10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED APRIL 4, 2015 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)

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 and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes (X) No ( )

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer, accelerated filer, and smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one)

Large Accelerated Filer (X) Accelerated Filer ( ) Non-Accelerated Filer ( ) Smaller Reporting Company ( )

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes (X) No (X)

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock	Outstanding Shares at April 24, 2015
Common stock, par value $0.01 per share	52,538,616

CARTER’S, INC.

INDEX

			Page
Part I. Financial Information
	Item 1	Financial Statements
		Unaudited Condensed Consolidated Balance Sheets as of April 4, 2015, January 3, 2015, and March 29, 2014	1
		Unaudited Condensed Consolidated Statements of Operations for the fiscal quarters ended April 4, 2015 and March 29, 2014	2
		Unaudited Condensed Consolidated Statements of Comprehensive Income for the fiscal quarters ended April 4, 2015 and March 29, 2014	3
		Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity for the fiscal quarter ended April 4, 2015	4
		Unaudited Condensed Consolidated Statements of Cash Flows for the fiscal quarters ended April 4, 2015 and March 29, 2014	5
		Notes to the Unaudited Condensed Consolidated Financial Statements	6
	Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	25
	Item 3	Quantitative and Qualitative Disclosures about Market Risk	34
	Item 4	Controls and Procedures	34
Part II. Other Information
	Item 1	Legal Proceedings	35
	Item 1A	Risk Factors	35
	Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	36
	Item 3	Defaults upon Senior Securities	37
	Item 4	Mine Safety Disclosures	37
	Item 5	Other Information	37
	Item 6	Exhibits	37
Signatures			38
Certifications

PART 1 - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CARTER’S, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except for share data)

(unaudited)

	April 4, 2015			January 3, 2015			March 29, 2014
ASSETS
Current assets:
Cash and cash equivalents	$	377,400		$	340,638		$	277,236
Accounts receivable, net	195,593			184,563			205,166
Finished goods inventories	358,014			444,844			363,018
Prepaid expenses and other current assets	34,718			34,788			26,362
Deferred income taxes	32,842			36,625			37,343
Total current assets	998,567			1,041,458			909,125
Property, plant, and equipment, net of accumulated depreciation of $257,394, $245,011, and $220,847	341,658			333,097			316,786
Tradenames and other intangibles, net	314,955			317,297			323,967
Goodwill	178,859			181,975			184,604
Deferred debt issuance costs, net	6,361			6,677			7,758
Other assets	12,786			12,592			10,109
Total assets	$	1,853,186		$	1,893,096		$	1,752,349
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	94,129		$	150,243		$	103,439
Other current liabilities	93,403			97,728			75,235
Total current liabilities	187,532			247,971			178,674
Long-term debt	586,349			586,000			586,000
Deferred income taxes	120,275			121,536			118,032
Other long-term liabilities	153,317			150,905			140,493
Total liabilities	$	1,047,473		$	1,106,412		$	1,023,199
Commitments and contingencies
Stockholders' equity:
Preferred stock; par value $.01 per share; 100,000 shares authorized; none issued or outstanding at April 4, 2015, January 3, 2015, and March 29, 2014	—			—			—
Common stock, voting; par value $.01 per share; 150,000,000 shares authorized; 52,615,316, 52,712,193, and 53,742,906 shares issued and outstanding at April 4, 2015, January 3, 2015 and March 29, 2014, respectively	526			527			537
Additional paid-in capital	—			—			11,420
Accumulated other comprehensive loss	(29,031		)	(23,037		)	(12,842		)
Retained earnings	834,218			809,194			730,035
Total stockholders' equity	805,713			786,684			729,150
Total liabilities and stockholders' equity	$	1,853,186		$	1,893,096		$	1,752,349

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 4, 2015			March 29, 2014
Net sales	$	684,764		$	651,643
Cost of goods sold	400,712			389,918
Gross profit	284,052			261,725
Selling, general, and administrative expenses	211,183			210,095
Royalty income	(11,636		)	(9,901		)
Operating income	84,505			61,531
Interest expense	6,692			6,897
Interest income	(137		)	(132		)
Other expense, net	1,962			596
Income before income taxes	75,988			54,170
Provision for income taxes	26,196			19,873
Net income	$	49,792		$	34,297
Basic net income per common share	$0.94			$0.64
Diluted net income per common share	$0.94			$0.63
Dividend declared and paid per common share	$0.22			$0.19

See accompanying notes to the unaudited condensed consolidated financial statements.

2

CARTER’S, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(dollars in thousands)

(unaudited)

	Fiscal quarter ended
	April 4, 2015			March 29, 2014
Net income	$	49,792		$	34,297
Other comprehensive income (loss):
Foreign currency translation adjustments	(5,994		)	(2,760		)
Comprehensive income	$	43,798		$	31,537

See accompanying notes to the unaudited condensed consolidated financial statements.

3

CARTER’S, INC.

CONDENSED CONSOLIDATED STATEMENT 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 January 3, 2015	$	52,712,193		$	527		$	—		$	(23,037	)	$	809,194		$	786,684
Income tax benefit from stock-based compensation	—			—			5,771			—			—			5,771
Exercise of stock options	74,575			1			2,767			—			—			2,768
Withholdings from vesting of restricted stock	(144,002		)	(1		)	(12,330		)	—			—			(12,331		)
Restricted stock activity	130,450			1			(1		)	—			—			—
Stock-based compensation expense	—			—			4,740			—			—			4,740
Repurchase of common stock	(157,900		)	(2		)	(947		)	—			(13,171		)	(14,120		)
Cash dividends declared and paid	—			—			—			—			(11,597		)	(11,597		)
Comprehensive income (loss)	—			—						(5,994		)	49,792			43,798
Balance at April 4, 2015	$	52,615,316		$	526		$	—		$	(29,031	)	$	834,218		$	805,713

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 4, 2015			March 29, 2014
Cash flows from operating activities:
Net income	$	49,792		$	34,297
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	14,875			15,354
Amortization of tradenames	2,325			6,271
Accretion of contingent consideration	483			454
Amortization of debt issuance costs	280			375
Non-cash stock-based compensation expense	4,740			4,535
Foreign currency exchange loss	1,652			—
Income tax benefit from stock-based compensation	(5,771		)	(3,370		)
Loss on disposal of property, plant, and equipment	52			189
Deferred income taxes	2,207			(3,320		)
Effect of changes in operating assets and liabilities:
Accounts receivable	(11,402		)	(11,725		)
Inventories	83,349			53,309
Prepaid expenses and other assets	(472		)	8,424
Accounts payable and other liabilities	(54,886		)	(74,233		)
Net cash provided by operating activities	87,224			30,560
Cash flows from investing activities:
Capital expenditures	(20,760		)	(32,083		)
Proceeds from sale of property, plant, and equipment	76			—
Net cash used in investing activities	(20,684		)	(32,083		)
Cash flows from financing activities:
Payments of debt issuance costs	—			(55		)
Borrowings under secured revolving credit facility	20,349			—
Payments on secured revolving credit facility	(20,000		)	—
Repurchase of common stock	(14,120		)	(2,292		)
Dividends paid	(11,597		)	(10,208		)
Income tax benefit from stock-based compensation	5,771			3,370
Withholdings from vesting of restricted stock	(12,331		)	(4,079		)
Proceeds from exercise of stock options	2,768			5,546
Net cash used in financing activities	(29,160		)	(7,718		)
Effect of exchange rate changes on cash	(618		)	(69		)
Net increase (decrease) in cash and cash equivalents	36,762			(9,310		)
Cash and cash equivalents, beginning of period	340,638			286,546
Cash and cash equivalents, end of period	$	377,400		$	277,236

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,” “its,” "us" and "our") design, source, and market branded childrenswear under the Carter’s, Child ofMine, Just One You,Precious Firsts, OshKosh,and other brands. The Company's products are sourced through contractual arrangements with manufacturers worldwide for wholesale distribution to major domestic and international retailers and for the Company's own retail stores and websites that market its brand name merchandise and other licensed products manufactured by other companies. As of April 4, 2015, the Company operated 549 Carter’s stores in the United States, 208 OshKosh stores in the United States, and 127 stores in Canada.

NOTE 2 – BASIS OF PREPARATION

The accompanying unaudited condensed consolidated financial statements include the accounts of Carter's, Inc. and its wholly owned subsidiaries and 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, statement of stockholder’s 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 4, 2015 are not necessarily indicative of the results that may be expected for the 2015 fiscal year ending January 2, 2016.

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 3, 2015 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. The accounting policies the Company follows are set forth in the Company's Annual Report on Form 10-K for the 2014 fiscal year ended January 3, 2015. There have been no material subsequent changes to these accounting policies.

The Company's fiscal year ends on the Saturday in December or January, nearest the last day of December, resulting in an additional week of results every five or six years. As a result, fiscal 2014, which ended on January 3, 2015, contained 53 weeks. Fiscal 2015, which will end on January 2, 2016, contains 52 weeks. The first fiscal quarter of 2015 and 2014 each contained 13 weeks.

NOTE 3 – ACCUMULATED OTHER COMPREHENSIVE LOSS

The components, net of applicable income taxes, of accumulated other comprehensive (loss) consisted of the following:

(dollars in thousands)	April 4, 2015			January 3, 2015			March 29, 2014
Cumulative foreign currency translation adjustments	$	(21,391	)	$	(15,397	)	$	(10,312	)
Pension and post-retirement liability adjustments	(7,640		)	(7,640		)	(2,530		)
Total accumulated other comprehensive loss	$	(29,031	)	$	(23,037	)	$	(12,842	)

Changes in accumulated other comprehensive loss for the first quarters of fiscal 2015 and 2014 consisted of additional losses for foreign currency translation adjustments of approximately $6.0 million and $2.8 million, respectively. During the first quarters of fiscal 2015 and 2014, no amounts were reclassified from other accumulated other comprehensive loss to the statement of operations.

6

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 4 – GOODWILL AND OTHER INTANGIBLE ASSETS

The Company’s goodwill and other intangible assets were as follows:

		April 4, 2015						January 3, 2015
(dollars in thousands)	Weighted-average useful life	Gross amount		Accumulated amortization		Net amount		Gross amount		Accumulated amortization		Net amount
Carter’s goodwill	Indefinite	$	136,570	$	—	$	136,570	$	136,570	$	—	$	136,570
Bonnie Togs goodwill	Indefinite	42,289		—		42,289		45,405		—		45,405
Total goodwill		$	178,859	$	—	$	178,859	$	181,975	$	—	$	181,975
Carter’s tradename	Indefinite	$	220,233	$	—	$	220,233	$	220,233	$	—	$	220,233
OshKosh tradename	Indefinite	85,500		—		85,500		85,500		—		85,500
Other tradenames	2-20 years	42,037		32,830		9,207		42,073		30,541		11,532
Total tradenames		347,770		32,830		314,940		347,806		30,541		317,265
Non-compete agreements	4 years	220		205		15		257		225		32
Total tradenames and other intangibles, net		$	347,990	$	33,035	$	314,955	$	348,063	$	30,766	$	317,297

		March 29, 2014
(dollars in thousands)	Weighted-average useful life	Gross amount		Accumulated amortization		Net amount
Carter’s goodwill	Indefinite	$	136,570	$	—	$	136,570
Bonnie Togs goodwill	Indefinite	48,034		—		48,034
Total goodwill		$	184,604	$	—	$	184,604
Carter’s tradename	Indefinite	$	220,233	$	—	$	220,233
OshKosh tradename	Indefinite	85,500		—		85,500
Other tradenames	2-3 years	38,552		20,404		18,148
Total tradenames		344,285		20,404		323,881
Non-compete agreements	4 years	272		186		86
Total tradenames and other intangibles, net		$	344,557	$	20,590	$	323,967

The Company recorded approximately $2.3 million and $6.3 million in amortization expense for the fiscal quarters ended April 4, 2015 and March 29, 2014, respectively. The estimated future amortization expense for these assets is approximately $4.1 million for the remainder of fiscal 2015, $1.9 million for fiscal 2016, $0.2 million for each fiscal year 2017, 2018 and 2019, and $2.6 million thereafter.

NOTE 5 – COMMON STOCK

SHARE REPURCHASES

In the second quarter of fiscal 2013, the Company's Board of Directors authorized the repurchase of shares in an amount up to$300 million, inclusive of amounts remaining under previous authorizations. In the third quarter of 2013, the Board approved an additional $400 million share repurchase authorization. The total remaining capacity under the repurchase authorizations as of April 4, 2015 was approximately $171.0 million. The authorizations have no expiration date.

Open Market Repurchases

During the first quarter of fiscal 2015, the Company repurchased and retired 157,900 shares in open market transactions with an average share price of $89.43 for an aggregate purchase price of $14.1 million. During the first quarter fiscal 2014, the

7

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Company repurchased and retired 30,151 shares, in open market transactions, with an average share price of $76.03 for an aggregate purchase price of $2.3 million.

Future repurchases may occur from time to time in the open market, in negotiated transactions, or otherwise. The timing and amount of any repurchases will be determined by the Company’s management, based on its evaluation of market conditions, share price, other investment priorities, and other factors.

Accelerated Stock Repurchase Program

On August 29, 2013, the Company entered into two fixed-dollar uncollared accelerated stock repurchase agreements (the "ASR agreements") totaling $400 million. The ASR agreements were settled in January 2014. As of the date of settlement, the Company had received a total of approximately 5.6 million shares, of which one million shares were received in January 2014. All shares received under the ASR agreements were retired upon receipt.

DIVIDENDS

In the first quarters of fiscal 2015 and fiscal 2014, the Company paid cash dividends per share of $0.22 and $0.19, respectively. Future declarations of dividends and the establishment of future record and payment dates are at the discretion of the Company's Board of Directors and based on a number of factors including the Company's future financial performance and other investment priorities.

Provisions in the Company's secured revolving credit facility and indenture governing its senior notes could have the effect of restricting the Company's ability to pay future cash dividends on, or make future repurchases of, its common stock as further described in the Company's Annual Report for Form 10-K for the 2014 fiscal year ended January 3, 2015.

NOTE 6 – LONG-TERM DEBT

Long-term debt consisted of the following:

(dollars in thousands)	April 4, 2015		January 3, 2015		March 29, 2014
Senior notes	$	400,000	$	400,000	$	400,000
Secured revolving credit facility	186,349		186,000		186,000
Total long-term debt	$	586,349	$	586,000	$	586,000

Secured Revolving Credit Facility

As of April 4, 2015, the Company had $186.3 million in outstanding borrowings under its secured revolving credit facility, exclusive of $7.9 million of outstanding letters of credit. During the first quarter of fiscal 2015, the Company replaced $20.0 million of outstanding borrowings with CAD $25.5 million of borrowings in Canadian dollars, which approximated $20.3 million. Amounts outstanding under the revolving credit facility currently accrue interest at a LIBOR rate plus Base Rate, which, as of April 4, 2015, was 1.93% for U.S. dollar borrowings and 2.74% for Canadian dollar borrowings. As of April 4, 2015, there was approximately $180.8 million available for future borrowing.

As of April 4, 2015, the Company was in compliance with the financial debt covenants under the secured revolving credit facility.

Senior Notes

As of April 4, 2015, The William Carter Company ("TWCC"), a 100% owned subsidiary of Carter's Inc., had outstanding $400 million principal amount of senior notes bearing interest at a fixed rate of 5.25% per annum and maturing on August 15, 2021. The senior notes are unsecured and are fully and unconditionally guaranteed by Carter's, Inc. and certain subsidiaries of TWCC.

NOTE 7 – STOCK-BASED COMPENSATION

The Company recorded stock-based compensation cost as follows:

8

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

	Fiscal quarter ended
(dollars in thousands)	April 4, 2015		March 29, 2014
Stock options	$	1,324	$	1,370
Restricted stock:
Time-based awards	2,083		1,941
Performance-based awards	1,333		1,224
Total	$	4,740	$	4,535

All stock-based compensation expense was reflected as a component of selling, general, and administrative expenses, where other forms of compensation were recorded.

On February 18, 2015, 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:  177,900 stock options with an exercise price of $82.40 each; 84,800 shares of time-based restricted stock awards with a grant-date fair value of $82.40 each; and 50,600 shares of performance-based restricted stock awards with a grant-date fair value of $82.40 each.   

During the first quarter of fiscal 2015, a total of 331,163 restricted stock awards (time and performance based) vested with a weighted-average grant-date fair value of $41.16 each. For the first quarter of fiscal 2014, a total of 151,500 restricted stock awards (time and performance based) vested with a weighted average grant-date fair value of $39.65 each.

NOTE 8 – EMPLOYEE BENEFIT PLANS

The Company maintains a defined contribution plan and two defined benefit plans. The two defined benefit plans include the OshKosh B'Gosh pension plan and a post-retirement life and medical plan.

OSHKOSH B'GOSH PENSION PLAN

The net periodic pension (benefit) cost included in the statement of operations was comprised of:

	Fiscal quarter ended
(dollars in thousands)	April 4, 2015			March 29, 2014
Interest cost	$	623		$	622
Expected return on plan assets	(785		)	(798		)
Recognized actuarial loss	161			21
Net periodic pension (benefit) cost	$	(1	)	$	(155	)

POST-RETIREMENT LIFE AND MEDICAL PLAN

The components of post-retirement benefit expense charged to the statement of operations were as follows:

	Fiscal quarter ended
(dollars in thousands)	April 4, 2015			March 29, 2014
Service cost – benefits attributed to service during the period	$	32		$	28
Interest cost on accumulated post-retirement benefit obligation	45			57
Amortization net actuarial gain	(48		)	(51		)
Curtailment gain	—			(22		)
Total net periodic post-retirement benefit cost	$	29		$	12

9

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 9 – INCOME TAXES

During the first quarter of fiscal 2015, the Company recognized prior-year income tax benefits of approximately $1.8 million due to a favorable settlement of an ongoing IRS audit of fiscal 2011, 2012 and 2013, in addition to a favorable settlement of an ongoing state income tax audit. These settlements decreased the Company's effective tax rate for the first quarter of fiscal 2015 compared to the first quarter of fiscal 2014.

As of April 4, 2015, the Company had gross unrecognized income tax benefits of approximately $9.3 million, of which $6.3 million, if ultimately recognized, may affect the Company’s effective 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 4, 2015 are approximately $1.7 million of reserves for which the statute of limitations is expected to expire within the next fiscal year.  If these tax benefits are ultimately recognized, such recognition, net of federal income taxes, may affect the annual effective tax rate for fiscal 2015 or fiscal 2016 along with the effective 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 tax benefits as a component of income tax expense.  During the fiscal quarters ended April 4, 2015 and March 29, 2014, interest expense recorded on uncertain tax positions was not significant. The Company had approximately $0.8 million, $0.9 million, and $0.9 million of interest accrued on uncertain tax positions as of April 4, 2015, January 3, 2015, and March 29, 2014, respectively.     

NOTE 10 – 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 owned by the Company are included in other assets on the Company's consolidated balance sheet. The Company had approximately $7.9 million, $7.6 million, and $5.5 million of such Level 1 investments as of April 4, 2015, January 3, 2015, and March 29, 2014, respectively.

Gains on the investments in marketable securities were $0.2 million for the first quarter of fiscal 2015 and were not significant for the first quarter of fiscal 2014.

10

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

CONTINGENT CONSIDERATION

The following table summarizes the changes in the remaining contingent consideration liability related to the Company's

2011 acquisition of Bonnie Togs:

	Fiscal quarter ended
(dollars in thousands)	April 4, 2015			March 29, 2014
Balance at the beginning of period	7,711			16,348
Accretion	483			454
Foreign currency translation adjustment	(533		)	(487		)
Balance at the end of period	$	7,661		$	16,315

The contingent consideration liability is a Level 3 fair value measurement. As of April 4, 2015, the Company determined the fair value of contingent consideration based upon a probability-weighted discounted cash flow analysis that reflects a high probability that the earnings targets will be met, and a discount rate of 18%.

BORROWINGS

As of April 4, 2015, the Level 2 fair value of the Company's $186.3 million in outstanding borrowings under its secured revolving credit facility approximated carrying value. The fair value of the Company's $400 million in senior notes was estimated by obtaining market quotes given the trade levels of other bonds of the same general issuer type and market-perceived credit quality and is therefore within Level 2 of the fair value hierarchy. The fair value of the outstanding senior notes as of April 4, 2015 was approximately $414.0 million.

11

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 11 – 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 4, 2015			March 29, 2014
Weighted-average number of common and common equivalent shares outstanding:
Basic number of common shares outstanding	52,119,215			53,172,459
Dilutive effect of equity awards	495,386			501,322
Diluted number of common and common equivalent shares outstanding	52,614,601			53,673,781
Basic net income per common share (in thousands, except per share data):
Net income	$	49,792		$	34,297
Income allocated to participating securities	(560		)	(470		)
Net income available to common shareholders	$	49,232		$	33,827
Basic net income per common share	$	0.94		$	0.64
Diluted net income per common share (in thousands, except per share data):
Net income	$	49,792		$	34,297
Income allocated to participating securities	(556		)	(467		)
Net income available to common shareholders	$	49,236		$	33,830
Diluted net income per common share	$	0.94		$	0.63
Anti-dilutive shares excluded from dilutive earnings per share computation	183,400			269,650

12

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 12 – OTHER CURRENT AND LONG-TERM LIABILITIES

Other current liabilities consisted of the following:

(dollars in thousands)	April 4, 2015		January 3, 2015		March 29, 2014
Accrued bonuses and incentive compensation	$	4,396	$	18,875	$	3,196
Contingent consideration	7,661		7,711		8,878
Income taxes payable	18,410		692		6,637
Accrued workers' compensation	3,057		2,662		7,392
Accrued interest	2,759		8,106		2,874
Accrued sales and use taxes	7,653		5,318		7,307
Accrued salaries and wages	8,111		3,576		3,405
Accrued gift certificates	9,882		10,100		7,877
Accrued 401(k) contributions	1,296		10,073		893
Accrued closure costs	633		835		7,754
Other current liabilities	29,545		29,780		19,022
Total	$	93,403	$	97,728	$	75,235

Other long-term liabilities consisted of the following:

(dollars in thousands)	April 4, 2015		January 3, 2015		March 29, 2014
Deferred lease incentives	$	68,652	$	67,205	$	69,900
Accrued rent	43,504		40,656		34,446
Contingent consideration	—		—		7,437
Accrued workers' compensation	4,717		4,717		—
OshKosh pension plan	11,029		11,031		3,613
Unrecognized tax benefits	10,087		12,230		12,505
Post-retirement life and medical plan	4,731		4,731		5,069
Deferred compensation	8,710		8,388		7,420
Other	1,887		1,947		103
Total	$	153,317	$	150,905	$	140,493

NOTE 13 – 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.

13

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 14 – SEGMENT INFORMATION

The table below presents certain segment information for the periods indicated:

	Fiscal quarter ended
(dollars in thousands)	April 4, 2015			% of Total Net Sales		March 29, 2014			% of Total Net Sales
Net sales:
Carter’s Wholesale	$	269,315		39.3	%	$	271,628		41.7	%
Carter’s Retail (a)	257,727			37.7	%	230,328			35.3	%
Total Carter’s (U.S.)	527,042			77.0	%	501,956			77.0	%
OshKosh Retail (a)	73,042			10.7	%	63,558			9.8	%
OshKosh Wholesale	16,051			2.3	%	15,585			2.4	%
Total OshKosh (U.S.)	89,093			13.0	%	79,143			12.2	%
International (b)	68,629			10.0	%	70,544			10.8	%
Total net sales	$	684,764		100.0	%	$	651,643		100.0	%
Operating income (loss):				% of Segment Net Sales					% of Segment Net Sales
Carter’s Wholesale	$	57,931		21.5	%	$	46,867		17.3	%
Carter’s Retail (a)	44,493			17.3	%	42,979			18.7	%
Total Carter’s (U.S.)	102,424			19.4	%	89,846			17.9	%
OshKosh Retail (a)	(960		)	(1.3	)%	(4,489		)	(7.1	)%
OshKosh Wholesale	2,979			18.6	%	2,025			13.0	%
Total OshKosh (U.S.)	2,019			2.3	%	(2,464		)	(3.1	)%
International (b) (c)	6,511			9.5	%	4,036			5.7	%
Corporate expenses (d) (e)	(26,449		)			(29,887		)
Total operating income	$	84,505		12.3	%	$	61,531		9.4	%

(a) Includes eCommerce results.

(b) Net sales include international retail, eCommerce, and wholesale sales. Operating income includes international licensing income.

(c) Includes charges associated with the revaluation of the Company's contingent consideration related to the Company's 2011 acquisition of Bonnie Togs of approximately $0.5 million for each of the first quarters of fiscal 2015 and 2014. Also includes a benefit of approximately $0.4 million for the first quarter of fiscal 2014 related to a favorable recovery on inventory related to the Company's exit from Japan retail operations.

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

(e) Includes the following charges:

	Fiscal quarter ended
(dollars in millions)	April 4, 2015		March 29, 2014
Closure of distribution facility in Hogansville, GA (1)	$	—	$	0.3
Office consolidation costs	$	—	$	2.0
Amortization of tradenames	$	2.3	$	6.3

(1) Continuing operating costs associated with the closure of the Company's distribution facility in Hogansville, Georgia. This facility was sold in          December 2014.    

14

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 15 – FACILITY CLOSURES

OFFICE CONSOLIDATION

The Company consolidated its Shelton, Connecticut and Atlanta, Georgia offices, as well as certain functions from its other offices, into a new headquarters facility in Atlanta, Georgia. During the first quarter of fiscal 2014, approximately $2.0 million of expense, including $0.6 million of severance costs, were incurred related to the office consolidation project. No such expenses were incurred during the first quarter of fiscal 2015, and no additional expenses are expected to be incurred in the future.

The following table summarizes the restructuring reserves related to the office consolidation as of April 4, 2015:

(dollars in millions)	Severance			Other closure costs			Total
Balance at January 3, 2015	$	0.8		$	2.8		$	3.6
Provision	—			—			—
Payments	(0.2		)	(0.3		)	(0.5		)
Other	—			—			—
Balance at April 4, 2015	$	0.6		$	2.5		$	3.1

The severance reserve is included in other current liabilities and other closure costs are included in other long-term liabilities in the accompanying unaudited condensed consolidated balance sheet. The Company has completed its consolidation efforts. The severance accrual is expected to be substantially paid during fiscal 2015.

As of March 29, 2014, restructuring reserves were approximately $5.6 million.

JAPAN RETAIL OPERATIONS

In 2013, the Company made the decision to exit retail operations in Japan based on revised forecasts that did not meet the Company's investment objectives. In connection with the plan to exit these operations, during the first quarter of fiscal 2014, the Company recorded approximately $0.6 million of accelerated depreciation in selling, general, and administrative expenses and approximately $1.0 million in cost of goods sold related to a favorable recovery on inventory. There were no exit costs or recoveries related to the former Japan operations during the first quarter of fiscal 2015.

NOTE 16 – RECENT ACCOUNTING PRONOUNCEMENTS

Revenue Recognition

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), which clarifies the principles for recognizing revenue. The guidance is applicable to all contracts with customers regardless of industry-specific or transaction-specific fact patterns. Further, the guidance requires improved disclosures as well as additional disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. The standard is effective for the Company beginning in the first quarter of fiscal 2017, including interim periods within that first fiscal year, and early adoption is not permitted. Upon becoming effective, the Company will apply the amendments in the updated standard either retrospectively to each prior reporting period presented, or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application. The Company is currently evaluating the impact of adopting this standard on its consolidated financial position, results of operations, and cash flows.

On April 1, 2015, the FASB voted to propose a deferral of the effective date of the new revenue standard by one year, but to permit entities to adopt one year earlier if they choose (i.e., the original effective date). The proposal is currently undergoing the FASB's due process requirement, which includes a 30-day period for public comment.

15

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Presentation of Debt Issuance Costs

In April 2015, the FASB issued Accounting Standard Update 2015-03, Simplifying the Presentation of Debt Issuance Costs ("ASU 2015-03"). Upon adoption, ASU 2015-03 will require debt issuance costs to be presented in thebalance sheet as a direct reduction in the carrying value of the associated debt liability, consistent with the current presentation of a debt discount. Under current guidance prior to ASU 2015-03, debt issuance costs are presented in the balance sheet as a deferred charge (asset). ASU 2015-03 is limited to the presentation of debt issuance costs and will not affect the recognition and measurement of debt issuance costs. Upon adoption, ASU 2015-03 must be applied on a retrospective basis and is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted. Since ASU 2015-03 involves balance sheet presentation only, its adoption will not have any impact on the Company's results of operations, financial condition, or cash flows. The Company is evaluating a decision to early adopt ASU 2015-03 prior to its mandatory effective date.

Simplified Measurement Date for Defined Benefit Plan Assets and Obligations

In April 2015, the FASB issued Accounting Standard Update 2015-04, Practical Expedient for the Measurement Date of an Employer's Defined Benefit Obligation and Plan Assets ("ASU 2015-04"). Upon adoption, ASU 2015-04 will allow employers with fiscal year ends that do not coincide with a calendar month end to make an accounting policy election to measure defined benefit plan assets and obligations as of the end of the month closest to their fiscal year ends (i.e., on an alternative measurement date). An employer that makes this election must consistently apply the practical expedient from year to year and to all of its defined benefit plans. ASU 2015-04 will be effective for interim and fiscal periods beginning after December 15, 2015; prospective application is required and early adoption is permitted. The Company's fiscal year ends on the Saturday in December or January nearest the last day of December, and the Company has defined benefit plans. The Company is currently evaluating the policy election that will be allowed upon the adoption of ASU 2015-04.

NOTE 17 – GUARANTOR UNAUDITED CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

The Company’s senior notes constitute debt obligations of its wholly-owned subsidiary, The William Carter Company ("TWCC" or the “Subsidiary Issuer”), are unsecured and are fully and unconditionally guaranteed by Carter’s, Inc. (the “Parent”) by each of the Company’s current domestic subsidiaries, and, subject to certain exceptions, future restricted subsidiaries that guarantee the Company’s senior secured revolving credit facility or certain other debt of the Company or the subsidiary guarantors. For additional information, refer to the Company's Annual Report on Form 10-K for the 2014 fiscal year ended January 3, 2015.

The unaudited condensed consolidating financial information for the Parent, the Subsidiary Issuer and the guarantor and non-guarantor subsidiaries has been prepared from the books and records maintained by the Company. The accompanying unaudited condensed consolidating financial information has been prepared and presented pursuant to SEC Regulation S-X Rule 3-10. The financial information may not necessarily be indicative of the financial position, results of operations, comprehensive income (loss), and cash flows, had the Parent, Subsidiary Issuer, guarantor or non-guarantor subsidiaries operated as independent entities.

Intercompany revenues and expenses included in the subsidiary records are eliminated in consolidation. As a result of this activity, an amount due to/due from affiliates will exist at any time. The principal elimination entries relate to investments in subsidiaries and intercompany balances and transactions. The Company has accounted for investments in subsidiaries under the equity method. The guarantor subsidiaries are 100% owned directly or indirectly by the Parent and all guarantees are joint, several and unconditional.

During fiscal 2014, the Company revised its Guarantor Condensed Consolidating Statements of Comprehensive Income to correct a presentation error related to certain other comprehensive income (loss) transactions within the Subsidiary Issuer and Guarantor Subsidiaries columns in the Company’s previously filed Form 10-Q for the first and second fiscal quarters of 2014, which included the comparative periods, and for the fiscal years ended December 28, 2013 and December 29, 2012.   These presentation items had no effect on the Company’s Consolidated Financial Statements.  The Company concluded that these items were not material to the financial statements taken as a whole, but elected to revise previously reported amounts within this footnote for all periods presented.  Future filings will reflect these revisions.

16

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

CARTER’S, INC.

Condensed Consolidating Balance Sheets (unaudited)

As of April 4, 2015 (dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	338,709	$	17,505	$	21,186	$	—		$	377,400
Accounts receivable, net	—		167,196		22,250		6,147		—			195,593
Intercompany receivable	—		62,791		84,908		728		(148,427		)	—
Finished goods inventories, net	—		173,892		179,932		40,563		(36,373		)	358,014
Prepaid expenses and other current assets	—		13,329		13,369		8,020		—			34,718
Deferred income taxes	—		18,673		12,356		1,813		—			32,842
Total current assets	—		774,590		330,320		78,457		(184,800		)	998,567
Property, plant, and equipment, net	—		157,206		156,962		27,490		—			341,658
Goodwill	—		136,570		—		42,289		—			178,859
Tradenames and other intangibles, net	—		229,440		85,500		15		—			314,955
Deferred debt issuance costs, net	—		6,361		—		—		—			6,361
Other assets	—		11,934		852		—		—			12,786
Intercompany long term receivable	—		—		279,897		—		(279,897		)	—
Intercompany long term note receivable	—		100,000		—		—		(100,000		)	—
Investment in subsidiaries	805,713		591,454		10,173		—		(1,407,340		)	—
Total assets	$	805,713	$	2,007,555	$	863,704	$	148,251	$	(1,972,037	)	$	1,853,186
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	—	$	61,014	$	22,936	$	10,179	$	—		$	94,129
Intercompany payables	—		84,259		60,851		3,316		(148,427		)	—
Other current liabilities	—		25,078		54,833		13,492		—			93,403
Total current liabilities	—		170,351		138,620		26,987		(148,427		)	187,532
Long-term debt	—		566,000		—		20,349		—			586,349
Deferred income taxes	—		80,185		40,090		—		—			120,275
Intercompany long term liability	—		279,897		—		—		(279,897		)	—
Intercompany long term note payable	—		—		100,000		—		(100,000		)	—
Other long-term liabilities	—		69,035		72,026		12,256		—			153,317
Stockholders' equity	805,713		842,087		512,968		88,659		(1,443,713		)	805,713
Total liabilities and stockholders' equity	$	805,713	$	2,007,555	$	863,704	$	148,251	$	(1,972,037	)	$	1,853,186

17

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

As of January 3, 2015

(dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	311,078	$	10,442	$	19,118	$	—		$	340,638
Accounts receivable, net	—		155,192		22,770		6,601		—			184,563
Intercompany receivable	—		58,402		106,137		2,012		(166,551		)	—
Intercompany loan receivable	—		20,000		—		—		(20,000		)	—
Finished goods inventories, net	—		240,702		191,953		48,463		(36,274		)	444,844
Prepaid expenses and other current assets	—		15,143		13,059		6,586		—			34,788
Deferred income taxes	—		21,308		12,983		2,334		—			36,625
Total current assets	—		821,825		357,344		85,114		(222,825		)	1,041,458
Property, plant, and equipment, net	—		158,017		147,076		28,004		—			333,097
Goodwill	—		136,570		—		45,405		—			181,975
Tradenames and other intangibles, net	—		231,765		85,500		32		—			317,297
Deferred debt issuance costs, net	—		6,677		—		—		—			6,677
Other assets	—		11,781		811		—		—			12,592
Intercompany long term receivable	—		—		274,584		—		(274,584		)	—
Intercompany long term note receivable	—		100,000		—		—		(100,000		)	—
Investment in subsidiaries	786,684		591,735		9,647		—		(1,388,066		)	—
Total assets	$	786,684	$	2,058,370	$	874,962	$	158,555	$	(1,985,475	)	$	1,893,096
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	—	$	102,233	$	37,869	$	10,141	$	—		$	150,243
Intercompany payables	—		105,940		55,812		4,799		(166,551		)	—
Intercompany loan payables	—		—		—		20,000		(20,000		)	—
Other current liabilities	—		15,782		67,793		14,153		—			97,728
Total current liabilities	—		223,955		161,474		49,093		(186,551		)	247,971
Long-term debt	—		586,000		—		—		—			586,000
Deferred income taxes	—		81,406		40,130		—		—			121,536
Intercompany long term liability	—		274,584		—		—		(274,584		)	—
Intercompany long term note payable	—		—		100,000		—		(100,000		)	—
Other long-term liabilities	—		69,467		68,426		13,012		—			150,905
Stockholders' equity	786,684		822,958		504,932		96,450		(1,424,340		)	786,684
Total liabilities and stockholders' equity	$	786,684	$	2,058,370	$	874,962	$	158,555	$	(1,985,475	)	$	1,893,096

18

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

As of March 29, 2014

(dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	264,128	$	—	$	13,108	$	—		$	277,236
Accounts receivable, net	—		178,034		18,504		8,628		—			205,166
Intercompany receivable	—		54,911		80,281		12,078		(147,270		)	—
Intercompany loan receivable	—		10,000		—		—		(10,000		)	—
Finished goods inventories, net	—		177,816		180,133		35,933		(30,864		)	363,018
Prepaid expenses and other current assets	—		10,137		12,306		3,919		—			26,362
Deferred income taxes	—		24,252		12,155		936		—			37,343
Total current assets	—		719,278		303,379		74,602		(188,134		)	909,125
Property, plant, and equipment, net	—		154,045		137,170		25,571		—			316,786
Goodwill	—		136,570		—		48,034		—			184,604
Tradenames and other intangibles, net	—		238,382		85,500		85		—			323,967
Deferred debt issuance costs, net	—		7,758		—		—		—			7,758
Other assets	—		10,107		2		—		—			10,109
Intercompany long term receivable	—		—		261,259		—		(261,259		)	—
Intercompany long term note receivable	—		100,000		—		—		(100,000		)	—
Investment in subsidiaries	729,150		555,914		2,487		—		(1,287,551		)	—
Total assets	$	729,150	$	1,922,054	$	789,797	$	148,292	$	(1,836,944	)	$	1,752,349
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	—	$	68,708	$	28,654	$	6,077	$	—		$	103,439
Intercompany payables	—		78,020		62,719		6,531		(147,270		)	—
Intercompany loan payables	—		—		—		10,000		(10,000		)	—
Other current liabilities	—		29,124		33,638		12,473		—			75,235
Total current liabilities	—		175,852		125,011		35,081		(157,270		)	178,674
Long-term debt	—		586,000		—		—		—			586,000
Deferred income taxes	—		74,832		43,200		—		—			118,032
Intercompany long term liability	—		261,259		—		—		(261,259		)	—
Intercompany long term note payable	—		—		100,000		—		(100,000		)	—
Other long-term liabilities	—		64,097		57,852		18,544		—			140,493
Stockholders' equity	729,150		760,014		463,734		94,667		(1,318,415		)	729,150
Total liabilities and stockholders' equity	$	729,150	$	1,922,054	$	789,797	$	148,292	$	(1,836,944	)	$	1,752,349

19

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

CARTER’S, INC.

Condensed Consolidating Statements of Operations (unaudited)

For the fiscal quarter ended April 4, 2015

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	435,286		$	359,396		$	47,120		$	(157,038	)	$	684,764
Cost of goods sold	—			298,211			222,915			30,479			(150,893		)	400,712
Gross profit	—			137,075			136,481			16,641			(6,145		)	284,052
Selling, general, and administrative expenses	—			42,249			157,263			19,831			(8,160		)	211,183
Royalty income	—			(9,039		)	(4,711		)	—			2,114			(11,636		)
Operating income	—			103,865			(16,071		)	(3,190		)	(99		)	84,505
Interest expense	—			6,662			1,343			115			(1,428		)	6,692
Interest income	—			(1,557		)	—			(8		)	1,428			(137		)
(Income) loss in subsidiaries	(49,792		)	23,394			(520		)	—			26,918			—
Other (income) expense, net	—			(146		)	137			1,971			—			1,962
Income (loss) before income taxes	49,792			75,512			(17,031		)	(5,268		)	(27,017		)	75,988
Provision for income taxes	—			25,621			1,980			(1,405		)	—			26,196
Net income (loss)	$	49,792		$	49,891		$	(19,011	)	$	(3,863	)	$	(27,017	)	$	49,792

20

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the fiscal quarter ended March 29, 2014

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	407,365		$	321,708		$	49,158		$	(126,588	)	$	651,643
Cost of goods sold	—			293,774			188,020			30,059			(121,935		)	389,918
Gross profit	—			113,591			133,688			19,099			(4,653		)	261,725
Selling, general, and administrative expenses	—			48,527			146,417			22,932			(7,781		)	210,095
Royalty income	—			(8,045		)	(4,027		)	—			2,171			(9,901		)
Operating income	—			73,109			(8,702		)	(3,833		)	957			61,531
Interest expense	—			6,897			1,313			24			(1,337		)	6,897
Interest income	—			(1,469		)	—			—			1,337			(132		)
(Income) loss in subsidiaries	(34,297		)	17,435			(586		)	—			17,448			—
Other (income) expense, net	—			(57		)	57			596			—			596
Income (loss) before income taxes	34,297			50,303			(9,486		)	(4,453		)	(16,491		)	54,170
Provision for income taxes	—			16,963			3,740			(830		)	—			19,873
Net income (loss)	$	34,297		$	33,340		$	(13,226	)	$	(3,623	)	$	(16,491	)	$	34,297

21

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

CARTER’S, INC.

Condensed Consolidating Statements of Comprehensive Income (unaudited)

For the fiscal quarter ended April 4, 2015

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net income (loss)	$	49,792		$	49,891		$	(19,011	)	$	(3,863	)	$	(27,017	)	$	49,792
Foreign currency translation adjustments	$	(5,994	)	$	(5,994	)	$	8		$	(5,994	)	$	11,980		$	(5,994	)
Comprehensive income (loss)	$	43,798		$	43,897		$	(19,003	)	$	(9,857	)	$	(15,037	)	$	43,798

For the fiscal quarter ended March 29, 2014

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net income (loss)	$	34,297		$	33,340		$	(13,226	)	$	(3,623	)	$	(16,491	)	$	34,297
Foreign currency translation adjustments	$	(2,760	)	$	(2,760	)	$	(132	)	$	(2,760	)	$	5,652		$	(2,760	)
Comprehensive income (loss)	$	31,537		$	30,580		$	(13,358	)	$	(6,383	)	$	(10,839	)	$	31,537

22

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

CARTER’S, INC.

Condensed Consolidating Statements of Cash Flows (unaudited)

For the fiscal quarter ended April 4, 2015

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Cash flows provided by operating activities:	$	—		$	78,186		$	3,969		$	5,069		$	—		$	87,224
Cash flows from investing activities:
Capital expenditures	—			(5,517		)	(12,701		)	(2,542		)	—			(20,760		)
Intercompany investing activity	35,280			(8,332		)	(1,232		)	—			(25,716		)	—
Proceeds from repayment of intercompany loan	—			20,000			—			—			(20,000		)	—
Proceeds from sale of property, plant and equipment	—			69			—			7			—			76
Net cash provided by (used in) investing activities	35,280			6,220			(13,933		)	(2,535		)	(45,716		)	(20,684		)
Cash flows from financing activities:
Intercompany financing activity	—			(41,315		)	15,796			(197		)	25,716			—
Repayment of intercompany loan	—			—			—			(20,000		)	20,000			—
Borrowings under secured revolving credit facility	—			—			—			20,349			—			20,349
Payments on secured revolving credit facility	—			(20,000		)	—			—			—			(20,000		)
Dividends paid	(11,597		)	—			—			—			—			(11,597		)
Repurchase of common stock	(14,120		)	—			—			—			—			(14,120		)
Income tax benefit from stock-based compensation	—			4,540			1,231			—			—			5,771
Withholdings from vesting of restricted stock	(12,331		)	—			—			—			—			(12,331		)
Proceeds from exercise of stock options	2,768			—			—			—			—			2,768
Net cash (used in) provided by financing activities	(35,280		)	(56,775		)	17,027			152			45,716			(29,160		)
Effect of exchange rate changes on cash	—			—			—			(618		)	—			(618		)
Net increase in cash and cash equivalents	—			27,631			7,063			2,068			—			36,762
Cash and cash equivalents, beginning of period	—			311,078			10,442			19,118			—			340,638
Cash and cash equivalents, end of period	$	—		$	338,709		$	17,505		$	21,186		$	—		$	377,400

23

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the fiscal quarter ended March 29, 2014

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Cash flows provided by (used in) operating activities:	$	—		$	44,470		$	(12,284	)	$	(1,626	)	$	—		$	30,560
Cash flows from investing activities:
Capital expenditures	—			(18,417		)	(10,994		)	(2,672		)	—			(32,083		)
Intercompany investing activity	11,033			3,772			(2,305		)	—			(12,500		)	—
Issuance of intercompany loan				(10,000		)							10,000
Net cash provided by (used in) investing activities	11,033			(24,645		)	(13,299		)	(2,672		)	(2,500		)	(32,083		)
Cash flows from financing activities:
Intercompany financing activity	—			(34,969		)	23,280			(811		)	12,500			—
Proceeds from intercompany loan	—			—			—			10,000			(10,000		)	—
Dividends Paid	(10,208		)	—			—			—			—			(10,208		)
Payment on debt issuance costs	—			(55		)	—			—			—			(55		)
Income tax benefit from stock-based compensation	—			1,067			2,303			—			—			3,370
Repurchase of common stock	(2,292		)	—			—			—			—			(2,292		)
Withholdings from vesting of restricted stock	(4,079		)	—			—			—			—			(4,079		)
Proceeds from exercise of stock options	5,546			—			—			—			—			5,546
Net cash (used in) provided by financing activities	(11,033		)	(33,957		)	25,583			9,189			2,500			(7,718		)
Effect of exchange rate changes on cash	—			—			—			(69		)	—			(69		)
Net (decrease) increase in cash and cash equivalents	—			(14,132		)	—			4,822			—			(9,310		)
Cash and cash equivalents, beginning of period	—			278,260			—			8,286			—			286,546
Cash and cash equivalents, end of period	$	—		$	264,128		$	—		$	13,108		$	—		$	277,236

24

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

The following is a discussion of our results of operations and current financial condition. This should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included in this Form 10-Q and our Annual Report on Form 10-K for the 2014 fiscal year ended January 3, 2015.

Our Business

We are the largest branded marketer in the United States ("U.S.") and in Canada of apparel exclusively for babies and young children. We own two of the most highly recognized and most trusted brand names in the children's apparel industry, Carter's and OshKosh B'gosh ("OshKosh"). Established in 1865, our Carter's brand is recognized and trusted by consumers for high-quality apparel for children sizes newborn to eight. Established in 1895, OshKosh is a well-known brand, trusted by consumers for its line of apparel for children sizes newborn to 12, with a focus on playclothes for toddlers and young children. Given each brand's product category emphasis and brand aesthetic, we believe the brands provide a complementary product offering. We have extensive experience in the young children's apparel market and focus on delivering products that satisfy our consumers' needs. Our strategy is to market high-quality, essential core products at prices that deliver an attractive value proposition for consumers.

25

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated: (i) selected statement of operations data expressed as a percentage of consolidated net sales and (ii) the number of retail stores open at the end of each period:

	Fiscal quarter ended
	April 4, 2015		March 29, 2014
Net sales
Carter’s Wholesale	39.3	%	41.7	%
Carter’s Retail	37.7	%	35.3	%
Total Carter’s (U.S.)	77.0	%	77.0	%
OshKosh Retail	10.7	%	9.8	%
OshKosh Wholesale	2.3	%	2.4	%
Total OshKosh (U.S.)	13.0	%	12.2	%
International	10.0	%	10.8	%
Consolidated net sales	100.0	%	100.0	%
Cost of goods sold	58.5	%	59.8	%
Gross margin	41.5	%	40.2	%
Selling, general, and administrative expenses	30.8	%	32.2	%
Royalty Income	(1.7	)%	(1.5	)%
Operating income	12.3	%	9.4	%
Interest expense	1.0	%	1.1	%
Interest income	—	%	—	%
Other expense (income), net	0.3	%	0.1	%
Income before income taxes	11.1	%	8.3	%
Provision for income taxes	3.8	%	3.0	%
Net income	7.3	%	5.3	%
Number of retail stores at end of period:
Carter’s - U.S.	549		491
OshKosh - U.S.	208		186
International	127		103
Total retail stores	884		780

Note: Results may not be additive due to rounding.

26

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

FISCAL QUARTER ENDED APRIL 4, 2015 COMPARED WITH FISCAL QUARTER ENDED MARCH 29, 2014

CONSOLIDATED NET SALES

In the first quarter of fiscal 2015, consolidated net sales increased$33.1 million, or 5.1%, to $684.8 million, reflecting strong sales growth in our Carter's Retail and OshKosh Retail segments and slight growth in our Oshkosh Wholesale segment. Sales growth was partially offset by slight declines in our Carter's Wholesale segment and in our International segment. Changes in foreign currency exchange rates in the first quarter of fiscal 2015, as compared to the first fiscal quarter of 2014, negatively impacted our consolidated net sales by approximately $5.6 million, or 0.9%.

Net sales by segment, and each segment's percentage of consolidated net sales, were as follows for the first quarters of fiscal 2015 and 2014:

	Fiscal quarter ended
(dollars in thousands)	April 4, 2015		% of Total		March 29, 2014		% of Total
Net sales:
Carter’s Wholesale	$	269,315	39.3	%	$	271,628	41.7	%
Carter’s Retail	257,727		37.7	%	230,328		35.3	%
Total Carter’s (U.S.)	527,042		77.0	%	501,956		77.0	%
OshKosh Retail	$	73,042	10.7	%	$	63,558	9.8	%
OshKosh Wholesale	16,051		2.3	%	15,585		2.4	%
Total OshKosh (U.S.)	89,093		13.0	%	79,143		12.2	%
International	68,629		10.0	%	70,544		10.8	%
Total net sales	$	684,764	100.0	%	$	651,643	100.0	%

CARTER’S WHOLESALE SALES

Carter’s wholesale sales decreased$2.3 million, or 0.9%, in the first quarter of fiscal 2015 to $269.3 million. This decrease was primarily due to a 3% decrease in the number of units shipped, partially offset by a 2% increase in the average price per unit as compared to the first quarter of fiscal 2014.

CARTER’S RETAIL SALES

Carter’s retail segment sales increased$27.4 million, or 11.9%, in the first quarter of fiscal 2015 to $257.7 million. The increase was driven primarily by a/an:

• Increase of $18.5 million in sales from new store openings;

• Increase of $6.6 million in sales from eCommerce;

• Increase of $3.8 million in comparable store sales; and

• Decrease of $1.5 million related to store closings.

Carter's direct-to-consumer comparable sales for the first quarter of fiscal 2015 increased 0.7%, comprised of eCommerce comparable sales growth of 8.1%, partially offset by a retail stores comparable sales decline of 1.2%. Although Carter's retail comparable store sales increased $3.8 million during the first quarter of fiscal 2015 compared to the first quarter of fiscal 2014, comparable store sales declined 1.2% in the first quarter of 2015 when a comparable period of January 5, 2014 to April 5, 2014 is used to represent the first quarter of 2014. This decrease was the result of a decline in the average transaction value, partially offset by an increase in the number of transactions.

27

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

During the first quarter of fiscal 2015, we opened 20 Carter's retail stores and closed 2 stores. A total of 549 Carter’s retail stores were open as of April 4, 2015. During fiscal 2015, we plan to open approximately 65 Carter's retail stores, many of which will be in a "side-by-side" format with an OshKosh retail store, and close four stores.

OSHKOSH RETAIL SALES

OshKosh retail sales increased$9.5 million, or 14.9%, in the first quarter of fiscal 2015 to $73.0 million. The increase was driven primarily by a/an:

• Increase of $5.2 million in sales from new store openings;

• Increase of $3.2 million in sales from eCommerce;

• Increase of $2.3 million in comparable store sales; and

• Decrease of $1.2 million related to store closings.

OshKosh direct-to-consumer comparable sales for the first quarter of fiscal 2015 increased 5.2%, comprised of eCommerce comparable sales growth of 20.3% and a retail stores comparable sales increase of 1.5%. Although OshKosh retail comparable store sales increased $2.3 million during the first quarter of fiscal 2015 compared to the first quarter of fiscal 2014, comparable store sales increased 1.5% in the first quarter of 2015 when a comparable period of January 5, 2014 to April 5, 2014 is used to represent the first quarter of 2014. This increase was driven by higher transaction volume.

During the first quarter of fiscal 2015, we opened 9 OshKosh retail stores and closed 1 store. A total of 208 OshKosh retail stores were open as of April 4, 2015. During fiscal 2015, we plan to open approximately 45 OshKosh retail stores, most of which will be in a "side-by-side" format with a Carter's retail store, and close five stores.

OSHKOSH WHOLESALE SALES

OshKosh wholesale sales increased$0.5 million, or 3.0%, in the first quarter of fiscal 2015 to $16.1 million. This increase was primarily the result of a 5% increase in the average price per unit, partially offset by a 1.6% decline in units shipped as compared to the first quarter of fiscal 2014.

INTERNATIONAL SALES

International sales decreased$1.9 million, or 2.7%, in the first quarter of fiscal 2015 to $68.6 million. Unfavorable currency exchange rates between the U.S. dollar and the Canadian dollar negatively impacted International net sales by approximately $5.6 million, or 7.9%, in the first quarter of fiscal 2015.

The overall $1.9 million decrease reflected a/an:

• Increase of $4.3 million in sales in our Canadian retail locations;

• Increase of $2.1 million in sales from eCommerce primarily due to the launch of our Canadian website;

• Decrease of $4.4 million in sales related to the exit of retail operations in Japan in 2014;

• Decrease of $3.4 million in sales in our Canadian wholesale business primarily due to the Target bankruptcy; and

• Decrease of $0.5 million in wholesale sales in our other international locations.

The increase in sales in our Canadian retail stores reflects a 7.0% increase in comparable store sales in the first quarter of fiscal 2015 compared to the first quarter of fiscal 2014.

During the first quarter of fiscal 2015, we opened 3 retail stores in Canada and had no closures. A total of 127 retail stores were open in Canada as of April 4, 2015. For all of fiscal 2015, we plan to open approximately 20 retail stores in Canada.

GROSS MARGIN AND GROSS PROFIT

Our consolidated gross margin increased from 40.2% in the first quarter of fiscal 2014 to 41.5% in the first quarter of fiscal 2015. This 1.3% margin improvement was driven by our Carter's and OshKosh wholesale segments.

28

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Our consolidated gross profit increased$22.3 million, or 8.5%, to $284.1 million in the first quarter of fiscal 2015. This $22.3 million improvement was driven by all of our operating segments except International, as discussed in the section entitled Operating Income, below.

We include distribution costs in selling, general, and administrative ("SG&A") expenses. Accordingly, our gross margin and gross profit may not be comparable to other companies that include such distribution costs in their cost of goods sold.

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES

SG&A expenses in the first quarter of fiscal 2015increased$1.1 million, or 0.5%, to $211.2 million. As a percentage of net sales, SG&A expenses decreased from 32.2% to 30.8% in the first quarter of fiscal 2015.

The decrease in SG&A expenses, as a percentage of net sales, in the first quarter of fiscal 2015 reflected:

• $4.0 million in reduced amortization for the H.W. Carter & Sons trademark;

• $2.7 million in lower provisions for accounts receivable;

• $3.0 million absence of expenses associated with operating and exit activities of our former Japan business;

• $2.0 million in lower costs associated with our office consolidation project;

• $1.3 million in lower costs for external consultants; and

• $1.2 million in lower costs for distribution.

Partially offset by:

• $8.8 million increase in costs related to retail store operations; and

• $1.5 million increase in costs related to information technology.

ROYALTY INCOME

We license the use of our Carter’s, Just One You, Child of Mine, OshKosh B’gosh, OshKosh, Genuine Kids from OshKosh, and Precious Firsts brand names. Royalty income from these brands for the first quarter of fiscal 2015 was approximately $11.6 million. This reflects an increase of $1.7 million, or 17.5%, when compared to the first quarter of fiscal 2014. This increase reflects domestic growth in both our Carter's and OshKosh licensed revenues along with timing of favorable settlements with our licensees.

OPERATING INCOME

Consolidated operating income increased$23.0 million, or 37.3%, to $84.5 million in the first quarter of fiscal 2015 compared to the first quarter of fiscal 2014. The table below summarizes the changes in each of our segments' operating results when comparing the first quarter of fiscal 2015 to the first quarter of fiscal 2014:

(dollars in thousands)	Carter's Wholesale			Carter's Retail		OshKosh Wholesale			OshKosh Retail			International			Corporate Expenses			Total
Operating income (loss) for first quarter of fiscal 2014	$	46,867		$	42,979	$	2,025		$	(4,489	)	$	4,036		$	(29,887	)	$	61,531
Increase (decrease):
Gross profit	5,679			12,198		340			4,545			(55		)	(380		)	22,327
Royalty income	484			310		498			119			324			—			1,735
SG&A expenses	(4,901		)	10,994		(116		)	1,135			(2,206		)	(3,818		)	1,088
Operating income (loss) for first quarter of fiscal 2015	$	57,931		$	44,493	$	2,979		$	(960	)	$	6,511		$	(26,449	)	$	84,505
	(a)			(b)		(c)			(d)			(e)			(f)

(a) Carter's wholesale operating income in the first quarter of fiscal 2015 increased $11.1 million, or 23.6%, from the first quarter of fiscal 2014 to $57.9 million. The segment's operating margin increased from 17.3% in the first quarter of fiscal 2014 to 21.5% in first quarter of fiscal 2015. The primary drivers of the change in operating income were a/an:

29

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

• Increase in gross profit of $5.7 million primarily due to lower off-price sales and lower inventory reserves, slightly offset by lower sales as previously discussed;

• Increase in royalty income of $0.5 million; and

• Decrease in SG&A expenses of $4.9 million driven primarily by decreases in provisions for accounts receivable and lower distribution and freight costs.

(b) Carter's retail operating income increased by $1.5 million, or 3.5%, to $44.5 million in the first quarter of fiscal 2015. This segment's operating margin decreased from 18.7% to 17.3% in the first quarter of fiscal 2015. The primary drivers of the change in operating income were an:

• Increase in gross profit of $12.2 million primarily due to higher sales as previously discussed, partially offset by higher product costs;

• Increase in royalty income of $0.3 million; and

• Increase of $11.0 million in SG&A expenses comprised mostly of an:

• Increase of $8.0 million in retail store operating expenses due to an increase in the number of stores; and

• Increase of $2.7 million in distribution and freight costs.

(c) OshKosh wholesale operating income increased by $1.0 million, or 47.1%, to $3.0 million in the first quarter of fiscal 2015. This segment's operating margin increased from 13.0% to 18.6% in first quarter of fiscal 2015. The primary drivers of the change in operating income were a/an:

• Increase in gross profit of $0.3 million primarily due to higher sales as previously discussed;

• Increase in royalty income of $0.5 million; and

• Decrease of $0.1 million in SG&A expenses.

(d) OshKosh retail operating loss improved by $3.5 million, or 78.6%, from $(4.5) million in the first quarter of fiscal 2014 to $(1.0) million in the first quarter of fiscal 2015. The segment's operating margin increased from (7.1)% to (1.3)% in the first quarter of fiscal 2015. The primary drivers of the change in operating income were an:

• Increase in gross profit of $4.5 million due primarily to higher sales as previously discussed, partially offset by higher product costs;

• Increase in royalty income of $0.1 million; and

• Increase in SG&A expenses of $1.1 million due mainly to additional retail stores in 2015.

(e) International operating income increased by $2.5 million, or 61.3%, to $6.5 million in the first quarter of fiscal 2015. This segment's operating margin increased from 5.7% to 9.5% in the first quarter of fiscal 2015. The primary drivers of the change in operating income were a/an:

• Decrease of $2.2 million in SG&A expenses primarily due to the exit from our former Japan retail operations; and

• Increase in royalty income of $0.3 million.

(f) Corporate operating expenses decreased by $3.4 million, or 11.5%, in first quarter of fiscal 2015. Corporate expenses as a percentage of consolidated net sales decreased from 4.6% to 3.9% in first quarter of fiscal 2015. The decrease in operating expenses primarily reflected a/an:

• Decrease of $4.0 million in amortization expense for the H.W. Carter & Sons tradename;

• Decrease of $2.0 million in expenses related to the office consolidation project and facility closures;

• Increase of $1.3 million in expenses related to information technology; and

• Increase of $0.8 million in expenses related to insurance and other employee benefits.

30

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

INTEREST EXPENSE

Interest expense in the first quarter of fiscal 2015 was comparable to the first quarter of fiscal 2014. Weighted-average borrowings for the first quarters of fiscal 2015 and 2014 were approximately $586.0 million at an effective interest rate of 4.64% for both quarters.

INCOME TAXES

Our consolidated effective income tax rate for the first quarter of fiscal 2015 was 34.5% as compared to 36.7% for the first quarter of fiscal 2014. The decrease in the rate for the first quarter of fiscal 2015 was primarily due to favorable settlements of federal and state tax audits for 2011, 2012 and 2013. For the full fiscal year 2015, we expect our consolidated effective income tax rate to be approximately 36.0%.

NET INCOME

Our consolidated net income for the first quarter of fiscal 2015increased by $15.5 million, or 45.2%, to $49.8 million as compared to $34.3 million in the first quarter of fiscal 2014.

FINANCIAL CONDITION, CAPITAL RESOURCES, AND LIQUIDITY

Our primary cash needs are for working capital and capital expenditures. We expect that our primary sources of liquidity will continue to be cash and cash equivalents on hand, cash flow from operations, and borrowings available under our secured revolving credit facility. We expect that these sources will fund our ongoing requirements for the foreseeable future. Further, we do not expect current economic conditions to prevent us from meeting our cash requirements. These sources of liquidity may be affected by events described in our risk factors, as further discussed in Item 1.A., Risk Factors, in our Annual Report on Form 10-K for the 2014 fiscal year ended January 3, 2015.

As of April 4, 2015, the Company has approximately $377.4 million of cash and cash equivalents in major financial institutions, including approximately $21.2 million in financial institutions located outside of the United States. We maintain cash deposits with major financial institutions that exceed the insurance coverage limits provided by the Federal Deposit Insurance Corporation in the United States and by similar insurers for deposits located outside the United States.  To mitigate this risk, we utilize a policy of allocating cash deposits among major financial institutions that have been evaluated by the Company and third-party rating agencies.

BALANCE SHEET

Net accounts receivable at April 4, 2015 were $195.6 million compared to $205.2 million at March 29, 2014 and $184.6 million at January 3, 2015. The decrease of $9.6 million, or 4.7%, as compared to March 29, 2014 reflects the slight decrease in net sales from our wholesale customers and the improvement in the timing of collection of receivables. Due to the seasonal nature of our operations, the net accounts receivable balance at April 4, 2015 is not comparable to the net accounts receivable balance of $184.6 million at January 3, 2015.

Inventories at April 4, 2015 were $358.0 million compared to $363.0 million at March 29, 2014 and $444.8 million at January 3, 2015. The decrease of $5.0 million, or 1.4%, as compared to March 29, 2014, primarily reflects reductions in store inventory levels, partially offset by business growth. Due to the seasonal nature of our operations, the net inventories balance at April 4, 2015 is not comparable to the net inventories balance of $444.8 million at January 3, 2015.

CASH FLOW

Net cash provided by operating activities for the first quarter of fiscal 2015 was $87.2 million compared to net cash provided by operating activities of $30.6 million in the first quarter of fiscal 2014. This increase in operating cash flow primarily reflects an

31

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

increase in net income and favorable movements in net working capital primarily due to the timing of inventory purchases and other payments.

Capital expenditures were $20.8 million in the first quarter of fiscal 2015 compared to $32.1 million in the first quarter of fiscal 2014, primarily reflecting expenditures of approximately $12.8 million for our U.S. and international retail store openings and remodelings, $3.2 million for information technology initiatives, and $2.7 million for distribution and office facilities.

We plan to invest approximately $130 million in capital expenditures in fiscal 2015, primarily for our U.S. and international retail store openings and remodelings, and information technology.

Net cash used in financing activities was $29.2 million in the first quarter of fiscal 2015 compared to $7.7 million in the first quarter of fiscal 2014. This increase primarily reflects higher repurchases of our common stock and increases in withholding taxes for vested restricted shares issued under our employee stock-based compensation plan.

SECURED REVOLVING CREDIT FACILITY

We have a $375.0 million revolving credit facility which provides aU.S. dollar revolving facility of $340.0 million ($175.0 million sub-limit for letters of credit and a swing line sub-limit of $40.0 million) plus a $35.0 million multi-currency revolving facility ($15.0 million sub-limit for letters of credit and a swing line sub-limit of $5.0 million), which is available for borrowings by either our The William Carter Company ("TWCC") subsidiary or our Canadian subsidiary, in U.S. dollars, Canadian dollars or other currencies agreed to by the applicable lenders. The revolving credit facility expires August 31, 2017.

At April 4, 2015, we had $186.3 million in outstanding borrowings under our revolving credit facility, exclusive of $7.9 million of outstanding letters of credit, leaving approximately $180.8 million available for future borrowings. The $186.3 million in outstanding borrowings at April 4, 2015 included CAD $25.5 million of outstanding borrowings in Canadian dollars, which translated to approximately $20.3 million based on currency exchange rates at April 4, 2015.

The secured revolving credit facility provides for different pricing options based on, among other things, the currency being borrowed and our leverage. Amounts outstanding under the secured revolving credit facility as of April 4, 2015 were accruing interest at an annual rate of 1.93% (LIBOR rate plus Base Rate) for U.S. dollar borrowings and an annual rate of 2.74% (LIBOR rate plus Base Rate) for Canadian dollar borrowings.

As of April 4, 2015, we were in compliance with the financial debt covenants under our secured revolving credit facility.

SENIOR NOTES

As of April 4, 2015, our wholly-owned operating subsidiary TWCC had $400.0 million principal amount of senior notes outstanding, bearing interest at a fixed rate of 5.25% per annum, and maturing on August 15, 2021. The senior notes are unsecured and are fully and unconditionally guaranteed by Carter's, Inc. and certain subsidiaries of TWCC.

BONNIE TOGS ACQUISITION

As of April 4, 2015, a discounted contingent consideration liability of approximately $7.7 million remains and is classified as a current liability.

SHARE REPURCHASES

Open Market Purchases

Pursuant to the previously announced share repurchase authorizations by our Board of Directors, during the first quarter of fiscal 2015 the Company repurchased and retired 157,900 shares in open market transactions for approximately $14.1 million at an average price of $89.43 per share. During the first quarter of fiscal 2014, the Company repurchased and retired 30,151 shares in open market transactions for approximately $2.3 million, at an average price of $76.03 per share. The total remaining capacity under the repurchase authorizations as of April 4, 2015 was approximately $171.0 million. Future repurchases may be

32

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

made in the open market or in privately negotiated transactions, with the level and timing of activity being at management's discretion depending on market conditions, share price, other investment priorities, and other factors. The share repurchase authorizations have no expiration date.

DIVIDENDS

In the first quarters of fiscal 2015 and 2014, our Company paid quarterly cash dividends of $0.22 and $0.19 per share, respectively. Future declarations of quarterly dividends and the establishment of future record and payment dates are at the discretion of our Board of Directors and will be based on a number of factors, including our future financial performance and other investment priorities.

Provisions in our secured revolving credit facility and indenture governing our senior notes could have the effect of restricting our ability to pay future cash dividends on or make future repurchases of our common stock.

SEASONALITY

We experience seasonal fluctuations in our sales and profitability due to the timing of certain holidays and key retail shopping periods, which generally have resulted in declines in our net sales and gross profit in the first half of our fiscal year versus the second half. Accordingly, our results of operations during the first half of our fiscal year may not be indicative of the results we expect for the full fiscal year.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. Preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions.

Our significant accounting policies are described in Note 2, Summary of Significant Accounting Policies, to our audited consolidated financial statements included in our most recent Annual Report on Form 10-K for the 2014 fiscal year ended January 3, 2015. Our critical accounting policies and estimates are those policies that require management’s most difficult and subjective judgments and may result in the need to make estimates about the effect of matters that are inherently uncertain. Our critical accounting policies and estimates include: revenue recognition and accounts receivable allowance, inventory, goodwill and tradename, accrued expenses, loss contingencies, accounting for income taxes, foreign currency, employee benefit plans and stock-based compensation arrangements. There have been no material changes in our critical accounting policies and estimates from those described in our most recent Annual Report on Form 10-K.

Information related to pending adoption of recently issued accounting standards is provided in Note 16, Recent Accounting Pronouncements, to the accompanying unaudited condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q.

FORWARD-LOOKING STATEMENTS

Statements contained herein that relate to our future performance, including, without limitation, statements with respect to our anticipated results of operations or level of business for fiscal 2015 or any other future period, are forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on current expectations only and are subject to certain risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize or not materialize as expected, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, or projected. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Certain risks that may cause our results to differ from those anticipated are described in Item 1A of Part I of our most recent Annual Report on Form 10-K for the 2014 fiscal year ended January 3, 2015.

33

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

CURRENCY AND INTEREST RATE RISKS

In the operation of our business, we have market risk exposures including those related to foreign currency risk and interest rates. These risks, and our strategies to manage our exposure to them, are discussed below.

We contract for production with third parties primarily in Asia. While these contracts are stated in United States dollars, there can be no assurance that the cost for the future production of our products will not be affected by exchange rate fluctuations between the United States dollar and the local currencies of these contractors. We cannot quantify the potential impact of future currency fluctuations on net income (loss) in future years. To date, such exchange fluctuations have not had a material impact on our financial condition or results of operations.

The financial statements of our foreign subsidiaries that are denominated in functional currencies other than the U.S. dollar are translated into U.S. dollars using period-end exchange rates for assets and liabilities and weighted-average exchange rates for revenues and expenses. Gains and losses resulting from translating assets and liabilities from the functional currency to U.S. dollars are included in Accumulated Other Comprehensive Income (Loss).

Transactions by our Canadian subsidiary may be denominated in a currency other than the entity’s functional currency, which is the Canadian dollar. Fluctuations in exchange rates, primarily between the United States dollar and the Canadian dollar, may affect our results of operations, financial position, and cash flows. Transaction gains and losses are recorded in our Statement of Operations within Other Expense, net.

For our secured revolving credit facility, during the first quarter of fiscal 2015 we replaced approximately $20.0 million of outstanding borrowings with CAD $25.5 million of borrowings in Canadian dollars, which approximated $20.3 million. Outstanding borrowings under our secured revolving credit facility that are repayable in a currency other than the U.S. dollar are subject to future changes in currency exchange rates.

Our operating results are subject to risk from interest rate fluctuations on our secured revolving credit facility, which carries variable interest rates. Weighted-average variable rate borrowings as of April 4, 2015 were $186.0 million. An increase or decrease of 1% in the effective interest rate on that amount would have increased or decreased our annual pretax interest cost by approximately $1.9 million.

OTHER RISKS

We enter into various purchase order commitments with our suppliers. We have the ability to cancel these arrangements, although in some instances, we may be subject to a termination charge reflecting a percentage of work performed prior to cancellation.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined under Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective as of April 4, 2015.

Changes in Internal Control over Financial Reporting

There were no changes in the Company's internal controls over financial reporting during the first quarter of fiscal 2015 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

34

PART II

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors described in our Form 10-K for the 2014 fiscal year ended January 3, 2015.

35

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Share Repurchases

The following table provides information about share repurchases during the first quarter of fiscal 2015:

Period	Total number of shares purchased (1)	Average price paid per share	Total number of shares purchased as part of publicly announced plans or programs (2)	Approximate dollar value of shares that may yet be purchased under the plans or programs
January 5, 2015 through January 31, 2015	9,600	$85.19	9,600	$184,319,167
February 1, 2015 through February 28, 2015	159,602	$85.31	15,600	$183,035,409
March 1, 2015 through April 4, 2015	132,700	$90.58	132,700	$171,016,041
Total	301,902		157,900

(1) Includes shares of our common stock surrendered by our employees to satisfy required tax withholding upon the vesting of restricted stock awards. There were 144,002 shares surrendered between January 5, 2015 and April 4, 2015.

(2) Amounts purchased during the first quarter of 2015 were made in compliance with all applicable rules and regulations and in accordance with the share repurchase authorizations described in Note 5 to our accompanying unaudited condensed consolidated financial statements included in Item 1 of this quarterly report on Form 10-Q.

36

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

N/A

ITEM 4. MINE SAFETY DISCLOSURES

N/A

ITEM 5. OTHER INFORMATION

N/A

ITEM 6. EXHIBITS

Exhibit Number Description of Exhibits

31.1	Rule 13a-15(e)/15d-15(e) and 13a-15(f)/15d-15(f) Certification.
31.2	Rule 13a-15(e)/15d-15(e) and 13a-15(f)/15d-15(f) Certification.
32	Section 1350 Certification.

37

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on their behalf by the undersigned, thereunto duly authorized.

CARTER’S, INC.

Date : April 29, 2015	/s/ MICHAEL D. CASEY
	Michael D. Casey
	Chief Executive Officer
	(Principal Executive Officer)

Date : April 29, 2015	/s/ RICHARD F. WESTENBERGER
	Richard F. Westenberger
	Executive Vice President and
	Chief Financial Officer
	(Principal Financial and Accounting Officer)

38

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Michael D. Casey, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Carter’s, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date : April 29, 2015	/s/ MICHAEL D. CASEY
	Michael D. Casey
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Richard F. Westenberger, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Carter’s, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date : April 29, 2015	/s/ RICHARD F. WESTENBERGER
	Richard F. Westenberger
	Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION

Each of the undersigned in the capacity indicated hereby certifies that, to his knowledge, this Report on Form 10-Q for the fiscal quarter ended April 4, 2015 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of Carter’s, Inc.

Date : April 29, 2015	/s/ MICHAEL D. CASEY
	Michael D. Casey
	Chief Executive Officer

Date : April 29, 2015	/s/ RICHARD F. WESTENBERGER
	Richard F. Westenberger
	Chief Financial Officer

The foregoing certifications are being furnished solely pursuant to 18 U.S.C. § 1350 and are not being filed as part of the Report on Form 10-Q or as a separate disclosure document.

XML

COMMON STOCK (Share Repurchases) (Details) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Apr. 04, 2015	Mar. 29, 2014	Sep. 28, 2013	Jan. 31, 2014	Aug. 29, 2013	Jun. 29, 2013	Jan. 30, 2013
Stockholders' Equity Note [Abstract]
Share repurchase, authorized amount						$ 300
Share repurchase, additional authorized amount			400
Number of shares repurchased and retired	157,900	30,151
Cost of repurchased and retired shares	14.1	2.3
Remaining capacity under authorization	171.0
Average price per share	$ 89.43	$ 76.03
Uncollared accelerated stock repurchase agreement amount					$ 400
Received shares				1,000,000			5,600,000
Dividend declared per common share	$ 0.22	$ 0.19

XML

GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (Income Statement) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Apr. 04, 2015	Mar. 29, 2014
Condensed Income Statements, Captions [Line Items]
Net sales	$ 684,764	$ 651,643
Cost of goods sold	400,712	389,918
Gross profit	284,052	261,725
Selling, general, and administrative expenses	211,183	210,095
Royalty income	(11,636)	(9,901)
Operating income (loss)	84,505	61,531
Interest expense	6,692	6,897
Interest income	(137)	(132)
(Income) loss in subsidiaries	0	0
Other expense, net	1,962	596
Income before income taxes	75,988	54,170
Provision for income taxes	26,196	19,873
Net income	49,792	34,297
Parent [Member]
Condensed Income Statements, Captions [Line Items]
Net sales	0	0
Cost of goods sold	0	0
Gross profit	0	0
Selling, general, and administrative expenses	0	0
Royalty income	0	0
Operating income (loss)	0	0
Interest expense	0	0
Interest income	0	0
(Income) loss in subsidiaries	(49,792)	(34,297)
Other expense, net	0	0
Income before income taxes	49,792	34,297
Provision for income taxes	0	0
Net income	49,792	34,297
Subsidiary Issuer [Member]
Condensed Income Statements, Captions [Line Items]
Net sales	435,286	407,365
Cost of goods sold	298,211	293,774
Gross profit	137,075	113,591
Selling, general, and administrative expenses	42,249	48,527
Royalty income	(9,039)	(8,045)
Operating income (loss)	103,865	73,109
Interest expense	6,662	6,897
Interest income	(1,557)	(1,469)
(Income) loss in subsidiaries	23,394	17,435
Other expense, net	(146)	(57)
Income before income taxes	75,512	50,303
Provision for income taxes	25,621	16,963
Net income	49,891	33,340
Guarantor Subsidiaries [Member]
Condensed Income Statements, Captions [Line Items]
Net sales	359,396	321,708
Cost of goods sold	222,915	188,020
Gross profit	136,481	133,688
Selling, general, and administrative expenses	157,263	146,417
Royalty income	(4,711)	(4,027)
Operating income (loss)	(16,071)	(8,702)
Interest expense	1,343	1,313
Interest income	0	0
(Income) loss in subsidiaries	(520)	(586)
Other expense, net	137	57
Income before income taxes	(17,031)	(9,486)
Provision for income taxes	1,980	3,740
Net income	(19,011)	(13,226)
Non-Guarantors Subsidiaries [Member]
Condensed Income Statements, Captions [Line Items]
Net sales	47,120	49,158
Cost of goods sold	30,479	30,059
Gross profit	16,641	19,099
Selling, general, and administrative expenses	19,831	22,932
Royalty income	0	0
Operating income (loss)	(3,190)	(3,833)
Interest expense	115	24
Interest income	(8)	0
(Income) loss in subsidiaries	0	0
Other expense, net	1,971	596
Income before income taxes	(5,268)	(4,453)
Provision for income taxes	(1,405)	(830)
Net income	(3,863)	(3,623)
Consolidating Adjustments [Member]
Condensed Income Statements, Captions [Line Items]
Net sales	(157,038)	(126,588)
Cost of goods sold	(150,893)	(121,935)
Gross profit	(6,145)	(4,653)
Selling, general, and administrative expenses	(8,160)	(7,781)
Royalty income	2,114	2,171
Operating income (loss)	(99)	957
Interest expense	(1,428)	(1,337)
Interest income	1,428	1,337
(Income) loss in subsidiaries	26,918	17,448
Other expense, net	0	0
Income before income taxes	(27,017)	(16,491)
Provision for income taxes	0	0
Net income	$ (27,017)	$ (16,491)

XML

EARNINGS PER SHARE (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Apr. 04, 2015	Mar. 29, 2014
Weighted-average number of common and common equivalent shares outstanding:
Basic number of common shares outstanding	52,119,215	53,172,459
Dilutive effect of equity awards	495,386	501,322
Diluted number of common and common equivalent shares outstanding	52,614,601	53,673,781
Basic net income per common share (in thousands, except per share data):
Net income	$ 49,792	$ 34,297
Income allocated to participating securities	(560)	(470)
Net income available to common shareholders	49,232	33,827
Basic net income per common share	$ 0.94	$ 0.64
Diluted net income per common share (in thousands, except per share data):
Net income	49,792	34,297
Income allocated to participating securities	(556)	(467)
Net income available to common shareholders	$ 49,236	$ 33,830
Diluted net income per common share	$ 0.94	$ 0.63
Anti-dilutive shares (in shares)	183,400	269,650

XML

GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (Comprehensive Income) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Apr. 04, 2015	Mar. 29, 2014
Condensed Financial Statements, Captions [Line Items]
Net income	$ 49,792	$ 34,297
Foreign currency translation adjustments	(5,994)	(2,760)
Comprehensive income	43,798	31,537
Parent [Member]
Condensed Financial Statements, Captions [Line Items]
Net income	49,792	34,297
Foreign currency translation adjustments	(5,994)	(2,760)
Comprehensive income	43,798	31,537
Subsidiary Issuer [Member]
Condensed Financial Statements, Captions [Line Items]
Net income	49,891	33,340
Foreign currency translation adjustments	(5,994)	(2,760)
Comprehensive income	43,897	30,580
Guarantor Subsidiaries [Member]
Condensed Financial Statements, Captions [Line Items]
Net income	(19,011)	(13,226)
Foreign currency translation adjustments	8	(132)
Comprehensive income	(19,003)	(13,358)
Non-Guarantors Subsidiaries [Member]
Condensed Financial Statements, Captions [Line Items]
Net income	(3,863)	(3,623)
Foreign currency translation adjustments	(5,994)	(2,760)
Comprehensive income	(9,857)	(6,383)
Consolidating Adjustments [Member]
Condensed Financial Statements, Captions [Line Items]
Net income	(27,017)	(16,491)
Foreign currency translation adjustments	11,980	5,652
Comprehensive income	$ (15,037)	$ (10,839)

XML

FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS (Contingent Consideration) (Details) (Level 3 [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended
	Apr. 04, 2015	Mar. 29, 2014
Level 3 [Member]
Business Acquisition, Contingent Consideration [Line Items]
Balance at beginning of period	$ 7,711	$ 16,348
Accretion	483	454
Foreign currency translation adjustment	(533)	(487)
Balance at end of period	$ 7,661	$ 16,315
Discount rate	18.00%

XML

SEGMENT INFORMATION (Tables)

3 Months Ended

Apr. 04, 2015

Segment Reporting [Abstract]

Schedule of segment information

The table below presents certain segment information for the periods indicated:

	Fiscal quarter ended
(dollars in thousands)	April 4, 2015			% of Total Net Sales		March 29, 2014			% of Total Net Sales
Net sales:
Carter’s Wholesale	$	269,315		39.3	%	$	271,628		41.7	%
Carter’s Retail (a)	257,727			37.7	%	230,328			35.3	%
Total Carter’s (U.S.)	527,042			77.0	%	501,956			77.0	%
OshKosh Retail (a)	73,042			10.7	%	63,558			9.8	%
OshKosh Wholesale	16,051			2.3	%	15,585			2.4	%
Total OshKosh (U.S.)	89,093			13.0	%	79,143			12.2	%
International (b)	68,629			10.0	%	70,544			10.8	%
Total net sales	$	684,764		100.0	%	$	651,643		100.0	%
Operating income (loss):				% of Segment Net Sales					% of Segment Net Sales
Carter’s Wholesale	$	57,931		21.5	%	$	46,867		17.3	%
Carter’s Retail (a)	44,493			17.3	%	42,979			18.7	%
Total Carter’s (U.S.)	102,424			19.4	%	89,846			17.9	%
OshKosh Retail (a)	(960		)	(1.3	)%	(4,489		)	(7.1	)%
OshKosh Wholesale	2,979			18.6	%	2,025			13.0	%
Total OshKosh (U.S.)	2,019			2.3	%	(2,464		)	(3.1	)%
International (b) (c)	6,511			9.5	%	4,036			5.7	%
Corporate expenses (d) (e)	(26,449		)			(29,887		)
Total operating income	$	84,505		12.3	%	$	61,531		9.4	%

(a) Includes eCommerce results.

(b) Net sales include international retail, eCommerce, and wholesale sales. Operating income includes international licensing income.

(c) Includes charges associated with the revaluation of the Company's contingent consideration related to the Company's 2011 acquisition of Bonnie Togs of approximately $0.5 million for each of the first quarters of fiscal 2015 and 2014. Also includes a benefit of approximately $0.4 million for the first quarter of fiscal 2014 related to a favorable recovery on inventory related to the Company's exit from Japan retail operations.

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

(e) Includes the following charges:

	Fiscal quarter ended
(dollars in millions)	April 4, 2015		March 29, 2014
Closure of distribution facility in Hogansville, GA (1)	$	—	$	0.3
Office consolidation costs	$	—	$	2.0
Amortization of tradenames	$	2.3	$	6.3

(1) Continuing operating costs associated with the closure of the Company's distribution facility in Hogansville, Georgia. This facility was sold in          December 2014.    

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ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables)

3 Months Ended

Apr. 04, 2015

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Schedule of Accumulated Other Comprehensive Loss

ccumulated other comprehensive (loss) consisted of the following:

(dollars in thousands)	April 4, 2015			January 3, 2015			March 29, 2014
Cumulative foreign currency translation adjustments	$	(21,391	)	$	(15,397	)	$	(10,312	)
Pension and post-retirement liability adjustments	(7,640		)	(7,640		)	(2,530		)
Total accumulated other comprehensive loss	$	(29,031	)	$	(23,037	)	$	(12,842	)

Changes in accumulated other comprehensive loss for the first quarters of fiscal 2015 and 2014 consisted of additional losses for foreign currency translation adjustments of approximately $6.0 million and $2.8 million, respectively. During the first quarters of fiscal 2015 and 2014, no amounts were reclassified from other accumulated other comprehensive loss to the statement of operations.

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OTHER CURRENT AND LONG-TERM LIABILITIES (Other Long-Term Liabilities) (Details) (USD $) In Thousands, unless otherwise specified	Apr. 04, 2015	Jan. 03, 2015	Mar. 29, 2014
Other Liabilities Disclosure [Abstract]
Deferred lease incentives	$ 68,652	$ 67,205	$ 69,900
Accrued rent	43,504	40,656	34,446
Contingent consideration	0	0	7,437
Accrued workers' compensation	4,717	4,717	0
OshKosh pension plan	11,029	11,031	3,613
Unrecognized tax benefits	10,087	12,230	12,505
Post-retirement life and medical plan	4,731	4,731	5,069
Deferred compensation	8,710	8,388	7,420
Other	1,887	1,947	103
Total	$ 153,317	$ 150,905	$ 140,493

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STOCK-BASED COMPENSATION (Details) (USD $) In Thousands, except Share data, unless otherwise specified	0 Months Ended	3 Months Ended
	Feb. 18, 2015	Apr. 04, 2015	Mar. 29, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation		$ 4,740	$ 4,535
Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	177,900
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price	$ 82.40
Stock-based compensation		1,324	1,370
Time-based Awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Granted	84,800
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 82.40
Stock-based compensation		2,083	1,941
Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Granted	50,600
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 82.40
Stock-based compensation		$ 1,333	$ 1,224
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares		331,163	151,500
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Weighted Average Grant Date Fair Value		$ 41.16	$ 39.65

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ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) (USD $)	3 Months Ended
	Apr. 04, 2015	Mar. 29, 2014	Jan. 03, 2015
Accumulated Other Comprehensive Income (Loss) [Line Items]
Other Comprehensive (Income) Loss, Pension and Other Postretirement Benefit Plans, Tax, Portion Attributable to Parent	$ 6,000,000	$ 2,800,000
Total accumulated other comprehensive loss	(29,031,000)	(12,842,000)	(23,037,000)
Cumulative Foreign Currency Translation Adjustments [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Total accumulated other comprehensive loss	(21,391,000)	(10,312,000)	(15,397,000)
Pension and Post-retirement Liability Adjustment [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Total accumulated other comprehensive loss	$ (7,640,000)	$ (2,530,000)	$ (7,640,000)

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FACILITY CLOSURE (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 29, 2014	Apr. 04, 2015
Hogansville Distribution Facility [Member]
Restructuring Reserve [Roll Forward]
Provision	$ 2.0
Office Consolidation [Member]
Restructuring Reserve [Roll Forward]
Restructuring reserve, beginning balance		3.6
Provision		0
Payments		(0.5)
Other		0
Restructuring reserve, ending balance	5.6	3.1
Office Consolidation [Member] | Severance [Member]
Restructuring Reserve [Roll Forward]
Restructuring reserve, beginning balance		0.8
Provision		0
Payments		(0.2)
Other		0
Restructuring reserve, ending balance		0.6
Office Consolidation [Member] | Other Closure Costs [Member]
Restructuring Reserve [Roll Forward]
Restructuring reserve, beginning balance		2.8
Provision		0
Payments		(0.3)
Other		0
Restructuring reserve, ending balance		2.5
Japan Retail Operations [Member] | Office Consolidation [Member] | Severance and Other Benefits [Member]
Restructuring Reserve [Roll Forward]
Provision		0.6
Japan Retail Operations [Member] | Office Consolidation [Member] | Accelerated Depreciation [Member]
Restructuring Reserve [Roll Forward]
Provision	0.6
Cost of Sales [Member] | Japan Retail Operations [Member] | Recovery on Inventory [Member]
Restructuring Reserve [Roll Forward]
Provision		$ 1.0

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FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS (Borrowings) (Details) (USD $) In Thousands, unless otherwise specified	Apr. 04, 2015	Jan. 03, 2015	Mar. 29, 2014
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt	$ 586,349	$ 586,000	$ 586,000
Secured revolving credit facility [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt	186,349	186,000	186,000
Senior Notes [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt		400,000	400,000
Debt Instrument, face amount	400,000
Fair Value [Member] | Level 2 [Member] | Senior Notes [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt	$ 414,000

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BASIS OF PREPARATION

3 Months Ended

Apr. 04, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PREPARATION

BASIS OF PREPARATION

The accompanying unaudited condensed consolidated financial statements include the accounts of Carter's, Inc. and its wholly owned subsidiaries and 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, statement of stockholder’s 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 4, 2015 are not necessarily indicative of the results that may be expected for the 2015 fiscal year ending January 2, 2016.

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 3, 2015 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. The accounting policies the Company follows are set forth in the Company's Annual Report on Form 10-K for the 2014 fiscal year ended January 3, 2015. There have been no material subsequent changes to these accounting policies.

The Company's fiscal year ends on the Saturday in December or January, nearest the last day of December, resulting in an additional week of results every five or six years. As a result, fiscal 2014, which ended on January 3, 2015, contained 53 weeks. Fiscal 2015, which will end on January 2, 2016, contains 52 weeks. The first fiscal quarter of 2015 and 2014 each contained 13 weeks.

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EMPLOYEE BENEFIT PLANS (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Apr. 04, 2015	Mar. 29, 2014
Pension Plans [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Interest cost on accumulated benefit obligation	$ 623	$ 622
Expected return on plan assets	(785)	(798)
Amortization of net actuarial loss (gain)	161	21
Net periodic pension (benefit) cost	(1)	(155)
Post-retirement Benefit [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Interest cost on accumulated benefit obligation	45	57
Service cost – benefits attributed to service during the period	32	28
Amortization of net actuarial loss (gain)	(48)	(51)
Curtailment gain	0	(22)
Net periodic pension (benefit) cost	$ 29	$ 12

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EMPLOYEE BENEFIT PLANS (Tables)

3 Months Ended

Apr. 04, 2015

Compensation and Retirement Disclosure [Abstract]

Components of pension expense and post-retirement benefit expense

The net periodic pension (benefit) cost included in the statement of operations was comprised of:

	Fiscal quarter ended
(dollars in thousands)	April 4, 2015			March 29, 2014
Interest cost	$	623		$	622
Expected return on plan assets	(785		)	(798		)
Recognized actuarial loss	161			21
Net periodic pension (benefit) cost	$	(1	)	$	(155	)

The components of post-retirement benefit expense charged to the statement of operations were as follows:

	Fiscal quarter ended
(dollars in thousands)	April 4, 2015			March 29, 2014
Service cost – benefits attributed to service during the period	$	32		$	28
Interest cost on accumulated post-retirement benefit obligation	45			57
Amortization net actuarial gain	(48		)	(51		)
Curtailment gain	—			(22		)
Total net periodic post-retirement benefit cost	$	29		$	12

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STOCK-BASED COMPENSATION (Tables)

3 Months Ended

Apr. 04, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of recorded stock-based compensation cost

The Company recorded stock-based compensation cost as follows:

	Fiscal quarter ended
(dollars in thousands)	April 4, 2015		March 29, 2014
Stock options	$	1,324	$	1,370
Restricted stock:
Time-based awards	2,083		1,941
Performance-based awards	1,333		1,224
Total	$	4,740	$	4,535

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GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (Cash Flows) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Apr. 04, 2015	Mar. 29, 2014
Condensed Cash Flow Statements, Captions [Line Items]
Net cash provided by operating activities	$ 87,224	$ 30,560
Cash flows from investing activities:
Capital expenditures	(20,760)	(32,083)
Intercompany investing activity	0	0
Proceeds From Repayment of Intercompany Loan	0
Proceeds from sale of property, plant and equipment	76	0
Net cash used in investing activities	(20,684)	(32,083)
Cash flows from financing activities:
Intercompany financing activity	0	0
Proceeds from intercompany loan	0	0
Borrowings under secured revolving credit facility	20,349	0
Dividends paid	(11,597)	(10,208)
Payments of debt issuance costs	0	(55)
Income tax benefit from stock-based compensation	5,771	3,370
Payments on secured revolving credit facility	20,000	0
Repurchase of common stock	(14,120)	(2,292)
Withholdings from vesting of restricted stock	(12,331)	(4,079)
Proceeds from exercise of stock options	2,768	5,546
Net cash (used in) provided by financing activities	(29,160)	(7,718)
Effect of exchange rate changes on cash	(618)	(69)
Net increase (decrease) in cash and cash equivalents	36,762	(9,310)
Cash and cash equivalents, beginning of period	340,638	286,546
Cash and cash equivalents, end of period	377,400	277,236
Parent [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Net cash provided by operating activities	0	0
Cash flows from investing activities:
Capital expenditures	0	0
Intercompany investing activity	35,280	11,033
Proceeds From Repayment of Intercompany Loan	0
Proceeds from sale of property, plant and equipment	0
Net cash used in investing activities	35,280	11,033
Cash flows from financing activities:
Intercompany financing activity	0	0
Proceeds from intercompany loan	0	0
Borrowings under secured revolving credit facility	0
Dividends paid	(11,597)	(10,208)
Payments of debt issuance costs		0
Income tax benefit from stock-based compensation	0	0
Payments on secured revolving credit facility	0
Repurchase of common stock	(14,120)	(2,292)
Withholdings from vesting of restricted stock	(12,331)	(4,079)
Proceeds from exercise of stock options	2,768	5,546
Net cash (used in) provided by financing activities	(35,280)	(11,033)
Effect of exchange rate changes on cash	0	0
Net increase (decrease) in cash and cash equivalents	0	0
Cash and cash equivalents, beginning of period	0	0
Cash and cash equivalents, end of period	0	0
Subsidiary Issuer [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Net cash provided by operating activities	78,186	44,470
Cash flows from investing activities:
Capital expenditures	(5,517)	(18,417)
Intercompany investing activity	(8,332)	3,772
Payment of Intercompany Borrowings		10,000
Proceeds From Repayment of Intercompany Loan	20,000
Proceeds from sale of property, plant and equipment	69
Net cash used in investing activities	6,220	(24,645)
Cash flows from financing activities:
Intercompany financing activity	(41,315)	(34,969)
Proceeds from intercompany loan	0	0
Borrowings under secured revolving credit facility	0
Dividends paid	0	0
Payments of debt issuance costs		(55)
Income tax benefit from stock-based compensation	4,540	1,067
Payments on secured revolving credit facility	20,000
Repurchase of common stock	0	0
Withholdings from vesting of restricted stock	0	0
Proceeds from exercise of stock options	0	0
Net cash (used in) provided by financing activities	(56,775)	(33,957)
Effect of exchange rate changes on cash	0	0
Net increase (decrease) in cash and cash equivalents	27,631	(14,132)
Cash and cash equivalents, beginning of period	311,078	278,260
Cash and cash equivalents, end of period	338,709	264,128
Guarantor Subsidiaries [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Net cash provided by operating activities	3,969	(12,284)
Cash flows from investing activities:
Capital expenditures	(12,701)	(10,994)
Intercompany investing activity	(1,232)	(2,305)
Proceeds From Repayment of Intercompany Loan	0
Proceeds from sale of property, plant and equipment	0
Net cash used in investing activities	(13,933)	(13,299)
Cash flows from financing activities:
Intercompany financing activity	15,796	23,280
Proceeds from intercompany loan	0	0
Borrowings under secured revolving credit facility	0
Dividends paid	0	0
Payments of debt issuance costs		0
Income tax benefit from stock-based compensation	1,231	2,303
Payments on secured revolving credit facility	0
Repurchase of common stock	0	0
Withholdings from vesting of restricted stock	0	0
Proceeds from exercise of stock options	0	0
Net cash (used in) provided by financing activities	17,027	25,583
Effect of exchange rate changes on cash	0	0
Net increase (decrease) in cash and cash equivalents	7,063	0
Cash and cash equivalents, beginning of period	10,442	0
Cash and cash equivalents, end of period	17,505	0
Non-Guarantors Subsidiaries [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Net cash provided by operating activities	5,069	(1,626)
Cash flows from investing activities:
Capital expenditures	(2,542)	(2,672)
Intercompany investing activity	0	0
Proceeds From Repayment of Intercompany Loan	0
Proceeds from sale of property, plant and equipment	7
Net cash used in investing activities	(2,535)	(2,672)
Cash flows from financing activities:
Intercompany financing activity	(197)	(811)
Proceeds from intercompany loan	(20,000)	10,000
Borrowings under secured revolving credit facility	20,349
Dividends paid	0	0
Payments of debt issuance costs		0
Income tax benefit from stock-based compensation	0	0
Payments on secured revolving credit facility	0
Repurchase of common stock	0	0
Withholdings from vesting of restricted stock	0	0
Proceeds from exercise of stock options	0	0
Net cash (used in) provided by financing activities	152	9,189
Effect of exchange rate changes on cash	(618)	(69)
Net increase (decrease) in cash and cash equivalents	2,068	4,822
Cash and cash equivalents, beginning of period	19,118	8,286
Cash and cash equivalents, end of period	21,186	13,108
Consolidating Adjustments [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Net cash provided by operating activities	0	0
Cash flows from investing activities:
Capital expenditures	0	0
Intercompany investing activity	(25,716)	(12,500)
Payment of Intercompany Borrowings		(10,000)
Proceeds From Repayment of Intercompany Loan	(20,000)
Proceeds from sale of property, plant and equipment	0
Net cash used in investing activities	(45,716)	(2,500)
Cash flows from financing activities:
Intercompany financing activity	25,716	12,500
Proceeds from intercompany loan	20,000	(10,000)
Borrowings under secured revolving credit facility	0
Dividends paid	0	0
Payments of debt issuance costs		0
Income tax benefit from stock-based compensation	0	0
Payments on secured revolving credit facility	0
Repurchase of common stock	0	0
Withholdings from vesting of restricted stock	0	0
Proceeds from exercise of stock options	0	0
Net cash (used in) provided by financing activities	45,716	2,500
Effect of exchange rate changes on cash	0	0
Net increase (decrease) in cash and cash equivalents	0	0
Cash and cash equivalents, beginning of period	0	0
Cash and cash equivalents, end of period	$ 0	$ 0

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INCOME TAXES (Details) (USD $) In Millions, unless otherwise specified	Apr. 04, 2015	Jan. 03, 2015	Mar. 29, 2014
Income Tax Disclosure [Abstract]
Tax reserve Statue of Limitation, Benefits Recognized	$ 1.8
Gross unrecognized tax benefits	9.3
Unrecognized tax benefits that if recognized would impact effective tax rate	6.3
Reserves for unrecognized tax benefits	1.7
Interest accrued on uncertain tax positions	$ 0.8	$ 0.9	$ 0.9

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FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Apr. 04, 2015

Fair Value Disclosures [Abstract]

Schedule of changes in contingent consideration

The following table summarizes the changes in the remaining contingent consideration liability related to the Company's

2011 acquisition of Bonnie Togs:

	Fiscal quarter ended
(dollars in thousands)	April 4, 2015			March 29, 2014
Balance at the beginning of period	7,711			16,348
Accretion	483			454
Foreign currency translation adjustment	(533		)	(487		)
Balance at the end of period	$	7,661		$	16,315

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EARNINGS PER SHARE (Tables)

3 Months Ended

Apr. 04, 2015

Earnings Per Share [Abstract]

Reconciliation of basic common shares outstanding to diluted common and common equivalent shares outstanding

The following is a reconciliation of basic common shares outstanding to diluted common and common equivalent shares outstanding:

	Fiscal quarter ended
	April 4, 2015			March 29, 2014
Weighted-average number of common and common equivalent shares outstanding:
Basic number of common shares outstanding	52,119,215			53,172,459
Dilutive effect of equity awards	495,386			501,322
Diluted number of common and common equivalent shares outstanding	52,614,601			53,673,781
Basic net income per common share (in thousands, except per share data):
Net income	$	49,792		$	34,297
Income allocated to participating securities	(560		)	(470		)
Net income available to common shareholders	$	49,232		$	33,827
Basic net income per common share	$	0.94		$	0.64
Diluted net income per common share (in thousands, except per share data):
Net income	$	49,792		$	34,297
Income allocated to participating securities	(556		)	(467		)
Net income available to common shareholders	$	49,236		$	33,830
Diluted net income per common share	$	0.94		$	0.63
Anti-dilutive shares excluded from dilutive earnings per share computation	183,400			269,650

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THE COMPANY

3 Months Ended

Apr. 04, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

THE COMPANY

THE COMPANY

Carter’s, Inc. and its wholly owned subsidiaries (collectively, the “Company,” “its,” "us" and "our") design, source, and market branded childrenswear under the Carter’s, Child ofMine, Just One You,Precious Firsts, OshKosh,and other brands. The Company's products are sourced through contractual arrangements with manufacturers worldwide for wholesale distribution to major domestic and international retailers and for the Company's own retail stores and websites that market its brand name merchandise and other licensed products manufactured by other companies. As of April 4, 2015, the Company operated 549 Carter’s stores in the United States, 208 OshKosh stores in the United States, and 127 stores in Canada.

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OTHER CURRENT AND LONG-TERM LIABILITIES (Tables)

3 Months Ended

Apr. 04, 2015

Other Liabilities Disclosure [Abstract]

Schedule of other current liabilities

Other current liabilities consisted of the following:

(dollars in thousands)	April 4, 2015		January 3, 2015		March 29, 2014
Accrued bonuses and incentive compensation	$	4,396	$	18,875	$	3,196
Contingent consideration	7,661		7,711		8,878
Income taxes payable	18,410		692		6,637
Accrued workers' compensation	3,057		2,662		7,392
Accrued interest	2,759		8,106		2,874
Accrued sales and use taxes	7,653		5,318		7,307
Accrued salaries and wages	8,111		3,576		3,405
Accrued gift certificates	9,882		10,100		7,877
Accrued 401(k) contributions	1,296		10,073		893
Accrued closure costs	633		835		7,754
Other current liabilities	29,545		29,780		19,022
Total	$	93,403	$	97,728	$	75,235

Schedule of other long-term liabilities

Other long-term liabilities consisted of the following:

(dollars in thousands)	April 4, 2015		January 3, 2015		March 29, 2014
Deferred lease incentives	$	68,652	$	67,205	$	69,900
Accrued rent	43,504		40,656		34,446
Contingent consideration	—		—		7,437
Accrued workers' compensation	4,717		4,717		—
OshKosh pension plan	11,029		11,031		3,613
Unrecognized tax benefits	10,087		12,230		12,505
Post-retirement life and medical plan	4,731		4,731		5,069
Deferred compensation	8,710		8,388		7,420
Other	1,887		1,947		103
Total	$	153,317	$	150,905	$	140,493

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LONG-TERM DEBT (Schedule of Long Term Debt) (Details) (USD $) In Thousands, unless otherwise specified	Apr. 04, 2015	Jan. 03, 2015	Mar. 29, 2014
Debt Instrument [Line Items]
Long-term debt	$ 586,349	$ 586,000	$ 586,000
Senior Notes [Member]
Debt Instrument [Line Items]
Long-term debt		400,000	400,000
Secured revolving credit facility [Member]
Debt Instrument [Line Items]
Long-term debt	$ 186,349	$ 186,000	$ 186,000

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GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (Balance Sheets) (Details) (USD $) In Thousands, unless otherwise specified	Apr. 04, 2015	Jan. 03, 2015	Mar. 29, 2014	Dec. 28, 2013
Current assets:
Cash and cash equivalents	$ 377,400	$ 340,638	$ 277,236	$ 286,546
Accounts receivable, net	195,593	184,563	205,166
Intercompany receivable	0	0	0
Intercompany Loan Receivables		0	0
Finished goods inventories	358,014	444,844	363,018
Prepaid expenses and other current assets	34,718	34,788	26,362
Deferred income taxes	32,842	36,625	37,343
Total current assets	998,567	1,041,458	909,125
Property, plant, and equipment, net of accumulated depreciation of $257,394, $245,011, and $220,847	341,658	333,097	316,786
Goodwill	178,859	181,975	184,604
Tradenames and other intangibles, net	314,955	317,297	323,967
Deferred debt issuance costs, net	6,361	6,677	7,758
Other assets	12,786	12,592	10,109
Intercompany long term receivable	0	0	0
Intercompany long term note receivable	0	0	0
Investment in subsidiaries	0	0	0
Total assets	1,853,186	1,893,096	1,752,349
Current liabilities:
Accounts payable	94,129	150,243	103,439
Intercompany payables	0	0	0
Intercompany Loan Payables		0	0
Other current liabilities	93,403	97,728	75,235
Total current liabilities	187,532	247,971	178,674
Long-term debt	586,349	586,000	586,000
Deferred income taxes	120,275	121,536	118,032
Intercompany long term liability	0	0	0
Intercompany long term note payable	0	0	0
Other long-term liabilities	153,317	150,905	140,493
Total stockholders' equity	805,713	786,684	729,150
Total liabilities and stockholders' equity	1,853,186	1,893,096	1,752,349
Parent [Member]
Current assets:
Cash and cash equivalents	0	0	0	0
Accounts receivable, net	0	0	0
Intercompany receivable	0	0	0
Intercompany Loan Receivables		0	0
Finished goods inventories	0	0	0
Prepaid expenses and other current assets	0	0	0
Deferred income taxes	0	0	0
Total current assets	0	0	0
Property, plant, and equipment, net of accumulated depreciation of $257,394, $245,011, and $220,847	0	0	0
Goodwill	0	0	0
Tradenames and other intangibles, net	0	0	0
Deferred debt issuance costs, net	0	0	0
Other assets	0	0	0
Intercompany long term receivable	0	0	0
Intercompany long term note receivable	0	0	0
Investment in subsidiaries	805,713	786,684	729,150
Total assets	805,713	786,684	729,150
Current liabilities:
Accounts payable	0	0	0
Intercompany payables	0	0	0
Intercompany Loan Payables		0	0
Other current liabilities	0	0	0
Total current liabilities	0	0	0
Long-term debt	0	0	0
Deferred income taxes	0	0	0
Intercompany long term liability	0	0	0
Intercompany long term note payable	0	0	0
Other long-term liabilities	0	0	0
Total stockholders' equity	805,713	786,684	729,150
Total liabilities and stockholders' equity	805,713	786,684	729,150
Subsidiary Issuer [Member]
Current assets:
Cash and cash equivalents	338,709	311,078	264,128	278,260
Accounts receivable, net	167,196	155,192	178,034
Intercompany receivable	62,791	58,402	54,911
Intercompany Loan Receivables		20,000	10,000
Finished goods inventories	173,892	240,702	177,816
Prepaid expenses and other current assets	13,329	15,143	10,137
Deferred income taxes	18,673	21,308	24,252
Total current assets	774,590	821,825	719,278
Property, plant, and equipment, net of accumulated depreciation of $257,394, $245,011, and $220,847	157,206	158,017	154,045
Goodwill	136,570	136,570	136,570
Tradenames and other intangibles, net	229,440	231,765	238,382
Deferred debt issuance costs, net	6,361	6,677	7,758
Other assets	11,934	11,781	10,107
Intercompany long term receivable	0	0	0
Intercompany long term note receivable	100,000	100,000	100,000
Investment in subsidiaries	591,454	591,735	555,914
Total assets	2,007,555	2,058,370	1,922,054
Current liabilities:
Accounts payable	61,014	102,233	68,708
Intercompany payables	84,259	105,940	78,020
Intercompany Loan Payables		0	0
Other current liabilities	25,078	15,782	29,124
Total current liabilities	170,351	223,955	175,852
Long-term debt	566,000	586,000	586,000
Deferred income taxes	80,185	81,406	74,832
Intercompany long term liability	279,897	274,584	261,259
Intercompany long term note payable	0	0	0
Other long-term liabilities	69,035	69,467	64,097
Total stockholders' equity	842,087	822,958	760,014
Total liabilities and stockholders' equity	2,007,555	2,058,370	1,922,054
Guarantor Subsidiaries [Member]
Current assets:
Cash and cash equivalents	17,505	10,442	0	0
Accounts receivable, net	22,250	22,770	18,504
Intercompany receivable	84,908	106,137	80,281
Intercompany Loan Receivables		0	0
Finished goods inventories	179,932	191,953	180,133
Prepaid expenses and other current assets	13,369	13,059	12,306
Deferred income taxes	12,356	12,983	12,155
Total current assets	330,320	357,344	303,379
Property, plant, and equipment, net of accumulated depreciation of $257,394, $245,011, and $220,847	156,962	147,076	137,170
Goodwill	0	0	0
Tradenames and other intangibles, net	85,500	85,500	85,500
Deferred debt issuance costs, net	0	0	0
Other assets	852	811	2
Intercompany long term receivable	279,897	274,584	261,259
Intercompany long term note receivable	0	0	0
Investment in subsidiaries	10,173	9,647	2,487
Total assets	863,704	874,962	789,797
Current liabilities:
Accounts payable	22,936	37,869	28,654
Intercompany payables	60,851	55,812	62,719
Intercompany Loan Payables		0	0
Other current liabilities	54,833	67,793	33,638
Total current liabilities	138,620	161,474	125,011
Long-term debt	0	0	0
Deferred income taxes	40,090	40,130	43,200
Intercompany long term liability	0	0	0
Intercompany long term note payable	100,000	100,000	100,000
Other long-term liabilities	72,026	68,426	57,852
Total stockholders' equity	512,968	504,932	463,734
Total liabilities and stockholders' equity	863,704	874,962	789,797
Non-Guarantors Subsidiaries [Member]
Current assets:
Cash and cash equivalents	21,186	19,118	13,108	8,286
Accounts receivable, net	6,147	6,601	8,628
Intercompany receivable	728	2,012	12,078
Intercompany Loan Receivables		0	0
Finished goods inventories	40,563	48,463	35,933
Prepaid expenses and other current assets	8,020	6,586	3,919
Deferred income taxes	1,813	2,334	936
Total current assets	78,457	85,114	74,602
Property, plant, and equipment, net of accumulated depreciation of $257,394, $245,011, and $220,847	27,490	28,004	25,571
Goodwill	42,289	45,405	48,034
Tradenames and other intangibles, net	15	32	85
Deferred debt issuance costs, net	0	0	0
Other assets	0	0	0
Intercompany long term receivable	0	0	0
Intercompany long term note receivable	0	0	0
Investment in subsidiaries	0	0	0
Total assets	148,251	158,555	148,292
Current liabilities:
Accounts payable	10,179	10,141	6,077
Intercompany payables	3,316	4,799	6,531
Intercompany Loan Payables		20,000	10,000
Other current liabilities	13,492	14,153	12,473
Total current liabilities	26,987	49,093	35,081
Long-term debt	20,349	0	0
Deferred income taxes	0	0	0
Intercompany long term liability	0	0	0
Intercompany long term note payable	0	0	0
Other long-term liabilities	12,256	13,012	18,544
Total stockholders' equity	88,659	96,450	94,667
Total liabilities and stockholders' equity	148,251	158,555	148,292
Consolidating Adjustments [Member]
Current assets:
Cash and cash equivalents	0	0	0	0
Accounts receivable, net	0	0	0
Intercompany receivable	(148,427)	(166,551)	(147,270)
Intercompany Loan Receivables		(20,000)	(10,000)
Finished goods inventories	(36,373)	(36,274)	(30,864)
Prepaid expenses and other current assets	0	0	0
Deferred income taxes	0	0	0
Total current assets	(184,800)	(222,825)	(188,134)
Property, plant, and equipment, net of accumulated depreciation of $257,394, $245,011, and $220,847	0	0	0
Goodwill	0	0	0
Tradenames and other intangibles, net	0	0	0
Deferred debt issuance costs, net	0	0	0
Other assets	0	0	0
Intercompany long term receivable	(279,897)	(274,584)	(261,259)
Intercompany long term note receivable	(100,000)	(100,000)	(100,000)
Investment in subsidiaries	(1,407,340)	(1,388,066)	(1,287,551)
Total assets	(1,972,037)	(1,985,475)	(1,836,944)
Current liabilities:
Accounts payable	0	0	0
Intercompany payables	(148,427)	(166,551)	(147,270)
Intercompany Loan Payables		(20,000)	(10,000)
Other current liabilities	0	0	0
Total current liabilities	(148,427)	(186,551)	(157,270)
Long-term debt	0	0	0
Deferred income taxes	0	0	0
Intercompany long term liability	(279,897)	(274,584)	(261,259)
Intercompany long term note payable	(100,000)	(100,000)	(100,000)
Other long-term liabilities	0	0	0
Total stockholders' equity	(1,443,713)	(1,424,340)	(1,318,415)
Total liabilities and stockholders' equity	$ (1,972,037)	$ (1,985,475)	$ (1,836,944)

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Apr. 04, 2015	Jan. 03, 2015	Mar. 29, 2014
Current assets:
Cash and cash equivalents	$ 377,400	$ 340,638	$ 277,236
Accounts receivable, net	195,593	184,563	205,166
Finished goods inventories	358,014	444,844	363,018
Prepaid expenses and other current assets	34,718	34,788	26,362
Deferred income taxes	32,842	36,625	37,343
Total current assets	998,567	1,041,458	909,125
Property, plant, and equipment, net of accumulated depreciation of $257,394, $245,011, and $220,847	341,658	333,097	316,786
Tradenames and other intangibles, net	314,955	317,297	323,967
Goodwill	178,859	181,975	184,604
Deferred debt issuance costs, net	6,361	6,677	7,758
Other assets	12,786	12,592	10,109
Total assets	1,853,186	1,893,096	1,752,349
Current liabilities:
Accounts payable	94,129	150,243	103,439
Other current liabilities	93,403	97,728	75,235
Total current liabilities	187,532	247,971	178,674
Long-term debt	586,349	586,000	586,000
Deferred income taxes	120,275	121,536	118,032
Other long-term liabilities	153,317	150,905	140,493
Total liabilities	1,047,473	1,106,412	1,023,199
Commitments and contingencies
Stockholders' equity:
Preferred stock; par value $.01 per share; 100,000 shares authorized; none issued or outstanding at April 4, 2015, January 3, 2015, and March 29, 2014	0	0	0
Common stock, voting; par value $.01 per share; 150,000,000 shares authorized; 52,615,316, 52,712,193, and 53,742,906 shares issued and outstanding at April 4, 2015, January 3, 2015 and March 29, 2014, respectively	526	527	537
Additional paid-in capital	0	0	11,420
Accumulated other comprehensive loss	(29,031)	(23,037)	(12,842)
Retained earnings	834,218	809,194	730,035
Total stockholders' equity	805,713	786,684	729,150
Total liabilities and stockholders' equity	$ 1,853,186	$ 1,893,096	$ 1,752,349

XML

FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS (Investments) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Apr. 04, 2015	Jan. 03, 2015	Mar. 29, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gain (Loss) on Investments	$ 0.2
Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	$ 7.9	$ 7.6	$ 5.5

XML

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (USD $) In Thousands, except Share data	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Other Comprehensive (Loss) Income [Member]	Retained Earnings [Member]
Balance at Jan. 03, 2015	$ 786,684	$ 527	$ 0	$ (23,037)	$ 809,194
Balance (in shares) at Jan. 03, 2015	54,541,879	52,712,193
Income tax benefit from stock-based compensation	5,771		5,771
Exercise of stock options	2,768	1	2,767
Exercise of stock options (in shares)		74,575
Withholdings from vesting of restricted stock	(12,331)	(1)	(12,330)
Withholdings from vesting of restricted stock (in shares)		(144,002)
Restricted stock activity	0	1	(1)
Restricted stock activity (in shares)		130,450
Stock-based compensation expense	4,740		4,740
Repurchase of common stock	(14,120)	(2)	(947)		(13,171)
Repurchase of common stock (in shares)		(157,900)
Cash dividends declared and paid	(11,597)				(11,597)
Comprehensive income (loss)	43,798			(5,994)	49,792
Balance at Apr. 04, 2015	$ 805,713	$ 526	$ 0	$ (29,031)	$ 834,218
Balance (in shares) at Apr. 04, 2015	52,977,519	52,615,316

XML

GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (Tables)

3 Months Ended

Apr. 04, 2015

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Consolidating Balance Sheets

Condensed Consolidating Balance Sheets (unaudited)

As of April 4, 2015 (dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	338,709	$	17,505	$	21,186	$	—		$	377,400
Accounts receivable, net	—		167,196		22,250		6,147		—			195,593
Intercompany receivable	—		62,791		84,908		728		(148,427		)	—
Finished goods inventories, net	—		173,892		179,932		40,563		(36,373		)	358,014
Prepaid expenses and other current assets	—		13,329		13,369		8,020		—			34,718
Deferred income taxes	—		18,673		12,356		1,813		—			32,842
Total current assets	—		774,590		330,320		78,457		(184,800		)	998,567
Property, plant, and equipment, net	—		157,206		156,962		27,490		—			341,658
Goodwill	—		136,570		—		42,289		—			178,859
Tradenames and other intangibles, net	—		229,440		85,500		15		—			314,955
Deferred debt issuance costs, net	—		6,361		—		—		—			6,361
Other assets	—		11,934		852		—		—			12,786
Intercompany long term receivable	—		—		279,897		—		(279,897		)	—
Intercompany long term note receivable	—		100,000		—		—		(100,000		)	—
Investment in subsidiaries	805,713		591,454		10,173		—		(1,407,340		)	—
Total assets	$	805,713	$	2,007,555	$	863,704	$	148,251	$	(1,972,037	)	$	1,853,186
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	—	$	61,014	$	22,936	$	10,179	$	—		$	94,129
Intercompany payables	—		84,259		60,851		3,316		(148,427		)	—
Other current liabilities	—		25,078		54,833		13,492		—			93,403
Total current liabilities	—		170,351		138,620		26,987		(148,427		)	187,532
Long-term debt	—		566,000		—		20,349		—			586,349
Deferred income taxes	—		80,185		40,090		—		—			120,275
Intercompany long term liability	—		279,897		—		—		(279,897		)	—
Intercompany long term note payable	—		—		100,000		—		(100,000		)	—
Other long-term liabilities	—		69,035		72,026		12,256		—			153,317
Stockholders' equity	805,713		842,087		512,968		88,659		(1,443,713		)	805,713
Total liabilities and stockholders' equity	$	805,713	$	2,007,555	$	863,704	$	148,251	$	(1,972,037	)	$	1,853,186

As of January 3, 2015

(dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	311,078	$	10,442	$	19,118	$	—		$	340,638
Accounts receivable, net	—		155,192		22,770		6,601		—			184,563
Intercompany receivable	—		58,402		106,137		2,012		(166,551		)	—
Intercompany loan receivable	—		20,000		—		—		(20,000		)	—
Finished goods inventories, net	—		240,702		191,953		48,463		(36,274		)	444,844
Prepaid expenses and other current assets	—		15,143		13,059		6,586		—			34,788
Deferred income taxes	—		21,308		12,983		2,334		—			36,625
Total current assets	—		821,825		357,344		85,114		(222,825		)	1,041,458
Property, plant, and equipment, net	—		158,017		147,076		28,004		—			333,097
Goodwill	—		136,570		—		45,405		—			181,975
Tradenames and other intangibles, net	—		231,765		85,500		32		—			317,297
Deferred debt issuance costs, net	—		6,677		—		—		—			6,677
Other assets	—		11,781		811		—		—			12,592
Intercompany long term receivable	—		—		274,584		—		(274,584		)	—
Intercompany long term note receivable	—		100,000		—		—		(100,000		)	—
Investment in subsidiaries	786,684		591,735		9,647		—		(1,388,066		)	—
Total assets	$	786,684	$	2,058,370	$	874,962	$	158,555	$	(1,985,475	)	$	1,893,096
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	—	$	102,233	$	37,869	$	10,141	$	—		$	150,243
Intercompany payables	—		105,940		55,812		4,799		(166,551		)	—
Intercompany loan payables	—		—		—		20,000		(20,000		)	—
Other current liabilities	—		15,782		67,793		14,153		—			97,728
Total current liabilities	—		223,955		161,474		49,093		(186,551		)	247,971
Long-term debt	—		586,000		—		—		—			586,000
Deferred income taxes	—		81,406		40,130		—		—			121,536
Intercompany long term liability	—		274,584		—		—		(274,584		)	—
Intercompany long term note payable	—		—		100,000		—		(100,000		)	—
Other long-term liabilities	—		69,467		68,426		13,012		—			150,905
Stockholders' equity	786,684		822,958		504,932		96,450		(1,424,340		)	786,684
Total liabilities and stockholders' equity	$	786,684	$	2,058,370	$	874,962	$	158,555	$	(1,985,475	)	$	1,893,096

As of March 29, 2014

(dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	264,128	$	—	$	13,108	$	—		$	277,236
Accounts receivable, net	—		178,034		18,504		8,628		—			205,166
Intercompany receivable	—		54,911		80,281		12,078		(147,270		)	—
Intercompany loan receivable	—		10,000		—		—		(10,000		)	—
Finished goods inventories, net	—		177,816		180,133		35,933		(30,864		)	363,018
Prepaid expenses and other current assets	—		10,137		12,306		3,919		—			26,362
Deferred income taxes	—		24,252		12,155		936		—			37,343
Total current assets	—		719,278		303,379		74,602		(188,134		)	909,125
Property, plant, and equipment, net	—		154,045		137,170		25,571		—			316,786
Goodwill	—		136,570		—		48,034		—			184,604
Tradenames and other intangibles, net	—		238,382		85,500		85		—			323,967
Deferred debt issuance costs, net	—		7,758		—		—		—			7,758
Other assets	—		10,107		2		—		—			10,109
Intercompany long term receivable	—		—		261,259		—		(261,259		)	—
Intercompany long term note receivable	—		100,000		—		—		(100,000		)	—
Investment in subsidiaries	729,150		555,914		2,487		—		(1,287,551		)	—
Total assets	$	729,150	$	1,922,054	$	789,797	$	148,292	$	(1,836,944	)	$	1,752,349
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	—	$	68,708	$	28,654	$	6,077	$	—		$	103,439
Intercompany payables	—		78,020		62,719		6,531		(147,270		)	—
Intercompany loan payables	—		—		—		10,000		(10,000		)	—
Other current liabilities	—		29,124		33,638		12,473		—			75,235
Total current liabilities	—		175,852		125,011		35,081		(157,270		)	178,674
Long-term debt	—		586,000		—		—		—			586,000
Deferred income taxes	—		74,832		43,200		—		—			118,032
Intercompany long term liability	—		261,259		—		—		(261,259		)	—
Intercompany long term note payable	—		—		100,000		—		(100,000		)	—
Other long-term liabilities	—		64,097		57,852		18,544		—			140,493
Stockholders' equity	729,150		760,014		463,734		94,667		(1,318,415		)	729,150
Total liabilities and stockholders' equity	$	729,150	$	1,922,054	$	789,797	$	148,292	$	(1,836,944	)	$	1,752,349

Condensed Consolidating Statements of Operations and Comprehensive Income

Condensed Consolidating Statements of Operations (unaudited)

For the fiscal quarter ended April 4, 2015

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	435,286		$	359,396		$	47,120		$	(157,038	)	$	684,764
Cost of goods sold	—			298,211			222,915			30,479			(150,893		)	400,712
Gross profit	—			137,075			136,481			16,641			(6,145		)	284,052
Selling, general, and administrative expenses	—			42,249			157,263			19,831			(8,160		)	211,183
Royalty income	—			(9,039		)	(4,711		)	—			2,114			(11,636		)
Operating income	—			103,865			(16,071		)	(3,190		)	(99		)	84,505
Interest expense	—			6,662			1,343			115			(1,428		)	6,692
Interest income	—			(1,557		)	—			(8		)	1,428			(137		)
(Income) loss in subsidiaries	(49,792		)	23,394			(520		)	—			26,918			—
Other (income) expense, net	—			(146		)	137			1,971			—			1,962
Income (loss) before income taxes	49,792			75,512			(17,031		)	(5,268		)	(27,017		)	75,988
Provision for income taxes	—			25,621			1,980			(1,405		)	—			26,196
Net income (loss)	$	49,792		$	49,891		$	(19,011	)	$	(3,863	)	$	(27,017	)	$	49,792

For the fiscal quarter ended March 29, 2014

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	407,365		$	321,708		$	49,158		$	(126,588	)	$	651,643
Cost of goods sold	—			293,774			188,020			30,059			(121,935		)	389,918
Gross profit	—			113,591			133,688			19,099			(4,653		)	261,725
Selling, general, and administrative expenses	—			48,527			146,417			22,932			(7,781		)	210,095
Royalty income	—			(8,045		)	(4,027		)	—			2,171			(9,901		)
Operating income	—			73,109			(8,702		)	(3,833		)	957			61,531
Interest expense	—			6,897			1,313			24			(1,337		)	6,897
Interest income	—			(1,469		)	—			—			1,337			(132		)
(Income) loss in subsidiaries	(34,297		)	17,435			(586		)	—			17,448			—
Other (income) expense, net	—			(57		)	57			596			—			596
Income (loss) before income taxes	34,297			50,303			(9,486		)	(4,453		)	(16,491		)	54,170
Provision for income taxes	—			16,963			3,740			(830		)	—			19,873
Net income (loss)	$	34,297		$	33,340		$	(13,226	)	$	(3,623	)	$	(16,491	)	$	34,297

Condensed Consolidating Statements of Comprehensive Income (unaudited)

For the fiscal quarter ended April 4, 2015

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net income (loss)	$	49,792		$	49,891		$	(19,011	)	$	(3,863	)	$	(27,017	)	$	49,792
Foreign currency translation adjustments	$	(5,994	)	$	(5,994	)	$	8		$	(5,994	)	$	11,980		$	(5,994	)
Comprehensive income (loss)	$	43,798		$	43,897		$	(19,003	)	$	(9,857	)	$	(15,037	)	$	43,798

For the fiscal quarter ended March 29, 2014

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net income (loss)	$	34,297		$	33,340		$	(13,226	)	$	(3,623	)	$	(16,491	)	$	34,297
Foreign currency translation adjustments	$	(2,760	)	$	(2,760	)	$	(132	)	$	(2,760	)	$	5,652		$	(2,760	)
Comprehensive income (loss)	$	31,537		$	30,580		$	(13,358	)	$	(6,383	)	$	(10,839	)	$	31,537

Condensed Consolidating Statements of Cash Flows

Condensed Consolidating Statements of Cash Flows (unaudited)

For the fiscal quarter ended April 4, 2015

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Cash flows provided by operating activities:	$	—		$	78,186		$	3,969		$	5,069		$	—		$	87,224
Cash flows from investing activities:
Capital expenditures	—			(5,517		)	(12,701		)	(2,542		)	—			(20,760		)
Intercompany investing activity	35,280			(8,332		)	(1,232		)	—			(25,716		)	—
Proceeds from repayment of intercompany loan	—			20,000			—			—			(20,000		)	—
Proceeds from sale of property, plant and equipment	—			69			—			7			—			76
Net cash provided by (used in) investing activities	35,280			6,220			(13,933		)	(2,535		)	(45,716		)	(20,684		)
Cash flows from financing activities:
Intercompany financing activity	—			(41,315		)	15,796			(197		)	25,716			—
Repayment of intercompany loan	—			—			—			(20,000		)	20,000			—
Borrowings under secured revolving credit facility	—			—			—			20,349			—			20,349
Payments on secured revolving credit facility	—			(20,000		)	—			—			—			(20,000		)
Dividends paid	(11,597		)	—			—			—			—			(11,597		)
Repurchase of common stock	(14,120		)	—			—			—			—			(14,120		)
Income tax benefit from stock-based compensation	—			4,540			1,231			—			—			5,771
Withholdings from vesting of restricted stock	(12,331		)	—			—			—			—			(12,331		)
Proceeds from exercise of stock options	2,768			—			—			—			—			2,768
Net cash (used in) provided by financing activities	(35,280		)	(56,775		)	17,027			152			45,716			(29,160		)
Effect of exchange rate changes on cash	—			—			—			(618		)	—			(618		)
Net increase in cash and cash equivalents	—			27,631			7,063			2,068			—			36,762
Cash and cash equivalents, beginning of period	—			311,078			10,442			19,118			—			340,638
Cash and cash equivalents, end of period	$	—		$	338,709		$	17,505		$	21,186		$	—		$	377,400

For the fiscal quarter ended March 29, 2014

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Cash flows provided by (used in) operating activities:	$	—		$	44,470		$	(12,284	)	$	(1,626	)	$	—		$	30,560
Cash flows from investing activities:
Capital expenditures	—			(18,417		)	(10,994		)	(2,672		)	—			(32,083		)
Intercompany investing activity	11,033			3,772			(2,305		)	—			(12,500		)	—
Issuance of intercompany loan				(10,000		)							10,000
Net cash provided by (used in) investing activities	11,033			(24,645		)	(13,299		)	(2,672		)	(2,500		)	(32,083		)
Cash flows from financing activities:
Intercompany financing activity	—			(34,969		)	23,280			(811		)	12,500			—
Proceeds from intercompany loan	—			—			—			10,000			(10,000		)	—
Dividends Paid	(10,208		)	—			—			—			—			(10,208		)
Payment on debt issuance costs	—			(55		)	—			—			—			(55		)
Income tax benefit from stock-based compensation	—			1,067			2,303			—			—			3,370
Repurchase of common stock	(2,292		)	—			—			—			—			(2,292		)
Withholdings from vesting of restricted stock	(4,079		)	—			—			—			—			(4,079		)
Proceeds from exercise of stock options	5,546			—			—			—			—			5,546
Net cash (used in) provided by financing activities	(11,033		)	(33,957		)	25,583			9,189			2,500			(7,718		)
Effect of exchange rate changes on cash	—			—			—			(69		)	—			(69		)
Net (decrease) increase in cash and cash equivalents	—			(14,132		)	—			4,822			—			(9,310		)
Cash and cash equivalents, beginning of period	—			278,260			—			8,286			—			286,546
Cash and cash equivalents, end of period	$	—		$	264,128		$	—		$	13,108		$	—		$	277,236

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FACILITY CLOSURE

3 Months Ended

Apr. 04, 2015

Restructuring and Related Activities [Abstract]

FACILITY CLOSURE

FACILITY CLOSURES

OFFICE CONSOLIDATION

The Company consolidated its Shelton, Connecticut and Atlanta, Georgia offices, as well as certain functions from its other offices, into a new headquarters facility in Atlanta, Georgia. During the first quarter of fiscal 2014, approximately $2.0 million of expense, including $0.6 million of severance costs, were incurred related to the office consolidation project. No such expenses were incurred during the first quarter of fiscal 2015, and no additional expenses are expected to be incurred in the future.

The following table summarizes the restructuring reserves related to the office consolidation as of April 4, 2015:

(dollars in millions)	Severance			Other closure costs			Total
Balance at January 3, 2015	$	0.8		$	2.8		$	3.6
Provision	—			—			—
Payments	(0.2		)	(0.3		)	(0.5		)
Other	—			—			—
Balance at April 4, 2015	$	0.6		$	2.5		$	3.1

The severance reserve is included in other current liabilities and other closure costs are included in other long-term liabilities in the accompanying unaudited condensed consolidated balance sheet. The Company has completed its consolidation efforts. The severance accrual is expected to be substantially paid during fiscal 2015.

As of March 29, 2014, restructuring reserves were approximately $5.6 million.

JAPAN RETAIL OPERATIONS

In 2013, the Company made the decision to exit retail operations in Japan based on revised forecasts that did not meet the Company's investment objectives. In connection with the plan to exit these operations, during the first quarter of fiscal 2014, the Company recorded approximately $0.6 million of accelerated depreciation in selling, general, and administrative expenses and approximately $1.0 million in cost of goods sold related to a favorable recovery on inventory. There were no exit costs or recoveries related to the former Japan operations during the first quarter of fiscal 2015.

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THE COMPANY (Details)	Apr. 04, 2015 store
United States [Member] | Carter's [Member]
Segment Reporting Information [Line Items]
Number of locations	549
United States [Member] | OshKosh [Member]
Segment Reporting Information [Line Items]
Number of locations	208
Canada [Member]
Segment Reporting Information [Line Items]
Number of international retail stores	127

XML

GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

3 Months Ended

Apr. 04, 2015

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

GUARANTOR UNAUDITED CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

The Company’s senior notes constitute debt obligations of its wholly-owned subsidiary, The William Carter Company ("TWCC" or the “Subsidiary Issuer”), are unsecured and are fully and unconditionally guaranteed by Carter’s, Inc. (the “Parent”) by each of the Company’s current domestic subsidiaries, and, subject to certain exceptions, future restricted subsidiaries that guarantee the Company’s senior secured revolving credit facility or certain other debt of the Company or the subsidiary guarantors. For additional information, refer to the Company's Annual Report on Form 10-K for the 2014 fiscal year ended January 3, 2015.

The unaudited condensed consolidating financial information for the Parent, the Subsidiary Issuer and the guarantor and non-guarantor subsidiaries has been prepared from the books and records maintained by the Company. The accompanying unaudited condensed consolidating financial information has been prepared and presented pursuant to SEC Regulation S-X Rule 3-10. The financial information may not necessarily be indicative of the financial position, results of operations, comprehensive income (loss), and cash flows, had the Parent, Subsidiary Issuer, guarantor or non-guarantor subsidiaries operated as independent entities.

Intercompany revenues and expenses included in the subsidiary records are eliminated in consolidation. As a result of this activity, an amount due to/due from affiliates will exist at any time. The principal elimination entries relate to investments in subsidiaries and intercompany balances and transactions. The Company has accounted for investments in subsidiaries under the equity method. The guarantor subsidiaries are 100% owned directly or indirectly by the Parent and all guarantees are joint, several and unconditional.

During fiscal 2014, the Company revised its Guarantor Condensed Consolidating Statements of Comprehensive Income to correct a presentation error related to certain other comprehensive income (loss) transactions within the Subsidiary Issuer and Guarantor Subsidiaries columns in the Company’s previously filed Form 10-Q for the first and second fiscal quarters of 2014, which included the comparative periods, and for the fiscal years ended December 28, 2013 and December 29, 2012.   These presentation items had no effect on the Company’s Consolidated Financial Statements.  The Company concluded that these items were not material to the financial statements taken as a whole, but elected to revise previously reported amounts within this footnote for all periods presented.  Future filings will reflect these revisions.

Condensed Consolidating Balance Sheets (unaudited)

As of April 4, 2015 (dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	338,709	$	17,505	$	21,186	$	—		$	377,400
Accounts receivable, net	—		167,196		22,250		6,147		—			195,593
Intercompany receivable	—		62,791		84,908		728		(148,427		)	—
Finished goods inventories, net	—		173,892		179,932		40,563		(36,373		)	358,014
Prepaid expenses and other current assets	—		13,329		13,369		8,020		—			34,718
Deferred income taxes	—		18,673		12,356		1,813		—			32,842
Total current assets	—		774,590		330,320		78,457		(184,800		)	998,567
Property, plant, and equipment, net	—		157,206		156,962		27,490		—			341,658
Goodwill	—		136,570		—		42,289		—			178,859
Tradenames and other intangibles, net	—		229,440		85,500		15		—			314,955
Deferred debt issuance costs, net	—		6,361		—		—		—			6,361
Other assets	—		11,934		852		—		—			12,786
Intercompany long term receivable	—		—		279,897		—		(279,897		)	—
Intercompany long term note receivable	—		100,000		—		—		(100,000		)	—
Investment in subsidiaries	805,713		591,454		10,173		—		(1,407,340		)	—
Total assets	$	805,713	$	2,007,555	$	863,704	$	148,251	$	(1,972,037	)	$	1,853,186
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	—	$	61,014	$	22,936	$	10,179	$	—		$	94,129
Intercompany payables	—		84,259		60,851		3,316		(148,427		)	—
Other current liabilities	—		25,078		54,833		13,492		—			93,403
Total current liabilities	—		170,351		138,620		26,987		(148,427		)	187,532
Long-term debt	—		566,000		—		20,349		—			586,349
Deferred income taxes	—		80,185		40,090		—		—			120,275
Intercompany long term liability	—		279,897		—		—		(279,897		)	—
Intercompany long term note payable	—		—		100,000		—		(100,000		)	—
Other long-term liabilities	—		69,035		72,026		12,256		—			153,317
Stockholders' equity	805,713		842,087		512,968		88,659		(1,443,713		)	805,713
Total liabilities and stockholders' equity	$	805,713	$	2,007,555	$	863,704	$	148,251	$	(1,972,037	)	$	1,853,186

As of January 3, 2015

(dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	311,078	$	10,442	$	19,118	$	—		$	340,638
Accounts receivable, net	—		155,192		22,770		6,601		—			184,563
Intercompany receivable	—		58,402		106,137		2,012		(166,551		)	—
Intercompany loan receivable	—		20,000		—		—		(20,000		)	—
Finished goods inventories, net	—		240,702		191,953		48,463		(36,274		)	444,844
Prepaid expenses and other current assets	—		15,143		13,059		6,586		—			34,788
Deferred income taxes	—		21,308		12,983		2,334		—			36,625
Total current assets	—		821,825		357,344		85,114		(222,825		)	1,041,458
Property, plant, and equipment, net	—		158,017		147,076		28,004		—			333,097
Goodwill	—		136,570		—		45,405		—			181,975
Tradenames and other intangibles, net	—		231,765		85,500		32		—			317,297
Deferred debt issuance costs, net	—		6,677		—		—		—			6,677
Other assets	—		11,781		811		—		—			12,592
Intercompany long term receivable	—		—		274,584		—		(274,584		)	—
Intercompany long term note receivable	—		100,000		—		—		(100,000		)	—
Investment in subsidiaries	786,684		591,735		9,647		—		(1,388,066		)	—
Total assets	$	786,684	$	2,058,370	$	874,962	$	158,555	$	(1,985,475	)	$	1,893,096
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	—	$	102,233	$	37,869	$	10,141	$	—		$	150,243
Intercompany payables	—		105,940		55,812		4,799		(166,551		)	—
Intercompany loan payables	—		—		—		20,000		(20,000		)	—
Other current liabilities	—		15,782		67,793		14,153		—			97,728
Total current liabilities	—		223,955		161,474		49,093		(186,551		)	247,971
Long-term debt	—		586,000		—		—		—			586,000
Deferred income taxes	—		81,406		40,130		—		—			121,536
Intercompany long term liability	—		274,584		—		—		(274,584		)	—
Intercompany long term note payable	—		—		100,000		—		(100,000		)	—
Other long-term liabilities	—		69,467		68,426		13,012		—			150,905
Stockholders' equity	786,684		822,958		504,932		96,450		(1,424,340		)	786,684
Total liabilities and stockholders' equity	$	786,684	$	2,058,370	$	874,962	$	158,555	$	(1,985,475	)	$	1,893,096

As of March 29, 2014

(dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	264,128	$	—	$	13,108	$	—		$	277,236
Accounts receivable, net	—		178,034		18,504		8,628		—			205,166
Intercompany receivable	—		54,911		80,281		12,078		(147,270		)	—
Intercompany loan receivable	—		10,000		—		—		(10,000		)	—
Finished goods inventories, net	—		177,816		180,133		35,933		(30,864		)	363,018
Prepaid expenses and other current assets	—		10,137		12,306		3,919		—			26,362
Deferred income taxes	—		24,252		12,155		936		—			37,343
Total current assets	—		719,278		303,379		74,602		(188,134		)	909,125
Property, plant, and equipment, net	—		154,045		137,170		25,571		—			316,786
Goodwill	—		136,570		—		48,034		—			184,604
Tradenames and other intangibles, net	—		238,382		85,500		85		—			323,967
Deferred debt issuance costs, net	—		7,758		—		—		—			7,758
Other assets	—		10,107		2		—		—			10,109
Intercompany long term receivable	—		—		261,259		—		(261,259		)	—
Intercompany long term note receivable	—		100,000		—		—		(100,000		)	—
Investment in subsidiaries	729,150		555,914		2,487		—		(1,287,551		)	—
Total assets	$	729,150	$	1,922,054	$	789,797	$	148,292	$	(1,836,944	)	$	1,752,349
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	—	$	68,708	$	28,654	$	6,077	$	—		$	103,439
Intercompany payables	—		78,020		62,719		6,531		(147,270		)	—
Intercompany loan payables	—		—		—		10,000		(10,000		)	—
Other current liabilities	—		29,124		33,638		12,473		—			75,235
Total current liabilities	—		175,852		125,011		35,081		(157,270		)	178,674
Long-term debt	—		586,000		—		—		—			586,000
Deferred income taxes	—		74,832		43,200		—		—			118,032
Intercompany long term liability	—		261,259		—		—		(261,259		)	—
Intercompany long term note payable	—		—		100,000		—		(100,000		)	—
Other long-term liabilities	—		64,097		57,852		18,544		—			140,493
Stockholders' equity	729,150		760,014		463,734		94,667		(1,318,415		)	729,150
Total liabilities and stockholders' equity	$	729,150	$	1,922,054	$	789,797	$	148,292	$	(1,836,944	)	$	1,752,349

Condensed Consolidating Statements of Operations (unaudited)

For the fiscal quarter ended April 4, 2015

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	435,286		$	359,396		$	47,120		$	(157,038	)	$	684,764
Cost of goods sold	—			298,211			222,915			30,479			(150,893		)	400,712
Gross profit	—			137,075			136,481			16,641			(6,145		)	284,052
Selling, general, and administrative expenses	—			42,249			157,263			19,831			(8,160		)	211,183
Royalty income	—			(9,039		)	(4,711		)	—			2,114			(11,636		)
Operating income	—			103,865			(16,071		)	(3,190		)	(99		)	84,505
Interest expense	—			6,662			1,343			115			(1,428		)	6,692
Interest income	—			(1,557		)	—			(8		)	1,428			(137		)
(Income) loss in subsidiaries	(49,792		)	23,394			(520		)	—			26,918			—
Other (income) expense, net	—			(146		)	137			1,971			—			1,962
Income (loss) before income taxes	49,792			75,512			(17,031		)	(5,268		)	(27,017		)	75,988
Provision for income taxes	—			25,621			1,980			(1,405		)	—			26,196
Net income (loss)	$	49,792		$	49,891		$	(19,011	)	$	(3,863	)	$	(27,017	)	$	49,792

For the fiscal quarter ended March 29, 2014

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	407,365		$	321,708		$	49,158		$	(126,588	)	$	651,643
Cost of goods sold	—			293,774			188,020			30,059			(121,935		)	389,918
Gross profit	—			113,591			133,688			19,099			(4,653		)	261,725
Selling, general, and administrative expenses	—			48,527			146,417			22,932			(7,781		)	210,095
Royalty income	—			(8,045		)	(4,027		)	—			2,171			(9,901		)
Operating income	—			73,109			(8,702		)	(3,833		)	957			61,531
Interest expense	—			6,897			1,313			24			(1,337		)	6,897
Interest income	—			(1,469		)	—			—			1,337			(132		)
(Income) loss in subsidiaries	(34,297		)	17,435			(586		)	—			17,448			—
Other (income) expense, net	—			(57		)	57			596			—			596
Income (loss) before income taxes	34,297			50,303			(9,486		)	(4,453		)	(16,491		)	54,170
Provision for income taxes	—			16,963			3,740			(830		)	—			19,873
Net income (loss)	$	34,297		$	33,340		$	(13,226	)	$	(3,623	)	$	(16,491	)	$	34,297

Condensed Consolidating Statements of Comprehensive Income (unaudited)

For the fiscal quarter ended April 4, 2015

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net income (loss)	$	49,792		$	49,891		$	(19,011	)	$	(3,863	)	$	(27,017	)	$	49,792
Foreign currency translation adjustments	$	(5,994	)	$	(5,994	)	$	8		$	(5,994	)	$	11,980		$	(5,994	)
Comprehensive income (loss)	$	43,798		$	43,897		$	(19,003	)	$	(9,857	)	$	(15,037	)	$	43,798

For the fiscal quarter ended March 29, 2014

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net income (loss)	$	34,297		$	33,340		$	(13,226	)	$	(3,623	)	$	(16,491	)	$	34,297
Foreign currency translation adjustments	$	(2,760	)	$	(2,760	)	$	(132	)	$	(2,760	)	$	5,652		$	(2,760	)
Comprehensive income (loss)	$	31,537		$	30,580		$	(13,358	)	$	(6,383	)	$	(10,839	)	$	31,537

Condensed Consolidating Statements of Cash Flows (unaudited)

For the fiscal quarter ended April 4, 2015

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Cash flows provided by operating activities:	$	—		$	78,186		$	3,969		$	5,069		$	—		$	87,224
Cash flows from investing activities:
Capital expenditures	—			(5,517		)	(12,701		)	(2,542		)	—			(20,760		)
Intercompany investing activity	35,280			(8,332		)	(1,232		)	—			(25,716		)	—
Proceeds from repayment of intercompany loan	—			20,000			—			—			(20,000		)	—
Proceeds from sale of property, plant and equipment	—			69			—			7			—			76
Net cash provided by (used in) investing activities	35,280			6,220			(13,933		)	(2,535		)	(45,716		)	(20,684		)
Cash flows from financing activities:
Intercompany financing activity	—			(41,315		)	15,796			(197		)	25,716			—
Repayment of intercompany loan	—			—			—			(20,000		)	20,000			—
Borrowings under secured revolving credit facility	—			—			—			20,349			—			20,349
Payments on secured revolving credit facility	—			(20,000		)	—			—			—			(20,000		)
Dividends paid	(11,597		)	—			—			—			—			(11,597		)
Repurchase of common stock	(14,120		)	—			—			—			—			(14,120		)
Income tax benefit from stock-based compensation	—			4,540			1,231			—			—			5,771
Withholdings from vesting of restricted stock	(12,331		)	—			—			—			—			(12,331		)
Proceeds from exercise of stock options	2,768			—			—			—			—			2,768
Net cash (used in) provided by financing activities	(35,280		)	(56,775		)	17,027			152			45,716			(29,160		)
Effect of exchange rate changes on cash	—			—			—			(618		)	—			(618		)
Net increase in cash and cash equivalents	—			27,631			7,063			2,068			—			36,762
Cash and cash equivalents, beginning of period	—			311,078			10,442			19,118			—			340,638
Cash and cash equivalents, end of period	$	—		$	338,709		$	17,505		$	21,186		$	—		$	377,400

For the fiscal quarter ended March 29, 2014

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Cash flows provided by (used in) operating activities:	$	—		$	44,470		$	(12,284	)	$	(1,626	)	$	—		$	30,560
Cash flows from investing activities:
Capital expenditures	—			(18,417		)	(10,994		)	(2,672		)	—			(32,083		)
Intercompany investing activity	11,033			3,772			(2,305		)	—			(12,500		)	—
Issuance of intercompany loan				(10,000		)							10,000
Net cash provided by (used in) investing activities	11,033			(24,645		)	(13,299		)	(2,672		)	(2,500		)	(32,083		)
Cash flows from financing activities:
Intercompany financing activity	—			(34,969		)	23,280			(811		)	12,500			—
Proceeds from intercompany loan	—			—			—			10,000			(10,000		)	—
Dividends Paid	(10,208		)	—			—			—			—			(10,208		)
Payment on debt issuance costs	—			(55		)	—			—			—			(55		)
Income tax benefit from stock-based compensation	—			1,067			2,303			—			—			3,370
Repurchase of common stock	(2,292		)	—			—			—			—			(2,292		)
Withholdings from vesting of restricted stock	(4,079		)	—			—			—			—			(4,079		)
Proceeds from exercise of stock options	5,546			—			—			—			—			5,546
Net cash (used in) provided by financing activities	(11,033		)	(33,957		)	25,583			9,189			2,500			(7,718		)
Effect of exchange rate changes on cash	—			—			—			(69		)	—			(69		)
Net (decrease) increase in cash and cash equivalents	—			(14,132		)	—			4,822			—			(9,310		)
Cash and cash equivalents, beginning of period	—			278,260			—			8,286			—			286,546
Cash and cash equivalents, end of period	$	—		$	264,128		$	—		$	13,108		$	—		$	277,236

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Apr. 04, 2015	Mar. 29, 2014
Cash flows from operating activities:
Net income	$ 49,792	$ 34,297
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	14,875	15,354
Amortization of tradenames	2,325	6,271
Accretion of contingent consideration	483	454
Amortization of debt issuance costs	280	375
Non-cash stock-based compensation expense	4,740	4,535
Foreign currency exchange loss	1,652	0
Income tax benefit from stock-based compensation	(5,771)	(3,370)
Loss on disposal of property, plant, and equipment	52	189
Deferred income taxes	2,207	(3,320)
Effect of changes in operating assets and liabilities:
Accounts receivable	(11,402)	(11,725)
Inventories	83,349	53,309
Prepaid expenses and other assets	(472)	8,424
Accounts payable and other liabilities	(54,886)	(74,233)
Net cash provided by operating activities	87,224	30,560
Cash flows from investing activities:
Capital expenditures	(20,760)	(32,083)
Proceeds from sale of property, plant, and equipment	76	0
Net cash used in investing activities	(20,684)	(32,083)
Cash flows from financing activities:
Payments of debt issuance costs	0	(55)
Borrowings under secured revolving credit facility	20,349	0
Payments on secured revolving credit facility	20,000	0
Repurchase of common stock	(14,120)	(2,292)
Dividends paid	(11,597)	(10,208)
Income tax benefit from stock-based compensation	5,771	3,370
Withholdings from vesting of restricted stock	(12,331)	(4,079)
Proceeds from exercise of stock options	2,768	5,546
Net cash used in financing activities	29,160	7,718
Effect of exchange rate changes on cash	(618)	(69)
Net increase (decrease) in cash and cash equivalents	36,762	(9,310)
Cash and cash equivalents, beginning of period	340,638	286,546
Cash and cash equivalents, end of period	$ 377,400	$ 277,236

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Apr. 04, 2015	Jan. 03, 2015	Mar. 29, 2014
Statement of Financial Position [Abstract]
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	$ 257,394	$ 245,011	$ 220,847
Preferred stock; par value	$ 0.01	$ 0.01	$ 0.01
Preferred stock; shares authorized	100,000	100,000	100,000
Preferred stock; issued	0	0	0
Preferred stock; outstanding	0	0	0
Common stock, voting; par value	$ 0.01	$ 0.01	$ 0.01
Common stock, voting; shares authorized	150,000,000	150,000,000	150,000,000
Common stock voting; shares issued	52,977,519	54,541,879	54,542,594
Common stock voting; shares outstanding	52,977,519	54,541,879	54,542,594

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FAIR VALUE MEASUREMENTS

3 Months Ended

Apr. 04, 2015

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

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 owned by the Company are included in other assets on the Company's consolidated balance sheet. The Company had approximately $7.9 million, $7.6 million, and $5.5 million of such Level 1 investments as of April 4, 2015, January 3, 2015, and March 29, 2014, respectively.

Gains on the investments in marketable securities were $0.2 million for the first quarter of fiscal 2015 and were not significant for the first quarter of fiscal 2014.

CONTINGENT CONSIDERATION

The following table summarizes the changes in the remaining contingent consideration liability related to the Company's

2011 acquisition of Bonnie Togs:

	Fiscal quarter ended
(dollars in thousands)	April 4, 2015			March 29, 2014
Balance at the beginning of period	7,711			16,348
Accretion	483			454
Foreign currency translation adjustment	(533		)	(487		)
Balance at the end of period	$	7,661		$	16,315

The contingent consideration liability is a Level 3 fair value measurement. As of April 4, 2015, the Company determined the fair value of contingent consideration based upon a probability-weighted discounted cash flow analysis that reflects a high probability that the earnings targets will be met, and a discount rate of 18%.

BORROWINGS

As of April 4, 2015, the Level 2 fair value of the Company's $186.3 million in outstanding borrowings under its secured revolving credit facility approximated carrying value. The fair value of the Company's $400 million in senior notes was estimated by obtaining market quotes given the trade levels of other bonds of the same general issuer type and market-perceived credit quality and is therefore within Level 2 of the fair value hierarchy. The fair value of the outstanding senior notes as of April 4, 2015 was approximately $414.0 million.

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Document and Entity Information	3 Months Ended
	Apr. 04, 2015	Apr. 24, 2015
Document Information [Abstract]
Entity Registrant Name	CARTERS INC
Entity Central Index Key	0001060822
Current Fiscal Year End Date	--01-02
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Apr. 04, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Common Stock, Shares Outstanding		52,538,616

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EARNINGS PER SHARE

3 Months Ended

Apr. 04, 2015

Earnings Per Share [Abstract]

EARNINGS PER SHARE

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 4, 2015			March 29, 2014
Weighted-average number of common and common equivalent shares outstanding:
Basic number of common shares outstanding	52,119,215			53,172,459
Dilutive effect of equity awards	495,386			501,322
Diluted number of common and common equivalent shares outstanding	52,614,601			53,673,781
Basic net income per common share (in thousands, except per share data):
Net income	$	49,792		$	34,297
Income allocated to participating securities	(560		)	(470		)
Net income available to common shareholders	$	49,232		$	33,827
Basic net income per common share	$	0.94		$	0.64
Diluted net income per common share (in thousands, except per share data):
Net income	$	49,792		$	34,297
Income allocated to participating securities	(556		)	(467		)
Net income available to common shareholders	$	49,236		$	33,830
Diluted net income per common share	$	0.94		$	0.63
Anti-dilutive shares excluded from dilutive earnings per share computation	183,400			269,650

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Apr. 04, 2015	Mar. 29, 2014
Income Statement [Abstract]
Net sales	$ 684,764	$ 651,643
Cost of goods sold	400,712	389,918
Gross profit	284,052	261,725
Selling, general, and administrative expenses	211,183	210,095
Royalty income	(11,636)	(9,901)
Operating income	(84,505)	(61,531)
Interest expense	6,692	6,897
Interest income	(137)	(132)
Other expense, net	1,962	596
Income before income taxes	75,988	54,170
Provision for income taxes	26,196	19,873
Net income	$ 49,792	$ 34,297
Diluted net income per common share	$ 0.94	$ 0.64
Dividend declared and paid per common share	$ 0.94	$ 0.63
Dividend declared per common share	$ 0.22	$ 0.19
Dividend paid per common share	$ 0.22	$ 0.19

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COMMON STOCK

3 Months Ended

Apr. 04, 2015

Stockholders' Equity Note [Abstract]

COMMON STOCK

COMMON STOCK

SHARE REPURCHASES

In the second quarter of fiscal 2013, the Company's Board of Directors authorized the repurchase of shares in an amount up to$300 million, inclusive of amounts remaining under previous authorizations. In the third quarter of 2013, the Board approved an additional $400 million share repurchase authorization. The total remaining capacity under the repurchase authorizations as of April 4, 2015 was approximately $171.0 million. The authorizations have no expiration date.

Open Market Repurchases

During the first quarter of fiscal 2015, the Company repurchased and retired 157,900 shares in open market transactions with an average share price of $89.43 for an aggregate purchase price of $14.1 million. During the first quarter fiscal 2014, the Company repurchased and retired 30,151 shares, in open market transactions, with an average share price of $76.03 for an aggregate purchase price of $2.3 million.

Future repurchases may occur from time to time in the open market, in negotiated transactions, or otherwise. The timing and amount of any repurchases will be determined by the Company’s management, based on its evaluation of market conditions, share price, other investment priorities, and other factors.

Accelerated Stock Repurchase Program

On August 29, 2013, the Company entered into two fixed-dollar uncollared accelerated stock repurchase agreements (the "ASR agreements") totaling $400 million. The ASR agreements were settled in January 2014. As of the date of settlement, the Company had received a total of approximately 5.6 million shares, of which one million shares were received in January 2014. All shares received under the ASR agreements were retired upon receipt.

DIVIDENDS

In the first quarters of fiscal 2015 and fiscal 2014, the Company paid cash dividends per share of $0.22 and $0.19, respectively. Future declarations of dividends and the establishment of future record and payment dates are at the discretion of the Company's Board of Directors and based on a number of factors including the Company's future financial performance and other investment priorities.

Provisions in the Company's secured revolving credit facility and indenture governing its senior notes could have the effect of restricting the Company's ability to pay future cash dividends on, or make future repurchases of, its common stock as further described in the Company's Annual Report for Form 10-K for the 2014 fiscal year ended January 3, 2015.

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GOODWILL AND OTHER INTANGIBLE ASSETS

3 Months Ended

Apr. 04, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

GOODWILL AND OTHER INTANGIBLE ASSETS

The Company’s goodwill and other intangible assets were as follows:

		April 4, 2015						January 3, 2015
(dollars in thousands)	Weighted-average useful life	Gross amount		Accumulated amortization		Net amount		Gross amount		Accumulated amortization		Net amount
Carter’s goodwill	Indefinite	$	136,570	$	—	$	136,570	$	136,570	$	—	$	136,570
Bonnie Togs goodwill	Indefinite	42,289		—		42,289		45,405		—		45,405
Total goodwill		$	178,859	$	—	$	178,859	$	181,975	$	—	$	181,975
Carter’s tradename	Indefinite	$	220,233	$	—	$	220,233	$	220,233	$	—	$	220,233
OshKosh tradename	Indefinite	85,500		—		85,500		85,500		—		85,500
Other tradenames	2-20 years	42,037		32,830		9,207		42,073		30,541		11,532
Total tradenames		347,770		32,830		314,940		347,806		30,541		317,265
Non-compete agreements	4 years	220		205		15		257		225		32
Total tradenames and other intangibles, net		$	347,990	$	33,035	$	314,955	$	348,063	$	30,766	$	317,297

		March 29, 2014
(dollars in thousands)	Weighted-average useful life	Gross amount		Accumulated amortization		Net amount
Carter’s goodwill	Indefinite	$	136,570	$	—	$	136,570
Bonnie Togs goodwill	Indefinite	48,034		—		48,034
Total goodwill		$	184,604	$	—	$	184,604
Carter’s tradename	Indefinite	$	220,233	$	—	$	220,233
OshKosh tradename	Indefinite	85,500		—		85,500
Other tradenames	2-3 years	38,552		20,404		18,148
Total tradenames		344,285		20,404		323,881
Non-compete agreements	4 years	272		186		86
Total tradenames and other intangibles, net		$	344,557	$	20,590	$	323,967

The Company recorded approximately $2.3 million and $6.3 million in amortization expense for the fiscal quarters ended April 4, 2015 and March 29, 2014, respectively. The estimated future amortization expense for these assets is approximately $4.1 million for the remainder of fiscal 2015, $1.9 million for fiscal 2016, $0.2 million for each fiscal year 2017, 2018 and 2019, and $2.6 million thereafter.

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RECENT ACCOUNTING PRONOUNCEMENTS

3 Months Ended

Apr. 04, 2015

Accounting Policies [Abstract]

RECENT ACCOUNTING PRONOUNCEMENTS

RECENT ACCOUNTING PRONOUNCEMENTS

Revenue Recognition

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), which clarifies the principles for recognizing revenue. The guidance is applicable to all contracts with customers regardless of industry-specific or transaction-specific fact patterns. Further, the guidance requires improved disclosures as well as additional disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. The standard is effective for the Company beginning in the first quarter of fiscal 2017, including interim periods within that first fiscal year, and early adoption is not permitted. Upon becoming effective, the Company will apply the amendments in the updated standard either retrospectively to each prior reporting period presented, or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application. The Company is currently evaluating the impact of adopting this standard on its consolidated financial position, results of operations, and cash flows.

On April 1, 2015, the FASB voted to propose a deferral of the effective date of the new revenue standard by one year, but to permit entities to adopt one year earlier if they choose (i.e., the original effective date). The proposal is currently undergoing the FASB's due process requirement, which includes a 30-day period for public comment.

Presentation of Debt Issuance Costs

In April 2015, the FASB issued Accounting Standard Update 2015-03, Simplifying the Presentation of Debt Issuance Costs ("ASU 2015-03"). Upon adoption, ASU 2015-03 will require debt issuance costs to be presented in thebalance sheet as a direct reduction in the carrying value of the associated debt liability, consistent with the current presentation of a debt discount. Under current guidance prior to ASU 2015-03, debt issuance costs are presented in the balance sheet as a deferred charge (asset). ASU 2015-03 is limited to the presentation of debt issuance costs and will not affect the recognition and measurement of debt issuance costs. Upon adoption, ASU 2015-03 must be applied on a retrospective basis and is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted. Since ASU 2015-03 involves balance sheet presentation only, its adoption will not have any impact on the Company's results of operations, financial condition, or cash flows. The Company is evaluating a decision to early adopt ASU 2015-03 prior to its mandatory effective date.

Simplified Measurement Date for Defined Benefit Plan Assets and Obligations

In April 2015, the FASB issued Accounting Standard Update 2015-04, Practical Expedient for the Measurement Date of an Employer's Defined Benefit Obligation and Plan Assets ("ASU 2015-04"). Upon adoption, ASU 2015-04 will allow employers with fiscal year ends that do not coincide with a calendar month end to make an accounting policy election to measure defined benefit plan assets and obligations as of the end of the month closest to their fiscal year ends (i.e., on an alternative measurement date). An employer that makes this election must consistently apply the practical expedient from year to year and to all of its defined benefit plans. ASU 2015-04 will be effective for interim and fiscal periods beginning after December 15, 2015; prospective application is required and early adoption is permitted. The Company's fiscal year ends on the Saturday in December or January nearest the last day of December, and the Company has defined benefit plans. The Company is currently evaluating the policy election that will be allowed upon the adoption of ASU 2015-04.

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OTHER CURRENT AND LONG-TERM LIABILITIES

3 Months Ended

Apr. 04, 2015

Other Liabilities Disclosure [Abstract]

OTHER CURRENT AND LONG-TERM LIABILITIES

OTHER CURRENT AND LONG-TERM LIABILITIES

Other current liabilities consisted of the following:

(dollars in thousands)	April 4, 2015		January 3, 2015		March 29, 2014
Accrued bonuses and incentive compensation	$	4,396	$	18,875	$	3,196
Contingent consideration	7,661		7,711		8,878
Income taxes payable	18,410		692		6,637
Accrued workers' compensation	3,057		2,662		7,392
Accrued interest	2,759		8,106		2,874
Accrued sales and use taxes	7,653		5,318		7,307
Accrued salaries and wages	8,111		3,576		3,405
Accrued gift certificates	9,882		10,100		7,877
Accrued 401(k) contributions	1,296		10,073		893
Accrued closure costs	633		835		7,754
Other current liabilities	29,545		29,780		19,022
Total	$	93,403	$	97,728	$	75,235

Other long-term liabilities consisted of the following:

(dollars in thousands)	April 4, 2015		January 3, 2015		March 29, 2014
Deferred lease incentives	$	68,652	$	67,205	$	69,900
Accrued rent	43,504		40,656		34,446
Contingent consideration	—		—		7,437
Accrued workers' compensation	4,717		4,717		—
OshKosh pension plan	11,029		11,031		3,613
Unrecognized tax benefits	10,087		12,230		12,505
Post-retirement life and medical plan	4,731		4,731		5,069
Deferred compensation	8,710		8,388		7,420
Other	1,887		1,947		103
Total	$	153,317	$	150,905	$	140,493

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EMPLOYEE BENEFIT PLANS

3 Months Ended

Apr. 04, 2015

Compensation and Retirement Disclosure [Abstract]

EMPLOYEE BENEFIT PLANS

EMPLOYEE BENEFIT PLANS

The Company maintains a defined contribution plan and two defined benefit plans. The two defined benefit plans include the OshKosh B'Gosh pension plan and a post-retirement life and medical plan.

OSHKOSH B'GOSH PENSION PLAN

The net periodic pension (benefit) cost included in the statement of operations was comprised of:

	Fiscal quarter ended
(dollars in thousands)	April 4, 2015			March 29, 2014
Interest cost	$	623		$	622
Expected return on plan assets	(785		)	(798		)
Recognized actuarial loss	161			21
Net periodic pension (benefit) cost	$	(1	)	$	(155	)

POST-RETIREMENT LIFE AND MEDICAL PLAN

The components of post-retirement benefit expense charged to the statement of operations were as follows:

	Fiscal quarter ended
(dollars in thousands)	April 4, 2015			March 29, 2014
Service cost – benefits attributed to service during the period	$	32		$	28
Interest cost on accumulated post-retirement benefit obligation	45			57
Amortization net actuarial gain	(48		)	(51		)
Curtailment gain	—			(22		)
Total net periodic post-retirement benefit cost	$	29		$	12

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LONG-TERM DEBT

3 Months Ended

Apr. 04, 2015

Debt Disclosure [Abstract]

LONG-TERM DEBT

LONG-TERM DEBT

Long-term debt consisted of the following:

(dollars in thousands)	April 4, 2015		January 3, 2015		March 29, 2014
Senior notes	$	400,000	$	400,000	$	400,000
Secured revolving credit facility	186,349		186,000		186,000
Total long-term debt	$	586,349	$	586,000	$	586,000

Secured Revolving Credit Facility

As of April 4, 2015, the Company had $186.3 million in outstanding borrowings under its secured revolving credit facility, exclusive of $7.9 million of outstanding letters of credit. During the first quarter of fiscal 2015, the Company replaced $20.0 million of outstanding borrowings with CAD $25.5 million of borrowings in Canadian dollars, which approximated $20.3 million. Amounts outstanding under the revolving credit facility currently accrue interest at a LIBOR rate plus Base Rate, which, as of April 4, 2015, was 1.93% for U.S. dollar borrowings and 2.74% for Canadian dollar borrowings. As of April 4, 2015, there was approximately $180.8 million available for future borrowing.

As of April 4, 2015, the Company was in compliance with the financial debt covenants under the secured revolving credit facility.

Senior Notes

As of April 4, 2015, The William Carter Company ("TWCC"), a 100% owned subsidiary of Carter's Inc., had outstanding $400 million principal amount of senior notes bearing interest at a fixed rate of 5.25% per annum and maturing on August 15, 2021. The senior notes are unsecured and are fully and unconditionally guaranteed by Carter's, Inc. and certain subsidiaries of TWCC.

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STOCK-BASED COMPENSATION

3 Months Ended

Apr. 04, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

The Company recorded stock-based compensation cost as follows:

	Fiscal quarter ended
(dollars in thousands)	April 4, 2015		March 29, 2014
Stock options	$	1,324	$	1,370
Restricted stock:
Time-based awards	2,083		1,941
Performance-based awards	1,333		1,224
Total	$	4,740	$	4,535

All stock-based compensation expense was reflected as a component of selling, general, and administrative expenses, where other forms of compensation were recorded.

On February 18, 2015, 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:  177,900 stock options with an exercise price of $82.40 each; 84,800 shares of time-based restricted stock awards with a grant-date fair value of $82.40 each; and 50,600 shares of performance-based restricted stock awards with a grant-date fair value of $82.40 each.   

During the first quarter of fiscal 2015, a total of 331,163 restricted stock awards (time and performance based) vested with a weighted-average grant-date fair value of $41.16 each. For the first quarter of fiscal 2014, a total of 151,500 restricted stock awards (time and performance based) vested with a weighted average grant-date fair value of $39.65 each.

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INCOME TAXES

3 Months Ended

Apr. 04, 2015

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

During the first quarter of fiscal 2015, the Company recognized prior-year income tax benefits of approximately $1.8 million due to a favorable settlement of an ongoing IRS audit of fiscal 2011, 2012 and 2013, in addition to a favorable settlement of an ongoing state income tax audit. These settlements decreased the Company's effective tax rate for the first quarter of fiscal 2015 compared to the first quarter of fiscal 2014.

As of April 4, 2015, the Company had gross unrecognized income tax benefits of approximately $9.3 million, of which $6.3 million, if ultimately recognized, may affect the Company’s effective 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 4, 2015 are approximately $1.7 million of reserves for which the statute of limitations is expected to expire within the next fiscal year.  If these tax benefits are ultimately recognized, such recognition, net of federal income taxes, may affect the annual effective tax rate for fiscal 2015 or fiscal 2016 along with the effective 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 tax benefits as a component of income tax expense.  During the fiscal quarters ended April 4, 2015 and March 29, 2014, interest expense recorded on uncertain tax positions was not significant. The Company had approximately $0.8 million, $0.9 million, and $0.9 million of interest accrued on uncertain tax positions as of April 4, 2015, January 3, 2015, and March 29, 2014, respectively.

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FACILITY CLOSURE (Tables)

3 Months Ended

Apr. 04, 2015

Restructuring and Related Activities [Abstract]

Schedule of restructuring reserve

The following table summarizes the restructuring reserves related to the office consolidation as of April 4, 2015:

(dollars in millions)	Severance			Other closure costs			Total
Balance at January 3, 2015	$	0.8		$	2.8		$	3.6
Provision	—			—			—
Payments	(0.2		)	(0.3		)	(0.5		)
Other	—			—			—
Balance at April 4, 2015	$	0.6		$	2.5		$	3.1

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SEGMENT INFORMATION (Details) (USD $)	3 Months Ended
	Apr. 04, 2015		Mar. 29, 2014
Segment Reporting Information [Line Items]
Net sales	$ 684,764,000		$ 651,643,000
Operating income (loss)	84,505,000		61,531,000
Operating income (loss) as percentage of segment net sales	12.30%	[1]	9.40%
Amortization of tradenames	2,300,000		6,300,000
Other Tradenames [Member]
Segment Reporting Information [Line Items]
Amortization of tradenames	2,300,000		6,300,000
Hogansville Distribution Facility [Member]
Segment Reporting Information [Line Items]
Restructuring charge due to closure	0	[2]	300,000	[2]
Office Consolidation [Member]
Segment Reporting Information [Line Items]
Restructuring charge due to closure	0		2,000,000
Operating Segments [Member]
Segment Reporting Information [Line Items]
Net sales	684,764,000		651,643,000
Percentage of total net sales	100.00%		100.00%
Operating Segments [Member] | Carter's [Member]
Segment Reporting Information [Line Items]
Net sales	527,042,000		501,956,000
Percentage of total net sales	77.00%		77.00%
Operating income (loss)	102,424,000		89,846,000
Operating income (loss) as percentage of segment net sales	19.40%		17.90%
Operating Segments [Member] | OshKosh [Member]
Segment Reporting Information [Line Items]
Net sales	89,093,000		79,143,000
Percentage of total net sales	13.00%		12.20%
Operating income (loss)	2,019,000		(2,464,000)
Operating income (loss) as percentage of segment net sales	2.30%		(3.10%)
Operating Segments [Member] | Wholesale [Member] | Carter's [Member]
Segment Reporting Information [Line Items]
Net sales	269,315,000		271,628,000
Percentage of total net sales	39.30%		41.70%
Operating income (loss)	57,931,000		46,867,000
Operating income (loss) as percentage of segment net sales	21.50%		17.30%
Operating Segments [Member] | Wholesale [Member] | OshKosh [Member]
Segment Reporting Information [Line Items]
Net sales	16,051,000		15,585,000
Percentage of total net sales	2.30%		2.40%
Operating income (loss)	2,979,000		2,025,000
Operating income (loss) as percentage of segment net sales	18.60%		13.00%
Operating Segments [Member] | Retail [Member] | Carter's [Member]
Segment Reporting Information [Line Items]
Net sales	257,727,000	[1]	230,328,000	[1]
Percentage of total net sales	37.70%	[1]	35.30%	[1]
Operating income (loss)	44,493,000		42,979,000	[1]
Operating income (loss) as percentage of segment net sales	17.30%	[1]	18.70%	[1]
Operating Segments [Member] | Retail [Member] | OshKosh [Member]
Segment Reporting Information [Line Items]
Net sales	73,042,000	[1]	63,558,000	[1]
Percentage of total net sales	10.70%	[1]	9.80%	[1]
Operating income (loss)	(960,000)		(4,489,000)	[1]
Operating income (loss) as percentage of segment net sales	(1.30%)	[1]	(7.10%)	[1]
Operating Segments [Member] | International [Member]
Segment Reporting Information [Line Items]
Net sales	68,629,000	[3]	70,544,000	[3]
Percentage of total net sales	10.00%	[3]	10.80%	[3]
Operating income (loss)	6,511,000		4,036,000	[3],[4]
Operating income (loss) as percentage of segment net sales	9.50%	[3]	5.70%	[3],[4]
Corporate [Member]
Segment Reporting Information [Line Items]
Corporate expenses	$ (26,449,000)		$ (29,887,000)	[5],[6]

[1] Includes eCommerce results.

[2] Continuing operating costs associated with the closure of the Company's distribution facility in Hogansville, Georgia. This facility was sold in December 2014.

[3] Net sales include international retail, eCommerce, and wholesale sales. Operating income includes international licensing income.

[4] Includes charges associated with the revaluation of the Company's contingent consideration related to the Company's 2011 acquisition of Bonnie Togs of approximately $0.5 million for each of the first quarters of fiscal 2015 and 2014. Also includes a benefit of approximately $0.4 million for the first quarter of fiscal 2014 related to a favorable recovery on inventory related to the Company's exit from Japan retail operations.

[5] Fiscal quarter ended(dollars in millions)April 4, 2015 March 29, 2014Closure of distribution facility in Hogansville, GA (1)$— $0.3Office consolidation costs $— $2.0Amortization of tradenames$2.3 $6.3(1) Continuing operating costs associated with the closure of the Company's distribution facility in Hogansville, Georgia. This facility was sold in December 2014.

[6] Corporate expenses include expenses related to incentive compensation, stock-based compensation, executive management, severance and relocation, finance, building occupancy, information technology, certain legal fees, consulting, and audit fees.

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SEGMENT INFORMATION

3 Months Ended

Apr. 04, 2015

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION

The table below presents certain segment information for the periods indicated:

	Fiscal quarter ended
(dollars in thousands)	April 4, 2015			% of Total Net Sales		March 29, 2014			% of Total Net Sales
Net sales:
Carter’s Wholesale	$	269,315		39.3	%	$	271,628		41.7	%
Carter’s Retail (a)	257,727			37.7	%	230,328			35.3	%
Total Carter’s (U.S.)	527,042			77.0	%	501,956			77.0	%
OshKosh Retail (a)	73,042			10.7	%	63,558			9.8	%
OshKosh Wholesale	16,051			2.3	%	15,585			2.4	%
Total OshKosh (U.S.)	89,093			13.0	%	79,143			12.2	%
International (b)	68,629			10.0	%	70,544			10.8	%
Total net sales	$	684,764		100.0	%	$	651,643		100.0	%
Operating income (loss):				% of Segment Net Sales					% of Segment Net Sales
Carter’s Wholesale	$	57,931		21.5	%	$	46,867		17.3	%
Carter’s Retail (a)	44,493			17.3	%	42,979			18.7	%
Total Carter’s (U.S.)	102,424			19.4	%	89,846			17.9	%
OshKosh Retail (a)	(960		)	(1.3	)%	(4,489		)	(7.1	)%
OshKosh Wholesale	2,979			18.6	%	2,025			13.0	%
Total OshKosh (U.S.)	2,019			2.3	%	(2,464		)	(3.1	)%
International (b) (c)	6,511			9.5	%	4,036			5.7	%
Corporate expenses (d) (e)	(26,449		)			(29,887		)
Total operating income	$	84,505		12.3	%	$	61,531		9.4	%

(a) Includes eCommerce results.

(b) Net sales include international retail, eCommerce, and wholesale sales. Operating income includes international licensing income.

(c) Includes charges associated with the revaluation of the Company's contingent consideration related to the Company's 2011 acquisition of Bonnie Togs of approximately $0.5 million for each of the first quarters of fiscal 2015 and 2014. Also includes a benefit of approximately $0.4 million for the first quarter of fiscal 2014 related to a favorable recovery on inventory related to the Company's exit from Japan retail operations.

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

(e) Includes the following charges:

	Fiscal quarter ended
(dollars in millions)	April 4, 2015		March 29, 2014
Closure of distribution facility in Hogansville, GA (1)	$	—	$	0.3
Office consolidation costs	$	—	$	2.0
Amortization of tradenames	$	2.3	$	6.3

(1) Continuing operating costs associated with the closure of the Company's distribution facility in Hogansville, Georgia. This facility was sold in          December 2014.

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GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)

3 Months Ended

Apr. 04, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets Table

The Company’s goodwill and other intangible assets were as follows:

		April 4, 2015						January 3, 2015
(dollars in thousands)	Weighted-average useful life	Gross amount		Accumulated amortization		Net amount		Gross amount		Accumulated amortization		Net amount
Carter’s goodwill	Indefinite	$	136,570	$	—	$	136,570	$	136,570	$	—	$	136,570
Bonnie Togs goodwill	Indefinite	42,289		—		42,289		45,405		—		45,405
Total goodwill		$	178,859	$	—	$	178,859	$	181,975	$	—	$	181,975
Carter’s tradename	Indefinite	$	220,233	$	—	$	220,233	$	220,233	$	—	$	220,233
OshKosh tradename	Indefinite	85,500		—		85,500		85,500		—		85,500
Other tradenames	2-20 years	42,037		32,830		9,207		42,073		30,541		11,532
Total tradenames		347,770		32,830		314,940		347,806		30,541		317,265
Non-compete agreements	4 years	220		205		15		257		225		32
Total tradenames and other intangibles, net		$	347,990	$	33,035	$	314,955	$	348,063	$	30,766	$	317,297

		March 29, 2014
(dollars in thousands)	Weighted-average useful life	Gross amount		Accumulated amortization		Net amount
Carter’s goodwill	Indefinite	$	136,570	$	—	$	136,570
Bonnie Togs goodwill	Indefinite	48,034		—		48,034
Total goodwill		$	184,604	$	—	$	184,604
Carter’s tradename	Indefinite	$	220,233	$	—	$	220,233
OshKosh tradename	Indefinite	85,500		—		85,500
Other tradenames	2-3 years	38,552		20,404		18,148
Total tradenames		344,285		20,404		323,881
Non-compete agreements	4 years	272		186		86
Total tradenames and other intangibles, net		$	344,557	$	20,590	$	323,967

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OTHER CURRENT AND LONG-TERM LIABILITIES (Other Current Liabilities) (Details) (USD $) In Thousands, unless otherwise specified	Apr. 04, 2015	Jan. 03, 2015	Mar. 29, 2014
Other Liabilities Disclosure [Abstract]
Accrued bonuses and incentive compensation	$ 4,396	$ 18,875	$ 3,196
Contingent consideration	7,661	7,711	8,878
Income taxes payable	18,410	692	6,637
Accrued workers' compensation	3,057	2,662	7,392
Accrued Interest	2,759	8,106	2,874
Accrued sales and use taxes	7,653	5,318	7,307
Accrued salaries and wages	8,111	3,576	3,405
Accrued gift certificates	9,882	10,100	7,877
Accrued 401(k) contributions	1,296	10,073	893
Accrued closure costs	633	835	7,754
Other current liabilities	29,545	29,780	19,022
Total	$ 93,403	$ 97,728	$ 75,235

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LONG-TERM DEBT (Details)	3 Months Ended						3 Months Ended			3 Months Ended			3 Months Ended
	Apr. 04, 2015 USD ($)	Mar. 29, 2014 USD ($)	Jan. 03, 2015 USD ($)	Apr. 04, 2015 Senior Notes [Member] USD ($)	Jan. 03, 2015 Senior Notes [Member] USD ($)	Mar. 29, 2014 Senior Notes [Member] USD ($)	Apr. 04, 2015 Secured revolving credit facility [Member] USD ($)	Jan. 03, 2015 Secured revolving credit facility [Member] USD ($)	Mar. 29, 2014 Secured revolving credit facility [Member] USD ($)	Apr. 04, 2015 Secured revolving credit facility [Member] LIBOR [Member]	Apr. 04, 2015 United States of America, Dollars USD ($)	Apr. 04, 2015 United States of America, Dollars Secured revolving credit facility [Member] LIBOR [Member]	Apr. 04, 2015 Canada, Dollars CAD	Apr. 04, 2015 Canada, Dollars Secured revolving credit facility [Member] LIBOR [Member]
Debt Instrument [Line Items]
Long-term debt	$ 586,349,000	$ 586,000,000	$ 586,000,000		$ 400,000,000	$ 400,000,000	$ 186,349,000	$ 186,000,000	$ 186,000,000
Outstanding letters of credit	7,900,000
Payments on secured revolving credit facility	20,000,000	0					20,000,000
Borrowings under secured revolving credit facility	20,349,000	0									20,300,000		25,500,000
Variable interest rate, index										LIBOR
Effective interest rate (as a percentage)												1.93%		2.74%
Available for future borrowing							180,800,000
Debt Instrument, face amount				$ 400,000,000
Interest rate (as a percentage)				5.25%

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Apr. 04, 2015	Mar. 29, 2014
Statement of Comprehensive Income [Abstract]
Net income	$ 49,792	$ 34,297
Other comprehensive income (loss):
Foreign currency translation adjustments	(5,994)	(2,760)
Comprehensive income	$ 43,798	$ 31,537

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ACCUMULATED OTHER COMPREHENSIVE LOSS

3 Months Ended

Apr. 04, 2015

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

ACCUMULATED OTHER COMPREHENSIVE LOSS

ACCUMULATED OTHER COMPREHENSIVE LOSS

The components, net of applicable income taxes, of accumulated other comprehensive (loss) consisted of the following:

(dollars in thousands)	April 4, 2015			January 3, 2015			March 29, 2014
Cumulative foreign currency translation adjustments	$	(21,391	)	$	(15,397	)	$	(10,312	)
Pension and post-retirement liability adjustments	(7,640		)	(7,640		)	(2,530		)
Total accumulated other comprehensive loss	$	(29,031	)	$	(23,037	)	$	(12,842	)

Changes in accumulated other comprehensive loss for the first quarters of fiscal 2015 and 2014 consisted of additional losses for foreign currency translation adjustments of approximately $6.0 million and $2.8 million, respectively. During the first quarters of fiscal 2015 and 2014, no amounts were reclassified from other accumulated other comprehensive loss to the statement of operations.

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LONG-TERM DEBT (Tables)

3 Months Ended

Apr. 04, 2015

Debt Disclosure [Abstract]

Schedule of long-term debt

Long-term debt consisted of the following:

(dollars in thousands)	April 4, 2015		January 3, 2015		March 29, 2014
Senior notes	$	400,000	$	400,000	$	400,000
Secured revolving credit facility	186,349		186,000		186,000
Total long-term debt	$	586,349	$	586,000	$	586,000

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GOODWILL AND OTHER INTANGIBLE ASSETS (Details) (USD $)	3 Months Ended		12 Months Ended
	Apr. 04, 2015	Mar. 29, 2014	Jan. 03, 2015
Goodwill and Other Intangible Assets [Line Items]
Amortization costs	$ 2,300,000	$ 6,300,000
Goodwill, Gross amount	178,859,000	184,604,000	181,975,000
Goodwill, Net amount	178,859,000	184,604,000	181,975,000
Finite intangible assets, Accumulated amortization	33,035,000	20,590,000	30,766,000
Total, Gross amount	347,990,000	344,557,000	348,063,000
Total, Net amount	314,955,000	323,967,000	317,297,000
Carter's Goodwill [Member]
Goodwill and Other Intangible Assets [Line Items]
Goodwill, Gross amount	136,570,000	136,570,000	136,570,000
Goodwill, Net amount	136,570,000	136,570,000	136,570,000
Bonnie Togs Goodwill [Member]
Goodwill and Other Intangible Assets [Line Items]
Goodwill, Gross amount	42,289,000	48,034,000	45,405,000
Goodwill, Net amount	42,289,000	48,034,000	45,405,000
Carter's Tradename [Member]
Goodwill and Other Intangible Assets [Line Items]
Indefinite intangible assets	220,233,000	220,233,000	220,233,000
Oshkosh Tradename [Member]
Goodwill and Other Intangible Assets [Line Items]
Indefinite intangible assets	85,500,000	85,500,000	85,500,000
Tradenames [Member]
Goodwill and Other Intangible Assets [Line Items]
Finite intangible assets, Accumulated amortization	32,830,000	20,404,000	30,541,000
Intangible assets, Gross amount	347,770,000	344,285,000	347,806,000
Indefinite-lived trademarks	314,940,000	323,881,000	317,265,000
Other Tradenames [Member]
Goodwill and Other Intangible Assets [Line Items]
Amortization costs	2,300,000	6,300,000
Future amortization expense, 2015	4,100,000
Future amortization expense, 2016	1,900,000
Future amortization expense, 2017	200,000
Future amortization expense, 2018	200,000
Future amortization expense, thereafter	2,600,000
Weighted-average useful life	3 years	3 years	3 years
Finite intangible assets, Gross amount	42,037,000	38,552,000	42,073,000
Finite intangible assets, Accumulated amortization	32,830,000	20,404,000	30,541,000
Finite intangible assets, Net amount	9,207,000	18,148,000	11,532,000
Non-compete Agreements [Member]
Goodwill and Other Intangible Assets [Line Items]
Weighted-average useful life	4 years	4 years	4 years
Finite intangible assets, Gross amount	220,000	272,000	257,000
Finite intangible assets, Accumulated amortization	205,000	186,000	225,000
Finite intangible assets, Net amount	$ 15,000	$ 86,000	$ 32,000

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Apr. 04, 2015

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

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.