---

---

---

---

---

---

(*)	The Company reclassified $1.5 million of tax benefits from "Accumulated other comprehensive loss" to "Retained earnings" for the tax effects resulting from the December 22, 2017 enactment of the Tax Cuts and Jobs Act in accordance with the adoption of ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income in the first quarter of fiscal 2019.

---

---

---

Carter's, Inc. and its wholly owned subsidiaries (collectively, the "Company," "its," "us" and "our") design, source, and market branded childrenswear and accessories under the Carter's, OshKosh B'gosh ("OshKosh"), Skip Hop, Child of Mine, Just One You, Simple Joys, Precious Baby, Little Planet, and other brands. The Company's products are sourced through contractual arrangements with manufacturers worldwide for: 1) wholesale distribution to leading department stores, national chains, and specialty retailers domestically and internationally and 2) distribution to the Company's own retail stores and eCommerce sites that market its brand name merchandise and other licensed products manufactured by other companies.

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") for interim financial information and the rules and regulations of the Securities and Exchange Commission (the "SEC"). All intercompany transactions and balances have been eliminated in consolidation.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all normal and recurring adjustments necessary to state fairly the consolidated financial condition, results of operations, comprehensive income (loss), statement of stockholders' equity, and cash flows of the Company for the interim periods presented. Except as otherwise disclosed, all such adjustments consist only of those of a normal recurring nature. Operating results for the fiscal quarter ended September 26, 2020 are not necessarily indicative of the results that may be expected for the current fiscal year ending January 2, 2021.

The preparation of these unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ materially from those estimates.

The accompanying condensed consolidated balance sheet as of December 28, 2019 was derived from the Company's audited consolidated financial statements included in its most recently filed Annual Report on Form 10-K. Certain information and footnote disclosure normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC and the instructions to Form 10-Q.

Revision of Previously Issued Financial Statements

During the second quarter of fiscal year 2020, it was determined that there were amounts presented incorrectly in the statement of cash flows for the annual and interim year to date periods subsequent to the December 30, 2018 adoption of ASC 842, Leases, due to the presentation of the non-cash impact of the initial and subsequent recognition of the Right of Use ("ROU") assets and lease liabilities within the "Prepaid expenses and other assets" and "Accounts payable and other liabilities" line items, respectively, within operating cash flows. This incorrect presentation had no impact on net cash (used in) provided by operating activities for any of the periods. We assessed the materiality of the incorrect presentation and concluded that the previously issued financial statements were not materially misstated. The presentation errors resulted in an offsetting overstatement of cash used for prepaid expenses and other assets and cash provided by accounts payable and other liabilities of $739 million, $773 million and $815 million for the three, six and nine-months ended March 30, 2019, June 29, 2019 and September 28, 2019, respectively, $828 million for the year ended December 28, 2019 and $29 million for the three months ended March 28, 2020. The accompanying unaudited condensed consolidated statement of cash flows appropriately reflect the corrected presentation of these non-cash activities. In addition, the Company has reclassified and will reclassify prior comparable period amounts to present ROU asset amortization and lease liability payment activity on a net basis within the "Accounts payable and other liabilities" line item. The revisions to the year ended December 31, 2019 and three months ended March 31, 2020 will be presented in future Forms 10-Q and 10-K filings. We will continue to provide supplemental noncash cash flow disclosure information in the notes to the financial statements, as well as correct for the omission of such disclosure during the 2019 interim periods in connection with our 2020 quarterly filings.

---

COVID-19

In December 2019, an outbreak of a new strain of coronavirus ("COVID-19") began in Wuhan, China. In March 2020, the World Health Organization declared COVID-19 a pandemic and the President of the United States declared a national emergency. As a result of COVID-19, the Company temporarily closed its retail stores in North America and implemented several actions during fiscal 2020 to enhance liquidity and financial flexibility including the deferral of lease payments, reductions in discretionary spending, amending its revolving credit facility, issuing $500 million principal amount of senior notes, and suspending dividends and share repurchases.

Beginning in April 2020, the Company suspended rent payments under the leases for our temporarily closed stores in North America and has been in discussions with landlords to obtain rent concessions. The Company considered the Financial Accounting Standards Board's ("FASB") recent guidance regarding lease concessions as a result of the effects of the COVID-19 pandemic and has elected to treat these rent concessions as lease modifications. As of September 26, 2020, lease modifications resulting from COVID-19 related rent concessions were not material to the financial statements. The Company continues to negotiate lease concessions with landlords. As of the end of the fiscal quarter, the Company resumed making the required rent payments under these leases.

See Note 4, Leases, for further details on deferral of rent payments under these leases.

On May 4, 2020, the Company, through its wholly owned subsidiary, The William Carter Company ("TWCC"), successfully amended its revolving credit facility. This amendment provided for, among other things, a waiver of financial covenants through the balance of fiscal year 2020, revised covenant requirements through the third quarter of fiscal year 2021, and the ability to raise additional unsecured financing at the Company’s discretion. Additionally, on May 11, 2020, TWCC issued $500 million principal amount of senior notes at par, bearing interest at a rate of 5.500% per annum, and maturing on May 15, 2025. See Note 8, Long-Term Debt, for further details on the amendment to the revolving credit facility and the issuance of $500 million principal amount of senior notes.

The Company announced in the first half of fiscal 2020, that in connection with the COVID-19 pandemic, it suspended its common stock share repurchase program and its quarterly cash dividend. The Company's Board of Directors will evaluate future capital distributions, including dividend declarations, based on a number of factors, including restrictions under our revolving credit facility, business conditions, our financial performance, and other considerations.

The Company also assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to us and the unknown future impacts of COVID-19 as of September 26, 2020 and through the date of this report filing. The accounting matters assessed included, but were not limited to, our allowance for credit losses, inventory reserves, adverse inventory and fabric purchase commitments, stock based compensation, and the carrying value of our goodwill and other long-lived assets. Based on these assessments, in the third quarter of fiscal 2020, the Company recorded impairments on operating lease assets and other long-lived assets for our underperforming retail stores of $1.7 million, and a benefit in excess inventory and fabric purchase commitment charges of $8.5 million related to better than expected sales of inventory that were reserved for in the first fiscal quarter of 2020 due to COVID-19 related disruptions. For the three fiscal quarters ending September 26, 2020, the Company recorded impairments on operating lease assets and other long-lived assets for our underperforming retail stores of $6.7 million, incremental inventory reserve related charges of $20.9 million, adverse inventory and fabric purchase commitments of $16.2 million, intangible asset impairments of $26.5 million, and goodwill impairment of $17.7 million. There could be a further material impact to our consolidated financial statements in future reporting periods if, at a future date, the Company determines that these assessments of the magnitude and duration of COVID-19, as well as other factors, were incorrect.

Additional COVID-19 related charges in the third quarter of fiscal 2020 were $3.3 million, which primarily included costs associated with additional protective equipment and cleaning supplies of $2.5 million. COVID-19 related charges for the three fiscal quarters ending September 26, 2020 were $18.8 million, which primarily included incremental payroll continuation and employee related costs of $12.1 million, costs associated with additional protective equipment and cleaning supplies of $6.8 million, and restructuring costs of $2.3 million, partially offset by a payroll tax benefit of $3.5 million.

Accounting Policies

The accounting policies the Company follows are set forth in its most recently filed Annual Report on Form 10-K. There have been no material changes to these accounting policies. New accounting pronouncements adopted at the beginning of fiscal 2020 are noted below.

---

Credit Losses (ASU 2016-13)

At the beginning of fiscal 2020, the Company adopted Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). This new guidance changed how entities account for credit impairment for trade and other receivables, as well as for certain financial assets and other instruments. ASU 2016-13 replaced the previous "incurred loss" model with an "expected loss" model, that requires an entity to recognize a loss (or allowance) upon initial recognition of the asset that reflects all future events that will lead to a loss being realized, regardless of whether it is probable that the future event will occur. The Company estimates current expected credit losses based on collection history and management’s assessment of the current economic trends, business environment, customers’ financial condition, accounts receivable aging, and customer disputes that may impact the level of future credit losses. The effect of the adoption of ASU 2016-13 was not material to the Company's consolidated financial statements.

Goodwill Impairment Testing (ASU 2017-04)

At the beginning of fiscal 2020, the Company adopted ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). ASU 2017-04 eliminates the requirement to calculate the implied fair value of goodwill (step 2 of the current goodwill impairment test) to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit's carrying amount over its fair value (i.e., measure the charge based on the current step 1). Any impairment charge will be limited to the amount of goodwill allocated to an impacted reporting unit. ASU 2017-04 does not change the current guidance for completing step 1 of the goodwill impairment test, and an entity can still perform the current optional qualitative goodwill impairment assessment before determining whether to proceed to step 1. The effect of the adoption of ASU 2017-04 had no impact to the Company's consolidated financial statements. During the first quarter of fiscal 2020, the Company conducted an interim quantitative impairment assessment on the goodwill ascribed to the Other International reporting unit. As a result of this assessment and based on the application of ASU 2017-04, a goodwill impairment charge of $17.7 million was recorded to our Other International reporting unit. See Note 6, Goodwill and Intangible Assets, for further details on the impairment charge and valuation methodology.

Simplifying the Accounting for Income Taxes (Topic 740)

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"), as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. Amendments include removal of certain exceptions to the general principles of Topic 740, "Income Taxes," and simplification in several other areas. ASU 2019-12 is effective for annual reporting periods beginning after December 15, 2020, and interim periods therein, with early adoption permitted. The Company elected to early adopt this guidance in the first quarter of fiscal 2020. The Company retrospectively adopted the provision related to the classification of taxes partially based on income and has determined that the adoption of this standard did not have a material impact on its prior period financial statements. The provisions related to intra period tax allocation and interim recognition of enactment of tax laws are being adopted on a prospective basis. The effect of the adoption of ASU 2019-12 was not material to the Company's consolidated financial statements.

---

The Company’s revenues are earned from contracts or arrangements with retail and wholesale customers and licensees. Contracts include written agreements as well as arrangements that are implied by customary practices or law.

Disaggregation of Revenue

The Company sells its products directly to consumers ("direct-to-consumer") and to other retail companies and partners that subsequently sell the products directly to their own retail customers. The Company also earns royalties from certain of its licensees. Disaggregated revenues from these sources for the third quarter and three quarters ended fiscal 2020 and 2019 were as follows:

		Fiscal quarter ended September 26, 2020
(dollars in thousands)		U.S. Retail				U.S. Wholesale				International				Total
Wholesale channel		$	—			$	302,135			$	37,838			$	339,973
Direct-to-consumer		449,150				—				75,957				525,107
		$	449,150			$	302,135			$	113,795			$	865,080
Royalty income		$	3,902			$	3,986			$	1,175			$	9,063

		Three fiscal quarters ended September 26, 2020
(dollars in thousands)		U.S. Retail				U.S. Wholesale				International				Total
Wholesale channel		$	—			$	706,009			$	92,110			$	798,119
Direct-to-consumer		1,085,883				—				150,435				1,236,318
		$	1,085,883			$	706,009			$	242,545			$	2,034,437
Royalty income		$	7,648			$	9,576			$	2,765			$	19,989

		Fiscal quarter ended September 28, 2019
(dollars in thousands)		U.S. Retail				U.S. Wholesale				International				Total
Wholesale channel		$	—			$	352,256			$	56,101			$	408,357
Direct-to-consumer		464,100				—				70,865				534,965
		$	464,100			$	352,256			$	126,966			$	943,322
Royalty income		$	4,244			$	4,038			$	910			$	9,192

		Three fiscal quarters ended September 28, 2019
(dollars in thousands)		U.S. Retail				U.S. Wholesale				International				Total
Wholesale channel		$	—			$	856,713			$	121,631			$	978,344
Direct-to-consumer		1,264,283				—				176,137				1,440,420
		$	1,264,283			$	856,713			$	297,768			$	2,418,764
Royalty income		$	10,688			$	14,051			$	2,632			$	27,371

---

Accounts Receivable from Customers and Licensees

The components of Accounts receivable, net, were as follows:

(dollars in thousands)		September 26, 2020				December 28, 2019				September 28, 2019
Trade receivables from wholesale customers, net(1)		$	255,214			$	239,059			$	277,234
Royalties receivable		8,596				6,982				9,128
Tenant allowances and other receivables		12,064				16,247				16,281
Total gross receivables		$	275,874			$	262,288			$	302,643
Less:
Wholesale accounts receivable reserves(2)		(12,643		)		(11,283		)		(9,440		)
Accounts receivable, net(1)		$	263,231			$	251,005			$	293,203

(1)	The Company reclassified $1.7 million and $1.3 million of customer support related items from Wholesale accounts receivable reserves into Trade receivables from wholesale customers, net for the periods ended December 28, 2019 and September 28, 2019, respectively.

(2)	Includes allowance for credit losses of $7.7 million, $6.4 million, and $4.6 million for the periods ended September 26, 2020, December 28, 2019, and September 28, 2019, respectively.

Contract Assets and Liabilities

The Company's contract assets are not material.

Contract Liabilities

The Company recognizes a contract liability when it has received consideration from a customer and has a future obligation to transfer goods to the customer. Total contract liabilities consisted of the following amounts:        

(dollars in thousands)	September 26, 2020				December 28, 2019				September 28, 2019
Contract liabilities - current:
Unredeemed gift cards	$	15,977			$	17,563			$	14,264
Unredeemed customer loyalty rewards	5,510				5,615				5,109
Carter's credit card - upfront bonus(1)	714				714				714
Total contract liabilities - current(2)	$	22,201			$	23,892			$	20,087

(1)	Carter's credit card - upfront bonus - the Company received an upfront signing bonus from a third-party financial institution, which will be recognized as revenue on a straight-line basis over the term of the agreement. This amount reflects the current portion of this bonus to be recognized as revenue over the next twelve months.

(2)	Included with Other current liabilities on the Company's consolidated balance sheets.

The Company has operating leases for retail stores, distribution centers, corporate offices, data centers, and certain equipment. The Company's leases generally have initial terms ranging from 1 year to 10 years, some of which may include options to extend the leases for up to 5 years, and some of which may include options to early terminate the lease.

As of September 26, 2020, the Company's finance leases were not material to the consolidated balance sheets, consolidated statements of operations, or statements of cash flows.

As a result of the COVID-19 pandemic, during the second quarter of fiscal 2020 the Company suspended rent payments under the leases for our temporarily closed stores in North America. The Company has continued to recognize expense and has established an accrual for the fixed rent payments that were not made. As of September 26, 2020, the Company accrued $31.8 million in fixed rent payments. The accrued rent is included within Accounts payable on the Company's consolidated balance sheets. As of the end of the fiscal quarter, the Company resumed making the required rent payments under these leases.

In the third quarter and for the three quarters of fiscal 2020, the Company recorded operating lease asset impairment charges totaling $1.4 million and $6.1 million, respectively, related to underperforming stores primarily as a result of decreased net revenues and cash flow projections resulting from the COVID-19 disruption and other facility and office closures. See Note 11, Fair Value Measurements, for further details on the fair value calculations for operating lease assets for the retail stores.

---

The following components of lease expense are included in Selling, general and administrative expenses on the Company's consolidated statements of operations for the third quarter and first three quarters of fiscal 2020 and 2019:

		Fiscal quarter ended								Three fiscal quarters ended
(dollars in thousands)		September 26, 2020				September 28, 2019				September 26, 2020				September 28, 2019
Operating lease cost		$	44,230			$	45,584			$	136,180			$	133,491
Variable lease cost (*)		19,635				15,492				55,139				46,692
Net lease cost		$	63,865			$	61,076			$	191,319			$	180,183

(*)	Includes operating lease asset impairment charges, and short-term leases which are immaterial.

Supplemental balance sheet information related to leases was as follows:

		Fiscal quarter ended
		September 26, 2020		September 28, 2019
Weighted average remaining operating lease term (years)		5.6		6.1
Weighted average discount rate for operating leases		3.71%		4.39%

Cash paid for amounts included in the measurement of operating lease liabilities in the third quarter and first three quarters of fiscal 2020 was $41.6 million and $139.4 million, respectively. The total cash paid reflects the contractual amounts due to be paid in cash, which includes the suspended rent payments under the leases for our temporarily closed stores. For the three fiscal quarters ended September 26, 2020, the Company deferred cash payments of $31.8 million, which are included in the statement of cash flows as part of the change in Accounts payable and other liabilities.

Cash paid for amounts included in the measurement of operating lease liabilities in the third quarter and three quarters of fiscal 2019 was $48.5 million and $143.7 million, respectively.

Non-cash transactions to recognize operating assets and liabilities for the third quarter and first three quarters of fiscal 2020 were $7.3 million and $52.5 million, respectively. Non-cash transactions to recognize operating assets and liabilities for the third quarter and first three quarters of fiscal 2019 were $41.6 million and $96.0 million, respectively.

As of September 26, 2020, the maturities of lease liabilities were as follows:

(dollars in thousands)	Operating leases
Remainder of 2020	$	48,575
2021	194,335
2022	158,594
2023	130,414
2024	105,059
2025	76,501
After 2025	128,220
Total lease payments	$	841,698
Less: Interest	(82,235		)
Present value of lease liabilities(*)	$	759,463

(*)	As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date to determine the present value of lease payments. We used the incremental borrowing rate on December 30, 2018, for operating leases that commenced prior to that date.

As of September 26, 2020, the minimum rental commitments for additional operating lease contracts that have not yet commenced, primarily for retail stores, are $11.0 million. These operating leases will commence between fiscal year 2021 and fiscal year 2023 with lease terms of 6 years to 11 years.

---

The components of Accumulated other comprehensive loss consisted of the following:

(dollars in thousands)	September 26, 2020				December 28, 2019				September 28, 2019
Cumulative foreign currency translation adjustments	$	(32,290	)		$	(26,522	)		$	(29,533	)
Pension and post-retirement obligations(*)	(9,112		)		(9,112		)		(9,375		)
Total accumulated other comprehensive loss	$	(41,402	)		$	(35,634	)		$	(38,908	)

(*)	Net of income taxes of $2.8 million, $2.8 million, and $2.9 million for the period ended September 26, 2020, December 28, 2019, and September 28, 2019, respectively.

During the first three quarters of both fiscal 2020 and fiscal 2019, no amounts were reclassified from Accumulated other comprehensive loss to the statement of operations.

The balances and changes in the carrying amount of goodwill attributable to each segment were as follows:

(dollars in thousands)	U.S. Retail				U.S. Wholesale				International				Total
Balance at December 29, 2018	$	83,934			$	74,454			$	68,713			$	227,101
Foreign currency impact	—				—				1,134				1,134
Balance at September 28, 2019	$	83,934			$	74,454			$	69,847			$	228,235
Balance at December 28, 2019	$	83,934			$	74,454			$	70,638			$	229,026
Goodwill impairment(*)	—				—				(17,742		)		(17,742		)
Foreign currency impact	—				—				(1,777		)		(1,777		)
Balance at September 26, 2020	$	83,934			$	74,454			$	51,119			$	209,507

(*)	In the first quarter of fiscal 2020, a charge of $17.7 million was recorded to reflect the impairment of the value ascribed to the goodwill in the Other International reporting unit in the International segment.

---

A summary of the carrying value of the Company's intangible assets were as follows:

			September 26, 2020												December 28, 2019
(dollars in thousands)	Weighted-average useful life		Gross amount				Accumulated amortization				Net amount				Gross amount				Accumulated amortization				Net amount
Carter's tradename	Indefinite		$	220,233			$	—			$	220,233			$	220,233			$	—			$	220,233
OshKosh tradename(1)	Indefinite		70,000				—				70,000				85,500				—				85,500
Skip Hop tradename(2)	Indefinite		15,000				—				15,000				26,000				—				26,000
Finite-life tradenames	5-20 years		3,911				1,189				2,722				3,911				1,002				2,909
Total tradenames, net			$	309,144			$	1,189			$	307,955			$	335,644			$	1,002			$	334,642
Skip Hop customer relationships	15 years		$	47,300			$	11,039			$	36,261			$	47,300			$	8,657			$	38,643
Carter's Mexico customer relationships	10 years		2,875				989				1,886				3,258				775				2,483
Total customer relationships, net			$	50,175			$	12,028			$	38,147			$	50,558			$	9,432			$	41,126

			September 28, 2019
(dollars in thousands)	Weighted-average useful life		Gross amount				Accumulated amortization				Net amount
Carter's tradename	Indefinite		$	220,233			$	—			$	220,233
OshKosh tradename	Indefinite		85,500				—				85,500
Skip Hop tradename(3)	Indefinite		26,000				—				26,000
Finite-life tradenames	5-20 years		3,911				939				2,972
Total tradenames, net			$	335,644			$	939			$	334,705
Skip Hop customer relationships	15 years		$	47,300			$	7,863			$	39,437
Carter's Mexico customer relationships	10 years		3,148				695				2,453
Total customer relationships, net			$	50,448			$	8,558			$	41,890

(1)	In the first quarter of fiscal 2020, a charge of $13.6 million, $1.6 million, and $0.3 million was recorded on our indefinite-lived OshKosh tradename asset in the U.S. Retail, U.S. Wholesale, and International segments, respectively, to reflect the impairment of the value ascribed to the indefinite-lived OshKosh tradename asset.

(2)	In the first quarter of fiscal 2020, a charge of $6.8 million, $3.7 million, and $0.5 million was recorded on our indefinite-lived Skip Hop tradename asset in the U.S. Wholesale, International, and U.S. Retail segments, respectively, to reflect the impairment of the value ascribed to the indefinite-lived Skip Hop tradename asset.

(3)	In the third quarter of fiscal 2019, a charge of $19.1 million, $10.5 million, and $1.2 million was recorded on our indefinite-lived Skip Hop tradename asset in the U.S. Wholesale, International, and U.S. Retail segments, respectively, to reflect the impairment of the value ascribed to the indefinite-lived Skip Hop tradename asset.

The carrying values of goodwill and indefinite-lived tradename assets are subject to annual impairment reviews as of the last day of each fiscal year. Between annual assessments, impairment reviews may also be triggered by any significant events or changes in circumstances affecting our business. Due to the decrease in the Company's market capitalization, lower than expected actual sales, and lower projected sales and profitability, primarily due to the impacts from the outbreak of COVID-19, the Company concluded that impairment indicators existed for the first quarter of fiscal 2020. As a result, during the first quarter of fiscal 2020, the Company conducted interim quantitative impairment assessments of 1) the goodwill ascribed to the Other International reporting unit recorded in connection with the allocation of goodwill to the newly created International segment as a result of the acquisition of Bonnie Togs in 2011 and 2) on the value of the Company's indefinite-lived OshKosh and Skip Hop tradename assets that was recorded in connection with the acquisition of OshKosh B'Gosh Inc. in July 2005 and Skip Hop Holdings, Inc. in February 2017, respectively.

The goodwill impairment assessment for the Other International reporting unit was performed in accordance with ASC 350, "Intangibles--Goodwill and Other" ("ASC 350") and compares the carrying value of the Other International reporting unit to its fair value. Consistent with prior practice, the fair value of the Other International reporting unit was determined using discounted cash flows ("income approach") and relevant data from guideline public companies ("market approach"). As a result of this assessment, a goodwill impairment charge of $17.7 million was recorded to our Other International reporting unit in the International segment during the first quarter of fiscal 2020. The goodwill impairment charge recorded on our Other International reporting unit included charges of $9.4 million, $5.2 million, and $3.1 million to Skip Hop, Carter's, and Carter's

---

Mexico goodwill, respectively. The carrying value of the Company's goodwill for the Other International reporting unit after the impairment charge and as of September 26, 2020 was approximately $11.5 million.

The OshKosh and Skip Hop indefinite-lived tradename asset assessments were performed in accordance with ASC 350 and were determined using a discounted cash flow analysis which examined the hypothetical cost savings that accrue as a result of not having to license the tradename from another owner. Based on these assessments, charges of $15.5 million and $11.0 million were recorded during the first quarter of fiscal 2020 on our indefinite-lived OshKosh and Skip Hop tradename assets, respectively. The charge recorded on our indefinite-lived OshKosh tradename asset included charges of $13.6 million, $1.6 million, and $0.3 million in the U.S. Retail, U.S. Wholesale, and International segments, respectively, to reflect the impairment of the value ascribed to the indefinite-lived OshKosh tradename asset. The charge recorded on our indefinite-lived Skip Hop tradename asset included charges of $6.8 million, $3.7 million, and $0.5 million in the U.S. Wholesale, International, and U.S. Retail segments, respectively, to reflect the impairment of the value ascribed to the indefinite-lived Skip Hop tradename asset. The carrying values of the Company's indefinite-lived OshKosh and Skip Hop tradename assets after the impairment charges and as of September 26, 2020 were $70.0 million and $15.0 million, respectively.

There were no impairments of goodwill or indefinite-lived or definite-lived intangible assets during the third quarter of fiscal 2020. Although the Company determined that no further impairment exists for the Company's goodwill or indefinite-lived or definite-lived intangible assets, these assets could be at risk for impairment should global economic conditions continue to deteriorate as a result of COVID-19.

Amortization expense for intangible assets subject to amortization was approximately $0.9 million for both third fiscal quarters ended September 26, 2020 and September 28, 2019. Amortization expense was approximately $2.8 million for each of the first three quarters of fiscal 2020 and for the first three quarters of fiscal 2019.

The estimated amortization expense for the next five fiscal years is as follows:

(dollars in thousands)	Amortization expense
2021	$	3,702
2022	$	3,702
2023	$	3,660
2024	$	3,630
2025	$	3,630

Open Market Share Repurchases

The total aggregate remaining capacity under outstanding repurchase authorizations as of September 26, 2020 was approximately $650.4 million, based on settled repurchase transactions. The authorizations have no expiration date.

The Company repurchased and retired shares in open market transactions in the following amounts for the fiscal periods indicated:

	Fiscal quarter ended								Three fiscal quarters ended
	September 26, 2020				September 28, 2019				September 26, 2020				September 28, 2019
Number of shares repurchased	—				602,043				474,684				1,607,920
Aggregate cost of shares repurchased (dollars in thousands)	$	—			$	55,021			$	45,255			$	147,464
Average price per share	$	—			$	91.39			$	95.34			$	91.71

On March 26, 2020, the Company announced that, in connection with the COVID-19 pandemic, it suspended its common stock share repurchase program. The timing and amount of any future repurchases will be determined by the Company based on its evaluation of market conditions, share price, other investment priorities, and other factors.

Dividends

In the first fiscal quarter ended March 28, 2020, the Company declared and paid cash dividends per share of $0.60. On May 1, 2020, in connection with the COVID-19 pandemic, the Company suspended its quarterly cash dividend. As a result, the

---

Company did not declare or pay cash dividends in the third fiscal quarter ended September 26, 2020. The Board of Directors will evaluate future dividend declarations based on a number of factors, including business conditions, the Company's financial performance, and other considerations. In the third fiscal quarter and three fiscal quarters ended September 28, 2019, the Company declared and paid cash dividends per share of $0.50 and $1.50, respectively.

Provisions in the Company's secured revolving credit facility have the effect of restricting the Company's ability to pay cash dividends on, or make future repurchases of, its common stock through the date the Company delivers its financial statements and associated certificates relating to the third fiscal quarter of 2021, and could have the effect of restricting the Company's ability to do so thereafter, as described in the Company's Annual Report on Form 10-K for the 2019 fiscal year ended December 28, 2019, and in Note 8, Long-Term Debt.

Long-term debt consisted of the following:

(dollars in thousands)	September 26, 2020				December 28, 2019				September 28, 2019
5.500% Senior Notes due 2025	$	500,000			$	—			$	—
5.625% Senior Notes due 2027	500,000				500,000				500,000
Total senior notes	$	1,000,000			$	500,000			$	500,000
Less unamortized issuance-related costs for senior notes	(10,914		)		(5,328		)		(5,475		)
Senior notes, net	$	989,086			$	494,672			$	494,525
Secured revolving credit facility	—				100,000				275,000
Total long-term debt, net	$	989,086			$	594,672			$	769,525

Secured Revolving Credit Facility

To improve the Company's cash position in light of the uncertainty and disruption related to COVID-19, the Company drew $639.0 million under its secured revolving credit facility in the month of March 2020, and in May 2020 repaid a portion of the outstanding borrowings with the net proceeds of a new $500 million senior notes offering, as discussed below, and cash on hand. During the third quarter of fiscal 2020, the Company repaid the remainder of its borrowings under its secured revolving credit facility with cash on hand. As of September 26, 2020, the Company had no outstanding borrowings under its secured revolving credit facility, exclusive of $7.0 million of outstanding letters of credit. As of September 26, 2020, approximately $743.0 million was available for future borrowing. All outstanding borrowings under the Company's secured revolving credit facility are classified as non-current liabilities on the Company's consolidated balance sheets due to contractual repayment terms under the credit facility.

On May 4, 2020, the Company, through its wholly owned subsidiary, The William Carter Company ("TWCC"), entered into Amendment No.2 ("Amendment") to its fourth amended and restated credit agreement. This Amendment provided for, among other things, a waiver of financial covenants through the balance of fiscal year 2020, revised covenant requirements through the third quarter of fiscal year 2021, and the ability to raise additional unsecured financing, at the Company’s discretion.

Among other things, the Amendment provides that the Consolidated Fixed Charge Coverage Ratio and Lease Adjusted Leverage Ratio covenants, in each case, as defined in the Amendment, are waived during the period from and including the second fiscal quarter of 2020 through and including the fourth fiscal quarter of 2020. Thereafter, the Lease Adjusted Leverage Ratio is set at 5.50:1.00 for the first fiscal quarter of 2021 and, during the remainder of 2021, gradually steps down to 4.00:1.00 for the fourth fiscal quarter of 2021 and, subject to the consummation of a Material Acquisition (as defined in the Amendment), thereafter. The Consolidated Fixed Charge Coverage Ratio is set at 1.25:1.00 for the first fiscal quarter of 2021 and, during the remainder of 2021 and, gradually steps back up to 1.85:1.00 for the fourth fiscal quarter of 2021 and, subject to the consummation of a Material Acquisition, thereafter.

In addition, the Amendment provides that during the period from May 4, 2020 through the date the Company delivers its financial statements and associated certificates relating to the third fiscal quarter of 2021, the Company must maintain a minimum liquidity (defined as cash-on-hand plus availability under its secured revolving credit facility) on the last day of each fiscal month of at least $700 million. Also, during this period, the availability of certain exceptions to the lien, investment, indebtedness, and restricted payment negative covenants (including those related to dividend payments and share repurchases) are limited or removed, and any incremental credit extensions and the possibility of collateral and covenant release periods are suspended.

---

Additionally, the Amendment provides that, among other things during the period from May 4, 2020 through the date the Company delivers its financial statements and associated certificates relating to the third quarter of fiscal 2021, interest rate margins applicable to the secured revolving credit facility were initially 2.125% for LIBOR rate loans (which may be adjusted based on a leverage-based pricing grid ranging from 1.125% to 2.375%) and 1.125% for base rate loans (which may be adjusted based on a leverage-based pricing grid ranging from 0.125% to 1.375%). The Amendment also provides for a commitment fee initially equal to 0.35% per annum and ranging from 0.15% per annum to 0.40% per annum, based upon a leverage-based pricing grid, which is payable quarterly in arrears with respect to the average daily unused portion of the revolving loan commitments.

Approximately $1.2 million, including both bank fees and other third party expenses, has been capitalized in connection with the amendment and is being amortized over the remaining term of the secured revolving credit facility.

The interest rate margins applicable to our secured revolving credit facility as of September 26, 2020 were 1.625% for LIBOR rate loans and 0.625% for base rate loans. There were no U.S. dollar borrowings or foreign currency borrowings outstanding on September 26, 2020.

As of September 26, 2020, the Company was in compliance with the financial and other covenants under the secured revolving credit facility.

Senior Notes

On May 11, 2020, TWCC issued $500 million principal amount of senior notes at par, bearing interest at a rate of 5.500% per annum, and maturing on May 15, 2025, all of which were outstanding as of September 26, 2020. TWCC received net proceeds from the offering of the senior notes of approximately $494.5 million, after deducting underwriting fees, which TWCC used to repay borrowings outstanding under the Company's secured revolving credit facility. Approximately $6.5 million, including both bank fees and other third party expenses, has been capitalized in connection with the issuance and is being amortized over the term of the senior notes.

Additionally, as of September 26, 2020, the Company had outstanding $500 million principal amount of senior notes at par, bearing interest at a rate of 5.625% per annum, and maturing on March 15, 2027.

The Company recorded stock-based compensation expense as follows:

	Fiscal quarter ended								Three fiscal quarters ended
(dollars in thousands)	September 26, 2020				September 28, 2019				September 26, 2020				September 28, 2019
Stock options	$	597			$	904			$	2,065			$	3,146
Restricted stock:
Time-based awards	2,449				2,288				7,798				7,034
Performance-based awards	—				299				(1,927		)		1,957
Stock awards	—				242				1,595				1,403
Total	$	3,046			$	3,733			$	9,531			$	13,540

The Company recognizes compensation cost ratably over the applicable performance periods based on the estimated probability of achievement of its performance targets at the end of each period. During the first quarter of fiscal 2020, the achievement of performance target estimates was revised resulting in a $2.8 million reversal of previously recognized stock-based compensation expense.

As of September 26, 2020, the Company had gross unrecognized income tax benefits of approximately $13.4 million, of which $11.5 million, if ultimately recognized, may affect the Company's effective income tax rate in the periods settled. The Company has recorded tax positions for which the ultimate deductibility is more likely than not, but for which there is uncertainty about the timing of such deductions.

Included in the reserves for unrecognized tax benefits at September 26, 2020 is approximately $2.7 million of reserves for which the statute of limitations is expected to expire within the next 12 months. If these tax benefits are ultimately recognized,

---

such recognition, net of federal income taxes, may affect the annual effective income tax rate for fiscal 2020 or fiscal 2021 along with the effective income tax rate in the quarter in which the benefits are recognized.

The Company recognizes interest related to unrecognized tax benefits as a component of interest expense and recognizes penalties related to unrecognized income tax benefits as a component of income tax expense. During the third fiscal quarter ended September 26, 2020 and September 28, 2019, interest expense on uncertain tax positions was not material. Interest expense recorded on uncertain tax positions was $0.6 million and $0.7 million for the first three quarters of fiscal 2020 and the first three quarters of fiscal 2019, respectively. The Company had approximately $2.9 million, $2.3 million, and $2.5 million of interest accrued on uncertain tax positions as of September 26, 2020, December 28, 2019, and September 28, 2019, respectively.

The Company early adopted the provisions of ASU 2019-12 in the first quarter of 2020 in order to simplify its income tax accounting disclosures during 2020 as a result of incurring an operating loss. The Company retrospectively adopted the provision related to the classification of taxes partially based on income and has determined that the adoption of this standard did not have a material impact on its prior period financial statements. The provisions related to intra period tax allocation and interim recognition of enactment of tax laws are being adopted on a prospective basis.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act, ("CARES Act") was signed into law. This law includes several taxpayer favorable provisions that may impact the Company, including an employee retention credit, relaxed interest expense limitations, a carryback of net operating losses, accelerated depreciation on certain store build out costs, and the deferral of employer FICA taxes. It is likely that this act will reduce the Company’s cash requirement for taxes over the balance of fiscal 2020.

Investments

The Company invests in marketable securities, principally equity-based mutual funds, to mitigate the risk associated with the investment return on employee deferrals of compensation. All of the marketable securities are included in Other assets on the accompanying consolidated balance sheets, and their aggregate fair values were approximately $18.9 million, $19.7 million, and $18.2 million at September 26, 2020, December 28, 2019, and September 28, 2019, respectively. These investments are classified as Level 1 within the fair value hierarchy. Gains on the investments in marketable securities were $2.5 million and $0.6 million for the third fiscal quarter and three fiscal quarters ended September 26, 2020, respectively. Gains on the investments in marketable securities were $0.9 million and $2.5 million for the third fiscal quarter and three fiscal quarters ended September 28, 2019, respectively. These amounts are included in Other (income) expense, net on the Company's consolidated statement of operations.

Borrowings

As of September 26, 2020, the Company had no outstanding borrowings under its secured revolving credit facility.

The fair value of the Company's senior notes at September 26, 2020 was approximately $1.05 billion. The fair value of these senior notes with a notional value and carrying value (gross of debt cost) of $1.00 billion was estimated using a quoted price as provided in the secondary market, which considers the Company's credit risk and market related conditions, and is therefore within Level 2 of the fair value hierarchy.

Impairment of long-lived tangible assets

Long-lived assets, which for the Company primarily consist of operating lease assets and store assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. The asset group is defined as the lowest level for which identifiable cash flows are available and is largely independent of cash flows of other groups of assets, which for our retail stores, is at the store level. For impaired assets, the Company recognized a loss equal to the difference between the carrying amount of the asset or asset group and its estimated fair value, which is recorded in Selling, general and administrative expenses on the Company's consolidated statements of operations. For operating lease assets, the Company determines the fair value of the assets by discounting the estimated market rental rates over the remaining term of the lease. These estimates can be affected by factors such as future store results, real estate demand, store closure plans, property specific discount rates, and economic conditions that can be difficult to predict. These fair value measurements qualify as level 3 measurements in the fair value hierarchy.

The impact of the COVID-19 pandemic resulted in a qualitative indication of impairment related to our store long-lived assets. During the third quarter and first three quarters of fiscal 2020, the Company recorded impairment charges of operating lease

---

assets and other long-lived assets for our underperforming retail stores of $1.7 million and $6.7 million, respectively. The impairment charges were recorded in Selling, general and administrative expenses on the Company's consolidated statements of operations.

Goodwill and Intangible Assets

Goodwill and indefinite-lived intangible assets are tested annually, or if a triggering event occurs that indicates an impairment loss may have been incurred, using fair value measurements with unobservable inputs (Level 3).

Due to the decrease in the Company's market capitalization, lower than expected actual sales, and lower projected sales and profitability due to the impacts from the outbreak of COVID-19, the Company concluded that impairment indicators existed for the first quarter of fiscal 2020. As a result, during the first quarter of fiscal 2020, the Company conducted interim quantitative impairment assessments on goodwill ascribed to the Other International reporting unit and on the value of the Company's indefinite-lived OshKosh and Skip Hop tradename assets that was recorded in connection with the acquisition of OshKosh B'Gosh, Inc. in July 2005 and Skip Hop Holdings, Inc. in February 2017, respectively.

Based on these assessments, a goodwill impairment charge of $17.7 million was recorded during the first quarter of fiscal 2020 to our Other International reporting unit in the International segment and charges of $15.5 million and $11.0 million were recorded on our indefinite-lived OshKosh and Skip Hop tradename assets, respectively. The charge recorded on our indefinite-lived OshKosh tradename asset included charges of $13.6 million, $1.6 million, and $0.3 million in the U.S. Retail, U.S. Wholesale, and International segments, respectively, to reflect the impairment of the value ascribed to the indefinite-lived OshKosh tradename asset. The charge recorded on our indefinite-lived Skip Hop tradename asset included charges of $6.8 million, $3.7 million, and $0.5 million in the U.S. Wholesale, International, and U.S. Retail segments, respectively, to reflect the impairment of the value ascribed to the indefinite-lived Skip Hop tradename asset. The carrying value of the Company's goodwill for the Other International reporting unit after the impairment charge and as of September 26, 2020 was approximately $11.5 million. The carrying values of the Company's indefinite-lived OshKosh and Skip Hop tradename asset after the impairment charge and as of September 26, 2020 were $70.0 million and $15.0 million, respectively. See Note 6, Goodwill and Intangibles, for further details on the impairment charges and valuation methodologies.

---

Other current liabilities that exceeded five percent of total current liabilities, at the end of any comparable period, were as follows:

(dollars in thousands)	September 26, 2020				December 28, 2019				September 28, 2019
Income taxes payable	$	18,744			$	23,269			$	26,909

There are no Other long-term liabilities that exceeded five percent of total liabilities, at the end of any comparable period.

The Company is subject to various claims and pending or threatened lawsuits in the normal course of business. The Company is not currently a party to any legal proceedings that it believes would have a material adverse impact on its financial position, results of operations, or cash flows.

The Company's contractual obligations and commitments include obligations associated with leases, the secured revolving credit agreement, senior notes, employee benefit plans, and facility consolidations/closures as disclosed in Note 16, Organizational Restructuring and Office Consolidation, to the consolidated financial statements.

---

The tables below present certain information for our reportable segments and unallocated corporate expenses for the periods indicated:

	Fiscal quarter ended														Three fiscal quarters ended
(dollars in thousands)	September 26, 2020				% of Total Net Sales			September 28, 2019				% of Total Net Sales			September 26, 2020				% of Total Net Sales			September 28, 2019				% of Total Net Sales
Net sales:
U.S. Retail	$	449,150			51.9	%		$	464,100			49.2	%		$	1,085,883			53.4	%		$	1,264,283			52.3	%
U.S. Wholesale	302,135				34.9	%		352,256				37.3	%		706,009				34.7	%		856,713				35.4	%
International	113,795				13.2	%		126,966				13.5	%		242,545				11.9	%		297,768				12.3	%
Total net sales	$	865,080			100.0	%		$	943,322			100.0	%		$	2,034,437			100.0	%		$	2,418,764			100.0	%
Operating income (loss):					% of Segment Net Sales							% of Segment Net Sales							% of Segment Net Sales							% of Segment Net Sales
U.S. Retail	$	47,559			10.6	%		$	49,472			10.7	%		$	38,902			3.6	%		$	124,567			9.9	%
U.S. Wholesale	65,718				21.8	%		54,391				15.4	%		89,141				12.6	%		145,181				16.9	%
International	17,400				15.3	%		6,136				4.8	%		(15,819		)		(6.5	)%		15,351				5.2	%
Corporate expenses(*)	(17,150		)		n/a			(26,129		)		n/a			(56,221		)		n/a			(75,994		)		n/a
Total operating income	$	113,527			13.1	%		$	83,870			8.9	%		$	56,003			2.8	%		$	209,105			8.6	%

(*)	Corporate expenses include expenses related to incentive compensation, stock-based compensation, executive management, severance and relocation, finance, office occupancy, information technology, certain legal fees, consulting fees, and audit fees.

(dollars in millions)	Fiscal quarter ended September 26, 2020												Three fiscal quarters ended September 26, 2020
Charges:	U.S. Retail				U.S. Wholesale				International				U.S. Retail				U.S. Wholesale				International
Organizational restructuring(1)	$	0.3			$	0.2			$	0.3			$	3.4			$	1.5			$	1.9
Goodwill impairment	—				—				—				—				—				17.7
Skip Hop tradename impairment charge	—				—				—				0.5				6.8				3.7
OshKosh tradename impairment charge	—				—				—				13.6				1.6				0.3
Incremental costs associated with COVID-19 pandemic	1.6				1.4				0.3				8.3				8.5				2.0
Retail store operating leases and other long-lived asset impairments, net of gain(2)	1.5				—				—				6.3				—				0.2
Total charges	$	3.4			$	1.6			$	0.6			$	32.1			$	18.4			$	25.8

(1)	The third fiscal quarter ended September 26, 2020, the three fiscal quarters ended September 26, 2020, and the three fiscal quarters ended September 28, 2019 also include corporate charges related to organizational restructuring of $0.4 million, $2.0 million, and $1.6 million, respectively.

(2)	Impairments include an immaterial gain on the remeasurement of retail store operating leases.

(dollars in millions)	Fiscal quarter ended September 28, 2019												Three fiscal quarters ended September 28, 2019
Charges:	U.S. Retail				U.S. Wholesale				International				U.S. Retail				U.S. Wholesale				International
Benefit related to sale of inventory previously reserved in China	$	—			$	—			$	—			$	—			$	—			$	(2.1	)
Reversal of store restructuring costs previously recorded during the third quarter of fiscal 2017	—				—				—				(0.7		)		—				—
Skip Hop tradename impairment charge	1.2				19.1				10.5				1.2				19.1				10.5
Total charges	$	1.2			$	19.1			$	10.5			$	0.5			$	19.1			$	8.4

---

In the first quarter of fiscal 2020, the Company announced several organizational restructuring initiatives which included a reorganization of staffing models across multiple functions to drive labor savings and increase efficiencies as well as the consolidation of certain functions into our corporate headquarters in Atlanta, Georgia. In conjunction with these initiatives, the Company recorded the following charges in selling, general and administrative expenses:

	Fiscal quarter ended				Three fiscal quarters ended
(dollars in thousands)	September 26, 2020				September 26, 2020
Severance and other termination benefits	$	181			$	4,423
Lease exit costs	780				2,495
Relocation and recruiting	253				1,755
Other closure costs	—				80
Total	$	1,214			$	8,753

As of September 26, 2020, there was approximately $1.3 million in reserves related to severance and other termination benefits expected to be paid out by the end of the year included in Other current liabilities in the Company's consolidated balance sheets. The Company expects to incur additional restructuring-related charges of approximately $1.0 million to $2.0 million through fiscal 2021. These charges primarily relate to accelerated depreciation, lease exit costs, severance, and relocation and recruiting costs.

---

---

•	As of September 26, 2020, we had 1,095 stores out of 1,104 stores open in North America; stores were opened subject to safety considerations resulting from the progression of the novel coronavirus and related laws and regulations put in place by state and local governments.

•

The Company repaid all of its borrowings under its secured revolving credit facility with cash on hand. As of September 26, 2020, the Company had no outstanding borrowings under its secured revolving credit facility, exclusive of $7.0 million of outstanding letters of credit, and had approximately $1.57 billion in total liquidity, including $831.2 million cash on hand and $743.0 million available for future borrowing under our secured revolving credit facility.

•	The Company reinstated previously reduced salaries for executives and employees, and Board of Directors' fees to pre-reduction levels.

•	The Company resumed its strategic investments in information technology, eCommerce, marketing, and retail store initiatives, which had been paused to create financial flexibility as a result of the COVID-19 pandemic.

•	Consolidated net sales decreased $78.2 million, or 8.3%, to $865.1 million in the third quarter of fiscal 2020.

◦	The decrease in sales to certain of our wholesale customers, decreased retail store traffic, and decreased back-to-school sales as a result of the COVID-19 pandemic negatively affected our financial results for the third quarter of fiscal 2020.

◦	Our eCommerce delivered strong growth in the third quarter of fiscal 2020, reflecting higher online demand, enhanced marketing efforts, the relaunch of our enhanced websites in the second-half of fiscal 2019, and the launch of our website in Mexico in late fiscal 2019.

◦	We also delivered growth in our omni-channel programs during the third quarter of fiscal 2020 due to increased investments and enhancements, including expanding our curbside pickup program and direct-from-store shipment program.

•

Gross profit decreased $18.5 million, or 4.6%, to $383.7 million in the third quarter of fiscal 2020. Gross margin increased 180 basis points ("bps") to 44.4% in the third quarter of fiscal 2020, primarily due to an increase in eCommerce average selling prices as a result of decreased promotions, decreased inventory provisions, and channel mix, partially offset by deleverage of in-bound transportation costs (which includes costs associated with shipping product to our distribution centers for further outbound distribution to our stores and customers).

•

Selling, general and administrative ("SG&A") expenses as a percentage of total net sales ("SG&A rate") increased 80 bps to 32.3% for the third quarter of fiscal 2020. The increase in the SG&A rate was primarily due to decreased consolidated net sales as a result of business disruptions related to the COVID-19 pandemic, the incremental COVID-19 related charges as discussed below, increased eCommerce costs due to an increase in eCommerce demand, increased bad debt expense, impairment charges on operating lease assets, and organizational restructuring charges, all partially offset by reductions in performance-based compensation expense, decreased marketing costs due to a reduction in spend and the shift to eCommerce demand, and other reductions in spending.

◦	COVID-19 related SG&A expenses in the third quarter of fiscal 2020 were $3.3 million, which primarily included costs associated with additional protective equipment and cleaning supplies of $2.5 million.

---

•	Operating income increased $29.7 million, or 35.4%, to $113.5 million in the third quarter of fiscal 2020, primarily due to an indefinite-lived tradename asset impairment charge of $30.8 million in the third quarter of fiscal 2019 that did not re-occur in the third quarter of fiscal 2020, and the factors discussed above.

•	Net income increased $21.0 million, or 34.8%, to $81.2 million in the third quarter of fiscal 2020, primarily due to the factors discussed above, partially offset by a $6.4 million increase in interest expense as a result of increased borrowings, and increased income taxes.

•	Diluted net income per common share increased 38.1% to $1.85 in the third quarter of fiscal 2020.

(*)	Effective tax rate is calculated by dividing the provision for income taxes by income before income taxes.

---

---

---

---

(*)	Effective tax rate is calculated by dividing the provision for income taxes by income before income taxes.

---

---

---

---

---

---

---

---

---

---

(1)	All of the shares purchased during the current quarter represent shares of our common stock surrendered by our employees to satisfy required tax withholding upon the vesting of restricted stock awards.

(2)	In the first quarter of fiscal 2020, the Company announced, that in connection with the COVID-19 pandemic, it suspended its common stock share repurchase program. Refer to the open market repurchases as disclosed in Note 7, Common Stock, to the consolidated financial statements.

(3)	Under share repurchase authorizations approved by our Board of Directors.

---

---