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For the year:
-- Net revenues were $2.1 billion, up 14% from the prior year
-- Gross margin increased 340 basis points from the prior year to 45% of net revenues
-- Operating income was $140.3 million and operating margin decreased 110 basis points to 7% of net revenues
-- Income per diluted share from continuing operations was $1.07 compared to $1.86 in fiscal 2007, and includes costs related to pension expense, restructuring expenses, certain tax related items and other items of $1.59 and $0.38 per diluted share, respectively (on an adjusted, non-GAAP basis, excluding these items, income per diluted share from continuing operations was $2.66 for fiscal 2008 compared to $2.24 for fiscal 2007)
-- Net cash flow from continuing operations was $151.9 million
-- Net debt declined by $79.0 million to $96.1 million
For the fourth quarter:
-- Net revenues were $445.9 million, down 4% from the prior year quarter
-- Net revenues, on a constant currency basis, rose 4% compared to the prior year quarter
-- Gross margin increased 250 basis points from the prior year quarter to 42% of net revenues
-- Operating loss was $12.0 million, and includes $32.4 million of pension expense
-- Income per diluted share from continuing operations was a loss of $0.27 compared to income of $0.44 in the prior year quarter, and includes costs of $0.56 and a gain of $0.02, respectively, related to pension expense, restructuring expenses, certain tax related items and other items (on an adjusted, non-GAAP basis excluding these items, income per diluted share from continuing operations was $0.29 compared to $0.42 for the prior year quarter).
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, "Fiscal 2008 represented another year of important progress for Warnaco and we are pleased with our results, particularly in light of the recent economic downturn. Powerful growth in our Calvin Klein businesses and continued improvement in the performance of our heritage businesses contributed to these results."
"Our geographic diversification, powerful Calvin Klein business and focused execution enabled us to capitalize on our growth opportunities while navigating through the challenges of global economic uncertainty and currency volatility," Mr. Gromek continued. "As we begin fiscal 2009, our long-term business strategy remains unchanged. Our goal is to continue to grow our Calvin Klein businesses, capitalize on our international opportunities and expand our direct to consumer channel, while continuing to focus on enhancing profitability within our heritage businesses. Additionally, in response to current economic conditions and significant currency headwinds, we have taken actions to streamline our operations. These actions should enable us to achieve cost reductions of approximately $70 million (which equate to approximately $0.90 per diluted share), as we strive to achieve profit levels in 2009 comparable to 2008. However, we will continue to direct our capital and resources to our most compelling opportunities to maximize profitability, including our direct to consumer expansion."
"Looking forward, we have powerful brands, a strong balance sheet, a solid infrastructure and a seasoned team and expect to leverage our strengths to increase our market share and enhance shareholder value," concluded Mr. Gromek.
Fiscal 2009 Outlook
Global economic turmoil and foreign currency volatility present a considerable challenge for forecasting future results. For fiscal 2009, on an adjusted basis (excluding restructuring expense and assuming minimal pension expense):
-- The Company anticipates net revenues will decline 2% - 5%, on a constant currency basis, compared to fiscal 2008.
-- Based on current exchange rates, the impact of foreign currency exchange relative to the U.S. dollar is expected to further lower anticipated net revenues by 7%- 9%, with expected diluted earnings per share from continuing operations in the range of $2.40 - $2.66.
The accompanying tables provide a reconciliation of expected diluted earnings per share from continuing operations, on a GAAP basis and based on current exchange rates of $2.15- $2.39 per diluted share (assuming minimal pension expense), to the adjusted fiscal 2009 outlook above.
Fiscal 2008 Highlights
Total Company
Net revenues rose 13% on a constant currency basis and rose 14% on a reported basis to $2.1 billion and gross margin increased 340 basis points to 45% of net revenues. Operating income was $140.3 million, including $31.6 million of pension expense, compared to income of $143.7 million, including $8.8 million of pension income, in the prior year.
The Company recorded income from continuing operations of $50.2 million, or $1.07 per diluted share, compared to $86.9 million, or $1.86 per diluted share, in the prior year. Operating income for fiscal 2008 was adversely affected by $66.9 million of pension and restructuring expense, compared to $23.5 million for fiscal 2007.
On an adjusted, non-GAAP basis, as detailed in the accompanying tables, income from continuing operations was $124.7 million, or $2.66 per diluted share, compared to $104.6 million, or $2.24 per diluted share, in fiscal 2007.
The Company's effective tax rate was 54% compared to 26% for fiscal 2007. The effective tax rate was adversely affected by restrictions on the deductibility of certain restructuring expense and discontinued operations as well as repatriation of the proceeds from the divestiture of the Lejaby(R) business. The adjusted non-GAAP effective tax rate was approximately 32%, compared to 25% for fiscal 2007. The increase in the adjusted tax rate reflects the shift in earnings from lower to higher taxing jurisdictions. A reconciliation of the reported to adjusted rate can be found in the accompanying tables.
The impact of foreign currency exchange rates increased fiscal 2008 net revenues by approximately $10.6 million and decreased income from continuing operations by $0.15 per diluted share.
Segment Results
Sportswear
Sportswear Group net revenues increased 17% to $1.1 billion and operating income was $88.7 million, or 8% of Sportswear Group net revenues, compared to $97.9 million, or 10% of Group net revenues in fiscal 2007. Operating results were adversely affected by approximately $27.8 million of restructuring expenses primarily related to the Company's exit of the Calvin Klein Collection business.
Intimate Apparel
Intimate Apparel Group net revenues increased 12% to $702.3 million and operating income was $126.1 million, or 18% of Intimate Apparel Group net revenues, up from $108.3 million, or 17% of Group net revenues in fiscal 2007. Global expansion and new product launches in Calvin Klein Underwear as well as continued positive contributions from the Core business added to these results.
Swimwear
Swimwear Group net revenues increased 3% to $260.0 million. Operating income was $11.5 million, or 4% of Swimwear Group net revenues, a $36.0 million improvement from fiscal 2007. Focused execution and a $25.9 million reduction in restructuring expense contributed to the improved results.
Fourth Quarter Highlights
Total Company
Net revenues were up 4% on a constant currency basis and fell 4% on a reported basis to $445.9 million. Gross margin increased 250 basis points to 42% of net revenues. The Company recorded an operating loss of $12.0 million, compared to income of $27.3 million in the prior year quarter. Operating income for the fourth quarter of fiscal 2008 was adversely affected by $36.9 million of pension and restructuring expense, compared to $6.4 million for the fourth quarter of fiscal 2007.
The Company recorded a loss from continuing operations of $12.4 million, or $0.27 per diluted share, compared to income from continuing operations of $20.4 million, or $0.44 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 $13.3 million, or $0.29 per diluted share, compared to $19.3 million, or $0.42 per diluted share, in the prior year period.
The Company's adjusted non-GAAP effective tax rate in the quarter was approximately 32%, compared to 25% 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 decreased fourth quarter net revenues by approximately $41.6 million and decreased income from continuing operations by $0.18 per diluted share.
Segment Results
Sportswear
Sportswear Group net revenues decreased 4% to $236.5 million and operating income was $3.8 million, or 2% of Sportswear Group net revenues, down from $16.3 million, or 7% of Group revenues in the prior year period. Net revenue and operating income particularly in the Company's retail and wholesale Calvin Klein businesses were adversely affected by the impact of foreign currency exchange rates.
Intimate Apparel
Intimate Apparel Group net revenues fell 8% to $163.3 million from $176.9 million in the prior year quarter and operating income was $27.6 million, or 17% of Intimate Apparel Group net revenues compared to $29.5 million, or 17% of Group net revenues, in the prior year period. The global economic slowdown and effects of foreign currency exchange rates contributed to the revenue declines for the Intimate Apparel Group.
Swimwear
Swimwear Group net revenues increased 5% to $46.2 million and the Group had an operating loss of $0.8 million, a sharp improvement compared to the prior year period's loss of $16.0 million. Operating results benefited from an increase in gross profit compared to the prior year period and an $11.0 million reduction in restructuring expense.
Balance Sheet
Cash and cash equivalents at January 3, 2009 were $147.6 million compared to $191.9 million at December 29, 2007.
For the year ended January 3, 2009, net cash flow from continuing operations was $151.9 million. During the year the Company used approximately $16.0 million to repurchase approximately 940,000 shares of its common stock under its share repurchase plan. Net debt as of January 3, 2009 was $96.1 million, a $79.0 million reduction from December 29, 2007.
Inventories were $326.3 million at January 3, 2009, a 2% decline, compared to $332.7 million at December 29, 2007, due to the impact of foreign currency exchange rates.
Conference Call Information
Stockholders and other persons are invited to listen to the fourth quarter and fiscal 2008 earnings conference call scheduled for today, Thursday, February 26, 2009, at 9:00 a.m. EST. To participate in Warnaco's conference call, dial (877) 692-2592 approximately five minutes prior to the 9:00 a.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(R), Olga(R), Body Nancy Ganz(R), and Speedo(R), as well as Chaps(R) sportswear and denim, and Calvin Klein(R) 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 February 26, 2009 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 products on a cost-effective basis; the effect of laws and regulations, including those relating to labor, workplace and the environment; 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.
Schedule 1
THE WARNACO GROUP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands, excluding per share amounts)
(Unaudited)
As Reported Restructuring As Adjusted
Fourth Quarter Charges and Taxation (b) Fourth Quarter
of Fiscal 2008 Pension (a) of Fiscal 2008 (c)
Net revenues $ 445,922 $ - $ - $ 445,922
Cost of goods sold 257,763 (758 ) 257,005
Gross profit 188,159 758 - 188,917
Selling, general and administrative expenses 165,624 (3,766 ) 161,858
Amortization of intangible assets 2,107 2,107
Pension expense 32,430 (32,430 ) -
Operating income (loss) (12,002 ) 36,954 - 24,952
Other expense (income) (1,136 ) (1,136 )
Interest expense 6,191 6,191
Interest income (607 ) (607 )
Income (loss) from continuing operations before
provision for income taxes and minority interest (16,450 ) 36,954 - 20,504
Provision (benefit) for income taxes (4,636 ) 11,197 6,561
Income (loss) from continuing operations before minority interest (11,814 ) 36,954 (11,197 ) 13,943
Minority Interest 621 621
Income (loss) from continuing operations (12,435 ) 36,954 (11,197 ) 13,322
Loss from discontinued operations, net of taxes (3,898 ) (3,898 )
Net income (loss) $ (16,333 ) $ 36,954 $ (11,197 ) $ 9,424
Basic income (loss) per common share:
Income (loss) from continuing operations $ (0.27 ) $ 0.29
Loss from discontinued operations (0.09 ) (0.08 )
Net income (loss) $ (0.36 ) $ 0.21
Diluted income (loss) per common share:
Income (loss) from continuing operations $ (0.27 ) $ 0.29
Loss from discontinued operations (0.09 ) (0.09 )
Net income (loss) $ (0.36 ) $ 0.20
Weighted average number of shares outstanding used in
computing income per common share:
Basic 45,653,867 45,653,867
Diluted 46,092,736 46,092,736
(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 $4,524 or pension expense
of $32,430. See note (c) below.
(b) Adjustment to reflect the Company's income from continuing
operations at a normalized tax rate of 32% which reflects the
Company's estimated tax rate for Fiscal 2008 excluding the effects
of restructuring charges, pension income, costs related to the
refinancing of its debt, an additional depreciation charge of
$1,084 recorded during Fiscal 2008 (which amount related to the
correction of amounts recorded in prior periods) and certain other
tax related items. 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 1a
THE WARNACO GROUP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands, excluding per share amounts)
(Unaudited)
As Reported Restructuring As Adjusted
Fourth Quarter Charges and Other Taxation (b) Fourth Quarter
of Fiscal 2007 Pension (a) Item of Fiscal 2007 (c)
Net revenues $ 466,465 $ - $ - $ - $ 466,465
Cost of goods sold 281,311 (11,421 ) 269,890
Gross profit 185,154 11,421 - - 196,575
Selling, general and administrative expenses 162,575 (2,753 ) 270 160,092
Amortization of intangible assets 3,120 3,120
Pension income (7,800 ) 7,800 -
Operating income 27,259 6,374 (270 ) - 33,363
Other expense (income) (600 ) (600 )
Interest expense 9,735 9,735
Interest income (1,473 ) (1,473 )
Income from continuing operations before
provision for income taxes 19,597 6,374 (270 ) - 25,701
Provision (benefit) for income taxes (757 ) - - 7,157 6,400
Income from continuing operations 20,354 6,374 (270 ) (7,157 ) 19,301
Income from discontinued operations, net of taxes 2,588 2,588
Net income $ 22,942 $ 6,374 $ (270 ) $ (7,157 ) $ 21,889
Basic income per common share:
Income from continuing operations $ 0.45 $ 0.43
Income from discontinued operations 0.06 0.06
Net income $ 0.51 $ 0.49
Diluted income per common share:
Income from continuing operations $ 0.44 $ 0.42
Income from discontinued operations 0.05 0.05
Net income $ 0.49 $ 0.47
Weighted average number of shares outstanding used in
computing income per common share:
Basic 44,751,397 44,751,397
Diluted 46,430,923 46,430,923
(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 $14,174 or pension income
of $7,800. See note (c) below.
(b) Adjustment to reflect the Company's income from continuing
operations at a normalized tax rate of 24.9% which reflects the
Company's tax rate for Fiscal 2007 excluding the effects of
restructuring charges, pension income and certain tax related
items. 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 2
THE WARNACO GROUP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands, excluding per share amounts)
(Unaudited)
As Reported Restructuring Other As Adjusted
Fiscal Year Ended Charges and Items (c) Taxation (d) Fiscal Year Ended
January 3, 2009 Pension (b) January 3, 2009 (e)
Net revenues $ 2,065,023 $ - $ - $ 2,065,023
Cost of goods sold 1,142,977 (1,878 ) 1,141,099
Gross profit 922,046 1,878 - - 923,924
Selling, general and administrative expenses 740,452 (33,380 ) (1,084 ) 705,988
Amortization of intangible assets 9,629 9,629
Pension expense 31,644 (31,644 ) -
Operating income 140,321 66,902 1,084 - 208,307
Other expense (income) 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 minority interest 111,996 66,902 6,413 - 185,311
Provision for income taxes 60,469 (a) (1,169 ) 59,300
Income from continuing operations before minority interest 51,527 66,902 6,413 1,169 126,011
Minority Interest 1,347 1,347
Income from continuing operations 50,180 66,902 6,413 1,169 124,664
Loss from discontinued operations, net of taxes (2,926 ) (2,926 )
Net income $ 47,254 $ 66,902 $ 6,413 $ 1,169 $ 121,738
Basic income per common share:
Income from continuing operations $ 1.11 $ 2.75
Loss from discontinued operations (0.07 ) (0.07 )
Net income $ 1.04 $ 2.68
Diluted income per common share:
Income from continuing operations $ 1.07 $ 2.66
Loss from discontinued operations (0.06 ) (0.06 )
Net income $ 1.01 $ 2.60
Weighted average number of shares outstanding used in
computing income per common share:
Basic 45,351,336 45,351,336
Diluted 46,779,107 46,779,107
(a) Includes, among other items, a non-recurring tax charge of
approximately $14,600 related to the repatriation, 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 of $35,258 or pension expense
of $31,644. 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 charges of $5,329 related to the refinancing /
repurchase of its debt, during the Fiscal Year Ended January 3,
2009, and an additional depreciation charge of $1,084 recorded
during the Fiscal Year Ended January 3, 2009 which amount related
to the correction of amounts recorded in prior periods. The amount
was not material to any prior period. See note (e) below.
(d) Adjustment to reflect the Company's income from continuing
operations at a normalized tax rate of 32% which reflects the
Company's estimated tax rate for Fiscal 2008 excluding the effects
of restructuring charges, pension income, costs related to the
refinancing / repurchase of its debt, an additional depreciation
charge of $1,084 recorded during Fiscal 2008 (which amount related
to the correction of amounts recorded in prior periods) and
certain other tax related items (including a non-recurring tax
charge of approximately $14,600 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.
Schedule 2a
THE WARNACO GROUP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands, excluding per share amounts)
(Unaudited)
As Reported Restructuring As Adjusted
Fiscal Year Ended Charges and Other Taxation (c) Fiscal Year Ended
December 29, 2007 Pension (a) Item (b) December 29, 2007 (d)
Net revenues $ 1,819,579 $ - $ - $ - $ 1,819,579
Cost of goods sold 1,069,904 (21,588 ) 1,048,316
Gross profit 749,675 21,588 - - 771,263
Selling, general and administrative expenses 601,656 (10,770 ) 1,084 591,970
Amortization of intangible assets 13,167 13,167
Pension income (8,838 ) 8,838 -
Operating income 143,690 23,520 (1,084 ) - 166,126
Other expense (income) (7,063 ) (7,063 )
Interest expense 37,718 37,718
Interest income (3,766 ) (3,766 )
Income from continuing operations before
provision for income taxes 116,801 23,520 (1,084 ) - 139,237
Provision for income taxes 29,892 - - 4,778 34,670
Income from continuing operations 86,909 23,520 (1,084 ) (4,778 ) 104,567
Loss from discontinued operations, net of taxes (7,802 ) (7,802 )
Net income $ 79,107 $ 23,520 $ (1,084 ) $ (4,778 ) $ 96,765
Basic income per common share:
Income from continuing operations $ 1.94 $ 2.33
Income from discontinued operations (0.18 ) (0.18 )
Net income $ 1.76 $ 2.15
Diluted income per common share:
Income from continuing operations $ 1.86 $ 2.24
Income from discontinued operations (0.16 ) (0.16 )
Net income $ 1.70 $ 2.08
Weighted average number of shares outstanding used in
computing income per common share:
Basic 44,908,028 44,908,028
Diluted 46,618,307 46,618,307
(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 $32,358 or pension income
of $8,838. See note (d) below.
(b) This adjustment seeks to present the Company's consolidated
condensed statement of operations on a continuing basis including
the effect of an additional depreciation charge of $1,084 recorded
during the Fiscal Year Ended January 3, 2009 which amount related
to depreciation expense for the Fiscal Year Ended December 29,
2007. See note (d) below.
(c) Adjustment to reflect the Company's income from continuing
operations at a tax rate of 24.9% which reflects the Company's tax
rate for Fiscal 2007 excluding the effects of restructuring
charges, pension income and certain tax related items and
including the effect of an additional depreciation charge recorded
during the Fiscal Year Ended January 3, 2009 which amount related
to depreciation expense for the Fiscal Year Ended December 29,
2007. 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.
Schedule 3
THE WARNACO GROUP, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
January 3, 2009 December 29, 2007
ASSETS
Current assets:
Cash and cash equivalents $ 147,627 $ 191,918
Accounts receivable, net 251,886 267,450
Inventories 326,297 332,652
Assets of discontinued operations (a) 6,279 67,931
Other current assets 156,777 133,211
Total current assets 888,866 993,162
Property, plant and equipment, net 109,563 111,916
Intangible and other assets 497,664 501,425
TOTAL ASSETS $ 1,496,093 $ 1,606,503
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 79,888 $ 56,115
Accounts payable and accrued liabilities 320,963 304,249
Taxes 1,406 2,221
Liabilities of discontinued operations (b) 12,055 42,566
Total current liabilities 414,312 405,151
Long-term debt 163,794 310,500
Other long-term liabilities 130,300 117,956
Total stockholders' equity 787,687 772,896
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,496,093 $ 1,606,503
NET DEBT (Total debt net of cash and cash equivalents) $ 96,055 $ 174,697
(a) Assets of discontinued operations include the following:
January 3, 2009 December 29, 2007
Accounts receivable, net $ 5,396 $ 21,487
Inventories 23 28,167
Other current assets 860 8,665
Property, plant and equipment, net - 3,001
Intangible and other assets - 6,611
Assets of discontinued operations $ 6,279 $ 67,931
(b) Liabilities of discontinued operations include the following:
January 3, 2009 December 29, 2007
Accounts payable $ 356 $ 14,867
Accrued liabilities 9,839 22,635
Other liabilities 1,860 5,064
Liabilities of discontinued operations $ 12,055 $ 42,566
Schedule 4
THE WARNACO GROUP, INC.
NET REVENUES AND OPERATING INCOME BY BUSINESS GROUP
(Dollars in thousands)
(Unaudited)
Net revenues: Fourth Quarter Fourth Quarter Increase / % Constant $
of Fiscal 2008 of Fiscal 2007 (Decrease) Change % Change
Sportswear Group $ 236,476 $ 245,728 $ (9,252 ) -3.8 % 7.8 %
Intimate Apparel Group 163,283 176,950 (13,667 ) -7.7 % -0.8 %
Swimwear Group 46,163 43,787 2,376 5.4 % 7.6 %
Net revenues $ 445,922 $ 466,465 $ (20,543 ) -4.4 % 4.5 %
Fourth Quarter % of Group Fourth Quarter % of Group
of Fiscal 2008 Net Revenues of Fiscal 2007 Net Revenues
Operating income (loss):
Sportswear Group (a), (b) $ 3,815 1.6 % $ 16,251 6.6 %
Intimate Apparel Group (a), (b) 27,611 16.9 % 29,453 16.6 %
Swimwear Group (a), (b) (767 ) -1.7 % (16,042 ) -36.6 %
Unallocated corporate expenses (b), (c) (42,661 ) na (2,403 ) na
Operating income $ (12,002 ) na $ 27,259 na
Operating income as a percentage of
total net revenues -2.7 % 5.8 %
(a) Includes an allocation of shared services expenses as follows:
Fourth Quarter Fourth Quarter
of Fiscal 2008 of Fiscal 2007
Sportswear Group $ 5,439 $ 5,582
Intimate Apparel Group $ 4,430 $ 4,292
Swimwear Group $ 3,824 $ 4,646
(b) Includes restructuring charges as follows:
Fourth Quarter Fourth Quarter
of Fiscal 2008 of Fiscal 2007
Sportswear Group $ 1,573 $ -
Intimate Apparel Group 368 1,099
Swimwear Group 1,766 12,773
Unallocated corporate expenses 815 301
$ 4,522 $ 14,173
(c) Includes pension expense of $32,383 for the fourth quarter of
Fiscal 2008 and pension income of $7,800 for the fourth quarter of
Fiscal 2007 related to the Company's U.S. pension plan.
Schedule 4a
THE WARNACO GROUP, INC.
NET REVENUES AND OPERATING INCOME BY BUSINESS GROUP
(Dollars in thousands)
(Unaudited)
Net revenues: Fiscal Year Ended Fiscal Year Ended Increase / % Constant $
January 3, 2009 December 29, 2007 (Decrease) Change % Change
Sportswear Group $ 1,102,771 $ 939,147 $ 163,624 17.4 % 17.9 %
Intimate Apparel Group 702,252 627,014 75,238 12.0 % 10.2 %
Swimwear Group 260,000 253,418 6,582 2.6 % 1.2 %
Net revenues $ 2,065,023 $ 1,819,579 $ 245,444 13.5 % 12.9 %
Fiscal Year Ended % of Group Fiscal Year Ended % of Group
January 3, 2009 Net Revenues December 29, 2007 Net Revenues
Operating income (loss):
Sportswear Group (a), (b) $ 88,656 8.0 % $ 97,946 10.4 %
Intimate Apparel Group (a), (b) 126,133 18.0 % 108,343 17.3 %
Swimwear Group (a), (b) 11,478 4.4 % (24,499 ) -9.7 %
Unallocated corporate expenses (b), (c) (85,946 ) na (38,100 ) na
Operating income $ 140,321 na $ 143,690 na
Operating income as a percentage of
total net revenues 6.8 % 7.9 %
(a) Includes an allocation of shared services expenses as follows:
Fiscal Year Ended Fiscal Year Ended
January 3, 2009 December 29, 2007
Sportswear Group $ 21,824 $ 22,328
Intimate Apparel Group $ 17,728 $ 17,160
Swimwear Group $ 15,297 $ 19,336
(b) Includes restructuring charges as follows:
Fiscal Year Ended Fiscal Year Ended
January 3, 2009 December 29, 2007
Sportswear Group $ 27,820 $ 118
Intimate Apparel Group 1,267 2,142
Swimwear Group 3,944 29,821
Unallocated corporate expenses 2,229 279
$ 35,260 $ 32,360
(c) Includes pension expense of $31,440 for Fiscal 2008 and
pension income of $9,025 for Fiscal 2007 related to the Company's
U.S. pension plan.
Schedule 5
THE WARNACO GROUP, INC.
NET REVENUES AND OPERATING INCOME BY REGION & CHANNEL
(Dollars in thousands)
(Unaudited)
By Region: Net Revenues
Fourth Quarter Fourth Quarter Increase / % Change Constant $ %
of Fiscal 2008 of Fiscal 2007 (Decrease) Change
United States $ 196,770 $ 219,645 $ (22,875 ) -10.4 % -10.4 %
Europe 117,951 125,837 (7,886 ) -6.3 % 5.1 %
Asia 73,605 68,507 5,098 7.4 % 28.8 %
Canada 29,934 31,232 (1,298 ) -4.2 % 17.5 %
Mexico, Central and South America 27,662 21,244 6,418 30.2 % 55.1 %
Total $ 445,922 $ 466,465 $ (20,543 ) -4.4 % 4.5 %
Operating Income (loss)
Fourth Quarter Fourth Quarter Increase / % Change
of Fiscal 2008 of Fiscal 2007 (Decrease)
United States $ 7,228 $ (6,334 ) $ 13,562 nm
Europe 6,481 15,067 (8,586 ) -57.0 %
Asia 8,070 9,143 (1,073 ) -11.7 %
Canada 6,477 8,246 (1,769 ) -21.5 %
Mexico, Central and South America 2,403 3,540 (1,137 ) -32.1 %
Unallocated corporate expenses (a) (42,661 ) (2,403 ) (40,258 ) 1675.3 %
Total $ (12,002 ) $ 27,259 $ (39,261 ) -144.0 %
By Channel: Net Revenues
Fourth Quarter Fourth Quarter Increase / % Change
of Fiscal 2008 of Fiscal 2007 (Decrease)
Wholesale $ 339,745 $ 368,603 $ (28,858 ) -7.8 %
Retail 106,177 97,862 8,315 8.5 %
Total $ 445,922 $ 466,465 $ (20,543 ) -4.4 %
Operating Income (loss)
Fourth Quarter Fourth Quarter Increase / % Change
of Fiscal 2008 of Fiscal 2007 (Decrease)
Wholesale $ 21,473 $ 15,649 $ 5,824 37.2 %
Retail 9,186 14,013 (4,827 ) -34.4 %
Unallocated corporate expenses (a) (42,661 ) (2,403 ) (40,258 ) 1675.3 %
Total $ (12,002 ) $ 27,259 $ (39,261 ) -144.0 %
(a) Includes pension expense of $32,383 for the fourth quarter of
Fiscal 2008 and pension income of $7,800 for the fourth quarter of
Fiscal 2007 related to the Company's U.S. pension plan.
Schedule 5a
THE WARNACO GROUP, INC.
NET REVENUES AND OPERATING INCOME BY REGION & CHANNEL
(Dollars in thousands)
(Unaudited)
By Region: Net Revenues
Fiscal Year Fiscal Year Increase % Change Constant $ %
Ended January Ended Change
3, 2009 December 29,
2007
United States $ 942,203 $ 927,154 $ 15,049 1.6 % 1.6 %
Europe For full details on Warnaco Group Inc (the) (WRC) click here. Warnaco Group Inc (the) (WRC) has Short Term PowerRatings of 5. Details on Warnaco Group Inc (the) (WRC) Short Term PowerRatings is available at This Link.
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