Delaware
|
001-10857
|
95-4032739
|
||
(State or other jurisdiction
of incorporation)
|
(Commission File Number)
|
(IRS Employer Identification No.)
|
501 Seventh Avenue, New York, New York
|
10018
|
|
(Address of principal executive offices)
|
(Zip Code)
|
o
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
o
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
o
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
o
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
(d)
|
Exhibits
|
||
99.1
|
Press Release, dated November 3, 2011
|
THE WARNACO GROUP, INC.
|
||||
Date: November 3, 2011
|
By:
|
/s/ Lawrence R. Rutkowski
|
||
Name:
|
Lawrence R. Rutkowski
|
|||
Title:
|
Executive Vice President and Chief Financial Officer
|
Exhibit No.
|
Document
|
|
99.1 |
Press Release, dated November 3, 2011
|
Investor Relations:
|
Deborah Abraham
|
|
Vice President, Investor Relations
|
||
(212) 287-8289
|
·
|
Net revenues increased 8%, to $645.1 million, compared to the prior year quarter
|
·
|
International net revenues increased 16% compared to the prior year quarter
|
·
|
Direct-to-consumer net revenues increased 31%, including a 2% increase in comparable store sales, compared to the prior year quarter
|
·
|
Income per diluted share from continuing operations was $1.13 compared to $0.90 in the prior year quarter
|
·
|
Income per diluted share from continuing operations on an adjusted, non-GAAP, basis was $1.07 compared to $1.04 in the prior year quarter (both of which exclude restructuring expenses, pension expenses, tax related items and other items)
|
·
|
The Company purchased approximately 2.5 million shares of its common stock for approximately $123.2 million pursuant to its share repurchase programs
|
·
|
Net revenues will grow 10% - 12% compared to fiscal 2010, and
|
·
|
Adjusted income per diluted share from continuing operations in the range of $4.00 - $4.15.
|
Balance Sheet
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
October 1, 2011
|
October 2, 2010
|
October 1, 2011
|
October 2, 2010
|
|||||||||||||
Net revenues
|
$ | 645,121 | $ | 596,761 | $ | 1,898,669 | $ | 1,704,259 | ||||||||
Cost of goods sold
|
365,412 | 327,736 | 1,065,552 | 938,374 | ||||||||||||
Gross profit
|
279,709 | 269,025 | 833,117 | 765,885 | ||||||||||||
Selling, general and administrative expenses
|
212,000 | 198,129 | 637,491 | 554,962 | ||||||||||||
Amortization of intangible assets
|
3,263 | 3,021 | 9,548 | 8,275 | ||||||||||||
Pension income
|
(310 | ) | (22 | ) | (931 | ) | (65 | ) | ||||||||
Operating income
|
64,756 | 67,897 | 187,009 | 202,713 | ||||||||||||
Other loss (income)
|
1,357 | (1,899 | ) | 498 | 5,651 | |||||||||||
Interest expense
|
4,986 | 2,953 | 11,142 | 12,190 | ||||||||||||
Interest income
|
(986 | ) | (699 | ) | (2,542 | ) | (2,192 | ) | ||||||||
Income from continuing operations before provision
|
||||||||||||||||
for income taxes and noncontrolling interest
|
59,399 | 67,542 | 177,911 | 187,064 | ||||||||||||
Provision for income taxes
|
10,770 | 26,102 | 39,184 | 67,285 | ||||||||||||
Income from continuing operations before noncontrolling interest
|
48,629 | 41,440 | 138,727 | 119,779 | ||||||||||||
Income (loss) from discontinued operations, net of taxes
|
(4,177 | ) | 57 | (4,741 | ) | (373 | ) | |||||||||
Net income
|
44,452 | 41,497 | 133,986 | 119,406 | ||||||||||||
Less: Net income attributable to the noncontrolling interest
|
(159 | ) | - | (159 | ) | - | ||||||||||
Net income attributable to Warnaco Group, Inc.
|
44,611 | 41,497 | 134,145 | 119,406 | ||||||||||||
Amounts attributable to Warnaco Group, Inc. common shareholders:
|
||||||||||||||||
Income from continuing operations, net of tax
|
$ | 48,788 | $ | 41,440 | $ | 138,886 | $ | 119,779 | ||||||||
Income (Loss) from discontinued operations, net of tax
|
(4,177 | ) | 57 | (4,741 | ) | (373 | ) | |||||||||
Net Income
|
$ | 44,611 | $ | 41,497 | $ | 134,145 | $ | 119,406 | ||||||||
Basic income per common share:
|
||||||||||||||||
Income from continuing operations
|
$ | 1.15 | $ | 0.92 | $ | 3.18 | $ | 2.64 | ||||||||
Loss from discontinued operations
|
(0.10 | ) | - | (0.11 | ) | (0.01 | ) | |||||||||
Net income
|
$ | 1.05 | $ | 0.92 | $ | 3.07 | $ | 2.63 | ||||||||
Diluted income per common share:
|
||||||||||||||||
Income from continuing operations
|
$ | 1.13 | $ | 0.90 | $ | 3.11 | $ | 2.58 | ||||||||
Loss from discontinued operations
|
(0.10 | ) | - | (0.11 | ) | (0.01 | ) | |||||||||
Net income
|
$ | 1.03 | $ | 0.90 | $ | 3.00 | $ | 2.57 | ||||||||
Weighted average number of shares outstanding used in
|
||||||||||||||||
computing income per common share:
|
||||||||||||||||
Basic
|
41,713,958 | 44,553,898 | 43,076,120 | 44,813,952 | ||||||||||||
Diluted
|
42,581,100 | 45,465,691 | 44,023,646 | 45,806,530 |
October 1, 2011
|
January 1, 2011
|
October 2, 2010
|
||||||||||
ASSETS
|
||||||||||||
Current assets:
|
||||||||||||
Cash and cash equivalents
|
$ | 179,326 | $ | 191,227 | $ | 213,409 | ||||||
Accounts receivable, net
|
341,406 | 318,123 | 346,464 | |||||||||
Inventories
|
392,073 | 310,504 | 324,439 | |||||||||
Assets of discontinued operations
|
- | 125 | 112 | |||||||||
Other current assets
|
174,355 | 158,659 | 147,421 | |||||||||
Total current assets
|
1,087,160 | 978,638 | 1,031,845 | |||||||||
Property, plant and equipment, net
|
129,205 | 129,252 | 127,157 | |||||||||
Intangible and other assets
|
596,406 | 545,382 | 525,466 | |||||||||
TOTAL ASSETS
|
$ | 1,812,771 | $ | 1,653,272 | $ | 1,684,468 | ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||||||
Current liabilities:
|
||||||||||||
Short-term debt
|
$ | 47,773 | $ | 32,172 | $ | 69,607 | ||||||
Accounts payable and accrued liabilities
|
392,359 | 380,275 | 388,568 | |||||||||
Taxes
|
34,906 | 38,219 | 43,431 | |||||||||
Liabilities of discontinued operations
|
7,048 | 18,800 | 8,365 | |||||||||
Total current liabilities
|
482,086 | 469,466 | 509,971 | |||||||||
Long-term debt
|
209,552 | - | - | |||||||||
Other long-term liabilities
|
206,529 | 211,200 | 194,880 | |||||||||
Redeemable non-controlling interest
|
15,200 | - | - | |||||||||
Total stockholders' equity
|
899,404 | 972,606 | 979,617 | |||||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ | 1,812,771 | $ | 1,653,272 | $ | 1,684,468 | ||||||
NET CASH AND CASH EQUIVALENTS (NET DEBT)
|
$ | (77,999 | ) | $ | 159,055 | $ | 143,802 |
Net revenues:
|
Three Months Ended
|
Three Months Ended
|
Increase /
|
%
|
Constant $
|
|||||||||||||||
October 1, 2011
|
October 2, 2010
|
(Decrease)
|
Change
|
% Change (a)
|
||||||||||||||||
Sportswear Group
|
$ | 357,935 | $ | 337,020 | $ | 20,915 | 6.2% | 1.3% | ||||||||||||
Intimate Apparel Group
|
247,880 | 223,081 | 24,799 | 11.1% | 7.0% | |||||||||||||||
Swimwear Group
|
39,306 | 36,660 | 2,646 | 7.2% | 5.0% | |||||||||||||||
Net revenues
|
$ | 645,121 | $ | 596,761 | $ | 48,360 | 8.1% | 3.7% | ||||||||||||
Three Months Ended
|
% of Group
|
Three Months Ended
|
% of Group
|
|||||||||||||||||
October 1, 2011
|
Net Revenues
|
October 2, 2010
|
Net Revenues
|
|||||||||||||||||
Operating income (loss):
|
||||||||||||||||||||
Sportswear Group (b), (c)
|
$ | 34,129 | 9.5% | $ | 51,309 | 15.2% | ||||||||||||||
Intimate Apparel Group (b), (c)
|
38,620 | 15.6% | 39,939 | 17.9% | ||||||||||||||||
Swimwear Group (b), (c)
|
(3,352 | ) | -8.5% | (3,794 | ) | -10.3% | ||||||||||||||
Unallocated corporate expenses (b), (c)
|
(4,641 | ) |
na
|
(19,557 | ) |
na
|
||||||||||||||
Operating income
|
$ | 64,756 |
na
|
$ | 67,897 |
na
|
||||||||||||||
Operating income as a percentage of
|
||||||||||||||||||||
total net revenues
|
10.0% | 11.4% |
(a)
|
Reflects the percentage increase in net revenues for the Three Months Ended October 1, 2011, compared to the Three Months Ended October 2, 2010, assuming foreign based net revenues for the Three Months Ended October 1, 2011 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 October 2, 2010. See Schedule 6a.
|
(b)
|
Amounts related to certain shared services expenses incurred in the U.S. during the Three Months Ended October 2, 2010 have been reclassified to the international operating units and reclassified within the U.S operating units resulting in a decrease (increase) in operating income of the Sportswear Group ($1,730), Intimate Apparel Group ($1,053), Swimwear Group (($315)) and Unallocated corporate expenses (($2,468)) in order to conform to the current period presentation. Shared services expenses included in the operating income of the business groups are as follows:
|
Three Months Ended
|
Three Months Ended
|
|||||||
October 1, 2011
|
October 2, 2010
|
|||||||
Sportswear Group
|
$ | 6,970 | $ | 6,935 | ||||
Intimate Apparel Group
|
$ | 5,086 | $ | 4,985 | ||||
Swimwear Group
|
$ | 2,347 | $ | 2,238 |
(c)
|
Includes restructuring charges and other exit costs as follows:
|
Three Months Ended
|
Three Months Ended
|
|||||||
October 1, 2011
|
October 2, 2010
|
|||||||
Sportswear Group
|
$ | 3,545 | $ | (47 | ) | |||
Intimate Apparel Group
|
699 | 9 | ||||||
Swimwear Group
|
2,987 | 1,732 | ||||||
Unallocated corporate expenses
|
315 | 3 | ||||||
$ | 7,546 | $ | 1,697 |
Net revenues:
|
Nine Months Ended
|
Nine Months Ended
|
Increase /
|
%
|
Constant $
|
|||||||||||||||
October 1, 2011
|
October 2, 2010
|
(Decrease)
|
Change
|
% Change (a)
|
||||||||||||||||
Sportswear Group
|
$ | 983,695 | $ | 887,410 | $ | 96,285 | 10.9% | 6.5% | ||||||||||||
Intimate Apparel Group
|
695,317 | 616,139 | 79,178 | 12.9% | 9.1% | |||||||||||||||
Swimwear Group
|
219,657 | 200,710 | 18,947 | 9.4% | 7.8% | |||||||||||||||
Net revenues
|
$ | 1,898,669 | $ | 1,704,259 | $ | 194,410 | 11.4% | 7.6% | ||||||||||||
Nine Months Ended
|
% of Group
|
Nine Months Ended
|
% of Group
|
|||||||||||||||||
October 1, 2011
|
Net Revenues
|
October 2, 2010
|
Net Revenues
|
|||||||||||||||||
Operating income (loss):
|
||||||||||||||||||||
Sportswear Group (b), (c)
|
$ | 88,686 | 9.0% | $ | 123,834 | 14.0% | ||||||||||||||
Intimate Apparel Group (b), (c)
|
103,627 | 14.9% | 106,363 | 17.3% | ||||||||||||||||
Swimwear Group (b), (c)
|
21,421 | 9.8% | 17,121 | 8.5% | ||||||||||||||||
Unallocated corporate expenses (b), (c)
|
(26,725 | ) |
na
|
(44,605 | ) |
na
|
||||||||||||||
Operating income (d), (e)
|
$ | 187,009 |
na
|
$ | 202,713 |
na
|
||||||||||||||
Operating income as a percentage of
|
||||||||||||||||||||
total net revenues
|
9.8% | 11.9% |
(a)
|
Reflects the percentage increase in net revenues for the Nine Months Ended October 1, 2011, compared to the Nine Months Ended October 2, 2010, assuming foreign based net revenues for the Nine Months Ended October 1, 2011 are translated into U.S. dollars using the same foreign currency exchange rates that were used in the calculation of net revenues for the Nine Months Ended October 2, 2010. See Schedule 6b.
|
(b)
|
Amounts related to certain shared services expenses incurred in the U.S. during the Nine Months Ended October 2, 2010 have been reclassified to the international operating units and reclassified within the U.S operating units resulting in a decrease (increase) in operating income of the Sportswear Group ($5,134), Intimate Apparel Group ($2,809), Swimwear Group (($521)) and Unallocated corporate expenses (($7,422)) in order to conform to the current period presentation. Shared services expenses included in the operating income of the business groups are as follows:
|
Nine Months Ended
|
Nine Months Ended
|
|||||||
October 1, 2011
|
October 2, 2010
|
|||||||
Sportswear Group
|
$ | 20,813 | $ | 20,739 | ||||
Intimate Apparel Group
|
$ | 14,787 | $ | 14,597 | ||||
Swimwear Group
|
$ | 7,572 | $ | 7,162 |
(c)
|
Includes restructuring charges as follows:
|
Nine Months Ended
|
Nine Months Ended
|
|||||||
October 1, 2011
|
October 2, 2010
|
|||||||
Sportswear Group
|
$ | 7,169 | $ | 395 | ||||
Intimate Apparel Group
|
3,619 | 122 | ||||||
Swimwear Group
|
7,253 | 2,446 | ||||||
Unallocated corporate expenses
|
948 | 847 | ||||||
$ | 18,989 | $ | 3,810 |
(d)
|
Includes a gain of $2,000 recorded during the Nine Months Ended October 1, 2011 related to the sale and assignment of the Company's Nancy Ganz trademarks in Australia and New Zealand to the Company's former licensee for cash consideration of $2,000.
|
(e)
|
Includes a gain of $1,600 recorded during the Nine Months Ended October 1, 2011 related to the recovery of an insurance claim related to a fire in a warehouse in Peru.
|
By Region:
|
Net Revenues | |||||||||||||||||||
Three Months Ended October 1, 2011
|
Three Months Ended October 2, 2010
|
Increase / (Decrease)
|
% Change
|
Constant $ % Change (a)
|
||||||||||||||||
United States
|
$ | 241,764 | $ | 250,039 | $ | (8,275 | ) | -3.3% | -3.3% | |||||||||||
Europe
|
182,265 | 166,749 | 15,516 | 9.3% | 0.4% | |||||||||||||||
Asia
|
129,985 | 101,090 | 28,895 | 28.6% | 21.7% | |||||||||||||||
Mexico, Central and South America
|
62,848 | 48,216 | 14,632 | 30.3% | 24.4% | |||||||||||||||
Canada
|
28,259 | 30,667 | (2,408 | ) | -7.9% | -13.0% | ||||||||||||||
Total
|
$ | 645,121 | $ | 596,761 | $ | 48,360 | 8.1% | 3.7% | ||||||||||||
Operating Income | ||||||||||||||||
Three Months Ended October 1, 2011
|
Three Months Ended October 2, 2010 (b)
|
Increase / (Decrease)
|
% Change
|
|||||||||||||
United States
|
$ | 21,926 | $ | 29,918 | $ | (7,992 | ) | -26.7% | ||||||||
Europe
|
8,133 | 26,109 | (17,976 | ) | -68.8% | |||||||||||
Asia
|
24,218 | 18,253 | 5,965 | 32.7% | ||||||||||||
Mexico, Central and South America
|
11,635 | 7,029 | 4,606 | 65.5% | ||||||||||||
Canada
|
3,485 | 6,145 | (2,660 | ) | -43.3% | |||||||||||
Unallocated corporate expenses
|
(4,641 | ) | (19,557 | ) | 14,916 | 76.3% | ||||||||||
Total
|
$ | 64,756 | $ | 67,897 | $ | (3,141 | ) | -4.6% |
(a) | Reflects the percentage increase (decrease) in net revenues for the Three Months Ended October 1, 2011, compared to the Three Months Ended October 2, 2010, assuming foreign based net revenues for the Three Months Ended October 1, 2011 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 October 2, 2010. See Schedule 6a. |
(b) | In order to conform to the current period presentation of operating income, amounts related to certain shared services expenses incurred in the U.S. for the Three Months Ended October 2, 2010 have been reclassified to the international operating units. |
By Region:
|
Net Revenues
|
|||||||||||||||||||
Nine Months Ended October 1, 2011
|
Nine Months Ended October 2, 2010
|
Increase / (Decrease)
|
% Change
|
Constant $ % Change (a)
|
||||||||||||||||
United States
|
$ | 777,552 | $ | 782,753 | $ | (5,201 | ) | -0.7% | -0.7% | |||||||||||
Europe
|
478,827 | 423,882 | 54,945 | 13.0% | 6.0% | |||||||||||||||
Asia
|
370,546 | 281,655 | 88,891 | 31.6% | 25.3% | |||||||||||||||
Mexico, Central and South America
|
176,698 | 129,940 | 46,758 | 36.0% | 26.6% | |||||||||||||||
Canada
|
95,046 | 86,029 | 9,017 | 10.5% | 3.4% | |||||||||||||||
Total
|
$ | 1,898,669 | $ | 1,704,259 | $ | 194,410 | 11.4% | 7.6% | ||||||||||||
Operating Income
|
||||||||||||||||||||
Nine Months Ended October 1, 2011
|
Nine Months Ended October 2, 2010 (b)
|
Increase / (Decrease)
|
% Change
|
|||||||||||||||||
United States
|
$ | 98,079 | $ | 120,459 | $ | (22,380 | ) | -18.6% | ||||||||||||
Europe
|
5,621 | 44,677 | (39,056 | ) | -87.4% | |||||||||||||||
Asia
|
69,264 | 49,017 | 20,247 | 41.3% | ||||||||||||||||
Mexico, Central and South America
|
31,621 | 20,500 | 11,121 | 54.2% | ||||||||||||||||
Canada
|
9,149 | 12,665 | (3,516 | ) | -27.8% | |||||||||||||||
Unallocated corporate expenses
|
(26,725 | ) | (44,605 | ) | 17,880 | 40.1% | ||||||||||||||
Total
|
$ | 187,009 | $ | 202,713 | $ | (15,704 | ) | -7.7% |
(a) | Reflects the percentage increase (decrease) in net revenues for the Nine Months Ended October 1, 2011, compared to the Nine Months Ended October 2, 2010, assuming foreign based net revenues for the Nine Months Ended October 1, 2011 are translated into U.S. dollars using the same foreign currency exchange rates that were used in the calculation of net revenues for the Nine Months Ended October 2, 2010. See schedule 6b. |
(b) | In order to conform to the current period presentation of operating income, amounts related to certain shared services expenses incurred in the U.S. for the Nine Months Ended October 2, 2010 have been reclassified to the international operating units. |
By Channel:
|
Net Revenues
|
|||||||||||||||||||||||
Three Months Ended October 1, 2011
|
Three Months Ended October 2, 2010
|
Increase / (Decrease)
|
% Change
|
|||||||||||||||||||||
Wholesale
|
$ | 458,877 | $ | 454,066 | $ | 4,811 | 1.1% | |||||||||||||||||
Retail
|
186,244 | 142,695 | 43,549 | 30.5% | ||||||||||||||||||||
Total
|
$ | 645,121 | $ | 596,761 | $ | 48,360 | 8.1% | |||||||||||||||||
Operating Income
|
||||||||||||||||||||||||
Three Months Ended October 1, 2011
|
% of Net Revenues
|
Three Months Ended October 2, 2010
|
% of Net Revenues
|
Increase / (Decrease)
|
% Change
|
|||||||||||||||||||
Wholesale (a)
|
$ | 60,209 | 13.1% | $ | 70,057 | 15.4% | $ | (9,848 | ) | -14.1% | ||||||||||||||
Retail (a)
|
9,188 | 4.9% | 17,397 | 12.2% | (8,209 | ) | -47.2% | |||||||||||||||||
Unallocated corporate expenses
|
(4,641 | ) |
na
|
(19,557 | ) |
na
|
14,916 | 76.3% | ||||||||||||||||
Total
|
$ | 64,756 | 10.0% | $ | 67,897 | 11.4% | $ | (3,141 | ) | -4.6% |
(a) | For the Three Months ended October 1, 2011 and Three Months ended October 2, 2010 wholesale operating income includes an intercompany profit of $10,602 and $5,880, respectively, related to certain inventories sold by the retail business to end consumers. |
Conversely, for the Three Months ended October 1, 2011 and Three Months ended October 2, 2010 retail operating income includes an intercompany charge of $10,602 and $5,880, respectively, related to these inventories. |
By Channel:
|
Net Revenues
|
|||||||||||||||||||||||
Nine Months Ended October 1, 2011
|
Nine Months Ended October 2, 2010
|
Increase / (Decrease)
|
% Change
|
|||||||||||||||||||||
Wholesale
|
$ | 1,370,212 | $ | 1,311,096 | $ | 59,116 | 4.5% | |||||||||||||||||
Retail
|
528,457 | 393,163 | 135,294 | 34.4% | ||||||||||||||||||||
Total
|
$ | 1,898,669 | $ | 1,704,259 | $ | 194,410 | 11.4% | |||||||||||||||||
Operating Income
|
||||||||||||||||||||||||
Nine Months Ended October 1, 2011
|
% of Net Revenues
|
Nine Months Ended October 2, 2010
|
% of Net Revenues
|
Increase / (Decrease)
|
% Change
|
|||||||||||||||||||
Wholesale (a)
|
$ | 178,267 | 13.0% | $ | 208,894 | 15.9% | $ | (30,627 | ) | -14.7% | ||||||||||||||
Retail (a)
|
35,467 | 6.7% | 38,424 | 9.8% | (2,957 | ) | -7.7% | |||||||||||||||||
Unallocated corporate expenses
|
(26,725 | ) |
na
|
(44,605 | ) |
na
|
17,880 | 40.1% | ||||||||||||||||
Total
|
$ | 187,009 | 9.8% | $ | 202,713 | 11.9% | $ | (15,704 | ) | -7.7% |
(a) | For the Nine Months Ended October 1, 2011 and Nine Months Ended October 2, 2010 wholesale operating income includes an intercompany profit of $25,821 and $15,784 respectively, related to certain inventories sold by the retail business to end consumers. |
Conversely, for the Nine Months Ended October 1, 2011 and Nine Months Ended October 2, 2010 retail operating income includes an intercompany charge of $25,821 and $15,784, respectively, related to these inventories. |
Three Months Ended* | Nine Months Ended* | ||||||||||||||||
October 1, 2011
|
October 2, 2010
|
October 1, 2011
|
October 2, 2010
|
||||||||||||||
(Dollars in thousands, except per share amounts)
|
|||||||||||||||||
Operating income, as reported (GAAP)
|
$ | 64,756 | $ | 67,897 | $ | 187,009 | $ | 202,713 | |||||||||
Restructuring charges and pension income (a)
|
7,238 | 1,675 | 18,060 | 3,745 | |||||||||||||
Brazil acquisition adjustment (b)
|
- | 1,521 | - | 1,521 | |||||||||||||
State franchise taxes and other (c)
|
- | 1,269 | - | 1,269 | |||||||||||||
Operating income, as adjusted (non-GAAP) (f)
|
$ | 71,994 | $ | 72,362 | $ | 205,069 | $ | 209,248 | |||||||||
Income from continuing operations attributable to Warnaco Group, Inc. common shareholders, as reported (GAAP)
|
$ | 48,788 | $ | 41,440 | $ | 138,886 | $ | 119,779 | |||||||||
Restructuring charges and pension, net of income tax (a)
|
5,486 | 1,403 | 12,825 | 2,743 | |||||||||||||
Brazil acquisition adjustment, net of income tax (b)
|
- | 1,004 | - | 1,004 | |||||||||||||
State franchise taxes and other, net of income tax (c)
|
- | 802 | - | 802 | |||||||||||||
Costs related to the redemption of debt, net of income tax (d)
|
- | - | - | 2,368 | |||||||||||||
Taxation (e)
|
(8,202 | ) | 3,236 | (16,528 | ) | 4,539 | |||||||||||
Income from continuing operations attributable to Warnaco Group, Inc. common shareholders, as adjusted (non-GAAP) (f)
|
$ | 46,072 | $ | 47,885 | $ | 135,183 | $ | 131,235 | |||||||||
Diluted earnings per share from continuing operations attributable to Warnaco Group, Inc. common shareholders, as reported (GAAP)
|
$ | 1.13 | $ | 0.90 | $ | 3.11 | $ | 2.58 | |||||||||
Restructuring and pension, net of income tax (a)
|
0.13 | 0.03 | 0.30 | 0.06 | |||||||||||||
Brazil acquisition adjustment, net of income tax (b)
|
- | 0.02 | - | 0.02 | |||||||||||||
State franchise taxes and other, net of income tax (c)
|
- | 0.02 | - | 0.02 | |||||||||||||
Costs related to the redemption of debt, net of income tax (d)
|
- | - | - | 0.05 | |||||||||||||
Taxation (e)
|
(0.19 | ) | 0.07 | (0.38 | ) | 0.10 | |||||||||||
Diluted earnings per share from continuing operations attributable to Warnaco Group. Inc, common shareholders, as adjusted
(non-GAAP) (f) |
$ | 1.07 | $ | 1.04 | $ | 3.03 | $ | 2.83 |
a) | For all periods presented, this adjustment seeks to present operating income, income from continuing operations attributable to Warnaco Group, Inc. common shareholders, and diluted earnings per share from continuing operations attributable to Warnaco Group, Inc. common shareholders without the effects of restructuring charges and pension income. Restructuring charges (on a pre-tax basis) were $7,548 and $18,991 for the Three and Nine Months Ended October 1, 2011, respectively, and $1,697 and $3,810 for the Three and Nine Months Ended October 2, 2010, respectively. Pension income (on a pre-tax basis) was $310 and $931 for the Three and Nine Months Ended October 1, 2011, respectively and $22 and $65 for the Three and Nine Months Ended October 2, 2010, respectively. The income tax rates used to compute the income tax effect related to this adjustment correspond to the local statutory tax rates of the reporting entities that incurred restructuring charges or recognized pension income. |
b) | For the Three and Nine Months Ended October 2, 2010, this adjustment seeks to present operating income, income from continuing operations attributable to Warnaco Group, Inc. common shareholders and diluted earnings per share from continuing operations attributable to Warnaco Group, Inc. common shareholders without the effects of an additional charge related to an adjustment to the contingent consideration to be paid for the business acquired in Brazil in 2009 of $1,521 ($1,004 after tax). The income tax rate used to compute the income tax effect related to this adjustment corresponds to the local statutory tax rate in Brazil. |
c) | For the Three and Nine Months Ended October 2, 2010, this adjustment seeks to present operating income, income from continuing operations attributable to Warnaco Group, Inc. common shareholders and diluted earnings per share from continuing operations attributable to Warnaco Group, Inc. common shareholders excluding a charge of $1,269 ($802 after tax) for certain franchise taxes recorded during the Three Months Ended October 2, 2010 related to the correction of amounts recorded in prior periods. The amount was not material to any prior period. The income tax rates used to compute the income tax effect related to the abovementioned charge for franchise taxes correspond to the statutory tax rates in the United States. |
d) | This adjustment seeks to present income from continuing operations attributable to Warnaco Group, Inc. common shareholders and diluted earnings per share from continuing operations attributable to Warnaco Group, Inc. common shareholders without the effect of the charges shown in the table above related to the repurchase of a portion of the Company's Senior Notes during the Nine Months Ended October 2, 2010. The income tax rates used to compute the income tax effect related to this adjustment correspond to the statutory tax rates in the United States. |
e) | For the Three and Nine Months Ended October 1, 2011 and Three and Nine Months Ended October 2, 2010, this adjustment reflects an amount required in order to present income from continuing operations attributable to Warnaco Group, Inc. common shareholders and diluted earnings per share from continuing operations attributable to Warnaco Group, Inc. common shareholders on an adjusted (non-GAAP) basis at the Company’s forecasted normalized tax rates for Fiscal 2011 (31.1%) and Fiscal 2010 (33.5%), respectively. This adjustment excludes the effects of certain tax adjustments related to either changes in estimates in prior period tax provisions or adjustments for certain discrete tax items. Adjustments for discrete items reflect the federal, state and foreign tax effects related to: 1) income taxes associated with legal entity reorganizations and restructurings; 2) tax provision or benefit resulting from statute expirations or the finalization of income tax examinations, and 3) other adjustments not considered part of the Company's core business activities. |
For 2011, this adjustment primarily reflects the following:
|
a. | The exclusion of a $10,900 tax benefit recorded during the Nine Months Ended October 1, 2011 associated with the recognition of pre-2004 net operating losses in a foreign jurisdiction as result of receiving a favorable ruling from that country’s taxing authority during the second quarter of 2011; | |
b. | The exclusion of a $7,300 tax benefit recorded during the Three Months Ended October 1, 2011 related to the reduction in the reserve for uncertain tax positions in certain foreign tax jurisdictions; and | |
c. | The exclusion of a $1,300 million tax benefit recorded during the Three Months Ended October 1, 2011 relating to a change in various domestic and foreign tax provision estimates for fiscal 2010 following the filing of certain of the Company’s tax returns during the Three Months Ended October 1, 2011. |
For 2010, this adjustment primarily reflects the exclusion of certain tax adjustments related to errors or changes in estimates in prior period tax provisions (approximately $1,900) and adjustments for certain other discrete tax items (approximately $2,600). The adjustment related to prior period errors or estimate changes includes, among other items, a charge of approximately $1,700 recorded during the Nine Months Ended October 2, 2010 associated with the correction of an error in the 2006 through 2009 income tax provisions as a consequence of the loss of a credit related to prior year tax overpayments caused by the delayed filing of tax returns in a U.S. state taxing jurisdiction. This error was not material to any prior period.
|
|
f) | The Company believes it is valuable for users of its financial statements to be made aware of the non-GAAP financial information, as such measures are used by management to evaluate the operating performance of the Company's continuing businesses on a comparable basis and to make operating and strategic decisions. Management believes such non-GAAP measures will also enhance users' ability to analyze trends in the Company's business. In addition, the Company uses performance targets based on non-GAAP operating income and diluted earnings per share as a component of the measurement of incentive compensation. |
Three Months Ended October 1, 2011 | ||||||||||||
GAAP
|
Impact of Foreign
|
Non-GAAP (Note 1)
|
||||||||||
As Reported
|
Currency Exchange
|
Constant Currency
|
||||||||||
By Segment:
|
||||||||||||
Sportswear Group
|
$ | 357,935 | $ | 16,375 | $ | 341,560 | ||||||
Intimate Apparel Group
|
247,880 | 9,100 | 238,780 | |||||||||
Swimwear Group
|
39,306 | 808 | 38,498 | |||||||||
Net revenues
|
$ | 645,121 | $ | 26,283 | $ | 618,838 | ||||||
By Region:
|
||||||||||||
United States
|
$ | 241,764 | $ | - | $ | 241,764 | ||||||
Europe
|
182,265 | 14,816 | 167,449 | |||||||||
Asia
|
129,985 | 7,001 | 122,984 | |||||||||
Mexico, Central and South America
|
62,848 | 2,890 | 59,958 | |||||||||
Canada
|
28,259 | 1,576 | 26,683 | |||||||||
Total
|
$ | 645,121 | $ | 26,283 | $ | 618,838 |
Nine Months Ended October 1, 2011 | ||||||||||||
GAAP
|
Impact of Foreign
|
Non-GAAP*
|
||||||||||
As Reported
|
Currency Exchange
|
Constant Currency
|
||||||||||
By Segment:
|
||||||||||||
Sportswear Group
|
$ | 983,695 | $ | 38,774 | $ | 944,921 | ||||||
Intimate Apparel Group
|
695,317 | 23,289 | 672,029 | |||||||||
Swimwear Group
|
219,657 | 3,251 | 216,406 | |||||||||
Net revenues
|
$ | 1,898,669 | $ | 65,314 | $ | 1,833,355 | ||||||
By Region:
|
||||||||||||
United States
|
$ | 777,552 | $ | (0 | ) | $ | 777,552 | |||||
Europe
|
478,827 | 29,467 | 449,360 | |||||||||
Asia
|
370,546 | 17,523 | 353,023 | |||||||||
Mexico, Central and South America
|
176,698 | 12,234 | 164,464 | |||||||||
Canada
|
95,046 | 6,090 | 88,956 | |||||||||
Total
|
$ | 1,898,669 | $ | 65,314 | $ | 1,833,355 | ||||||
*
|
see Note 1 on schedule 6a.
|
NET REVENUE GUIDANCE
|
||||||||
Percentages | ||||||||
Estimated increase in net revenues in Fiscal 2011 compared to
|
||||||||
Fiscal 2010 levels.
|
10.00% | to | 12.00% | |||||
EARNINGS PER SHARE GUIDANCE
|
||||||||
Diluted Income per common share from continuing operations
|
U.S. Dollars | |||||||
GAAP basis (assuming minimal pension expense / income)
|
$ | 4.08 | to | $ | 4.19 | |||
Restructuring charges (a)
|
0.37 | to | 0.41 | |||||
Taxation (b)
|
(0.45 | ) | (0.45 | ) | ||||
As adjusted (Non-GAAP basis) (c)
|
$ | 4.00 | to | $ | 4.15 |
(a) | Reflects between $16 million to $18 million of estimated restructuring charges (net of an income tax benefit of between $6 million and $8 million) primarily related to the consolidation of certain international operations in Fiscal 2011. |
(b) | Primarily excludes, among other items, the effect of the following: |
- | A $10.9 million tax benefit recorded during the Nine Months Ended October 1, 2011 relating to the recognition of pre-2004 net operating losses in a foreign jurisdiction as result of receiving a favorable ruling from that country's taxing authority during the second quarter of 2011; | |
- | A $7.3 million tax benefit recorded during the Three and Nine Months Ended October 1, 2011 relating to the reduction in the reserve for uncertain tax positions in certain foreign tax jurisdictions; and | |
- | A $1.3 million tax benefit recorded during the Three and Nine Months Ended October 1, 2011 relating to a change in various domestic and foreign tax provision estimates for fiscal 2010 following the filing of certain of the Company's tax returns during the Three Months Ended October 1, 2011. |
(c) | The Company believes it is useful for users of its financial statements to be made aware of the "As Adjusted" (non-GAAP) forecasted diluted income per common share from continuing operations as this is one of the measures used by management to evaluate the operating performance of the Company's continuing businesses on a comparable basis. The Company believes that this non-GAAP measure will also enhance users’ ability to analyze trends in the Company’s business. In addition, the Company uses performance targets based, in part, on this non-GAAP measure as a component of the measurement of employee incentive compensation. Management does not, nor should investors, consider this non-GAAP financial measure in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. |