Business Context and Reporting Period
Company: Oxford Industries, Inc.
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended May 31, 2002
Business Overview: The Company designs, manufactures, markets, and sells consumer apparel products in the popular to better price ranges. Operations are divided into four segments: Oxford Shirt Group, Lanier Clothes, Oxford Slacks, and Oxford Womenswear Group. Approximately 95% of products are manufactured offshore in Mexico, the Caribbean, Central America, and Asia.
Key Financial Metrics
Note: Specific revenue, profit, and cash flow figures are incorporated by reference to the 2002 Annual Report to Stockholders and are not explicitly detailed in the provided text.
- Order Backlog: $118,195,000 as of May 31, 2002 (down from $142,694,000 as of June 1, 2001).
- Liquidity and Debt:
- Securitization Program: $65,000,000 capacity; $0 outstanding borrowings as of May 31, 2002.
- Lines of Credit: $219,500,000 in uncommitted lines of credit available; $0 outstanding borrowings as of May 31, 2002.
- Letters of Credit: $118,500,000 of the uncommitted lines are reserved exclusively for letters of credit.
- Allowance for Doubtful Accounts: Balance of $3,390,000 at May 31, 2002, with $3,666,000 charged to income during the year.
- Market Value: Approximately $145,243,259 for voting stock held by nonaffiliates as of August 15, 2002.
- Shares Outstanding: 7,515,929 shares of Common Stock as of August 15, 2002.
Material Changes and Operational Highlights
- Customer Concentration: The top 10 customers accounted for approximately 72% of net sales in fiscal 2002 (compared to 73% in fiscal 2001).
- Target: 19% of sales (up from 14%).
- Wal-Mart: 13% of sales (down from 15%).
- Lands' End: 10% of sales (down from 11%).
- Order Backlog Decline: Booked orders decreased by approximately $24.5 million year-over-year. Management notes this is not indicative of future sales due to the growth of "Quick response" EDI programs which bypass traditional backlog reporting.
- Accounting Change: The Company changed its method of calculating LIFO inventories in the fiscal year ended May 31, 2002.
- Employee Count: Total employees were 7,427 as of May 31, 2002, with 1,613 in the United States.
Guidance, Risks, and Contingencies
- Accountant Change: Effective May 22, 2002, the Company appointed Ernst & Young LLP as its independent public accountants, replacing Arthur Andersen LLP. There were no disagreements with the former accountant regarding accounting principles or practices.
- Trade and Sourcing Risks: The Company faces risks from currency exchange fluctuations, import duties, and trade restraints. The Agreement on Textiles and Clothing (ATC) is phasing out quotas, with full elimination scheduled for January 1, 2005, which may significantly alter sourcing competitiveness.
- Competition: The Company competes in a highly competitive market. A noted competitive challenge is "direct sourcing," where customers purchase directly from foreign manufacturers, bypassing the Company. Management believes this trend adversely affects sales and profits but is mitigated by the Company's foreign facility ownership and supply chain services.
- Seasonality: Business is divided into four retail seasons (Spring, Summer, Fall, Holiday), though the Company does not regard its overall business as highly seasonal.
Investor Verification Checklist
- Verify the specific impact of the LIFO inventory accounting change on reported earnings and inventory valuation.
- Review the full 2002 Annual Report to Stockholders for detailed revenue, net income, and cash flow figures not present in this filing text.
- Assess the sustainability of the 72% revenue concentration among the top 10 customers, particularly the increased reliance on Target.
- Monitor the transition of the "Quick response" EDI programs and their effect on future order backlog trends.
- Evaluate the Company's strategy for maintaining competitiveness against direct sourcing trends post-2005 quota elimination.