UNITED STATES SECURITIES AND EXCHANGE COMMISSION

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 SEPTEMBER 1, 2006

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to                    

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 principal executive offices)

(404) 659-2424
(Registrant’s telephone number, including area code):

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

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

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ     Accelerated filer o     Non-accelerated filer o

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

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

Title of each class		Number of shares outstanding as of September 29, 2006
Common Stock, $1 par value		17,728,842

 

 

OXFORD INDUSTRIES, INC.
INDEX TO FORM 10-Q
For quarter ended September 1, 2006

		Page
PART I. FINANCIAL INFORMATION
Item 1. Unaudited Condensed Consolidated Financial Statements
Condensed Consolidated Statements of Earnings (Unaudited)			4
Condensed Consolidated Balance Sheets (Unaudited)			5
Condensed Consolidated Statements of Cash Flows (Unaudited)			6
Notes to Unaudited Condensed Consolidated Financial Statements			7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			17
Item 3. Quantitative and Qualitative Disclosures About Market Risk			24
Item 4. Controls and Procedures			25
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			26
Item 1A. Risk Factors			26
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			26
Item 3. Defaults Upon Senior Securities			26
Item 4. Submission of Matters to a Vote of Security Holders			26
Item 5. Other Information			26
Item 6. Exhibits			27
Signatures			27
EX-10.1 FIRST AMENDMENT TO DEFERRED COMPENSATION PLAN
EX-31.1 SECTION 302 CERTIFICATION OF PEO
EX-31.2 SECTION 302 CERTIFICATION OF PFO
EX-32 SECTION 906 CERTIFICATION OF PEO/PFO

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS

Our U.S. Securities and Exchange Commission filings and public announcements often include forward-looking statements about future events. Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will” and similar expressions identify forward-looking statements, which generally are not historical in nature. We intend for all such forward-looking statements contained herein, the entire contents of our website, and all subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf, to be covered by the safe harbor provisions for forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (which Sections were adopted as part of the Private Securities Litigation Reform Act of 1995). Important assumptions relating to these forward-looking statements include, among others, assumptions regarding demand for our products, expected pricing levels, raw material costs, the timing and cost of planned capital expenditures, expected outcomes of pending litigation and regulatory actions, competitive conditions, general economic conditions and expected synergies in connection with acquisitions and joint ventures. Forward-looking statements reflect our current expectations, based on currently available information, and are not guarantees of performance. Although we believe that the expectations reflected in such forward-looking statements are reasonable, these expectations could prove inaccurate as such statements involve risks and uncertainties, many of which are beyond our ability to control or predict. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. Important factors relating to these risks and uncertainties include, but are not limited to, those described in Part I, Item 1A. Risk Factors contained in our fiscal 2006 Form 10-K, as updated by Part II, Item 1A. Risk Factors in this report, and those described from time to time in our future reports filed with the U.S. Securities and Exchange Commission.

We caution that one should not place undue reliance on forward-looking statements, which are current only as of the date this report is filed with the U.S. Securities and Exchange Commission. We disclaim any intention, obligation or duty to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

DEFINITIONS

As used in this report, unless the context requires otherwise, “our,” “us” and “we” mean Oxford Industries, Inc. and its consolidated subsidiaries. Also, the terms “FASB,” “SFAS” and “SEC” mean the Financial Accounting Standards Board, Statement of Financial Accounting Standards and the U.S. Securities and Exchange Commission, respectively. Additionally, the terms listed below reflect the respective period noted:

Fiscal 2007		52 weeks ending June 1, 2007
Fiscal 2006		52 weeks ended June 2, 2006
Fourth quarter fiscal 2007		13 weeks ending June 1, 2007
Third quarter fiscal 2007		13 weeks ending March 2, 2007
Second quarter fiscal 2007		13 weeks ending December 1, 2006
First quarter fiscal 2007		13 weeks ended September 1, 2006
Fourth quarter fiscal 2006		13 weeks ended June 2, 2006
Third quarter fiscal 2006		13 weeks ended March 3, 2006
Second quarter fiscal 2006		13 weeks ended December 2, 2005
First quarter fiscal 2006		13 weeks ended September 2, 2005

PART I. FINANCIAL INFORMATION

ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

OXFORD INDUSTRIES, INC.

		First Quarter				First Quarter
		Fiscal 2007				Fiscal 2006
Net sales		$	284,078			$	268,475
Cost of goods sold			175,967				162,760
Gross profit			108,111				105,715
Selling, general and administrative expenses			86,446				82,788
Amortization of intangible assets			1,547				1,853
			87,993				84,641
Royalties and other operating income			2,892				3,261
Operating income			23,010				24,335
Interest expense, net			5,492				5,833
Earnings before income taxes			17,518				18,502
Income taxes			6,363				6,682
Earnings from continuing operations			11,155				11,820
Earnings (loss) from discontinued operations, net of taxes			(205	)			2,063
Net earnings		$	10,950			$	13,883
Earnings from continuing operations per common share:
Basic		$	0.63			$	0.68
Diluted		$	0.63			$	0.67
Earnings (loss) from discontinued operations per common share:
Basic		$	(0.01	)		$	0.12
Diluted		$	(0.01	)		$	0.12
Net earnings per common share:
Basic		$	0.62			$	0.80
Diluted		$	0.62			$	0.79
Weighted average common shares outstanding:
Basic			17,594				17,391
Dilutive impact of stock options and unvested restricted shares			184				275
Diluted			17,778				17,666
Dividends per common share		$	0.15			$	0.135

See accompanying notes.

OXFORD INDUSTRIES, INC.

		September 1,				June 2,				September 2,
		2006				2006				2005
ASSETS
Current Assets:
Cash and cash equivalents		$	10,742			$	10,479			$	7,024
Receivables, net			155,602				142,297				151,277
Inventories			139,444				123,594				149,835
Prepaid expenses			25,847				21,996				24,066
Current assets related to discontinued operations, net			18,132				59,215				67,947
Total current assets			349,767				357,581				400,149
Property, plant and equipment, net			73,527				73,663				64,057
Goodwill, net			200,228				199,232				186,759
Intangible assets, net			234,390				234,453				234,283
Other non-current assets, net			27,896				20,666				22,785
Non-current assets related to discontinued operations, net			—				—				4,842
Total Assets		$	885,808			$	885,595			$	912,875
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Trade accounts payable and other accrued expenses		$	102,428			$	105,038			$	101,150
Accrued compensation			16,367				26,754				20,139
Additional acquisition cost payable			—				11,897				20,433
Dividends payable			—				2,646				2,301
Income taxes payable			8,468				3,138				10,103
Short-term debt and current maturities of long-term debt			122				130				4,614
Current liabilities related to discontinued operations			11,488				30,716				16,075
Total current liabilities			138,873				180,319				174,815
Long-term debt, less current maturities			226,864				200,023				315,911
Other non-current liabilities			32,433				29,979				25,737
Deferred income taxes			78,404				76,573				76,494
Non-current liabilities related to discontinued operations			—				—				47
Commitments and contingencies
Shareholders’ Equity:
Preferred stock, $1.00 par value; 30,000 authorized and none issued and outstanding at September 1, 2006; June 2, 2006; and September 2, 2005			—				—				—
Common stock, $1.00 par value; 60,000 authorized and 17,723 issued and outstanding at September 1, 2006; 17,646 issued and outstanding at June 2, 2006; and 17,049 issued and outstanding at September 2, 2005			17,723				17,646				17,049
Additional paid-in capital			76,461				74,812				48,931
Retained earnings			309,261				300,973				252,281
Accumulated other comprehensive income			5,789				5,270				1,610
Total shareholders’ equity			409,234				398,701				319,871
Total Liabilities and Shareholders’ Equity		$	885,808			$	885,595			$	912,875

See accompanying notes.

OXFORD INDUSTRIES, INC.

		First Quarter				First Quarter
		Fiscal 2007				Fiscal 2006
Cash Flows From Operating Activities:
Earnings from continuing operations		$	11,155			$	11,820
Adjustments to reconcile earnings from continuing operations to net cash provided by (used in) operating activities:
Depreciation			3,747				3,501
Amortization of intangible assets			1,547				1,853
Amortization of deferred financing costs and bond discount			617				616
Stock compensation expense			840				591
Loss (gain) on sale of property, plant and equipment			18				7
Equity loss (income) from unconsolidated entities			(97	)			(164	)
Deferred income taxes			(47	)			(1,820	)
Changes in working capital:
Receivables			(12,973	)			(5,100	)
Inventories			(15,614	)			(3,759	)
Prepaid expenses			(4,132	)			(2,819	)
Current liabilities			(7,975	)			(33,688	)
Other non-current assets			1,356				(1,327	)
Other non-current liabilities			2,440				2,169
Net cash provided by (used in) operating activities			(19,118	)			(28,120	)
Cash Flows From Investing Activities:
Acquisitions, net of cash acquired			(12,111	)			(6,569	)
Investment in unconsolidated entity			(9,063	)			—
Distribution from unconsolidated entity			—				1,856
Purchases of property, plant and equipment			(3,556	)			(3,448	)
Proceeds from sale of property, plant and equipment			—				6
Net cash provided by (used in) investing activities			(24,730	)			(8,155	)
Cash Flows From Financing Activities:
Repayment of financing arrangements			(27,048	)			(73,971	)
Proceeds from financing arrangements			53,835				101,920
Proceeds from issuance of common stock			886				2,586
Dividends on common stock			(5,304	)			(2,278	)
Net cash provided by (used in) financing activities			22,369				28,257
Cash Flows From Discontinued Operations:
Net operating cash flows provided by discontinued operations			21,650				8,677
Net investing cash flows provided by (used in) discontinued operations			—				(25	)
Net cash provided by (used in) discontinued operations			21,650				8,652
Net change in cash and cash equivalents			171				634
Effect of foreign currency translation on cash and cash equivalents			92				(109	)
Cash and cash equivalents at the beginning of period			10,479				6,499
Cash and cash equivalents at the end of period		$	10,742			$	7,024
Supplemental disclosure of non-cash investing and financing activities:
Accrual for additional acquisition cost		$	—			$	20,465
Supplemental disclosure of cash flow information:
Cash paid for interest, net		$	2,760			$	2,574
Cash paid for income taxes		$	6,959			$	11,466

See accompanying notes.

OXFORD INDUSTRIES, INC.

1.		Basis of Presentation: The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial reporting and the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States. We believe our condensed consolidated financial statements reflect all normal, recurring adjustments that are necessary for a fair presentation of our financial position and results of operations for the periods presented. Results of operations for the interim periods presented are not necessarily indicative of results to be expected for the year primarily due to the impact of seasonality on our business. The accounting policies applied during the interim periods presented are consistent with the significant and critical accounting policies as described in our fiscal 2006 Form 10-K. The information included in this Form 10-Q should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and notes thereto included in our fiscal 2006 Form 10-K.
		As disclosed in our fiscal 2006 Form 10-K, we sold substantially all of the assets of our Womenswear Group on June 2, 2006. Therefore, the results of operations of the Womenswear Group have been reported as discontinued operations in our consolidated statements of earnings. The assets and liabilities related to the Womenswear Group for all periods presented have been reclassified to current assets, non-current assets, current liabilities and non-current liabilities related to discontinued operations, as applicable.
2.		Inventories: The components of inventories as of the dates specified are summarized as follows (in thousands):

		September 1, 2006				June 2, 2006				September 2, 2005
Finished goods		$	110,744			$	99,576			$	125,995
Work in process			8,995				6,388				8,914
Fabric, trim and supplies			19,705				17,630				14,926
Total		$	139,444			$	123,594			$	149,835

3.

Debt: The following table details our debt as of the dates specified (in thousands):

		September 1,				June 2,				September 2,
		2006				2006				2005
$280 million U.S. Secured Revolving Credit Facility (“U.S. Revolver”), which accrues interest (8.25% at September 1, 2006), unused line fees and letter of credit fees based upon a pricing grid which is tied to certain debt ratios, requires interest payments monthly with principal due at maturity (July 2009), and is collateralized by substantially all the assets of the company and our consolidated domestic subsidiaries		$	27,700			$	900			$	116,900
£12 million Senior Secured Revolving Credit Facility (“U.K. Revolver”), which accrues interest at the bank’s base rate plus 1.0% (5.75% at September 1, 2006), requires interest payments monthly with principal payable on demand or at maturity (July 2007), and is collateralized by substantially all the United Kingdom assets of Ben Sherman			101				102				1,192
$200 million Senior Unsecured Notes (“Senior Unsecured Notes”), which accrue interest at 8.875% (effective interest rate of 9.0%) and require interest payments semi-annually on June 1 and December 1 of each year, require payment of principal at maturity (June 2011), are subject to certain prepayment penalties and are guaranteed by our consolidated domestic subsidiaries			200,000				200,000				200,000
Seller Notes, which accrued interest at LIBOR plus 1.2%, required interest payments quarterly with principal payable on demand and were repaid during February, May and November 2005			—				—				3,378
Other debt, including capital lease obligations with varying terms and conditions, collateralized by the respective assets			24				35				73
Total debt			227,825				201,037				321,543
Unamortized discount on Senior Unsecured Notes			(839	)			(884	)			(1,018	)
Short-term debt and current maturities of long-term debt			(122	)			(130	)			(4,614	)
Long-term debt, less current maturities		$	226,864			$	200,023			$	315,911

		The U.S. Revolver, the U.K. Revolver and the Senior Unsecured Notes each include certain debt covenant restrictions that require us or our subsidiaries to maintain certain financial ratios that we believe are customary for similar facilities. The U.S. Revolver also includes limitations on certain restricted payments such as earn-outs, payment of dividends and prepayment of debt. As of September 1, 2006, we were compliant with all financial covenants and restricted payment clauses related to our debt agreements.
		Our U.S. Revolver and U.K. Revolver are used to finance trade letters of credit and standby letters of credit as well as provide funding for other operating activities and acquisitions, if any. As of September 1, 2006, approximately $76.6 million of trade letters of credit and other limitations on availability, were outstanding against our U.S. Revolver and our U.K. Revolver. The combined net availability under our U.S. Revolver and U.K. Revolver agreements was approximately $198.5 million as of September 1, 2006.

4.

Comprehensive Income: Comprehensive income, which reflects the effects of foreign currency translation adjustments, is calculated as follows for the periods presented (in thousands):

		First Quarter of
		Fiscal 2007				Fiscal 2006
Net earnings		$	10,950			$	13,883
Gain (loss) on foreign currency translation, net of tax			519				1,312
Comprehensive income		$	11,469			$	15,195

5.		Stock Compensation: In December 2004, the FASB issued FASB Statement No. 123 (revised 2004), “Share-Based Payment” (FAS 123R), which is a revision of FASB Statement No. 123, “Accounting for Stock-Based Compensation” (FAS 123). FAS 123R supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25) and amends FASB Statement No. 95, “Statement of Cash Flows.” Generally, the approach in FAS 123R is similar to the approach described in FAS 123. However, FAS 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in consolidated statement of earnings based on their fair values. Pro forma disclosure is no longer an alternative.
		We adopted FAS 123R on June 3, 2006 and applied the modified prospective transition method. Under this transition method, we (1) did not restate any prior periods and (2) are recognizing compensation expense for all share-based payment awards that were outstanding, but not yet vested, as of June 3, 2006, based upon the same estimated grant-date fair values and service periods used to prepare our FAS 123 pro forma disclosures.
		At September 1, 2006, we have options or awards outstanding under certain plans as further described in our fiscal 2006 Form 10-K. As permitted by FAS 123, we had previously accounted for share-based payments to employees using APB 25’s intrinsic value method. Accordingly, no stock-based employee compensation costs for any options were reflected in net earnings unless the options were modified, as all options granted under our plans had an exercise price equal to the market value of the underlying common stock on the date of grant. In fiscal 2005, we transitioned from the use of options to performance and service based restricted stock awards as the primary vehicle in our stock-based compensation strategy.
		During the first quarter of fiscal 2007, we recognized stock compensation expense of approximately $0.8 million in earnings from continuing operations. This expense consists of approximately $0.5 million related to restricted stock awards, which would have been recognized under FAS 123R or APB 25, and approximately $0.3 million (or $0.2 million after tax and $0.01 per common share after tax) related to stock options and our employee stock purchase plan which would not have been expensed under APB 25. The income tax benefit related to the compensation cost was approximately $0.3 million and $0.2 million during the first quarter of fiscal 2007 and the first quarter of fiscal 2006, respectively. The adoption of FAS 123R resulted in an increase in cash flow from operations and a decrease in cash flow from financing activities of approximately $0.1 million during the first quarter of fiscal 2007.
		The following table illustrates the effect on earnings from continuing operations and net earnings in the first quarter of fiscal 2006, if we had applied the fair value recognition provisions of FAS 123R to stock-based employee compensation (in thousands, except per share amounts). For purposes of this pro forma disclosure, the value of the options is estimated using a Black-Scholes option-pricing model and amortized over the option vesting period.

		First Quarter
		Fiscal 2006
Earnings from continuing operations, as reported		$	11,820
Add: Total stock-based employee compensation expense recognized in continuing operations as determined under intrinsic value method for all awards, net of related tax effects			328
Deduct: Total stock-based employee compensation expense to be recognized in continuing operations determined under fair value based method for all awards, net of related tax effects			(495	)
Pro forma earnings from continuing operations		$	11,653
Basic earnings from continuing operations per common share as reported		$	0.68
Pro forma basic earnings from continuing operations per common share		$	0.67
Diluted earnings from continuing operations per common share as reported		$	0.67
Pro forma diluted earnings from continuing operations per common share		$	0.66
Net earnings as reported		$	13,883
Add: Total stock-based employee compensation expense recognized in net earnings as determined under intrinsic value method for all awards, net of related tax effects			376
Deduct: Total stock-based employee compensation expense to be recognized in net earnings determined under fair value based method for all awards, net of related tax effects			(568	)
Pro forma net earnings		$	13,691
Basic net earnings per common share as reported		$	0.80
Pro forma basic net earnings per common share		$	0.79
Diluted net earnings per common share as reported		$	0.79
Pro forma diluted net earnings per common share		$	0.78

The following table summarizes information about the stock options as of September 1, 2006.

		Number of				Exercise				Grant Date				Number
Date of Option Grant		Shares				Price				Fair Value				Exercisable				Expiration Date
July 1998			24,000			$	17.83			$	5.16				24,000			July 2008
July 1999			28,100				13.94				4.70				28,100			July 2009
July 2000			29,820				8.63				2.03				29,820			July 2010
July 2001			43,330				10.73				3.18				43,330			July 2011
July 2002			89,300				11.73				3.25				54,620			August 2012
August 2003			140,320				26.44				11.57				61,800			August 2013
November 2003			40,000				32.15				14.81				16,000			November 2013
December 2003			101,700				32.75				14.17				33,900			December 2013
			496,570												291,570

The table below summarizes options activity during the first quarter of fiscal 2007.

						Weighted
						Average
						Exercise
		Shares				Price
Outstanding at June 2, 2006			533,180			$	22
Granted			—				—
Exercised			(32,410	)			15
Forfeited			(4,200	)			28
Outstanding at September 1, 2006			496,570			$	22
Exercisable at September 1, 2006			291,570			$	19

The total intrinsic value for options exercised during the first quarter of fiscal 2007 and the first quarter of fiscal 2006 was approximately $0.7 million and $2.7 million, respectively. The total fair value for options that vested during the first quarter of fiscal 2007 and the first quarter of fiscal 2006 was approximately $1.1 million and $1.2 million, respectively. The aggregate intrinsic value for all options outstanding and exercisable at September 1, 2006 was approximately $9.7 million and $6.7 million, respectively.

Grants of restricted stock and restricted share units are made to certain officers, key employees and members of our Board of Directors under our Long-Term Stock Incentive Plan. The following table summarizes information about the unvested stock as of September 1, 2006.

Market Price on Date of

Restricted Stock Grant

Number of Shares

Grant

Vesting Date

Grants Based on Fiscal

2005 Performance Awards

61,650

$

42

June 2008

Grants Based on Fiscal

2006 Performance Awards

38,771

$

42

June 2009

100,421

The table below summarizes the restricted stock award activity during the first quarter of fiscal 2007:

		Shares
Outstanding at June 2, 2006			67,125
Issued			39,772
Vested			(4,976	)
Forfeited			(1,500	)
Outstanding at September 1, 2006			100,421

Additionally, during the first quarter of fiscal 2007, we awarded performance share awards and restricted share unit awards to certain officers, key employees and members of our Board of Directors, pursuant to which a maximum total of approximately 0.1 million shares of our common stock may be granted (initially in the form of restricted shares and restricted share units) subject to specified operating performance measures being met for fiscal 2007 and the employee being employed by us on June 1, 2010. As of September 1, 2006, there was approximately $2.3 million of unrecognized compensation cost related to unvested share-based compensation awards which have been made. That cost is expected to be recognized over the next three years. Additionally, approximately $2.0 million of compensation cost related to unvested stock options will be recognized through the first half of fiscal 2009.

6.		Segment Information: In our continuing operations, we have two operating segments for purposes of allocating resources and assessing performance. The Menswear Group produces branded and private label dress shirts, sport shirts, dress slacks, casual slacks, suits, sportcoats, suit separates, walkshorts, golf apparel, outerwear, sweaters, jeans, swimwear, footwear and headwear, licenses its brands for accessories and other products and operates retail stores. The Tommy Bahama Group produces lifestyle branded casual attire, operates retail stores and restaurants, and licenses its brands for accessories, footwear, furniture and other products. The head of each operating segment reports to the chief operating decision maker.
		Corporate and Other is a reconciling category for reporting purposes and includes our corporate offices, substantially all financing activities, LIFO inventory accounting adjustments and other costs that are not allocated to the operating groups. Total assets for Corporate and Other includes the LIFO inventory reserve of $38.0 million, $38.0 million and $37.3 million at September 1, 2006, June 2, 2006 and September 2, 2005, respectively.
		As discussed in note 3 in our consolidated financial statements included in our fiscal 2006 Form 10-K, we sold substantially all of the assets of our Womenswear Group operations at the end of fiscal 2006. Our Womenswear Group produced private label women’s sportswear separates, coordinated sportswear, outerwear, dresses and swimwear. The operating results of the Womenswear Group have not been included in segment information as all amounts were reclassified to discontinued operations. The information below presents certain information about our segments for the periods or as of the dates specified (in thousands).

		First Quarter				First Quarter
		Fiscal 2007				Fiscal 2006
Net Sales
Menswear Group		$	178,811			$	177,076
Tommy Bahama Group			104,148				91,544
Corporate and Other			1,119				(145	)
Total		$	284,078			$	268,475

		First Quarter				First Quarter
		Fiscal 2007				Fiscal 2006
Depreciation
Menswear Group		$	973			$	944
Tommy Bahama Group			2,672				2,456
Corporate and Other			102				101
Total		$	3,747			$	3,501

		First Quarter				First Quarter
		Fiscal 2007				Fiscal 2006
Amortization of Intangible Assets
Menswear Group		$	803			$	811
Tommy Bahama Group			744				1,042
Total		$	1,547			$	1,853

		First Quarter				First Quarter
		Fiscal 2007				Fiscal 2006
Operating Income
Menswear Group		$	10,611			$	15,004
Tommy Bahama Group			16,835				14,357
Corporate and Other			(4,436	)			(5,026	)
Total Operating Income			23,010				24,335
Interest Expense			5,492				5,833
Earnings before taxes		$	17,518			$	18,502

		September 1,				June 2,				September 2,
		2006				2006				2005
Assets
Menswear Group		$	437,510			$	398,930			$	452,694
Tommy Bahama Group			426,577				423,376				386,977
Womenswear Group (discontinued)			18,132				59,215				72,789
Corporate and Other			3,589				4,074				415
Total		$	885,808			$	885,595			$	912,875

7.

Consolidating Financial Data of Subsidiary Guarantors: Our Senior Unsecured Notes are guaranteed by our wholly owned domestic subsidiaries (“Subsidiary Guarantors”). All guarantees are full and unconditional. Non-guarantors consist of our subsidiaries which are organized outside of the United States and any subsidiaries which are not wholly-owned. We use the equity method with respect to investment in subsidiaries included in other non-current assets in our condensed consolidating financial statements. Set forth below are our unaudited condensed consolidating balance sheets as of September 1, 2006, June 2, 2006 and September 2, 2005, our unaudited condensed consolidating statements of earnings for the first quarter of fiscal 2007 and the first quarter of fiscal 2006 and our unaudited condensed consolidating statements of cash flows for the first quarter of fiscal 2007 and the first quarter of fiscal 2006 (in thousands).

OXFORD INDUSTRIES, INC.
CONDENSED CONSOLIDATING BALANCE SHEETS
September 1, 2006

		Oxford								Subsidiary
		Industries				Subsidiary				Non-				Consolidating				Consolidated
		(Parent)				Guarantors				Guarantors				Adjustments				Total
						ASSETS
Current Assets:
Cash and cash equivalents		$	3,499			$	840			$	6,402			$	1			$	10,742
Receivables, net			79,389				53,825				29,384				(6,996	)			155,602
Inventories			65,106				57,626				17,438				(726	)			139,444
Prepaid expenses			11,061				9,631				5,155				—				25,847
Current assets related to discontinued operations, net			2,323				31				15,778				—				18,132
Total current assets			161,378				121,953				74,157				(7,721	)			349,767
Property, plant and equipment, net			10,668				54,167				8,692				—				73,527
Goodwill, net			1,847				148,556				49,825				—				200,228
Intangible assets, net			1,441				138,662				94,287				—				234,390
Other non-current assets, net			688,329				152,795				1,394				(814,622	)			27,896
Total Assets		$	863,663			$	616,133			$	228,355			$	(822,343	)		$	885,808
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities related to continuing operations		$	50,698			$	49,952			$	33,142			$	(6,407	)		$	127,385
Current liabilities related to discontinued operations			60				67				11,361				—				11,488
Long-term debt, less current portion			226,861				3				—				—				226,864
Non-current liabilities			177,325				(148,016	)			112,273				(109,149	)			32,433
Deferred income taxes			(515	)			46,652				32,267				—				78,404
Total shareholders’/invested equity			409,234				667,475				39,312				(706,787	)			409,234
Total Liabilities and Shareholders’/Invested Equity		$	863,663			$	616,133			$	228,355			$	(822,343	)		$	885,808

OXFORD INDUSTRIES, INC.
CONDENSED CONSOLIDATING BALANCE SHEETS
June 2, 2006

		Oxford								Subsidiary
		Industries				Subsidiary				Non-				Consolidating				Consolidated
		(Parent)				Guarantors				Guarantors				Adjustments				Total
						ASSETS
Current Assets:
Cash and cash equivalents		$	5,175			$	1,134			$	4,181			$	(11	)		$	10,479
Receivables, net			61,428				57,785				37,227				(14,143	)			142,297
Inventories			58,924				50,880				14,546				(756	)			123,594
Prepaid expenses			8,959				7,321				5,716				—				21,996
Current assets related to discontinued operations, net			52,065				7,150				—				—				59,215
Total current assets			186,551				124,270				61,670				(14,910	)			357,581
Property, plant and equipment, net			11,122				53,648				8,893				—				73,663
Goodwill, net			1,847				148,342				49,043				—				199,232
Intangible assets, net			1,451				139,406				93,596				—				234,453
Other non-current assets, net			677,414				143,790				1,436				(801,974	)			20,666
Total Assets		$	878,385			$	609,456			$	214,638			$	(816,884	)		$	885,595
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities related to continuing operations		$	70,262			$	57,872			$	35,026			$	(13,557	)		$	149,603
Current liabilities related to discontinued operations			27,813				2,903				—				—				30,716
Long-term debt, less current portion			200,016				7				—				—				200,023
Non-current liabilities			181,845				(154,586	)			111,878				(109,158	)			29,979
Deferred income taxes			(252	)			46,795				30,030				—				76,573
Total shareholders’/invested equity			398,701				656,465				37,704				(694,169	)			398,701
Total Liabilities and Shareholders’/Invested Equity		$	878,385			$	609,456			$	214,638			$	(816,884	)		$	885,595

OXFORD INDUSTRIES, INC.
CONDENSED CONSOLIDATING BALANCE SHEETS
September 2, 2005

		Oxford								Subsidiary
		Industries				Subsidiary				Non-				Consolidating				Consolidated
		(Parent)				Guarantors				Guarantors				Adjustments				Total
						ASSETS
Current Assets:
Cash and cash equivalents		$	4,317			$	938			$	1,768			$	1			$	7,024
Receivables, net			85,107				48,796				64,768				(47,394	)			151,277
Inventories			91,402				39,115				19,961				(643	)			149,835
Prepaid expenses			11,619				6,170				6,277				—				24,066
Current assets related to discontinued operations, net			50,743				15,854				1,350				—				67,947
Total current assets			243,188				110,873				94,124				(48,036	)			400,149
Property, plant and equipment, net			11,193				44,235				8,629				—				64,057
Goodwill, net			1,847				135,918				48,994				—				186,759
Intangible assets, net			1,480				140,123				92,680				—				234,283
Other non-current assets, net			647,650				148,327				1,774				(774,966	)			22,785
Other assets related to discontinued operations, net			848				3,994				—				—				4,842
Total Assets		$	906,206			$	583,470			$	246,201			$	(823,002	)		$	912,875
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities related to continuing operations		$	103,106			$	53,624			$	49,167			$	(47,157	)		$	158,740
Current liabilities related to discontinued operations			15,066				971				38				—				16,075
Long-term debt, less current portion			315,892				19				—				—				315,911
Non-current liabilities			148,122				(120,709	)			107,619				(109,295	)			25,737
Deferred income taxes			4,102				43,428				28,964				—				76,494
Non-current liabilities related to discontinued operations			47				—				—				—				47
Total shareholders’/invested equity			319,871				606,137				60,413				(666,550	)			319,871
Total Liabilities and Shareholders’/Invested Equity		$	906,206			$	583,470			$	246,201			$	(823,002	)		$	912,875

OXFORD INDUSTRIES, INC.
UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF EARNINGS
First Quarter of Fiscal 2007

		Oxford								Subsidiary
		Industries				Subsidiary				Non-				Consolidating				Consolidated
		(Parent)				Guarantors				Guarantors				Adjustments				Total
Net sales		$	135,870			$	120,622			$	38,653			$	(11,067	)		$	284,078
Cost of goods sold			105,985				54,586				18,604				(3,208	)			175,967
Gross profit			29,885				66,036				20,049				(7,859	)			108,111
Selling, general and administrative			26,865				53,480				18,198				(10,550	)			87,993
Royalties and other income			—				1,495				1,473				(76	)			2,892
Operating income			3,020				14,051				3,324				2,615				23,010
Interest (income) expense, net			3,840				(2,843	)			1,912				2,583				5,492
Income from equity investment			11,924				3				—				(11,927	)			—
Earnings before income taxes			11,104				16,897				1,412				(11,895	)			17,518
Income taxes			(28	)			6,066				315				10				6,363
Earnings from continuing operations			11,132				10,831				1,097				(11,905	)			11,155
Earnings from discontinued operations, net of tax			(205	)			(36	)			—				36				(205	)
Net earnings		$	10,927			$	10,795			$	1,097			$	(11,869	)		$	10,950

UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOW
First Quarter of Fiscal 2007

		Oxford								Subsidiary
		Industries				Subsidiary				Non-				Consolidating				Consolidated
		(Parent)				Guarantors				Guarantors				Adjustments				Total
Cash Flows From Operating Activities
Net cash (used in) provided by operating activities		$	(24,568	)		$	3,597			$	1,843			$	10			$	(19,118	)
Cash Flows from Investing Activities
Acquisitions			(12,111	)			—				—				—				(12,111	)
Investment in unconsolidated entity			—				(9,063	)			—				—				(9,063	)
Purchases of property, plant and equipment			(82	)			(3,360	)			(114	)			—				(3,556	)
Net cash (used in) provided by investing activities			(12,193	)			(12,423	)			(114	)			—				(24,730	)
Cash Flows from Financing Activities
Change in debt			26,793				(4	)			(2	)			—				26,787
Proceeds from issuance of common stock			886				—				—				—				886
Change in inter-company payable			(5,138	)			4,734				402				2				—
Dividends on common stock			(5,304	)			—				—				—				(5,304	)
Net cash (used in) provided by financing activities			17,237				4,730				400				2				22,369
Cash Flows from Discontinued Operations
Net operating cash flows provided by discontinued operations			17,848				3,802				—				—				21,650
Net change in Cash and Cash Equivalents			(1,676	)			(294	)			2,129				12				171
Effect of foreign currency translation			—				—				92				—				92
Cash and Cash Equivalents at the Beginning of Period			5,175				1,134				4,181				(11	)			10,479
Cash and Cash Equivalents at the End of Period		$	3,499			$	840			$	6,402			$	1			$	10,742

OXFORD INDUSTRIES, INC.
UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF EARNINGS
First Quarter of Fiscal 2006

		Oxford								Subsidiary
		Industries				Subsidiary				Non-				Consolidating				Consolidated
		(Parent)				Guarantors				Guarantors				Adjustments				Total
Net sales		$	132,429			$	108,001			$	46,596			$	(18,551	)		$	268,475
Cost of goods sold			100,984				47,251				21,191				(6,666	)			162,760
Gross profit			31,445				60,750				25,405				(11,885	)			105,715
Selling, general and administrative			27,398				47,691				20,460				(10,908	)			84,641
Royalties and other income			(150	)			1,930				1,481				—				3,261
Operating income			3,897				14,989				6,426				(977	)			24,335
Interest (income) expense, net			7,170				(2,533	)			1,990				(794	)			5,833
Income from equity investment			15,468				79				—				(15,547	)			—
Earnings before income taxes			12,195				17,601				4,436				(15,730	)			18,502
Income taxes			(563	)			6,154				1,105				(14	)			6,682
Earnings from continuing operations			12,758				11,447				3,331				(15,716	)			11,820
Earnings from discontinued operations, net of tax			1,295				878				(110	)			—				2,063
Net earnings		$	14,053			$	12,325			$	3,221			$	(15,716	)		$	13,883

UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOW
First Quarter of Fiscal 2006

		Oxford								Subsidiary
		Industries				Subsidiary				Non-				Consolidating				Consolidated
		(Parent)				Guarantors				Guarantors				Adjustments				Total
Cash Flows From Operating Activities
Net cash (used in) provided by operating activities		$	(23,581	)		$	(1,137	)		$	(3,479	)		$	77			$	(28,120	)
Cash Flows from Investing Activities
Acquisitions			(6,569	)			—				—				—				(6,569	)
Distribution from joint venture			—				1,856				—				—				1,856
Purchases of property, plant and equipment			(921	)			(1,936	)			(591	)			—				(3,448	)
Proceeds from sale of property, plant and equipment			6				—				—				—				6
Net cash (used in) provided by investing activities			(7,484	)			(80	)			(591	)			—				(8,155	)
Cash Flows from Financing Activities
Change in debt			26,790				(9	)			1,168				—				27,949
Proceeds from issuance of common stock			2,586				—				—				—				2,586
Change in inter-company payable			149				(3,388	)			3,341				(102	)			—
Dividends on common stock			(2,278	)			—				—				—				(2,278	)
Net cash (used in) provided by financing activities			27,247				(3,397	)			4,509				(102	)			28,257
Cash Flows from Discontinued Operations
Net operating cash flows provided by discontinued operations			5,422				3,693				(463	)			—				8,652
Net change in Cash and Cash Equivalents			1,604				(921	)			(24	)			(25	)			634
Effect of foreign currency translation			—				—				(109	)			—				(109	)
Cash and Cash Equivalents at the Beginning of Period			2,713				1,859				1,901				26				6,499
Cash and Cash Equivalents at the End of Period		$	4,317			$	938			$	1,768			$	1			$	7,024

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

The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and the notes to unaudited condensed consolidated financial statements contained in this report and the consolidated financial Statements, notes to consolidated financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our fiscal 2006 Form 10-K.

OVERVIEW

We generate revenues and cash flow through the design, sale, production and distribution of branded and private label consumer apparel and footwear for men, women and children and the licensing of company-owned trademarks. Our markets and customers are located primarily in the United States. We source more than 95% of our products through third-party producers. We primarily distribute our products through our wholesale customers which include chain stores, department stores, specialty stores, specialty catalogs and mass merchants. We also sell our products for some brands in our own retail stores.

We operate in an industry that is highly competitive. Our ability to continuously evaluate and respond to changing consumer demands and tastes across multiple market segments, distribution channels and geographic regions is critical to our success. Although our approach is aimed at diversifying our risks, misjudging shifts in consumer preferences could have a negative effect on future operating results. Other key aspects of competition include quality, brand image, distribution methods, price, customer service and intellectual property protection. Our size and global operating strategies help us to successfully compete by providing opportunities for operating synergies. Our success in the future will depend on our ability to continue to design products that are acceptable to the markets we serve and to source our products on a competitive basis while still earning appropriate margins.

The most significant factors impacting our results and contributing to the change in diluted earnings from continuing operations per common share to $0.63 in the first quarter of fiscal 2007 from $0.67 in the first quarter of fiscal 2006 and the change in diluted net earnings per common share to $0.62 in the first quarter of fiscal 2007 from $0.79 in the first quarter of fiscal 2006 were:

	•		relatively flat sales and a 29% decrease in operating income in the Menswear Group primarily due to the decreased sales for Ben Sherman and a decline in the gross margins in our historical menswear business;
	•		the Tommy Bahama Group’s 14% increase in net sales and 17% increase in operating income primarily due to product line expansion including Tommy Bahama Relaxtm and Tommy Bahama Golf 18tm; and
	•		the disposition of substantially all of the assets of our Womenswear Group on June 2, 2006, resulting in all Womenswear Group operations being reclassified to discontinued operations for all periods presented, including the loss of $0.2 million in the first quarter of fiscal 2007 which primarily consists of expenses incurred in wrapping up the Womenswear Group operations.

The following tables set forth the line items in our consolidated statements of earnings both in dollars (in thousands) and as a percentage of net sales. The first tables also sets forth the percentage change of the data as compared to the comparable period in the prior year. We have calculated all percentages based on actual data, but percentage columns may not add due to rounding. Individual line items of our consolidated statements of earnings may not be directly comparable to those of our competitors, as statement of earnings classification of certain expenses may vary by company.

		First				First
		Quarter				Quarter				Percent
		Fiscal 2007				Fiscal 2006				Change
Net sales		$	284,078			$	268,475				5.8	%
Cost of goods sold			175,967				162,760				8.1	%
Gross profit			108,111				105,715				2.3	%
Selling, general and administrative			86,446				82,788				4.4	%
Amortization of intangible assets			1,547				1,853				(16.6	)%
Royalties and other operating income			2,892				3,261				(11.3	)%
Operating income			23,010				24,335				(5.4	)%
Interest expense, net			5,492				5,833				(5.8	)%
Earnings before income taxes			17,518				18,502				(5.3	)%
Income taxes			6,363				6,682				(4.8	)%
Earnings (loss) from continuing operations			11,155				11,820				(5.6	)%
Earnings from discontinued operations, net of taxes			(205	)			2,063				(109.9	)%
Net earnings		$	10,950			$	13,883				(21.1	)%