UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 28, 2009
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Carter’s, Inc. |
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(Exact name of Registrant as specified in its charter) |
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Delaware |
001-31829 |
13-3912933 | ||
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(State or other jurisdiction
of incorporation) |
(Commission File Number) |
(I.R.S. Employer
Identification No.) | ||
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The Proscenium,
1170 Peachtree Street NE, Suite 900
Atlanta, Georgia 30309 | ||||
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(Address of principal executive offices, including zip code) | ||||
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(404) 745-2700 | ||||
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(Registrant’s telephone number, including area code) | ||||
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(Former name or former address, if changed since last report.) | ||||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:
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o |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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o |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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o |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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o |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.
On July 28, 2009, Carter’s, Inc. issued a press release announcing its financial results for its second quarter ended July 4, 2009. A copy of that press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.
The information in this Current Report on Form 8-K is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report
on Form 8-K shall not be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended.
Item 9.01. Financial Statements and Exhibits.
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Exhibits – The following exhibit is furnished as part of this Current Report on Form 8-K.
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Exhibit
Number |
Description | ||
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99.1 |
Press Release of Carter’s, Inc., dated July 28, 2009 | ||
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, Carter’s, Inc. has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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July 28, 2009 |
CARTER’S, INC.
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By: |
/s/ BRENDAN M. GIBBONS |
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Name: |
Brendan M. Gibbons | |
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Title: |
Vice President, General Counsel, and
Secretary | |
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Contact: | |
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Richard F. Westenberger | |
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Executive Vice President &
Chief Financial Officer | |
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(404) 745-2889 |
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CARTER’S, INC. REPORTS SECOND QUARTER RESULTS | |
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· |
NET SALES INCREASED $16 MILLION, +5% |
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· |
TOTAL RETAIL STORE SALES +14% |
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· |
NET INCOME INCREASED FROM $3 MILLION TO $11 MILLION |
Atlanta, Georgia, July 28, 2009 / Business Wire -- Carter’s, Inc. (NYSE:CRI), the largest branded marketer in the United States of apparel exclusively for babies and young children, today reported its second quarter 2009 results.
“We are very pleased with our performance in the second quarter, which was driven by the strength of our product offerings and very good execution of our inventory management and cost reduction initiatives,” said Michael D. Casey, Chief Executive Officer. “Our outlook for the year has improved based on our first
half performance and the growth we anticipate in the second half of the year. We believe we’re well positioned to deliver strong performance in this difficult retail marketplace given the compelling design and value of our Carter’s and OshKosh B’Gosh products.”
Second Quarter of Fiscal 2009 compared to Second Quarter of Fiscal 2008
Consolidated net sales increased 5.4% to $317.9 million. Net sales of the Company’s Carter’s brands increased 6.9% to $254.4 million. Net sales of the Company’s OshKosh B’Gosh brand decreased 0.3% to $63.5 million.
Consolidated retail sales increased 13.9% to $162.3 million. Carter’s retail segment sales increased 18.9% to $110.1 million, with comparable store sales increasing 8.1%. OshKosh retail segment sales increased 4.6% to $52.2 million, with comparable store sales increasing 2.6%. Consolidated retail operating
income increased $9.6 million to $17.4 million, driven primarily by Carter’s retail sales growth and OshKosh retail gross margin improvement.
In the second quarter of fiscal 2009, the Company opened 11 Carter’s and three OshKosh retail stores. As of the end of the second quarter of fiscal 2009, the Company operated 271 Carter’s and 168 OshKosh retail stores.
Carter’s wholesale sales increased $5.8 million, or 6.1%, to $100.1 million due to increased product demand. OshKosh wholesale sales decreased $2.4 million, or 17.7%, to $11.3 million due to timing of shipments, which were heavier in the first quarter.
The Company’s mass channel sales, which are comprised of sales of its Child of Mine brand to Walmart and Just One Year brand to Target, decreased 13.4% to $44.2 million due largely to strategic merchandising assortment changes
made by Walmart.
In connection with a previously announced workforce reduction and distribution facility closure, the Company recorded pre-tax charges of approximately $2.9 million related to severance and other benefits and accelerated depreciation in the second quarter of fiscal 2009. Also during the second quarter of fiscal 2009, the Company
reduced the carrying value of its White House, Tennessee distribution facility held for sale by $0.7 million.
In connection with the retirement of an executive officer, the Company recorded charges of $5.3 million in the second quarter of fiscal 2008.
2
Operating income in the second quarter of fiscal 2009 was $20.9 million, an increase of $11.7 million, or 126.3%, from $9.3 million in the second quarter of fiscal 2008. Excluding the effect of certain items, which are detailed at the end of this
release, adjusted operating income increased $10.0 million, or 68.5%, to $24.5 million from $14.6 million in the second quarter of fiscal 2008, driven largely by growth in earnings from its Carter’s retail segment as well as improved performance of its OshKosh retail and wholesale segments.
Net income increased $8.6 million to $11.3 million, or $0.19 per diluted share, compared to $2.8 million, or $0.05 per diluted share, in the second quarter of fiscal 2008. Excluding the effect of certain items, which are detailed at the end of this release, adjusted net income increased $7.5 million to $13.6 million, or $0.23 per
adjusted diluted earnings per share, compared to $6.1 million, or $0.10 per adjusted diluted earnings per share in the second quarter of fiscal 2008.
A reconciliation of income as reported under accounting principles generally accepted in the United States of America (“GAAP”) to income adjusted for certain items is provided at the end of this release.
First Half of Fiscal 2009 compared to First Half of Fiscal 2008
Consolidated net sales increased 6.8% to $674.7 million. Net sales of the Company’s Carter’s brands increased 6.5% to $538.0 million. Net sales of the Company’s OshKosh B'Gosh brand increased 8.1% to $136.7 million.
Consolidated retail sales increased 15.6% to $316.0 million. Carter’s retail segment sales increased 18.4% to $212.1 million, with comparable store sales increasing 6.7%. OshKosh retail segment sales increased 10.3% to $104.0 million, with comparable store sales increasing 6.7%. Consolidated retail operating
income increased $21.2 million to $33.6 million. Increased sales, improved gross margin, and better inventory management in both retail segments contributed to the growth in earnings. In the first half of fiscal 2009, the Company opened 18 Carter’s and three OshKosh retail stores.
3
Carter’s wholesale sales increased $10.8 million, or 5.1%, to $223.0 million due to improved product performance. OshKosh wholesale sales increased $0.5 million, or 1.5%, to $32.7 million.
The Company’s mass channel sales decreased 9.7% to $103.0 million primarily due to strategic merchandising assortment changes made by Walmart.
In connection with the workforce reduction and distribution facility closure, the Company recorded pre-tax charges in the first half of fiscal 2009 of approximately $11.6 million related to severance and other benefits, asset impairment, accelerated depreciation, and other closure costs.
Results for the first half of fiscal 2009 include the $0.7 million write-down in the second quarter of the carrying value of the Company’s White House, Tennessee distribution facility held for sale.
Operating income in the first half of fiscal 2009 was $49.5 million, an increase of $19.7 million, or 66.1%, from $29.8 million in the first half of fiscal 2008. Excluding the effect of certain items, which are detailed at the end of this release,
adjusted operating income increased $26.7 million, or 76.1%, to $61.8 million from $35.1 million in first half of fiscal 2008, driven largely by growth in earnings in the Company’s Carter’s and OshKosh retail segments in addition to growth in earnings in its wholesale segments and its Carter’s mass channel segment.
Net income increased $13.4 million to $27.7 million, or $0.47 per diluted share, compared to $14.3 million, or $0.24 per diluted share, in the first half of fiscal 2008. Excluding the effect of certain items, which are detailed at the end of this release, adjusted net income increased $17.8 million to $35.5 million, or $0.61 per
adjusted diluted earnings per share, compared to $17.7 million, or $0.30 per adjusted diluted earnings per share in the first half of fiscal 2008.
A reconciliation of income as reported under GAAP to income adjusted for certain items is provided at the end of this release.
4
Cash flow from operations in the first half of fiscal 2009 increased $2.9 million over the first half of fiscal 2008 due primarily to increased earnings, partially offset by net working capital needs.
Outlook
For the third quarter of fiscal 2009, the Company expects low single-digit growth in net sales and mid to high single-digit growth in adjusted diluted earnings per share, as compared to the third quarter of fiscal 2008, excluding a $2.6 million charge in the third quarter of fiscal 2008 related to the write-down of the carrying value of the
Company’s White House, Tennessee distribution facility held for sale.
Conference Call
The Company will hold a conference call with investors to discuss second quarter results on July 29, 2009 at 8:30 a.m. Eastern Time. To participate in the call, please dial
913-312-1457. To listen to a live broadcast of the call on the internet, please log on to www.carters.com and select the “Q2 2009 Earnings Conference Call” link under the “Investor Relations” tab. The conference call will be simultaneously
broadcast on the Company’s website at www.carters.com. Presentation materials for the call can be accessed on the Company’s website at www.carters.com by selecting the “Conference Calls & Webcasts” link under the “Investor Relations” tab. A replay of the call will be available shortly after the broadcast through August 7,
2009, at 719-457-0820, passcode 9553145. The replay will be archived on the Company’s website at the same location.
For more information on Carter’s, Inc., please visit www.carters.com.
5
Cautionary Language
Statements contained herein that relate to the Company’s future performance, including, without limitation, statements with respect to the Company’s anticipated results for fiscal 2009 or any other future period, are forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Such statements 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, estimated, or projected. Factors that could cause actual results to materially differ include: a decrease in sales to, or the loss of one or more of, the Company’s
key customers; increased competition in the baby and young children’s apparel market; the acceptance of the Company’s products in the marketplace; deflationary pricing pressures; the Company’s dependence on foreign supply sources; failure of foreign supply sources to meet the Company’s quality standards or regulatory requirements; negative publicity; leverage, which increases the Company’s exposure to interest rate risk and could require the Company to dedicate a substantial portion
of it’s cash flow to repay debt principal; an inability to access suitable financing due to the current economic environment; a continued decrease in the overall value of the United States equity markets due to the current economic environment; a continued decrease in the overall level of consumer spending; changes in consumer preference and fashion trends; the impact of governmental regulations and environmental risks applicable to the Company’s business; the breach of the Company’s consumer
databases; the ability of the Company to adequately forecast demand, which could create significant levels of excess inventory; the ability of the Company to identify new retail store locations, and negotiate appropriate lease terms for the retail stores; the ability to attract and retain key individuals within the organization; failure to realize the revenue growth and earnings forecasts of OshKosh B’Gosh, Inc., which could further impact the carrying value of the Company’s OshKosh intangible asset;
and seasonal fluctuations in the children’s apparel business. Many of these risks are further described in the most recently filed Annual Report on Form 10-K and other reports filed with the Securities and Exchange Commission under the headings “Risk Factors” and “Forward-Looking Statements.” 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.
6
CARTER’S, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except for share data)
(unaudited)
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Three-month periods ended |
Six-month periods ended |
|||||||||||||||
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July 4,
2009 |
June 28,
2008 |
July 4,
2009 |
June 28,
2008 |
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Net sales: |
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Carter’s: |
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Wholesale |
$ | 100,088 | $ | 94,322 | $ | 222,985 | $ | 212,154 | ||||||||
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Retail |
110,127 | 92,656 | 212,057 | 179,058 | ||||||||||||
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Mass Channel |
44,216 | 51,054 | 102,961 | 113,978 | ||||||||||||
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Carter’s net sales |
254,431 | 238,032 | 538,003 | 505,190 | ||||||||||||
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OshKosh: |
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Retail |
52,160 | 49,883 | 103,988 | 94,248 | ||||||||||||
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Wholesale |
11,318 | 13,760 | 32,705 | 32,209 | ||||||||||||
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OshKosh net sales |
63,478 | 63,643 | 136,693 | 126,457 | ||||||||||||
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Total net sales |
317,909 | 301,675 | 674,696 | 631,647 | ||||||||||||
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Cost of goods sold |
201,619 | 202,094 | 431,059 | 427,151 | ||||||||||||
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Gross profit |
116,290 | 99,581 | 243,637 | 204,496 | ||||||||||||
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Selling, general, and administrative expenses |
99,843 | 92,207 | 198,973 | 184,483 | ||||||||||||
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Executive retirement charges |
-- | 5,325 | -- | 5,325 | ||||||||||||
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Workforce reduction and facility write-down and closure costs |
2,980 | -- | 11,400 | -- | ||||||||||||
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Royalty income |
(7,472 | ) | (7,203 | ) | (16,234 | ) | (15,117 | ) | ||||||||
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Operating income |
20,939 | 9,252 | 49,498 | 29,805 | ||||||||||||
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Interest expense, net |
2,708 | 4,789 | 5,883 | 9,309 | ||||||||||||
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Income before income taxes |
18,231 | 4,463 | 43,615 | 20,496 | ||||||||||||
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Provision for income taxes |
6,902 | 1,684 | 15,918 | 6,158 | ||||||||||||
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Net income |
$ | 11,329 | $ | 2,779 | $ | 27,697 | $ | 14,338 | ||||||||
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Basic net income per common share |
$ | 0.20 | $ | 0.05 | $ | 0.49 | $ | 0.25 | ||||||||
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Diluted net income per common share |
$ | 0.19 | $ | 0.05 | $ | 0.47 | $ | 0.24 | ||||||||
7
CARTER’S, INC.
BUSINESS SEGMENT RESULTS
(unaudited)
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For the three-month periods ended |
For the six-month periods ended |
|||||||||||||||||||||||||||||||
|
(dollars in thousands) |
July 4,
2009 |
% of
Total |
June 28,
2008 |
% of
Total |
July 4,
2009 |
% of
Total |
June 28,
2008 |
% of
Total |
||||||||||||||||||||||||
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Net sales: |
||||||||||||||||||||||||||||||||
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Carter’s: |
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Wholesale |
$ | 100,088 | 31.5 | % | $ | 94,322 | 31.3 | % | $ | 222,985 | 33.0 | % | $ | 212,154 | 33.6 | % | ||||||||||||||||
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Retail |
110,127 | 34.6 | % | 92,656 | 30.7 | % | 212,057 | 31.4 | % | 179,058 | 28.4 | % | ||||||||||||||||||||
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Mass Channel |
44,216 | 13.9 | % | 51,054 | 16.9 | % | 102,961 | 15.3 | % | 113,978 | 18.0 | % | ||||||||||||||||||||
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Carter’s net sales |
254,431 | 80.0 | % | 238,032 | 78.9 | % | 538,003 | 79.7 | % | 505,190 | 80.0 | % | ||||||||||||||||||||
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OshKosh: |
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Retail |
52,160 | 16.4 | % | 49,883 | 16.5 | % | 103,988 | 15.4 | % | 94,248 | 14.9 | % | ||||||||||||||||||||
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Wholesale |
11,318 | 3.6 | % | 13,760 | 4.6 | % | 32,705 | 4.9 | % | 32,209 | 5.1 | % | ||||||||||||||||||||
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OshKosh net sales |
63,478 | 20.0 | % | 63,643 | 21.1 | % | 136,693 | 20.3 | % | 126,457 | 20.0 | % | ||||||||||||||||||||
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Total net sales |
$ | 317,909 | 100.0 | % | $ | 301,675 | 100.0 | % | $ | 674,696 | 100.0 | % | $ | 631,647 | 100.0 | % | ||||||||||||||||
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Operating income (loss): |
% of
segment
net sales |
% of
segment
net sales |
% of
segment
net sales |
% of
segment
net sales |
||||||||||||||||||||||||||||
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Carter’s: |
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Wholesale |
$ | 12,352 | 12.3 | % | $ | 12,663 | 13.4 | % | $ | 36,531 | 16.4 | % | $ | 34,222 | 16.1 | % | ||||||||||||||||
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Retail |
16,575 | 15.1 | % | 10,358 | 11.2 | % | 33,163 | 15.6 | % | 21,800 | 12.2 | % | ||||||||||||||||||||
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Mass Channel |
8,639 | 19.5 | % | 7,123 | 14.0 | % | 16,674 | 16.2 | % | 13,865 | 12.2 | % | ||||||||||||||||||||
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Carter’s operating income |
37,566 | 14.8 | % | 30,144 | 12.7 | % | 86,368 | 16.1 | % | 69,887 | 13.8 | % | ||||||||||||||||||||
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OshKosh: |
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Retail |
786 | 1.5 | % | (2,646 | ) | (5.3 | %) | 455 | 0.4 | % | (9,379 | ) | (10.0 | %) | ||||||||||||||||||
|
Wholesale |
(2,318 | ) | (20.5 | %) | (4,312 | ) | (31.3 | %) | (2,274 | ) | (7.0 | %) | (6,836 | ) | (21.2 | %) | ||||||||||||||||
|
Mass Channel (a) |
438 | -- | 628 | -- | 1,144 | -- | 1,159 | -- | ||||||||||||||||||||||||
|
OshKosh operating loss |
(1,094 | ) | (1.7 | %) | (6,330 | ) | (9.9 | %) | (675 | ) | (0.5 | %) | (15,056 | ) | (11.9 | %) | ||||||||||||||||
|
Segment operating income |
36,472 | 11.5 | % | 23,814 | 7.9 | % | 85,693 | 12.7 | % | 54,831 | 8.7 | % | ||||||||||||||||||||
|
Corporate expenses (b) |
(11,910 | ) | (3.7 | %) | (9,237 | ) | (3.1 | %) | (23,830 | ) | (3.5 | %) | (19,701 | ) | (3.1 | %) | ||||||||||||||||
|
Workforce reduction and facility
write-down and closure costs (c) |
(3,623 | ) | (1.0 | %) | -- | -- | (12,365 | ) | (1.7 | %) | -- | -- | ||||||||||||||||||||
|
Executive retirement charges |
-- | -- | (5,325 | ) | (1.7 | %) | -- | -- | (5,325 | ) | (0.9 | %) | ||||||||||||||||||||
|
Net corporate expenses |
(15,533 | ) | (4.9 | %) | (14,562 | ) | (4.8 | %) | (36,195 | ) | (5.4 | %) | (25,026 | ) | (4.0 | %) | ||||||||||||||||
|
Total operating income |
$ | 20,939 | 6.6 | % | $ | 9,252 | 3.1 | % | $ | 49,498 | 7.3 | % | $ | 29,805 | 4.7 | % | ||||||||||||||||
|
|
|
|
|
(a) |
OshKosh mass channel consists of a licensing agreement with Target Stores. Operating income consists of royalty income, net of related expenses. |
|
(b) |
Corporate expenses generally include expenses related to severance and relocation, executive management, finance, stock-based compensation, building occupancy, information technology, certain legal fees, incentive compensation, consulting, and audit fees. |
|
(c) |
Includes closure costs associated with the Company’s Barnesville, Georgia distribution facility including severance, asset impairment charges, other closure costs, and accelerated depreciation, asset impairment charges related to the Company’s Oshkosh, Wisconsin facility, write-down of the Company’s White House, Tennessee facility held
for sale, and severance and other benefits related to the corporate workforce reduction. |
8
CARTER’S, INC.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except for share data)
(unaudited)
|
July 4,
2009 |
January 3,
2009 |
June 28,
2008 |
||||||||||
|
ASSETS |
||||||||||||
|
Current assets: |
||||||||||||
|
Cash and cash equivalents |
$ | 173,812 | $ | 162,349 | $ | 45,223 | ||||||
|
Accounts receivable, net |
96,864 | 106,060 | 102,593 | |||||||||
|
Finished goods inventories, net |
256,151 | 203,486 | 250,817 | |||||||||
|
Prepaid expenses and other current assets |
13,538 | 13,214 | 21,573 | |||||||||
|
Deferred income taxes |
25,712 | 27,982 | 23,727 | |||||||||
|
Total current assets |
566,077 | 513,091 | 443,933 | |||||||||
|
Property, plant, and equipment, net |
83,677 | 86,229 | 70,014 | |||||||||
|
Tradenames |
305,733 | 305,733 | 306,733 | |||||||||
|
Cost in excess of fair value of net assets acquired |
136,570 | 136,570 | 136,570 | |||||||||
|
Deferred debt issuance costs, net |
3,031 | 3,598 | 4,176 | |||||||||
|
Licensing agreements, net |
3,432 | 5,260 | 7,087 | |||||||||
|
Other assets |
293 | 576 | 8,021 | |||||||||
|
Total assets |
$ | 1,098,813 | $ | 1,051,057 | $ | 976,534 | ||||||
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||||||
|
Current liabilities: |
||||||||||||
|
Current maturities of long-term debt |
$ | 3,503 | $ | 3,503 | $ | 4,379 | ||||||
|
Accounts payable |
109,944 | 79,011 | 73,822 | |||||||||
|
Other current liabilities |
42,509 | 57,613 | 36,803 | |||||||||
|
Total current liabilities |
155,956 | 140,127 | 115,004 | |||||||||
|
Long-term debt |
332,772 | 334,523 | 336,275 | |||||||||
|
Deferred income taxes |
106,361 | 108,989 | 113,316 | |||||||||
|
Other long-term liabilities |
43,082 | 40,822 | 30,979 | |||||||||
|
Total liabilities |
638,171 | 624,461 | 595,574 | |||||||||
|
Commitments and contingencies |
||||||||||||
|
Stockholders’ equity: |
||||||||||||
|
Preferred stock; par value $.01 per share; 100,000 shares authorized; none issued or outstanding at July 4, 2009, January 3, 2009, and June 28, 2008 |
-- | -- | -- | |||||||||
|
Common stock, voting; par value $.01 per share; 150,000,000 shares authorized, 56,784,758, 56,352,111, and 56,422,592 shares issued and outstanding at July 4, 2009, January 3, 2009, and June 28, 2008, respectively |
568 | 563 | 564 | |||||||||
|
Additional paid-in capital |
217,707 | 211,767 | 217,741 | |||||||||
|
Accumulated other comprehensive (loss) income |
(6,914 | ) | (7,318 | ) | 1,791 | |||||||
|
Retained earnings |
249,281 | 221,584 | 160,864 | |||||||||
|
Total stockholders’ equity |
460,642 | 426,596 | 380,960 | |||||||||
|
Total liabilities and stockholders’ equity |
$ | 1,098,813 | $ | 1,051,057 | $ | 976,534 | ||||||
9
CARTER’S, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
(dollars in thousands)
(unaudited)
|
For the six-month periods ended |
||||||||
|
July 4,
2009 |
June 28,
2008 |
|||||||
|
Cash flows from operating activities: |
||||||||
|
Net income |
$ | 27,697 | $ | 14,338 | ||||
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
||||||||
|
Depreciation and amortization |
16,990 | 14,150 | ||||||
|
Amortization of debt issuance costs |
567 | 567 | ||||||
|
Non-cash stock-based compensation expense |
3,543 | 5,055 | ||||||
|
Income tax benefit from exercised stock options |
(1,313 | ) | (60 | ) | ||||
|
Non-cash asset impairment and facility write-down charges |
3,662 | -- | ||||||
|
Deferred income taxes |
(401 | ) | 552 | |||||
|
Effect of changes in operating assets and liabilities: |
||||||||
|
Accounts receivable |
9,196 | 17,114 | ||||||
|
Inventories |
(52,665 | ) | (25,323 | ) | ||||
|
Prepaid expenses and other assets |
(767 | ) | (7,120 | ) | ||||
|
Accounts payable and other liabilities |
20,492 | 4,786 | ||||||
|
Net cash provided by operating activities |
27,001 | 24,059 | ||||||
|
Cash flows from investing activities: |
||||||||
|
Capital expenditures |
(15,835 | ) | (7,055 | ) | ||||
|
Net cash used in investing activities |
(15,835 | ) | (7,055 | ) | ||||
|
Cash flows from financing activities: |
||||||||
|
Payments on term loan |
(1,751 | ) | (875 | ) | ||||
|
Share repurchase |
-- | (20,059 | ) | |||||
|
Income tax benefit from exercised stock options |
1,313 | 60 | ||||||
|
Proceeds from exercise of stock options |
735 | 81 | ||||||
|
Net cash provided by (used in) financing activities |
297 | (20,793 | ) | |||||
|
Net increase (decrease) in cash and cash equivalents |
11,463 | (3,789 | ) | |||||
|
Cash and cash equivalents, beginning of period |
162,349 | 49,012 | ||||||
|
Cash and cash equivalents, end of period |
$ | 173,812 | $ | 45,223 | ||||
10
|
CARTER’S, INC.
RECONCILIATION OF GAAP TO ADJUSTED RESULTS
|
||||||||||||||||||||||||
|
Three-month period ended July 4, 2009 |
Six-month period ended July 4, 2009 |
|||||||||||||||||||||||
|
Operating
Income |
Net
Income |
Diluted
EPS |
Operating
Income |
Net
Income |
Diluted
EPS |
|||||||||||||||||||
|
(dollars in millions, except earnings per share) | ||||||||||||||||||||||||
|
Income, as reported (GAAP) |
$ | 20.9 | $ | 11.3 | $ | 0.19 | $ | 49.5 | $ | 27.7 | $ | 0.47 | ||||||||||||
|
Workforce reduction (a) |
2.2 | 1.4 | 0.02 | 5.5 | 3.5 | 0.06 | ||||||||||||||||||
|
Distribution facility closure costs (b) |
-- | -- | -- | 3.3 | 2.1 | 0.04 | ||||||||||||||||||
|
Asset impairment charges (c) |
-- | -- | -- | 1.8 | 1.1 | 0.02 | ||||||||||||||||||
|
Accelerated depreciation (d) |
0.7 | 0.4 | 0.01 | 1.0 | 0.6 | 0.01 | ||||||||||||||||||
|
Facility write-down (e) |
0.7 | 0.5 | 0.01 | 0.7 | 0.5 | 0.01 | ||||||||||||||||||
|
Income, as adjusted (f) |
$ | 24.5 | $ | 13.6 | $ | 0.23 | $ | 61.8 | $ | 35.5 | $ | 0.61 | ||||||||||||
|
(a) |
Severance charges and other benefits associated with the reduction in the Company’s corporate workforce. |
|
(b) |
Costs associated with the closure of the Company’s Barnesville, Georgia distribution facility, including $1.7 million in severance and other benefits, $1.1 million in asset impairment charges, and $0.5 million in other closure costs. |
|
(c) |
Asset impairment charges associated with the closure of the Company’s Oshkosh, Wisconsin facility. |
|
(d) |
Accelerated depreciation charges (included in selling, general, and administrative expenses) related to the closure of the Company’s Barnesville, Georgia distribution facility. |
|
(e) |
Charge related to the write-down of the carrying value of the White House, Tennessee distribution facility held for sale. |
|
(f) |
In addition to the results provided in this earnings release in accordance with GAAP, the Company has provided adjusted, non-GAAP financial measurements that present operating income, net income, and net income on a diluted share basis excluding the adjustments discussed above. These adjustments, which the Company does not believe to be indicative
of on-going business trends, are excluded from these calculations. We believe these adjustments provide a meaningful comparison of the Company’s results. The adjusted, non-GAAP financial measurements included in this earnings release should not be considered as an alternative to net income or as any other measurement of performance derived in accordance with GAAP. The adjusted, non-GAAP financial measurements are presented for informational purposes only and are not necessarily
indicative of the Company’s future condition or results of operations. |
11
|
CARTER’S, INC.
RECONCILIATION OF GAAP TO ADJUSTED RESULTS
|
||||||||||||||||||||||||
|
Three-month period ended June 28, 2008 |
Six-month period ended June 28, 2008 |
|||||||||||||||||||||||
|
Operating
Income |
Net
Income |
Diluted
EPS |
Operating
Income |
Net
Income |
Diluted
EPS |
|||||||||||||||||||
|
(dollars in millions, except earnings per share) | ||||||||||||||||||||||||
|
Income, as reported (GAAP) |
$ | 9.3 | $ | 2.8 | $ | 0.05 | $ | 29.8 | $ | 14.3 | $ | 0.24 | ||||||||||||
|
Executive retirement charges |
5.3 | 3.3 | 0.05 | 5.3 | 3.3 | 0.06 | ||||||||||||||||||
|
Income, as adjusted (a) |
$ | 14.6 | $ | 6.1 | $ | 0.10 | $ | 35.1 | $ | 17.6 | $ | 0.30 | ||||||||||||
|
(a) |
In addition to the results provided in this earnings release in accordance with GAAP, the Company has provided adjusted, non-GAAP financial measurements that present operating income, net income, and net income on a diluted share basis excluding the adjustments discussed above. These adjustments, which the Company does not believe to be indicative
of on-going business trends, are excluded from these calculations. We believe these adjustments provide a meaningful comparison of the Company’s results. The adjusted, non-GAAP financial measurements included in this earnings release should not be considered as an alternative to net income or as any other measurement of performance derived in accordance with GAAP. The adjusted, non-GAAP financial measurements are presented for informational purposes only and are not necessarily
indicative of the Company’s future condition or results of operations. |
12