<PAGE>
UNITED STATES SECURITIES AND EXCHANGE
COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 27, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number - 333-22155
THE WILLIAM CARTER COMPANY
(Exact name of registrant as specified in charter)
Massachusetts 04-1156680
(State or other jurisdiction of incorporation (IRS Employer Identification
or organization) No.)
1590 Adamson Parkway, Suite 400, Morrow, Georgia 30260
(Address of principal executive offices) (Zip Code)
(770) 961-8722
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
As of October 31, 1997, there were 1,000 shares of Common Stock outstanding.
<PAGE>
FORM 10-Q
THE WILLIAM CARTER COMPANY
INDEX
<TABLE>
<CAPTION>
Page
Part I. Financial Information
Item 1. Financial Statements
<C> <S> <C>
Condensed Consolidated Balance Sheets as of September 27,
1997 (unaudited) and December 28, 1996 3
Unaudited Condensed Consolidated Statements of Income for
the three-month periods ended September 27, 1997 and
September 28, 1996 4
Unaudited Condensed Consolidated Statements of Income for
the nine-month periods ended September 27, 1997 and September
28, 1996 5
Unaudited Condensed Consolidated Statements of Cash Flows for
the nine-month periods ended September 27, 1997 and September
28, 1996 6
Notes to Condensed Consolidated Financial Statements 7
(unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 10
Part II. Other Information 15
</TABLE>
2
<PAGE>
THE WILLIAM CARTER COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
SUCCESSOR
---------------------------------------
September 27, December 28,
1997 1996
------------- ------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 5,640 $ 1,961
Accounts receivable, net 38,493 19,259
Inventories 83,299 76,540
Prepaid expenses and other current assets 2,822 6,378
Deferred income taxes 14,838 14,502
------ ------
Total current assets 145,092 118,640
Property, plant and equipment, net 50,729 48,221
Tradename, net 97,708 99,583
Cost in excess of fair value of net assets acquired, net 37,642 38,363
Deferred debt issuance costs, net 8,301 8,618
Other assets 4,361 5,284
------ ------
Total assets $343,833 $318,709
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current maturities of long-term debt $ 900 $ 900
Accounts payable 23,788 14,593
Other current liabilities 38,397 32,355
------ ------
Total current liabilities 63,085 47,848
Long-term debt 153,150 144,100
Deferred income taxes 41,437 40,861
Other long-term liabilities 10,198 10,178
------ ------
Total liabilities 267,870 242,987
------- -------
Redeemable preferred stock, par value $.01 per share, $4,000 per
share liquidation and redemption value, 5,000 shares
authorized, issued and outstanding 19,002 18,234
------- -------
Common stockholder's equity:
Common stock, par value $.01 per share, 1,000 shares
authorized, issued and outstanding -- --
Additional paid-in capital 57,578 59,566
Accumulated deficit (617) (2,078)
------ -------
Total common stockholder's equity 56,961 57,488
------- -------
Total liabilities and stockholder's equity $343,833 $318,709
======== ========
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
3
<PAGE>
THE WILLIAM CARTER COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three-month periods ended
September 27, September 28,
1997 1996
------------- -------------
(Successor) (Predecessor)
<S> <C> <C>
Net sales $116,853 | | $102,085
| |
Costs of goods sold 74,098 | | 63,505
---------- | | -----------
Gross profit 42,755 | | 38,580
| |
Selling, general and administrative expenses 30,103 | | 26,037
---------- | | -----------
Operating income 12,652 | | 12,543
| |
Interest expense 4,610 | | 2,232
----------- | | -----------
Earnings before income taxes 8,042 | | 10,311
| |
Provision for income taxes 3,940 | | 3,828
----------- | | -----------
Net income 4,102 | | 6,483
| |
Dividend requirements and accretion on | |
redeemable preferred stock (655) | |
----------- | | -----------
| |
Net income applicable to common stockholders $ 3,447 | | $ 6,483
========== | | ===========
See accompanying notes to the condensed consolidated financial statements.
4
</TABLE>
<PAGE>
THE WILLIAM CARTER COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine-month periods ended
September 27, September 28,
1997 1996
------------- --------------
(Successor) (Predecessor)
<S> <C> <C>
Net sales $264,571 | | $236,967
| |
Costs of goods sold 166,420 | | 151,570
-------- | | ---------
Gross profit 98,151 | | 85,397
| |
Selling, general and administrative expenses 82,328 | | 70,853
-------- | | ---------
Operating income 15,823 | | 14,544
| |
Interest expense 12,957 | | 6,516
-------- | | ---------
Earnings before income taxes 2,866 | | 8,028
| |
Provision for income taxes 1,405 | | 2,960
-------- | | ---------
Net income 1,461 | | 5,068
| |
Dividend requirements and accretion on redeemable | |
preferred stock (1,988) | |
-------- | | ---------
| |
Net (loss) income applicable to common stockholders $ (527) | | $5,068
========= | | ========
</TABLE>
See accompanying notes to the condensed consolidated financial statements
5
<PAGE>
<TABLE>
<CAPTION>
THE WILLIAM CARTER COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Nine-month periods ended
September 27, September 28,
1997 1996
------------- -------------
(Successor) (Predecessor)
Cash flows from operating activities:
<S> <C> <C>
Net income $ 1,461 | | 5,068
Adjustments to reconcile net income to net cash provided by operating | |
activities: | |
Depreciation and amortization 11,305 | | 6,526
Deferred tax provision 240 | |
Effect of changes in operating assets and liabilities: | |
(Increase) decrease in assets: | |
Accounts receivable (19,234) | | (12,424)
Inventories (6,759) | | 5,860
Prepaid expenses and other assets 3,469 | | 2,565
(Decrease) increase in liabilities: | |
Accounts payable 9,195 | | 2,223
Other liabilities 6,062 | | 10,868
------ | | ------
Net cash provided by operating activities 5,739 | | 20,686
------ | | ------
Cash flows from investing activities: | |
Capital expenditures (9,275) | | (3,730)
Proceeds from sale of fixed assets 35 | | 17
------ | | ------
Net cash used in investing activities (9,240) | | (3,713)
------- | | -------
Cash flows from financing activities: | |
Proceeds from revolving line of credit 9,500 | |
Payment of revolving line of credit | | (19,000)
Payment of term loan (450) | |
Preferred stock dividends (1,220) | |
Payment of debt issuance costs (650) | |
Payment of Industrial Revenue Bond | | (433)
-------- | | -------
Net cash provided by (used in) financing activities 7,180 | | (19,433)
-------- | | --------
Net increase (decrease) in cash and cash equivalents 3,679 | | (2,460)
Cash and cash equivalents, beginning of period 1,961 | | 2,865
-------- | | --------
Cash and cash equivalents, end of period $ 5,640 | | $ 405
========== | | =========
See accompanying notes to the condensed consolidated financial statements.
6
</TABLE>
<PAGE>
THE WILLIAM CARTER COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1 - BASIS OF PREPARATION
In the opinion of management, the accompanying unaudited condensed consolidated
financial statements of The William Carter Company (the "Company") contain all
adjustments (consisting only of normal recurring adjustments) necessary to
present fairly the financial position of the Company as of September 27, 1997,
the results of its operations for the three-month and nine-month periods ended
September 27, 1997 and September 28, 1996, and cash flows for the nine-month
periods ended September 27, 1997 and September 28, 1996. Operating results for
the three-month and nine-month periods ended September 27, 1997 are not
necessarily indicative of the results that may be expected for the fiscal year
ending January 3, 1998.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission and the instructions to Form 10-Q. The
accounting policies followed by the Company are set forth in its Annual Report
on Form 10-K in the Notes to the Company's consolidated financial statements for
the fiscal year ended December 28, 1996.
2 - THE COMPANY
The Company is a United States based manufacturer and marketer of premier
branded childrenswear under the CARTER'S, CARTER'S CLASSICS and BABY DIOR
labels. The Company manufactures its products in plants located in the
southern United States, Costa Rica and the Dominican Republic. In 1997, the
Company commenced the start-up of a manufacturing operation in Mexico.
Products are manufactured for wholesale distribution to major domestic
retailers, and for the Company's 139 retail outlet stores that market its
brand name merchandise. The Company's retail operations represented
approximately 35.8% and 37.2% of consolidated net sales in the third quarter
and first nine months of fiscal 1997, respectively (39.8% and 39.5% in the
third quarter and first nine months of fiscal 1996, respectively).
The Company is a wholly-owned subsidiary of Carter Holdings, Inc. ("Holdings").
On October 30, 1996, Holdings, a company organized on behalf of affiliates of
INVESTCORP S.A. ("Investcorp"), management and certain other investors, acquired
100% of the previously outstanding common and preferred stock of the Company
from MBL Life Assurance Corporation, CHC Charitable Irrevocable Trust and
certain management stockholders (the "Acquisition"). Financing for the
Acquisition totaled $226.1 million and was provided by (i) $56.1 million of
borrowings under a $100.0 million senior credit facility; (ii) $90.0 million of
borrowings under a subordinated loan facility; (iii) $70.9 million of capital
invested by affiliates of Investcorp and certain other investors in Holdings,
which included a $20.0 million investment by Holdings in the
7
<PAGE>
THE WILLIAM CARTER COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Company's newly issued redeemable preferred stock; and (iv) issuance of
non-voting stock of Holdings valued at $9.1 million to certain members of
management.
In addition to purchasing or exchanging and retiring the previously issued
capital stock of the Company, the proceeds of the Acquisition and financing were
used to make certain contractual payments to management ($11.3 million), pay for
costs of the transaction ($20.9 million), and to retire all of the Company's
previously outstanding long-term debt along with accrued interest thereon ($69.1
million). In November 1996, the Company offered and sold in a private placement
$100.0 million of Senior Subordinated Notes, the net proceeds of which were used
to retire $90.0 million of subordinated loan facility borrowings and $5.0
million of borrowings under the Senior Credit Facility. Holdings has no assets
or investments other than the shares of stock of The William Carter Company.
In February 1997, the Company filed a registration statement on Form S-4 with
the Securities and Exchange Commission related to an Exchange Offer for $100.0
million of 10 3/8% Senior Subordinated Notes for a like amount of the 10 3/8%
Senior Subordinated Notes issued in the November 1996 private placement. This
registration statement became effective on April 7, 1997.
For purposes of identification and description, the Company is referred to as
the "Predecessor" for the period prior to the Acquisition, the "Successor" for
the period subsequent to the Acquisition, and the "Company" for both periods.
The Acquisition was accounted for by the purchase method. Accordingly, the
assets and liabilities of the Predecessor were adjusted at the Acquisition date
to reflect the allocation of the purchase price based on estimated fair values.
The following unaudited pro forma operating data present the results of
operations for the nine-month period ended September 28, 1996 as though the
controlling ownership of the Predecessor had been acquired on December 31, 1995,
with financing obtained as described above and assumes that there were no other
changes in the operations of the Predecessor. The pro forma results are not
necessarily indicative of the financial results that might have occurred had the
transaction included in the pro forma statement actually taken place on December
31, 1995, or of future results of operations ($000):
ACQUISITION
HISTORICAL ADJUSTMENTS PRO FORMA
Net sales $236,967 -- $236,967
Gross profit 85,397 ($ 254) 85,143
Operating income 14,544 ( 3,574) 10,970
Interest expense 6,516 6,072 12,588
Net income (loss) $ 5,068 ($6,344) ($ 1,276)
8
<PAGE>
THE WILLIAM CARTER COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
3 - INVENTORIES
Successor
-----------------------------------
September 27, December 28,
1997 1996
---- ----
(dollars in thousands)
Finished goods $44,867 $51,700
Work in process 23,566 15,884
Raw materials 14,866 8,956
------ -----
Total $83,299 $76,540
======= =======
4 - DIVIDEND TO PARENT COMPANY:
On October 7, 1997, the Company paid a dividend of $1.2 million on its
common stock held by its parent, Holdings. The proceeds from the dividend were
used by Holdings to repurchase shares of Holdings stock owned by three former
Company employees.
9
<PAGE>
FORM 10-Q
THE WILLIAM CARTER COMPANY
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE FOLLOWING MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS CONTAINS FORWARD-LOOKING STATEMENTS WHICH INVOLVE RISKS
AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM
THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS. THE COMPANY UNDERTAKES NO
OBLIGATION TO RELEASE PUBLICLY ANY REVISIONS TO THESE FORWARD-LOOKING STATEMENTS
TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE HEREOF OR TO REFLECT THE
OCCURRENCE OF ANTICIPATED OR UNANTICIPATED EVENTS.
RESULTS OF OPERATIONS
Consolidated net sales for the third quarter of 1997 were $116.9 million, an
increase of $14.8 million (14.5%) compared to the third quarter of 1996.
Consolidated net sales for the first nine months of 1997 were $264.6 million, an
increase of $27.6 million (11.6%) compared to the first nine months of 1996.
The increase in consolidated net sales was attributable principally to
increases in sales to the Company's wholesale customers. Wholesale sales in
the third quarter of 1997 were $73.7 million, an increase of $14.2 million
(23.9%) compared to the third quarter of 1996. Wholesale sales in the third
quarter of 1997 reflect a $14.2 million (25.2%) increase in regular-price
sales. Third quarter wholesale sales reflect shipments of the Company's new
Just One Year ("JOY") program, a total nursery concept focused on a child's
first year of life. The increase in regular-price wholesale sales also
reflects higher levels of shipments of Fall and Holiday 1997 products
compared to shipments of Fall and Holiday 1996 products in the third quarter
of 1996.
Wholesale sales in the first nine months of 1997 were $161.5 million, an
increase of $21.1 million (15.0%) compared to the first nine months of 1996.
Regular-price and off-price wholesale sales increased $20.9 million (16.2%) and
$.2 million (1.7%), respectively, compared to the first nine months of 1996. The
increase in regular-price wholesale sales reflects sales of the new JOY program
which commenced in the second quarter of 1997 and higher levels of Fall and
Holiday 1997 product sales.
The Company's retail outlet store sales in the third quarter of 1997 were
$41.9 million, an increase of $1.3 million (3.2%) compared to the third
quarter of 1996. Comparable store sales decreased 3.4% in the third quarter
of 1997 compared to the third quarter of 1996. The Company opened 2 stores
and closed 2 stores in the third quarter of 1997. In the first nine months of
1997, the Company opened 7 stores and closed 3 stores. There were 139 stores
in operation at September 27, 1997 compared to 131 stores at September 28,
1996.
10
<PAGE>
FORM 10-Q
THE WILLIAM CARTER COMPANY
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Retail sales in the first nine months of 1997 were $98.5 million, an increase
of $4.8 million (5.1%) compared to the first nine months of 1996. Comparable
store sales decreased 3.7% in the first nine months of 1997. The decrease in
comparable store performance is due primarily to a less aggressive markdown
plan in 1997 and the reduction of certain higher-priced, but lower margin,
product lines, including outerwear and girls playwear in sizes 7-14X.
In the latter part of the second quarter of 1997, Carter's retail division
initiated a new marketing and promotional program designed to improve
significantly the communication of value to the outlet store consumer. This
initiative and improvements in product presentation, assortment and
replenishment have begun to improve comparable store results.
The Company's gross profit increased $4.2 million (10.8%) to $42.8 million in
the third quarter of 1997 compared to the third quarter of 1996. In the third
quarter of 1997, gross profit as a percentage of net sales decreased to 36.6%
compared to 37.8% in the third quarter of 1996.
In the first nine months of 1997, gross profit increased $12.8 million (14.9%)
to $98.2 million compared to the first nine months of 1996. Gross profit as a
percentage of net sales in the first nine months of 1997 increased to 37.1%
compared to 36.0% in the first nine months of 1996. The improvement is
attributed to the growth in the Company's "baby" product category, including the
new JOY program; improvement in margins from off-price sales; the maturing
effect of the Company's three off-shore sewing plants and higher levels of
efficiency in the Company's manufacturing operations.
11
<PAGE>
FORM 10-Q
THE WILLIAM CARTER COMPANY
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Selling, general and administrative expenses for the third quarter of 1997
increased $4.1 million (15.6%) to $30.1 million compared to the third quarter of
1996. Selling, general and administrative expenses as a percentage of net sales
increased to 25.8% compared to 25.5% in the third quarter of 1996. Selling,
general and administrative expenses in the first nine months of 1997 increased
$11.5 million (16.2%) to $82.3 million compared to the first nine months of
1996. The increase in selling, general and administrative expenses is attributed
to the costs of amortization of intangible assets and prepaid management fees
recorded in connection with the Acquisition, comparable store sales declines
experienced by the Company's retail outlet stores, expenses of 8 additional
stores opened since the end of the third quarter of 1996, and expenses
associated with engaging a more experienced retail management team.
Operating income in the third quarter of 1997 was $12.7 million compared to
$12.5 million in the third quarter of 1996. Operating income in the first
nine months of 1997 increased $1.3 million (8.8%) to $15.8 million compared
to the first nine months of 1996. Operating income in the third quarter and
first nine months of 1997 reflects expense of $1.2 million and $3.6 million,
respectively, associated with the amortization of intangible assets and
prepaid management fees recorded at Acquisition.
Interest expense in the third quarter of 1997 increased to $4.6 million compared
to $2.2 million in the third quarter of 1996. In the first nine months of 1997,
interest expense was $13.0 million compared to $6.5 million in the first nine
months of 1996. The increase in interest expense is attributed to additional
indebtedness resulting from the Acquisition. Average revolver borrowings during
the third quarter of 1997 were $21.0 million compared to $15.5 million in the
third quarter of 1996. Average revolver borrowings during the first nine months
of 1997 were $11.5 million compared with $16.9 million in the first nine months
of 1996. At September 27, 1997, total debt outstanding was $154.1 million.
The Company recorded an income tax provision of $3.9 million in the third
quarter of 1997 compared to an income tax provision of $3.8 million in the
third quarter of 1996. The tax provision for the first nine months of 1997
was $1.4 million compared to $3.0 million in the first nine months of 1996.
The effective tax rate for the first nine months of 1997 was 49% compared
with 37% for the first nine months of 1996. The Company's 1997 tax rate is
impacted by goodwill recorded in connection with the Acquisition which is not
deductible for tax purposes.
12
<PAGE>
FORM 10-Q
THE WILLIAM CARTER COMPANY
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
As a result of the factors described above, the Company reported net income
of $4.1 million in the third quarter of 1997 compared to net income of $6.5
million in the third quarter of 1996. Net income for the first nine months of
1997 was $1.5 million compared to income of $5.1 million in the first nine
months of 1996.
FINANCIAL CONDITION, CAPITAL RESOURCES AND LIQUIDITY
The Company has financed its working capital, capital expenditures and debt
service requirements primarily through internally generated cash flow, and
funds borrowed under the Company's revolving credit facility.
Net accounts receivable at September 27, 1997 were $38.5 million compared to
$27.1 million at September 28, 1996. This increase primarily reflects the
higher levels of wholesale revenues in the third quarter of 1997 compared to
the third quarter of 1996. Due to the seasonal nature of the Company's
operations, the net accounts receivable balance at September 27, 1997 is not
comparable to the net accounts receivable balance at December 28, 1996.
Inventories at September 27, 1997 were $83.3 million compared to $88.6
million at September 28, 1996. The Company has achieved a net reduction in
inventory despite higher levels of inventory required to support increases in
its sales plans. Due to the seasonal nature of the Company's operations,
inventories at September 27, 1997 are not comparable to inventories at
December 28, 1996.
The Company invested $9.3 million and $3.7 million in capital expenditures
during the first nine months of 1997 and 1996, respectively. This increase in
capital expenditures includes the start-up operations in Mexico and expansion
in Costa Rica.
The Company incurred additional indebtedness in connection with the Acquisition.
At September 27, 1997, the Company had $154.1 million of debt outstanding,
consisting of $100 million of 10 3/8% Series A Senior Subordinated Notes, $44.6
million in term loan borrowings and $9.5 million in revolver borrowings. At
September 27, 1997, the Company had approximately $36.3 million of seasonal
financing available under the revolving credit portion of the Senior Credit
Facility, including approximately $4.2 million of outstanding letters of credit.
13
<PAGE>
FORM 10-Q
THE WILLIAM CARTER COMPANY
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
The Company believes that cash generated from operations, together with
availability under the revolving portion of the Senior Credit Facility, will be
adequate to meet its debt service requirements, capital expenditures and working
capital needs for the foreseeable future, although no assurance can be given in
this regard.
On April 23, 1997, the Company's Board of Directors declared a semiannual
dividend of 12% on $20.0 million of redeemable preferred stock which was paid
on May 1, 1997. The Company intends to pay a similar dividend on November 1,
1997. Also, on October 7, 1997 the Company paid a dividend of $1.2 milion on
its common stock held by Holdings.
EFFECTS OF INFLATION
The Company is affected by inflation primarily through the purchase of raw
material, increased operating costs and expenses, and higher interest rates. The
effects of inflation on the Company's operations have not been material in
recent years.
SEASONALITY
The Company experiences seasonal fluctuations in its sales and profitability,
with generally lower sales and gross profit in the first and second quarters of
its fiscal year. The Company believes that seasonality of sales and
profitability is a factor that affects the baby and children's apparel industry
generally and is primarily due to retailers' emphasis on Fall and Holiday sales,
including back to school promotions, which results in higher sales and
profitability in the third and fourth quarters.
Accordingly, the results of operations for the three-month and nine-month
periods ended September 27, 1997 are not indicative of the results to be
expected for the full year.
14
<PAGE>
FORM 10-Q
THE WILLIAM CARTER COMPANY
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is a party to various routine legal proceedings arising out of
the ordinary course of its business. Management believes that none of these
actions, individually or in the aggregate, will have a material adverse
effect on the results of operations or financial condition of the Company.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Description of Exhibits
- ------- -----------------------
2. Agreement of Merger dated September 18, 1996 between TWCC
Acquisition Corp. and the Company, incorporated herein by reference to
Exhibit 2 to the Company's Registration Statement on Form S-4 as
declared effective by the Commission on April 7, 1997.
3.1 Amended and Restated Articles of Organization of the Company,
incorporated herein by reference to Exhibit 3.1 to the Company's
Registration Statement on Form S-4 as declared effective by the
Commission on April 7, 1997.
3.2 Articles of Merger of the Company, incorporated herein by
reference to Exhibit 3.2 to the Company's Registration Statement on
Form S-4 as declared effective by the Commission on April 7, 1997.
3.3 By-laws of the Company, incorporated herein by reference to Exhibit
3.3 to the Company's Registration Statement on Form S-4 as declared
effective by the Commission on April 7, 1997.
3.4 Certificate of Designation relating to the Preferred Stock of the
Company dated October 30, 1996 (included in Exhibit 3.2).
4.1 Indenture dated as of November 25, 1996 between the Company and State
Street Bank and Trust Company, as Trustee, incorporated herein by
reference to Exhibit 4.1 to the Company's Registration Statement on
Form S-4 as declared effective by the Commission on April 7, 1997.
4.2 Exchange and Registration Rights Agreement dated November 25, 1996
between the Company and BT Securities Corporation, Bankers Trust
International plc, Chase Securities Inc. and Goldman, Sachs & Co.,
incorporated herein by reference to Exhibit 4.2 to the Company's
Registration Statement on Form S-4 as declared effective by the
Commission on April 7, 1997.
*27 Financial Data Schedule
(b) Reports on Form 8K
No report was filed by the Registrant during the quarter ended
September 27, 1997
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE WILLIAM CARTER COMPANY
Date: November 10, 1997 /s/ FREDERICK J. ROWAN, II
Frederick J. Rowan, II
Chairman of the Board, President,
Chief Executive Officer and Director
Date: November 10, 1997 /s/ MICHAEL D. CASEY
Michael D. Casey
Senior Vice President of Finance
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 3-MOS
<FISCAL-YEAR-END> JAN-03-1998 JAN-03-1998
<PERIOD-START> DEC-29-1996 JUN-29-1997
<PERIOD-END> SEP-27-1997 SEP-27-1997
<CASH> 5,640 0
<SECURITIES> 0 0
<RECEIVABLES> 41,792 0
<ALLOWANCES> 3,299 0
<INVENTORY> 83,299 0
<CURRENT-ASSETS> 145,092 0
<PP&E> 113,970 0
<DEPRECIATION> 63,241 0
<TOTAL-ASSETS> 343,833 0
<CURRENT-LIABILITIES> 63,085 0
<BONDS> 153,150 0
19,002 0
0 0
<COMMON> 0 0
<OTHER-SE> 56,961 0
<TOTAL-LIABILITY-AND-EQUITY> 343,833 0
<SALES> 264,571 116,853
<TOTAL-REVENUES> 264,571 116,853
<CGS> 166,420 74,098
<TOTAL-COSTS> 166,420 74,098
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 12,957 4,610
<INCOME-PRETAX> 2,866 8,042
<INCOME-TAX> 1,405 3,940
<INCOME-CONTINUING> 1,461 4,102
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,461 4,102
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
