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Central Garden & Pet Company Announces Fourth Quarter & Fiscal 2011 Results

Stocks in this article: CENT CENTA

About Central Garden & Pet

Central Garden & Pet Company is a leading innovator, marketer and producer of quality branded products for the lawn & garden and pet supplies markets. Committed to new product innovation, our products are sold to specialty independent and mass retailers. Participating categories in Lawn & Garden include: Grass seed and the brands PENNINGTON®, SMART SEED™ and THE REBELS™; wild bird feed and the brand PENNINGTON®; weed and insect control and the brands AMDRO®, SEVIN®, IRONITE® and OVER-N-OUT®; and decorative outdoor patio products and the brands NORCAL®, NEW ENGLAND POTTERY® and MATTHEWS FOUR SEASONS™. We also provide a host of other regional and application-specific garden brands and supplies. Participating categories in Pet include: Animal health and the brands ADAMS™ and ZODIAC®; aquatics and reptile and the brands OCEANIC®, AQUEON™ and ZILLA™; bird & small animal and the brands KAYTEE®, SUPER PET® and CRITTER TRAIL®; dog & cat and the brands TFH®, NYLABONE®, FOUR PAWS®, PINNACLE® and AVODERM®; and equine and the brands FARNAM®, BRONCO® and SUPER MASK®. We also provide a host of other application-specific pet brands and supplies. Central Garden & Pet Company is based in Walnut Creek, California, and has approximately 4,300 employees, primarily in North America and Europe. For additional information on Central Garden & Pet Company, including access to the Company's SEC filings, please visit the Company’s website at www.central.com.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: The statements contained in this release which are not historical facts, including forecasted cost reductions, margin improvements and improved financial performance from the Company’s transformation initiatives, are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. These risks are described in the Central’s Annual Report on Form 10-K, to be filed in the next several business days, and other Securities and Exchange Commission filings. Central undertakes no obligation to publicly update these forward-looking statements to reflect new information, subsequent events or otherwise.

CENTRAL GARDEN & PET COMPANY

CONSOLIDATED BALANCE SHEETS

 
September 24, 2011 September 25, 2010
ASSETSCurrent assets: (in thousands)
 
Cash and cash equivalents $ 12,031 $ 91,460
Short term investments 17,820 15,320
Accounts receivable, net 195,417 192,422
Inventories 329,546 285,964
Prepaid expenses, deferred income taxes and other   47,772     42,733  
Total current assets 602,586 627,899
Land, buildings, improvements and equipment:
Land 9,254 8,925
Buildings and improvements 100,439 95,664
Transportation equipment 6,550 4,031
Machinery and warehouse equipment 168,475 150,215
Office furniture and equipment   108,967     91,294  
Total. 393,685 350,129
Less accumulated depreciation and amortization   (217,283 )   (184,848 )
Land, buildings, improvements and equipment–net 176,402 165,281
Goodwill 210,223 207,319
Other intangible assets, net 84,526 86,798
Deferred income taxes and other assets   19,266     43,587  
Total. $ 1,093,003   $ 1,130,884  
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 116,524 $ 112,611
Accrued expenses 75,128 81,418
Current portion of long-term debt   279     165  
Total current liabilities 191,931 194,194
Long-term debt 435,330 400,106
Deferred taxes and other long-term obligations 8,960 4,441
 
Commitments and contingencies

Equity:

Common stock 129 163
Class A common stock 359 437
Class B stock 16 16
Additional paid-in capital 396,208 483,817
Retained earnings 59,045 45,319
Accumulated other comprehensive income   1,019     944  
Total Central Garden & Pet shareholders’ equity   456,776     530,696  
Noncontrolling interest   6     1,447  
Total equity   456,782     532,143  
Total $ 1,093,003   $ 1,130,884  

Central Garden & Pet Company

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

 
Three Months Ended Fiscal Year Ended
September 24,

2011

  September 25,

2010

September 24, 2011

 

September 25, 2010

Net sales $

376,906

$ 346,990 $ 1,628,652 $ 1,523,648
Cost of goods sold and occupancy   278,702     243,556     1,134,733     1,008,482  
Gross profit 98,204 103,434 493,919 515,166
Selling, general and administrative expenses 102,770 96,043 408,744 394,092
Intangible asset impairments   0     12,000     0     12,000  
Income (loss) from operations (4,566 ) (4,609 ) 85,175 109,074
Interest expense (9,786 ) (9,151 ) (38,044 ) (33,706 )
Interest income 35 107 296 119
Other income   434     (9 )   550     419  
Income (loss) before income taxes and noncontrolling interest (13,883 ) (13,662 ) 47,977 75,906
Income taxes   (2,357 )   (4,916 )   19,595     28,110  
Income including noncontrolling interest (11,526 ) (8,746 ) 28,382 47,796
Net income attributable to noncontrolling interest   (594 )   20     59     1,963  
Net income attributable to Central Garden & Pet Company $ (10,932 ) $ (8,766 ) $ 28,323   $ 45,833  
 
Net income per share attributable to Central Garden & Pet Company:
Basic $ (0.21 ) $ (0.14 ) $ 0.50   $ 0.71  
Diluted $ (0.21 ) $ (0.14 ) $ 0.50   $ 0.70  
 
Weighted average shares used in the computation of net income per share:
Basic 51,943 62,476 56,217 64,272
Diluted 51,943 62,476 56,645 65,091

Non-GAAP Financial Measures

This press release includes adjustments to operating income (loss), GAAP net income (loss), and earnings per share for the fourth quarter and fiscal year ended September 25, 2010. Adjusted operating income (loss), net income (loss) and adjusted earnings per share, are non-GAAP financial measures which exclude the impact of the impairment of an intangible asset. We believe that they are useful as supplemental measures in assessing the operating performance of our business. These measures are used by our management, including our chief operating decision maker, to evaluate business results. We exclude impairment charges which we believe are not representative of the on-going results of operations of our business and are not used to determine compliance with the financial covenants in our credit facility and indenture.

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