**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 JULY 31, 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 as specified 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 August 27, 2010   |
| Common Stock, $1 par value         |   | 16,560,787                                  |

 

 

 

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OXFORD INDUSTRIES, INC.

INDEX TO FORM 10-Q

For the second 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 | 14     |
| Item 3.  Quantitative and Qualitative Disclosures About Market Risk                                  | 28     |
| Item 4. Controls and  Procedures                                                                     | 28     |
|                                                                                                 |   |
| PART II. OTHER  INFORMATION                                                                     |   |
|                                                                                                 |   |
| Item 1. Legal Proceedings                                                                            | 28     |
| Item 1A. Risk Factors                                                                                | 28     |
| Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds                                 | 29     |
| Item 3.  Defaults Upon Senior Securities                                                             | 29     |
| Item 4. Reserved                                                                                     | 29     |
| Item 5. Other Information                                                                            | 29     |
| Item 6. Exhibits                                                                                     | 29     |
| Signatures                                                                                           | 29     |

 

2

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**Table of Contents**

 

**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 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 requires otherwise, the followingterms, or words of similar import, have the following meanings:

 

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

 

SG&A: Selling,general and administrative expenses

 

11 3/8% Senior SecuredNotes: Our 11.375% senior secured notes due 2015.

 

8 7/8% Senior UnsecuredNotes: Our 8.875% senior unsecured notes due 2011, which were satisfied anddischarged in June 2009.

 

SEC: U.S. Securities andExchange Commission

 

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

 

FASB: FinancialAccounting Standards Board

 

U.S. GAAP: Generallyaccepted accounting principles in the United States

 

ASC: FASB AccountingStandards Codification

 
| Fiscal 2010                |   | 52 weeks ending January 29, 2011      |
|----------------------------|--------|--------------------------------------------|
| Fiscal 2009                |   | 52 weeks ended January 30, 2010       |
| First half fiscal 2010     |   | 26 weeks ended July 31, 2010          |
| First half fiscal 2009     |   | 26 weeks ended August 1, 2009         |
| Fourth quarter fiscal 2010 |   | 13 weeks ending January 29, 2011 |
| Third quarter fiscal 2010  |   | 13 weeks ending 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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**Table of Contents**

 

**PART I. FINANCIALINFORMATION**

 

**ITEM 1. FINANCIAL STATEMENTS**

 

**OXFORDINDUSTRIES, INC.**

**CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS**

**(UNAUDITED)**

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

 
| ** **                                   | ** ** | **Second  Quarter********Fiscal 2010**    | ** ** | **Second  Quarter********Fiscal 2009** | ** **                                | **First********Half********Fiscal 2010** | ** ** | **First********Half********Fiscal 2009**  | ** ** |
|----------------------------------------------|------------|-------------------------------------------|------------|----------------------------------------|-------------------------------------------|------------------------------------------|------------|-------------------------------------------|------------|
| Net  sales                                   |       | $186,531                                  |       |                                   | $192,887                                  |                                     |       | $404,281                                  |       |   | $ 409,618 |   |   |
| Cost  of goods sold                          |       | 98,701                                    |       |                                   | 115,514                                   |                                     |       | 214,869                                   |       |   | 242,311 |   |   |
| Gross  profit                                |       | 87,830                                    |       |                                   | 77,373                                    |                                     |       | 189,412                                   |       |   | 167,307 |   |   |
| SG&A                                     |       | 76,246                                    |       |                                   | 73,637                                    |                                     |       | 159,998                                   |       |   | 152,320 |   |   |
| Amortization  of intangible assets           |       | 249                                       |       |                                   | 315                                       |                                     |       | 499                                       |       |   | 623 |   |   |
|                                         |       | 76,495                                    |       |                                   | 73,952                                    |                                     |       | 160,497                                   |       |   | 152,943 |   |   |
| Royalties  and other operating income        |       | 4,031                                     |       |                                   | 2,916                                     |                                     |       | 7,872                                     |       |   | 5,385 |   |   |
| Operating  income                            |       | 15,366                                    |       |                                   | 6,337                                     |                                     |       | 36,787                                    |       |   | 19,749 |   |   |
| Interest  expense, net                       |       | 5,143                                     |       |                                   | 6,245                                     |                                     |       | 10,152                                    |       |   | 10,810 |   |   |
| Earnings  before income taxes                |       | 10,223                                    |       |                                   | 92                                        |                                     |       | 26,635                                    |       |   | 8,939 |   |   |
| Income  taxes                                |       | 3,004                                     |       |                                   | 272                                       |                                     |       | 6,919                                     |       |   | 2,508 |   |   |
| Net earnings (loss)                          |       | $    7,219            |       |                                   | $      (180 | )                                        |       | $  19,716                       |       |   | $     6,431 |   |   |
|                                         |       |                                      |       |                                   |                                      |                                     |       |                                      |       |   |   |   |   |
| Net  earnings (loss) per common share:       |       |                                      |       |                                   |                                      |                                     |       |                                      |       |   |   |   |   |
| Basic                                        |       | $      0.44 |       |                                   | $     (0.01      | )                                        |       | $      1.19 |       |   | $       0.40 |   |   |
| Diluted                                      |       | $      0.44 |       |                                   | $     (0.01      | )                                        |       | $      1.19 |       |   | $       0.40 |   |   |
| Weighted  average common shares outstanding: |       |                                      |       |                                   |                                      |                                     |       |                                      |       |   |   |   |   |
| Basic                                        |       | 16,540                                    |       |                                   | 16,288                                    |                                     |       | 16,515                                    |       |   | 16,083 |   |   |
| Dilution                                     |       | 12                                        |       |                                   | —                                    |                                     |       | 12                                        |       |   | — |   |   |
| Diluted                                      |       | 16,552                                    |       |                                   | 16,288                                    |                                     |       | 16,527                                    |       |   | 16,083 |   |   |
|                                         |       |                                      |       |                                   |                                      |                                     |       |                                      |       |   |   |   |   |
| Dividends  declared per common share         |       | $      0.11 |       |                                   | $      0.09 |                                     |       | $     0.22       |       |   | $      0.18 |   |   |

 

See accompanying notes.

 

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**OXFORDINDUSTRIES, INC.**

**CONDENSED CONSOLIDATED BALANCE SHEETS**

**(UNAUDITED)**

**(inthousands, except par amounts)**

 
| ** **                                                | ** ** | **July 31,********2010** | ** ** | **January 30,********2010** | ** **                     | **August 1,********2009** | ** ** |
|-----------------------------------------------------------|------------|-------------------------------|------------|----------------------------------|--------------------------------|--------------------------------|------------|
| **ASSETS**                                                |       |                          |       |                             |                           |                           |       |
| **Current Assets:**                                       |       |                          |       |                             |                           |                           |       |   |
| Cash  and cash equivalents                                |       | $  28,171           |       |                             | $    8,288 |                           |       | $    5,461 |   |   |
| Receivables,  net                                         |       | 74,611                        |       |                             | 74,398                         |                           |       | 78,467 |   |   |
| Inventories,  net                                         |       | 76,330                        |       |                             | 77,029                         |                           |       | 86,828 |   |   |
| Prepaid  expenses, net                                    |       | 15,484                        |       |                             | 10,713                         |                           |       | 13,312 |   |   |
| Deferred  tax assets                                      |       | 15,384                        |       |                             | 13,875                         |                           |       | 10,208 |   |   |
| **Total current assets**                                  |       | 209,980                       |       |                             | 184,303                        |                           |       | 194,276 |   |   |
| Property,  plant and equipment, net                       |       | 73,919                        |       |                             | 79,540                         |                           |       | 86,365 |   |   |
| Intangible  assets, net                                   |       | 136,233                       |       |                             | 137,490                        |                           |       | 138,880 |   |   |
| Other  non-current assets, net                            |       | 22,623                        |       |                             | 23,841                         |                           |       | 22,932 |   |   |
| **Total Assets**                                          |       | $442,755                      |       |                             | $425,174                       |                           |       | $442,453 |   |   |
| **LIABILITIES AND SHAREHOLDERS’  EQUITY**            |       |                          |       |                             |                           |                           |       |   |   |   |
| **Current Liabilities:**                                  |       |                          |       |                             |                           |                           |       |   |   |   |
| Trade  accounts payable and other accrued expenses        |       | $  79,105           |       |                             | $  81,831            |                           |       | $  75,827 |   |   |
| Accrued  compensation                                     |       | 18,844                        |       |                             | 11,514                         |                           |       | 11,132 |   |   |
| Income  taxes payable                                     |       | —                        |       |                             | 2,517                          | ** **                     | ** ** | **—** | ** ** | ** ** |
| Short-term  debt and current maturities of long-term debt |       | 1,195                         |       |                             | —                         |                           |       | 20,417 |   |   |
| **Total current liabilities**                             |       | 99,144                        |       |                             | 95,862                         |                           |       | 107,376 |   |   |
| Long-term  debt, less current maturities                  |       | 146,736                       |       |                             | 146,408                        |                           |       | 160,357 |   |   |
| Other  non-current liabilities                            |       | 46,965                        |       |                             | 50,066                         |                           |       | 46,804 |   |   |
| Non-current  deferred income taxes                        |       | 28,143                        |       |                             | 28,421                         |                           |       | 30,013 |   |   |
| Commitments  and contingencies                            |       |                          |       |                             |                           |                           |       |   |   |   |
| **Shareholders’ Equity:**                            |       |                          |       |                             |                           |                           |       |   |   |   |
| Common  stock, $1.00 par value per common share      |       | 16,561                        |       |                             | 16,461                         |                           |       | 16,520 |   |   |
| Additional  paid-in capital                               |       | 94,442                        |       |                             | 91,840                         |                           |       | 89,253 |   |   |
| Retained  earnings                                        |       | 35,437                        |       |                             | 19,356                         |                           |       | 14,136 |   |   |
| Accumulated  other comprehensive loss                     |       | (24,673                       | )          |                             | (23,240                        | )                              |       | (22,006 | ) |   |
| **Total shareholders’ equity**                       |       | 121,767                       |       |                             | 104,417                        |                           |       | 97,903 |   |   |
| **Total Liabilities and Shareholders’ Equity**       |       | $442,755                      |       |                             | $425,174                       |                           |       | $442,453 |   |   |

 

See accompanying notes.

 

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**OXFORDINDUSTRIES, INC.**

**CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(UNAUDITED)**

**(in thousands)**

 
| ** **                                                                           | ** ** | **First Half********Fiscal 2010** | ** ** | **First Half  Fiscal 2009** | ** **                     |
|--------------------------------------------------------------------------------------|------------|-----------------------------------|------------|-----------------------------|--------------------------------|
| **Cash Flows From Operating Activities:**                                            |       |                              |       |                        |                           |
| Net  earnings                                                                        |       | $ 19,716                     |       |                        | $    6,431 |   |   |
| Adjustments  to reconcile net earnings to net cash provided by operating activities: |       |                              |       |                        |                           |   |   |
| Depreciation                                                                         |       | 8,754                             |       |                        | 9,259                          |   |   |
| Amortization  of intangible assets                                                   |       | 499                               |       |                        | 623                            |   |   |
| Amortization/write-off  of deferred financing costs and bond discount                |       | 977                               |       |                        | 2,392                          |   |   |
| Stock  compensation expense                                                          |       | 2,767                             |       |                        | 1,637                          |   |   |
| (Gain)  loss on sale of property, plant and equipment                                |       | (3                                | )          |                        | 42                             |   |   |
| Deferred  income taxes                                                               |       | (1,587                            | )          |                        | (3,043                         | ) |   |
| Changes  in working capital:                                                         |       |                              |       |                        |                           |   |   |
| Receivables                                                                          |       | (630                              | )          |                        | 2,574                          |   |   |
| Inventories                                                                          |       | 357                               |       |                        | 35,396                         |   |   |
| Prepaid  expenses                                                                    |       | (4,824                            | )          |                        | (2,255                         | ) |   |
| Current  liabilities                                                                 |       | 2,018                             |       |                        | (17,601                        | ) |   |
| Other  non-current assets                                                            |       | 570                               |       |                        | 157                            |   |   |
| Other  non-current liabilities                                                       |       | (3,078                            | )          |                        | (506                           | ) |   |
| **Net cash provided by operating activities**                                        |       | 25,536                            |       |                        | 35,106                         |   |   |
| **Cash Flows From Investing Activities:**                                            |       |                              |       |                        |                           |   |   |
| Purchases  of property, plant and equipment                                          |       | (3,370                            | )          |                        | (5,840                         | ) |   |
| Proceeds  from sale of property, plant and equipment                                 |       | 78                                | ** ** | ** **                  | **—**                     | ** ** | ** ** |
| **Net cash used in investing activities**                                            |       | (3,292                            | )          |                        | (5,840                         | ) |   |
| **Cash Flows From Financing Activities:**                                            |       |                              |       |                        |                           |   |   |
| Repayment  of revolving credit arrangements                                          |       | (33,925                           | )          |                        | (138,135                       | ) |   |
| Proceeds  from revolving credit arrangements                                         |       | 35,097                            |       |                        | 138,859                        |   |   |
| 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                                                       |       | —                            |       |                        | (4,878                         | ) |   |
| Proceeds  from issuance of common stock                                              |       | 230                               |       |                        | 193                            |   |   |
| Dividends  on common stock                                                           |       | (3,638                            | )          |                        | (2,919                         | ) |   |
| **Net cash used in financing activities**                                            |       | (2,236                            | )          |                        | (27,656                        | ) |   |
| Net  change in cash and cash equivalents                                             |       | 20,008                            |       |                        | 1,610                          |   |   |
| Effect  of foreign currency translation on cash and cash equivalents                 |       | (125                              | )          |                        | 561                            |   |   |
| Cash  and cash equivalents at the beginning of year                                  |       | 8,288                             |       |                        | 3,290                          |   |   |
| Cash  and cash equivalents at the end of period                                      |       | $ 28,171                     |       |                        | $    5,461 |   |   |
|                                                                                 |       |                              |       |                        |                           |   |   |
| **Supplemental disclosure of cash flow information:**                                | ** ** | ** **                        |       |                        |                           |   |   |
| Cash  paid for interest, net                                                         |       | $   9,114          |       |                        | $    9,626 |   |   |
| Cash  paid for income taxes                                                          |       | $ 14,762                     |       |                        | $    7,088 |   |   |

 

See accompanying notes.

 

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**OXFORD INDUSTRIES, INC.**

**NOTES TO UNAUDITED CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS**

**SECOND QUARTER 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.****                               ****Inventories: **The components ofinventories as of the dates specified are summarized as follows (in thousands):

 
| ** **                | ** ** | **July 31,  2010** | ** ** | **January 30,  2010** | ** **          | **August 1,  2009** | ** ** |
|---------------------------|------------|-------------------------|------------|----------------------------|---------------------|--------------------------|------------|
| Finished goods            |       | $111,220                |       |                       | $108,788            |                     |       | $121,306 |   |   |
| Work in process           |       | 6,466                   |       |                       | 6,972               |                     |       | 5,677 |   |   |
| Fabric, trim and supplies |       | 3,082                   |       |                       | 5,707               |                     |       | 6,568 |   |   |
| LIFO reserve              |       | (44,438                 | )          |                       | (44,438             | )                        |       | (46,723 | ) |   |
| Total                     |       | $  76,330     |       |                       | $  77,029 |                     |       | $  86,828 |   |   |

 

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

 
| ** **                                                                       | ** ** | **Second Quarter  Fiscal 2010** | ** ** | **Second Quarter  Fiscal 2009** | ** **        | **First Half  Fiscal 2010** | ** ** | **First Half  Fiscal 2009** | ** ** |
|----------------------------------------------------------------------------------|------------|---------------------------------|------------|---------------------------------|-------------------|-----------------------------|------------|-----------------------------|------------|
| Net earnings (loss)                                                              |       | $7,219                          |       |                            | $  (180 | )                           |       | $19,716                     |       |   | $  6,431 |   |   |
| Gain (loss) on foreign currency translation, net  of tax                         |       | 686                             |       |                            | 4,326             |                        |       | (1,241                      | )          |   | 5,599 |   |   |
| Net unrealized gains (losses) on forward foreign  exchange contracts, net of tax |       | (192                            | )          |                            | —            |                        |       | (192                        | )          |   | — |   |   |
| Comprehensive income                                                             |       | $7,713                          |       |                            | $4,146            |                        |       | $18,283                     |       |   | $12,030 |   |   |

 

**4.****                               ****OperatingGroup Information: **Our business isoperated through our four operating groups: Tommy Bahama, Ben Sherman, LanierClothes and Oxford Apparel. We identify our operating groups based on the wayour management organizes the components of our business for purposes ofallocating resources and assessing performance. Corporate and Other is areconciling category for reporting purposes and includes our corporate offices,substantially all financing activities, elimination of inter-group sales,  LIFO inventory accounting adjustments andother costs that are not allocated to the operating groups.

 

The table below presentscertain information about our operating groups (in thousands).

 
| ** **           | ** ** | **Second    Quarter  Fiscal 2010** | ** ** | **Second    Quarter  Fiscal 2009** | ** ** | **First  Half  Fiscal 2010** | ** ** | **First  Half  Fiscal 2009** | ** ** |
|----------------------|------------|------------------------------------|------------|------------------------------------|------------|------------------------------|------------|------------------------------|------------|
| **Net Sales**        |       |                               |       |                               |       |                         |       |                         |       |
| Tommy  Bahama        |       | $  99,349                |       | $  94,439                |       | $208,454                     |       | $192,859                     |       |
| Ben  Sherman         |       | 18,346                             |       | 23,627                             |       | 40,500                       |       | 47,846                       |       |
| Lanier  Clothes      |       | 22,736                             |       | 25,204                             |       | 53,164                       |       | 56,711                       |       |
| Oxford  Apparel      |       | 45,551                             |       | 49,464                             |       | 101,893                      |       | 112,668                      |       |
| Corporate  and Other |       | 549                                |       | 153                                |       | 270                          |       | (466)                        |       |
| **Total**            |       | $186,531                           |       | $192,887                           |       | $404,281                     |       | $409,618                     |       |

 

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| ** **                            | ** ** | **Second    Quarter  Fiscal 2010** | ** ** | **Second    Quarter  Fiscal 2009**            | ** ** | **First  Half  Fiscal 2010**             | ** ** | **First  Half  Fiscal 2009**             | ** ** |
|---------------------------------------|------------|------------------------------------|------------|-----------------------------------------------|------------|------------------------------------------|------------|------------------------------------------|------------|
| **Depreciation**                      |       |                               |       |                                          |       |                                     |       |                                     |       |
| Tommy  Bahama                         |       | $  3,289                 |       | $  3,643                            |       | $   6,563                 |       | $   7,305                 |       |
| Ben  Sherman                          |       | 524                                |       | 606                                           |       | 1,060                                    |       | 1,161                                    |       |
| Lanier  Clothes                       |       | 118                                |       | 135                                           |       | 237                                      |       | 280                                      |       |
| Oxford  Apparel                       |       | 183                                |       | 195                                           |       | 365                                      |       | 399                                      |       |
| Corporate  and Other                  |       | 274                                |       | 57                                            |       | 529                                      |       | 114                                      |       |
| **Total**                             |       | $  4,388                 |       | $  4,636                            |       | $   8,754                 |       | $   9,259                 |       |
| **Amortization of Intangible Assets** | ** ** | ** **                         |       |                                          | ** ** | ** **                               |       |                                     |       |
| Tommy Bahama                          |       | $     173 |       | $     222            |       | $      346 |       | $      444 |       |
| Ben Sherman                           |       | 65                                 |       | 84                                            |       | 132                                      |       | 160                                      |       |
| Lanier Clothes                        |       | —                             |       | —                                        |       | —                                   |       | —                                   |       |
| Oxford Apparel                        |       | 11                                 |       | 9                                             |       | 21                                       |       | 19                                       |       |
| Corporate and Other                   |       | —                             |       | —                                        |       | —                                   |       | —                                   |       |
| **Total**                             |       | $     249 |       | $     315            |       | $      499 |       | $      623 |       |
| **Operating Income (Loss)**           | ** ** | ** **                         |       |                                          | ** ** | ** **                               |       |                                     |       |
| Tommy Bahama                          |       | $14,172                            |       | $13,379                                       |       | $ 32,033                            |       | $ 25,629                            |       |
| Ben Sherman                           |       | (598                               | )          | (6,308                                        | )          | (76)                                     |       | (8,284)                                  |       |
| Lanier Clothes                        |       | 2,809                              |       | 2,701                                         |       | 7,168                                    |       | 5,438                                    |       |
| Oxford Apparel                        |       | 3,358                              |       | 4,129                                         |       | 9,329                                    |       | 9,322                                    |       |
| Corporate and Other                   |       | (4,375                             | )          | (7,564                                        | )          | (11,667                                  | )          | (12,356                                  | )          |
| **Total Operating Income**            |       | $15,366                            |       | $  6,337                            |       | $ 36,787                            |       | $ 19,749                            |       |
| Interest Expense, net                 |       | 5,143                              |       | 6,245                                         |       | 10,152                                   |       | 10,810                                   |       |
| **Earnings Before Income Taxes**      |       | $10,223                            |       | $       92 |       | $ 26,635                            |       | $   8,939                 |       |
|                                       |            |                                    |            |                                               |            |                                          |            |                                          |            |  |  |  |  |

 

**5.****                               ****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 July 31, 2010, January 30, 2010 and August 1, 2009 (inthousands) as well as our condensed consolidating statements of operations forthe second quarter and first half of each of fiscal 2010 and fiscal 2009 (inthousands) and our condensed consolidating statements of cash flows for thefirst half of fiscal 2010 and fiscal 2009 (in thousands).

 

8

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**Table ofContents**

 

**OXFORD INDUSTRIES, INC.**

**UNAUDITED CONDENSED CONSOLIDATINGBALANCE SHEETS**

**July 31, 2010**

 
|                                            |       |                                         |       |                                           |       |                                   |       |                                                                |       |                          |   |   |   |   |   |
|-------------------------------------------------|------------|----------------------------------------------|------------|------------------------------------------------|------------|----------------------------------------|------------|---------------------------------------------------------------------|------------|-------------------------------|--------|--------|--------|--------|--------|
| ** **                                      | ** ** | **Oxford********Industries********(Parent)** | ** ** | **Subsidiary********Guarantors**               | ** ** | **Subsidiary********Non-  Guarantors** | ** ** | **Consolidating********Adjustments**                                | ** ** | **Consolidated********Total** |
| **ASSETS**                                      |       |
| Cash  and cash equivalents                      |       | $  25,251                          |       | $       595 |       | $    2,325         |       | $          — |       | $  28,171           |   |
| Receivables,  net                               |       | 32,537                                       |       | 6,860                                          |       | 44,879                                 |       | (9,665                                                              | )          | 74,611                        |   |
| Inventories,  net                               |       | 10,744                                       |       | 52,677                                         |       | 13,632                                 |       | (723                                                                | )          | 76,330                        |   |
| Prepaid  expenses and deferred tax assets       |       | 19,038                                       |       | 9,086                                          |       | 4,457                                  |       | (1,713                                                              | )          | 30,868                        |   |
| Total  current assets                           |       | 87,570                                       |       | 69,218                                         |       | 65,293                                 |       | (12,101                                                             | )          | 209,980                       |   |
| Property,  plant and equipment, net             |       | 13,014                                       |       | 55,786                                         |       | 5,119                                  |       | —                                                              |       | 73,919                        |   |
| Intangible  assets, net                         |       | 7                                            |       | 112,826                                        |       | 23,400                                 |       | —                                                              |       | 136,233                       |   |
| Other  non-current assets, net                  |       | 518,307                                      |       | 148,912                                        |       | 6,994                                  |       | (651,590                                                            | )          | 22,623                        |   |
| Total Assets                                    |       | $618,898                                     |       | $386,742                                       |       | $100,806                               |       | $(663,691                                                           | )          | $442,755                      |   |
| ** **                                      |       |                                         |       |                                           |       |                                   |       |                                                                |       |                          |   |
| **LIABILITIES AND SHAREHOLDERS’ EQUITY**   |       |
| Current  liabilities                            |       | $  17,886                          |       | $   47,195                      |       | $  41,370                    |       | $    (7,307                                     | )          | $  99,144           |   |
| Long-term  debt, less current maturities        |       | 146,736                                      |       | —                                         |       | —                                 |       | —                                                              |       | 146,736                       |   |
| Other  non-current liabilities                  |       | 336,825                                      |       | (325,463                                       | )          | 144,157                                |       | (108,554                                                            | )          | 46,965                        |   |
| Non-current  deferred income taxes              |       | (4,316                                       | )          | 26,005                                         |       | 6,454                                  |       | —                                                              |       | 28,143                        |   |
| Total  shareholders’/invested equity       |       | 121,767                                      |       | 639,005                                        |       | (91,175                                | )          | (547,830                                                            | )          | 121,767                       |   |
| Total Liabilities and Shareholders’ Equity |       | $618,898                                     |       | $ 386,742                                 |       | $100,806                               |       | $(663,691                                                           | )          | $442,755                      |   |
|                                                 |            |                                              |            |                                                |            |                                        |            |                                                                     |            |                               |        |        |        |        |        |  |

 

**OXFORDINDUSTRIES, INC.**

**CONDENSED CONSOLIDATING BALANCE SHEETS**

**January 30,2010**

 
|                                            |       |                             |       |                                     |       |                             |       |                                                                |       |                     |       |   |   |   |   |   |
|-------------------------------------------------|------------|----------------------------------|------------|------------------------------------------|------------|----------------------------------|------------|---------------------------------------------------------------------|------------|--------------------------|------------|--------|--------|--------|--------|--------|
| ** **                                      | ** ** | **Oxford  Industries  (Parent)** | ** ** | **Subsidiary  Guarantors**               | ** ** | **Subsidiary  Non-  Guarantors** | ** ** | **Consolidating  Adjustments**                                      | ** ** | **Consolidated  Total**  | ** ** |
| **ASSETS**                                      |       |
| Cash and cash equivalents                       |       | $    5,954   |       | $      782 |       | $  1,552               |       | $          — |       | $   8,288 |       |
| Receivables, net                                |       | 35,943                           |       | 2,412                                    |       | 45,958                           |       | (9,915                                                              | )          | 74,398                   |       |
| Inventories, net                                |       | 14,218                           |       | 51,911                                   |       | 11,897                           |       | (997                                                                | )          | 77,029                   |       |
| Prepaid expenses and deferred tax assets        |       | 17,292                           |       | 8,111                                    |       | 3,103                            |       | (3,918                                                              | )          | 24,588                   |       |
| Total current assets                            |       | 73,407                           |       | 63,216                                   |       | 62,510                           |       | (14,830                                                             | )          | 184,303                  |       |
| Property, plant and equipment, net              |       | 13,997                           |       | 59,939                                   |       | 5,604                            |       | —                                                              |       | 79,540                   |       |
| Intangible assets, net                          |       | 28                               |       | 113,173                                  |       | 24,289                           |       | —                                                              |       | 137,490                  |       |
| Other non-current assets, net                   |       | 499,389                          |       | 148,932                                  |       | 4,216                            |       | (628,696                                                            | )          | 23,841                   |       |
| Total Assets                                    |       | $586,821                         |       | $385,260                                 |       | $96,619                          |       | $(643,526                                                           | )          | $425,174                 |       |
| ** **                                      |       |                             |       |                                     |       |                             |       |                                                                |       |                     |       |
| **LIABILITIES AND SHAREHOLDERS’ EQUITY**   |       |
| Current liabilities                             |       | 39,507                           |       | 27,319                                   |       | 38,686                           |       | (9,650                                                              | )          | 95,862                   |       |
| Long-term debt, less current maturities         |       | 146,408                          |       | —                                   |       | —                           |       | —                                                              |       | 146,408                  |       |
| Other non-current liabilities                   |       | 300,896                          |       | (288,230                                 | )          | 145,195                          |       | (107,795                                                            | )          | 50,066                   |       |
| Non-current deferred income taxes               |       | (4,407                           | )          | 27,000                                   |       | 6,794                            |       | (966                                                                | )          | 28,421                   |       |
| Total shareholders’/invested equity        |       | 104,417                          |       | 619,171                                  |       | (94,056                          | )          | (525,115                                                            | )          | 104,417                  |       |
| Total Liabilities and Shareholders’ Equity |       | $586,821                         |       | $385,260                                 |       | $96,619                          |       | $(643,526                                                           | )          | $425,174                 |       |

 

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**OXFORDINDUSTRIES, INC.**

**UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEETS**

**August 1,2009**

 
| ** **                                      | ** ** | **Oxford********Industries********(Parent)** | ** ** | **Subsidiary********Guarantors**                              | ** ** | **Subsidiary********Non-  Guarantors** | ** ** | **Consolidating********Adjustments**                          | ** ** | **Consolidated********Total** |
|-------------------------------------------------|------------|----------------------------------------------|------------|---------------------------------------------------------------|------------|----------------------------------------|------------|---------------------------------------------------------------|------------|-------------------------------|
| **ASSETS**                                      |
| Cash  and cash equivalents                      |       | $    1,675               |       | $         — |       | $    3,786         |       | $         — |       |                          | $    5,461 |   |
| Receivables,  net                               |       | 37,314                                       |       | 10,752                                                        |       | 38,882                                 |       | (8,481                                                        | )          |                          | 78,467 |   |
| Inventories,  net                               |       | 10,950                                       |       | 58,525                                                        |       | 19,105                                 |       | (1,752                                                        | )          |                          | 86,828 |   |
| Prepaid  expenses and deferred tax assets       |       | 9,931                                        |       | 9,068                                                         |       | 3,977                                  |       | 544                                                           |       |                          | 23,520 |   |
| Total  current assets                           |       | 59,870                                       |       | 78,345                                                        |       | 65,750                                 |       | (9,689                                                        | )          |                          | 194,276 |   |
| Property,  plant and equipment, net             |       | 9,793                                        |       | 70,320                                                        |       | 6,252                                  |       | —                                                        |       |                          | 86,365 |   |
| Intangible  assets, net                         |       | 47                                           |       | 113,616                                                       |       | 25,217                                 |       | —                                                        |       |                          | 138,880 |   |
| Other  non-current assets, net                  |       | 473,815                                      |       | 145,802                                                       |       | 35,273                                 |       | (631,958                                                      | )          |                          | 22,932 |   |
| Total Assets                                    |       | $543,525                                     |       | $ 408,083                                                |       | $132,492                               |       | $(641,647                                                     | )          |                          | $442,453 |   |
| ** **                                      | ** ** | ** **                                   | ** ** | ** **                                                    | ** ** | ** **                             | ** ** | ** **                                                    | ** ** | ** **                    | ** ** | ** ** |
| **LIABILITIES AND SHAREHOLDERS’  EQUITY**  |
| Current  liabilities                            |       | $  37,644                          |       | $   29,710                                     |       | $  47,518                    |       | $    (7,496                               | )          |                          | $107,376 |   |
| Long-term  debt, less current maturities        |       | 160,357                                      |       | —                                                        |       | —                                 |       | —                                                        |       |                          | 160,357 |   |
| Other  non-current liabilities                  |       | 251,608                                      |       | (205,878                                                      | )          | 110,229                                |       | (109,155                                                      | )          |                          | 46,804 |   |
| Non-current  deferred income taxes              |       | (3,987                                       | )          | 27,305                                                        |       | 6,695                                  |       | —                                                        |       |                          | 30,013 |   |
| Total  shareholders’/invested equity       |       | 97,903                                       |       | 556,946                                                       |       | (31,950                                | )          | (524,996                                                      | )          |                          | 97,903 |   |
| Total Liabilities and Shareholders’ Equity |       | $543,525                                     |       | $ 408,083                                                |       | $132,492                               |       | $(641,647                                                     | )          |                          | $442,453 |   |

 

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**OXFORDINDUSTRIES, INC.**

**UNAUDITEDCONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS**

**SecondQuarter Fiscal 2010**

 
| ** **                                            | ** ** | **Oxford********Industries********(Parent)** | ** ** | **Subsidiary********Guarantors** | ** ** | **Subsidiary********Non-  Guarantors** | ** ** | **Consolidating********Adjustments** | ** ** | **Consolidated********Total** | ** ** |
|-------------------------------------------------------|------------|----------------------------------------------|------------|----------------------------------|------------|----------------------------------------|------------|--------------------------------------|------------|-------------------------------|------------|
| Net  sales                                            |       | $                                            | 74,164     |                             | $          | 100,899                                |       | $                                    | 20,366     |                          | $          | (8,898 | ) | $ | 186,531 |   |
| Cost  of goods sold                                   |       | 55,564                                       |       | 38,637                           |       | 8,424                                  |       | (3,924                               | )          | 98,701                        |       |
| Gross  profit                                         |       | 18,600                                       |       | 62,262                           |       | 11,942                                 |       | (4,974                               | )          | 87,830                        |       |
| SG&A  including amortization of intangible assets |       | 15,844                                       |       | 53,194                           |       | 12,825                                 |       | (5,368                               | )          | 76,495                        |       |
| Royalties  and other operating income                 |       | 27                                           |       | 2,503                            |       | 1,800                                  |       | (299                                 | )          | 4,031                         |       |
| Operating  income                                     |       | 2,783                                        |       | 11,571                           |       | 917                                    |       | 95                                   |       | 15,366                        |       |
| Interest  (income) expense, net                       |       | 5,097                                        |       | (1,078                           | )          | 717                                    |       | 407                                  |       | 5,143                         |       |
| Income  from equity investment                        |       | 8,549                                        |       | —                           |       | —                                 |       | (8,549                               | )          | —                        |       |
| Earnings  before income taxes                         |       | 6,235                                        |       | 12,649                           |       | 200                                    |       | (8,861                               | )          | 10,223                        |       |
| Income  taxes (benefit)                               |       | (1,186                                       | )          | 4,294                            |       | 5                                      |       | (109                                 | )          | 3,004                         |       |
| Net  earnings                                         |       | $                                            | 7,421      |                             | $          | 8,355                                  |       | $                                    | 195        |                          | $          | (8,752 | ) | $ | 7,219 |   |

 

**OXFORDINDUSTRIES, INC.**

**UNAUDITEDCONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS**

**FirstHalf Fiscal 2010**

 
| ** **                                            | ** ** | **Oxford********Industries********(Parent)** | ** ** | **Subsidiary********Guarantors** | ** ** | **Subsidiary********Non-  Guarantors** | ** ** | **Consolidating********Adjustments** | ** ** | **Consolidated********Total** | ** ** |
|-------------------------------------------------------|------------|----------------------------------------------|------------|----------------------------------|------------|----------------------------------------|------------|--------------------------------------|------------|-------------------------------|------------|
| Net  sales                                            |       | $                                            | 166,840    |                             | $          | 211,856                                |       | $                                    | 42,698     |                          | $          | (17,113 | ) | $ | 404,281 |   |
| Cost  of goods sold                                   |       | 124,184                                      |       | 81,375                           |       | 16,907                                 |       | (7,597                               | )          | 214,869                       |       |
| Gross  profit                                         |       | 42,656                                       |       | 130,481                          |       | 25,791                                 |       | (9,516                               | )          | 189,412                       |       |
| SG&A  including amortization of intangible assets |       | 38,535                                       |       | 107,836                          |       | 25,722                                 |       | (11,596                              | )          | 160,497                       |       |
| Royalties  and other operating income                 |       | 64                                           |       | 5,433                            |       | 3,368                                  |       | (993                                 | )          | 7,872                         |       |
| Operating  income                                     |       | 4,185                                        |       | 28,078                           |       | 3,437                                  |       | 1,087                                |       | 36,787                        |       |
| Interest  (income) expense, net                       |       | 10,062                                       |       | (2,119                           | )          | 1,399                                  |       | 810                                  |       | 10,152                        |       |
| Income  from equity investment                        |       | 21,359                                       |       | —                           |       | —                                 |       | (21,359                              | )          | —                        |       |
| Earnings  before income taxes                         |       | 15,482                                       |       | 30,197                           |       | 2,038                                  |       | (21,082                              | )          | 26,635                        |       |
| Income  taxes (benefit)                               |       | (4,052                                       | )          | 10,360                           |       | 514                                    |       | 97                                   |       | 6,919                         |       |
| Net  earnings                                         |       | $                                            | 19,534     |                             | $          | 19,837                                 |       | $                                    | 1,524      |                          | $          | (21,179 | ) | $ | 19,716 |   |

 

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**OXFORDINDUSTRIES, INC.**

**CONDENSEDCONSOLIDATING STATEMENTS OF OPERATIONS**

**SecondQuarter Fiscal 2009**

 
| ** **                                            | ** ** | **Oxford********Industries********(Parent)** | ** ** | **Subsidiary********Guarantors** | ** ** | **Subsidiary********Non-  Guarantors** | ** ** | **Consolidating********Adjustments** | ** ** | **Consolidated********Total** | ** ** |
|-------------------------------------------------------|------------|----------------------------------------------|------------|----------------------------------|------------|----------------------------------------|------------|--------------------------------------|------------|-------------------------------|------------|
| Net  sales                                            |       | $                                            | 74,081     |                             | $          | 102,239                                |       | $                                    | 25,848     |                          | $          | (9,281 | ) | $ | 192,887 |   |
| Cost  of goods sold                                   |       | 62,270                                       |       | 42,965                           |       | 14,596                                 |       | (4,317                               | )          | 115,514                       |       |
| Gross  profit                                         |       | 11,811                                       |       | 59,274                           |       | 11,252                                 |       | (4,964                               | )          | 77,373                        |       |
| SG&A  including amortization of intangible assets |       | 11,175                                       |       | 52,187                           |       | 15,821                                 |       | (5,231                               | )          | 73,952                        |       |
| Royalties  and other operating income                 |       | 22                                           |       | 2,057                            |       | 1,203                                  |       | (366                                 | )          | 2,916                         |       |
| Operating  income (loss)                              |       | 658                                          |       | 9,144                            |       | (3,366                                 | )          | (99                                  | )          | 6,337                         |       |
| Interest  (income) expense, net                       |       | 6,684                                        |       | (1,370                           | )          | 931                                    |       | —                               |       | 6,245                         |       |
| Income  from equity investment                        |       | 4,594                                        |       | —                           |       | —                                 |       | (4,594                               | )          | —                        |       |
| Earnings  (loss) before income taxes                  |       | (1,432                                       | )          | 10,514                           |       | (4,297                                 | )          | (4,693                               | )          | 92                            |       |
| Income  taxes (benefit)                               |       | (1,316                                       | )          | 2,821                            |       | (1,199                                 | )          | (34                                  | )          | 272                           |       |
| Net  earnings (loss)                                  |       | $                                            | (116       | )                                | $          | 7,693                                  |       | $                                    | (3,098     | )                             | $          | (4,659 | ) | $ | (180 | ) |

 

**FirstHalf Fiscal 2009**

 
| ** **                                            | ** ** | **Oxford********Industries********(Parent)** | ** ** | **Subsidiary********Guarantors** | ** ** | **Subsidiary********Non-  Guarantors** | ** ** | **Consolidating********Adjustments** | ** ** | **Consolidated********Total** | ** ** |
|-------------------------------------------------------|------------|----------------------------------------------|------------|----------------------------------|------------|----------------------------------------|------------|--------------------------------------|------------|-------------------------------|------------|
| Net  sales                                            |       | $                                            | 166,874    |                             | $          | 210,304                                |       | $                                    | 51,133     |                          | $          | (18,693 | ) | $ | 409,618 |   |
| Cost  of goods sold                                   |       | 136,776                                      |       | 88,929                           |       | 25,384                                 |       | (8,778                               | )          | 242,311                       |       |
| Gross  profit                                         |       | 30,098                                       |       | 121,375                          |       | 25,749                                 |       | (9,915                               | )          | 167,307                       |       |
| SG&A  including amortization of intangible assets |       | 25,162                                       |       | 109,221                          |       | 29,800                                 |       | (11,240                              | )          | 152,943                       |       |
| Royalties  and other operating income                 |       | 34                                           |       | 4,276                            |       | 2,184                                  |       | (1,109                               | )          | 5,385                         |       |
| Operating  income (loss)                              |       | 4,970                                        |       | 16,430                           |       | (1,867                                 | )          | 216                                  |       | 19,749                        |       |
| Interest  (income) expense, net                       |       | 11,640                                       |       | (2,717                           | )          | 1,887                                  |       | —                               |       | 10,810                        |       |
| Income  from equity investment                        |       | 11,550                                       |       | —                           |       | —                                 |       | (11,550                              | )          | —                        |       |
| Earnings  (loss) before income taxes                  |       | 4,880                                        |       | 19,147                           |       | (3,754                                 | )          | (11,334                              | )          | 8,939                         |       |
| Income  taxes (benefit)                               |       | (1,411                                       | )          | 5,084                            |       | (1,241                                 | )          | 76                                   |       | 2,508                         |       |
| Net  earnings (loss)                                  |       | $                                            | 6,291      |                             | $          | 14,063                                 |       | $                                    | (2,513     | )                             | $          | (11,410 | ) | $ | 6,431 |   |

 

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**OXFORD INDUSTRIES, INC.**

**UNAUDITEDCONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS**

**FirstHalf Fiscal 2010**

 
| ** **                                           | ** ** | **Oxford********Industries********(Parent)** | ** ** | **Subsidiary********Guarantors** | ** ** | **Subsidiary********Non-  Guarantors** | ** ** | **Consolidating********Adjustments** | ** ** | **Consolidated********Total** | ** ** |
|------------------------------------------------------|------------|----------------------------------------------|------------|----------------------------------|------------|----------------------------------------|------------|--------------------------------------|------------|-------------------------------|------------|
| Cash  Flows From Operating Activities:               | ** ** | ** **                                   | ** ** | ** **                       | ** ** | ** **                             | ** ** | ** **                           | ** ** | ** **                    | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Net  cash (used in) provided by operating activities |       | $                                            | (14,632    | )                                |       | $                                      | 39,115     |                                 |       | $ 1,053                  |       |   | $ — |   | $25,536 |   |   |
| Cash  Flows from Investing Activities:               |       |                                         |       |                             |       |                                   |       |                                 |       |                          |       |   |   |   |   |   |   |
| Net  cash used in investing activities               |       |                                         | (485       | )                                |       |                                   | (2,430     | )                                    |       | (377                          | )          |   | — |   | (3,292 | ) |   |
| Cash  Flows from Financing Activities:               |       |                                         |       |                             |       |                                   |       |                                 |       |                          |       |   |   |   |   |   |   |
| Change  in debt                                      |       |                                         | —     |                             |       |                                   | —     |                                 |       | 1,172                         |       |   | — |   | 1,172 |   |   |
| Proceeds  from issuance of common stock              |       |                                         | 230        |                             |       |                                   | —     |                                 |       | —                        |       |   | — |   | 230 |   |   |
| Change  in intercompany payable                      |       |                                         | 37,822     |                             |       |                                   | (36,872    | )                                    |       | (950                          | )          |   | — |   | — |   |   |
| Dividends  on common stock                           |       |                                         | (3,638     | )                                |       |                                   | —     |                                 |       | —                        |       |   | — |   | (3,638 | ) |   |
| Net  cash (used in) provided by financing activities |       |                                         | 34,414     |                             |       |                                   | (36,872    | )                                    |       | 222                           |       |   | — |   | (2,236 | ) |   |
| Net  change in cash and cash equivalents             |       |                                         | 19,297     |                             |       |                                   | (187       | )                                    |       | 898                           |       |   | — |   | 20,008 |   |   |
| Effect  of foreign currency translation              |       |                                         | —     |                             |       |                                   | —     |                                 |       | (125                          | )          |   | — |   | (125 | ) |   |
| Cash  and cash equivalents at the beginning of year  |       |                                         | 5,954      |                             |       |                                   | 782        |                                 |       | 1,552                         |       |   | — |   | 8,288 |   |   |
| Cash  and cash equivalents at the end of period      |       | $                                            | 25,251     |                             |       | $                                      | 595        |                                 |       | $ 2,325                  |       |   | $ — |   | $28,171 |   |   |

 

**OXFORDINDUSTRIES, INC.**

**UNAUDITEDCONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS**

**FirstHalf Fiscal 2009**

 
| ** **                                           | ** ** | **Oxford********Industries********(Parent)** | ** ** | **Subsidiary********Guarantors** | ** ** | **Subsidiary********Non-  Guarantors** | ** ** | **Consolidating********Adjustments** | ** ** | **Consolidated********Total** | ** ** |
|------------------------------------------------------|------------|----------------------------------------------|------------|----------------------------------|------------|----------------------------------------|------------|--------------------------------------|------------|-------------------------------|------------|
| Cash  Flows From Operating Activities:               | ** ** | ** **                                   | ** ** | ** **                       | ** ** | ** **                             | ** ** | ** **                           | ** ** | ** **                    | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Net  cash (used in) provided by operating activities |       | $                                            | (97        | )                                |       | $                                      | 35,965     |                                 |       | $                             | (762       | ) |   | $ — |   | $ | 35,106 |   |   |
| Cash  Flows from Investing Activities:               |       |                                         |       |                             |       |                                   |       |                                 |       |                          |       |   |   |   |   |   |   |   |   |
| Net  cash (used in) provided by investing activities |       |                                         | (1,496     | )                                |       |                                   | (3,212     | )                                    |       |                          | (1,132     | ) |   | — |   |   | (5,840 | ) |   |
| Cash  Flows from Financing Activities:               |       |                                         |       |                             |       |                                   |       |                                 |       |                          |       |   |   |   |   |   |   |   |   |
| Change  in debt                                      |       |                                         | (24,221    | )                                |       |                                   | —     |                                 |       |                          | 4,169      |   |   | — |   |   | (20,052 | ) |   |
| Payments  of debt issuance costs                     |       |                                         | (4,878     | )                                |       |                                   | —     |                                 |       |                          | —     |   |   | — |   |   | (4,878 | ) |   |
| Proceeds  from issuance of common stock              |       |                                         | 193        |                             |       |                                   | —     |                                 |       |                          | —     |   |   | — |   |   | 193 |   |   |
| Change  in intercompany payable                      |       |                                         | 33,566     |                             |       |                                   | (33,290    | )                                    |       |                          | (276       | ) |   | — |   |   | — |   |   |
| Dividends  on common stock                           |       |                                         | (2,919     | )                                |       |                                   | —     |                                 |       |                          | —     |   |   | — |   |   | (2,919 | ) |   |
| Net  cash (used in) provided by financing activities |       |                                         | 1,741      |                             |       |                                   | (33,290    | )                                    |       |                          | 3,893      |   |   | — |   |   | (27,656 | ) |   |
| Net  change in cash and cash equivalents             |       |                                         | 148        |                             |       |                                   | (537       | )                                    |       |                          | 1,999      |   |   | — |   |   | 1,610 |   |   |
| Effect  of foreign currency translation              |       |                                         | —     |                             |       |                                   | —     |                                 |       |                          | 561        |   |   | — |   |   | 561 |   |   |
| Cash  and cash equivalents at the beginning of year  |       |                                         | 1,527      |                             |       |                                   | 537        |                                 |       |                          | 1,226      |   |   | — |   |   | 3,290 |   |   |
| Cash  and cash equivalents at the end of period      |       | $                                            | 1,675      |                             |       | $                                      | —     |                                 |       | $                             | 3,786      |   |   | $ — |   | $ | 5,461 |   |   |

 

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**ITEM 2. MANAGEMENT’S DISCUSSIONAND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

 

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. We distributethe majority of our products through our wholesale customers, which includechain stores, department stores, specialty stores, specialty catalog retailers,mass merchants and Internet retailers. Our products for certain owned brandsare also sold through our owned and licensed retail stores and e-commercewebsites.

 

Asa result of the weak global economic conditions, fiscal 2009 was a particularlychallenging year for each of our operating groups. While we have seen somesigns of recovery, we believe these challenging economic conditions willcontinue to persist and impact each of our operating groups through the end offiscal 2010, or beyond. Thus, we have purchased inventory for fiscal 2010 atlevels which we believe should mitigate inventory markdown risk and promotionalpressure; however, these precautions may also limit our growth opportunities.In the current economic environment, we also believe it is important tocontinue to focus on maintaining a strong balance sheet and ample liquidity. Webelieve that the measures we have taken to reduce working capital requirements,moderate capital expenditures for retail stores, reduce our overhead andrefinance our significant debt agreements have significantly enhanced ourbalance sheet and liquidity.

 

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.

 

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

 
| ** **                                              | ** ** | **First Half**                       | ** ** | ** ** | ** **                                | ** ** |
|---------------------------------------------------------|------------|-------------------------------------------|------------|------------|-------------------------------------------|------------|
| ** **                                              | ** ** | **Fiscal 2010**                      | ** ** | ** ** | **Fiscal 2009**                      | ** ** | ** ** | **$ Change** | ** ** |
| Net sales                                               |       | $404,281                                  |       |       | $409,618                                  |       |   | $ (5,337 | ) |
| Net earnings                                            |       | $  19,716                       |       |       | $    6,431            |       |   | $13,285 |   |
| Diluted net earnings per common share                   |       | $      1.19 |       |       | $      0.40 |       |   | $    0.79 |   |
| Weighted average common shares outstanding—diluted |       | 16,527                                    |       |       | 16,083                                    |       |   | 444 |   |

 

The primary reasons for the improvement in net earnings were:

 

·                   A change in our net sales mix, with Tommy Bahama sales, whichgenerally have higher gross margins than our other operating groups,representing a higher proportion of consolidated net sales and sales related tocertain exited businesses representing a lower proportion of consolidated netsales during the first half of fiscal 2010. The first half of fiscal 2009included $26.4 million of net sales associated with businesses that we haveexited.

 

·                  Improved gross margins,which benefitted from the first half of fiscal 2010 including a LIFO charge of$1.6 million compared to the first half of fiscal 2009 including a LIFO chargeof $5.5 million.

 

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·                  Increased royalty income in both Tommy Bahamaand Ben Sherman resulting from increased sales during the first half of fiscal2010 by existing licensees, as well as the addition of new licensees.

 

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

 

·                  The first half of fiscal 2009 included a $1.8million write-off of unamortized deferred financing costs related to thesatisfaction and discharge of the remaining 8 7/8% Senior Unsecured Notes,which was included in interest expense.

 

Theseitems were partially offset by increased SG&A primarily due to increasedincentive compensation amounts resulting from the resumption of our incentivecompensation program, which was suspended in fiscal 2009 and is tied to ourfinancial performance.

 

**OPERATING GROUPS**

 

Ourbusiness is operated through our four operating groups: Tommy Bahama, BenSherman, Lanier Clothes and Oxford Apparel. We identify our operating groupsbased on the way our management organizes the components of our business forpurposes of allocating resources and assessing performance.

 

TommyBahama designs, sources and markets collections of men’s and women’s sportswearand related products. The target consumers of Tommy Bahama are affluent men andwomen age 35 and older who embrace a relaxed and casual approach to dailyliving. 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.

 

BenSherman is a London-based designer, marketer and distributor of brandedsportswear and related products. Ben Sherman® wasestablished in 1963 as an edgy, young men’s, “Mod”-inspired shirt brand and hasevolved into a British lifestyle brand of apparel targeted at youthful-thinkingmen age 19 to 35 throughout the world. We offer a Ben Sherman men’s sportswearcollection, as well as tailored clothing and accessories. 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. We also license the Ben Sherman name for variousproduct categories.

 

LanierClothes designs and markets branded and private label men’s suits, sportcoats,suit separates and dress slacks across a wide range of price points. CertainLanier Clothes products are sold using trademarks licensed to us by thirdparties, including Kenneth Cole®, Dockers®, and Geoffrey Beene®. We also offer branded tailored clothing productsunder our Billy London® and Arnold Brant® trademarks.In addition to our branded businesses, we design and source certain privatelabel tailored clothing products. Significant private label brands includeStafford®, 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.

 

OxfordApparel produces branded and private label dress shirts, suit separates, sportshirts, casual slacks, outerwear, sweaters, jeans, swimwear, westernwear andgolf apparel. We design and source certain private label programs for severalcustomers, including programs for Costco, Sears, Target and Macy’s. Significantowned brands of Oxford 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. Our Oxford Apparel products are sold to a variety ofdepartment stores, mass merchants, specialty catalog retailers, discountretailers, specialty stores, “green grass” golf merchants and Internetretailers throughout the United States.

 

Corporateand Other is a reconciling category for reporting purposes and includes ourcorporate office, substantially all financing activities, elimination ofinter-segment sales, LIFO inventory accounting adjustments and other costs thatare not allocated to the operating groups. LIFO inventory calculations are madeon a legal entity basis which does not correspond to our operating groupdefinitions; therefore, LIFO inventory accounting adjustments are not allocatedto operating groups.

 

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For further information regarding our operating groups,see Note 4 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.

 

**RESULTSOF OPERATIONS**

 

**SECOND QUARTER OF FISCAL 2010COMPARED TO SECOND 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.

 
| ** **                            | ** ** | **Second Quarter**       | ** ** | ** **           | ** ** | ** **                                | ** ** |
|---------------------------------------|------------|--------------------------|------------|----------------------|------------|-------------------------------------------|------------|
| ** **                            | ** ** | **Fiscal 2010**     | ** ** | **Fiscal 2009** | ** ** | **$ Change**                         | ** ** | **% Change** | ** ** |
| Net sales                             |       | $186,531                 |       | 100.0%               |       | $192,887                                  |       | 100.0% |   | $  (6,356 | ) | (3.3% | ) |
| Cost of goods sold                    |       | 98,701                   |       | 52.9%                |       | 115,514                                   |       | 59.9% |   | (16,813 | ) | (14.6% | ) |
| Gross profit                          |       | 87,830                   |       | 47.1%                |       | 77,373                                    |       | 40.1% |   | 10,457 |   | 13.5% |   |
| SG&A                              |       | 76,246                   |       | 40.9%                |       | 73,637                                    |       | 38.2% |   | 2,609 |   | 3.5% |   |
| Amortization of intangible  assets    |       | 249                      |       | 0.1%                 |       | 315                                       |       | 0.2% |   | (66 | ) | (21.0% | ) |
| Royalties and other  operating income |       | 4,031                    |       | 2.2%                 |       | 2,916                                     |       | 1.5% |   | 1,115 |   | 38.2% |   |
| Operating income                      |       | 15,366                   |       | 8.2%                 |       | 6,337                                     |       | 3.3% |   | 9,029 |   | 142.5% |   |
| Interest expense, net                 |       | 5,143                    |       | 2.8%                 |       | 6,245                                     |       | 3.2% |   | (1,102 | ) | (17.6% | ) |
| Earnings before income taxes          |       | 10,223                   |       | 5.5%                 |       | 92                                        |       | 0.0% |   | 10,131 |   | NM |   |
| Income taxes                          |       | 3,004                    |       | 1.6%                 |       | 272                                       |       | 0.1% |   | 2,732 |   | NM |   |
| Net earnings (loss)                   |       | $   7,219 |       | 3.9%                 |       | $      (180 | )          | (0.1% | ) | $    7,399 |   | NM |   |

 

The discussion and tablesbelow compare certain line items included in our statements of operations forthe second quarter of fiscal 2010 to the second 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.

 

***Net Sales***

 
| ** **          | ** ** | ** ** | ** ** | ** ** | ** ** | **Second Quarter** | ** ** | ** **           | ** **          | ** **        | ** ** |
|---------------------|------------|------------|------------|------------|------------|-------------------------|------------|----------------------|---------------------|-------------------|------------|
| ** **          | ** ** | ** ** | ** ** | ** ** | ** ** | **Fiscal 2010**    | ** ** | **Fiscal 2009** | ** **          | **$ Change** | ** ** | **% Change** | ** ** |
| Tommy Bahama        |       |       |       |       |       | $  99,349     |       |                 | $  94,439 |              |       | $  4,910 |   |   | 5.2% |   |
| Ben Sherman         |       |       |       |       |       | 18,346                  |       |                 | 23,627              |              |       | (5,281 | ) |   | (22.4% | ) |
| Lanier Clothes      |       |       |       |       |       | 22,736                  |       |                 | 25,204              |              |       | (2,468 | ) |   | (9.8% | ) |
| Oxford Apparel      |       |       |       |       |       | 45,551                  |       |                 | 49,464              |              |       | (3,913 | ) |   | (7.9% | ) |
| Corporate and Other |       |       |       |       |       | 549                     |       |                 | 153                 |              |       | 396 |   |   | NM |   |
| Total net sales     |       |       |       |       |       | $186,531                |       |                 | $192,887            |              |       | $(6,356 | ) |   | (3.3% | ) |

 

Consolidatednet sales decreased $6.4 million, or 3.3%, in the second quarter of fiscal 2010compared to the second quarter of fiscal 2009 primarily due to $13.4 million ofsales related to businesses that we have exited being included in the secondquarter of fiscal 2009 and the other changes in each operating group discussedbelow.

 

*TommyBahama:*

 

Theincrease in net sales for Tommy Bahama was primarily due to improved comparableretail store sales and higher e-commerce sales. Tommy Bahama unit sales increased8.5%, which was primarily a result of the improvement in the direct to consumerchannels, while the average selling price per unit decreased by 2.9%. Thedecrease in the average selling price per unit for apparel was primarily due toa change in product mix. As of July 31, 2010 and August 1, 2009, weoperated 86 and 84 Tommy Bahama retail stores, respectively.

 

*Ben Sherman**:***

 

The decrease in net salesfor Ben Sherman was primarily due to a 23.0% 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. Net sales in the secondquarter of fiscal 2009 related to these exited businesses totaled approximately$5.4

 

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**Table of Contents**

 

million. The decrease inunit sales was compounded by a 6.3% decrease in the average exchange rate ofthe British pound sterling versus the United States dollar during the secondquarter of fiscal 2010 compared to the average exchange rate during the secondquarter of fiscal 2009 resulting in a reduction in net sales of $1.2 million.These items that reduced net sales were partially offset by an increase incomparable retail store sales and increases in Ben Sherman’s men’s sportswearbusiness. The average selling price per unit for Ben Sherman increased 0.8%compared to the second quarter of fiscal 2009 due to the increased proportionof retail sales, which has a higher average selling price, as a percentage oftotal Ben Sherman sales, as well as the second quarter of fiscal 2009’swholesale sales including a larger proportion of close-out sales.

 

*Lanier Clothes:*

 

The decrease in net salesfor Lanier Clothes was primarily due to $1.8 million of close-out salesassociated with exited businesses during the second quarter of fiscal 2009.Unit sales declined 14.1% and the average selling price per unit increased5.1%, both primarily as a result of the second quarter of fiscal 2010 notincluding any close-out sales associated with the exited businesses.

 

*Oxford Apparel:*

 

The decrease in net salesfor Oxford Apparel was primarily due to the second quarter of fiscal 2009including $6.2 million of close-out sales related to certain businesses that wepreviously exited. Unit sales declined 7.9%, as a result of the inclusion ofthe close-out sales in the second quarter of fiscal 2009, and the averageselling price per unit was relatively flat between the two periods.

 

***Gross Profit***

 
| ** **                                       | ** ** | **Second Quarter**                       | ** ** | ** **               | ** ** | ** **        | ** ** |
|--------------------------------------------------|------------|------------------------------------------|------------|--------------------------|------------|-------------------|------------|
| ** **                                       | ** ** | **Fiscal  2010**                         | ** ** | **Fiscal  2009**         | ** ** | **$ Change** | ** ** | **% Change** | ** ** |
| Gross profit                                     |       | $ 87,830                            |       | $ 77,373            |       | $ 10,457     |       | 13.5% |   |
| Gross margin (gross  profit as a % of net sales) |       | 47.1                                     | %          | 40.1                     | %          |              |       |   |   |
| LIFO charges included in cost of goods sold      |       | $      976 |       | $   4,043 |       |              |       |   |   |

 

The increase in gross profit was primarilydue to (1) improved gross margins in each operating group resulting fromchanges in product mix as a result of the prior year including a greaterproportion of close-out sales, (2) the increase in Tommy Bahama’s netsales, which generally have higher gross margins than our other operatinggroups, both in total and as a proportion of consolidated net sales and (3) theimpact of LIFO accounting charges.  Grossmargins increased to 47.1% of net sales during the second quarter of fiscal2010 from 40.1% in the second quarter of fiscal 2009. Gross profit includedcharges for LIFO accounting of $1.0 million in the second quarter of fiscal2010 and $4.0 million in the second quarter of fiscal 2009. We anticipate thatconsolidated gross margins in fiscal 2010 will continue to increase compared tothe prior year as our consolidated sales mix is more heavily weighted towardsTommy Bahama; however, this change is expected to be partially offset byincreases in cotton prices, wages in Asia and ocean shipping costs. Our grossprofit may not be directly comparable to those of our competitors, as statementof operations classification of certain expenses may vary by company.

 

***SG&A***

 
| ** **                                  | ** ** | **Second Quarter**                                      | ** ** | ** **               | ** ** | ** **        | ** ** |
|---------------------------------------------|------------|---------------------------------------------------------|------------|--------------------------|------------|-------------------|------------|
| ** **                                  | ** ** | **Fiscal  2010**                                        | ** ** | **Fiscal  2009**         | ** ** | **$ Change** | ** ** | **% Change** | ** ** |
| SG&A                                    |       | $ 76,246                                           |       | $ 73,637            |       | $ 2,609      |       | 3.5% |   |
| SG&A (as % of net  sales)               |       | 40.9                                                    | %          | 38.2                     | %          |              |       |   |   |
| 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 operating group. The second quarter of fiscal 2009 included $1.4 million of restructuringcharges in Ben Sherman related to its exit from and subsequent licensing of itsfootwear and kids’ businesses and other streamlining initiatives.

 

***Royalties and otheroperating income***

 
| ** **                            | ** ** | **Second Quarter** | ** ** | ** **       | ** ** | ** **        | ** ** |
|---------------------------------------|------------|--------------------|------------|------------------|------------|-------------------|------------|
| ** **                            | ** ** | **Fiscal 2010**    | ** ** | **Fiscal  2009** | ** ** | **$ Change** | ** ** | **% Change** | ** ** |
| Royalties and other  operating income |       | $ 4,031       |       | $ 2,916     |       | $ 1,115      |       | 38.2% |   |

 

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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.

 

***Operating income (loss)***

 
| ** **                                          | ** ** | **Second Quarter**                                | ** ** | ** **         | ** ** | ** **             | ** ** |
|-----------------------------------------------------|------------|---------------------------------------------------|------------|--------------------|------------|------------------------|------------|
| ** **                                          | ** ** | **Fiscal  2010**                                  | ** ** | **Fiscal  2009**   | ** ** | **$ Change**      | ** ** | **% Change   ** |
| Tommy Bahama                                        |       | $14,172                                           |       | $13,379            |       | $   793 |       | 5.9 | % |
| Ben Sherman                                         |       | (598                                              | )          | (6,308             | )          | 5,710                  |       | 90.5 | % |
| Lanier Clothes                                      |       | 2,809                                             |       | 2,701              |       | 108                    |       | 4.0 | % |
| Oxford Apparel                                      |       | 3,358                                             |       | 4,129              |       | (771                   | )          | (18.7 | %) |
| Corporate and Other                                 |       | (4,375                                            | )          | (7,564             | )          | 3,189                  |       | 42.2 | % |
| Total operating income                              |       | $15,366                                           |       | $  6,337 |       | $9,029                 |       | 142.5 | % |
| LIFO charges included in  operating income          |       | $     976                |       | $  4,043 |       |                   |       |   |   |
| Restructuring charges  included in operating income |       | $       — |       | $  1,362 |       |                   |       |   |   |

 

Operatingincome, on a consolidated basis, increased to $15.4 million inthe second quarter of fiscal 2010 from $6.3 million in the second quarter offiscal 2009. The $9.0 million increase in operating income was primarily due tothe improved gross margins in each operating group and higher royalty income,which was partially offset by decreased net sales and increased SG&A, eachas described above. Operating income included charges for LIFO accounting of$1.0 million in the second quarter of fiscal 2010 and $4.0 million in thesecond quarter of fiscal 2009. The second quarter of fiscal 2009 also includedrestructuring charges of $1.4 million in Ben Sherman. Changes in operatingincome by operating group are discussed below.

 

*TommyBahama:*

 
| ** **                          | ** ** | **Second Quarter** | ** ** | ** **       | ** ** | ** **             | ** ** |
|-------------------------------------|------------|--------------------|------------|------------------|------------|------------------------|------------|
| ** **                          | ** ** | **Fiscal  2010**   | ** ** | **Fiscal  2009** | ** ** | **$ Change**      | ** ** | **% Change** | ** ** |
| Net sales                           |       | $99,349            |       | $94,439          |       | $4,910                 |       | 5.2% |   |
| Operating income                    |       | $14,172            |       | $13,379          |       | $   793 |       | 5.9% |   |
| Operating income as % of net  sales |       | 14.3               | %          | 14.2             | %          |                   |       |   |   |

 

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.

 

*Ben Sherman:*

 
| ** **                                                 | ** ** | **Second Quarter**                                | ** ** | ** **         | ** ** | ** **         | ** ** |
|------------------------------------------------------------|------------|---------------------------------------------------|------------|--------------------|------------|--------------------|------------|
| ** **                                                 | ** ** | **Fiscal  2010**                                  | ** ** | **Fiscal  2009**   | ** ** | **$ Change**  | ** ** | **% Change** | ** ** |
| Net sales                                                  |       | $18,346                                           |       | $23,627            |       | $(5,281            | )          | (22.4% | ) |
| Operating income (loss)                                    |       | $    (598                     | )          | $ (6,308      | )          | $  5,710 |       | 90.5% |   |
| Operating income (loss)  as % of net sales                 |       | (3.3                                              | %)         | (26.7              | %)         |               |       |   |   |
| Restructuring charges  included in operating income (loss) |       | $       — |       | $  1,362 |       |               |       |   |   |

 

The improved operatingresults for Ben Sherman were primarily due to improved gross margins andreduced SG&A, both of which were primarily a result of our exit from andsubsequent licensing of the footwear and kids’ businesses, our exit from thewomen’s operations and increased royalty income. The second quarter of fiscal2009 SG&A for Ben Sherman also included $1.4 million of restructuringcharges primarily related to our exit from and subsequent licensing of thefootwear and kids’ businesses and other streamlining initiatives.

 

*LanierClothes:*

 
| ** **                          | ** ** | **Second Quarter** | ** ** | ** **         | ** ** | ** **                   | ** ** |
|-------------------------------------|------------|--------------------|------------|--------------------|------------|------------------------------|------------|
| ** **                          | ** ** | **Fiscal  2010**   | ** ** | **Fiscal  2009**   | ** ** | **$ Change**            | ** ** | **% Change** | ** ** |
| Net sales                           |       | $22,736            |       | $25,204            |       | $(2,468                      | )          | (9.8% | ) |
| Operating income                    |       | $  2,809 |       | $  2,701 |       | $    108 |       | 4.0% |   |
| Operating income as % of net  sales |       | 12.4               | %          | 10.7               | %          |                         |       |   |   |

 

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 secondquarter of fiscal 2010, and close-out sales associated with exited businessesincluded in the prior year.

 

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*OxfordApparel:*

 
| ** **                          | ** ** | **Second Quarter** | ** ** | ** **         | ** ** | ** **              | ** ** |
|-------------------------------------|------------|--------------------|------------|--------------------|------------|-------------------------|------------|
| ** **                          | ** ** | **Fiscal  2010**   | ** ** | **Fiscal  2009**   | ** ** | **$ Change**       | ** ** | **% Change** | ** ** |
| Net sales                           |       | $45,551            |       | $49,464            |       | $(3,913                 | )          | (7.9% | ) |
| Operating income                    |       | $  3,358 |       | $  4,129 |       | $   (771 | )          | (18.7% | ) |
| Operating income as % of net  sales |       | 7.4                | %          | 8.3                | %          |                    |       |   |   |

 

The decrease in operatingincome was primarily due to decreased sales and increased SG&A, which werepartially offset by higher gross margins resulting from a greater proportion ofclose-out sales included in the second quarter of fiscal 2009.

 

*Corporateand Other:*

 
| ** **                                       | ** ** | **Second Quarter**           | ** ** | ** **         | ** ** | ** **        | ** ** |
|--------------------------------------------------|------------|------------------------------|------------|--------------------|------------|-------------------|------------|
| ** **                                       | ** ** | **Fiscal  2010**             | ** ** | **Fiscal  2009**   | ** ** | **$ Change** | ** ** | **% Change** | ** ** |
| Operating income (loss)                          |       | $(4,375                      | )          | $(7,564            | )          | $3,189            |       | 42.2% |   |
| LIFO charges included in operating income (loss) |       | $    976 |       | $  4,043 |       |              |       |   |   |

 

The Corporate and Otheroperating loss decreased by $3.2 million from a loss of $7.6 million in thesecond quarter of fiscal 2009 to a loss of $4.4 million in the second quarterof fiscal 2010. The decrease in the operating loss was primarily due to LIFOaccounting charges of $1.0 million in the second quarter of fiscal 2010 and$4.0 million in the second quarter of fiscal 2009.

 

***Interestexpense, net***

 
| ** **                                                          | ** ** | **Second Quarter**                    | ** ** | ** **       | ** ** | ** **        | ** ** |
|---------------------------------------------------------------------|------------|---------------------------------------|------------|------------------|------------|-------------------|------------|
| ** **                                                          | ** ** | **Fiscal  2010**                      | ** ** | **Fiscal  2009** | ** ** | **$ Change** | ** ** | **% Change** | ** ** |
| Interest expense, net                                               |       | $5,143                                |       | $6,245           |       | $(1,102           | )          | (17.6% | ) |
| Write-off of deferred  financing costs included in interest expense |       | $     — |       | $1,759           |       |              |       |   |   |

 

The decrease in interestexpense was primarily due to the $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, as well as a lower levelof borrowings in the second quarter of fiscal 2010 resulting from the cash flowfrom operations generated subsequent to the second quarter of fiscal 2009.These items were partially offset by the higher interest rate associated withour 11 3/8% Senior Secured Notes.

 

***Income taxes***

 
| ** **         | ** ** | **Second Quarter** | ** ** | ** **             | ** ** | ** **        | ** ** |
|--------------------|------------|--------------------|------------|------------------------|------------|-------------------|------------|
| ** **         | ** ** | **Fiscal  2010**   | ** ** | **Fiscal  2009**       | ** ** | **$ Change** | ** ** | **% Change** | ** ** |
| Income taxes       |       | $3,004             |       | $   272 |       | $2,732            |       | NM |   |
| Effective tax rate |       | 29.4               | %          | 295.7                  | %          |              |       |   |   |

 

Therates for both periods reflect the impact of permanent differences which do notnecessarily fluctuate with earnings, as well as the impact of certain discrete items.Also, the second quarter of fiscal 2009 was impacted by a reduction in theanticipated benefit of favorable permanent differences expected for the year,as compared to our estimates as of the first quarter of fiscal 2009, resultingfrom changes in the mix of earnings between taxing jurisdictions, which had asignificant impact on the effective tax rate due to the low earnings in thesecond quarter of fiscal 2009.

 

***Net earnings (loss)***

 
| ** **                                         | ** ** | **Second Quarter**            | ** ** | ** **                    | ** ** | ** **        | ** ** |
|----------------------------------------------------|------------|-------------------------------|------------|-------------------------------|------------|-------------------|------------|
| ** **                                         | ** ** | **Fiscal  2010**              | ** ** | **Fiscal  2009**              | ** ** | **Change**        | ** ** | **%  Change** | ** ** |
| Net earnings (loss)                                |       | $  7,219            |       | $    (180 | )          | $7,399            |       | NM |   |
| Diluted net earnings (loss) per common share       |       | $    0.44 |       | $   (0.01      | )          | $  0.45 |       | NM |   |
| Weighted average common shares outstanding-diluted |       | 16,552                        |       | 16,288                        |       | 264               |       | 1.6 | % |

 

Theincrease in diluted net earnings per common share was primarily due to (1) thechange in consolidated sales mix with a greater proportion of net sales beingsales of Tommy Bahama products and a lower proportion of net sales beingrelated to exited businesses, (2) the impact of LIFO accounting in eachperiod, (3) higher royalty income, (4) the $1.4 million ofrestructuring charges incurred in the second quarter of fiscal 2009 related toBen Sherman’s exit from and 

 

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subsequentlicensing of its footwear and kids’ businesses and other streamlininginitiatives and (5) the $1.8 million write-off of unamortized deferredfinancing costs in the second quarter of fiscal 2009 related to thesatisfaction and discharge of the remaining 8 7/8% Senior Unsecured Notes,which was included in interest expense. These items were partially offset byincreased SG&A primarily due to higher incentive compensation amountsresulting from the resumption of our incentive compensation program which wassuspended in fiscal 2009 and is tied to our financial performance.

 

**FIRST HALF OF FISCAL 2010 COMPARED TO FIRST HALF OF FISCAL2009**

 

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.

 
| ** **                            | ** ** | **First Half**            | ** ** | ** **      | ** ** | ** **                           | ** ** |
|---------------------------------------|------------|---------------------------|------------|-----------------|------------|--------------------------------------|------------|
| ** **                            | ** ** | **Fiscal 2010**           | ** ** | **Fiscal 2009** | ** ** | **$ Change**                    | ** ** | **% Change** | ** ** |
| Net sales                             |       | $ 404,281            |       | 100.0%          |       | $ 409,618                       |       | 100.0% |   | $   (5,337 | ) | (1.3% | ) |
| Cost of goods sold                    |       | 214,869                   |       | 53.1%           |       | 242,311                              |       | 59.2% |   | (27,442 | ) | (11.3% | ) |
| Gross profit                          |       | 189,412                   |       | 46.9%           |       | 167,307                              |       | 40.8% |   | 22,105 |   | 13.2% |   |
| SG&A                              |       | 159,998                   |       | 39.6%           |       | 152,320                              |       | 37.2% |   | 7,678 |   | 5.0% |   |
| Amortization of intangible  assets    |       | 499                       |       | 0.1%            |       | 623                                  |       | 0.2% |   | (124 | ) | (19.9% | ) |
| Royalties and other  operating income |       | 7,872                     |       | 1.9%            |       | 5,385                                |       | 1.3% |   | 2,487 |   | 46.2% |   |
| Operating income                      |       | 36,787                    |       | 9.1%            |       | 19,749                               |       | 4.8% |   | 17,038 |   | 86.3% |   |
| Interest expense, net                 |       | 10,152                    |       | 2.5%            |       | 10,810                               |       | 2.6% |   | (658 | ) | (6.1% | ) |
| Earnings before income taxes          |       | 26,635                    |       | 6.6%            |       | 8,939                                |       | 2.2% |   | 17,696 |   | 198.0% |   |
| Income taxes                          |       | 6,919                     |       | 1.7%            |       | 2,508                                |       | 0.6% |   | 4,411 |   | 175.9% |   |
| Net earnings                          |       | $   19,716 |       | 4.9%            |       | $     6,431 |       | 1.6% |   | $    13,285 |   | 206.6% |   |

 

The discussion and tablesbelow compare certain line items included in our statements of operations forthe first half of fiscal 2010 to the first half of fiscal 2009. Each dollar andpercentage change provided reflects the change between these periods unlessindicated otherwise. Each dollar and share amount included in the tables is inthousands except for per share amounts.

 

***Net Sales***

 
| ** **          | ** ** | **First Half**  | ** ** | ** **      | ** ** | ** **        | ** ** |
|---------------------|------------|-----------------|------------|-----------------|------------|-------------------|------------|
| ** **          | ** ** | **Fiscal 2010** | ** ** | **Fiscal 2009** | ** ** | **$ Change** | ** ** | **% Change** | ** ** |
| Tommy Bahama        |       | $ 208,454  |       | $ 192,859  |       | $ 15,595     |       | 8.1% |   |
| Ben Sherman         |       | 40,500          |       | 47,846          |       | (7,346            | )          | (15.4% | ) |
| Lanier Clothes      |       | 53,164          |       | 56,711          |       | (3,547            | )          | (6.3% | ) |
| Oxford Apparel      |       | 101,893         |       | 112,668         |       | (10,775           | )          | (9.6% | ) |
| Corporate and Other |       | 270             |       | (466            | )          | 736               |       | NM |   |
| Total net sales     |       | $ 404,281  |       | $ 409,618  |       | $ (5,337     | )          | (1.3% | ) |

 

Consolidatednet sales decreased $5.3 million, or 1.3%, in the first half of fiscal 2010compared to the first half of fiscal 2009 primarily as a result of the firsthalf of fiscal 2009 including $26.4 million of net sales related to businessesthat we have exited and the other changes in each operating group discussedbelow.

 

*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 14.1%, which was primarily a result of the improvement in the directto consumer channels, while the average selling price per unit decreased by4.6% due to a change in product mix.

 

*Ben Sherman**:***

 

The decrease in net salesfor Ben Sherman was primarily due to a 15.6% 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 

 

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operations. Net salesrelated to the footwear, kids’ and women’s businesses totaled approximately$10.1 million in the first half of fiscal 2009 compared to $2.0 million in thefirst half of fiscal 2010. The decrease related to these exited businesses waspartially offset by an increase in comparable retail store sales and increasesin wholesale sales in Ben Sherman’s men’s sportswear business. The averageselling price per unit for Ben Sherman was relatively flat between the twoperiods.

 

*Lanier Clothes:*

 

The decrease in net salesfor Lanier Clothes was primarily due to our exit from certain businesses as thefirst half of fiscal 2009 included $3.6 million of close-out sales associatedwith these businesses. Unit sales declined 7.5% and the average selling priceper unit increased 1.4%, in both cases as a result of the first half of fiscal2010 not including any close-out sales associated with the exited businesses.

 

*Oxford Apparel:*

 

The decrease in net salesfor Oxford Apparel was primarily due to the first half of fiscal 2009 including$12.5 million of close-out sales related to certain businesses that we exited.Unit sales declined 9.4% and the average selling price per unit was relativelyflat between the two periods.

 

***Gross Profit***

 
| ** **                                       | ** ** | **First Half**                 | ** ** | ** **                     | ** ** | ** **        | ** ** |
|--------------------------------------------------|------------|--------------------------------|------------|--------------------------------|------------|-------------------|------------|
| ** **                                       | ** ** | **Fiscal  2010**               | ** ** | **Fiscal  2009**               | ** ** | **$ Change** | ** ** | **% Change** | ** ** |
| Gross profit                                     |       | $189,412                       |       | $167,307                       |       | $22,105           |       | 13.2% |   |
| Gross margin (gross  profit as a % of net sales) |       | 46.9                           | %          | 40.8                           | %          |              |       |   |   |
| LIFO charges included in cost of goods sold      |       | $    1,627 |       | $    5,491 |       |              |       |   |   |

 

The increase in gross profitwas primarily due to (1) improved gross margins in each operating groupresulting from changes in product mix in each operating group as a result ofthe prior year including a greater proportion of close-out sales, (2) theincrease in Tommy Bahama’s net sales, which generally have higher gross marginsthan our other operating groups, both in total and as a proportion ofconsolidated net sales and (3) the impact of LIFO accounting charges.  Gross margins increased to 46.9% of net salesduring the first half of fiscal 2010 from 40.8% in the first half of fiscal2009. Gross profit included charges for LIFO accounting of $1.6 million in thefirst half of fiscal 2010 and $5.5 million in the first half of fiscal 2009. Weanticipate that consolidated gross margins in fiscal 2010 will continue toincrease compared to the prior year as our consolidated sales mix is moreheavily weighted towards Tommy Bahama; however, this change is expected to bepartially offset by increases in cotton prices, wages in Asia and oceanshipping costs. Our gross profit may not be directly comparable to those of ourcompetitors, as statement of operations classification of certain expenses mayvary by company.

 

***SG&A***

 
| ** **                                  | ** ** | **First Half**                                                | ** ** | ** **                     | ** ** | ** **        | ** ** |
|---------------------------------------------|------------|---------------------------------------------------------------|------------|--------------------------------|------------|-------------------|------------|
| ** **                                  | ** ** | **Fiscal  2010**                                              | ** ** | **Fiscal  2009**               | ** ** | **$ Change** | ** ** | **% Change** | ** ** |
| SG&A                                    |       | $159,998                                                      |       | $152,320                       |       | $7,678            |       | 5.0% |   |
| SG&A (as % of net  sales)               |       | 39.6                                                          | %          | 37.2                           | %          |              |       |   |   |
| 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.  The first half of fiscal 2009 included $1.4million of restructuring charges related to Ben Sherman’s exit from andsubsequent licensing of its footwear and kids’ businesses and otherstreamlining initiatives.

 

***Royalties and otheroperating income***

 
| ** **                            | ** ** | **First Half**   | ** ** | ** **       | ** ** | ** **        | ** ** |
|---------------------------------------|------------|------------------|------------|------------------|------------|-------------------|------------|
| ** **                            | ** ** | **Fiscal  2010** | ** ** | **Fiscal  2009** | ** ** | **$ Change** | ** ** | **% Change** | ** ** |
| Royalties and other  operating income |       | $7,872           |       | $5,385           |       | $2,487            |       | 46.2% |   |

 

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 Half**                                          | ** ** | ** **                     | ** ** | ** **         | ** ** |
|-----------------------------------------------------|------------|---------------------------------------------------------|------------|--------------------------------|------------|--------------------|------------|
| ** **                                          | ** ** | **Fiscal  2010**                                        | ** ** | **Fiscal  2009**               | ** ** | **$ Change**  | ** ** | **% Change** | ** ** |
| Tommy Bahama                                        |       | $ 32,033                                           |       | $  25,629            |       | $  6,404 |       | 25.0% |   |
| Ben Sherman                                         |       | (76                                                     | )          | (8,284                         | )          | 8,208              |       | 99.1% |   |
| Lanier Clothes                                      |       | 7,168                                                   |       | 5,438                          |       | 1,730              |       | 31.8% |   |
| Oxford Apparel                                      |       | 9,329                                                   |       | 9,322                          |       | 7                  |       | 0.1% |   |
| Corporate and Other                                 |       | (11,667                                                 | )          | (12,356                        | )          | 689                |       | 5.6% |   |
| Total operating income                              |       | $ 36,787                                           |       | $  19,749            |       | $17,038            |       | 86.3% |   |
| LIFO charges included in  operating income          |       | $  1,627                                      |       | $    5,491 |       |               |       |   |   |
| Restructuring charges  included in operating income |       | $        — |       | $    1,362 |       |               |       |   |   |

 

Operatingincome, on a consolidated basis, increased to $36.8 million inthe first half of fiscal 2010 from $19.7 million in the first half of fiscal2009. The $17.0 million increase in operating income was primarily due to theimproved gross margins in each operating group and higher royalty income, whichwas partially offset by increased SG&A, each as described above. Operatingincome included charges for LIFO accounting of $1.6 million in the first halfof fiscal 2010 and $5.5 million in the first half of fiscal 2009. The firsthalf of fiscal 2009 also included restructuring charges of $1.4 million in BenSherman. Changes in operating income by operating group are discussed below.

 

*TommyBahama:*

 
| ** **                          | ** ** | **First Half**      | ** ** | ** **          | ** ** | ** **         | ** ** |
|-------------------------------------|------------|---------------------|------------|---------------------|------------|--------------------|------------|
| ** **                          | ** ** | **Fiscal  2010**    | ** ** | **Fiscal  2009**    | ** ** | **$ Change**  | ** ** | **% Change** | ** ** |
| Net sales                           |       | $208,454            |       | $192,859            |       | $15,595            |       | 8.1% |   |
| Operating income                    |       | $  32,033 |       | $  25,629 |       | $  6,404 |       | 25.0% |   |
| Operating income as % of net  sales |       | 15.4                | %          | 13.3                | %          |               |       |   |   |

 

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, partiallyoffset by increased SG&A.

 

*BenSherman:*

 
| ** **                                                 | ** **                                  | **First Half**                     | ** **         | ** **       | ** ** | ** **        | ** ** |
|------------------------------------------------------------|---------------------------------------------|------------------------------------|--------------------|------------------|------------|-------------------|------------|
| ** **                                                 | ** **                                  | **Fiscal  2010**                   | ** **         | **Fiscal  2009** | ** ** | **$ Change** | ** ** | **% Change** | ** ** |
| Net sales                                                  |                                        | $40,500                            |               | $47,846          |       | $(7,346           | )          | (15.4% | ) |
| Operating income (loss)                                    |                                        | $     (76 | )                  | $ (8,284    | )          | $ 8,208      |       | 99.1% |   |
| Operating income (loss)  as % of net sales                 |                                        | (0.2                               | %)                 | (17.3            | %)         |              |       |   |   |
| 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 a result of our exit from and subsequentlicensing of the footwear and kids’ business, our exit from the women’soperations and increased royalty income. The first half of fiscal 2009 SG&Afor Ben Sherman also included $1.4 million of restructuring charges primarilyrelated to our exit from and subsequent licensing of the footwear and kids’businesses and other streamlining initiatives.

 

*LanierClothes:*

 
| ** **                          | ** ** | **First Half**   | ** ** | ** **       | ** ** | ** **        | ** ** |
|-------------------------------------|------------|------------------|------------|------------------|------------|-------------------|------------|
| ** **                          | ** ** | **Fiscal  2010** | ** ** | **Fiscal  2009** | ** ** | **$ Change** | ** ** | **% Change** | ** ** |
| Net sales                           |       | $53,164          |       | $56,711          |       | $(3,547           | )          | (6.3% | ) |
| Operating income                    |       | $ 7,168     |       | $ 5,438     |       | $ 1,730      |       | 31.8% |   |
| Operating income as % of net  sales |       | 13.5             | %          | 9.6              | %          |              |       |   |   |

 

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 second quarter of fiscal 2010, and close-out salesassociated with exited businesses included in the prior year. The improvedgross margins were partially offset by increased SG&A.

 

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*OxfordApparel:*

 
|                                | ** ** | **First Half**                 | ** ** | ** **      | ** **                     | ** **        |       |
|-------------------------------------|------------|--------------------------------|------------|-----------------|--------------------------------|-------------------|------------|
|                                | ** ** | **Fiscal 2010**                | ** ** | **Fiscal 2009** | ** **                     | **$ Change** | ** ** | ** ** | **% Change** | ** ** |
| Net sales                           |       | $101,893                       |       | ** **      | $112,668                       |              | ** ** | $(10,775 | ) | ** ** | (9.6% | ) |
| Operating income                    |       | $    9,329 |       | ** **      | $    9,322 |              | ** ** | $          7 |   | ** ** | 0.1% |   |
| Operating income as % of net  sales |       | 9.2                            | %          | ** **      | 8.3                            | %                 | ** ** |   | ** ** | ** ** |   | ** ** |

 

Despite the decrease in netsales, operating income for Oxford Apparel for the two periods was comparableas the reduction in net sales was offset by improved gross margins due to theprior year including certain close-out sales associated with exited businesses.

 

*Corporateand Other:*

 
|                                             | ** ** | **First Half**           | ** ** | ** **      | ** **               |              |
|--------------------------------------------------|------------|--------------------------|------------|-----------------|--------------------------|-------------------|
|                                             | ** ** | **Fiscal 2010**          | ** ** | **Fiscal 2009** | ** **               | **$ Change** | ** ** | ** ** | **% Change** |   |
| Operating income (loss)                          |       | $(11,667                 | )          | ** **      | $(12,356                 | )                 | ** ** | $(689 | ) | ** ** | (5.6% | ) |
| LIFO charges included in operating income (loss) |       | $   1,627 |       | ** **      | $   5,491 |              | ** ** |   |   | ** ** |   |   |

 

The Corporate and Otheroperating loss decreased $0.7 million from a loss of $12.4 million in the firsthalf of fiscal 2009 to a loss of $11.7 million in the first half of fiscal2010. The decrease in the operating loss was primarily due to LIFO accountingcharges of $1.6 million in the first half of fiscal 2010 and $5.5 million inthe first half of fiscal 2009. After removing the impact of LIFO accountingcharges, the increase in operating loss is 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 Half**                                    | ** ** | ** **      | ** **         | ** **        | ** **                         |
|---------------------------------------------------------------------|------------|---------------------------------------------------|------------|-----------------|--------------------|-------------------|------------------------------------|
| ** **                                                          | ** ** | **Fiscal 2010**                                   | ** ** | **Fiscal 2009** | ** **         | **$ Change** | ** **                         | **% Change** | ** ** |
| Interest expense, net                                               |       | $10,152                                           |       |            | $10,810            |              |      $658 |   | 6.1% |   |
| Write-off of deferred  financing costs included in interest expense |       | $       — |       |            | $  1,759 |              |                               |   |   |   |

 

The decrease in interestexpense was primarily due to the first half of fiscal 2009 including a $1.8million write-off of unamortized deferred financing costs and discount relatedto the 8 7/8% Senior Unsecured Notes, which were satisfied and discharged in June 2009,as well as a lower level of borrowings in the first half of fiscal 2010. Theseitems were partially offset by the higher interest rate associated with our 113/8% Senior Secured Notes.

 

***Income taxes***

 
| ** **         | ** ** | **First Half**  | ** ** | ** **      | ** ** | ** **        | ** ** |
|--------------------|------------|-----------------|------------|-----------------|------------|-------------------|------------|
| ** **         | ** ** | **Fiscal 2010** | ** ** | **Fiscal 2009** | ** ** | **$ Change** | ** ** | **% Change** | ** ** |
| Income taxes       |       | $6,919          |       | $2,508          |       | $4,411            |       | 175.9% |   |
| Effective tax rate |       | 26.0%           |       | 28.1%           |       |              |       |   |   |

 

Therates for both periods reflect the favorable impact of permanent differenceswhich do not necessarily fluctuate with earnings as well as the impact ofcertain discrete items, including the decrease in certain income taxcontingency reserves upon the expiration of the corresponding statute oflimitations.

 

***Net earnings***

 
| ** **                                         | ** ** | **First Half**                | ** ** | ** **                    | ** ** | ** **                    | ** ** |
|----------------------------------------------------|------------|-------------------------------|------------|-------------------------------|------------|-------------------------------|------------|
| ** **                                         | ** ** | **Fiscal 2010**               | ** ** | **Fiscal 2009**               | ** ** | **Change**                    | ** ** | **% Change** | ** ** |
| Net earnings                                       |       | $19,716                       |       | $  6,431            |       | $13,285                       |       | 206.6% |   |
| Diluted net earnings per common share              |       | $    1.19 |       | $    0.40 |       | $    0.79 |       | 197.5% |   |
| Weighted average common shares outstanding-diluted |       | 16,527                        |       | 16,083                        |       | 444                           |       | 2.8% |   |

 

Theincrease in diluted net earnings per common share was primarily due to (1) thechange in consolidated sales mix with a greater proportion of net sales beingsales of Tommy Bahama products and a lower proportion of net sales beingrelated to exited businesses, (2) the impact of LIFO accounting in eachperiod, (3) higher royalty income, (4) the $1.4 million ofrestructuring charges incurred in the second quarter of fiscal 2009 related toBen Sherman’s exit from and subsequent licensing of its footwear and kids’businesses and other streamlining initiatives and (5) the $1.8 millionwrite-off of unamortized deferred financing costs in the second quarter offiscal 2009 related to the satisfaction and 

 

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dischargeof the remaining 8 7/8% Senior Unsecured Notes, which was included in interestexpense. These items were partially offset by increased SG&A primarily dueto higher incentive compensation costs.

 

**FINANCIAL CONDITION,LIQUIDITY AND 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 (each asdescribed below), subject to their terms, each of which is described below. Wemay seek to finance future capital investment programs through various methods,including, but not limited to, cash flow from operations, borrowings under ourcurrent or additional credit 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)       | ** ** | **July 31,  2010** | ** ** | **January 30,  2010** | ** **          | **August 1,  2009** | ** ** | **January 31,  2009** | ** ** |
|-----------------------------|------------|-------------------------|------------|----------------------------|---------------------|--------------------------|------------|----------------------------|------------|
| Current assets              |       | $209,980                |       |                       | $184,303            |                     |       | $194,276                   |       |   | $222,477 |   |   |
| Current liabilities         |       | 99,144                  |       |                       | 95,862              |                     |       | 107,376                    |       |   | 106,833 |   |   |
| Working capital             |       | $110,836                |       |                       | $  88,441 |                     |       | $  86,900        |       |   | $115,644 |   |   |
| Working capital ratio       |       | 2.12                    |       |                       | 1.92                |                     |       | 1.81                       |       |   | 2.08 |   |   |
| Debt to total capital ratio |       | 55                      | %          |                       | 58                  | %                        |       | 65                         | %          |   | 70 | % |   |

 

Ourworking capital ratio is calculated by dividing total current assets by totalcurrent liabilities. Current assets increased and current liabilities decreasedfrom August 1, 2009 to July 31, 2010, as described below, resultingin the higher working capital ratio. For the ratio of debt to total capital,debt is defined as short-term and long-term debt, and total capital is definedas debt plus shareholders’ equity. The change in the debt to total capitalratio from August 1, 2009 to July 31, 2010 was primarily a result ofthe $32.8 million reduction in debt since August 1, 2009 due to cash flowsfrom operations, as well as increased shareholders’ equity due to our netearnings subsequent to August 1, 2009. Our debt levels and ratio of debtto total capital in future periods may not be comparable to historical amountsas we continue to assess and may periodically make changes to our capitalstructure. Changes in our capital structure, if any, will depend on prevailingmarket conditions, our liquidity requirements, contractual restrictions andother factors.

 

***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 August 1, 2009 to July 31,2010.

 

*Current Assets:*

 
| ** **                | ** ** | **July 31, 2010** | ** ** | **January 30, 2010**      | ** ** | **August 1, 2009**  | ** ** | **January 31, 2009**      | ** ** |
|---------------------------|------------|------------------------|------------|--------------------------------|------------|--------------------------|------------|--------------------------------|------------|
| Cash and cash equivalents |       | $  28,171    |       | $    8,288 |       | $   5,461 |       | $    3,290 |       |
| Receivables, net          |       | 74,611                 |       | 74,398                         |       | 78,467                   |       | 78,567                         |       |
| Inventories, net          |       | 76,330                 |       | 77,029                         |       | 86,828                   |       | 119,616                        |       |
| Prepaid expenses, net     |       | 15,484                 |       | 10,713                         |       | 13,312                   |       | 10,845                         |       |
| Deferred tax assets       |       | 15,384                 |       | 13,875                         |       | 10,208                   |       | 10,159                         |       |
| Total current assets      |       | $209,980               |       | $184,303                       |       | $194,276                 |       | $222,477                       |       |

 

Cashand cash equivalents increased at July 31, 2010 primarily due to ourpositive cash flows from operating activities subsequent to August 1,2009. Receivables, net decreased due to the lower wholesale sales in the lasttwo months of the second quarter of fiscal 2010 compared to the last two monthsof the second quarter of fiscal 2009. Inventories, net decreased primarily due to the significant decline atBen Sherman resulting from our exit from and subsequent licensing of ourfootwear and kids’ businesses and our exit from the Ben Sherman women’soperations. Prepaid expenses have increased from August 1, 2009 primarilyas a result of the timing of payment of income taxes and certain other operatingexpenses. The increase in deferred tax assets was primarily related to the taximpact associated with inventory levels at July 31, 2010 and August 1,2009.

 

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*Non-current Assets:*

 
| ** **                         | ** ** | **July 31, 2010** | ** ** | **January 30, 2010** | ** ** | **August 1, 2009** | ** ** | **January 31, 2009** | ** ** |
|------------------------------------|------------|------------------------|------------|---------------------------|------------|-------------------------|------------|---------------------------|------------|
| Property, plant and equipment, net |       | $  73,919    |       | $  79,540       |       | $  86,365     |       | $  89,026       |       |
| Intangible assets, net             |       | 136,233                |       | 137,490                   |       | 138,880                 |       | 135,999                   |       |
| Other non-current assets, net      |       | 22,623                 |       | 23,841                    |       | 22,932                  |       | 20,180                    |       |
| Total non-current assets, net      |       | $232,775               |       | $240,871                  |       | $248,177                |       | $245,205                  |       |

 

Thedecrease in property, plant and equipment, net was primarily due todepreciation expense exceeding capital expenditures during the twelve monthssubsequent to August 31, 2009, as we reduced our investments in new retailstores during the challenging economic environment. The decrease in intangibleassets, net is primarily due to the amortization of intangible assetssubsequent to August 1, 2009 and the decrease in the period-end exchangerate for the British pound sterling versus the U.S. dollar from August 1,2009 to July 31, 2010.

 

*Liabilities:*

 
| ** **                              | ** ** | **July 31, 2010** | ** ** | **January 30, 2010** | ** ** | **August 1, 2009** | ** ** | **January 31, 2009** | ** ** |
|-----------------------------------------|------------|------------------------|------------|---------------------------|------------|-------------------------|------------|---------------------------|------------|
| Current liabilities                     |       | $  99,144    |       | $  95,862       |       | $107,376                |       | $106,833                  |       |
| Long-term debt, less current maturities |       | 146,736                |       | 146,408                   |       | 160,357                 |       | 194,187                   |       |
| Other non-current liabilities           |       | 46,965                 |       | 50,066                    |       | 46,804                  |       | 47,244                    |       |
| Non-current deferred income taxes       |       | 28,143                 |       | 28,421                    |       | 30,013                  |       | 32,111                    |       |
| Total liabilities                       |       | $320,988               |       | $320,757                  |       | $344,550                |       | $380,375                  |       |

 

Thedecrease in current liabilities was primarily due to the $19.2 millionreduction in the current maturities of long-term debt from the prior year. Thisdecrease was partially offset by an increase in accrued compensation and tradeaccounts payable and other accrued expenses compared to August 1, 2009.The decrease in long-term debt less current maturities and current maturitiesof long-term debt are primarily due to cash flow from operating activities forthe twelve months preceding July 31, 2010. The cash flow from operatingactivities was a result of net earnings and improved working capital positions.The change in non-current deferred income taxes primarily resulted from(1) changes in book/tax differences for depreciation and deferredcompensation, (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 rates.

 

***Statement of Cash Flows***

 

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

 
| ** **                                | ** ** | **First Half**  | ** ** |
|-------------------------------------------|------------|-----------------|------------|
| ** **                                | ** ** | **Fiscal 2010** | ** ** | **Fiscal 2009** | ** ** |
| Net cash provided by operating activities |       | $25,536    |       | $ 35,106  |   |
| Net cash used in investing activities     |       | (3,292)         |       | (5,840) |   |
| Net cash used in financing activities     |       | (2,236)         |       | (27,656) |   |
| Net change in cash and cash equivalents   |       | $20,008    |       | $   1,610  |   |

 

*Operating Activities:*

 

Theoperating cash flows for the first half of fiscal 2010 and the first half offiscal 2009 were primarily the result of net earnings for the relevant period,adjusted for non-cash activities such as depreciation, amortization and stockcompensation expense as well as changes in our working capital accounts. In thefirst half of fiscal 2010, the significant changes in working capital wereincreases in prepaid expenses and decreases in other non-current liabilities,whereas the first half of fiscal 2009 reflected a significant reduction ininventories, partially offset by a reduction in current liabilities.

 

*Investing Activities:*

 

Duringthe first half of fiscal 2010 and the first half of fiscal 2009, investingactivities used $3.3 million and $5.8 million, respectively, of cash.In each of the applicable periods, these investing activities primarilyconsisted of 

 

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capitalexpenditures related to new retail stores and costs associated with investmentin certain technology initiatives, including the continuing implementation ofour new integrated financial systems.

 

*Financing Activities:*

 

Duringthe first half of fiscal 2010 and fiscal 2009, financing activities used$2.2 million and $27.7 million, respectively, of cash. In the first halfof fiscal 2010, the primary use of cash for financing purposes was the paymentof dividends, partially offset by short-term borrowings under our U.K.Revolving Credit Agreement. In the first half of fiscal 2009, cash flow fromoperations, borrowings under our U.S. Revolving Credit Agreement and theproceeds from the issuance of $150.0 million aggregate principal amount of our11 3/8% Senior Secured Notes were used to repurchase $166.8 million aggregateprincipal amount of our 8 7/8% Senior Unsecured Notes, to pay $2.9 million ofdividends and to pay $4.9 million of financing costs associated with theissuance of our 11 3/8% Senior Secured Notes in June 2009.

 

***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 July 31, 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, 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 interest in those assets in which the holders of the 113/8% Senior Secured Notes  have a first priority interest |   | $       |  — |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------|--------------|--------|
| £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 July 31, 2010), requires interest  payments monthly with principal payable on demand and is collateralized by  substantially all of the United Kingdom assets of Ben Sherman                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | 1,195   |         |
| 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 interest in those assets in which the  lenders under the U.S. Revolving Credit Agreement have a first priority  interest, and are guaranteed by certain of our domestic subsidiaries                                                                                                                                                                                                                                                                                          |   | 150,000 |         |
| Unamortized  discount                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | (3,264  | )            |
| Total  debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | $       | 147,931      |   |
| Short-term  debt and current maturities of long-term debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | (1,195  | )            |
| Long-term  debt, less current maturities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | $       | 146,736      |   |

 

Ourcredit facilities are used to finance trade letters of credit, as well toprovide funding for other operating activities, capital expenditures andacquisitions. As of July 31, 2010, approximately $38.3 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 July 31, 2010, we had approximately$120.1 million and $10.5 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 in the U.S.Revolving Credit Agreement, U.K. Revolving Credit Agreement and the indenturefor 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 

 

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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 July 31,2010, 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 during fiscal 2010 whichgenerally consist of working capital needs, capital expenditures and interestpayments on our debt, primarily from cash on hand, positive cash flow fromoperations and borrowings under our lines of credit, if necessary. Our need forworking capital 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 July 31, 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, including $3.4 million incurred during the firsthalf of fiscal 2010, are expected to be approximately $13 million. These expendituresare expected to consist primarily of additional retail stores and costsassociated with investment in certain technology initiatives, including thecontinuing implementation of new integrated financial systems.

 

***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 an ongoingbasis, 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 half 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. 

 

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Generally,our wholesale products are sold prior to each of the retail selling seasons,including spring, summer, fall and holiday. As the timing of product shipmentsand other events affecting the retail business may vary, we do not believe thatresults for any particular quarter are necessarily indicative of results forthe full fiscal year. The following table presents the percentage of net salesand operating income by quarter (unaudited) for fiscal 2009.

 
| ** **       | ** ** | **First  Quarter** | ** ** | **Second  Quarter** | ** ** | **Third  Quarter** | ** ** | **Fourth  Quarter** | ** ** |
|------------------|------------|--------------------|------------|---------------------|------------|--------------------|------------|---------------------|------------|
| Net sales        |       | 27%                |       | 24%                 |       | 25%                |       | 24%                 |       |
| Operating income |       | 33%                |       | 15%                 |       | 27%                |       | 25%                 |       |

 

**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 half 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 such informationis accumulated and communicated to our management, including our PrincipalExecutive Officer and Principal Financial Officer, as appropriate, to allowtimely decisions regarding required disclosure.

 

Duringthe second quarter of fiscal 2010, we converted our accounts receivable systemin our United States operations, to a new integrated financial system. Afterthis conversion our accounts receivable, general ledger, payables and fixedassets systems for our United States operations are all on one integratedfinancial system. As a result of this conversion, certain controls weremodified, as necessary, to supplement and complement our existing internalcontrols over financial reporting. We anticipate converting certain foreignregions and other of our financial systems to the new integrated financialsystem in future periods. The conversion of certain of our financial systems toan integrated financial system was undertaken to provide a more integratedfinancial system across our operating groups, more timely management reporting,efficiencies in our operations and enhanced customer service, and not inresponse to any actual or perceived deficiencies in our internal control overfinancial reporting.

 

Exceptfor the conversion of our accounts receivable system to a new integratedfinancial system as discussed above, there were no changes in our internalcontrol over financial reporting (as such term is defined in Rule 13a-15(f) and15d-15(f) under the Securities Exchange Act) that occurred during the secondquarter of fiscal 2010 that have materially affected, or are reasonably likelyto materially affect, our internal 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**

 

We believe that an investorshould carefully consider the factors discussed in Part I, Item 1A.Risk Factors in our Annual Report on Form 10-K for fiscal 2009, which arenot the only risks facing our company. We do not believe there have been anymaterial changes to the risk factors described in our Annual Report on Form 10-Kfor fiscal 2009. If any of the risks described in such Annual Report, or otherrisks or uncertainties not currently known to us or that we currently deem tobe immaterial, actually occur, our business, financial condition or operatingresults could suffer.

 

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

 

(a)          During thesecond 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 secondquarter 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 July 31, 2010, no shares of our common stock nor any of our 11 3/8%Senior Secured Notes had been repurchased pursuant to this authorization, whichhas no automatic expiration.

 

**ITEM 3.  DEFAULTS UPON SENIOR SECURITIES**

 

None

 

**ITEM 4. RESERVED**

 

None

 

**ITEM 5.  OTHER INFORMATION**

 

None

 

**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.

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.

 
| September 2,  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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