x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED JANUARY 2, 2016 OR |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____ TO ______ |
Delaware | 13-3912933 | |
(state or other jurisdiction of | (I.R.S. Employer Identification No.) | |
incorporation or organization) |
Title of each class | Name of each Exchange on which Registered | |
Carter's, Inc.'s common stock par value $0.01 per share | New York Stock Exchange |
Page | |||
Location | Approx. floor space in square feet | Principal use | Lease expiration date | ||||
Braselton, Georgia | 1,062,000 | Distribution/warehousing | September 2026 | ||||
Stockbridge, Georgia | 505,000 | Distribution/warehousing | April 2018 | ||||
Chino, California | 413,000 | Distribution/warehousing (1) | July 2017 | ||||
Atlanta, Georgia | 292,000 | Corporate headquarters (2) | April 2030 | ||||
Griffin, Georgia | 224,000 | Information technology | Owned | ||||
Fayetteville, Georgia | 30,000 | Information technology | September 2020 | ||||
Cambridge, Ontario | 277,000 | Distribution/warehousing | March 2020 | ||||
Cambridge, Ontario | 37,000 | Canadian corporate office (3) | June 2021 |
2015 | High | Low | ||||||
First quarter | $ | 93.89 | $ | 80.98 | ||||
Second quarter | $ | 108.84 | $ | 91.92 | ||||
Third quarter | $ | 108.98 | $ | 87.67 | ||||
Fourth quarter | $ | 94.00 | $ | 84.08 |
2014 | High | Low | ||||||
First quarter | $ | 77.97 | $ | 64.84 | ||||
Second quarter | $ | 79.36 | $ | 67.83 | ||||
Third quarter | $ | 83.52 | $ | 67.94 | ||||
Fourth quarter | $ | 87.31 | $ | 75.10 |
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 | ||||||||||
October 4, 2015 through October 31, 2015 | 131,263 | $ | 89.82 | 131,263 | $ | 95,007,894 | ||||||||
November 1, 2015 through November 28, 2015 | 100,972 | $ | 87.65 | 100,100 | $ | 86,233,902 | ||||||||
November 29, 2015 through January 2, 2016 | 127,900 | $ | 89.03 | 127,900 | $ | 74,847,185 | ||||||||
Total | 360,135 | 359,263 |
(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 872 shares surrendered between October 4, 2015 and January 2, 2016. |
(2) | Amounts purchased during the fiscal year were made in accordance with the share repurchase authorizations described in Note 8 to the accompanying audited consolidated financial statements contained in this Annual Report on Form 10-K. |
For the fiscal years ended | ||||||||||||||||||||
(dollars in thousands, except per share data) | January 2, 2016 | January 3, 2015 | December 28, 2013 | December 29, 2012 | December 31, 2011 | |||||||||||||||
Operating Data: | ||||||||||||||||||||
Retail sales - Carter's | $ | 1,151,268 | $ | 1,087,165 | $ | 954,160 | $ | 818,909 | $ | 671,590 | ||||||||||
Wholesale sales - Carter's | 1,107,706 | 1,081,888 | 1,035,420 | 981,445 | 939,115 | |||||||||||||||
Retail sales - OshKosh | 363,087 | 335,140 | 289,311 | 283,343 | 280,900 | |||||||||||||||
Wholesale sales - OshKosh | 65,607 | 73,201 | 74,564 | 79,752 | 81,888 | |||||||||||||||
International | 326,211 | 316,474 | 285,256 | 218,285 | 136,241 | |||||||||||||||
Total net sales | $ | 3,013,879 | $ | 2,893,868 | $ | 2,638,711 | $ | 2,381,734 | $ | 2,109,734 | ||||||||||
Cost of goods sold | $ | 1,755,855 | $ | 1,709,428 | $ | 1,543,332 | $ | 1,443,786 | $ | 1,417,456 | ||||||||||
Gross profit (a) | $ | 1,258,024 | $ | 1,184,440 | $ | 1,095,379 | $ | 937,948 | $ | 692,278 | ||||||||||
Operating income (b) | $ | 392,857 | $ | 333,345 | $ | 264,151 | $ | 261,986 | $ | 187,466 | ||||||||||
Income before income taxes | $ | 368,188 | $ | 302,906 | $ | 249,465 | $ | 255,391 | $ | 180,888 | ||||||||||
Net income | $ | 237,822 | $ | 194,670 | $ | 160,407 | $ | 161,150 | $ | 114,016 | ||||||||||
Per Common Share Data: | ||||||||||||||||||||
Basic net income | $ | 4.55 | $ | 3.65 | $ | 2.78 | $ | 2.73 | $ | 1.96 | ||||||||||
Diluted net income | $ | 4.50 | $ | 3.62 | $ | 2.75 | $ | 2.69 | $ | 1.94 | ||||||||||
Balance Sheet Data: | ||||||||||||||||||||
Working capital (c) | $ | 868,747 | $ | 793,487 | $ | 701,242 | $ | 713,468 | $ | 629,394 | ||||||||||
Total assets | $ | 2,009,113 | $ | 1,893,096 | $ | 1,812,484 | $ | 1,630,109 | $ | 1,402,709 | ||||||||||
Total debt | $ | 584,431 | $ | 586,000 | $ | 586,000 | $ | 186,000 | $ | 236,000 | ||||||||||
Stockholders' equity | $ | 875,051 | $ | 786,684 | $ | 700,731 | $ | 985,479 | $ | 805,709 | ||||||||||
Cash Flow Data: | ||||||||||||||||||||
Net cash provided by operating activities | $ | 307,987 | $ | 282,397 | $ | 209,696 | $ | 278,619 | $ | 81,074 | ||||||||||
Net cash (used in) investing activities | $ | (103,425 | ) | $ | (104,732 | ) | $ | (220,532 | ) | $ | (83,392 | ) | $ | (106,692 | ) | |||||
Net cash (used in) provided by financing activities | $ | (162,005 | ) | $ | (122,438 | ) | $ | (84,658 | ) | $ | (46,317 | ) | $ | 11,505 | ||||||
Other Data: | ||||||||||||||||||||
Capital expenditures | $ | 103,497 | $ | 103,453 | $ | 182,525 | $ | 83,398 | $ | 45,495 | ||||||||||
Dividend declared and paid per common share | $ | 0.88 | $ | 0.76 | $ | 0.48 | $ | — | $ | — |
(a) | Gross profit in fiscal 2011 includes $6.7 million in additional expenses related to the amortization of the fair value step-up of inventory acquired as a result of the acquisition of our former licensee, Bonnie Togs, in 2011. |
For the fiscal years ended | ||||||||||||||||||||
(dollars in thousands) | January 2, 2016 | January 3, 2015 | December 28, 2013 | December 29, 2012 | December 31, 2011 | |||||||||||||||
Amortization of H.W. Carter and Sons tradenames | $ | 6,239 | $ | 16,437 | $ | 13,588 | $ | — | $ | — | ||||||||||
Workforce reduction, facility write-down, and closure costs | $ | — | $ | 9,126 | $ | 38,214 | $ | 9,490 | — | |||||||||||
Accretion and adjustment of contingent consideration | $ | 1,886 | $ | 1,348 | $ | 2,825 | $ | 3,589 | 2,484 | |||||||||||
Acquisition-related charges | $ | — | $ | — | $ | — | $ | — | 3,050 |
(c) | Represents total current assets less total current liabilities. |
For the fiscal years ended | ||||||||
January 2, 2016 (52 weeks) | January 3, 2015 (53 weeks) | December 28, 2013 (52 weeks) | ||||||
Net sales | ||||||||
Carter’s Retail | 38.2 | % | 37.6 | % | 36.2 | % | ||
Carter’s Wholesale | 36.8 | % | 37.4 | % | 39.2 | % | ||
Total Carter’s (U.S.) | 75.0 | % | 75.0 | % | 75.4 | % | ||
OshKosh Retail | 12.0 | % | 11.6 | % | 11.0 | % | ||
OshKosh Wholesale | 2.2 | % | 2.5 | % | 2.8 | % | ||
Total OshKosh (U.S.) | 14.2 | % | 14.1 | % | 13.8 | % | ||
International | 10.8 | % | 10.9 | % | 10.8 | % | ||
Consolidated net sales | 100.0 | % | 100.0 | % | 100.0 | % | ||
Cost of goods sold | 58.3 | % | 59.1 | % | 58.5 | % | ||
Gross profit | 41.7 | % | 40.9 | % | 41.5 | % | ||
Selling, general, and administrative expenses | 30.2 | % | 30.8 | % | 32.9 | % | ||
Royalty income | (1.5 | )% | (1.4 | )% | (1.4 | )% | ||
Operating income | 13.0 | % | 11.5 | % | 10.0 | % | ||
Interest expense | 0.9 | % | 1.0 | % | 0.5 | % | ||
Interest income | n/m | n/m | n/m | |||||
Other (income) expense, net | (0.1 | )% | 0.1 | % | n/m | |||
Income before income taxes | 12.2 | % | 10.4 | % | 9.5 | % | ||
Provision for income taxes | 4.3 | % | 3.7 | % | 3.4 | % | ||
Net income | 7.9 | % | 6.7 | % | 6.1 | % | ||
Number of retail stores at end of fiscal year: | ||||||||
Carter’s - U.S. | 594 | 531 | 476 | |||||
OshKosh - U.S. | 241 | 200 | 181 | |||||
International | 147 | 124 | 117 | |||||
Total | 982 | 855 | 774 |
Carter's Retail | OshKosh Retail | Canada | Total | ||||||
Fiscal 2014: | Openings | 61 | 27 | 23 | 111 | ||||
Closings | 6 | 8 | 1 | 15 | |||||
Fiscal 2015: | Openings | 67 | 47 | 23 | 137 | ||||
Closings | 4 | 6 | — | 10 | |||||
Projections for fiscal 2016: | Openings | 60 | 52 | 19 | 131 | ||||
Closings | 4 | 5 | 1 | 10 |
• | When comparing 2015 to 2014, comparable 52-week periods were used; and |
• | When comparing 2014 to 2013, comparable 53-week periods were used. |
U.S. Direct-to-Consumer Comparable Sales | ||||
Change from 2014 to 2015 | ||||
Increase (Decrease) | ||||
Carter's Retail | OshKosh Retail | |||
Stores | (3.1)% | (2.5)% | ||
eCommerce | +18.9% | +24.0% | ||
Total DTC | +1.2% | +2.4% |
For the fiscal years ended | |||||||||||||
(dollars in thousands) | January 2, 2016 (52 weeks) | % of Total Net Sales | January 3, 2015 (53 weeks) | % of Total Net Sales | |||||||||
Net sales: | |||||||||||||
Carter’s Retail | $ | 1,151,268 | 38.2 | % | $ | 1,087,165 | 37.6 | % | |||||
Carter’s Wholesale | 1,107,706 | 36.8 | % | 1,081,888 | 37.4 | % | |||||||
Total Carter’s (U.S.) | 2,258,974 | 75.0 | % | 2,169,053 | 75.0 | % | |||||||
OshKosh Retail | 363,087 | 12.0 | % | 335,140 | 11.6 | % | |||||||
OshKosh Wholesale | 65,607 | 2.2 | % | 73,201 | 2.5 | % | |||||||
Total OshKosh (U.S.) | 428,694 | 14.2 | % | 408,341 | 14.1 | % | |||||||
International | 326,211 | 10.8 | % | 316,474 | 10.9 | % | |||||||
Total net sales | $ | 3,013,879 | 100.0 | % | $ | 2,893,868 | 100.0 | % |
• | Increase of $68.9 million from new store openings; |
• | Increase of $38.5 million in eCommerce sales; |
• | Decrease of $25.9 million in comparable store sales; and |
• | Decrease of $4.0 million due to the impact of store closings. |
• | Increase of $30.9 million from new store openings; |
• | Increase of $14.2 million in eCommerce sales; |
• | Decrease of $6.5 million in comparable store sales; and |
• | Decrease of $6.0 million due to the impact of store closings. |
• | Increase of $9.6 million from international wholesale locations, excluding Canada; |
• | Increase of $7.2 million from eCommerce driven primarily by our Canadian website; |
• | Increase of $6.9 million from our Canadian retail stores; |
• | Increase of $5.9 million from eCommerce primarily due to the 2015 launch of our website in China; |
• | Decrease of $15.0 million in our wholesale business primarily due to the Target Canada bankruptcy that occurred in early 2015; and |
• | Decrease of $4.4 million related to the exit of retail operations in Japan during the first quarter of fiscal 2014. |
• | $10.2 million decrease in amortization expense for the H.W. Carter & Sons trademarks; |
• | $6.7 million decrease in provisions for doubtful receivables; |
• | $6.6 million decrease in expenses associated with office consolidations occurring in prior periods; |
• | $6.5 million decrease in expenses for legal and consulting services; |
• | $6.3 million decrease in fulfillment and distribution expenses; |
• | $4.0 million decrease in expenses related to our exit from Japan retail operations in the first quarter of fiscal 2014; and |
• | $2.0 million decrease in incentive compensation expenses; |
• | $29.8 million increase in expenses related to retail store operations, primarily due to new stores; |
• | $10.5 million increase in expenses related to marketing and brand management; |
• | $6.3 million increase in insurance and other benefits primarily due to higher health insurance costs; and |
• | $1.8 million increase in the Company's match of 401(k) contributions due to higher employee participation. |
(dollars in thousands) | Carter's Wholesale | Carter's Retail | OshKosh Wholesale | OshKosh Retail | International | Unallocated Corporate Expenses | Total | |||||||||||||||||||||
Operating income (loss) for fiscal 2014 | $ | 185,463 | $ | 211,297 | $ | 8,842 | $ | 8,210 | $ | 39,470 | $ | (119,937 | ) | $ | 333,345 | |||||||||||||
Increase (decrease) in: | ||||||||||||||||||||||||||||
Gross profit | 32,872 | 20,214 | 2,114 | 12,073 | 7,974 | (1,663 | ) | 73,584 | ||||||||||||||||||||
Royalty income | 1,832 | 1,627 | 1,438 | 969 | (956 | ) | — | 4,910 | ||||||||||||||||||||
SG&A expenses | (12,330 | ) | 34,098 | (876 | ) | 9,321 | (516 | ) | (10,715 | ) | 18,982 | |||||||||||||||||
Operating income (loss) for fiscal 2015 | $ | 232,497 | $ | 199,040 | $ | 13,270 | $ | 11,931 | $ | 47,004 | $ | (110,885 | ) | $ | 392,857 | |||||||||||||
Carter's Retail | Carter's Wholesale | OshKosh Retail | OshKosh Wholesale | International | |||||||||||
Operating margin for fiscal 2014 | 19.4 | % | 17.1 | % | 2.4 | % | 12.1 | % | 12.5 | % | |||||
Favorable (unfavorable) bps changes in fiscal 2015: | |||||||||||||||
Gross profit | (130) bps | 240 bps | (40) bps | 540 bps | 110 bps | ||||||||||
Royalty income | 10 bps | 10 bps | 20 bps | 350 bps | (40) bps | ||||||||||
SG&A expenses | (90) bps | 140 bps | 110 bps | (80) bps | 120 bps | ||||||||||
Operating margin for fiscal 2015 | 17.3 | % | 21.0 | % | 3.3 | % | 20.2 | % | 14.4 | % | |||||
(a) | (b) | (c) | (d) | (e) |
• | 130 bps decrease in gross profit primarily due to lower average price per unit; and |
• | 90 bps increase in SG&A expenses mainly due to a: |
• | 60 bps increase in marketing expenses; and |
• | 50 bps increase in expenses associated with new stores. |
• | 240 bps increase in gross profit primarily due to strong demand and product performance, supply chain efficiencies, favorable product costs, and higher average price per unit as a result of product mix; and |
• | 140 bps decrease in SG&A expenses consisting primarily of a: |
• | 100 bps decrease in distribution and other expenses driven by efficiencies at our Braselton, Georgia distribution center; and |
• | 20 bps decrease related to provisions for accounts receivable. |
• | 110 bps decrease in SG&A expenses primarily due to a: |
• | 70 bps decrease in retail administration expenses; |
• | 60 bps decrease in fulfillment and distribution expenses; and |
• | 40 bps increase in marketing expenses; |
• | 20 bps increase in royalty income from our licensees; and |
• | 40 bps decrease in gross profit due to lower average price per unit. |
• | 540 bps increase in gross profit primarily due to favorable product costs and a higher average price per unit as a result of product mix; |
• | 350 bps increase in royalty income primarily due to sales growth from our licensees; and |
• | 80 bps increase in SG&A expenses primarily due to a: |
• | 190 bps increase in customer service expenses; and |
• | 80 bps decrease in distribution and freight expenses. |
• | 110 bps increase in gross profit driven primarily by growth in our eCommerce channel; |
• | 40 bps decrease in royalty income; and |
• | 120 bps decrease in SG&A expenses consisting mainly of a: |
▪ | 210 bps decrease due to the exit of retail operations in Japan in the first quarter of fiscal 2014; |
▪ | 60 bps decrease in customer service expenses; |
▪ | 40 bps decrease related to provisions for accounts receivable; |
▪ | 90 bps increase in retail expenses associated with new stores in Canada; |
▪ | 60 bps increase in marketing expenses; and |
▪ | 60 bps increase in distribution and freight expenses. |
• | Decrease of $10.2 million in amortization expense for the H.W. Carter & Sons tradenames; |
• | Decrease of $6.6 million in expenses related to office consolidations that occurred in prior periods; |
• | Decrease of $4.0 million in administrative and legal expenses; |
• | Increase of $8.0 million in insurance and other benefits, primarily driven by higher employee health insurance costs and higher 401-K match expense due to higher employee participation; and |
• | Increase of $4.2 million in expenses related to information technology. |
U.S. Direct-to-Consumer Comparable Sales | ||||
Change from 2013 to 2014 | ||||
Increase (Decrease) | ||||
Carter's Retail | OshKosh Retail | |||
Stores | (1.0)% | +3.3% | ||
eCommerce | +26.1% | +27.4% | ||
Total DTC | +3.7% | +7.3% |
For the fiscal years ended | |||||||||||||
(dollars in thousands) | January 3, 2015 (53 weeks) | % of Total Net Sales | December 28, 2013 (52 weeks) | % of Total Net Sales | |||||||||
Net sales: | |||||||||||||
Carter’s Retail | $ | 1,087,165 | 37.6 | % | $ | 954,160 | 36.2 | % | |||||
Carter’s Wholesale | 1,081,888 | 37.4 | % | 1,035,420 | 39.2 | % | |||||||
Total Carter’s | 2,169,053 | 75.0 | % | 1,989,580 | 75.4 | % | |||||||
OshKosh Retail | 335,140 | 11.6 | % | 289,311 | 11.0 | % | |||||||
OshKosh Wholesale | 73,201 | 2.5 | % | 74,564 | 2.8 | % | |||||||
Total OshKosh | 408,341 | 14.1 | % | 363,875 | 13.8 | % | |||||||
International | 316,474 | 10.9 | % | 285,256 | 10.8 | % | |||||||
Total net sales | $ | 2,893,868 | 100.0 | % | $ | 2,638,711 | 100.0 | % |
• | Increase of $87.7 million from new store openings; |
• | Increase of $43.2 million in eCommerce sales; |
• | Decrease of $9.0 million in comparable store sales driven by a decline in the number of transactions; |
• | Decrease of $3.3 million due to the impact of store closings; and |
• | Increase of $13.7 million in incremental net sales during the 53rd week of fiscal 2014, exclusive of the other factors noted above. |
• | Increase of $25.4 million from new store openings; |
• | Increase of $12.7 million in eCommerce sales; |
• | Increase of $7.0 million in comparable store sales driven by an increase in the average transaction value; |
• | Decrease of $4.4 million due to the impact of store closings; and |
• | Increase of $4.8 million in incremental net sales during the 53rd week of fiscal 2014, exclusive of the other factors noted above. |
• | $14.0 million in incremental sales in our international wholesale locations excluding Canada; |
• | $12.4 million in incremental sales in our Canadian wholesale business; |
• | $11.8 million in incremental sales in our Canadian retail stores primarily due to new store openings; and |
• | $4.4 million in incremental sales from our international eCommerce business primarily due to the launch of the Canada website in fiscal 2014. |
• | $26.6 million decrease in expenses associated with the office consolidation; |
• | $13.0 million decrease in associated with our exit from Japan retail operations in the first quarter of 2014; |
• | $7.7 million decrease in marketing expenses; |
• | $3.3 million decrease in expenses associated with insurance and other employee benefits; and |
• | $1.0 million decrease in incentive compensation expenses. |
(dollars in thousands) | Carter's Wholesale | Carter's Retail | OshKosh Wholesale | OshKosh Retail | International | Unallocated Corporate Expenses | Total | |||||||||||||||||||||
Operating income (loss) for fiscal 2013 | $ | 185,501 | $ | 181,169 | $ | 9,796 | $ | (1,433 | ) | $ | 40,641 | $ | (151,523 | ) | $ | 264,151 | ||||||||||||
Increase (decrease) in: | ||||||||||||||||||||||||||||
Gross profit | 2,240 | 63,458 | (1,125 | ) | 21,210 | 2,070 | 1,208 | 89,061 | ||||||||||||||||||||
Royalty income | (508 | ) | 1,297 | 263 | 316 | 536 | — | 1,904 | ||||||||||||||||||||
SG&A expenses | 1,770 | 34,627 | 92 | 11,883 | 3,777 | (30,378 | ) | 21,771 | ||||||||||||||||||||
Operating income (loss) for fiscal 2014 | $ | 185,463 | $ | 211,297 | $ | 8,842 | $ | 8,210 | $ | 39,470 | $ | (119,937 | ) | $ | 333,345 | |||||||||||||
Carter's Retail | Carter's Wholesale | OshKosh Retail | OshKosh Wholesale | International | |||||||||||
Operating margin for fiscal 2013 | 19.0 | % | 17.9 | % | (0.5 | )% | 13.1 | % | 14.2 | % | |||||
Favorable (unfavorable) bps change in fiscal 2014: | |||||||||||||||
Gross profit | (90) bps | (100) bps | (20) bps | (120) bps | (400) bps | ||||||||||
Royalty income | - | (10) bps | - | 60 bps | - | ||||||||||
SG&A expenses | 130 bps | 30 bps | 310 bps | (40) bps | 230 bps | ||||||||||
Operating margin for fiscal 2014 | 19.4 | % | 17.1 | % | 2.4 | % | 12.1 | % | 12.5 | % | |||||
(a) | (b) | (c) | (d) | (e) |
• | 130 bps decrease in SG&A expenses due primarily to a/an: |
• | 120 bps decrease in distribution and freight expenses; |
• | 40 bps decrease in marketing expenses due to the absence of television advertising in fiscal 2014; |
• | 40 bps increase in administrative expenses; and |
• | 90 bps decrease in gross profit primarily due to less favorable product costs. |
• | 100 bps decrease in gross profit primarily due to less favorable product costs, partially offset by lower air freight related to inventory; and |
• | 30 bps decrease in SG&A expenses consisting primarily of a: |
• | 50 bps decrease in administrative expenses primarily due to cost savings from the office consolidation; |
• | 30 bps decrease in marketing expenses primarily due to the absence of television advertising in fiscal 2014; and |
• | 60 bps increase in distribution costs. |
• | 310 bps decrease in SG&A expenses consisting primarily of a: |
• | 250 bps decrease in retail store and eCommerce operating expenses; |
• | 60 bps decrease in marketing expenses; and |
• | 20 bps decrease in gross profit due primarily to less favorable product costs. |
• | 120 bps decrease in gross profit mainly due to less favorable product costs, inventory provisions, and increased promotional pricing; |
• | 60 bps increase in royalty income; and |
• | 40 bps increase in SG&A expenses primarily due to a: |
▪ | 120 bps increase in distribution and freight costs; |
▪ | 60 bps increase in administrative expenses; and |
▪ | 160 bps decrease in marketing expenses primarily due to less advertising in fiscal 2014. |
• | 400 bps decrease in gross profit primarily due to less favorable product costs and increased promotional pricing; |
• | 230 bps decrease in SG&A expenses due primarily to a: |
• | 250 bps decrease in retail administration expenses due to the exit of retail operations in Japan; |
• | 130 bps decrease in operating expenses related to our retail store and eCommerce; and |
• | Decrease of $26.6 million in expenses related to the completion of office consolidation and facility closures; and |
• | Decrease of $3.3 million in insurance and other employee benefits. |
Year | Percentage |
2017 | 102.63% |
2018 | 101.31% |
2019 and thereafter | 100.00% |
(dollars in thousands) | 2016 | 2017 | 2018 | 2019 | 2020 | Thereafter | Total | ||||||||||||||||||||
Long-term debt (a) | $ | — | $ | — | $ | — | $ | — | $ | 186,000 | $ | 400,000 | $ | 586,000 | |||||||||||||
Interest on debt (b) | 24,266 | 24,266 | 24,266 | 24,266 | 23,450 | 35,000 | 155,514 | ||||||||||||||||||||
Operating leases | 141,707 | 136,104 | 127,376 | 115,097 | 104,317 | 369,410 | 994,011 | ||||||||||||||||||||
Other | 392 | 392 | 365 | 231 | 231 | 673 | 2,284 | ||||||||||||||||||||
Total financial obligations | 166,365 | 160,762 | 152,007 | 139,594 | 313,998 | 805,083 | 1,737,809 | ||||||||||||||||||||
Letters of credit | 7,700 | — | — | — | — | — | 7,700 | ||||||||||||||||||||
Total financial obligations and commitments (c) (d) | $ | 174,065 | $ | 160,762 | $ | 152,007 | $ | 139,594 | $ | 313,998 | $ | 805,083 | $ | 1,745,509 |
Page | |
Consolidated Balance Sheets at January 2, 2016 and January 3, 2015 | |
Consolidated Statements of Operations for the fiscal years ended January 2, 2016, January 3, 2015, and December 28, 2013 | |
Consolidated Statements of Comprehensive Income for the fiscal years ended January 2, 2016, January 3, 2015, and December 28, 2013 | |
Consolidated Statements of Cash Flows for the fiscal years ended January 2, 2016, January 3, 2015, and December 28, 2013 | |
Consolidated Statements of Changes in Stockholders' Equity for the fiscal years ended January 2, 2016, January 3, 2015, and December 28, 2013 | |
January 2, 2016 | January 3, 2015 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 381,209 | $ | 340,638 | |||
Accounts receivable, net | 207,570 | 184,563 | |||||
Finished goods inventories | 469,934 | 444,844 | |||||
Prepaid expenses and other current assets | 38,672 | 34,788 | |||||
Deferred income taxes | 34,080 | 36,625 | |||||
Total current assets | 1,131,465 | 1,041,458 | |||||
Property, plant, and equipment, net | 371,704 | 333,097 | |||||
Tradenames and other intangible assets, net | 310,848 | 317,297 | |||||
Goodwill | 174,874 | 181,975 | |||||
Deferred debt issuance costs, net | 6,813 | 6,677 | |||||
Other assets | 13,409 | 12,592 | |||||
Total assets | $ | 2,009,113 | $ | 1,893,096 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 157,648 | $ | 150,243 | |||
Other current liabilities | 105,070 | 97,728 | |||||
Total current liabilities | 262,718 | 247,971 | |||||
Long-term debt | 584,431 | 586,000 | |||||
Deferred income taxes | 128,838 | 121,536 | |||||
Other long-term liabilities | 158,075 | 150,905 | |||||
Total liabilities | 1,134,062 | 1,106,412 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Preferred stock; par value $.01 per share; 100,000 shares authorized; none issued or outstanding at January 2, 2016 and January 3, 2015 | — | — | |||||
Common stock, voting; par value $.01 per share; 150,000,000 shares authorized; 51,764,309 and 52,712,193 shares issued and outstanding at January 2, 2016 and January 3, 2015, respectively | 518 | 527 | |||||
Additional paid-in capital | — | — | |||||
Accumulated other comprehensive loss | (36,367 | ) | (23,037 | ) | |||
Retained earnings | 910,900 | 809,194 | |||||
Total stockholders’ equity | 875,051 | 786,684 | |||||
Total liabilities and stockholders’ equity | $ | 2,009,113 | $ | 1,893,096 |
For the fiscal years ended | |||||||||||
January 2, 2016 (52 weeks) | January 3, 2015 (53 weeks) | December 28, 2013 (52 weeks) | |||||||||
Net sales | $ | 3,013,879 | $ | 2,893,868 | $ | 2,638,711 | |||||
Cost of goods sold | 1,755,855 | 1,709,428 | 1,543,332 | ||||||||
Gross profit | 1,258,024 | 1,184,440 | 1,095,379 | ||||||||
Selling, general, and administrative expenses | 909,233 | 890,251 | 868,480 | ||||||||
Royalty income | (44,066 | ) | (39,156 | ) | (37,252 | ) | |||||
Operating income | 392,857 | 333,345 | 264,151 | ||||||||
Interest expense | 27,031 | 27,653 | 13,437 | ||||||||
Interest income | (500 | ) | (403 | ) | (669 | ) | |||||
Other (income) expense, net | (1,862 | ) | 3,189 | 1,918 | |||||||
Income before income taxes | 368,188 | 302,906 | 249,465 | ||||||||
Provision for income taxes | 130,366 | 108,236 | 89,058 | ||||||||
Net income | $ | 237,822 | $ | 194,670 | $ | 160,407 | |||||
Basic net income per common share | $ | 4.55 | $ | 3.65 | $ | 2.78 | |||||
Diluted net income per common share | $ | 4.50 | $ | 3.62 | $ | 2.75 | |||||
Dividend declared and paid per common share | $ | 0.88 | $ | 0.76 | $ | 0.48 |
For the fiscal years ended | |||||||||||
January 2, 2016 (52 weeks) | January 3, 2015 (53 weeks) | December 28, 2013 (52 weeks) | |||||||||
Net income | $ | 237,822 | $ | 194,670 | $ | 160,407 | |||||
Other comprehensive income (loss): | |||||||||||
Unrealized gain (loss) on OshKosh defined benefit plan, net of tax of ($470), $2,920, ($3,660) for the fiscal years 2015, 2014, and 2013, respectively | 803 | (4,963 | ) | 6,238 | |||||||
Unrealized gain (loss) on Carter's post-retirement benefit obligation, net of (tax) or tax benefit of ($30), $91, ($210) for fiscal years 2015, 2014, and 2013, respectively | 56 | (147 | ) | 371 | |||||||
Foreign currency translation adjustments | (14,189 | ) | (7,845 | ) | (5,486 | ) | |||||
Total other comprehensive (loss) income | (13,330 | ) | (12,955 | ) | 1,123 | ||||||
Comprehensive income | $ | 224,492 | $ | 181,715 | $ | 161,530 |
For the fiscal years ended | |||||||||||
January 2, 2016 (52 weeks) | January 3, 2015 (53 weeks) | December 28, 2013 (52 weeks) | |||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | 237,822 | $ | 194,670 | $ | 160,407 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 61,982 | 58,487 | 54,915 | ||||||||
Amortization of tradenames | 6,417 | 16,437 | 13,588 | ||||||||
Accretion of contingent consideration | 809 | 1,348 | 2,825 | ||||||||
Amortization of debt issuance costs | 1,603 | 1,533 | 1,049 | ||||||||
Non-cash stock-based compensation expense | 17,029 | 17,598 | 16,040 | ||||||||
Unrealized foreign currency exchange loss, net | 4 | 2,378 | — | ||||||||
Income tax benefit from stock-based compensation | (8,839 | ) | (4,700 | ) | (11,040 | ) | |||||
Loss on disposal of property, plant, and equipment | 870 | 1,157 | 272 | ||||||||
Deferred income taxes | 8,657 | 3,911 | 596 | ||||||||
Effect of changes in operating assets and liabilities: | |||||||||||
Accounts receivable | (23,837 | ) | 8,405 | (26,064 | ) | ||||||
Inventories | (34,352 | ) | (32,151 | ) | (70,691 | ) | |||||
Prepaid expenses and other assets | (3,496 | ) | (2,719 | ) | (18,716 | ) | |||||
Accounts payable and other liabilities | 43,318 | 16,043 | 86,515 | ||||||||
Net cash provided by operating activities | 307,987 | 282,397 | 209,696 | ||||||||
Cash flows from investing activities: | |||||||||||
Capital expenditures | (103,497 | ) | (103,453 | ) | (182,525 | ) | |||||
Acquisition of tradenames | — | (3,550 | ) | (38,007 | ) | ||||||
Proceeds from sale of property, plant, and equipment | 72 | 2,271 | — | ||||||||
Net cash used in investing activities | (103,425 | ) | (104,732 | ) | (220,532 | ) | |||||
Cash flows from financing activities: | |||||||||||
Proceeds from senior notes | — | — | 400,000 | ||||||||
Payments of debt issuance costs | (1,628 | ) | (177 | ) | (6,989 | ) | |||||
Borrowings under secured revolving credit facility | 205,586 | — | — | ||||||||
Payments on secured revolving credit facility | (205,237 | ) | — | — | |||||||
Repurchase of common stock | (110,290 | ) | (82,099 | ) | (454,133 | ) | |||||
Payment of contingent consideration | (7,572 | ) | (8,901 | ) | (14,721 | ) | |||||
Dividends paid | (46,028 | ) | (40,477 | ) | (27,715 | ) | |||||
Income tax benefit from stock-based compensation | 8,839 | 4,700 | 11,040 | ||||||||
Withholdings of taxes from vesting of restricted stock | (12,651 | ) | (4,548 | ) | (5,052 | ) | |||||
Proceeds from exercise of stock options | 6,976 | 9,064 | 12,912 | ||||||||
Net cash used in financing activities | (162,005 | ) | (122,438 | ) | (84,658 | ) | |||||
Net effect of exchange rate changes on cash | (1,986 | ) | (1,135 | ) | (196 | ) | |||||
Net increase (decrease) in cash and cash equivalents | 40,571 | 54,092 | (95,690 | ) | |||||||
Cash and cash equivalents, beginning of fiscal year | 340,638 | 286,546 | 382,236 | ||||||||
Cash and cash equivalents, end of fiscal year | $ | 381,209 | $ | 340,638 | $ | 286,546 |
Common stock - shares | Common stock - $ | Additional paid-in capital | Accumulated other comprehensive (loss) income | Retained earnings | Total stockholders’ equity | |||||||||||||||||
Balance at December 29, 2012 | 59,126,639 | $ | 591 | $ | 250,276 | $ | (11,205 | ) | $ | 745,817 | $ | 985,479 | ||||||||||
Income tax benefit from stock-based compensation | — | — | 11,040 | — | — | 11,040 | ||||||||||||||||
Exercise of stock options | 669,834 | 7 | 12,905 | — | — | 12,912 | ||||||||||||||||
Withholdings from vesting of restricted stock | (84,766 | ) | (1 | ) | (5,051 | ) | — | — | (5,052 | ) | ||||||||||||
Restricted stock activity | 240,899 | 2 | (2 | ) | — | — | — | |||||||||||||||
Stock-based compensation expense | — | — | 15,572 | — | — | 15,572 | ||||||||||||||||
Issuance of common stock | 16,173 | — | 1,080 | — | — | 1,080 | ||||||||||||||||
Repurchase of common stock | (5,426,900 | ) | (54 | ) | (281,488 | ) | — | (172,591 | ) | (454,133 | ) | |||||||||||
Cash dividends declared and paid | — | — | — | — | (27,697 | ) | (27,697 | ) | ||||||||||||||
Comprehensive income | — | — | — | 1,123 | 160,407 | 161,530 | ||||||||||||||||
Balance at December 28, 2013 | 54,541,879 | $ | 545 | $ | 4,332 | $ | (10,082 | ) | $ | 705,936 | $ | 700,731 | ||||||||||
Income tax benefit from stock-based compensation | — | — | 4,700 | — | — | 4,700 | ||||||||||||||||
Exercise of stock options | 287,511 | 3 | 9,061 | — | — | 9,064 | ||||||||||||||||
Withholdings from vesting of restricted stock | (66,352 | ) | (1 | ) | (4,547 | ) | — | — | (4,548 | ) | ||||||||||||
Restricted stock activity | 70,349 | 1 | (1 | ) | — | — | — | |||||||||||||||
Stock-based compensation expense | — | — | 16,517 | — | — | 16,517 | ||||||||||||||||
Issuance of common stock | 14,859 | — | 1,081 | — | — | 1,081 | ||||||||||||||||
Repurchases of common stock | (2,136,053 | ) | (21 | ) | (31,143 | ) | — | (50,935 | ) | (82,099 | ) | |||||||||||
Cash dividends declared and paid | — | — | — | — | (40,477 | ) | (40,477 | ) | ||||||||||||||
Comprehensive income | — | — | — | (12,955 | ) | 194,670 | 181,715 | |||||||||||||||
Balance at January 3, 2015 | 52,712,193 | $ | 527 | $ | — | $ | (23,037 | ) | $ | 809,194 | $ | 786,684 | ||||||||||
Income tax benefit from stock-based compensation | — | — | 8,839 | — | — | 8,839 | ||||||||||||||||
Exercise of stock options | 214,420 | 2 | 6,974 | — | — | 6,976 | ||||||||||||||||
Withholdings from vesting of restricted stock | (147,339 | ) | (1 | ) | (12,650 | ) | — | — | (12,651 | ) | ||||||||||||
Restricted stock activity | 128,390 | 1 | (1 | ) | — | — | — | |||||||||||||||
Stock-based compensation expense | — | — | 15,934 | — | — | 15,934 | ||||||||||||||||
Issuance of common stock | 10,933 | — | 1,095 | — | — | 1,095 | ||||||||||||||||
Repurchases of common stock | (1,154,288 | ) | (11 | ) | (20,191 | ) | — | (90,088 | ) | (110,290 | ) | |||||||||||
Cash dividends declared and paid | — | — | — | — | (46,028 | ) | (46,028 | ) | ||||||||||||||
Comprehensive income | — | — | — | (13,330 | ) | 237,822 | 224,492 | |||||||||||||||
Balance at January 2, 2016 | 51,764,309 | $ | 518 | $ | — | $ | (36,367 | ) | $ | 910,900 | $ | 875,051 |
(dollars in thousands) | January 2, 2016 | January 3, 2015 | |||||
Trade receivables | $ | 185,046 | $ | 173,962 | |||
Royalties receivable | 11,164 | 9,978 | |||||
Tenant allowances and other receivables | 20,303 | 12,831 | |||||
Total gross receivables | $ | 216,513 | $ | 196,771 | |||
Less: | |||||||
Allowance for doubtful accounts | (8,543 | ) | (11,808 | ) | |||
Sales returns reserve | (400 | ) | (400 | ) | |||
Total reserves | (8,943 | ) | (12,208 | ) | |||
Accounts receivable, net | $ | 207,570 | $ | 184,563 |
Level 1: | Quoted prices in active markets for identical assets or liabilities. |
Level 2: | Quoted prices for similar assets and liabilities in active markets or inputs that are observable. |
Level 3: | Unobservable inputs reflecting management's own assumptions about the inputs used in pricing the asset or liability. |
Balance at December 29, 2012 | $ | 29,704 | |
Payments made | (14,721 | ) | |
Accretion expense | 2,825 | ||
Foreign currency translation adjustment | (1,460 | ) | |
Balance at December 28, 2013 | 16,348 | ||
Payments made | (8,901 | ) | |
Accretion expense | 1,348 | ||
Foreign currency translation adjustment | (1,084 | ) | |
Balance at January 3, 2015 | 7,711 | ||
Payments made | (8,568 | ) | |
Accretion expense | 809 | ||
Foreign currency translation adjustment | (1,029 | ) | |
Final contingent adjustment | 1,077 | ||
Balance at January 2, 2016 | $ | — |
(dollars in thousands) | January 2, 2016 | January 3, 2015 | |||||
Fixtures, equipment, computer hardware and software | $ | 367,593 | $ | 325,852 | |||
Land, buildings, and improvements | 260,809 | 220,995 | |||||
Marketing fixtures | 12,336 | 12,089 | |||||
Construction in progress | 21,602 | 19,172 | |||||
662,340 | 578,108 | ||||||
Accumulated depreciation and amortization | (290,636 | ) | (245,011 | ) | |||
Total | $ | 371,704 | $ | 333,097 |
January 2, 2016 | 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 (1) | Indefinite | $ | 136,570 | $ | — | $ | 136,570 | $ | 136,570 | $ | — | $ | 136,570 | |||||||||||||
Bonnie Togs goodwill (2) | Indefinite | 38,304 | — | 38,304 | 45,405 | — | 45,405 | |||||||||||||||||||
Total goodwill | $ | 174,874 | $ | — | $ | 174,874 | $ | 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 (3) | 2 - 20 years | 41,992 | 36,877 | 5,115 | 42,073 | 30,541 | 11,532 | |||||||||||||||||||
Total tradenames | 347,725 | 36,877 | 310,848 | 347,806 | 30,541 | 317,265 | ||||||||||||||||||||
Non-compete agreements (2) | 4 years | 199 | 199 | — | 257 | 225 | 32 | |||||||||||||||||||
Total tradenames and other intangibles, net | $ | 347,924 | $ | 37,076 | $ | 310,848 | $ | 348,063 | $ | 30,766 | $ | 317,297 |
(1) | $45.9 million of which relates to the Carter’s wholesale segment, $82.0 million of which relates to the Carter’s retail segment, and $8.6 million of which relates to the international segment. |
(2) | Relates to the international segment. The change in the gross amount of goodwill and other intangible assets reflects foreign currency translation adjustments for the applicable periods. |
(3) | Relates to the acquisition of rights to the Carter's brand in Chile in December 2014 and the Carter's Watch the Wear and H.W. Carter & Sons brands worldwide in June 2013. |
(dollars in thousands) | Pension liability adjustment | Post-retirement liability adjustment | Cumulative translation adjustment | Accumulated other comprehensive (loss) income | |||||||||||
Balance at December 29, 2012 | $ | (10,263 | ) | $ | 1,124 | $ | (2,066 | ) | $ | (11,205 | ) | ||||
Fiscal year 2013 change | 6,238 | 371 | (5,486 | ) | 1,123 | ||||||||||
Balance at December 28, 2013 | (4,025 | ) | 1,495 | (7,552 | ) | (10,082 | ) | ||||||||
Fiscal year 2014 change | (4,963 | ) | (147 | ) | (7,845 | ) | (12,955 | ) | |||||||
Balance at January 3, 2015 | (8,988 | ) | 1,348 | (15,397 | ) | (23,037 | ) | ||||||||
Fiscal year 2015 change | 803 | 56 | (14,189 | ) | (13,330 | ) | |||||||||
Balance at January 2, 2016 | $ | (8,185 | ) | $ | 1,404 | $ | (29,586 | ) | $ | (36,367 | ) |
(dollars in thousands) | January 2, 2016 | January 3, 2015 | |||||
Senior notes | $ | 400,000 | $ | 400,000 | |||
Secured revolving credit facility (1) | 184,431 | 186,000 | |||||
Total long-term debt | $ | 584,431 | $ | 586,000 |
(1) Reported balance that is payable in Canadian dollars is subject to currency exchange rate changes. |
Year | Percentage | ||
2017 | 102.63 | % | |
2018 | 101.31 | % | |
2019 and thereafter | 100.00 | % |
For the fiscal years ended | |||||||||||
(dollars in thousands) | January 2, 2016 | January 3, 2015 | December 28, 2013 | ||||||||
Stock options | $ | 4,350 | $ | 4,672 | $ | 4,728 | |||||
Restricted stock: | |||||||||||
Time-based awards | 6,855 | 7,018 | 6,732 | ||||||||
Performance-based awards | 4,728 | 4,827 | 4,127 | ||||||||
Stock awards | 1,096 | 1,081 | 453 | ||||||||
Total | $ | 17,029 | $ | 17,598 | $ | 16,040 |
Number of shares | Weighted- average exercise price | Weighted-average remaining contractual terms (years) | Aggregate intrinsic value (in thousands) | |||||||
Outstanding, January 3, 2015 | 1,486,390 | $39.99 | ||||||||
Granted | 201,940 | $83.45 | ||||||||
Exercised | (214,420 | ) | $32.53 | |||||||
Forfeited | (38,750 | ) | $67.31 | |||||||
Expired | (11,500 | ) | $37.40 | |||||||
Outstanding, January 2, 2016 | 1,423,660 | $46.56 | 6.05 | $ | 60,556 | |||||
Vested and Expected to Vest, January 2, 2016 | 1,363,590 | $45.31 | 5.95 | $ | 59,684 | |||||
Exercisable, January 2, 2016 | 897,095 | $33.41 | 4.87 | $ | 49,900 |
For the fiscal years ended | |||||||||||
January 2, 2016 | January 3, 2015 | December 28, 2013 | |||||||||
Expected volatility | 31.65 | % | 30.85 | % | 33.15 | % | |||||
Risk-free interest rate | 1.65 | % | 1.82 | % | 1.15 | % | |||||
Expected term (years) | 6.0 | 6.0 | 6.0 | ||||||||
Dividend yield | 1.06 | % | 1.11 | % | 0.91 | % | |||||
Weighted average fair value of options granted | $ | 24.59 | $ | 19.86 | $ | 20.21 |
Restricted stock awards | Weighted-average grant-date fair value | |||||
Outstanding, January 3, 2015 | 674,875 | $ | 51.34 | |||
Granted | 157,073 | $ | 84.25 | |||
Vested | (352,396 | ) | $ | 43.20 | ||
Forfeited | (18,825 | ) | $ | 66.91 | ||
Outstanding, January 2, 2016 | 460,727 | $ | 68.14 |
Fiscal year | Number of shares granted | Weighted-average fair value per share | |||||
2013 | 118,200 | $ | 59.27 | ||||
2014 | 61,200 | $ | 68.49 | ||||
2015 | 50,600 | $ | 82.40 |
Number of shares issued | Fair value per share | Aggregate value (in thousands) | |||
2013 | 16,173 | $66.79 | $1,080 | ||
2014 | 14,859 | $72.72 | $1,081 | ||
2015 | 10,933 | $100.21 | $1,096 |
For the fiscal years ended | |||||||
(dollars in thousands) | January 2, 2016 | January 3, 2015 | |||||
Change in projected benefit obligation: | |||||||
Projected benefit obligation at beginning of year | $ | 63,515 | $ | 53,386 | |||
Interest cost | 2,493 | 2,488 | |||||
Actuarial (gain) loss | (3,329 | ) | 9,420 | ||||
Benefits paid | (2,304 | ) | (1,779 | ) | |||
Projected benefit obligation at end of year | $ | 60,375 | $ | 63,515 | |||
Change in plan assets: | |||||||
Fair value of plan assets at beginning of year | $ | 52,484 | $ | 49,618 | |||
Actual return on plan assets | 439 | 4,645 | |||||
Benefits paid | (2,304 | ) | (1,779 | ) | |||
Fair value of plan assets at end of year | $ | 50,619 | $ | 52,484 | |||
Unfunded status | $ | 9,756 | $ | 11,031 |
For the fiscal years ended | |||||||||||
(dollars in thousands) | January 2, 2016 | January 3, 2015 | December 28, 2013 | ||||||||
Interest cost | $ | 2,493 | $ | 2,488 | $ | 2,335 | |||||
Expected return on plan assets | (3,138 | ) | (3,193 | ) | (3,058 | ) | |||||
Recognized actuarial loss (a) | 643 | 85 | 831 | ||||||||
Net periodic pension (benefit) cost | $ | (2 | ) | $ | (620 | ) | $ | 108 |
Benefit obligation | 2015 | 2014 | |||
Discount rate | 4.25% | 4.00% | |||
Net periodic pension cost | 2015 | 2014 | 2013 | ||
Discount rate | 4.00% | 4.75% | 4.00% | ||
Expected long-term rate of return on assets | 6.00% | 6.50% | 7.00% |
(dollars in thousands) | |||
Fiscal Year | |||
2016 | $ | 2,300 | |
2017 | $ | 2,370 | |
2018 | $ | 2,220 | |
2019 | $ | 2,270 | |
2020 | $ | 2,610 | |
2021-2025 | $ | 15,470 |
January 2, 2016 | January 3, 2015 | ||||||||||||||||||||||||
(dollars in thousands) Asset Category | Total | Level 1 | Level 2 | Total | Level 1 | Level 2 | |||||||||||||||||||
Cash and cash equivalents | $ | 149 | $ | 149 | $ | — | $ | 133 | $ | 133 | $ | — | |||||||||||||
Equity Securities: | |||||||||||||||||||||||||
U.S. Large-Cap blend (a) | 8,438 | 4,222 | 4,216 | 8,671 | 4,337 | 4,334 | |||||||||||||||||||
U.S. Large-Cap growth | 4,216 | 4,216 | — | 4,346 | 4,346 | — | |||||||||||||||||||
U.S. Mid-Cap growth | 2,550 | — | 2,550 | 2,609 | — | 2,609 | |||||||||||||||||||
U.S. Small-Cap blend | 2,523 | 2,523 | — | 2,596 | 2,596 | — | |||||||||||||||||||
International blend | 2,523 | 2,523 | — | 2,614 | 2,614 | — | |||||||||||||||||||
Fixed income securities: | |||||||||||||||||||||||||
Corporate bonds (b) | 25,097 | 25,097 | — | 26,325 | 26,325 | — | |||||||||||||||||||
Real estate (c) | 5,123 | 5,123 | — | 5,190 | 5,190 | — | |||||||||||||||||||
$ | 50,619 | $ | 43,853 | $ | 6,766 | $ | 52,484 | $ | 45,541 | $ | 6,943 |
For the fiscal years ended | |||||||
(dollars in thousands) | January 2, 2016 | January 3, 2015 | |||||
APBO at beginning of period | $ | 5,331 | $ | 5,730 | |||
Service cost | 130 | 113 | |||||
Interest cost | 178 | 230 | |||||
Actuarial (gain) loss | (278 | ) | 32 | ||||
Plan participants' contribution | 17 | 18 | |||||
Benefits paid | (440 | ) | (501 | ) | |||
Curtailment gain | — | (291 | ) | ||||
APBO at end of period | $ | 4,938 | $ | 5,331 |
For the fiscal years ended | ||||||||||||
(dollars in thousands) | January 2, 2016 | January 3, 2015 | December 28, 2013 | |||||||||
Service cost – benefits attributed to service during the period | $ | 130 | $ | 113 | $ | 161 | ||||||
Interest cost on accumulated post-retirement benefit obligation | 178 | 230 | 231 | |||||||||
Amortization net actuarial gain (a) | (192 | ) | (206 | ) | (135 | ) | ||||||
Curtailment gain | — | (291 | ) | (278 | ) | |||||||
Total net periodic post-retirement cost (benefit) | $ | 116 | $ | (154 | ) | $ | (21 | ) |
2015 | 2014 | ||||
Benefit obligation | |||||
Discount rate | 3.75% | 3.50% | |||
2015 | 2014 | 2013 | |||
Net periodic pension cost | |||||
Discount rate | 3.50% | 4.25% | 3.50% |
For the fiscal years ended | |||||||||||
(dollars in thousands) | January 2, 2016 | January 3, 2015 | December 28, 2013 | ||||||||
Current tax provision: | |||||||||||
Federal | $ | 103,316 | $ | 88,635 | $ | 71,696 | |||||
State | 10,277 | 9,049 | 8,486 | ||||||||
Foreign | 8,116 | 6,641 | 8,280 | ||||||||
Total current provision | $ | 121,709 | $ | 104,325 | $ | 88,462 | |||||
Deferred tax provision (benefit): | |||||||||||
Federal | $ | 6,577 | $ | 5,519 | $ | 1,412 | |||||
State | 1,193 | 41 | (942 | ) | |||||||
Foreign | 887 | (1,649 | ) | 126 | |||||||
Total deferred provision | 8,657 | 3,911 | 596 | ||||||||
Total provision | $ | 130,366 | $ | 108,236 | $ | 89,058 |
For the fiscal years ended | |||||||||||
(dollars in thousands) | January 2, 2016 | January 3, 2015 | December 28, 2013 | ||||||||
Domestic | $ | 335,955 | $ | 286,177 | $ | 223,907 | |||||
Foreign | 32,233 | 16,729 | 25,558 | ||||||||
Total | $ | 368,188 | $ | 302,906 | $ | 249,465 |
For the fiscal years ended | ||||||||
January 2, 2016 | January 3, 2015 | December 28, 2013 | ||||||
Statutory federal income tax rate | 35.0 | % | 35.0 | % | 35.0 | % | ||
State income taxes, net of federal income tax benefit | 2.5 | % | 2.5 | % | 2.5 | % | ||
Impact of foreign operations | (1.3 | )% | (1.2 | )% | (1.4 | )% | ||
Settlement of uncertain tax positions | (0.8 | )% | (0.6 | )% | (0.4 | )% | ||
Total | 35.4 | % | 35.7 | % | 35.7 | % |
(dollars in thousands) | January 2, 2016 | January 3, 2015 | |||||
Deferred tax assets: | Assets (Liabilities) | ||||||
Accounts receivable allowance | $ | 4,394 | $ | 4,990 | |||
Inventory | 9,019 | 11,253 | |||||
Accrued liabilities | 15,156 | 13,947 | |||||
Equity-based compensation | 10,022 | 10,596 | |||||
Deferred employee benefits | 8,929 | 8,070 | |||||
Deferred rent | 43,616 | 37,381 | |||||
Other | 5,125 | 6,127 | |||||
Total deferred tax assets | $ | 96,261 | $ | 92,364 | |||
Deferred tax liabilities: | |||||||
Depreciation | $ | (84,610 | ) | $ | (70,510 | ) | |
Tradename and licensing agreements | (101,160 | ) | (102,298 | ) | |||
Other | (5,249 | ) | (4,467 | ) | |||
Total deferred tax liabilities | $ | (191,019 | ) | $ | (177,275 | ) |
(dollars in thousands) | January 2, 2016 | January 3, 2015 | |||||
Assets (Liabilities) | |||||||
Current net deferred tax asset | $ | 34,080 | $ | 36,625 | |||
Non-current net deferred tax liability | (128,838 | ) | (121,536 | ) | |||
Total deferred tax liability | $ | (94,758 | ) | $ | (84,911 | ) |
(dollars in thousands) | |||
Balance at December 29, 2012 | $ | 9,763 | |
Additions based on tax positions related to fiscal 2013 | 3,200 | ||
Additions for prior year tax positions | (375 | ) | |
Reductions for lapse of statute of limitations | (1,029 | ) | |
Reductions for prior year tax settlements | (377 | ) | |
Balance at December 28, 2013 | $ | 11,182 | |
Additions based on tax positions related to fiscal 2014 | 2,572 | ||
Reductions for prior year tax positions | (471 | ) | |
Reductions for lapse of statute of limitations | (1,536 | ) | |
Reductions for prior year tax settlements | (436 | ) | |
Balance at January 3, 2015 | $ | 11,311 | |
Additions based on tax positions related to fiscal 2015 | 2,840 | ||
Reductions for prior year tax positions | (260 | ) | |
Reductions for lapse of statute of limitations | (1,427 | ) | |
Reductions for prior year tax settlements | (3,049 | ) | |
Balance at January 2, 2016 | $ | 9,415 |
For the fiscal years ended | |||||||||||
January 2, 2016 | January 3, 2015 | December 28, 2013 | |||||||||
Weighted-average number of common and common equivalent shares outstanding: | |||||||||||
Basic number of common shares outstanding | 51,835,053 | 52,614,425 | 56,931,216 | ||||||||
Dilutive effect of equity awards | 499,583 | 479,114 | 590,951 | ||||||||
Diluted number of common and common equivalent shares outstanding | 52,334,636 | 53,093,539 | 57,522,167 | ||||||||
Earnings per share: | |||||||||||
(dollars in thousands, except per share data) | |||||||||||
Basic net income per common share: | |||||||||||
Net income | $ | 237,822 | $ | 194,670 | $ | 160,407 | |||||
Income allocated to participating securities | (2,184 | ) | (2,586 | ) | (2,144 | ) | |||||
Net income available to common shareholders | $ | 235,638 | $ | 192,084 | $ | 158,263 | |||||
Basic net income per common share | $ | 4.55 | $ | 3.65 | $ | 2.78 | |||||
Diluted net income per common share: | |||||||||||
Net income | $ | 237,822 | $ | 194,670 | $ | 160,407 | |||||
Income allocated to participating securities | (2,167 | ) | (2,568 | ) | (2,126 | ) | |||||
Net income available to common shareholders | $ | 235,655 | $ | 192,102 | $ | 158,281 | |||||
Diluted net income per common share | $ | 4.50 | $ | 3.62 | $ | 2.75 | |||||
Anti-dilutive shares excluded from dilutive earnings per share calculations (1) | 192,740 | 230,150 | 355,900 |
For the fiscal years ended | ||||||||||||||||||||
(dollars in thousands) | January 2, 2016 | % of Total | January 3, 2015 | % of Total | December 28, 2013 | % of Total | ||||||||||||||
Net sales: | ||||||||||||||||||||
Carter’s Retail (a) | $ | 1,151,268 | 38.2 | % | $ | 1,087,165 | 37.6 | % | $ | 954,160 | 36.2 | % | ||||||||
Carter’s Wholesale | 1,107,706 | 36.8 | % | 1,081,888 | 37.4 | % | 1,035,420 | 39.2 | % | |||||||||||
Total Carter’s | 2,258,974 | 75.0 | % | 2,169,053 | 75.0 | % | 1,989,580 | 75.4 | % | |||||||||||
OshKosh Retail (a) | 363,087 | 12.0 | % | 335,140 | 11.6 | % | 289,311 | 11.0 | % | |||||||||||
OshKosh Wholesale | 65,607 | 2.2 | % | 73,201 | 2.5 | % | 74,564 | 2.8 | % | |||||||||||
Total OshKosh | 428,694 | 14.2 | % | 408,341 | 14.1 | % | 363,875 | 13.8 | % | |||||||||||
International (b) | 326,211 | 10.8 | % | 316,474 | 10.9 | % | 285,256 | 10.8 | % | |||||||||||
Total net sales | $ | 3,013,879 | 100.0 | % | $ | 2,893,868 | 100.0 | % | $ | 2,638,711 | 100.0 | % | ||||||||
Operating income (loss): | % of segment net sales | % of segment net sales | % of segment net sales | |||||||||||||||||
Carter’s Retail (a) | $ | 199,040 | 17.3 | % | $ | 211,297 | 19.4 | % | $ | 181,169 | 19.0 | % | ||||||||
Carter’s Wholesale | 232,497 | 21.0 | % | 185,463 | 17.1 | % | 185,501 | 17.9 | % | |||||||||||
Total Carter’s | 431,537 | 19.1 | % | 396,760 | 18.3 | % | 366,670 | 18.4 | % | |||||||||||
OshKosh Retail (a) | 11,931 | 3.3 | % | 8,210 | 2.4 | % | (1,433 | ) | (0.5 | )% | ||||||||||
OshKosh Wholesale | 13,270 | 20.2 | % | 8,842 | 12.1 | % | 9,796 | 13.1 | % | |||||||||||
Total OshKosh | 25,201 | 5.9 | % | 17,052 | 4.2 | % | 8,363 | 2.3 | % | |||||||||||
International (b) (c) | 47,004 | 14.4 | % | 39,470 | 12.5 | % | 40,641 | 14.2 | % | |||||||||||
Corporate expenses (d) (e) | (110,885 | ) | (119,937 | ) | (151,523 | ) | ||||||||||||||
Total operating income | $ | 392,857 | 13.0 | % | $ | 333,345 | 11.5 | % | $ | 264,151 | 10.0 | % |
(a) | Includes eCommerce results. |
(b) | Net sales include international retail, eCommerce, and wholesale sales. Operating income includes international licensing income. |
(c) | Includes the following charges: |
For the fiscal years ended | |||||||||||
(dollars in millions) | January 2, 2016 | January 3, 2015 | December 28, 2013 | ||||||||
Revaluation of contingent consideration | $ | 1.9 | $ | 1.3 | $ | 2.8 | |||||
Exit from Japan retail operations | $ | — | $ | 0.5 | $ | 4.1 |
(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. |
For the fiscal years ended | ||||||||||||
(dollars in millions) | January 2, 2016 | January 3, 2015 | December 28, 2013 | |||||||||
Office consolidation costs | $ | — | $ | 6.6 | $ | 33.3 | ||||||
Amortization of H.W. Carter and Sons tradenames | $ | 6.2 | $ | 16.4 | $ | 13.6 | ||||||
Closure of distribution facility in Hogansville, GA (1) | $ | — | $ | 0.9 | $ | 1.9 |
For the fiscal years ended | |||||||
(dollars in thousands) | January 2, 2016 | January 3, 2015 | |||||
Carter's Wholesale | $ | 271,117 | $ | 240,669 | |||
Carter's Retail | 68,694 | 84,004 | |||||
OshKosh Retail | 31,136 | 31,829 | |||||
OshKosh Wholesale | 50,027 | 39,879 | |||||
International | 48,960 | 48,463 | |||||
Total | $ | 469,934 | $ | 444,844 |
For the fiscal years ended | |||||||||||
(dollars in thousands) | January 2, 2016 (52 weeks) | January 3, 2015 (53 weeks) | December 28, 2013 (52 weeks) | ||||||||
Baby | $ | 1,173,002 | $ | 1,107,973 | $ | 975,374 | |||||
Playclothes | 1,182,281 | 1,146,797 | 1,074,581 | ||||||||
Sleepwear | 378,419 | 381,574 | 366,289 | ||||||||
Other (a) | 280,177 | 257,524 | 222,467 | ||||||||
Total net sales | $ | 3,013,879 | $ | 2,893,868 | $ | 2,638,711 |
For the fiscal years ended | |||||||
(dollars in thousands) | January 2, 2016 | January 3, 2015 | |||||
United States | $ | 342,354 | $ | 305,093 | |||
International | 29,350 | 28,004 | |||||
Total | $ | 371,704 | $ | 333,097 |
January 2, 2016 | January 3, 2015 | |||||||||||||||||||||||
(dollars in millions) | Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||
Assets | ||||||||||||||||||||||||
Investments | $ | 8.6 | $ | — | $ | — | $ | 7.6 | $ | — | $ | — | ||||||||||||
Foreign exchange forward contracts (1) | $ | — | $ | 2.1 | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Liabilities | ||||||||||||||||||||||||
Contingent consideration | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 7.7 |
(dollars in millions) | Fair Value (USD) | Valuation technique | Unobservable inputs | Amount (CAD) | |||||||
Contingent consideration | $ | 7.7 | Discounted cash flow | Estimated contingent consideration payment | C$ | 10 | |||||
Discount rate | 18 | % | |||||||||
Probability assumption | 100 | % |
(dollars in thousands) | January 2, 2016 | January 3, 2015 | |||||
Accrued bonuses and incentive compensation | $ | 17,934 | $ | 18,875 | |||
Accrued employee benefits | $ | 19,751 | $ | 17,131 |
(dollars in thousands) | January 2, 2016 | January 3, 2015 | |||||
Deferred lease incentives | $ | 70,060 | $ | 67,205 |
For the fiscal years ended | |||||||
(dollars in millions) | January 3, 2015 | December 28, 2013 | |||||
Other closure costs | $ | 5.7 | $ | 24.5 | |||
Severance and other benefits | 0.9 | 4.8 | |||||
Accelerated depreciation | — | 4.0 | |||||
Total | $ | 6.6 | $ | 33.3 |
(dollars in millions) | Severance | Other closure costs | Total | ||||||||
Balance at January 3, 2015 | $ | 0.8 | $ | 2.8 | $ | 3.6 | |||||
Payments | (0.6 | ) | (0.8 | ) | (1.4 | ) | |||||
Balance at January 2, 2016 | $ | 0.2 | $ | 2.0 | $ | 2.2 |
Fiscal Year | Operating Leases | ||
2016 | $ | 141,707 | |
2017 | 136,104 | ||
2018 | 127,376 | ||
2019 | 115,097 | ||
2020 | 104,317 | ||
Thereafter | 369,410 | ||
Total | $ | 994,011 |
(dollars in thousands) | Accounts receivable reserves | Sales returns reserves | Total | ||||||||
Balance at December 29, 2012 | $ | 7,188 | $ | 400 | $ | 7,588 | |||||
Additional provisions | 10,245 | 1,110 | 11,355 | ||||||||
Charges to reserve | (8,125 | ) | (1,110 | ) | (9,235 | ) | |||||
Balance at December 28, 2013 | $ | 9,308 | $ | 400 | $ | 9,708 | |||||
Additional provisions | 9,919 | 715 | 10,634 | ||||||||
Charges to reserve | (7,419 | ) | (715 | ) | (8,134 | ) | |||||
Balance at January 3, 2015 | $ | 11,808 | $ | 400 | $ | 12,208 | |||||
Additional provisions | 4,170 | 264 | 4,434 | ||||||||
Charges to reserve | (7,435 | ) | (264 | ) | (7,699 | ) | |||||
Balance at January 2, 2016 | $ | 8,543 | $ | 400 | $ | 8,943 |
(dollars in thousands, except per share data) | Quarter 1 | Quarter 2 | Quarter 3 | Quarter 4 | |||||||||||
Fiscal 2015 | |||||||||||||||
Net sales | $ | 684,764 | $ | 612,765 | $ | 849,806 | $ | 866,544 | |||||||
Gross profit | 284,052 | 262,895 | 347,539 | 363,538 | |||||||||||
Selling, general, and administrative expenses | 211,183 | 209,296 | 230,017 | 258,737 | |||||||||||
Royalty income | (11,636 | ) | (8,353 | ) | (12,699 | ) | (11,378 | ) | |||||||
Operating income | 84,505 | 61,952 | 130,221 | 116,179 | |||||||||||
Net income | 49,792 | 36,105 | 79,326 | 72,599 | |||||||||||
Basic net income per common share (1) | 0.94 | 0.69 | 1.52 | 1.40 | |||||||||||
Diluted net income per common share (1) | 0.94 | 0.68 | 1.51 | 1.39 | |||||||||||
Fiscal 2014: (2) | |||||||||||||||
Net sales | $ | 651,643 | $ | 574,065 | $ | 798,936 | $ | 869,224 | |||||||
Gross profit | 261,725 | 245,477 | 321,206 | 356,032 | |||||||||||
Selling, general, and administrative expenses | 210,095 | 206,315 | 221,939 | 251,902 | |||||||||||
Royalty income | (9,901 | ) | (8,185 | ) | (11,190 | ) | (9,880 | ) | |||||||
Operating income | 61,531 | 47,347 | 110,457 | 114,010 | |||||||||||
Net income | 34,297 | 25,897 | 65,886 | 68,590 | |||||||||||
Basic net income per common share (1) | 0.64 | 0.48 | 1.24 | 1.30 | |||||||||||
Diluted net income per common share (1) | 0.63 | 0.48 | 1.23 | 1.29 |
Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | ||||||||||||||||||
ASSETS | |||||||||||||||||||||||
Current assets: | |||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 325,771 | $ | 14,652 | $ | 40,786 | $ | — | $ | 381,209 | |||||||||||
Accounts receivable, net | — | 178,842 | 23,980 | 4,748 | — | 207,570 | |||||||||||||||||
Intercompany receivable | — | 52,676 | 133,092 | 3,317 | (189,085 | ) | — | ||||||||||||||||
Intercompany loan receivable | — | — | — | — | — | — | |||||||||||||||||
Finished goods inventories | — | 271,148 | 184,618 | 48,960 | (34,792 | ) | 469,934 | ||||||||||||||||
Prepaid expenses and other current assets | — | 18,317 | 14,261 | 6,094 | — | 38,672 | |||||||||||||||||
Deferred income taxes | — | 19,502 | 13,544 | 1,034 | — | 34,080 | |||||||||||||||||
Total current assets | — | 866,256 | 384,147 | 104,939 | (223,877 | ) | 1,131,465 | ||||||||||||||||
Property, plant, and equipment, net | — | 162,031 | 180,322 | 29,351 | — | 371,704 | |||||||||||||||||
Goodwill | — | 136,570 | — | 38,304 | — | 174,874 | |||||||||||||||||
Tradenames and other intangibles, net | — | 225,348 | 85,500 | — | — | 310,848 | |||||||||||||||||
Deferred debt issuance costs, net | — | 6,813 | — | — | — | 6,813 | |||||||||||||||||
Other assets | — | 12,423 | 665 | 321 | — | 13,409 | |||||||||||||||||
Intercompany long-term receivable | — | — | 294,070 | — | (294,070 | ) | — | ||||||||||||||||
Intercompany long-term note receivable | — | 100,000 | — | — | (100,000 | ) | — | ||||||||||||||||
Investment in subsidiaries | 875,051 | 652,598 | 100,146 | — | (1,627,795 | ) | — | ||||||||||||||||
Total assets | $ | 875,051 | $ | 2,162,039 | $ | 1,044,850 | $ | 172,915 | $ | (2,245,742 | ) | $ | 2,009,113 | ||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||||||||||||||
Current liabilities: | |||||||||||||||||||||||
Accounts payable | $ | — | $ | 93,585 | $ | 44,951 | $ | 19,112 | $ | — | $ | 157,648 | |||||||||||
Intercompany payables | — | 134,694 | 51,362 | 3,029 | (189,085 | ) | — | ||||||||||||||||
Intercompany loan payables | — | — | — | — | — | — | |||||||||||||||||
Other current liabilities | — | 12,996 | 80,908 | 11,166 | — | 105,070 | |||||||||||||||||
Total current liabilities | — | 241,275 | 177,221 | 33,307 | (189,085 | ) | 262,718 | ||||||||||||||||
Long-term debt | — | 566,000 | — | 18,431 | — | 584,431 | |||||||||||||||||
Deferred income taxes | — | 84,038 | 44,800 | — | — | 128,838 | |||||||||||||||||
Intercompany long-term liability | — | 294,070 | — | — | (294,070 | ) | — | ||||||||||||||||
Intercompany long-term note payable | — | — | 100,000 | — | (100,000 | ) | — | ||||||||||||||||
Other long-term liabilities | — | 66,813 | 79,568 | 11,694 | — | 158,075 | |||||||||||||||||
Stockholders' equity | 875,051 | 909,843 | 643,261 | 109,483 | (1,662,587 | ) | 875,051 | ||||||||||||||||
Total liabilities and stockholders' equity | $ | 875,051 | $ | 2,162,039 | $ | 1,044,850 | $ | 172,915 | $ | (2,245,742 | ) | $ | 2,009,113 |
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 |
Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | |||||||||||||||||||
Net sales | $ | — | $ | 1,813,950 | $ | 1,639,826 | $ | 246,158 | $ | (686,055 | ) | $ | 3,013,879 | |||||||||||
Cost of goods sold | — | 1,286,411 | 989,284 | 136,317 | (656,157 | ) | 1,755,855 | |||||||||||||||||
Gross profit | — | 527,539 | 650,542 | 109,841 | (29,898 | ) | 1,258,024 | |||||||||||||||||
Selling, general, and administrative expenses | — | 181,150 | 679,532 | 88,257 | (39,706 | ) | 909,233 | |||||||||||||||||
Royalty income | — | (32,978 | ) | (19,414 | ) | — | 8,326 | (44,066 | ) | |||||||||||||||
Operating income (loss) | — | 379,367 | (9,576 | ) | 21,584 | 1,482 | 392,857 | |||||||||||||||||
Interest expense | — | 26,550 | 5,331 | 557 | (5,407 | ) | 27,031 | |||||||||||||||||
Interest income | — | (5,826 | ) | — | (81 | ) | 5,407 | (500 | ) | |||||||||||||||
(Income) loss in subsidiaries | (237,822 | ) | 19,775 | (9,742 | ) | — | 227,789 | — | ||||||||||||||||
Other (income), net | — | (6 | ) | (60 | ) | (1,796 | ) | — | (1,862 | ) | ||||||||||||||
Income (loss) before income taxes | 237,822 | 338,874 | (5,105 | ) | 22,904 | (226,307 | ) | 368,188 | ||||||||||||||||
Provision for income taxes | — | 102,534 | 20,590 | 7,242 | — | 130,366 | ||||||||||||||||||
Net income (loss) | $ | 237,822 | $ | 236,340 | $ | (25,695 | ) | $ | 15,662 | $ | (226,307 | ) | $ | 237,822 |
Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | |||||||||||||||||||
Net sales | $ | — | $ | 1,770,238 | $ | 1,564,717 | $ | 241,191 | $ | (682,278 | ) | $ | 2,893,868 | |||||||||||
Cost of goods sold | — | 1,271,260 | 936,260 | 138,838 | (636,930 | ) | 1,709,428 | |||||||||||||||||
Gross profit | — | 498,978 | 628,457 | 102,353 | (45,348 | ) | 1,184,440 | |||||||||||||||||
Selling, general, and administrative expenses | — | 203,371 | 646,728 | 91,521 | (51,369 | ) | 890,251 | |||||||||||||||||
Royalty income | — | (30,741 | ) | (18,896 | ) | — | 10,481 | (39,156 | ) | |||||||||||||||
Operating income (loss) | — | 326,348 | 625 | 10,832 | (4,460 | ) | 333,345 | |||||||||||||||||
Interest expense | — | 27,651 | 5,310 | 343 | (5,651 | ) | 27,653 | |||||||||||||||||
Interest income | — | (5,998 | ) | — | (56 | ) | 5,651 | (403 | ) | |||||||||||||||
(Income) loss in subsidiaries | (194,670 | ) | 20,226 | (15,050 | ) | — | 189,494 | — | ||||||||||||||||
Other (income) expense, net | — | (235 | ) | 2,263 | 1,161 | — | 3,189 | |||||||||||||||||
Income (loss) before income taxes | 194,670 | 284,704 | 8,102 | 9,384 | (193,954 | ) | 302,906 | |||||||||||||||||
Provision for income taxes | — | 85,574 | 19,441 | 3,221 | — | 108,236 | ||||||||||||||||||
Net income (loss) | $ | 194,670 | $ | 199,130 | $ | (11,339 | ) | $ | 6,163 | $ | (193,954 | ) | $ | 194,670 |
Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | |||||||||||||||||||
Net sales | $ | — | $ | 1,637,361 | $ | 1,397,540 | $ | 220,438 | $ | (616,628 | ) | $ | 2,638,711 | |||||||||||
Cost of goods sold | — | 1,170,073 | 819,798 | 112,503 | (559,042 | ) | 1,543,332 | |||||||||||||||||
Gross profit | — | 467,288 | 577,742 | 107,935 | (57,586 | ) | 1,095,379 | |||||||||||||||||
Selling, general, and administrative expenses | — | 204,255 | 632,854 | 102,115 | (70,744 | ) | 868,480 | |||||||||||||||||
Royalty income | — | (28,174 | ) | (17,909 | ) | — | 8,831 | (37,252 | ) | |||||||||||||||
Operating income (loss) | — | 291,207 | (37,203 | ) | 5,820 | 4,327 | 264,151 | |||||||||||||||||
Interest expense | — | 13,374 | 598 | 63 | (598 | ) | 13,437 | |||||||||||||||||
Interest income | — | (1,100 | ) | — | (167 | ) | 598 | (669 | ) | |||||||||||||||
(Income) loss in subsidiaries | (160,407 | ) | 51,973 | 10,122 | — | 98,312 | — | |||||||||||||||||
Other expense (income), net | — | (358 | ) | 403 | 1,873 | — | 1,918 | |||||||||||||||||
Income (loss) before income taxes | 160,407 | 227,318 | (48,326 | ) | 4,051 | (93,985 | ) | 249,465 | ||||||||||||||||
Provision for income taxes | — | 71,238 | 11,061 | 6,759 | — | 89,058 | ||||||||||||||||||
Net income (loss) | $ | 160,407 | $ | 156,080 | $ | (59,387 | ) | $ | (2,708 | ) | $ | (93,985 | ) | $ | 160,407 |
Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | |||||||||||||||||||
Net income (loss) | $ | 237,822 | $ | 236,340 | $ | (25,695 | ) | $ | 15,662 | $ | (226,307 | ) | $ | 237,822 | ||||||||||
Post-retirement benefit plans | 859 | 859 | 803 | — | (1,662 | ) | 859 | |||||||||||||||||
Foreign currency translation adjustments | (14,189 | ) | (14,189 | ) | (29,574 | ) | (14,189 | ) | 57,952 | (14,189 | ) | |||||||||||||
Comprehensive income (loss) | $ | 224,492 | $ | 223,010 | $ | (54,466 | ) | $ | 1,473 | $ | (170,017 | ) | $ | 224,492 |
Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | |||||||||||||||||||
Net income (loss) | $ | 194,670 | $ | 199,130 | $ | (11,339 | ) | $ | 6,163 | $ | (193,954 | ) | $ | 194,670 | ||||||||||
Post-retirement benefit plans | (5,110 | ) | (5,110 | ) | (4,963 | ) | — | 10,073 | (5,110 | ) | ||||||||||||||
Foreign currency translation adjustments | (7,845 | ) | (7,845 | ) | (251 | ) | (7,845 | ) | 15,941 | (7,845 | ) | |||||||||||||
Comprehensive income (loss) | $ | 181,715 | $ | 186,175 | $ | (16,553 | ) | $ | (1,682 | ) | $ | (167,940 | ) | $ | 181,715 |
Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | |||||||||||||||||||
Net income (loss) | $ | 160,407 | $ | 156,080 | $ | (59,387 | ) | $ | (2,708 | ) | $ | (93,985 | ) | $ | 160,407 | |||||||||
Post-retirement benefit plans | 6,609 | 6,609 | 6,237 | — | (12,846 | ) | 6,609 | |||||||||||||||||
Foreign currency translation adjustments | (5,486 | ) | (5,486 | ) | 354 | (5,486 | ) | 10,618 | (5,486 | ) | ||||||||||||||
Comprehensive income (loss) | $ | 161,530 | $ | 157,203 | $ | (52,796 | ) | $ | (8,194 | ) | $ | (96,213 | ) | $ | 161,530 |
Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | |||||||||||||||||||
Cash flows provided by operating activities: | $ | — | $ | 148,656 | $ | 115,589 | $ | 43,742 | $ | — | $ | 307,987 | ||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||||||
Capital expenditures | — | (27,813 | ) | (64,707 | ) | (10,977 | ) | — | (103,497 | ) | ||||||||||||||
Intercompany investing activity | 161,993 | 5,642 | (2,735 | ) | (8,582 | ) | (156,318 | ) | — | |||||||||||||||
Proceeds from repayment of intercompany loan | — | 35,000 | — | — | (35,000 | ) | — | |||||||||||||||||
Issuance of intercompany loan | — | (15,000 | ) | — | — | 15,000 | — | |||||||||||||||||
Proceeds from sale of property, plant and equipment | — | 65 | — | 7 | — | 72 | ||||||||||||||||||
Net cash provided by(used in) investing activities | $ | 161,993 | $ | (2,106 | ) | $ | (67,442 | ) | $ | (19,552 | ) | $ | (176,318 | ) | $ | (103,425 | ) | |||||||
Cash flows from financing activities: | ||||||||||||||||||||||||
Intercompany financing activity | — | (108,761 | ) | (46,672 | ) | (885 | ) | 156,318 | — | |||||||||||||||
Repayments of intercompany loan | — | — | — | (35,000 | ) | 35,000 | — | |||||||||||||||||
Borrowings from intercompany loans | — | — | — | 15,000 | (15,000 | ) | — | |||||||||||||||||
Borrowings under secured revolving credit facility | — | 166,000 | — | 39,586 | — | 205,586 | ||||||||||||||||||
Payments on secured revolving credit facility | — | (186,000 | ) | — | (19,237 | ) | — | (205,237 | ) | |||||||||||||||
Payment of debt issuance costs | — | (1,628 | ) | — | — | — | (1,628 | ) | ||||||||||||||||
Payment of contingent consideration | — | (7,572 | ) | — | — | — | (7,572 | ) | ||||||||||||||||
Dividends paid | (46,028 | ) | — | — | — | — | (46,028 | ) | ||||||||||||||||
Repurchase of common stock | (110,290 | ) | — | — | — | — | (110,290 | ) | ||||||||||||||||
Income tax benefit from stock-based compensation | — | 6,104 | 2,735 | — | — | 8,839 | ||||||||||||||||||
Withholdings from vesting of restricted stock | (12,651 | ) | — | — | — | — | (12,651 | ) | ||||||||||||||||
Proceeds from exercise of stock options | 6,976 | — | — | — | — | 6,976 | ||||||||||||||||||
Net cash (used in) provided by financing activities | (161,993 | ) | (131,857 | ) | (43,937 | ) | (536 | ) | 176,318 | (162,005 | ) | |||||||||||||
Effect of exchange rate changes on cash | — | — | — | (1,986 | ) | — | (1,986 | ) | ||||||||||||||||
Net increase in cash and cash equivalents | — | 14,693 | 4,210 | 21,668 | — | 40,571 | ||||||||||||||||||
Cash and cash equivalents, beginning of period | — | 311,078 | 10,442 | 19,118 | — | 340,638 | ||||||||||||||||||
Cash and cash equivalents, end of period | $ | — | $ | 325,771 | $ | 14,652 | $ | 40,786 | $ | — | $ | 381,209 |
Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | |||||||||||||||||||
Cash flows provided by operating activities: | $ | — | $ | 189,945 | $ | 83,439 | $ | 9,013 | $ | — | $ | 282,397 | ||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||||||
Capital expenditures | — | (45,868 | ) | (46,694 | ) | (10,891 | ) | — | (103,453 | ) | ||||||||||||||
Intercompany investing activity | 118,060 | 15,864 | (2,445 | ) | (8,901 | ) | (122,578 | ) | — | |||||||||||||||
Proceeds from repayment of intercompany loan | — | 15,000 | — | — | (15,000 | ) | — | |||||||||||||||||
Issuance of intercompany loan | — | (35,000 | ) | — | — | 35,000 | — | |||||||||||||||||
Acquisition of tradenames | — | (3,550 | ) | — | — | — | (3,550 | ) | ||||||||||||||||
Proceeds from sale of property, plant and equipment | — | 2,267 | — | 4 | — | 2,271 | ||||||||||||||||||
Net cash provided by (used in) investing activities | $ | 118,060 | $ | (51,287 | ) | $ | (49,139 | ) | $ | (19,788 | ) | $ | (102,578 | ) | $ | (104,732 | ) | |||||||
Cash flows from financing activities: | ||||||||||||||||||||||||
Intercompany financing activity | — | (99,018 | ) | (26,302 | ) | 2,742 | 122,578 | — | ||||||||||||||||
Repayment of intercompany loan | — | — | — | (15,000 | ) | 15,000 | — | |||||||||||||||||
Proceeds from intercompany loan | — | — | — | 35,000 | (35,000 | ) | — | |||||||||||||||||
Payment of debt issuance costs | — | (177 | ) | — | — | — | (177 | ) | ||||||||||||||||
Payment of contingent consideration | — | (8,901 | ) | — | — | — | (8,901 | ) | ||||||||||||||||
Dividends paid | (40,477 | ) | — | — | — | — | (40,477 | ) | ||||||||||||||||
Repurchase of common stock | (82,099 | ) | — | — | — | — | (82,099 | ) | ||||||||||||||||
Income tax benefit from stock-based compensation | — | 2,256 | 2,444 | — | — | 4,700 | ||||||||||||||||||
Withholdings from vesting of restricted stock | (4,548 | ) | — | — | — | — | (4,548 | ) | ||||||||||||||||
Proceeds from exercise of stock options | 9,064 | — | — | — | — | 9,064 | ||||||||||||||||||
Net cash (used in) provided by financing activities | (118,060 | ) | (105,840 | ) | (23,858 | ) | 22,742 | 102,578 | (122,438 | ) | ||||||||||||||
Effect of exchange rate changes on cash | — | — | — | (1,135 | ) | — | (1,135 | ) | ||||||||||||||||
Net decrease in cash and cash equivalents | — | 32,818 | 10,442 | 10,832 | — | 54,092 | ||||||||||||||||||
Cash and cash equivalents, beginning of period | — | 278,260 | — | 8,286 | — | 286,546 | ||||||||||||||||||
Cash and cash equivalents, end of period | $ | — | $ | 311,078 | $ | 10,442 | $ | 19,118 | $ | — | $ | 340,638 |
Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | |||||||||||||||||||
Cash flows provided by operating activities: | — | 125,482 | 72,095 | 12,119 | — | 209,696 | ||||||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||||||
Capital expenditures | — | (111,560 | ) | (59,852 | ) | (11,113 | ) | — | (182,525 | ) | ||||||||||||||
Intercompany investing activity | 473,988 | 26,693 | (4,112 | ) | (14,721 | ) | (481,848 | ) | — | |||||||||||||||
Issuance of intercompany loan | — | (100,000 | ) | — | — | 100,000 | — | |||||||||||||||||
Acquisition of tradenames | — | (38,007 | ) | — | — | — | (38,007 | ) | ||||||||||||||||
Net cash used in investing activities | 473,988 | (222,874 | ) | (63,964 | ) | (25,834 | ) | (381,848 | ) | (220,532 | ) | |||||||||||||
Cash flows from financing activities: | ||||||||||||||||||||||||
Proceeds from senior notes | — | 400,000 | — | — | — | 400,000 | ||||||||||||||||||
Intercompany financing activity | — | (361,424 | ) | (119,183 | ) | (1,241 | ) | 481,848 | — | |||||||||||||||
Proceeds from intercompany loan | — | — | 100,000 | — | (100,000 | ) | — | |||||||||||||||||
Payment of debt issuance costs | — | (6,989 | ) | — | — | — | (6,989 | ) | ||||||||||||||||
Payment of contingent consideration | — | (14,721 | ) | — | — | — | (14,721 | ) | ||||||||||||||||
Dividends paid | (27,715 | ) | — | — | — | — | (27,715 | ) | ||||||||||||||||
Repurchase of common stock | (454,133 | ) | — | — | — | — | (454,133 | ) | ||||||||||||||||
Income tax benefit from stock-based compensation | — | 6,928 | 4,112 | — | — | 11,040 | ||||||||||||||||||
Withholdings from vesting of restricted stock | (5,052 | ) | — | — | — | — | (5,052 | ) | ||||||||||||||||
Proceeds from exercise of stock options | 12,912 | — | — | — | — | 12,912 | ||||||||||||||||||
Net cash provided by (used in) financing activities | (473,988 | ) | 23,794 | (15,071 | ) | (1,241 | ) | 381,848 | (84,658 | ) | ||||||||||||||
Effect of exchange rate changes on cash | — | — | — | (196 | ) | — | (196 | ) | ||||||||||||||||
Net increase in cash and cash equivalents | — | (73,598 | ) | (6,940 | ) | (15,152 | ) | — | (95,690 | ) | ||||||||||||||
Cash and cash equivalents, beginning of period | — | 351,858 | 6,940 | 23,438 | — | 382,236 | ||||||||||||||||||
Cash and cash equivalents, end of period | $ | — | $ | 278,260 | $ | — | $ | 8,286 | $ | — | $ | 286,546 |
• | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; |
• | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and |
• | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements. |
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants, and rights | Weighted-average exercise price of outstanding options, warrants, and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in first column) | ||||||
Equity compensation plans approved by security holders (1) | 1,423,660 | $ | 46.56 | 2,041,526 | |||||
Equity compensation plans not approved by security holders | — | — | — | ||||||
Total | 1,423,660 | $ | 46.56 | 2,041,526 |
(1) | Represents stock options that are outstanding or that are available for future issuance pursuant to the Carter's, Inc. Amended and Restated Equity Incentive Plan. |
Page | |||
(A) | 1. | ||
Consolidated Balance Sheets at January 2, 2016 and January 3, 2015 | |||
Consolidated Statements of Operations for the fiscal years ended January 2, 2016, January 3, 2015, and December 28, 2013 | |||
Consolidated Statements of Comprehensive Income for the fiscal years ended January 2, 2016, January 3, 2015, and December 28, 2013 | |||
Consolidated Statements of Cash Flows for the fiscal years ended January 2, 2016, January 3, 2015, and December 28, 2013 | |||
Consolidated Statements of Changes in Stockholders' Equity for the fiscal years ended January 2, 2016, January 3, 2015, and December 28, 2013 | |||
2. | Financial Statement Schedules: None | ||
(B) | Exhibits: |
Exhibit Number | Description of Exhibits |
3.1 | Certificate of Incorporation of Carter's, Inc., as amended on October 29, 2015. Incorporated by reference to Carter's, Inc.'s Quarterly Report on Form 10-Q filed on October 29, 2015. |
3.2 | Amended and Restated By-laws of Carter's, Inc. Incorporated by reference to Carter's, Inc.'s Current Report on Form 8-K filed on August 26, 2015. |
4.1 | Specimen Certificate of Common Stock. Incorporated by reference to Carter's, Inc.'s Registration Statement on Form S-1 (No. 333-98679) filed on October 10, 2003. |
4.2 | Indenture, dated August 12, 2013, by and among The William Carter Company, certain guarantors party thereto from time to time, and Wells Fargo Bank, National Association, as trustee. Incorporated by reference to Carter’s, Inc. Current Report on Form 8-K filed on August 12, 2013. |
4.3 | First Supplemental Indenture, dated June 25, 2014, by and among The William Carter Company, certain guarantors party thereto from time to time, and Wells Fargo Bank, National Association, as Trustee. Incorporated by reference to Carter’s, Inc.'s Amendment No. 1 to Registration Statement on Form S-4 filed on June 27, 2014. |
4.4 | Registration Rights Agreement, dated August 12, 2013, by and among The William Carter Company, the guarantors party thereto, and Merrill Lynch, Pierce, Fenner & Smith Incorporated. Incorporated by reference to Carter’s, Inc.'s Periodic Report on Form 8-K filed on August 12, 2013. |
10.1 | Second Amended and Restated Credit Agreement dated as of August 31, 2012, among The William Carter Company, as U.S. borrower, The Genuine Canadian Corp., as Canadian borrower, Bank of America, N.A., as Administrative Agent, U.S. Dollar Facility Swing Line Lender, U.S. Dollar Facility L/C Issuer and Collateral Agent, Bank of America, N.A., Canada Branch, as Canadian Agent, Multicurrency Facility Swing Line Lender and as a Multicurrency Facility L/C Issuer, JPMorgan Chase Bank, N.A., as Syndication Agent, Royal Bank of Canada, SunTrust Bank and U.S. Bank National Association, as Co-Documentation Agents and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Sole Lead Arranger and Sole Bookrunning Manager, and certain other lenders party thereto. Incorporated by reference to Carter's, Inc.'s Current Report on Form 8-K filed on September 4, 2012. |
10.2 | Amendment to the Second Amended and Restated Credit Facility dated August 7, 2013, Incorporated by reference to Carter's, Inc.'s Quarterly Report on Form 10-Q filed October 24, 2013. |
10.3 | Third Amended and Restated Credit Agreement, dated as of September 16, 2015, among The William Carter Company, as U.S. Borrower, The Genuine Canada Corp., as Canadian Borrower, Carter’s Holdings B.V., as Dutch Borrower, JPMorgan Chase Bank, N.A., as Administrative Agent, U.S. Dollar Facility swing Line Lender, U.S. Dollar Facility L/C Issuer and Collateral Agent, JPMorgan Chase Bank, N.A. Toronto Branch, as Canadian Agent, a Multicurrency Facility swing Line Lender and a Multicurrency Facility L/A Issuer, J.P. Morgan Europe Limited, as European Agent, JPMorgan Chase Bank, N.A., London Branch, as a Multicurrency Facility swing Line Lender and a Multicurrency Facility L/C Issuer, Bank of America, N.A., as Syndication Agent, and certain other lenders party thereto. Incorporated by reference to Carter’s, Inc.'s Current Report on Form 8-K filed on September 22, 2015. |
10.4 | Form of Severance Agreement entered into from time to time between The William Carter Company and executive officers. Incorporated by reference to Carter’s Inc.’s Quarterly Report on Form 10-Q filed on October 29, 2015. |
10.5 | Amended and Restated Equity Incentive Plan. Incorporated by reference to Carter's, Inc.'s Schedule 14A filed on April 5, 2011. |
10.6 | Amended and Restated Annual Incentive Compensation Plan. Incorporated by reference to Carter's, Inc.'s Schedule 14A filed on April 5, 2011. |
10.7 | The William Carter Company Severance Plan, dated as of March 1, 2009. Incorporated by reference to Carter's, Inc.'s Annual Report on Form 10-K filed on March 2, 2011. |
10.8 | The William Carter Company Deferred Compensation Plan, dated as of November 10, 2010. Incorporated by reference to Carter's, Inc.'s Annual Report on Form 10-K filed on March 2, 2011. |
10.9 | Lease Agreement dated March 29, 2012 between The William Carter Company and Duke Secured Financing 2009-1 ALZ, LLC. Incorporated by reference to Carter's, Inc. Quarterly Report on Form 10-Q filed on April 27, 2012. |
10.10 | Lease Agreement dated December 14, 2012 between The William Carter Company and Phipps Tower Associates, LLC. & Lease Termination Agreement dated December 14, 2012 between The William Carter Company and John Hancock Life Insurance Company (U.S.A.). Incorporated by reference to Carter's, Inc.'s Current Report on Form 8-K filed on December 14, 2012. |
10.11 | Phipps Tower Lease - Second Amendment dated June 17, 2013 Incorporated by reference to Carter's, Inc. Quarterly Report on Form 10-Q filed on July 26, 2013. |
21 | Subsidiaries of Carter's, Inc. |
23 | Consent of Independent Registered Public Accounting Firm. |
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. |
CARTER'S, INC. |
/s/ MICHAEL D. CASEY |
Michael D. Casey |
Chief Executive Officer |
Name | Title | Date |
/s/ MICHAEL D. CASEY | Chairman and Chief Executive Officer | February 25, 2016 |
Michael D. Casey | (Principal Executive Officer) | |
/s/ RICHARD F. WESTENBERGER | Executive Vice President and Chief Financial Officer | February 25, 2016 |
Richard F. Westenberger | (Principal Financial and Accounting Officer) | |
/s/ AMY WOODS BRINKLEY | Director | February 25, 2016 |
Amy Woods Brinkley | ||
/s/ VANESSA J. CASTAGNA | Director | February 25, 2016 |
Vanessa J. Castagna | ||
/s/ A. BRUCE CLEVERLY | Director | February 25, 2016 |
A. Bruce Cleverly | ||
/s/ JEVIN S. EAGLE | Director | February 25, 2016 |
Jevin S. Eagle |
/s/ PAUL FULTON | Director | February 25, 2016 |
Paul Fulton | ||
/s/ WILLIAM J. MONTGORIS | Director | February 25, 2016 |
William J. Montgoris | ||
/s/ DAVID PULVER | Director | February 25, 2016 |
David Pulver | ||
/s/ THOMAS E. WHIDDON | Director | February 25, 2016 |
Thomas E. Whiddon | ||
1. | I have reviewed this annual report on Form 10-K 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: |
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): |
February 25, 2016 | /s/ MICHAEL D. CASEY |
Michael D. Casey | |
Chief Executive Officer |
1. | I have reviewed this annual report on Form 10-K 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: |
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): |
February 25, 2016 | /s/ RICHARD F. WESTENBERGER |
Richard F. Westenberger | |
Chief Financial Officer |
February 25, 2016 | /s/ MICHAEL D. CASEY |
Michael D. Casey | |
Chief Executive Officer |
February 25, 2016 | /s/ RICHARD F. WESTENBERGER |
Richard F. Westenberger | |
Chief Financial Officer |
Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Jan. 02, 2016 |
Feb. 19, 2016 |
Jul. 04, 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-K | ||
Document Period End Date | Jan. 02, 2016 | ||
Document Fiscal Year Focus | 2015 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding | 51,746,604 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 5,563,932,389 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Jan. 02, 2016 |
Jan. 03, 2015 |
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Statement of Financial Position [Abstract] | ||
Preferred stock; par value | $ 0.01 | $ 0.01 |
Preferred stock; shares authorized | 100,000 | 100,000 |
Preferred stock; issued | 0 | 0 |
Preferred stock; outstanding | 0 | 0 |
Common stock, voting; par value | $ 0.01 | $ 0.01 |
Common stock, voting; shares authorized | 150,000,000 | 150,000,000 |
Common stock voting; shares issued | 52,712,193 | 54,541,879 |
Common stock voting; shares outstanding | 52,712,193 | 54,541,879 |
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands |
12 Months Ended | ||
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Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
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Income Statement [Abstract] | |||
Net sales | $ 3,013,879 | $ 2,893,868 | $ 2,638,711 |
Cost of goods sold | 1,755,855 | 1,709,428 | 1,543,332 |
Gross profit | 1,258,024 | 1,184,440 | 1,095,379 |
Selling, general, and administrative expenses | 909,233 | 890,251 | 868,480 |
Royalty income | (44,066) | (39,156) | (37,252) |
Operating income | 392,857 | 333,345 | 264,151 |
Interest expense | 27,031 | 27,653 | 13,437 |
Interest income | (500) | (403) | (669) |
Other (income) expense, net | (1,862) | 3,189 | 1,918 |
Income before income taxes | 368,188 | 302,906 | 249,465 |
Provision for income taxes | 130,366 | 108,236 | 89,058 |
Net income | $ 237,822 | $ 194,670 | $ 160,407 |
Basic net income per common share | $ 4.55 | $ 3.65 | $ 2.78 |
Diluted net income per common share | 4.50 | 3.62 | 2.75 |
Dividend declared per common share | 0.88 | 0.76 | 0.48 |
Dividend paid per common share | $ 0.76 | $ 0.48 | $ 0.00 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 237,822 | $ 194,670 | $ 160,407 |
Other comprehensive income (loss): | |||
Foreign currency translation adjustments | (14,189) | (7,845) | (5,486) |
Total other comprehensive (loss) income | (13,330) | (12,955) | 1,123 |
Comprehensive income | 224,492 | 181,715 | 161,530 |
Unrealized gain (loss) on OshKosh defined benefit plan, net of tax of ($470), $2,920, ($3,660) for the fiscal years 2015, 2014, and 2013, respectively | 803 | (4,963) | 6,238 |
Unrealized gain (loss) on Carter's post-retirement benefit obligation, net of (tax) or tax benefit of ($30), $91, ($210) for fiscal years 2015, 2014, and 2013, respectively | $ 56 | $ (147) | $ 371 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Pension Plans | |||
Unrealized gain (loss) on OshKosh defined benefit and postretirement plans, tax | $ 2,920 | $ (3,660) | $ 690 |
Postretirement Benefit | |||
Unrealized gain (loss) on OshKosh defined benefit and postretirement plans, tax | $ 91 | $ (210) | $ (107) |
THE COMPANY |
12 Months Ended |
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Jan. 02, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
THE COMPANY | THE COMPANY Carter's, Inc. and its wholly owned subsidiaries (collectively, the "Company," and its) design, source, and market branded childrenswear under the Carter’s, Child of Mine, 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 January 2, 2016, the Company operated 594 Carter’s domestic stores, 241 OshKosh domestic stores, and 147 Canadian stores. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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Jan. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The accompanying audited consolidated financial statements include the accounts of Carter's, Inc. and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. FISCAL YEAR 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. Fiscal 2015, which ended on January 2, 2016, contained 52 weeks. Fiscal 2014, which ended on January 3, 2015, contained 53 weeks. Fiscal 2013, which ended on December 28, 2013, contained 52 weeks. USE OF ESTIMATES IN THE PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS The preparation of these consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS Translation adjustments The functional currency of substantially all of the Company's foreign operations is the local currency. Assets and liabilities are translated into U.S. dollars using the current exchange rates in effect at the balance sheet date, while revenues and expenses are translated at the average exchange rates for the period. The resulting translation adjustments are recorded as a component of accumulated other comprehensive income (loss) within the accompanying audited consolidated balance sheet. Transaction adjustments The Company also recognizes gains and losses on transactions that are denominated in a currency other than the respective entity's functional currency. Foreign currency transaction gains and losses also include intercompany loans with foreign subsidiaries that are of a short-term investment nature. Foreign currency transaction gains and losses are recognized in earnings, as a separate component of other expense, net, within the audited consolidated statements of operations. Foreign Currency Contracts As part of the Company's overall strategy to manage the level of exposure to the risk of foreign currency exchange rate fluctuations, primarily between the U.S. dollar and Canadian dollar, the Company's Canadian subsidiary may use foreign currency forward contracts to hedge purchases that are made in U.S. dollars, primarily for inventory purchases. As part of this hedging strategy, the Company uses foreign currency forward exchange contracts that have maturities of less than 12 months to provide continuing coverage throughout the hedging period. As currently designed, the Company's contracts are not designated for hedge accounting treatment, and therefore changes in the fair value of these contracts are recorded in other (income) expense, net in the Company's consolidated statement of operations. Such foreign currency gains and losses include the mark-to-market fair value adjustments at the end of each reporting period related to open contracts, as well as any realized gains and losses on contracts settled during the reporting period. The fair values of unsettled currency contracts are included in other current assets or other current liabilities on the Company's consolidated balance sheet. On the consolidated statement of cash flows, the Company includes all activity, including cash settlement of the contracts, as a component of cash flows from operations. CASH AND CASH EQUIVALENTS The Company considers all highly liquid investments that have original maturities of three months or less to be cash equivalents. Cash and cash equivalents consist of deposit accounts and cash management funds invested in U.S. government instruments. These investments are stated at cost, which approximates fair value. Concentration of cash deposits risk As of January 2, 2016, the Company had approximately $381.2 million of cash and cash equivalents in major financial institutions, including approximately $40.8 million in financial institutions located outside of the U.S. The Company maintains cash deposits with major financial institutions that exceed the insurance coverage limits provided by the Federal Deposit Insurance Corporation in the U.S. and by similar insurers for deposits located outside the U.S. To mitigate this risk, the Company utilizes a policy of allocating cash deposits among major financial institutions that have been evaluated by the Company and third-party rating agencies. ACCOUNTS RECEIVABLE The components of accounts receivable, net, as of January 2, 2016 and January 3, 2015 are as follows:
Concentration of credit risk In each of fiscal 2015, 2014, and 2013, no one customer accounted for 10% or more of the Company's consolidated net sales. At January 2, 2016, five customers each had individual receivable balances in excess of 10% of gross accounts receivable, and the total receivable balances due from these five customers in the aggregate equaled approximately 60% of total gross accounts receivable outstanding. At January 3, 2015, five customers each had individual receivable balances in excess of 10% of gross accounts receivable, and the total receivable balances due from these five customers in the aggregate equaled approximately 59% of total gross accounts receivable outstanding. Allowance for doubtful accounts The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make payments and other estimated deductions. If the financial condition of a customer were to deteriorate, resulting in an impairment of its ability to make payments, an additional allowance could be required. Past due balances over 90 days are reviewed individually for collectibility. The Company's credit and collections department reviews all other balances regularly. Account balances are charged off against the allowance when it is probable that the receivable will not be recovered. The Company also records reserves for potential returns based on historical experience. INVENTORIES Inventories, which consist primarily of finished goods, are stated at the lower of cost (first-in, first-out basis for wholesale inventory and average cost for retail inventories) or market. The Company adjusts for slow-moving inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. The Company also adjusts its inventory to reflect estimated shrinkage based on historical trends. PROPERTY, PLANT, AND EQUIPMENT Property, plant, and equipment are stated at cost, less accumulated depreciation and amortization. When fixed assets are sold or otherwise disposed of, the accounts are relieved of the original cost of the assets and the related accumulated depreciation or amortization and any resulting profit or loss is credited or charged to income. For financial reporting purposes, depreciation and amortization are computed on the straight-line method over the estimated useful lives of the assets as follows: buildings and improvements from 15 to 26 years, retail store fixtures, equipment, and computers from 3 to 10 years, and computer software from 3 to 7 years. Leasehold improvements and fixed assets purchased under capital lease are amortized over the lesser of the asset life or related lease term. The Company capitalizes the cost of its fixtures designed and purchased for use at major wholesale accounts. The cost of these fixtures is amortized over 3 years. GOODWILL AND OTHER INTANGIBLE ASSETS The Company's goodwill balance is comprised of amounts related to the acquisition of Carter's, Inc. by a predecessor company and the acquisition of Bonnie Togs. The goodwill balances have indefinite useful lives and are not deductible for income tax purposes. The Company's other intangible assets are comprised of tradenames and non-compete agreements. The tradenames include Carter's, OshKosh, Carter's Watch the Wear, H.W. Carter & Sons, and the Carter's tradename in the country of Chile. The Carter's and OshKosh tradenames have indefinite useful lives. The Carter's Watch the Wear and H.W. Carter & Sons have definite lives and are being amortized on an accelerated basis over three years. The Carter's tradename in Chile has a definite life and is being amortized over a period of 20 years. Annual impairment reviews The carrying values of the goodwill and indefinite-lived tradename assets are subject to annual impairment reviews which are performed as of the last day of each fiscal year. Additionally, a review for potential impairment is performed whenever significant events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Significant assumptions in the impairment models include estimates of future cash flows, discount rates, and, in the case of tradenames, royalty rates. Based upon the Company's most recent assessment, performed as of January 2, 2016, there were no impairments in the values of goodwill or indefinite-lived tradename assets and no reporting units were at risk of an impairment. Goodwill The Company performs impairment tests of its goodwill at the reporting unit level. Both qualitative and quantitative methods may be used to assess for impairment, including the use of discounted cash flows ("income approach") and relevant data from guideline public companies ("market approach"). Under a qualitative assessment, the Company determines if it is "more likely than not" that the fair value of the reporting unit is less than its carrying value. Qualitative factors may include, but are not limited to: macroeconomic conditions, industry and market considerations, cost factors that may have a negative effect on earnings, overall financial performance, and other relevant entity-specific events. If the Company determines that it is "more likely than not" that the fair value of the reporting unit is less than its carrying value, then the Company performs the two-step goodwill impairment test as required. If it is determined that it is "not likely" that the fair value of the reporting unit is less than its carrying value, then no further testing is required and the Company documents the relevant qualitative factors that support the strength in the fair value. The first step of a quantitative assessment is to compare the fair value of the reporting unit to its carrying value, including goodwill. The Company uses a discounted cash flow model to determine the fair value, using assumptions consistent with those of hypothetical marketplace participants. If the fair value of a reporting unit is less than its carrying value, the second step of the impairment test must be performed. The second step compares the implied fair value of the reporting unit goodwill with the carrying value of that goodwill, in order to determine the amount of the impairment loss and charge to the consolidated statement of operations. Indefinite-lived tradenames For indefinite-lived tradenames, the Company may utilize a qualitative assessment, as described above, to determine whether the fair value of an indefinite-lived asset is less than its carrying value. If a quantitative assessment is necessary, the Company determines fair value using a discounted cash flow model that uses the relief-from-royalty method. If the carrying amount exceeds the fair value of the tradename, an impairment charge is recognized in the amount of the excess. IMPAIRMENT OF OTHER LONG-LIVED ASSETS The Company reviews other long-lived assets, including property, plant, and equipment, and licensing agreements, for impairment whenever events or changes in circumstances indicate that the carrying amount of such an asset may not be recoverable. Management will determine whether there has been a permanent impairment on such assets held for use in the business by comparing anticipated undiscounted future cash flows from the use and eventual disposition of the asset or asset group to the carrying value of the asset. The amount of any resulting impairment will be calculated by comparing the carrying value to fair value, which may be estimated using the present value of the same cash flows. Long-lived assets that meet the definition of held for sale will be valued at the lower of carrying amount or fair value, less costs to sell. DEFERRED DEBT ISSUANCE COSTS Debt issuance costs associated with the Company's secured revolving credit facility and senior notes are deferred and amortized to interest expense over the term of the related debt using the effective interest method. FAIR VALUE MEASUREMENTS The fair value framework requires the Company to categorize certain assets and liabilities into three levels, based upon the assumptions used to price those assets or liabilities. The three levels are defined as follows:
The Company measures its pension assets, deferred compensation plan investment assets, unsettled foreign currency forward contracts, and contingent consideration liability for acquisitions (if any) at fair value, as disclosed in the accompanying notes to the consolidated financial statements. The Company's cash and cash equivalents, accounts receivable, and accounts payable are short-term in nature. As such, their carrying value approximates fair value. The carrying values of the Company’s outstanding borrowings are not required to be remeasured and adjusted to the then-current fair values at the end of each reporting period. Instead, the fair values of the Company's outstanding borrowings are disclosed at the end of each reporting period in Note 7, Long-Term Debt, to the accompanying consolidated financial statements. Had the Company been required to remeasure and adjust the carrying values of its outstanding borrowings to fair value at the end of each reporting period, such fair value measurements would have been disclosed as a Level 2 liability in the fair value hierarchy. REVENUE RECOGNITION Revenues consist of sales to customers, net of returns, accommodations, allowances, deductions, and cooperative advertising. The Company considers revenue realized or realizable and earned when the product has been shipped, when title passes, when all risks and rewards of ownership have transferred, the sales price is fixed or determinable, and collectibility is reasonably assured. In certain cases, in which the Company retains the risk of loss during shipment, revenue recognition does not occur until the goods have reached the specified customer. In the normal course of business, the Company grants certain accommodations and allowances to its wholesale customers in order to assist these customers with inventory clearance and promotions. Such amounts are reflected as a reduction of net sales and are recorded based on agreements with customers, historical trends, and annual forecasts. The Company records its cooperative advertising arrangements with certain of its major wholesale customers at fair value. Fair value is determined based upon, among other factors, comparable market analysis for similar advertisements. The Company has included the fair value of these arrangements of approximately $3.9 million for each of the fiscal years 2015, 2014, and 2013, as a component of selling, general, and administrative expenses on the accompanying consolidated statements of operations, rather than as a reduction of net sales. Amounts determined to be in excess of the fair value of these arrangements are recorded as a reduction of net sales. Retail store revenues are recognized at the point of sale. The Company reduces revenue for estimated customer returns and deductions. ACCOUNTING FOR SHIPPING AND HANDLING FEES AND COSTS Shipping and handling costs include related labor costs, third-party shipping costs, shipping supplies, and certain distribution overhead. Such costs are absorbed by the Company and are included in selling, general, and administrative expenses. These costs amounted to approximately $67.2 million, $72.1 million, and $59.1 million for fiscal 2015, 2014, and 2013, respectively. With respect to the freight component of the Company's shipping and handling costs, certain customers arrange for shipping and pay the related freight costs directly to third parties. However, in the event that the Company arranges and pays the freight for these customers and bills them for this service, such amounts billed are included in revenue and the related cost is charged to cost of goods sold. In addition, shipping and handling costs billed to the Company's eCommerce customers are included in revenue and the related cost is charged to cost of goods sold. Amounts billed to customers for such costs were approximately $11.0 million, $12.3 million, and $12.1 million for fiscal years 2015, 2014, and 2013, respectively. INCOME FROM ROYALTIES AND LICENSE FEES The Company licenses the Carter's, Just One You, Precious Firsts, Child of Mine, OshKosh B'gosh, OshKosh, and Genuine Kids from OshKosh trademarks to other companies for use on baby and young children's products, including bedding, outerwear, sleepwear, shoes, underwear, socks, room décor, toys, stationery, hair accessories, furniture, and related products. These royalties are recorded as earned, based upon the sales of licensed products by licensees and reported as royalty income in the statements of operations. ADVERTISING EXPENSES Costs associated with the production of advertising, such as writing, copy, printing, and other costs, are expensed as incurred. Costs associated with communicating advertising that has been produced, such as magazine costs and website banners, are expensed when the advertising event takes place. STOCK-BASED COMPENSATION ARRANGEMENTS The Company recognizes the cost resulting from all stock-based payment transactions in the financial statements at grant date fair value. Stock-based compensation expense is recognized over the requisite service period, net of estimated forfeitures. Stock Options The Company determines the fair value of stock options using the Black-Scholes option pricing model, which requires the use of the following subjective assumptions: Volatility - This is a measure of the amount by which a stock price has fluctuated or is expected to fluctuate. The Company uses actual monthly historical changes in the market value of its stock covering the expected life of options being valued. An increase in the expected volatility will increase the fair value of the stock option and related compensation expense. Risk-free interest rate - This is the U.S. Treasury rate as of the grant date having a term equal to the expected term of the stock option. An increase in the risk-free interest rate will increase the fair value of the stock option and related compensation expense. Expected term - This is the period of time over which the stock options granted are expected to remain outstanding and is based on historical experience and estimated future exercise behavior. Separate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. An increase in the expected term will increase the fair value of the stock option and the related compensation expense. Dividend yield - The Company estimates a dividend yield based on the current dividend amount as a percentage of the current stock price. An increase in the dividend yield will decrease the fair value of the stock option and the related compensation expenses. Forfeitures - The Company estimates forfeitures of stock-based awards based on historical experience and expected future activity. Changes in these subjective assumptions can materially affect the estimate of fair value of stock-based compensation expense and the related amount recognized in the audited consolidated statements of operations. Time-Based Restricted Stock Awards The fair value of time-based restricted stock awards is determined based on the quoted closing price of the Company's common stock on the date of grant and is recognized as compensation expense over the vesting term of the awards, net of estimated forfeitures. Performance-Based Restricted Stock Awards The Company accounts for its performance-based restricted stock awards based on the quoted closing price of the Company's common stock on the date of grant and records stock-based compensation expense over the vesting term of the awards based on the probability that the performance criteria will be achieved. The Company reassesses the probability of vesting at each reporting period and prospectively adjusts stock-based compensation expense based on its probability assessment. Stock Awards The fair value of stock granted to non-management board members is determined based on the quoted closing price of the Company's common stock on the date of grant. The Company records the stock-based compensation expense immediately as there are no vesting terms. INCOME TAXES The accompanying consolidated financial statements reflect current and deferred tax provisions. The deferred tax provision is determined under the liability method. Deferred tax assets and liabilities are recognized based on differences between the book and tax bases of assets and liabilities using presently enacted tax rates. Valuation allowances are established when it is "more likely than not" that a deferred tax asset will not be recovered. The provision for income taxes is the sum of the amount of income taxes paid or payable for the year as determined by applying the provisions of enacted tax laws to the taxable income for that year, the net change during the year in deferred tax assets and liabilities, and the net change during the year in any valuation allowances. The Company assesses its income tax positions and records tax benefits for all years subject to examination based upon management's evaluation of the facts, circumstances, and information available at the reporting dates. The Company determines whether it is "more likely than not" that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded in the financial statements. For those tax positions where it is not "more likely than not" that a tax benefit will be sustained, no tax benefit is recognized. Where applicable, associated interest and penalties are also recorded. Interest is recorded as a component of interest expense and penalties, if any, are recorded within the provision for incomes taxes in the consolidated statements of operations and are classified on the consolidated balance sheets with the related liability for uncertain tax contingency liabilities. SUPPLEMENTAL CASH FLOW INFORMATION Interest paid in cash approximated $25.1 million, $26.1 million, and $3.8 million for fiscal years 2015, 2014, and 2013, respectively. Income taxes paid in cash approximated $108.4 million, $95.8 million and $83.3 million for fiscal years 2015, 2014, and 2013, respectively. Additions to property, plant and equipment of approximately $6.1 million, $2.0 million, and $17.8 million were excluded from capital expenditures on the Company's consolidated statements of cash flows for fiscal years 2015, 2014, and 2013, respectively, since these amounts were accrued and unpaid at the end of each respective fiscal year. The Company's consolidated statement of cash flows shows the following sources and uses of financing cash flows related to the Company's revolving credit facility during fiscal 2015. In the first quarter, the Company replaced $20.0 million of outstanding borrowings under the then-existing amended revolving credit facility with CAD 25.5 million of borrowings, which approximated $20.3 million. Additionally, because of a change in the lead administrative agent and certain changes in commitment amounts among the lenders in the syndication, the third quarter amendment to the Company's secured revolving credit facility led to the repayment and simultaneous re-borrowing of the then-outstanding balance on the secured revolving credit agreement of approximately $185.2 million. EARNINGS PER SHARE The Company calculates basic and diluted net income per common share under the two-class method for unvested share-based payment awards that contain participating rights to dividends or dividend equivalents (whether paid or unpaid). Basic net income per share is calculated by dividing net income for the period by the weighted-average common shares outstanding for the period. Diluted net income per share includes the effect of dilutive instruments and uses the average share price for the period in determining the number of shares that are to be added to the weighted-average number of shares outstanding. OPEN MARKET REPURCHASES OF COMMON STOCK Shares of the Company's common stock that are repurchased ("buy back") by the Company through open market transactions are retired. Through the end of fiscal 2015, all such open market repurchases have been at prices that exceeded the par value of the repurchased common stock, and the amounts of the purchase prices that exceeded par value were charged to additional paid-in capital or to retained earnings if the balance in additional paid-in capital was not sufficient. EMPLOYEE BENEFIT PLANS The Company has several defined benefit plans. Various actuarial methods and assumptions are used in determining net pension and post-retirement costs and obligations. Key assumptions include the discount rate used to determine the present value of future benefits and the expected long-term rate of return on plan assets. The over-funded or under-funded status of the defined benefit plans is recorded as an asset or liability on the consolidated balance sheet. The gains or losses that arise during the period are recognized as a component of comprehensive income, net of tax. These costs are then subsequently recognized as components of net periodic benefit cost in the consolidated statements of operations. FACILITY CLOSURE AND OFFICE CONSOLIDATION The Company records severance costs when the appropriate notifications have been made to affected employees or when the decision is made, if the benefits are contractual. When employees are required to work for a period before termination, the severance costs are recognized over the required service period. Relocation and recruitment costs are expensed as incurred. For operating leases, lease termination costs are recognized at fair value at the date the Company ceases to use the leased property, and adjusted for the effects of deferred items recognized under the lease and reduced by estimated sub-lease rental income. Useful lives assigned to fixed assets at the facility to be closed are revised based on the specifics of the exit plan, resulting in accelerated depreciation expense. LEASES AND DEFERRED RENT The Company enters into a significant number of lease transactions related to properties for its retail stores in addition to leases for offices, distribution facilities, and other uses. The lease agreements may contain provisions related to allowances for property improvements, rent escalation, and free rent periods. Substantially all of these leases are classified as operating leases for accounting purposes. For property improvement allowances, the Company records a deferred lease credit on the consolidated balance sheet and amortizes the deferred lease credit as a reduction of rent expense over the terms of the applicable lease. For scheduled rent escalation clauses during the lease term, the Company records rent expense on a straight-line basis over the term of the lease. The difference between the rent expense and the amount payable under the lease is included within the Company's liabilities on the consolidated balance sheet. The term of the lease over which the Company amortizes allowances and minimum rental expenses on a straight-line basis begins on the date of initial possession, which is generally when the Company enters the space and/or begins construction. Where leases provide for contingent rents, which are generally determined as a percentage of gross sales, the Company records additional rent expense when management determines that achieving the specified level of revenue during the fiscal year is probable. Amounts accrued for contingent rent are included within the Company's liabilities on the consolidated balance sheet. SEASONALITY The Company experiences seasonal fluctuations in its sales and profitability due to the timing of certain holidays and key retail shopping periods, typically resulting in lower sales and gross profit in the first half of its fiscal year. Accordingly, the Company's results of operations during the first half of the year may not be indicative of the results for the full year. RECENT ACCOUNTING PRONOUNCEMENTS Revenue Recognition In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 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 2018, including interim periods within that first fiscal year, and early adoption is now permitted for 2017. 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. Since the original issuance of ASU 2014-09, the FASB has issued several amendments to this guidance, and additional amendments are currently being considered by the FASB. Presentation of Debt Issuance Costs for Term Debt In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs ("ASU 2015-03"). Upon adoption, ASU 2015-03 will require debt issuance costs associated with outstanding term debt to be presented in the balance sheet as a direct reduction in the carrying value of the associated debt liability, consistent with the current presentation of a debt discount. For fees paid to lenders to secure revolving lines of credit, such fees will continue to be presented as a deferred charge (asset) on the balance sheet, as clarified in August 2015 by the FASB's issuance of ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements ("ASU 2015-15"). Under guidance prior to ASU 2015-03, all debt issuance costs, for both term debt and revolving lines of credit, 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 and ASU 2015-15 must be applied on a retrospective basis. The Company adopted the provisions of ASU 2015-03 and ASU 2015-15 at the beginning of fiscal 2016. Since ASU 2015-03 and ASU 2015-15 involve balance sheet presentation only, their adoption will not have any impact on the Company's results of operations, financial condition, or cash flows. Simplified Measurement Date for Defined Benefit Plan Assets and Obligations In April 2015, the FASB issued ASU No. 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 end (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. The Company adopted the provisions of ASU 2015-04 at the beginning of fiscal 2016 and the Company does not expect the adoption to have a material impact on the Company's benefit plans or the Company's results of operations, financial condition, or cash flows. Accounting for Fees Paid in a Cloud Computing Arrangement In April 2015, the FASB issued ASU No. 2015-05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement ("ASU 2015-05"). ASU 2015-05 provides new guidance for a customer’s accounting for fees paid in a cloud computing arrangement. Previously, there was no specific U.S. GAAP guidance on accounting for such fees from the customer’s perspective, and entities generally applied lease accounting guidance to acquired software licenses. Under ASU 2015-05, customers will apply the same criteria as vendors to determine whether a cloud computing arrangement contains a software license or is solely a service contract. More specifically, if a hosting arrangement includes a software license for internal use software, the software license will be capitalized and amortized over the life of the license, and a hosting arrangement that does not include software licenses will be accounted for as service contracts. For public entities, ASU 2015-05 is effective for annual periods, including interim periods, beginning after December 15, 2015. Early adoption is permitted. Entities will have the option of transitioning to the new guidance either retrospectively, or prospectively for all new transactions entered into or materially modified after the date of adoption. The Company prospectively adopted the provisions of ASU 2015-05 at the beginning of fiscal 2016, and the Company does not expect the adoption of ASU 2015-05 to have a material impact on the Company's results of operations, financial condition, or cash flows. Simplified Subsequent Measurement of Inventory In July 2015, the FASB issue ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory ("ASU 2015-11"). Upon adoption by an entity, ASU 2015-11 will simplify the subsequent measurement of inventory by replacing the current lower of cost or market test with a lower of cost and net realizable value test. The new guidance applies only to inventories for which cost is determined by methods other than last-in-first-out (LIFO) and the retail inventory method. For inventory within the scope of ASU 2015-11, entities will be required to compare the cost of inventory to only one measure, its net realizable value, and not the three measures required by current guidance ("market," "subject to a floor," and a "ceiling"). When evidence exists that the net realizable value of inventory is less than its cost (due to damage, physical deterioration, obsolescence, changes in price levels or other causes), entities will recognize the difference as a loss in earnings in the period in which it occurs. ASU 2015-11 is effective for public entities for fiscal years beginning after December 15, 2016, and interim periods within the year of adoption. Early adoption is permitted. The Company expects to adopt the provisions of ASU 2015-11 at the beginning of fiscal 2017. At this time, the Company does not believe the adoption of ASU 2015-11 will have a material impact on its consolidated financial condition, results of operations, or cash flows. Balance Sheet Classification of Deferred Taxes On November 20, 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes ("ASU 2015-17"). Current GAAP requires the deferred taxes for each tax jurisdiction (or tax-paying component of a jurisdiction) to be presented as a net current asset or liability and net noncurrent asset or liability. This requires a jurisdiction-by-jurisdiction analysis based on the classification of the assets and liabilities to which the underlying temporary differences relate based on the period in which the attribute is expected to be realized. Upon adoption of ASU 2015-17, all deferred tax assets and liabilities will be classified as noncurrent on an entity's balance sheet. As a result, each jurisdiction will have only one net noncurrent deferred tax asset or liability. ASU 2015-17 will not change the existing guidance that prohibits the offsetting of deferred tax liabilities of one jurisdiction against the deferred tax assets of another jurisdiction. ASU 2015-17 is effective for public entities in fiscal years beginning after December 15, 2016, including interim periods in the year of adoption. Early adoption is permitted, and adoption may be applied either prospectively or retrospectively. The Company plans to adopt ASU 2015-17 at the beginning of the first quarter of fiscal 2017. ASU 2015-17 will only involve classification of certain deferred tax assets and liabilities on the Company's consolidated balance sheet and will have no impact on the Company's results of operations or cash flows. The Company does not expect the adoption of ASU 2015-17 to be material to the Company's consolidated balance sheet. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Advertising Expense (Notes) |
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Advertising Costs, Policy [Policy Text Block] | ADVERTISING EXPENSES Costs associated with the production of advertising, such as writing, copy, printing, and other costs, are expensed as incurred. Costs associated with communicating advertising that has been produced, such as magazine costs and website banners, are expensed when the advertising event takes place. |
ACQUISITION OF BONNIE TOGS |
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ACQUISITION OF BONNIE TOGS | ACQUISITION OF BONNIE TOGS On June 30, 2011, the Company purchased all of the outstanding shares of capital stock of Bonnie Togs for total consideration of up to CAD $95 million, of which USD $61.2 million was paid in cash at closing. The Company made payments of approximately USD $14.7 million and USD $8.9 million related to the contingent consideration liability based on the achievement of interim earnings targets through June 2013 and 2014, respectively. In fiscal 2015, the Company made a final payment under the contingent consideration obligation of approximately USD $8.6 million. Of this amount, approximately USD $7.6 million is reported in the Company's consolidated statement of cash flows as a financing activity and the remaining portion, which represented the contingency adjustment recognized in the second quarter of fiscal 2015, is reported as an operating activity. The following table summarizes the changes in the contingent consideration liability related to the 2011 acquisition of Bonnie Togs during fiscal 2013, 2014, and 2015 (dollars in thousands):
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PROPERTY, PLANT, AND EQUIPMENT |
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PROPERTY, PLANT, AND EQUIPMENT | PROPERTY, PLANT, AND EQUIPMENT Property, plant, and equipment, net consists of the following:
Depreciation and amortization expense related to property, plant, and equipment was approximately $62.0 million, $58.5 million, and $54.7 million for fiscal years 2015, 2014, and 2013, respectively. |
GOODWILL AND OTHER INTANGIBLE ASSETS |
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GOODWILL AND OTHER INTANGIBLE ASSETS | GOODWILL AND OTHER INTANGIBLE ASSETS Acquisition of Tradenames In December 2014, the Company acquired the exclusive rights to the Carter's brands including trademark registrations in Chile. The Company acquired these rights in order to freely operate in Chile by offering products and service under the Carter's brand. The total consideration paid was approximately $3.6 million in cash and was accounted for as an asset acquisition. This tradename is being amortized over 20 years using a straight-line method. In June 2013, the Company acquired worldwide rights to the Carter's Watch the Wear and H.W. Carter & Sons brands, including trademark registrations. The Company acquired these worldwide rights for defensive purposes to reduce brand confusion and facilitate expansion in certain key international markets. The total consideration paid was approximately $38.0 million in cash and was accounted for as an asset acquisition. These tradenames are being amortized over three years, using an accelerated amortization method. Balance Sheet Components The Company’s goodwill and other intangible assets were as follows:
Amortization expense for intangible assets subject to amortization was approximately $6.4 million, $16.5 million, and $13.8 million for fiscal years 2015, 2014, and 2013, respectively. The estimated future amortization expense is approximately $1.9 million for fiscal 2016, $0.2 million for fiscal 2017, and $0.2 million for each fiscal year 2018 through 2020. |
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME |
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ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME | ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME Accumulated other comprehensive (loss) income is summarized as follows:
As of January 2, 2016 and January 3, 2015, the cumulative pension liability adjustments were, net of tax effect, $4.8 million and $5.3 million, respectively. As of January 2, 2016 and January 3, 2015, the post-retirement liability adjustments were, net of tax effect, approximately $0.8 million for each period. For the fiscal years ended January 2, 2016 and January 3, 2015, amounts reclassified from accumulated other comprehensive loss to the consolidated statements of operations consisted of amortization of actuarial gains and losses related to the Company's defined benefit retirement plans. Such amortization amounts are included in the net periodic cost or benefit recognized for these plans during the respective fiscal year. See Note 10, Employee Benefit Plans, for additional details. Also, during the fiscal year ended January 3, 2015, approximately $0.1 million was reclassified from cumulative translation adjustment into other expense, net on the consolidated statement of operations as a result of the completion of the Company's exit from retail operations in Japan. |
LONG-TERM DEBT |
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LONG-TERM DEBT | LONG-TERM DEBT Long-term debt consisted of the following:
SENIOR NOTES On August 12, 2013, the Company's 100% owned subsidiary, The William Carter Company ("TWCC") issued $400 million principal amount of senior notes (the "senior notes") at par, bearing interest at a rate of 5.25% per annum, and maturing on August 15, 2021, all of which were outstanding as of January 2, 2016. At issuance, TWCC received net proceeds from the offering of the senior notes of approximately $394.2 million, after deducting bank fees and other related fees. Approximately $7.0 million, including both bank fees and other third party expenses, was capitalized in connection with the issuance and is being amortized over the term of the senior notes. The senior notes are unsecured and are fully and unconditionally guaranteed by Carter's, Inc. and certain subsidiaries of TWCC. The guarantor subsidiaries are 100% owned directly or indirectly by Carter's, Inc. and all guarantees are joint, several and unconditional. At any time prior to August 15, 2017, TWCC may redeem all or part of the senior notes at 100% of the principal amount redeemed plus an applicable premium and accrued and unpaid interest. On and after August 15, 2017, TWCC may redeem all or part of the senior notes at the redemption prices (expressed as percentages of principal amount of the senior notes to be redeemed) set forth below, plus accrued and unpaid interest. The redemption price applicable where the redemption occurs during the twelve-month period beginning on August 15 of each of the years indicated is as follows:
In addition, until August 15, 2016, TWCC may, at its option, redeem up to 35% of the aggregate principal amount of the senior notes at a redemption price equal to 105.25% of the aggregate principal amount, plus accrued and unpaid interest, subject to certain terms, with the proceeds of certain equity offerings. Upon the occurrence of specific kinds of changes of control, unless a redemption notice with respect to all the outstanding senior notes has previously or concurrently been mailed or delivered, TWCC will be required to make an offer to purchase the senior notes at 101% of their principal amount. In addition, if TWCC or any of its restricted subsidiaries engages in certain asset sales, under certain circumstances TWCC will be required to use the net proceeds to make an offer to purchase the senior notes at 100% of their principal amount. The indenture governing the senior notes includes a number of covenants, that, among other things and subject to certain exceptions, restrict TWCC's ability and the ability of certain of its subsidiaries to: (a) incur, assume or guarantee additional indebtedness; (b) issue disqualified stock and preferred stock; (c) pay dividends or make distributions or other restricted payments; (d) prepay, redeem or repurchase certain debt; (e) make loans and investments (including joint ventures); (f) incur liens; (g) create restrictions on the payment of dividends or other amounts from restricted subsidiaries that are not guarantors of the notes; (h) sell or otherwise dispose of assets, including capital stock of subsidiaries; (i) consolidate or merge with or into, or sell substantially all of TWCC's assets to, another person; (j) designate subsidiaries as unrestricted subsidiaries; and (k) enter into transactions with affiliates. Specific provisions restrict the ability of the Company's operating subsidiary, TWCC, from paying cash dividends to Carter’s, Inc. in excess of $100.0 million plus an additional amount that builds based on 50% of our consolidated net income on a cumulative basis beginning with the third fiscal quarter of 2013 and subject to certain conditions, unless TWCC and its consolidated subsidiaries meet a leverage ratio requirement under the indenture, which could restrict Carter's, Inc. from paying cash dividends on our common stock. Additionally, the terms of the notes contain customary affirmative covenants and provide for events of default which, if certain of them occur, would permit the trustee or the holders of at least 25% in principal amount of the then total outstanding senior notes to declare all amounts owning under the notes to be due and payable. Carter's, Inc. is not subject to these covenants. TWCC completed the required registered exchange offer during fiscal 2014. SECURED REVOLVING CREDIT FACILITY On October 15, 2010, the Company entered into a $375 million ($130 million sub-limit for letters of credit and a swing line sub-limit of $40 million) secured revolving credit facility with Bank of America as sole lead arranger and administrative agent, JP Morgan Chase Bank as syndication agent, and other financial institutions. On December 22, 2011, the Company amended and restated the secured revolving credit facility to, among other things, provide a U.S. dollar secured revolving facility of $340 million (including a $130 million sub-limit for letters of credit and a swing line sub-limit of $40 million) and a $35 million multicurrency secured revolving facility (including a $15 million sub-limit for letters of credit and a swing line sub-limit of $5 million), which is available for borrowings by either TWCC or its Canadian subsidiary, in U.S. dollars or Canadian dollars. On August 31, 2012, the Company and lenders amended and restated the secured revolving credit facility to, among other things, improve interest rates applicable to pricing, extend the maturity of the facility, and allow borrowings in currencies other than U.S. dollars or Canadian dollars subject to the consent of all multicurrency lenders. The aggregate principal amount of the facility remained unchanged at $375 million consisting of a $340 million U.S. dollar secured revolving credit facility and a $35 million multicurrency secured revolving credit facility (although the sub-limit for U.S. dollar letters of credit was increased to $175 million). Amended and Restated Credit Facility On September 16, 2015, the Company and a syndicate of lenders amended and restated the secured revolving credit facility (the "amended revolving credit facility") to, among other things: (i) refinance the Company's existing credit facility in order to achieve better pricing terms and (ii) provide additional liquidity to be used for ongoing working capital purposes and for general corporate purposes. The aggregate principal amount of the amended revolving credit facility was increased from $375 million to $500 million to provide for (i) a $400 million U.S. dollar revolving facility (including a $175 million sub-limit for letters of credit and a swing line sub-limit of $50 million) available for borrowings by TWCC and (ii) a $100 million multicurrency revolving facility (including a $40 million sub-limit for letters of credit and a swing line sub-limit of $15 million), available for borrowing by TWCC and certain other subsidiaries of TWCC, in U.S. dollars, Canadian dollars, Euros, Pounds Sterling, or other currencies agreed to by the applicable lenders. In connection with the amendment, the Company paid approximately $1.6 million in debt issuance costs in connection with the amended and restated secured revolving credit agreement in fiscal 2015. These newly-incurred debt issuance costs, together with certain existing unamortized debt issuance costs, are being amortized over the remaining term of the amended revolving credit facility (five years). The amended revolving credit facility matures September 16, 2020. As of January 2, 2016, the Company had approximately $184.4 million in outstanding borrowings under its secured revolving credit facility, exclusive of $7.7 million of outstanding letters of credit. As of January 2, 2016, there was approximately $307.9 million available for future borrowing. As of January 2, 2016, the interest rate margins applicable to the amended revolving credit facility were 1.375% for LIBOR (London Interbank Offered Rate) rate loans (which may be adjusted based on a leverage-based pricing grid ranging from 1.125% to 1.875%) and 0.375% for base rate loans (which may be adjusted based on a leverage-based pricing grid ranging from 0.125% to 0.875%). At January 2, 2016, U.S. dollar borrowings outstanding under the secured revolving credit facility accrued interest at a LIBOR rate plus the applicable base rate, which was 1.72% on that date, and Canadian borrowing outstanding accrued interest at a CDOR rate plus the applicable base rate, which was 2.23% on that date. Covenants Subject to certain customary exceptions, the amended revolving credit facility contains covenants that restrict the Company's ability to, among other things: (i) create or incur liens, debt, guarantees or other investments, (ii) engage in mergers and consolidations, (iii) pay dividends or other distributions to, and redemptions and repurchases from, equity holders, (iv) prepay, redeem or repurchase subordinated or junior debt, (v) amend organizational documents, and (vi) engage in certain transactions with affiliates. The amended revolving credit facility also contains affirmative financial covenants. Specifically, TWCC and its subsidiaries will not (i) permit at the end of any four consecutive fiscal quarters the Lease Adjusted Leverage Ratio (defined as, with certain adjustments, the ratio of the Company's consolidated indebtedness plus six times rent expense, as defined, to consolidated net income before interest, taxes, depreciation, amortization, and rent expense ("EBITDAR")) to exceed 4.00:1.00 (provided, however, that if any "Material Acquisition" occurs and the Lease Adjusted Leverage Ratio on a pro forma basis giving effect to the consummation of the Material Acquisition is less than 4.00:1.00, then the maximum Lease Adjusted Leverage Ratio may be increased to 4.50:1.00 for the fiscal quarter in which such Material Acquisition is consummated and the three fiscal quarters immediately following the fiscal quarter in which such Material Acquisition occurs) or (ii) permit at the end of any four consecutive fiscal quarters the Consolidated Fixed Charge Coverage Ratio (defined as, with certain adjustments, the ratio of consolidated EBITDAR to consolidated fixed charges (defined as interest plus rent expense)), for any such period to be less than 2.25:1.00 (provided, however, that if any Material Acquisition occurs and the Consolidated Fixed Charge Coverage Ratio on a pro forma basis giving effect to the consummation of the Material Acquisition is at least 2.25:1.00, then the minimum Consolidated Fixed Charge Coverage Ratio may be decreased to 2.00:1.00 for the fiscal quarter in which such Material Acquisition is consummated and the three fiscal quarters immediately following the fiscal quarter in which such Material Acquisition occurs). The amended revolving credit facility also provides that certain covenants fall away and that the liens over the collateral securing each of the Company and certain subsidiaries' collective obligations are released following, among other things, the achievement of, and during the maintenance of, investment grade ratings by Moody's Investor Services, Inc. and Standard & Poor's Ratings Services. The amended revolving credit facility also provides for incremental facilities in an aggregate amount not to exceed $250 million, either in the form of a commitment increase under the existing credit facility or the incurrence of one or more tranches of term loans (with the aggregate U.S. dollar amount available to the Company not to exceed $200 million and the aggregate multicurrency amount available not to exceed $50 million). As of January 2, 2016, the Company was in compliance with its financial debt covenants under the secured revolving credit facility. |
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Equity [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 Company's Board of Directors authorized entry into two fixed-dollar accelerated stock repurchase ("ASR") agreements totaling $400 million. Final settlement of the ASR agreements occurred in January 2014. As of final settlement, the Company had received a total of approximately 5.6 million shares, of which approximately one million million shares were received in January 2014. The total fair market value, at trade dates, of the shares was approximately $398.7 million. All shares received under the ASR agreements were retired upon receipt. The ASR agreements were treated as equity classified forward contracts indexed to the Company's own stock. During the fiscal year ended January 2, 2016, the Company repurchased, in open market transactions, and retired 1,154,288 shares with an average share price of $95.55 for an aggregate amount of $110.3 million. During the fiscal year ended January 3, 2015, the Company repurchased, in open market transactions, and retired 1,111,899 shares with an average share price of $73.84 for an aggregate amount of $82.1 million. The total remaining capacity under the repurchase authorizations as of January 2, 2016, was approximately $74.8 million. On February 24, 2016, the Company's Board of Directors authorized a new $500 million share repurchase program. The new share repurchase authorization permits the Company to repurchase shares of its common stock up to $500 million, in addition to the approximate $74.8 million remaining at January 2, 2016 under previous authorizations described above. Future share 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. The share repurchase authorizations have no expiration dates. DIVIDENDS In fiscal 2015 the Company's Board of Directors paid quarterly cash dividends of $0.22 per share during all four quarters. In fiscal 2014 the Company's Board of Directors paid quarterly cash dividends of $0.19 per share during all four quarters. On February 24, 2016, the Company's Board of Directors authorized a quarterly cash dividend payment of $0.33 per common share, payable on March 25, 2016 to shareholders of record at the close of business on March 11, 2016. Future declarations of dividends and the establishment of future record and payment dates are at the discretion of the Company's Board of Directors 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 Note 7, Long-Term Debt. |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Under the Company’s Amended and Restated Equity Incentive Plan (the "Plan"), the Compensation Committee of the Board of Directors may award incentive stock options, stock appreciation rights, restricted stock, unrestricted stock, stock deliverable on a deferred basis (including restricted stock units), and performance-based stock awards. At the Company's May 13, 2011 shareholders' meeting, the shareholders approved an amendment to the Plan to (i) increase the maximum number of shares of stock available under the existing Plan by 3,725,000 shares from 12,053,392 shares to 15,778,392 shares and (ii) eliminate the Company's ability to grant cash awards and provide tax gross-ups under the Plan. As of January 2, 2016, there were 2,041,526 shares available for grant under the Plan. The Plan makes provision for the treatment of awards upon termination of service or in the case of a merger or similar corporate transaction. Participation in the Plan is limited to members of the Company's board of directors, executive officers and other key employees. The limit on shares available under the Plan, the individual limits, and other award terms are subject to adjustment to reflect stock splits or stock dividends, combinations, and certain other events. All stock options issued under the Plan expire no later than ten years from the date of grant. The Company believes that the current level of authorized shares is sufficient to satisfy future option exercises. The Company recorded stock-based compensation cost as follows:
All stock-based compensation expense was reflected as a component of selling, general, and administrative expenses, where participants' other compensation expenses are also recorded. STOCK OPTIONS Stock options vest in equal annual installments over a four-year period. The Company issues new shares to satisfy stock option exercises. Changes in the Company's stock options for the fiscal year ended January 2, 2016 were as follows:
The intrinsic value of stock options exercised during the fiscal years ended January 2, 2016, January 3, 2015, and December 28, 2013 was approximately $13.2 million, $12.9 million, and $30.0 million, respectively. At January 2, 2016, there was approximately $6.7 million of unrecognized compensation cost (net of estimated forfeitures) related to stock options which is expected to be recognized over a weighted-average period of approximately 2.4 years. The table below presents the assumptions used to calculate the fair value of options granted in each of the respective fiscal years:
RESTRICTED STOCK AWARDS Restricted stock awards issued under the Plan vest based upon continued service (time-based) or performance (performance-based) targets. The following table summarizes activity related to all restricted stock awards during the fiscal year ended January 2, 2016:
During fiscal 2014, a total of 184,133 shares of restricted stock vested with a weighted-average fair value of $42.24 per share. During fiscal 2013, a total of 237,355 shares of restricted stock vested with a weighted-average fair value of $31.40 per share. At January 2, 2016, there was approximately $15.3 million of unrecognized compensation cost (net of estimated forfeitures) related to all restricted stock awards which is expected to be recognized over a weighted-average period of approximately 2.2 years. Time-based Restricted Stock Awards Time-based restricted stock awards vest in equal annual installments or cliff vest after a three- or four-year period. During fiscal years 2015, 2014, and 2013, a total of 148,396 shares, 184,133 shares, and 237,355 shares, respectively, of time-based restricted stock vested with a weighted-average fair value of $51.67 per share, $42.24 per share, and $31.40 per share, respectively. At January 2, 2016, there was approximately $10.9 million of unrecognized compensation cost (net of estimated forfeitures) related to time-based restricted stock which is expected to be recognized over a weighted-average period of approximately 2.4 years. Performance-based Restricted Stock Awards
During the fiscal year ended January 2, 2016, a total of 204,000 performance shares vested with a weighted-average fair value of $37.03 per share. As of January 2, 2016, a total of 198,400 performance shares were unvested with a weighted-average fair value of $67.66 per share. Vesting of these 198,400 performance shares is based on the performance targets for the shares granted in fiscal 2015, 2014, and 2013. As of January 2, 2016, there was approximately $4.4 million of unrecognized compensation cost (net of estimated forfeitures) related to the unvested performance-based restricted stock awards which is expected to be recognized over a weighted-average period of approximately 1.7 years. The Company estimates that all of the performance targets will be fully achieved and is recognizing compensation cost ratably over the applicable performance periods based on 100% estimated achievement. Stock Awards Included in restricted stock awards are grants to non-management members of the Company's Board of Directors. At issuance, these awards were fully vested and issued as shares of the Company's common stock. During fiscal years 2015, 2014, and 2013, such awards were as follows:
The Company received no proceeds from the issuance of these shares. |
EMPLOYEE BENEFIT PLANS |
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EMPLOYEE BENEFIT PLANS | EMPLOYEE BENEFIT PLANS The Company maintains a defined contribution plan, a deferred compensation 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 Funded Status The retirement benefits under the OshKosh B'Gosh pension plan were frozen as of December 31, 2005. A reconciliation of changes in the projected pension benefit obligation and plan assets is as follows:
The accumulated benefit obligation is equal to the projected benefit obligation as of January 2, 2016 and January 3, 2015 because the plan is frozen. The unfunded status is included in other long-term liabilities in the Company's consolidated balance sheet. The Company does not expect to make any contributions to the OshKosh B'Gosh pension plan during fiscal 2016 as the plan's funding exceeds the minimum funding requirements. The actuarial gain incurred in fiscal 2015 was primarily attributable to a higher discount rate. The actuarial loss incurred in fiscal year 2014 was primarily attributable to a lower discount rate, as well as changes in the mortality assumptions. Net Periodic Pension (Benefit) Cost The net periodic pension (benefit) cost included in the statement of operations was comprised of:
(a) Represents pre-tax amounts reclassified from accumulated other comprehensive loss. For fiscal 2016, approximately $0.6 million is expected to be reclassified from accumulated other comprehensive loss to a component of net periodic pension cost. Assumptions The actuarial computations utilized the following assumptions, using year-end measurement dates:
The discount rates used at January 2, 2016, January 3, 2015, and December 28, 2013 were determined with consideration given to the Citigroup Pension Discount and Liability Index and the Barclay Capital Aggregate AA Bond Index, adjusted for the timing of expected plan distributions. The Company believes these indexes reflect a risk-free rate consistent with a portfolio of high quality debt instruments with maturities that are comparable to the timing of the expected payments under the plan. The expected long-term rate of return assumption considers historic returns adjusted for changes in overall economic conditions that may affect future returns and a weighting of each investment class. A 0.25% change in the assumed discount rate would result in an increase or decrease in the amount of the pension plan's projected benefit obligation of approximately $2.2 million. The Company currently expects benefit payments for its defined benefit pension plans as follows for the next ten fiscal years;
Plan Assets The Company's investment strategy is to invest in a well-diversified portfolio consisting of approximately 10 mutual funds or group annuity contracts that minimize concentration of risks by utilizing a variety of asset types, fund strategies, and fund managers. The target allocation for plan assets is 40% equity securities, 50% bond funds, and 10% real estate investments. Based on actual returns over a long-term basis, the Company believes that a 6.0% annual return on plan assets can be achieved based on the current allocation and investment strategy. Equity securities primarily include funds invested in large-cap and mid-cap companies, primarily located in the U.S., with up to 5% of the plan assets invested in international equities. Fixed income securities include funds holding corporate bonds of companies from diverse industries, and U.S. Treasuries. Real estate funds include investments in actively managed mutual funds that invest in real estate. The fair value of the Company's pension plan assets at January 2, 2016 and January 3, 2015, by asset category, were as follows:
(a) This category comprises low-cost equity index funds not actively managed that track the Standard & Poor's 500 Index. (b) This category invests in both U.S. Treasuries and mid-term corporate debt from U.S. issuers from diverse industries. (c) This category represents an investment in a mutual fund that invests primarily in real estate securities, including common stocks, preferred stock and other equity securities issued by real estate companies. POST-RETIREMENT LIFE AND MEDICAL PLAN Under a defined benefit plan frozen in 1991, the Company offers a comprehensive post-retirement medical plan to current and certain future retirees and their spouses. The Company also offers life insurance to current and certain future retirees. Employee contributions are required as a condition of participation for both medical benefits and life insurance and the Company's liabilities are net of these expected employee contributions. Accumulated Post-Retirement Benefit Obligation The following is a reconciliation of the accumulated post-retirement benefit obligation ("APBO") under this plan:
Approximately $4.3 million and $4.7 million of the APBO at the end of fiscal 2015 and 2014, respectively, were classified as other long term liabilities in the Company's consolidated balance sheets. Net Periodic Post-Retirement Benefit (Benefit) Cost The components of post-retirement benefit expense charged to the statement of operations were as follows:
(a) Represents pre-tax amounts reclassified from accumulated other comprehensive loss. For fiscal 2016, approximately $0.2 million is expected to be reclassified from accumulated other comprehensive loss as a credit to periodic net periodic pension cost. Curtailment In fiscal 2014 and 2013, a curtailment gain was recognized as a result of the Company's facility closures, which decreased the number of employees eligible for retiree medical benefits. Assumptions The actuarial computations utilized the following assumptions, using year-end measurement dates:
The discount rates used at January 2, 2016, January 3, 2015, and December 28, 2013, were determined with primary consideration given to the Citigroup Pension Discount and Liability Index adjusted for the timing of expected plan distributions. The Company believes this index reflects a risk-free rate with maturities that are comparable to the timing of the expected payments under the plan. The effects on the Company's plan of all future increases in health care costs are borne primarily by employees; accordingly, increasing medical costs are not expected to have any material effect on the Company's future financial results. The Company's contribution for these post-retirement benefit obligations was approximately $0.4 million in fiscal 2015, and $0.5 million in both of the fiscal years 2014 and 2013. The Company expects that its contribution and benefit payments for post-retirement benefit obligations will be approximately $0.4 million for each fiscal year between 2016 and 2020. For the five years subsequent to fiscal 2020, the aggregate contributions and benefit payments for post-retirement benefit obligations is expected to be approximately $1.6 million. The Company does not pre-fund this plan and as a result there are no plan assets. The measurement date used to determine the post-retirement benefit obligations is as of the end of the fiscal year. DEFERRED COMPENSATION PLAN The Company maintains a deferred compensation plan allowing voluntary salary and incentive compensation deferrals for qualifying employees as permitted by the Internal Revenue Code. Participant deferrals earn investment returns based on a select number of investment options, including equity, debt, and real estate mutual funds. The Company invests comparable amounts in marketable securities to mitigate the risk associated with the investment return on the employee deferrals. DEFINED CONTRIBUTION PLAN The Company also sponsors defined contribution savings plans within the U.S. and Canada. The U.S. plan covers employees who are at least 21 years of age and have completed three months of service, during which at least 250 hours were served. The plan provides for a discretionary employer match. The Company's expense for the U.S. defined contribution savings plan totaled approximately $12.2 million, $10.5 million, and $8.5 million for the fiscal years ended January 2, 2016, January 3, 2015, and December 28, 2013, respectively. Expenses related to the Canadian defined contribution savings plan were not material. |
INCOME TAXES |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net deferred tax liability [Table Text Block] | The net deferred tax liability was classified on the Company's consolidated balance sheets as follows:
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INCOME TAXES | INCOME TAXES PROVISION FOR INCOME TAXES The provision for income taxes consisted of the following:
The foreign portion of the tax position substantially relates to Canadian, Hong Kong and China income taxes on the Company's international operations and foreign tax withholdings related to the Company's foreign royalty income. The components of income before income taxes were as follows:
EFFECTIVE RATE RECONCILIATION The difference between the Company's effective income tax rate and the federal statutory tax rate is reconciled below:
The Company and its subsidiaries file a consolidated U.S. federal income tax return, as well as separate and combined income tax returns in numerous state and foreign jurisdictions. The Internal Revenue Service completed an income tax audit for fiscal 2011- 2013 in the first quarter of 2015. As a result of the settlement of this audit and on ongoing state income tax audit, the Company recognized prior-year income tax benefits of approximately $1.8 million in the first quarter of 2015. The federal statute of limitations for fiscal 2010 closed during the third quarter of 2014. In most cases, the Company is no longer subject to state and local tax authority examinations for years prior to fiscal 2011. DEFERRED TAXES Components of deferred tax assets and liabilities were as follows:
The net deferred tax liability was classified on the Company's consolidated balance sheets as follows:
The Company has not provided deferred taxes on undistributed earnings from its foreign subsidiaries, as the Company anticipates that these earnings will be reinvested indefinitely. Undistributed earnings from the Company's foreign subsidiaries at January 2, 2016 amounted to approximately $89.7 million. These earnings have been reinvested in foreign operations and the Company does not currently plan to initiate any action that would result in these earnings being repatriated to the U.S. Because of the availability of foreign tax credits, it is not practicable to determine the U.S. federal income tax liability that would be payable if such earnings were not reinvested indefinitely. UNCERTAIN TAX POSITIONS The following is a reconciliation of the beginning and ending amount of unrecognized tax benefits:
As of January 2, 2016, the Company had gross unrecognized tax benefits of approximately $9.4 million, of which $6.5 million, if ultimately recognized, will affect the Company's effective tax rate in the period 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. Because of deferred tax accounting, changes in the timing of these deductions would not affect the annual effective tax rate, but would accelerate the payment of cash to the taxing authorities. Included in the reserves for unrecognized tax benefits are approximately $1.2 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 2016 and 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 penalties related to unrecognized tax benefits as a component of income tax expense. During fiscal 2015, 2014, and 2013, interest expense recorded on uncertain tax positions was not significant. The Company had approximately $0.8 million and $0.9 million of interest accrued on uncertain tax positions as of January 2, 2016 and January 3, 2015, respectively. |
EARNINGS PER SHARE |
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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:
(1) The volume of antidilutive shares is, in part, due to the related unamortized compensation costs. In connection with the 2013 ASR agreements discussed in Note 8, Common Stock, the Company received one million additional shares in January 2014 for a total of approximately 5.6 million shares during fiscal 2014 and 2013 under the ASR program. The shares were retired upon receipt and, accordingly, reduced the Company's weighted average shares outstanding for purposes of the calculation of earnings per share. The Company evaluated the ASR agreements for their potential dilution of earnings per share and determined, for all periods impacted by the ASR agreements, that the Company would not have been required to deliver additional shares to JPMorgan based on the volume-weighted average prices calculated for all impacted periods. The Company determined that these shares would have had an anti-dilutive effect and excluded these shares from the diluted earnings per share calculation for all periods. |
SEGMENT INFORMATION |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT INFORMATION | SEGMENT INFORMATION The Company reports segment information based upon a "management approach." The management approach refers to the internal reporting that is used by management for making operating decisions and assessing the performance of the Company's reportable segments. The Company reports its corporate expenses separately as they are not included in the internal measures of segment operating performance used by the Company to measure the underlying performance of its reportable segments. Segment results include the direct costs of each segment and all other costs are allocated based upon detailed estimates and analysis of actual time and expenses incurred to support the operations of each segment or units produced or sourced to support each segment's revenue. Certain costs, including incentive compensation for certain employees, and various other general corporate costs that are not specifically allocable to segments, are included in corporate expenses below. Intersegment sales and transfers are recorded at cost and are treated as a transfer of inventory. The accounting policies of the segments are the same as those described in Note 2, Summary of Significant Accounting Policies. The Company's reportable segments are Carter's Wholesale, Carter’s Retail, OshKosh Retail, OshKosh Wholesale, and International. The table below presents certain segment information for the periods indicated:
(e) Includes the following charges:
(1) Continuing operating costs associated with the closure of the Company's distribution facility in Hogansville, Georgia. ADDITIONAL DATA BY SEGMENT Inventory The table below represents inventory by segment:
Wholesale inventories include inventory produced and warehoused for the retail segment. The table below represents consolidated net sales by product:
(a) Other product offerings include bedding, outwear, swimwear, shoes, socks, diaper bags, gift sets, toys, and hair accessories. GEOGRAPHICAL DATA Revenue The Company's international sales principally represent sales to customers in Canada. Such sales were 65.6% and 67.9% of total international sales in fiscal 2015 and 2014, respectively. Long-Lived Assets The following represents property, plant, and equipment, net, by geographic area:
Long-lived assets in the international segment relate principally to Canada. Long-lived assets in Canada were 89.5% and 98.1% of total international long-lived assets at the end of fiscal 2015 and 2014, respectively. |
FAIR VALUE MEASUREMENTS |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Intercompany Foreign Currency Balances [Table Text Block] | FOREIGN CURRENCY CONTRACTS Fair values for unsettled foreign exchange forward contracts are calculated by using readily observable market inputs (market-quoted currency exchange rates in effect between U.S. and Canadian dollars), classified as Level 2 within the fair value hierarchy, and included in other current assets or other current liabilities on the Company's consolidated balance sheet. At January 2, 2016, the notional value of the open foreign currency forward contracts was approximately $59.0 million. During fiscal 2015, the Company recorded unrealized gains of approximately $2.1 million related to the mark-to-market adjustments. The Company recorded realized gains of approximately $3.1 million for contracts settled. These amounts are included in other (income) expense, net on the Company's consolidated statement of operations. During fiscal 2014 and fiscal 2013, the Company did not utilize foreign exchange contracts. |
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Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block] | 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 purchased are included in other assets on the accompanying consolidated balance sheets. Gains on the mark to market of marketable securities were not material for fiscal 2015, and were $0.4 million for fiscal 2014. The fair value of the Company's pension plan assets at January 2, 2016 and January 3, 2015, by asset category, are disclosed in Note 10, Employee Benefits Plans, to these consolidated financial statements. |
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FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The following table summarizes assets and liabilities measured at fair value on a recurring basis:
(1) Included in Prepaid expenses and other current assets in the Company's consolidated balance sheet. 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 purchased are included in other assets on the accompanying consolidated balance sheets. Gains on the mark to market of marketable securities were not material for fiscal 2015, and were $0.4 million for fiscal 2014. The fair value of the Company's pension plan assets at January 2, 2016 and January 3, 2015, by asset category, are disclosed in Note 10, Employee Benefits Plans, to these consolidated financial statements. FOREIGN CURRENCY CONTRACTS Fair values for unsettled foreign exchange forward contracts are calculated by using readily observable market inputs (market-quoted currency exchange rates in effect between U.S. and Canadian dollars), classified as Level 2 within the fair value hierarchy, and included in other current assets or other current liabilities on the Company's consolidated balance sheet. At January 2, 2016, the notional value of the open foreign currency forward contracts was approximately $59.0 million. During fiscal 2015, the Company recorded unrealized gains of approximately $2.1 million related to the mark-to-market adjustments. The Company recorded realized gains of approximately $3.1 million for contracts settled. These amounts are included in other (income) expense, net on the Company's consolidated statement of operations. During fiscal 2014 and fiscal 2013, the Company did not utilize foreign exchange contracts. CONTINGENT CONSIDERATION RELATED TO BONNIE TOGS ACQUISITION At January 2, 2016, the Company had no remaining contingent consideration liability related to the 2011 Bonnie Togs acquisition in Canada. The following summarizes the significant unobservable inputs for the Company's Level 3 fair value measurements at December January 3, 2015:
BORROWINGS As of January 2, 2016, the Level 2 fair value of the Company's $184 million in borrowings under its secured revolving credit facility approximated carrying value. The fair value of the Company's $400 million senior notes was estimated by obtaining market quotes given the trading 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 January 2, 2016 was approximately $409 million. |
OTHER CURRENT AND LONG-TERM LIABILITIES |
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Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER CURRENT AND LONG-TERM LIABILITIES | OTHER CURRENT AND LONG-TERM LIABILITIES Other current liabilities that exceeded five percent of total current liabilities (at the end of either fiscal year) consisted of the following:
Other long-term liabilities that exceeded five percent of total liabilities (at the end of either fiscal year) consisted of the following:
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FACILITY CLOSURE |
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FACILITY CLOSURE | FACILITY CLOSURE HOGANSVILLE DISTRIBUTION FACILITY In 2012, the Company announced its plan to close its Hogansville, Georgia distribution facility. In connection with this plan, the Company recorded approximately $1.9 million in closing-related charges in selling, general, and administrative expenses for fiscal 2013. There were no additional closing-related charges recorded for the fiscal 2015 and 2014. There was no ending liability amount as of January 2, 2016. The Hogansville facility was sold in the fourth quarter of 2014 for an amount that approximated carrying value. OFFICE CONSOLIDATION In 2013 and 2014, the Company consolidated its Shelton, Connecticut and Atlanta, Georgia offices, as well as certain functions from our other offices, into a new headquarters facility in Atlanta, Georgia. The Company recorded approximately $6.6 million, and $33.3 million in closing-related costs in fiscal 2014 and 2013, respectively, in connection with this plan. There were no closing-related costs recorded in fiscal 2015 in connection with this plan, and no additional costs are expected to be incurred in the future. For fiscal year 2014 and 2013, the total amount of charges was included in selling, general, and administrative expenses and consisted of the following:
The following table summarizes the restructuring reserves related to the office consolidation as of January 2, 2016:
The severance reserve is included in other current liabilities and other closure costs are included in other long-term liabilities in the Company's consolidated balance sheets. The Company has completed its office consolidation efforts. The severance accrual is expected to be fully paid during fiscal 2016. Other closure costs relate to an ongoing lease liability for the closed office in Shelton, Connecticut. JAPAN RETAIL OPERATIONS In 2013, the Company made the decision to exit retail operations in Japan based on revised forecasts which did not meet the Company's investment objectives. The Company recorded approximately $1.5 million and $4.1 million in closing related costs for the fiscal years 2014 and 2013, respectively. There were no related costs to the exit of Japan operations recorded in fiscal 2015, and no additional related costs are expected in the future. |
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Restructuring and Related Costs [Table Text Block] | he total amount of charges was included in selling, general, and administrative expenses and consisted of the following:
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LEASE COMMITMENTS |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||
LEASE COMMITMENTS | LEASE COMMITMENTS Rent expense under operating leases (including properties and computer and office equipment) was approximately $136.6 million, $123.6 million, and $117.3 million for the fiscal years ended January 2, 2016, January 3, 2015, and December 28, 2013, respectively. Minimum annual rental commitments under current noncancellable operating leases, as of January 2, 2016, substantially all of which relate to leased real estate, were as follows:
Amounts related to property include leases on retail stores as well as various corporate offices, distribution facilities, and other premises. The majority of the Company's lease terms range between 5 and 10 years. |
COMMITMENTS AND CONTINGENCIES |
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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 effect on its financial position, results of operations, or cash flows. The Company's contractual obligations and commitments also include obligations associated with leases, the secured revolving credit agreement, senior notes, employee benefit plans, and facility consolidations/closures as disclosed elsewhere in the notes to the consolidated financial statements. |
VALUATION AND QUALIFYING ACCOUNTS |
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VALUATION AND QUALIFYING ACCOUNTS | VALUATION AND QUALIFYING ACCOUNTS Information regarding accounts receivable is as follows:
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UNAUDITED QUARTERLY FINANCIAL DATA |
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UNAUDITED QUARTERLY FINANCIAL DATA | UNAUDITED QUARTERLY FINANCIAL DATA The unaudited summarized financial data by quarter for the fiscal years ended January 2, 2016 and January 3, 2015 is presented in the table below:
(1) May not be additive to the net income per common share amounts for the fiscal year due to the calculation provision of ASC 260, Earnings Per Share. (2) The fourth quarter of fiscal 2014 contained 14 weeks instead of the typical 13 weeks for each quarter in a fiscal year that contains 52 weeks. |
GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS |
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Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS | GUARANTOR 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 Parent's current domestic subsidiaries (other than TWCC), and, subject to certain exceptions, future restricted subsidiaries that guarantee the Company’s amended revolving credit facility or certain other debt of the Company or the subsidiary guarantors. Under specific customary conditions, the guarantees are not full and unconditional because subsidiary guarantors can be released and relieved of their obligations under customary circumstances contained in the indenture governing the senior notes. These circumstances include among others the following, so long as other applicable provisions of the indentures are adhered to: any sale or other disposition of all or substantially all of the assets of any subsidiary guarantor, any sale or other disposition of capital stock of any subsidiary guarantor, or designation of any restricted subsidiary that is a subsidiary guarantor as an unrestricted subsidiary. The 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 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. In 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 includes 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. In December 2015, as part of a foreign subsidiary restructuring, certain non-guarantor subsidiaries became subsidiaries of certain other non-guarantor subsidiaries. The restructuring did not retroactively impact the prior status of the guarantor and the non-guarantor subsidiaries, and accordingly the condensed consolidating financial information for periods prior to the restructuring have not been adjusted to reflect the restructuring. CARTER’S, INC. Condensed Consolidating Balance Sheet As of January 2, 2016 (dollars in thousands)
CARTER’S, INC. Condensed Consolidating Balance Sheet As of January 3, 2015 (dollars in thousands)
Condensed Consolidating Statement of Operations For the year end January 2, 2016 (dollars in thousands)
CARTER’S, INC. Condensed Consolidating Statement of Operations For the year end January 3, 2015 (dollars in thousands)
CARTER’S, INC. Condensed Consolidating Statement of Operations For the year end December 28, 2013 (dollars in thousands)
Condensed Consolidating Statements of Comprehensive Income (Loss) For the year end January 2, 2016 (dollars in thousands)
For the year end January 3, 2015 (dollars in thousands)
For the year end December 28, 2013 (dollars in thousands)
Condensed Consolidating Statement of Cash Flows For the year end January 2, 2016 (dollars in thousands)
CARTER’S, INC. Condensed Consolidating Statement of Cash Flows For the year end January 3, 2015 (dollars in thousands)
CARTER’S, INC. Condensed Consolidating Statement of Cash Flows For the year end December 28, 2013 (dollars in thousands)
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Accounting Policies [Abstract] | |||||||||||
PRINCIPLES OF CONSOLIDATION | PRINCIPLES OF CONSOLIDATION The accompanying audited consolidated financial statements include the accounts of Carter's, Inc. and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. |
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FISCAL YEAR | FISCAL YEAR 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. Fiscal 2015, which ended on January 2, 2016, contained 52 weeks. Fiscal 2014, which ended on January 3, 2015, contained 53 weeks. Fiscal 2013, which ended on December 28, 2013, contained 52 weeks. |
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USE OF ESTIMATES IN THE PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS | USE OF ESTIMATES IN THE PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS The preparation of these consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
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FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS | FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS Translation adjustments The functional currency of substantially all of the Company's foreign operations is the local currency. Assets and liabilities are translated into U.S. dollars using the current exchange rates in effect at the balance sheet date, while revenues and expenses are translated at the average exchange rates for the period. The resulting translation adjustments are recorded as a component of accumulated other comprehensive income (loss) within the accompanying audited consolidated balance sheet. Transaction adjustments The Company also recognizes gains and losses on transactions that are denominated in a currency other than the respective entity's functional currency. Foreign currency transaction gains and losses also include intercompany loans with foreign subsidiaries that are of a short-term investment nature. Foreign currency transaction gains and losses are recognized in earnings, as a separate component of other expense, net, within the audited consolidated statements of operations. Foreign Currency Contracts As part of the Company's overall strategy to manage the level of exposure to the risk of foreign currency exchange rate fluctuations, primarily between the U.S. dollar and Canadian dollar, the Company's Canadian subsidiary may use foreign currency forward contracts to hedge purchases that are made in U.S. dollars, primarily for inventory purchases. As part of this hedging strategy, the Company uses foreign currency forward exchange contracts that have maturities of less than 12 months to provide continuing coverage throughout the hedging period. As currently designed, the Company's contracts are not designated for hedge accounting treatment, and therefore changes in the fair value of these contracts are recorded in other (income) expense, net in the Company's consolidated statement of operations. Such foreign currency gains and losses include the mark-to-market fair value adjustments at the end of each reporting period related to open contracts, as well as any realized gains and losses on contracts settled during the reporting period. The fair values of unsettled currency contracts are included in other current assets or other current liabilities on the Company's consolidated balance sheet. On the consolidated statement of cash flows, the Company includes all activity, including cash settlement of the contracts, as a component of cash flows from operations. |
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CASH AND CASH EQUIVALENTS | CASH AND CASH EQUIVALENTS The Company considers all highly liquid investments that have original maturities of three months or less to be cash equivalents. Cash and cash equivalents consist of deposit accounts and cash management funds invested in U.S. government instruments. These investments are stated at cost, which approximates fair value. Concentration of cash deposits risk As of January 2, 2016, the Company had approximately $381.2 million of cash and cash equivalents in major financial institutions, including approximately $40.8 million in financial institutions located outside of the U.S. The Company maintains cash deposits with major financial institutions that exceed the insurance coverage limits provided by the Federal Deposit Insurance Corporation in the U.S. and by similar insurers for deposits located outside the U.S. To mitigate this risk, the Company utilizes a policy of allocating cash deposits among major financial institutions that have been evaluated by the Company and third-party rating agencies. |
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ACCOUNTS RECEIVABLE | Allowance for doubtful accounts The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make payments and other estimated deductions. If the financial condition of a customer were to deteriorate, resulting in an impairment of its ability to make payments, an additional allowance could be required. Past due balances over 90 days are reviewed individually for collectibility. The Company's credit and collections department reviews all other balances regularly. Account balances are charged off against the allowance when it is probable that the receivable will not be recovered. The Company also records reserves for potential returns based on historical experience. ACCOUNTS RECEIVABLE Concentration of credit risk In each of fiscal 2015, 2014, and 2013, no one customer accounted for 10% or more of the Company's consolidated net sales. At January 2, 2016, five customers each had individual receivable balances in excess of 10% of gross accounts receivable, and the total receivable balances due from these five customers in the aggregate equaled approximately 60% of total gross accounts receivable outstanding. At January 3, 2015, five customers each had individual receivable balances in excess of 10% of gross accounts receivable, and the total receivable balances due from these five customers in the aggregate equaled approximately 59% of total gross accounts receivable outstanding. |
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INVENTORIES | INVENTORIES Inventories, which consist primarily of finished goods, are stated at the lower of cost (first-in, first-out basis for wholesale inventory and average cost for retail inventories) or market. The Company adjusts for slow-moving inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. The Company also adjusts its inventory to reflect estimated shrinkage based on historical trends. |
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PROPERTY, PLANT, AND EQUIPMENT | PROPERTY, PLANT, AND EQUIPMENT Property, plant, and equipment are stated at cost, less accumulated depreciation and amortization. When fixed assets are sold or otherwise disposed of, the accounts are relieved of the original cost of the assets and the related accumulated depreciation or amortization and any resulting profit or loss is credited or charged to income. For financial reporting purposes, depreciation and amortization are computed on the straight-line method over the estimated useful lives of the assets as follows: buildings and improvements from 15 to 26 years, retail store fixtures, equipment, and computers from 3 to 10 years, and computer software from 3 to 7 years. Leasehold improvements and fixed assets purchased under capital lease are amortized over the lesser of the asset life or related lease term. The Company capitalizes the cost of its fixtures designed and purchased for use at major wholesale accounts. The cost of these fixtures is amortized over 3 years. |
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VALUATION OF GOODWILL AND OTHER INTANGIBILE ASSETS | GOODWILL AND OTHER INTANGIBLE ASSETS The Company's goodwill balance is comprised of amounts related to the acquisition of Carter's, Inc. by a predecessor company and the acquisition of Bonnie Togs. The goodwill balances have indefinite useful lives and are not deductible for income tax purposes. The Company's other intangible assets are comprised of tradenames and non-compete agreements. The tradenames include Carter's, OshKosh, Carter's Watch the Wear, H.W. Carter & Sons, and the Carter's tradename in the country of Chile. The Carter's and OshKosh tradenames have indefinite useful lives. The Carter's Watch the Wear and H.W. Carter & Sons have definite lives and are being amortized on an accelerated basis over three years. The Carter's tradename in Chile has a definite life and is being amortized over a period of 20 years. Annual impairment reviews The carrying values of the goodwill and indefinite-lived tradename assets are subject to annual impairment reviews which are performed as of the last day of each fiscal year. Additionally, a review for potential impairment is performed whenever significant events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Significant assumptions in the impairment models include estimates of future cash flows, discount rates, and, in the case of tradenames, royalty rates. Based upon the Company's most recent assessment, performed as of January 2, 2016, there were no impairments in the values of goodwill or indefinite-lived tradename assets and no reporting units were at risk of an impairment. Goodwill The Company performs impairment tests of its goodwill at the reporting unit level. Both qualitative and quantitative methods may be used to assess for impairment, including the use of discounted cash flows ("income approach") and relevant data from guideline public companies ("market approach"). Under a qualitative assessment, the Company determines if it is "more likely than not" that the fair value of the reporting unit is less than its carrying value. Qualitative factors may include, but are not limited to: macroeconomic conditions, industry and market considerations, cost factors that may have a negative effect on earnings, overall financial performance, and other relevant entity-specific events. If the Company determines that it is "more likely than not" that the fair value of the reporting unit is less than its carrying value, then the Company performs the two-step goodwill impairment test as required. If it is determined that it is "not likely" that the fair value of the reporting unit is less than its carrying value, then no further testing is required and the Company documents the relevant qualitative factors that support the strength in the fair value. The first step of a quantitative assessment is to compare the fair value of the reporting unit to its carrying value, including goodwill. The Company uses a discounted cash flow model to determine the fair value, using assumptions consistent with those of hypothetical marketplace participants. If the fair value of a reporting unit is less than its carrying value, the second step of the impairment test must be performed. The second step compares the implied fair value of the reporting unit goodwill with the carrying value of that goodwill, in order to determine the amount of the impairment loss and charge to the consolidated statement of operations. Indefinite-lived tradenames For indefinite-lived tradenames, the Company may utilize a qualitative assessment, as described above, to determine whether the fair value of an indefinite-lived asset is less than its carrying value. If a quantitative assessment is necessary, the Company determines fair value using a discounted cash flow model that uses the relief-from-royalty method. If the carrying amount exceeds the fair value of the tradename, an impairment charge is recognized in the amount of the excess. |
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IMPAIRMENT OF OTHER LONG-LIVED ASSETS | IMPAIRMENT OF OTHER LONG-LIVED ASSETS The Company reviews other long-lived assets, including property, plant, and equipment, and licensing agreements, for impairment whenever events or changes in circumstances indicate that the carrying amount of such an asset may not be recoverable. Management will determine whether there has been a permanent impairment on such assets held for use in the business by comparing anticipated undiscounted future cash flows from the use and eventual disposition of the asset or asset group to the carrying value of the asset. The amount of any resulting impairment will be calculated by comparing the carrying value to fair value, which may be estimated using the present value of the same cash flows. Long-lived assets that meet the definition of held for sale will be valued at the lower of carrying amount or fair value, less costs to sell. |
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DEFERRED DEBT ISSUANCE COSTS | DEFERRED DEBT ISSUANCE COSTS Debt issuance costs associated with the Company's secured revolving credit facility and senior notes are deferred and amortized to interest expense over the term of the related debt using the effective interest method. |
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FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The fair value framework requires the Company to categorize certain assets and liabilities into three levels, based upon the assumptions used to price those assets or liabilities. The three levels are defined as follows:
The Company measures its pension assets, deferred compensation plan investment assets, unsettled foreign currency forward contracts, and contingent consideration liability for acquisitions (if any) at fair value, as disclosed in the accompanying notes to the consolidated financial statements. The Company's cash and cash equivalents, accounts receivable, and accounts payable are short-term in nature. As such, their carrying value approximates fair value. The carrying values of the Company’s outstanding borrowings are not required to be remeasured and adjusted to the then-current fair values at the end of each reporting period. Instead, the fair values of the Company's outstanding borrowings are disclosed at the end of each reporting period in Note 7, Long-Term Debt, to the accompanying consolidated financial statements. Had the Company been required to remeasure and adjust the carrying values of its outstanding borrowings to fair value at the end of each reporting period, such fair value measurements would have been disclosed as a Level 2 liability in the fair value hierarchy. |
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REVENUE RECOGNITION | REVENUE RECOGNITION Revenues consist of sales to customers, net of returns, accommodations, allowances, deductions, and cooperative advertising. The Company considers revenue realized or realizable and earned when the product has been shipped, when title passes, when all risks and rewards of ownership have transferred, the sales price is fixed or determinable, and collectibility is reasonably assured. In certain cases, in which the Company retains the risk of loss during shipment, revenue recognition does not occur until the goods have reached the specified customer. In the normal course of business, the Company grants certain accommodations and allowances to its wholesale customers in order to assist these customers with inventory clearance and promotions. Such amounts are reflected as a reduction of net sales and are recorded based on agreements with customers, historical trends, and annual forecasts. The Company records its cooperative advertising arrangements with certain of its major wholesale customers at fair value. Fair value is determined based upon, among other factors, comparable market analysis for similar advertisements. The Company has included the fair value of these arrangements of approximately $3.9 million for each of the fiscal years 2015, 2014, and 2013, as a component of selling, general, and administrative expenses on the accompanying consolidated statements of operations, rather than as a reduction of net sales. Amounts determined to be in excess of the fair value of these arrangements are recorded as a reduction of net sales. Retail store revenues are recognized at the point of sale. The Company reduces revenue for estimated customer returns and deductions. |
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ACCOUNTING FOR SHIPPING AND HANDLING FEES AND COSTS | ACCOUNTING FOR SHIPPING AND HANDLING FEES AND COSTS Shipping and handling costs include related labor costs, third-party shipping costs, shipping supplies, and certain distribution overhead. Such costs are absorbed by the Company and are included in selling, general, and administrative expenses. These costs amounted to approximately $67.2 million, $72.1 million, and $59.1 million for fiscal 2015, 2014, and 2013, respectively. With respect to the freight component of the Company's shipping and handling costs, certain customers arrange for shipping and pay the related freight costs directly to third parties. However, in the event that the Company arranges and pays the freight for these customers and bills them for this service, such amounts billed are included in revenue and the related cost is charged to cost of goods sold. In addition, shipping and handling costs billed to the Company's eCommerce customers are included in revenue and the related cost is charged to cost of goods sold. Amounts billed to customers for such costs were approximately $11.0 million, $12.3 million, and $12.1 million for fiscal years 2015, 2014, and 2013, respectively. |
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ROYALTIES AND LICENSE FEES | ROYALTIES AND LICENSE FEES The Company licenses the Carter's, Just One You, Precious Firsts, Child of Mine, OshKosh B'gosh, OshKosh, and Genuine Kids from OshKosh trademarks to other companies for use on baby and young children's products, including bedding, outerwear, sleepwear, shoes, underwear, socks, room décor, toys, stationery, hair accessories, furniture, and related products. These royalties are recorded as earned, based upon the sales of licensed products by licensees and reported as royalty income in the statements of operations. |
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STOCK-BASED COMPENSATION ARRANGEMENTS | STOCK-BASED COMPENSATION ARRANGEMENTS The Company recognizes the cost resulting from all stock-based payment transactions in the financial statements at grant date fair value. Stock-based compensation expense is recognized over the requisite service period, net of estimated forfeitures. Stock Options The Company determines the fair value of stock options using the Black-Scholes option pricing model, which requires the use of the following subjective assumptions: Volatility - This is a measure of the amount by which a stock price has fluctuated or is expected to fluctuate. The Company uses actual monthly historical changes in the market value of its stock covering the expected life of options being valued. An increase in the expected volatility will increase the fair value of the stock option and related compensation expense. Risk-free interest rate - This is the U.S. Treasury rate as of the grant date having a term equal to the expected term of the stock option. An increase in the risk-free interest rate will increase the fair value of the stock option and related compensation expense. Expected term - This is the period of time over which the stock options granted are expected to remain outstanding and is based on historical experience and estimated future exercise behavior. Separate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. An increase in the expected term will increase the fair value of the stock option and the related compensation expense. Dividend yield - The Company estimates a dividend yield based on the current dividend amount as a percentage of the current stock price. An increase in the dividend yield will decrease the fair value of the stock option and the related compensation expenses. Forfeitures - The Company estimates forfeitures of stock-based awards based on historical experience and expected future activity. Changes in these subjective assumptions can materially affect the estimate of fair value of stock-based compensation expense and the related amount recognized in the audited consolidated statements of operations. Time-Based Restricted Stock Awards The fair value of time-based restricted stock awards is determined based on the quoted closing price of the Company's common stock on the date of grant and is recognized as compensation expense over the vesting term of the awards, net of estimated forfeitures. Performance-Based Restricted Stock Awards The Company accounts for its performance-based restricted stock awards based on the quoted closing price of the Company's common stock on the date of grant and records stock-based compensation expense over the vesting term of the awards based on the probability that the performance criteria will be achieved. The Company reassesses the probability of vesting at each reporting period and prospectively adjusts stock-based compensation expense based on its probability assessment. Stock Awards The fair value of stock granted to non-management board members is determined based on the quoted closing price of the Company's common stock on the date of grant. The Company records the stock-based compensation expense immediately as there are no vesting terms. |
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INCOME TAXES | INCOME TAXES The accompanying consolidated financial statements reflect current and deferred tax provisions. The deferred tax provision is determined under the liability method. Deferred tax assets and liabilities are recognized based on differences between the book and tax bases of assets and liabilities using presently enacted tax rates. Valuation allowances are established when it is "more likely than not" that a deferred tax asset will not be recovered. The provision for income taxes is the sum of the amount of income taxes paid or payable for the year as determined by applying the provisions of enacted tax laws to the taxable income for that year, the net change during the year in deferred tax assets and liabilities, and the net change during the year in any valuation allowances. The Company assesses its income tax positions and records tax benefits for all years subject to examination based upon management's evaluation of the facts, circumstances, and information available at the reporting dates. The Company determines whether it is "more likely than not" that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded in the financial statements. For those tax positions where it is not "more likely than not" that a tax benefit will be sustained, no tax benefit is recognized. Where applicable, associated interest and penalties are also recorded. Interest is recorded as a component of interest expense and penalties, if any, are recorded within the provision for incomes taxes in the consolidated statements of operations and are classified on the consolidated balance sheets with the related liability for uncertain tax contingency liabilities. |
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EARNINGS PER SHARE | EARNINGS PER SHARE The Company calculates basic and diluted net income per common share under the two-class method for unvested share-based payment awards that contain participating rights to dividends or dividend equivalents (whether paid or unpaid). Basic net income per share is calculated by dividing net income for the period by the weighted-average common shares outstanding for the period. Diluted net income per share includes the effect of dilutive instruments and uses the average share price for the period in determining the number of shares that are to be added to the weighted-average number of shares outstanding. |
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EMPLOYEE BENEFIT PLANS | EMPLOYEE BENEFIT PLANS The Company has several defined benefit plans. Various actuarial methods and assumptions are used in determining net pension and post-retirement costs and obligations. Key assumptions include the discount rate used to determine the present value of future benefits and the expected long-term rate of return on plan assets. The over-funded or under-funded status of the defined benefit plans is recorded as an asset or liability on the consolidated balance sheet. The gains or losses that arise during the period are recognized as a component of comprehensive income, net of tax. These costs are then subsequently recognized as components of net periodic benefit cost in the consolidated statements of operations. |
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FACILITY CLOSURE AND OFFICE CONSOLIDATION | FACILITY CLOSURE AND OFFICE CONSOLIDATION The Company records severance costs when the appropriate notifications have been made to affected employees or when the decision is made, if the benefits are contractual. When employees are required to work for a period before termination, the severance costs are recognized over the required service period. Relocation and recruitment costs are expensed as incurred. For operating leases, lease termination costs are recognized at fair value at the date the Company ceases to use the leased property, and adjusted for the effects of deferred items recognized under the lease and reduced by estimated sub-lease rental income. Useful lives assigned to fixed assets at the facility to be closed are revised based on the specifics of the exit plan, resulting in accelerated depreciation expense. |
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LEASES AND DEFERRED RENT | LEASES AND DEFERRED RENT The Company enters into a significant number of lease transactions related to properties for its retail stores in addition to leases for offices, distribution facilities, and other uses. The lease agreements may contain provisions related to allowances for property improvements, rent escalation, and free rent periods. Substantially all of these leases are classified as operating leases for accounting purposes. For property improvement allowances, the Company records a deferred lease credit on the consolidated balance sheet and amortizes the deferred lease credit as a reduction of rent expense over the terms of the applicable lease. For scheduled rent escalation clauses during the lease term, the Company records rent expense on a straight-line basis over the term of the lease. The difference between the rent expense and the amount payable under the lease is included within the Company's liabilities on the consolidated balance sheet. The term of the lease over which the Company amortizes allowances and minimum rental expenses on a straight-line basis begins on the date of initial possession, which is generally when the Company enters the space and/or begins construction. Where leases provide for contingent rents, which are generally determined as a percentage of gross sales, the Company records additional rent expense when management determines that achieving the specified level of revenue during the fiscal year is probable. Amounts accrued for contingent rent are included within the Company's liabilities on the consolidated balance sheet. |
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SEASONALITY | SEASONALITY The Company experiences seasonal fluctuations in its sales and profitability due to the timing of certain holidays and key retail shopping periods, typically resulting in lower sales and gross profit in the first half of its fiscal year. Accordingly, the Company's results of operations during the first half of the year may not be indicative of the results for the full year. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of accounts receivable | The components of accounts receivable, net, as of January 2, 2016 and January 3, 2015 are as follows:
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ACQUISITION OF BONNIE TOGS (Tables) |
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Summary of changes in contingent consideration liability | The following table summarizes the changes in the contingent consideration liability related to the 2011 acquisition of Bonnie Togs during fiscal 2013, 2014, and 2015 (dollars in thousands):
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PROPERTY, PLANT, AND EQUIPMENT (Tables) |
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Property, plant, and equipment | Property, plant, and equipment, net consists of the following:
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GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible assets table | The Company’s goodwill and other intangible assets were as follows:
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ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME (Tables) |
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Schedule of accumulated other comprehensive (loss) income | Accumulated other comprehensive (loss) income is summarized as follows:
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LONG-TERM DEBT (Tables) |
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Schedule of long-term debt | Long-term debt consisted of the following:
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Schedule of redemption price applicable where redemption occurs | The redemption price applicable where the redemption occurs during the twelve-month period beginning on August 15 of each of the years indicated is as follows:
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STOCK-BASED COMPENSATION (Tables) |
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Jan. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
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Summary of stock option activity | Changes in the Company's stock options for the fiscal year ended January 2, 2016 were as follows:
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Assumptions used for grants and summary of stock options and restricted stock activity | The table below presents the assumptions used to calculate the fair value of options granted in each of the respective fiscal years:
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Summary of restricted stock award activity | The following table summarizes activity related to all restricted stock awards during the fiscal year ended January 2, 2016:
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Summary of issued shares of common stock to non-management board members | During fiscal years 2015, 2014, and 2013, such awards were as follows:
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EMPLOYEE BENEFIT PLANS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of changes in the projected pension benefit obligation and plan assets | A reconciliation of changes in the projected pension benefit obligation and plan assets is as follows:
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Components of post retirement benefit expense and pension expense | The net periodic pension (benefit) cost included in the statement of operations was comprised of:
The components of post-retirement benefit expense charged to the statement of operations were as follows:
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Schedule of assumptions used in actuarial computations | The actuarial computations utilized the following assumptions, using year-end measurement dates:
The actuarial computations utilized the following assumptions, using year-end measurement dates:
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Expected benefit payments for defined benefit pension plans for the next ten fiscal years | The Company currently expects benefit payments for its defined benefit pension plans as follows for the next ten fiscal years;
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Fair value of the Company's pension plan assets by category | The fair value of the Company's pension plan assets at January 2, 2016 and January 3, 2015, by asset category, were as follows:
(a) This category comprises low-cost equity index funds not actively managed that track the Standard & Poor's 500 Index. (b) This category invests in both U.S. Treasuries and mid-term corporate debt from U.S. issuers from diverse industries. (c) This category represents an investment in a mutual fund that invests primarily in real estate securities, including common stocks, preferred stock and other equity securities issued by real estate companies. |
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Reconciliation of accumulated post retirement benefit obligation | The following is a reconciliation of the accumulated post-retirement benefit obligation ("APBO") under this plan:
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INCOME TAXES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Provision for income taxes | The provision for income taxes consisted of the following:
The components of income before income taxes were as follows:
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Federal statutory tax rate reconciliation | The difference between the Company's effective income tax rate and the federal statutory tax rate is reconciled below:
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Components of deferred tax assets and liabilities | Components of deferred tax assets and liabilities were as follows:
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Net deferred tax liability | The net deferred tax liability was classified on the Company's consolidated balance sheets as follows:
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Unrecognized tax benefits | The following is a reconciliation of the beginning and ending amount of unrecognized tax benefits:
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EARNINGS PER SHARE (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
(1) The volume of antidilutive shares is, in part, due to the related unamortized compensation costs. |
SEGMENT INFORMATION (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of segment information | The table below presents certain segment information for the periods indicated:
(e) Includes the following charges:
(1) Continuing operating costs associated with the closure of the Company's distribution facility in Hogansville, Georgia. |
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Inventory, net, by segment | The table below represents inventory by segment:
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Consolidated Net Sales by Product | The table below represents consolidated net sales by product:
(a) Other product offerings include bedding, outwear, swimwear, shoes, socks, diaper bags, gift sets, toys, and hair accessories. |
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Property, plant, and equipment, net, by geographic area | The following represents property, plant, and equipment, net, by geographic area:
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FAIR VALUE MEASUREMENTS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and liabilities measured at fair value table | The following table summarizes assets and liabilities measured at fair value on a recurring basis:
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Significant unobservable inputs for Level 3 fair value measurements table | January 2, 2016, the Company had no remaining contingent consideration liability related to the 2011 Bonnie Togs acquisition in Canada. The following summarizes the significant unobservable inputs for the Company's Level 3 fair value measurements at December January 3, 2015:
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OTHER CURRENT AND LONG-TERM LIABILITIES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Jan. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||
Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Schedule of other current liabilities | Other current liabilities that exceeded five percent of total current liabilities (at the end of either fiscal year) consisted of the following:
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Schedule of other long-term liabilities |
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FACILITY CLOSURE (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Costs [Table Text Block] | he total amount of charges was included in selling, general, and administrative expenses and consisted of the following:
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Schedule of restructuring reserve | The following table summarizes the restructuring reserves related to the office consolidation as of January 2, 2016:
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LEASE COMMITMENTS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Jan. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Minimum annual rental commitments under current operating leases | Minimum annual rental commitments under current noncancellable operating leases, as of January 2, 2016, substantially all of which relate to leased real estate, were as follows:
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VALUATION AND QUALIFYING ACCOUNTS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Valuation and Qualifying Accounts [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts receivable reserves | Information regarding accounts receivable is as follows:
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UNAUDITED QUARTERLY FINANCIAL DATA (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unaudited summarized financial data | The unaudited summarized financial data by quarter for the fiscal years ended January 2, 2016 and January 3, 2015 is presented in the table below:
(1) May not be additive to the net income per common share amounts for the fiscal year due to the calculation provision of ASC 260, Earnings Per Share. (2) The fourth quarter of fiscal 2014 contained 14 weeks instead of the typical 13 weeks for each quarter in a fiscal year that contains 52 weeks. |
GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Consolidating Balance Sheets |
CARTER’S, INC. Condensed Consolidating Balance Sheet As of January 3, 2015 (dollars in thousands)
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Condensed Consolidating Statements of Operations and Comprehensive Income |
CARTER’S, INC. Condensed Consolidating Statement of Operations For the year end January 3, 2015 (dollars in thousands)
CARTER’S, INC. Condensed Consolidating Statement of Operations For the year end December 28, 2013 (dollars in thousands)
For the year end January 3, 2015 (dollars in thousands)
For the year end December 28, 2013 (dollars in thousands)
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Condensed Consolidating Statements of Cash Flows |
CARTER’S, INC. Condensed Consolidating Statement of Cash Flows For the year end January 3, 2015 (dollars in thousands)
CARTER’S, INC. Condensed Consolidating Statement of Cash Flows For the year end December 28, 2013 (dollars in thousands)
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Intangible Assets) (Details) |
12 Months Ended |
---|---|
Jan. 02, 2016 | |
Non-compete Agreements [Member] | Carter's Watch the Wear and H.W Carter & Sons [Member] | |
Acquired Indefinite-lived Intangible Assets [Line Items] | |
Useful Life | 3 years |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Revenue Recognition) (Details) $ in Millions |
12 Months Ended |
---|---|
Jan. 02, 2016
USD ($)
| |
Accounting Policies [Abstract] | |
Cooperative advertising arrangements, fair value | $ 3.9 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Accounting for Shipping and Handling Fees and Costs) (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
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Accounting Policies [Abstract] | |||
Shipping and handling costs | $ 67.2 | $ 72.1 | $ 59.1 |
Shipping and handling revenue | $ 11.0 | $ 12.3 | $ 12.1 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Supplemental Cash Flow Information) (Details) CAD in Millions, $ in Millions |
3 Months Ended | 12 Months Ended | ||||
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Apr. 04, 2015
USD ($)
|
Apr. 04, 2015
CAD
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Jan. 02, 2016
USD ($)
|
Jan. 03, 2015
USD ($)
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Dec. 28, 2013
USD ($)
|
Oct. 03, 2015
USD ($)
|
|
Debt Instrument [Line Items] | ||||||
Interest paid in cash | $ 25.1 | $ 26.1 | $ 3.8 | |||
Income taxes paid in cash | 108.4 | 95.8 | 83.3 | |||
Property, plant and equipment additions | $ 6.1 | $ 2.0 | $ 17.8 | |||
Original debt amount | $ 20.0 | |||||
Converted debt amount | $ 20.3 | CAD 25.5 | ||||
Revolving credit facility | ||||||
Debt Instrument [Line Items] | ||||||
Secured revolving credit facility | $ 185.2 |
ACQUISITION OF BONNIE TOGS (Details) - USD ($) $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
Jun. 30, 2011 |
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Business Acquisition [Line Items] | ||||
Payment of contingent consideration | $ 7,572 | $ 8,901 | $ 14,721 | |
Bonnie Togs [Member] | ||||
Business Acquisition [Line Items] | ||||
Maximum consideration paid for business acquired | $ 95,000 | |||
Cash paid at closing for business acquired | $ 61,200 | |||
Payment of contingent consideration | $ 8,568 | $ 8,901 | $ 14,721 |
ACQUISITION OF BONNIE TOGS (Contingent Consideration) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Business Acquisition, Contingent Consideration [Line Items] | |||
Payments made | $ (7,572) | $ (8,901) | $ (14,721) |
Accretion expense | 809 | ||
Foreign currency translation adjustment | (1,029) | ||
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability | 1,077 | ||
Ending balance | 0 | ||
Depreciation and amortization | 62,000 | 58,500 | 54,700 |
Bonnie Togs [Member] | |||
Business Acquisition, Contingent Consideration [Line Items] | |||
Beginning balance | 7,711 | 16,348 | 29,704 |
Payments made | (8,568) | (8,901) | (14,721) |
Accretion expense | $ 1,883 | 1,348 | 2,825 |
Foreign currency translation adjustment | (1,084) | (1,460) | |
Ending balance | $ 7,711 | $ 16,348 |
PROPERTY, PLANT, AND EQUIPMENT (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | $ 662,340 | $ 578,108 | |
Accumulated depreciation and amortization | (290,636) | (245,011) | |
Property, plant, and equipment, net | 371,704 | 333,097 | |
Depreciation and amortization | 62,000 | 58,500 | $ 54,700 |
Fixtures, Equipment, and Computers [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 367,593 | 325,852 | |
Land, Buildings, and Improvements [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 260,809 | 220,995 | |
Marketing Fixtures [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 12,336 | 12,089 | |
Construction in Progress [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | $ 21,602 | $ 19,172 |
LONG-TERM DEBT (Schedule of Long Term Debt) (Details) - USD ($) $ in Thousands |
Jan. 02, 2016 |
Oct. 03, 2015 |
Jan. 03, 2015 |
---|---|---|---|
Debt Instrument [Line Items] | |||
Long-term debt | $ 584,431 | $ 500,000 | $ 586,000 |
Senior notes | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 400,000 | 400,000 | |
Secured revolving credit facility | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 186,000 |
COMMON STOCK (Share Repurchases) (Details) - USD ($) $ / shares in Units, $ in Millions |
1 Months Ended | 9 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|
Feb. 24, 2016 |
Jan. 31, 2014 |
Sep. 28, 2013 |
Jan. 02, 2016 |
Jan. 03, 2015 |
Jun. 29, 2013 |
|
Accelerated Share Repurchases [Line Items] | ||||||
Stock repurchase, authorized amount | $ 300.0 | |||||
Stock repurchase, additional authorized amount | $ 400.0 | |||||
Remaining capacity under authorization | $ 74.8 | |||||
Stock repurchased | 1,000,000 | |||||
Stock repurchased and retired | 1,154,288 | 1,111,899 | ||||
Average price of repurchased and retired shares | $ 95.55 | $ 73.84 | ||||
Cost of repurchased and retired shares | $ 110.3 | $ 82.1 | ||||
Subsequent Event [Member] | ||||||
Accelerated Share Repurchases [Line Items] | ||||||
Stock repurchase, additional authorized amount | $ 500.0 |
COMMON STOCK (Accelerated Share Repurchase Program) (Details) shares in Millions, $ in Millions |
Jan. 31, 2014
USD ($)
shares
|
---|---|
Accelerated Share Repurchases [Line Items] | |
Shares repurchased under accelerated stock repurchase program | 5.6 |
Accelerated share repurchases, settlement (payment) or receipt | $ | $ 398.7 |
ASR Settlement [Member] | |
Accelerated Share Repurchases [Line Items] | |
Shares repurchased under accelerated stock repurchase program | 1.0 |
COMMON STOCK (Dividends) (Details) - $ / shares |
3 Months Ended | 12 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Feb. 24, 2016 |
Jan. 02, 2016 |
Sep. 27, 2014 |
Jun. 28, 2014 |
Mar. 29, 2014 |
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Subsequent Event [Line Items] | ||||||||
Dividend declared per common share | $ 0.22 | $ 0.16 | $ 0.16 | $ 0.19 | $ 0.88 | $ 0.76 | $ 0.48 | |
Subsequent Event [Member] | ||||||||
Subsequent Event [Line Items] | ||||||||
Dividend declared per common share | $ 0.33 |
STOCK-BASED COMPENSATION (Weighted-Average Assumptions) (Details) - Stock options - $ / shares |
12 Months Ended | ||
---|---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected Volatility | 31.65% | 30.85% | 33.15% |
Risk-free interest rate | 1.65% | 1.82% | 1.15% |
Expected term (years) | 6 years | 6 years | 6 years |
Dividend yield | 1.06% | 1.11% | 0.91% |
Weighted average fair value of options granted | $ 24.59 | $ 19.86 | $ 20.21 |
STOCK-BASED COMPENSATION (Non-Management Board Directors) (Details) - Non-Management Board Members - $ / shares |
12 Months Ended | ||
---|---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares issued | 10,933 | 14,859 | 16,173 |
Fair value per share | $ 100.21 | $ 72.72 | $ 66.79 |
Aggregate value | $ 1,096,000 | $ 1,081,000 | $ 1,080,000 |
EMPLOYEE BENEFIT PLANS (Assumptions) (Details) |
12 Months Ended | ||
---|---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Net periodic pension cost | |||
Expected long-term rate of return on assets | 6.00% | ||
Pension Plans | |||
Benefit obligation | |||
Discount rate | 4.25% | 4.00% | |
Net periodic pension cost | |||
Discount rate | 4.00% | 4.80% | 4.00% |
Expected long-term rate of return on assets | 6.00% | 6.50% | 7.00% |
Postretirement Benefit | |||
Benefit obligation | |||
Discount rate | 3.80% | 3.50% | |
Net periodic pension cost | |||
Discount rate | 3.50% | 4.30% | 3.50% |
EMPLOYEE BENEFIT PLANS (Expected Benefit Payments) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
2015 | $ 400 | ||
Pension Plans | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
2017 | 2,220 | ||
2018 | 2,270 | ||
2019 | 2,610 | ||
2020 and thereafter | 15,470 | ||
Postretirement Benefit | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
2015 | $ 500 | $ 500 | |
2017 | 500 | ||
2018 | 500 | ||
2019 | 500 | ||
2020 and thereafter | $ 1,600 |
EMPLOYEE BENEFIT PLANS (Defined Contribution Plans) (Details) - Defined Contribution Plan - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items] | |||
Minimum age participation for the defined contribution plan (in years) | 21 years | ||
Minimum service participation for the defined contribution plan (in months) | 3 months | ||
Minimum hours service participation for the defined contribution plan (in hours) | 250 hours | ||
Defined contribution plan expense for the fiscal year | $ 12.2 | $ 10.5 | $ 8.5 |
INCOME TAXES (Provision for Income Taxes) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Current tax provision: | |||
Federal | $ 103,316 | $ 88,635 | $ 71,696 |
State | 10,277 | 9,049 | 8,486 |
Foreign | 8,116 | 6,641 | 8,280 |
Total current provision | 121,709 | 104,325 | 88,462 |
Deferred tax provision (benefit): | |||
Federal | 6,577 | 5,519 | 1,412 |
State | 1,193 | 41 | (942) |
Foreign | 887 | (1,649) | 126 |
Total deferred provision (benefit) | 8,657 | 3,911 | 596 |
Total provision | $ 130,366 | $ 108,236 | $ 89,058 |
INCOME TAXES (Income Before Income Taxes) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Income Tax Disclosure [Abstract] | |||
Domestic | $ 335,955 | $ 286,177 | $ 223,907 |
Foreign | 32,233 | 16,729 | 25,558 |
Total | $ 368,188 | $ 302,906 | $ 249,465 |
INCOME TAXES (Effective Rate Reconciliation) (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Income Tax Disclosure [Abstract] | |||
Tax reserves applicable to the ongoing examination | $ 1.8 | ||
Income tax rate reconciliation [Abstract] | |||
Statutory federal income tax rate | 35.00% | 35.00% | 35.00% |
State income taxes, net of federal income tax benefit | 2.50% | 2.50% | 2.50% |
Impact of foreign operations | (1.30%) | (1.20%) | (1.40%) |
Settlement of uncertain tax positions | (0.80%) | (0.60%) | (0.40%) |
Total | 35.40% | 35.70% | 35.70% |
INCOME TAXES (Deferred Taxes) (Details) - USD ($) $ in Thousands |
Jan. 02, 2016 |
Jan. 03, 2015 |
---|---|---|
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Current net deferred tax asset | $ 34,080 | $ 36,625 |
Non-current net deferred tax liability | (128,838) | (121,536) |
Total deferred tax liability | (94,758) | (84,911) |
Deferred tax assets: | ||
Accounts receivable allowance | 4,394 | 4,990 |
Inventory | 9,019 | 11,253 |
Accrued liabilities | 15,156 | 13,947 |
Equity-based compensation | 10,022 | 10,596 |
Deferred employee benefits | 8,929 | 8,070 |
Deferred rent | 43,616 | 37,381 |
Other | 5,125 | 6,127 |
Total deferred tax assets | 96,261 | 92,364 |
Deferred tax liabilities: | ||
Depreciation | (84,610) | (70,510) |
Tradename and licensing agreements | (101,160) | (102,298) |
Other | (5,249) | (4,467) |
Total deferred tax liabilities | (191,019) | $ (177,275) |
Foreign Tax Authority [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Undistributed earnings from subsidiary | $ 89,700 |
INCOME TAXES (Uncertain Tax Provisions) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Unrecognized income tax benefits [Roll Forward] | |||
Beginning Balance | $ 11,311 | $ 11,182 | $ 9,763 |
Additions based on fiscal year tax positions | 2,840 | 2,572 | 3,200 |
Additions for prior year tax positions | (375) | ||
Reductions for prior year tax positions | (260) | (471) | |
Reductions for lapse of statute of limitations | (1,427) | (1,536) | (1,029) |
Reductions for prior year tax settlements | (3,049) | (436) | (377) |
Ending Balance | 9,415 | 11,311 | $ 11,182 |
Impact of recognized tax benefit on effective tax rate, if recognized | 6,500 | ||
Tax reserve for which statute of limitations is expected to expire | 1,200 | ||
Tax reserves applicable to the ongoing examination | 1,800 | ||
Interest accrued for uncertain tax positions | $ 800 | $ 900 |
SEGMENT INFORMATION (Net Inventory) (Details) - USD ($) $ in Thousands |
Jan. 02, 2016 |
Jan. 03, 2015 |
---|---|---|
Segment Reporting Information [Line Items] | ||
Net inventory | $ 469,934 | $ 444,844 |
Operating Segments [Member] | Wholesale [Member] | Carter's [Member] | ||
Segment Reporting Information [Line Items] | ||
Net inventory | 271,117 | 240,669 |
Operating Segments [Member] | Wholesale [Member] | OshKosh [Member] | ||
Segment Reporting Information [Line Items] | ||
Net inventory | 50,027 | 39,879 |
Operating Segments [Member] | Retail [Member] | Carter's [Member] | ||
Segment Reporting Information [Line Items] | ||
Net inventory | 68,694 | 84,004 |
Operating Segments [Member] | Retail [Member] | OshKosh [Member] | ||
Segment Reporting Information [Line Items] | ||
Net inventory | 31,136 | 31,829 |
Operating Segments [Member] | International [Member] | ||
Segment Reporting Information [Line Items] | ||
Net inventory | $ 48,960 | $ 48,463 |
SEGMENT INFORMATION (Revenue) (Details) |
12 Months Ended | |
---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
|
Canada [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Percentage of total net sales | 65.60% | 67.90% |
SEGMENT INFORMATION (Long-Lived Assets) (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
|
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | $ 371,704 | $ 333,097 |
UNITED STATES | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | 342,354 | 305,093 |
International [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | $ 29,350 | $ 28,004 |
Canada [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
International long-lived assets, as a percent of total long-lived assets | 89.50% | 98.10% |
SEGMENT INFORMATION Net Sales (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||
---|---|---|---|---|---|---|---|
Jan. 03, 2015 |
Sep. 27, 2014 |
Jun. 28, 2014 |
Mar. 29, 2014 |
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Revenue from External Customer [Line Items] | |||||||
Net sales | $ 869,224 | $ 798,936 | $ 574,065 | $ 651,643 | $ 3,013,879 | $ 2,893,868 | $ 2,638,711 |
Baby [Member] | |||||||
Revenue from External Customer [Line Items] | |||||||
Net sales | 1,173,002 | 1,107,973 | 975,374 | ||||
Playclothes [Member] | |||||||
Revenue from External Customer [Line Items] | |||||||
Net sales | 1,182,281 | 1,146,797 | 1,074,581 | ||||
Sleepwear [Member] | |||||||
Revenue from External Customer [Line Items] | |||||||
Net sales | 378,419 | 381,574 | 366,289 | ||||
Other Products [Member] | |||||||
Revenue from External Customer [Line Items] | |||||||
Net sales | $ 280,177 | $ 257,524 | $ 222,467 |
FAIR VALUE MEASUREMENTS (Assets and Liabilities Measured on Recurring Basis) (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Jan. 03, 2015 |
Jan. 02, 2016 |
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Gain on mark to market of marketable securities | $ 400 | |
Liabilities | ||
Business Combination, Contingent Consideration, Liability | $ 0 | |
Level 1 [Member] | ||
Assets | ||
Investments | 7,600 | 8,600 |
Foreign Currency Contract, Asset, Fair Value Disclosure | 0 | 0 |
Liabilities | ||
Contingent consideration | 0 | 0 |
Level 2 [Member] | ||
Assets | ||
Investments | 0 | 0 |
Foreign Currency Contract, Asset, Fair Value Disclosure | 0 | 2,100 |
Liabilities | ||
Contingent consideration | 0 | 0 |
Level 3 [Member] | ||
Assets | ||
Investments | 0 | 0 |
Foreign Currency Contract, Asset, Fair Value Disclosure | 0 | $ 0 |
Liabilities | ||
Contingent consideration | $ 7,700 |
FAIR VALUE MEASUREMENTS (Unobservable Inputs) (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Jan. 03, 2015 |
Jan. 02, 2016 |
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items] | ||
Business Combination, Contingent Consideration, Liability | $ 0 | |
Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items] | ||
Contingent consideration | $ 7,700 | |
Discounted Cash Flow [Member] | Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items] | ||
Business Combination, Contingent Consideration, Liability | 7,700 | $ 0 |
Unobservable inputs, Estimated contingent consideration payment | $ 10,000 | |
Unobservable inputs, Discount rate | 18.00% | |
Unobservable inputs, Probability assumption | 100.00% |
FAIR VALUE MEASUREMENTS (Borrowings) (Details) - USD ($) $ in Thousands |
Jan. 02, 2016 |
Oct. 03, 2015 |
Jan. 03, 2015 |
---|---|---|---|
Debt Instrument [Line Items] | |||
Long-term debt | $ 584,431 | $ 500,000 | $ 586,000 |
Secured revolving credit facility | |||
Debt Instrument [Line Items] | |||
Credit facility, amount outstanding | 184,431 | ||
Long-term debt | 186,000 | ||
Senior notes | |||
Debt Instrument [Line Items] | |||
Long-term debt | 400,000 | $ 400,000 | |
Long-term debt, fair value | $ 409,000 |
FAIR VALUE MEASUREMENTS Foreign currency contracts (Details) $ in Millions |
12 Months Ended |
---|---|
Jan. 02, 2016
USD ($)
| |
Foreign currency contracts [Abstract] | |
Derivative, Notional Amount | $ 59.0 |
Unrealized Gain (Loss) on Derivatives | 2.1 |
Foreign Currency Transaction Gain (Loss), Realized | $ 3.1 |
OTHER CURRENT AND LONG-TERM LIABILITIES (Other Current Liabilities) (Details) - USD ($) $ in Thousands |
Jan. 02, 2016 |
Jan. 03, 2015 |
---|---|---|
Other Liabilities Disclosure [Abstract] | ||
Accrued bonuses and incentive compensation | $ 17,934 | $ 18,875 |
Accrued 401 (k) contributions | $ 19,751 | $ 17,131 |
OTHER CURRENT AND LONG-TERM LIABILITIES (Other Long-Term Liabilities) (Details) - USD ($) $ in Thousands |
Jan. 02, 2016 |
Jan. 03, 2015 |
---|---|---|
Other Liabilities Disclosure [Abstract] | ||
Deferred lease incentives | $ 70,060 | $ 67,205 |
LEASE COMMITMENTS (Details) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 02, 2016
USD ($)
store
|
Jan. 03, 2015
USD ($)
|
Dec. 28, 2013
USD ($)
|
|
Operating Leased Assets [Line Items] | |||
Rent expense under operating leases | $ 136,600 | $ 123,600 | $ 117,300 |
Operating Leases, 2015 | 141,707 | ||
Operating Leases, 2016 | 136,104 | ||
2017 | 127,376 | ||
Operating Leases, 2018 | 115,097 | ||
Operating Leases, 2019 | 104,317 | ||
Operating Leases, thereafter | 369,410 | ||
Operating Leases, total | $ 994,011 | ||
Minimum [Member] | |||
Operating Leased Assets [Line Items] | |||
International retail store average lease term | 5 years | ||
Maximum [Member] | |||
Operating Leased Assets [Line Items] | |||
International retail store average lease term | 10 years | ||
Canada [Member] | |||
Operating Leased Assets [Line Items] | |||
Number of Stores | store | 147 |
VALUATION AND QUALIFYING ACCOUNTS (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Accounts receivable reserves [Roll Forward] | |||
Beginning balance | $ 12,208 | $ 9,708 | $ 7,588 |
Additions, charged to expense | 4,434 | 10,634 | 11,355 |
Charges to reserve | (7,699) | (8,134) | (9,235) |
Ending balance | 8,943 | 12,208 | 9,708 |
Accounts receivable reserves [Member] | |||
Accounts receivable reserves [Roll Forward] | |||
Beginning balance | 11,808 | 9,308 | 7,188 |
Additions, charged to expense | 4,170 | 9,919 | 10,245 |
Charges to reserve | (7,435) | (7,419) | (8,125) |
Ending balance | 8,543 | 11,808 | 9,308 |
Sales returns reserve [Member] | |||
Accounts receivable reserves [Roll Forward] | |||
Beginning balance | 400 | 400 | 400 |
Additions, charged to expense | 264 | 715 | 1,110 |
Charges to reserve | (264) | (715) | (1,110) |
Ending balance | $ 400 | $ 400 | $ 400 |
UNAUDITED QUARTERLY FINANCIAL DATA (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||
---|---|---|---|---|---|---|---|
Jan. 03, 2015 |
Sep. 27, 2014 |
Jun. 28, 2014 |
Mar. 29, 2014 |
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Quarterly Financial Information Disclosure [Abstract] | |||||||
Net sales | $ 869,224 | $ 798,936 | $ 574,065 | $ 651,643 | $ 3,013,879 | $ 2,893,868 | $ 2,638,711 |
Gross profit | 356,032 | 321,206 | 245,477 | 261,725 | 1,258,024 | 1,184,440 | 1,095,379 |
Selling, general, and administrative expenses | 251,902 | 221,939 | 206,315 | 210,095 | 909,233 | 890,251 | 868,480 |
Royalty income | (9,880) | (11,190) | (8,185) | (9,901) | (44,066) | (39,156) | (37,252) |
Operating income | 114,010 | 110,457 | 47,347 | 61,531 | 392,857 | 333,345 | 264,151 |
Net income | $ 68,590 | $ 65,886 | $ 25,897 | $ 34,297 | $ 237,822 | $ 194,670 | $ 160,407 |
Basic net income per common share (in dollars per share) | $ 1.30 | $ 1.24 | $ 0.48 | $ 0.64 | $ 4.55 | $ 3.65 | $ 2.78 |
Diluted net income per common share (in dollars per share) | $ 1.29 | $ 1.23 | $ 0.48 | $ 0.63 | $ 4.50 | $ 3.62 | $ 2.75 |
GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (Income Statement) (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||
---|---|---|---|---|---|---|---|
Jan. 03, 2015 |
Sep. 27, 2014 |
Jun. 28, 2014 |
Mar. 29, 2014 |
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Condensed Income Statements, Captions [Line Items] | |||||||
Net sales | $ 869,224 | $ 798,936 | $ 574,065 | $ 651,643 | $ 3,013,879 | $ 2,893,868 | $ 2,638,711 |
Cost of goods sold | 1,755,855 | 1,709,428 | 1,543,332 | ||||
Gross profit | 356,032 | 321,206 | 245,477 | 261,725 | 1,258,024 | 1,184,440 | 1,095,379 |
Selling, general, and administrative expenses | 251,902 | 221,939 | 206,315 | 210,095 | 909,233 | 890,251 | 868,480 |
Royalty income | (9,880) | (11,190) | (8,185) | (9,901) | (44,066) | (39,156) | (37,252) |
Operating income | 114,010 | 110,457 | 47,347 | 61,531 | 392,857 | 333,345 | 264,151 |
Interest expense | 27,031 | 27,653 | 13,437 | ||||
Interest income | (500) | (403) | (669) | ||||
(Income) loss in subsidiaries | 0 | 0 | 0 | ||||
Other (income) expense, net | (1,862) | 3,189 | 1,918 | ||||
Income before income taxes | 368,188 | 302,906 | 249,465 | ||||
Provision for income taxes | 130,366 | 108,236 | 89,058 | ||||
Net income | $ 68,590 | $ 65,886 | $ 25,897 | $ 34,297 | 237,822 | 194,670 | 160,407 |
Parent [Member] | |||||||
Condensed Income Statements, Captions [Line Items] | |||||||
Net sales | 0 | 0 | 0 | ||||
Cost of goods sold | 0 | 0 | 0 | ||||
Gross profit | 0 | 0 | 0 | ||||
Selling, general, and administrative expenses | 0 | 0 | 0 | ||||
Royalty income | 0 | 0 | 0 | ||||
Operating income | 0 | 0 | 0 | ||||
Interest expense | 0 | 0 | 0 | ||||
Interest income | 0 | 0 | 0 | ||||
(Income) loss in subsidiaries | (237,822) | (194,670) | (160,407) | ||||
Other (income) expense, net | 0 | 0 | 0 | ||||
Income before income taxes | 237,822 | 194,670 | 160,407 | ||||
Provision for income taxes | 0 | 0 | 0 | ||||
Net income | 237,822 | 194,670 | 160,407 | ||||
Subsidiary Issuer [Member] | |||||||
Condensed Income Statements, Captions [Line Items] | |||||||
Net sales | 1,813,950 | 1,770,238 | 1,637,361 | ||||
Cost of goods sold | 1,286,411 | 1,271,260 | 1,170,073 | ||||
Gross profit | 527,539 | 498,978 | 467,288 | ||||
Selling, general, and administrative expenses | 181,150 | 203,371 | 204,255 | ||||
Royalty income | (32,978) | (30,741) | (28,174) | ||||
Operating income | 379,367 | 326,348 | 291,207 | ||||
Interest expense | 26,550 | 27,651 | 13,374 | ||||
Interest income | (5,826) | (5,998) | (1,100) | ||||
(Income) loss in subsidiaries | 19,775 | 20,226 | 51,973 | ||||
Other (income) expense, net | (6) | (235) | (358) | ||||
Income before income taxes | 338,874 | 284,704 | 227,318 | ||||
Provision for income taxes | 102,534 | 85,574 | 71,238 | ||||
Net income | 236,340 | 199,130 | 156,080 | ||||
Guarantor Subsidiaries [Member] | |||||||
Condensed Income Statements, Captions [Line Items] | |||||||
Net sales | 1,639,826 | 1,564,717 | 1,397,540 | ||||
Cost of goods sold | 989,284 | 936,260 | 819,798 | ||||
Gross profit | 650,542 | 628,457 | 577,742 | ||||
Selling, general, and administrative expenses | 679,532 | 646,728 | 632,854 | ||||
Royalty income | (19,414) | (18,896) | (17,909) | ||||
Operating income | (9,576) | 625 | (37,203) | ||||
Interest expense | 5,331 | 5,310 | 598 | ||||
Interest income | 0 | 0 | 0 | ||||
(Income) loss in subsidiaries | (9,742) | (15,050) | 10,122 | ||||
Other (income) expense, net | (60) | 2,263 | 403 | ||||
Income before income taxes | (5,105) | 8,102 | (48,326) | ||||
Provision for income taxes | 20,590 | 19,441 | 11,061 | ||||
Net income | (25,695) | (11,339) | (59,387) | ||||
Non-Guarantors Subsidiaries [Member] | |||||||
Condensed Income Statements, Captions [Line Items] | |||||||
Net sales | 246,158 | 241,191 | 220,438 | ||||
Cost of goods sold | 136,317 | 138,838 | 112,503 | ||||
Gross profit | 109,841 | 102,353 | 107,935 | ||||
Selling, general, and administrative expenses | 88,257 | 91,521 | 102,115 | ||||
Royalty income | 0 | 0 | 0 | ||||
Operating income | 21,584 | 10,832 | 5,820 | ||||
Interest expense | 557 | 343 | 63 | ||||
Interest income | (81) | (56) | (167) | ||||
(Income) loss in subsidiaries | 0 | 0 | 0 | ||||
Other (income) expense, net | (1,796) | 1,161 | 1,873 | ||||
Income before income taxes | 22,904 | 9,384 | 4,051 | ||||
Provision for income taxes | 7,242 | 3,221 | 6,759 | ||||
Net income | 15,662 | 6,163 | (2,708) | ||||
Consolidating Adjustments [Member] | |||||||
Condensed Income Statements, Captions [Line Items] | |||||||
Net sales | (686,055) | (682,278) | (616,628) | ||||
Cost of goods sold | (656,157) | (636,930) | (559,042) | ||||
Gross profit | (29,898) | (45,348) | (57,586) | ||||
Selling, general, and administrative expenses | (39,706) | (51,369) | (70,744) | ||||
Royalty income | 8,326 | 10,481 | 8,831 | ||||
Operating income | 1,482 | (4,460) | 4,327 | ||||
Interest expense | (5,407) | (5,651) | (598) | ||||
Interest income | 5,407 | 5,651 | 598 | ||||
(Income) loss in subsidiaries | 227,789 | 189,494 | 98,312 | ||||
Other (income) expense, net | 0 | 0 | 0 | ||||
Income before income taxes | (226,307) | (193,954) | (93,985) | ||||
Provision for income taxes | 0 | 0 | 0 | ||||
Net income | $ (226,307) | $ (193,954) | $ (93,985) |
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