GOSHA Oshkosh Bgosh Cla (MM)

OshKosh B'Gosh, Inc. Reports First Quarter 2004 Results; Company Reaffirms Fiscal 2004 Guidance OSHKOSH, Wis., April 21 /PRNewswire-FirstCall/ -- OshKosh B'Gosh, Inc. , today reported financial results for its first quarter ended April 3, 2004. (Logo: http://www.newscom.com/cgi-bin/prnh/20030409/GOSHALOGO ) First quarter net sales were $79.5 million versus $99.3 million last year. The first quarter of fiscal 2004 contained 13 weeks compared to 14 weeks in fiscal 2003, which accounts for a portion of the year-over-year sales decline. Softer Spring 2004 bookings, including the impact of the previously announced Kids 'R' Us store closings, resulted in wholesale net sales of $32.1 million compared to $50.5 million in the year-ago period. The Company's first quarter retail comparable store sales (for the comparable 13 week period) increased 1.1%. Retail net sales declined 2.9% to $46.5 million. During the quarter, the Company opened two new Family Lifestyle stores as planned, closed five outlet stores, and ended the quarter with 162 total retail locations. Gross margin was 38.7% compared to 41.0% for the first quarter of 2003, primarily due to increases in promotional support to wholesale customers combined with an aggressive promotional pricing policy in Company-operated stores undertaken to liquidate excess inventory. Selling, general and administrative expenses decreased to $36.6 million compared to $40.8 million last year due in part to implementation of the Company's initiatives, announced in December, to streamline its operations and workforce in light of the soft wholesale market. Net loss was $1.2 million, or $0.10 per diluted share. Excluding the gain on the sale of the vacant Oshkosh, Wisconsin distribution facility that was sold during the first quarter of 2004, net loss totaled $1.9 million, or $0.16 per diluted share. This compares to net income of $1.3 million, or $0.11 per diluted share, last year. Douglas W. Hyde, Chairman and Chief Executive Officer, said, "Despite the difficult first quarter results, we believe we have now stabilized the core businesses and can focus on executing our strategic initiatives to revitalize the Company. As we've discussed before, our plan includes reinvigorating the OshKosh brand, improving the core wholesale and outlet store businesses and implementing our Family Lifestyle store strategy, which is our primary growth vehicle. Mr. Hyde concluded, "While the year ahead will be one of transition, our first quarter results were generally in line with our internal targets and our strategic initiatives are progressing as planned. Additionally, we are confident that our strong balance sheet, with no long-term debt, and industry-leading brand recognition provide us a very solid platform from which to execute our long-term plan. As such, we reaffirm our previously announced guidance for fiscal 2004 of net sales in the range of $390 million to $410 million, with retail sales accounting for approximately 65% of the total, and earnings per share between $0.75 and $0.95." OshKosh B'Gosh will host a webcast of its first quarter results conference call today at 10:00 a.m., Eastern Time. Investors and the media are invited to listen to the call at the Company's web site, http://www.oshkoshbgosh.com/. An archive of the webcast will be available on the same site. OshKosh B'Gosh, Inc. is best known as a premier marketer of quality children's apparel and accessories, available in over 50 countries around the world. The Company is headquartered in Oshkosh, Wisconsin. Statements contained herein that relate to the Company's future performance including, without limitation, statements with respect to the Company's anticipated financial position, results of operations or level of businesses for 2004 or any other future period, are "forward-looking statements" within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements, which are generally indicated by words or phrases such as "plan," "estimate," "guidance," "project," "anticipate," "reaffirm," "the Company believes," "management expects," "currently anticipates," and similar phrases are based on current expectations only and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, projected, or estimated. Among the factors that could cause actual results to materially differ include the level of consumer spending for apparel, particularly in the children's wear segment; risks associated with competition in the market place, including the financial condition of and consolidations, restructurings and other ownership changes in, the apparel and related products industry and the retail industry, the introduction of new products or pricing changes by the Company's competitors, price deflation in the apparel industry, and the Company's ability to remain competitive with respect to product, service and value; risks associated with the Company's dependence on sales to a limited number of large department and specialty store customers, including risks related to customer requirements for vendor margin support, as well as risks related to extending credit to large customers; risks associated with possible deterioration in the strength of the retail industry, including, but not limited to, business conditions and the economy, natural disasters, and the unanticipated loss of a major customer; risks related to the failure of Company suppliers to timely deliver needed raw materials, risks associated with importing its products using a global transportation matrix and the Company's ability to correctly balance the level of its commitments with actual orders; risks associated with terrorist activities as well as risks associated with foreign operations including global disease management; risks related to the Company's ability to defend and protect its trademarks and other proprietary rights and other risks related to managing intellectual property issues. In addition, the inability to ship Company products within agreed time frames due to unanticipated manufacturing, distribution system or freight carrier delays or the failure of Company contractors to deliver products within scheduled time frames are risk factors in ongoing business. As a part of the Company's product sourcing strategy, it routinely contracts for apparel products produced by contractors in Asia, Africa, Mexico and Central America. If financial, political or other related difficulties were to adversely impact the Company's contractors in these regions, it could disrupt the supply of product contracted for by the Company. The forward-looking statements included herein are only made as of the date of this press release. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. OSHKOSH B'GOSH, INC. AND SUBSIDIARIES Summary of Net Sales (In millions) Net Sales (in millions) Domestic Wholesale Retail Other Total Three months ended: April 3, 2004 $32.1 $46.5 $0.9 $79.5 April 5, 2003 50.5 47.9 0.9 99.3 Increase (decrease) $(18.4) $(1.4) $-- $(19.8) Percent increase (decrease) (36.4%) (2.9%) -- (19.9%) OSHKOSH B'GOSH, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands) April 3, 2004 January 3, 2004* (unaudited) ASSETS Current assets Cash and cash equivalents $17,411 $23,931 Accounts receivable, net 14,167 16,669 Inventories 62,205 61,358 Prepaid expenses and other current assets 8,791 8,316 Deferred income taxes 9,100 10,100 Total current assets 111,674 120,374 Property, plant and equipment 72,523 72,416 Less accumulated depreciation and amortization 50,067 48,720 Net property, plant and equipment 22,456 23,696 Non-current deferred income taxes 2,550 2,000 Other assets 5,280 5,855 Total assets $141,960 $151,925 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable $12,991 $16,961 Accrued liabilities 30,140 33,552 Total current liabilities 43,131 50,513 Employee benefit plan liabilities 13,320 13,647 Shareholders' equity Preferred stock -- -- Common stock: Class A 96 94 Class B 22 22 Additional paid-in capital 3,183 -- Retained earnings 85,193 87,649 Unearned compensation under restricted stock plan (2,985) -- Total shareholders' equity 85,509 87,765 Total liabilities and shareholders' equity $141,960 $151,925 *Condensed from audited financial statements. OSHKOSH B'GOSH, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations (In thousands, except per share amounts) (Unaudited) Three Month Period Ended April 3, 2004 April 5, 2003 Net Sales $79,507 $99,287 Cost of products sold 48,709 58,583 Gross profit 30,798 40,704 Selling, general and administrative expenses 36,594 40,818 Royalty income, net (2,863) (2,213) (Gain) loss on sale of assets (1,037) 39 Operating income (loss) (1,896) 2,060 Other income (expense): Interest expense (49) (74) Interest income 67 42 Miscellaneous 9 6 Other income (expense) -- net 27 (26) Income (loss) before income taxes (1,869) 2,034 Income taxes (benefit) (673) 753 Net income (loss) $(1,196) $1,281 Net income (loss) per common share Basic $(0.10) $0.11 Diluted $(0.10) $0.11 Weighted average common shares outstanding Basic 11,693 11,915 Diluted (including share equivalents) 11,693 12,037 Cash dividends per common share Class A $0.110 $0.070 Class B $0.095 $0.060 OSHKOSH B'GOSH, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) Three Month Period Ended April 3, 2004 April 5, 2003 Cash flows from operating activities Net income (loss) $(1,196) $1,281 Depreciation and amortization 1,575 1,676 Deferred income taxes 450 580 Income tax benefit from stock options exercised 2 173 Items in net income not affecting cash and cash equivalents (1,186) (33) Changes in current assets 1,180 (10,455) Changes in current liabilities (7,382) (6,426) Net cash used in operating activities (6,557) (13,204) Cash flows from investing activities Additions to property, plant and equipment (472) (447) Proceeds from disposal of assets 1,869 31 Changes in other assets (120) (278) Net cash provided by (used in) investing activities 1,277 (694) Cash flows from financing activities Dividends paid (1,259) (813) Net proceeds from issuance of common shares 19 10 Repurchase of common shares -- (2,584) Net cash used in financing activities (1,240) (3,387) Net decrease in cash and cash equivalents (6,520) (17,285) Cash and cash equivalents at beginning of period 23,931 36,198 Cash and cash equivalents at end of period $17,411 $18,913 http://www.newscom.com/cgi-bin/prnh/20030409/GOSHALOGO http://photoarchive.ap.org/ DATASOURCE: OshKosh B'Gosh, Inc. CONTACT: David L. Omachinski, President and Chief Operating Officer, +1-920-232-4140, or Michael L. Heider, Vice President Finance, Treasurer and Chief Financial Officer, +1-920-232-4418, both of OshKosh B'Gosh, Inc.; or Investor Relations - Cara O'Brien or Melissa Myron, both of Financial Dynamics, +1-212-850-5600, for OshKosh B'Gosh, Inc. Web site: http://www.oshkoshbgosh.com/

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