-
Net Sales Increased $16 Million, +5%
-
Total Retail Store Sales +14%
-
Net Income Increased from $3 Million to $11 Million
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.
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.
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.
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.
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.
|
CARTER’S, INC.
|
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(dollars in thousands, except for share data)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Three-month periods ended
|
|
Six-month periods ended
|
|
|
|
July 4,
2009
|
|
June 28,
2008
|
|
July 4,
2009
|
|
June 28,
2008
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
Carter’s:
|
|
|
|
|
|
|
|
|
|
Wholesale
|
|
$100,088
|
|
|
$ 94,322
|
|
|
$222,985
|
|
|
$212,154
|
|
|
Retail
|
|
110,127
|
|
|
92,656
|
|
|
212,057
|
|
|
179,058
|
|
|
Mass Channel
|
|
44,216
|
|
|
51,054
|
|
|
102,961
|
|
|
113,978
|
|
|
Carter’s net sales
|
|
254,431
|
|
|
238,032
|
|
|
538,003
|
|
|
505,190
|
|
|
OshKosh:
|
|
|
|
|
|
|
|
|
|
Retail
|
|
52,160
|
|
|
49,883
|
|
|
103,988
|
|
|
94,248
|
|
|
Wholesale
|
|
11,318
|
|
|
13,760
|
|
|
32,705
|
|
|
32,209
|
|
|
OshKosh net sales
|
|
63,478
|
|
|
63,643
|
|
|
136,693
|
|
|
126,457
|
|
|
Total net sales
|
|
317,909
|
|
|
301,675
|
|
|
674,696
|
|
|
631,647
|
|
|
Cost of goods sold
|
|
201,619
|
|
|
202,094
|
|
|
431,059
|
|
|
427,151
|
|
|
Gross profit
|
|
116,290
|
|
|
99,581
|
|
|
243,637
|
|
|
204,496
|
|
|
Selling, general, and administrative expenses
|
|
99,843
|
|
|
92,207
|
|
|
198,973
|
|
|
184,483
|
|
|
Executive retirement charges
|
|
--
|
|
|
5,325
|
|
|
--
|
|
|
5,325
|
|
|
Workforce reduction and facility write-down and closure costs
|
|
2,980
|
|
|
--
|
|
|
11,400
|
|
|
--
|
|
|
Royalty income
|
|
(7,472
|
)
|
|
(7,203
|
)
|
|
(16,234
|
)
|
|
(15,117
|
)
|
|
Operating income
|
|
20,939
|
|
|
9,252
|
|
|
49,498
|
|
|
29,805
|
|
|
Interest expense, net
|
|
2,708
|
|
|
4,789
|
|
|
5,883
|
|
|
9,309
|
|
|
Income before income taxes
|
|
18,231
|
|
|
4,463
|
|
|
43,615
|
|
|
20,496
|
|
|
Provision for income taxes
|
|
6,902
|
|
|
1,684
|
|
|
15,918
|
|
|
6,158
|
|
|
Net income
|
|
$ 11,329
|
|
|
$ 2,779
|
|
|
$ 27,697
|
|
|
$ 14,338
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per common share
|
|
$0.20
|
|
|
$0.05
|
|
|
$0.49
|
|
|
$0.25
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per common share
|
|
$0.19
|
|
|
$0.05
|
|
|
$0.47
|
|
|
$0.24
|
|
|
CARTER’S, INC.
|
|
BUSINESS SEGMENT RESULTS
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
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
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carter’s:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholesale
|
|
$100,088
|
|
|
31.5
|
%
|
|
$94,322
|
|
|
31.3
|
%
|
|
$222,985
|
|
|
33.0
|
%
|
|
$212,154
|
|
|
33.6
|
%
|
|
Retail
|
|
110,127
|
|
|
34.6
|
%
|
|
92,656
|
|
|
30.7
|
%
|
|
212,057
|
|
|
31.4
|
%
|
|
179,058
|
|
|
28.4
|
%
|
|
Mass Channel
|
|
44,216
|
|
|
13.9
|
%
|
|
51,054
|
|
|
16.9
|
%
|
|
102,961
|
|
|
15.3
|
%
|
|
113,978
|
|
|
18.0
|
%
|
|
Carter’s net sales
|
|
254,431
|
|
|
80.0
|
%
|
|
238,032
|
|
|
78.9
|
%
|
|
538,003
|
|
|
79.7
|
%
|
|
505,190
|
|
|
80.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OshKosh:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
|
|
52,160
|
|
|
16.4
|
%
|
|
49,883
|
|
|
16.5
|
%
|
|
103,988
|
|
|
15.4
|
%
|
|
94,248
|
|
|
14.9
|
%
|
|
Wholesale
|
|
11,318
|
|
|
3.6
|
%
|
|
13,760
|
|
|
4.6
|
%
|
|
32,705
|
|
|
4.9
|
%
|
|
32,209
|
|
|
5.1
|
%
|
|
OshKosh net sales
|
|
63,478
|
|
|
20.0
|
%
|
|
63,643
|
|
|
21.1
|
%
|
|
136,693
|
|
|
20.3
|
%
|
|
126,457
|
|
|
20.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales
|
|
$317,909
|
|
|
100.0
|
%
|
|
$301,675
|
|
|
100.0
|
%
|
|
$674,696
|
|
|
100.0
|
%
|
|
$631,647
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss):
|
|
|
|
% of
segment
net sales
|
|
|
|
% of
segment
net sales
|
|
|
|
% of
segment
net sales
|
|
|
|
% of
segment
net sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carter’s:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholesale
|
|
$ 12,352
|
|
|
12.3
|
%
|
|
$ 12,663
|
|
|
13.4
|
%
|
|
$ 36,531
|
|
|
16.4
|
%
|
|
$ 34,222
|
|
|
16.1
|
%
|
|
Retail
|
|
16,575
|
|
|
15.1
|
%
|
|
10,358
|
|
|
11.2
|
%
|
|
33,163
|
|
|
15.6
|
%
|
|
21,800
|
|
|
12.2
|
%
|
|
Mass Channel
|
|
8,639
|
|
|
19.5
|
%
|
|
7,123
|
|
|
14.0
|
%
|
|
16,674
|
|
|
16.2
|
%
|
|
13,865
|
|
|
12.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carter’s operating income
|
|
37,566
|
|
|
14.8
|
%
|
|
30,144
|
|
|
12.7
|
%
|
|
86,368
|
|
|
16.1
|
%
|
|
69,887
|
|
|
13.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OshKosh:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
|
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
|
|
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
|
|
|
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.
|
|
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.
|
Carter’s, Inc.
Richard F. Westenberger, 404-745-2889
Executive
Vice President &
Chief Financial Officer
