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Carter's, Inc. Reports Fourth Quarter And Fiscal 2012 Results

Stocks in this article: CRI

(b) Net sales includes international retail, eCommerce, and wholesale sales. Operating income includes international licensing income.

(c) Includes charges of $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 $1.5 million and $2.5 million for the quarter and fiscal year ended December 31, 2011, respectively, associated with the revaluation of the Company’s contingent consideration. Includes charges of $0.7 million and $6.7 million for the quarter and fiscal year ended December 31, 2011, respectively, related to the amortization of the fair value step-up for Bonnie Togs inventory acquired.

(d) Corporate expenses generally include expenses related to incentive compensation, stock-based compensation, executive management, severance and relocation, finance, building occupancy, information technology, certain legal fees, consulting, and audit fees.

(e) Includes $0.4 million and $3.1 million in facility closure-related costs related to the closure of a distribution facility located in Hogansville, GA, for the quarter and fiscal year ended December 29, 2012, and $6.4 million related to the Shelton, CT office consolidation, for the quarter and fiscal year ended December 29, 2012.

(f) Includes $0.7 million and $3.0 million of professional service fees and other expenses associated with the acquisition of Bonnie Togs for the quarter and fiscal year ended December 31, 2011.

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 29, 2012 December 31, 2011
ASSETS
Current assets:
Cash and cash equivalents $ 382,236 $ 233,494
Accounts receivable, net 168,046 157,754
Finished goods inventories, net 349,530 347,215
Prepaid expenses and other current assets 22,216 18,519
Deferred income taxes 35,675   25,165  
Total current assets 957,703 782,147
Property, plant, and equipment, net 170,110 122,346
Tradenames 305,884 306,176
Goodwill 189,749 188,679
Deferred debt issuance costs, net 2,878 2,624
Other intangible assets, net 188 258
Other assets 3,597   479  
Total assets $ 1,630,109   $ 1,402,709  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt $ $
Accounts payable 149,625 102,804
Other current liabilities 94,610   49,949  
Total current liabilities 244,235 152,753
Long-term debt 186,000 236,000
Deferred income taxes 114,341 114,421
Other long-term liabilities 100,054   93,826  
Total liabilities 644,630   597,000  
Commitments and contingencies
Stockholders’ equity:
Preferred stock; par value $.01 per share; 100,000 shares authorized; none issued or outstanding at December 29, 2012 and December 31, 2011, respectively
Common stock, voting; par value $.01 per share; 150,000,000 shares authorized; 59,126,639 and 58,595,421 shares issued and outstanding at December 29, 2012 and December 31, 2011, respectively 591 586
Additional paid-in capital 250,276 231,738
Accumulated other comprehensive loss (11,205 ) (11,282 )
Retained earnings 745,817   584,667  
Total stockholders’ equity 985,479   805,709  
Total liabilities and stockholders’ equity $ 1,630,109   $ 1,402,709  
 

CARTER’S, INC.

CONSOLIDATED STATEMENTS OF CASH FLOW

(dollars in thousands)

(unaudited)

 
For the fiscal years ended

December 29, 2012

     

December 31, 2011

Cash flows from operating activities:
Net income $ 161,150 $ 114,016
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 39,473 32,548
Amortization of Bonnie Togs inventory step-up 6,672
Non-cash revaluation of contingent consideration 3,589 2,484
Amortization of Bonnie Togs tradename and non-compete agreements 375 187
Amortization of debt issuance costs 877 708
Non-cash stock-based compensation expense 13,049 9,644
Income tax benefit from stock-based compensation (2,760 ) (6,900 )
Loss on disposal of property, plant, and equipment 802 139
Deferred income taxes (9,651 ) 9,128
Effect of changes in operating assets and liabilities:
Accounts receivable (10,200 ) (33,222 )
Inventories (1,790 ) (20,571 )
Prepaid expenses and other assets (6,004 ) (948 )
Accounts payable and other liabilities 89,709   (32,811 )
 
Net cash provided by operating activities 278,619   81,074  
 
Cash flows from investing activities:
Capital expenditures (83,398 ) (45,495 )
Acquisition of Bonnie Togs, net of cash acquired (61,207 )
Proceeds from sale of property, plant, and equipment 6   10  
 
Net cash used in investing activities (83,392 ) (106,692 )
 
Cash flows from financing activities:
Borrowings under revolving credit facility 2,500
Payments on revolving credit facility (52,500 )
Payment of debt issuance costs (1,916 )
Income tax benefit from stock-based compensation 2,760 6,900
Withholdings from vesting of restricted stock (2,846 ) (2,181 )
Proceeds from exercise of stock options 5,685   6,786  
 
Net cash (used in) provided by financing activities (46,317 ) 11,505  
 
Effect of exchange rate changes on cash (168 ) 225  
Net increase (decrease) in cash and cash equivalents 148,742 (13,888 )
Cash and cash equivalents, beginning of period 233,494   247,382  
 
Cash and cash equivalents, end of period $ 382,236   $ 233,494  
 

CARTER’S, INC.

RECONCILIATION OF GAAP TO ADJUSTED RESULTS

(dollars in millions, except earnings per share)

   
Quarter ended December 29, 2012
SG&A   Operating Income   Net Income   Diluted EPS
As reported (GAAP): $ 222.0 $ 78.4 $ 48.7 $ 0.81
Shelton 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
Facility closure costs - Hogansville DC (c) (0.4 ) 0.4   0.3  
As adjusted (f): $ 214.6   $ 85.9   $ 53.7   $ 0.89
 
 
Fiscal year ended December 29, 2012
SG&A Operating Income Net Income Diluted EPS
As reported (GAAP): $ 713.2 $ 262.0 $ 161.2 $ 2.69
Shelton 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
Facility closure costs - Hogansville DC (c) (3.1 ) 3.1   1.9   0.03
As adjusted (f): $ 700.1   $ 275.1   $ 170.7   $ 2.85
 
 
Quarter ended December 31, 2011
Gross Margin   SG&A   Operating Income   Net Income   Diluted EPS
As reported (GAAP): $ 207.0 $ 161.2 $ 55.0 $ 34.8 $ 0.59
Amortization of fair value step-up of inventory (d) 0.7 0.7 0.5 0.01
Revaluation of contingent consideration (b) (1.5 ) 1.5 1.5 0.02
Professional fees / other expenses (e)     (0.7 ) 0.7   0.5   0.01
As adjusted (f): $ 207.8     $ 158.9   $ 58.0   $ 37.3   $ 0.63
 
 
Fiscal year ended December 31, 2011
Gross Margin SG&A Operating Income Net Income Diluted EPS
As reported (GAAP): $ 692.3 $ 542.1 $ 187.5 $ 114.0 $ 1.94
Amortization of fair value step-up of inventory (d) 6.7 6.7 4.8 0.08
Revaluation of contingent consideration (b) (2.5 ) 2.5 2.5 0.04
Professional fees / other expenses (e)     (3.0 ) 3.0   1.9   0.03
As adjusted (f): $ 699.0     $ 536.6   $ 199.7   $ 123.2   $ 2.09
 

(a) Includes costs related to the Shelton, CT office consolidation, announced in the fourth quarter of fiscal 2012.

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