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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
     For the quarterly period ended April 3, 2021
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: 001-31829
CARTER’S, INC.
(Exact name of Registrant as specified in its charter)    
Delaware
13-3912933
(State or other jurisdiction of(I.R.S. Employer Identification No.)
incorporation or organization)

Phipps Tower,
3438 Peachtree Road NE, Suite 1800
Atlanta, Georgia 30326
(Address of principal executive offices, including zip code)
(678) 791-1000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common stock, par value $0.01 per shareCRINew York Stock Exchange
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 ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ☐



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer x Accelerated filer ☐
Non-accelerated filer ☐ Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes No x
As of April 23, 2021, there were 43,956,877 shares of the registrant’s common stock outstanding.






CARTER’S, INC.
INDEX
Page
Unaudited Condensed Consolidated Balance Sheets as of April 3, 2021, January 2, 2021 and March 28, 2020
Unaudited Condensed Consolidated Statements of Operations for the fiscal quarter ended April 3, 2021 and March 28, 2020
Unaudited Condensed Consolidated Statements of Comprehensive Income for the fiscal quarter ended April 3, 2021 and March 28, 2020
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the fiscal quarter ended April 3, 2021 and March 28, 2020
Unaudited Condensed Consolidated Statements of Cash Flows for the fiscal quarter ended April 3, 2021 and March 28, 2020
Part II. Other Information
Certifications




PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CARTER’S, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)
(unaudited)
April 3, 2021January 2, 2021March 28, 2020
ASSETS
Current assets:
Cash and cash equivalents$1,053,690 $1,102,323 $759,100 
Accounts receivable, net of allowance for credit losses of $6,695, $5,940, and $10,620, respectively
240,212 186,512 221,884 
Finished goods inventories, net of inventory reserves of $15,581, $14,206, and $35,597, respectively
560,683 599,262 565,932 
Prepaid expenses and other current assets63,290 57,927 43,349 
Total current assets1,917,875 1,946,024 1,590,265 
Property, plant, and equipment, net of accumulated depreciation of $557,608, $583,980, and $542,158, respectively
248,799 262,345 303,919 
Operating lease assets559,391 593,008 673,301 
Tradenames, net307,830 307,893 308,080 
Goodwill212,271 211,776 207,720 
Customer relationships, net36,596 37,510 39,785 
Other assets27,711 34,024 30,435 
Total assets$3,310,473 $3,392,580 $3,153,505 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$334,831 $472,140 $187,199 
Current operating lease liabilities172,117 185,152 161,341 
Other current liabilities149,911 135,240 79,135 
Total current liabilities656,859 792,532 427,675 
Long-term debt, net989,980 989,530 1,238,822 
Deferred income taxes56,990 52,770 65,260 
Long-term operating lease liabilities517,875 554,497 647,334 
Other long-term liabilities59,160 65,218 58,412 
Total liabilities$2,280,864 $2,454,547 $2,437,503 
Commitments and contingencies - Note 14
Stockholders’ equity:
Preferred stock; par value $0.01 per share;100,000 shares authorized; none issued or outstanding at April 3, 2021, January 2, 2021, and March 28, 2020
$ $ $ 
Common stock, voting; par value $0.01 per share; 150,000,000 shares authorized; 43,947,659, 43,780,075 and 43,610,725 shares issued and outstanding at April 3, 2021, January 2, 2021, and March 28, 2020, respectively
440 438 436 
Additional paid-in capital21,904 17,752  
Accumulated other comprehensive loss(31,534)(32,760)(48,626)
Retained earnings1,038,799 952,603 764,192 
Total stockholders’ equity1,029,609 938,033 716,002 
Total liabilities and stockholders’ equity$3,310,473 $3,392,580 $3,153,505 
See accompanying notes to the unaudited condensed consolidated financial statements.
1


CARTER’S, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
(unaudited)
Fiscal quarter ended
April 3, 2021March 28, 2020
Net sales$787,361 $654,473 
Cost of goods sold401,731 403,373 
Adverse purchase commitments (inventory and raw materials), net(6,330)22,837 
Gross profit391,960 228,263 
Royalty income, net7,463 7,338 
Selling, general, and administrative expenses271,927 269,837 
Goodwill impairment 17,742 
Intangible asset impairment 26,500 
Operating income (loss) 127,496 (78,478)
Interest expense15,348 8,864 
Interest income(225)(464)
Other (income) expense, net(917)4,818 
Income (loss) before income taxes113,290 (91,696)
Income tax provision (benefit) 27,094 (13,002)
Net income (loss) $86,196 $(78,694)
Basic net income (loss) per common share$1.96 $(1.82)
Diluted net income (loss) per common share$1.96 $(1.82)
Dividend declared and paid per common share$ $0.60 
See accompanying notes to the unaudited condensed consolidated financial statements.
2


CARTER’S, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(dollars in thousands)
(unaudited)
Fiscal quarter ended
April 3, 2021March 28, 2020
Net income (loss)$86,196 $(78,694)
Other comprehensive income (loss):
Foreign currency translation adjustments1,226 (12,992)
Comprehensive income (loss)$87,422 $(91,686)
See accompanying notes to the unaudited condensed consolidated financial statements.
3


CARTER’S, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(amounts in thousands, except share amounts)
(unaudited)
Common stock - shares Common stock - $
Additional paid-in capital
Accumulated other comprehensive loss
Retained earnings
Total stockholders’ equity
Balance at December 28, 201943,963,103 $440 $ $(35,634)$915,324 $880,130 
Exercise of stock options33,158  1,840   1,840 
Withholdings from vesting
of restricted stock
(43,611) (4,712)  (4,712)
Restricted stock activity132,759 1 (1)   
Stock-based compensation expense—  1,945   1,945 
Repurchase of common stock(474,684)(5)928  (46,178)(45,255)
Cash dividends declared and paid—    (26,260)(26,260)
Comprehensive loss—   (12,992)(78,694)(91,686)
Balance at March 28, 202043,610,725 $436 $ $(48,626)$764,192 $716,002 
Common stock - sharesCommon stock - $
Additional paid-in capital
Accumulated other comprehensive loss
Retained earnings
Total stockholders’ equity
Balance at January 2, 202143,780,075 $438 $17,752 $(32,760)$952,603 $938,033 
Exercise of stock options12,065  811   811 
Withholdings from vesting
of restricted stock
(37,444) (3,588)  (3,588)
Restricted stock activity192,963 2 (2)   
Stock-based compensation expense—  6,931   6,931 
Comprehensive income—   1,226 86,196 87,422 
Balance at April 3, 202143,947,659 $440 $21,904 $(31,534)$1,038,799 $1,029,609 
See accompanying notes to the unaudited condensed consolidated financial statements.
4


CARTER’S, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
Fiscal quarter ended
April 3, 2021March 28, 2020
Cash flows from operating activities:
Net income (loss)$86,196 $(78,694)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation of property, plant, and equipment23,183 22,433 
Amortization of intangible assets932 935 
Provisions for excess and obsolete inventory, net1,364 26,596 
Goodwill impairment 17,742 
Intangible asset impairments 26,500 
Other asset impairments and (gain) loss on disposal of property, plant and equipment, net of recoveries(25)2,050 
Amortization of debt issuance costs738 353 
Stock-based compensation expense6,931 1,945 
Unrealized foreign currency exchange loss, net49 3,856 
Provisions for doubtful accounts receivable from customers766 4,270 
Deferred income tax (benefit)4,365 (10,053)
Effect of changes in operating assets and liabilities:
Accounts receivable(54,484)22,926 
Finished goods inventories37,812 (5,634)
Prepaid expenses and other assets(5,186)7,254 
Accounts payable and other liabilities(142,171)(56,781)
Net cash used in operating activities$(39,530)$(14,302)
Cash flows from investing activities:
Capital expenditures$(11,665)$(8,068)
Proceeds from sale of investments5,000  
Net cash used in investing activities$(6,665)$(8,068)
Cash flows from financing activities:
Borrowings under secured revolving credit facility$ $644,000 
Repurchases of common stock (45,255)
Dividends paid (26,260)
Withholdings from vesting of restricted stock(3,588)(4,712)
Proceeds from exercises of stock options811 1,840 
Net cash (used in) provided by financing activities$(2,777)$569,613 
Net effect of exchange rate changes on cash and cash equivalents339 (2,454)
Net (decrease) increase in cash and cash equivalents$(48,633)$544,789 
Cash and cash equivalents, beginning of period1,102,323 214,311 
Cash and cash equivalents, end of period$1,053,690 $759,100 
See accompanying notes to the unaudited condensed consolidated financial statements.
5


CARTER’S, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 1 – THE COMPANY
Carter’s, Inc. and its wholly owned subsidiaries (collectively, the “Company”) design, source, and market branded childrenswear under the Carter’s, OshKosh, Skip Hop, Child of Mine, Just One You, Simple Joys, Carter’s little baby basics, 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.
NOTE 2 – BASIS OF PRESENTATION
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 April 3, 2021 are not necessarily indicative of the results that may be expected for the current fiscal year ending January 1, 2022.
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 January 2, 2021 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 $29 million for the three months ended March 28, 2020. The accompanying consolidated statement of cash flows appropriately reflect the corrected presentation of these non-cash activities. In addition, the Company has reclassified 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 three months ended March 31, 2020 have been presented in this Form 10-Q. We will continue to provide supplemental noncash cash flow disclosure information in the notes to the financial statements.
COVID-19
The Company is closely monitoring the effects of the ongoing coronavirus (“COVID-19”) pandemic and its impact on our business. Additionally, the Company 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 April 3, 2021 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 first
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
quarter of fiscal 2021, the Company recorded a benefit in fabric purchase commitment charges of $6.3 million related to better than expected sales of inventory and utilization of fabric that were reserved for in the first quarter of fiscal 2020 due to COVID-19 related disruptions. As of April 3, 2021, the Company had an outstanding reserve of $6.3 million for adverse inventory and fabric purchase commitments.
Additional COVID-19 related charges in the first quarter of fiscal 2021 were $2.1 million and were primarily related to the costs associated with additional protective equipment and cleaning supplies.
Accounting Policies
The accounting policies the Company follows are set forth in its most recently filed Annual Report on Form 10-K. There have been no material changes to these accounting policies.
NOTE 3 - REVENUE RECOGNITION
The Company’s revenues are earned from contracts or arrangements with retail and wholesale customers and licensees. Contracts include written agreements as well as arrangements that are implied by customary practices or law.
Disaggregation of Revenue
The Company sells its products directly to consumers (“direct-to-consumer”) and to other retail companies and partners that subsequently sell the products directly to their own retail customers. The Company also earns royalties from certain of its licensees. Disaggregated revenues from these sources for the first quarter of fiscal 2021 and 2020 were as follows:
Fiscal quarter ended April 3, 2021
(dollars in thousands)U.S. RetailU.S. WholesaleInternationalTotal
Wholesale channel$ $283,377 $42,792 $326,169 
Direct-to-consumer407,067  54,125 461,192 
$407,067 $283,377 $96,917 $787,361 
Royalty income$3,070 $3,775 $618 $7,463 
Fiscal quarter ended March 28, 2020
(dollars in thousands)U.S. RetailU.S. WholesaleInternationalTotal
Wholesale channel$ $252,130 $38,730 $290,860 
Direct-to-consumer320,717  42,896 363,613 
$320,717 $252,130 $81,626 $654,473 
Royalty income$2,494 $4,083 $761 $7,338 
Accounts Receivable from Customers and Licensees
The components of Accounts receivable, net, were as follows:
(dollars in thousands)April 3, 2021January 2, 2021March 28, 2020
Trade receivables from wholesale customers, net(1)
$234,643 $180,830 $219,140 
Royalties receivable7,090 5,733 6,428 
Tenant allowances and other receivables11,664 12,315 11,968 
Total gross receivables$253,397 $198,878 $237,536 
Less: Wholesale accounts receivable reserves(1)(2)
(13,185)(12,366)(15,652)
Accounts receivable, net$240,212 $186,512 $221,884 
(1)The Company reclassified $2.0 million of customer support related items from Wholesale accounts receivable reserves into Trade receivables from wholesale customers, net for the period ended March 28, 2020.
(2)Includes allowance for credit losses of $6.7 million, $5.9 million, and $10.6 million for the periods ended April 3, 2021, January 2, 2021, and March 28, 2020, respectively.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
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)April 3, 2021January 2, 2021March 28, 2020
Contract liabilities - current:
Unredeemed gift cards$17,426 $18,300 $16,758 
Unredeemed customer loyalty rewards5,893 5,241 4,503 
Carter’s credit card - upfront bonus(1)
714 714 714 
Total contract liabilities - current(2)
$24,033 $24,255 $21,975 
Contract liabilities - non-current$2,679 $2,857 $3,393 
Total contract liabilities$26,712 $27,112 $25,368 
(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 sheet.
NOTE 4 - LEASES
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 April 3, 2021, the Company’s finance leases were not material to the consolidated balance sheets, consolidated statements of operations, or statements of cash flows.
The following components of lease expense are included in Selling, general and administrative expenses on the Company’s consolidated statements of operations for the first quarter of fiscal 2021 and 2020:
Fiscal quarter ended
(dollars in thousands)April 3, 2021March 28, 2020
Operating lease cost$42,698 $46,423 
Variable lease cost(*)
16,398 16,285 
Net lease cost$59,096 $62,708 
(*)Includes short-term leases, which are not material.
Supplemental balance sheet information related to leases was as follows:
Fiscal quarter ended
April 3, 2021March 28, 2020
Weighted average remaining operating lease term (years)5.35.9
Weighted average discount rate for operating leases3.29%4.29%
Cash paid for amounts included in the measurement of operating lease liabilities in the first quarter of fiscal 2021 and 2020 were $57.9 million and $50.2 million, respectively.
Non-cash transactions to recognize operating assets and liabilities for new leases in the first quarter of fiscal 2021 and 2020 were $3.3 million and $29.4 million, respectively.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
As of April 3, 2021, the maturities of lease liabilities were as follows:
(dollars in thousands)Operating leases
Remainder of 2021$149,606 
2022159,141 
2023130,852 
2024104,942 
202576,530 
202654,094 
After 202677,693 
Total lease payments$752,858 
Less: Interest(62,866)
Present value of lease liabilities(*)
$689,992 
(*)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 April 3, 2021, the minimum rental commitments for additional operating lease contracts that have not yet commenced, primarily for retail stores, are $6.9 million. These operating leases will commence between fiscal year 2021 and fiscal year 2023 with lease terms of 7 years to 9 years.
NOTE 5 – ACCUMULATED OTHER COMPREHENSIVE LOSS
The components of Accumulated other comprehensive loss consisted of the following:
(dollars in thousands)April 3, 2021January 2, 2021March 28, 2020
Cumulative foreign currency translation adjustments$(20,081)$(21,307)$(39,514)
Pension and post-retirement obligations(*)
(11,453)(11,453)(9,112)
Total accumulated other comprehensive loss$(31,534)$(32,760)$(48,626)
(*)Net of income taxes of $3.5 million, $3.5 million, and $2.8 million, for the periods ended April 3, 2021, January 2, 2021, and March 28, 2020, respectively.
During the first quarter of both fiscal 2021 and fiscal 2020, no amounts were reclassified from Accumulated other comprehensive loss to the statement of operations.
NOTE 6 – GOODWILL AND INTANGIBLE ASSETS
The balances and changes in the carrying amount of goodwill attributable to each segment were as follows:
(dollars in thousands)U.S. RetailU.S. WholesaleInternationalTotal
Balance at December 28, 2019$83,934 $74,454 $70,638 $229,026 
Goodwill impairment(1)
  (17,742)(17,742)
Foreign currency impact  (3,564)(3,564)
Balance at March 28, 2020(2)
$83,934 $74,454 $49,332 $207,720 
Balance at January 2, 2021(2)
$83,934 $74,454 $53,388 $211,776 
Foreign currency impact  495 495 
Balance at April 3, 2021(2)
$83,934 $74,454 $53,883 $212,271 
(1)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.
(2)Goodwill balance for the International reporting unit is net of accumulated impairment losses of $17.7 million.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
A summary of the carrying value of the Company’s intangible assets were as follows:
April 3, 2021January 2, 2021
(dollars in thousands)Weighted-average useful lifeGross amountAccumulated amortizationNet amountGross amountAccumulated amortizationNet amount
Carter’s tradename
Indefinite$220,233 $— $220,233 $220,233 $— $220,233 
OshKosh tradename
Indefinite70,000 — 70,000 70,000 — 70,000 
Skip Hop tradename
Indefinite15,000 — 15,000 15,000 — 15,000 
Finite-life tradenames
5 -20 years
3,911 1,314 2,597 3,911 1,251 2,660 
Total tradenames, net$309,144 $1,314 $307,830 $309,144 $1,251 $307,893 
Skip Hop customer relationships15 years$47,300 $12,628 $34,672 $47,300 $11,834 $35,466 
Carter’s Mexico customer relationships10 years3,063 1,139 1,924 3,108 1,064 2,044 
Total customer relationships, net$50,363 $13,767 $36,596 $50,408 $12,898 $37,510 
March 28, 2020
(dollars in thousands)Weighted-average useful lifeGross amountAccumulated amortizationNet amount
Carter’s tradename
Indefinite$220,233 $— $220,233 
OshKosh tradename(1)
Indefinite70,000 — 70,000 
Skip Hop tradename(2)
Indefinite15,000 — 15,000 
Finite-life tradenames
 5 - 20 years
3,911 1,064 2,847 
Total tradenames, net$309,144 $1,064 $308,080 
Skip Hop customer relationships15 years$47,300 $9,451 $37,849 
Carter’s Mexico customer relationships10 years2,790 854 1,936 
Total customer relationships, net$50,090 $10,305 $39,785 
(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.
Amortization expense for intangible assets subject to amortization was approximately $0.9 million for both first fiscal quarters ended April 3, 2021 and March 28, 2020.
The estimated amortization expense for the next five fiscal years is as follows:
(dollars in thousands)Amortization expense
Remainder of 2021$2,797 
2022$3,730 
2023$3,688 
2024$3,658 
2025$3,658 
2026$3,658 
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 7 – COMMON STOCK
Open Market Share Repurchases
The Company repurchased and retired shares in open market transactions in the following amounts for the fiscal periods indicated:
Fiscal quarter ended
April 3, 2021March 28, 2020
Number of shares repurchased 474,684 
Aggregate cost of shares repurchased (dollars in thousands)$ $45,255 
Average price per share$ $95.34 
The total aggregate remaining capacity under outstanding repurchase authorizations as of April 3, 2021 was approximately $650.4 million, based on settled repurchase transactions. The share repurchase authorizations have no expiration date.
As previously announced, the Company, in connection with the COVID-19 pandemic, suspended its common stock share repurchase program at the end of the first quarter in fiscal 2020. While the Company may elect to resume purchases at any time, 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
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 for the first quarter of fiscal 2021. In the first fiscal quarter ended March 28, 2020, the Company declared and paid cash dividends per share of $0.60.
On April 27, 2021, in connection with the announcement of the amendment on the Company’s revolving credit facility, the Company’s Board of Directors authorized a quarterly cash dividend payment of $0.40 per common share, payable on May 28, 2021, to shareholders of record at the close of business on May 12, 2021. The Board of Directors will evaluate future dividend declarations based on a number of factors, including restrictions under the Company’s revolving credit facility, business conditions, the Company’s financial performance, and other considerations.
Provisions in the Company’s secured revolving credit facility could have the effect of restricting the Company’s ability to pay cash dividends on, or make future repurchases of, its common stock, as further described in Note 8, Long-term Debt, to the consolidated financial statements.
NOTE 8 – LONG-TERM DEBT
Long-term debt consisted of the following:
(dollars in thousands)April 3, 2021January 2, 2021March 28, 2020
$500 million 5.500% Senior Notes due May 15, 2025
$500,000 $500,000 $ 
$500 million 5.625% Senior Notes due March 15, 2027
500,000 500,000 500,000 
Total senior notes$1,000,000 $1,000,000 $500,000 
Less unamortized issuance-related costs for senior notes(10,020)(10,470)(5,178)
      Senior notes, net$989,980 $989,530 $494,822 
Secured revolving credit facility  744,000 
Total long-term debt, net
$989,980 $989,530 $1,238,822 
Secured Revolving Credit Facility
As of April 3, 2021, the Company had no outstanding borrowings under its secured revolving credit facility, exclusive of $5.0 million of outstanding letters of credit. As of April 3, 2021, approximately $745.0 million remained 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 sheet because of the contractual repayment terms under the credit facility.
As of April 3, 2021, the interest rate margins applicable to the secured revolving credit facility were 1.625% for LIBOR (London Interbank Offered Rate) rate loans and 0.625% for base rate loans.
11


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
In the first quarter of fiscal 2021, there were no changes in our financial and other covenants under the secured revolving credit facility as described in our Form 10-K for the 2020 fiscal year ended January 2, 2021.
As of April 3, 2021, the Company was in compliance with its financial and other covenants under the secured revolving credit facility.
On April 21, 2021, the Company, through its wholly owned subsidiary, The William Carter Company (“TWCC”), entered into Amendment No. 3 to its fourth amended and restated credit agreement (“Amendment No. 3”). Among other things, Amendment No. 3 provides that through the remainder of the Restricted Period, which ends on 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 the secured revolving credit facility) on the last day of each fiscal month of at least $950 million (the “Revised Liquidity Requirement”), which was increased by $250 million from $700 million; and
the Company may make additional restricted payments, including to pay cash dividends and repurchase common stock, in an amount not to exceed $250 million, provided that (a) no default or event of default will have occurred and be continuing or would result from the payment and (b) after giving effect to the payment, the Company would have been in compliance with Revised Liquidity Requirement as of the last day of the most recent month.
NOTE 9 – STOCK-BASED COMPENSATION
The Company recorded stock-based compensation expense as follows:
Fiscal quarter ended
(dollars in thousands)April 3, 2021March 28, 2020
Stock options$474 $883 
Restricted stock:
   Time-based awards3,900 2,989 
   Performance-based awards2,557 (1,927)
Total$6,931 $1,945 
On February 10, 2021, the Company’s Board of Directors approved the issuance of the following new awards to certain key employees under the Company’s existing stock-based compensation plan, subject to vesting: 301,584 shares of time-based restricted stock awards with a grant-date fair value of $98.05 each.
During the first quarter of fiscal 2021, a total of 94,589 restricted stock awards (time-based) vested.
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 2021, the achievement of performance target estimates related to certain performance-based grants were revised resulting in a $2.6 million increase to stock-based compensation expense.
NOTE 10 – INCOME TAXES
As of April 3, 2021, the Company had gross unrecognized income tax benefits of approximately $15.6 million, of which $11.0 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 April 3, 2021 is approximately $2.1 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 2021 or fiscal 2022 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 first fiscal quarter ended April 3, 2021 and March 28, 2020, interest expense on uncertain tax positions was not material. The Company had approximately $2.9 million, $2.7 million, and $2.5 million of interest accrued on uncertain tax positions as of April 3, 2021, January 2, 2021, and March 28, 2020, respectively.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 11 – FAIR VALUE MEASUREMENTS
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 $15.4 million, $20.2 million, and $16.7 million at April 3, 2021, January 2, 2021, and March 28, 2020, respectively. These investments are classified as Level 1 within the fair value hierarchy. The change in the aggregate fair values of marketable securities are due to the net activity of gains and losses and any contributions and distributions during the period. Gains on the investments in marketable securities were not material for the first fiscal quarter ended April 3, 2021. Loss on the investments in marketable securities were $3.0 million for the first fiscal quarter ended March 28, 2020. These amounts are included in Other expense (income), net on the Company’s consolidated statement of operations.
Borrowings
As of April 3, 2021, the Company had no outstanding borrowings under its secured revolving credit facility.
The fair value of the Company’s senior notes at April 3, 2021 was approximately $1.06 billion. The fair value of these senior notes with a notional value and carrying value (gross of debt issuance costs) 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.
NOTE 12 – EARNINGS PER SHARE
The following is a reconciliation of basic common shares outstanding to diluted common and common equivalent shares outstanding:
Fiscal quarter ended
April 3, 2021March 28, 2020
Weighted-average number of common and common equivalent shares outstanding:
Basic number of common shares outstanding43,370,744 43,355,635 
Dilutive effect of equity awards(1)
129,198  
Diluted number of common and common equivalent shares outstanding43,499,942 43,355,635 
Earnings per share:
(dollars in thousands, except per share data)
Basic net income (loss) per common share:
Net income (loss)$86,196 $(78,694)
Income allocated to participating securities
(1,033)(254)
Net income (loss) available to common shareholders$85,163 $(78,948)
Basic net income (loss) per common share$1.96 $(1.82)
Diluted net income (loss) per common share:
Net income (loss)$86,196 $(78,694)
Income allocated to participating securities
(1,030)(254)
Net income (loss) available to common shareholders$85,166 $(78,948)
Diluted net income (loss) per common share$1.96 $(1.82)
Anti-dilutive awards excluded from diluted earnings per share computation(2)
481,491 302,238 
(1)For the quarter ended March 28, 2020, there were 339,841 potentially dilutive equity awards that were excluded from the diluted earnings per share calculation because the Company incurred a net loss for this period and their inclusion would be anti-dilutive.
(2)The volume of anti-dilutive awards is, in part, due to the related unamortized compensation costs.
13


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 13 – OTHER CURRENT LIABILITIES
Other current liabilities at the end of any comparable period, were as follows:
(dollars in thousands)April 3, 2021January 2, 2021March 28, 2020
Income taxes payable$40,143 $21,164 $7,665 
Unredeemed gift cards17,426 18,300 16,758 
Accrued employee benefits17,307 22,876 9,908 
Accrued taxes16,054 10,900 7,378 
Accrued interest11,987 12,092 1,605 
Accrued bonuses and incentive compensation10,222 8,873 24 
Accrued salaries and wages4,773 10,650 11,911 
Other31,999 30,385 23,886 
Other current liabilities$149,911 $135,240 $79,135 
NOTE 14 – COMMITMENTS AND CONTINGENCIES
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.
NOTE 15 – SEGMENT INFORMATION
The table below presents certain information for our reportable segments and unallocated corporate expenses for the periods indicated:
Fiscal quarter ended
(dollars in thousands)April 3, 2021
% of
Total Net Sales
March 28, 2020
% of
Total Net Sales
Net sales:
U.S. Retail$407,067 51.7 %$320,717 49.0 %
U.S. Wholesale283,377 36.0 %252,130 38.5 %
International    96,917 12.3 %81,626 12.5 %
Total net sales
$