<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 1, 1998
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 1, 1998, JANUARY 31, 1998 AND AUGUST 2, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
AUGUST 1, JANUARY 31, AUGUST 2,
1998 1998 1997
------------ ------------ ------------
(UNAUDITED) (UNAUDITED)
ASSETS
<S> <C> <C> <C>
CURRENT ASSETS
CASH AND CASH EQUIVALENTS 4,870 363 489
ACCOUNTS RECEIVABLE, LESS ALLOWANCE OF
$130 AUG 98, $130 JAN 98 AND $225 AUG 97 1,696 1,729 2,970
MERCHANDISE INVENTORIES 92,689 99,874 101,340
PREPAID EXPENSES AND OTHER 3,612 2,838 5,075
------------ ------------ ------------
TOTAL CURRENT ASSETS 102,867 104,804 109,874
PROPERTY, PLANT AND EQUIPMENT, AT COST 90,363 91,957 92,951
LESS ACCUMULATED DEPRECIATION AND
AMORTIZATION 50,134 48,755 49,262
------------ ------------ ------------
NET PROPERTY, PLANT AND EQUIPMENT 40,229 43,202 43,689
OTHER ASSETS 315 344 373
------------ ------------ ------------
143,411 148,350 153,936
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
CURRENT MATURITIES OF LONG-TERM OBLIGATIONS 0 566 731
TRADE ACCOUNTS PAYABLE 33,034 42,367 39,200
ACCRUED LIABILITIES 16,627 17,141 15,727
INCOME TAXES 52 73 4,506
STORE CLOSING RESERVE 2,938 3,852 5,116
------------ ------------ ------------
TOTAL CURRENT LIABILITIES 52,651 63,999 65,280
LONG-TERM OBLIGATIONS 40,277 35,953 48,707
OTHER NONCURRENT LIABILITIES 6,853 7,085 5,476
STOCKHOLDERS' EQUITY
COMMON STOCK 5,830 5,830 5,830
ADDITIONAL CAPITAL 4,198 4,177 4,125
RETAINED EARNINGS 33,623 31,327 24,539
LESS TREASURY STOCK, AT COST (21) (21) (21)
------------ ------------ ------------
STOCKHOLDERS' EQUITY 43,630 41,313 34,473
------------ ------------ ------------
143,411 148,350 153,936
=========== =========== ===========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
OSHMAN'S SPORTING GOODS, INC, AND SUSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE QUARTER ENDED
AUGUST 1, 1998 AND AUGUST 2, 1997
(in thousands, except per share data)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------- ------------------------------
1998 1997 1998 1997
--------- ---------- ------------- -------------
<S> <C> <C> <C> <C>
NET SALES $79,032 $82,913 $ 151,172 $ 171,345
COST OF GOODS SOLD 52,186 54,545 98,945 113,015
------- ------- --------- ---------
GROSS PROFIT 26,846 28,368 52,227 58,330
OPERATING EXPENSES
SELLING AND ADMINISTRATIVE EXPENSES 26,744 29,965 52,619 59,986
PRE-OPENING EXPENSES - - - 202
STORE CLOSING PROVISION (499) (713) (499) (688)
MISCELLANEOUS INCOME (3,493) (748) (3,838) (3,006)
------- ------- --------- ---------
OPERATING INCOME(LOSS) 4,094 (136) 3,945 1,836
INTEREST EXPENSE, NET 842 1,144 1,814 2,173
------- ------- --------- ---------
EARNINGS(LOSS) BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
METHOD FOR PRE-OPENING EXPENSES 3,252 (1,280) 2,131 (337)
INCOME TAX EXPENSE (BENEFIT) (168) 56 (165) 79
------- ------- --------- ---------
EARNINGS(LOSS) BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING METHOD FOR
PRE-OPENING EXPENSES 3,420 (1,336) 2,296 (416)
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
METHOD FOR PRE-OPENING EXPENSES - - - (1,299)
------- ------- --------- ---------
NET EARNINGS/(LOSS) $ 3,420 $(1,336) $ 2,296 $ (1,715)
======= ======= ========= =========
EARNINGS(LOSS) PER SHARE
EARNINGS(LOSS) BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING METHOD FOR
PRE-OPENING EXPENSES
BASIC EARNINGS(LOSS) PER SHARE $ .59 $ (.23) $ .39 $ (.07)
======= ======= ========= =========
DILUTED EARNINGS(LOSS) PER SHARE $ .57 $ (.23) $ .39 $ (.07)
======= ======= ========= =========
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
METHOD FOR PRE-OPENING EXPENSES
BASIC EARNINGS(LOSS) PER SHARE $ - $ - $ - $ (.22)
======= ======= ========= =========
DILUTED EARNINGS(LOSS) PER SHARE $ - $ - $ - $ (.22)
======= ======= ========= =========
NET EARNINGS(LOSS)
BASIC EARNINGS(LOSS) PER SHARE $ .59 $ (.23) $ .39 $ (.29)
======= ======= ========= =========
DILUTED EARNINGS(LOSS) PER SHARE $ .57 $ (.23) $ .39 $ (.29)
======= ======= ========= =========
WEIGHTED AVERAGE SHARES OUTSTANDING 5,830 5,830 5,830 5,830
DILUTIVE EFFECT OF STOCK OPTIONS 135 - 114 -
------- ------- --------- ---------
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING 5,965 5,830 5,944 5,830
======= ======= ========= =========
</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 1, 1998 AND AUGUST 2, 1997
(in thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997
-------- -----------
<S> <C> <C>
CASH FLOWS OF OPERATING ACTIVITIES:
NET EARNINGS/(LOSS) $ 2,296 $(1,715)
ADJUSTMENTS TO RECONCILE NET CASH (USED)PROVIDED BY OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 3,833 3,494
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE FOR
PRE-OPENING COSTS - 1,299
CHARGE TO RESERVE FOR CORPORATE RESTRUCTURING, NET OF DEPRECIATION
AND AMORTIZATION - (1)
CHARGE TO RESERVE FOR STORE CLOSINGS (1,215) (6,783)
(RECOVERY) PROVISION FOR STORE CLOSINGS - (609)
STOCK OPTION AND BONUS PLAN EXPENSE 21 57
GAIN ON DISPOSITION OF FIXED ASSETS (3,390) (2,294)
AMORTIZATION OF DEFERRED RENTAL ALLOWANCES (232) (179)
CHANGES IN ASSETS AND LIABILITIES:
DECREASE IN ACCOUNTS RECEIVABLE 33 801
DECREASE IN MERCHANDISE INVENTORIES 7,297 10,945
(INCREASE) IN PREPAID EXPENSES AND OTHER (886) (2,374)
INCREASE IN OTHER ASSETS 2 -
DECREASE IN TRADE ACCOUNTS PAYABLE (9,333) (6,504)
DECREASE IN ACCRUED LIABILITIES (470) (2,503)
INCREASE IN INCOME TAXES (21) (23)
------- -------
NET CASH USED BY OPERATING ACTIVITIES (2,065) (6,389)
CASH FLOWS OF INVESTING ACTIVITIES:
PROCEEDS FROM SALE OF FIXED ASSETS 63 19
PURCHASE OF PROPERTY, PLANT AND EQUIPMENT (1,199) (2,896)
PROCEEDS FROM DISPOSITION OF REAL ESTATE AND LEASEHOLDS 3,820 2,681
PROCEEDS FROM NOTE RECEIVABLE 25 25
PROCEEDS FROM LANDLORDS 105 347
------- -------
NET CASH (USED)PROVIDED BY INVESTING ACTIVITIES 2,814 176
CASH FLOWS OF FINANCING ACTIVITIES:
PAYMENTS OF LONG-TERM OBLIGATIONS (427) (423)
PROCEEDS FROM REVOLVING CREDIT FACILITY, NET 4,185 6,688
------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES 3,758 6,265
NET (DECREASE)INCREASE IN CASH AND CASH EQUIVALENTS 4,507 52
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 363 437
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 4,870 $ 489
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
CASH (RECEIVED)PAID DURING THE YEAR FOR
INCOME TAXES $ (15) $ 30
INTEREST 1,731 2,251
NONCASH FINANCING ACTIVITIES:
BORROWINGS UNDER THE REVOLVING CREDIT FACILITY
TO SETTLE LONG-TERM OBLIGATIONS $ 3,100 $ -
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
OSHMAN'S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 1, 1998 AND AUGUST 2, 1997
(UNAUDITED)
NOTE A
The financial statements are condensed and should be read in conjunction with
the 1997 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 1, 1998 are not necessarily indicative of the results to be
expected for the full year.
NOTE B
In fiscal 1997, the Company changed its method of accounting for pre-opening
expenses from amortizing such expenses against earnings over a one year period
subsequent to the new store opening to charging such expenses against earnings
in the period in which the new store opens for business. The cumulative effect
to periods prior to February 2, 1997 was $1,299,000. The first two quarters of
fiscal 1997 have been restated to reflect the change in the method of accounting
for pre-opening expenses resulting in a net reduction of $446,000 for the first
six months of 1997.
<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
--------------------------- ---------------------------
1998 1997 1998 1997
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Net sales 100.0 100.0 100.0 100.0
Cost of goods sold 66.0 65.8 65.5 66.0
----- ----- ----- -----
Gross profit 34.0 34.2 34.5 34.0
Operating expenses
Selling and administrative expenses 33.8 36.1 34.8 35.0
Pre-opening expenses - - - .1
Store closing provision (.6) (.9) (.3) (.4)
Miscellaneous income (4.4) (.9) (2.5) (1.7)
----- ----- ----- -----
Operating income (loss) 5.2 (.2) 2.6 1.1
Interest expense, net 1.1 1.4 1.2 1.3
----- ----- ----- -----
Earnings (loss) before income taxes 4.1 (1.5) 1.4 ( .2)
Income taxes (.2) .1 (.1) -
----- ----- ----- -----
Earnings (loss) before cumulative effect of change
in accounting method for pre-opening expenses 4.3 (1.6) 1.5 (.2)
Cumulative effect of change in accounting method
for pre-opening expenses - - - (.8)
----- ----- ----- -----
Net earnings (loss) 4.3 (1.6) 1.5 (1.0)
===== ===== ===== =====
</TABLE>
Net sales for the second quarter of fiscal 1998 decreased 4.7% to $79.0 million
from $82.9 million in the second quarter of fiscal 1997. The net reduction in
sales is primarily attributable to lost sales ($6.3 million) from the stores
closed in fiscal 1997 and a comparable store sales decline of 5.3% in continuing
stores. Net sales for the first six
<PAGE>
months of fiscal 1998 decreased 11.8% to $151.2 million from $171.3 million in
the first six months of fiscal 1997. The net reduction in sales is attributable
primarily to lost sales from stores closed in fiscal 1997 ($25.9 million) and a
comparable store sales decline of 5.0% in continuing stores. Management
attributes the decline in comparable store sales to several factors, including
lower inventory levels related to the Company's efforts to increase margins and
improve inventory turnover rates, reduced advertising expenditures and increased
competitive pressures.
Cost of goods sold as a percentage of net sales was 66.0% and 65.5% respectively
in the quarter and six months ending August 1, 1998 compared to 65.8% and 66.0%
respectively in the same periods of fiscal 1997. The reduction in cost of goods
sold as a percentage of net sales in the first six months of fiscal 1998 was
attributable to an improvement in gross margins as a percentage of sales
resulting from the Company's strategy to improve inventory productivity and to
reduced markdowns in the first quarter of fiscal 1998 compared to the first
quarter of the previous year. Cost of goods sold as a percentage of sales for
the second quarter of fiscal 1998 increased slightly compared to the second
quarter of fiscal 1997.
Selling and administrative expenses as a percentage of net sales were 33.8% and
34.8% respectively for the quarter and six months ended August 1, 1998 compared
to 36.1% and 35.0% respectively in the same periods of fiscal 1997. In the
second quarter and first six months of fiscal 1998, selling and administrative
expenses as a percentage of sales in continuing stores increased slightly as a
result of lower sales as discussed above, however this increased rate was offset
by reduced corporate overhead and distribution costs as a percentage of sales.
Selling and administrative expenses as a percentage of sales for continuing
operations decreased slightly (.4%) in the first six months of fiscal 1998
compared to the same period in fiscal 1997. In fiscal 1997, total selling and
administrative expenses as a percentage of sales in the first quarter were lower
than normal primarily due to increased sales volumes in discontinued stores
which were undergoing liquidation sales during that period. In the second
quarter of fiscal 1997, total selling and administrative expenses were somewhat
higher than normal as a percentage of sales as a result of costs in discontinued
stores which increased as a percentage of sales as certain of these stores
experienced reduced sales volumes during the final stages of liquidation.
In fiscal 1997, the Company changed its accounting method for pre-opening
expenses to charge such expenses against earnings in the period in which a new
store opens for business. The cumulative effect to periods prior to February 2,
1997 was $1.3 million. Results for the second quarter and first six months of
fiscal 1997 have been restated to reflect the new accounting method, resulting
in a net improvement of $474,000 to previously reported second quarter results
and a net reduction of $446,000 to previously reported results for the first six
months. No new stores were opened in the first six months of fiscal 1998.
Store closing provision was a benefit of $499,000 in both the second quarter and
first six months of fiscal 1998 compared to a benefit of $713,000 and $688,000
respectively in the same periods of fiscal 1997. The benefit in both years is
related to management's re-
<PAGE>
evaluation of store closing reserves for lease termination costs, leasehold and
other asset writeoffs and other incremental store closing costs.
Miscellaneous income was $3.5 million and $3.8 million respectively in the
second quarter and six months ending August 1, 1998 compared to $748,000 and
$3.0 million respectively in the same periods of fiscal 1997. The second
quarter of fiscal 1998 includes a gain of $3.5 million from a sale of real
estate that was not being used in the Company's retail business. In fiscal
1997, miscellaneous income included a gain 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 decreased interest expense for the second quarter and first six months of
fiscal 1998 is primarily related to reduced interest rates and lower average
borrowings in fiscal 1998 under the Company's credit facility.
Income tax (benefit) in fiscal 1998 includes a benefit of $219,000 related to a
refund of prior years Federal income taxes. Income taxes in fiscal 1997 are
related primarily to state income taxes. In fiscal 1998, net operating loss
carryforwards are anticipated to be realized, resulting in no Federal income tax
expense.
In the first six months of fiscal 1998, the Company had pretax earnings of $2.1
million compared to a loss of $337,000 before income taxes and cumulative effect
of change in accounting method for pre-opening expenses in the same period in
fiscal 1997. The improved results in fiscal 1998 compared to fiscal 1997 are
primarily attributable to (i) improved results from continuing operations both
as a result of an improved gross margin rate and slightly reduced selling and
administrative expenses as a percentage of sales and (ii) the increased gain
from sale of real estate in fiscal 1998 over the gain from disposition of
leasehold interests in fiscal 1997.
LIQUIDITY AND CAPITAL RESOURCES
In the first six months of fiscal 1998, operating activities used cash totaling
$2.1 million. Investing activities provided cash of $2.8 million as a result of
a sale of real estate for $3.8 million, offset by $1.2 million used for the
purchase of property, plant and equipment. Financing activities provided net
cash of $3.8 million through the utilization of the Company's credit facility.
In the first quarter of fiscal 1998, the Company, at its option and without
penalty, pre-paid a $3.1 million mortgage note secured by land and a building
where it operates a SuperSports USA megastore.
Cash was $4.9 million at August 1, 1998 primarily as a result of a temporary
over-advanced condition under the Company's revolving credit facility.
Merchandise inventories declined to $92.7 million from $99.9 million at the
beginning of the fiscal year. Comparable store inventories were reduced
approximately 10.8% from year ago levels primarily as a result of the Company's
strategy to improve inventory productivity by lowering average inventory levels
and improving turnover rates. Trade accounts payable declined to $33.0 million
from $42.4 million at the beginning of fiscal
<PAGE>
1998 primarily as a result of the decline in merchandise inventories and normal
seasonal fluctuations.
Net additions to property, plant and equipment of $1.2 million during the first
six months of fiscal 1998 were related primarily to renovations and
refurbishment in existing locations. The Company does not expect to open any
new stores in fiscal 1998, however, it has signed leases for three new store
locations and would like to open an additional eight new SuperSports USA
megastores during the next two fiscal years.
The Company's primary source of liquidity in the first six months of fiscal 1998
was the Company's credit facility, under which average borrowings were $43.0
million compared to $43.9 million in the first six months of fiscal 1997. Long-
term obligations increased to $40.3 million from $36.0 million at the beginning
of the fiscal 1998 as the Company utilized its credit facility to meet its
working capital requirements. In May 1998, the Company sold land and a building
in California, which had been leased to a third party, for $3.8 million in cash.
The Company believes that its revolving credit facility together with cash
provided by operations will be adequate to meet anticipated capital needs for
fiscal 1998.
YEAR 2000 ISSUE
The year 2000 issue is the result of computer programs written using two digits
rather than four to define the applicable year. Without corrective actions,
programs with time-sensitive software would potentially recognize a date ending
in "00" as the year 1900 rather than the year 2000, causing many computer
applications to fail or create erroneous results and potentially causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar normal business
practices.
During fiscal 1996, the Company completed the installation of new financial
accounting and reporting systems and payroll and human resources systems, and in
fiscal 1997 the Company installed new sales audit software. The Company also
installed a new IBM AS400 computer in fiscal 1997 to accommodate the new systems
and those to be installed in 1998. In addition, the Company is in the process
of installing new merchandising information and inventory management systems
which are expected to be implemented by the end of fiscal 1998. When
installation of these systems is complete, the Company will have updated
substantially all its computer systems and software to accommodate the year 2000
and beyond. Cumulatively, capital costs of approximately $3.9 million have been
incurred for the purchase and installation of hardware and software related to
the year 2000 issue. The Company does not expect future expenditures related to
the year 2000 issue to be significant for its internal systems.
The Company presently believes that upon completion of its installation of
computer hardware and software systems described above, the Year 2000 issue will
have been adequately addressed with respect to all of the Company's internal
computer systems. Any failure of the Company's systems to be timely compliant,
however, could have a material and adverse impact on the business and operations
of the Company. In addition,
<PAGE>
the Company may face risks to the extent that suppliers of products, services
and systems purchased by the Company and others with whom the Company transacts
business do not have business systems or products that comply with the year 2000
requirements. In the event that any such third parties cannot timely provide the
Company with products, services or systems as a result of any such non-
compliance, the Company's operating results could be materially adversely
affected.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
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 19, 1998 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 5,573,580 7,508 -
Karen Oshman Desenberg 5,575,380 5,708 -
William M. Hitchcock 5,575,930 5,158 -
Alvin N. Lubetkin 5,575,580 5,508 -
Marilyn Oshman 5,574,380 6,708 -
Stephen A. Lasher 5,575,930 5,158 -
Dolph B. H. Simon 5,575,780 5,308 -
<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 14, 1998 By: /s/ A. LYNN BOERNER
------------------------------
A. Lynn Boerner
Vice-President and
Chief Accounting Officer
<PAGE>
ITEM 6. EXHIBITS
Exhibit Index
4.1(b) Amendment Dated May 1, 1998 to the Amended and Restated Financing
Agreement dated December 15, 1997 between the Company and The CIT
Group/Business Credit, Inc.
27 Financial Data Schedule
<PAGE>
[CIT LETTERHEAD APPEARS HERE
EXHIBIT 4.1(b)
May 1, 1998
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
(collectively, the "Companies")
2302 Maxwell Lane
Houston, Texas 77023
Gentlemen:
Reference is made to the Amended and Restated Financing Agreement among each of
you and us, dated as of December 15, 1997, as amended (herein the "Financing
Agreement"). Capitalized terms used herein shall have the same meanings ascribed
to such terms, unless otherwise specifically defined herein.
<PAGE>
Pursuant to mutual understanding, the Financing Agreement is hereby amended as
follows:
1. The definition of EBITDA appearing in Section 1 of the Financing Agreement is
hereby deleted in its entirety and the following is substituted in lieu
thereof:
"EBITDA shall mean all earnings of the Parent and its Subsidiaries, on a
consolidated basis, before all Interest Expense, income tax obligations (paid
or accrued), depreciation expense and amortization expense, excluding any
gain or loss from the disposition of an Earning Asset plus, if in the event,
an Earning Asset of the Parent or one of its Subsidiaries is sold or disposed
of, any future pro-forma lost revenue stream and depreciation resulting from
the sale of the Earning Asset shall be included in the calculation of EBITDA
for the current fiscal year only, determined in accordance with GAAP
consistently applied."
2. Section 1 of the Financing Agreement is hereby amended by adding the
following definition in its proper alphabetical order:
"Earning Asset shall mean any real estate, fixture, equipment, leasehold
interests or any other asset with an income stream."
3. Subparagraph I of paragraph 10 of Section 6 of the Financing Agreement is
hereby amended by deleting the references to the figures appearing under the
caption entitled "EBITDA" opposite the periods indicated below and
substituting the following in lieu thereof:
"Fiscal Quarter Ending EBITDA
--------------------- ------
On the last day in the first fiscal quarter More negative than
of each fiscal year thereafter negative $807,000
On the last day in the second fiscal quarter Less than $1,371,000
of each fiscal year thereunder
On the last day in the third fiscal quarter Less than $1,089,000
of each fiscal year thereafter
On the last day in the fourth fiscal quarter Less than $6,911,000"
of each fiscal year thereafter
4. Paragraph 9 of Section 6 of the Financing Agreement is hereby amended by
deleting in its entirety and substituting the following in lieu thereof:
"9. The Parent and its Subsidiaries shall maintain, on a consolidated basis
and as of the end of each fiscal year set forth below, a Net Worth of not
less than the corresponding amount set forth below:
Fiscal Year Ending Amount
------------------ ------
January 30, 1999 $36,396,000
January 29, 2000 $37,896,000
January 27, 2001 and each fiscal $39,396,000"
year ending after such date
<PAGE>
No other change in the terms or conditions 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 WOZNICK
---------------------------------
Title: AVP
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
(collectively, the "Companies")
By: /s/ A. LYNN BOERNER
-----------------------------------
Title: Vice President and
Chief Accounting Officer
(of each of the above Companies)
OSHMAN'S SPORTING GOODS, INC., in its capacity, as Guarantor, hereby
acknowledges the foregoing.
By: /s/ A. LYNN BOERNER
-----------------------------------
Title: Vice President and
Chief Accounting Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-30-1999
<PERIOD-START> FEB-01-1998
<PERIOD-END> AUG-01-1998
<CASH> 4,870
<SECURITIES> 0
<RECEIVABLES> 1,696
<ALLOWANCES> 0
<INVENTORY> 92,689
<CURRENT-ASSETS> 102,867
<PP&E> 90,363
<DEPRECIATION> 50,134
<TOTAL-ASSETS> 143,411
<CURRENT-LIABILITIES> 52,651
<BONDS> 40,277
0
0
<COMMON> 5,830
<OTHER-SE> 37,800
<TOTAL-LIABILITY-AND-EQUITY> 143,411
<SALES> 151,172
<TOTAL-REVENUES> 151,172
<CGS> 98,945
<TOTAL-COSTS> 98,945
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,814
<INCOME-PRETAX> 2,131
<INCOME-TAX> (165)
<INCOME-CONTINUING> 2,296
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,296
<EPS-PRIMARY> 0.39
<EPS-DILUTED> 0.39
</TABLE>
