StockSelector.com
  Research, Select, & Monitor Thursday, September 21, 2017 10:37:46 PM ET  
Trade Ideas The Market Industries Stocks Portfolio

 
Ticker Lookup
Carter's, Inc.$93.24($.63)(.67%)

  Quote | Ranking | Chart | Valuations | Sentiment | Industry | News | Earnings | Analysts | More...

Your Target?

 Carter’s, Inc. Reports Second Quarter Fiscal 2017 Results
   Thursday, July 27, 2017 6:13:00 AM ET

--Diluted EPS $0.78, growth of 10%; adjusted diluted EPS $0.79, growth of 10%

--Returned $134 million to shareholders through share repurchases and dividends in the first half of fiscal 2017

--Company reaffirms full year fiscal 2017 outlook: net sales growth of 4% to 6%; adjusted diluted EPS growth of 8% to 10%

Carter’s, Inc. (CRI ), the largest branded marketer in the United States and Canada of apparel exclusively for babies and young children, today reported its second quarter fiscal 2017 results.

"We achieved good growth in sales and earnings in our second quarter," said Michael D. Casey, Chairman and Chief Executive Officer. "Our growth was driven by our retail and international businesses, and the contribution from our Skip Hop brand which was acquired earlier this year. Given the strength of our fall and holiday product offerings, we’re forecasting good growth in the second half and expect to achieve our growth objectives this year."



Consolidated Results

Second Quarter of Fiscal 2017 compared to Second Quarter of Fiscal 2016

Net sales increased $52.6 million, or 8.2%, to $692.1 million, principally driven by growth in the Company’s U.S. Retail segment, and the benefit of Skip Hop, a global lifestyle brand for families with young children acquired by the Company in February 2017. Skip Hop contributed $25.0 million to consolidated net sales in the second quarter of fiscal 2017. Changes in foreign currency exchange rates in the second quarter of fiscal 2017 compared to the second quarter of fiscal 2016 adversely affected consolidated net sales in the second quarter of fiscal 2017 by $2.6 million, or 0.4%. On a constant currency basis (a non-GAAP measure), consolidated net sales increased 8.6% in the second quarter of fiscal 2017.

Operating income in the second quarter of fiscal 2017 increased $1.3 million, or 2.0%, to $64.5 million, compared to $63.2 million in the second quarter of fiscal 2016. Operating margin decreased 60 basis points to 9.3%, compared to 9.9% in the second quarter of fiscal 2016. Adjusted operating income (a non-GAAP measure) increased $1.5 million, or 2.3%, to $65.5 million, compared to $64.0 million in the second quarter of fiscal 2016. Adjusted operating margin (a non-GAAP measure) decreased 50 basis points to 9.5%, compared to 10.0% in the second quarter of fiscal 2016, which principally reflects increased investments in retail operations and marketing and increased promotions.

Net income in the second quarter of fiscal 2017 increased $1.7 million, or 4.8%, to $37.9 million, or $0.78 per diluted share, compared to $36.2 million, or $0.71 per diluted share, in the second quarter of fiscal 2016. Adjusted net income (a non-GAAP measure) increased $1.9 million, or 5.1%, to $38.6 million, compared to $36.7 million in the second quarter of fiscal 2016. Adjusted earnings per diluted share (a non-GAAP measure) in the second quarter of fiscal 2017 increased 9.9% to $0.79, compared to $0.72 in the second quarter of fiscal 2016.

First Half of Fiscal 2017 compared to First Half of Fiscal 2016

Net sales increased $61.3 million, or 4.5%, to $1.42 billion, principally driven by growth in the Company’s U.S. Retail segment and the benefit of the Skip Hop acquisition. Skip Hop contributed $35.4 million to consolidated net sales in the first half of fiscal 2017. Changes in foreign currency exchange rates in the first half of fiscal 2017 compared to the first half of fiscal 2016 had a negligible impact on consolidated net sales comparability.

Operating income in the first half of fiscal 2017 decreased $13.2 million, or 8.4%, to $143.1 million, compared to $156.3 million in the first half of fiscal 2016. Operating margin decreased 150 basis points to 10.0%, compared to 11.5% in the first half of fiscal 2016. Adjusted operating income (a non-GAAP measure) decreased $12.4 million, or 7.8%, to $145.6 million, compared to $158.0 million in the first half of fiscal 2016. Adjusted operating margin (a non-GAAP measure) decreased 140 basis points to 10.2%, compared to 11.6% in the first half of fiscal 2016, which principally reflects increased investments in retail operations, marketing, and technology.

Net income in the first half of fiscal 2017 decreased $5.6 million, or 6.2%, to $84.6 million, or $1.73 per diluted share, compared to $90.2 million, or $1.75 per diluted share, in the first half of fiscal 2016. Adjusted net income (a non-GAAP measure) decreased $5.1 million, or 5.6%, to $86.2 million, compared to $91.3 million in the first half of fiscal 2016. Adjusted earnings per diluted share (a non-GAAP measure) in the first half of fiscal 2017 decreased 0.5% to $1.76, compared to $1.77 in the first half of fiscal 2016.

Cash flow from operations in the first half of fiscal 2017 was $107.3 million compared to $85.6 million in the first half of fiscal 2016. The increase reflects favorable changes in net working capital, partially offset by lower earnings.

See the "Reconciliation of GAAP to Adjusted Results" section of this release for additional disclosures and reconciliations regarding non-GAAP measures.

Business Segment Results

At the beginning of fiscal 2017, the Company combined its Carter’s Retail and OshKosh Retail segments into a single U.S. Retail operating segment, and its Carter’s Wholesale and OshKosh Wholesale segments into a single U.S. Wholesale operating segment, to reflect the sales-channel approach executive management now uses to evaluate business performance and manage operations in the U.S. The International segment was not affected by these changes. The Company’s reportable segments are now U.S. Retail, U.S. Wholesale, and International. Prior periods have been conformed to reflect this current segment structure.

U.S. Retail Segment

Second Quarter of Fiscal 2017 compared to Second Quarter of Fiscal 2016

U.S. Retail segment sales increased $39.0 million, or 11.1%, to $391.8 million. U.S. Retail comparable sales increased 6.0%, comprised of comparable stores sales growth of 0.4% and comparable eCommerce sales growth of 27.6%. Skip Hop contributed $0.9 million to segment net sales in the second quarter of fiscal 2017.

In the second quarter of fiscal 2017, the Company opened 11 stores and closed three stores in the United States.

First Half of Fiscal 2017 compared to First Half of Fiscal 2016

U.S. Retail segment sales increased $48.7 million, or 6.9%, to $755.6 million. U.S. Retail comparable sales increased 1.1%, comprised of eCommerce comparable sales growth of 23.5%, partially offset by a stores comparable sales decline of 5.0%. Skip Hop contributed $1.2 million to segment net sales in the first half of fiscal 2017.

In the first half of fiscal 2017, the Company opened 26 stores and closed eight stores in the United States.

As of the end of the second quarter of fiscal 2017, the Company operated 810 retail stores in the United States, comprised of 621 stand-alone and 189 dual-branded stores.

U.S. Wholesale Segment

Second Quarter of Fiscal 2017 compared to Second Quarter of Fiscal 2016

U.S. wholesale segment net sales increased $2.6 million, or 1.2%, to $217.7 million, reflecting the benefit of the Skip Hop acquisition, partially offset by a decrease in demand for Carter’s and OshKosh products. Skip Hop contributed $15.1 million to segment net sales in the second quarter of fiscal 2017.

First Half of Fiscal 2017 compared to First Half of Fiscal 2016

U.S. wholesale segment net sales increased $3.1 million, or 0.6%, to $510.3 million, reflecting the benefit of the Skip Hop acquisition, partially offset by a decrease in demand for Carter’s and OshKosh products. Skip Hop contributed $21.9 million to segment net sales in the first half of fiscal 2017.

International Segment

Second Quarter of Fiscal 2017 compared to Second Quarter of Fiscal 2016

International segment net sales increased $11.0 million, or 15.4%, to $82.6 million, reflecting the benefit of the Skip Hop acquisition and growth in Canada and China, partially offset by decreased wholesale demand in other markets outside of the U.S. Skip Hop contributed $9.1 million to segment net sales in the second quarter of fiscal 2017.

Changes in foreign currency exchange rates in the second quarter of fiscal 2017 compared to the second quarter of fiscal 2016 adversely affected international segment net sales in the second quarter of fiscal 2017 by $2.6 million, or 3.6%. On a constant currency basis (a non-GAAP measure), international segment net sales increased 19.0%

For the second quarter of fiscal 2017, Canada retail comparable sales increased 8.2%, comprised of a stores comparable sales increase of 5.9% and eCommerce comparable sales growth of 46.8%. In the second quarter of fiscal 2017, the Company opened six stores and closed one store in Canada.

First Half of Fiscal 2017 compared to First Half of Fiscal 2016

International segment net sales increased $9.5 million, or 6.4%, to $159.0 million, reflecting the benefit of the Skip Hop acquisition and growth in Canada and China, partially offset by decreased wholesale demand in other markets outside of the U.S. Skip Hop contributed $12.3 million to segment net sales in the first half of fiscal 2017.

Changes in foreign currency exchange rates in the first half of fiscal 2017 compared to the first half of fiscal 2016 adversely affected international segment net sales in the first half of fiscal 2017 by $1.2 million, or 0.8%. On a constant currency basis (a non-GAAP measure), international segment net sales increased 7.1%.

For the first half of fiscal 2017, Canada retail comparable sales increased 0.1%, comprised of eCommerce comparable sales growth of 43.1%, offset by a stores comparable sales decline of 2.9%.

In the first half of fiscal 2017, the Company opened six stores and closed two stores in Canada. As of the end of the second quarter of fiscal 2017, the Company operated 168 retail stores in Canada.

Return of Capital

In the second quarter and first half of fiscal 2017, the Company returned to shareholders, through share repurchases and cash dividends, a total of $69.4 million and $134.1 million, respectively, as described below.

During the second quarter of fiscal 2017, the Company repurchased and retired 587,465 shares of its common stock for $51.6 million at an average price of $87.84 per share. In the first half of fiscal 2017, the Company repurchased and retired 1,131,409 shares of its common stock for $98.2 million at an average price of $86.82 per share. Fiscal year-to-date through July 26, 2017, the Company repurchased and retired a total of 1,296,734 shares for $112.7 million at an average price of $86.89 per share. All shares were repurchased in open market transactions pursuant to applicable regulations for such transactions. As of July 26, 2017, the total remaining capacity under the Company’s previously announced repurchase authorizations was approximately $162 million.

During the second quarter of fiscal 2017, the Company paid a cash dividend of $0.37 per share totaling $17.8 million. In the first half of fiscal 2017, the Company paid cash dividends of $0.74 per share totaling $35.8 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.

2017 Business Outlook

For fiscal 2017, the Company projects net sales to increase approximately 4% to 6% compared to fiscal 2016 and adjusted earnings per diluted share to increase approximately 8% to 10% compared to adjusted earnings per diluted share of $5.14 in fiscal 2016. This forecast for fiscal 2017 adjusted earnings per diluted share excludes anticipated expenses of approximately $2.5 million related to acquisitions and approximately $0.3 million related to the Company’s direct sourcing initiative, which includes severance and relocation costs.

For the third quarter of fiscal 2017, the Company projects net sales to increase approximately 5% compared to the third quarter of fiscal 2016 and adjusted earnings per diluted share to be approximately comparable to adjusted earnings per diluted share of $1.61 in the third quarter of fiscal 2016. This projection contemplates increased investment to support the Company’s long-term growth objectives compared to the prior-year period. The forecast for third quarter fiscal 2017 adjusted earnings per diluted share excludes anticipated expenses of approximately $0.1 million related to acquisitions.

The Company believes non-GAAP measurements, including adjusted earnings per diluted share, provide investors with a meaningful view of the Company’s core operating results, and are the same measurements used by the Company’s executive management to assess the Company’s performance.

Conference Call

The Company will hold a conference call with investors to discuss second quarter fiscal 2017 results and its business outlook on July 27, 2017 at 8:30 a.m. Eastern Daylight Time. To participate in the call, please dial 719-325-2349. To listen to a live broadcast via the internet, please visit www.carters.com and select the "Q2 2017 Earnings Conference Call" link under the "Investor Relations" tab. Presentation materials for the call can be accessed under the same tab by selecting the link for "News & Events" followed by "Webcasts & Presentations." A replay of the call will be available shortly after the broadcast through August 5, 2017, at 888-203-1112 (U.S. / Canada) or 719-457-0820 (international), passcode 2169382. 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 nearly 1,000 Company-operated stores in the United States and Canada and on-line at www.carters.com, www.oshkosh.com, and www.cartersoshkosh.ca. The Company’s Just One You, Precious Firsts, and Genuine Kids brands are available at Target, its Child of Mine brand is available at Walmart, and its Simple Joys brand is available on Amazon.com. The Company also owns Skip Hop, a global lifestyle brand for families with young children. 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 third quarter of fiscal 2017 and fiscal year 2017, or any other future period, assessments 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 not materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, or projected. Certain of the risks and uncertainties that could cause actual results and performance to differ materially are described in the Company’s most recently filed Annual Report on Form 10-K and other reports filed with the Securities and Exchange Commission from time to time under the headings "Risk Factors." Included among the risks and uncertainties that may impact future results are the risks of: losing one or more major customers, vendors, or licensees, due to competition, inadequate quality of the Company’s products, or otherwise; financial difficulties for one or more of the Company’s major customers, vendors, or licensees, or an overall decrease in consumer spending; fluctuations in foreign currency exchange rates; our products not being accepted in the marketplace, due to quality concerns, changes in consumer preference and fashion trends, or otherwise; negative publicity, including as a result of product recalls or otherwise; failure to protect the Company’s intellectual property; various types of litigation, including class action litigation brought under various consumer protection, employment, and privacy and information security laws; a breach of the Company’s consumer databases, systems, or processes; the risk of slow-downs, disruptions, or strikes along the Company’s supply chain, including disruptions resulting from foreign supply sources, the Company’s distribution centers, or in-sourcing capabilities; unsuccessful expansion into international markets or failure to successfully manage legal, regulatory, political and economic risks of the Company’s existing international operations, including maintaining compliance with worldwide anti-bribery laws; and an inability to obtain additional financing on favorable terms. The Company does not undertake any 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 per share data)
                                                                                                                                                                             (unaudited)
                                                                                                                                                                                                                                                 
                                                                                                                                     Fiscal Quarter Ended                                                                                                                                     Two Fiscal Quarters Ended
                                                                                        --------------------------------------------------------------------------------------------------------------                                          --------------------------------------------------------------------------------------------------------------------
                                                                                                   July 1, 2017                          July 2, 2016                                                                 July 1, 2017                             July 2, 2016
                                                                                        ----------------------------------                                          ----------------------------------                                          ------------------------------------                                          --------------------------------------
Net sales                                                                                  $ 692,117                                                                   $ 639,471                                                                   $ 1,424,872                                                                     $ 1,363,556
Cost of goods sold                                                                           388,660                                                  357,289                                                    805,613                                                      770,445  
                                                                                        ---------------------------------                                           ---------------------------------                                           -----------------------------------                                           -------------------------------------
Gross profit                                                                                 303,457                                                                     282,182                                                                       619,259                                                                         593,111
Selling, general, and administrative expenses                                                250,146                                                                     228,464                                                                       497,940                                                                         457,460
Royalty income                                                                               (11,210 )                                                                    (9,525 )                                                                     (21,768 )                                                                       (20,600 )
                                                                                        ---------------------------------                                           ---------------------------------                                           -----------------------------------                                           -------------------------------------
Operating income                                                                              64,521                                                                      63,243                                                                       143,087                                                                         156,251
Interest expense                                                                               7,194                                                                       6,803                                                                        14,298                                                                          13,542
Interest income                                                                                  (79 )                                                                      (178 )                                                                        (218 )                                                                          (385 )
Other (income) expense, net                                                                     (544 )                                                                       516                                                       (765 )                                                                         3,709  
                                                                                        ---------------------------------                                           ---------------------------------                                           -----------------------------------                                           -------------------------------------
Income before income taxes                                                                    57,950                                                                      56,102                                                                       129,772                                                                         139,385
Provision for income taxes                                                                    20,025                                                   19,904                                                     45,183                                                       49,207  
                                                                                        ---------------------------------                                           ---------------------------------                                           -----------------------------------                                           -------------------------------------
Net income                                                                                 $  37,925                                                $  36,198                                                $    84,589                                                  $    90,178  
                                                                                        ==== ======= ====================                                           ==== ======= ====================                                           ==== ========= ====================                                           ====== ========= ====================
                                                                                                                                                                                                                                                                                                                               
Basic net income per common share                                                          $    0.79                                                                   $    0.72                                                                   $      1.75                                                                     $      1.77
Diluted net income per common share                                                        $    0.78                                                                   $    0.71                                                                   $      1.73                                                                     $      1.75
Dividend declared and paid per common share                                                $    0.37                                                                   $    0.33                                                                   $      0.74                                                                     $      0.66
                                                                                                                                                                                                                                                                                                                                                
                                                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                     CARTER’S, INC.
                                                                                                                                                                                                                                     BUSINESS SEGMENT RESULTS
                                                                                                                                                                                                                                     (dollars in thousands)
                                                                                                                                                                                                                                     (unaudited)
                                                                                                                                                                                                                                                                                                                                                        
                                                                                                                                                                                   Fiscal Quarter Ended                                                                                                                                                                                                                                                        Two Fiscal Quarters Ended
                                                                             --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                                          ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                          July 1,                       % of                       July 2,                       % of                                                              July 1,                        % of                        July 2,                          % of
                                                                                           2017                                                          Total Net Sales                                                        2016                                                          Total Net Sales                                                         2017                                                           Total Net Sales                                                         2016                                                             Total Net Sales
                                                                             ------------------------------                                             --------------                                            ------------------------------                                             --------------                                            --------------------------------                                             --------------                                            --------------------------------                                             -------------------
Net sales:
----------------------------------
U.S. Wholesale                                                                 $ 217,710                                                                   31.5 %                                                   $ 215,122                                                                   33.6 %                                                   $   510,265                                                                   35.8 %                                                   $   507,176                                                                      37.2 %
U.S. Retail (a)                                                                  391,822                                                                   56.6 %                                                     352,782                                                                   55.2 %                                                       755,593                                                                   53.0 %                                                       706,871                                                                      51.8 %
International (b)                                                                 82,585                                                11.9 %                                                      71,567                                                11.2 %                                                       159,014                                                11.2 %                                                       149,509                                                   11.0 %
                                                                             --------------------------------                                           ------- -------                                           --------------------------------                                           ------- -------                                           ----------------------------------                                           ------- -------                                           ----------------------------------                                           ---------- ---------
     Total net sales                                                           $ 692,117                                               100.0 %                                                   $ 639,471                                               100.0 %                                                   $ 1,424,872                                               100.0 %                                                   $ 1,363,556                                                  100.0 %
                                                                             === ======= ====================                                           ======= =======                                           === ======= ====================                                           ======= =======                                           === ========= ====================                                           ======= =======                                           === ========= ====================                                           ========== =========
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
Operating income (loss):                                                                                                                                      % of                                                                                                                                 % of                                                                                                                                   % of                                                                                                                                     % of
                                                                                                                                                             Segment                                                                                                                              Segment                                                                                                                                Segment                                                                                                                                  Segment
                                                                                                                                                            Net Sales                                                                                                                            Net Sales                                                                                                                              Net Sales                                                                                                                                Net Sales
----------------------------------                                                                                                                      --------------                                                                                                                       --------------                                                                                                                         --------------                                                                                                                         -------------------
U.S. Wholesale (g)                                                             $  35,806                                                                   16.4 %                                                   $  41,509                                                                   19.3 %                                                   $   105,501                                                                   20.7 %                                                   $   109,920                                                                      21.7 %
U.S. Retail (a) (g)                                                               42,342                                                                   10.8 %                                                      36,952                                                                   10.5 %                                                        72,242                                                                    9.6 %                                                        76,421                                                                      10.8 %
International (b) (g)                                                              7,597                                                                    9.2 %                                                       9,105                                                                   12.7 %                                                        11,282                                                                    7.1 %                                                        17,546                                                                      11.7 %
Corporate expenses (c) (d) (e) (f)                                               (21,224 )                                                                                                                            (24,323 )                                                                                                                              (45,938 )                                                                                                                              (47,636 )
                                                                             --------------------------------                                                                                                     --------------------------------                                                                                                     ----------------------------------                                                                                                     ----------------------------------
     Total operating income                                                    $  64,521                                                 9.3 %                                                   $  63,243                                                 9.9 %                                                   $   143,087                                                10.0 %                                                   $   156,251                                                   11.5 %
                                                                             === ======= ====================                                                                                                     === ======= ====================                                                                                                     === ========= ====================                                                                                                     === ========= ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
(a)    Includes retail store and eCommerce results.
(b)                       Net sales includes international retail, eCommerce, and wholesale
                          sales.
(c)                       Corporate expenses include expenses related to incentive
                          compensation, stock-based compensation, executive management,
                          severance and relocation, finance, office occupancy, information
                          technology, legal, consulting, and audit fees.
(d)                       Includes charges related to the amortization of the H.W. Carter and
                          Sons tradenames of approximately $0.8 million and $1.7 million for
                          the fiscal quarter and two fiscal quarters ended July 2, 2016,
                          respectively.
(e)                       Includes acquisition-related expenses of approximately $0.6 million
                          and $1.8 million for fiscal quarter and two fiscal quarters ended
                          July 1, 2017, respectively.
(f)                       Includes charges related to the Company’s direct sourcing initiative
                          of approximately $0.1 million and $0.3 million for the fiscal
                          quarter and two fiscal quarters ended July 1, 2017, respectively.
(g)                       A total of $0.4 million of certain costs related to inventory
                          acquired from Skip Hop is included in operating income between U.S.
                          Wholesale, U.S. Retail, and International for the fiscal quarter and
                          two fiscal quarters ended July 1, 2017.
                          
                                                                                                                                                              
                                                                                                                                        CARTER’S, INC.
                                                                                                                                          CONDENSED CONSOLIDATED BALANCE SHEETS
                                                                                                                                      (dollars in thousands, except per share data)
                                                                                                                                                       (unaudited)
                                                                                                                                                                                                                                                                                  
                                                                                                                            July 1, 2017                                                                   December 31, 2016                                                                  July 2, 2016
                                                                                                               ---------------------------------------                                          ---------------------------------------                                          ---------------------------------------
ASSETS
Current assets:
   Cash and cash equivalents                                                                                         $   173,564                                                                      $   299,358                                                                      $   205,080
   Accounts receivable, net                                                                                              165,183                                                                          202,471                                                                          150,633
   Finished goods inventories                                                                                            610,423                                                                          487,591                                                                          587,434
   Prepaid expenses and other current assets                                                                              44,527                                                                           32,180                                                                           46,189
   Deferred income taxes                                                                                          --                                                        35,486                                                        32,816  
                                                                                                               --------------------------------------                                           --------------------------------------                                           --------------------------------------
      Total current assets                                                                                               993,697                                                                        1,057,086                                                                        1,022,152
Property, plant, and equipment, net of accumulated depreciation of                                                       382,472                                                                          385,874                                                                          386,034
$384,881, $345,907, and $317,580, respectively
Tradenames and other intangible assets, net                                                                              400,735                                                                          308,928                                                                          309,017
Goodwill                                                                                                                 231,709                                                                          176,009                                                                          177,540
Other assets                                                                                                              23,246                                                        18,700                                                        17,749  
                                                                                                               --------------------------------------                                           --------------------------------------                                           --------------------------------------
        Total assets                                                                                                 $ 2,031,859                                                   $ 1,946,597                                                   $ 1,912,492  
                                                                                                               ======= ========= ====================                                           ======= ========= ====================                                           ======= ========= ====================
                                                                                                                                                                                                                                                                                  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
   Accounts payable                                                                                                  $   217,340                                                                      $   158,432                                                                      $   190,366
   Other current liabilities                                                                                              94,644                                                       119,177                                                        80,595  
                                                                                                               --------------------------------------                                           --------------------------------------                                           --------------------------------------
      Total current liabilities                                                                                          311,984                                                                          277,609                                                                          270,961
                                                                                                                                                                                                                                                                                  
Long-term debt, net                                                                                                      661,846                                                                          580,376                                                                          580,678
Deferred income taxes                                                                                                    133,251                                                                          130,656                                                                          128,682
Other long-term liabilities                                                                                              174,867                                                       169,832                                                       165,469  
                                                                                                               --------------------------------------                                           --------------------------------------                                           --------------------------------------
        Total liabilities                                                                                              1,281,948                                                                        1,158,473                                                                        1,145,790
                                                                                                                                                                                                                                                                                  
Commitments and contingencies
                                                                                                                                                                                                                                                                                  
Stockholders’ equity:
Preferred stock; par value $.01 per share; 100,000 shares                                                         --                                                                   --                                                                   --
authorized; none issued or outstanding at July 1, 2017, December 31,
2016, and July 2, 2016
Common stock, voting; par value $.01 per share; 150,000,000 shares                                                           480                                                                              489                                                                              502
authorized; 47,971,577, 48,948,670 and 50,194,955 shares issued and
outstanding at July 1, 2017, December 31, 2016 and July 2, 2016,
respectively
Accumulated other comprehensive loss                                                                                     (30,653 )                                                                        (34,740 )                                                                        (30,533 )
Retained earnings                                                                                                        780,084                                                       822,375                                                       796,733  
                                                                                                               --------------------------------------                                           --------------------------------------                                           --------------------------------------
Total stockholders’ equity                                                                                               749,911                                                       788,124                                                       766,702  
                                                                                                               --------------------------------------                                           --------------------------------------                                           --------------------------------------
        Total liabilities and stockholders’ equity                                                                   $ 2,031,859                                                   $ 1,946,597                                                   $ 1,912,492  
                                                                                                               ======= ========= ====================                                           ======= ========= ====================                                           ======= ========= ====================
                                                                                                                                                                                                                                                                                                    
                                                                 
                                                                                          CARTER’S, INC.
                                                                                       CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                                                   (dollars in thousands)
                                                                                                         (unaudited)
                                                                                                         
                                                                                                                                                      Two Fiscal Quarters Ended
                                                                                                        --------------------------------------------------------------------------------------------------------------------
                                                                                                                    July 1, 2017                             July 2, 2016
                                                                                                        -------------------------------------                                          -------------------------------------
Cash flows from operating activities:
Net income                                                                                                    $  84,589                                                                      $  90,178
Adjustments to reconcile net income to net cash provided by
operating activities:
   Depreciation and amortization                                                                                 39,705                                                                         34,916
   Amortization of tradenames                                                                                       892                                                                          1,831
   Amortization of fair value step up of inventory                                                                  400                                                                 --
   Amortization of debt issuance costs                                                                              749                                                                            725
   Non-cash stock-based compensation expense                                                                      9,646                                                                          9,250
   Foreign currency (gain) loss, net                                                                               (555 )                                                                        3,130
   Income tax benefit from stock-based compensation                                                      --                                                                         (3,684 )
   Loss on disposal of property, plant, and equipment                                                               221                                                                            133
   Deferred income taxes                                                                                          3,227                                                                          1,258
Effect of changes in operating assets and liabilities, net of
acquisition:
      Accounts receivable, net                                                                                   57,215                                                                         57,229
      Finished goods inventories                                                                                (91,846 )                                                                     (114,817 )
      Prepaid expenses and other assets                                                                         (13,871 )                                                                      (12,643 )
      Accounts payable and other liabilities                                                                     16,961                                                      18,093  
                                                                                                        ------------------------------------                                           ------------------------------------
                                                                                                                107,333                                                      85,599  
         Net cash provided by operating activities
                                                                                                        --------------  --------------------                                           --------------  --------------------
                                                                                                                                                                                        
Cash flows from investing activities:
Capital expenditures                                                                                            (34,276 )                                                                      (49,698 )
Acquisition of Skip Hop Holdings, Inc., net of cash acquired                                                   (143,704 )                                                               --
Proceeds from sale of property, plant, and equipment                                                     --                                                         193  
                                                                                                        ------------------------------------                                           ------------------------------------
         Net cash used in investing activities                                                                 (177,980 )                                                                      (49,505 )
                                                                                                        ------------------------------------                                           ------------------------------------
                                                                                                                                                                                        
Cash flows from financing activities:
Borrowings under secured revolving credit facility                                                              100,000                                                                 --
Payments on secured revolving credit facility                                                                   (18,965 )                                                               --
Repurchases of common stock                                                                                     (98,236 )                                                                     (180,209 )
Dividends paid                                                                                                  (35,831 )                                                                      (33,679 )
Income tax benefit from stock-based compensation                                                         --                                                                          3,684
Withholdings from vestings of restricted stock                                                                   (5,590 )                                                                       (8,508 )
Proceeds from exercises of stock options                                                                          3,122                                                       5,101  
                                                                                                        ------------------------------------                                           ------------------------------------
         Net cash used in financing activities                                                                  (55,500 )                                                                     (213,611 )
                                                                                                        ------------------------------------                                           ------------------------------------
                                                                                                                                                                                        
Effect of exchange rate changes on cash and cash equivalents                                                        353                                                       1,388  
                                                                                                        ------------------------------------                                           ------------------------------------
Net decrease in cash and cash equivalents                                                                      (125,794 )                                                                     (176,129 )
Cash and cash equivalents, beginning of period                                                                  299,358                                                     381,209  
                                                                                                        ------------------------------------                                           ------------------------------------
Cash and cash equivalents, end of period                                                                      $ 173,564                                                   $ 205,080  
                                                                                                        ======= ======= ====================                                           ======= ======= ====================
                                                                                                                                                                                                        
                                      
                                                                                                                                                                                                                                     CARTER’S, INC.
                                                                                                                                                                                                                                     RECONCILIATION OF GAAP TO ADJUSTED RESULTS
                                                                                                                                                                                                                                     (dollars in millions, except earnings per share)
                                                                                                                                                                                                                                     (unaudited)
                                                                              
                                                                                                                                                                                                                                                                                        Fiscal Quarter Ended July 1, 2017
                                                                             ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Gross Margin      % Net Sales                  SG&A                 % Net Sales      Operating Income     % Net Sales        Net Income                Diluted EPS
                                                                             ----------------                                          ------------                                          ------------------------------                                          ------------                                          ------------------                                          ------------                                          ----------------                                          -----------------------------
As reported (GAAP)                                                                 $   303.5                                            43.8 %                                                $ 250.1                                                                 36.1 %                                                      $     64.5                                             9.3 %                                                     $    37.9                                                 $                 0.78
Acquisition-related costs (b)                                                            0.4                                                                                                     (0.6 )                                                                                                                                  1.0                                                                                                             0.6                                                                   0.01
Direct sourcing initiative (b) (c)                                            --                                                                                                     (0.1 )                                                                                                                                  0.1                                                                                                  --                                                         --
                                                                             ----------------                                                                                                -----------------------------                                                                                                 ------------------                                                                                                ----------------                                          -----------------------------
As adjusted (a)                                                                    $   303.9                                            43.9 %                                                $ 249.5                                              36.1 %                                                      $     65.5                                             9.5 %                                                     $    38.6                                                 $                 0.79
                                                                             ======= =======                                                                                                 == ===== ====================                                                                                                 ======== ========                                                                                                 ======= =======                                           ======= ====================
                                                                              
                                                                                                                                                                                                                                                                                     Two Fiscal Quarters Ended July 1, 2017
                                                                             ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Gross Margin                                            % Net Sales                                                        SG&A                                                       % Net Sales                                            Operating Income                                           % Net Sales                                              Net Income                                                      Diluted EPS
                                                                             ----------------                                          ------------                                          ------------------------------                                          ------------                                          ------------------                                          ------------                                          ----------------                                          -----------------------------
As reported (GAAP)                                                                 $   619.3                                            43.5 %                                                $ 497.9                                                                 34.9 %                                                      $    143.1                                            10.0 %                                                     $    84.6                                                 $                 1.73
Acquisition-related costs (b)                                                            0.4                                                                                                     (1.8 )                                                                                                                                  2.2                                                                                                             1.4                                                                   0.03
Direct sourcing initiative (b) (c)                                            --                                                                                                     (0.3 )                                                                                                                                  0.3                                                                                                             0.2                                                         --
                                                                             ----------------                                                                                                -----------------------------                                                                                                 ------------------                                                                                                ----------------                                          -----------------------------
As adjusted (a)                                                                    $   619.7                                            43.5 %                                                $ 495.8                                              34.8 %                                                      $    145.6                                            10.2 %                                                     $    86.2                                                 $                 1.76
                                                                             ======= =======                                                                                                 == ===== ====================                                                                                                 ======== ========                                                                                                 ======= =======                                           ======= ====================
                                                                              
                                                                                                                                                                                                                                                                                        Fiscal Quarter Ended July 2, 2016
                                                                             ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Gross Margin                                            % Net Sales                                                        SG&A                                                       % Net Sales                                            Operating Income                                           % Net Sales                                              Net Income                                                      Diluted EPS
                                                                             ----------------                                          ------------                                          ------------------------------                                          ------------                                          ------------------                                          ------------                                          ----------------                                          -----------------------------
As reported (GAAP)                                                                 $   282.2                                            44.1 %                                                $ 228.5                                                                 35.7 %                                                      $     63.2                                             9.9 %                                                     $    36.2                                                 $                 0.71
Amortization of tradename (b)                                                 --                                                                                                     (0.8 )                                                                                                                                  0.8                                                                                                             0.5                                                                   0.01
                                                                             ----------------                                                                                                -----------------------------                                                                                                 ------------------                                                                                                ----------------                                          -----------------------------
As adjusted (a)                                                                    $   282.2                                            44.1 %                                                $ 227.7                                              35.6 %                                                      $     64.0                                            10.0 %                                                     $    36.7                                                 $                 0.72
                                                                             ======= =======                                                                                                 == ===== ====================                                                                                                 ======== ========                                                                                                 ======= =======                                           ======= ====================
                                                                              
                                                                                                                                                                                                                                                                                     Two Fiscal Quarters Ended July 2, 2016
                                                                             ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Gross Margin                                            % Net Sales                                                        SG&A                                                       % Net Sales                                            Operating Income                                           % Net Sales                                              Net Income                                                      Diluted EPS
                                                                             ----------------                                          ------------                                          ------------------------------                                          ------------                                          ------------------                                          ------------                                          ----------------                                          -----------------------------
As reported (GAAP)                                                                 $   593.1                                            43.5 %                                                $ 457.5                                                                 33.5 %                                                      $    156.3                                            11.5 %                                                     $    90.2                                                 $                 1.75
Amortization of tradename (b)                                                 --                                                                                                     (1.7 )                                                                                                                                  1.7                                                                                                             1.1                                                                   0.02
                                                                             ----------------                                                                                                -----------------------------                                                                                                 ------------------                                                                                                ----------------                                          -----------------------------
As adjusted (a)                                                                    $   593.1                                            43.5 %                                                $ 455.7                                              33.4 %                                                      $    158.0                                            11.6 %                                                     $    91.3                                                 $                 1.77
                                                                             ======= =======                                                                                                 == ===== ====================                                                                                                 ======== ========                                                                                                 ======= =======                                           ======= ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
(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 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 and affords investors a view of what management considers to
                                       be the Company’s core performance. 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.
(b)                                    The difference between the impacts on Operating Income and Net
                                       Income represents the income taxes related to the adjustment item
                                       (calculated using the applicable tax rate of the underlying
                                       jurisdiction).
(c)                                    Costs associated with the Company’s direct sourcing initiative,
                                       which includes severance and relocation.
 
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 October 1, 2016
                                                                             ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                         Gross Margin                              SG&A                         Operating Income                       Net Income                       Diluted EPS
                                                                             -------------------------------------                                          ------------------------------                                          ---------------------------------                                          -------------------------------                                          ---------------------------
As reported (GAAP)                                                                 $   375.5                                                                 $ 255.3                                                                    $ 130.9                                                                  $  80.8                                                                    $                 1.60
Direct sourcing initiative (b) (c)                                            --                                                 (0.5 )                                                                      0.5                                                   0.3                                                                   0.01
                                                                             ------------------------------------                                           -----------------------------                                           --------------------------------                                           ------------------------------                                           ---------------------------
As adjusted (a)                                                                    $   375.5                                              $ 254.8                                                 $ 131.4                                               $  81.1                                                 $                 1.61
                                                                             ======= ======= ====================                                           == ===== ====================                                           ===== ===== ====================                                           === ===== ====================                                           ===== ====================
                                                                              
                                                                              
                                                                                                                                                                                                                               Fiscal Year Ended December 31, 2016
                                                                             ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                         Gross Margin                                                                    SG&A                                                               Operating Income                                                             Net Income                                                             Diluted EPS
                                                                             -------------------------------------                                          ------------------------------                                          ---------------------------------                                          -------------------------------                                          ---------------------------
As reported (GAAP)                                                                 $ 1,379.1                                                                 $ 995.4                                                                    $ 426.6                                                                  $ 258.1                                                                    $                 5.08
Amortization of tradename (b)                                                 --                                                                    (1.7 )                                                                      1.7                                                                      1.1                                                                                      0.02
Direct sourcing initiative (b) (c)                                            --                                                                    (0.7 )                                                                      0.7                                                                      0.5                                                                                      0.01
Acquisition-related costs (b)                                                 --                                                 (2.4 )                                                                      2.4                                                   1.5                                                                   0.03
                                                                             ------------------------------------                                           -----------------------------                                           --------------------------------                                           ------------------------------                                           ---------------------------
As adjusted (a)                                                                    $ 1,379.1                                              $ 990.6                                                 $ 431.4                                               $ 261.1                                                 $                 5.14
                                                                             ======= ======= ====================                                           == ===== ====================                                           ===== ===== ====================                                           === ===== ====================                                           ===== ====================
                                                                                                                                                                                                                                                                                                                                                                                               
(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 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 and affords
                                       investors a view of what management considers to be the Company’s
                                       core performance. 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.
(b)                                    The difference between the impacts on Operating Income and Net
                                       Income represents the income taxes related to the adjustment item
                                       (calculated using the applicable tax rate of the underlying
                                       jurisdiction).
(c)                                    Costs associated with the Company’s direct sourcing initiative,
                                       which include severance and relocation.
 
Note: Results may not be additive due to rounding.
 
                                                                                                                                                                                          
                                                                                                                                                                      CARTER’S, INC.
                                                                                                                                                            RECONCILIATION OF NET INCOME ALLOCABLE TO COMMON SHAREHOLDERS
                                                                                                                                                                                     (unaudited)
                                                                                                                                                                                                                                                                        
                                                                                                                                                            Fiscal Quarter Ended                                                                                                                                  Two Fiscal Quarters Ended
                                                                                                               --------------------------------------------------------------------------------------------------------------                                          --------------------------------------------------------------------------------------------------------------
                                                                                                                             July 1,                               July 2,                                                                     July 1,                               July 2,
                                                                                                                              2017                                                                        2016                                                                        2017                                                                        2016
                                                                                                               -------------------------------                                             -------------------------------                                             -------------------------------                                             -------------------------------
Weighted-average number of common and common equivalent shares
outstanding:
   Basic number of common shares outstanding                                                                     47,863,618                                                                  50,143,568                                                                  48,093,155                                                                  50,660,278
   Dilutive effect of equity awards                                                                                 550,726                                                  469,114                                                  552,866                                                  468,632  
                                                                                                               ---------------------------------                                           ---------------------------------                                           ---------------------------------                                           ---------------------------------
   Diluted number of common and common equivalent shares outstanding                                             48,414,344                                               50,612,682                                               48,646,021                                               51,128,910  
                                                                                                               =================================                                           =================================                                           =================================                                           =================================
As reported on a GAAP Basis:
--------------------------------------------------------------------
(dollars in thousands, except per share data)
Basic net income per common share:
   Net income                                                                                                      $ 37,925                                                                    $ 36,198                                                                    $ 84,589                                                                    $ 90,178
   Income allocated to participating securities                                                                        (291 )                                                                      (279 )                                                                      (660 )                                                                      (720 )
                                                                                                               ---------------------------------                                           ---------------------------------                                           ---------------------------------                                           ---------------------------------
   Net income available to common shareholders                                                                     $ 37,634                                                 $ 35,919                                                 $ 83,929                                                 $ 89,458  
                                                                                                               ===== ====== ====================                                           ===== ====== ====================                                           ===== ====== ====================                                           ===== ====== ====================
   Basic net income per common share                                                                               $   0.79                                                                    $   0.72                                                                    $   1.75                                                                    $   1.77
Diluted net income per common share:
   Net income                                                                                                      $ 37,925                                                                    $ 36,198                                                                    $ 84,589                                                                    $ 90,178
   Income allocated to participating securities                                                                        (289 )                                                                      (278 )                                                                      (656 )                                                                      (715 )
                                                                                                               ---------------------------------                                           ---------------------------------                                           ---------------------------------                                           ---------------------------------
   Net income available to common shareholders                                                                     $ 37,636                                                 $ 35,920                                                 $ 83,933                                                 $ 89,463  
                                                                                                               ===== ====== ====================                                           ===== ====== ====================                                           ===== ====== ====================                                           ===== ====== ====================
   Diluted net income per common share                                                                             $   0.78                                                                    $   0.71                                                                    $   1.73                                                                    $   1.75
As adjusted (a):
--------------------------------------------------------------------
Basic net income per common share:
   Net income                                                                                                      $ 38,559                                                                    $ 36,697                                                                    $ 86,167                                                                    $ 91,276
   Income allocated to participating securities                                                                        (296 )                                                                      (284 )                                                                      (673 )                                                                      (729 )
                                                                                                               ---------------------------------                                           ---------------------------------                                           ---------------------------------                                           ---------------------------------
   Net income available to common shareholders                                                                     $ 38,263                                                 $ 36,413                                                 $ 85,494                                                 $ 90,547  
                                                                                                               ===== ====== ====================                                           ===== ====== ====================                                           ===== ====== ====================                                           ===== ====== ====================
   Basic net income per common share                                                                               $   0.80                                                                    $   0.73                                                                    $   1.78                                                                    $   1.79
Diluted net income per common share:
   Net income                                                                                                      $ 38,559                                                                    $ 36,697                                                                    $ 86,167                                                                    $ 91,276
   Income allocated to participating securities                                                                        (294 )                                                                      (282 )                                                                      (669 )                                                                      (725 )
                                                                                                               ---------------------------------                                           ---------------------------------                                           ---------------------------------                                           ---------------------------------
   Net income available to common shareholders                                                                     $ 38,265                                                 $ 36,415                                                 $ 85,498                                                 $ 90,551  
                                                                                                               ===== ====== ====================                                           ===== ====== ====================                                           ===== ====== ====================                                           ===== ====== ====================
   Diluted net income per common share                                                                             $   0.79                                                                    $   0.72                                                                    $   1.76                                                                    $   1.77
                                                                                                                                                                                                                                                                                                                                                                 
(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 $0.6 million
                                      and $1.6 million in after-tax expenses from these results for the
                                      fiscal quarter and two fiscal quarters ended July 1, 2017,
                                      respectively. The Company has excluded $0.5 million and $1.1 million
                                      from these results for the fiscal quarter and two fiscal quarters
                                      ended July 2, 2016, respectively.
 
Note: Results may not be additive due to rounding.
 
                                                                                                                                                                                                                                                                                        
                                                                                                                                                                                               RECONCILIATION OF U.S. GAAP AND NON-GAAP INFORMATION
                                                                                                                                                                                                                    (unaudited)
                                                                                                                                                                                                                                                                                                                                                                                                            
The following table provides a reconciliation of net income to
EBITDA and Adjusted EBITDA for the periods indicated:
                                                                                                                                                                                                                                                                                                                                                                                                            
                                                                                                                            Fiscal Quarter Ended                                                                                                                                          Two Fiscal Quarters Ended                                                                                              Four Fiscal Quarters Ended
                                                                            ---------------------------------------------------------------------------------------------------------------------                                          ----------------------------------------------------------------------------------------------------------------------                                          ---------------------------------------
                                                                                     July 1, 2017                              July 2, 2016                                                                    July 1, 2017                              July 2, 2016                                                                       July 1, 2017
                                                                            -------------------------------                                          --------------------------------------------                                          --------------------------------                                          --------------------------------------------                                          ---------------------------------------
(dollars in millions)
Net income                                                                     $ 37.9                                                                      $           36.2                                                                   $  84.6                                                                      $           90.2                                                                       $    252.5
Interest expense                                                                  7.2                                                                                   6.8                                                                      14.3                                                                                  13.5                                                                             27.8
Interest income                                                                  (0.1 )                                                                                (0.2 )                                                                    (0.2 )                                                                                (0.4 )                                                                           (0.4 )
Income tax expense                                                               20.0                                                                                  19.9                                                                      45.2                                                                                  49.2                                                                            133.9
Depreciation and amortization (a)                                                20.8                                                               18.6                                                   40.6                                                               36.7                                                          77.3  
                                                                            ------------------------------                                           -------------------------------------------                                           -------------------------------                                           -------------------------------------------                                           --------------------------------------
EBITDA                                                                         $ 85.9                                                   $           81.3                                                $ 184.4                                                   $          189.3                                                    $    491.2  
                                                                            ==== ==== ====================                                           ======= ============== ====================                                           ==== ===== ====================                                           ======= ============== ====================                                           ======== ======== ====================
                                                                                                                                                                                                                                                                                                                                                                                                            
Adjustments to EBITDA
Acquisition-related costs                                                      $  1.0                                                                      $ --                                                                   $   2.2                                                                      $ --                                                                       $      4.6
Direct sourcing initiative (b)                                                    0.1                                                     --                                                    0.3                                                     --                                                           1.0  
                                                                            ------------------------------                                           -------------------------------------------                                           -------------------------------                                           -------------------------------------------                                           --------------------------------------
Adjusted EBITDA                                                                $ 86.9                                                   $           81.3                                                $ 187.0                                                   $          189.3                                                    $    496.7  
                                                                            ==== ==== ====================                                           ======= ============== ====================                                           ==== ===== ====================                                           ======= ============== ====================                                           ======== ======== ====================
                                                                                                                                                                                                                                                                                                                                                                                                                              
(a)                Includes amortization of acquired tradenames.
(b)                                   Pre-tax costs associated with the Company’s direct sourcing
                                      initiative, which includes severance and relocation.
 
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 listed in 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. These measures also afford investors a view of what management considers to be the Company’s core performance.

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.

                                   
                                                                                                                                                              RECONCILIATION OF U.S. GAAP AND NON-GAAP INFORMATION
                                                                                                                                                                              (dollars in millions)
                                                                                                                                                                                   (unaudited)
                                                                           
The tables below reflect the calculation of constant currency for
total net sales of the International segment and consolidated net
sales for the fiscal quarter and two fiscal quarters ended July 1,
2017:
                                                                           
                                                                                                                                                                                                                   Fiscal Quarter Ended
                                                                          ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                            Reported         Impact of        Constant-         Reported         Reported           Constant-
                                                                            Net Sales                                               Foreign                                               Currency                                                Net Sales                                              Net Sales                                                Currency
                                                                             July 1,                                               Currency                                               Net Sales                                             July 2, 2016                                             % Change                                                 Net Sales
                                                                              2017                                                Translation                                               July                                                                                                                                                                      %
                                                                                                                                                                                           1, 2017                                                                                                                                                                 Change
                                                                          -----------                                            ----------                                             -----------                                            -------------                                            --------                                            -------------------
                                                                                                                                                                                                                                                                                                                                                             
Consolidated net sales                                                       $   692.1                                             $ (2.6 )                                                $   694.7                                                $   639.5                                            8.2 %                                                     8.6 %
International segment net sales                                              $    82.6                                             $ (2.6 )                                                $    85.1                                                $    71.6                                           15.4 %                                                    19.0 %
                                                                                                                                                                                                                                                                                                                                                             
                                                                           
                                                                           
                                                                                                                                                                                                                 Two Fiscal Quarters Ended
                                                                          ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                            Reported                                               Impact of                                              Constant-                                               Reported                                               Reported                                                 Constant-
                                                                            Net Sales                                               Foreign                                               Currency                                                Net Sales                                              Net Sales                                                Currency
                                                                             July 1,                                               Currency                                               Net Sales                                             July 2, 2016                                             % Change                                                 Net Sales
                                                                              2017                                                Translation                                               July                                                                                                                                                                      %
                                                                                                                                                                                           1, 2017                                                                                                                                                                 Change
                                                                          -----------                                            ----------                                             -----------                                            -------------                                            --------                                            -------------------
                                                                                                                                                                                                                                                                                                                                                             
Consolidated net sales                                                       $ 1,424.9                                             $ (1.2 )                                                $ 1,426.1                                                $ 1,363.6                                            4.5 %                                                     4.6 %
International segment net sales                                              $   159.0                                             $ (1.2 )                                                $   160.2                                                $   149.5                                            6.4 %                                                     7.1 %
                                                                                                                                                                                                                                                                                                                                                             

The Company evaluates its net sales on both an "as reported" and a "constant currency" basis. The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates that occurred between the comparative periods. Constant currency net sales results are calculated by translating current period net sales in local currency to the U.S. dollar amount by using the currency conversion rate for the prior comparative period. The Company consistently applies this approach to net sales for all countries where the functional currency is not the U.S. dollar. The Company believes that the presentation of net sales on a constant currency basis provides useful supplemental information regarding changes in our net sales that were not due to fluctuations in currency exchange rates and such information is consistent with how the Company assesses changes in its net sales between comparative periods.

Note: Results may not be additive due to rounding.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170727005626r1&sid=cmtx6&distro=nx&

View source version on businesswire.com: http://www.businesswire.com/news/home/20170727005626/en/

SOURCE: Carter’s, Inc.

Carter’s, Inc. 
Sean McHugh, 678-791-7615 
Vice President & Treasurer


Register |  Password |  Feedback |  Copyright |  Usage Agreement |  Privacy Policy |  Advertising |  About Us |  Contact Us |  FAQ 

Past performance is not indicative of future results

StockSelector.com, the StockSelector.com logo, and News Selects are trademarks of StockSelector.com.
Copyright © 1998 - 2017 StockSelector.com. All rights reserved.