed above.
Liquidity and Capital Resources
In the first six months of fiscal 1997, operating activities used cash totaling
$6.4 million. Cash totaling $2.9 million was used primarily for the purchase of
property plant and equipment offset by $2.7 in proceeds from the sale of
leasehold interests. Financing activities provided $6.3 million through the
utilization of the Company's credit facility.
Merchandise inventories declined to $101.3 million from $107.6 million at the
beginning of the fiscal year primarily as a result of liquidation of inventories
in stores closed and targeted to close in fiscal 1997. Additionally, the
Company has taken steps to improve inventory turnover rates and reduce average
store inventory levels. The Company's continuing stores operated with
approximately 10% less inventory in the first six months of fiscal 1997 than
during the first six months of fiscal 1996.
Additions to property, plant and equipment of $2.9 million during the first six
months of fiscal 1997 were related primarily to the opening of a new SuperSports
USA megastore in March and two additional megastores which opened in August.
The Company expects to open three additional megastores during the balance of
fiscal 1997.
<PAGE>
The Company's primary source of liquidity in the first six months of fiscal 1997
was the Company's credit facility, under which average borrowings were $43.9
million compared to $39.0 million in the first six months of fiscal 1996.
Proceeds from the sale of leasehold interests also provided cash of $2.7
million. Long-term obligations increased to $48.7 million from $42.4 million at
the beginning of the fiscal 1997 as the Company utilized its credit facility to
meet its working capital requirements. The Company believes that its revolving
credit facility together with cash provided by operations will be adequate to
meet anticipated capital needs for fiscal 1997.
The information discussed herein includes "forward-looking statements" within
the meaning of the federal securities laws. Although the Company believes that
the expectations reflected in such forward-looking statements are reasonable,
the Company's actual results could differ materially as a result of certain
factors, including: the Company's ability to manage its expansion efforts in
existing and new markets, availability of suitable new store locations at
acceptable terms, levels of discretionary consumer spending, availability of
merchandise to meet fluctuating consumer demands, customer response to the
Company's merchandise offerings, fluctuating sales margins, increasing
competition in sporting goods and apparel retailing, the results of financing
efforts and financial market conditions, as well as other factors described from
time to time in the Company's periodic reports filed with the Securities and
Exchange Commission.
<PAGE>
PART II -- OTHER INFORMATION
<PAGE>
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) June 20, 1997 annual meeting of stockholders
(c) Matters voted upon.
1. Election of seven directors to serve as the Board of Directors
until the next annual meeting of stockholders and their
respective successors are elected.
NUMBER OF VOTES
----------------------------------
WITHHELD BROKER
NOMINEE FOR AUTHORITY NON-VOTES
- ------- --- --------- ---------
Marvin Aronowitz 5,174,369 2,350 -
Karen Oshman Desenberg 5,174,369 2,350 -
William M. Hitchcock 5,174,369 2,350 -
Alvin N. Lubetkin 5,174,369 2,350 -
Marilyn Oshman 5,174,369 2,350 -
Manuel Sanchez, III 5,174,369 2,350 -
Dolph B. H. Simon 5,174,369 2,350 -
<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 15, 1997 By: A. LYNN BOERNER
---------------------------------
A. Lynn Boerner
Vice-President and
Chief Accounting Officer
<PAGE>
ITEM 6. EXHIBITS
Exhibit Index
4.1 Twenty second Amendment Dated August 19, 1997 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>
[THE CIT GROUP LOGO appears here] August 19, 1997
As of August 1, 1997
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's Sporting Goods, Inc. - Services
2302 Maxwell Lane
Houston, Texas 77023
<PAGE>
Gentlemen:
We refer to that certain Financing Agreement among each of you (herein
collectively called the "Companies") and us, dated August 31, 1992, as
supplemented and amended from time to time (herein referred to as the
"Agreement"). Capitalized terms used herein and not otherwise defined shall
have the meanings ascribed to them in the Agreement.
Pursuant to mutual understanding, the Agreement is hereby amended as follows:
1. The definition of "Availability Reserve" set forth in the Agreement shall
be, and hereby is, amended and restated in its entirety to read as follows:
"Availability Reserve shall mean at any time of determination an amount
equal to the sum of (i) the then undrawn amount of all outstanding Letters
of Credit, plus (ii) a thirty-two and one-half percent (32.5%) reserve
against the cost of inventory located in the traditional stores (i.e.,
stores other than those having a tradename of "Oshman's Supersports" or
"Supersports U.S.A.") scheduled to be closed during the fiscal year
1997, such reserve to remain in place until the liquidation process is
complete; plus (iii) the amount of all sales taxes collected by the
Companies and not yet remitted to the authority to which such taxes are
owed, the amount of which shall be determined by CITBC in its sole
discretion."
2. Subpart I of Paragraph 10 of Section 6 of the Agreement is hereby
amended by inserting the following under the captions "Fiscal Quarter Ending"
and "EBITDA":
Fiscal Quarter Ending EBITDA
- --------------------------- ----------------------------------------
August 2, 1997 Less than $0.00
November 1, 1997 More negative then negative $2,000,000.00
January 31, 1998 Less than $5,250,000.00
3. The following new paragraph 24 shall be added to the end of Section 6 of the
Agreement:
"24. The Companies shall, for the fiscal month beginning January 4, 1998
and ending January 31, 1998, maintain, on a consolidated basis, Availability
of not less than $8,000,000.00, which shall exclude any amount imposed by
CITBC under subclause (iii) of the Availability Reserve, and which
Availability shall be computed on the basis of all of the Companies' debts,
obligations and accounts payable being current in accordance with the
Companies' customary business practices with respect thereto."
4. The word "or" after the roman numeral "xii)" shall be deleted in
subparagraph g) of Paragraph 1 in Section 9 of the Agreement, and the following
shall be inserted at the end of such subparagraph: "xiii) Paragraph 23 of
Section 6, or xix) Paragraph 24 of Section 6;"
-2-
<PAGE>
5. The following new paragraph 6 shall be added to the end of Section 3 of the
Agreement:
"6. The Companies also agree that CITBC may enter upon the Companies'
premises x) once a year, and y) upon the occurrence of a Default or Event of
Default at any time and from time to time, at CITBC's sole discretion, for
the purpose of conducting, at the Companies' sole expense, one or more
complete physical inventories and/or reappraisals of the Companies'
Inventory."
In consideration of the use of our in-house staff for the preparation of the
foregoing, you, by your signature below, hereby authorize us to immediately
charge your account with us a documentation fee of $475.00.
Except as otherwise provided herein, no other 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 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
----------------------------
Name: Pamela Wozniak
Title: AVP
-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's Sporting Goods, Inc. - Services
By /s/ A. Lynn Boerner
---------------------------
Name: A. Lynn Boerner
Title: VP - CAO
of each of the above Companies
-4-
<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 NINE MONTHS ENDED NINE MONTHS ENDED
AUGUST 2, 1997 AUGUST 3, 1996 AUGUST 2, 1997 AUGUST 3, 1996
------------------ ------------------ ----------------- -----------------
FULLY FULLY FULLY FULLY
PRIMARY DILUTED PRIMARY DILUTED PRIMARY DILUTED PRIMARY DILUTED
------- -------- ------- ------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET LOSS $ (1,810) $ (1,810) $ (8,041) $ (8,041) $ (1,269) $ (1,269) $ (9,262) $ (9,262)
======== ======== ======== ======== ======== ======== ======== ========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 5,830 5,830 5,828 5,828 5,830 5,830 5,828 5,828
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 5,830 5,830 5,828 5,828 5,830 5,830 5,828 5,828
======== ======== ======== ======== ======== ======== ======== ========
EARNINGS (LOSS) PER COMMON AND
COMMON EQUIVALENT SHARE $ (.31) $ (.31) $ (1.38) $ (1.38) $ (.22) $ (.22) $ (1.59) $ (1.59)
======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> FEB-01-1997
<PERIOD-END> AUG-02-1997
<CASH> 489
<SECURITIES> 0
<RECEIVABLES> 2,970
<ALLOWANCES> 0
<INVENTORY> 101,340
<CURRENT-ASSETS> 110,320
<PP&E> 92,951
<DEPRECIATION> 49,262
<TOTAL-ASSETS> 154,382
<CURRENT-LIABILITIES> 65,280
<BONDS> 48,707
0
0
<COMMON> 5,830
<OTHER-SE> 29,089
<TOTAL-LIABILITY-AND-EQUITY> 154,382
<SALES> 171,345
<TOTAL-REVENUES> 171,345
<CGS> 113,015
<TOTAL-COSTS> 60,031
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,173
<INCOME-PRETAX> (1,190)
<INCOME-TAX> 79
<INCOME-CONTINUING> (1,269)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,269)
<EPS-PRIMARY> (.22)
<EPS-DILUTED> (.22)
</TABLE>
