Atlanta, Georgia, October 27, 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 third quarter 2011 results.
“We are very pleased with our third quarter performance. The success of our growth strategies has resulted in strong revenue growth and market share gains this year,” said Michael D. Casey, Chairman and Chief Executive Officer. “As expected, profitability this year has been affected by the abnormal spike in cotton prices. We are encouraged by the improved outlook on product costs and the continued support of our brands from consumers in all channels of distribution.”
Third Quarter of Fiscal 2011 compared to Third Quarter of Fiscal 2010
Consolidated net sales increased $121.7 million, or 23.5%, to $639.6 million. Net domestic sales of the Company’s Carter’s brands increased $70.5 million, or 17.5%, to $473.3 million. Net domestic sales of the Company’s OshKosh B’gosh brand increased $3.2 million, or 3.1%, to $106.9 million. Net international sales, which are comprised of sales of Carter’s and OshKosh B’gosh branded products to wholesale customers outside the United States and Canadian retail store sales, increased $48.0 million to $59.4 million.
The Company’s pre-tax income in the third quarter of fiscal 2011 includes expenses related to the acquisition of Bonnie Togs, a Canadian children’s apparel retailer, of approximately $7.0 million, including $5.9 million of purchase accounting adjustments recorded in cost of goods sold.
Operating income in the third quarter of fiscal 2011 was $56.8 million, a decrease of $23.1 million, or 28.9%, from $79.9 million in the third quarter of fiscal 2010. Excluding the effect of the acquisition-related expenses described above, adjusted operating income in the third quarter of fiscal 2011 was $63.8 million, a decrease of $16.1 million, or 20.1%, from the third quarter of fiscal 2010. The decrease primarily reflects the net effect of higher product costs.
Net income decreased $15.2 million, or 30.6%, to $34.4 million, or $0.58 per diluted share, compared to $49.7 million, or $0.83 per diluted share, in the third quarter of fiscal 2010. Excluding the effect of the acquisition-related expenses described above, adjusted net income in the third quarter of fiscal 2011 decreased $9.9 million, or 19.9%, to $39.7 million, or $0.67 per adjusted diluted share.
A reconciliation of income as reported under accounting principles generally accepted in the United States of America (“GAAP”) to adjusted income is provided at the end of this release.
Business Segment Results
In light of the acquisition of Bonnie Togs, the Company has realigned certain of its reportable segments. Effective in the third quarter of fiscal year 2011, the Carter’s and OshKosh wholesale segments now reflect domestic business activities formerly reported in these brands’ wholesale and mass channel segments. In addition, the Company added a new international segment, which includes its Canadian retail business, international wholesale sales, and international royalty income. Prior-year amounts have been recast to conform to the current year presentation.
Carter’s Segments
Carter’s retail segment sales increased $33.7 million, or 22.3%, to $184.5 million, driven by incremental sales of $15.9 million generated by new store openings, $10.9 million generated by eCommerce sales, and a comparable store sales increase of $7.9 million, or 5.5%. In the third quarter of fiscal 2011, the Company opened 23 Carter’s retail stores. As of the end of the third quarter, the Company operated 351 Carter’s retail stores.
Carter’s wholesale segment sales increased $36.8 million, or 14.6%, to $288.8 million driven by strong demand.
OshKosh B’gosh Segments
OshKosh retail segment sales increased $2.5 million, or 3.2%, to $80.5 million, driven by incremental sales of $2.5 million generated by new store openings, $3.3 million generated by eCommerce sales, partially offset by a comparable store sales decrease of $1.7 million, or 2.3%, and store closures of $1.6 million. In the third quarter of fiscal 2011, the Company opened one and closed two OshKosh retail stores. As of the end of the third quarter, the Company operated 176 OshKosh retail stores.
OshKosh wholesale segment sales increased $0.7 million, or 2.6%, to $26.5 million.
International Segment
International segment sales increased $48.0 million to $59.4 million, reflecting the acquisition of the Canadian retailer Bonnie Togs in the current year and higher wholesale sales. In the third quarter of fiscal 2011, the Company opened five stores in Canada. As of the end of the third quarter, the Company operated 64 retail stores in Canada.
First Nine Months of Fiscal 2011 compared to First Nine Months of Fiscal 2010
Consolidated net sales increased $249.1 million, or 19.9%, to $1.5 billion. Net domestic sales of the Company’s Carter’s brands increased $182.1 million, or 18.5%, to $1.2 billion. Net domestic sales of the Company’s OshKosh B’gosh brand increased $11.8 million, or 4.9%, to $252.8 million. Net international sales increased $55.1 million to $82.0 million.
The Company’s pre-tax income in the first nine months of fiscal 2011 includes Bonnie Togs acquisition related charges of approximately $9.2 million, which includes $5.9 million of purchase accounting adjustments recorded in cost of goods sold.
Operating income in the first nine months of fiscal 2011 was $132.4 million, a decrease of $52.0 million, or 28.2%, from $184.5 million in the first nine months of fiscal 2010. Excluding the effect of the acquisition-related expenses described above, adjusted operating income in the first nine months of fiscal 2011 was $141.6 million, a decrease of $42.8 million, or 23.2%, from the first nine months of fiscal 2010. The decrease primarily reflects the net effect of higher product costs.
Net income decreased $32.3 million, or 29.0%, to $79.2 million, or $1.35 per diluted share, compared to $111.6 million, or $1.86 per diluted share, in the first nine months of fiscal 2010. Excluding the effect of the acquisition-related expenses described above, adjusted net income in the first nine months of fiscal 2011 decreased $25.6 million, or 23.0%, to $85.9 million, or $1.46 per adjusted diluted share from the first nine months 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 nine months of fiscal 2011 was $85.8 million compared to cash flow from operations of $5.2 million in the first nine months of fiscal 2010. The decline was primarily due to net changes in working capital and decreased earnings.
Carter’s Segments
Carter’s retail segment sales increased $82.7 million, or 21.6%, to $465.3 million, driven by incremental sales of $37.7 million generated by new store openings, $27.8 million generated by eCommerce sales, and a comparable store sales increase of $18.1 million, or 4.9%. In the first nine months of fiscal 2011, the Company opened 47 Carter’s retail stores and closed two stores.
Carter’s wholesale segment sales increased $99.4 million, or 16.5%, to $703.0 million principally due to strong demand.
OshKosh B’gosh Segments
OshKosh retail segment sales increased $6.5 million, or 3.5%, to $191.6 million, driven by incremental sales of $8.2 million generated by eCommerce sales, $7.3 million generated by new store openings, partially offset by a comparable store sales decrease of $5.8 million, or 3.3%, and store closures of $3.2 million. In the first nine months of fiscal 2011, the Company opened three OshKosh retail stores and closed seven stores.
OshKosh wholesale segment sales increased $5.3 million, or 9.5%, to $61.2 million.
International Segment
International segment sales increased $55.1 million to $82.0 million, reflecting the acquisition of Bonnie Togs in the current year and higher wholesale sales.
Outlook
The Company projects net sales for the fourth quarter of fiscal 2011 will increase approximately 15% to 17% (inclusive of the contribution from the Bonnie Togs acquisition) over the fourth quarter of fiscal 2010. The Company also expects adjusted diluted earnings per share, excluding the impact of purchase accounting charges related to the Bonnie Togs acquisition and other acquisition related or other non-recurring items, to be approximately $0.40 to $0.45 compared to $0.60 in the fourth quarter of fiscal 2010.
For fiscal 2011, the Company expects net sales to increase approximately 19%, with adjusted diluted earnings per share to be approximately $1.88 to $1.93 compared to $2.46 in fiscal 2010.
The Company anticipates that product costs for its domestic Spring 2012 merchandise assortments will increase approximately 15% compared to its Spring 2011 assortments, due to continued elevated cotton, labor, and other product-related costs. Although product costs for the Company’s domestic Fall 2012 merchandise assortment are still being negotiated, the Company expects domestic Fall 2012 costs to decline compared to Fall 2011 costs.
Conference Call
The Company will hold a conference call with investors to discuss third quarter results on October 27, 2011 at 8:30 a.m. Eastern Time. To participate in the call, please dial 913-312-0708. To listen to a live broadcast of the call on the internet, please log on to www.carters.com and select the “Q3 2011 Earnings Conference Call” link under the “Investor Relations” tab. 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 November 5, 2011, at 719-457-0820, passcode 3242025. 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 fourth 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)
| | | For the three-month periods ended | | | For the nine-month periods ended | |
| | | October 1, | | | October 2, | | | October 1, | | | October 2, | |
| | | | | | | | | | | | | |
| Net sales | | $ | 639,617 | | | $ | 517,928 | | | $ | 1,503,105 | | | $ | 1,253,986 | |
| Cost of goods sold | | | 447,744 | | | | 325,125 | | | | 1,018,688 | | | | 764,122 | |
| Gross profit | | | 191,873 | | | | 192,803 | | | | 484,417 | | | | 489,864 | |
| Selling, general, and administrative expenses | | | 145,602 | | | | 123,321 | | | | 380,088 | | | | 333,084 | |
| Royalty income | | | (10,494 | ) | | | (10,396 | ) | | | (28,092 | ) | | | (27,690 | ) |
| Operating income | | | 56,765 | | | | 79,878 | | | | 132,421 | | | | 184,470 | |
| Interest expense, net | | | 1,699 | | | | 1,568 | | | | 5,305 | | | | 6,674 | |
| Foreign currency gain | | | (88 | ) | | | -- | | | | (319 | ) | | | -- | |
| Income before income taxes | | | 55,154 | | | | 78,310 | | | | 127,435 | | | | 177,796 | |
| Provision for income taxes | | | 20,705 | | | | 28,653 | | | | 48,204 | | | | 66,218 | |
| Net income | | $ | 34,449 | | | $ | 49,657 | | | $ | 79,231 | | | $ | 111,578 | |
| | | | | | | | | | | | | | | | | |
| Basic net income per common share | | $ | 0.59 | | | $ | 0.84 | | | $ | 1.37 | | | $ | 1.89 | |
| | | | | | | | | | | | | | | | | |
| Diluted net income per common share | | $ | 0.58 | | | $ | 0.83 | | | $ | 1.35 | | | $ | 1.86 | |
CARTER’S, INC.
BUSINESS SEGMENT RESULTS
(unaudited)
| | | For the three-month periods ended | | | For the nine-month periods ended | |
| (dollars in thousands) | | October 1, | | | | % of | | | October 2, | | | % of | | | October 1, | | | | % of | | | October 2, | | | % of | |
Net sales: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Carter’s Wholesale | | $ | 288,775 | | | | | 45.1 | % | | $ | 251,943 | | | | 48.7 | % | | $ | 703,028 | | | | | 46.7 | % | | $ | 603,599 | | | | 48.1 | % |
Carter’s Retail (a) | | | 184,498 | | | | | 28.9 | % | | | 150,838 | | | | 29.1 | % | | | 465,281 | | | | | 31.0 | % | | | 382,570 | | | | 30.5 | % |
Total Carter’s | | | 473,273 | | | | | 74.0 | % | | | 402,781 | | | | 77.8 | % | | | 1,168,309 | | | | | 77.7 | % | | | 986,169 | | | | 78.6 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
OshKosh Retail (a) | | | 80,472 | | | | | 12.6 | % | | | 77,946 | | | | 15.0 | % | | | 191,578 | | | | | 12.7 | % | | | 185,050 | | | | 14.8 | % |
OshKosh Wholesale | | | 26,472 | | | | | 4.1 | % | | | 25,810 | | | | 5.0 | % | | | 61,248 | | | | | 4.1 | % | | | 55,935 | | | | 4.5 | % |
Total OshKosh | | | 106,944 | | | | | 16.7 | % | | | 103,756 | | | | 20.0 | % | | | 252,826 | | | | | 16.8 | % | | | 240,985 | | | | 19.3 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
International (b) | | | 59,400 | | | | | 9.3 | % | | | 11,391 | | | | 2.2 | % | | | 81,970 | | | | | 5.5 | % | | | 26,832 | | | | 2.1 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total net sales | | $ | 639,617 | | | | | 100.0 | % | | $ | 517,928 | | | | 100.0 | % | | $ | 1,503,105 | | | | | 100.0 | % | | $ | 1,253,986 | | | | 100.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating income (loss): | | | | | | | % of segment | | | | | | | % of segment | | | | | | | | % of segment | | | | | | | % of segment | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Carter’s Wholesale | | $ | 33,023 | | | | | 11.4 | % | | $ | 44,496 | | | | 17.7 | % | | $ | 90,603 | | | | | 12.9 | % | | $ | 122,407 | | | | 20.3 | % |
Carter’s Retail (a) | | | 25,698 | | | | | 13.9 | % | | | 31,579 | | | | 20.9 | % | | | 72,897 | | | | | 15.7 | % | | | 76,405 | | | | 20.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Carter’s | | | 58,721 | | | | | 12.4 | % | | | 76,075 | | | | 18.9 | % | | | 163,500 | | | | | 14.0 | % | | | 198,812 | | | | 20.2 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
OshKosh Retail (a) | | | 2,154 | | | | | 2.7 | % | | | 9,420 | | | | 12.1 | % | | | (10,079 | ) | | | | (5.3 | %) | | | 10,474 | | | | 5.7 | % |
OshKosh Wholesale | | | 362 | | | | | 1.4 | % | | | 3,855 | | | | 14.9 | % | | | (260 | ) | | | | (0.4 | %) | | | 4,476 | | | | 8.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total OshKosh | | | 2,516 | | | | | 2.4 | % | | | 13,275 | | | | 12.8 | % | | | (10,339 | ) | | | | (4.1 | %) | | | 14,950 | | | | 6.2 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
International (b) | | | 7,919 | | (c) | | | 13.3 | % | | | 5,567 | | | | 48.9 | % | | | 16,500 | | (c) | | | 20.1 | % | | | 12,794 | | | | 47.7 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Segment operating income | | | 69,156 | | | | | 10.8 | % | | | 94,917 | | | | 18.3 | % | | | 169,661 | | | | | 11.3 | % | | | 226,556 | | | | 18.1 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Corporate expenses (d) | | | (12,391 | ) | (e) | | | (1.9 | %) | | | (15,039 | ) | | | (2.9 | %) | | | (37,240 | ) | (e) | | | (2.5 | %) | | | (42,086 | ) | | | (3.4 | %) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total operating income | | $ | 56,765 | | | | | 8.9 | % | | $ | 79,878 | | | | 15.4 | % | | $ | 132,421 | | | | | 8.8 | % | | $ | 184,470 | | | | 14.7 | % |
| (a) | Includes eCommerce results. |
| (b) | Includes international retail and wholesale sales, and international licensing income. |
| (c) | Includes $5.9 million of expense related to the amortization of the fair value step-up for Bonnie Togs inventory acquired and a $1.0 million charge associated with the revaluation of the Company’s contingent consideration. |
| (d) | 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. |
| (e) | Includes $0.1 million and $2.3 million of professional service fees associated with the acquisition of Bonnie Togs for the three and nine-month periods ended October 1, 2011, respectively. |
CARTER’S, INC.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except for share data)
(unaudited)
| | | | | | | | | | |
| ASSETS | | | | | | | | | |
| Current assets: | | | | | | | | | |
| Cash and cash equivalents | | $ | 81,634 | | | $ | 247,382 | | | $ | 182,329 | |
| Accounts receivable, net | | | 214,558 | | | | 121,453 | | | | 171,501 | |
| Finished goods inventories, net | | | 385,960 | | | | 298,509 | | | | 263,782 | |
| Prepaid expenses and other current assets | | | 16,412 | | | | 17,372 | | | | 12,369 | |
| Deferred income taxes | | | 24,384 | | | | 31,547 | | | | 25,701 | |
| | | | | | | | | | | | | |
| Total current assets | | | 722,948 | | | | 716,263 | | | | 655,682 | |
| Property, plant, and equipment, net | | | 111,830 | | | | 94,968 | | | | 92,558 | |
| Trade names | | | 306,234 | | | | 305,733 | | | | 305,733 | |
| Goodwill | | | 186,536 | | | | 136,570 | | | | 136,570 | |
| Deferred debt issuance costs, net | | | 2,801 | | | | 3,332 | | | | 1,237 | |
| Other intangible assets, net | | | 268 | | | | -- | | | | -- | |
| Other assets | | | 499 | | | | 316 | | | | 305 | |
| Total assets | | $ | 1,331,116 | | | $ | 1,257,182 | | | $ | 1,192,085 | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | | | | |
| Current liabilities: | | | | | | | | | | | | |
| Current maturities of long-term debt | | $ | -- | | | $ | -- | | | $ | 2,450 | |
| Accounts payable | | | 83,491 | | | | 116,481 | | | | 94,440 | |
| Other current liabilities | | | 42,426 | | | | 66,891 | | | | 62,502 | |
| | | | | | | | | | | | | |
| Total current liabilities | | | 125,917 | | | | 183,372 | | | | 159,392 | |
| Long-term debt | | | 236,000 | | | | 236,000 | | | | 229,709 | |
| Deferred income taxes | | | 115,982 | | | | 113,817 | | | | 109,855 | |
| Other long-term liabilities | | | 81,600 | | | | 44,057 | | | | 45,626 | |
| Total liabilities | | | 559,499 | | | | 577,246 | | | | 544,582 | |
| | | | | | | | | | | | | |
| Commitments and contingencies | | | | | | | | | | | | |
| Stockholders’ equity: | | | | | | | | | | | | |
| Preferred stock; par value $.01 per share; 100,000 shares authorized; none issued or outstanding at October 1, 2011, January 1, 2011, and October 2, 2010 | | | -- | | | | -- | | | | -- | |
| Common stock, voting; par value $.01 per share; 150,000,000 shares authorized, 58,529,586, 57,493,567, and 57,696,317 shares issued and outstanding at October 1, 2011, January 1, 2011, and October 2, 2010, respectively | | | 585 | | | | 575 | | | | 577 | |
| Additional paid-in capital | | | 228,061 | | | | 210,600 | | | | 214,547 | |
| Accumulated other comprehensive loss | | | (6,911 | ) | | | (1,890 | ) | | | (3,378 | ) |
| Retained earnings | | | 549,882 | | | | 470,651 | | | | 435,757 | |
| | | | | | | | | | | | | |
| Total stockholders’ equity | | | 771,617 | | | | 679,936 | | | | 647,503 | |
| | | | | | | | | | | | | |
| Total liabilities and stockholders’ equity | | $ | 1,331,116 | | | $ | 1,257,182 | | | $ | 1,192,085 | |
CARTER’S, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
(dollars in thousands)
(unaudited)
| | | For the | |
| | | October 1, | | | October 2, | |
| Cash flows from operating activities: | | | | | | |
Net income | | $ | 79,231 | | | $ | 111,578 | |
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | | | | | | | | |
Depreciation and amortization | | | 23,522 | | | | 22,730 | |
Amortization of Bonnie Togs inventory step-up | | | 5,944 | | | | -- | |
Non-cash revaluation of contingent consideration | | | 1,020 | | | | -- | |
| Amortization of Bonnie Togs tradename and non-compete agreements | | | 96 | | | | -- | |
Amortization of debt issuance costs | | | 531 | | | | 1,232 | |
Non-cash stock-based compensation expense | | | 7,161 | | | | 5,397 | |
Income tax benefit from stock-based compensation | | | (6,292 | ) | | | (8,973 | ) |
| Loss (gain) on disposal/sale of property, plant, and equipment | | | 149 | | | | (3 | ) |
Deferred income taxes | | | 8,021 | | | | 6,974 | |
Effect of changes in operating assets and liabilities: | | | | | | | | |
Accounts receivable | | | (90,263 | ) | | | (89,407 | ) |
Inventories | | | (59,355 | ) | | | (49,782 | ) |
Prepaid expenses and other assets | | | 1,019 | | | | (1,255 | ) |
Accounts payable and other liabilities | | | (56,572 | ) | | | 6,710 | |
| | | | | | | | | |
| Net cash (used in) provided by operating activities | | | (85,788 | ) | | | 5,201 | |
| | | | | | | | | |
| Cash flows from investing activities: | | | | | | | | |
Capital expenditures | | | (29,157 | ) | | | (29,483 | ) |
Acquisition of Bonnie Togs | | | (61,199 | ) | | | -- | |
Proceeds from sale of property, plant, and equipment | | | 10 | | | | 286 | |
| | | | | | | | | |
Net cash used in investing activities | | | (90,346 | ) | | | (29,197 | ) |
| | | | | | | | | |
| Cash flows from financing activities: | | | | | | | | |
Payments on term loan | | | -- | | | | (102,364 | ) |
Repurchases of common stock | | | -- | | | | (44,090 | ) |
Income tax benefit from stock-based compensation | | | 6,292 | | | | 8,973 | |
Withholdings from vesting of restricted stock | | | (1,635 | ) | | | (715 | ) |
Proceeds from exercise of stock options | | | 5,428 | | | | 9,480 | |
| | | | | | | | | |
| Net cash provided by (used in) financing activities | | | 10,085 | | | | (128,716 | ) |
| | | | | | | | | |
Effect of exchange rate changes on cash | | | 301 | | | | -- | |
Net decrease in cash and cash equivalents | | | (165,748 | ) | | | (152,712 | ) |
Cash and cash equivalents, beginning of period | | | 247,382 | | | | 335,041 | |
| | | | | | | | | |
Cash and cash equivalents, end of period | | $ | 81,634 | | | $ | 182,329 | |
CARTER’S, INC.
RECONCILIATION OF GAAP TO ADJUSTED RESULTS
Three-month period ended October 1, 2011
| | | | | | | | | | | | | | | | |
| (dollars in millions, except earnings per share) | | | | | | | | | | | Net | | | Diluted | |
| | | | | | | | | | | | | | | | |
| As reported (GAAP) | | $ | 191.9 | | | $ | 145.6 | | | $ | 56.8 | | | $ | 34.4 | | | $ | 0.58 | |
| | | | | | | | | | | | | | | | | | | | | |
| Amortization of fair value step-up of inventory (a) | | | 5.9 | | | | -- | | | | 5.9 | | | | 4.3 | | | | 0.07 | |
| Revaluation of contingent consideration | | | -- | | | | (1.0 | ) | | | 1.0 | | | | 1.0 | | | | 0.02 | |
| Professional fees / other expenses (b) | | | -- | | | | (0.1 | ) | | | 0.1 | | | | -- | | | | -- | |
| | | | | | | | | | | | | | | | | | | | | |
As adjusted (c) | | $ | 197.8 | | | $ | 144.5 | | | $ | 63.8 | | | $ | 39.7 | | | $ | 0.67 | |
Nine-month period ended October 1, 2011
| | | | | | | | | | | | | | | | |
| (dollars in millions, except earnings per share) | | | | | | | | | | | Net | | | Diluted | |
| | | | | | | | | | | | | | | | |
| As reported (GAAP) | | $ | 484.4 | | | $ | 380.1 | | | $ | 132.4 | | | $ | 79.2 | | | $ | 1.35 | |
| | | | | | | | | | | | | | | | | | | | | |
| Amortization of fair value step-up of inventory (a) | | | 5.9 | | | | -- | | | | 5.9 | | | | 4.3 | | | | 0.07 | |
| Revaluation of contingent consideration | | | -- | | | | (1.0 | ) | | | 1.0 | | | | 1.0 | | | | 0.02 | |
| Professional fees / other expenses (b) | | | -- | | | | (2.3 | ) | | | 2.3 | | | | 1.4 | | | | 0.02 | |
| | | | | | | | | | | | | | | | | | | | | |
As adjusted (c) | | $ | 490.3 | | | $ | 376.8 | | | $ | 141.6 | | | $ | 85.9 | | | $ | 1.46 | |
| (a) | Includes $5.9 million of expense related to the amortization of the fair value step-up for Bonnie Togs inventory acquired. |
| (b) | Professional service fees associated with the acquisition of Bonnie Togs. |
| (c) | 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. The Company has excluded $7.0 million and $9.2 million in acquisition-related expenses from these results for the three and nine-month period ended October 1, 2011, respectively. 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. |
