Price Graph
Price
Yield
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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED OCTOBER 2, 2010 OR
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____
TO _____
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Delaware
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13-3912933
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(state or other jurisdiction of
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(I.R.S. Employer Identification No.)
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incorporation or organization)
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Common Stock
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Outstanding Shares at October 29, 2010
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Common stock, par value $0.01 per share
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57,474,937
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October 2,
2010
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January 2,
2010
|
October 3,
2009
|
||||||||||
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ASSETS
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||||||||||||
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Current assets:
|
||||||||||||
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Cash and cash equivalents
|
$ | 182,329 | $ | 335,041 | $ | 214,339 | ||||||
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Accounts receivable, net
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171,501 | 82,094 | 127,879 | |||||||||
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Finished goods inventories, net
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263,782 | 214,000 | 223,510 | |||||||||
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Prepaid expenses and other current assets
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12,369 | 11,114 | 11,845 | |||||||||
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Deferred income taxes
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25,701 | 33,419 | 32,005 | |||||||||
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Total current assets
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655,682 | 675,668 | 609,578 | |||||||||
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Property, plant, and equipment, net
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92,558 | 86,077 | 84,430 | |||||||||
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Tradenames
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305,733 | 305,733 | 305,733 | |||||||||
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Goodwill
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136,570 | 136,570 | 136,570 | |||||||||
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Deferred debt issuance costs, net
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1,237 | 2,469 | 2,750 | |||||||||
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Licensing agreements, net
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-- | 1,777 | 2,597 | |||||||||
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Other assets
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305 | 305 | 405 | |||||||||
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Total assets
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$ | 1,192,085 | $ | 1,208,599 | $ | 1,142,063 | ||||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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||||||||||||
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Current liabilities:
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||||||||||||
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Current maturities of long-term debt
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$ | 2,450 | $ | 3,503 | $ | 3,503 | ||||||
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Accounts payable
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94,440 | 97,546 | 68,009 | |||||||||
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Other current liabilities
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62,502 | 69,568 | 69,808 | |||||||||
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Total current liabilities
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159,392 | 170,617 | 141,320 | |||||||||
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Long-term debt
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229,709 | 331,020 | 331,896 | |||||||||
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Deferred income taxes
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109,855 | 110,676 | 106,646 | |||||||||
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Other long-term liabilities
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45,626 | 40,262 | 43,628 | |||||||||
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Total liabilities
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544,582 | 652,575 | 623,490 | |||||||||
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Commitments and contingencies
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||||||||||||
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Stockholders’ equity:
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||||||||||||
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Preferred stock; par value $.01 per share; 100,000 shares authorized; none issued or outstanding at October 2, 2010, January 2, 2010, and October 3, 2009
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-- | -- | -- | |||||||||
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Common stock, voting; par value $.01 per share; 150,000,000 shares authorized; 57,696,317, 58,081,822, and 58,037,018 shares issued and outstanding at October 2, 2010, January 2, 2010, and October 3, 2009, respectively
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577 | 581 | 580 | |||||||||
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Additional paid-in capital
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214,547 | 235,330 | 233,565 | |||||||||
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Accumulated other comprehensive loss
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(3,378 | ) | (4,066 | ) | (6,755 | ) | ||||||
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Retained earnings
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435,757 | 324,179 | 291,183 | |||||||||
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Total stockholders’ equity
|
647,503 | 556,024 | 518,573 | |||||||||
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Total liabilities and stockholders’ equity
|
$ | 1,192,085 | $ | 1,208,599 | $ | 1,142,063 | ||||||
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For the
three-month periods ended
|
For the
nine-month periods ended
|
|||||||||||||||
|
October 2,
2010
|
October 3,
2009
|
October 2,
2010
|
October 3,
2009
|
|||||||||||||
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Net sales
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$ | 517,928 | $ | 481,506 | $ | 1,253,986 | $ | 1,164,997 | ||||||||
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Cost of goods sold
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325,125 | 295,942 | 764,122 | 727,001 | ||||||||||||
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Gross profit
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192,803 | 185,564 | 489,864 | 437,996 | ||||||||||||
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Selling, general, and administrative expenses
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123,321 | 115,225 | 333,084 | 314,198 | ||||||||||||
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Workforce reduction and facility write-down and closure costs
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-- | -- | -- | 11,400 | ||||||||||||
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Royalty income
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(10,396 | ) | (10,637 | ) | (27,690 | ) | (26,871 | ) | ||||||||
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Operating income
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79,878 | 80,976 | 184,470 | 139,269 | ||||||||||||
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Interest expense, net
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1,568 | 2,688 | 6,674 | 8,571 | ||||||||||||
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Income before income taxes
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78,310 | 78,288 | 177,796 | 130,698 | ||||||||||||
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Provision for income taxes
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28,653 | 28,882 | 66,218 | 48,054 | ||||||||||||
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Net income
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$ | 49,657 | $ | 49,406 | $ | 111,578 | $ | 82,644 | ||||||||
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Basic net income per common share (Note 13)
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$ | 0.84 | $ | 0.86 | $ | 1.89 | $ | 1.45 | ||||||||
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Diluted net income per common share (Note 13)
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$ | 0.83 | $ | 0.84 | $ | 1.86 | $ | 1.41 | ||||||||
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For the
nine-month periods ended
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||||||||
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October 2,
2010
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October 3,
2009
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|||||||
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Cash flows from operating activities:
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||||||||
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Net income
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$ | 111,578 | $ | 82,644 | ||||
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Adjustments to reconcile net income to net cash provided by
operating activities:
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||||||||
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Depreciation and amortization
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22,730 | 24,396 | ||||||
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Amortization of debt issuance costs
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1,232 | 848 | ||||||
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Non-cash stock-based compensation expense
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5,397 | 5,200 | ||||||
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Income tax benefit from exercised stock options
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(8,973 | ) | (11,374 | ) | ||||
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Non-cash asset impairment and facility write-down charges
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-- | 3,662 | ||||||
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(Gain) loss on sale of property, plant, and equipment
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(3 | ) | 96 | |||||
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Deferred income taxes
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6,974 | 1,310 | ||||||
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Effect of changes in operating assets and liabilities:
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||||||||
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Accounts receivable
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(89,407 | ) | (42,427 | ) | ||||
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Inventories
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(49,782 | ) | (20,024 | ) | ||||
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Prepaid expenses and other assets
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(1,255 | ) | (1,876 | ) | ||||
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Accounts payable and other liabilities
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6,710 | 18,679 | ||||||
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Net cash provided by operating activities
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5,201 | 61,134 | ||||||
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Cash flows from investing activities:
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||||||||
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Capital expenditures
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(29,483 | ) | (25,783 | ) | ||||
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Proceeds from sale of property, plant, and equipment
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286 | 2,805 | ||||||
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Net cash used in investing activities
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(29,197 | ) | (22,978 | ) | ||||
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Cash flows from financing activities:
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||||||||
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Payments on Term Loan (See Note 4)
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(102,364 | ) | (2,627 | ) | ||||
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Repurchases of common stock
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(44,090 | ) | -- | |||||
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Income tax benefit from exercised stock options
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8,973 | 11,374 | ||||||
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Proceeds from exercised stock options
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8,765 | 5,087 | ||||||
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Net cash (used in) provided by financing activities
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(128,716 | ) | 13,834 | |||||
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Net (decrease) increase in cash and cash equivalents
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(152,712 | ) | 51,990 | |||||
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Cash and cash equivalents, beginning of period
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335,041 | 162,349 | ||||||
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Cash and cash equivalents, end of period
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$ | 182,329 | $ | 214,339 | ||||
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Common
stock
|
Additional
paid-in
capital
|
Accumulated
other comprehensive
(loss)
income
|
Retained
earnings
|
Total
stockholders’
equity
|
||||||||||||||||
|
Balance at January 2, 2010
|
$ | 581 | $ | 235,330 | $ | (4,066 | ) | $ | 324,179 | $ | 556,024 | |||||||||
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Exercise of stock options (1,298,795 shares)
|
13 | 8,752 | -- | -- | 8,765 | |||||||||||||||
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Income tax benefit from exercised stock options
|
-- | 8,973 | -- | -- | 8,973 | |||||||||||||||
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Restricted stock activity
|
1 | (1 | ) | -- | -- | -- | ||||||||||||||
|
Stock-based compensation expense
|
-- | 4,715 | -- | -- | 4,715 | |||||||||||||||
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Issuance of common stock (26,147 shares)
|
-- | 850 | -- | -- | 850 | |||||||||||||||
|
Repurchases of common stock (1,837,450 shares)
|
(18 | ) | (44,072 | ) | -- | -- | (44,090 | ) | ||||||||||||
|
Comprehensive income:
|
||||||||||||||||||||
|
Net income
|
-- | -- | -- | 111,578 | 111,578 | |||||||||||||||
|
Unrealized gain on interest rate swap agreements, net of tax of $379
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-- | -- | 688 | -- | 688 | |||||||||||||||
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Total comprehensive income
|
-- | -- | 688 | 111,578 | 112,266 | |||||||||||||||
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Balance at October 2, 2010
|
$ | 577 | $ | 214,547 | $ | (3,378 | ) | $ | 435,757 | $ | 647,503 | |||||||||
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For the
three-month periods ended
|
For the
nine-month periods ended
|
|||||||||||||||
|
(dollars in thousands)
|
October 2,
2010
|
October 3,
2009
|
October 2,
2010
|
October 3,
2009
|
||||||||||||
|
Net income
|
$ | 49,657 | $ | 49,406 | $ | 111,578 | $ | 82,644 | ||||||||
|
Unrealized gain on interest rate swap agreements, net of tax of $107, $93, $379, and $91, respectively
|
225 | 159 | 688 | 156 | ||||||||||||
|
Settlement of interest rate collar agreement, net of tax of $216
|
-- | -- | -- | 407 | ||||||||||||
|
Total comprehensive income
|
$ | 49,882 | $ | 49,565 | $ | 112,266 | $ | 83,207 | ||||||||
|
(dollars in thousands)
|
October 2,
2010
|
January 2,
2010
|
October 3,
2009
|
|||||||||
|
Term Loan
|
$ | 232,159 | $ | 334,523 | $ | 335,399 | ||||||
|
Current maturities
|
(2,450 | ) | (3,503 | ) | (3,503 | ) | ||||||
|
Total long-term debt
|
$ | 229,709 | $ | 331,020 | $ | 331,896 | ||||||
|
October 2, 2010
|
January 2, 2010
|
||||||||||||||||||||||||
|
(dollars in thousands)
|
Weighted-average useful life
|
Gross amount
|
Accumulated amortization
|
Net amount
|
Gross amount
|
Accumulated amortization
|
Net amount
|
||||||||||||||||||
|
Carter’s
goodwill
(1)
|
Indefinite
|
$ | 136,570 | $ | -- | $ | 136,570 | $ | 136,570 | $ | -- | $ | 136,570 | ||||||||||||
|
Carter’s
tradename
|
Indefinite
|
$ | 220,233 | $ | -- | $ | 220,233 | $ | 220,233 | $ | -- | $ | 220,233 | ||||||||||||
|
OshKosh
tradename
|
Indefinite
|
$ | 85,500 | $ | -- | $ | 85,500 | $ | 85,500 | $ | -- | $ | 85,500 | ||||||||||||
|
OshKosh licensing agreements
|
4.7 years
|
$ | 19,100 | $ | 19,100 | $ | -- | $ | 19,100 | $ | 17,323 | $ | 1,777 | ||||||||||||
|
|
|
October 3, 2009
|
|||||||||||||
|
(dollars in thousands)
|
Weighted-average useful life
|
Gross amount
|
Accumulated amortization
|
Net amount
|
|||||||||
|
Carter’s
goodwill
(1)
|
Indefinite
|
$ | 136,570 | $ | -- | $ | 136,570 | ||||||
|
Carter’s
tradename
|
Indefinite
|
$ | 220,233 | $ | -- | $ | 220,233 | ||||||
|
OshKosh
tradename
|
Indefinite
|
$ | 85,500 | $ | -- | $ | 85,500 | ||||||
|
OshKosh licensing agreements
|
4.7 years
|
$ | 19,100 | $ | 16,503 | $ | 2,597 | ||||||
|
|
(1) $51.8 million of which relates to Carter’s wholesale segment, $82.0 million of which relates to Carter’s retail segment, and
$2.7 million of which
relates to
Carter’s mass channel segment.
|
|
Level 1
|
- Quoted prices in active markets for identical assets or liabilities
|
|
Level 2
|
- Quoted prices for similar assets and liabilities in active markets or inputs that are observable
|
|
Level 3
|
- Inputs that are unobservable (for example, cash flow modeling inputs based on assumptions)
|
|
October 2, 2010
|
January 2, 2010
|
October 3, 2009
|
||||||||||||||||||||||||||||||||||
|
(dollars in millions)
|
Level 1
|
Level 2
|
Level 3
|
Level 1
|
Level 2
|
Level 3
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||||||||||||||||
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Assets
|
||||||||||||||||||||||||||||||||||||
|
Investments
|
$ | 150.4 | $ | 13.0 | $ | -- | $ | -- | $ | 130.0 | $ | -- | $ | -- | $ | 190.0 | $ | -- | ||||||||||||||||||
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Interest rate swaps
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$ | -- | $ | -- | $ | -- | $ | -- | $ | -- | $ | -- | $ | -- | $ | 0.1 | $ | -- | ||||||||||||||||||
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Liabilities
|
||||||||||||||||||||||||||||||||||||
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Interest rate swaps
|
$ | -- | $ | 0.3 | $ | -- | $ | -- | $ | 1.3 | $ | -- | $ | -- | $ | 1.9 | $ | -- | ||||||||||||||||||
|
Asset Derivatives
|
Liability Derivatives
|
|||||||||
|
(dollars in millions)
|
Balance sheet
location
|
Fair value
|
Balance sheet
location
|
Fair value
|
||||||
|
October 2, 2010
|
Prepaid expenses and other current assets
|
$ | -- |
Other current liabilities
|
$ | 0.3 | ||||
|
January 2, 2010
|
Prepaid expenses and other current assets
|
$ | -- |
Other current liabilities
|
$ | 1.3 | ||||
|
October 3, 2009
|
Prepaid expenses and other current assets
|
$ | 0.1 |
Other current liabilities
|
$ | 1.9 | ||||
|
For the three-month period ended
October 2, 2010
|
For the nine-month period ended
October 2, 2010
|
|||||||||||||||
|
(dollars in thousands)
|
Amount of gain
recognized in accumulated
other comprehensive
income (loss)
on
effective hedges
(1)
|
Amount of loss
reclassified
from accumulated
other comprehensive
income (loss)
into interest expense
|
Amount of gain
recognized in accumulated
other comprehensive
income (loss)
on
effective hedges
(1)
|
Amount of loss
reclassified
from accumulated
other comprehensive
income (loss)
into interest expense
|
||||||||||||
|
Interest rate hedge agreements
|
$ | 225 | $ | (291 | ) | $ | 688 | $ | (1,440 | ) | ||||||
|
For the three-month period ended
October 3, 2009
|
For the nine-month period ended
October 3, 2009
|
||||||||||||||||
|
(dollars in thousands)
|
Amount of gain
recognized in accumulated
other comprehensive
income (loss)
on
effective hedges
(1)
|
Amount of loss
reclassified
from accumulated
other comprehensive
income (loss)
into interest expense
|
Amount of gain
recognized in accumulated
other comprehensive
income (loss)
on
effective hedges
(1)
|
Amount of loss
reclassified
from accumulated
other
comprehensive
income (loss)
into interest
expense
|
|||||||||||||
|
Interest rate hedge agreements
|
$ | 159 | $ | (720 | ) | $ | 156 | $ | (2,134 | ) | |||||||
|
For the
three-month periods ended
|
For the
nine-month periods ended
|
|||||||||||||||
|
(dollars in thousands)
|
October 2,
2010
|
October 3,
2009
|
October 2,
2010
|
October 3,
2009
|
||||||||||||
|
Service cost – benefits attributed to service during the period
|
$ | 23 | $ | 23 | $ | 69 | $ | 69 | ||||||||
|
Interest cost on accumulated post-retirement benefit obligation
|
133 | 113 | 399 | 339 | ||||||||||||
|
Amortization net actuarial gain
|
(7 | ) | (7 | ) | (21 | ) | (21 | ) | ||||||||
|
Total net periodic post-retirement benefit cost
|
$ | 149 | $ | 129 | $ | 447 | $ | 387 | ||||||||
|
For the
three-month periods ended
|
For the
nine-month periods ended
|
|||||||||||||||
|
(dollars in thousands)
|
October 2,
2010
|
October 3,
2009
|
October 2,
2010
|
October 3,
2009
|
||||||||||||
|
Interest cost on accumulated pension benefit obligation
|
$ | 12 | $ | 12 | $ | 36 | $ | 38 | ||||||||
|
For the
three-month periods ended
|
For the
nine-month periods ended
|
|||||||||||||||
|
(dollars in thousands)
|
October 2,
2010
|
October 3,
2009
|
October 2,
2010
|
October 3,
2009
|
||||||||||||
|
Interest cost on accumulated pension benefit obligation
|
$ | 598 | $ | 567 | $ | 1,794 | $ | 1,702 | ||||||||
|
Expected return on assets
|
(718 | ) | (651 | ) | (2,156 | ) | (1,951 | ) | ||||||||
|
Amortization of actuarial loss
|
34 | 103 | 101 | 308 | ||||||||||||
|
Total net periodic pension (benefit) expense
|
$ | (86 | ) | $ | 19 | $ | (261 | ) | $ | 59 | ||||||
|
Assumptions
|
||||
|
Volatility
|
34.58 | % | ||
|
Risk-free interest rate
|
3.03 | % | ||
|
Expected term (years)
|
7 | |||
|
Dividend yield
|
-- | |||
|
Time-based
stock options
|
Restricted
stock
|
|||||||
|
Outstanding, January 2, 2010
|
3,512,385 | 449,844 | ||||||
|
Granted
|
414,500 | 190,733 | ||||||
|
Exercised
|
(1,298,795 | ) | -- | |||||
|
Vested restricted stock
|
-- | (95,189 | ) | |||||
|
Forfeited
|
(105,600 | ) | (39,400 | ) | ||||
|
Expired
|
(17,800 | ) | -- | |||||
|
Outstanding, October 2, 2010
|
2,504,690 | 505,988 | ||||||
|
Exercisable, October 2, 2010
|
1,528,265 | -- | ||||||
|
(dollars in thousands)
|
Time-based
stock
options
|
Restricted
Stock
|
Total
|
|||||||||
|
2010 (period from October 3 through January 1, 2011)
|
$ | 752 | $ | 865 | $ | 1,617 | ||||||
|
2011
|
2,722 | 3,133 | 5,855 | |||||||||
|
2012
|
2,113 | 2,424 | 4,537 | |||||||||
|
2013
|
1,283 | 1,403 | 2,686 | |||||||||
|
Total
|
$ | 6,870 | $ | 7,825 | $ | 14,695 | ||||||
|
For the three-month periods ended
|
For the nine-month periods ended
|
|||||||||||||||||||||||||||||||
|
(dollars in thousands)
|
October 2,
2010
|
% of
Total
|
October 3,
2009
|
% of
Total
|
October 2,
2010
|
% of
Total
|
October 3,
2009
|
% of
Total
|
||||||||||||||||||||||||
|
Net sales
:
|
||||||||||||||||||||||||||||||||
|
Carter’s:
|
||||||||||||||||||||||||||||||||
|
Wholesale
|
$ | 186,396 | 36.0 | % | $ | 165,672 | 34.4 | % | $ | 443,902 | 35.4 | % | $ | 395,550 | 34.0 | % | ||||||||||||||||
|
Retail (a)
|
150,838 | 29.1 | % | 137,708 | 28.6 | % | 382,570 | 30.5 | % | 349,765 | 30.0 | % | ||||||||||||||||||||
|
Mass Channel
|
75,050 | 14.5 | % | 78,584 | 16.3 | % | 181,808 | 14.5 | % | 181,690 | 15.6 | % | ||||||||||||||||||||
|
Carter’s total net sales
|
412,284 | 79.6 | % | 381,964 | 79.3 | % | 1,008,280 | 80.4 | % | 927,005 | 79.6 | % | ||||||||||||||||||||
|
OshKosh:
|
||||||||||||||||||||||||||||||||
|
Retail (a)
|
77,946 | 15.0 | % | 74,103 | 15.4 | % | 185,050 | 14.8 | % | 178,091 | 15.3 | % | ||||||||||||||||||||
|
Wholesale
|
27,698 | 5.4 | % | 25,439 | 5.3 | % | 60,656 | 4.8 | % | 59,901 | 5.1 | % | ||||||||||||||||||||
|
OshKosh total net sales
|
105,644 | 20.4 | % | 99,542 | 20.7 | % | 245,706 | 19.6 | % | 237,992 | 20.4 | % | ||||||||||||||||||||
|
Total net sales
|
$ | 517,928 | 100.0 | % | $ | 481,506 | 100.0 | % | $ | 1,253,986 | 100.0 | % | $ | 1,164,997 | 100.0 | % | ||||||||||||||||
|
Operating income (loss):
|
% of
segment
net sales
|
% of
segment
net sales
|
% of
segment
net sales
|
% of
segment
net sales
|
||||||||||||||||||||||||||||
|
Carter’s:
|
||||||||||||||||||||||||||||||||
|
Wholesale
|
$ | 39,843 | 21.4 | % | $ | 37,698 | 22.8 | % | $ | 103,482 | 23.3 | % | $ | 81,122 | 20.5 | % | ||||||||||||||||
|
Retail (a)
|
31,579 | 20.9 | % | 31,381 | 22.8 | % | 76,405 | 20.0 | % | 64,544 | 18.5 | % | ||||||||||||||||||||
|
Mass Channel
|
8,356 | 11.1 | % | 13,738 | 17.5 | % | 28,006 | 15.4 | % | 30,557 | 16.8 | % | ||||||||||||||||||||
|
Carter’s operating income
|
79,778 | 19.4 | % | 82,817 | 21.7 | % | 207,893 | 20.6 | % | 176,223 | 19.0 | % | ||||||||||||||||||||
|
OshKosh:
|
||||||||||||||||||||||||||||||||
|
Retail (a)
|
9,420 | 12.1 | % | 10,765 | 14.5 | % | 10,475 | 5.7 | % | 11,220 | 6.3 | % | ||||||||||||||||||||
|
Wholesale
|
4,955 | 17.9 | % | 4,124 | 16.2 | % | 6,185 | 10.2 | % | 3,607 | 6.0 | % | ||||||||||||||||||||
|
Mass Channel (b)
|
764 | -- | 709 | -- | 2,003 | -- | 1,853 | -- | ||||||||||||||||||||||||
|
OshKosh operating income
|
15,139 | 14.3 | % | 15,598 | 15.7 | % | 18,663 | 7.6 | % | 16,680 | 7.0 | % | ||||||||||||||||||||
|
Segment operating income
|
94,917 | 18.3 | % | 98,415 | 20.4 | % | 226,556 | 18.1 | % | 192,903 | 16.6 | % | ||||||||||||||||||||
| Corporate expense (c) | (15,039 | ) | (2.9 | %) | (17,439 | ) | (3.6 | %) | (42,086 | ) | (3.4 | %) | (41,269 | ) | (3.5 | %) | ||||||||||||||||
|
Workforce reduction and facility
write-down and closure costs (d)
|
-- | -- | -- | -- | -- | -- | (12,365 | ) | (1.1 | %) | ||||||||||||||||||||||
|
Net corporate expenses
|
(15,039 | ) | (2.9 | %) | (17,439 | ) | (3.6 | %) | (42,086 | ) | (3.4 | %) | (53,634 | ) | (4.6 | %) | ||||||||||||||||
|
Total operating income
|
$ | 79,878 | 15.4 | % | $ | 80,976 | 16.8 | % | $ | 184,470 | 14.7 | % | $ | 139,269 | 12.0 | % | ||||||||||||||||
|
(a)
|
Includes eCommerce results.
|
|
(b)
|
OshKosh mass channel consists of a licensing agreement with Target Stores. Operating income consists of royalty income, net of related expenses.
|
|
(c)
|
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.
|
|
(d)
|
Includes closure costs associated with our Barnesville, Georgia distribution facility and our Oshkosh, Wisconsin facility, write-down of the White House, Tennessee facility, and severance and other benefits related to the corporate workforce reduction.
|
|
(dollars in thousands)
|
Severance
and other
one-time
benefits
|
|||
|
Balance at April 4, 2009
|
$ | 3,300 | ||
|
Provision
|
2,200 | |||
|
Payments
|
(900 | ) | ||
|
Balance at July 4, 2009
|
4,600 | |||
|
Provision
|
-- | |||
|
Payments
|
(1,300 | ) | ||
|
Balance at October 3, 2009
|
3,300 | |||
|
Provision
|
-- | |||
|
Payments
|
(800 | ) | ||
|
Balance at January 2, 2010
|
2,500 | |||
|
Provision
|
-- | |||
|
Payments
|
(1,000 | ) | ||
|
Balance at April 3, 2010
|
1,500 | |||
|
Provision
|
-- | |||
|
Payments
|
(600 | ) | ||
|
Balance at July 3, 2010
|
900 | |||
|
Provision
|
-- | |||
|
Adjustment
|
(300 | ) | ||
|
Payments
|
(300 | ) | ||
|
Balance at October 2, 2010
|
$ | 300 | ||
|
|
|
(dollars in thousands)
|
Severance
|
Other
closure
costs
|
Total
|
|||||||||
|
Balance at April 4, 2009
|
$ | 1,700 | $ | 500 | $ | 2,200 | ||||||
|
Provision
|
-- | -- | -- | |||||||||
|
Payments
|
(700 | ) | -- | (700 | ) | |||||||
|
Balance at July 4, 2009
|
1,000 | 500 | 1,500 | |||||||||
|
Provision
|
-- | -- | -- | |||||||||
|
Payments
|
(500 | ) | -- | (500 | ) | |||||||
|
Adjustments
|
(400 | ) | -- | (400 | ) | |||||||
|
Balance at October 3, 2009
|
100 | 500 | 600 | |||||||||
|
Provision
|
-- | -- | -- | |||||||||
|
Payments
|
(50 | ) | -- | (50 | ) | |||||||
|
Balance at January 2, 2010
|
50 | 500 | 550 | |||||||||
|
Provision
|
-- | -- | -- | |||||||||
|
Payments
|
-- | -- | -- | |||||||||
|
Balance at April 3, 2010
|
50 | 500 | 550 | |||||||||
|
Provision
|
-- | -- | -- | |||||||||
|
Payments
|
-- | (50 | ) | (50 | ) | |||||||
|
Balance at July 3, 2010
|
50 | 450 | 500 | |||||||||
|
Provision
|
-- | -- | -- | |||||||||
|
Adjustment
|
(50 | ) | -- | (50 | ) | |||||||
|
Payments
|
-- | -- | -- | |||||||||
|
Balance at October 2, 2010
|
$ | -- | $ | 450 | $ | 450 | ||||||
|
For the
three-month periods ended
|
For the
nine-month periods ended
|
|||||||||||||||
|
October 2,
2010
|
October 3,
2009
|
October 2,
2010
|
October 3,
2009
|
|||||||||||||
|
Weighted-average number of common and common equivalent shares outstanding:
|
||||||||||||||||
|
Basic number of common shares outstanding
|
58,325,162 | 56,825,229 | 58,513,228 | 56,334,860 | ||||||||||||
|
Dilutive effect of unvested restricted stock
|
89,931 | 112,370 | 111,110 | 116,483 | ||||||||||||
|
Dilutive effect of stock options
|
599,598 | 1,622,531 | 781,849 | 1,684,897 | ||||||||||||
|
Diluted number of common and common equivalent shares outstanding
|
59,014,691 | 58,560,130 | 59,406,187 | 58,136,240 | ||||||||||||
|
Basic net income per common share:
|
||||||||||||||||
|
Net income
|
$ | 49,657,000 | $ | 49,406,000 | $ | 111,578,000 | $ | 82,644,000 | ||||||||
|
Income allocated to participating securities
|
(427,084 | ) | (411,426 | ) | (956,589 | ) | (694,154 | ) | ||||||||
|
Net income available to common shareholders
|
$ | 49,229,916 | $ | 48,994,574 | $ | 110,621,411 | $ | 81,949,846 | ||||||||
|
Basic net income per common share
|
$ | 0.84 | $ | 0.86 | $ | 1.89 | $ | 1.45 | ||||||||
|
Diluted net income per common share:
|
||||||||||||||||
|
Net income
|
$ | 49,657,000 | $ | 49,406,000 | $ | 111,578,000 | $ | 82,644,000 | ||||||||
|
Income allocated to participating securities
|
(422,775 | ) | (400,097 | ) | (944,082 | ) | (674,160 | ) | ||||||||
|
Net income available to common shareholders
|
$ | 49,234,225 | $ | 49,005,903 | $ | 110,633,918 | $ | 81,969,840 | ||||||||
|
Diluted net income per common share
|
$ | 0.83 | $ | 0.84 | $ | 1.86 | $ | 1.41 | ||||||||
|
Three-month periods ended
|
Nine-month periods ended
|
|||||||||||||||
|
October 2,
2010
|
October 3,
2009
|
October 2,
2010
|
October 3,
2009
|
|||||||||||||
|
Wholesale sales:
|
||||||||||||||||
|
Carter’s
|
36.0 | % | 34.4 | % | 35.4 | % | 34.0 | % | ||||||||
|
OshKosh
|
5.4 | 5.3 | 4.8 | 5.1 | ||||||||||||
|
Total wholesale sales
|
41.4 | 39.7 | 40.2 | 39.1 | ||||||||||||
|
Retail store sales:
|
||||||||||||||||
|
Carter’s
|
29.1 | 28.6 | 30.5 | 30.0 | ||||||||||||
|
OshKosh
|
15.0 | 15.4 | 14.8 | 15.3 | ||||||||||||
|
Total retail store sales
|
44.1 | 44.0 | 45.3 | 45.3 | ||||||||||||
|
Mass channel sales
|
14.5 | 16.3 | 14.5 | 15.6 | ||||||||||||
|
Consolidated net sales
|
100.0 | 100.0 | 100.0 | 100.0 | ||||||||||||
|
Cost of goods sold
|
62.8 | 61.5 | 60.9 | 62.4 | ||||||||||||
|
Gross profit
|
37.2 | 38.5 | 39.1 | 37.6 | ||||||||||||
|
Selling, general, and administrative expenses
|
23.8 | 23.9 | 26.6 | 27.0 | ||||||||||||
|
Workforce reduction and facility
write-down and closure costs
|
-- | -- | -- | 0.9 | ||||||||||||
|
Royalty income
|
(2.0 | ) | (2.2 | ) | (2.2 | ) | (2.3 | ) | ||||||||
|
Operating income
|
15.4 | 16.8 | 14.7 | 12.0 | ||||||||||||
|
Interest expense, net
|
0.3 | 0.5 | 0.5 | 0.8 | ||||||||||||
|
Income before income taxes
|
15.1 | 16.3 | 14.2 | 11.2 | ||||||||||||
|
Provision for income taxes
|
5.5 | 6.0 | 5.3 | 4.1 | ||||||||||||
|
Net income
|
9.6 | % | 10.3 | % | 8.9 | % | 7.1 | % | ||||||||
|
Number of retail stores at end of period:
|
||||||||||||||||
|
Carter’s
|
297 | 273 | 297 | 273 | ||||||||||||
|
OshKosh
|
177 | 169 | 177 | 169 | ||||||||||||
|
Total
|
474 | 442 | 474 | 442 | ||||||||||||
|
For the three-month periods ended
|
For the nine-month periods ended
|
|||||||||||||||||||||||||||||||
|
(dollars in thousands)
|
October 2,
2010
|
% of
Total
|
October 3,
2009
|
% of
Total
|
October 2,
2010
|
% of
Total
|
October 3,
2009
|
% of
Total
|
||||||||||||||||||||||||
|
Net sales:
|
||||||||||||||||||||||||||||||||
|
Wholesale-Carter’s
|
$ | 186,396 | 36.0 | % | $ | 165,672 | 34.4 | % | $ | 443,902 | 35.4 | % | $ | 395,550 | 34.0 | % | ||||||||||||||||
|
Wholesale-OshKosh
|
27,698 | 5.4 | % | 25,439 | 5.3 | % | 60,656 | 4.8 | % | 59,901 | 5.1 | % | ||||||||||||||||||||
|
Retail-Carter’s
|
150,838 | 29.1 | % | 137,708 | 28.6 | % | 382,570 | 30.5 | % | 349,765 | 30.0 | % | ||||||||||||||||||||
|
Retail-OshKosh
|
77,946 | 15.0 | % | 74,103 | 15.4 | % | 185,050 | 14.8 | % | 178,091 | 15.3 | % | ||||||||||||||||||||
|
Mass Channel-Carter’s
|
75,050 | 14.5 | % | 78,584 | 16.3 | % | 181,808 | 14.5 | % | 181,690 | 15.6 | % | ||||||||||||||||||||
|
Total net sales
|
$ | 517,928 | 100.0 | % | $ | 481,506 | 100.0 | % | $ | 1,253,986 | 100.0 | % | $ | 1,164,997 | 100.0 | % | ||||||||||||||||
|
·
|
$11.7 million related to higher consolidated retail gross margins as a percentage of consolidated retail sales; and
|
|
·
|
$5.8 million related to growth in Carter’s wholesale margins due to increased volume and improved product performance.
|
|
·
|
a $0.6 million and $1.8 million decrease in provisions for performance-based incentives during the third quarter and first nine months of fiscal 2010, respectively; and
|
|
·
|
a $0.7 million and $1.1 million decrease in amortization expense on our intangible assets as they were fully amortized as of the end of the third quarter of fiscal 2010.
|
|
·
|
an increase in our consolidated retail expenses from 27.2% and 31.1% of retail store sales in the third quarter and first nine months of fiscal 2009, respectively, to 28.5% and 31.9% in the third quarter and first nine months of fiscal 2010, respectively; and
|
|
·
|
$2.8 million and $5.4 million of incremental expenses associated with eCommerce for the third quarter and first nine months of fiscal 2010, respectively.
|
|
·
|
Making personnel changes, including the separation of certain employees from the Company, and a
restructuring of the Company’s sales organization;
|
|
·
|
Establishing more comprehensive procedures for authorizing accommodations, including tiered accommodations approval levels that include the Chief Financial Officer and Chief Executive Officer;
|
|
·
|
Implementing a periodic training program for all sales personnel regarding the appropriate accounting for accommodations and the impact on the Company’s financial statements of recording such customer accommodations;
|
|
·
|
Implementing procedures to improve the capture, review, approval, and recording of all accommodation arrangements in the appropriate accounting period;
|
|
·
|
Establishing a new position in the finance organization with responsibilities to include tracking, monitoring, and reviewing all customer accommodations, including certain budgetary responsibilities for accommodations; and
|
|
·
|
Improving the method of educating employees on the Company’s Code of Business Ethics and Professional Conduct.
|
|
·
financial instability of one or more of our major vendors;
|
|
·
political instability or other international events resulting in the disruption of trade in foreign countries from which we source our products;
|
|
·
increases in transportation costs as a result of increased fuel prices or significant changes in the relationship between carrier capacity and shipper demand;
|
|
·
interruptions in the supply, or increases in the cost, of raw materials, including cotton, fabric, and trim items;
|
|
·
significant changes in the cost of labor in our sourcing locations;
|
|
·
the imposition of new regulations relating to imports, duties, taxes, and other charges on imports;
|
|
·
the occurrence of a natural disaster, unusual weather conditions, or an epidemic, the spread of which may impact our ability to obtain products on a timely basis;
|
|
·
changes in the United States customs procedures concerning the importation of apparel products;
|
|
·
unforeseen delays in customs clearance of any goods;
|
|
·
disruption in the global transportation network such as a port strike, world trade restrictions, or war;
|
|
·
the application of foreign intellectual property laws;
|
|
·
the ability of our vendors to secure sufficient credit to finance the manufacturing process including the acquisition of raw materials; and
|
|
·
exchange rate fluctuations between the United States dollar and the local currencies of foreign contractors.
|
|
·
adapt to changes in customer requirements more quickly;
|
|
·
take advantage of acquisition and other opportunities more readily;
|
|
·
devote greater resources to the marketing and sale of their products; and
|
|
·
adopt more aggressive pricing strategies than we can.
|
|
Period
|
Total number
of shares
purchased
(1)
|
Average price paid per share
|
Total number of shares purchased as part of publicly announced plans or programs
(2)
|
Approximate dollar value of shares that may yet be purchased under the plans or programs
(2)
|
||||||||||||
|
July 4, 2010 through July 31, 2010
|
-- | -- | -- | $ | 108,895,948 | |||||||||||
|
August 1, 2010 through August 28, 2010
|
831,450 | $ | 23.74 | 831,450 | $ | 89,159,057 | ||||||||||
|
August 29, 2010 through October 2, 2010
|
1,006,000 | $ | 24.21 | 1,006,000 | $ | 64,806,211 | ||||||||||
|
Total
|
1,837,450 | $ | 24.00 | 1,837,450 | $ | 64,806,211 | ||||||||||
|
|
(1)
|
Represents repurchased shares which were retired.
|
|
|
(2)
|
On February 16, 2007, our Board of Directors approved a share repurchase authorization, pursuant to which the Company is authorized to purchase up to $100 million of its outstanding common shares. This program was announced in the Company’s report on Form 8-K, which was filed on February 21, 2007. On June 15, 2010, the Company’s Board of Directors approved another share repurchase authorization, pursuant to which the Company is authorized to purchase up to an additional $100 million of its outstanding common shares. This program was announced in the Company’s report on Form 8-K, which was filed on July 29, 2010. Such repurchases may occur from time to time in the open market, in negotiated transactions, or otherwise. These authorizations have no time limit. The timing and amount of any repurchases will be determined by the Company’s management, based on its evaluation of market conditions, share price, and other factors. The total remaining authorization was $64,806,211 as of October 2, 2010.
|
|
Exhibit Number
|
Description of Exhibits
|
||
| 31.1 |
Rule 13a-15(e)/15d-15(e) and 13a-15(f)/15d-15(f) Certification
|
||
| 31.2 |
Rule 13a-15(e)/15d-15(e) and 13a-15(f)/15d-15(f) Certification
|
||
| 32 |
Section 1350 Certification
|
||
|
Date: October 29, 2010
|
/s/ MICHAEL D. CASEY
|
|
Michael D. Casey
|
|
|
Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
Date: October 29, 2010
|
/s/ RICHARD F. WESTENBERGER
|
|
Richard F. Westenberger
|
|
|
Executive Vice President and
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial and Accounting Officer)
|
No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
| FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
|---|
| DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
|---|
No information found
No Customers Found
No Suppliers Found
Price
Yield
| Owner | Position | Direct Shares | Indirect Shares |
|---|