- Net Sales $685 Million, Up
5%
- U.S. Direct-to-Consumer Sales:
Carter's Up 12%, OshKosh Up 15%
- EPS $0.94, Up 49%; Adjusted EPS
$0.97, Up 33%
Carter’s, Inc. (NYSE:CRI), the largest branded marketer in the
United States and Canada of apparel exclusively for babies and
young children, today reported its first quarter fiscal 2015
results.
“We’re off to a good start this year with a very positive
response to our Spring product offerings. Despite the winter storms
and West Coast port delays, we had good growth in first quarter
sales and exceptional growth in earnings driven by leveraging our
operating expenses,” said Michael D. Casey, Chairman and Chief
Executive Officer. “Given the current outlook for our business, we
expect to achieve our growth objectives this year.”
First Quarter of Fiscal 2015 compared to First Quarter of
Fiscal 2014
Consolidated net sales increased $33.1 million, or 5.1%, to
$684.8 million, principally driven by growth in the Company's U.S.
Carter's and OshKosh direct-to-consumer businesses. Changes in
foreign currency exchange rates in the first quarter of fiscal 2015
as compared to the first quarter of fiscal 2014 negatively impacted
consolidated net sales in the first quarter of fiscal 2015 by $5.6
million, or 0.9%. On a constant currency basis, consolidated net
sales increased 6.0% in the first quarter of fiscal 2015.
Operating income in the first quarter of fiscal 2015 increased
$23.0 million, or 37.3%, to $84.5 million, compared to $61.5
million in the first quarter of fiscal 2014. Operating margin in
the first quarter of fiscal 2015 increased 290 basis points to
12.3%, compared to 9.4% in the first quarter of fiscal 2014.
Adjusted operating income (a non-GAAP measure) in the first quarter
of fiscal 2015 increased $17.2 million, or 24.5%, to $87.3 million,
compared to $70.1 million in the first quarter of fiscal 2014.
Adjusted operating margin (a non-GAAP measure) in the first quarter
of fiscal 2015 increased 190 basis points to 12.7%, compared to
10.8% in the first quarter of fiscal 2014. The increase in adjusted
operating margin reflects improved gross margin and expense
leverage.
Net income in the first quarter of fiscal 2015 increased $15.5
million, or 45.2%, to $49.8 million, or $0.94 per diluted share,
compared to $34.3 million, or $0.63 per diluted share, in the first
quarter of fiscal 2014. Adjusted net income (a non-GAAP measure) in
the first quarter of fiscal 2015 increased $11.8 million, or 29.7%,
to $51.7 million, compared to $39.9 million in the first quarter of
fiscal 2014. Adjusted earnings per diluted share (a non-GAAP
measure) in the first quarter of fiscal 2015 increased 32.7% to
$0.97, compared to $0.73 in the first quarter of fiscal 2014.
Cash flow from operations in the first quarter of fiscal 2015
was $87.2 million compared to $30.6 million in the first quarter of
fiscal 2014. The increase reflects higher earnings and favorable
changes in net working capital.
See “Reconciliation of GAAP to Adjusted Results” section of this
release for additional disclosures and reconciliations regarding
non-GAAP measures.
Business Segment Results
Carter’s Segments
Carter’s retail segment sales increased $27.4 million, or 11.9%,
to $257.7 million. Carter's direct-to-consumer comparable sales
increased 0.7%, comprised of eCommerce comparable sales growth of
8.1%, partially offset by a retail stores comparable sales decline
of 1.2%.
In the first quarter of fiscal 2015, the Company opened 20
Carter’s retail stores in the United States and closed two. The
Company operated 549 Carter’s retail stores in the United States as
of April 4, 2015.
Carter’s wholesale segment sales decreased $2.3 million, or
0.9%, to $269.3 million.
OshKosh B’gosh Segments
OshKosh retail segment sales increased $9.5 million, or 14.9%,
to $73.0 million. OshKosh direct-to-consumer comparable sales
increased 5.2%, comprised of eCommerce comparable sales growth of
20.3% and a retail stores comparable sales increase of 1.5%. In the
first quarter of fiscal 2015, the Company opened nine OshKosh
retail stores in the United States and closed one. The Company
operated 208 OshKosh retail stores in the United States as of April
4, 2015.
OshKosh wholesale segment sales increased $0.5 million, or 3.0%,
to $16.1 million.
International Segment
International segment sales decreased $1.9 million, or 2.7%, to
$68.6 million. This decline reflects growth in the Company's retail
store and eCommerce businesses in Canada which was more than offset
by the Company's exit of retail operations in Japan in fiscal 2014,
the impact of the Target Canada bankruptcy in January 2015, and the
impact of foreign currency exchange rates. The Company's former
retail operations in Japan contributed $4.4 million to segment
sales in the first quarter of fiscal 2014.
Changes in foreign currency exchange rates in the first quarter
of fiscal 2015 as compared to the first quarter of fiscal 2014
negatively impacted international segment net sales in the first
quarter of fiscal 2015 by $5.6 million, or 7.9%. On a constant
currency basis, international segment net sales increased 5.2%.
Canadian comparable retail stores sales increased 7.0%, driven
by solid growth in both Carter's and OshKosh B'gosh branded
products. In the first quarter of fiscal 2015, the Company opened
three retail stores in Canada. The Company operated 127 retail
stores in Canada as of April 4, 2015.
Dividends
During the first quarter of fiscal 2015, the Company paid a cash
dividend of $0.22 per share totaling $11.6 million. 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
During the first quarter of fiscal 2015, the Company repurchased
and retired 157,900 shares of its common stock for $14.1 million at
an average price of $89.43 per share. Year-to-date through April
28, 2015, the Company repurchased and retired a total of 240,400
shares for $21.8 million at an average price of $90.77 per share.
All shares were repurchased in open market transactions pursuant to
applicable regulations for such transactions.
As of April 28, 2015, the total remaining capacity under the
Company's previously-announced repurchase authorizations was $163
million.
2015 Business Outlook
For the second quarter of fiscal 2015, the Company projects net
sales to increase approximately 6% over the second quarter of
fiscal 2014 and adjusted diluted earnings per share to be
comparable to adjusted diluted earnings per share of $0.61 in the
second quarter of fiscal 2014. The adjusted earnings per share
forecast excludes anticipated expenses of approximately $2 million
related to the amortization of acquired tradenames, approximately
$0.5 million related to the revaluation of the Bonnie Togs
contingent consideration, and other items the Company believes to
be non-representative of underlying business performance.
For fiscal 2015, the Company projects net sales to increase
approximately 5% over fiscal 2014 and adjusted diluted earnings per
share to increase approximately 10% to 14% compared to adjusted
diluted earnings per share of $3.93 in fiscal 2014. This forecast
for fiscal 2015 adjusted earnings per share excludes anticipated
expenses of approximately $6 million related to the amortization of
the acquired tradenames discussed above, approximately $1 million
related to the revaluation of the Bonnie Togs contingent
consideration, and other items the Company believes to be
non-representative of underlying business performance.
Conference Call
The Company will hold a conference call with investors to
discuss first quarter fiscal 2015 results and its business outlook
on April 29, 2015 at 8:30 a.m. Eastern Daylight Time. To
participate in the call, please dial 913-312-0834. To listen via
the internet, please visit www.carters.com and select links for
“Investor Relations” followed by “First Quarter 2015 Earnings
Conference Call”. Presentation materials for the call can be
accessed under the same “Investor Relations” section by selecting
links for “News & Events” followed by “Webcasts &
Presentations”. A replay of the call will be available shortly
after the broadcast through May 7, 2015, at 888-203-1112 (U.S. /
Canada) or 719-457-0820 (international), passcode 1080395. The
replay will also be archived on the Company’s website under the
“Investor Relations” tab.
About Carter’s, Inc.
Carter’s, Inc. is the largest branded marketer in the United
States and Canada 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 800
Company-operated stores in the United States and Canada and on-line
at www.carters.com, www.oshkoshbgosh.com, and
www.cartersoshkosh.ca. 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 second
quarter of fiscal 2015 and fiscal year 2015, 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, vendors, or licensees
or financial difficulties for one or more of our major customers,
vendors, or licensees; 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; incurring costs in connection with cooperating with
regulatory investigations and proceedings; the breach of the
Company’s consumer databases, systems or processes; deflationary
pricing pressures; decreases in the overall level of consumer
spending; disruptions resulting from the Company’s dependence on
foreign supply sources; foreign currency risks due to the Company’s
operations outside of the United States; the Company’s use of a
small number of vendors over whom it has little control; the
Company’s foreign supply sources not meeting the Company’s quality
standards or regulatory requirements; disruptions in the Company’s
supply chain, including distribution centers or in-sourcing
capabilities or otherwise, and the risk of slow-downs, disruptions
or strikes in the event that the new tentative agreement between
the Pacific Maritime Association, which represents the operator of
the port through which we source substantially all of our products,
and the International Longshore and Warehouse Union is not
finalized and approved in a timely manner; product recalls; 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’s failure to successfully manage its eCommerce business;
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; increased leverage, not being able to repay its
indebtedness and being subject to restrictions on operations by the
Company’s debt agreements; not attracting and retaining key
individuals within the organization; failure to properly manage
strategic projects; failure to implement needed upgrades to the
Company’s information technology systems; disruptions of
distribution functions in its Braselton, Georgia facility; 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
worldwide anti-bribery laws; fluctuations in the Company’s tax
obligations and effective tax rate; 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 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.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(dollars in thousands, except for share
data)
(unaudited)
Fiscal quarter ended April 4, 2015
March 29, 2014 Net sales $ 684,764 $ 651,643 Cost of goods
sold 400,712 389,918 Gross profit 284,052 261,725
Selling, general, and administrative expenses 211,183 210,095
Royalty income (11,636 ) (9,901 ) Operating income 84,505 61,531
Interest expense 6,692 6,897 Interest income (137 ) (132 ) Other
expense, net 1,962 596 Income before income taxes
75,988 54,170 Provision for income taxes 26,196 19,873
Net income $ 49,792 $ 34,297 Basic net
income per common share $ 0.94 $ 0.64 Diluted net income per common
share $ 0.94 $ 0.63 Dividend declared and paid per common share $
0.22 $ 0.19
CARTER’S, INC.
BUSINESS SEGMENT RESULTS
(dollars in thousands)
(unaudited)
Fiscal quarter ended
April 4, 2015
% ofTotal
March 29, 2014
% ofTotal
Net
sales:
Carter’s Wholesale $ 269,315 39.3 % $ 271,628 41.7 % Carter’s
Retail (a) 257,727 37.7 % 230,328 35.3 % Total
Carter’s 527,042 77.0 % 501,956 77.0 % OshKosh Retail
(a) 73,042 10.7 % 63,558 9.8 % OshKosh Wholesale 16,051 2.3
% 15,585 2.4 % Total OshKosh 89,093 13.0 % 79,143
12.2 % International (b) 68,629 10.0 % 70,544
10.8 % Total net sales $ 684,764 100.0 % $ 651,643
100.0 %
Operating
income:
% ofsegmentnet
sales
% ofsegment net
sales
Carter’s Wholesale $ 57,931 21.5 % $ 46,867 17.3 % Carter’s Retail
(a) 44,493 17.3 % 42,979 18.7 % Total Carter’s
102,424 19.4 % 89,846 17.9 % OshKosh Retail (a) (960
) (1.3 )% (4,489 ) (7.1 )% OshKosh Wholesale 2,979 18.6 %
2,025 13.0 % Total OshKosh 2,019 2.3 % (2,464 ) (3.1
)% International (b) (c) 6,511 9.5 % 4,036 5.7 %
Corporate expenses (d) (e) (26,449 ) (29,887 ) Total operating
income $ 84,505 12.3 % $ 61,531 9.4 %
(a)
Includes eCommerce results.
(b)
Net sales includes international retail,
eCommerce, and wholesale sales. Operating income includes
international licensing income.
(c)
Includes charges associated with the
revaluation of the Company's contingent consideration of
approximately $0.5 million for each of the first quarters of fiscal
2015 and 2014. Also includes a benefit of approximately $0.4
million for the first quarter of fiscal 2014 related to a favorable
recovery on inventory related to the Company's exit from Japan
retail operations.
(d)
Corporate expenses 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 (dollars in millions)
April
4, 2015 March 29, 2014 Closure of
distribution facility in Hogansville, GA (1) $ — $ 0.3 Office
consolidation costs $ — $ 2.0 Amortization of tradenames $ 2.3 $
6.3
(1) Continuing operating costs associated with the closure of
the Company's distribution facility in Hogansville, Georgia.
This facility was sold in December 2014.
CARTER’S, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(dollars in thousands, except for share
data)
(unaudited)
April 4,2015
January 3,2015
March 29,2014
ASSETS Current assets: Cash and cash equivalents $ 377,400 $
340,638 $ 277,236 Accounts receivable, net 195,593 184,563 205,166
Finished goods inventories 358,014 444,844 363,018 Prepaid expenses
and other current assets 34,718 34,788 26,362 Deferred income taxes
32,842 36,625 37,343 Total current assets
998,567 1,041,458 909,125 Property, plant, and equipment, net of
accumulated depreciation of $257,394, $245,011, and $220,847
341,658 333,097 316,786 Tradenames and other intangibles, net
314,955 317,297 323,967 Goodwill 178,859 181,975 184,604 Deferred
debt issuance costs, net 6,361 6,677 7,758 Other assets 12,786
12,592 10,109 Total assets $ 1,853,186
$ 1,893,096 $ 1,752,349
LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $
94,129 $ 150,243 $ 103,439 Other current liabilities 93,403
97,728 75,235 Total current liabilities 187,532
247,971 178,674 Long-term debt 586,349 586,000 586,000
Deferred income taxes 120,275 121,536 118,032 Other long-term
liabilities 153,317 150,905 140,493 Total
liabilities 1,047,473 1,106,412 1,023,199 Commitments and
contingencies Stockholders' equity: Preferred stock; par
value $.01 per share; 100,000 shares authorized; none issued or
outstanding at April 4, 2015, January 3, 2015, and March 29, 2014 —
— — Common stock, voting; par value $.01 per share; 150,000,000
shares authorized; 52,615,316, 52,712,193, and 53,742,906 shares
issued and outstanding at April 4, 2015, January 3, 2015 and March
29, 2014, respectively 526 527 537 Additional paid-in capital — —
11,420 Accumulated other comprehensive loss (29,031 ) (23,037 )
(12,842 ) Retained earnings 834,218 809,194 730,035
Total stockholders' equity 805,713 786,684
729,150 Total liabilities and stockholders' equity $
1,853,186 $ 1,893,096 $ 1,752,349
CARTER’S, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOW
(dollars in thousands)
(unaudited)
Fiscal quarter ended April 4, 2015
March 29, 2014 Cash flows from operating activities: Net
income $ 49,792 $ 34,297 Adjustments to reconcile net income to net
cash provided by operating activities: Depreciation and
amortization 14,875 15,354 Amortization of tradenames 2,325 6,271
Accretion of contingent consideration 483 454 Amortization of debt
issuance costs 280 375 Non-cash stock-based compensation expense
4,740 4,535 Foreign currency exchange loss 1,652 — Income tax
benefit from stock-based compensation (5,771 ) (3,370 ) Loss on
disposal of property, plant, and equipment 52 189 Deferred income
taxes 2,207 (3,320 ) Effect of changes in operating assets and
liabilities: Accounts receivable (11,402 ) (11,725 ) Inventories
83,349 53,309 Prepaid expenses and other assets (472 ) 8,424
Accounts payable and other liabilities (54,886 ) (74,233 ) Net cash
provided by operating activities 87,224 30,560
Cash flows from investing activities: Capital expenditures (20,760
) (32,083 ) Proceeds from sale of property, plant, and equipment 76
— Net cash used in investing activities (20,684 )
(32,083 ) Cash flows from financing activities: Payments of
debt issuance costs — (55 ) Borrowings under secured revolving
credit facility 20,349 — Payments on secured revolving credit
facility (20,000 ) — Repurchase of common stock (14,120 ) (2,292 )
Dividends paid (11,597 ) (10,208 ) Income tax benefit from
stock-based compensation 5,771 3,370 Withholdings from vesting of
restricted stock (12,331 ) (4,079 ) Proceeds from exercise of stock
options 2,768 5,546 Net cash used in financing
activities (29,160 ) (7,718 ) Effect of exchange rate
changes on cash (618 ) (69 ) Net increase (decrease) in cash and
cash equivalents 36,762 (9,310 ) Cash and cash equivalents,
beginning of period 340,638 286,546 Cash and cash
equivalents, end of period $ 377,400 $ 277,236
CARTER’S, INC.
RECONCILIATION OF GAAP TO ADJUSTED
RESULTS
(dollars in millions, except earnings per
share)
(unaudited)
Fiscal quarter ended April 4, 2015
GrossMargin
% NetSales
SG&A
% NetSales
OperatingIncome
% NetSales
NetIncome
DilutedEPS
As reported (GAAP) $ 284.1 41.5% $ 211.2 30.8% $ 84.5 12.3%
$ 49.8 $ 0.94 Amortization of tradenames (a) — (2.3 ) 2.3 1.5 0.03
Revaluation of contingent consideration (b) — (0.5 ) 0.5
0.5 0.01
As adjusted (c) $ 284.1 41.5%
$ 208.4 30.4% $ 87.3 12.7% $ 51.7 $ 0.97
Fiscal quarter ended March 29, 2014
GrossMargin
% NetSales
SG&A
% NetSales
OperatingIncome
% NetSales
NetIncome
DilutedEPS
As reported (GAAP) $ 261.7 40.2% $ 210.1 32.2% $ 61.5 9.4% $
34.3 $ 0.63 Amortization of tradenames (a) — (6.3 ) 6.3 4.0 0.07
Office consolidation costs (d) — (2.0 ) 2.0 1.2 0.02 Revaluation of
contingent consideration (b) — (0.5 ) 0.5 0.5 0.01 Closure of
distribution facility (Hogansville, GA) — (0.3 ) 0.3 0.2 — Japan
retail operations exit (e) (1.0 ) (0.6 ) (0.4 ) (0.3 ) (0.01 )
As adjusted (c) $ 260.7 40.0% $ 200.5 30.8% $
70.1 10.8% $ 39.9 $ 0.73
(a)
Amortization of H.W. Carter and Sons
tradenames acquired in 2013.
(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
gross margin, 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.
(d)
Costs associated with office consolidation
including severance, relocation, accelerated depreciation, and
other charges.
(e)
Reflects a favorable recovery on inventory
related to the exit of the Company's retail business in Japan.
Note: Results may not be additive due to
rounding.
CARTER’S, INC.
RECONCILIATION OF GAAP TO ADJUSTED
RESULTS
(dollars in millions, except earnings per
share)
(unaudited)
Fiscal quarter ended June 28, 2014
GrossMargin
SG&A
OperatingIncome
NetIncome
DilutedEPS
As reported (GAAP) $ 245.5 $ 206.3 $ 47.3 $ 25.9 $
0.48 Amortization of tradenames (a) — (5.6 ) 5.6 3.5 0.07 Office
consolidation costs (b) — (4.6 ) 4.6 2.9 0.05 Japan retail
operations exit — (0.9 ) 0.9 0.6 0.01 Closure of distribution
facility (Hogansville, GA) — (0.3 ) 0.3 0.2 —
As adjusted (c) $ 245.5 $ 194.8 $ 58.8
$ 33.1 $ 0.61
Fiscal year ended
January 3, 2015 (53 weeks)
GrossMargin
SG&A
OperatingIncome
NetIncome
DilutedEPS
As reported (GAAP) $ 1,184.4 $ 890.3 $ 333.3 $ 194.7
$ 3.62 Amortization of tradenames (a) — (16.4 ) 16.4 10.4 0.19
Office consolidation costs (b) — (6.6 ) 6.6 4.2 0.08 Revaluation of
contingent consideration (d) — (1.3 ) 1.3 1.3 0.03 Closure of
distribution facility (Hogansville, GA) — (0.9 ) 0.9 0.6 0.01 Japan
retail operations exit (e) (1.0 ) (1.5 ) 0.5 0.3 0.01
As adjusted (c) $ 1,183.4 $ 863.3 $ 359.3
$ 211.5 $ 3.93
(a)
Amortization of H.W. Carter and Sons
tradenames acquired in 2013.
(b)
Costs associated with office consolidation
including severance, relocation, accelerated depreciation, and
other charges.
(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
gross margin, 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.
(d)
Revaluation of the contingent
consideration liability associated with the Company's 2011
acquisition of Bonnie Togs.
(e)
Reflects a favorable recovery on inventory
related to the exit of the Company's retail business in Japan.
Note: Results may not be additive due to
rounding.
CARTER’S, INC.
RECONCILIATION OF NET INCOME ALLOCABLE
TO COMMON SHAREHOLDERS
(unaudited)
Fiscal quarter ended
April 4, 2015
March 29, 2014 Weighted-average number of
common and common equivalent shares outstanding: Basic number of
common shares outstanding 52,119,215 53,172,459 Dilutive effect of
equity awards 495,386 501,322 Diluted number of
common and common equivalent shares outstanding 52,614,601
53,673,781
As reported on a
GAAP Basis:
Basic net income per common share: Net income $ 49,792 $ 34,297
Income allocated to participating securities (560 ) (470 ) Net
income available to common shareholders $ 49,232 $ 33,827
Basic net income per common share $ 0.94 $ 0.64 Diluted net
income per common share: Net income $ 49,792 $ 34,297 Income
allocated to participating securities (556 ) (467 ) Net income
available to common shareholders $ 49,236 $ 33,830
Diluted net income per common share $ 0.94 $ 0.63
As adjusted
(a):
Basic net income per common share: Net income $ 51,713 $ 39,866
Income allocated to participating securities (582 ) (547 ) Net
income available to common shareholders $ 51,131 $ 39,319
Basic net income per common share $ 0.98 $ 0.74 Diluted net
income per common share: Net income $ 51,713 $ 39,866 Income
allocated to participating securities (577 ) (543 ) Net income
available to common shareholders $ 51,136 $ 39,323
Diluted net income per common share $ 0.97 $ 0.73
(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 $1.9 million and $5.6 million in after-tax expenses
from these results for the fiscal quarters ended April 4, 2015 and
March 29, 2014, respectively.
RECONCILIATION OF U.S. GAAP AND
NON-GAAP INFORMATION
(unaudited)
The following table provides a
reconciliation of EBITDA and Adjusted EBITDA for the periods
indicated to net income, which is the most directly comparable
financial measure presented in accordance with GAAP:
Fiscal quarter ended Four fiscal quarters
ended
April 4, 2015
March 29, 2014 April 4, 2015
(dollars in millions) Net income $ 49.8 $ 34.3 $ 210.2 Interest
expense 6.7 6.9 27.4 Interest income (0.1 ) (0.1 ) (0.4 ) Income
tax expense 26.2 19.9 114.6 Depreciation and amortization (a) 17.2
21.6 70.6 EBITDA $ 99.7 $ 82.5 $
422.3
Adjustments to EBITDA Office
consolidation costs (b) (c) $ — $ 2.0 $ 4.6 Revaluation of
contingent consideration (d) 0.5 0.5 1.4 Closure of distribution
facility in Hogansville, GA (c) — 0.3 0.6 Japan retail operations
exit (c) (e) — (1.0 ) 0.7
Adjusted EBITDA $
100.2 $ 84.3 $ 429.6
(a)
Includes amortization of acquired
tradenames.
(b)
Costs associated with office consolidation
including severance, relocation, and other charges.
(c)
Amounts exclude costs related to
accelerated depreciation as such amounts are included in the total
of depreciation and amortization above.
(d)
Revaluation of the contingent
consideration liability associated with the Company's 2011
acquisition of Bonnie Togs.
(e)
Fiscal quarter ended March 29, 2014
reflects a favorable recovery of inventory.
Note: Results may not be additive due to
rounding.
EBITDA and Adjusted EBITDA are supplemental financial measures
that are not defined or prepared in accordance with GAAP. We define
EBITDA as net income before interest, income taxes, and
depreciation and amortization. Adjusted EBITDA is EBITDA adjusted
for the items described in the footnotes (a) - (e) to the table
above.
We present EBITDA and Adjusted EBITDA because we consider them
important supplemental measures of our performance and believe they
are frequently used by securities analysts, investors, and other
interested parties in the evaluation of companies in our
industry.
The use of EBITDA and Adjusted EBITDA instead of net income or
cash flows from operations has limitations as an analytical tool,
and you should not consider them in isolation, or as a substitute
for analysis of our results as reported under GAAP. EBITDA and
Adjusted EBITDA do not represent net income or cash flow from
operations as those terms are defined by GAAP and do not
necessarily indicate whether cash flows will be sufficient to fund
cash needs. While EBITDA, Adjusted EBITDA and similar measures are
frequently used as measures of operations and the ability to meet
debt service requirements, these terms are not necessarily
comparable to other similarly titled captions of other companies
due to the potential inconsistencies in the method of calculation.
EBITDA and Adjusted EBITDA do not reflect the impact of earnings or
charges resulting from matters that we consider not to be
indicative of our ongoing operations. Because of these limitations,
EBITDA and Adjusted EBITDA should not be considered as
discretionary cash available to us for working capital, debt
service and other purposes.
Carter’s, Inc.Sean McHugh, 678-791-7615Vice President &
Treasurer
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