Attached files
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| 8-K - FORM 8-K - WARNACO GROUP INC /DE/ | form8-k.htm |
Exhibit
99.1
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Investor
Relations:
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Deborah
Abraham
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Vice
President, Investor Relations
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(212)
287-8289
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FOR IMMEDIATE
RELEASE
WARNACO
REPORTS FOURTH QUARTER AND FISCAL 2009 RESULTS
Company
Provides Guidance for Fiscal 2010
NEW
YORK – March 1, 2010 -- The Warnaco Group, Inc. (NYSE: WRC) today reported
results for the fourth quarter and fiscal year ended January 2,
2010.
For the
fourth quarter:
|
·
|
Net
revenues were $505.4 million, up 14% from the prior year
quarter
|
|
·
|
Net
revenues, on a constant currency basis, rose 8% compared to the prior year
quarter
|
|
·
|
Gross
margin increased 160 basis points from the prior year quarter to 44% of
net revenues
|
|
·
|
Selling,
general and administrative (SG&A) expense decreased 360 basis points
to 34% of net revenues
|
|
·
|
Operating
income was $28.0 million compared to an $11.9 million loss in the prior
year quarter, and operating margin was 6% of net revenues.
|
|
·
|
Income
per diluted share from continuing operations was $0.29 compared to a loss
of $0.27 in the prior year quarter and includes costs related to pension
expense, restructuring expenses, certain tax related items and other items
of $0.35 and $0.55 per diluted share, respectively
|
|
·
|
On
an adjusted, non-GAAP basis excluding the items above, income per diluted
share from continuing operations was $0.64 compared to $0.28 for the prior
year quarter.
|
For the
year:
|
·
|
Net
revenues were $2.0 billion, down 2% from the prior year
|
|
·
|
Net
revenues, on a constant currency basis, were up 2% from the prior
year
|
|
·
|
Gross
margin decreased 180 basis points from the prior year to 43% of net
revenues
|
|
·
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SG&A
expense decreased 420 basis points to 32% of net revenues
|
|
·
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Operating
income was $193.5 million, up 37% compared to the prior
year, and operating margin increased 270 basis points to 10% of
net revenues
|
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·
|
Income
per diluted share from continuing operations was $2.19 compared to $1.08
in fiscal 2008, and includes costs related to pension expense,
restructuring expenses,
|
1
|
certain
tax related items and other items of $0.63 and $1.56 per diluted share,
respectively
|
|
|
·
|
On
an adjusted, non-GAAP basis excluding the items above, income per diluted
share from continuing operations was $2.82 for fiscal 2009 compared to
$2.64 for fiscal 2008
|
|
·
|
Cash
& cash equivalents were $320.8 million and net operating cash flow
generated from continuing operations was $263.9 million
|
The
accompanying tables provide a reconciliation of actual results to the adjusted
results.
The
Company believes it is valuable for users of the Company’s financial statements
to be made aware of the adjusted financial information, as such measures are
used by management to evaluate the operating performance of the Company’s
continuing businesses on a comparable basis.
Joe
Gromek, Warnaco’s President and Chief Executive Officer, commented, “We are very
proud of our Fiscal 2009 results. Our record earnings performance was
fueled by the strength of our brands, continued implementation of our growth
strategies and superior execution. The ongoing success of our long
term growth initiatives, namely growth of our Calvin Klein businesses,
international expansion and continued development of our direct-to-consumer
channel, along with disciplined expense and balance sheet management, enabled
Warnaco to achieve strong results in one of the most challenging economic
periods in recent history. We recognize our 5,000 associates around
the globe for their hard work and achievement in helping us deliver these record
results.”
“During
the fourth quarter,” Mr. Gromek continued, “our strategies clearly worked with
net revenues from our Calvin Klein businesses growing by 17%, international net
revenues rising 21% and net revenues from our direct to consumer business
increasing 31%.“
“Looking
ahead, we begin 2010 in a position of strength and confidence,” Mr. Gromek
concluded. “Our brands and businesses are performing at a high level
and are supporting our long term growth objectives. We remain
committed to our current strategies which we believe position us to achieve both
our near and long term goals and increase value for our
shareholders.”
Fiscal
2010 Outlook
For
fiscal 2010, on an adjusted basis (excluding restructuring expense and assuming
minimal pension expense) and based on recent exchange rates:
|
·
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The
Company anticipates net revenues will grow 5% - 7% compared to fiscal 2009
and
|
|
·
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The
Company expects adjusted diluted earnings per share from continuing
operations in the range of $3.10 - $3.20.
|
The
accompanying tables provide a reconciliation of expected diluted earnings per
share from continuing operations, on a GAAP basis and based on 2009 average
exchange rates
2
of
$3.06- $3.15 per diluted share (assuming minimal pension expense), to the
adjusted fiscal 2010 outlook above.
Fourth
Quarter Highlights
Total
Company
Net
revenues in all major international markets grew by double-digits, with
particular strength in Latin America. Comparable store sales in the
Company’s direct to consumer segment increased 4% and the Company’s heritage
(non Calvin Klein) businesses achieved 4% net revenue growth.
Net
revenues were up 14% (up 8% on a constant currency basis) to $505.4
million. Gross margin, which benefited from retail expansion,
increased 160 basis points to 44% of net revenues. SG&A decreased 360 basis
points to 34% of net revenues, primarily the result of the Company’s cost
cutting initiatives. Operating income was $28.0 million compared to
an operating loss of $11.9 million in the prior year
quarter. Operating income for the fourth quarter of fiscal 2009 was
adversely affected by $20.3 million of pension and restructuring expense,
compared to $37.0 million for the fourth quarter of fiscal
2008.
Income
from continuing operations was $13.8 million, or $0.29 per diluted share,
compared to a loss from continuing operations of $12.3 million, or $0.27 per
diluted share, in the prior year quarter.
On an
adjusted, non-GAAP basis, as detailed in the accompanying tables, income from
continuing operations was $ 30.1 million, or $0.64 per diluted share, compared
to $13.2 million, or $0.28 per diluted share, in the prior year
period.
The
Company’s adjusted non-GAAP effective tax rate in the quarter was approximately
34% compared to 32%, in the prior year quarter. The increased tax
rate reflects the shift in earnings from lower to higher taxing
jurisdictions.
The
impact of foreign currency exchange rates, due to the strength of the U.S.
Dollar, increased fourth quarter 2009 net revenues, gross profit and SG&A by
approximately $26.7 million, $8.6 million and $11.3 million, respectively,
and decreased operating income and income from continuing operations by
approximately $2.7 million and $1.0 million, respectively, or $0.02 per diluted
share.
|
Segment
Results
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Sportswear
Sportswear
Group net revenues increased 17% (9% on a constant currency basis) to $275.6
million. Net revenues for Calvin Klein grew 22%, with notable
strength in Europe and Latin America, offsetting a 4% decline in Chaps net
revenues. Sportswear Group retail
3
net
revenues grew 31% in the quarter. Operating income increased to $24.1
million, or 9% of Sportswear Group net revenues, up 700 basis points compared to
the prior year quarter.
Intimate
Apparel
Intimate
Apparel Group net revenues increased 10% (5% on a constant currency basis) to
$179.1 million, driven by double digit growth in Core Intimates and high single
digit growth in Calvin Klein intimates. International growth in
Calvin Klein net revenues, both wholesale and retail, helped offset modest
declines in the U.S., due primarily to lower department store
replenishment. Operating income rose to $28.6 million, or 16% of
Intimate Apparel Group net revenues, resulting in the Group remaining the
Company’s most profitable segment.
Swimwear
Swimwear
Group net revenues increased 10% (8% on a constant currency basis) to $50.8
million, reflecting gains in both Speedo and Calvin Klein Swim. Operating income
increased to $2.3 million, or 4% of Swimwear Group net revenues, compared to a
loss of $.8 million in the prior year quarter. Stronger sales coupled
with expense reductions and lower restructuring expense contributed to the
improved results.
|
Fiscal
2009 Highlights
|
Total
Company
Net
revenues declined 2% on a reported basis and rose 2% on a constant currency
basis to $2.0 billion. Gross margin, which was adversely affected by currency
exchange rates, decreased 180 basis points to 43% of net revenues and
SG&A, driven by cost cutting initiatives, lower restructuring expense and
fluctuations in currency exchange rates, decreased 420 basis points to 32% of
net revenues. Operating income was $193.5 million, including $20.9
million of pension expense, compared to income of $141.4 million, including
$31.6 million of pension expense, in the prior year.
The
Company’s income from continuing operations increased to $102.2 million, or
$2.19 per diluted share, more than double the $51.0 million, or $1.08 per
diluted share, in the prior year. Income from continuing operations was
adversely affected by pension and restructuring expense of $33.0 million pre-tax
and $66.9 million pre-tax for fiscal 2009 and fiscal 2008,
respectively.
On an
adjusted, non-GAAP basis, as detailed in the accompanying tables, income from
continuing operations was $131.7 million, or $2.82 per diluted share, compared
to $124.7 million, or $2.64 per diluted share in fiscal 2008.
The
Company’s effective tax rate was 38% compared to 54% for fiscal
2008. The effective tax rate for fiscal 2009 was adversely affected
by prior period adjustments. The effective tax rate for fiscal
2008 was adversely affected by restrictions on the deductibility of certain
restructuring expenses and discontinued operations as well as repatriation of
the proceeds from the divestiture of the Company’s Lejaby®
business. The adjusted non-GAAP effective
4
tax
rate for fiscal 2009 was approximately 34%, compared to 32% for fiscal
2008. The increase in the adjusted tax rate reflects the shift in
earnings from lower to higher taxing jurisdictions.
The
impact of foreign currency exchange rates, due to a weak U.S.
Dollar, decreased fiscal 2009 net revenues, gross profit, SG&A
and operating income by approximately $85.0 million, $72.4 million,
$31.9 million and $40.5 million, respectively, and decreased income from
continuing operations by approximately $26.8 million, or $0.57 per diluted
share.
Segment
Results
Sportswear
Sportswear
Group net revenues fell 1% (increased 4% on a constant currency basis) to $1.1
billion. Operating income, however, increased to $124.9 million, or
12% of Sportswear Group net revenues, compared to $89.8 million, or 8% of Group
net revenues in fiscal 2008. Improved profitability at Chaps and
Calvin Klein, primarily driven by lower SG&A and restructuring expenses,
contributed to the positive results.
Intimate
Apparel
Intimate
Apparel Group net revenues fell 4% (flat on a constant currency basis) to $677.3
million. Continued growth of Calvin Klein retail helped to partially offset
declines in the wholesale business, while fewer product launches adversely
affected Core Intimates net revenues. Operating income was $117.1
million, or 17% of Intimate Apparel Group net revenues compared to $126.1
million, or 18% Group net revenues in fiscal 2008.
Swimwear
Swimwear
Group net revenues declined 3% (decreased 2% on a constant currency basis) to
$251.1 million. Operating income increased to $15.6 million, or 6% of
Swimwear Group net revenues compared to $11.5 million, or 4% of Swimwear Group
net revenues in the prior year. Disciplined execution and lower
SG&A and restructuring expense contributed to the improved operating
results, notwithstanding the $3.6 million charge to write-down inventory related
to suits banned by FINA.
Balance
Sheet
Cash
and cash equivalents at January 2, 2010 more than doubled to $320.8 million from
$147.6 million at January 3, 2009.
For the
year ended January 2, 2010, net cash flow generated from continuing operations
was $263.9 million. The Company was $110.0 million net cash positive
as of January 2, 2010.
5
Inventories
were $253.4 million at January 2, 2010, down $72.9 million from $326.3 million
at January 3, 2009. The reduction was consistent with the Company’s
plan to reduce the quantity of its inventory.
“In
response to the challenging market conditions in 2009 we took actions to reduce
expenses, lower inventory levels and improve our cash position,” commented Larry
Rutkowski, Warnaco’s Chief Financial Officer. “We start 2010 in a
strong financial position. Our healthy balance sheet will allow us to invest in
our business and in those opportunities that further our growth prospects while
building long term shareholder value.”
Conference
Call Information
Stockholders
and other persons are invited to listen to the fourth quarter and fiscal 2009
earnings conference call scheduled for today, Monday, March 1, 2010, at 4:30
p.m. EST. To participate in Warnaco’s conference call, dial
(877) 692-2592 approximately five minutes prior to the 4:30 p.m. start
time. The call will also be broadcast live over the Internet at
www.warnaco.com. An online archive will be available following the
call.
This
press release was furnished to the SEC (www.sec.gov) and may also be accessed
through the Company’s internet website: www.warnaco.com.
ABOUT
WARNACO
The
Warnaco Group, Inc., headquartered in New York, is a leading apparel company
engaged in the business of designing, sourcing, marketing and selling intimate
apparel, menswear, jeanswear, swimwear, men's and women's sportswear and
accessories under such owned and licensed brands as Warner's®,
Olga®, and Speedo®, as well as Chaps® sportswear and denim, and
Calvin Klein® men's and women's underwear, men’s and women’s bridge apparel and
accessories, men's and women's jeans and jeans accessories, junior
women's and children's jeans and men’s and women's swimwear.
FORWARD-LOOKING
STATEMENTS
The
Warnaco Group, Inc. notes that this press release, the conference call scheduled
for March 1, 2010 and certain other written, electronic and oral disclosure made
by the Company from time to time, may contain forward-looking statements that
are made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. The forward-looking statements involve
risks and uncertainties and reflect, when made, the Company's estimates,
objectives, projections, forecasts, plans, strategies, beliefs, intentions,
opportunities and expectations. Actual results may differ materially from
anticipated results, targets or expectations and investors are cautioned not to
place undue reliance on any forward-looking statements. Statements other than
statements of historical fact, including, without limitation, future financial
targets, are forward-looking statements. These forward-looking statements may be
identified by, among other things, the use of forward-looking language, such as
the words "believe," "anticipate," "estimate," "expect," "intend," "may,"
"project," "scheduled to," "seek," "should," "will be," "will continue," "will
likely result," “targeted”, or the negative of those terms, or other similar
words and phrases or by discussions of intentions or strategies.
The
following factors, among others and in addition to those described in the
Company's reports filed with the SEC (including, without limitation, those
described under the headings "Risk Factors" and "Statement Regarding
Forward-Looking Disclosure," as such disclosure may be modified or supplemented
from time to time), could cause the Company's actual results to differ
materially from those expressed in any forward-looking statements made by it:
the Company's ability to execute its repositioning and sale initiatives
(including achieving enhanced productivity and profitability) previously
announced; economic conditions that affect the apparel industry, including the
recent turmoil in the financial and credit markets; the Company's failure to
anticipate, identify or promptly react to changing trends, styles, or brand
preferences; further declines in prices in the apparel industry; declining sales
resulting from increased competition in the Company’s markets; increases in the
prices of raw materials; events which result in difficulty in procuring or
producing the Company's
6
products
on a cost-effective basis; the effect of laws and regulations, including those
relating to labor, workplace and the environment; possible additional tax
liabilities; changing international trade regulation, including as it
relates to the imposition or elimination of quotas on imports of textiles and
apparel; the Company’s ability to protect its intellectual property or the costs
incurred by the Company related thereto; the risk of product safety issues,
defects or other production problems associated with our products; the Company’s
dependence on a limited number of customers; the effects of consolidation in the
retail sector; the Company’s dependence on license agreements with third
parties; the Company’s dependence on the reputation of its brand names,
including, in particular, Calvin Klein; the Company’s exposure to conditions in
overseas markets in connection with the Company’s foreign operations and the
sourcing of products from foreign third-party vendors; the Company's foreign
currency exposure; the Company’s history of insufficient disclosure controls and
procedures and internal controls and restated financial statements;
unanticipated future internal control deficiencies or weaknesses or ineffective
disclosure controls and procedures; the effects of fluctuations in the value of
investments of the Company’s pension plan; the sufficiency of cash to fund
operations, including capital expenditures; the Company's ability to service its
indebtedness, the effect of changes in interest rates on the Company's
indebtedness that is subject to floating interest rates and the limitations
imposed on the Company's operating and financial flexibility by the agreements
governing the Company's indebtedness; the Company’s dependence on its senior
management team and other key personnel; the Company’s reliance on information
technology; the limitations on purchases under the Company's share repurchase
program contained in the Company's debt instruments, the number of shares that
the Company purchases under such program and the prices paid for such shares;
the Company’s inability to achieve its financial targets and strategic
objectives, as a result of one or more of the factors described above, changes
in the assumptions underlying the targets or goals, or otherwise; the failure of
acquired businesses to generate expected levels of revenues; the failure of the
Company to successfully integrate such businesses with its existing businesses
(and as a result, not achieving all or a substantial portion of the anticipated
benefits of such acquisitions); and such acquired businesses being adversely
affected, including by one or more of the factors described above and thereby
failing to achieve anticipated revenues and earnings growth.
The
Company encourages investors to read the section entitled "Risk Factors" and the
discussion of the Company's critical accounting policies under "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Discussion of Critical Accounting Policies" included in the Company's Annual
Report on Form 10-K, as such discussions may be modified or supplemented by
subsequent reports that the Company files with the SEC. The discussion in this
press release is not exhaustive but is designed to highlight important factors
that may affect actual results. Forward-looking statements speak only as of the
date on which they are made, and, except for the Company's ongoing obligation
under the U.S. federal securities laws, the Company disclaims any intention or
obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
7
Schedule
1
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THE
WARNACO GROUP, INC.
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||||||||
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CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS
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||||||||
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(Dollars
in thousands, excluding per share amounts)
|
||||||||
|
(Unaudited)
|
|
As
Reported
Three
Months Ended
January
2, 2010
|
Restructuring Charges and |
Other
(c)
|
Taxation
(d)
|
As Adjusted Three Months Ended January 2, 2010 (e) | |||||||||||||||||
|
Net
revenues
|
$ | 505,445 | $ | - | $ | 505,445 | |||||||||||||||
|
Cost
of goods sold
|
284,204 | (46 | ) | 284,158 | |||||||||||||||||
|
Gross
profit
|
221,241 | 46 | - | - | 221,287 | ||||||||||||||||
|
Selling,
general and administrative expenses
|
169,582 | (1,124 | ) | 168,458 | |||||||||||||||||
|
Amortization
of intangible assets
|
4,476 | (1,875 | ) | 2,601 | |||||||||||||||||
|
Pension
expense
|
19,176 | (19,176 | ) | - | - | ||||||||||||||||
|
Operating
income
|
28,007 | 20,346 | 1,875 | - | 50,228 | ||||||||||||||||
|
Other
expense (income)
|
(1,267 | ) | (1,267 | ) | |||||||||||||||||
|
Interest
expense
|
6,130 | 6,130 | |||||||||||||||||||
|
Interest
income
|
(228 | ) | (228 | ) | |||||||||||||||||
|
Income
from continuing operations before provisions for income taxes and
noncontrolling interest
|
23,372 | 20,346 | 1,875 | - | 45,593 | ||||||||||||||||
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Provision
for income taxes
|
9,595 |
(a)
|
8,276 | 750 | (3,165 | ) | 15,456 | ||||||||||||||
|
Income
from continuing operations before noncontrolling
interest
|
13,777 | 12,070 | 1,125 | 3,165 | 30,137 | ||||||||||||||||
|
Loss
from discontinued operations, net of taxes
|
(2,766 | ) | (2,766 | ) | |||||||||||||||||
|
Net
Income
|
11,011 | 12,070 | 1,125 | 3,165 | 27,371 | ||||||||||||||||
|
Less: Net
income attributable to the noncontrolling interest
|
- | - | |||||||||||||||||||
|
Net
income attributable to Warnaco Group, Inc.
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$ | 11,011 | $ | 12,070 | $ | 1,125 | $ | 3,165 | $ | 27,371 | |||||||||||
|
Amounts
attributable to Warnaco Group Inc. common shareholders:
|
|||||||||||||||||||||
|
Income
from continuing operations, net of tax
|
13,777 | 12,070 | 1,125 | 3,165 | 30,137 | ||||||||||||||||
|
Discontinued
operations, net of tax
|
(2,766 | ) | - | - | - | (2,766 | ) | ||||||||||||||
|
Net
income
|
11,011 | 12,070 | 1,125 | 3,165 | 27,371 | ||||||||||||||||
|
Basic
income per common share attributable to Warnaco Group, Inc. common
shareholders:
|
|||||||||||||||||||||
|
Income
from continuing operations
|
$ | 0.30 | $ | 0.65 | |||||||||||||||||
|
Loss
from discontinued operations
|
(0.06 | ) | (0.06 | ) | |||||||||||||||||
|
Net
income
|
$ | 0.24 | $ | 0.59 | |||||||||||||||||
|
Diluted
income per common share attributable to Warnaco Group, Inc. common
shareholders:
|
|
||||||||||||||||||||
|
Income
from continuing operations
|
$ | 0.29 | $ | 0.64 | |||||||||||||||||
|
Loss
from discontinued operations
|
(0.06 | ) | (0.06 | ) | |||||||||||||||||
|
Net
income
|
$ | 0.23 | $ | 0.58 | |||||||||||||||||
|
Weighted
average number of shares outstanding used in computing income per common
share:
|
|||||||||||||||||||||
|
Basic
|
45,571,470 | 45,571,470 | |||||||||||||||||||
|
Diluted
|
46,627,552 | 46,627,552 | |||||||||||||||||||
|
(a)
|
Includes
a charge of approximately $1,100 in order to correct an error in prior
period income tax provisions related to the recapture of cancellation of
indebtedness ("COD") income which had been deferred in connection with the
Company's bankruptcy proceedings in 2003.
|
|
(b)
|
This
adjustment seeks to present the Company's consolidated condensed statement
of operations on a continuing basis without the effects of restructuring
charges of $1,170 or pension expense of $19,176. See note (e)
below.
|
|
(c)
|
This
adjustment seeks to present the Company's consolidated condensed statement
of operations on a continuing basis without the effects of a charge of
$1,875 related to additional amortization expense recorded during the
Three Months Ended January 2, 2010 which amount related to the the
correction of amounts recorded in prior periods in connection with the COD
income error described in (a) above. See note (e) below.
|
|
(d)
|
Adjustment
to reflect the Company's income from continuing operations at a tax rate
of 33.9% which reflects the Company's normalized tax rate for Fiscal 2009
excluding the effects of restructuring charges, pension income, an
additional charge recorded during Fiscal 2009 for amortization expense
(which amount related to the correction of amounts recorded in prior
periods) and certain other tax related items including, among other items,
the charge related to the correction of the COD income error described in
(a) above. See Note (e) below.
|
|
(e)
|
The
"As Adjusted" statement of operations is used by management to evaluate
the operating performance of the Company's continuing operations on a
comparable basis. Management does not, nor should investors, consider such
non-GAAP financial measures in isolation from, or as a
substitution for, financial information prepared in accordance
with GAAP. The Company presents such non-GAAP financial measures in
reporting its results to provide investors with an additional tool to
evaluate the Company's operating results.
|
Schedule
1a
|
THE
WARNACO GROUP, INC.
|
|
CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS
|
|
(Dollars
in thousands, excluding per share amounts)
|
|
(Unaudited)
|
|
As
Reported
Three
Months Ended
January
3, 2009
|
Restructuring
Charges
and
Pension
(a)
|
Other
|
Taxation
(b)
|
As
Adjusted Three
Months Ended
January 3, 2009 (c) |
|
|||||||||||||||
|
Net
revenues
|
$ | 445,278 | $ | - | $ | - | $ | 445,278 | ||||||||||||
|
Cost
of goods sold
|
257,442 | (758 | ) | 256,684 | ||||||||||||||||
|
Gross
profit
|
187,836 | 758 | - | - | 188,594 | |||||||||||||||
|
Selling,
general and administrative expenses
|
165,242 | (3,764 | ) | 161,478 | ||||||||||||||||
|
Amortization
of intangible assets
|
2,063 | 274 | 2,337 | |||||||||||||||||
|
Pension
expense
|
32,429 | (32,429 | ) | - | ||||||||||||||||
|
Operating
income (loss)
|
(11,898 | ) | 36,951 | (274 | ) | - | 24,779 | |||||||||||||
|
Other
expense (income)
|
(1,136 | ) | (1,136 | ) | ||||||||||||||||
|
Interest
expense
|
6,190 | 6,190 | ||||||||||||||||||
|
Interest
income
|
(607 | ) | (607 | ) | ||||||||||||||||
|
Income
from continuing operations before provision for income
taxes and noncontrolling interest
|
(16,345 | ) | 36,951 | (274 | ) | - | 20,332 | |||||||||||||
|
Provision
for income taxes
|
(4,620 | ) | 14,472 | (110 | ) | (3,236 | ) | 6,506 | ||||||||||||
|
Income
(loss) from continuing operations before noncontrolling
interest
|
(11,725 | ) | 22,479 | (164 | ) | 3,236 | 13,826 | |||||||||||||
|
Loss
from discontinued operations, net of taxes
|
(3,984 | ) | (3,984 | ) | ||||||||||||||||
|
Net
Income (loss)
|
(15,709 | ) | 22,479 | (164 | ) | 3,236 | 9,842 | |||||||||||||
|
Less: Net
income attributable to the noncontrolling interest
|
(621 | ) | (621 | ) | ||||||||||||||||
|
Net
income (loss) attributable to Warnaco Group, Inc.
|
$ | (16,330 | ) | $ | 22,479 | $ | (164 | ) | $ | 3,236 | $ | 9,221 | ||||||||
|
Amounts
attributable to Warnaco Group Inc. common shareholders:
|
||||||||||||||||||||
|
Income
(loss) from continuing operations, net of tax
|
(12,346 | ) | 22,479 | (164 | ) | 3,236 | 13,205 | |||||||||||||
|
Discontinued
operations, net of tax
|
(3,984 | ) | - | - | - | (3,984 | ) | |||||||||||||
|
Net
income (loss)
|
(16,330 | ) | 22,479 | (164 | ) | 3,236 | 9,221 | |||||||||||||
|
Basic
income per common share attributable to Warnaco Group, Inc. common
shareholders:
|
||||||||||||||||||||
|
Income
(loss) from continuing operations
|
$ | (0.27 | ) | $ | 0.29 | |||||||||||||||
|
Loss
from discontinued operations
|
(0.08 | ) | (0.09 | ) | ||||||||||||||||
|
Net
income (loss)
|
$ | (0.35 | ) | $ | 0.20 |
(d)
|
||||||||||||||
|
Diluted
income per common share attributable to Warnaco Group, Inc. common
shareholders:
|
||||||||||||||||||||
|
Income
(loss) from continuing operations
|
$ | (0.27 | ) | $ | 0.28 | |||||||||||||||
|
Loss
from discontinued operations
|
(0.08 | ) | (0.08 | ) | ||||||||||||||||
|
Net
income (loss)
|
$ | (0.35 | ) | $ | 0.20 |
(d)
|
||||||||||||||
|
Weighted
average number of shares outstanding used in computing income per common
share:
|
||||||||||||||||||||
|
Basic
|
45,653,867 | 45,653,867 | ||||||||||||||||||
|
Diluted
|
45,984,804 | 45,984,804 | ||||||||||||||||||
|
(a)
|
This
adjustment seeks to present the Company's consolidated condensed statement
of operations on a continuing basis without the effects of restructuring
charges of $4,522 or pension expense of $32,429. See note (c)
below.
|
|
(b)
|
Adjustment
to reflect the Company's income from continuing operations at a tax rate
of 32% which reflects the Company's normalized tax rate for fiscal 2008
excluding the effects of restructuring charges, pension expense and costs
related to the refinancing of its debt. See
note (c) below.
|
|
(c)
|
The
"As Adjusted" statement of operations is used by management to evaluate
the operating performance of the Company's continuing operations on a
comparable basis. Management does not, nor should investors, consider such
non-GAAP financial measures in isolation from, or as a
substitution for, financial information prepared in accordance
with GAAP. The Company presents such non-GAAP financial measures in
reporting its results to provide investors with an additional tool to
evaluate the Company's operating results.
|
|
(d)
|
Effective
January 4, 2009, the Company adopted the provisions of FSP EITF 03-6-1,
Determining Whether Instruments Granted
in Share-Based Payment Transactions Are Participating
Securities ("FSP EITF 03-6-1"), which clarifies that unvested
share-based payment awards that contain non-forfeitable rights to
dividends or dividend equivalents are participating securities and are
required to be included in the computation of both basic and diluted
earnings per share. All prior period earnings per share data are required
to be adjusted retrospectively to give effect to FSP EITF 03-6-1.
Consequently earnings per share data for the Three Months Ended January 3,
2009 was adjusted accordingly. The effect of the adoption of FSP EITF
03-6-1 resulted in a $0.01 decrease in basic net income per share, on an
"As Adjusted" basis, compared to amounts previously reported.
|
|
Schedule
2
|
|
THE
WARNACO GROUP, INC.
|
|||||||||
|
CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS
|
|||||||||
|
(Dollars
in thousands, excluding per share amounts)
|
|||||||||
|
(Unaudited)
|
|
As
Reported
Fiscal
Year Ended
January
2, 2010
|
Restructuring
Charges
and
Pension
(c)
|
Other
(d)
|
Taxation
(e)
|
As
Adjusted
Fiscal
Year Ended
January
2, 2010 (f)
|
|||||||||||||||||
|
Net
revenues
|
$ | 2,019,625 | $ | - | $ | - | $ | - | $ | 2,019,625 | |||||||||||
|
Cost
of goods sold (a)
|
1,155,278 | (1,765 | ) | 1,153,513 | |||||||||||||||||
|
Gross
profit
|
864,347 | 1,765 | - | - | 866,112 | ||||||||||||||||
|
Selling,
general and administrative expenses
|
638,907 | (10,361 | ) | 628,546 | |||||||||||||||||
|
Amortization
of intangible assets
|
11,032 | (1,095 | ) | 9,937 | |||||||||||||||||
|
Pension
expense
|
20,873 | (20,873 | ) | - | - | ||||||||||||||||
|
Operating
income
|
193,535 | 32,999 | 1,095 | - | 227,629 | ||||||||||||||||
|
Other
expense (income)
|
1,889 | 1,889 | |||||||||||||||||||
|
Interest
expense
|
23,897 | 23,897 | |||||||||||||||||||
|
Interest
income
|
(1,248 | ) | (1,248 | ) | |||||||||||||||||
|
Income
from continuing operations before provision for income
taxes and noncontrolling interest
|
168,997 | 32,999 | 1,095 | - | 203,091 | ||||||||||||||||
|
Provision
for income taxes
|
64,272 |
(b)
|
11,855 | 438 | (7,717 | ) | 68,848 | ||||||||||||||
|
Income
from continuing operations before
noncontrolling interest
|
104,725 | 21,144 | 657 | 7,717 | 134,243 | ||||||||||||||||
|
Loss
from discontinued operations, net of taxes
|
(6,227 | ) | (6,227 | ) | |||||||||||||||||
|
Net
Income
|
98,498 | 21,144 | 657 | 7,717 | 128,016 | ||||||||||||||||
|
Less: Net
income attributable to the noncontrolling interest
|
(2,500 | ) | (2,500 | ) | |||||||||||||||||
|
Net
income attributable to Warnaco Group, Inc.
|
$ | 95,998 | $ | 21,144 | $ | 657 | $ | 7,717 | $ | 125,516 | |||||||||||
|
Amounts
attributable to Warnaco Group Inc. common shareholders:
|
|||||||||||||||||||||
|
Income
from continuing operations, net of tax
|
102,225 | 21,144 | 657 | 7,717 | 131,743 | ||||||||||||||||
|
Discontinued
operations, net of tax
|
(6,227 | ) | - | - | - | (6,227 | ) | ||||||||||||||
|
Net
income
|
95,998 | 21,144 | 657 | 7,717 | 125,516 | ||||||||||||||||
|
Basic
income per common share attributable to Warnaco Group,
Inc. common shareholders:
|
|||||||||||||||||||||
|
Income
from continuing operations
|
$ | 2.22 | $ | 2.86 | |||||||||||||||||
|
Loss
from discontinued operations
|
(0.13 | ) | (0.13 | ) | |||||||||||||||||
|
Net
income
|
$ | 2.09 | $ | 2.73 | |||||||||||||||||
|
Diluted
income per common share attributable to Warnaco Group,
Inc. common shareholders:
|
|||||||||||||||||||||
|
Income
from continuing operations
|
$ | 2.19 | $ | 2.82 | |||||||||||||||||
|
Loss
from discontinued operations
|
(0.14 | ) | (0.14 | ) | |||||||||||||||||
|
Net
income
|
$ | 2.05 | $ | 2.68 | |||||||||||||||||
|
Weighted
average number of shares outstanding used in computing income per common
share:
|
|||||||||||||||||||||
|
Basic
|
45,433,874 | 45,433,874 | |||||||||||||||||||
|
Diluted
|
46,196,397 | 46,196,397 | |||||||||||||||||||
|
(a)
|
Includes
a charge of $3,556 recorded during Fiscal 2009 related to the write-down
of inventory associated with the Company's LZR Racer and similar swimsuits
which were banned by the Federation Internationale de Natation
("FINA"). FINA is the international organization responsible
for, among other things, administering swimming competitions.
|
|
(b)
|
Includes
a charge of approximately $3,600 in order to correct an error in prior
period income tax provisions related to the recapture of cancellation of
indebtedness ("COD") income which had been deferred in connection with the
Company's emergence from bankruptcy on February 4, 2003.
|
|
(c)
|
This
adjustment seeks to present the Company's consolidated condensed statement
of operations on a continuing basis without the effects of restructuring
charges of $12,126 or pension expense of $20,873. See note (f)
below.
|
|
(d)
|
This
adjustment seeks to present the Company's consolidated condensed statement
of operations on a continuing basis without the effects of a charge of
$1,095 related to additional amortization expense recorded during Fiscal
2009 which amount related to the correction of amounts recorded in prior
periods in connection with the COD income error described in (a) above.
See note (f) below.
|
|
(e)
|
Adjustment
to reflect the Company's income from continuing operations at a tax rate
of 33.9% which reflects the Company's normalized tax rate for Fiscal 2009
excluding the effects of restructuring charges, pension income, an
additional charge recorded during Fiscal 2009 for amortization expense
(which amount related to the correction of amounts recorded in prior
periods) and certain other tax related items including, among other items,
the charge related to the correction of the COD income error described in
(a) above. See
Note (f) below.
|
|
(f)
|
The
"As Adjusted" statement of operations is used by management to evaluate
the operating performance of the Company's continuing operations on a
comparable basis. Management does not, nor should investors, consider such
non-GAAP financial measures in isolation from, or as a
substitution for, financial information prepared in accordance
with GAAP. The Company presents such non-GAAP financial measures in
reporting its results to provide investors with an additional tool to
evaluate the Company's operating results.
|
Schedule
2a
|
THE
WARNACO GROUP, INC.
|
|||||||||
|
CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS
|
|||||||||
|
(Dollars
in thousands, excluding per share amounts)
|
|||||||||
|
(Unaudited)
|
|
As
Reported
Fiscal
Year Ended
January
3, 2009
|
Restructuring
Charges
and
Pension
(b)
|
Other
Items
(c)
|
Taxation
(d)
|
As
Adjusted (e)
Fiscal
Year Ended
January
3, 2009
|
||||||||||||||||
|
Net
revenues
|
$ | 2,062,849 | $ | - | $ | - | $ | 2,062,849 | ||||||||||||
|
Cost
of goods sold
|
1,142,076 | (1,878 | ) | 1,140,198 | ||||||||||||||||
|
Gross
profit
|
920,773 | 1,878 | - | - | 922,651 | |||||||||||||||
|
Selling,
general and administrative expenses
|
738,238 | (33,382 | ) | (1,084 | ) | 703,772 | ||||||||||||||
|
Amortization
of intangible assets
|
9,446 | 1,095 | 10,541 | |||||||||||||||||
|
Pension
expense
|
31,644 | (31,644 | ) | - | ||||||||||||||||
|
Operating
income
|
141,445 | 66,904 | (11 | ) | - | 208,338 | ||||||||||||||
|
Other
expense
|
1,926 | (5,329 | ) | (3,403 | ) | |||||||||||||||
|
Interest
expense
|
29,519 | 29,519 | ||||||||||||||||||
|
Interest
income
|
(3,120 | ) | (3,120 | ) | ||||||||||||||||
|
Income
from continuing operations before provision
for income taxes and noncontrolling interest
|
113,120 | 66,904 | 5,318 | - | 185,342 | |||||||||||||||
|
Provision
for income taxes
|
60,727 |
(a)
|
16,858 | 2,127 | (20,403 | ) | 59,309 | |||||||||||||
|
Income
from continuing operations before noncontrolling
interest
|
52,393 | 50,046 | 3,191 | 20,403 | 126,033 | |||||||||||||||
|
Loss
from discontinued operations, net of taxes
|
(3,792 | ) | (3,792 | ) | ||||||||||||||||
|
Net
Income
|
48,601 | 50,046 | 3,191 | 20,403 | 122,241 | |||||||||||||||
|
Less: Net
income attributable to the noncontrolling interest
|
(1,347 | ) | (1,347 | ) | ||||||||||||||||
|
Net
income attributable to Warnaco Group, Inc.
|
$ | 47,254 | $ | 50,046 | $ | 3,191 | $ | 20,403 | $ | 120,894 | ||||||||||
|
Amounts
attributable to Warnaco Group Inc. common shareholders:
|
||||||||||||||||||||
|
Income
from continuing operations, net of tax
|
51,046 | 50,046 | 3,191 | 20,403 | 124,686 | |||||||||||||||
|
Discontinued
operations, net of tax
|
(3,792 | ) | - | - | - | (3,792 | ) | |||||||||||||
|
Net
income
|
47,254 | 50,046 | 3,191 | 20,403 | 120,894 | |||||||||||||||
|
Basic
income per common share attributable to Warnaco Group, Inc. common
shareholders:
|
||||||||||||||||||||
|
Income
from continuing operations
|
$ | 1.11 | $ | 2.71 | ||||||||||||||||
|
Loss
from discontinued operations
|
(0.08 | ) | (0.08 | ) | ||||||||||||||||
|
Net
income
|
$ | 1.03 | $ | 2.63 | (f) | |||||||||||||||
|
Diluted
income per common share attributable to Warnaco Group, Inc. common
shareholders:
|
||||||||||||||||||||
|
Income
from continuing operations
|
$ | 1.08 | $ | 2.64 | ||||||||||||||||
|
Loss
from discontinued operations
|
(0.08 | ) | (0.08 | ) | ||||||||||||||||
|
Net
income
|
$ | 1.00 | $ | 2.56 | (f) | |||||||||||||||
|
Weighted
average number of shares outstanding used in computing
income per common share:
|
||||||||||||||||||||
|
Basic
|
45,351,336 | 45,351,336 | ||||||||||||||||||
|
Diluted
|
46,595,038 | 46,595,038 | ||||||||||||||||||
|
(a)
|
Includes,
among other items, a non-recurring tax charge of approximately $14,587
related to the repatriation (as a dividend distribution), to the United
States, of the net proceeds received in connection with the
sale of the Lejaby business.
|
|
(b)
|
This
adjustment seeks to present the Company's consolidated condensed statement
of operations on a continuing basis without the effects of
restructuring charges or pension income. See note (e) below.
|
|
(c)
|
This
adjustment seeks to present the Company's consolidated condensed statement
of operations on a continuing basis including the effect of a charge
of $1,095 for amortization expense recorded during Fiscal 2009, which
amount related to the correction of amounts recorded during
Fiscal 2008, and without the effects of charges of $5,329 related to the
repurchase of a portion of its debt during Fiscal 2008, and without an
additional depreciation charge of $1, 084 recorded during Fiscal 2008
which amount related to the correction of amounts recorded in prior
periods. See note (e) below.
|
|
(d)
|
Adjustment
to reflect the Company's income from continuing operations at a tax rate
of 32% which reflects the Company's normalized tax rate for fiscal
2008 excluding the effects of restructuring charges, pension income, costs
related to the refinancing / repurchase of its debt facilities
and certain other tax related items (including a non-recurring tax charge
of approximately $15,500 related to the repatriation, to the United States
of the net proceeds received in connection with the sale of the Lejaby
business). See note (e) below.
|
|
(e)
|
The
"As Adjusted" statement of operations is used by management to evaluate
the operating performance of the Company's continuing operations on a
comparable basis. Management does not, nor should investors, consider such
non-GAAP financial measures in isolation from, or as
a substitution for, financial information prepared in
accordance with GAAP. The Company presents such non-GAAP financial
measures in reporting its results to provide investors with an
additional tool to evaluate the Company's operating results.
|
|
(f)
|
Effective
January 4, 2009, the Company adopted the provisions of FSP EITF 03-6-1,
Determining Whether
Instruments Granted in Share-Based Payment Transactions Are Participating
Securities ("FSP EITF 03-6-1"), which clarifies that unvested
share-based payment awards that contain non-forfeitable rights to
dividends or dividend equivalents are participating securities and are
required to be included in the computation of both basic and diluted
earnings per share. All prior period earnings per share data are required
to be adjusted retrospectively to give effect to FSP EITF 03-6-1.
Consequently earnings per share data for Fiscal 2008 was adjusted
accordingly. The effect of the adoption of FSP EITF 03-6-1 resulted in a
$0.03 and $0.02 decrease in basic and diluted net income per share,
respectively, on an "As Adjusted" basis, compared to amounts previously
reported.
|
Schedule
3
|
THE
WARNACO GROUP, INC.
|
|
CONSOLIDATED
CONDENSED BALANCE SHEETS
|
|
(Dollars
in thousands)
|
|
(Unaudited)
|
|
January
2, 2010 (a)
|
January
3, 2009
|
||||||
|
ASSETS
|
|||||||
|
Current
assets:
|
|||||||
|
Cash
and cash equivalents
|
$ | 320,754 | $ | 147,627 | |||
|
Accounts
receivable, net
|
290,737 | 251,886 | |||||
|
Inventories
|
253,362 | 326,297 | |||||
|
Assets
of discontinued operations
|
2,172 | 6,279 | |||||
|
Other
current assets
|
135,832 | 156,777 | |||||
|
Total
current assets
|
1,002,857 | 888,866 | |||||
|
Property,
plant and equipment, net
|
120,491 | 109,563 | |||||
|
Intangible
and other assets
|
536,446 | 497,664 | |||||
|
TOTAL
ASSETS
|
$ | 1,659,794 | $ | 1,496,093 | |||
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
|
Current
liabilities:
|
|||||||
|
Short-term
debt
|
$ | 97,873 | $ | 79,888 | |||
|
Accounts
payable and accrued liabilities
|
312,074 | 314,922 | |||||
|
Taxes
|
24,723 | 7,447 | |||||
|
Liabilities
of discontinued operations
|
8,018 | 12,055 | |||||
|
Total
current liabilities
|
442,688 | 414,312 | |||||
|
Long-term
debt
|
112,835 | 163,794 | |||||
|
Other
long-term liabilities
|
188,161 | 129,246 | |||||
|
Total
stockholders' equity
|
916,110 | 788,741 | |||||
|
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ | 1,659,794 | $ | 1,496,093 | |||
|
NET
CASH AND CASH EQUIVALENTS (NET DEBT)
|
$ | 110,046 | $ | (96,055 | ) | ||
| (a) |
During
Fiscal 2009, in connection with the correction of the COD income error,
the Company also corrected for certain of its assets recorded upon its
emergence from bankruptcy on February 4, 2003 resulting in the following
adjustments:
|
||||
|
-
increase in Intangible and other assets
|
$ | 17,033 | |||
|
-
increase in Other long-term liabilities
|
15,273 | ||||
|
-
increase in Taxes
|
10,707 | ||||
|
-
reduction in stockholders' equity
|
8,947 | ||||
|
The
Company determined that the errors were not material to any previously
issued financial statements.
|
|||||
|
Schedule
4
|
|
THE
WARNACO GROUP, INC.
|
|
NET
REVENUES AND OPERATING INCOME BY BUSINESS GROUP
|
|
(Dollars
in thousands)
|
|
(Unaudited)
|
| Net revenues: |
Three
Months
Ended January
2, 2010 |
Three
Months Ended January
3, 2009 |
Increase
/ (Decrease) |
% Change |
Constant
$ %
Change (a) |
|||||||||||||||
|
Sportswear
Group
|
$ | 275,613 | $ | 235,832 | $ | 39,781 | 16.9 | % | 9.4 | % | ||||||||||
|
Intimate
Apparel Group
|
179,052 | 163,283 | 15,769 | 9.7 | % | 4.5 | % | |||||||||||||
|
Swimwear
Group
|
50,780 | 46,163 | 4,617 | 10.0 | % | 8.3 | % | |||||||||||||
|
Net
revenues
|
$ | 505,445 | $ | 445,278 | $ | 60,167 | 13.5 | % | 7.5 | % | ||||||||||
|
Three
Months Ended January
2, 2010 |
%
of Group Net
Revenues |
Three
Months Ended January
3, 2009 |
%
of Group Net
Revenues |
|||||||||||||||||
|
Operating
income (loss):
|
||||||||||||||||||||
|
Sportswear
Group (b), (c)
|
$ | 24,076 | 8.7 | % | $ | 3,919 | 1.7 | % | ||||||||||||
|
Intimate
Apparel Group (b), (c)
|
28,598 | 16.0 | % | 27,611 | 16.9 | % | ||||||||||||||
|
Swimwear
Group (b), ( c)
|
2,261 | 4.5 | % | (767 | ) | -1.7 | % | |||||||||||||
|
Unallocated
corporate expenses (c)
|
(26,928 | ) |
na
|
(42,661 | ) |
na
|
||||||||||||||
|
Operating
income (loss)
|
$ | 28,007 |
na
|
$ | (11,898 | ) |
na
|
|||||||||||||
|
|
||||||||||||||||||||
|
Operating
income (loss) as a percentage of total net revenues
|
5.5 | % | -2.7 | % | ||||||||||||||||
|
(a)
|
Reflects
the percentage increase in net revenues for the Three Months
Ended January 2, 2010 compared to the Three Months Ended January 3, 2009
where
foreign based net revenues for the Three Months Ended January 2, 2010 are
translated into U.S. dollars using the same foreign currency exchange
rates that
were used in the calculation of net revenues for the Three Months Ended
January 3, 2009.
|
|
(b)
|
Includes
an allocation of shared services expenses as
follows:
|
|
Three
Months Ended January 2,
2010 |
Three
Months Ended January 3,
2009 |
|||||||
|
Sportswear
Group
|
$ | 5,054 | $ | 5,439 | ||||
|
Intimate
Apparel Group
|
$ | 3,772 | $ | 4,430 | ||||
|
Swimwear
Group
|
$ | 2,628 | $ | 3,824 | ||||
|
(c)
|
Includes
restructuring charges as
follows:
|
|
Three
Months Ended
January 2, 2010 |
Three
Months Ended
January 3, 2009 |
|||||||
|
Sportswear
Group
|
$ | (592 | ) | $ | 1,573 | |||
|
Intimate
Apparel Group
|
914 | 368 | ||||||
|
Swimwear
Group
|
708 | 1,766 | ||||||
|
Unallocated
corporate expenses
|
140 | 815 | ||||||
| $ | 1,170 | $ | 4,522 | |||||
Schedule
4a
|
THE
WARNACO GROUP, INC.
|
|
NET
REVENUES AND OPERATING INCOME BY BUSINESS GROUP
|
|
(Dollars
in thousands)
|
|
(Unaudited)
|
| Net revenues: |
Fiscal
Year Ended
January 2, 2010 (a) |
Fiscal
Year Ended
January 3, 2009 (a) |
Increase
/ (Decrease) |
% Change |
Constant
$ %
Change (b) |
|||||||||||||||
|
Sportswear
Group
|
$ | 1,091,165 | $ | 1,100,597 | $ | (9,432 | ) | -0.9 | % | 4.2 | % | |||||||||
|
Intimate
Apparel Group
|
677,315 | 702,252 | (24,937 | ) | -3.6 | % | -0.1 | % | ||||||||||||
|
Swimwear
Group
|
251,145 | 260,000 | (8,855 | ) | -3.4 | % | -1.5 | % | ||||||||||||
|
Net
revenues
|
$ | 2,019,625 | $ | 2,062,849 | $ | (43,224 | ) | -2.1 | % | 2.0 | % | |||||||||
|
Fiscal
Year Ended
January 2, 2010 (a) |
%
of Group Net
Revenues |
Fiscal
Year Ended
January 3, 2009 (a) |
%
of Group Net
Revenues |
|||||||||||||||||
|
Operating
income (loss):
|
||||||||||||||||||||
|
Sportswear
Group (c), (d)
|
$ | 124,950 | 11.5 | % | $ | 89,782 | 8.2 | % | ||||||||||||
|
Intimate
Apparel Group (c), (d)
|
117,070 | 17.3 | % | 126,132 | 18.0 | % | ||||||||||||||
|
Swimwear
Group (c), (d), (e)
|
15,558 | 6.2 | % | 11,478 | 4.4 | % | ||||||||||||||
|
Unallocated
corporate expenses (d)
|
(64,043 | ) |
na
|
(85,947 | ) |
na
|
||||||||||||||
|
Operating
income
|
$ | 193,535 |
na
|
$ | 141,445 |
na
|
||||||||||||||
|
|
||||||||||||||||||||
|
Operating
income as a percentage of total net revenues
|
9.6 | % | 6.9 | % | ||||||||||||||||
|
(a)
|
The
Fiscal Year ended January 2, 2010 contained 52 weeks of operations while
the Fiscal Year ended January 3, 2009 contained 53 weeks of operations.
Net revenues related to the extra week of operations in the
Fiscal Year ended January 3, 2009 were approximately $23,000.
|
|
(b)
|
Reflects
the percentage increase (decrease) in net revenues for the Fiscal Year
Ended January 2, 2010 compared to the Fiscal Year Ended January 3, 2009
where foreign based net revenues for the Fiscal Year Ended January 2, 2010
are translated into U.S. dollars using the same foreign currency exchange
rates that were used in the calculation of net revenues for the Fiscal
Year Ended January 3, 2009.
|
|
(c)
|
Includes
an allocation of shared services expenses as
follows:
|
|
Fiscal
Year Ended January 2,
2010 |
Fiscal
Year Ended January 3,
2009 |
|||||||
|
Sportswear
Group
|
$ | 20,229 | $ | 21,824 | ||||
|
Intimate
Apparel Group
|
$ | 15,102 | $ | 17,728 | ||||
|
Swimwear
Group
|
$ | 10,512 | $ | 15,297 | ||||
| (d) |
Includes
restructuring charges as
follows:
|
|
Fiscal
Year Ended January 2,
2010 |
Fiscal
Year Ended January 3,
2009 |
|||||||
|
Sportswear
Group
|
$ | 3,242 | $ | 27,820 | ||||
|
Intimate
Apparel Group
|
4,314 | 1,267 | ||||||
|
Swimwear
Group
|
3,019 | 3,944 | ||||||
|
Unallocated
corporate expenses
|
1,551 | 2,229 | ||||||
| $ | 12,126 | $ | 35,260 | |||||
|
(e)
|
Includes
a charge of $3,556 recorded during Fiscal 2009 related to the write-down
of inventory associated with the Company's LZR Racer and similar swimsuits
which were banned by FINA. FINA is the international
organization responsible for, among other things, administering swimming
competitions.
|
Schedule
5
|
THE
WARNACO GROUP, INC.
|
|
NET
REVENUES AND OPERATING INCOME BY REGION
|
|
(Dollars
in thousands)
|
|
(Unaudited)
|
|
By
Region:
|
Net
Revenues
|
|||||||||||||||||||
|
Three
Months Ended
January 2, 2010 |
Three
Months Ended
January 3, 2009 |
Increase
/ (Decrease)
|
%
Change
|
Constant
$ % Change (a)
|
||||||||||||||||
|
United
States
|
$ | 204,482 | $ | 196,770 | $ | 7,712 | 3.9 | % | 3.9 | % | ||||||||||
|
Europe
|
144,022 | 117,953 | 26,069 | 22.1 | % | 11.0 | % | |||||||||||||
|
Asia
|
84,503 | 72,959 | 11,544 | 15.8 | % | 7.5 | % | |||||||||||||
|
Canada
|
33,580 | 29,934 | 3,646 | 12.2 | % | -1.4 | % | |||||||||||||
|
Mexico,
Central and South America
|
38,858 | 27,662 | 11,196 | 40.5 | % | 28.3 | % | |||||||||||||
|
Total
|
$ | 505,445 | $ | 445,278 | $ | 60,167 | 13.5 | % | 7.5 | % | ||||||||||
|
Operating
Income (loss)
|
||||||||||||||||||||
|
Three
Months Ended
January 2, 2010 (b) |
Three
Months Ended
January 3, 2009 (b) |
Increase
/ (Decrease)
|
%
Change
|
|||||||||||||||||
|
United
States
|
$ | 13,100 | $ | 7,228 | $ | 5,872 | 81.2 | % | ||||||||||||
|
Europe
|
13,881 | 6,481 | 7,400 | 114.2 | % | |||||||||||||||
|
Asia
|
14,194 | 8,174 | 6,020 | 73.6 | % | |||||||||||||||
|
Canada
|
7,722 | 6,477 | 1,245 | 19.2 | % | |||||||||||||||
|
Mexico,
Central and South America
|
6,038 | 2,403 | 3,635 | 151.3 | % | |||||||||||||||
|
Unallocated
corporate expenses
|
(26,928 | ) | (42,661 | ) | 15,733 | -36.9 | % | |||||||||||||
|
Total
|
$ | 28,007 | $ | (11,898 | ) | $ | 39,905 |
na
|
||||||||||||
| (a) |
Reflects
the percentage increase in net revenues for the Three Months
Ended January 2, 2010 compared to the Three Months Ended January 3, 2009
where
foreign based net revenues for the Three Months Ended January 2, 2010 are
translated into U.S. dollars using the same foreign currency exchange
rates that
were used in the calculation of net revenues for the Three Months Ended
January 3, 2009.
|
| (b) |
Includes
restructuring charges as follows:
|
|
Three
Months Ended
January 2, 2010 |
Three
Months Ended
January 3, 2009 |
|||||||
|
|
||||||||
|
United
States
|
$ | 871 | $ | 2,351 | ||||
|
Europe
|
(321 | ) | 1,356 | |||||
|
Asia
|
24 | - | ||||||
|
Canada
|
(20 | ) | - | |||||
|
Mexico,
Central and South America
|
476 | - | ||||||
|
Unallocated
corporate expenses
|
140 | 815 | ||||||
|
Total
|
$ | 1,170 | $ | 4,522 | ||||
Schedule
5a
|
THE
WARNACO GROUP, INC.
|
|
NET
REVENUES AND OPERATING INCOME BY REGION
|
|
(Dollars
in thousands)
|
|
(Unaudited)
|
|
By
Region:
|
Net
Revenues
|
|||||||||||||||||||
|
Fiscal
Year Ended January 2, 2010 (a)
|
Fiscal
Year Ended January 3, 2009 (a)
|
Increase
/ (Decrease)
|
%
Change
|
Constant
$ % Change (b)
|
||||||||||||||||
|
United
States
|
$ | 916,691 | $ | 942,205 | $ | (25,514 | ) | -2.7 | % | -2.7 | % | |||||||||
|
Europe
|
551,595 | 576,320 | (24,725 | ) | -4.3 | % | 1.7 | % | ||||||||||||
|
Asia
|
322,890 | 319,052 | 3,838 | 1.2 | % | 9.3 | % | |||||||||||||
|
Canada
|
109,300 | 115,448 | (6,148 | ) | -5.3 | % | 0.2 | % | ||||||||||||
|
Mexico,
Central and South America
|
119,149 | 109,824 | 9,325 | 8.5 | % | 24.7 | % | |||||||||||||
|
Total
|
$ | 2,019,625 | $ | 2,062,849 | $ | (43,224 | ) | -2.1 | % | 2.0 | % | |||||||||
|
Operating
Income
|
||||||||||||||||||||
|
Fiscal
Year Ended January 2, 2010 (a), (c)
|
Fiscal
Year Ended January 3, 2009 (a), (c)
|
Increase
/ (Decrease)
|
%
Change
|
|||||||||||||||||
|
United
States (d)
|
$ | 116,912 | $ | 92,195 | $ | 24,717 | 26.8 | % | ||||||||||||
|
Europe
|
54,704 | 50,294 | 4,410 | 8.8 | % | |||||||||||||||
|
Asia
|
49,124 | 44,641 | 4,483 | 10.0 | % | |||||||||||||||
|
Canada
(d)
|
19,633 | 27,478 | (7,845 | ) | -28.6 | % | ||||||||||||||
|
Mexico,
Central and South America (d)
|
17,205 | 12,784 | 4,421 | 34.6 | % | |||||||||||||||
|
Unallocated
corporate expenses
|
(64,043 | ) | (85,947 | ) | 21,904 | -25.5 | % | |||||||||||||
|
Total
|
$ | 193,535 | $ | 141,445 | $ | 52,090 | 36.8 | % | ||||||||||||
|
(a)
|
The
Fiscal Year ended January 2, 2010 contained 52 weeks of operations while
the Fiscal Year ended January 3, 2009 contained 53 weeks of operations.
Net revenues related to the extra week of operations in the Fiscal Year
ended January 3, 2009 were approximately $23,000.
|
|
(b)
|
Reflects
the percentage increase (decrease) in net revenues for the Fiscal Year
Ended January 2, 2010 compared to the Fiscal Year Ended January 3, 2009
where foreign based net revenues for the Fiscal Year Ended January 2, 2010
are translated into U.S. dollars using the same foreign currency exchange
rates that were used in the calculation of net revenues for the Fiscal
Year Ended January 3, 2009.
|
|
(c)
|
Includes
restructuring charges as
follows:
|
|
Fiscal
Year Ended
January 2, 2010 |
Fiscal
Year Ended
January 3, 2009 |
|||||||
|
United
States
|
||||||||
| $ | 5,584 | $ | 4,893 | |||||
|
Europe
|
3,785 | 28,088 | ||||||
|
Asia
|
151 | 52 | ||||||
|
Canada
|
551 | - | ||||||
|
Mexico,
Central and South America
|
506 | - | ||||||
|
Unallocated
corporate expenses
|
1,549 | 2,227 | ||||||
|
Total
|
$ | 12,126 | $ | 35,260 | ||||
|
(d)
|
Includes
a charge of $3,556 recorded during Fiscal 2009 related to the write-down
of inventory associated with the Company's LZR Racer and similar swimsuits
which were banned by FINA. FINA is the international organization
responsible for, among other things, administering swimming
competitions.
|
Schedule
6
|
THE
WARNACO GROUP, INC.
|
|
NET
REVENUES AND OPERATING INCOME BY CHANNEL
|
|
(Dollars
in thousands)
|
|
(Unaudited)
|
|
By
Channel:
|
Net
Revenues
|
|||||||||||||||
|
Three
Months Ended
January 2, 2010 |
Three
Months Ended
January 3, 2009 |
Increase
/ (Decrease)
|
%
Change
|
|||||||||||||
|
Wholesale
|
$ | 368,301 | $ | 340,164 | $ | 28,137 | 8.3 | % | ||||||||
|
Retail
|
137,144 | 105,114 | 32,030 | 30.5 | % | |||||||||||
|
Total
|
$ | 505,445 | $ | 445,278 | $ | 60,167 | 13.5 | % | ||||||||
|
Operating
Income (loss)
|
||||||||||||||||
|
Three
Months Ended
January 2, 2010 (a) |
Three
Months Ended
January 3, 2009 (a) |
Increase
/ (Decrease)
|
%
Change
|
|||||||||||||
|
Wholesale
|
$ | 34,342 | $ | 21,529 | $ | 12,813 | 59.5 | % | ||||||||
|
Retail
|
20,593 | 9,234 | 11,359 | 123.0 | % | |||||||||||
|
Unallocated
corporate expenses
|
(26,928 | ) | (42,661 | ) | 15,733 | -36.9 | % | |||||||||
|
Total
|
$ | 28,007 | $ | (11,898 | ) | $ | 39,905 |
na
|
||||||||
|
(a) Includes
restructuring charges as follows:
|
||||||||||||||||
|
Three
Months Ended
January 2, 2010 |
Three
Months Ended
January 3, 2009 |
|||||||||||||||
|
Wholesale
|
$ | 524 | $ | 3,460 | ||||||||||||
|
Retail
|
506 | 247 | ||||||||||||||
|
Unallocated
corporate expenses
|
140 | 815 | ||||||||||||||
|
Total
|
$ | 1,170 | $ | 4,522 | ||||||||||||
Schedule
6a
|
THE
WARNACO GROUP, INC.
|
|
NET
REVENUES AND OPERATING INCOME BY CHANNEL
|
|
(Dollars
in thousands)
|
|
(Unaudited)
|
|
By
Channel:
|
Net
Revenues
|
|||||||||||||||
|
Fiscal
Year Ended
January 2, 2010 (a) |
Fiscal
Year Ended
January 3, 2009 (a) |
Increase
/ (Decrease)
|
%
Change
|
|||||||||||||
|
Wholesale
|
$ | 1,564,457 | $ | 1,638,560 | $ | (74,103 | ) | -4.5 | % | |||||||
|
Retail
|
455,168 | 424,289 | 30,879 | 7.3 | % | |||||||||||
|
Total
|
$ | 2,019,625 | $ | 2,062,849 | $ | (43,224 | ) | -2.1 | % | |||||||
|
Operating
Income
|
||||||||||||||||
|
Fiscal
Year Ended
January 2, 2010 (a), (b) |
Fiscal
Year Ended
January 3, 2009 (a), (b) |
Increase
/ (Decrease)
|
%
Change
|
|||||||||||||
|
Wholesale
(c)
|
$ | 207,965 | $ | 181,519 | $ | 26,446 | 14.6 | % | ||||||||
|
Retail
(c)
|
49,613 | 45,873 | 3,740 | 8.2 | % | |||||||||||
|
Unallocated
corporate expenses
|
(64,043 | ) | (85,947 | ) | 21,904 | -25.5 | % | |||||||||
|
Total
|
$ | 193,535 | $ | 141,445 | $ | 52,090 | 36.8 | % | ||||||||
| (a) |
The
Fiscal year ended January 2, 2010 contained 52 weeks of operations while
the Fiscal year ended January 3, 2009 contained 53 weeks of operations.
Net revenues related to the extra week of operations in the Fiscal year
ended January 3, 2009 were approximately $23,000.
|
| (b) |
Includes
restructuring charges as follows:
|
|
Fiscal
Year Ended
January 2, 2010 |
Fiscal
Year Ended
January 3, 2009 |
|||||||
| Wholesale | $ | 9,712 | $ | 32,392 | ||||
|
Retail
|
865 | 641 | ||||||
|
Unallocated
corporate expenses
|
1,549 | 2,227 | ||||||
|
Total
|
$ | 12,126 | $ | 35,260 | ||||
| (c) |
Includes
a charge of $3,556 recorded during Fiscal 2009 related to the write-down
of inventory associated with the Company's LZR Racer and similar swimsuits
which were banned by FINA. FINA is the international organization
responsible for, among other things, administering swimming
competitions.
|
Schedule
7
|
THE
WARNACO GROUP, INC.
|
|
SUPPLEMENTAL
SCHEDULE - FISCAL 2010 OUTLOOK
|
|
(Unaudited)
|
|
NET
REVENUE GUIDANCE
|
Percentages
|
|||||||
|
Estimated
increase in net revenues in Fiscal 2010 compared to comparable Fiscal 2009
levels.
|
5.00 | % |
to
|
7.00 | % | |||
|
EARNINGS
PER SHARE GUIDANCE
|
U.S.
Dollars
|
|||||||
|
Diluted
Income per common share from continuing operations
|
||||||||
|
GAAP
basis (assuming minimal pension expense / income)
|
$ | 3.06 |
to
|
$ | 3.15 | |||
|
Restructuring
charges (a)
|
0.04 |
to
|
0.05 | |||||
|
As
adjusted (Non-GAAP basis) (b)
|
$ | 3.10 |
to
|
$ | 3.20 | |||
|
(a)
|
Reflects
between $1.5 million to $2.0 million of expected restructuring charges
(net of an income tax benefit of between $1.0 million and $1.5
million)
for
Fiscal 2010.
|
||||||
|
(b)
|
The
Company believes it is useful for users of the Company's financial
statements to be made aware of the "As Adjusted" net
revenue growth and per share amounts related to the Company's income from
continuing operations as such measures are used by management to evaluate
the operating performance of the Company's continuing businesses on a
comparable basis. Management does not, nor should investors, consider such
non-GAAP financial measures in isolation from, or as a substitute for,
financial information prepared in accordance with GAAP.
The Company presents such non-GAAP financial measures in
reporting its projected results to provide investors with an additional
tool to evaluate the Company's operating
results.
|
||||||
Schedule
8
|
THE
WARNACO GROUP, INC.
|
|
CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS
|
|
(Dollars
in thousands, excluding per share amounts)
|
|
(Unaudited)
|
|
As
Reported Three Months Ended April 4, 2009
|
Restructuring
Charges and Pension (a)
|
Other
|
Taxation
(b)
|
As
Adjusted Three Months Ended April 4, 2009 (c)
|
|||||||||||||||
|
Net
revenues
|
$ | 537,844 | $ | - | $ | 537,844 | |||||||||||||
|
Cost
of goods sold
|
312,559 | (1,483 | ) | 311,076 | |||||||||||||||
|
Gross
profit
|
225,285 | 1,483 | - | - | 226,768 | ||||||||||||||
|
Selling,
general and administrative expenses
|
158,347 | (7,087 | ) | 151,260 | |||||||||||||||
|
Amortization
of intangible assets
|
2,127 | 260 | 2,387 | ||||||||||||||||
|
Pension
expense
|
537 | (537 | ) | - | - | ||||||||||||||
|
Operating
income
|
64,274 | 9,107 | (260 | ) | - | 73,121 | |||||||||||||
|
Other
expense (income)
|
(404 | ) | (404 | ) | |||||||||||||||
|
Interest
expense
|
6,069 | 6,069 | |||||||||||||||||
|
Interest
income
|
(408 | ) | (408 | ) | |||||||||||||||
|
Income
from continuing operations before provision for income taxes and
noncontrolling interest
|
59,017 | 9,107 | (260 | ) | - | 67,864 | |||||||||||||
|
Provision
for income taxes
|
20,167 | 2,615 | (104 | ) | 328 | 23,006 | |||||||||||||
|
Income
from continuing operations before noncontrolling interest
|
38,850 | 6,492 | (156 | ) | (328 | ) | 44,858 | ||||||||||||
|
Loss
from discontinued operations, net of taxes
|
(1,020 | ) | (1,020 | ) | |||||||||||||||
|
Net
Income
|
37,830 | 6,492 | (156 | ) | (328 | ) | 43,838 | ||||||||||||
|
Less: Net
income attributable to the noncontrolling interest
|
(258 | ) | (258 | ) | |||||||||||||||
|
Net
income attributable to Warnaco Group, Inc.
|
$ | 37,572 | $ | 6,492 | $ | (156 | ) | $ | (328 | ) | $ | 43,580 | |||||||
|
Amounts
attributable to Warnaco Group Inc. common shareholders:
|
|||||||||||||||||||
|
Income
from continuing operations, net of tax
|
38,592 | 6,492 | (156 | ) | (328 | ) | 44,600 | ||||||||||||
|
Discontinued
operations, net of tax
|
(1,020 | ) | - | - | - | (1,020 | ) | ||||||||||||
|
Net
income
|
37,572 | 6,492 | (156 | ) | (328 | ) | 43,580 | ||||||||||||
|
Basic
income per common share attributable to Warnaco Group,
Inc. common shareholders:
|
|||||||||||||||||||
|
Income
from continuing operations
|
$ | 0.84 | $ | 0.97 | |||||||||||||||
|
Loss
from discontinued operations
|
(0.02 | ) | (0.02 | ) | |||||||||||||||
|
Net
income
|
$ | 0.82 | $ | 0.95 | |||||||||||||||
|
Diluted
income per common share attributable to Warnaco Group,
Inc. common shareholders:
|
|||||||||||||||||||
|
Income
from continuing operations
|
$ | 0.84 | $ | 0.97 | |||||||||||||||
|
Loss
from discontinued operations
|
(0.03 | ) | (0.03 | ) | |||||||||||||||
|
Net
income
|
$ | 0.81 | $ | 0.94 | |||||||||||||||
|
Weighted
average number of shares outstanding used in computing income per common
share:
|
|||||||||||||||||||
|
Basic
|
45,304,591 | 45,304,591 | |||||||||||||||||
|
Diluted
|
45,651,170 | 45,651,170 | |||||||||||||||||
|
(a)
|
This
adjustment seeks to present the Company's consolidated condensed statement
of operations on a continuing basis without the effects of
restructuring charges or pension expense. See note (c) below.
|
|
(b)
|
Adjustment
to reflect the Company's income from continuing operations at a tax rate
of 33.9% which reflects the Company's normalized tax rate for
Fiscal 2009 excluding the effects of restructuring charges, pension
income, an additional charge recorded during Fiscal 2009 for amortization
expense (which amount related to the correction of amounts recorded in
prior periods) and certain other tax related items including, among other
items, the charge related to the correction of the COD income error
described previously. See
Note (c) below.
|
|
(c)
|
The
"As Adjusted" statement of operations is used by management to evaluate
the operating performance of the Company's
continuing operations on a comparable basis. Management does
not, nor should investors, consider such non-GAAP
financial measures in isolation from, or as a
substitution for, financial information prepared in accordance
with GAAP. The Company presents such non-GAAP financial measures
in reporting its results to provide investors with an
additional tool to evaluate the Company's operating results.
|
Schedule
9
|
THE
WARNACO GROUP, INC.
|
|
CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS
|
|
(Dollars
in thousands, excluding per share amounts)
|
|
(Unaudited)
|
|
As
Reported Three Months Ended July 4, 2009
|
Restructuring
Charges and Pension (a)
|
Other
|
Taxation
(b)
|
As
Adjusted Three Months Ended July 4, 2009 (c)
|
|||||||||||||||
|
Net
revenues
|
$ | 455,432 | $ | - | $ | 455,432 | |||||||||||||
|
Cost
of goods sold
|
266,432 | (201 | ) | 266,231 | |||||||||||||||
|
Gross
profit
|
189,000 | 201 | - | - | 189,201 | ||||||||||||||
|
Selling,
general and administrative expenses
|
145,165 | (1,274 | ) | 143,891 | |||||||||||||||
|
Amortization
of intangible assets
|
2,242 | 260 | 2,502 | ||||||||||||||||
|
Pension
expense
|
594 | (594 | ) | - | - | ||||||||||||||
|
Operating
income
|
40,999 | 2,069 | (260 | ) | - | 42,808 | |||||||||||||
|
Other
expense (income)
|
2,799 | 2,799 | |||||||||||||||||
|
Interest
expense
|
5,799 | 5,799 | |||||||||||||||||
|
Interest
income
|
(416 | ) | (416 | ) | |||||||||||||||
|
Income
from continuing operations before provision for income
taxes and noncontrolling interest
|
32,817 | 2,069 | (260 | ) | - | 34,626 | |||||||||||||
|
Provision
for income taxes
|
13,264 | 638 | (104 | ) | (2,060 | ) | 11,738 | ||||||||||||
|
Income
from continuing operations before noncontrolling interest
|
19,553 | 1,431 | (156 | ) | 2,060 | 22,888 | |||||||||||||
|
Loss
from discontinued operations, net of taxes
|
(881 | ) | (881 | ) | |||||||||||||||
|
Net
Income
|
18,672 | 1,431 | (156 | ) | 2,060 | 22,007 | |||||||||||||
|
Less: Net
income attributable to the noncontrolling interest
|
(912 | ) | (912 | ) | |||||||||||||||
|
Net
income attributable to Warnaco Group, Inc.
|
$ | 17,760 | $ | 1,431 | $ | (156 | ) | $ | 2,060 | $ | 21,095 | ||||||||
|
Amounts
attributable to Warnaco Group Inc. common shareholders:
|
|||||||||||||||||||
|
Income
from continuing operations, net of tax
|
18,641 | 1,431 | (156 | ) | 2,060 | 21,976 | |||||||||||||
|
Discontinued
operations, net of tax
|
(881 | ) | - | - | - | (881 | ) | ||||||||||||
|
Net
income
|
17,760 | 1,431 | (156 | ) | 2,060 | 21,095 | |||||||||||||
|
Basic
income per common share attributable to Warnaco Group,
Inc. common shareholders:
|
|||||||||||||||||||
|
Income
from continuing operations
|
$ | 0.41 | $ | 0.48 | |||||||||||||||
|
Loss
from discontinued operations
|
(0.02 | ) | (0.02 | ) | |||||||||||||||
|
Net
income
|
$ | 0.39 | $ | 0.46 | |||||||||||||||
|
Diluted
income per common share attributable to Warnaco Group,
Inc. common shareholders:
|
|||||||||||||||||||
|
Income
from continuing operations
|
$ | 0.40 | $ | 0.47 | |||||||||||||||
|
Loss
from discontinued operations
|
(0.02 | ) | (0.02 | ) | |||||||||||||||
|
Net
income
|
$ | 0.38 | $ | 0.45 | |||||||||||||||
|
Weighted
average number of shares outstanding used in computing income per common
share:
|
|||||||||||||||||||
|
Basic
|
45,412,175 | 45,412,175 | |||||||||||||||||
|
Diluted
|
46,010,870 | 46,010,870 | |||||||||||||||||
|
(a)
|
This
adjustment seeks to present the Company's consolidated condensed statement
of operations on a continuing basis without the effects of
restructuring charges or pension expense. See note (c) below.
|
|
(b)
|
Adjustment
to reflect the Company's income from continuing operations at a tax rate
of 33.9% which reflects the Company's normalized tax rate for
Fiscal 2009 excluding the effects of restructuring charges, pension
income, an additional charge recorded during Fiscal 2009 for amortization
expense (which amount related to the correction of amounts recorded in
prior periods) and certain other tax related items including, among other
items, the charge related to the correction of the COD income error
described previously. See Note (c) below.
|
|
(c)
|
The
"As Adjusted" statement of operations is used by management to evaluate
the operating performance of the Company's
continuing operations on a comparable basis. Management does
not, nor should investors, consider such non-GAAP
financial measures in isolation from, or as a
substitution for, financial information prepared in accordance
with GAAP. The Company presents such non-GAAP financial measures
in reporting its results to provide investors with an
additional tool to evaluate the Company's operating results.
|
Schedule
10
|
THE
WARNACO GROUP, INC.
|
|
CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS
|
|
(Dollars
in thousands, excluding per share amounts)
|
|
(Unaudited)
|
|
As
Reported
Three
Months Ended
October
3, 2009
|
Restructuring
Charges and Pension (a)
|
Other
|
Taxation
(c)
|
As
Adjusted
Three
Months Ended
October
3, 2009 (d)
|
|||||||||||||||
|
Net
revenues
|
$ | 520,905 | $ | - | $ | 520,905 | |||||||||||||
|
Cost
of goods sold (b)
|
292,083 | (34 | ) | 292,049 | |||||||||||||||
|
Gross
profit
|
228,822 | 34 | - | - | 228,856 | ||||||||||||||
|
Selling,
general and administrative expenses
|
165,720 | (874 | ) | 164,846 | |||||||||||||||
|
Amortization
of intangible assets
|
2,278 | 260 | 2,538 | ||||||||||||||||
|
Pension
expense
|
566 | (566 | ) | - | - | ||||||||||||||
|
Operating
income
|
60,258 | 1,474 | (260 | ) | - | 61,472 | |||||||||||||
|
Other
expense (income)
|
761 | 761 | |||||||||||||||||
|
Interest
expense
|
5,899 | 5,899 | |||||||||||||||||
|
Interest
income
|
(196 | ) | (196 | ) | |||||||||||||||
|
Income
from continuing operations before provision for income taxes and
noncontrolling interest
|
53,794 | 1,474 | (260 | ) | - | 55,008 | |||||||||||||
|
Provision
for income taxes
|
21,246 | 326 | (104 | ) | (2,820 | ) | 18,648 | ||||||||||||
|
Income
from continuing operations before noncontrolling
interest
|
32,548 | 1,148 | (156 | ) | 2,820 | 36,360 | |||||||||||||
|
Loss
from discontinued operations, net of taxes
|
(1,562 | ) | (1,562 | ) | |||||||||||||||
|
Net
Income
|
30,986 | 1,148 | (156 | ) | 2,820 | 34,798 | |||||||||||||
|
Less: Net
income attributable to the noncontrolling
interest
|
(1,330 | ) | (1,330 | ) | |||||||||||||||
|
Net
income attributable to Warnaco Group, Inc.
|
$ | 29,656 | $ | 1,148 | $ | (156 | ) | $ | 2,820 | $ | 33,468 | ||||||||
|
Amounts
attributable to Warnaco
Group Inc. common shareholders:
|
|||||||||||||||||||
|
Income
from continuing operations, net of tax
|
31,218 | 1,148 | (156 | ) | 2,820 | 35,030 | |||||||||||||
|
Discontinued
operations, net of tax
|
(1,562 | ) | - | - | - | (1,562 | ) | ||||||||||||
|
Net
income
|
29,656 | 1,148 | (156 | ) | 2,820 | 33,468 | |||||||||||||
|
Basic
income per common share attributable to Warnaco
Group, Inc. common shareholders:
|
|||||||||||||||||||
|
Income
from continuing operations
|
$ | 0.68 | $ | 0.76 | |||||||||||||||
|
Loss
from discontinued operations
|
(0.04 | ) | (0.03 | ) | |||||||||||||||
|
Net
income
|
$ | 0.64 | $ | 0.73 | |||||||||||||||
|
Diluted
income per common share attributable to Warnaco
Group, Inc. common shareholders:
|
|||||||||||||||||||
|
Income
from continuing operations
|
$ | 0.66 | $ | 0.75 | |||||||||||||||
|
Loss
from discontinued operations
|
(0.03 | ) | (0.03 | ) | |||||||||||||||
|
Net
income
|
$ | 0.63 | $ | 0.72 | |||||||||||||||
|
Weighted
average number of shares outstanding used in computing income per common
share:
|
|||||||||||||||||||
|
Basic
|
45,451,366 | 45,451,366 | |||||||||||||||||
|
Diluted
|
46,419,729 | 46,419,729 | |||||||||||||||||
|
(a)
|
This
adjustment seeks to present the Company's consolidated condensed statement
of operations on a continuing basis without the effects of
restructuring charges of $908 or pension expense. See note (d)
below.
|
|
(b)
|
Includes
a charge of $3,556 recorded during the Three Months Ended October 3, 2009
related to the write-down of inventory associated with the Company's LZR
Racer and similar swimsuits which were banned by FINA. FINA is the
international organization responsible for, among other things,
administering swimming competitions.
|
|
(c)
|
Adjustment
to reflect the Company's income from continuing operations at a tax rate
of 33.9% which reflects the Company's normalized tax rate for
Fiscal 2009 excluding the effects of restructuring charges, pension
income, an additional charge recorded during Fiscal 2009 for amortization
expense (which amount related to the correction of amounts recorded in
prior periods) and certain other tax related items including, among other
items, the charge related to the correction of the COD income error
described previously. See Note (d) below.
|
|
(d)
|
The
"As Adjusted" statement of operations is used by management to evaluate
the operating performance of the Company's
continuing operations on a comparable basis. Management does
not, nor should investors, consider such non-GAAP
financial measures in isolation from, or as a
substitution for, financial information prepared in accordance
with GAAP. The Company presents such non-GAAP financial measures
in reporting its results to provide investors with an
additional tool to evaluate the Company's operating results.
|