Table of Contents

 

 

 

**UNITED STATES**

**SECURITIES AND EXCHANGECOMMISSION**

**Washington, D.C. 20549**

** **

**FORM 10-Q**

 

| **þ** | **QUARTERLY REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**                                                          |
|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       |                                                                                                                                                            |
|       | **For  the quarterly period ended OCTOBER 30, 2010**                                                                                                            |
|       |                                                                                                                                                            |
| **or**     |
|       |                                                                                                                                                            |
| **o**      | **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: 1-4365**

 

**OXFORD INDUSTRIES, INC.**

(Exact name of registrant asspecified in its charter)

 

 

| **Georgia**                                                    | ** ** | **58-0831862**                       |
|----------------------------------------------------------------|------------|--------------------------------------|
| (State or other jurisdiction of incorporation or organization) |       | (I.R.S. Employer Identification No.) |

 

**222 Piedmont Avenue, N.E.,Atlanta, Georgia  30308**

(Address of principalexecutive offices)           (Zip Code)

 

**                              (404)659-2424                              **

(Registrant’s telephonenumber, including area code)

 

Indicate by check markwhether the registrant (1) has filed all reports required to be filed by Section 13or 15(d) of the Securities Exchange Act of 1934 during the preceding 12months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements forthe past 90 days. Yes þ No  ̈

 

Indicate by check markwhether the registrant has submitted electronically and posted on its corporateWeb site, if any, every Interactive Data File required to be submitted andposted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)during the preceding 12 months (or for such shorter period that the registrantwas required to submit and post such files). Yes  ̈ No  ̈

 

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or a smaller reporting company. See the definitions of “largeaccelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2of the Exchange Act.

 

| Large accelerated filer £ | Accelerated  filer þ | Non-accelerated  filer £                  | Smaller  reporting company £ |
|--------------------------------|---------------------------|------------------------------------------------|-----------------------------------|
|                           |                      | (Do  not check if a smaller reporting company) |                              |
|                                |                           |                                                |                                   |  |  |

 

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act).  Yes  ̈ No þ

 

Indicate the number of shares outstanding of each of the issuer’sclasses of common stock, as of the latest practicable date.

 

|                               |   | Number of shares outstanding |
|------------------------------------|--------|---------------------------------------------|
| Title of each class |   | as of December 3, 2010  |
| Common Stock, $1 par value         |   | 15,569,208                                  |

 

 

Table of Contents

OXFORD INDUSTRIES, INC.

INDEX TO FORM 10-Q

For the third quarter of fiscal 2010

 
|                                                                                                | Page   |
|-----------------------------------------------------------------------------------------------------|--------|
| PART I.  FINANCIAL INFORMATION                                                                 |   |
|                                                                                                |   |
| Item  1. Financial Statements                                                                       |   |
| Condensed  Consolidated Statements of Operations (Unaudited)                                        | 4      |
| Condensed Consolidated Balance Sheets (Unaudited)                                                   | 5      |
| Condensed Consolidated Statements of Cash Flows  (Unaudited)                                        | 6      |
| Notes  to Unaudited Condensed Consolidated Financial Statements                                     | 7      |
| Item 2. Management’s  Discussion and Analysis of Financial Condition and Results of Operations | 17     |
| Item 3. Quantitative and Qualitative Disclosures About  Market Risk                                 | 34     |
| Item 4. Controls and Procedures                                                                     | 34     |
|                                                                                                |   |
| PART II.  OTHER INFORMATION                                                                    |   |
|                                                                                                |   |
| Item  1. Legal Proceedings                                                                          | 34     |
| Item  1A. Risk Factors                                                                              | 34     |
| Item 2. Unregistered Sales of Equity Securities and  Use of Proceeds                                | 35     |
| Item 3. Defaults Upon Senior Securities                                                             | 35     |
| Item 4.  Reserved                                                                                   | 35     |
| Item  5. Other Information                                                                          | 35     |
| Item 6.  Exhibits                                                                                   | 36     |
| Signatures                                                                                          | 36     |

 

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**CAUTIONARYSTATEMENTS REGARDING FORWARD-LOOKING STATEMENTS**

 

Our SEC filings and publicannouncements may include forward-looking statements about future events.Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,”“will” and similar expressions identify forward-looking statements, whichgenerally are not historical in nature. We intend for all forward-lookingstatements contained herein, in our press releases or on our website, and allsubsequent written and oral forward-looking statements attributable to us orpersons acting on our behalf, to be covered by the safe harbor provisions forforward-looking statements within the meaning of the Private SecuritiesLitigation Reform Act of 1995 and the provisions of Section 27A of theSecurities Act of 1933 and Section 21E of the Securities Exchange Act of1934 (which Sections were adopted as part of the Private Securities LitigationReform Act of 1995). Important assumptions relating to these forward-lookingstatements include, among others, assumptions regarding the consummation andimpact of potential acquisition or disposition activities, including theannounced sale of substantially all of Oxford Apparel, the impact of economicconditions on consumer demand and spending, demand for our products, timing andcost of shipments requested by our wholesale customers, expected pricinglevels, competitive conditions, the timing and cost of planned capitalexpenditures, costs of products and raw materials we purchase, access tocapital and/or credit markets, costs of labor, expected outcomes of pending orpotential litigation and regulatory actions and disciplined execution by keymanagement. Forward-looking statements reflect our current expectations, basedon currently available information, and are not guarantees of performance.Although we believe that the expectations reflected in such forward-lookingstatements are reasonable, these expectations could prove inaccurate as suchstatements involve risks and uncertainties, many of which are beyond ourability to control or predict. Should one or more of these risks oruncertainties, or other risks or uncertainties not currently known to us orthat we currently deem to be immaterial, materialize, or should underlyingassumptions prove incorrect, actual results may vary materially from thoseanticipated, estimated or projected. Important factors relating to these risksand uncertainties include, but are not limited to, those described in Part I, Item1A. Risk Factors contained in our Annual Report on Form 10-K for fiscal2009, as updated by Part II, Item 1A. Risk Factors in this report andthose described from time to time in our future reports filed with the SEC.

 

We caution that one shouldnot place undue reliance on forward-looking statements, which speak only as ofthe date on which they are made. We disclaim any intention, obligation or dutyto update or revise any forward-looking statements, whether as a result of newinformation, future events or otherwise, except as required by law.

 

**DEFINITIONS**

 

Unless the context requiresotherwise, the following terms, or words of similar import, have the followingmeanings:

 

Our,us or we: Oxford Industries, Inc. and its consolidated subsidiaries

 

SG&A:Selling, general and administrative expenses

 

113/8% Senior Secured Notes: Our 11.375% senior secured notes due 2015

 

87/8% Senior Unsecured Notes: Our 8.875% senior unsecured notes due 2011, whichwere satisfied and discharged in June 2009

 

SEC:U.S. Securities and Exchange Commission

 

SecuritiesExchange Act: the Securities Exchange Act of 1934, as amended

 

FASB:Financial Accounting Standards Board

 

U.S.GAAP: Generally accepted accounting principles in the United States

 

ASC:FASB Accounting Standards Codification

 
| Fiscal 2010                    |   | 52 weeks ending  January 29, 2011      |
|--------------------------------|--------|---------------------------------------------|
| Fiscal 2009                    |   | 52 weeks ended  January 30, 2010       |
| First nine months fiscal  2010 |   | 39 weeks ended  July 31, 2010          |
| First nine months fiscal  2009 |   | 39 weeks ended  August 1, 2009         |
| Fourth quarter fiscal 2010     |   | 13 weeks ending  January 29, 2011 |
| Third quarter fiscal 2010      |   | 13 weeks ended  October 30, 2010  |
| Second quarter fiscal 2010     |   | 13 weeks ended  July 31, 2010     |
| First quarter fiscal 2010      |   | 13 weeks ended  May 1, 2010       |
| Fourth quarter fiscal 2009     |   | 13 weeks ended  January 30, 2010  |
| Third quarter fiscal 2009      |   | 13 weeks ended  October 31, 2009  |
| Second quarter fiscal 2009     |   | 13 weeks ended  August 1, 2009    |
| First quarter fiscal 2009      |   | 13 weeks ended  May 2, 2009       |

 

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**PART I.  FINANCIAL INFORMATION**

 

**ITEM 1. FINANCIAL STATEMENTS**

 

**OXFORDINDUSTRIES, INC.**

**CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS**

**(UNAUDITED)**

**(inthousands, except per share amounts)**

 
| ** **                                                      | ** ** | **Third********Quarter********Fiscal 2010** | ** ** | **Third********Quarter********Fiscal 2009** | ** **                                | **First********Nine Months********Fiscal 2010** | ** ** | **First********Nine Months********Fiscal 2009** | ** ** |
|-----------------------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|-------------------------------------------|-----------------------------------------------------------|------------|-----------------------------------------------------------|------------|
| Net  sales                                                      |       | $139,627                                         |       |                                             | $142,274                                  |                                                      |       | $446,233                                                  |       |   | $ 441,907 |   |   |
| Cost  of goods sold                                             |       | 65,942                                           |       |                                             | 74,163                                    |                                                      |       | 203,823                                                   |       |   | 227,876 |   |   |
| Gross  profit                                                   |       | 73,685                                           |       |                                             | 68,111                                    |                                                      |       | 242,410                                                   |       |   | 214,031 |   |   |
| SG&A                                                        |       | 70,995                                           |       |                                             | 66,896                                    |                                                      |       | 220,328                                                   |       |   | 207,827 |   |   |
| Amortization  of intangible assets                              |       | 241                                              |       |                                             | 307                                       |                                                      |       | 719                                                       |       |   | 911 |   |   |
|                                                            |       | 71,236                                           |       |                                             | 67,203                                    |                                                      |       | 221,047                                                   |       |   | 208,738 |   |   |
| Royalties  and other operating income                           |       | 3,982                                            |       |                                             | 3,266                                     |                                                      |       | 11,218                                                    |       |   | 8,038 |   |   |
| Operating  income                                               |       | 6,431                                            |       |                                             | 4,174                                     |                                                      |       | 32,581                                                    |       |   | 13,331 |   |   |
| Interest  expense, net                                          |       | 5,095                                            |       |                                             | 5,079                                     |                                                      |       | 15,115                                                    |       |   | 15,346 |   |   |
| Earnings  (loss) from continuing operations before income taxes |       | 1,336                                            |       |                                             | (905                                      | )                                                         |       | 17,466                                                    |       |   | (2,015 | ) |   |
| Income  taxes (benefit)                                         |       | 17                                               |       |                                             | (982                                      | )                                                         |       | 2,944                                                     |       |   | (2,293 | ) |   |
| Earnings from continuing operations                             |       | 1,319                                            |       |                                             | 77                                        |                                                      |       | 14,522                                                    |       |   | 278 |   |   |
| Earnings from discontinued operations, net of  taxes            |       | 4,231                                            |       |                                             | 4,228                                     |                                                      |       | 10,744                                                    |       |   | 10,458 |   |   |
| Net earnings                                                    |       | $    5,550                   |       |                                             | $    4,305            |                                                      |       | $   25,266                                 |       |   | $   10,736 |   |   |
|                                                            |       |                                             |       |                                             |                                      |                                                      |       |                                                      |       |   |   |   |   |
| Earnings  from continuing operations per common share:          |       |                                             |       |                                             |                                      |                                                      |       |                                                      |       |   |   |   |   |
| Basic                                                           |       | $      0.08        |       |                                             | $      0.00 |                                                      |       | $       0.88           |       |   | $       0.02 |   |   |
| Diluted                                                         |       | $      0.08        |       |                                             | $      0.00 |                                                      |       | $       0.88           |       |   | $       0.02 |   |   |
| Earnings  from discontinued operations per common share:        |       |                                             |       |                                             |                                      |                                                      |       |                                                      |       |   |   |   |   |
| Basic                                                           |       | $      0.26        |       |                                             | $      0.26 |                                                      |       | $       0.65           |       |   | $       0.64 |   |   |
| Diluted                                                         |       | $      0.26        |       |                                             | $      0.26 |                                                      |       | $       0.65           |       |   | $       0.64 |   |   |
| Net  earnings per common share:                                 |       |                                             |       |                                             |                                      |                                                      |       |                                                      |       |   |   |   |   |
| Basic                                                           |       | $      0.34        |       |                                             | $      0.26 |                                                      |       | $       1.53           |       |   | $       0.66 |   |   |
| Diluted                                                         |       | $      0.33        |       |                                             | $      0.26 |                                                      |       | $       1.53           |       |   | $       0.66 |   |   |
|                                                            |       |                                             |       |                                             |                                      |                                                      |       |                                                      |       |   |   |   |   |
| Weighted  average common shares outstanding:                    |       |                                             |       |                                             |                                      |                                                      |       |                                                      |       |   |   |   |   |
| Basic                                                           |       | 16,564                                           |       |                                             | 16,522                                    |                                                      |       | 16,532                                                    |       |   | 16,229 |   |   |
| Dilution                                                        |       | 12                                               |       |                                             | 11                                        |                                                      |       | 13                                                        |       |   | 4 |   |   |
| Diluted                                                         |       | 16,576                                           |       |                                             | 16,533                                    |                                                      |       | 16,545                                                    |       |   | 16,233 |   |   |
|                                                            |       |                                             |       |                                             |                                      |                                                      |       |                                                      |       |   |   |   |   |
| Dividends  declared per common share                            |       | $      0.11        |       |                                             | $      0.09 |                                                      |       | $       0.33           |       |   | $       0.27 |   |   |

 

See accompanying notes.

 

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**OXFORDINDUSTRIES, INC.**

**CONDENSED CONSOLIDATED BALANCE SHEETS**

**(UNAUDITED)**

**(inthousands, except par amounts)**

 
| ** **                                                | ** ** | **October 30,********2010** | ** ** | **January 30,********2010** | ** **                     | **October 31,********2009** | ** ** |
|-----------------------------------------------------------|------------|----------------------------------|------------|----------------------------------|--------------------------------|----------------------------------|------------|
| **ASSETS**                                                |       |                             |       |                             |                           |                             |       |   |   |   |
| **Current Assets:**                                       |       |                             |       |                             |                           |                             |       |   |   |   |
| Cash  and cash equivalents                                |       | $    4,376   |       |                             | $    8,288 |                             |       | $    5,995 |   |   |
| Receivables,  net                                         |       | 58,900                           |       |                             | 44,690                         |                             |       | 57,440 |   |   |
| Inventories,  net                                         |       | 63,484                           |       |                             | 58,180                         |                             |       | 54,483 |   |   |
| Prepaid  expenses, net                                    |       | 14,663                           |       |                             | 10,508                         |                             |       | 13,818 |   |   |
| Deferred  tax assets                                      |       | 15,624                           |       |                             | 13,875                         |                             |       | 9,885 |   |   |
| Assets  related to discontinued operations, net           |       | 84,936                           |       |                             | 56,365                         |                             |       | 63,579 |   |   |
| **Total current assets**                                  |       | 241,983                          |       |                             | 191,906                        |                             |       | 205,200 |   |   |
| Property,  plant and equipment, net                       |       | 74,721                           |       |                             | 78,425                         |                             |       | 82,843 |   |   |
| Intangible  assets, net                                   |       | 136,584                          |       |                             | 137,462                        |                             |       | 138,372 |   |   |
| Other  non-current assets, net                            |       | 21,181                           |       |                             | 17,381                         |                             |       | 17,216 |   |   |
| **Total Assets**                                          |       | $474,469                         |       |                             | $425,174                       |                             |       | $443,631 |   |   |
| **LIABILITIES AND SHAREHOLDERS’  EQUITY**            |       |                             |       |                             |                           |                             |       |   |   |   |
| **Current Liabilities:**                                  |       |                             |       |                             |                           |                             |       |   |   |   |
| Trade  accounts payable and other accrued expenses        |       | $  63,308              |       |                             | $  68,249            |                             |       | $  64,564 |   |   |
| Accrued  compensation                                     |       | 19,000                           |       |                             | 9,259                          |                             |       | 9,337 |   |   |
| Short-term  debt and current maturities of long-term debt |       | 20,924                           |       |                             | —                         |                             |       | 17,479 |   |   |
| Liabilities  related to discontinued operations           |       | 21,542                           |       |                             | 18,942                         |                             |       | 12,969 |   |   |
| **Total current liabilities**                             |       | 124,774                          |       |                             | 96,450                         |                             |       | 104,349 |   |   |
| Long-term  debt, less current maturities                  |       | 146,900                          |       |                             | 146,408                        |                             |       | 161,244 |   |   |
| Other  non-current liabilities                            |       | 47,351                           |       |                             | 49,478                         |                             |       | 46,832 |   |   |
| Non-current  deferred income taxes                        |       | 27,753                           |       |                             | 28,421                         |                             |       | 29,444 |   |   |
| Commitments  and contingencies                            |       |                             |       |                             |                           |                             |       |   |   |   |
| **Shareholders’ Equity:**                            |       |                             |       |                             |                           |                             |       |   |   |   |
| Common  stock, $1.00 par value per common share      |       | 16,570                           |       |                             | 16,461                         |                             |       | 16,528 |   |   |
| Additional  paid-in capital                               |       | 95,660                           |       |                             | 91,840                         |                             |       | 90,511 |   |   |
| Retained  earnings                                        |       | 39,165                           |       |                             | 19,356                         |                             |       | 16,955 |   |   |
| Accumulated  other comprehensive loss                     |       | (23,704                          | )          |                             | (23,240                        | )                                |       | (22,232 | ) |   |
| **Total shareholders’ equity**                       |       | 127,691                          |       |                             | 104,417                        |                             |       | 101,762 |   |   |
| **Total Liabilities and Shareholders’ Equity**       |       | $474,469                         |       |                             | $425,174                       |                             |       | $443,631 |   |   |

 

See accompanying notes.

 

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**OXFORDINDUSTRIES, INC.**

**CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(UNAUDITED)**

**(in thousands)**

 
| ** **                                                                                                       | ** ** | **First Nine  Months********Fiscal 2010** | ** ** | **First Nine  Months  Fiscal 2009** | ** **                                     |
|------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------|------------|-----------------------------------------------|------------------------------------------------|
| **Cash Flows From Operating Activities:**                                                                        |       |                                                |       |                                          |                                           |   |   |
| Earnings  from continuing operations                                                                             |       | $ 14,522                                       |       |                                          | $       278 |   |   |
| Adjustments  to reconcile net earnings from continuing operations to net cash provided by  operating activities: |       |                                                |       |                                          |                                           |   |   |
| Depreciation                                                                                                     |       | 13,005                                              |       |                                          | 13,856                                         |   |   |
| Amortization  of intangible assets                                                                               |       | 719                                                 |       |                                          | 911                                            |   |   |
| Amortization/write-off  of deferred financing costs and bond discount                                            |       | 1,464                                               |       |                                          | 2,881                                          |   |   |
| Stock  compensation expense                                                                                      |       | 3,563                                               |       |                                          | 2,731                                          |   |   |
| Loss  on sale of property, plant and equipment                                                                   |       | 10                                                  |       |                                          | 339                                            |   |   |
| Deferred  income taxes                                                                                           |       | (2,337                                              | )          |                                          | (3,271                                         | ) |   |
| Changes  in working capital:                                                                                     |       |                                                |       |                                          |                                           |   |   |
| Receivables                                                                                                      |       | (14,258                                             | )          |                                          | (11,160                                        | ) |   |
| Inventories                                                                                                      |       | (5,549                                              | )          |                                          | 39,613                                         |   |   |
| Prepaid  expenses                                                                                                |       | (4,154                                              | )          |                                          | (2,769                                         | ) |   |
| Current  liabilities                                                                                             |       | 4,535                                               |       |                                          | (5,548                                         | ) |   |
| Other  non-current assets                                                                                        |       | (644                                                | )          |                                          | (904                                           | ) |   |
| Other  non-current liabilities                                                                                   |       | (2,119                                              | )          |                                          | 712                                            |   |   |
| **Net cash provided by operating activities**                                                                    |       | 8,757                                               |       |                                          | 37,669                                         |   |   |
| **Cash Flows From Investing Activities:**                                                                        |       |                                                |       |                                          |                                           |   |   |
| Purchases  of property, plant and equipment                                                                      |       | (9,435                                              | )          |                                          | (8,406                                         | ) |   |
| Proceeds  from sale of property, plant and equipment                                                             |       | 78                                                  | ** ** | ** **                                    | **—**                                     | ** ** | ** ** |
| **Net cash used in investing activities**                                                                        |       | (9,357                                              | )          |                                          | (8,406                                         | ) |   |
| **Cash Flows From Financing Activities:**                                                                        |       |                                                |       |                                          |                                           |   |   |
| Repayment  of revolving credit arrangements                                                                      |       | (64,514                                             | )          |                                          | (188,575                                       | ) |   |
| Proceeds  from revolving credit arrangements                                                                     |       | 85,415                                              |       |                                          | 187,477                                        |   |   |
| Repayment  of company-owned life insurance policy loans                                                          |       | (4,125                                              | )          |                                          | —                                         |   |   |
| Repurchase  of 8 7/8% Senior Unsecured Notes                                                                     |       | —                                              |       |                                          | (166,805                                       | ) |   |
| Proceeds  from the issuance of 11 3/8% Senior Secured Notes                                                      |       | —                                              |       |                                          | 146,029                                        |   |   |
| Deferred  financing costs paid                                                                                   |       | —                                              |       |                                          | (5,043                                         | ) |   |
| Proceeds  from issuance of common stock                                                                          |       | 362                                                 |       |                                          | 316                                            |   |   |
| Dividends  on common stock                                                                                       |       | (5,460                                              | )          |                                          | (4,406                                         | ) |   |
| **Net cash provided by (used in) financing activities**                                                          |       | 11,678                                              |       |                                          | (31,007                                        | ) |   |
| **Cash  Flows from Discontinued Operations:**                                                                    | ** ** | ** **                                          |       |                                          |                                           |   |   |
| Net  operating cash flows provided by (used in) discontinued operations                                          |       | (14,939                                             | )          |                                          | 4,319                                          |   |   |
| Net  investing cash flows used in discontinued operations                                                        |       | (33                                                 | )          |                                          | (13                                            | ) |   |
| **Net cash provided by (used in) discontinued operations**                                                       |       | (14,972                                             | )          |                                          | 4,306                                          |   |   |
|                                                                                                             |       |                                                |       |                                          |                                           |   |   |
| Net  change in cash and cash equivalents                                                                         |       | (3,894                                              | )          |                                          | 2,562                                          |   |   |
| Effect  of foreign currency translation on cash and cash equivalents                                             |       | (18                                                 | )          |                                          | 143                                            |   |   |
| Cash  and cash equivalents at the beginning of year                                                              |       | 8,288                                               |       |                                          | 3,290                                          |   |   |
| Cash  and cash equivalents at the end of period                                                                  |       | $    4,376                      |       |                                          | $     5,995           |   |   |
|                                                                                                             |       |                                                |       |                                          |                                           |   |   |
| **Supplemental disclosure of cash flow information:**                                                            | ** ** | ** **                                          |       |                                          |                                           |   |   |
| Cash  paid for interest, net                                                                                     |       | $    9,658                      |       |                                          | $   10,220                      |   |   |
| Cash  paid for income taxes                                                                                      |       | $  19,071                                 |       |                                          | $     9,493           |   |   |

 

See accompanying notes.

 

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**OXFORDINDUSTRIES, INC.**

**NOTES TO UNAUDITED CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS**

**THIRDQUARTER OF FISCAL 2010**

 

**1.****                                     ****Basisof Presentation:**  Theaccompanying unaudited condensed consolidated financial statements have beenprepared in accordance with U.S. GAAP for interim financial reporting and theinstructions of Form 10-Q and Article 10 of Regulation S-X.Accordingly, they do not include all of the information and footnotes requiredby U.S. GAAP.  We believe theaccompanying unaudited condensed consolidated financial statements reflect allnormal, recurring adjustments that are necessary for a fair presentation of ourfinancial position and results of operations as of the dates and for theperiods presented.  Results of operationsfor the interim periods presented are not necessarily indicative of results tobe expected for our full fiscal year. The accounting policies applied during the interim periods presented areconsistent with the significant accounting policies described in our AnnualReport on Form 10-K for fiscal 2009.

 

**2.****                                     ****DiscontinuedOperations: **OnNovember 22, 2010, we entered into a purchase agreement with LF USA Inc. (“LF”),a subsidiary of Li & Fung Limited, pursuant to which we will sell toLF substantially all of the assets of Oxford Apparel (other than accountsreceivable associated with the businesses which are being sold and all assetsand operations relating to our Oxford Golf business and our distribution centerin Lyons, Georgia).  The purchase price to be paid by LF is equal toapproximately $121.7 million, subject to adjustment based on net workingcapital on the closing date of the transaction.  LF also agreed topurchase our goods in transit relating to Oxford Apparel following the closingof the transaction.

 

Inconnection with the consummation of the transaction described above, we will,among other things, enter into (1) license agreements with LF togrant licenses (subject to the limitations set forth in the applicable licenseagreements) to LF to use the trade name “Oxford Apparel” perpetually inconnection with its business, as well as to use certain other trademarks inconnection with the manufacture, sale and distribution of men’s dress shirtsfor certain periods of time in the applicable territory; (2) aservices agreement with LF pursuant to which, in exchange for various fees, wewill following the closing of the transaction, provide certain transitionalsupport services to LF in its operation of the transferred assets; and (3) alimited non-competition agreement with LF pursuant to which we will agree(subject to the exceptions set forth in the non-competition agreement) not toengage in certain activities for a period of three years following thecompletion of the transaction. The closing of the transaction is subject tocustomary closing conditions and is expected to occur by the end of calendaryear 2010.

 

Asa result of the planned disposal of substantially all of the assets and operationsof Oxford Apparel, the results of operations for Oxford Apparel, other than theoperations relating to our Oxford Golf business and our Lyons, Georgiadistribution center, have been classified as discontinued operations in ourconsolidated statements of operations and our consolidated statements of cashflows for all periods presented. The assets and liabilities related to thediscontinued operations have been reclassified to assets and liabilitiesrelated to discontinued operations, as applicable.

 

The results of operations classified as discontinued operations areconsistent with the net sales, operating expenses and operating income forOxford Apparel, except that (1) the operations of our Oxford Golf businessand the operations of our Lyons, Georgia distribution center are reportedwithin Oxford Apparel continuing operations as those operations are not beingsold and (2) certain corporate service costs which were previouslyallocated to Oxford Apparel are reported as corporate service costs included inCorporate and Other as we are not certain that such corporate service costswill not continue.

 

With respect to interest expense, we have allocated all interestexpense related to our U.S. Revolving Credit Agreement to earnings fromdiscontinued operations as the estimated net proceeds from the transaction andthe proceeds from the settlement of the retained assets and liabilities relatedto the discontinued operations, substantially all of which are expected to beconverted into cash before the end of the first quarter of fiscal 2011, exceedthe amounts outstanding under our U.S. Revolving Credit Agreement during theperiods presented. Proceeds from the transaction and the retained assets areexpected to be used to repay any debt outstanding under our U.S. RevolvingCredit Agreement; fund general corporate operating activities, includingfurther development of our existing operations; fund future acquisitions, ifany; and opportunistically enhance our capital structure. We did not allocateany interest related to our 11 3/8% Senior Secured Notes to discontinuedoperations. The income tax rate used for the tax effect of the discontinuedoperations is based on the domestic effective tax rate of Oxford Industries, Inc.as the assets and operations that were disposed of were primarily domesticoperations of that entity and should not be impacted by rates in foreignjurisdictions or other subsidiaries.

 

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The following represents the major classes of assets and liabilitiesrelated to the discontinued operations included in our consolidated balancesheets as of the following dates (in thousands):

 
| ** **                                                               | ** ** | **October 30,********2010** | ** ** | **January 30,********2010** | ** ** | **October 31,********2009** | ** ** |
|--------------------------------------------------------------------------|------------|----------------------------------|------------|----------------------------------|------------|----------------------------------|------------|
| Receivables,  net                                                        |       | $50,816                          |       |                             | $29,708    |                             |       | $37,063 |   |   |
| Inventories,  net                                                        |       | 26,723                           |       |                             | 18,849     |                             |       | 18,750 |   |   |
| Other  current assets, net                                               |       | 225                              |       |                             | 205        |                             |       | 278 |   |   |
| Property,  plant and equipment, net                                      |       | 939                              |       |                             | 1,115      |                             |       | 926 |   |   |
| Other  assets, net                                                       |       | 6,233                            |       |                             | 6,488      |                             |       | 6,562 |   |   |
| Total  assets                                                            |       | 84,936                           |       |                             | 56,365     |                             |       | 63,579 |   |   |
| Trade  accounts payable, other accrued expenses and accrued compensation |       | 20,974                           |       |                             | 18,354     |                             |       | 12,369 |   |   |
| Other  liabilities                                                       |       | 568                              |       |                             | 588        |                             |       | 600 |   |   |
| Total  liabilities                                                       |       | 21,542                           |       |                             | 18,942     |                             |       | 12,969 |   |   |
| Net  assets                                                              |       | $63,394                          |       |                             | $37,423    |                             |       | $50,610 |   |   |

 

Operating results of the discontinued operations are shown below (inthousands):

 
| ** **                                                 | ** ** | **Third******** Quarter********Fiscal 2010** | ** ** | **Third******** Quarter******** Fiscal 2009** | ** **         | **First********Nine Months********Fiscal 2010** | ** ** | **First********Nine Months********Fiscal 2009** | ** ** |
|------------------------------------------------------------|------------|--------------------------------------------------------|------------|--------------------------------------------------------------|--------------------|-----------------------------------------------------------|------------|-----------------------------------------------------------|------------|
| Net  sales                                                 |       | $64,889                                                |       |                                                         | $58,264            |                                                      |       | $162,564                                                  |       |   | $168,249 |   |   |
| Cost  of goods sold                                        |       | 52,330                                                 |       |                                                         | 46,012             |                                                      |       | 129,318                                                   |       |   | 134,610 |   |   |
| Gross  profit                                              |       | 12,559                                                 |       |                                                         | 12,252             |                                                      |       | 33,246                                                    |       |   | 33,639 |   |   |
| SG&A,  including amortization of intangible assets     |       | 5,884                                                  |       |                                                         | 5,540              |                                                      |       | 16,570                                                    |       |   | 16,948 |   |   |
| Royalties  and other operating income                      |       | 262                                                    |       |                                                         | 330                |                                                      |       | 898                                                       |       |   | 943 |   |   |
| Operating  income                                          |       | 6,937                                                  |       |                                                         | 7,042              |                                                      |       | 17,574                                                    |       |   | 17,634 |   |   |
| Interest  expense, net                                     |       | 112                                                    |       |                                                         | 223                |                                                      |       | 244                                                       |       |   | 766 |   |   |
| Earnings  from discontinued operations before income taxes |       | 6,825                                                  |       |                                                         | 6,819              |                                                      |       | 17,330                                                    |       |   | 16,868 |   |   |
| Income  taxes                                              |       | 2,594                                                  |       |                                                         | 2,591              |                                                      |       | 6,586                                                     |       |   | 6,410 |   |   |
| Earnings from discontinued operations, net of  taxes       |       | $  4,231                                     |       |                                                         | $  4,228 |                                                      |       | $  10,744                                       |       |   | $  10,458 |   |   |

 

**3.****                                     ****Inventories: **The components ofinventories related to continuing operations as of the dates specified aresummarized as follows (in thousands):

 
| ** **                | ** ** | **October 30,  2010** | ** ** | **January 30,  2010** | ** **    | **October 31,  2009** | ** ** |
|---------------------------|------------|----------------------------|------------|----------------------------|---------------|----------------------------|------------|
| Finished goods            |       | $100,901                   |       |                       | $ 89,980 |                       |       | $ 90,683 |   |   |
| Work in process           |       | 4,010                      |       |                       | 6,971         |                       |       | 5,269 |   |   |
| Fabric, trim and supplies |       | 3,011                      |       |                       | 5,667         |                       |       | 5,255 |   |   |
| LIFO reserve              |       | (44,438                    | )          |                       | (44,438       | )                          |       | (46,724 | ) |   |
| Total                     |       | $  63,484        |       |                       | $ 58,180 |                       |       | $ 54,483 |   |   |

 

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**4.****                                     ****ComprehensiveIncome: **Comprehensive income iscalculated as follows for the periods presented (in thousands):

 
| ** **                                                             | ** ** | **Third Quarter  Fiscal 2010** | ** ** | **Third Quarter  Fiscal 2009** | ** ** | **First Nine   Months  Fiscal 2010** | ** ** | **First Nine   Months  Fiscal 2009** | ** ** |
|------------------------------------------------------------------------|------------|------------------------------------------|------------|------------------------------------------|------------|-----------------------------------------------------|------------|-----------------------------------------------------|------------|
| Net earnings                                                           |       | $5,550                                   |       |                                     | $4,305     |                                                |       | $25,266                                             |       |   | $10,736 |   |   |
| Gain (loss) on foreign currency translation, net  of tax               |       | 994                                      |       |                                     | (226       | )                                                   |       | (247                                                | )          |   | 5,373 |   |   |
| Net unrealized loss on forward foreign exchange  contracts, net of tax |       | (25                                      | )          |                                     | —     |                                                |       | (217                                                | )          |   | — |   |   |
| Comprehensive income                                                   |       | $6,519                                   |       |                                     | $4,079     |                                                |       | $24,802                                             |       |   | $16,109 |   |   |

 

**5.****                                     ****OperatingGroup Information: **Our business isoperated through our four operating groups: Tommy Bahama, Ben Sherman, LanierClothes and Oxford Apparel. Oxford Apparel operating results included incontinuing operations only reflect the operations for our Oxford Golf businessand the Lyons, Georgia distribution center. All other operations of OxfordApparel are included in discontinued operations as we have entered into adefinitive agreement to sell these assets and operations, as discussed in Note2. We identify our operating groups based on the way our management organizesthe components of our business for purposes of allocating resources andassessing performance. Corporate and Other is a reconciling category forreporting purposes and includes our corporate offices, substantially allfinancing activities, elimination of inter-group sales,  LIFO inventory accounting adjustments andother costs that are not allocated to the operating groups.

 

Thetable below presents certain information about the continuing operations of ouroperating groups (in thousands).

 
| ** **                            | ** ** | **Third  Quarter  Fiscal 2010**           | ** ** | **Third   Quarter  Fiscal 2009**     | ** ** | **First  Nine   Months  Fiscal 2010** | ** ** | **First  Nine  Months  Fiscal 2009**      | ** ** |
|---------------------------------------|------------|------------------------------------------------|------------|------------------------------------------------|------------|-------------------------------------------------|------------|------------------------------------------------|------------|
| **Net Sales**                         |       |                                           |       |                                           |       |                                            |       |                                           |       |
| Tommy  Bahama                         |       | $  81,131                            |       | $  75,403                            |       | $289,585                                        |       | $268,262                                       |       |
| Ben  Sherman                          |       | 25,528                                         |       | 29,844                                         |       | 66,028                                          |       | 77,690                                         |       |
| Lanier  Clothes                       |       | 30,820                                         |       | 35,555                                         |       | 83,984                                          |       | 92,266                                         |       |
| Oxford  Apparel                       |       | 2,097                                          |       | 1,891                                          |       | 6,315                                           |       | 4,574                                          |       |
| Corporate  and Other                  |       | 51                                             |       | (419)                                          |       | 321                                             |       | (885)                                          |       |
| **Total**                             |       | $139,627                                       |       | $142,274                                       |       | $446,233                                        |       | $441,907                                       |       |
| **Depreciation**                      |       |                                           |       |                                           |       |                                            |       |                                           |       |
| Tommy  Bahama                         |       | $    3,285                 |       | $    3,663                 |       | $    9,848                  |       | $  10,968                            |       |
| Ben  Sherman                          |       | 566                                            |       | 640                                            |       | 1,626                                           |       | 1,801                                          |       |
| Lanier  Clothes                       |       | 113                                            |       | 125                                            |       | 350                                             |       | 405                                            |       |
| Oxford  Apparel                       |       | 94                                             |       | 102                                            |       | 339                                             |       | 343                                            |       |
| Corporate  and Other                  |       | 314                                            |       | 225                                            |       | 842                                             |       | 339                                            |       |
| **Total**                             |       | $    4,372                 |       | $    4,755                 |       | $  13,005                             |       | $  13,856                            |       |
| **Amortization of Intangible Assets** | ** ** | ** **                                     |       |                                           | ** ** | ** **                                      |       |                                           |       |
| Tommy Bahama                          |       | $       174 |       | $       222 |       | $       520  |       | $       666 |       |
| Ben Sherman                           |       | 67                                             |       | 85                                             |       | 199                                             |       | 245                                            |       |
| Lanier Clothes                        |       | —                                         |       | —                                         |       | —                                          |       | —                                         |       |
| Oxford Apparel                        |       | —                                         |       | —                                         |       | —                                          |       | —                                         |       |
| Corporate and Other                   |       | —                                         |       | —                                         |       | —                                          |       | —                                         |       |
| **Total**                             |       | $       241 |       | $       307 |       | $       719  |       | $       911 |       |

 

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| ** **                              | ** ** | **Third  Quarter  Fiscal 2010** | ** ** | **Third   Quarter  Fiscal 2009** | ** ** | **First  Nine   Months  Fiscal 2010** | ** ** | **First  Nine   Months  Fiscal 2009** | ** ** |
|-----------------------------------------|------------|--------------------------------------|------------|--------------------------------------------|------------|-------------------------------------------------|------------|-------------------------------------------------|------------|
| **Operating Income (Loss)**             | ** ** | ** **                           |       |                                       | ** ** | ** **                                      |       |                                            |       |
| Tommy Bahama                            |       | $ 3,440                         |       | $ 2,143                               |       | $ 35,473                                   |       | $ 27,772                                   |       |
| Ben Sherman                             |       | 1,684                                |       | 2,323                                      |       | 1,608                                           |       | (5,961                                          | )          |
| Lanier Clothes                          |       | 5,345                                |       | 5,243                                      |       | 12,513                                          |       | 10,681                                          |       |
| Oxford Apparel                          |       | (316                                 | )          | (308                                       | )          | (983                                            | )          | (819                                            | )          |
| Corporate and Other                     |       | (3,722                               | )          | (5,227                                     | )          | (16,030                                         | )          | (18,342                                         | )          |
| **Total Operating Income**              |       | $ 6,431                         |       | $ 4,174                               |       | $ 32,581                                   |       | $ 13,331                                   |       |
| Interest Expense, net                   |       | 5,095                                |       | 5,079                                      |       | 15,115                                          |       | 15,346                                          |       |
| **Earnings (Loss) Before Income Taxes** |       | $ 1,336                         |       | $   (905                    | )          | $ 17,466                                   |       | $  (2,015                             | )          |
|                                         |            |                                      |            |                                            |            |                                                 |            |                                                 |            |  |  |  |  |

 

**6.****                                     ****ConsolidatingFinancial Data of Subsidiary Guarantors: **Our 11 3/8% Senior Secured Notes due 2015 are guaranteed bysubstantially all of our wholly owned domestic subsidiaries (“SubsidiaryGuarantors”). All guarantees are full and unconditional. For consolidatedfinancial reporting purposes, non-guarantors consist of our subsidiaries whichare organized outside the United States and certain domestic subsidiaries. Weuse the equity method with respect to our investment in subsidiaries includedin other non-current assets in our condensed consolidating financialstatements. Set forth below are our condensed consolidating balance sheets asof October 30, 2010, January 30, 2010 and October 31, 2009 (inthousands) as well as our condensed consolidating statements of operations forthe third quarter and first nine months of each of fiscal 2010 and fiscal 2009(in thousands) and our condensed consolidating statements of cash flows for thefirst nine months of fiscal 2010 and fiscal 2009 (in thousands).

 

**OXFORD INDUSTRIES, INC.**

**UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEETS**

**October 30, 2010**

 
| ** **                                              | ** ** | ** **                                   | ** ** | ** **                                     | ** ** | ** **                             | ** ** | ** **                                                          | ** ** | ** **                    | ** **                     |
|---------------------------------------------------------|------------|----------------------------------------------|------------|------------------------------------------------|------------|----------------------------------------|------------|---------------------------------------------------------------------|------------|-------------------------------|--------------------------------|
| ** **                                              | ** ** | **Oxford********Industries********(Parent)** | ** ** | **Subsidiary********Guarantors**               | ** ** | **Subsidiary********Non-  Guarantors** | ** ** | **Consolidating********Adjustments**                                | ** ** | **Consolidated********Total** | ** **                     |
| **ASSETS**                                              |
| Cash  and cash equivalents                              |       | $    1,273               |       | $       563 |       | $  2,540                     |       | $          — |       |                          | $    4,376 |   |
| Receivables,  net                                       |       | 18,396                                       |       | 9,399                                          |       | 39,823                                 |       | (8,718                                                              | )          |                          | 58,900                         |   |
| Inventories,  net                                       |       | (15,529                                      | )          | 71,186                                         |       | 8,463                                  |       | (636                                                                | )          |                          | 63,484                         |   |
| Prepaid  expenses and deferred tax assets, net          |       | 17,589                                       |       | 10,291                                         |       | 3,559                                  |       | (1,152                                                              | )          |                          | 30,287                         |   |
| Assets  related to discontinued operations, net         |       | 69,200                                       |       | 6,859                                          |       | 8,877                                  |       | —                                                              |       |                          | 84,936                         |   |
| Total  current assets                                   |       | 90,929                                       |       | 98,298                                         |       | 63,262                                 |       | (10,506                                                             | )          |                          | 241,983                        |   |
| Property,  plant and equipment, net                     |       | 7,531                                        |       | 62,147                                         |       | 5,043                                  |       | —                                                              |       |                          | 74,721                         |   |
| Intangible  assets, net                                 |       | —                                       |       | 112,653                                        |       | 23,931                                 |       | —                                                              |       |                          | 136,584                        |   |
| Other  non-current assets, net                          |       | 517,873                                      |       | 142,457                                        |       | 3,882                                  |       | (643,031                                                            | )          |                          | 21,181                         |   |
| Total Assets                                            |       | $616,333                                     |       | $415,555                                       |       | $96,118                                |       | $(653,537                                                           | )          |                          | $474,469                       |   |
|                                                    |       |                                         |       |                                           |       |                                   |       |                                                                |       |                          |                           |   |
| **LIABILITIES AND SHAREHOLDERS’ EQUITY**           |
| Current  liabilities related to continuing operations   |       | $  32,905                          |       | $  50,229                            |       | $25,815                                |       | $    (5,717                                     | )          |                          | $103,232                       |   |
| Current  liabilities related to discontinued operations |       | 11,570                                       |       | —                                         |       | 9,972                                  |       | —                                                              |       |                          | 21,542                         |   |
| Long-term  debt, less current maturities                |       | 146,900                                      |       | —                                         |       | —                                 |       | —                                                              |       |                          | 146,900                        |   |
| Other  non-current liabilities                          |       | 301,217                                      |       | (289,059                                       | )          | 143,790                                |       | (108,597                                                            | )          |                          | 47,351                         |   |
| Non-current  deferred income taxes                      |       | (3,950                                       | )          | 25,233                                         |       | 6,455                                  |       | 15                                                                  |       |                          | 27,753                         |   |
| Total  shareholders’/invested equity               |       | 127,691                                      |       | 629,152                                        |       | (89,914                                | )          | (539,238                                                            | )          |                          | 127,691                        |   |
| Total Liabilities and Shareholders’ Equity         |       | $616,333                                     |       | $415,555                                       |       | $96,118                                |       | $(653,537                                                           | )          |                          | $474,469                       |   |

 

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**OXFORDINDUSTRIES, INC.**

**UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEETS**

**January 30,2010**

 
| ** **                                              | ** ** | **Oxford********Industries********(Parent)** | ** ** | **Subsidiary********Guarantors**               | ** ** | **Subsidiary********Non-  Guarantors** | ** ** | **Consolidating********Adjustments**                                      | ** ** | **Consolidated********Total** | ** **                     |
|---------------------------------------------------------|------------|----------------------------------------------|------------|------------------------------------------------|------------|----------------------------------------|------------|---------------------------------------------------------------------------|------------|-------------------------------|--------------------------------|
| **ASSETS**                                              |
| Cash  and cash equivalents                              |       | $    5,933               |       | $       803 |       | $  1,552                     |       | $           — |       |                          | $    8,288 |   |
| Receivables,  net                                       |       | 11,251                                       |       | 2,868                                          |       | 40,486                                 |       | (9,915                                                                    | )          |                          | 44,690                         |   |
| Inventories,  net                                       |       | (9,896                                       | )          | 57,217                                         |       | 11,856                                 |       | (997                                                                      | )          |                          | 58,180                         |   |
| Prepaid  expenses and deferred tax assets, net          |       | 16,347                                       |       | 8,851                                          |       | 3,103                                  |       | (3,918                                                                    | )          |                          | 24,383                         |   |
| Assets  related to discontinued operations, net         |       | 43,805                                       |       | 6,631                                          |       | 5,929                                  |       | —                                                                    |       |                          | 56,365                         |   |
| Total  current assets                                   |       | 67,440                                       |       | 76,370                                         |       | 62,926                                 |       | (14,830                                                                   | )          |                          | 191,906                        |   |
| Property,  plant and equipment, net                     |       | 8,398                                        |       | 64,442                                         |       | 5,585                                  |       | —                                                                    |       |                          | 78,425                         |   |
| Intangible  assets, net                                 |       | —                                       |       | 113,173                                        |       | 24,289                                 |       | —                                                                    |       |                          | 137,462                        |   |
| Other  non-current assets, net                          |       | 490,554                                      |       | 142,827                                        |       | 3,819                                  |       | (619,819                                                                  | )          |                          | 17,381                         |   |
| Total Assets                                            |       | $566,392                                     |       | $396,812                                       |       | $96,619                                |       | $(634,649                                                                 | )          |                          | $425,174                       |   |
|                                                    |       |                                         |       |                                           |       |                                   |       |                                                                      |       |                          |                           |
| **LIABILITIES AND SHAREHOLDERS’ EQUITY**           |
| Current  liabilities related to continuing operations   |       | $  27,108                          |       | $  27,974                            |       | $32,076                                |       | $    (9,650                                           | )          |                          | $  77,508            |   |
| Current  liabilities related to discontinued operations |       | 12,332                                       |       | —                                         |       | 6,610                                  |       | —                                                                    |       |                          | 18,942                         |   |
| Long-term  debt, less current maturities                |       | 146,408                                      |       | —                                         |       | —                                 |       | —                                                                    |       |                          | 146,408                        |   |
| Other  non-current liabilities                          |       | 280,138                                      |       | (268,060                                       | )          | 145,195                                |       | (107,795                                                                  | )          |                          | 49,478                         |   |
| Non-current  deferred income taxes                      |       | (4,011                                       | )          | 26,605                                         |       | 6,794                                  |       | (967                                                                      | )          |                          | 28,421                         |   |
| Total  shareholders’/invested equity               |       | 104,417                                      |       | 610,293                                        |       | (94,056                                | )          | (516,237                                                                  | )          |                          | 104,417                        |   |
| Total Liabilities and Shareholders’ Equity         |       | $566,392                                     |       | $396,812                                       |       | $96,619                                |       | $(634,649                                                                 | )          |                          | $425,174                       |   |

 

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**OXFORD INDUSTRIES, INC.**

**UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEETS**

**October 31, 2009**

 
| ** **                                              | ** ** | ** **                                   | ** ** | ** **                                           | ** ** | ** **                             | ** ** | ** **                                                          | ** ** | ** **                    |
|---------------------------------------------------------|------------|----------------------------------------------|------------|------------------------------------------------------|------------|----------------------------------------|------------|---------------------------------------------------------------------|------------|-------------------------------|
| ** **                                              | ** ** | **Oxford********Industries********(Parent)** | ** ** | **Subsidiary********Guarantors**                     | ** ** | **Subsidiary********Non-  Guarantors** | ** ** | **Consolidating********Adjustments**                                | ** ** | **Consolidated********Total** |
| **ASSETS**                                              |
| Cash  and cash equivalents                              |       | $    1,466               |       | $        493 |       | $    4,036         |       | $          — |       |                          | $    5,995 |   |
| Receivables,  net                                       |       | 15,435                                       |       | 13,504                                               |       | 37,353                                 |       | (8,852                                                              | )          |                          | 57,440 |   |
| Inventories,  net                                       |       | (18,127                                      | )          | 61,916                                               |       | 11,934                                 |       | (1,240                                                              | )          |                          | 54,483 |   |
| Prepaid  expenses and deferred tax assets, net          |       | 9,213                                        |       | 9,716                                                |       | 4,138                                  |       | 636                                                                 |       |                          | 23,703 |   |
| Assets  related to discontinued operations, net         |       | 54,230                                       |       | 6,483                                                |       | 2,866                                  |       | —                                                              |       |                          | 63,579 |   |
| Total  current assets                                   |       | 62,217                                       |       | 92,112                                               |       | 60,327                                 |       | (9,456                                                              | )          |                          | 205,200 |   |
| Property,  plant and equipment, net                     |       | 8,743                                        |       | 68,063                                               |       | 6,037                                  |       | —                                                              |       |                          | 82,843 |   |
| Intangible  assets, net                                 |       | —                                       |       | 113,394                                              |       | 24,978                                 |       | —                                                              |       |                          | 138,372 |   |
| Other  non-current assets, net                          |       | 478,741                                      |       | 142,881                                              |       | 35,038                                 |       | (639,444                                                            | )          |                          | 17,216 |   |
| Total Assets                                            |       | $549,701                                     |       | $ 416,450                                       |       | $126,380                               |       | $(648,900                                                           | )          |                          | $443,631 |   |
|                                                    |       |                                         |       |                                                 |       |                                   |       |                                                                |       |                          |   |   |
| **LIABILITIES AND SHAREHOLDERS’ EQUITY**           |
| Current  liabilities related to continuing operations   |       | $  39,269                          |       | $   30,792                            |       | $  28,908                    |       | $    (7,589                                     | )          |                          | $  91,380 |   |
| Current  liabilities related to discontinued operations |       | 8,156                                        |       | —                                               |       | 4,813                                  |       | —                                                              |       |                          | 12,969 |   |
| Long-term  debt, less current maturities                |       | 161,244                                      |       | —                                               |       | —                                 |       | —                                                              |       |                          | 161,244 |   |
| Other  non-current liabilities                          |       | 243,461                                      |       | (199,005                                             | )          | 111,526                                |       | (109,150                                                            | )          |                          | 46,832 |   |
| Non-current  deferred income taxes                      |       | (4,191                                       | )          | 26,812                                               |       | 6,823                                  |       | —                                                              |       |                          | 29,444 |   |
| Total  shareholders’/invested equity               |       | 101,762                                      |       | 557,851                                              |       | (25,690                                | )          | (532,161                                                            | )          |                          | 101,762 |   |
| Total Liabilities and Shareholders’ Equity         |       | $549,701                                     |       | $ 416,450                                       |       | $126,380                               |       | $(648,900                                                           | )          |                          | $443,631 |   |

 

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**OXFORDINDUSTRIES, INC.**

**UNAUDITEDCONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS**

**ThirdQuarter Fiscal 2010**

 
| ** **                                                      | ** ** | **Oxford********Industries********(Parent)** | ** ** | **Subsidiary********Guarantors** | ** ** | **Subsidiary********Non-  Guarantors** | ** ** | **Consolidating********Adjustments** | ** ** | **Consolidated********Total** | ** ** |
|-----------------------------------------------------------------|------------|----------------------------------------------|------------|----------------------------------|------------|----------------------------------------|------------|--------------------------------------|------------|-------------------------------|------------|
| Net  sales                                                      |       | $                                            | 32,966     |                             | $          | 90,608                                 |       | $                                    | 24,155     |                          | $          | (8,102 | ) | $ | 139,627 |   |
| Cost  of goods sold                                             |       | 21,980                                       |       | 38,236                           |       | 10,156                                 |       | (4,430                               | )          | 65,942                        |       |
| Gross  profit                                                   |       | 10,986                                       |       | 52,372                           |       | 13,999                                 |       | (3,672                               | )          | 73,685                        |       |
| SG&A  including amortization of intangible assets           |       | 7,633                                        |       | 54,030                           |       | 12,483                                 |       | (2,910                               | )          | 71,236                        |       |
| Royalties  and other operating income (loss)                    |       | (7                                           | )          | 1,886                            |       | 2,244                                  |       | (141                                 | )          | 3,982                         |       |
| Operating  income (loss)                                        |       | 3,346                                        |       | 228                              |       | 3,760                                  |       | (903                                 | )          | 6,431                         |       |
| Interest  (income) expense, net                                 |       | 6,390                                        |       | (1,115                           | )          | 774                                    |       | (954                                 | )          | 5,095                         |       |
| Income  (loss) from equity investment                           |       | 5,149                                        |       | —                           |       | —                                 |       | (5,149                               | )          | —                        |       |
| Earnings  (loss) from continuing operations before income taxes |       | 2,105                                        |       | 1,343                            |       | 2,986                                  |       | (5,098                               | )          | 1,336                         |       |
| Income  taxes (benefit)                                         |       | (1,287                                       | )          | 517                              |       | 770                                    |       | 17                                   |       | 17                            |       |
| Earnings  from continuing operations                            |       | 3,392                                        |       | 826                              |       | 2,216                                  |       | (5,115                               | )          | 1,319                         |       |
| Earnings  from discontinued operations, net of taxes            |       | 3,034                                        |       | 333                              |       | 864                                    |       | —                               |       | 4,231                         |       |
| Net  earnings (loss)                                            |       | $                                            | 6,426      |                             | $          | 1,159                                  |       | $                                    | 3,080      |                          | $          | (5,115 | ) | $ | 5,550 |   |

 

**OXFORDINDUSTRIES, INC.**

**UNAUDITEDCONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS**

**FirstNine Months Fiscal 2010**

 
| ** **                                                      | ** ** | **Oxford********Industries********(Parent)** | ** ** | **Subsidiary********Guarantors** | ** ** | **Subsidiary********Non-  Guarantors** | ** ** | **Consolidating********Adjustments** | ** ** | **Consolidated********Total** | ** ** |
|-----------------------------------------------------------------|------------|----------------------------------------------|------------|----------------------------------|------------|----------------------------------------|------------|--------------------------------------|------------|-------------------------------|------------|
| Net  sales                                                      |       | $                                            | 90,765     |                             | $          | 313,831                                |       | $                                    | 63,512     |                          | $          | (21,875 | ) | $ | 446,233 |   |
| Cost  of goods sold                                             |       | 61,945                                       |       | 126,688                          |       | 27,063                                 |       | (11,873                              | )          | 203,823                       |       |
| Gross  profit                                                   |       | 28,820                                       |       | 187,143                          |       | 36,449                                 |       | (10,002                              | )          | 242,410                       |       |
| SG&A  including amortization of intangible assets           |       | 28,340                                       |       | 168,336                          |       | 35,019                                 |       | (10,648                              | )          | 221,047                       |       |
| Royalties  and other operating income (loss)                    |       | 21                                           |       | 6,048                            |       | 5,612                                  |       | (463                                 | )          | 11,218                        |       |
| Operating  income (loss)                                        |       | 501                                          |       | 24,855                           |       | 7,042                                  |       | 183                                  |       | 32,581                        |       |
| Interest  (income) expense, net                                 |       | 16,319                                       |       | (3,233                           | )          | 2,173                                  |       | (144                                 | )          | 15,115                        |       |
| Income  (loss) from equity investment                           |       | 23,407                                       |       | —                           |       | —                                 |       | (23,407                              | )          | —                        |       |
| Earnings  (loss) from continuing operations before income taxes |       | 7,589                                        |       | 28,088                           |       | 4,869                                  |       | (23,080                              | )          | 17,466                        |       |
| Income  taxes (benefit)                                         |       | (8,828                                       | )          | 10,399                           |       | 1,259                                  |       | 114                                  |       | 2,944                         |       |
| Earnings  from continuing operations                            |       | 16,417                                       |       | 17,689                           |       | 3,610                                  |       | (23,194                              | )          | 14,522                        |       |
| Earnings  from discontinued operations, net of taxes            |       | 8,638                                        |       | 1,113                            |       | 993                                    |       | —                               |       | 10,744                        |       |
| Net  earnings (loss)                                            |       | $                                            | 25,055     |                             | $          | 18,802                                 |       | $                                    | 4,603      |                          | $          | (23,194 | ) | $ | 25,266 |   |

 

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**OXFORDINDUSTRIES, INC.**

**UNAUDITEDCONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS**

**ThirdQuarter Fiscal 2009**

 
| ** **                                                      | ** ** | **Oxford********Industries********(Parent)** | ** ** | **Subsidiary********Guarantors** | ** ** | **Subsidiary********Non-Guarantors** | ** ** | **Consolidating********Adjustments** | ** ** | **Consolidated********Total** | ** ** |
|-----------------------------------------------------------------|------------|----------------------------------------------|------------|----------------------------------|------------|--------------------------------------|------------|--------------------------------------|------------|-------------------------------|------------|
| Net  sales                                                      |       | $                                            | 36,093     |                             | $          | 86,334                               |       | $                                    | 27,826     |                          | $          | (7,979 | ) | $ | 142,274 |   |
| Cost  of goods sold                                             |       | 28,448                                       |       | 37,205                           |       | 13,393                               |       | (4,883                               | )          | 74,163                        |       |
| Gross  profit                                                   |       | 7,645                                        |       | 49,129                           |       | 14,433                               |       | (3,096                               | )          | 68,111                        |       |
| SG&A  including amortization of intangible assets           |       | 6,644                                        |       | 51,876                           |       | 12,437                               |       | (3,754                               | )          | 67,203                        |       |
| Royalties  and other operating income (loss)                    |       | 3                                            |       | 1,241                            |       | 2,179                                |       | (157                                 | )          | 3,266                         |       |
| Operating  income (loss)                                        |       | 1,004                                        |       | (1,506                           | )          | 4,175                                |       | 501                                  |       | 4,174                         |       |
| Interest  (income) expense, net                                 |       | 5,475                                        |       | (1,218                           | )          | 822                                  |       | —                               |       | 5,079                         |       |
| Income  (loss) from equity investment                           |       | 4,074                                        |       | —                           |       | —                               |       | (4,074                               | )          | —                        |       |
| Earnings  (loss) from continuing operations before income taxes |       | (397                                         | )          | (288                             | )          | 3,353                                |       | (3,573                               | )          | (905                          | )          |
| Income  taxes (benefit)                                         |       | (632                                         | )          | (1,385                           | )          | 860                                  |       | 175                                  |       | (982                          | )          |
| Earnings  from continuing operations                            |       | 235                                          |       | 1,097                            |       | 2,493                                |       | (3,748                               | )          | 77                            |       |
| Earnings  from discontinued operations, net of taxes            |       | 3,742                                        |       | (192                             | )          | 678                                  |       | —                               |       | 4,228                         |       |
| Net  earnings (loss)                                            |       | $                                            | 3,977      |                             | $          | 905                                  |       | $                                    | 3,171      |                          | $          | (3,748 | ) | $ | 4,305 |   |

 

**OXFORDINDUSTRIES, INC.**

**UNAUDITEDCONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS**

**FirstNine Months Fiscal 2009**

 
| ** **                                                      | ** ** | **Oxford********Industries********(Parent)** | ** ** | **Subsidiary********Guarantors** | ** ** | **Subsidiary********Non-Guarantors** | ** ** | **Consolidating********Adjustments** | ** ** | **Consolidated********Total** | ** ** |
|-----------------------------------------------------------------|------------|----------------------------------------------|------------|----------------------------------|------------|--------------------------------------|------------|--------------------------------------|------------|-------------------------------|------------|
| Net  sales                                                      |       | $                                            | 92,982     |                             | $          | 296,638                              |       | $                                    | 74,855     |                          | $          | (22,568 | ) | $ | 441,907 |   |
| Cost  of goods sold                                             |       | 75,857                                       |       | 126,134                          |       | 38,777                               |       | (12,892                              | )          | 227,876                       |       |
| Gross  profit                                                   |       | 17,125                                       |       | 170,504                          |       | 36,078                               |       | (9,676                               | )          | 214,031                       |       |
| SG&A  including amortization of intangible assets           |       | 19,476                                       |       | 161,084                          |       | 38,903                               |       | (10,725                              | )          | 208,738                       |       |
| Royalties  and other operating income (loss)                    |       | 14                                           |       | 3,993                            |       | 4,363                                |       | (332                                 | )          | 8,038                         |       |
| Operating  income (loss)                                        |       | (2,337                                       | )          | 13,413                           |       | 1,538                                |       | 717                                  |       | 13,331                        |       |
| Interest  (income) expense, net                                 |       | 16,571                                       |       | (3,935                           | )          | 2,710                                |       | —                               |       | 15,346                        |       |
| Income  (loss) from equity investment                           |       | 15,624                                       |       | —                           |       | —                               |       | (15,624                              | )          | —                        |       |
| Earnings  (loss) from continuing operations before income taxes |       | (3,284                                       | )          | 17,348                           |       | (1,172                               | )          | (14,907                              | )          | (2,015                        | )          |
| Income  taxes (benefit)                                         |       | (5,724                                       | )          | 3,699                            |       | (519                                 | )          | 251                                  |       | (2,293                        | )          |
| Earnings  from continuing operations                            |       | 2,440                                        |       | 13,649                           |       | (653                                 | )          | (15,158                              | )          | 278                           |       |
| Earnings  from discontinued operations, net of taxes            |       | 7,830                                        |       | 1,319                            |       | 1,309                                |       | —                               |       | 10,458                        |       |
| Net  earnings (loss)                                            |       | $                                            | 10,270     |                             | $          | 14,968                               |       | $                                    | 656        |                          | $          | (15,158 | ) | $ | 10,736 |   |

 

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**OXFORD INDUSTRIES, INC.**

**UNAUDITEDCONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS**

**FirstNine Months Fiscal 2010**

 
| ** **                                               | ** ** | **Oxford********Industries********(Parent)** | ** ** | **Subsidiary********Guarantors** | ** ** | **Subsidiary********Non-  Guarantors** | ** ** | **Consolidating********Adjustments** | ** ** | **Consolidated********Total** | ** ** |
|----------------------------------------------------------|------------|----------------------------------------------|------------|----------------------------------|------------|----------------------------------------|------------|--------------------------------------|------------|-------------------------------|------------|
| Cash  Flows From Operating Activities:                   | ** ** | ** **                                   | ** ** | ** **                       | ** ** | ** **                             | ** ** | ** **                           | ** ** | ** **                    | ** ** |
| Net  cash provided by (used in) operating activities     |       | $                                            | (20,907)   |                             | $          | 27,753                                 |       | $                                    | 1,781      |                          | $          | 130 |   | $ | 8,757 |   |
| Cash  Flows from Investing Activities:                   |       |                                         |       |                             |       |                                   |       |                                 |       |                          |       |   |   |   |   |   |
| Net  cash provided by (used in) investing activities     |       |                                         | (607)      |                             |       | (8,224)                                |       |                                 | (526)      |                          |       | — |   |   | (9,357) |   |
| Cash  Flows from Financing Activities:                   |       |                                         |       |                             |       |                                   |       |                                 |       |                          |       |   |   |   |   |   |
| Change  in debt                                          |       |                                         | 20,273     |                             |       | —                                 |       |                                 | 628        |                          |       | — |   |   | 20,901 |   |
| Repayments  of company-owned life insurance policy loans |       |                                         | (4,125)    |                             |       | —                                 |       |                                 | —     |                          |       | — |   |   | (4,125) |   |
| Proceeds  from issuance of common stock                  |       |                                         | 362        |                             |       | —                                 |       |                                 | —     |                          |       | — |   |   | 362 |   |
| Change  in intercompany payable                          |       |                                         | 21,933     |                             |       | (20,502)                               |       |                                 | (1,301)    |                          |       | (130) |   |   | — |   |
| Dividends  on common stock                               |       |                                         | (5,460)    |                             |       | —                                 |       |                                 | —     |                          |       | — |   |   | (5,460) |   |
| Net  cash provided by (used in) financing activities     |       |                                         | 32,983     |                             |       | (20,502)                               |       |                                 | (673)      |                          |       | (130) |   |   | 11,678 |   |
| Cash  Flows from Discontinued Operations:                |       |                                         |       |                             |       |                                   |       |                                 |       |                          |       |   |   |   |   |   |
| Net  cash provided by (used in) discontinued operations  |       |                                         | (16,129)   |                             |       | 733                                    |       |                                 | 424        |                          |       | — |   |   | (14,972) |   |
| Net  change in Cash and Cash Equivalents                 |       |                                         | (4,660)    |                             |       | (240)                                  |       |                                 | 1,006      |                          |       | — |   |   | (3,894) |   |
| Effect  of foreign currency translation                  |       |                                         | —     |                             |       | —                                 |       |                                 | (18)       |                          |       | — |   |   | (18) |   |
| Cash  and Cash Equivalents at the Beginning of Period    |       |                                         | 5,933      |                             |       | 803                                    |       |                                 | 1,552      |                          |       | — |   |   | 8,288 |   |
| Cash  and Cash Equivalents at the End of Period          |       | $                                            | 1,273      |                             | $          | 563                                    |       | $                                    | 2,540      |                          | $          | — |   | $ | 4,376 |   |
|                                                          |            |                                              |            |                                  |            |                                        |            |                                      |            |                               |            |  |  |  |  |  |  |

 

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**OXFORDINDUSTRIES, INC.**

**UNAUDITEDCONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS**

**FirstNine Months Fiscal 2009**

 
| ** **                                                  | ** ** | **Oxford********Industries********(Parent)** | ** ** | ** ** | **Subsidiary********Guarantors** | ** ** | ** ** | **Subsidiary********Non-Guarantors** | ** ** | ** ** | **Consolidating********Adjustments** | ** ** | **Consolidated********Total** | ** **    |
|-------------------------------------------------------------|------------|----------------------------------------------|------------|------------|----------------------------------|------------|------------|--------------------------------------|------------|------------|--------------------------------------|------------|-------------------------------|---------------|
| Cash  Flows From Operating Activities:                      | ** ** |                                         |       | ** ** | ** **                       |       |       | ** **                           | ** ** |       |                                 | ** ** | ** **                    | ** **    | ** ** | ** ** | ** ** | ** ** | ** ** |
| Net  cash provided by (used in) operating activities        |       | $                                            | 6,819      |       |                             | $          | 30,972     |                                 |       | $          | (122                                 | )          |                          | $ — |   |   | $ | 37,669 |   |
| Cash  Flows from Investing Activities:                      |       |                                         |       |       |                             |       |       |                                 |       |       |                                 |       |                          |          |   |   |   |   |   |
| Net  cash provided by (used in) investing activities        |       |                                         | (1,841     | )          |                             |       | (5,111     | )                                    |       |       | (1,454                               | )          |                          | —        |   |   |   | (8,406 | ) |
| Cash  Flows from Financing Activities:                      |       |                                         |       |       |                             |       |       |                                 |       |       |                                 |       |                          |          |   |   |   |   |   |
| Change  in debt                                             |       |                                         | (901       | )          |                             |       | —     |                                 |       |       | (197                                 | )          |                          | —        |   |   |   | (1,098 | ) |
| Repurchase  of 8 7/8% Senior Unsecured Notes                |       |                                         | (166,805   | )          |                             |       | —     |                                 |       |       | —                               |       |                          | —        |   |   |   | (166,805 | ) |
| Proceeds  from the issuance of 11 3/8% Senior Secured notes |       |                                         | 146,029    |       |                             |       | —     |                                 |       |       | —                               |       |                          | —        |   |   |   | 146,029 |   |
| Deferred  financing costs paid                              |       |                                         | (5,043     | )          |                             |       | —     |                                 |       |       | —                               |       |                          | —        |   |   |   | (5,043 | ) |
| Proceeds  from issuance of common stock                     |       |                                         | 316        |       |                             |       | —     |                                 |       |       | —                               |       |                          | —        |   |   |   | 316 |   |
| Change  in intercompany payable                             |       |                                         | 25,149     |       |                             |       | (26,205    | )                                    |       |       | 1,056                                |       |                          | —        |   |   |   | — |   |
| Dividends  on common stock                                  |       |                                         | (4,406     | )          |                             |       | —     |                                 |       |       | —                               |       |                          | —        |   |   |   | (4,406 | ) |
| Net  cash provided by (used in) financing activities        |       |                                         | (5,661     | )          |                             |       | (26,205    | )                                    |       |       | 859                                  |       |                          | —        |   |   |   | (31,007 | ) |
| Cash  Flows from Discontinued Operations:                   |       |                                         |       |       |                             |       |       |                                 |       |       |                                 |       |                          |          |   |   |   |   |   |
| Net  cash provided by (used in) discontinued operations     |       |                                         | 622        |       |                             |       | 300        |                                 |       |       | 3,384                                |       |                          | —        |   |   |   | 4,306 |   |
| Net  change in Cash and Cash Equivalents                    |       |                                         | (61        | )          |                             |       | (44        | )                                    |       |       | 2,667                                |       |                          | —        |   |   |   | 2,562 |   |
| Effect  of foreign currency translation                     |       |                                         | —     |       |                             |       | —     |                                 |       |       | 143                                  |       |                          | —        |   |   |   | 143 |   |
| Cash  and Cash Equivalents at the Beginning of Period       |       |                                         | 1,527      |       |                             |       | 537        |                                 |       |       | 1,226                                |       |                          | —        |   |   |   | 3,290 |   |
| Cash  and Cash Equivalents at the End of Period             |       | $                                            | 1,466      |       |                             | $          | 493        |                                 |       | $          | 4,036                                |       |                          | $ — |   |   | $ | 5,995 |   |

 

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**ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS**

 

The following discussion and analysis should be read inconjunction with our unaudited condensed consolidated financial statements andthe notes to the unaudited condensed consolidated financial statementscontained in this report and the consolidated financial statements, notes toconsolidated financial statements and Management’s Discussion and Analysis ofFinancial Condition and Results of Operations contained in our AnnualReport on Form 10-K for fiscal 2009.

 

**OVERVIEW**

 

Wegenerate revenues and cash flow primarily through the design, production, saleand distribution of branded and private label consumer apparel for men andwomen and the licensing of company-owned trademarks. Our principal markets andcustomers are located in the United States and, to a lesser extent, the UnitedKingdom. We source substantially all of our products through third partymanufacturers located outside of the United States and United Kingdom. Wedistribute the majority of our products through our wholesale customers, whichinclude chain stores, department stores, specialty stores, specialty catalogretailers, mass merchants and Internet retailers. Our products for certainowned brands are also sold through our owned and licensed retail stores ande-commerce websites.

 

Asa result of the weak global economic conditions which began in fiscal 2008, fiscal2009 was a particularly challenging year for each of our operating groups.While we did observe signs of recovery, the challenging economic conditionscontinued to persist and impacted each of our operating groups in fiscal 2010.In fiscal 2009 and the first nine months of fiscal 2010, we purchased inventoryat levels which mitigated inventory markdown risk and promotional pressure;however, these precautions also limited our growth opportunities in some cases.Although the challenging economic conditions continue to have an impact on ourbusiness and the apparel industry as a whole, and we continue to focus onminimizing inventory markdown risk and promotional pressure, we were slightlymore aggressive in our inventory purchases for the holiday 2010 season andanticipate purchasing inventory more aggressively in 2011 if the economicconditions continue to show improvement. We believe that fiscal 2011 will beimpacted by pricing pressures on raw materials, fuel, transportation and othercosts necessary for the production and sourcing of apparel products, whichcould negatively impact our gross margins.

 

Theapparel and retail industry is cyclical and dependent upon the overall level ofdiscretionary consumer spending, which changes as regional, domestic andinternational economic conditions change. The impact of negative economicconditions may have a longer and more severe impact on the apparel and retailindustry than the same conditions have on other industries. Therefore, even ifconditions improve in the general economy, the negative impact on the appareland retail industry may continue.

 

Wecontinue to believe it is important to focus on maintaining a strong balancesheet and ample liquidity. We believe that the measures we have taken to reduceworking capital requirements, moderate capital expenditures for retail stores,reduce our overhead and refinance our significant debt agreements havesignificantly enhanced our balance sheet and liquidity, which will be enhancedfurther upon the completion of our anticipated disposal of substantially all ofthe operations of Oxford Apparel. We expect the closing of the Oxford Appareldisposition to occur by the end of calendar year 2010. We believe our strongbalance sheet and liquidity will allow us to aggressively develop Tommy Bahamaand Ben Sherman, our key lifestyle brands, while maintaining Lanier Clothes’high level of performance, and at the same time maintain the financialflexibility to pursue acquisitions and opportunistically enhance our capitalstructure.

 

Thefollowing table sets forth our consolidated operating results (in thousands,except per share amounts) for the first nine months of fiscal 2010 compared tothe first nine months of fiscal 2009:

 

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| ** **                                                      | ** ** | **First Nine Months** | ** ** | ** **           | ** ** |
|-----------------------------------------------------------------|------------|---------------------------------|------------|----------------------|------------|
| ** **                                                      | ** ** | **Fiscal 2010**            | ** ** | **Fiscal 2009** | ** ** | **$ Change** | ** ** |
| Net sales                                                       |       | $                               | 446,233    |                 | $          | 441,907 |   | $ | 4,326 |   |
| Earnings from continuing operations                             |       | $                               | 14,522     |                 | $          | 278 |   | $ | 14,244 |   |
| Earnings from continuing operations per diluted  common share   |       | $                               | 0.88       |                 | $          | 0.02 |   | $ | 0.86 |   |
| Earnings from discontinued operations, net of  taxes            |       | $                               | 10,744     |                 | $          | 10,458 |   | $ | 286 |   |
| Earnings from discontinued operations per diluted  common share |       | $                               | 0.65       |                 | $          | 0.64 |   | $ | 0.01 |   |
| Net earnings                                                    |       | $                               | 25,266     |                 | $          | 10,736 |   | $ | 14,530 |   |
| Net earnings per diluted common share                           |       | $                               | 1.53       |                 | $          | 0.66 |   | $ | 0.87 |   |
| Weighted average common shares outstanding—diluted         |       |                            | 16,545     |                 |       | 16,233 |   |   | 312 |   |

 

Theprimary reasons for the improvement in earnings from continuing operationswere:

 

·                  An increase in net sales anda change in our net sales mix in our continuing operations, with Tommy Bahamadirect to consumer and wholesale sales, which generally have higher grossmargins than our other sales, representing a higher proportion of consolidatednet sales and sales related to certain exited businesses in Ben Sherman andLanier Clothes representing a lower proportion of consolidated net salesrelated to continuing operations during the first nine months of fiscal 2010.The first nine months of fiscal 2009 included $18.1 million of net salesassociated with businesses in Ben Sherman and Lanier Clothes that we haveexited compared to $2.4 million of such sales in the first nine months offiscal 2010.

 

·                  Improved gross margins, which benefitted fromthe change in sales mix, and the first nine months of fiscal 2010 including aLIFO accounting charge of $1.4 million compared to the first nine months fiscal2009 including a LIFO accounting charge of $6.7 million.

 

·                  Increased royalty income in both Tommy Bahamaand Ben Sherman resulting from increased sales during the first nine months offiscal 2010 by existing licensees, as well as the addition of new licensees.

 

·                  The first nine months of fiscal 2009 including$1.4 million of restructuring charges related to Ben Sherman’s exit from andsubsequent licensing of its footwear and kids operations and other streamlininginitiatives.

 

·                  The first nine months of fiscal 2009including a $1.8 million write-off of unamortized deferred financing costsrelated to the satisfaction and discharge of the remaining 8 7/8% SeniorUnsecured Notes, which was included in interest expense.

 

Theseitems were partially offset by increased SG&A primarily due to (1) increasedincentive compensation amounts resulting from the resumption of our incentivecompensation program, which was suspended in fiscal 2009 and is tied to ourfinancial performance, and (2) increased retail store operating costs as aresult of the opening of additional retail stores during fiscal 2009 and fiscal2010.

 

Earnings from discontinuedoperations reflect operations related to Oxford Apparel, of which we haveentered into a definitive agreement to sell substantially all of the assets andoperations, as discussed below. Earnings from discontinued operations wererelatively consistent for the first nine months of fiscal 2010 as compared tothe first nine months of fiscal 2009.

 

**DISCONTINUED OPERATIONS**

 

OnNovember 22, 2010, we entered into a purchase agreement with LF USA Inc.,which we refer to as LF, a subsidiary of Li & Fung Limited, pursuantto which we will sell to LF substantially all of the assets of Oxford Apparel(other than accounts receivable associated with the businesses which are beingsold and all assets and operations relating to our Oxford Golf business and ourdistribution center in Lyons, Georgia).  The purchase price to be paid byLF is equal to approximately $121.7 million, subject to adjustment based on networking capital on the closing date of the transaction.  LF also agreed topurchase our goods in transit relating to Oxford Apparel following the closingof the transaction.

 

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In connection with theconsummation of the transaction described above, we will, among other things,enter into (1) license agreements with LF to grant licenses (subjectto the limitations set forth in the applicable license agreements) to LF to usethe trade name “Oxford Apparel” perpetually in connection with its business, aswell as to use certain other trademarks in connection with the manufacture,sale and distribution of men’s dress shirts for certain periods of time in theapplicable territory; (2) a services agreement with LF pursuant towhich, in exchange for various fees, we will, following the closing of thetransaction, provide certain transitional support services to LF in itsoperation of the transferred assets; and (3) a limitednon-competition agreement with LF pursuant to which we will agree (subject tothe exceptions set forth in the non-competition agreement) not to engage incertain activities for a period of three years following the completion of thetransaction. The closing of the transaction is subject to customary closingconditions and is expected to occur by the end of calendar year 2010.

 

As a result of the planneddisposal of substantially all of the assets and operations of Oxford Apparel,the results of operations for Oxford Apparel, other than the operationsrelating to our Oxford Golf business and our Lyons, Georgia distributioncenter, have been classified as discontinued operations in our consolidatedstatements of operations and our consolidated statements of cash flows for allperiods presented. The assets and liabilities related to the discontinuedoperations have been reclassified to assets and liabilities related todiscontinued operations, as applicable.

 

The results of operations classified as discontinuedoperations are consistent with the net sales, operating expenses and operatingincome for Oxford Apparel, except that (1) the operations of our OxfordGolf business and the operations of our Lyons, Georgia distribution center arereported within Oxford Apparel continuing operations as those operations arenot being sold and (2) certain corporate service costs which werepreviously allocated to Oxford Apparel are reported as corporate service costsincluded in Corporate and Other as we are not certain that such corporateservice costs will not continue.

 

With respect to interest expense, we have allocatedall interest expense related to our U.S. Revolving Credit Agreement to earningsfrom discontinued operations as the estimated net proceeds from the transactionand the proceeds from the settlement of the retained assets and liabilitiesrelated to the discontinued operations, substantially all of which are expectedto be converted into cash before the end of the first quarter of fiscal 2011,exceed the amounts outstanding under our U.S. Revolving Credit Agreement duringthe periods presented. Proceeds from the transaction and the retained assetsare expected to be used to repay any debt outstanding under our U.S. RevolvingCredit Agreement; fund general corporate operating activities, includingfurther development of our existing operations; fund future acquisitions, ifany; and opportunistically enhance our capital structure. We did not allocateany interest related to our 11 3/8% Senior Secured Notes to discontinuedoperations. The income tax rate used for the tax effect of the discontinuedoperations is based on the domestic effective tax rate of Oxford Industries, Inc.as the assets and operations that were disposed of were primarily domesticoperations of that entity and should not be impacted by rates in foreignjurisdictions or other subsidiaries.

 

**OPERATINGGROUPS**

 

Our business is operated through our four operatinggroups: Tommy Bahama, Ben Sherman, Lanier Clothes and Oxford Apparel. Weidentify our operating groups based on the way our management organizes thecomponents of our business for purposes of allocating resources and assessingperformance.

 

Tommy Bahama designs, sources and marketscollections of men’s and women’s sportswear and related products. The targetconsumers of Tommy Bahama are affluent men and women age 35 and older whoembrace a relaxed and casual approach to daily living. Tommy Bahama® products can be found in our owned andlicensed Tommy Bahama retail stores and on our e-commerce website, as well asin certain department stores and independent specialty stores throughout theUnited States. We also license the Tommy Bahama name for various productcategories and operate Tommy Bahama restaurants.

 

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Ben Sherman is a London-based designer, marketer anddistributor of branded sportswear and related products. Ben Sherman® was established in 1963 as an edgy, young men’s,“Mod”-inspired shirt brand and has evolved into a British lifestyle brand ofapparel targeted at youthful-thinking men age 19 to 35 throughout the world. Weoffer a Ben Sherman men’s sportswear collection, while our licensees offertailored clothing, accessories and other product categories. Our Ben Shermanproducts can be found in certain department stores, a variety of independentspecialty stores and our owned and licensed Ben Sherman retail stores, as wellas on our e-commerce websites.

 

Lanier Clothes designs and markets branded andprivate label men’s suits, sportcoats, suit separates and dress slacks across awide range of price points. Certain Lanier Clothes products are sold usingtrademarks licensed to us by third parties, including Kenneth Cole®, Dockers®, and Geoffrey Beene®. We also offer brandedtailored clothing products under our Billy London® and ArnoldBrant® trademarks. In addition to our brandedbusinesses, we design and source certain private label tailored clothingproducts. Significant private label brands include Stafford®, Lands’ End® and Alfani®. Our Lanier Clothes products are sold to nationalchains, department stores, mass merchants, specialty stores, specialty catalogretailers and discount retailers throughout the United States.

 

Oxford Apparel produces branded and private labeldress shirts, suit separates, sport shirts, casual slacks, outerwear, sweaters,jeans, swimwear, westernwear and golf apparel. Oxford Apparel designs andsources certain private label programs for several customers, includingprograms for Costco, Sears, Target and Macy’s. Significant owned brands ofOxford Apparel include Oxford Golf®, Ely®, Cattleman® andCumberland Outfitters®. OxfordApparel also owns a two-thirds interest in the entity that owns the Hathaway® trademark in the United States and severalother countries. Additionally, Oxford Apparel licenses from third parties theright to use certain trademarks, including Dockers and United States PoloAssociation®, for certainapparel products. Oxford Apparel products are sold to a variety of departmentstores, mass merchants, specialty catalog retailers, discount retailers,specialty stores, “green grass” golf merchants and Internet retailersthroughout the United States. Oxford Apparel operating results included incontinuing operations reflect the operations for our Oxford Golf business andthe Lyons, Georgia distribution center. All other operations of Oxford Apparelare included in discontinued operations as we have entered into a definitiveagreement to sell these assets and operations, as described above.

 

Corporate and Other is a reconciling category forreporting purposes and includes our corporate office, substantially allfinancing activities, elimination of inter-segment sales, LIFO inventoryaccounting adjustments and other costs that are not allocated to the operatinggroups. LIFO inventory calculations are made on a legal entity basis which doesnot correspond to our operating group definitions; therefore, LIFO inventoryaccounting adjustments are not allocated to operating groups.

 

For further information regarding our operating groups,see Note 5 to our unaudited condensed consolidated financial statementsincluded in this report and Part I, Item 1. Business in our AnnualReport on Form 10-K for fiscal 2009.

 

**RESULTS OF OPERATIONS**

 

**THIRD QUARTER OF FISCAL 2010 COMPARED TO THIRD QUARTER OF FISCAL 2009**

 

The following table setsforth the specified line items in our unaudited condensed consolidatedstatements of operations both in dollars (in thousands) and as a percentage ofnet sales. The table also sets forth the dollar change and the percentagechange of the data as compared to the same period of the prior year. We havecalculated all percentages based on actual data, but percentage columns may notadd due to rounding. Individual line items of our consolidated statements ofoperations may not be directly comparable to those of our competitors, asclassification of certain expenses may vary by company. In accordance with U.S.GAAP, net sales, cost of goods sold, gross profit, SG&A, amortization ofintangible assets, royalties and other operating income, operating income,interest expense, net, earnings from continuing operations before income taxes,income taxes and earnings from continuing operations reflect continuingoperations only, and all discontinued operations are reflected in earnings fromdiscontinued operations, net.

 

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| ** **                                               | ** ** | **Third Quarter**         | ** ** | ** **           | ** ** | ** **                     | ** ** |
|----------------------------------------------------------|------------|--------------------------------|------------|----------------------|------------|--------------------------------|------------|
| ** **                                               | ** ** | **Fiscal 2010**           | ** ** | **Fiscal 2009** | ** ** | **$ Change**              | ** ** | **% Change** | ** ** |
| Net  sales                                               |       | $139,627                       |       | 100.0%               |       | $142,274                       |       | 100.0% |   | $(2,647 | ) | (1.9% | ) |
| Cost  of goods sold                                      |       | 65,942                         |       | 47.2%                |       | 74,163                         |       | 52.1% |   | (8,221 | ) | (11.1% | ) |
| Gross  profit                                            |       | 73,685                         |       | 52.8%                |       | 68,111                         |       | 47.9% |   | 5,574 |   | 8.2% |   |
| SG&A                                                 |       | 70,995                         |       | 50.8%                |       | 66,896                         |       | 47.0% |   | 4,099 |   | 6.1% |   |
| Amortization  of intangible assets                       |       | 241                            |       | 0.2%                 |       | 307                            |       | 0.2% |   | (66 | ) | (21.5% | ) |
| Royalties  and other operating income                    |       | 3,982                          |       | 2.9%                 |       | 3,266                          |       | 2.3% |   | 716 |   | 21.9% |   |
| Operating  income                                        |       | 6,431                          |       | 4.6%                 |       | 4,174                          |       | 2.9% |   | 2,257 |   | 54.1% |   |
| Interest  expense, net                                   |       | 5,095                          |       | 3.6%                 |       | 5,079                          |       | 3.6% |   | 16 |   | 0.3% |   |
| Earnings  from continuing operations before income taxes |       | 1,336                          |       | 1.0%                 |       | (905                           | )          | (0.6% | ) | 2,241 |   | NM |   |
| Income  taxes                                            |       | 17                             |       | 0.0%                 |       | (982                           | )          | (0.7% | ) | 999 |   | NM |   |
| Earnings  from continuing operations                     |       | 1,319                          |       | 0.9%                 |       | 77                             |       | 0.1% |   | 1,242 |   | NM |   |
| Earnings  from discontinued operations, net of taxes     |       | 4,231                          |       | NM                   |       | 4,228                          |       | NM |   | 3 |   | 0.1% |   |
| Net  earnings                                            |       | $    5,550 |       | NM                   |       | $    4,305 |       | NM |   | $ 1,245 |   | 28.9% |   |

 

The discussion and tablesbelow compare certain line items included in our statements of operations forthe third quarter of fiscal 2010 to the third quarter of fiscal 2009. Eachdollar and percentage change provided reflects the change between these periodsunless indicated otherwise. Each dollar and share amount included in the tablesis in thousands except for per share amounts.

 

***NetSales***

 
| ** **           | ** ** | ** ** | ** ** | ** ** | ** ** | **Third Quarter** | ** ** | ** **           | ** **          | ** **        | ** ** |
|----------------------|------------|------------|------------|------------|------------|------------------------|------------|----------------------|---------------------|-------------------|------------|
| ** **           | ** ** | ** ** | ** ** | ** ** | ** ** | **Fiscal 2010**   | ** ** | **Fiscal 2009** | ** **          | **$ Change** | ** ** | **% Change** | ** ** |
| Tommy  Bahama        |       |       |       |       |       | $  81,131    |       |                 | $  75,403 |              |       | $ 5,728 |   |   | 7.6% |   |
| Ben  Sherman         |       |       |       |       |       | 25,528                 |       |                 | 29,844              |              |       | (4,316 | ) |   | (14.5% | ) |
| Lanier  Clothes      |       |       |       |       |       | 30,820                 |       |                 | 35,555              |              |       | (4,735 | ) |   | (13.3% | ) |
| Oxford  Apparel      |       |       |       |       |       | 2,097                  |       |                 | 1,891               |              |       | 206 |   |   | 10.9% |   |
| Corporate  and Other |       |       |       |       |       | 51                     |       |                 | (419                | )                 |       | 470 |   |   | NM |   |
| Total net sales      |       |       |       |       |       | $139,627               |       |                 | $142,274            |              |       | $(2,647 | ) |   | (1.9% | ) |

 

Consolidatednet sales decreased $2.6 million, or 1.9%, in the third quarter of fiscal 2010compared to the third quarter of fiscal 2009 primarily due to the decreasedsales in Ben Sherman and Lanier Clothes, which were partially offset byincreased sales in Tommy Bahama, each as discussed below.

 

*Tommy Bahama:*

 

Theincrease in net sales for Tommy Bahama was primarily due to improved comparableretail store sales and higher e-commerce sales. Tommy Bahama unit salesincreased 9.8%, which was primarily a result of the improvement in the directto consumer channels, while the average selling price per unit decreased by2.0%. The decrease in the average selling price per unit for apparel wasprimarily due to a change in sales mix. As of October 30, 2010 and October 31,2009, we operated 86 and 85 Tommy Bahama retail stores, respectively.

 

*Ben Sherman**:***

 

The decrease in net salesfor Ben Sherman was primarily due to a 21.9% reduction in unit sales primarilyresulting from our exit from and subsequent licensing of our footwear and kids’businesses and our exit from the women’s operations during fiscal 2009. Netsales in the third quarter of fiscal 2009 related to these exited businessestotaled approximately $4.3 million. Net sales were also impacted by a 3.4%decrease in the average exchange rate of the British pound sterling versus theUnited States dollar during the third quarter of fiscal 2010 compared to theaverage exchange rate during the third quarter of fiscal 2009. The averageselling price per unit for Ben Sherman increased 9.5% compared to the thirdquarter of fiscal 2009 due to the increased proportion of retail store sales,which have a higher average selling price, as a percentage of total Ben Shermansales, as well as the wholesale sales in the third quarter of fiscal 2009including a larger proportion of close-out sales as a result of the businessesexited in fiscal 2009.

 

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*Lanier Clothes:*

 

The decrease in net salesfor Lanier Clothes was primarily due to a reduction in unit sales of 17.9%,which was driven by lower sales in our private label businesses. The averageselling price per unit increased 5.5% as a result of the change in sales mix asprivate label products typically have a lower selling price than brandedproducts.

 

*Oxford Apparel:*

 

Oxford Apparel net salesincluded in continuing operations reflect our Oxford Golf business and theoperations of our Lyons, Georgia distribution center. Net sales from continuingoperations in Oxford Apparel increased to $2.1 million in the third quarter offiscal 2010 from $1.9 million in the third quarter of fiscal 2009.

 

***GrossProfit***

 
| ** **                                             | ** ** | **Third Quarter**                   | ** ** | ** **               | ** ** | ** **        | ** ** |
|--------------------------------------------------------|------------|-------------------------------------|------------|--------------------------|------------|-------------------|------------|
| ** **                                             | ** ** | **Fiscal 2010**                | ** ** | **Fiscal 2009**     | ** ** | **$ Change** | ** ** | **% Change** | ** ** |
| Gross profit                                           |       | $ 73,685                       |       | $ 68,111            |       | $ 5,574      |       | 8.2% |   |
| Gross margin (gross profit as a % of net sales)        |       | 52.8                                | %          | 47.9                     | %          |              |       |   |   |
| LIFO  (credits) charges included in cost of goods sold |       | $     (265 | )          | $   1,180 |       |              |       |   |   |

 

The increase in gross profitis primarily due to increased gross margins as discussed below, but partiallyoffset by lower net sales. The increase in gross margins was primarily due tochanges in the sales mix for the third quarter of fiscal 2010 compared to thethird quarter of fiscal 2009. The changes in sales mix included (1) higherdirect to consumer sales in Tommy Bahama, both in total and as a proportion oftotal Tommy Bahama sales, (2) Tommy Bahama sales representing a largerproportion of our total net sales, (3) fewer close-out sales in BenSherman and (4) a sales mix change in Lanier Clothes towards brandedproducts. Additionally, gross profit reflects a LIFO accounting adjustmentcredit of $0.3 million in the third quarter of fiscal 2010 and a LIFOaccounting charge of $1.2 million in the third quarter of fiscal 2009. Weanticipate that consolidated gross margins in fiscal 2010 will continue toincrease compared to the prior year as our sales mix is more heavily weightedtowards Tommy Bahama. Our gross profit may not be directly comparable to thoseof our competitors, as statement of operations classification of certainexpenses may vary by company.

 

***SG&A***

 
| ** **                   | ** ** | **Third Quarter**    | ** ** | ** **           | ** ** | ** **        | ** ** |
|------------------------------|------------|----------------------|------------|----------------------|------------|-------------------|------------|
| ** **                   | ** ** | **Fiscal 2010** | ** ** | **Fiscal 2009** | ** ** | **$ Change** | ** ** | **% Change** | ** ** |
| SG&A                     |       | $ 70,995        |       | $ 66,896        |       | $ 4,099      |       | 6.1% |   |
| SG&A (as % of net sales) |       | 50.8                 | %          | 47.0                 | %          |              |       |   |   |

 

The increase in SG&A wasprimarily due to costs associated with the resumption of our incentivecompensation program, which was suspended in fiscal 2009 and is tied to ourfinancial performance. The resumption of our incentive compensation programimpacted SG&A for each operating group. SG&A was also impacted by theSG&A costs associated with operating retail stores opened during orsubsequent to the third quarter of fiscal 2009.

 

***Royalties and otheroperating income***

 
| ** **                            | ** ** | **Third Quarter** | ** ** | ** **       | ** ** | ** **        | ** ** |
|---------------------------------------|------------|-------------------|------------|------------------|------------|-------------------|------------|
| ** **                            | ** ** | **Fiscal  2010**  | ** ** | **Fiscal  2009** | ** ** | **$ Change** | ** ** | **% Change** | ** ** |
| Royalties and other  operating income |       | $ 3,982      |       | $ 3,266     |       | $ 716        |       | 21.9% |   |

 

The increase in royaltiesand other operating income was primarily due to increased royalty income inTommy Bahama as sales reported by certain licensees increased and new licenseeswere added.

 

***Operating income (loss)***

 
| ** **                                           | ** ** | **Third Quarter**             | ** ** | ** **       | ** ** | ** **        | ** ** |
|------------------------------------------------------|------------|-------------------------------|------------|------------------|------------|-------------------|------------|
| ** **                                           | ** ** | **Fiscal  2010**              | ** ** | **Fiscal  2009** | ** ** | **$ Change** | ** ** | **% Change   ** |
| Tommy Bahama                                         |       | $  3,440            |       | $ 2,143     |       | $1,297            |       | 60.5 | % |
| Ben Sherman                                          |       | 1,684                         |       | 2,323            |       | (639              | )          | (27.5 | %) |
| Lanier Clothes                                       |       | 5,345                         |       | 5,243            |       | 102               |       | 1.9 | % |
| Oxford Apparel                                       |       | (316                          | )          | (308             | )          | (8                | )          | (2.6 | %) |
| Corporate and Other                                  |       | (3,722                        | )          | (5,227           | )          | 1,505             |       | 28.8 | % |
| Total  operating income                              |       | $  6,431            |       | $ 4,174     |       | $2,257            |       | 54.1 | % |
| LIFO  (credits) charges included in operating income |       | $    (265 | )          | $ 1,180     |       |              |       |   |   |

 

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Operatingincome, on a consolidated basis, increased to $6.4 million inthe third quarter of fiscal 2010 from $4.2 million in the third quarter offiscal 2009. The $2.3 million increase in operating income was primarily due tohigher gross profit and higher royalty income, which were both partially offsetby decreased net sales and increased SG&A, each as described above.Operating income included a credit for LIFO accounting of $0.3 million in thethird quarter of fiscal 2010 and a charge of $1.2 million in the third quarterof fiscal 2009. Changes in operating income by operating group are discussedbelow.

 

*TommyBahama:*

 
| ** **                          | ** ** | **Third Quarter**  | ** ** | ** **         | ** ** | ** **        | ** ** |
|-------------------------------------|------------|--------------------|------------|--------------------|------------|-------------------|------------|
| ** **                          | ** ** | **Fiscal  2010**   | ** ** | **Fiscal  2009**   | ** ** | **$ Change** | ** ** | **% Change** | ** ** |
| Net  sales                          |       | $81,131            |       | $75,403            |       | $5,728            |       | 7.6% |   |
| Operating  income                   |       | $  3,440 |       | $  2,143 |       | $1,297            |       | 60.5% |   |
| Operating  income as % of net sales |       | 4.2                | %          | 2.8                | %          |              |       |   |   |

 

The increase in operatingincome for Tommy Bahama was primarily due to the increased net sales, improvedgross margins due to a greater proportion of direct to consumer sales as apercentage of total Tommy Bahama sales and higher royalty income. These itemswere partially offset by increased SG&A. The third quarter is Tommy Bahama’slowest quarter of the fiscal year for net sales and operating income.

 

*BenSherman:*

 
| ** **                         | ** ** | **Third Quarter**  | ** ** | ** **         | ** ** | ** **              | ** ** |
|------------------------------------|------------|--------------------|------------|--------------------|------------|-------------------------|------------|
| ** **                         | ** ** | **Fiscal  2010**   | ** ** | **Fiscal  2009**   | ** ** | **$ Change**       | ** ** | **% Change** | ** ** |
| Net sales                          |       | $25,528            |       | $29,844            |       | $(4,316                 | )          | (14.5% | ) |
| Operating income                   |       | $  1,684 |       | $  2,323 |       | $   (639 | )          | (27.5% | ) |
| Operating income as % of net sales |       | 6.6%               |       | 7.8%               |       |                    |       |   |   |

 

The decrease in operatingincome for Ben Sherman was primarily due to decreased net sales partiallyoffset by improved gross margins, both of which were primarily a result of ourexit from and subsequent licensing of the footwear and kids’ businesses and ourexit from the women’s operations.

 

*LanierClothes:*

 
| ** **                         | ** ** | **Third Quarter**  | ** ** | ** **         | ** ** | ** **                   | ** ** |
|------------------------------------|------------|--------------------|------------|--------------------|------------|------------------------------|------------|
| ** **                         | ** ** | **Fiscal  2010**   | ** ** | **Fiscal  2009**   | ** ** | **$ Change**            | ** ** | **% Change** | ** ** |
| Net sales                          |       | $30,820            |       | $35,555            |       | $(4,735                      | )          | (13.3% | ) |
| Operating income                   |       | $  5,345 |       | $  5,243 |       | $    102 |       | 1.9% |   |
| Operating income as % of net sales |       | 17.3%              |       | 14.7%              |       |                         |       |   |   |

 

The increase in operatingincome for Lanier Clothes, despite a decrease in net sales, was primarily dueto improved gross margins resulting from sales mix, with branded salesrepresenting a greater proportion of Lanier Clothes’ sales in the third quarterof fiscal 2010. The improved gross margins were partially offset by higherSG&A primarily resulting from the increased branded sales.

 

*OxfordApparel:*

 
| ** **                       | ** ** | **Third Quarter**             | ** ** | ** **                          | ** ** | ** **            | ** ** |
|----------------------------------|------------|-------------------------------|------------|-------------------------------------|------------|-----------------------|------------|
| ** **                       | ** ** | **Fiscal  2010**              | ** ** | **Fiscal  2009**                    | ** ** | **$ Change**     | ** ** | **% Change** | ** ** |
| Net sales                        |       | $  2,097            |       | $   1,891            |       | $206                  |       | 10.9% |   |
| Operating loss                   |       | $    (316 | )          | $     (308 | )          | $   (8 | )          | (2.6% | ) |
| Operating loss as % of net sales |       | (15.1%                        | )          | (16.3%                              | )          |                  |       |   |   |

 

The operating results of thecontinuing operations of Oxford Apparel, which include our Oxford Golf businessand Lyons, Georgia distribution center operations, were consistent with thethird quarter of fiscal 2009 as the Oxford Golf business had lower operatinglosses and the distribution center results declined as a result of lower volumeof shipments in our Lyons, Georgia distribution center.

 

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*Corporateand Other:*

 
| ** **                                                  | ** ** | **Third Quarter**       | ** ** | ** **       | ** ** | ** **        | ** ** |
|-------------------------------------------------------------|------------|-------------------------|------------|------------------|------------|-------------------|------------|
| ** **                                                  | ** ** | **Fiscal  2010**        | ** ** | **Fiscal  2009** | ** ** | **$ Change** | ** ** | **% Change** | ** ** |
| Operating loss                                              |       | $(3,722                 | )          | $(5,227          | )          | $1,505            |       | 28.8% |   |
| LIFO (credits) charges  included in operating income (loss) |       | $   (265 | )          | $ 1,180     |       |              |       |   |   |

 

The Corporate and Otheroperating results improved by $1.5 million from a loss of $5.2 million in thethird quarter of fiscal 2009 to a loss of $3.7 million in the third quarter offiscal 2010. The decrease in the operating loss was primarily due to a LIFOaccounting credit of $0.3 million in the third quarter of fiscal 2010 and aLIFO accounting charge of $1.2 million in the third quarter of fiscal 2009.

 

***Interestexpense, net***

 
| ** **            | ** ** | **Third Quarter** | ** ** | ** **       | ** ** | ** **        | ** ** |
|-----------------------|------------|-------------------|------------|------------------|------------|-------------------|------------|
| ** **            | ** ** | **Fiscal  2010**  | ** ** | **Fiscal  2009** | ** ** | **$ Change** | ** ** | **% Change** | ** ** |
| Interest expense, net |       | $5,095            |       | $5,079           |       | $16          |       | 0.3% |   |

 

Interest expense for the thirdquarter of fiscal 2010 and the third quarter of fiscal 2009 was relativelyunchanged after reclassifying all interest expense associated with the U.S.Revolving Credit Agreement to discontinued operations.

 

***Incometaxes***

 
| ** **          | ** ** | **Third Quarter** | ** ** | ** **       | ** ** | ** **        | ** ** |
|---------------------|------------|-------------------|------------|------------------|------------|-------------------|------------|
| ** **          | ** ** | **Fiscal 2010**   | ** ** | **Fiscal  2009** | ** ** | **$ Change** | ** ** | **% Change** | ** ** |
| Income taxes        |       | $ 17         |       | $(982            | )          | $999              |       | NM |   |
| Effective  tax rate |       | 1.3               | %          | NM               |       |              |       |   |   |

 

Theeffective tax rate for both periods was impacted by certain favorable permanentdifferences which do not necessarily fluctuate with earnings.  The effective tax rate in the third quarterof fiscal 2010 is not necessarily indicative of the effective tax rates infuture periods as the effective tax rate in the future will be higher if ourearnings levels increase as the incremental earnings will likely be taxed atrates more closely aligned with statutory tax rates.

 

***Net earnings***

 
| ** **                                                      | ** ** | **Third Quarter**             | ** ** | ** **                                    | ** ** | ** **                                   | ** ** |
|-----------------------------------------------------------------|------------|-------------------------------|------------|-----------------------------------------------|------------|----------------------------------------------|------------|
| ** **                                                      | ** ** | **Fiscal  2010**              | ** ** | **Fiscal  2009**                              | ** ** | **Change**                                   | ** ** | **%  Change** | ** ** |
| Earnings  from continuing operations                            |       | $  1,319            |       | $       77 |       | $1,242                                       |       | NM |   |
| Earnings  from continuing operations per diluted common share   |       | $    0.08 |       | $    0.00                 |       | $  0.08                            |       | NM |   |
| Earnings  from discontinued operations, net of taxes            |       | $  4,231            |       | $  4,228                            |       | $       3 |       | 0.1% |   |
| Earnings  from discontinued operations per diluted common share |       | $    0.26 |       | $    0.26                 |       | $  0.00                            |       | 0.0% |   |
| Net  earnings                                                   |       | $  5,550            |       | $  4,305                            |       | $1,245                                       |       | 28.9% |   |
| Net  earnings per diluted common share                          |       | $    0.33 |       | $    0.26                 |       | $  0.07                            |       | 26.9% |   |
| Weighted average common  shares outstanding-diluted             |       | 16,576                        |       | 16,533                                        |       | 43                                           |       | 0.3% |   |

 

The increase in earningsfrom continuing operations was primarily due to the higher gross marginsresulting from a change in sales mix and higher royalty income partially offsetby lower sales and higher SG&A, each as discussed above.  The improved results of the discontinuedoperations reflect higher sales, which were partially offset by higherSG&A.

 

**FIRST NINE MONTHS OF FISCAL 2010 COMPARED TO FIRSTNINE MONTHS OF FISCAL 2009**

 

The following table setsforth the specified line items in our unaudited condensed consolidatedstatements of operations both in dollars (in thousands) and as a percentage ofnet sales. The table also sets forth the dollar change and the percentagechange of the data as compared to the same period of the prior year. We havecalculated all percentages based on actual data, but percentage columns may notadd due to rounding. Individual line items of our consolidated statements ofoperations may not be directly comparable to those of our competitors, asclassification of certain expenses may vary by company. In accordance with U.S.GAAP, net sales, cost of goods sold, gross profit, SG&A, amortization ofintangible assets, royalties and other operating income, operating income,interest expense, net, earnings from continuing operations before income taxes,income taxes and earnings from continuing operations reflect continuingoperations only, and all discontinued operations are reflected in earnings fromdiscontinued operations, net.

 

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| ** **                                               | ** ** | **First Nine Months** | ** ** | ** **           | ** ** | ** **          | ** ** |
|----------------------------------------------------------|------------|---------------------------------|------------|----------------------|------------|---------------------|------------|
| ** **                                               | ** ** | **Fiscal 2010**            | ** ** | **Fiscal 2009** | ** ** | **$ Change**   | ** ** | **% Change** | ** ** |
| Net  sales                                               |       | $ 446,233                  |       | 100.0%               |       | $ 441,907      |       | 100.0% |   | $    4,326 |   | 1.0% |   |
| Cost  of goods sold                                      |       | 203,823                         |       | 45.7%                |       | 227,876             |       | 51.6% |   | (24,053 | ) | (10.6% | ) |
| Gross  profit                                            |       | 242,410                         |       | 54.3%                |       | 214,031             |       | 48.4% |   | 28,379 |   | 13.3% |   |
| SG&A                                                 |       | 220,328                         |       | 49.4%                |       | 207,827             |       | 47.0% |   | 12,501 |   | 6.0% |   |
| Amortization  of intangible assets                       |       | 719                             |       | 0.2%                 |       | 911                 |       | 0.2% |   | (192 | ) | (21.1% | ) |
| Royalties  and other operating income                    |       | 11,218                          |       | 2.5%                 |       | 8,038               |       | 1.8% |   | 3,180 |   | 39.6% |   |
| Operating  income                                        |       | 32,581                          |       | 7.3%                 |       | 13,331              |       | 3.0% |   | 19,250 |   | 144.4% |   |
| Interest  expense, net                                   |       | 15,115                          |       | 3.4%                 |       | 15,346              |       | 3.5% |   | (231 | ) | (1.5% | ) |
| Earnings  from continuing operations before income taxes |       | 17,466                          |       | 3.9%                 |       | (2,015              | )          | (0.5% | ) | 19,481 |   | NM |   |
| Income  taxes                                            |       | 2,944                           |       | 0.7%                 |       | (2,293              | )          | (0.5% | ) | 5,237 |   | NM |   |
| Earnings  from continuing operations                     |       | $  14,522             |       | 3.3%                 |       | 278                 |       | 0.1% |   | $  14,244 |   | NM |   |
| Earnings  from discontinued operations                   |       | 10,744                          |       | NM                   |       | 10,458              |       | NM |   | 286 |   | 2.7% |   |
| Net  earnings                                            |       | $  25,266             |       | NM                   |       | $  10,736 |       | NM |   | $  14,530 |   | 135.3% |   |

 

The discussion and tablesbelow compare certain line items included in our statements of operations forthe first nine months of fiscal 2010 to the first nine months of fiscal 2009.Each dollar and percentage change provided reflects the change between theseperiods unless indicated otherwise. Each dollar and share amount included inthe tables is in thousands except for per share amounts.

 

***NetSales***

 
| ** **          | ** ** | **First Nine Months** | ** ** | ** **           | ** ** | ** **               | ** ** |
|---------------------|------------|---------------------------------|------------|----------------------|------------|--------------------------|------------|
| ** **          | ** ** | **Fiscal 2010**            | ** ** | **Fiscal 2009** | ** ** | **$ Change**        | ** ** | **% Change** | ** ** |
| Tommy Bahama        |       | $ 289,585                  |       | $ 268,262       |       | $  21,323      |       | 7.9% |   |
| Ben Sherman         |       | 66,028                          |       | 77,690               |       | (11,662                  | )          | (15.0% | ) |
| Lanier Clothes      |       | 83,984                          |       | 92,266               |       | (8,282                   | )          | (9.0% | ) |
| Oxford Apparel      |       | 6,315                           |       | 4,574                |       | 1,741                    |       | 38.1% |   |
| Corporate and Other |       | 321                             |       | (885                 | )          | 1,206                    |       | NM |   |
| Total  net sales    |       | $ 446,233                  |       | $ 441,907       |       | $   4,326 |       | 1.0% |   |

 

Consolidatednet sales increased $4.3 million, or 1.0%, in the first nine months of fiscal2010 compared to the first nine months of fiscal 2009. The increase in netsales is primarily a result of the changes in each operating group discussedbelow. The first nine months of fiscal 2009 included $18.1 million of net salesrelated to businesses that we have exited in Ben Sherman and Lanier Clothescompared to $2.4 million of such sales in the first nine months of fiscal 2010.

 

*Tommy Bahama:*

 

Theincrease in net sales for Tommy Bahama was primarily due to improved comparableretail store sales, sales at retail stores opened during fiscal 2009 and fiscal2010 and higher e-commerce sales. Tommy Bahama unit sales increased 12.9%,which was primarily a result of the improvement in the direct to consumerchannels, while the average selling price per unit decreased by 3.9% due to achange in sales mix.

 

*Ben Sherman**:***

 

The decrease in net salesfor Ben Sherman was primarily due to a 17.7% reduction in unit sales primarilyresulting from our exit from and subsequent licensing of our footwear and kids’businesses and our exit from our women’s operations during fiscal 2009. Netsales related to the footwear, kids’ and women’s businesses totaledapproximately $14.5 million in the first nine months of fiscal 2009 compared to$2.1 million in the first nine months of fiscal 2010. The decrease related tothese exited businesses was partially offset by an increase in comparableretail store sales. The average selling price per unit for Ben Shermanincreased 3.2% as retail sales represented a greater proportion of total BenSherman sales during the first nine months of fiscal 2010 and there were feweroff-price sales in the first nine months of fiscal 2010.

 

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*Lanier Clothes:*

 

The decrease in net salesfor Lanier Clothes was primarily due to a reduction in unit sales of 11.6%,which was driven by lower sales in our private label businesses and theinclusion of approximately $3.6 million of net sales in the first nine monthsof fiscal 2009 related to businesses that we have exited. The average sellingprice per unit increased 3.0% as a result of the change in sales mix as privatelabel products typically have a lower selling price than branded products andmany of the sales of the products for businesses that we exited were close-outsales.

 

*Oxford Apparel:*

 

Oxford Apparel net salesincluded in continuing operations reflect our Oxford Golf business and theoperations of our Lyons, Georgia distribution center. Net sales from continuingoperations in Oxford Apparel increased to $6.3 million in the first nine monthsof fiscal 2010 from $4.6 million in the first nine months of fiscal 2009.

 

***GrossProfit***

 
| ** **                                       | ** ** | **First Nine Months**      | ** ** | ** **                           | ** ** | ** **        | ** ** |
|--------------------------------------------------|------------|--------------------------------------|------------|--------------------------------------|------------|-------------------|------------|
| ** **                                       | ** ** | **Fiscal 2010**                 | ** ** | **Fiscal 2009**                 | ** ** | **$ Change** | ** ** | **% Change** | ** ** |
| Gross  profit                                    |       | $ 242,410                       |       | $ 214,031                       |       | $ 28,379     |       | 13.3% |   |
| Gross  margin (gross profit as a % of net sales) |       | 54.3                                 | %          | 48.4                                 | %          |              |       |   |   |
| LIFO charges included in  cost of goods sold     |       | $     1,362 |       | $     6,671 |       |              |       |   |   |

 

The increase in gross profitis primarily due to increased gross margins as discussed below and higher netsales in Tommy Bahama, which increased more than the sales decreases in BenSherman and Lanier Clothes. The increase in gross margins was primarily due tochanges in the sales mix for the first nine months of fiscal 2010 compared tothe first nine months of fiscal 2009. The changes in sales mix included (1) higherdirect to consumer sales in Tommy Bahama, both in total and as a proportion oftotal Tommy Bahama sales, (2) Tommy Bahama sales representing a largerproportion of our total net sales, (3) fewer close-out sales in BenSherman and (4) a sales mix change in Lanier Clothes towards brandedproducts. Additionally, gross profit reflects LIFO accounting charges of $1.4million and $6.7 million in the first nine months of fiscal 2010 and the firstnine months of fiscal 2009, respectively. We anticipate that consolidated grossmargins in fiscal 2010 will continue to increase compared to the prior year asour sales mix is more heavily weighted towards Tommy Bahama. Our gross profitmay not be directly comparable to those of our competitors, as statement ofoperations classification of certain expenses may vary by company.

 

***SG&A***

 
| ** **                                  | ** ** | **First Nine Months**                                     | ** ** | ** **                           | ** ** | ** **        | ** ** |
|---------------------------------------------|------------|---------------------------------------------------------------------|------------|--------------------------------------|------------|-------------------|------------|
| ** **                                  | ** ** | **Fiscal 2010**                                                | ** ** | **Fiscal 2009**                 | ** ** | **$ Change** | ** ** | **% Change** | ** ** |
| SG&A                                    |       | $ 220,328                                                      |       | $ 207,827                       |       | $ 12,501     |       | 6.0% |   |
| SG&A (as % of net  sales)               |       | 49.4                                                                | %          | 47.0                                 | %          |              |       |   |   |
| Restructuring  charges included in SG&A |       | $          — |       | $     1,362 |       |              |       |   |   |

 

The increase in SG&A wasprimarily due to costs associated with the resumption of our incentivecompensation program, which was suspended in fiscal 2009 and is tied to ourfinancial performance. The resumption of our incentive compensation programimpacted SG&A for each of our operating groups.  SG&A was also impacted by the SG&Acosts associated with retail stores opened during fiscal 2009 and fiscal2010.  The first nine months of fiscal2009 also included $1.4 million of restructuring charges related to Ben Sherman’sexit from and subsequent licensing of its footwear and kids’ businesses andother streamlining initiatives.

 

***Royalties and otheroperating income***

 
| ** **                            | ** ** | **First Nine Months** | ** ** | ** **           | ** ** | ** **        | ** ** |
|---------------------------------------|------------|---------------------------------|------------|----------------------|------------|-------------------|------------|
| ** **                            | ** ** | **Fiscal 2010**            | ** ** | **Fiscal 2009** | ** ** | **$ Change** | ** ** | **% Change** | ** ** |
| Royalties  and other operating income |       | $ 11,218                   |       | $ 8,038         |       | $ 3,180      |       | 39.6% |   |

 

The increase in royaltiesand other operating income was primarily due to increased royalty income inboth Tommy Bahama and Ben Sherman, as sales reported by certain licenseesincreased and new licensees were added.

 

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***Operating income (loss)***

 
| ** **                                          | ** ** | **First Nine Months**                         | ** ** | ** **               | ** ** | ** **         | ** ** |
|-----------------------------------------------------|------------|---------------------------------------------------------|------------|--------------------------|------------|--------------------|------------|
| ** **                                          | ** ** | **Fiscal 2010**                                    | ** ** | **Fiscal 2009**     | ** ** | **$ Change**  | ** ** | **% Change** | ** ** |
| Tommy Bahama                                        |       | $ 35,473                                           |       | $ 27,772            |       | $  7,701 |       | 27.7% |   |
| Ben Sherman                                         |       | 1,608                                                   |       | (5,961                   | )          | 7,569              |       | NM |   |
| Lanier Clothes                                      |       | 12,513                                                  |       | 10,681                   |       | 1,832              |       | 17.2% |   |
| Oxford Apparel                                      |       | (983                                                    | )          | (819                     | )          | (164               | )          | (20.0% | ) |
| Corporate and Other                                 |       | (16,030                                                 | )          | (18,342                  | )          | 2,312              |       | 12.6% |   |
| Total  operating income                             |       | $ 32,581                                           |       | $ 13,331            |       | $19,250            |       | 144.4% |   |
| LIFO  charges included in operating income          |       | $   1,362                                |       | $   6,671 |       |               |       |   |   |
| Restructuring  charges included in operating income |       | $        — |       | $   1,362 |       |               |       |   |   |

 

Operatingincome, on a consolidated basis, increased to $32.6 million inthe first nine months of fiscal 2010 from $13.3 million in the first ninemonths of fiscal 2009. The $19.3 million increase in operating income wasprimarily due to increased net sales, improved gross margins and higher royaltyincome, which was partially offset by increased SG&A, each as describedabove. Operating income included charges for LIFO accounting of $1.4 million inthe first nine months of fiscal 2010 and $6.7 million in the first nine monthsof fiscal 2009. The first nine months of fiscal 2009 also includedrestructuring charges of $1.4 million in Ben Sherman. Changes in operatingincome by operating group are discussed below.

 

*TommyBahama:*

 
| ** **                          | ** ** | **First Nine Months** | ** ** | ** **           | ** ** | ** **         | ** ** |
|-------------------------------------|------------|---------------------------------|------------|----------------------|------------|--------------------|------------|
| ** **                          | ** ** | **Fiscal 2010**            | ** ** | **Fiscal 2009** | ** ** | **$ Change**  | ** ** | **% Change** | ** ** |
| Net  sales                          |       | $289,585                        |       | $268,262             |       | $21,323            |       | 7.9 | % |   |
| Operating  income                   |       | $  35,473             |       | $  27,772  |       | $  7,701 |       | 27.7 | % |   |
| Operating  income as % of net sales |       | 12.3                            | %          | 10.4                 | %          |               |       |   |   |   |

 

The increase in operatingincome for Tommy Bahama was primarily due to the increased net sales, improvedgross margins due to a greater proportion of direct to consumer sales as apercentage of total Tommy Bahama sales and higher royalty income, which werepartially offset by increased SG&A.

 

*BenSherman:*

 
| ** **                                                 | ** ** | **First Nine Months**                   | ** ** | ** **           | ** ** | ** **               | ** ** |
|------------------------------------------------------------|------------|---------------------------------------------------|------------|----------------------|------------|--------------------------|------------|
| ** **                                                 | ** ** | **Fiscal 2010**                              | ** ** | **Fiscal 2009** | ** ** | **$ Change**        | ** ** | **% Change** | ** ** |
| Net  sales                                                 |       | $66,028                                           |       | $77,690              |       | $(11,662                 | )          | (15.0% | ) |
| Operating  income (loss)                                   |       | $  1,608                                |       | $ (5,961        | )          | $   7,569 |       | NM |   |
| Operating  income (loss) as % of net sales                 |       | 2.4                                               | %          | (7.7                 | %)         |                     |       |   |   |
| Restructuring charges included in operating  income (loss) |       | $       — |       | $  1,362   |       |                     |       |   |   |

 

The improved operatingresults for Ben Sherman were primarily due to increased gross margins andreduced SG&A, both of which were impacted by our exit from and subsequentlicensing of the footwear and kids’ businesses, our exit from the women’soperations and increased royalty income. The first nine months of fiscal 2009SG&A also included $1.4 million of restructuring charges primarily relatedto our exit from and subsequent licensing of the footwear and kids’ businessesand other streamlining initiatives.

 

*LanierClothes:*

 
| ** **                          | ** ** | **First Nine Months** | ** ** | ** **           | ** ** | ** **        | ** ** |
|-------------------------------------|------------|---------------------------------|------------|----------------------|------------|-------------------|------------|
| ** **                          | ** ** | **Fiscal 2010**            | ** ** | **Fiscal 2009** | ** ** | **$ Change** | ** ** | **% Change** | ** ** |
| Net  sales                          |       | $83,984                         |       | $92,266              |       | $(8,282           | )          | (9.0% | ) |
| Operating  income                   |       | $12,513                         |       | $10,681              |       | $ 1,832      |       | 17.2% |   |
| Operating  income as % of net sales |       | 14.9                            | %          | 11.6                 | %          |              |       |   |   |

 

The increase in operatingincome for Lanier Clothes was primarily a result of improved gross margins dueto sales mix, with branded sales representing a greater proportion of LanierClothes’ sales in the first nine months of fiscal 2010, and close-out salesassociated with exited businesses included in the first nine months of fiscal2009. The improved gross margins were partially offset by increased SG&A.

 

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*OxfordApparel:*

 
| ** **                        | ** ** | **First Nine Months** | ** ** | ** **           | ** ** | ** **        | ** ** |
|-----------------------------------|------------|---------------------------------|------------|----------------------|------------|-------------------|------------|
| ** **                        | ** ** | **Fiscal 2010**            | ** ** | **Fiscal 2009** | ** ** | **$ Change** | ** ** | **% Change** | ** ** |
| Net  sales                        |       | $6,315                          |       | $4,574               |       | $1,741            |       | 38.1% |   |
| Operating  loss                   |       | $  (983               | )          | $  (819    | )          | $  (164 | )          | (20.0% | ) |
| Operating  loss as % of net sales |       | (15.6                           | %)         | (17.9                | %)         |              |       |   |   |

 

The operating results of thecontinuing operations of Oxford Apparel, which include our Oxford Golf businessand Lyons, Georgia distribution center operations, were consistent with thefirst nine months of fiscal 2009 as the Oxford Golf business had loweroperating losses and the distribution center results declined as a result oflower volume of shipments in our Lyons, Georgia distribution center.

 

*Corporateand Other:*

 
| ** **                               | ** ** | **First Nine Months** | ** ** | ** **                           | ** ** | ** **        | ** ** |
|------------------------------------------|------------|---------------------------------|------------|--------------------------------------|------------|-------------------|------------|
| ** **                               | ** ** | **Fiscal 2010**            | ** ** | **Fiscal 2009**                 | ** ** | **$ Change** | ** ** | **% Change** | ** ** |
| Operating  loss                          |       | $(16,030                        | )          | $(18,342                             | )          | $2,312            |       | 12.6 | % |
| LIFO charges included in  operating loss |       | $    1,362  |       | $     6,671 |       |              |       |   |   |

 

The Corporate and Otheroperating results improved by $2.3 million from a loss of $18.3 million in thefirst nine months of fiscal 2009 to a loss of $16.0 million in the first ninemonths of fiscal 2010. The first nine months of fiscal 2010 and the first ninemonths of fiscal 2009 included LIFO accounting charges of $1.4 million and $6.7million, respectively. After removing the impact of LIFO accounting charges,the reduced operating results are primarily due to higher incentivecompensation costs resulting from the resumption of our incentive compensationprogram, which was suspended in fiscal 2009 and is tied to our financialperformance.

 

***Interestexpense, net***

 
| ** **                                                          | ** ** | **First Nine Months**                   | ** ** | ** **           | ** ** | ** **        | ** ** |
|---------------------------------------------------------------------|------------|---------------------------------------------------|------------|----------------------|------------|-------------------|------------|
| ** **                                                          | ** ** | **Fiscal 2010**                              | ** ** | **Fiscal 2009** | ** ** | **$ Change** | ** ** | **% Change** | ** ** |
| Interest  expense, net                                              |       | $15,115                                           |       | $15,346              |       | $(231             | )          | (1.5% | ) |
| Write-off of deferred financing costs  included in interest expense |       | $       — |       | $  1,759   |       |              |       |   |   |

 

Interest expense for thefirst nine months of fiscal 2010 and the first nine months of fiscal 2009 wasrelatively unchanged, after reclassifying all interest related to our U.S.Revolving Credit Agreement to discontinued operations. However, the first ninemonths of fiscal 2009 included a $1.8 million write-off of unamortized deferredfinancing costs and discount related to the 8 7/8% Senior Unsecured Notes,which were satisfied and discharged in June 2009. After removing theimpact of this $1.8 million write-off, the increase in interest expense wasprimarily due to higher interest rates in the first nine months of fiscal 2010,which partially resulted from the June 2009 replacement of our 8 7/8%Senior Unsecured Notes with our 11 3/8% Senior Secured Notes in June 2009.This higher interest rate was partially offset by lower debt levels in thefirst nine months of fiscal 2010.

 

***Incometaxes***

 
| ** **         | ** ** | **First Nine Months** | ** ** | ** **           | ** ** | ** **        | ** ** |
|--------------------|------------|---------------------------------|------------|----------------------|------------|-------------------|------------|
| ** **         | ** ** | **Fiscal 2010**            | ** ** | **Fiscal 2009** | ** ** | **$ Change** | ** ** | **% Change** | ** ** |
| Income  taxes      |       | $2,944                          |       | $(2,293              | )          | $5,237            |       | NM |   |
| Effective tax rate |       | 16.9                            | %          | NM                   |       |              |       |   |   |

 

Theeffective tax rate for both periods was impacted by certain favorable permanentdifferences which do not necessarily fluctuate with earnings and certaindiscrete items, including the decrease in income tax contingency reserves uponthe expiration of the corresponding statute of limitations. The effective taxrate in the first nine months of fiscal 2010 is not necessarily indicative ofthe effective tax rates in future periods as the effective tax rate in thefuture will be higher if our earnings levels increase as the incrementalearnings will likely be taxed at rates more closely aligned with statutory taxrates.

 

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***Net earnings***

 
| ** **                                                      | ** ** | **First Nine Months** | ** ** | ** **                    | ** ** | ** **                         | ** ** |
|-----------------------------------------------------------------|------------|---------------------------------|------------|-------------------------------|------------|------------------------------------|------------|
| ** **                                                      | ** ** | **Fiscal 2010**            | ** ** | **Fiscal 2009**          | ** ** | **Change**                         | ** ** | **% Change** | ** ** |
| Earnings from continuing  operations                            |       | $14,522                         |       | $    278  |       | $14,244                            |       | NM |   |
| Earnings from continuing  operations per diluted common share   |       | $   0.88         |       | $    0.02 |       | $    0.86      |       | NM |   |
| Earnings from discontinued  operations                          |       | $10,744                         |       | $10,458                       |       | $     286 |       | 2.7 | % |
| Earnings from discontinued  operations per diluted common share |       | $   0.65         |       | $    0.64 |       | $   0.01            |       | 1.6 | % |
| Net earnings                                                    |       | $25,266                         |       | $10,736                       |       | $14,530                            |       | 135.3 | % |
| Net earnings per diluted  common share                          |       | $   1.53         |       | $    0.66 |       | $   0.87            |       | 131.8 | % |
| Weighted average common  shares outstanding-diluted             |       | 16,545                          |       | 16,233                        |       | 312                                |       | 1.9 | % |

 

The increase in earningsfrom continuing operations was primarily due to higher net sales with a highergross margin resulting from a change in sales mix and higher royalty income,but partially offset by higher SG&A, each as discussed above. The resultsof the discontinued operations reflect lower sales, higher gross margins andlower interest expense as the interest incurred for the U.S. Revolving Credit Agreementwas lower in the first nine months of fiscal 2010 as lower amounts wereoutstanding during the period.

 

**FINANCIAL CONDITION, LIQUIDITYAND CAPITAL RESOURCES**

 

Ourprimary source of revenue and cash flow is our operating activities in theUnited States and, to a lesser extent, the United Kingdom. When cash inflowsare less than cash outflows, we also have access to amounts under our U.S.Revolving Credit Agreement and U.K. Revolving Credit Agreement, subject totheir terms, each of which is described below. We may seek to finance futurecapital investment programs through various methods, including, but not limitedto, cash flow from operations, borrowings under our current or additionalcredit facilities and sales of debt or equity securities.

 

Ourliquidity requirements arise from the funding of our working capital needs,which include inventory and accounts receivable, other operating expenses,funding of capital expenditures, payment of quarterly dividends, periodicinterest payments related to our financing arrangements and repayment of ourindebtedness. Some of our product purchases are facilitated by trade letters ofcredit which are drawn against our lines of credit at the time of shipment ofthe products and reduce the amounts available under our lines of credit andborrowing capacity under our credit facilities when issued.

 

***Key Liquidity Measures***

 
| **($ in thousands)**    | ** ** | **October 30, 2010** | **January 30, 2010** | **October 31, 2009** | **January 31, 2009** |
|------------------------------|------------|--------------------------------|--------------------------------|--------------------------------|--------------------------------|
| Current assets               |       | $241,983                       |                           | $191,906                       |                           | $205,200 |   | $230,287 |   |
| Current liabilities          |       | 124,774                        |                           | 96,450                         |                           | 104,349 |   | 108,011 |   |
| Working capital              |       | $117,209                       |                           | $  95,456            |                           | $100,851 |   | $122,276 |   |
| Working capital ratio        |       | 1.94                           |                           | 1.99                           |                           | 1.97 |   | 2.13 |   |
| Debt to total capital  ratio |       | 57                             | %                              | 58                             | %                              | 64 | % | 70 | % |

 

Ourworking capital ratio is calculated by dividing total current assets by totalcurrent liabilities, including assets and liabilities related to discontinuedoperations. Current assets and current liabilities increased from October 31,2009 to October 30, 2010, as described below, resulting in a comparableworking capital ratio between the two periods. For the ratio of debt to totalcapital, debt is defined as short-term and long-term debt, and total capital isdefined as debt plus shareholders’ equity. The change in the debt to totalcapital ratio from October 31, 2009 to October 30, 2010 was primarilya result of the $10.9 million reduction in debt since October 31, 2009 dueto cash flows from operations, as well as increased shareholders’ equity due toour net earnings subsequent to October 31, 2009. Our debt levels and ratioof debt to total capital in future periods may not be comparable to historicalamounts due to the impact of the sale of substantially all of the operations ofOxford Apparel and as we continue to assess our capital structure. Changes inour capital structure in the future, if any, will depend on prevailing marketconditions, our liquidity requirements, contractual restrictions and otherfactors. The amounts involved may be material.

 

***Balance Sheet***

 

Thefollowing tables set forth certain information included in our consolidatedbalance sheets (in thousands). Below each table are explanations for anysignificant changes in the balances from October 31, 2009 to October 30,2010.

 

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*Current Assets:*

 
| ** **                                             | ** ** | **October 30, 2010** | **January 30, 2010** | **October 31, 2009** | **January 31, 2009** |
|--------------------------------------------------------|------------|--------------------------------|--------------------------------|--------------------------------|--------------------------------|
| Cash and cash equivalents                              |       | $    4,376 |                           | $    8,288 |                           | $    5,995 |   | $    3,290 |   |
| Receivables, net                                       |       | 58,900                         |                           | 44,690                         |                           | 57,440 |   | 44,161 |   |
| Inventories, net                                       |       | 63,484                         |                           | 58,180                         |                           | 54,483 |   | 91,997 |   |
| Prepaid expenses, net                                  |       | 14,663                         |                           | 10,508                         |                           | 13,818 |   | 10,274 |   |
| Deferred tax assets                                    |       | 15,624                         |                           | 13,875                         |                           | 9,885 |   | 10,159 |   |
| Total current assets  related to continuing operations |       | 157,047                        |                           | 135,541                        |                           | 141,621 |   | 159,881 |   |
| Assets related to discontinued operations              |       | 84,936                         |                           | 56,365                         |                           | 63,579 |   | 70,406 |   |
| Total current assets                                   |       | $241,983                       |                           | $191,906                       |                           | $205,200 |   | $230,287 |   |

 

Cashand cash equivalents as of October 30, 2010 were comparable to the cashand cash equivalents as of October 31, 2009, with the balance at eachperiod representing typical cash on hand operating requirements. Receivables,net increased 2.5% primarily due to the higher wholesale sales in the last twomonths of the third quarter of fiscal 2010 compared to the last two months ofthe third quarter of fiscal 2009. Inventories, net as of October 30, 2010 increased by 16.5% from October 31,2009 primarily due to an increase in inventories in both Tommy Bahama andLanier Clothes to support anticipated sales, which was partially offset by thedecline at Ben Sherman resulting from our exit from and subsequent licensing ofour footwear and kids’ businesses and our exit from the Ben Sherman women’s operations.Deferred tax assets have increased from October 31, 2009 primarily as aresult of the change in book to tax differences associated with inventorybalances at October 30, 2010 and October 31, 2009. The increase inassets related to discontinued operations was a result of higher accountsreceivable and higher inventory balances reflecting the business activity ofthe discontinued operations.

 

*Non-current Assets:*

 
| ** **                          | ** ** | **October 30, 2010** | **January 30, 2010** | **October 31, 2009** | **January 31, 2009** |
|-------------------------------------|------------|--------------------------------|--------------------------------|--------------------------------|--------------------------------|
| Property, plant and  equipment, net |       | $  74,721            |                           | $  78,425            |                           | $  82,843 |   | $  87,873 |   |
| Intangible assets, net              |       | 136,584                        |                           | 137,462                        |                           | 138,372 |   | 135,932 |   |
| Other  non-current assets, net      |       | 21,181                         |                           | 17,381                         |                           | 17,216 |   | 13,590 |   |
| Total  non-current assets, net      |       | 232,486                        |                           | 233,268                        |                           | 238,431 |   | 237,395 |   |

 

Thedecrease in property, plant and equipment, net was primarily due todepreciation expense exceeding capital expenditures during the twelve monthssubsequent to October 31, 2009, as we reduced our investments in newretail stores during the challenging economic environment. The decrease inintangible assets, net is primarily due to the amortization of intangibleassets subsequent to October 31, 2009 and the decrease in the period-endexchange rate for the British pound sterling versus the U.S. dollar from October 31,2009 to October 30, 2010. The increase in other non-current assets isprimarily due to the payment of loans associated with company owned lifeinsurance policies, which had previously been recorded as a reduction to othernon-current assets in accordance with U.S. GAAP.

 

*Liabilities:*

 
| ** **                                            | ** ** | **October 30, 2010** | **January 30, 2010** | **October 31, 2009** | **January 31, 2009** |
|-------------------------------------------------------|------------|--------------------------------|--------------------------------|--------------------------------|--------------------------------|
| Current liabilities  related to continuing operations |       | $103,232                       |                           | $  77,508            |                           | $  91,380 |   | $  82,065 |   |
| Long-term debt, less  current maturities              |       | 146,900                        |                           | 146,408                        |                           | 161,244 |   | 194,187 |   |
| Other non-current  liabilities                        |       | 47,351                         |                           | 49,478                         |                           | 46,832 |   | 46,066 |   |
| Non-current deferred  income taxes                    |       | 27,753                         |                           | 28,421                         |                           | 29,444 |   | 32,111 |   |
| Total liabilities related  to continuing operations   |       | $325,236                       |                           | $301,815                       |                           | $328,900 |   | $354,429 |   |
| Liabilities related to discontinued operations        |       | $  21,542            |                           | $  18,942            |                           | $  12,969 |   | $  25,946 |   |
| Total liabilities                                     |       | $346,778                       |                           | $320,757                       |                           | $341,869 |   | $380,375 |   |

 

Theincrease in current liabilities was primarily due to the increase in accruedcompensation, which resulted from the resumption of our incentive compensationprogram. Our incentive compensation program was suspended in fiscal 2009 and istied to our financial performance.  Thedecrease in total debt, including long-term debt less current maturities

 

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andcurrent maturities of long-term debt, was primarily due to cash flow fromoperating activities for the twelve months preceding October 30, 2010,which were primarily used for repayment of debt. The cash flow from operatingactivities was primarily a result of net earnings during the twelve monthperiod ended October 30, 2010 partially offset by increases in workingcapital levels. The change in non-current deferred income taxes primarilyresulted from (1) changes in book/tax differences for depreciation anddeferred compensation, (2) changes in tax accrued on undistributed foreignearnings, (3) the indirect federal benefit of certain reserves foruncertain tax positions and (4) adjustments to reflect changes in theeffective tax rate at which certain deferred items are expected to be realized,which are partially offset by changes in foreign currency exchange rates.  The increase in liabilities related todiscontinued operations was primarily a result of the higher working capitalassets at October 30, 2010 and reflects the business activity of thediscontinued operations.

 

***Statement of Cash Flows***

 

Thefollowing table sets forth the net cash flows resulting in the change in ourcash and cash equivalents (in thousands):

 
| ** **                                              | ** ** | **First Nine Months** | ** ** |
|---------------------------------------------------------|------------|---------------------------------|------------|
| ** **                                              | ** ** | **Fiscal 2010**            | ** ** | **Fiscal 2009** | ** ** |
| Net  cash provided by operating activities              |       | $  8,757         |       | $ 37,669  |   |
| Net  cash used in investing activities                  |       | (9,357)                         |       | (8,406) |   |
| Net  cash provided by (used in) financing activities    |       | 11,678                     |       | (31,007) |   |
| Net  cash (used in) provided by discontinued operations |       | (14,972)                        |       | 4,306  |   |
| Net  change in cash and cash equivalents                |       | $(3,894)                        |       | $   2,562  |   |

 

*Operating Activities:*

 

Theoperating cash flows for the first nine months of fiscal 2010 and the firstnine months of fiscal 2009 were primarily the result of net earnings for therelevant period, adjusted for non-cash activities such as depreciation,amortization and stock compensation expense as well as changes in our workingcapital accounts. In the first nine months of fiscal 2010, the larger changesin working capital were increases in accounts receivable, inventories andprepaid expenses, partially offset by an increase in accounts payable, whereasthe first nine months of fiscal 2009 reflected a significant reduction ininventories, partially offset by an increase in accounts receivable and areduction in current liabilities.

 

*Investing Activities:*

 

Duringthe first nine months of fiscal 2010 and the first nine months of fiscal 2009,investing activities used $9.4 million and $8.4 million,respectively, of cash. In each of the applicable periods, these investingactivities primarily consisted of capital expenditures related to new retailstores and costs associated with investment in certain technology initiatives.

 

*Financing Activities:*

 

Duringthe first nine months of fiscal 2010 and fiscal 2009, financing activitiesprovided $11.7 million and used $31.0 million, respectively, of cash. Inthe first nine months of fiscal 2010, the primary use of cash for financingpurposes was the payment of dividends and the repayment of loans related tocertain company-owned life insurance policies, both of which were funded byadditional borrowings under our U.S. Revolving Credit Agreement. In the firstnine months of fiscal 2009, cash flow from operations, borrowings under ourU.S. Revolving Credit Agreement and the proceeds from the issuance of $150.0million aggregate principal amount of our 11 3/8% Senior Secured Notes were usedto repurchase $166.8 million aggregate principal amount of our 8 7/8% SeniorUnsecured Notes, to pay $4.4 million of dividends and to pay $5.0 million offinancing costs associated with the issuance of our 11 3/8% Senior SecuredNotes in June 2009.

 

*Discontinued Operations:*

 

Thecash flows from discontinued operations reflect cash flow provided by or usedin the activities of Oxford Apparel, which we have classified as discontinuedoperations as a result of our plan to dispose of substantially all of its operations.The change in cash flow from discontinued operations primarily reflectrelatively consistent earnings for the first nine months of fiscal 2010 and thefirst nine months of fiscal 2009 as well as increased working capital in fiscal2010 due to the increased sales in the third quarter and to support anticipatedsales increases in the fourth quarter of fiscal 2010.

 

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***Liquidity and Capital Resources***

 

Thetable below provides a description of our significant financing arrangementsand the amounts outstanding under these financing arrangements (in thousands)as of October 30, 2010:

 
| $175 million U.S. Secured Revolving Credit  Facility (“U.S. Revolving Credit Agreement”), which is limited to a borrowing  base consisting of specified percentages of eligible categories of assets,  accrues interest (3.25% as of October 30, 2010), unused line fees and  letter of credit fees based upon a pricing grid which is tied to average  unused availability, requires interest payments monthly with principal due at  maturity (August 2013) and is secured by a first priority security  interest in the accounts receivable (other than royalty payments in respect  of trademark licenses), inventory, investment property (including the equity  interests of certain subsidiaries), general intangibles (other than  trademarks, trade names and related rights), deposit accounts, intercompany  obligations, equipment, goods, documents, contracts, books and records and  other personal property of Oxford Industries, Inc. and substantially all  of its domestic subsidiaries and a second priority security interest in those  assets in which the holders of the 113/8% Senior Secured Notes  have a first priority security interest |   | $       | 20,273  |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------|---------|--------|
| £10 million Senior Secured Revolving Credit  Facility (“U.K. Revolving Credit Agreement”), which accrues interest at the  bank’s base rate plus 3.5% (4.0% as of October 30, 2010), requires  interest payments monthly with principal payable on demand and is  collateralized by substantially all of the United Kingdom assets of Ben  Sherman                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | 651     |    |
| 11.375% Senior Secured Notes (“113/8% Senior Secured Notes”),  which accrue interest at an annual rate of 11.375% (effective interest rate  of 12%) and require interest payments semi-annually in January and July of  each year, require payment of principal at maturity (July 2015), are  subject to certain prepayment penalties, are secured by a first priority interest  in all U.S. registered trademarks and certain related rights and certain  future acquired real property owned in fee simple of Oxford  Industries, Inc. and substantially all of its consolidated domestic  subsidiaries and a second priority security interest in those assets in which  the lenders under the U.S. Revolving Credit Agreement have a first priority  security interest, and are guaranteed by certain of our domestic subsidiaries                                                                                                                                                                                                                                                                                                                               |   | 150,000 |    |
| Unamortized  discount                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | (3,100  | )       |
| Total  debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | $       | 167,824 |   |
| Short-term  debt and current maturities of long-term debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | (20,924 | )       |
| Long-term  debt, less current maturities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | $       | 146,900 |   |

 

Ourcredit facilities are used to finance trade letters of credit, as well toprovide funding for other operating activities, capital expenditures andacquisitions. As of October 30, 2010, approximately $33.3 million of tradeletters of credit and other limitations on availability in the aggregate wereoutstanding against the U.S. Revolving Credit Agreement and the U.K. RevolvingCredit Agreement. On October 30, 2010, we had approximately$124.7 million and $13.4 million in unused availability under theU.S. Revolving Credit Agreement and the U.K. Revolving Credit Agreement,respectively, subject to the respective limitations on borrowings set forth inthe U.S. Revolving Credit Agreement, U.K. Revolving Credit Agreement and theindenture for the 113/8% Senior Secured Notes.

 

*Covenants, Other Restrictions and PrepaymentPenalties:*

 

Ourcredit facilities and 113/8% Senior Secured Notes aresubject to a number of affirmative covenants, negative covenants, financialcovenants and other restrictions as discussed in Part II, Item 7.Management’s Discussion and Analysis of Financial Condition and Results ofOperations and Note 5 in our consolidated financial statements, both includedin our Annual Report on Form 10-K for fiscal 2009. We believe theaffirmative covenants, negative covenants, financial covenants and otherrestrictions are customary for those included in similar facilities and notesentered into at the time we entered into our agreements. As of October 30,2010, we were compliant with all covenants related to our credit facilities and113/8% Senior Secured Notes. Ifwe were to redeem any of our 113/8% Senior Secured Notes prior to July 15, 2014 pursuant to theindenture governing the notes, we would be required to pay certain premiumsabove the principal amount, which are also discussed in Part II, Item7. Management’s Discussion and Analysis of Financial Condition and Results ofOperations and Note 5 in our consolidated financial statements, both includedin our Annual Report on Form 10-K for fiscal 2009.

 

*Other Liquidity Items:*

 

We anticipate that we willbe able to satisfy our ongoing cash requirements, which generally consist ofworking capital needs, capital expenditures and interest payments on our debt,primarily from cash on hand, positive cash flow from 

 

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operations and borrowingsunder our lines of credit, if necessary, as well as the proceeds from our saleof substantially all of the assets of Oxford Apparel. Our need for workingcapital is typically seasonal with the greatest requirements generally existingin the fall and spring of each year. Our capital needs will depend on manyfactors, including our growth rate, the need to finance inventory levels andthe success of our various products. At maturity of the U.S. Revolving CreditAgreement and the 113/8% Senior Secured Notes or ifthe U.K. Revolving Credit Agreement was required to be paid, we anticipate thatwe will be able to refinance the facilities and debt with terms available inthe market at that time, which may or may not be as favorable as the terms ofthe current agreements.

 

Our contractual obligations as of October 30, 2010have not changed significantly from the contractual obligations outstanding at January 30,2010 other than changes in the amounts outstanding under our U.K. RevolvingCredit Agreement and pursuant to letters of credit (each as discussed above).

 

Our anticipated capitalexpenditures for fiscal 2010 for continuing operations, including $9.4 millionincurred during the first nine months of fiscal 2010, are expected to beapproximately $12 million. The fiscal 2010 capital expenditures primarilyconsist of costs associated with new retail stores and investment in certaintechnology initiatives.

 

Asdiscussed above, on November 22, 2010, we entered into a purchaseagreement with LF pursuant to which we will sell to LF substantially all of theassets of Oxford Apparel (other than accounts receivable associated with thebusinesses which are being sold and all assets and operations relating to ourOxford Golf business and our distribution center in Lyons, Georgia).  Thepurchase price to be paid by LF is equal to approximately $121.7 million,subject to adjustment based on net working capital on the closing date of thetransaction.  LF also agreed to purchase our goods in transit relating toOxford Apparel following the closing of the transaction, which is subject tocustomary closing conditions and is expected to occur by the end of calendaryear 2010. We anticipate net cash proceeds of approximately $90 millionafter the collection of retained accounts receivable, the sale of thein-transit inventory to LF and the payment of retained liabilities, transactionexpenses and income taxes. Proceeds from the transaction and the retainedassets are expected to be used to repay any debt outstanding under our U.S.Revolving Credit Agreement; fund general corporate operating activities,including further development of our existing operations; fund futureacquisitions, if any; and opportunistically enhance our capital structure.

 

***Off Balance Sheet Arrangements***

 

We have not entered into agreements which meet the SEC’sdefinition of an off balance sheet financing arrangement, other than operatingleases, and have made no financial commitments to or guarantees with respect toany unconsolidated subsidiaries or special purpose entities.

 

**CRITICAL ACCOUNTING POLICIES AND ESTIMATES**

 

The discussion and analysis of our financial conditionand results of operations are based upon our unaudited condensed consolidatedfinancial statements, which have been prepared in accordance with U.S. GAAP.The preparation of these financial statements requires us to make estimates andjudgments that affect the reported amounts of assets, liabilities, revenues andexpenses and related disclosures of contingent assets and liabilities. On anongoing basis, we evaluate our estimates, including those related to bad debts,inventories, intangible assets, income taxes, stock compensation expense,contingencies and litigation and certain other accrued expenses. We base ourestimates on historical experience and on various other assumptions that arebelieved to be reasonable under the circumstances, the results of which formthe basis for making judgments about the carrying values of assets andliabilities that are not readily apparent from other sources. Actual resultsmay differ from these estimates under different assumptions or conditions. Ourcritical accounting policies and estimates are discussed in Part II, Item7, Management’s Discussion and Analysis of Financial Condition and Results ofOperations in our Annual Report on Form 10-K for fiscal 2009. There havenot been any significant changes to the application of our critical accountingpolicies and estimates during the first nine months of fiscal 2010.

 

A detailed summary ofsignificant accounting policies is included in Note 1 to our consolidatedfinancial statements contained in our Annual Report on Form 10-K forfiscal 2009.

 

**SEASONALITY**

 

Althoughour various product lines are sold on a year-round basis, the demand forspecific products or styles may be seasonal. For example, the demand for TommyBahama in our principal markets is higher in the spring season. Generally, ourwholesale products are sold prior to each of the retail selling seasons,including spring, summer, fall and 

 

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holiday.As the timing of product shipments and other events affecting the retail businessmay vary, we do not believe that results for any particular quarter arenecessarily indicative of results for the full fiscal year. Also, we do notbelieve that fiscal 2009 distribution of earnings and operating income isnecessarily indicative of the expected distribution in future years as certainquarters may be impacted by certain unusual or non-recurring items, impactedmore severely by economic conditions than other quarters within the same fiscalyear, or impacted by other factors. The following table presents the percentageof net sales and operating income from continuing operations by quarter(unaudited) for fiscal 2009:

 
| ** **                                  | ** ** | **First  Quarter** | ** ** | **Second  Quarter** | ** ** | **Third  Quarter** | ** ** | **Fourth  Quarter** | ** ** |
|---------------------------------------------|------------|--------------------|------------|---------------------|------------|--------------------|------------|---------------------|------------|
| Net sales                                   |       | 27%                |       | 25%                 |       | 24%                |       | 24%                 |       |
| Operating income from continuing operations |       | 41%                |       | 8%                  |       | 22%                |       | 29%                 |       |

 

**ITEM 3. QUANTITATIVE ANDQUALITATIVE DISCLOSURES ABOUT MARKET RISK**

 

Weare exposed to certain interest rate, foreign currency, commodity and inflationrisks as discussed in Part II, Item 7A, Quantitative and QualitativeDisclosures About Market Risk in our Annual Report on Form 10-K for fiscal2009. There have not been any significant changes in our exposure to theserisks during the first nine months of fiscal 2010.

 

**ITEM 4.  CONTROLS AND PROCEDURES**

 

OurPrincipal Executive Officer and Principal Financial Officer have evaluated theeffectiveness of the design and operation of our disclosure controls andprocedures (as defined in Rules 13a-15(e) and 15d-15(e) underthe Securities Exchange Act) as of the end of the period covered by thisreport. Based upon that evaluation, our Principal Executive Officer andPrincipal Financial Officer concluded that, as of the end of the period coveredby this report, our disclosure controls and procedures were effective inensuring that information required to be disclosed by us in our SecuritiesExchange Act reports is recorded, processed, summarized and reported within thetime periods specified in the SEC’s rules and forms, and that suchinformation is accumulated and communicated to our management, including ourPrincipal Executive Officer and Principal Financial Officer, as appropriate, toallow timely decisions regarding required disclosure.

 

Therewere no changes in our internal control over financial reporting (as such termis defined in Rule 13a-15(f) and 15d-15(f) under the SecuritiesExchange Act) that occurred during the third quarter of fiscal 2010 that havematerially affected, or are reasonably likely to materially affect, ourinternal control over financial reporting.

 

**PART II.  OTHER INFORMATION**

 

**ITEM 1.  LEGAL PROCEEDINGS**

 

In the ordinary course ofbusiness, we may become subject to litigation or claims. We are not currently aparty to any litigation or regulatory action that we believe could reasonablybe expected to have a material adverse effect on our financial position,results of operations or cash flows.

 

**ITEM 1A.  RISK FACTORS**

 

Inaddition to the other information set forth in this report, investors shouldcarefully consider the factors discussed in Part I, Item 1A. RiskFactors in our Annual Report on Form 10-K for fiscal 2009, which couldmaterially affect our business, financial condition or operating results. Therisks described in our Annual Report on Form 10-K for fiscal 2009 are notthe only risks facing our company.

 

**Our business may be adverselyaffected if we are unable to identify or complete strategic acquisitions anddispositions.**

 

One component of ourbusiness strategy is the acquisition of new businesses or product lines as andwhen appropriate investment opportunities are available.  In addition, we may determine that it isappropriate to divest certain businesses that do not align with our strategy ordiscontinue certain product lines which may not provide the returns that weexpect or desire.  There can be noassurance that we will be able to identify suitable acquisition or dispositionopportunities on terms acceptable to us. In addition, even upon reaching an agreement with a buyer or seller forthe acquisition or disposition of a business or product line, the closing ofthe transaction may be subject to the satisfaction 

 

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of applicable closingconditions, which may prevent us from completing the transaction or imposeconditions on our business that may have an adverse effect on our operatingresults.

 

Werecently announced that we entered into an agreement to sell substantially allof the assets of Oxford Apparel for approximately $121.7 million in cash,subject to adjustment based on net working capital on the closing date of thetransaction.  Although we believe thatthe completion of this transaction is subject to customary closing conditions,including the absence of a material adverse change in the business being soldprior to the closing date, it is possible that we may be unable to completethis transaction if applicable closing conditions are not satisfied.  If we do not complete the Oxford Apparel transaction,we will not receive the expected proceeds from the sale.  Further, Oxford Apparel’s operating resultsand customer relationships may be adversely impacted by our public announcementof our intent to sell this business. Even if we are unable to close the transaction, we will be required topay our expenses relating to the transaction.

 

Ifany of the risks described in this report or in our Annual Report on Form 10-Kfor fiscal 2009 or other risks or uncertainties not currently known to us orthat we currently deem to be immaterial, actually occur, our business,financial condition or operating results could suffer.

 

**ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES ANDUSE OF PROCEEDS**

 

(a)          During thethird quarter of fiscal 2010, we did not make any unregistered sales of ourequity securities.

 

(c)          We have certainstock incentive plans as described in Note 7 to our consolidated financialstatements included in our Annual Report on Form 10-K for fiscal 2009, allof which are publicly announced plans. Under the plans, we can repurchaseshares from employees to cover employee tax liabilities related to the exerciseof stock options or the vesting of previously restricted shares.  No shares were purchased during the thirdquarter of fiscal 2010.

 

In the second quarter offiscal 2010, our Board of Directors authorized us to spend up to $50 million torepurchase shares of our common stock and/or 11 3/8% Senior Secured Notes. Thisauthorization superseded and replaced all previously existing authorizations torepurchase shares of our common stock and/or our 11 3/8% Senior Secured Notes.As of October 30, 2010, no shares of our common stock nor any of our 113/8% Senior Secured Notes had been repurchased pursuant to this authorization,which has no automatic expiration.

 

**ITEM 3.  DEFAULTS UPON SENIOR SECURITIES**

 

None

 

**ITEM 4. RESERVED**

 

None

 

**ITEM 5.  OTHER INFORMATION**

 

OurGroup Vice President, Mr. Knowlton J. O’Reilly, has notified us that heintends to retire effective on December 31, 2010. We previously disclosed Mr. O’Reilly’sexpected retirement this year.  In recognition of Mr. O’Reilly’sservice to our company, including his significant contributions in negotiatingand finalizing the terms of our sale of substantially all of the operations ofOxford Apparel to LF, on December 8, 2010, our Nominating, Compensation &Governance Committee approved a special award of $412,500 payable to Mr. O’Reillyin cash in January 2011 following the effectiveness of his retirement.

 

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**ITEM 6.  EXHIBITS**

 

3.1                                 RestatedArticles of Incorporation of Oxford Industries, Inc. Incorporated byreference to Exhibit 3.1 to the Company’s Form 10-Q for the fiscalquarter ended August 29, 2003.

3.2                                 Bylaws ofOxford Industries, Inc., as amended. Incorporated by reference to Exhibit 3.1to the Company’s Form 8-K filed on June 17, 2009.

10.1                           OxfordIndustries, Inc. Deferred Compensation Plan, as amended and restatedeffective September 1, 2010. *

31.1                           Section 302Certification by Principal Executive Officer.*

31.2                           Section 302Certification by Principal Financial Officer.*

32                                    Section 906Certification by Principal Executive Officer and Principal Financial Officer.*

 

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*Filed herewith.

 

**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 theundersigned hereunto duly authorized.

 
| December 9,  2010 | **OXFORD INDUSTRIES, INC.**                              |   |
|------------------------|---------------------------------------------------------------|--------|
|                   | (Registrant)                                                  |   |
|                   |                                                          |   |
|                   | /s/ K. Scott Grassmyer                                        |   |
|                   | K. Scott Grassmyer                                            |   |
|                   | Senior Vice President, Chief Financial Officer and Controller |   |
|                   | (Authorized Signatory)                                        |   |

 

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