| CARTER’S, INC. REPORTS SECOND QUARTER 2011 RESULTS |
| § | NET SALES $394.5 MILLION, UP 21% |
| § | EARNINGS PER SHARE $0.22, DOWN 31% |
| § | COMPANY COMPLETES ACQUISITION OF CANADIAN RETAILER |
Atlanta, Georgia, July 28, 2011 / 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 2011 results.
“In the second quarter, we achieved sales growth in every segment of our business, led by the strength of our Carter’s brand. As expected, earnings have been affected by higher cotton prices, but our outlook for product costs is improving,” said Michael D. Casey, Chairman and Chief Executive Officer. “We recently completed the acquisition of Bonnie Togs, a Toronto-based children’s apparel retailer. We believe the Canadian marketplace represents a meaningful opportunity for growth and this acquisition supports our strategy to extend the reach of our brands outside the United States.”
Second Quarter of Fiscal 2011 compared to Second Quarter of Fiscal 2010
Consolidated net sales increased $67.5 million, or 20.6%, to $394.5 million. Net sales of the Company’s Carter’s brands increased $58.0 million, or 22.0%, to $321.7 million. Net sales of the Company’s OshKosh B’gosh brand increased $9.5 million, or 15.0%, to $72.8 million.
In connection with the Company’s acquisition of Bonnie Togs, the Company recorded pre-tax charges in the second quarter of fiscal 2011 of approximately $1.2 million principally related to professional service fees.
Operating income in the second quarter of fiscal 2011 was $22.0 million, a decrease of $11.4 million, or 34.1%, from $33.4 million in the second quarter of fiscal 2010. Excluding the effect of the acquisition-related expenses in the second quarter of fiscal 2011, adjusted operating income in the second quarter of fiscal 2011 was $23.2 million, a decrease of $10.2 million, or 30.6%, from the second quarter of fiscal 2010. The decrease primarily reflects higher product costs.
Net income decreased $6.4 million, or 33.7%, to $12.7 million, or $0.22 per diluted share, compared to $19.1 million, or $0.32 per diluted share, in the second quarter of fiscal 2010. Excluding the effect of the acquisition-related expenses in the second quarter of fiscal 2011, adjusted net income in the second quarter of fiscal 2011 decreased $5.7 million, or 29.8%, to $13.4 million, or $0.23 per adjusted diluted share.
A reconciliation of income as reported under accounting principles generally accepted in the United States of America (“GAAP”) to income adjusted for expenses related to the Company’s acquisition of the Bonnie Togs business is provided at the end of this release.
Carter’s Brand Businesses
Carter’s retail segment sales increased $29.3 million, or 25.8%, to $142.9 million, driven by incremental sales of $20.4 million generated by new store openings and eCommerce sales and a comparable store sales increase of $8.8 million, or 8.1%. In the second quarter of fiscal 2011, the Company opened 14 Carter’s retail stores and closed two stores. As of the end of the second quarter, the Company operated 328 Carter’s retail stores.
Carter’s wholesale sales increased $16.9 million, or 15.2%, to $128.1 million principally due to strong over-the-counter performance of our products.
Carter’s mass channel sales, which are comprised of sales of its Child of Mine brand and Just One You brand, increased $11.8 million, or 30.3%, to $50.6 million. The increase was driven by higher sales of our Child of Mine brand, reflecting expanded door growth and additional floor space, as well as timing of customer demand compared to the second quarter of fiscal 2010.
OshKosh B’gosh Brand Businesses
OshKosh retail segment sales increased $5.2 million, or 9.9%, to $57.1 million, driven by incremental sales of $4.9 million generated by new store openings and eCommerce sales and a comparable store sales increase of $1.1 million, or 2.2%. In the second quarter of fiscal 2011, the Company closed two OshKosh retail stores. As of the end of the second quarter, the Company operated 177 OshKosh retail stores.
OshKosh wholesale sales increased $4.3 million, or 38.0%, to $15.7 million driven by higher sales in both the wholesale and off-price channels.
First Half of Fiscal 2011 compared to First Half of Fiscal 2010
Consolidated net sales increased $127.4 million, or 17.3%, to $863.5 million. Net sales of the Company’s Carter’s brands increased $118.1 million, or 19.8%, to $714.1 million. Net sales of the Company’s OshKosh B’gosh brand increased $9.4 million, or 6.7%, to $149.4 million.
In connection with the Company’s acquisition of Bonnie Togs, the Company recorded pre-tax charges in the first half of fiscal 2011 of approximately $2.2 million principally related to professional service fees.
Operating income in the first half of fiscal 2011 was $75.7 million, a decrease of $28.9 million, or 27.7%, from $104.6 million in the first half of fiscal 2010. Excluding the effect of the acquisition-related expenses in the first half of fiscal 2011, adjusted operating income in the first half of fiscal 2011 was $77.9 million, a decrease of $26.7 million, or 25.5%, from the first half of fiscal 2010. The decrease primarily reflects higher product costs.
Net income decreased $17.1 million, or 27.7%, to $44.8 million, or $0.76 per diluted share, compared to $61.9 million, or $1.03 per diluted share, in the first half of fiscal 2010. Excluding the effect of the acquisition-related expenses in the first half of fiscal 2011, adjusted net income in the first half of fiscal 2011 decreased $15.7 million, or 25.4%, to $46.2 million, or $0.79 per adjusted diluted share from the first half of fiscal 2010.
A reconciliation of income as reported under GAAP to income adjusted for expenses related to the Company’s acquisition of the Bonnie Togs business is provided at the end of this release.
Cash flow used in operations in the first half of fiscal 2011 was $86.3 million compared to cash flow from operations of $15.3 million in the first half of fiscal 2010 primarily due to net changes in working capital and decreased earnings.
Carter’s Brand Businesses
Carter’s wholesale sales increased $58.5 million, or 22.7%, to $316.0 million due to higher sales in the off-price channel and strong over-the-counter performance of our product offerings.
Carter’s retail segment sales increased $49.1 million, or 21.2%, to $280.8 million, driven by incremental sales of $38.7 million generated by new store openings and eCommerce sales and a comparable store sales increase of $10.2 million, or 4.5%. In the first half of fiscal 2011, the Company opened 24 Carter’s retail stores and closed two stores.
Carter’s mass channel sales increased $10.5 million, or 9.8%, to $117.3 million. The increase was driven by higher sales of its Child of Mine brand, reflecting expanded door growth and additional floor space, as well as timing of customer demand compared to a year ago, and higher sales of its Just One You brand, primarily due to additional floor space than a year ago.
OshKosh B’gosh Brand Businesses
OshKosh retail segment sales increased $4.0 million, or 3.7%, to $111.1 million, driven by incremental sales of $9.6 million generated by new store openings and eCommerce sales partially offset by a comparable store sales decrease of $4.1 million, or 4.1%. In the first half of fiscal 2011, the Company opened two OshKosh retail stores and closed five stores.
OshKosh wholesale sales increased $5.4 million, or 16.3%, to $38.3 million, primarily due to higher sales in the off-price channel.
Bonnie Togs Acquisition
On June 30, 2011, the Company completed its previously announced acquisition of Bonnie Togs, a children’s apparel retailer based in Toronto, Canada. The Company is in the process of finalizing the opening balance sheet related to this acquisition. As the acquisition closed on June 30, 2011, preliminary estimates of the assets and liabilities of Bonnie Togs have been included in the Company’s balance sheet, while its results of operations were not material to the Company’s second quarter. Please refer to the Company’s second quarter 2011 Quarterly Report on Form 10-Q for additional information.
Third Quarter 2011 Business Outlook
The Company expects net sales for the third quarter of fiscal 2011 will increase approximately 16% to 19% over the third quarter of fiscal 2010. The Company also expects adjusted diluted earnings per share, excluding the impact of non-recurring purchase accounting-related charges related to the Bonnie Togs acquisition and any other non-recurring items, to be approximately $0.50 to $0.60 compared to $0.83 in the third quarter of last year.
Outlook for Product Costs
The Company anticipates that product costs for its Spring 2012 merchandise assortments will be higher than those reflected in its Spring 2011 merchandise assortments, due to continued elevated cotton, labor, and other product-related costs.
Conference Call
The Company will hold a conference call with investors to discuss second quarter results on July 28, 2011 at 8:30 a.m. Eastern Time. To participate in the call, please dial 913-905-3226. To listen to a live broadcast of the call on the internet, please log on to www.carters.com and select the “Q2 2011 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 6, 2011, at 719-457-0820, passcode 7256410. 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.
Cautionary Language
This press release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 relating to the Company’s future performance, including, without limitation, statements with respect to the Company’s anticipated financial results for the third quarter of fiscal 2011 and fiscal 2011, or any other future period, assessment of the Company’s performance and financial position, and drivers of the Company’s sales and earnings growth. 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: the acceptance of the Company's products in the marketplace; changes in consumer preference and fashion trends; seasonal fluctuations in the children's apparel business; negative publicity; the breach of the Company's consumer databases; increased production costs; deflationary pricing pressures and customer acceptance of higher selling prices; a continued decrease in the overall level of consumer spending; the Company's dependence on its foreign supply sources; failure of its foreign supply sources to meet the Company's quality standards or regulatory requirements; the impact of governmental regulations and environmental risks applicable to the Company's business; the loss of a product sourcing agent; increased competition in the baby and young children's apparel market; the ability of the Company to identify new retail store locations, and negotiate appropriate lease terms for the retail stores; the ability of the Company to adequately forecast demand, which could create significant levels of excess inventory; failure to successfully integrate Bonnie Togs into our existing business and realize growth opportunities and other benefits from the acquisition; failure to achieve sales growth plans, cost savings, and other assumptions that support the carrying value of the Company's intangible assets; and the ability to attract and retain key individuals within the organization. Many of these risks are further described in the most recently filed Quarterly Report on Form 10-Q 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.
CARTER’S, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except for share data)
(unaudited)
| | | Three-month periods ended | | | | |
| | | July 2, | | | July 3, | | | July 2, | | | July 3, | |
| Net sales: | | | | | | | | | | | | |
| Carter’s: | | | | | | | | | | | | |
| Wholesale | | $ | 128,133 | | | $ | 111,248 | | | $ | 316,011 | | | $ | 257,506 | |
| Retail | | | 142,921 | | | | 113,593 | | | | 280,783 | | | | 231,732 | |
| Mass Channel | | | 50,625 | | | | 38,838 | | | | 117,261 | | | | 106,758 | |
| Carter’s net sales | | | 321,679 | | | | 263,679 | | | | 714,055 | | | | 595,996 | |
| OshKosh: | | | | | | | | | | | | | | | | |
| Retail | | | 57,112 | | | | 51,959 | | | | 111,106 | | | | 107,104 | |
| Wholesale | | | 15,697 | | | | 11,371 | | | | 38,327 | | | | 32,958 | |
| OshKosh net sales | | | 72,809 | | | | 63,330 | | | | 149,433 | | | | 140,062 | |
| Total net sales | | | 394,488 | | | | 327,009 | | | | 863,488 | | | | 736,058 | |
| Cost of goods sold | | | 259,750 | | | | 196,758 | | | | 570,944 | | | | 438,997 | |
| Gross profit | | | 134,738 | | | | 130,251 | | | | 292,544 | | | | 297,061 | |
| Selling, general, and administrative expenses | | | 119,802 | | | | 104,468 | | | | 232,266 | | | | 209,763 | |
| Acquisition–related costs | | | 1,183 | | | | -- | | | | 2,220 | | | | -- | |
| Royalty income | | | (8,269 | ) | | | (7,640 | ) | | | (17,598 | ) | | | (17,294 | ) |
| Operating income | | | 22,022 | | | | 33,423 | | | | 75,656 | | | | 104,592 | |
| Interest expense, net | | | 1,756 | | | | 2,662 | | | | 3,606 | | | | 5,106 | |
| Foreign exchange gain | | | (231 | ) | | | -- | | | | (231 | ) | | | -- | |
| Income before income taxes | | | 20,497 | | | | 30,761 | | | | 72,281 | | | | 99,486 | |
| Provision for income taxes | | | 7,838 | | | | 11,665 | | | | 27,499 | | | | 37,565 | |
| Net income | | $ | 12,659 | | | $ | 19,096 | | | $ | 44,782 | | | $ | 61,921 | |
| | | | | | | | | | | | | | | | | |
| Basic net income per common share | | $ | 0.22 | | | $ | 0.32 | | | $ | 0.77 | | | $ | 1.05 | |
| | | | | | | | | | | | | | | | | |
| Diluted net income per common share | | $ | 0.22 | | | $ | 0.32 | | | $ | 0.76 | | | $ | 1.03 | |
CARTER’S, INC.
BUSINESS SEGMENT RESULTS
(unaudited)
| | | For the three-month periods ended | | | For the six-month periods ended | |
| (dollars in thousands) | | July 2, | | | % of | | | July 3, | | | % of | | | July 2, | | | % of | | | July 3, | | | % of | |
| Net sales: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Carter’s: | | | | | | | | | | | | | | | | | | | | | | | | |
Wholesale | | $ | 128,133 | | | | 32.5 | % | | $ | 111,248 | | | | 34.0 | % | | $ | 316,011 | | | | 36.6 | % | | $ | 257,506 | | | | 35.0 | % |
Retail (a) | | | 142,921 | | | | 36.2 | % | | | 113,593 | | | | 34.7 | % | | | 280,783 | | | | 32.5 | % | | | 231,732 | | | | 31.5 | % |
Mass Channel | | | 50,625 | | | | 12.8 | % | | | 38,838 | | | | 11.9 | % | | | 117,261 | | | | 13.6 | % | | | 106,758 | | | | 14.5 | % |
Carter’s net sales | | | 321,679 | | | | 81.5 | % | | | 263,679 | | | | 80.6 | % | | | 714,055 | | | | 82.7 | % | | | 595,996 | | | | 81.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| OshKosh: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Retail (a) | | | 57,112 | | | | 14.5 | % | | | 51,959 | | | | 15.9 | % | | | 111,106 | | | | 12.9 | % | | | 107,104 | | | | 14.5 | % |
Wholesale | | | 15,697 | | | | 4.0 | % | | | 11,371 | | | | 3.5 | % | | | 38,327 | | | | 4.4 | % | | | 32,958 | | | | 4.5 | % |
OshKosh net sales | | | 72,809 | | | | 18.5 | % | | | 63,330 | | | | 19.4 | % | | | 149,433 | | | | 17.3 | % | | | 140,062 | | | | 19.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total net sales | | $ | 394,488 | | | | 100.0 | % | | $ | 327,009 | | | | 100.0 | % | | $ | 863,488 | | | | 100.0 | % | | $ | 736,058 | | | | 100.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Operating income (loss): | | | | | | % of segment | | | | | | | % of segment | | | | | | | % of segment | | | | | | | % of segment | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Carter’s: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Wholesale | | $ | 16,059 | | | | 12.5 | % | | $ | 23,341 | | | | 21.0 | % | | $ | 50,766 | | | | 16.1 | % | | $ | 63,639 | | | | 24.7 | % |
Retail (a) | | | 20,031 | | | | 14.0 | % | | | 18,683 | | | | 16.4 | % | | | 47,198 | | | | 16.8 | % | | | 44,826 | | | | 19.3 | % |
Mass Channel | | | 6,654 | | | | 13.1 | % | | | 6,856 | | | | 17.7 | % | | | 12,099 | | | | 10.3 | % | | | 19,650 | | | | 18.4 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Carter’s operating income | | | 42,744 | | | | 13.3 | % | | | 48,880 | | | | 18.5 | % | | | 110,063 | | | | 15.4 | % | | | 128,115 | | | | 21.5 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| OshKosh: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Retail (a) | | | (6,346 | ) | | | (11.1 | %) | | | (909 | ) | | | (1.7 | %) | | | (12,233 | ) | | | (11.0 | %) | | | 1,054 | | | | 1.0 | % |
Wholesale | | | (1,470 | ) | | | (9.4 | %) | | | (2,363 | ) | | | (20.8 | %) | | | 1,155 | | | | 3.0 | % | | | 1,230 | | | | 3.7 | % |
Mass Channel (b) | | | 712 | | | | -- | | | | 474 | | | | -- | | | | 1,520 | | | | -- | | | | 1,239 | | | | -- | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
OshKosh operating (loss) income | | | (7,104 | ) | | | (9.8 | %) | | | (2,798 | ) | | | (4.4 | %) | | | (9,558 | ) | | | (6.4 | %) | | | 3,523 | | | | 2.5 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Segment operating income | | | 35,640 | | | | 9.0 | % | | | 46,082 | | | | 14.1 | % | | | 100,505 | | | | 11.6 | % | | | 131,638 | | | | 17.9 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Corporate expenses (c) | | | (12,435 | ) | | | (3.2 | %) | | | (12,659 | ) | | | (3.9 | %) | | | (22,629 | ) | | | (2.6 | %) | | | (27,046 | ) | | | (3.7 | %) |
Acquisition-related expenses (d) | | | (1,183 | ) | | | (0.3 | %) | | | -- | | | | -- | | | | (2,220 | ) | | | (0.3 | %) | | | -- | | | | -- | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net corporate expenses | | | (13,618 | ) | | | (3.5 | %) | | | (12,659 | ) | | | (3.9 | %) | | | (24,849 | ) | | | (2.9 | %) | | | (27,046 | ) | | | (3.7 | %) |
Total operating income | | $ | 22,022 | | | | 5.6 | % | | $ | 33,423 | | | | 10.2 | % | | $ | 75,656 | | | | 8.8 | % | | $ | 104,592 | | | | 14.2 | % |
| (a) | Includes eCommerce results. |
| (b) | OshKosh mass channel consists of a licensing agreement with Target Stores. Operating income consists of royalty income, net of related expenses. |
| (c) | Corporate expenses generally include expenses related to incentive compensation, stock-based compensation, executive management, severance and relocation, finance, building occupancy, information technology, certain legal fees, consulting, and audit fees. |
| (d) | Acquisition-related expenses consist of professional service fees associated with the acquisition of Bonnie Togs. |
CARTER’S, INC.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except for share data)
(unaudited)
| | | | | | | | | | |
| ASSETS | | | | | | | | | |
| Current assets: | | | | | | | | | |
| Cash and cash equivalents | | $ | 86,725 | | | $ | 247,382 | | | $ | 245,013 | |
| Accounts receivable, net | | | 124,667 | | | | 121,453 | | | | 99,526 | |
| Finished goods inventories, net | | | 458,114 | | | | 298,509 | | | | 260,660 | |
| Prepaid expenses and other current assets | | | 16,689 | | | | 17,372 | | | | 11,583 | |
| Deferred income taxes | | | 23,687 | | | | 31,547 | | | | 25,726 | |
| | | | | | | | | | | | | |
| Total current assets | | | 709,882 | | | | 716,263 | | | | 642,508 | |
| Property, plant, and equipment, net | | | 101,796 | | | | 94,968 | | | | 90,374 | |
| Tradenames | | | 306,356 | | | | 305,733 | | | | 305,733 | |
| Goodwill | | | 191,050 | | | | 136,570 | | | | 136,570 | |
| Deferred debt issuance costs, net | | | 2,978 | | | | 3,332 | | | | 1,459 | |
| Other intangible assets, net | | | 311 | | | | - | | | | 137 | |
| Other assets | | | 445 | | | | 316 | | | | 292 | |
| Total assets | | $ | 1,312,818 | | | $ | 1,257,182 | | | $ | 1,177,073 | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | | | | |
| Current liabilities: | | | | | | | | | | | | |
| Current maturities of long-term debt | | $ | -- | | | $ | -- | | | $ | 3,503 | |
| Accounts payable | | | 119,428 | | | | 116,481 | | | | 121,047 | |
| Other current liabilities | | | 37,226 | | | | 66,891 | | | | 31,848 | |
| | | | | | | | | | | | | |
| Total current liabilities | | | 156,654 | | | | 183,372 | | | | 156,398 | |
| Long-term debt | | | 236,000 | | | | 236,000 | | | | 229,269 | |
| Deferred income taxes | | | 112,261 | | | | 113,817 | | | | 108,162 | |
| Other long-term liabilities | | | 75,021 | | | | 44,057 | | | | 44,105 | |
| Total liabilities | | | 579,936 | | | | 577,246 | | | | 537,934 | |
| | | | | | | | | | | | | |
| Commitments and contingencies | | | | | | | | | | | | |
| Stockholders’ equity: | | | | | | | | | | | | |
| Preferred stock; par value $.01 per share; 100,000 shares authorized; none issued or outstanding at July 2, 2011, January 1, 2011, and July 3, 2010 | | | -- | | | | -- | | | | -- | |
| Common stock, voting; par value $.01 per share; 150,000,000 shares authorized, 58,087,327, 57,493,567, and 59,442,933 shares issued and outstanding at July 2, 2011, January 1, 2011, and July 3, 2010, respectively | | | 581 | | | | 575 | | | | 594 | |
| Additional paid-in capital | | | 218,857 | | | | 210,600 | | | | 256,048 | |
| Accumulated other comprehensive loss | | | (1,989 | ) | | | (1,890 | ) | | | (3,603 | ) |
| Retained earnings | | | 515,433 | | | | 470,651 | | | | 386,100 | |
| | | | | | | | | | | | | |
| Total stockholders’ equity | | | 732,882 | | | | 679,936 | | | | 639,139 | |
| | | | | | | | | | | | | |
| Total liabilities and stockholders’ equity | | $ | 1,312,818 | | | $ | 1,257,182 | | | $ | 1,177,073 | |
CARTER’S, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
(dollars in thousands)
(unaudited)
| | | For the six-month periods ended | |
| | | July 2, | | | July 3, | |
| Cash flows from operating activities: | | | | | | |
Net income | | $ | 44,782 | | | $ | 61,921 | |
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | | | | | | | | |
Depreciation and amortization | | | 16,367 | | | | 16,082 | |
Amortization of debt issuance costs | | | 354 | | | | 1,010 | |
Non-cash stock-based compensation expense | | | 4,883 | | | | 3,510 | |
Income tax benefit from exercised stock options | | | (2,840 | ) | | | (8,579 | ) |
Loss (gain) on disposal/sale of property, plant, and equipment | | | 140 | | | | (172 | ) |
Deferred income taxes | | | 4,844 | | | | 5,152 | |
Effect of changes in operating assets and liabilities, excluding the effects from the Acquisition of Bonnie Togs: | | | | | | | | |
| Accounts receivable | | | (234 | ) | | | (17,432 | ) |
| Inventories | | | (123,324 | ) | | | (46,660 | ) |
| Prepaid expenses and other assets | | | 1,291 | | | | (456 | ) |
| Accounts payable and other liabilities | | | (32,565 | ) | | | 952 | |
| Net cash (used in) provided by operating activities | | | (86,302 | ) | | | 15,328 | |
| | | | | | | | | |
| Cash flows from investing activities: | | | | | | | | |
Capital expenditures | | | (16,086 | ) | | | (20,720 | ) |
| Acquisition of Bonnie Togs | | | (61,199 | ) | | | -- | |
Proceeds from sale of property, plant, and equipment | | | -- | | | | 286 | |
| Net cash used in investing activities | | | (77,285 | ) | | | (20,434 | ) |
| | | | | | | | | |
| Cash flows from financing activities: | | | | | | | | |
Payments on term loan | | | -- | | | | (101,751 | ) |
Income tax benefit from exercised stock options | | | 2,840 | | | | 8,579 | |
| Withholdings from vesting of restricted stock | | | (1,602 | ) | | | (621 | ) |
Proceeds from exercise of stock options | | | 1,692 | | | | 8,871 | |
| Net cash provided by (used in) financing activities | | | 2,930 | | | | (84,922 | ) |
| | | | | | | | | |
| Net decrease in cash and cash equivalents | | | (160,657 | ) | | | (90,028 | ) |
| Cash and cash equivalents, beginning of period | | | 247,382 | | | | 335,041 | |
| | | | | | | | | |
| Cash and cash equivalents, end of period | | $ | 86,725 | | | $ | 245,013 | |
CARTER’S, INC. RECONCILIATION OF GAAP TO ADJUSTED RESULTS | |
| | | Three-month period ended | | | Six-month period ended | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | Net | | | Diluted | | | | | | Net | | | Diluted | |
| (dollars in millions, except earnings per share) |
| | | | | | | | | | | | | | | | | | | |
| Income, as reported (GAAP) | | $ | 22.0 | | | $ | 12.7 | | | $ | 0.22 | | | $ | 75.7 | | | $ | 44.8 | | | $ | 0.76 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Acquisition-related costs (a) | | | 1.2 | | | | 0.7 | | | | 0.01 | | | | 2.2 | | | | 1.4 | | | | 0.03 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Income, as adjusted (b) | | $ | 23.2 | | | $ | 13.4 | | | $ | 0.23 | | | $ | 77.9 | | | $ | 46.2 | | | $ | 0.79 | |
| (a) | Professional service fees associated with the acquisition of Bonnie Togs. |
| (b) | 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. The Company believes 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. |
