- Fourth Quarter Net Sales $770
Million, Up 12%
- Fourth Quarter EPS $0.78, Down 4%;
Adjusted EPS $1.02, Up 14%
- Fiscal 2013 Net Sales $2.6 Billion,
Up 11%
- Fiscal 2013 EPS $2.75, Up 2%;
Adjusted EPS $3.37, Up 18%
- Returned $482 Million to
Shareholders Via Share Repurchases and Dividends in 2013
- Board of Directors Authorizes
Quarterly Dividend Increase of 19% to $0.19 Per Share
Carter’s, Inc. (NYSE:CRI), the largest branded marketer in the
United States of apparel exclusively for babies and young children,
today reported its fourth quarter and fiscal 2013 results.
“Carter's achieved its 25th consecutive year of sales growth in
2013. This performance reflects our focus on providing consumers
with the best value and experience in young children’s apparel,
extending the reach of our brands, and improving profitability,”
said Michael D. Casey, Chairman and Chief Executive Officer. “We
are planning good growth in sales and earnings in 2014, driven by
our direct-to-consumer businesses in the U.S. and Canada."
Fourth Quarter of Fiscal 2013 compared to Fourth Quarter of
Fiscal 2012
Consolidated net sales increased $80.4 million, or 11.7%, to
$769.7 million. Net domestic sales of the Company’s Carter’s brands
increased $50.2 million, or 9.7%, to $567.2 million. Net domestic
sales of the Company’s OshKosh B’gosh brand increased $8.7 million,
or 8.1%, to $116.1 million. Net international sales increased $21.4
million, or 33.0%, to $86.3 million. Foreign currency translation
negatively impacted net international sales by approximately $3.5
million, or 5.4%.
Operating income in the fourth quarter of fiscal 2013 decreased
$5.0 million, or 6.3%, to $73.4 million, compared to $78.4 million
in the fourth quarter of fiscal 2012. Fourth quarter fiscal 2013
operating income includes expenses totaling approximately $21.0
million related to the previously-announced office consolidation;
the amortization associated with the previously-announced
acquisition of tradenames; the costs to exit retail operations in
Japan, as discussed further below; the previously-announced
Hogansville, Georgia distribution center closure; and the
revaluation of contingent consideration associated with the
acquisition of Bonnie Togs in 2011. Fourth quarter fiscal 2012
operating income included expenses totaling approximately $7.5
million related to the office consolidation; the revaluation of the
Bonnie Togs contingent consideration; and the Hogansville
distribution center closure. Excluding the expenses noted above in
both periods, adjusted operating income in the fourth quarter of
fiscal 2013 increased $8.5 million, or 10.0%, to $94.4 million,
compared to $85.9 million in the fourth quarter of fiscal 2012.
Net income in the fourth quarter of fiscal 2013 decreased $5.9
million, or 12.2%, to $42.7 million, or $0.78 per diluted share,
compared to $48.7 million, or $0.81 per diluted share, in the
fourth quarter of fiscal 2012. Excluding the expenses noted above
in both periods, adjusted net income in the fourth quarter of
fiscal 2013 increased $2.5 million, or 4.6%, to $56.2 million,
compared to $53.7 million in the fourth quarter of fiscal 2012.
Adjusted earnings per diluted share in the fourth quarter of fiscal
2013 increased 14.0% to $1.02, compared to $0.89 per diluted share
in the fourth quarter of fiscal 2012.
Business Segment Results (Fourth Quarter of Fiscal 2013
compared to Fourth Quarter of Fiscal 2012)
Carter’s Segments
Carter’s retail segment sales increased $40.2 million, or 15.8%,
to $295.3 million. The increase was driven by incremental sales of
$22.5 million from new retail store openings and $18.7 million from
eCommerce. This growth was partially offset by $0.5 million in
lower sales due to retail store closings and a $0.5 million
decrease in comparable retail store sales. Carter's
direct-to-consumer comparable sales, defined as the combination of
retail store and eCommerce comparable sales, increased 7.3%,
comprised of eCommerce comparable sales growth of 48.3% and a
retail store comparable sales decline of 0.2%. In the fourth
quarter of fiscal 2013, the Company opened 21 Carter’s retail
stores in the United States. As of the end of the fourth quarter of
fiscal 2013, the Company operated 476 Carter’s retail stores in the
United States.
Carter’s wholesale segment sales grew $10.0 million, or 3.8%, to
$271.9 million, principally driven by growth in the Carter's
brand.
OshKosh B’gosh Segments
OshKosh retail segment sales increased $6.7 million, or 7.5%, to
$95.6 million. The increase reflects incremental sales of $6.2
million from eCommerce and $4.6 million from new retail store
openings. The increases were partially offset by $2.7 million
attributed to retail store closings and a $1.5 million decline in
comparable retail store sales. OshKosh direct-to-consumer
comparable sales increased 5.5%, comprised of eCommerce comparable
sales growth of 46.5% and a retail store comparable sales decline
of 2.1%. In the fourth quarter of fiscal 2013, the Company opened
11 OshKosh retail stores in the United States. As of the end of the
fourth quarter of fiscal 2013, the Company operated 181 OshKosh
retail stores in the United States.
OshKosh wholesale segment sales increased $2.1 million, or
11.3%, to $20.5 million.
International Segment
International segment sales increased $21.4 million, or 33.0%,
to $86.3 million, principally driven by the Company's retail store
and wholesale businesses in Canada. Our retail operations in Japan,
which are not comparable to the prior year period, contributed $3.8
million to international segment sales. As noted above, foreign
currency translation negatively impacted international segment net
sales by approximately $3.5 million. In the fourth quarter of
fiscal 2013, the Company opened six retail stores in Canada. As of
the end of the fourth quarter of fiscal 2013, the Company operated
102 retail stores in Canada.
In the first quarter of 2013, we assumed control of retail
operations in Japan, previously managed by a licensee. In fiscal
2013, our retail operations in Japan generated net sales of $15.9
million and an operating loss of $11.3 million, which includes exit
costs of $4.1 million. In the fourth quarter of 2013, we decided to
exit those operations based on revised forecasts which do not meet
our investment objectives.
Fiscal 2013 compared to Fiscal 2012
Consolidated net sales increased $257.0 million, or 10.8%, to
$2.6 billion. Net domestic sales of the Company’s Carter’s brands
increased $189.2 million, or 10.5%, to $2.0 billion. Net domestic
sales of the Company’s OshKosh B’gosh brand increased $0.8 million,
or 0.2%, to $363.9 million. Net international sales increased $67.0
million, or 30.7%, to $285.3 million. Foreign currency translation
negatively impacted net international sales by approximately $6.8
million, or 3.1%.
Operating income in fiscal 2013 increased $2.2 million, or 0.8%,
to $264.2 million, compared to $262.0 million in fiscal 2012.
Operating income for fiscal 2013 includes expenses totaling
approximately $55.7 million incurred in connection with the office
consolidation; amortization of acquired tradenames; costs to exit
retail operations in Japan; revaluation of the Bonnie Togs
contingent consideration; and Hogansville distribution center
closure. Operating income in fiscal 2012 included expenses totaling
approximately $13.1 million related to costs associated with the
office consolidation; the revaluation of the Bonnie Togs contingent
consideration; and the Hogansville distribution center closure.
Excluding the expenses noted above in both periods, adjusted
operating income in fiscal 2013 increased $44.8 million, or 16.3%,
to $319.8 million, compared to $275.1 million in fiscal 2012.
Net income in fiscal 2013 decreased $0.7 million, or 0.5%, to
$160.4 million, or $2.75 per diluted share, compared to $161.2
million, or $2.69 per diluted share, in fiscal 2012. Excluding the
expenses noted above in both periods, adjusted net income in fiscal
2013 increased $25.8 million, or 15.1%, to $196.5 million, compared
to adjusted net income of $170.7 million in fiscal 2012. Adjusted
diluted earnings per share in fiscal 2013 increased 18.2% to $3.37,
compared to $2.85 per diluted share in fiscal 2012.
Cash flow from operations in fiscal 2013 was $209.7 million
compared to cash flow from operations of $278.6 million in fiscal
2012. The decrease was driven by changes in net working
capital.
Business Segment Results (Fiscal 2013 compared to Fiscal
2012)
Carter’s Segments
Carter’s retail segment sales increased $135.3 million, or
16.5%, to $954.2 million, driven by incremental sales of $79.1
million generated by new retail store openings, $54.6 million
generated by eCommerce sales, and a comparable retail store sales
increase of $6.8 million, partially offset by the impact of retail
store closings of $5.3 million. Carter's direct-to-consumer
comparable sales increased 7.7%, comprised of eCommerce comparable
sales growth of 49.9% and a retail store comparable sales growth of
1.0%. In fiscal 2013, the Company opened 65 Carter’s retail stores
in the United States and closed two.
Carter’s wholesale segment sales increased $54.0 million, or
5.5%, to $1,035.4 million, reflecting growth in all Carter's
brands.
OshKosh B’gosh Segments
OshKosh retail segment sales increased $6.0 million, or 2.1%, to
$289.3 million, driven by incremental sales of $13.5 million
generated by eCommerce sales and $11.0 million generated by new
retail store openings, partially offset by the impact of retail
store closings of $10.5 million and a comparable retail store sales
decrease of $8.0 million. OshKosh direct-to-consumer comparable
sales increased 2.0%, comprised of eCommerce comparable sales
growth of 40.9% and a retail store comparable sales decline of
3.4%. In fiscal 2013, the Company opened eighteen OshKosh retail
stores in the United States and closed five.
OshKosh wholesale segment sales decreased $5.2 million, or 6.5%,
to $74.6 million.
International Segment
International segment sales increased $67.0 million, or 30.7%,
to $285.3 million, principally driven by our retail store and
wholesale businesses in Canada and higher wholesale sales in other
markets. Our retail sales in Japan, which are not comparable to the
prior year, contributed $15.9 million to international segment
sales. As noted above, foreign currency translation negatively
impacted international segment net sales by approximately $6.8
million. In fiscal 2013, the Company opened 21 retail stores in
Canada and closed one.
Dividends
In the second, third and fourth quarters of fiscal 2013, the
Company's Board of Directors authorized quarterly cash dividends of
$0.16 per share totaling $27.7 million.
On February 19, 2014, the Company's Board of Directors
authorized a 19% increase ($0.03 per share) to the quarterly cash
dividend, to $0.19 per share for payment on March 20, 2014, to
shareholders of record at the close of business on March 10,
2014.
Future declarations of quarterly dividends and the establishment
of related record and payment dates will be at the discretion of
the Company’s Board of Directors based on a number of factors,
including the Company's future financial performance and other
considerations.
Stock Repurchase Activity
On May 9, 2013, the Company's Board of Directors authorized the
Company to repurchase shares of its common stock up to $300
million, inclusive of amounts remaining under previous
authorizations. On August 22, 2013, the Board of Directors approved
an additional $400 million share repurchase authorization.
As previously disclosed, in August 2013, the Company entered
into accelerated stock repurchase ("ASR") agreements of $400
million. During the third quarter of fiscal 2013, the Company
received approximately 4.6 million shares under the ASR, which were
retired upon receipt.
The ASR agreements were settled in January 2014 with the
delivery to the Company of approximately one million additional
shares. As of the date of settlement, total shares received under
the agreements were approximately 5.6 million at an average price
of $70.99 per share.
During the first three quarters of fiscal 2013, the Company
repurchased 816,402 shares for $54.1 million at an average price of
$66.31 in the open market. During the fourth quarter of fiscal
2013, the Company did not purchase shares in the open market due to
the ASR arrangement.
As of February 25, 2014, the total remaining capacity under the
Company's share repurchase authorizations was $267.2 million.
2014 Business Outlook
For fiscal 2014, the Company projects net sales to increase
approximately 8% to 10% over fiscal 2013 and adjusted diluted
earnings per share to increase approximately 12% to 15% compared to
adjusted diluted earnings per share of $3.37 in fiscal 2013. This
forecast for fiscal 2014 adjusted earnings per share excludes
anticipated expenses of approximately $16 million related to the
amortization of the acquired tradenames discussed above,
approximately $6 million related to operating losses associated
with retail operations in Japan, approximately $5 million related
to the previously-announced corporate office consolidation,
approximately $2 million to $3 million related to the Bonnie Togs
acquisition, and other items the Company believes to be
nonrepresentative of underlying business performance.
For the first quarter of fiscal 2014, the Company projects net
sales to increase approximately 8% to 10% over the first quarter of
fiscal 2013 and adjusted diluted earnings per share to decline
approximately 10% to 15% compared to adjusted diluted earnings per
share of $0.79 in the first quarter of fiscal 2013, reflecting the
expected impact of higher product costs and investment spending.
This forecast for first quarter fiscal 2014 adjusted earnings per
share excludes anticipated expenses of approximately $6 million
related to the amortization of the acquired tradenames discussed
above, approximately $4 million to $5 million related to operating
losses associated with retail operations in Japan, approximately $2
million related to the previously-announced corporate office
consolidation, approximately $0.5 million related to the Bonnie
Togs acquisition, and other items the Company believes to be
nonrepresentative of underlying business performance.
Conference Call
The Company will hold a conference call with investors to
discuss fourth quarter and fiscal 2013 results and its business
outlook on February 26, 2014 at 8:30 a.m. Eastern Time. To
participate in the call, please dial 913-312-1491. To listen to a
live broadcast of the call on the internet, please log on to
www.carters.com and select the “Fourth Quarter 2013 Earnings
Conference Call” link under the “Investor Relations” tab.
Presentation materials for the call can be accessed under the same
"Investor Relations" tab by selecting the “Webcasts &
Presentations” link under the “News & Events” tab. A replay of
the call will be available shortly after the broadcast through
March 7, 2014, at 888-203-1112 (U.S. / Canada) or 719-457-0820
(international), passcode 6050323. The replay will also be archived
on the Company's website.
About Carter's, Inc.
Carter's, Inc. is the largest branded marketer in the United
States of apparel and related products exclusively for babies and
young children. The Company owns the Carter's and OshKosh B'gosh
brands, two of the most recognized brands in the marketplace. These
brands are sold in leading department stores, national chains, and
specialty retailers domestically and internationally. They are also
sold through more than 700 Company-operated stores in the United
States and Canada and on-line at www.carters.com and
www.oshkoshbgosh.com. The Company's Just One You, Precious Firsts,
and Genuine Kids brands are available at Target, and its Child of
Mine brand is available at Walmart. Carter's is headquartered in
Atlanta, Georgia. Additional information may be found at
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 first
quarter of fiscal 2014 and fiscal year 2014, 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
risks of: losing one or more major customers or financial
difficulties for one or more of our major customers; the Company's
products not being accepted in the marketplace; changes in consumer
preference and fashion trends; negative publicity; the Company
failing to protect its intellectual property; the breach of the
Company's consumer databases, systems or processes; incurring costs
in connection with cooperating with regulatory investigations and
proceedings; increased leverage, not being able to repay its
indebtedness and being subject to restrictions on operations by the
Company's debt agreements; increased production costs; deflationary
pricing pressures; decreases in the overall level of consumer
spending; disruptions resulting from the Company's dependence on
foreign supply sources; the Company's foreign supply sources not
meeting the Company's quality standards or regulatory requirements;
disruptions in the Company's supply chain or in-sourcing
capabilities resulting from sourcing through a single port or
otherwise; the loss of the Company's principal product sourcing
agent; increased competition in the baby and young children's
apparel market; the Company being unable to identify new retail
store locations or negotiate appropriate lease terms for the retail
stores; the Company not adequately forecasting demand, which could,
among other things, create significant levels of excess inventory;
failure to achieve sales growth plans, cost savings, and other
assumptions that support the carrying value of the Company's
intangible assets; not attracting and retaining key individuals
within the organization; failure to implement needed upgrades to
the Company's information technology systems; disruptions resulting
from the Company's transition of distribution functions to its new
Braselton facility and not achieving planned efficiencies; being
unsuccessful in expanding into international markets and failing to
successfully manage legal, regulatory, political and economic risks
of international operations, including maintaining compliance with
world-wide anti-bribery laws; incurring substantial costs as a
result of various claims or pending or threatened lawsuits; and the
failure to declare future quarterly dividends. 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 fiscalquarters
ended
For the fiscal years ended
December 28,2013
December 29,2012
December 28,2013
December 29,2012
Net sales $ 769,655 $ 689,253 $ 2,638,711 $ 2,381,734 Cost of goods
sold 447,232 399,364 1,543,332 1,443,786
Gross profit 322,423 289,889 1,095,379 937,948 Selling,
general, and administrative expenses 258,841 222,049 868,480
713,211 Royalty income (9,812 ) (10,527 ) (37,252 ) (37,249 )
Operating income 73,394 78,367 264,151 261,986 Interest expense
6,755 1,329 13,437 6,765 Interest income (147 ) (78 ) (669 ) (234 )
Other expense (income), net 871 83 1,918 64
Income before income taxes 65,915 77,033 249,465 255,391
Provision for income taxes 23,167 28,341 89,058
94,241 Net income $ 42,748 $ 48,692 $
160,407 $ 161,150 Basic net income per common share $
0.78 $ 0.82 $ 2.78 $ 2.73 Diluted net income per common share $
0.78 $ 0.81 $ 2.75 $ 2.69
CARTER’S, INC.
BUSINESS SEGMENT RESULTS
(dollars in thousands)
(unaudited)
For the fiscal
quarters ended For the fiscal years ended
December 28,2013
% ofTotal
December 29,2012
% ofTotal
December 28,2013
% ofTotal
December 29,2012
% ofTotal
Net
sales:
Carter’s Wholesale $ 271,902 35.3 % $ 261,860 38.0 % $ 1,035,420
39.2 % $ 981,445 41.2 % Carter’s Retail (a) 295,333 38.4 %
255,145 37.0 % 954,160 36.2 % 818,909 34.4 %
Total Carter’s 567,235 73.7 % 517,005 75.0 %
1,989,580 75.4 % 1,800,354 75.6 % OshKosh Retail (a)
95,649 12.4 % 88,984 12.9 % 289,311 11.0 % 283,343 11.9 % OshKosh
Wholesale 20,495 2.7 % 18,413 2.7 % 74,564 2.8
% 79,752 3.3 % Total OshKosh 116,144 15.1 % 107,397
15.6 % 363,875 13.8 % 363,095 15.2 %
International (b) 86,276 11.2 % 64,851 9.4 % 285,256
10.8 % 218,285 9.2 % Total net sales $ 769,655
100.0 % $ 689,253 100.0 % $ 2,638,711 100.0 % $
2,381,734 100.0 %
Operating income
(loss):
% ofsegmentnet
sales
% ofsegmentnet
sales
% ofsegmentnet
sales
% ofsegmentnet
sales
Carter’s Wholesale $ 47,314 17.4 % $ 43,550 16.6 % $ 185,501 17.9 %
$ 172,673 17.6 % Carter’s Retail (a) 60,529 20.5 % 52,401
20.5 % 181,169 19.0 % 145,940 17.8 % Total
Carter’s 107,843 19.0 % 95,951 18.6 % 366,670
18.4 % 318,613 17.7 % OshKosh Retail (a) 4,086 4.3 % 5,533
6.2 % (1,433 ) (0.5 )% (7,752 ) (2.7 )% OshKosh Wholesale 1,867
9.1 % 955 5.2 % 9,796 13.1 % 4,086 5.1
% Total OshKosh 5,953 5.1 % 6,488 6.0 % 8,363
2.3 % (3,666 ) (1.0 )% International (b) (c) 13,154 15.2 %
14,391 22.2 % 40,641 14.2 % 43,376 19.9 %
Total segment operating income
126,950 16.5 % 116,830 17.0 % 415,674 15.8 % 358,323 15.0 %
Corporate expenses (d) (e) (f) (53,556 ) (7.0 )% (38,463 ) (5.6 )%
(151,523 ) (5.7 )% (96,337 ) (4.0 )% Total operating income $
73,394 9.5 % $ 78,367 11.4 % $ 264,151 10.0 %
$ 261,986 11.0 %
(a) Includes eCommerce results.
(b) Net sales includes international
retail, eCommerce, and wholesale sales. Operating income includes
international licensing income.
(c) Includes charges of $0.5 million and
$2.8 million for the quarter and fiscal year ended December 28,
2013, respectively, and $0.7 million and $3.6 million for the
quarter and fiscal year ended December 29, 2012, respectively,
associated with the revaluation of the Company’s contingent
consideration. Includes a charge of $4.1 million in both the
quarter and fiscal year ended December 28, 2013, related to the
Company's exit from retail operations in Japan.
(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 the following charges:
Fiscal quarter ended
Fiscal years ended (dollars in millions)
December 28,2013
December 29,2012
December 28,2013
December 29,2012
Office consolidation costs $ 9.2 $ 6.4 $ 33.3 $ 6.4 Amortization of
H.W. Carter and Sons tradenames $ 6.3 $ — $ 13.6 $ — Closure of
distribution facility in Hogansville, GA $ 0.9 $ 0.4 $ 1.9 $ 3.1
Certain prior year amounts have been
reclassified for comparative purposes.
CARTER’S, INC. CONSOLIDATED BALANCE
SHEETS
(dollars in thousands, except for share
data)
(unaudited)
December 28,2013
December 29,2012
ASSETS Current assets:
Cash and cash equivalents
$ 286,546 $ 382,236 Accounts receivable, net 193,611 168,046
Finished goods inventories, net 417,754 349,530 Prepaid expenses
and other current assets 35,157 22,216 Deferred income taxes 37,313
35,675 Total current assets 970,381 957,703 Property,
plant, and equipment, net 307,885 170,110 Tradenames 330,258
306,072 Goodwill 186,077 189,749 Deferred debt issuance costs, net
8,088 2,878 Other assets 9,795 3,597 Total assets $
1,812,484 $ 1,630,109
LIABILITIES AND
STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable
164,010 149,625 Other current liabilities 105,129 94,610
Total current liabilities 269,139 244,235 Long-term debt
586,000 186,000 Deferred income taxes 121,434 114,341 Other
long-term liabilities 135,180 100,054 Total
liabilities 1,111,753 644,630 Commitments and
contingencies Stockholders’ equity:
Preferred stock; par value $.01 per share;
100,000 shares authorized; none issued or outstanding at December
28, 2013 and December 29, 2012, respectively
— — Common stock, voting; par value $.01 per share; 150,000,000
shares authorized; 54,541,879 and 59,126,639 shares issued and
outstanding at December 28, 2013 and December 29, 2012,
respectively 545 591 Additional paid-in capital 4,332 250,276
Accumulated other comprehensive loss (10,082 ) (11,205 ) Retained
earnings 705,936 745,817 Total stockholders’ equity
700,731 985,479 Total liabilities and stockholders’
equity $ 1,812,484 $ 1,630,109
CARTER’S, INC. CONSOLIDATED STATEMENTS OF CASH FLOW
(dollars in thousands)
(unaudited)
For the fiscal years ended
December 28,2013
December 29,2012
Cash flows from operating activities: Net income $ 160,407 $
161,150 Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization 54,915 39,848
Amortization of H.W. Carter and Sons tradenames 13,588 — Non-cash
revaluation of contingent consideration 2,825 3,589 Amortization of
debt issuance costs 1,049 877 Non-cash stock-based compensation
expense 16,040 13,049 Income tax benefit from stock-based
compensation (11,040 ) (2,760 ) Loss on disposal of property,
plant, and equipment 272 802 Deferred income taxes 596 (9,651 )
Effect of changes in operating assets and liabilities: Accounts
receivable (26,064 ) (10,200 ) Inventories (70,691 ) (1,790 )
Prepaid expenses and other assets (18,716 ) (6,004 ) Accounts
payable and other liabilities 86,515 89,709 Net cash
provided by operating activities 209,696 278,619
Cash flows from investing activities: Capital expenditures
(182,525 ) (83,398 ) Acquisition of tradenames (38,007 ) — Proceeds
from sale of property, plant, and equipment — 6 Net
cash used in investing activities (220,532 ) (83,392 ) Cash
flows from financing activities: Proceeds from senior notes 400,000
— Payments of debt issue costs (6,989 ) (1,916 ) Borrowings under
revolving credit facility — 2,500 Payments on revolving credit
facility — (52,500 ) Repurchase of common stock (454,133 ) —
Payment of contingent consideration (14,721 ) — Dividends paid
(27,715 ) — Income tax benefit from stock-based compensation 11,040
2,760 Withholdings from vesting of restricted stock (5,052 ) (2,846
) Proceeds from exercise of stock options 12,912 5,685
Net cash used in financing activities (84,658 ) (46,317 )
Effect of exchange rate changes on cash (196 ) (168 )
Net (decrease) increase in cash and cash equivalents (95,690 )
148,742 Cash and cash equivalents, beginning of period 382,236
233,494 Cash and cash equivalents, end of period $
286,546 $ 382,236
CARTER’S, INC.
RECONCILIATION OF GAAP TO ADJUSTED RESULTS
(dollars in millions, except earnings per
share)
Fiscal quarter ended December 28,
2013
Gross Margin
SG&A
OperatingIncome
Net Income
Diluted EPS
As reported (GAAP) $ 322.4 $ 258.8 $ 73.4 $ 42.7 $ 0.78
Office consolidation costs (a) — (9.2 ) 9.2 5.8 0.11 Amortization
of H.W. Carter and Sons tradenames — (6.3 ) 6.3 4.0 0.07 Costs to
exit retail operations in Japan 1.1 (3.0 ) 4.1 2.6 0.05 Closure of
distribution facility in Hogansville, GA — (0.9 ) 0.9 0.6 0.01
Revaluation of contingent consideration (b) — (0.5 ) 0.5
0.5 0.01
As adjusted (c) $ 323.5 $
238.9 $ 94.4 $ 56.2 $ 1.02
Fiscal year ended December 28, 2013 Gross
Margin SG&A
OperatingIncome
Net Income Diluted EPS
As reported (GAAP) $ 1,095.4 $ 868.5 $ 264.2 $ 160.4 $ 2.75
Office consolidation costs (a) — (33.3 ) 33.3 21.0 0.36
Amortization of H.W. Carter and Sons tradenames — (13.6 ) 13.6 8.6
0.15 Costs to exit retail operations in Japan 1.1 (3.0 ) 4.1 2.6
0.04 Closure of distribution facility in Hogansville, GA — (1.9 )
1.9 1.2 0.02 Revaluation of contingent consideration (b) —
(2.8 ) 2.8 2.8 0.05
As adjusted (c) $ 1,096.4
$ 813.9 $ 319.8 $ 196.5 $ 3.37
Fiscal quarter ended December 29, 2012
Gross Margin
SG&A
OperatingIncome
Net Income Diluted EPS
As reported (GAAP) $ 289.9 $ 222.0 $ 78.4 $ 48.7 $
0.81 Office consolidation costs (a) — (6.4 ) 6.4 4.0 0.07
Revaluation of contingent consideration (b) — (0.7 ) 0.7 0.7 0.01
Closure of distribution facility in Hogansville, GA — (0.4 )
0.4 0.3 —
As adjusted (c) $ 289.9 $
214.6 $ 85.9 $ 53.7 $ 0.89
Fiscal year ended December 29, 2012 Gross
Margin SG&A
OperatingIncome
Net Income
Diluted EPS
As reported (GAAP) $ 937.9 $ 713.2 $ 262.0 $ 161.2 $
2.69 Office consolidation costs (a) — (6.4 ) 6.4 4.0 0.07
Revaluation of contingent consideration (b) — (3.6 ) 3.6 3.6 0.06
Closure of distribution facility in Hogansville, GA — (3.1 )
3.1 1.9 0.03
As adjusted (c) $ 937.9 $
700.1 $ 275.1 $ 170.7 $ 2.85
(a) Costs associated with office
consolidation including severance, relocation, accelerated
depreciation and other charges.
(b) Revaluation of the contingent
consideration liability associated with the Company's 2011
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
SG&A, operating income, net income, and net income on a diluted
share basis excluding the adjustments discussed above. 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.
Note: Results may not be additive due to
rounding. Certain prior year amounts have been reclassified for
comparative purposes.
CARTER’S, INC. RECONCILIATION OF GAAP TO
ADJUSTED RESULTS
(dollars in millions, except earnings per
share)
Fiscal quarter ended March 31,
2013
SG&A
OperatingIncome
Net Income
Diluted EPS
As reported (GAAP): $ 185.4 $ 66.9 $ 41.4 $ 0.69 Office
consolidation costs (a) (8.0 ) 8.0 5.1 0.09 Revaluation of
contingent consideration (b) (0.9 ) 0.9 0.9 0.02 Closure of
distribution facility in Hogansville, GA (0.6 ) 0.6 0.4
0.01
As adjusted (c): $ 175.9 $ 76.4 $
47.7 $ 0.79
(a) Costs related to consolidating our
Shelton, Connecticut and Atlanta, Georgia offices, as well as
certain functions from our other offices, into a new headquarters
facility in Atlanta, Georgia.
(b) Revaluation of the contingent
consideration liability associated with the Company's June 2011
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
SG&A, operating income, net income, and net income on a diluted
share basis excluding the adjustments discussed above. 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.
Note: Results may not be additive due to
rounding. Certain prior year amounts have been reclassified for
comparative purposes.
CARTER’S, INC. RECONCILIATION OF NET INCOME
ALLOCABLE TO COMMON SHAREHOLDERS
For the fiscalquarters
ended
For the fiscal years ended
December 28,2013
December 29,2012
December 28,2013
December 29,2012
Weighted-average number of common and common equivalent shares
outstanding: Basic number of common shares outstanding 53,777,662
58,344,635 56,931,216 58,217,503 Dilutive effect of equity awards
516,242 871,669 590,951 851,684 Diluted
number of common and common equivalent shares outstanding
54,293,904 59,216,304 57,522,167
59,069,187
As reported on a
GAAP Basis:
(dollars in
thousands, except per share data)
Basic net income per common share: Net income $
42,748
$
48,692
$
160,407
$
161,150
Income allocated to participating securities
(586
)
(632
)
(2,144
)
(2,095
) Net income available to common shareholders $
42,162
$
48,060
$
158,263
$
159,055
Basic net income per common share $ 0.78 $ 0.82 $
2.78 $ 2.73 Diluted net income per common share: Net income $
42,748
$
48,692
$
160,407
$
161,150
Income allocated to participating securities
(581
)
(625
)
(2,126
)
(2,072
) Net income available to common shareholders $
42,167
$
48,067
$
158,281
$
159,078
Diluted net income per common share $ 0.78 $ 0.81 $ 2.75 $
2.69
As adjusted
(a):
(dollars in
thousands, except per share data)
Basic net income per common share: Net income $
56,160
$
53,669
$
196,532
$
170,717
Income allocated to participating securities
(772
)
(696
)
(2,634
)
(2,219
) Net income available to common shareholders $
55,388
$
52,973
$
193,898
$
168,498
Basic net income per common share $ 1.03 $ 0.91 $ 3.41 $
2.89 Diluted net income per common share: Net income $
56,160
$
53,669
$
196,532
$
170,717
Income allocated to participating securities
(766
)
(689
)
(2,610
)
(2,194
) Net income available to common shareholders $
55,394
$
52,980
$
193,922
$
168,523
Diluted net income per common share $ 1.02 $ 0.89 $ 3.37 $
2.85
(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 per
share data excluding the adjustments discussed above. The Company
has excluded approximately $13.4 million and $36.1 million in
after-tax expenses from these results for quarter and fiscal year
ended December 28, 2013, respectively. The Company has excluded
approximately $5.0 million and $9.6 million in after-tax expenses
from these results for the quarter and fiscal year ended December
29, 2012, respectively.
Carter’s, Inc.Sean McHugh, 678-791-7615Vice President &
Treasurer
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