10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED APRIL 1, 2017 OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____ TO ______

Commission file number:

001-31829

CARTER’S, INC.

(Exact name of Registrant as specified in its charter)

Delaware	13-3912933
(state or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)

Phipps Tower

3438 Peachtree Road NE, Suite 1800

Atlanta, Georgia 30326

(Address of principal executive offices, including zip code)

(678) 791-1000

(Registrant's telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes (X) No ( )

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes (X) No ( )

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

Large Accelerated Filer (X) Accelerated Filer ( )

Non-Accelerated Filer ( ) (Do not check if a smaller reporting company) Smaller Reporting Company ( )

Emerging Growth Company ( )

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ( )

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes (X) No (X)

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

Common Stock	Outstanding Shares at April 21, 2017
Common stock, par value $0.01 per share	48,390,342

CARTER’S, INC.

INDEX

			Page
Part I. Financial Information
	Item 1	Financial Statements
		Unaudited Condensed Consolidated Balance Sheets as of April 1, 2017, December 31, 2016 and April 2, 2016	1
		Unaudited Condensed Consolidated Statements of Operations for the fiscal quarters ended April 1, 2017 and April 2, 2016	2
		Unaudited Condensed Consolidated Statements of Comprehensive Income for the fiscal quarters ended April 1, 2017 and April 2, 2016	3
		Unaudited Condensed Consolidated Statement of Changes in Stockholders' Equity for the fiscal quarter ended April 1, 2017	4
		Unaudited Condensed Consolidated Statements of Cash Flows for the fiscal quarters ended April 1, 2017 and April 2, 2016	5
		Notes to the Unaudited Condensed Consolidated Financial Statements	6
	Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	29
	Item 3	Quantitative and Qualitative Disclosures about Market Risk	39
	Item 4	Controls and Procedures	39
Part II. Other Information
	Item 1	Legal Proceedings	40
	Item 1A	Risk Factors	40
	Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	41
	Item 3	Defaults upon Senior Securities	42
	Item 4	Mine Safety Disclosures	42
	Item 5	Other Information	42
	Item 6	Exhibits	42
Signatures			43
Certifications

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CARTER’S, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data)

(unaudited)

	April 1, 2017			December 31, 2016			April 2, 2016
ASSETS
Current assets:
Cash and cash equivalents	$	154,278		$	299,358		$	395,141
Accounts receivable, net	206,707			202,471			192,569
Finished goods inventories	434,712			487,591			376,499
Prepaid expenses and other current assets	46,153			32,180			36,791
Deferred income taxes	—			35,486			31,841
Total current assets	841,850			1,057,086			1,032,841
Property, plant, and equipment, net of accumulated depreciation of $365,733, $345,907, and $307,449, respectively	386,275			385,874			377,273
Tradenames and other intangible assets, net	401,379			308,928			309,853
Goodwill	232,925			176,009			177,238
Other assets	23,034			18,700			15,258
Total assets	$	1,885,463		$	1,946,597		$	1,912,463
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	101,386		$	158,432		$	90,387
Other current liabilities	123,661			119,177			102,494
Total current liabilities	225,047			277,609			192,881
Long-term debt, net	581,621			580,376			580,319
Deferred income taxes	133,552			130,656			128,815
Other long-term liabilities	173,280			169,832			161,731
Total liabilities	$	1,113,500		$	1,158,473		$	1,063,746
Commitments and contingencies - Note 13
Stockholders' equity:
Preferred stock; par value $.01 per share; 100,000 shares authorized; none issued or outstanding at April 1, 2017, December 31, 2016, and April 2, 2016	—			—			—
Common stock, voting; par value $.01 per share; 150,000,000 shares authorized; 48,517,417, 48,948,670 and 51,206,395 shares issued and outstanding at April 1, 2017, December 31, 2016 and April 2, 2016, respectively	485			489			512
Accumulated other comprehensive loss	(33,793		)	(34,740		)	(31,081		)
Retained earnings	805,271			822,375			879,286
Total stockholders' equity	771,963			788,124			848,717
Total liabilities and stockholders' equity	$	1,885,463		$	1,946,597		$	1,912,463

See accompanying notes to the unaudited condensed consolidated financial statements.

1

CARTER’S, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in thousands, except per share data)

(unaudited)

	Fiscal quarter ended
	April 1, 2017			April 2, 2016
Net sales	$	732,755		$	724,085
Cost of goods sold	416,953			413,156
Gross profit	315,802			310,929
Selling, general, and administrative expenses	247,794			228,996
Royalty income	(10,558		)	(11,075		)
Operating income	78,566			93,008
Interest expense	7,104			6,739
Interest income	(139		)	(207		)
Other (income) expense, net	(221		)	3,193
Income before income taxes	71,822			83,283
Provision for income taxes	25,158			29,303
Net income	$	46,664		$	53,980
Basic net income per common share	$	0.96		$	1.05
Diluted net income per common share	$	0.95		$	1.04
Dividend declared and paid per common share	$	0.37		$	0.33

See accompanying notes to the unaudited condensed consolidated financial statements.

2

CARTER’S, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(dollars in thousands)

(unaudited)

	Fiscal quarter ended
	April 1, 2017		April 2, 2016
Net income	$	46,664	$	53,980
Other comprehensive income:
Foreign currency translation adjustments	947		5,286
Comprehensive income	$	47,611	$	59,266

See accompanying notes to the unaudited condensed consolidated financial statements.

3

CARTER’S, INC.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(amounts in thousands, except share amounts)

(unaudited)

	Common stock - shares		Common stock - $			Additional paid-in capital			Accumulated other comprehensive loss			Retained earnings			Total stockholders’ equity
Balance at December 31, 2016	48,948,670		$	489		$	—		$	(34,740	)	$	822,375		$	788,124
Exercise of stock options	32,825		1			1,625			—			—			1,626
Withholdings from vesting of restricted stock	(65,388	)	(1		)	(5,551		)	—			—			(5,552		)
Restricted stock activity	145,254		1			(1		)	—			—			—
Stock-based compensation expense	—		—			4,779			—			—			4,779
Repurchase of common stock	(543,944	)	(5		)	(852		)	—			(45,770		)	(46,627		)
Cash dividends declared and paid	—		—			—			—			(17,998		)	(17,998		)
Comprehensive income	—		—			—			947			46,664			47,611
Balance at April 1, 2017	48,517,417		$	485		$	—		$	(33,793	)	$	805,271		$	771,963

See accompanying notes to the unaudited condensed consolidated financial statements.

4

CARTER’S, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(unaudited)

	Fiscal quarter ended
	April 1, 2017			April 2, 2016
Cash flows from operating activities:
Net income	$	46,664		$	53,980
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	19,513			17,177
Amortization of tradenames	250			995
Amortization of debt issuance costs	373			361
Non-cash stock-based compensation expense	4,779			4,556
Foreign currency (gain) loss, net	(62		)	3,780
Income tax benefit from stock-based compensation	—			(3,144		)
Loss on disposal of property, plant, and equipment	189			192
Deferred income taxes	3,491			2,226
Effect of changes in operating assets and liabilities, net of acquisition:
Accounts receivable, net	16,247			15,247
Finished goods inventories	82,086			96,056
Prepaid expenses and other assets	(15,350		)	(576		)
Accounts payable and other liabilities	(74,000		)	(62,568		)
Net cash provided by operating activities	84,180			128,282
Cash flows from investing activities:
Capital expenditures	(17,991		)	(25,552		)
Acquisition of Skip Hop Holdings, Inc., net of cash acquired	(143,704		)	—
Net cash used in investing activities	(161,695		)	(25,552		)
Cash flows from financing activities:
Borrowing under secured revolving credit facility	20,000			—
Payment on secured revolving credit facility	(18,965		)	—
Repurchases of common stock	(46,627		)	(71,561		)
Dividends paid	(17,998		)	(17,032		)
Income tax benefit from stock-based compensation	—			3,144
Withholdings from vestings of restricted stock	(5,552		)	(8,454		)
Proceeds from exercises of stock options	1,626			3,747
Net cash used in financing activities	(67,516		)	(90,156		)
Effect of exchange rate changes on cash and cash equivalents	(49		)	1,358
Net (decrease) increase in cash and cash equivalents	(145,080		)	13,932
Cash and cash equivalents, beginning of period	299,358			381,209
Cash and cash equivalents, end of period	$	154,278		$	395,141

See accompanying notes to the unaudited condensed consolidated financial statements.

5

CARTER’S, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1 – THE COMPANY

Carter's, Inc. and its wholly owned subsidiaries (collectively, the "Company," "its," "us" and "our") design, source, and market branded childrenswear and related products under the Carter's, Child ofMine, Just One You,Precious Firsts, Simple Joys, OshKosh B'gosh ("OshKosh"), Skip Hop and other brands. The Company's products are sourced through contractual arrangements with manufacturers worldwide for wholesale distribution to leading department stores, national chains, and specialty retailers domestically and internationally and for the Company's own retail stores and websites that market its brand name merchandise and other licensed products manufactured by other companies. As of April 1, 2017, the Company operated 965 retail stores.

NOTE 2 – BASIS OF PREPARATION AND BUSINESS ACQUISITION

The accompanying unaudited condensed consolidated financial statements include the accounts of Carter's, Inc. and its wholly owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") for interim financial information and the rules and regulations of the Securities and Exchange Commission (the "SEC"). All intercompany transactions and balances have been eliminated in consolidation. 

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all normal and recurring adjustments necessary to state fairly the consolidated financial condition, results of operations, comprehensive income, statement of stockholders' equity, and cash flows of the Company for the interim periods presented. Except as otherwise disclosed, all such adjustments consist only of those of a normal recurring nature. Operating results for the fiscal quarter ended April 1, 2017 are not necessarily indicative of the results that may be expected for the 2017 fiscal year ending December 30, 2017.

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

The accompanying condensed consolidated balance sheet as of December 31, 2016 was derived from the Company's audited consolidated financial statements included in its most recently filed Annual Report on Form 10-K. Certain information and footnote disclosure normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC and the instructions to Form 10-Q.

Skip Hop Acquisition

The accompanying unaudited condensed consolidated financial statements and footnotes include the accounts of Skip Hop Holdings, Inc. and subsidiaries ("Skip Hop") from February 23, 2017. Carter's, Inc.'s wholly-owned subsidiary, The William Carter Company ("TWCC"), acquired 100% of the voting equity interests of Skip Hop after the close of business on February 22, 2017. The acquisition of Skip Hop expanded the Company’s product offerings to include complementary essential core products for families with young children. Skip Hop's product lines include diaper bags, kid’s backpacks, travel accessories, home gear, and hardline goods for playtime, mealtime, and bath time. Skip Hop's products are sold through wholesale and eCommerce channels.

The Skip Hop purchase was deemed to be the acquisition of a business under the provisions of Accounting Standards Codification ("ASC") No. 805, Business Combinations. The purchase price is subject to a working capital adjustment, plus a potential future payment of up to $10 million contingent upon the achievement of certain financial targets in 2017. The measurement period, as defined under the provisions of ASC 805, is open for certain assets and liabilities. Based on preliminary fair values assigned to assets and liabilities, the purchase price at acquisition of approximately $147.3 million, net of $0.8 million cash acquired, represented: $56.6 million of goodwill which includes an assembled workforce; $92.7 million of intangible assets; $54.7 million of tangible assets acquired, including finished goods inventory of $28.6 million, accounts receivable of $20.4 million, PP&E of $4.2 million; and $23.2 million of liabilities in addition to $33.5 million of deferred income tax liabilities. The goodwill is not tax deductible to the Company. Based on the purchase price, Skip Hop's assets, and Skip Hop's pre-tax operating income prior to the acquisition, the acquired Skip Hop business does not meet the materiality

6

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

requirements for preparation and presentation of the pro forma financial information prescribed by Article 11 of Regulation S-X. The majority of Skip Hop's wholesale operations became a part of the Company's U.S. Wholesale operating segment, with the remainder becoming part of the Company's International operating segment. Skip Hop's eCommerce retail operations became part of the Company's U.S. Retail operating segment. Between the acquisition date and the end of the Company's first quarter of fiscal 2017, Skip Hop contributed approximately $10.4 million of net sales to the Company's consolidated net sales and produced operating income of approximately $0.3 million.

Accounting Policies

The accounting policies the Company follows are set forth in its most recently filed Annual Report on Form 10-K. There have been no material subsequent changes to these accounting policies, except as noted below for new accounting pronouncements adopted at the beginning of fiscal 2017.

Adoption of New Accounting Pronouncements At the Beginning of Fiscal 2017

Accounting for Share-Based Payments to Employees (ASU 2016-09)

At the beginning of its first quarter of fiscal 2017, the Company adopted the provisions of Financial Accounting Standards Board ("FASB") ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"), which amended ASC Topic 718, Stock Compensation. The adoption of this ASU affected the Company consolidated financial statements as follows.

Consolidated Statement of Operations - ASU 2016-09 imposes a new requirement to record all of the excess income tax benefits and deficiencies (that result from an increase or decrease in the value of an award from grant date to settlement date) related to share-based payments at settlement through the statement of operations instead of the former requirement to record income tax benefits in excess of compensation cost ("windfalls") in equity, and income tax deficiencies ("shortfalls") in equity to the extent of previous windfalls, and then to operations. This change is required to be applied prospectively upon adoption of ASU 2016-09 to all excess income tax benefits and deficiencies resulting from settlements of share-based payments after the date of adoption. For the first quarter of fiscal 2017, the Company’s provision for income taxes on its consolidated statement of operations includes a benefit of approximately $1.0 million related to net excess income tax benefits for settlements of share-based payments during the current quarter. For the first quarter of fiscal 2016, the Company recognized net excess income tax benefits of approximately $3.1 million for share-based payments settled during that quarter, and this net tax benefit was recorded directly to the Company’s consolidated statement of stockholders’ equity and has not been reclassified to the Company’s consolidated statement of operations, in accordance with adoption and transition provisions of ASU 2016-09.

Consolidated Statement of Cash Flows - ASU 2016-09 requires that all income tax-related cash flows resulting from share-based payments, such as excess income tax benefits, are to be reported as operating activities on the statement of cash flows, a change from the prior requirement to present windfall income tax benefits as an inflow from financing activities and an offsetting outflow from operating activities. As permitted, the Company elected to apply these provisions prospectively to its consolidated statement of cash flows, and accordingly, periods prior to fiscal 2017 have not been adjusted.

Additionally, ASU 2016-09 clarifies that all cash payments made to taxing authorities on the employees' behalf for withheld shares at settlement are presented as financing activities on the statement of cash flows. This change must be applied retrospectively. The presentation requirements did not result in reclassification for any prior periods since such cash flows have historically been presented as a financing activity by the Company on its consolidated statement of cash flows.

The Company elected to continue to estimate forfeitures expected to occur to determine the amount of share-based compensation cost to recognize in each period, as permitted by ASU 2016-09. Accordingly, no cumulative effect was recorded in retained earnings on the Company’s consolidated statement of stockholders’ equity at the beginning of fiscal 2017 upon the adoption of ASU 2016-09.

Simplified Subsequent Measurement of Inventory (ASU 2015-11)

At the beginning of its first quarter of fiscal 2017, the Company adopted the provisions of ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory ("ASU 2015-11"). ASU 2015-11 simplifies subsequent measurements of inventory by replacing the lower of cost or market test, required under prior guidance, with a lower of cost and net realizable

7

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

value test. ASU 2015-11 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 are required to compare the cost of inventory to only one measure, its net realizable value, and not the three measures required by prior 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 recognize the difference as a loss in earnings in the period in which it occurs. The adoption of ASU 2015-11 was not material to the Company's consolidated financial condition, results of operations, or cash flows.

Balance Sheet Classification of Deferred Taxes (ASU 2015-17)

The Company prospectively adopted the provisions of ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes ("ASU 2015-17"), at the beginning of the first quarter of fiscal 2017. ASU 2015-17 simplifies the balance sheet presentation of deferred income taxes by reporting the net amount of deferred tax assets and liabilities for each tax-paying jurisdiction as non-current on the balance sheet. Prior guidance required the deferred taxes for each tax-paying jurisdiction to be presented as a net current asset or liability and net non-current asset or liability. The Company's prospective adoption of ASU 2015-17 impacts the classification of deferred tax assets and liabilities on any balance sheet that reports the Company's financial position for any date after December 31, 2016. Balance sheets for prior periods have not been adjusted. The adoption of ASU 2015-17 has no impact on the Company's results of operations or cash flows.

NOTE 3 – ACCUMULATED OTHER COMPREHENSIVE LOSS

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

(dollars in thousands)	April 1, 2017			December 31, 2016			April 2, 2016
Cumulative foreign currency translation adjustments	$	(26,677	)	$	(27,624	)	$	(24,300	)
Pension and post-retirement liability adjustments	(7,116		)	(7,116		)	(6,781		)
Total accumulated other comprehensive loss	$	(33,793	)	$	(34,740	)	$	(31,081	)

Changes in accumulated other comprehensive loss for the first quarter of fiscal 2017 consisted of net gains of $0.9 million for foreign currency translation adjustments. Changes in accumulated other comprehensive loss for the first quarter of fiscal 2016 consisted of gains of $5.3 million for foreign currency translation adjustments. During the first quarters of both fiscal 2017 and fiscal 2016, no amounts were reclassified from accumulated other comprehensive loss to the statement of operations.

NOTE 4 – GOODWILL, TRADENAMES AND OTHER INTANGIBLE ASSETS

The Company's goodwill and intangible assets were as follows:

8

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

		April 1, 2017						December 31, 2016
(dollars in thousands)	Weighted-average useful life	Gross fair value		Accumulated amortization		Net amount		Gross fair value		Accumulated amortization		Net amount
Carter's goodwill	Indefinite	$	136,570	$	—	$	136,570	$	136,570	$	—	$	136,570
Canada acquisition	Indefinite	39,800		—		39,800		39,439		—		39,439
Skip Hop acquisition (1)	Indefinite	56,555		—		56,555		—		—		—
Total goodwill		$	232,925	$	—	$	232,925	$	176,009	$	—	$	176,009
Carter's tradename	Indefinite	$	220,233	$	—	$	220,233	$	220,233	$	—	$	220,233
OshKosh tradename	Indefinite	85,500		—		85,500		85,500		—		85,500
Skip Hop tradename (1)	Indefinite	56,800		—		56,800		—		—		—
Finite-life tradenames (2)	2-20 years	42,009		38,858		3,151		42,005		38,810		3,195
Total tradenames		$	404,542	$	38,858	$	365,684	$	347,738	$	38,810	$	308,928
Skip Hop customer relationships (1)	15 years	35,900		205		35,695		—		—		—
Total tradenames and other intangibles, net		$	440,442	$	39,063	$	401,379	$	347,738	$	38,810	$	308,928

(1) Subject to revision. The measurement period, as defined in ASC 805, Business Combinations, is open for certain assets and liabilities related to the Skip Hop business acquisition that closed on February 22, 2017.

(2) Relates to the acquisition of rights to the Carter's brand in Chile in December 2014, the Carter's Watch to Wear and H.W. Carter & Sons brand worldwide in 2013, and the Bonnie Togs (Canada) acquisition in 2011. At April 1, 2017, the remaining unamortized balance relates only to the Carter's brand in Chile.

		April 2, 2016
(dollars in thousands)	Weighted-average useful life	Gross amount		Accumulated amortization		Net amount
Carter's goodwill	Indefinite	$	136,570	$	—	$	136,570
Canadian acquisition	Indefinite	40,668		—		40,668
Total goodwill		$	177,238	$	—	$	177,238
Carter's tradename	Indefinite	$	220,233	$	—	$	220,233
OshKosh tradename	Indefinite	85,500		—		85,500
Finite-life tradenames	2-20 years	42,019		37,899		4,120
Total tradenames		$	347,752	$	37,899	$	309,853

The substantial majority of Skip Hop wholesale operations became part of the Company's U.S. Wholesale reportable segment, with the remainder becoming part of the Company's International reportable segment. Skip Hop's eCommerce operations became part of the U.S. Retail reportable segment. The assignment of goodwill to reporting units has not been completed.

Changes in the carrying values between comparative periods for goodwill related to the Company's 2011 acquisition of its Canadian business (Bonnie Togs) were due to fluctuations in the foreign currency exchange rates between the Canadian and U.S. dollar that were used in the remeasurement process for preparing the Company's consolidated financial statements. The portion of the changes in the carrying values for other trademarks, including the related accumulated amortization, that was not attributable to amortization expense was also impacted by these same foreign currency exchange rate fluctuations.

Included in finite-life tradenames is the Company's exclusive rights to the Carter's brands including trademark registrations in Chile. The Company acquired the Chile rights in 2014 for approximately $3.6 million in cash. This tradename is being amortized over 20 years using a straight-line method. The Company recorded approximately $0.1 million and $1.0 million in amortization expense for the fiscal quarters ended April 1, 2017 and April 2, 2016, respectively. Future amortization expense is estimated to be approximately $0.2 million for each of the next five fiscal years. All other finite-life tradenames were fully amortized prior to fiscal 2017.

9

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Skip Hop customer relationships intangible asset acquired in February 2017, the Company recorded approximately $0.2 million of amortization expense for the first quarter of fiscal 2017. Future amortization expense is estimated to be approximately $2.4 million each year for the next 15 years.

NOTE 5 – COMMON STOCK

SHARE REPURCHASES

The total aggregate remaining capacity under outstanding repurchase authorizations as of April 1, 2017 was approximately $227.8 million, based on settled repurchase transactions. The authorizations have no expiration date.

Open Market Repurchases

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

	Fiscal quarter ended
	April 1, 2017		April 2, 2016
Number of shares repurchased	543,944		722,364
Aggregate cost of shares repurchased (dollars in thousands)	$	46,627	$	71,561
Average price per share	$	85.72	$	99.07

Future repurchases may occur from time to time in the open market, in privately 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.

DIVIDENDS

In the first fiscal quarters ended April 1, 2017 and April 2, 2016, the Company declared and paid cash dividends per share of $0.37 and $0.33, respectively. Future declarations of dividends and the establishment of future record and payment dates are at the discretion of the Company's Board of Directors and based on a number of factors, including the Company's future financial performance and other investment priorities.

Provisions in the indenture governing the senior notes TWCC and in TWCC's secured revolving credit facility could have the effect of restricting the Company's ability to pay future cash dividends on, or make future repurchases of, its common stock. Provisions related to the indenture governing the senior notes are described in the Company's Annual Report on Form 10-K for the 2016 fiscal year ended December 31, 2016.

NOTE 6 – LONG-TERM DEBT

Long-term debt consisted of the following:

10

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(dollars in thousands)	April 1, 2017			December 31, 2016			April 2, 2016
Senior notes at amounts repayable	$	400,000		$	400,000		$	400,000
Less unamortized issuance-related costs for senior notes	(4,379		)	(4,601		)	(5,250		)
Senior notes, net	395,621			395,399			394,750
Secured revolving credit facility	186,000			184,977			185,569
Total long-term debt, net	$	581,621		$	580,376		$	580,319

During the first quarter of fiscal 2017, the Company repaid CAD $25.5 million, which approximated $19.0 million, of outstanding borrowings under the multicurrency credit facility and simultaneously borrowed $20.0 million under the U.S. dollar credit facility. These transactions are reflected on the Company's consolidated statement of cash flows.

Secured Revolving Credit Facility

The aggregate principal amount of the Company's amended and restated secured revolving credit facility is $500 million consisting of (i) a $400 million U.S. dollar revolving credit 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 credit facility (including a $40 million sub-limit for letters of credit and a swing line sub-limit of $15 million) available for borrowings 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. The secured 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 revolving 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). The Company's secured revolving credit facility matures on September 16, 2020.

As of April 1, 2017, the Company had $186.0 million in outstanding borrowings under its secured revolving credit facility, exclusive of $4.8 million of outstanding letters of credit. As of April 1, 2017, approximately $309.2 million remained available for future borrowing.

As of April 1, 2017, the interest rate margins applicable to the secured 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%).

As of April 1, 2017, U.S. dollar borrowings outstanding under the secured revolving credit facility accrued interest at a LIBOR rate plus the applicable base rate, which was 2.29% on that date. All outstanding Canadian dollar borrowings were repaid during the first quarter of fiscal 2017.

As disclosed in the Company's most recent Annual Report on Form 10-K for the 2016 fiscal year ended December 31, 2016, the Company's secured revolving credit facility contains covenants, including affirmative and financial covenants. As of April 1, 2017, the Company was in compliance with the financial and other covenants under the secured revolving credit facility.

Senior Notes

As of April 1, 2017, TWCC had outstanding $400 million principal amount of senior notes bearing interest at a fixed rate of 5.25% per annum and maturing on August 15, 2021. The senior notes are unsecured and are fully and unconditionally guaranteed by Carter's, Inc. and certain subsidiaries of TWCC. On the Company's consolidated balance sheet, the senior notes are reported net of certain unamortized issuance-related costs, as described in the table above.

NOTE 7 – STOCK-BASED COMPENSATION

The Company recorded stock-based compensation expense as follows:

11

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

	Fiscal quarter ended
(dollars in thousands)	April 1, 2017		April 2, 2016
Stock options	$	1,244	$	1,296
Restricted stock:
Time-based awards	2,312		2,145
Performance-based awards	1,223		1,115
Total	$	4,779	$	4,556

On February 14, 2017, the Company's Board of Directors approved the issuance of the following new awards to certain key employees under the Company's existing stock-based compensation plan, subject to vesting: 295,964 stock options with an exercise price of $83.84 and grant-date fair value of $19.50 each; 91,592 shares of time-based restricted stock awards with a grant-date fair value of $83.84 each; and 58,784 shares of performance-based restricted stock awards with a grant-date fair value of $83.84 each.   

During the first quarter of fiscal 2017, a total of 148,171 restricted stock awards (time- and performance-based) vested with a weighted-average grant-date fair value of $72.47 each. During the first quarter of fiscal 2016, a total of 199,937 restricted stock awards (time- and performance-based) vested with a weighted average grant-date fair value of $60.23 each.

NOTE 8 – EMPLOYEE BENEFIT PLANS

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

OSHKOSH B'GOSH PENSION PLAN

The components of net periodic pension cost included in the statement of operations were comprised of:

	Fiscal quarter ended
(dollars in thousands)	April 1, 2017			April 2, 2016
Interest cost	$	611		$	629
Expected return on plan assets	(650		)	(676		)
Recognized actuarial loss	170			145
Net periodic pension cost	$	131		$	98

POST-RETIREMENT LIFE AND MEDICAL PLAN

The components of post-retirement (benefit) cost included in the statement of operations were comprised of:

	Fiscal quarter ended
(dollars in thousands)	April 1, 2017			April 2, 2016
Service cost – benefits attributed to service during the period	$	7		$	31
Interest cost on accumulated post-retirement benefit obligation	34			44
Amortization net actuarial gain	(76		)	(49		)
Total net periodic post-retirement (benefit) cost	$	(35	)	$	26

12

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 9 – INCOME TAXES

As of April 1, 2017, the Company had gross unrecognized income tax benefits of approximately $11.9 million, of which $7.8 million, if ultimately recognized, may affect the Company's effective tax rate in the periods settled.  The Company has recorded tax positions for which the ultimate deductibility is more likely than not, but for which there is uncertainty about the timing of such deductions.  

Included in the reserves for unrecognized tax benefits at April 1, 2017 were approximately $1.5 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 2017 or fiscal 2018 along with the effective tax rate in the quarter in which the benefits are recognized. 

The Company recognizes interest related to unrecognized tax benefits as a component of interest expense and recognizes penalties related to unrecognized tax benefits as a component of income tax expense.  During the first quarters of 2017 and 2016, interest expense recorded on uncertain tax positions was not significant. The Company had approximately $1.0 million, $0.8 million, and $0.7 million of interest accrued on uncertain tax positions as of April 1, 2017, December 31, 2016, and April 2, 2016, respectively.

As disclosed in note 2, the Company's adoption of ASU 2016-09 benefited consolidated income tax expense by approximately $1.0 million for the first quarter of fiscal 2017. The adoption of ASU 2016-09 had no impact on income tax expense for prior periods.

As disclosed in note 2, the Company prospectively adopted the provisions for classification of deferred income tax assets and liabilities on the Company's consolidated balance sheet at the beginning of fiscal 2017. Classifications for deferred income tax assets and liabilities for prior periods have not been adjusted on the Company's consolidated balance sheets.    

Deferred income tax liabilities on the Company's consolidated balance sheet at April 1, 2017 increased by $33.5 million due to the acquisition of Skip Hop during the first quarter of fiscal 2017.

NOTE 10 – FAIR VALUE MEASUREMENTS

The following table summarizes assets and liabilities that are remeasured at fair value each reporting period:

		April 1, 2017					December 31, 2016				April 2, 2016
(dollars in millions)		Level 1		Level 2	Level 3		Level 1		Level 2	Level 3	Level 1		Level 2		Level 3
Assets
	Investments (1)	$	14.8	—	—		$	12.3	—	—	$	8.2	—		—
	Foreign exchange forward contracts (3)	—		—	—		—		—	—	—		$	0.1	—
Liabilities
	Contingent consideration (2)	—		—	$	3.6	—		—	—	—		—		—
	Foreign exchange forward contracts (4)	—		—	—		—		—	—	—		$	2.1	—

(1) Included in Other Assets on the Company's consolidated balance sheet.

(2) Included in Other Current Liabilities on the Company's consolidated balance sheet.

(3) Included in Prepaid Expenses and Other Current Assets on the Company's consolidated balance sheet.

(4) Included in Other Current Liabilities on the Company's consolidated balance sheet.

13

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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. Gains on the investments in marketable securities were $0.7 million for the fiscal quarter ended April 1, 2017. Losses on the investments in marketable securities were $0.4 million for the fiscal quarter ended April 2, 2016. These amounts are included in Other (income) expense, net.

CONTINGENT CONSIDERATION

In connection with the Company's acquisition of Skip Hop on February 22, 2017, the Company may be obligated to pay up to $10 million of additional cash consideration to the sellers of Skip Hop if the acquired business achieves certain financial targets in fiscal 2017. The Company has preliminarily estimated the discounted fair value of this contingency to be approximately $3.6 million (undiscounted approximately $3.8 million) on the date of acquisition based on a weighted payout probability of 50%. Subsequent changes in the fair value of this contingency were not material through the end of the fiscal quarter ended April 1, 2017. The Company will remeasure the fair value of this contingency at the end of each reporting period in fiscal 2017.

FOREIGN EXCHANGE FORWARD 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) and are classified as Level 2 within the fair value hierarchy. At April 1, 2017 and December 31, 2016, there were no open foreign currency contracts. At April 2, 2016, the notional value of the open foreign currency forward contracts was $44.0 million.

DEBT OBLIGATIONS

The Company's outstanding debt obligations are reflected in the consolidated balance sheet at carrying value. These debt obligations are not remeasured at fair value each reporting period, however the following fair value disclosures are provided:

• As of April 1, 2017, the fair value of the Company's $186.0 million in outstanding borrowings under its secured revolving credit facility approximated carrying value.

• The fair value of the Company's senior notes at April 1, 2017 was approximately $412 million. The fair value of these senior notes with a notional value and carrying value of $400 million was estimated using a quoted price as provided in the secondary market, which considersthe Company's credit risk and market related conditions, and is therefore within Level 2 of the fair value hierarchy.

14

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 11 – EARNINGS PER SHARE

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

	Fiscal quarter ended
	April 1, 2017			April 2, 2016
Weighted-average number of common and common equivalent shares outstanding:
Basic number of common shares outstanding	48,322,692			51,176,987
Dilutive effect of equity awards	554,994			467,103
Diluted number of common and common equivalent shares outstanding	48,877,686			51,644,090
Basic net income per common share (in thousands, except per share data):
Net income	$	46,664		$	53,980
Income allocated to participating securities	(370		)	(444		)
Net income available to common shareholders	$	46,294		$	53,536
Basic net income per common share	$	0.96		$	1.05
Diluted net income per common share (in thousands, except per share data):
Net income	$	46,664		$	53,980
Income allocated to participating securities	(367		)	(441		)
Net income available to common shareholders	$	46,297		$	53,539
Diluted net income per common share	$	0.95		$	1.04
Anti-dilutive shares excluded from dilutive earnings per share computation	530,697			386,030

15

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 12 – OTHER CURRENT AND LONG-TERM LIABILITIES

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

(dollars in thousands)	April 1, 2017		December 31, 2016		April 2, 2016
Accrued bonuses and incentive compensation	$	2,924	$	16,834	$	4,148
Income taxes payable	25,960		8,458		19,195
Accrued customer loyalty program reserve	11,120		10,510		10,276
Accrued salaries and wages	11,616		4,312		10,284
Unredeemed gift cards	10,839		11,441		9,996
Accrued employee benefits	8,453		17,165		8,157
Accrued and deferred rent	17,022		15,632		13,409

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

(dollars in thousands)	April 1, 2017		December 31, 2016		April 2, 2016
Deferred lease incentives	$	74,447	$	74,015	$	72,086

NOTE 13 – COMMITMENTS AND CONTINGENCIES

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

NOTE 14 – SEGMENT INFORMATION

At the beginning of fiscal 2017, the Company combined its Carter's Retail and OshKosh Retail into a single U.S. Retail operating segment, and its Carter's Wholesale and OshKosh Wholesale into a single U.S. Wholesale operating segment, in order to reflect the sales-channel approach the Company's executive management now uses to evaluate its business performance and manage operations in the U.S.  The Company's International segment was not affected by these changes. The Company's reportable segments are now U.S. Retail, U.S. Wholesale, and International.

Prior periods have been conformed to reflect the Company's current segment structure by adding together Carter's Retail and OshKosh Retail as U.S. Retail and Carter's Wholesale and OshKosh Wholesale as U.S. Wholesale. Prior results for the International segment and Corporate were not impacted.

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

16

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

	Fiscal quarter ended
(dollars in thousands)	April 1, 2017			% of Total Net Sales		April 2, 2016			% of Total Net Sales
Net sales:
U.S. Wholesale	$	292,555		39.9	%	$	292,054		40.3	%
U.S. Retail (a)	363,771			49.6	%	354,089			48.9	%
International (b)	76,429			10.5	%	77,942			10.8	%
Total net sales	$	732,755		100.0	%	$	724,085		100.0	%
Operating income (loss):				% of Segment Net Sales					% of Segment Net Sales
U.S. Wholesale	$	69,695		23.8	%	$	68,411		23.4	%
U.S. Retail (a)	29,900			8.2	%	39,469			11.1	%
International (b)	3,685			4.8	%	8,441			10.8	%
Corporate expenses (c) (d) (e) (f)	(24,714		)			(23,313		)
Total operating income	$	78,566		10.7	%	$	93,008		12.8	%

(a) Includes retail store and eCommerce results.

(b) Net sales include international retail, eCommerce, and wholesale sales.

(c) 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.

(d) Includes charges related to the amortization of the H.W. Carter and Sons tradenames of approximately $1.0 million for the fiscal quarter ended April 2, 2016.

(e) Includes expenses related to the acquisition of Skip Hop of approximately $1.3 million for the fiscal quarter ended April 1, 2017.

(f) Includes charges related to the Company's direct sourcing initiative of approximately $0.2 million for the fiscal quarter ended April 1, 2017.

NOTE 15 – PENDING ADOPTION OF RECENT ACCOUNTING PRONOUNCEMENTS

Revenue Recognition (ASC 606)

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which since has been codified in Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers ("ASC 606"). This guidance clarifies the principles for recognizing revenue and will be applicable to all contracts with customers regardless of industry-specific or transaction-specific fact patterns. Further, the guidance will require 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. Since its original issuance, the FASB has issued several updates to this guidance, and additional updates are possible. The standard will be effective for the Company at the beginning of fiscal 2018, including interim periods within that fiscal year. Upon adoption, the Company will apply the provisions of ASC 606 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. Based on an assessment of the Company's significant sources of revenue, at this time the Company does not believe that the adoption of ASC 606, including any of the policy elections required or permitted by ASC 606, will have a material impact on its consolidated financial position, results of operations and cash flows. Based on this assessment, at this time the Company does not believe the adoption of ASC 606 will have a significant impact on processes, systems, or controls.

Leases (ASU 2016-02)

In February 2016, the FASB issued new lease accounting guidance in ASU No. 2016-02, Leases ("ASU 2016-02"). Under this new guidance, lessees will be required to recognize for all leases (with the exception of short-term leases): 1) a lease liability equal to the lessee's obligation to make lease payments arising from a lease, measured on a discounted basis and 2) a right-of-use asset which will represent the lessee's right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 will have little or no impact on an entity's results of operations or cash flows. The new standard will be effective for the Company at the beginning of fiscal 2019, including interim periods within the year of adoption. The new standard requires a modified retrospective basis, and early adoption is permitted. The Company is still evaluating the potential impacts of ASU

17

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

2016-02 on its consolidated balance sheet. However, the Company expects that the adoption of ASU 2016-02 will require the Company to recognize right-of-use assets and lease liabilities that will be material to the Company's consolidated balance sheet.

Credit Losses (ASU 2016-13)

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). This new guidance will change how entities account for credit impairment for trade and other receivables, as well as for certain financial assets and other instruments. ASU 2016-13 will replace the current "incurred loss" model with an "expected loss" model. Under the "incurred loss" model, a loss (or allowance) is recognized only when an event has occurred (such as a payment delinquency) that causes the entity to believe that a loss is probable (i.e., that it has been "incurred"). Under the "expected loss" model, an entity will recognize a loss (or allowance) upon initial recognition of the asset that reflects all future events that will lead to a loss being realized, regardless of whether it is probable that the future event will occur. The "incurred loss" model considers past events and current conditions, while the "expected loss" model includes expectations for the future which have yet to occur. ASU 2016-13 is effective for public companies for fiscal years beginning after December 15, 2019 with early adoption permitted for fiscal years beginning after December 15, 2018, including interim periods therein. The standard will require entities to record a cumulative-effect adjustment to the balance sheet as of the beginning of the first reporting period in which the guidance is effective. The Company is currently evaluating the potential impact that ASU 2016-13 may have on the timing of recognizing future provisions for expected losses on the Company's accounts receivable.

Classification of Costs Related to Defined Benefit Pension and Other Post-retirement Benefit Plans (ASU 2017-07)

In March 2017, the FASB issued ASU No. 2017-07, Compensation - Retirement Benefits (Topic 715: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit Cost ("ASU 2017-07"). ASU 2017-07 will change how employers that sponsor defined benefit pension and/or other post-retirement benefit plans present the net periodic benefit costs in the statement of operations. Under this new guidance, an employer's statement of operations will present service cost arising in the current period in the same income statement line item as other employee compensation. However, all other components of current period costs related to defined benefit plans, such as prior service costs and actuarial gains and losses, will be presented on the income statement on a line item outside (or below) operating income. For public companies, the guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted. Presentation of the components of net periodic benefit cost on the income statement will be applied retrospectively. The impact that ASU 2017-07 will have on the Company's operating income will depend on future periodic pension costs related to the Company's current frozen defined benefit pension plan and post-retirement medical benefit plan. However, based on these costs in recent annual and interim reporting periods, the adoption of ASU 2017-07 is not expected to be material to the Company's operating income.

Goodwill Impairment Testing (ASU 2017-04)

In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). ASU 2017-04 will eliminate the requirement to calculate the implied fair value of goodwill (step 2 of the current goodwill impairment test) to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit's carrying amount over its fair value (i.e., measure the charge based on the current step 1). Any impairment charge will be limited to the amount of goodwill allocated to an impacted reporting unit. ASU 2017-04 will not change the current guidance for completing Step 1 of the goodwill impairment test, and an entity will still be able to perform the current optional qualitative goodwill impairment assessment before determining whether to proceed to Step 1. Upon adoption, ASU 2017-04 will be applied prospectively. Adoption for public companies is effective for annual and interim impairment test performed in periods after December 15, 2019. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017. The impact that ASU 2017-04 may have on the Company's financial condition or results of operations will depend on the circumstances of any goodwill impairment event that may occur after adoption.

Statement of Cash Flows (ASU 2016-15)

18

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230) ("ASU 2016-15"). This ASU represents a consensus of the FASB’s Emerging Issues Task Force on eight separate issues that each impact classifications on the statement of cash flows. In particular, issue number three addresses the classification of contingent consideration payments made after a business combination. Under ASU 2016-15, cash payments made soon after an acquisition’s consummation date (i.e., approximately three months or less) will be classified as cash outflows for investing activities. Payments made thereafter will be classified as cash outflows for financing activities up to the amount of the original contingent consideration liability. Payments made in excess of the amount of the original contingent consideration liability will be classified as cash outflows for operating activities. For public business entities, ASU 2016-15 is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years.  The guidance requires application using a retrospective transition method.  Early adoption is permitted, provided that all of the amendments are adopted in the same period. At the current time, none of the other items contained in ASU 2016-15 are expected to impact the Company's classifications on its consolidated statement of cash flows.

19

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 16 – GUARANTOR UNAUDITED CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

The Company’s senior notes constitute debt obligations of its wholly-owned subsidiary, The William Carter Company ("TWCC" or the "Subsidiary Issuer"), are unsecured and are fully and unconditionally guaranteed by Carter’s, Inc. (the "Parent"), by certain of the Parent's current domestic subsidiaries (other than TWCC), and, subject to certain exceptions, future restricted subsidiaries that guarantee the Company’s secured 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.

For additional information, refer to the Company's Annual Report on Form 10-K for the 2016 fiscal year ended December 31, 2016.

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.

20

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

CARTER’S, INC.

Condensed Consolidating Balance Sheets (unaudited)

As of April 1, 2017

(dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	108,944	$	12,992	$	32,342	$	—		$	154,278
Accounts receivable, net	—		168,560		32,642		5,505		—			206,707
Intercompany receivable	—		87,901		60,971		14,810		(163,682		)	—
Finished goods inventories	—		197,022		205,335		48,934		(16,579		)	434,712
Prepaid expenses and other current assets	—		16,386		18,288		11,479		—			46,153
Total current assets	—		578,813		330,228		113,070		(180,261		)	841,850
Property, plant, and equipment, net	—		154,119		196,876		35,280		—			386,275
Goodwill	—		136,570		56,072		40,283		—			232,925
Tradenames and other intangible assets, net	—		223,384		177,995		—		—			401,379
Other assets	—		20,635		549		1,850		—			23,034
Intercompany long-term receivable	—		—		423,287		—		(423,287		)	—
Intercompany long-term note receivable	—		100,000		—		—		(100,000		)	—
Investment in subsidiaries	771,963		905,397		146,266		—		(1,823,626		)	—
Total assets	$	771,963	$	2,118,918	$	1,331,273	$	190,483	$	(2,527,174	)	$	1,885,463
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	—	$	56,871	$	34,820	$	9,695	$	—		$	101,386
Intercompany payables	—		71,796		88,529		3,357		(163,682		)	—
Other current liabilities	—		57,324		58,278		8,059		—			123,661
Total current liabilities	—		185,991		181,627		21,111		(163,682		)	225,047
Long-term debt, net	—		581,621		—		—		—			581,621
Deferred income taxes	—		71,250		62,200		102		—			133,552
Intercompany long-term liability	—		423,287		—		—		(423,287		)	—
Intercompany long-term note payable	—		—		100,000		—		(100,000		)	—
Other long-term liabilities	—		68,227		91,385		13,668		—			173,280
Stockholders' equity	771,963		788,542		896,061		155,602		(1,840,205		)	771,963
Total liabilities and stockholders' equity	$	771,963	$	2,118,918	$	1,331,273	$	190,483	$	(2,527,174	)	$	1,885,463

21

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

As of December 31, 2016

(dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	229,056	$	11,817	$	58,485	$	—		$	299,358
Accounts receivable, net	—		176,825		18,315		7,331		—			202,471
Intercompany receivable	—		55,902		74,681		14,601		(145,184		)	—
Finished goods inventories	—		278,696		174,542		60,153		(25,800		)	487,591
Prepaid expenses and other current assets	—		11,402		16,028		4,750		—			32,180
Deferred income taxes	—		18,476		15,440		1,570		—			35,486
Total current assets	—		770,357		310,823		146,890		(170,984		)	1,057,086
Property, plant, and equipment, net	—		155,187		194,691		35,996		—			385,874
Goodwill	—		136,570		—		39,439		—			176,009
Tradenames, net	—		223,428		85,500		—		—			308,928
Other assets	—		17,771		605		324		—			18,700
Intercompany long-term receivable	—		—		428,436		—		(428,436		)	—
Intercompany long-term note receivable	—		100,000		—		—		(100,000		)	—
Investment in subsidiaries	788,124		753,753		145,076		—		(1,686,953		)	—
Total assets	$	788,124	$	2,157,066	$	1,165,131	$	222,649	$	(2,386,373	)	$	1,946,597
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	—	$	97,103	$	41,947	$	19,382	$	—		$	158,432
Intercompany payables	—		85,894		55,257		4,033		(145,184		)	—
Other current liabilities	—		16,473		90,718		11,986		—			119,177
Total current liabilities	—		199,470		187,922		35,401		(145,184		)	277,609
Long-term debt, net	—		561,399		—		18,977		—			580,376
Deferred income taxes	—		87,116		43,540		—		—			130,656
Intercompany long-term liability	—		428,436		—		—		(428,436		)	—
Intercompany long-term note payable	—		—		100,000		—		(100,000		)	—
Other long-term liabilities	—		66,721		89,252		13,859		—			169,832
Stockholders' equity	788,124		813,924		744,417		154,412		(1,712,753		)	788,124
Total liabilities and stockholders' equity	$	788,124	$	2,157,066	$	1,165,131	$	222,649	$	(2,386,373	)	$	1,946,597

22

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

As of April 2, 2016

(dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	331,672	$	19,802	$	43,667	$	—		$	395,141
Accounts receivable, net	—		166,843		20,212		5,514		—			192,569
Intercompany receivable	—		67,203		120,901		5,157		(193,261		)	—
Intercompany loan receivable	—		—		—		—		—			—
Finished goods inventories	—		189,225		186,901		40,421		(40,048		)	376,499
Prepaid expenses and other current assets	—		17,879		14,273		4,639		—			36,791
Deferred income taxes	—		14,766		14,696		2,379		—			31,841
Total current assets	—		787,588		376,785		101,777		(233,309		)	1,032,841
Property, plant, and equipment, net	—		162,110		184,548		30,615		—			377,273
Goodwill	—		136,570		—		40,668		—			177,238
Tradenames and other intangibles, net	—		224,353		85,500		—		—			309,853
Other assets	—		14,164		795		299		—			15,258
Intercompany long-term receivable	—		—		294,017		—		(294,017		)	—
Intercompany long-term note receivable	—		100,000		—		—		(100,000		)	—
Investment in subsidiaries	848,717		676,350		106,542		—		(1,631,609		)	—
Total assets	$	848,717	$	2,101,135	$	1,048,187	$	173,359	$	(2,258,935	)	$	1,912,463
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	—	$	58,626	$	19,554	$	12,207	$	—		$	90,387
Intercompany payables	—		124,763		65,188		3,310		(193,261		)	—
Intercompany loan payables	—		—		—		—		—			—
Other current liabilities	—		23,801		68,514		10,179		—			102,494
Total current liabilities	—		207,190		153,256		25,696		(193,261		)	192,881
Long-term debt, net	—		560,751		—		19,568		—			580,319
Deferred income taxes	—		83,925		44,890		—		—			128,815
Intercompany long-term liability	—		294,017		—		—		(294,017		)	—
Intercompany long-term note payable	—		—		100,000		—		(100,000		)	—
Other long-term liabilities	—		66,487		83,027		12,217		—			161,731
Stockholders' equity	848,717		888,765		667,014		115,878		(1,671,657		)	848,717
Total liabilities and stockholders' equity	$	848,717	$	2,101,135	$	1,048,187	$	173,359	$	(2,258,935	)	$	1,912,463

23

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

CARTER’S, INC.

Condensed Consolidating Statements of Operations (unaudited)

For the fiscal quarter ended April 1, 2017

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	453,515		$	395,779		$	61,031		$	(177,570	)	$	732,755
Cost of goods sold	—			330,633			228,766			37,429			(179,875		)	416,953
Gross profit	—			122,882			167,013			23,602			2,305			315,802
Selling, general, and administrative expenses	—			40,932			189,504			26,271			(8,913		)	247,794
Royalty income	—			(8,430		)	(4,125		)	—			1,997			(10,558		)
Operating income (loss)	—			90,380			(18,366		)	(2,669		)	9,221			78,566
Interest expense	—			6,973			1,369			89			(1,327		)	7,104
Interest income	—			(1,439		)	—			(27		)	1,327			(139		)
(Income) loss in subsidiaries	(46,664		)	21,031			2,449			—			23,184			—
Other (income) expense, net	—			(368		)	368			(221		)	—			(221		)
Income (loss) before income taxes	46,664			64,183			(22,552		)	(2,510		)	(13,963		)	71,822
Provision (benefit) for income taxes	—			26,740			(1,520		)	(62		)	—			25,158
Net income (loss)	$	46,664		$	37,443		$	(21,032	)	$	(2,448	)	$	(13,963	)	$	46,664

24

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the fiscal quarter ended April 2, 2016

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	451,196		$	381,280		$	55,830		$	(164,221	)	$	724,085
Cost of goods sold	—			321,100			211,028			33,091			(152,063		)	413,156
Gross profit	—			130,096			170,252			22,739			(12,158		)	310,929
Selling, general, and administrative expenses	—			42,587			172,142			23,377			(9,110		)	228,996
Royalty income	—			(9,072		)	(4,211		)	—			2,208			(11,075		)
Operating income (loss)	—			96,581			2,321			(638		)	(5,256		)	93,008
Interest expense	—			6,608			845			103			(817		)	6,739
Interest income	—			(985		)	—			(39		)	817			(207		)
(Income) loss in subsidiaries	(53,980		)	6,496			3,340			—			44,144			—
Other expense (income), net	—			200			(214		)	3,207			—			3,193
Income (loss) before income taxes	53,980			84,262			(1,650		)	(3,909		)	(49,400		)	83,283
Provision for income taxes	—			25,026			4,846			(569		)	—			29,303
Net income (loss)	$	53,980		$	59,236		$	(6,496	)	$	(3,340	)	$	(49,400	)	$	53,980

25

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

CARTER’S, INC.

Condensed Consolidating Statements of Comprehensive Income (unaudited)

For the fiscal quarter ended April 1, 2017

(dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net income (loss)	$	46,664	$	37,443	$	(21,032	)	$	(2,448	)	$	(13,963	)	$	46,664
Foreign currency translation adjustments	947		947		947			947			(2,841		)	947
Comprehensive income (loss)	$	47,611	$	38,390	$	(20,085	)	$	(1,501	)	$	(16,804	)	$	47,611

For the fiscal quarter ended April 2, 2016

(dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net income (loss)	$	53,980	$	59,236	$	(6,496	)	$	(3,340	)	$	(49,400	)	$	53,980
Foreign currency translation adjustments	5,286		5,286		5,286			5,286			(15,858		)	5,286
Comprehensive income (loss)	$	59,266	$	64,522	$	(1,210	)	$	1,946		$	(65,258	)	$	59,266

26

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

CARTER’S, INC.

Condensed Consolidating Statements of Cash Flows (unaudited)

For the fiscal quarter ended April 1, 2017

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Cash flows provided by (used in) operating activities:	$	—		$	101,914		$	(13,678	)	$	(4,056	)	$	—		$	84,180
Cash flows from investing activities:
Capital expenditures	—			(6,503		)	(9,548		)	(1,940		)	—			(17,991		)
Intercompany investing activity	68,551			(3,926		)	—			—			(64,625		)	—
Acquisition of business, net of cash acquired	—			(144,520		)	746			70			—			(143,704		)
Net cash provided by (used in) investing activities	68,551			(154,949		)	(8,802		)	(1,870		)	(64,625		)	(161,695		)
Cash flows from financing activities:
Intercompany financing activity	—			(87,077		)	23,655			(1,203		)	64,625			—
Borrowings under secured revolving credit facility	—			20,000			—			—			—			20,000
Payments on secured revolving credit facility	—			—			—			(18,965		)	—			(18,965		)
Dividends paid	(17,998		)	—			—			—			—			(17,998		)
Repurchases of common stock	(46,627		)	—			—			—			—			(46,627		)
Withholdings from vestings of restricted stock	(5,552		)	—			—			—			—			(5,552		)
Proceeds from exercises of stock options	1,626			—			—			—			—			1,626
Net cash (used in) provided by financing activities	(68,551		)	(67,077		)	23,655			(20,168		)	64,625			(67,516		)
Effect of exchange rate changes on cash	—			—			—			(49		)	—			(49		)
Net (decrease) increase in cash and cash equivalents	—			(120,112		)	1,175			(26,143		)	—			(145,080		)
Cash and cash equivalents, beginning of period	—			229,056			11,817			58,485			—			299,358
Cash and cash equivalents, end of period	$	—		$	108,944		$	12,992		$	32,342		$	—		$	154,278

27

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the fiscal quarter ended April 2, 2016

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Cash flows provided by (used in) operating activities:	$	—		$	117,433		$	8,504		$	2,345		$	—		$	128,282
Cash flows from investing activities:
Capital expenditures	—			(8,825		)	(15,433		)	(1,294		)	—			(25,552		)
Intercompany investing activity	93,300			(3,250		)	(1,457		)	—			(88,593		)	—
Net cash provided by (used in) investing activities	93,300			(12,075		)	(16,890		)	(1,294		)	(88,593		)	(25,552		)
Cash flows from financing activities:
Intercompany financing activity	—			(101,144		)	12,079			472			88,593			—
Dividends Paid	(17,032		)	—			—			—			—			(17,032		)
Income tax benefit from stock-based compensation	—			1,687			1,457			—			—			3,144
Repurchases of common stock	(71,561		)	—			—			—			—			(71,561		)
Withholdings from vestings of restricted stock	(8,454		)	—			—			—			—			(8,454		)
Proceeds from exercises of stock options	3,747			—			—			—			—			3,747
Net cash (used in) provided by financing activities	(93,300		)	(99,457		)	13,536			472			88,593			(90,156		)
Effect of exchange rate changes on cash	—			—			—			1,358			—			1,358
Net increase in cash and cash equivalents	—			5,901			5,150			2,881			—			13,932
Cash and cash equivalents, beginning of period	—			325,771			14,652			40,786			—			381,209
Cash and cash equivalents, end of period	$	—		$	331,672		$	19,802		$	43,667		$	—		$	395,141

28

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

AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 relating to our future performance, including, without limitation, statements with respect to our anticipated financial results for any other quarter or period in fiscal 2017 or any other future period, assessment of our performance and financial position, and drivers of our sales and earnings growth. Such statements are based on current expectations only, and are subject to certain risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize or not materialize, or should any of the underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, or projected. Certain of the risks and uncertainties that could cause actual results and performance to differ materially are described under the heading "Risk Factors" in our most recently filed Annual Report on Form 10-K and other reports filed with the Securities and Exchange Commission from time to time.

OVERVIEW

We are the largest branded marketer in the United States ("U.S.") and in Canada of apparel exclusively for babies and young children. We own the Carter's and OshKosh B'gosh ("OshKosh") brands, two of the most recognized brands in the marketplace. Established in 1865, our Carter's brand is recognized and trusted by consumers for high-quality apparel and accessories for children sizes newborn to eight. Established in 1895, OshKosh is a well-known brand, trusted by consumers for apparel and accessories for children sizes newborn to 14, with a focus on playclothes for toddlers and young children. Given each brand's product category emphasis and brand aesthetic, we believe they provide a complementary product offering. We have extensive experience in the young children's apparel market and focus on delivering products that satisfy our consumers' needs.

We market high-quality products at an attractive value proposition for consumers, and offer multiple product categories. Our multi-channel international business model - retail stores, online and wholesale - enables us to reach a broad range of consumers around the world.

We acquired 100% ownership in Skip Hop Holdings, Inc. and its subsidiaries ("Skip Hop") after the close of business on February 22, 2017. The balance sheet, results of operations and cash flows for Skip Hop are included in our consolidated financial statements beginning on February 23, 2017. Skip Hop's products are sold in U.S. and international wholesale and eCommerce channels primarily to families with young children, and the product lines include diaper bags, kid’s backpacks, travel accessories, home gear, and hardline goods for playtime, mealtime, and bath time.

The following is a discussion of our results of operations and current financial condition. This should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included in this Form 10-Q and audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the 2016 fiscal year ended December 31, 2016.

Segments

At the beginning of fiscal 2017, we combined our Carter's Retail and OshKosh Retail into a single U.S. Retail operating segment, and our Carter's Wholesale and OshKosh Wholesale into a single U.S. Wholesale operating segment, to reflect the sales-channel approach executive management now uses to evaluate business performance and manage operations in the U.S.  Our International segment was not affected by these changes. Our reportable segments are now U.S. Retail, U.S. Wholesale, and International. Prior periods have been conformed to reflect our current segment structure.

Our U.S. Retail segment consists of revenue from sales of products in the United States, including Carter’s,OshKosh and Skip Hop products, through our retail and online stores. Similarly, our U.S. Wholesale segment consists of revenue from sales in the United States of Carter’s,OshKosh and Skip Hop products, respectively, through our wholesale partners. Finally, our International segment consists of income from sales of Carter’s,OshKosh and Skip Hop products through retail and online stores outside the United States, primarily through our retail and online stores in Canada and stores operated by our international partners, as well as sales to our international wholesale partners.

29

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

AND RESULTS OF OPERATIONS (Continued)

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, selected statement of operations data expressed as a percentage of consolidated net sales:

	Fiscal quarter ended
	April 1, 2017		April 2, 2016
Net sales
U.S. Wholesale	39.9	%	40.3	%
U.S. Retail	49.6	%	48.9	%
International	10.5	%	10.8	%
Consolidated net sales	100.0	%	100.0	%
Cost of goods sold	56.9	%	57.1	%
Gross margin	43.1	%	42.9	%
Selling, general, and administrative expenses	33.8	%	31.6	%
Royalty income	(1.4	)%	(1.5	)%
Operating income	10.7	%	12.8	%
Interest expense	0.9	%	0.9	%
Interest income	n/m		n/m
Other (income) expense, net	n/m		0.4	%
Income before income taxes	9.8	%	11.5	%
Provision for income taxes	3.4	%	4.0	%
Net income	6.4	%	7.5	%

n/m - rounds to less than 0.1%, therefore not material.

Note: Results may not be additive due to rounding.

30

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

AND RESULTS OF OPERATIONS (Continued)

FISCAL QUARTER ENDED APRIL 1, 2017 COMPARED TO FISCAL QUARTER ENDED APRIL 2, 2016

CONSOLIDATED NET SALES

In the first quarter of fiscal 2017, consolidated net sales increased$8.7 million, or 1.2%, to $732.8 million from $724.1 million in the first quarter of fiscal 2016. The increase was primarily driven by higher eCommerce sales in our U.S. Retail segment. Changes in foreign currency exchange rates in the first quarter of fiscal 2017, as compared to the first quarter of fiscal 2016, had a favorable impact on our consolidated net sales of approximately $1.4 million.

Net sales by segment, and each segment's percentage of consolidated net sales, were as follows:

	Fiscal quarter ended
(dollars in thousands)	April 1, 2017		% of Total		April 2, 2016		% of Total
Net sales:
U.S. Wholesale	$	292,555	39.9	%	$	292,054	40.3	%
U.S. Retail	363,771		49.6	%	354,089		48.9	%
International	76,429		10.5	%	77,942		10.8	%
Total net sales	$	732,755	100.0	%	$	724,085	100.0	%

U.S. WHOLESALE SALES

U.S. Wholesale segment net sales increased$0.5 million, or 0.2%, in the first quarter of fiscal 2017 to $292.6 million from $292.1 million in the first quarter of fiscal 2016. For the post-acquisition period of February 23 to April 1, 2017, Skip Hop's wholesale sales were approximately $6.8 million. The increase in net sales was offset by a 1.8% decrease in the number of units shipped, as well as a decrease of 0.4% in the average price per unit for the remaining U.S. Wholesale business.

U.S. RETAIL SALES

Store Count Data

Store count data for our U.S. Retail stores was as follows during the first quarter of fiscal 2017:

	U.S. Retail Stores
Store count at December 31, 2016	792
Openings	15
Closings	(5	)
Store count at April 1, 2017	802
Approximate new store projections for all of fiscal 2017:
Openings	60
Closings	(12	)

31

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

AND RESULTS OF OPERATIONS (Continued)

Comparable Sales

From the first quarter of fiscal 2016 to the first quarter of fiscal 2017, changes in comparable sales for our U.S. Retail segment were as follows:

Increase (Decrease)
Retail stores	(10.4)%
eCommerce	+19.9%
Total	(3.5)%

The decrease in comparable retail store sales during the first quarter of fiscal 2017 compared to the first quarter of fiscal 2016 was primarily due to a decrease in the number of transactions and a lower price per unit. We believe this resulted from delays for certain income tax refunds and the shift of the Easter holiday from first quarter to second quarter. The increase in eCommerce comparable sales during first quarter of fiscal 2017 compared to the first quarter of fiscal 2016 was primarily due to an increase in the number of transactions.

Sales Results

U.S. Retail segment net sales increased$9.7 million, or 2.7%, in the first quarter of fiscal 2017 to $363.8 million from $354.1 million in the first quarter of fiscal 2016. This increase in net sales primarily reflected a/an:

• Increase of $20.5 million from new and non-comparable store sales;

• Increase of$17.3 million from eCommerce sales;

• Increase of $0.4 million from Skip Hop eCommerce sales;

• Decrease of $28.3 million in comparable store sales; and

• Decrease of $2.9 million due to the impact of store closings.

INTERNATIONAL SALES

International segment net sales decreased$1.5 million, or 1.9%, in the first quarter of fiscal 2017 to $76.4 million from $77.9 million in the first quarter of fiscal 2016. Changes in foreign currency exchange rates, primarily between the U.S. dollar and the Canadian dollar, had a favorable impact on International segment net sales of approximately $1.4 million in the first quarter of fiscal 2017 compared to the first quarter of fiscal 2016. For the post-acquisition period of February 23 to April 1, 2017, Skip Hop's international sales were approximately $3.3 million.

The $1.5 milliondecrease in net sales in the International segment primarily reflected a:

• Increase of $4.6 million from our Canada, China, and Skip Hop wholesale businesses;

• Decrease of $7.9 million from our other international wholesale partners in certain markets; and

• Increase of $1.8 million from eCommerce, primarily from our websites in Canada and China.

Compared to the first quarter of fiscal 2016, our Canadian total retail comparable sales decreased 8.0% in the first quarter of fiscal 2017, primarily due to eCommerce comparable sales growth of 40.1%, which was more than offset by retail stores comparable sales decline of 11.7%.

Store Count Data

Store count data for our Canada retail stores was as follows during the first quarter of fiscal 2017:

32

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

AND RESULTS OF OPERATIONS (Continued)

	Canada Retail Stores
Store count at December 31, 2016	164
Openings	—
Closings	(1	)
Store count at April 1, 2017	163
Approximate new store projections for all of fiscal 2017:
Openings	16
Closings	(2	)

GROSS MARGIN AND GROSS PROFIT

Our consolidated gross margin increased from 42.9% in the first quarter of fiscal 2016 to 43.1% in the first quarter of fiscal 2017, primarily due to a shift to higher margin retail business, lower inventory charges, and lower product costs. Our consolidated gross profit increased$4.9 million, or 1.6%, to $315.8 million in the first quarter of fiscal 2017 from $310.9 million in the first quarter of fiscal 2016 primarily due to the increase in sales.

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

SELLING, GENERAL, AND ADMINISTRATIVE ("SG&A") EXPENSES

Consolidated SG&A expenses in the first quarter of fiscal 2017increased$18.8 million, or 8.2%, to $247.8 million from $229.0 million in the first quarter of fiscal 2016. As a percentage of net sales, SG&A expenses increased from 31.6% in the first quarter of fiscal 2016 to 33.8% in the first quarter of fiscal 2017.

The increase in SG&A expenses, as a percentage of net sales, in the first quarter of fiscal 2017 primarily reflected a:

• $10.2 million increase in expenses related to retail store operations, primarily due to new store openings;

• $3.3 million increase in expenses related to eCommerce operations, including investments in technology;

• $3.1 million increase in expenses related to legal and other general and administrative expenses;

• $2.1 million increase in expenses primarily related to selling and distribution expenses;

• $1.5 million increase in expenses related to Skip Hop acquisition costs and direct sourcing initiatives; and

• $1.5 million increase in expenses related to marketing and brand management;

which were partially offset by a:

• $1.6 million decrease in performance-based compensation expenses;

• $1.0 million decrease in amortization of the H.W.Carter & Sons trademarks; and

• $0.3 million decrease in information technology and systems costs.

ROYALTY INCOME

We license the use of our Carter's, Just One You, Child of Mine, OshKosh B'gosh, OshKosh, Genuine Kids from OshKosh, and Precious Firsts brand names. Royalty income from these brands for the first quarter of fiscal 2017decreased$0.5 million, or 4.7%, to $10.6 million from $11.1 million in the first quarter of fiscal 2016. The decrease in the fiscal 2017 period, as compared to the corresponding fiscal 2016 period, was primarily attributable to a decrease in income from certain licensees due to the insourcing of formerly licensed product categories, partially offset by sales growth from other domestic licensees.

33

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

AND RESULTS OF OPERATIONS (Continued)

OPERATING INCOME

Consolidated operating income decreased$14.4 million, or 15.5%, to $78.6 million in the first quarter of fiscal 2017 from $93.0 million in the first quarter of fiscal 2016. Consolidated operating margin decreased from 12.8% in the first quarter of fiscal 2016 to 10.7% in the first quarter of fiscal 2017. The tables below summarize the changes in each of our segments' operating results and unallocated corporate expenses between the fiscal periods indicated:

(dollars in thousands)	U.S. Wholesale			U.S. Retail			International			Corporate Expenses			Total
Operating income (loss) for first quarter of fiscal 2016	$	68,411		$	39,469		$	8,441		$	(23,313	)	$	93,008
Favorable (unfavorable) change in the first quarter of fiscal 2017
Gross profit	2,415			4,005			(1,931		)	384			4,873
Royalty income	(201		)	518			(834		)	—			(517		)
SG&A expenses	(930		)	(14,092		)	(1,991		)	(1,785		)	(18,798		)
Operating income (loss) for first quarter of fiscal 2017	$	69,695		$	29,900		$	3,685		$	(24,714	)	$	78,566

The following tables present changes in the operating margin for each of our three operating segments. The primary drivers of these changes are presented in terms of the difference in each driver's margin (based on net sales) between the respective periods, in each case expressed in basis points ("bps").

	U.S. Wholesale		U.S. Retail		International
Operating margin for the first quarter of fiscal 2016	23.4	%	11.1	%	10.8	%
Favorable (unfavorable) bps change in the first quarter of fiscal 2017
Gross profit	80 bps		(30) bps		(160) bps
Royalty income	(10) bps		10 bps		(100) bps
SG&A expenses	(30) bps		(270) bps		(340) bps
Operating margin for the first quarter of fiscal 2017	23.8	%	8.2	%	4.8	%
	(a)		(b)		(c)

(a) U.S. Wholesale segment operating income in the first quarter of fiscal 2017increased $1.3 million, or 1.9%, to $69.7 million from $68.4 million in the first quarter of fiscal 2016. The segment's operating margin increased40 bps from 23.4% in the first quarter of fiscal 2016 to 23.8% in the first quarter of fiscal 2017. The primary drivers of the change in operating margin were a/an:

• 80 bps increase in gross profit primarily due to favorable product costs, lower provisions on inventory, and improved price realization;

• 30 bps increase in SG&A expenses, primarily due to:

◦ 50 bps increase in distribution, selling and administrative expense; and

◦ 20 bps decrease in provisions for accounts receivable.

34

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

AND RESULTS OF OPERATIONS (Continued)

(b) U.S. Retail segment operating income decreased by $9.6 million, or 24.2%, to $29.9 million in the first quarter of fiscal 2017 from $39.5 million in the first quarter of fiscal 2016. This segment's operating margin decreased290 bps from 11.1% in the first quarter of fiscal 2016 to 8.2% in the first quarter of fiscal 2017. The primary drivers of the change in operating margin were a/an:

• 30 bps decrease in gross profit due to increased promotional activity, partially offset by lower product costs;

• 270 bps increase in SG&A expenses, primarily due to a:

• 120 bps increase in expenses associated with new retail stores;

• 50 bps increase in expenses associated with eCommerce expansion;

• 30 bps increase in expenses for administrative expenses;

• 30 bps increase in distribution and freight expenses due to volume; and

• 30 bps increase in marketing and brand management expenses.

(c) International segment operating income decreased by $4.8 million, or 56.3%, to $3.7 million in the first quarter of fiscal 2017 from $8.4 million in the first quarter of 2016. This segment's operating margin decreased600 bps from 10.8% in the first quarter of fiscal 2016 to 4.8% in the first quarter of fiscal 2017. The primary drivers of the change in operating margin were a/an:

• 160 bps decrease in gross profit, primarily due to higher provisions for inventory, unfavorable timing of shipments and foreign currency exchange impacts, partially offset by benefits from direct sourcing and higher price realization;

• 340 bps increase in SG&A expenses, primarily due to a/an:

• 230 bps increase in expenses associated with new retail stores;

• 130 bps increase in expenses associated with eCommerce expansion;

• 80 bps increase in general and administrative expenses;

• 40 bps increase in selling and marketing expenses;

• 110 bps decrease in performance-based compensation;

• 70 bps decrease in distribution expenses; and

• 100 bps decrease in royalty income due to reduction in licensees.

Unallocated Corporate Expenses

Unallocated corporate expenses increased by $1.4 million, or 6.0%, in the first quarter of fiscal 2017 compared to the first quarter of fiscal 2016, primarily due to the Skip Hop acquisition and direct sourcing initiatives. Unallocated corporate expenses, as a percentage of consolidated net sales, increased from 3.2% in the first quarter of fiscal 2016 to 3.4% in the first quarter of fiscal 2017.

INTEREST EXPENSE

Interest expense and effective interest rate calculations include the amortization of debt issuance costs.

Interest expense in the first quarter of fiscal 2017 and 2016 was approximately $7.1 million and $6.7 million, respectively. Weighted-average borrowings over the course of the first quarter of fiscal 2017 were approximately $608.5 million with an effective interest rate of 4.56%, compared to weighted-average borrowings for the first quarter of fiscal 2016 of $584.6 million with an effective interest rate of 4.59%. The increase in weighted-average borrowings during the first quarter of fiscal 2017 was attributable to an incremental $75 million of borrowings during the quarter on our secured revolving credit facility, which were subsequently repaid before April 1, 2017.

The decrease in the effective interest rate for the first quarter of fiscal 2017 compared to the first quarter of fiscal 2016 was due to a higher proportion of outstanding borrowings under our secured revolving credit facility during the first quarter of fiscal 2017. Borrowings under our secured revolving credit facility accrue interest at a lower interest rate than our senior notes. This decrease was partially offset by a higher LIBOR rate for our secured revolving credit facility during the first quarter of fiscal 2017.

35

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

AND RESULTS OF OPERATIONS (Continued)

On our consolidated balance sheets, unamortized debt issuance costs associated with our senior notes is presented as a direct reduction in the carrying value of the associated debt liability for all periods presented.

OTHER (INCOME) EXPENSE, NET

Other (income) expense, net included gains and losses on foreign currency transactions and foreign currency forward contracts. These amounts were not material for the first quarter of fiscal 2017 and represented a net loss of approximately $3.2 million for the first quarter of fiscal 2016. There were no open or settled foreign currency forward contracts during the first quarter of fiscal 2017.

INCOME TAXES

Our consolidated effective income tax rate for the first quarter of fiscal 2017 was 35.0% compared to 35.2% for the first quarter of fiscal 2016. The lower effective rate for the first quarter of fiscal 2017 was primarily due to new accounting guidance which requires excess income tax benefits realized from settled stock-based compensation awards to be reflected as a benefit to income tax expense instead of a credit to additional paid-in capital, partially offset by changes in the mix of taxable income among our domestic and international tax-paying entities.

For the full fiscal year 2017, we estimate our consolidated effective income tax rate to be approximately 35.0%.

NET INCOME

Our consolidated net income for the first quarter of fiscal 2017decreased by $7.3 million, or 13.6%, to $46.7 million compared to $54.0 million in the first quarter of fiscal 2016. This decrease was due to the factors previously discussed.

FINANCIAL CONDITION, CAPITAL RESOURCES, AND LIQUIDITY

Our ongoing cash needs are primarily for working capital and capital expenditures. We expect that our primary sources of liquidity will continue to be cash and cash equivalents on hand, cash flow from operations, and borrowings available under our secured revolving credit facility. We expect that these sources will fund our ongoing requirements for the foreseeable future, and we believe that we also have access to the capital markets. Further, we do not expect current economic conditions to prevent us from meeting our cash requirements. These sources of liquidity may be affected by events described in our risk factors, as further discussed under the heading "Risk Factors" in our most recently filed Annual Report on Form 10-K and other reports filed with the Securities and Exchange Commission from time to time.

As of April 1, 2017, the Company had approximately $154.3 million of cash and cash equivalents in major financial institutions, including approximately $32.3 million in financial institutions located outside of the United States. We maintain cash deposits with major financial institutions that exceed the insurance coverage limits provided by the Federal Deposit Insurance Corporation in the United States and by similar insurers for deposits located outside the United States.  To mitigate this risk, we utilize a policy of allocating cash deposits among major financial institutions that have been evaluated by us and third-party rating agencies.

BALANCE SHEET

Net accounts receivable at April 1, 2017 were $206.7 million compared to $192.6 million at April 2, 2016 and $202.5 million at December 31, 2016. The overall increase of $14.1 million, or 7.3%, at April 1, 2017 compared to April 2, 2016 primarily reflected the Skip Hop acquisition. Due to the seasonal nature of our operations, the net accounts receivable balance at April 1, 2017 is not comparable to the net accounts receivable balance of $202.5 million at December 31, 2016.

Inventories at April 1, 2017 were $434.7 million compared to $376.5 million at April 2, 2016 and $487.6 million at December 31, 2016. The increase of $58.2 million, or 15.5%, at April 1, 2017 compared to April 2, 2016 primarily reflected

36

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

AND RESULTS OF OPERATIONS (Continued)

business growth and timing of inventory purchases. Due to the seasonal nature of our operations, the inventories balance at April 1, 2017 is not comparable to the inventories balance of $487.6 million at December 31, 2016.

CASH FLOW

Net cash provided by operating activities for the first quarter of fiscal 2017 was $84.2 million compared to net cash provided by operating activities of $128.3 million in the first quarter of fiscal 2016. This decrease in operating cash flow for the 2017 period reflected lower net income and less favorable changes in net working capital due to timing of payments and business growth.

Net cash used in investing activities for the first quarter of fiscal 2017 reflected the $143.7 million paid, net of cash acquired, on February 22, 2017 to acquire all of the outstanding stock of Skip Hop. Capital expenditures were $18.0 million in the first quarter of fiscal 2017 compared to $25.6 million in the first quarter of fiscal 2016, primarily reflecting 2017 expenditures of approximately $9.9 million for our U.S. and international retail store openings and re-modelings, $3.3 million for information technology initiatives, $3.4 million for distribution and office facilities, and $0.5 million for wholesale fixtures.

We plan to invest approximately $90 million in total capital expenditures for all of fiscal 2017, primarily for our U.S. and international retail store openings and re-modelings, and information technology initiatives.

Net cash used in financing activities was $67.5 million in the first quarter of fiscal 2017 compared to $90.2 million in the first quarter of fiscal 2016. The decrease in cash used for the 2017 period primarily reflected decreases in repurchases of our common stock.

SECURED REVOLVING CREDIT FACILITY

Our amended and restated secured revolving credit facility provides 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 in U.S. dollars 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 borrowings denominated in U.S. dollars, Canadian dollars, Euros, Pounds Sterling, or other currencies agreed to by the applicable lenders. Our secured 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 not to exceed $200 million and the aggregate multicurrency amount not to exceed $50 million). Our secured revolving credit facility matures September 16, 2020.

As of April 1, 2017, we had $186.0 million in outstanding borrowings under our secured revolving credit facility, exclusive of $4.8 million of outstanding letters of credit. As of April 1, 2017, approximately $309.2 million was available for future borrowing.

The interest rate margins applicable to our secured revolving credit facility are presently 1.375% for LIBOR 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%).

As of April 1, 2017, U.S. dollar borrowings outstanding under the secured revolving credit facility accrued interest at a LIBOR rate plus the applicable base rate, which was equal to 2.29% on that date. Outstanding Canadian dollar borrowings were repaid during the first quarter of fiscal 2017.

As of April 1, 2017, we were in compliance with the financial and other covenants under our secured revolving credit facility.

SENIOR NOTES

As of April 1, 2017, our wholly-owned operating subsidiary The William Carter Company ("TWCC") had $400.0 million principal amount of senior notes outstanding, bearing interest at a fixed rate of 5.25% per annum, and maturing on August 15, 2021. On our consolidated balance sheet, the $400.0 million outstanding is reported net of $4.4 million, $4.6 million and $5.3

37

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

AND RESULTS OF OPERATIONS (Continued)

million unamortized issuance-related debt costs at April 1, 2017, December 31, 2016 and April 2, 2016, respectively. The senior notes are unsecured and are fully and unconditionally guaranteed by Carter's, Inc. and certain subsidiaries of TWCC.

SHARE REPURCHASES

In the first quarter of fiscal 2017, the Company repurchased and retired 543,944 shares in open market transactions for approximately $46.6 million at an average price of $85.72 per share. In the first quarter of fiscal 2016, the Company repurchased and retired 722,364 shares in open market transactions for approximately $71.6 million, at an average price of $99.07 per share.

The total remaining capacity under all remaining repurchase authorizations as of April 1, 2017 was approximately $227.8 million. Future repurchases may be made in the open market or in privately negotiated transactions, with the level and timing of activity being at management's discretion depending on market conditions, share price, other investment priorities, and other factors. The share repurchase authorizations have no expiration date.

DIVIDENDS

In the first quarter of fiscal 2017, we paid quarterly cash dividends of $0.37 per share. In the first quarter of fiscal 2016, we paid quarterly cash dividends of $0.33 per share. Future declarations of quarterly dividends and the establishment of future record and payment dates are at the discretion of our Board of Directors and will be based on a number of factors, including our future financial performance and other investment priorities.

As disclosed in our most recent Annual Report on Form 10-K for the 2016 fiscal year ended December 31, 2016, provisions in our secured revolving credit facility and indenture governing our senior notes could have the effect of restricting our ability to pay future cash dividends on or make future repurchases of our common stock.

SEASONALITY

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

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

Our critical accounting policies and estimates are described under the heading "Critical Accounting Policies and Estimates" in Item 7 of our most recent Annual Report on Form 10-K for the 2016 fiscal year ended December 31, 2016. Our critical accounting policies and estimates are those policies that require management's most difficult and subjective judgments and may result in the need to make estimates about the effect of matters that are inherently uncertain. Our critical accounting policies and estimates include: revenue recognition and accounts receivable allowance, inventory, goodwill and tradename, accrued expenses, loss contingencies, accounting for income taxes, foreign currency, employee benefit plans, and stock-based compensation arrangements. There have been no material changes in these critical accounting policies and estimates from those described in our most recent Annual Report on Form 10-K, except for the impact that the adoption of ASU 2016-09, Accounting for Share-Based Payments to Employees and ASU 2015-17, Balance Sheet Classification of Deferred Taxes had on our policies as disclosed under the header "Adoption of New Accounting Pronouncements At the Beginning of Fiscal 2017" in Note 2, Basis of Presentation, to the accompanying unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q.

38

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

AND RESULTS OF OPERATIONS (Continued)

Additionally, information related to the pending adoption of recently issued accounting standards is provided in Note 15, Pending Adoption of Recent Accounting Pronouncements, to the accompanying unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Currency and Interest Rate Risks

In the operation of our business, we have market risk exposures including those related to foreign currency and interest rates. We employ various strategies to attempt to minimize our exposure to these risks.

Currency Risk

We contract for production with third parties, primarily in Asia. While these contracts are stated in U.S. dollars, there can be no assurance that the cost for the future production of our products will not be affected by exchange rate fluctuations between the U.S. dollar and the local currencies of these contractors. Due to the number of currencies involved, we cannot quantify the potential impact of future currency fluctuations on our financial position, results of operations, or cash flows for future periods.

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

Fluctuations in exchange rates, primarily between the U.S. dollar and the Canadian dollar, may affect our results of operations, financial position, and cash flows. Transactions by our Canadian subsidiary may be denominated in a currency other than the entity's functional currency, which is the Canadian dollar. Foreign currency transaction gains and losses also include the impact of non-current intercompany loans with foreign subsidiaries that are marked to market. In our statement of operations, these gains and losses are recorded within Other expense, net.

As part of our 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, our 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 strategy, we use foreign currency forward exchange contracts that have maturities of less than 12 months to provide continuing coverage throughout the hedging period.

Interest Rate Risk

Our operating results are subject to risk from interest rate fluctuations on our secured revolving credit facility, which carries variable interest rates. Our weighted-average variable rate borrowings outstanding as of April 1, 2017 were $186.0 million. An increase or decrease of 1% in the effective interest rate on that amount would increase or decrease our annual pre-tax interest expense by approximately $1.9 million.

Other Risks

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

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined under Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange

39

Act of 1934, as amended) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective as of April 1, 2017.

Changes in Internal Control over Financial Reporting

The principal executive officer and principal financial officer also conducted an evaluation of the Company’s internal control over financial reporting (“Internal Control”) to determine whether any changes in Internal Control occurred during the fiscal quarter ended April 1, 2017 that have materially affected or which are reasonably likely to materially affect Internal Control.

As noted above, on February 22, 2017, the Company completed the acquisition of Skip Hop. The Company is currently integrating Skip Hop into its control environment. In executing this integration, the Company is analyzing, evaluating, and where necessary, making changes in controls and procedures related to the Skip Hop business, which is expected to be completed within one year of the acquisition date.

Except for the foregoing, there were no changes in the Company’s Internal Control that materially affected, or were likely to materially affect, such control over financial reporting during the fiscal quarter ended April 1, 2017.

PART II

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors described in our Form 10-K for the 2016 fiscal year ended December 31, 2016.

40

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

Share Repurchases

The following table provides information about share repurchases during the first quarter of fiscal 2017:

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 (3)
January 1, 2017 through January 28, 2017	170,587	$86.02	170,587	$259,727,991
January 29, 2017 through February 25, 2017	251,530	$82.33	186,142	$244,402,232
February 26, 2017 through April 1, 2017	187,215	$88.81	187,215	$227,775,032
Total	609,332		543,944

(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 65,388 shares surrendered between January 1, 2017 and April 1, 2017.

(2) Share purchases during the first quarter of fiscal 2017 were made in compliance with all applicable rules and regulations and in accordance with the share repurchase authorizations described in Note 5 to our accompanying unaudited condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q.

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

41

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

N/A

ITEM 4. MINE SAFETY DISCLOSURES

N/A

ITEM 5. OTHER INFORMATION

N/A

ITEM 6. EXHIBITS

Exhibit Number Description of Exhibits

3.1	Certificate of Incorporation of Carter's, Inc., as amended on May 12, 2006 (incorporated by reference to Exhibit 3.1 of 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 Exhibit 3.2 of Carter's, Inc.'s Current Report on Form 8-K filed on August 26, 2015).
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.
101	Interactive Data File.

42

SIGNATURES

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

CARTER’S, INC.

April 27, 2017	/s/ MICHAEL D. CASEY
	Michael D. Casey
	Chief Executive Officer
	(Principal Executive Officer)

April 27, 2017	/s/ RICHARD F. WESTENBERGER
	Richard F. Westenberger
	Executive Vice President and
	Chief Financial Officer
	(Principal Financial and Accounting Officer)

43

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Michael D. Casey, certify that:

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

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

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

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

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

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

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

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

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

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

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

April 27, 2017	/s/ MICHAEL D. CASEY
	Michael D. Casey
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Richard F. Westenberger, certify that:

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

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

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

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

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

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

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

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

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

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

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

April 27, 2017	/s/ RICHARD F. WESTENBERGER
	Richard F. Westenberger
	Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION

Each of the undersigned in the capacity indicated hereby certifies that, to his knowledge, this Report on Form 10-Q for the fiscal quarter ended April 1, 2017 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of Carter’s, Inc.

April 27, 2017	/s/ MICHAEL D. CASEY
	Michael D. Casey
	Chief Executive Officer

April 27, 2017	/s/ RICHARD F. WESTENBERGER
	Richard F. Westenberger
	Chief Financial Officer

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

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Document and Entity Information - shares	3 Months Ended
	Apr. 01, 2017	Apr. 21, 2017
Document Information [Line Items]
Entity Registrant Name	CARTERS INC
Entity Central Index Key	0001060822
Current Fiscal Year End Date	--12-30
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Mar. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Common Stock, Shares Outstanding		48,390,342

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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Apr. 01, 2017	Dec. 31, 2016	Apr. 02, 2016
Current assets:
Cash and cash equivalents	$ 154,278	$ 299,358	$ 395,141
Accounts receivable, net	206,707	202,471	192,569
Finished goods inventories	434,712	487,591	376,499
Prepaid expenses and other current assets	46,153	32,180	36,791
Deferred income taxes	0	35,486	31,841
Total current assets	841,850	1,057,086	1,032,841
Property, plant, and equipment, net of accumulated depreciation of $365,733, $345,907, and $307,449, respectively	386,275	385,874	377,273
Tradenames and other intangible assets, net	401,379	308,928	309,853
Goodwill	232,925	176,009	177,238
Other assets	23,034	18,700	15,258
Total assets	1,885,463	1,946,597	1,912,463
Current liabilities:
Accounts payable	101,386	158,432	90,387
Other current liabilities	123,661	119,177	102,494
Total current liabilities	225,047	277,609	192,881
Long-term debt, net	581,621	580,376	580,319
Deferred income taxes	133,552	130,656	128,815
Other long-term liabilities	173,280	169,832	161,731
Total liabilities	1,113,500	1,158,473	1,063,746
Commitments and contingencies - Note 13
Stockholders' equity:
Preferred stock; par value $.01 per share; 100,000 shares authorized; none issued or outstanding at April 1, 2017, December 31, 2016, and April 2, 2016	0	0	0
Common stock, voting; par value $.01 per share; 150,000,000 shares authorized; 48,517,417, 48,948,670 and 51,206,395 shares issued and outstanding at April 1, 2017, December 31, 2016 and April 2, 2016, respectively	485	489	512
Accumulated other comprehensive loss	(33,793)	(34,740)	(31,081)
Retained earnings	805,271	822,375	879,286
Total stockholders' equity	771,963	788,124	848,717
Total liabilities and stockholders' equity	$ 1,885,463	$ 1,946,597	$ 1,912,463

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Apr. 01, 2017	Dec. 31, 2016	Apr. 02, 2016
Statement of Financial Position [Abstract]
Accumulated depreciation	$ 365,733	$ 345,907	$ 307,449
Preferred stock; par value (USD per share)	$ 0.01	$ 0.01	$ 0.01
Preferred stock; shares authorized	100,000	100,000	100,000
Preferred stock; issued	0	0	0
Preferred stock; outstanding	0	0	0
Common stock, voting; par value (USD per share)	$ 0.01	$ 0.01	$ 0.01
Common stock, voting; shares authorized	150,000,000	150,000,000	150,000,000
Common stock voting; shares issued	48,517,417	48,948,670	51,206,395
Common stock voting; shares outstanding	48,517,417	48,948,670	51,206,395

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended
	Apr. 01, 2017	Apr. 02, 2016
Income Statement [Abstract]
Net sales	$ 732,755	$ 724,085
Cost of goods sold	416,953	413,156
Gross profit	315,802	310,929
Selling, general, and administrative expenses	247,794	228,996
Royalty income	(10,558)	(11,075)
Operating income	78,566	93,008
Interest expense	7,104	6,739
Interest income	(139)	(207)
Other (income) expense, net	(221)	3,193
Income before income taxes	71,822	83,283
Provision for income taxes	25,158	29,303
Net income	$ 46,664	$ 53,980
Diluted net income per common share (USD per share)	$ 0.96	$ 1.05
Dividend declared and paid per common share (USD per share)	0.95	1.04
Dividend declared per common share (USD per share)	$ 0.37	$ 0.33

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended
	Apr. 01, 2017	Apr. 02, 2016
Statement of Comprehensive Income [Abstract]
Net income	$ 46,664	$ 53,980
Other comprehensive income:
Foreign currency translation adjustments	947	5,286
Comprehensive income	$ 47,611	$ 59,266

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - 3 months ended Apr. 01, 2017 - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Other Comprehensive (Loss) Income [Member]	Retained Earnings [Member]
Balance at Dec. 31, 2016	$ 788,124	$ 489	$ 0	$ (34,740)	$ 822,375
Balance (in shares) at Dec. 31, 2016	48,948,670	48,948,670
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of stock options	$ 1,626	$ 1	1,625
Exercise of stock options (in shares)		32,825
Withholdings from vesting of restricted stock	(5,552)	$ (1)	(5,551)
Withholdings from vesting of restricted stock (in shares)		(65,388)
Restricted stock activity	0	$ 1	(1)
Restricted stock activity (in shares)		145,254
Stock-based compensation expense	4,779		4,779
Repurchase of common stock	(46,627)	$ (5)	(852)		(45,770)
Repurchase of common stock (in shares)		(543,944)
Cash dividends declared and paid	(17,998)				(17,998)
Comprehensive income	47,611			947	46,664
Balance at Apr. 01, 2017	$ 771,963	$ 485	$ 0	$ (33,793)	$ 805,271
Balance (in shares) at Apr. 01, 2017	48,517,417	48,517,417

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Apr. 01, 2017	Apr. 02, 2016
Cash flows from operating activities:
Net income	$ 46,664	$ 53,980
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	19,513	17,177
Amortization of tradenames	250	995
Amortization of debt issuance costs	373	361
Non-cash stock-based compensation expense	4,779	4,556
Foreign currency (gain) loss, net	(62)	3,780
Income tax benefit from stock-based compensation	0	(3,144)
Loss on disposal of property, plant, and equipment	189	192
Deferred income taxes	3,491	2,226
Effect of changes in operating assets and liabilities, net of acquisition:
Accounts receivable, net	16,247	15,247
Finished goods inventories	82,086	96,056
Prepaid expenses and other assets	(15,350)	(576)
Accounts payable and other liabilities	(74,000)	(62,568)
Net cash provided by operating activities	84,180	128,282
Cash flows from investing activities:
Capital expenditures	(17,991)	(25,552)
Acquisition of Skip Hop Holdings, Inc., net of cash acquired	(143,704)	0
Net cash used in investing activities	(161,695)	(25,552)
Cash flows from financing activities:
Borrowing under secured revolving credit facility	20,000	0
Payment on secured revolving credit facility	(18,965)	0
Repurchases of common stock	(46,627)	(71,561)
Dividends paid	(17,998)	(17,032)
Income tax benefit from stock-based compensation	0	3,144
Withholdings from vestings of restricted stock	(5,552)	(8,454)
Proceeds from exercises of stock options	1,626	3,747
Net cash used in financing activities	67,516	90,156
Effect of exchange rate changes on cash and cash equivalents	(49)	1,358
Net (decrease) increase in cash and cash equivalents	(145,080)	13,932
Cash and cash equivalents, beginning of period	299,358	381,209
Cash and cash equivalents, end of period	$ 154,278	$ 395,141

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THE COMPANY

3 Months Ended

Apr. 01, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

THE COMPANY

THE COMPANY

Carter's, Inc. and its wholly owned subsidiaries (collectively, the "Company," "its," "us" and "our") design, source, and market branded childrenswear and related products under the Carter's, Child ofMine, Just One You,Precious Firsts, Simple Joys, OshKosh B'gosh ("OshKosh"), Skip Hop and other brands. The Company's products are sourced through contractual arrangements with manufacturers worldwide for wholesale distribution to leading department stores, national chains, and specialty retailers domestically and internationally and for the Company's own retail stores and websites that market its brand name merchandise and other licensed products manufactured by other companies. As of April 1, 2017, the Company operated 965 retail stores.

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BASIS OF PREPARATION AND ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS

3 Months Ended

Apr. 01, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PREPARATION AND ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS

BASIS OF PREPARATION AND BUSINESS ACQUISITION

The accompanying unaudited condensed consolidated financial statements include the accounts of Carter's, Inc. and its wholly owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") for interim financial information and the rules and regulations of the Securities and Exchange Commission (the "SEC"). All intercompany transactions and balances have been eliminated in consolidation. 

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all normal and recurring adjustments necessary to state fairly the consolidated financial condition, results of operations, comprehensive income, statement of stockholders' equity, and cash flows of the Company for the interim periods presented. Except as otherwise disclosed, all such adjustments consist only of those of a normal recurring nature. Operating results for the fiscal quarter ended April 1, 2017 are not necessarily indicative of the results that may be expected for the 2017 fiscal year ending December 30, 2017.

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

The accompanying condensed consolidated balance sheet as of December 31, 2016 was derived from the Company's audited consolidated financial statements included in its most recently filed Annual Report on Form 10-K. Certain information and footnote disclosure normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC and the instructions to Form 10-Q.

Skip Hop Acquisition

The accompanying unaudited condensed consolidated financial statements and footnotes include the accounts of Skip Hop Holdings, Inc. and subsidiaries ("Skip Hop") from February 23, 2017. Carter's, Inc.'s wholly-owned subsidiary, The William Carter Company ("TWCC"), acquired 100% of the voting equity interests of Skip Hop after the close of business on February 22, 2017. The acquisition of Skip Hop expanded the Company’s product offerings to include complementary essential core products for families with young children. Skip Hop's product lines include diaper bags, kid’s backpacks, travel accessories, home gear, and hardline goods for playtime, mealtime, and bath time. Skip Hop's products are sold through wholesale and eCommerce channels.

The Skip Hop purchase was deemed to be the acquisition of a business under the provisions of Accounting Standards Codification ("ASC") No. 805, Business Combinations. The purchase price is subject to a working capital adjustment, plus a potential future payment of up to $10 million contingent upon the achievement of certain financial targets in 2017. The measurement period, as defined under the provisions of ASC 805, is open for certain assets and liabilities. Based on preliminary fair values assigned to assets and liabilities, the purchase price at acquisition of approximately $147.3 million, net of $0.8 million cash acquired, represented: $56.6 million of goodwill which includes an assembled workforce; $92.7 million of intangible assets; $54.7 million of tangible assets acquired, including finished goods inventory of $28.6 million, accounts receivable of $20.4 million, PP&E of $4.2 million; and $23.2 million of liabilities in addition to $33.5 million of deferred income tax liabilities. The goodwill is not tax deductible to the Company. Based on the purchase price, Skip Hop's assets, and Skip Hop's pre-tax operating income prior to the acquisition, the acquired Skip Hop business does not meet the materiality requirements for preparation and presentation of the pro forma financial information prescribed by Article 11 of Regulation S-X. The majority of Skip Hop's wholesale operations became a part of the Company's U.S. Wholesale operating segment, with the remainder becoming part of the Company's International operating segment. Skip Hop's eCommerce retail operations became part of the Company's U.S. Retail operating segment. Between the acquisition date and the end of the Company's first quarter of fiscal 2017, Skip Hop contributed approximately $10.4 million of net sales to the Company's consolidated net sales and produced operating income of approximately $0.3 million.

Accounting Policies

The accounting policies the Company follows are set forth in its most recently filed Annual Report on Form 10-K. There have been no material subsequent changes to these accounting policies, except as noted below for new accounting pronouncements adopted at the beginning of fiscal 2017.

Adoption of New Accounting Pronouncements At the Beginning of Fiscal 2017

Accounting for Share-Based Payments to Employees (ASU 2016-09)

At the beginning of its first quarter of fiscal 2017, the Company adopted the provisions of Financial Accounting Standards Board ("FASB") ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"), which amended ASC Topic 718, Stock Compensation. The adoption of this ASU affected the Company consolidated financial statements as follows.

Consolidated Statement of Operations - ASU 2016-09 imposes a new requirement to record all of the excess income tax benefits and deficiencies (that result from an increase or decrease in the value of an award from grant date to settlement date) related to share-based payments at settlement through the statement of operations instead of the former requirement to record income tax benefits in excess of compensation cost ("windfalls") in equity, and income tax deficiencies ("shortfalls") in equity to the extent of previous windfalls, and then to operations. This change is required to be applied prospectively upon adoption of ASU 2016-09 to all excess income tax benefits and deficiencies resulting from settlements of share-based payments after the date of adoption. For the first quarter of fiscal 2017, the Company’s provision for income taxes on its consolidated statement of operations includes a benefit of approximately $1.0 million related to net excess income tax benefits for settlements of share-based payments during the current quarter. For the first quarter of fiscal 2016, the Company recognized net excess income tax benefits of approximately $3.1 million for share-based payments settled during that quarter, and this net tax benefit was recorded directly to the Company’s consolidated statement of stockholders’ equity and has not been reclassified to the Company’s consolidated statement of operations, in accordance with adoption and transition provisions of ASU 2016-09.

Consolidated Statement of Cash Flows - ASU 2016-09 requires that all income tax-related cash flows resulting from share-based payments, such as excess income tax benefits, are to be reported as operating activities on the statement of cash flows, a change from the prior requirement to present windfall income tax benefits as an inflow from financing activities and an offsetting outflow from operating activities. As permitted, the Company elected to apply these provisions prospectively to its consolidated statement of cash flows, and accordingly, periods prior to fiscal 2017 have not been adjusted.

Additionally, ASU 2016-09 clarifies that all cash payments made to taxing authorities on the employees' behalf for withheld shares at settlement are presented as financing activities on the statement of cash flows. This change must be applied retrospectively. The presentation requirements did not result in reclassification for any prior periods since such cash flows have historically been presented as a financing activity by the Company on its consolidated statement of cash flows.

The Company elected to continue to estimate forfeitures expected to occur to determine the amount of share-based compensation cost to recognize in each period, as permitted by ASU 2016-09. Accordingly, no cumulative effect was recorded in retained earnings on the Company’s consolidated statement of stockholders’ equity at the beginning of fiscal 2017 upon the adoption of ASU 2016-09.

Simplified Subsequent Measurement of Inventory (ASU 2015-11)

At the beginning of its first quarter of fiscal 2017, the Company adopted the provisions of ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory ("ASU 2015-11"). ASU 2015-11 simplifies subsequent measurements of inventory by replacing the lower of cost or market test, required under prior guidance, with a lower of cost and net realizable value test. ASU 2015-11 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 are required to compare the cost of inventory to only one measure, its net realizable value, and not the three measures required by prior 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 recognize the difference as a loss in earnings in the period in which it occurs. The adoption of ASU 2015-11 was not material to the Company's consolidated financial condition, results of operations, or cash flows.

Balance Sheet Classification of Deferred Taxes (ASU 2015-17)

The Company prospectively adopted the provisions of ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes ("ASU 2015-17"), at the beginning of the first quarter of fiscal 2017. ASU 2015-17 simplifies the balance sheet presentation of deferred income taxes by reporting the net amount of deferred tax assets and liabilities for each tax-paying jurisdiction as non-current on the balance sheet. Prior guidance required the deferred taxes for each tax-paying jurisdiction to be presented as a net current asset or liability and net non-current asset or liability. The Company's prospective adoption of ASU 2015-17 impacts the classification of deferred tax assets and liabilities on any balance sheet that reports the Company's financial position for any date after December 31, 2016. Balance sheets for prior periods have not been adjusted. The adoption of ASU 2015-17 has no impact on the Company's results of operations or cash flows.

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ACCUMULATED OTHER COMPREHENSIVE LOSS

3 Months Ended

Apr. 01, 2017

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

ACCUMULATED OTHER COMPREHENSIVE LOSS

ACCUMULATED OTHER COMPREHENSIVE LOSS

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

(dollars in thousands)	April 1, 2017			December 31, 2016			April 2, 2016
Cumulative foreign currency translation adjustments	$	(26,677	)	$	(27,624	)	$	(24,300	)
Pension and post-retirement liability adjustments	(7,116		)	(7,116		)	(6,781		)
Total accumulated other comprehensive loss	$	(33,793	)	$	(34,740	)	$	(31,081	)

Changes in accumulated other comprehensive loss for the first quarter of fiscal 2017 consisted of net gains of $0.9 million for foreign currency translation adjustments. Changes in accumulated other comprehensive loss for the first quarter of fiscal 2016 consisted of gains of $5.3 million for foreign currency translation adjustments. During the first quarters of both fiscal 2017 and fiscal 2016, no amounts were reclassified from accumulated other comprehensive loss to the statement of operations.

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GOODWILL AND TRADENAMES INTANGIBLE ASSETS

3 Months Ended

Apr. 01, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND TRADENAMES INTANGIBLE ASSETS

GOODWILL, TRADENAMES AND OTHER INTANGIBLE ASSETS

The Company's goodwill and intangible assets were as follows:

		April 1, 2017						December 31, 2016
(dollars in thousands)	Weighted-average useful life	Gross fair value		Accumulated amortization		Net amount		Gross fair value		Accumulated amortization		Net amount
Carter's goodwill	Indefinite	$	136,570	$	—	$	136,570	$	136,570	$	—	$	136,570
Canada acquisition	Indefinite	39,800		—		39,800		39,439		—		39,439
Skip Hop acquisition (1)	Indefinite	56,555		—		56,555		—		—		—
Total goodwill		$	232,925	$	—	$	232,925	$	176,009	$	—	$	176,009
Carter's tradename	Indefinite	$	220,233	$	—	$	220,233	$	220,233	$	—	$	220,233
OshKosh tradename	Indefinite	85,500		—		85,500		85,500		—		85,500
Skip Hop tradename (1)	Indefinite	56,800		—		56,800		—		—		—
Finite-life tradenames (2)	2-20 years	42,009		38,858		3,151		42,005		38,810		3,195
Total tradenames		$	404,542	$	38,858	$	365,684	$	347,738	$	38,810	$	308,928
Skip Hop customer relationships (1)	15 years	35,900		205		35,695		—		—		—
Total tradenames and other intangibles, net		$	440,442	$	39,063	$	401,379	$	347,738	$	38,810	$	308,928

(1) Subject to revision. The measurement period, as defined in ASC 805, Business Combinations, is open for certain assets and liabilities related to the Skip Hop business acquisition that closed on February 22, 2017.

(2) Relates to the acquisition of rights to the Carter's brand in Chile in December 2014, the Carter's Watch to Wear and H.W. Carter & Sons brand worldwide in 2013, and the Bonnie Togs (Canada) acquisition in 2011. At April 1, 2017, the remaining unamortized balance relates only to the Carter's brand in Chile.

		April 2, 2016
(dollars in thousands)	Weighted-average useful life	Gross amount		Accumulated amortization		Net amount
Carter's goodwill	Indefinite	$	136,570	$	—	$	136,570
Canadian acquisition	Indefinite	40,668		—		40,668
Total goodwill		$	177,238	$	—	$	177,238
Carter's tradename	Indefinite	$	220,233	$	—	$	220,233
OshKosh tradename	Indefinite	85,500		—		85,500
Finite-life tradenames	2-20 years	42,019		37,899		4,120
Total tradenames		$	347,752	$	37,899	$	309,853

The substantial majority of Skip Hop wholesale operations became part of the Company's U.S. Wholesale reportable segment, with the remainder becoming part of the Company's International reportable segment. Skip Hop's eCommerce operations became part of the U.S. Retail reportable segment. The assignment of goodwill to reporting units has not been completed.

Changes in the carrying values between comparative periods for goodwill related to the Company's 2011 acquisition of its Canadian business (Bonnie Togs) were due to fluctuations in the foreign currency exchange rates between the Canadian and U.S. dollar that were used in the remeasurement process for preparing the Company's consolidated financial statements. The portion of the changes in the carrying values for other trademarks, including the related accumulated amortization, that was not attributable to amortization expense was also impacted by these same foreign currency exchange rate fluctuations.

Included in finite-life tradenames is the Company's exclusive rights to the Carter's brands including trademark registrations in Chile. The Company acquired the Chile rights in 2014 for approximately $3.6 million in cash. This tradename is being amortized over 20 years using a straight-line method. The Company recorded approximately $0.1 million and $1.0 million in amortization expense for the fiscal quarters ended April 1, 2017 and April 2, 2016, respectively. Future amortization expense is estimated to be approximately $0.2 million for each of the next five fiscal years. All other finite-life tradenames were fully amortized prior to fiscal 2017.

For the Skip Hop customer relationships intangible asset acquired in February 2017, the Company recorded approximately $0.2 million of amortization expense for the first quarter of fiscal 2017. Future amortization expense is estimated to be approximately $2.4 million each year for the next 15 years.

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COMMON STOCK

3 Months Ended

Apr. 01, 2017

Stockholders' Equity Note [Abstract]

COMMON STOCK

COMMON STOCK

SHARE REPURCHASES

The total aggregate remaining capacity under outstanding repurchase authorizations as of April 1, 2017 was approximately $227.8 million, based on settled repurchase transactions. The authorizations have no expiration date.

Open Market Repurchases

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

	Fiscal quarter ended
	April 1, 2017		April 2, 2016
Number of shares repurchased	543,944		722,364
Aggregate cost of shares repurchased (dollars in thousands)	$	46,627	$	71,561
Average price per share	$	85.72	$	99.07

Future repurchases may occur from time to time in the open market, in privately 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.

DIVIDENDS

In the first fiscal quarters ended April 1, 2017 and April 2, 2016, the Company declared and paid cash dividends per share of $0.37 and $0.33, respectively. Future declarations of dividends and the establishment of future record and payment dates are at the discretion of the Company's Board of Directors and based on a number of factors, including the Company's future financial performance and other investment priorities.

Provisions in the indenture governing the senior notes TWCC and in TWCC's secured revolving credit facility could have the effect of restricting the Company's ability to pay future cash dividends on, or make future repurchases of, its common stock. Provisions related to the indenture governing the senior notes are described in the Company's Annual Report on Form 10-K for the 2016 fiscal year ended December 31, 2016.

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LONG-TERM DEBT

3 Months Ended

Apr. 01, 2017

Debt Disclosure [Abstract]

LONG-TERM DEBT

LONG-TERM DEBT

Long-term debt consisted of the following:

(dollars in thousands)	April 1, 2017			December 31, 2016			April 2, 2016
Senior notes at amounts repayable	$	400,000		$	400,000		$	400,000
Less unamortized issuance-related costs for senior notes	(4,379		)	(4,601		)	(5,250		)
Senior notes, net	395,621			395,399			394,750
Secured revolving credit facility	186,000			184,977			185,569
Total long-term debt, net	$	581,621		$	580,376		$	580,319

During the first quarter of fiscal 2017, the Company repaid CAD $25.5 million, which approximated $19.0 million, of outstanding borrowings under the multicurrency credit facility and simultaneously borrowed $20.0 million under the U.S. dollar credit facility. These transactions are reflected on the Company's consolidated statement of cash flows.

Secured Revolving Credit Facility

The aggregate principal amount of the Company's amended and restated secured revolving credit facility is $500 million consisting of (i) a $400 million U.S. dollar revolving credit 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 credit facility (including a $40 million sub-limit for letters of credit and a swing line sub-limit of $15 million) available for borrowings 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. The secured 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 revolving 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). The Company's secured revolving credit facility matures on September 16, 2020.

As of April 1, 2017, the Company had $186.0 million in outstanding borrowings under its secured revolving credit facility, exclusive of $4.8 million of outstanding letters of credit. As of April 1, 2017, approximately $309.2 million remained available for future borrowing.

As of April 1, 2017, the interest rate margins applicable to the secured 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%).

As of April 1, 2017, U.S. dollar borrowings outstanding under the secured revolving credit facility accrued interest at a LIBOR rate plus the applicable base rate, which was 2.29% on that date. All outstanding Canadian dollar borrowings were repaid during the first quarter of fiscal 2017.

As disclosed in the Company's most recent Annual Report on Form 10-K for the 2016 fiscal year ended December 31, 2016, the Company's secured revolving credit facility contains covenants, including affirmative and financial covenants. As of April 1, 2017, the Company was in compliance with the financial and other covenants under the secured revolving credit facility.

Senior Notes

As of April 1, 2017, TWCC had outstanding $400 million principal amount of senior notes bearing interest at a fixed rate of 5.25% per annum and maturing on August 15, 2021. The senior notes are unsecured and are fully and unconditionally guaranteed by Carter's, Inc. and certain subsidiaries of TWCC. On the Company's consolidated balance sheet, the senior notes are reported net of certain unamortized issuance-related costs, as described in the table above.

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STOCK-BASED COMPENSATION

3 Months Ended

Apr. 01, 2017

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

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

The Company recorded stock-based compensation expense as follows:

	Fiscal quarter ended
(dollars in thousands)	April 1, 2017		April 2, 2016
Stock options	$	1,244	$	1,296
Restricted stock:
Time-based awards	2,312		2,145
Performance-based awards	1,223		1,115
Total	$	4,779	$	4,556

On February 14, 2017, the Company's Board of Directors approved the issuance of the following new awards to certain key employees under the Company's existing stock-based compensation plan, subject to vesting: 295,964 stock options with an exercise price of $83.84 and grant-date fair value of $19.50 each; 91,592 shares of time-based restricted stock awards with a grant-date fair value of $83.84 each; and 58,784 shares of performance-based restricted stock awards with a grant-date fair value of $83.84 each.   

During the first quarter of fiscal 2017, a total of 148,171 restricted stock awards (time- and performance-based) vested with a weighted-average grant-date fair value of $72.47 each. During the first quarter of fiscal 2016, a total of 199,937 restricted stock awards (time- and performance-based) vested with a weighted average grant-date fair value of $60.23 each.

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EMPLOYEE BENEFIT PLANS

3 Months Ended

Apr. 01, 2017

Compensation and Retirement Disclosure [Abstract]

EMPLOYEE BENEFIT PLANS

EMPLOYEE BENEFIT PLANS

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

OSHKOSH B'GOSH PENSION PLAN

The components of net periodic pension cost included in the statement of operations were comprised of:

	Fiscal quarter ended
(dollars in thousands)	April 1, 2017			April 2, 2016
Interest cost	$	611		$	629
Expected return on plan assets	(650		)	(676		)
Recognized actuarial loss	170			145
Net periodic pension cost	$	131		$	98

POST-RETIREMENT LIFE AND MEDICAL PLAN

The components of post-retirement (benefit) cost included in the statement of operations were comprised of:

	Fiscal quarter ended
(dollars in thousands)	April 1, 2017			April 2, 2016
Service cost – benefits attributed to service during the period	$	7		$	31
Interest cost on accumulated post-retirement benefit obligation	34			44
Amortization net actuarial gain	(76		)	(49		)
Total net periodic post-retirement (benefit) cost	$	(35	)	$	26

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INCOME TAXES

3 Months Ended

Apr. 01, 2017

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

As of April 1, 2017, the Company had gross unrecognized income tax benefits of approximately $11.9 million, of which $7.8 million, if ultimately recognized, may affect the Company's effective tax rate in the periods settled.  The Company has recorded tax positions for which the ultimate deductibility is more likely than not, but for which there is uncertainty about the timing of such deductions.  

Included in the reserves for unrecognized tax benefits at April 1, 2017 were approximately $1.5 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 2017 or fiscal 2018 along with the effective tax rate in the quarter in which the benefits are recognized. 

The Company recognizes interest related to unrecognized tax benefits as a component of interest expense and recognizes penalties related to unrecognized tax benefits as a component of income tax expense.  During the first quarters of 2017 and 2016, interest expense recorded on uncertain tax positions was not significant. The Company had approximately $1.0 million, $0.8 million, and $0.7 million of interest accrued on uncertain tax positions as of April 1, 2017, December 31, 2016, and April 2, 2016, respectively.

As disclosed in note 2, the Company's adoption of ASU 2016-09 benefited consolidated income tax expense by approximately $1.0 million for the first quarter of fiscal 2017. The adoption of ASU 2016-09 had no impact on income tax expense for prior periods.

As disclosed in note 2, the Company prospectively adopted the provisions for classification of deferred income tax assets and liabilities on the Company's consolidated balance sheet at the beginning of fiscal 2017. Classifications for deferred income tax assets and liabilities for prior periods have not been adjusted on the Company's consolidated balance sheets.    

Deferred income tax liabilities on the Company's consolidated balance sheet at April 1, 2017 increased by $33.5 million due to the acquisition of Skip Hop during the first quarter of fiscal 2017.

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FAIR VALUE MEASUREMENTS

3 Months Ended

Apr. 01, 2017

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

The following table summarizes assets and liabilities that are remeasured at fair value each reporting period:

		April 1, 2017					December 31, 2016				April 2, 2016
(dollars in millions)		Level 1		Level 2	Level 3		Level 1		Level 2	Level 3	Level 1		Level 2		Level 3
Assets
	Investments (1)	$	14.8	—	—		$	12.3	—	—	$	8.2	—		—
	Foreign exchange forward contracts (3)	—		—	—		—		—	—	—		$	0.1	—
Liabilities
	Contingent consideration (2)	—		—	$	3.6	—		—	—	—		—		—
	Foreign exchange forward contracts (4)	—		—	—		—		—	—	—		$	2.1	—

(1) Included in Other Assets on the Company's consolidated balance sheet.

(2) Included in Other Current Liabilities on the Company's consolidated balance sheet.

(3) Included in Prepaid Expenses and Other Current Assets on the Company's consolidated balance sheet.

(4) Included in Other Current Liabilities on 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. Gains on the investments in marketable securities were $0.7 million for the fiscal quarter ended April 1, 2017. Losses on the investments in marketable securities were $0.4 million for the fiscal quarter ended April 2, 2016. These amounts are included in Other (income) expense, net.

CONTINGENT CONSIDERATION

In connection with the Company's acquisition of Skip Hop on February 22, 2017, the Company may be obligated to pay up to $10 million of additional cash consideration to the sellers of Skip Hop if the acquired business achieves certain financial targets in fiscal 2017. The Company has preliminarily estimated the discounted fair value of this contingency to be approximately $3.6 million (undiscounted approximately $3.8 million) on the date of acquisition based on a weighted payout probability of 50%. Subsequent changes in the fair value of this contingency were not material through the end of the fiscal quarter ended April 1, 2017. The Company will remeasure the fair value of this contingency at the end of each reporting period in fiscal 2017.

FOREIGN EXCHANGE FORWARD 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) and are classified as Level 2 within the fair value hierarchy. At April 1, 2017 and December 31, 2016, there were no open foreign currency contracts. At April 2, 2016, the notional value of the open foreign currency forward contracts was $44.0 million.

DEBT OBLIGATIONS

The Company's outstanding debt obligations are reflected in the consolidated balance sheet at carrying value. These debt obligations are not remeasured at fair value each reporting period, however the following fair value disclosures are provided:

• As of April 1, 2017, the fair value of the Company's $186.0 million in outstanding borrowings under its secured revolving credit facility approximated carrying value.

• The fair value of the Company's senior notes at April 1, 2017 was approximately $412 million. The fair value of these senior notes with a notional value and carrying value of $400 million was estimated using a quoted price as provided in the secondary market, which considersthe Company's credit risk and market related conditions, and is therefore within Level 2 of the fair value hierarchy.

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EARNINGS PER SHARE

3 Months Ended

Apr. 01, 2017

Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS PER SHARE

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

	Fiscal quarter ended
	April 1, 2017			April 2, 2016
Weighted-average number of common and common equivalent shares outstanding:
Basic number of common shares outstanding	48,322,692			51,176,987
Dilutive effect of equity awards	554,994			467,103
Diluted number of common and common equivalent shares outstanding	48,877,686			51,644,090
Basic net income per common share (in thousands, except per share data):
Net income	$	46,664		$	53,980
Income allocated to participating securities	(370		)	(444		)
Net income available to common shareholders	$	46,294		$	53,536
Basic net income per common share	$	0.96		$	1.05
Diluted net income per common share (in thousands, except per share data):
Net income	$	46,664		$	53,980
Income allocated to participating securities	(367		)	(441		)
Net income available to common shareholders	$	46,297		$	53,539
Diluted net income per common share	$	0.95		$	1.04
Anti-dilutive shares excluded from dilutive earnings per share computation	530,697			386,030

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OTHER CURRENT AND LONG-TERM LIABILITIES

3 Months Ended

Apr. 01, 2017

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 any comparable period, were as follows:

(dollars in thousands)	April 1, 2017		December 31, 2016		April 2, 2016
Accrued bonuses and incentive compensation	$	2,924	$	16,834	$	4,148
Income taxes payable	25,960		8,458		19,195
Accrued customer loyalty program reserve	11,120		10,510		10,276
Accrued salaries and wages	11,616		4,312		10,284
Unredeemed gift cards	10,839		11,441		9,996
Accrued employee benefits	8,453		17,165		8,157
Accrued and deferred rent	17,022		15,632		13,409

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

(dollars in thousands)	April 1, 2017		December 31, 2016		April 2, 2016
Deferred lease incentives	$	74,447	$	74,015	$	72,086

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Apr. 01, 2017

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

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

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SEGMENT INFORMATION

3 Months Ended

Apr. 01, 2017

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION

At the beginning of fiscal 2017, the Company combined its Carter's Retail and OshKosh Retail into a single U.S. Retail operating segment, and its Carter's Wholesale and OshKosh Wholesale into a single U.S. Wholesale operating segment, in order to reflect the sales-channel approach the Company's executive management now uses to evaluate its business performance and manage operations in the U.S.  The Company's International segment was not affected by these changes. The Company's reportable segments are now U.S. Retail, U.S. Wholesale, and International.

Prior periods have been conformed to reflect the Company's current segment structure by adding together Carter's Retail and OshKosh Retail as U.S. Retail and Carter's Wholesale and OshKosh Wholesale as U.S. Wholesale. Prior results for the International segment and Corporate were not impacted.

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

	Fiscal quarter ended
(dollars in thousands)	April 1, 2017			% of Total Net Sales		April 2, 2016			% of Total Net Sales
Net sales:
U.S. Wholesale	$	292,555		39.9	%	$	292,054		40.3	%
U.S. Retail (a)	363,771			49.6	%	354,089			48.9	%
International (b)	76,429			10.5	%	77,942			10.8	%
Total net sales	$	732,755		100.0	%	$	724,085		100.0	%
Operating income (loss):				% of Segment Net Sales					% of Segment Net Sales
U.S. Wholesale	$	69,695		23.8	%	$	68,411		23.4	%
U.S. Retail (a)	29,900			8.2	%	39,469			11.1	%
International (b)	3,685			4.8	%	8,441			10.8	%
Corporate expenses (c) (d) (e) (f)	(24,714		)			(23,313		)
Total operating income	$	78,566		10.7	%	$	93,008		12.8	%

(a) Includes retail store and eCommerce results.

(b) Net sales include international retail, eCommerce, and wholesale sales.

(c) 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.

(d) Includes charges related to the amortization of the H.W. Carter and Sons tradenames of approximately $1.0 million for the fiscal quarter ended April 2, 2016.

(e) Includes expenses related to the acquisition of Skip Hop of approximately $1.3 million for the fiscal quarter ended April 1, 2017.

(f) Includes charges related to the Company's direct sourcing initiative of approximately $0.2 million for the fiscal quarter ended April 1, 2017.

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PENDING ADOPTION OF RECENT ACCOUNTING PRONOUNCEMENTS

3 Months Ended

Apr. 01, 2017

Accounting Policies [Abstract]

PENDING ADOPTION OF RECENT ACCOUNTING PRONOUNCEMENTS

PENDING ADOPTION OF RECENT ACCOUNTING PRONOUNCEMENTS

Revenue Recognition (ASC 606)

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which since has been codified in Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers ("ASC 606"). This guidance clarifies the principles for recognizing revenue and will be applicable to all contracts with customers regardless of industry-specific or transaction-specific fact patterns. Further, the guidance will require 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. Since its original issuance, the FASB has issued several updates to this guidance, and additional updates are possible. The standard will be effective for the Company at the beginning of fiscal 2018, including interim periods within that fiscal year. Upon adoption, the Company will apply the provisions of ASC 606 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. Based on an assessment of the Company's significant sources of revenue, at this time the Company does not believe that the adoption of ASC 606, including any of the policy elections required or permitted by ASC 606, will have a material impact on its consolidated financial position, results of operations and cash flows. Based on this assessment, at this time the Company does not believe the adoption of ASC 606 will have a significant impact on processes, systems, or controls.

Leases (ASU 2016-02)

In February 2016, the FASB issued new lease accounting guidance in ASU No. 2016-02, Leases ("ASU 2016-02"). Under this new guidance, lessees will be required to recognize for all leases (with the exception of short-term leases): 1) a lease liability equal to the lessee's obligation to make lease payments arising from a lease, measured on a discounted basis and 2) a right-of-use asset which will represent the lessee's right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 will have little or no impact on an entity's results of operations or cash flows. The new standard will be effective for the Company at the beginning of fiscal 2019, including interim periods within the year of adoption. The new standard requires a modified retrospective basis, and early adoption is permitted. The Company is still evaluating the potential impacts of ASU 2016-02 on its consolidated balance sheet. However, the Company expects that the adoption of ASU 2016-02 will require the Company to recognize right-of-use assets and lease liabilities that will be material to the Company's consolidated balance sheet.

Credit Losses (ASU 2016-13)

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). This new guidance will change how entities account for credit impairment for trade and other receivables, as well as for certain financial assets and other instruments. ASU 2016-13 will replace the current "incurred loss" model with an "expected loss" model. Under the "incurred loss" model, a loss (or allowance) is recognized only when an event has occurred (such as a payment delinquency) that causes the entity to believe that a loss is probable (i.e., that it has been "incurred"). Under the "expected loss" model, an entity will recognize a loss (or allowance) upon initial recognition of the asset that reflects all future events that will lead to a loss being realized, regardless of whether it is probable that the future event will occur. The "incurred loss" model considers past events and current conditions, while the "expected loss" model includes expectations for the future which have yet to occur. ASU 2016-13 is effective for public companies for fiscal years beginning after December 15, 2019 with early adoption permitted for fiscal years beginning after December 15, 2018, including interim periods therein. The standard will require entities to record a cumulative-effect adjustment to the balance sheet as of the beginning of the first reporting period in which the guidance is effective. The Company is currently evaluating the potential impact that ASU 2016-13 may have on the timing of recognizing future provisions for expected losses on the Company's accounts receivable.

Classification of Costs Related to Defined Benefit Pension and Other Post-retirement Benefit Plans (ASU 2017-07)

In March 2017, the FASB issued ASU No. 2017-07, Compensation - Retirement Benefits (Topic 715: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit Cost ("ASU 2017-07"). ASU 2017-07 will change how employers that sponsor defined benefit pension and/or other post-retirement benefit plans present the net periodic benefit costs in the statement of operations. Under this new guidance, an employer's statement of operations will present service cost arising in the current period in the same income statement line item as other employee compensation. However, all other components of current period costs related to defined benefit plans, such as prior service costs and actuarial gains and losses, will be presented on the income statement on a line item outside (or below) operating income. For public companies, the guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted. Presentation of the components of net periodic benefit cost on the income statement will be applied retrospectively. The impact that ASU 2017-07 will have on the Company's operating income will depend on future periodic pension costs related to the Company's current frozen defined benefit pension plan and post-retirement medical benefit plan. However, based on these costs in recent annual and interim reporting periods, the adoption of ASU 2017-07 is not expected to be material to the Company's operating income.

Goodwill Impairment Testing (ASU 2017-04)

In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). ASU 2017-04 will eliminate the requirement to calculate the implied fair value of goodwill (step 2 of the current goodwill impairment test) to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit's carrying amount over its fair value (i.e., measure the charge based on the current step 1). Any impairment charge will be limited to the amount of goodwill allocated to an impacted reporting unit. ASU 2017-04 will not change the current guidance for completing Step 1 of the goodwill impairment test, and an entity will still be able to perform the current optional qualitative goodwill impairment assessment before determining whether to proceed to Step 1. Upon adoption, ASU 2017-04 will be applied prospectively. Adoption for public companies is effective for annual and interim impairment test performed in periods after December 15, 2019. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017. The impact that ASU 2017-04 may have on the Company's financial condition or results of operations will depend on the circumstances of any goodwill impairment event that may occur after adoption.

Statement of Cash Flows (ASU 2016-15)

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230) ("ASU 2016-15"). This ASU represents a consensus of the FASB’s Emerging Issues Task Force on eight separate issues that each impact classifications on the statement of cash flows. In particular, issue number three addresses the classification of contingent consideration payments made after a business combination. Under ASU 2016-15, cash payments made soon after an acquisition’s consummation date (i.e., approximately three months or less) will be classified as cash outflows for investing activities. Payments made thereafter will be classified as cash outflows for financing activities up to the amount of the original contingent consideration liability. Payments made in excess of the amount of the original contingent consideration liability will be classified as cash outflows for operating activities. For public business entities, ASU 2016-15 is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years.  The guidance requires application using a retrospective transition method.  Early adoption is permitted, provided that all of the amendments are adopted in the same period. At the current time, none of the other items contained in ASU 2016-15 are expected to impact the Company's classifications on its consolidated statement of cash flows.

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GUARANTOR UNAUDITED CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

3 Months Ended

Apr. 01, 2017

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

GUARANTOR UNAUDITED CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

GUARANTOR UNAUDITED CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

The Company’s senior notes constitute debt obligations of its wholly-owned subsidiary, The William Carter Company ("TWCC" or the "Subsidiary Issuer"), are unsecured and are fully and unconditionally guaranteed by Carter’s, Inc. (the "Parent"), by certain of the Parent's current domestic subsidiaries (other than TWCC), and, subject to certain exceptions, future restricted subsidiaries that guarantee the Company’s secured 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.

For additional information, refer to the Company's Annual Report on Form 10-K for the 2016 fiscal year ended December 31, 2016.

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.

Condensed Consolidating Balance Sheets (unaudited)

As of April 1, 2017

(dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	108,944	$	12,992	$	32,342	$	—		$	154,278
Accounts receivable, net	—		168,560		32,642		5,505		—			206,707
Intercompany receivable	—		87,901		60,971		14,810		(163,682		)	—
Finished goods inventories	—		197,022		205,335		48,934		(16,579		)	434,712
Prepaid expenses and other current assets	—		16,386		18,288		11,479		—			46,153
Total current assets	—		578,813		330,228		113,070		(180,261		)	841,850
Property, plant, and equipment, net	—		154,119		196,876		35,280		—			386,275
Goodwill	—		136,570		56,072		40,283		—			232,925
Tradenames and other intangible assets, net	—		223,384		177,995		—		—			401,379
Other assets	—		20,635		549		1,850		—			23,034
Intercompany long-term receivable	—		—		423,287		—		(423,287		)	—
Intercompany long-term note receivable	—		100,000		—		—		(100,000		)	—
Investment in subsidiaries	771,963		905,397		146,266		—		(1,823,626		)	—
Total assets	$	771,963	$	2,118,918	$	1,331,273	$	190,483	$	(2,527,174	)	$	1,885,463
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	—	$	56,871	$	34,820	$	9,695	$	—		$	101,386
Intercompany payables	—		71,796		88,529		3,357		(163,682		)	—
Other current liabilities	—		57,324		58,278		8,059		—			123,661
Total current liabilities	—		185,991		181,627		21,111		(163,682		)	225,047
Long-term debt, net	—		581,621		—		—		—			581,621
Deferred income taxes	—		71,250		62,200		102		—			133,552
Intercompany long-term liability	—		423,287		—		—		(423,287		)	—
Intercompany long-term note payable	—		—		100,000		—		(100,000		)	—
Other long-term liabilities	—		68,227		91,385		13,668		—			173,280
Stockholders' equity	771,963		788,542		896,061		155,602		(1,840,205		)	771,963
Total liabilities and stockholders' equity	$	771,963	$	2,118,918	$	1,331,273	$	190,483	$	(2,527,174	)	$	1,885,463

As of December 31, 2016

(dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	229,056	$	11,817	$	58,485	$	—		$	299,358
Accounts receivable, net	—		176,825		18,315		7,331		—			202,471
Intercompany receivable	—		55,902		74,681		14,601		(145,184		)	—
Finished goods inventories	—		278,696		174,542		60,153		(25,800		)	487,591
Prepaid expenses and other current assets	—		11,402		16,028		4,750		—			32,180
Deferred income taxes	—		18,476		15,440		1,570		—			35,486
Total current assets	—		770,357		310,823		146,890		(170,984		)	1,057,086
Property, plant, and equipment, net	—		155,187		194,691		35,996		—			385,874
Goodwill	—		136,570		—		39,439		—			176,009
Tradenames, net	—		223,428		85,500		—		—			308,928
Other assets	—		17,771		605		324		—			18,700
Intercompany long-term receivable	—		—		428,436		—		(428,436		)	—
Intercompany long-term note receivable	—		100,000		—		—		(100,000		)	—
Investment in subsidiaries	788,124		753,753		145,076		—		(1,686,953		)	—
Total assets	$	788,124	$	2,157,066	$	1,165,131	$	222,649	$	(2,386,373	)	$	1,946,597
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	—	$	97,103	$	41,947	$	19,382	$	—		$	158,432
Intercompany payables	—		85,894		55,257		4,033		(145,184		)	—
Other current liabilities	—		16,473		90,718		11,986		—			119,177
Total current liabilities	—		199,470		187,922		35,401		(145,184		)	277,609
Long-term debt, net	—		561,399		—		18,977		—			580,376
Deferred income taxes	—		87,116		43,540		—		—			130,656
Intercompany long-term liability	—		428,436		—		—		(428,436		)	—
Intercompany long-term note payable	—		—		100,000		—		(100,000		)	—
Other long-term liabilities	—		66,721		89,252		13,859		—			169,832
Stockholders' equity	788,124		813,924		744,417		154,412		(1,712,753		)	788,124
Total liabilities and stockholders' equity	$	788,124	$	2,157,066	$	1,165,131	$	222,649	$	(2,386,373	)	$	1,946,597

As of April 2, 2016

(dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	331,672	$	19,802	$	43,667	$	—		$	395,141
Accounts receivable, net	—		166,843		20,212		5,514		—			192,569
Intercompany receivable	—		67,203		120,901		5,157		(193,261		)	—
Intercompany loan receivable	—		—		—		—		—			—
Finished goods inventories	—		189,225		186,901		40,421		(40,048		)	376,499
Prepaid expenses and other current assets	—		17,879		14,273		4,639		—			36,791
Deferred income taxes	—		14,766		14,696		2,379		—			31,841
Total current assets	—		787,588		376,785		101,777		(233,309		)	1,032,841
Property, plant, and equipment, net	—		162,110		184,548		30,615		—			377,273
Goodwill	—		136,570		—		40,668		—			177,238
Tradenames and other intangibles, net	—		224,353		85,500		—		—			309,853
Other assets	—		14,164		795		299		—			15,258
Intercompany long-term receivable	—		—		294,017		—		(294,017		)	—
Intercompany long-term note receivable	—		100,000		—		—		(100,000		)	—
Investment in subsidiaries	848,717		676,350		106,542		—		(1,631,609		)	—
Total assets	$	848,717	$	2,101,135	$	1,048,187	$	173,359	$	(2,258,935	)	$	1,912,463
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	—	$	58,626	$	19,554	$	12,207	$	—		$	90,387
Intercompany payables	—		124,763		65,188		3,310		(193,261		)	—
Intercompany loan payables	—		—		—		—		—			—
Other current liabilities	—		23,801		68,514		10,179		—			102,494
Total current liabilities	—		207,190		153,256		25,696		(193,261		)	192,881
Long-term debt, net	—		560,751		—		19,568		—			580,319
Deferred income taxes	—		83,925		44,890		—		—			128,815
Intercompany long-term liability	—		294,017		—		—		(294,017		)	—
Intercompany long-term note payable	—		—		100,000		—		(100,000		)	—
Other long-term liabilities	—		66,487		83,027		12,217		—			161,731
Stockholders' equity	848,717		888,765		667,014		115,878		(1,671,657		)	848,717
Total liabilities and stockholders' equity	$	848,717	$	2,101,135	$	1,048,187	$	173,359	$	(2,258,935	)	$	1,912,463

Condensed Consolidating Statements of Operations (unaudited)

For the fiscal quarter ended April 1, 2017

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	453,515		$	395,779		$	61,031		$	(177,570	)	$	732,755
Cost of goods sold	—			330,633			228,766			37,429			(179,875		)	416,953
Gross profit	—			122,882			167,013			23,602			2,305			315,802
Selling, general, and administrative expenses	—			40,932			189,504			26,271			(8,913		)	247,794
Royalty income	—			(8,430		)	(4,125		)	—			1,997			(10,558		)
Operating income (loss)	—			90,380			(18,366		)	(2,669		)	9,221			78,566
Interest expense	—			6,973			1,369			89			(1,327		)	7,104
Interest income	—			(1,439		)	—			(27		)	1,327			(139		)
(Income) loss in subsidiaries	(46,664		)	21,031			2,449			—			23,184			—
Other (income) expense, net	—			(368		)	368			(221		)	—			(221		)
Income (loss) before income taxes	46,664			64,183			(22,552		)	(2,510		)	(13,963		)	71,822
Provision (benefit) for income taxes	—			26,740			(1,520		)	(62		)	—			25,158
Net income (loss)	$	46,664		$	37,443		$	(21,032	)	$	(2,448	)	$	(13,963	)	$	46,664

For the fiscal quarter ended April 2, 2016

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	451,196		$	381,280		$	55,830		$	(164,221	)	$	724,085
Cost of goods sold	—			321,100			211,028			33,091			(152,063		)	413,156
Gross profit	—			130,096			170,252			22,739			(12,158		)	310,929
Selling, general, and administrative expenses	—			42,587			172,142			23,377			(9,110		)	228,996
Royalty income	—			(9,072		)	(4,211		)	—			2,208			(11,075		)
Operating income (loss)	—			96,581			2,321			(638		)	(5,256		)	93,008
Interest expense	—			6,608			845			103			(817		)	6,739
Interest income	—			(985		)	—			(39		)	817			(207		)
(Income) loss in subsidiaries	(53,980		)	6,496			3,340			—			44,144			—
Other expense (income), net	—			200			(214		)	3,207			—			3,193
Income (loss) before income taxes	53,980			84,262			(1,650		)	(3,909		)	(49,400		)	83,283
Provision for income taxes	—			25,026			4,846			(569		)	—			29,303
Net income (loss)	$	53,980		$	59,236		$	(6,496	)	$	(3,340	)	$	(49,400	)	$	53,980

Condensed Consolidating Statements of Comprehensive Income (unaudited)

For the fiscal quarter ended April 1, 2017

(dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net income (loss)	$	46,664	$	37,443	$	(21,032	)	$	(2,448	)	$	(13,963	)	$	46,664
Foreign currency translation adjustments	947		947		947			947			(2,841		)	947
Comprehensive income (loss)	$	47,611	$	38,390	$	(20,085	)	$	(1,501	)	$	(16,804	)	$	47,611

For the fiscal quarter ended April 2, 2016

(dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net income (loss)	$	53,980	$	59,236	$	(6,496	)	$	(3,340	)	$	(49,400	)	$	53,980
Foreign currency translation adjustments	5,286		5,286		5,286			5,286			(15,858		)	5,286
Comprehensive income (loss)	$	59,266	$	64,522	$	(1,210	)	$	1,946		$	(65,258	)	$	59,266

Condensed Consolidating Statements of Cash Flows (unaudited)

For the fiscal quarter ended April 1, 2017

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Cash flows provided by (used in) operating activities:	$	—		$	101,914		$	(13,678	)	$	(4,056	)	$	—		$	84,180
Cash flows from investing activities:
Capital expenditures	—			(6,503		)	(9,548		)	(1,940		)	—			(17,991		)
Intercompany investing activity	68,551			(3,926		)	—			—			(64,625		)	—
Acquisition of business, net of cash acquired	—			(144,520		)	746			70			—			(143,704		)
Net cash provided by (used in) investing activities	68,551			(154,949		)	(8,802		)	(1,870		)	(64,625		)	(161,695		)
Cash flows from financing activities:
Intercompany financing activity	—			(87,077		)	23,655			(1,203		)	64,625			—
Borrowings under secured revolving credit facility	—			20,000			—			—			—			20,000
Payments on secured revolving credit facility	—			—			—			(18,965		)	—			(18,965		)
Dividends paid	(17,998		)	—			—			—			—			(17,998		)
Repurchases of common stock	(46,627		)	—			—			—			—			(46,627		)
Withholdings from vestings of restricted stock	(5,552		)	—			—			—			—			(5,552		)
Proceeds from exercises of stock options	1,626			—			—			—			—			1,626
Net cash (used in) provided by financing activities	(68,551		)	(67,077		)	23,655			(20,168		)	64,625			(67,516		)
Effect of exchange rate changes on cash	—			—			—			(49		)	—			(49		)
Net (decrease) increase in cash and cash equivalents	—			(120,112		)	1,175			(26,143		)	—			(145,080		)
Cash and cash equivalents, beginning of period	—			229,056			11,817			58,485			—			299,358
Cash and cash equivalents, end of period	$	—		$	108,944		$	12,992		$	32,342		$	—		$	154,278

For the fiscal quarter ended April 2, 2016

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Cash flows provided by (used in) operating activities:	$	—		$	117,433		$	8,504		$	2,345		$	—		$	128,282
Cash flows from investing activities:
Capital expenditures	—			(8,825		)	(15,433		)	(1,294		)	—			(25,552		)
Intercompany investing activity	93,300			(3,250		)	(1,457		)	—			(88,593		)	—
Net cash provided by (used in) investing activities	93,300			(12,075		)	(16,890		)	(1,294		)	(88,593		)	(25,552		)
Cash flows from financing activities:
Intercompany financing activity	—			(101,144		)	12,079			472			88,593			—
Dividends Paid	(17,032		)	—			—			—			—			(17,032		)
Income tax benefit from stock-based compensation	—			1,687			1,457			—			—			3,144
Repurchases of common stock	(71,561		)	—			—			—			—			(71,561		)
Withholdings from vestings of restricted stock	(8,454		)	—			—			—			—			(8,454		)
Proceeds from exercises of stock options	3,747			—			—			—			—			3,747
Net cash (used in) provided by financing activities	(93,300		)	(99,457		)	13,536			472			88,593			(90,156		)
Effect of exchange rate changes on cash	—			—			—			1,358			—			1,358
Net increase in cash and cash equivalents	—			5,901			5,150			2,881			—			13,932
Cash and cash equivalents, beginning of period	—			325,771			14,652			40,786			—			381,209
Cash and cash equivalents, end of period	$	—		$	331,672		$	19,802		$	43,667		$	—		$	395,141

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BASIS OF PREPARATION AND ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS (Policies)

3 Months Ended

Apr. 01, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Adoption of New Accounting Pronouncements

Adoption of New Accounting Pronouncements At the Beginning of Fiscal 2017

Accounting for Share-Based Payments to Employees (ASU 2016-09)

At the beginning of its first quarter of fiscal 2017, the Company adopted the provisions of Financial Accounting Standards Board ("FASB") ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"), which amended ASC Topic 718, Stock Compensation. The adoption of this ASU affected the Company consolidated financial statements as follows.

Consolidated Statement of Operations - ASU 2016-09 imposes a new requirement to record all of the excess income tax benefits and deficiencies (that result from an increase or decrease in the value of an award from grant date to settlement date) related to share-based payments at settlement through the statement of operations instead of the former requirement to record income tax benefits in excess of compensation cost ("windfalls") in equity, and income tax deficiencies ("shortfalls") in equity to the extent of previous windfalls, and then to operations. This change is required to be applied prospectively upon adoption of ASU 2016-09 to all excess income tax benefits and deficiencies resulting from settlements of share-based payments after the date of adoption. For the first quarter of fiscal 2017, the Company’s provision for income taxes on its consolidated statement of operations includes a benefit of approximately $1.0 million related to net excess income tax benefits for settlements of share-based payments during the current quarter. For the first quarter of fiscal 2016, the Company recognized net excess income tax benefits of approximately $3.1 million for share-based payments settled during that quarter, and this net tax benefit was recorded directly to the Company’s consolidated statement of stockholders’ equity and has not been reclassified to the Company’s consolidated statement of operations, in accordance with adoption and transition provisions of ASU 2016-09.

Consolidated Statement of Cash Flows - ASU 2016-09 requires that all income tax-related cash flows resulting from share-based payments, such as excess income tax benefits, are to be reported as operating activities on the statement of cash flows, a change from the prior requirement to present windfall income tax benefits as an inflow from financing activities and an offsetting outflow from operating activities. As permitted, the Company elected to apply these provisions prospectively to its consolidated statement of cash flows, and accordingly, periods prior to fiscal 2017 have not been adjusted.

Additionally, ASU 2016-09 clarifies that all cash payments made to taxing authorities on the employees' behalf for withheld shares at settlement are presented as financing activities on the statement of cash flows. This change must be applied retrospectively. The presentation requirements did not result in reclassification for any prior periods since such cash flows have historically been presented as a financing activity by the Company on its consolidated statement of cash flows.

The Company elected to continue to estimate forfeitures expected to occur to determine the amount of share-based compensation cost to recognize in each period, as permitted by ASU 2016-09. Accordingly, no cumulative effect was recorded in retained earnings on the Company’s consolidated statement of stockholders’ equity at the beginning of fiscal 2017 upon the adoption of ASU 2016-09.

Simplified Subsequent Measurement of Inventory (ASU 2015-11)

At the beginning of its first quarter of fiscal 2017, the Company adopted the provisions of ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory ("ASU 2015-11"). ASU 2015-11 simplifies subsequent measurements of inventory by replacing the lower of cost or market test, required under prior guidance, with a lower of cost and net realizable value test. ASU 2015-11 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 are required to compare the cost of inventory to only one measure, its net realizable value, and not the three measures required by prior 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 recognize the difference as a loss in earnings in the period in which it occurs. The adoption of ASU 2015-11 was not material to the Company's consolidated financial condition, results of operations, or cash flows.

Balance Sheet Classification of Deferred Taxes (ASU 2015-17)

The Company prospectively adopted the provisions of ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes ("ASU 2015-17"), at the beginning of the first quarter of fiscal 2017. ASU 2015-17 simplifies the balance sheet presentation of deferred income taxes by reporting the net amount of deferred tax assets and liabilities for each tax-paying jurisdiction as non-current on the balance sheet. Prior guidance required the deferred taxes for each tax-paying jurisdiction to be presented as a net current asset or liability and net non-current asset or liability. The Company's prospective adoption of ASU 2015-17 impacts the classification of deferred tax assets and liabilities on any balance sheet that reports the Company's financial position for any date after December 31, 2016. Balance sheets for prior periods have not been adjusted. The adoption of ASU 2015-17 has no impact on the Company's results of operations or cash flows.

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ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables)

3 Months Ended

Apr. 01, 2017

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

Schedule of Accumulated Other Comprehensive Loss

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

(dollars in thousands)	April 1, 2017			December 31, 2016			April 2, 2016
Cumulative foreign currency translation adjustments	$	(26,677	)	$	(27,624	)	$	(24,300	)
Pension and post-retirement liability adjustments	(7,116		)	(7,116		)	(6,781		)
Total accumulated other comprehensive loss	$	(33,793	)	$	(34,740	)	$	(31,081	)

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GOODWILL AND TRADENAMES INTANGIBLE ASSETS (Tables)

3 Months Ended

Apr. 01, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible assets table

The Company's goodwill and intangible assets were as follows:

		April 1, 2017						December 31, 2016
(dollars in thousands)	Weighted-average useful life	Gross fair value		Accumulated amortization		Net amount		Gross fair value		Accumulated amortization		Net amount
Carter's goodwill	Indefinite	$	136,570	$	—	$	136,570	$	136,570	$	—	$	136,570
Canada acquisition	Indefinite	39,800		—		39,800		39,439		—		39,439
Skip Hop acquisition (1)	Indefinite	56,555		—		56,555		—		—		—
Total goodwill		$	232,925	$	—	$	232,925	$	176,009	$	—	$	176,009
Carter's tradename	Indefinite	$	220,233	$	—	$	220,233	$	220,233	$	—	$	220,233
OshKosh tradename	Indefinite	85,500		—		85,500		85,500		—		85,500
Skip Hop tradename (1)	Indefinite	56,800		—		56,800		—		—		—
Finite-life tradenames (2)	2-20 years	42,009		38,858		3,151		42,005		38,810		3,195
Total tradenames		$	404,542	$	38,858	$	365,684	$	347,738	$	38,810	$	308,928
Skip Hop customer relationships (1)	15 years	35,900		205		35,695		—		—		—
Total tradenames and other intangibles, net		$	440,442	$	39,063	$	401,379	$	347,738	$	38,810	$	308,928

(1) Subject to revision. The measurement period, as defined in ASC 805, Business Combinations, is open for certain assets and liabilities related to the Skip Hop business acquisition that closed on February 22, 2017.

(2) Relates to the acquisition of rights to the Carter's brand in Chile in December 2014, the Carter's Watch to Wear and H.W. Carter & Sons brand worldwide in 2013, and the Bonnie Togs (Canada) acquisition in 2011. At April 1, 2017, the remaining unamortized balance relates only to the Carter's brand in Chile.

		April 2, 2016
(dollars in thousands)	Weighted-average useful life	Gross amount		Accumulated amortization		Net amount
Carter's goodwill	Indefinite	$	136,570	$	—	$	136,570
Canadian acquisition	Indefinite	40,668		—		40,668
Total goodwill		$	177,238	$	—	$	177,238
Carter's tradename	Indefinite	$	220,233	$	—	$	220,233
OshKosh tradename	Indefinite	85,500		—		85,500
Finite-life tradenames	2-20 years	42,019		37,899		4,120
Total tradenames		$	347,752	$	37,899	$	309,853

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COMMON STOCK (Tables)

3 Months Ended

Apr. 01, 2017

Stockholders' Equity Note [Abstract]

Schedule of Shares Repurchased and Retired

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

	Fiscal quarter ended
	April 1, 2017		April 2, 2016
Number of shares repurchased	543,944		722,364
Aggregate cost of shares repurchased (dollars in thousands)	$	46,627	$	71,561
Average price per share	$	85.72	$	99.07

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LONG-TERM DEBT (Tables)

3 Months Ended

Apr. 01, 2017

Debt Disclosure [Abstract]

Schedule of long-term debt

Long-term debt consisted of the following:

(dollars in thousands)	April 1, 2017			December 31, 2016			April 2, 2016
Senior notes at amounts repayable	$	400,000		$	400,000		$	400,000
Less unamortized issuance-related costs for senior notes	(4,379		)	(4,601		)	(5,250		)
Senior notes, net	395,621			395,399			394,750
Secured revolving credit facility	186,000			184,977			185,569
Total long-term debt, net	$	581,621		$	580,376		$	580,319

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STOCK-BASED COMPENSATION (Tables)

3 Months Ended

Apr. 01, 2017

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

Summary of recorded stock-based compensation cost

The Company recorded stock-based compensation expense as follows:

	Fiscal quarter ended
(dollars in thousands)	April 1, 2017		April 2, 2016
Stock options	$	1,244	$	1,296
Restricted stock:
Time-based awards	2,312		2,145
Performance-based awards	1,223		1,115
Total	$	4,779	$	4,556

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EMPLOYEE BENEFIT PLANS (Tables)

3 Months Ended

Apr. 01, 2017

Compensation and Retirement Disclosure [Abstract]

Components of pension expense and post-retirement benefit expense

The components of net periodic pension cost included in the statement of operations were comprised of:

	Fiscal quarter ended
(dollars in thousands)	April 1, 2017			April 2, 2016
Interest cost	$	611		$	629
Expected return on plan assets	(650		)	(676		)
Recognized actuarial loss	170			145
Net periodic pension cost	$	131		$	98

Schedule of costs and retirement plans

The components of post-retirement (benefit) cost included in the statement of operations were comprised of:

	Fiscal quarter ended
(dollars in thousands)	April 1, 2017			April 2, 2016
Service cost – benefits attributed to service during the period	$	7		$	31
Interest cost on accumulated post-retirement benefit obligation	34			44
Amortization net actuarial gain	(76		)	(49		)
Total net periodic post-retirement (benefit) cost	$	(35	)	$	26

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FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Apr. 01, 2017

Fair Value Disclosures [Abstract]

Assets and liabilities that are remeasured at fair value

The following table summarizes assets and liabilities that are remeasured at fair value each reporting period:

		April 1, 2017					December 31, 2016				April 2, 2016
(dollars in millions)		Level 1		Level 2	Level 3		Level 1		Level 2	Level 3	Level 1		Level 2		Level 3
Assets
	Investments (1)	$	14.8	—	—		$	12.3	—	—	$	8.2	—		—
	Foreign exchange forward contracts (3)	—		—	—		—		—	—	—		$	0.1	—
Liabilities
	Contingent consideration (2)	—		—	$	3.6	—		—	—	—		—		—
	Foreign exchange forward contracts (4)	—		—	—		—		—	—	—		$	2.1	—

(1) Included in Other Assets on the Company's consolidated balance sheet.

(2) Included in Other Current Liabilities on the Company's consolidated balance sheet.

(3) Included in Prepaid Expenses and Other Current Assets on the Company's consolidated balance sheet.

(4) Included in Other Current Liabilities on the Company's consolidated balance sheet.

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EARNINGS PER SHARE (Tables)

3 Months Ended

Apr. 01, 2017

Earnings Per Share [Abstract]

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

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

	Fiscal quarter ended
	April 1, 2017			April 2, 2016
Weighted-average number of common and common equivalent shares outstanding:
Basic number of common shares outstanding	48,322,692			51,176,987
Dilutive effect of equity awards	554,994			467,103
Diluted number of common and common equivalent shares outstanding	48,877,686			51,644,090
Basic net income per common share (in thousands, except per share data):
Net income	$	46,664		$	53,980
Income allocated to participating securities	(370		)	(444		)
Net income available to common shareholders	$	46,294		$	53,536
Basic net income per common share	$	0.96		$	1.05
Diluted net income per common share (in thousands, except per share data):
Net income	$	46,664		$	53,980
Income allocated to participating securities	(367		)	(441		)
Net income available to common shareholders	$	46,297		$	53,539
Diluted net income per common share	$	0.95		$	1.04
Anti-dilutive shares excluded from dilutive earnings per share computation	530,697			386,030

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OTHER CURRENT AND LONG-TERM LIABILITIES (Tables)

3 Months Ended

Apr. 01, 2017

Other Liabilities Disclosure [Abstract]

Schedule of other current liabilities

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

(dollars in thousands)	April 1, 2017		December 31, 2016		April 2, 2016
Accrued bonuses and incentive compensation	$	2,924	$	16,834	$	4,148
Income taxes payable	25,960		8,458		19,195
Accrued customer loyalty program reserve	11,120		10,510		10,276
Accrued salaries and wages	11,616		4,312		10,284
Unredeemed gift cards	10,839		11,441		9,996
Accrued employee benefits	8,453		17,165		8,157
Accrued and deferred rent	17,022		15,632		13,409

Schedule of other long-term liabilities

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

(dollars in thousands)	April 1, 2017		December 31, 2016		April 2, 2016
Deferred lease incentives	$	74,447	$	74,015	$	72,086

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SEGMENT INFORMATION (Tables)

3 Months Ended

Apr. 01, 2017

Segment Reporting [Abstract]

Schedule of segment information

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

	Fiscal quarter ended
(dollars in thousands)	April 1, 2017			% of Total Net Sales		April 2, 2016			% of Total Net Sales
Net sales:
U.S. Wholesale	$	292,555		39.9	%	$	292,054		40.3	%
U.S. Retail (a)	363,771			49.6	%	354,089			48.9	%
International (b)	76,429			10.5	%	77,942			10.8	%
Total net sales	$	732,755		100.0	%	$	724,085		100.0	%
Operating income (loss):				% of Segment Net Sales					% of Segment Net Sales
U.S. Wholesale	$	69,695		23.8	%	$	68,411		23.4	%
U.S. Retail (a)	29,900			8.2	%	39,469			11.1	%
International (b)	3,685			4.8	%	8,441			10.8	%
Corporate expenses (c) (d) (e) (f)	(24,714		)			(23,313		)
Total operating income	$	78,566		10.7	%	$	93,008		12.8	%

(a) Includes retail store and eCommerce results.

(b) Net sales include international retail, eCommerce, and wholesale sales.

(c) 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.

(d) Includes charges related to the amortization of the H.W. Carter and Sons tradenames of approximately $1.0 million for the fiscal quarter ended April 2, 2016.

(e) Includes expenses related to the acquisition of Skip Hop of approximately $1.3 million for the fiscal quarter ended April 1, 2017.

(f) Includes charges related to the Company's direct sourcing initiative of approximately $0.2 million for the fiscal quarter ended April 1, 2017.

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GUARANTOR UNAUDITED CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (Tables)

3 Months Ended

Apr. 01, 2017

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Consolidating Balance Sheets

Condensed Consolidating Balance Sheets (unaudited)

As of April 1, 2017

(dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	108,944	$	12,992	$	32,342	$	—		$	154,278
Accounts receivable, net	—		168,560		32,642		5,505		—			206,707
Intercompany receivable	—		87,901		60,971		14,810		(163,682		)	—
Finished goods inventories	—		197,022		205,335		48,934		(16,579		)	434,712
Prepaid expenses and other current assets	—		16,386		18,288		11,479		—			46,153
Total current assets	—		578,813		330,228		113,070		(180,261		)	841,850
Property, plant, and equipment, net	—		154,119		196,876		35,280		—			386,275
Goodwill	—		136,570		56,072		40,283		—			232,925
Tradenames and other intangible assets, net	—		223,384		177,995		—		—			401,379
Other assets	—		20,635		549		1,850		—			23,034
Intercompany long-term receivable	—		—		423,287		—		(423,287		)	—
Intercompany long-term note receivable	—		100,000		—		—		(100,000		)	—
Investment in subsidiaries	771,963		905,397		146,266		—		(1,823,626		)	—
Total assets	$	771,963	$	2,118,918	$	1,331,273	$	190,483	$	(2,527,174	)	$	1,885,463
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	—	$	56,871	$	34,820	$	9,695	$	—		$	101,386
Intercompany payables	—		71,796		88,529		3,357		(163,682		)	—
Other current liabilities	—		57,324		58,278		8,059		—			123,661
Total current liabilities	—		185,991		181,627		21,111		(163,682		)	225,047
Long-term debt, net	—		581,621		—		—		—			581,621
Deferred income taxes	—		71,250		62,200		102		—			133,552
Intercompany long-term liability	—		423,287		—		—		(423,287		)	—
Intercompany long-term note payable	—		—		100,000		—		(100,000		)	—
Other long-term liabilities	—		68,227		91,385		13,668		—			173,280
Stockholders' equity	771,963		788,542		896,061		155,602		(1,840,205		)	771,963
Total liabilities and stockholders' equity	$	771,963	$	2,118,918	$	1,331,273	$	190,483	$	(2,527,174	)	$	1,885,463

As of December 31, 2016

(dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	229,056	$	11,817	$	58,485	$	—		$	299,358
Accounts receivable, net	—		176,825		18,315		7,331		—			202,471
Intercompany receivable	—		55,902		74,681		14,601		(145,184		)	—
Finished goods inventories	—		278,696		174,542		60,153		(25,800		)	487,591
Prepaid expenses and other current assets	—		11,402		16,028		4,750		—			32,180
Deferred income taxes	—		18,476		15,440		1,570		—			35,486
Total current assets	—		770,357		310,823		146,890		(170,984		)	1,057,086
Property, plant, and equipment, net	—		155,187		194,691		35,996		—			385,874
Goodwill	—		136,570		—		39,439		—			176,009
Tradenames, net	—		223,428		85,500		—		—			308,928
Other assets	—		17,771		605		324		—			18,700
Intercompany long-term receivable	—		—		428,436		—		(428,436		)	—
Intercompany long-term note receivable	—		100,000		—		—		(100,000		)	—
Investment in subsidiaries	788,124		753,753		145,076		—		(1,686,953		)	—
Total assets	$	788,124	$	2,157,066	$	1,165,131	$	222,649	$	(2,386,373	)	$	1,946,597
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	—	$	97,103	$	41,947	$	19,382	$	—		$	158,432
Intercompany payables	—		85,894		55,257		4,033		(145,184		)	—
Other current liabilities	—		16,473		90,718		11,986		—			119,177
Total current liabilities	—		199,470		187,922		35,401		(145,184		)	277,609
Long-term debt, net	—		561,399		—		18,977		—			580,376
Deferred income taxes	—		87,116		43,540		—		—			130,656
Intercompany long-term liability	—		428,436		—		—		(428,436		)	—
Intercompany long-term note payable	—		—		100,000		—		(100,000		)	—
Other long-term liabilities	—		66,721		89,252		13,859		—			169,832
Stockholders' equity	788,124		813,924		744,417		154,412		(1,712,753		)	788,124
Total liabilities and stockholders' equity	$	788,124	$	2,157,066	$	1,165,131	$	222,649	$	(2,386,373	)	$	1,946,597

As of April 2, 2016

(dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	331,672	$	19,802	$	43,667	$	—		$	395,141
Accounts receivable, net	—		166,843		20,212		5,514		—			192,569
Intercompany receivable	—		67,203		120,901		5,157		(193,261		)	—
Intercompany loan receivable	—		—		—		—		—			—
Finished goods inventories	—		189,225		186,901		40,421		(40,048		)	376,499
Prepaid expenses and other current assets	—		17,879		14,273		4,639		—			36,791
Deferred income taxes	—		14,766		14,696		2,379		—			31,841
Total current assets	—		787,588		376,785		101,777		(233,309		)	1,032,841
Property, plant, and equipment, net	—		162,110		184,548		30,615		—			377,273
Goodwill	—		136,570		—		40,668		—			177,238
Tradenames and other intangibles, net	—		224,353		85,500		—		—			309,853
Other assets	—		14,164		795		299		—			15,258
Intercompany long-term receivable	—		—		294,017		—		(294,017		)	—
Intercompany long-term note receivable	—		100,000		—		—		(100,000		)	—
Investment in subsidiaries	848,717		676,350		106,542		—		(1,631,609		)	—
Total assets	$	848,717	$	2,101,135	$	1,048,187	$	173,359	$	(2,258,935	)	$	1,912,463
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	—	$	58,626	$	19,554	$	12,207	$	—		$	90,387
Intercompany payables	—		124,763		65,188		3,310		(193,261		)	—
Intercompany loan payables	—		—		—		—		—			—
Other current liabilities	—		23,801		68,514		10,179		—			102,494
Total current liabilities	—		207,190		153,256		25,696		(193,261		)	192,881
Long-term debt, net	—		560,751		—		19,568		—			580,319
Deferred income taxes	—		83,925		44,890		—		—			128,815
Intercompany long-term liability	—		294,017		—		—		(294,017		)	—
Intercompany long-term note payable	—		—		100,000		—		(100,000		)	—
Other long-term liabilities	—		66,487		83,027		12,217		—			161,731
Stockholders' equity	848,717		888,765		667,014		115,878		(1,671,657		)	848,717
Total liabilities and stockholders' equity	$	848,717	$	2,101,135	$	1,048,187	$	173,359	$	(2,258,935	)	$	1,912,463

Condensed Consolidating Statements of Operations

Condensed Consolidating Statements of Operations (unaudited)

For the fiscal quarter ended April 1, 2017

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	453,515		$	395,779		$	61,031		$	(177,570	)	$	732,755
Cost of goods sold	—			330,633			228,766			37,429			(179,875		)	416,953
Gross profit	—			122,882			167,013			23,602			2,305			315,802
Selling, general, and administrative expenses	—			40,932			189,504			26,271			(8,913		)	247,794
Royalty income	—			(8,430		)	(4,125		)	—			1,997			(10,558		)
Operating income (loss)	—			90,380			(18,366		)	(2,669		)	9,221			78,566
Interest expense	—			6,973			1,369			89			(1,327		)	7,104
Interest income	—			(1,439		)	—			(27		)	1,327			(139		)
(Income) loss in subsidiaries	(46,664		)	21,031			2,449			—			23,184			—
Other (income) expense, net	—			(368		)	368			(221		)	—			(221		)
Income (loss) before income taxes	46,664			64,183			(22,552		)	(2,510		)	(13,963		)	71,822
Provision (benefit) for income taxes	—			26,740			(1,520		)	(62		)	—			25,158
Net income (loss)	$	46,664		$	37,443		$	(21,032	)	$	(2,448	)	$	(13,963	)	$	46,664

For the fiscal quarter ended April 2, 2016

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	451,196		$	381,280		$	55,830		$	(164,221	)	$	724,085
Cost of goods sold	—			321,100			211,028			33,091			(152,063		)	413,156
Gross profit	—			130,096			170,252			22,739			(12,158		)	310,929
Selling, general, and administrative expenses	—			42,587			172,142			23,377			(9,110		)	228,996
Royalty income	—			(9,072		)	(4,211		)	—			2,208			(11,075		)
Operating income (loss)	—			96,581			2,321			(638		)	(5,256		)	93,008
Interest expense	—			6,608			845			103			(817		)	6,739
Interest income	—			(985		)	—			(39		)	817			(207		)
(Income) loss in subsidiaries	(53,980		)	6,496			3,340			—			44,144			—
Other expense (income), net	—			200			(214		)	3,207			—			3,193
Income (loss) before income taxes	53,980			84,262			(1,650		)	(3,909		)	(49,400		)	83,283
Provision for income taxes	—			25,026			4,846			(569		)	—			29,303
Net income (loss)	$	53,980		$	59,236		$	(6,496	)	$	(3,340	)	$	(49,400	)	$	53,980

Condensed Consolidating Statements of Comprehensive Income

Condensed Consolidating Statements of Comprehensive Income (unaudited)

For the fiscal quarter ended April 1, 2017

(dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net income (loss)	$	46,664	$	37,443	$	(21,032	)	$	(2,448	)	$	(13,963	)	$	46,664
Foreign currency translation adjustments	947		947		947			947			(2,841		)	947
Comprehensive income (loss)	$	47,611	$	38,390	$	(20,085	)	$	(1,501	)	$	(16,804	)	$	47,611

For the fiscal quarter ended April 2, 2016

(dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net income (loss)	$	53,980	$	59,236	$	(6,496	)	$	(3,340	)	$	(49,400	)	$	53,980
Foreign currency translation adjustments	5,286		5,286		5,286			5,286			(15,858		)	5,286
Comprehensive income (loss)	$	59,266	$	64,522	$	(1,210	)	$	1,946		$	(65,258	)	$	59,266

Condensed Consolidating Statements of Cash Flows

Condensed Consolidating Statements of Cash Flows (unaudited)

For the fiscal quarter ended April 1, 2017

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Cash flows provided by (used in) operating activities:	$	—		$	101,914		$	(13,678	)	$	(4,056	)	$	—		$	84,180
Cash flows from investing activities:
Capital expenditures	—			(6,503		)	(9,548		)	(1,940		)	—			(17,991		)
Intercompany investing activity	68,551			(3,926		)	—			—			(64,625		)	—
Acquisition of business, net of cash acquired	—			(144,520		)	746			70			—			(143,704		)
Net cash provided by (used in) investing activities	68,551			(154,949		)	(8,802		)	(1,870		)	(64,625		)	(161,695		)
Cash flows from financing activities:
Intercompany financing activity	—			(87,077		)	23,655			(1,203		)	64,625			—
Borrowings under secured revolving credit facility	—			20,000			—			—			—			20,000
Payments on secured revolving credit facility	—			—			—			(18,965		)	—			(18,965		)
Dividends paid	(17,998		)	—			—			—			—			(17,998		)
Repurchases of common stock	(46,627		)	—			—			—			—			(46,627		)
Withholdings from vestings of restricted stock	(5,552		)	—			—			—			—			(5,552		)
Proceeds from exercises of stock options	1,626			—			—			—			—			1,626
Net cash (used in) provided by financing activities	(68,551		)	(67,077		)	23,655			(20,168		)	64,625			(67,516		)
Effect of exchange rate changes on cash	—			—			—			(49		)	—			(49		)
Net (decrease) increase in cash and cash equivalents	—			(120,112		)	1,175			(26,143		)	—			(145,080		)
Cash and cash equivalents, beginning of period	—			229,056			11,817			58,485			—			299,358
Cash and cash equivalents, end of period	$	—		$	108,944		$	12,992		$	32,342		$	—		$	154,278

For the fiscal quarter ended April 2, 2016

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Cash flows provided by (used in) operating activities:	$	—		$	117,433		$	8,504		$	2,345		$	—		$	128,282
Cash flows from investing activities:
Capital expenditures	—			(8,825		)	(15,433		)	(1,294		)	—			(25,552		)
Intercompany investing activity	93,300			(3,250		)	(1,457		)	—			(88,593		)	—
Net cash provided by (used in) investing activities	93,300			(12,075		)	(16,890		)	(1,294		)	(88,593		)	(25,552		)
Cash flows from financing activities:
Intercompany financing activity	—			(101,144		)	12,079			472			88,593			—
Dividends Paid	(17,032		)	—			—			—			—			(17,032		)
Income tax benefit from stock-based compensation	—			1,687			1,457			—			—			3,144
Repurchases of common stock	(71,561		)	—			—			—			—			(71,561		)
Withholdings from vestings of restricted stock	(8,454		)	—			—			—			—			(8,454		)
Proceeds from exercises of stock options	3,747			—			—			—			—			3,747
Net cash (used in) provided by financing activities	(93,300		)	(99,457		)	13,536			472			88,593			(90,156		)
Effect of exchange rate changes on cash	—			—			—			1,358			—			1,358
Net increase in cash and cash equivalents	—			5,901			5,150			2,881			—			13,932
Cash and cash equivalents, beginning of period	—			325,771			14,652			40,786			—			381,209
Cash and cash equivalents, end of period	$	—		$	331,672		$	19,802		$	43,667		$	—		$	395,141

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THE COMPANY (Details)	Apr. 01, 2017 store
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of locations	965

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BASIS OF PREPARATION AND ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS (Skip Hop Acquisition) (Details) - USD ($) $ in Thousands		3 Months Ended
	Feb. 23, 2017	Apr. 01, 2017	Apr. 02, 2016	Dec. 31, 2016
Business Acquisition [Line Items]
Goodwill		$ 232,925	$ 177,238	$ 176,009
Net sales		732,755	724,085
Operating Income (Loss)		78,566	$ 93,008
Skip Hop [Member]
Business Acquisition [Line Items]
Percentage of Voting Interests Acquired	100.00%
Contingent Consideration	$ 10,000
Payments to Acquire Businesses, Net of Cash Acquired	147,300
Goodwill	56,600
Intangible Assets	92,700
Tangible Assets	54,700
Inventory	28,600
Accounts Receivables	20,400
Property, Plant, and Equipment	4,200
Liabilities	23,200
Deferred Tax Liabilities	$ 33,500
Net sales		10,400
Operating Income (Loss)		$ 300

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BASIS OF PREPARATION AND ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS (Adoption of New Accounting Pronouncements) (Details) - USD ($) $ in Millions	3 Months Ended	12 Months Ended
	Apr. 01, 2017	Dec. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Excess Tax Benefit	$ 1.0	$ 3.1

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ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 01, 2017	Apr. 02, 2016	Dec. 31, 2016
Accumulated Other Comprehensive Income (Loss) [Line Items]
Total accumulated other comprehensive loss	$ (33,793)	$ (31,081)	$ (34,740)
Foreign currency translation adjustments	947	5,286
Cumulative Foreign Currency Translation Adjustments [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Total accumulated other comprehensive loss	(26,677)	(24,300)	(27,624)
Pension and Post-retirement Liability Adjustment [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Total accumulated other comprehensive loss	$ (7,116)	$ (6,781)	$ (7,116)

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GOODWILL AND TRADENAMES INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Apr. 01, 2017	Apr. 02, 2016	Jan. 03, 2015	Feb. 23, 2017	Dec. 31, 2016
Goodwill and Other Intangible Assets [Line Items]
Goodwill, Gross amount	$ 232,925	$ 177,238			$ 176,009
Goodwill, Net amount	232,925	177,238			176,009
Finite intangible assets, Accumulated amortization	39,063				38,810
Total tradenames and other intangibles, net, gross amount	440,442				347,738
Total, Net amount	401,379	309,853			308,928
Carter's Goodwill [Member]
Goodwill and Other Intangible Assets [Line Items]
Goodwill, Gross amount	136,570	136,570			136,570
Goodwill, Net amount	136,570	136,570			136,570
Canada Acquisition Goodwill [Member]
Goodwill and Other Intangible Assets [Line Items]
Goodwill, Gross amount	39,800	40,668			39,439
Goodwill, Net amount	39,800	40,668			39,439
Carter's Tradename [Member]
Goodwill and Other Intangible Assets [Line Items]
Indefinite intangible assets	220,233	220,233			220,233
Oshkosh Trade Name [Member]
Goodwill and Other Intangible Assets [Line Items]
Indefinite intangible assets	85,500	85,500			85,500
Skip Hop Goodwill [Member]
Goodwill and Other Intangible Assets [Line Items]
Goodwill, Gross amount	56,555				0
Goodwill, Net amount	56,555				0
Skip Hop Trade Name [Member]
Goodwill and Other Intangible Assets [Line Items]
Indefinite intangible assets	56,800				0
Tradenames [Member]
Goodwill and Other Intangible Assets [Line Items]
Finite intangible assets, Accumulated amortization	38,858	37,899			38,810
Intangible assets, Gross amount	404,542	347,752			347,738
Indefinite-lived trademarks	365,684	309,853			308,928
Other Tradenames [Member]
Goodwill and Other Intangible Assets [Line Items]
Finite intangible assets, Gross amount	42,009	42,019			42,005
Finite intangible assets, Accumulated amortization	38,858	37,899			38,810
Finite-Lived Intangible Assets, Net	3,151	4,120			$ 3,195
Indefinite-lived intangible assets acquired			$ 3,600
Useful life			20 years
Amortization costs	100	$ 1,000
Remainder of 2017	200
Amortization Expense, 2018	200
Amortization Expense, 2019	200
Amortization Expense, 2020	200
Amortization Expense, 2021	$ 200
Skip Hop Customer Relationships [Member]
Goodwill and Other Intangible Assets [Line Items]
Weighted-average useful life	15 years
Finite intangible assets, Gross amount	$ 35,900
Finite intangible assets, Accumulated amortization	205
Finite-Lived Intangible Assets, Net	$ 35,695
Minimum | Other Tradenames [Member]
Goodwill and Other Intangible Assets [Line Items]
Weighted-average useful life	2 years
Maximum | Other Tradenames [Member]
Goodwill and Other Intangible Assets [Line Items]
Weighted-average useful life	20 years
Skip Hop [Member]
Goodwill and Other Intangible Assets [Line Items]
Goodwill, Net amount				$ 56,600
Amortization costs	$ 200
Remainder of 2017	2,400
Amortization Expense, 2018	2,500
Amortization Expense, 2019	2,500
Amortization Expense, 2020	2,500
Amortization Expense, 2021	$ 2,500

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COMMON STOCK (Share Repurchases) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Apr. 01, 2017	Apr. 02, 2016
Stockholders' Equity Note [Abstract]
Remaining capacity under authorization	$ 227,800
Number of shares repurchased (shares)	543,944	722,364
Aggregate cost of shares repurchased	$ 46,627	$ 71,561
Average price per share (USD per share)	$ 85.72	$ 99.07
Dividend declared per common share (USD per share)	$ 0.37	$ 0.33

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LONG-TERM DEBT (Schedule of Long Term Debt) (Details) - USD ($) $ in Thousands	Apr. 01, 2017	Dec. 31, 2016	Apr. 02, 2016
Debt Instrument [Line Items]
Long-term debt	$ 581,621	$ 580,376	$ 580,319
Senior Notes [Member]
Debt Instrument [Line Items]
Long-term debt	400,000	400,000	400,000
Senior notes, net	395,621	395,399	394,750
Less unamortized issuance-related costs for senior notes	4,379	4,601	5,250
Secured revolving credit facility [Member]
Debt Instrument [Line Items]
Long-term debt	$ 186,000	$ 184,977	$ 185,569

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LONG-TERM DEBT (Details) CAD in Millions	3 Months Ended
	Apr. 01, 2017 USD ($)	Apr. 01, 2017 CAD	Apr. 02, 2016 USD ($)	Dec. 31, 2016 USD ($)
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 500,000,000
Long-term debt	581,621,000		$ 580,319,000	$ 580,376,000
Outstanding letters of credit	4,800,000
Borrowing under secured revolving credit facility	20,000,000		0
Incremental Facilities [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 250,000,000
LIBOR [Member]
Debt Instrument [Line Items]
Interest rate (as a percentage)	1.375%
LIBOR [Member] | Minimum
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate	1.125%	1.125%
LIBOR [Member] | Maximum
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate	1.875%	1.875%
Base Rate [Member] | Minimum
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate	0.125%	0.125%
Base Rate [Member] | Maximum
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate	0.875%	0.875%
Secured revolving credit facility [Member]
Debt Instrument [Line Items]
Repayments of Debt	$ 19,000,000	CAD 25.5
Line of Credit Facility, Maximum Borrowing Capacity	100,000,000
Long-term debt	186,000,000		185,569,000	184,977,000
Available for future borrowing	$ 309,200,000
Secured revolving credit facility [Member] | LIBOR [Member]
Debt Instrument [Line Items]
Debt Instrument, Description of Variable Rate Basis	LIBOR	LIBOR
Secured revolving credit facility [Member] | Base Rate [Member]
Debt Instrument [Line Items]
Interest rate (as a percentage)	0.375%
Swingline BOA [Member] | Multicurrency Credit Facility [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 15,000,000
Senior Notes [Member]
Debt Instrument [Line Items]
Long-term debt	$ 400,000,000		$ 400,000,000	$ 400,000,000
Interest rate (as a percentage)	5.25%
United States of America, Dollars
Debt Instrument [Line Items]
Borrowing under secured revolving credit facility	$ 175,000,000
United States of America, Dollars | Incremental Facilities [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	200,000,000
United States of America, Dollars | Secured revolving credit facility [Member]
Debt Instrument [Line Items]
Proceeds from Issuance of Debt	20,000,000
Line of Credit Facility, Maximum Borrowing Capacity	$ 400,000,000
United States of America, Dollars | Secured revolving credit facility [Member] | LIBOR [Member]
Debt Instrument [Line Items]
Effective interest rate (as a percentage)	2.29%
United States of America, Dollars | Swingline BOA [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 50,000,000
Canada, Dollars
Debt Instrument [Line Items]
Borrowing under secured revolving credit facility	40,000,000
Canada, Dollars | Incremental Facilities [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 50,000,000

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STOCK-BASED COMPENSATION (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended
	Feb. 14, 2017	Apr. 01, 2017	Apr. 02, 2016	Jan. 02, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Non-cash stock-based compensation expense		$ 4,779	$ 4,556
New Issues	295,964
Exercise Price	$ 83.84
Grant Date Fair Value	$ 19.50
Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Non-cash stock-based compensation expense		1,244	1,296
Time-based restricted stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Non-cash stock-based compensation expense		$ 2,312	$ 2,145
New Issues	91,592
Grant Date Fair Value	$ 83.84
Vested in Period		148,171	199,937
Weighted Average Exercise Price		$ 72.47		$ 60.23
Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Non-cash stock-based compensation expense		$ 1,223	$ 1,115
New Issues	58,784
Grant Date Fair Value	$ 83.84

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EMPLOYEE BENEFIT PLANS (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 01, 2017	Apr. 02, 2016
Pension Plans [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Interest cost on accumulated benefit obligation	$ 611	$ 629
Expected return on plan assets	(650)	(676)
Amortization of net actuarial loss (gain)	170	145
Net periodic pension cost	131	98
Post-retirement Benefit [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Interest cost on accumulated benefit obligation	34	44
Service cost – benefits attributed to service during the period	7	31
Amortization of net actuarial loss (gain)	(76)	(49)
Net periodic pension cost	$ (35)	$ 26

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INCOME TAXES (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Apr. 01, 2017	Dec. 31, 2016	Apr. 02, 2016
Income Tax Disclosure [Abstract]
Gross unrecognized tax benefits	$ 11,900
Unrecognized tax benefits that if recognized would impact effective tax rate	7,800
Reserves for unrecognized tax benefits	1,500
Interest accrued on uncertain tax positions	1,000	$ 800	$ 700
Excess Tax Benefit	1,000	3,100
Business Acquisition [Line Items]
Deferred income taxes	133,552	$ 130,656	$ 128,815
Skip Hop [Member]
Business Acquisition [Line Items]
Deferred income taxes	$ 33,500

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FAIR VALUE MEASUREMENTS Fair Value measurements (Hierarchy) (Details) - USD ($)	Apr. 01, 2017	Dec. 31, 2016	Apr. 02, 2016
Fair Value, Inputs, Level 1 [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investments, Fair Value Disclosure	$ 0	$ 0	$ 0
Foreign Currency Contract, Asset, Fair Value Disclosure	0	0	0
Contingent Consideration	0	0	0
Foreign Currency Contracts, Liability, Fair Value Disclosure	0	0	0
Fair Value, Inputs, Level 2 [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investments, Fair Value Disclosure	0	0	0
Foreign Currency Contract, Asset, Fair Value Disclosure	0	0	0
Contingent Consideration	0	0	0
Foreign Currency Contracts, Liability, Fair Value Disclosure	0	0	2,100
Fair Value, Inputs, Level 3 [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investments, Fair Value Disclosure	0	0	0
Foreign Currency Contract, Asset, Fair Value Disclosure	0	0	0
Contingent Consideration	3,600	0	0
Foreign Currency Contracts, Liability, Fair Value Disclosure	$ 0	$ 0	$ 0

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FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS (Investments) (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 01, 2017	Apr. 02, 2016
Fair Value Disclosures [Abstract]
Gain (Loss) on Investments	$ 0.7	$ (0.4)

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FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS (Contingent Consideration) (Details) - Skip Hop [Member] - USD ($) $ in Millions	3 Months Ended
	Apr. 01, 2017	Feb. 23, 2017
Business Acquisition, Contingent Consideration [Line Items]
Contingent Consideration		$ 10.0
Fair Value Inputs, Estimated Contingent Consideration Payment	$ 3.6
Fair Value Inputs, Estimated Contingent Consideration Payment, Undiscounted	$ 3.8
Fair Value Inputs, Discount Rate	50.00%

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FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS (Foreign exchange forward contracts) (Details) $ in Millions	Apr. 02, 2016 USD ($)
Fair Value Disclosures [Abstract]
Notional Amount	$ 44.0

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FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS (Borrowings) (Details) - USD ($)	Apr. 01, 2017	Dec. 31, 2016	Apr. 02, 2016
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt	$ 581,621,000	$ 580,376,000	$ 580,319,000
Secured revolving credit facility [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt	186,000,000	184,977,000	185,569,000
Senior Notes [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt	400,000,000	$ 400,000,000	$ 400,000,000
Debt Instrument, face amount	400,000,000
Fair Value [Member] | Fair Value, Inputs, Level 2 [Member] | Senior Notes [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt	$ 412,000,000

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EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Apr. 01, 2017	Apr. 02, 2016
Weighted-average number of common and common equivalent shares outstanding:
Basic number of common shares outstanding	48,322,692	51,176,987
Dilutive effect of equity awards	554,994	467,103
Diluted number of common and common equivalent shares outstanding	48,877,686	51,644,090
Basic net income per common share (in thousands, except per share data):
Net income	$ 46,664	$ 53,980
Income allocated to participating securities	(370)	(444)
Net income available to common shareholders	$ 46,294	$ 53,536
Basic net income per common share	$ 0.96	$ 1.05
Diluted net income per common share (in thousands, except per share data):
Net income	$ 46,664	$ 53,980
Income allocated to participating securities	(367)	(441)
Net income available to common shareholders	$ 46,297	$ 53,539
Diluted net income per common share	$ 0.95	$ 1.04
Anti-dilutive shares (in shares)	530,697	386,030

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OTHER CURRENT AND LONG-TERM LIABILITIES (Other Current Liabilities) (Details) - USD ($) $ in Thousands	Apr. 01, 2017	Dec. 31, 2016	Apr. 02, 2016
Other Liabilities Disclosure [Abstract]
Accrued bonuses and incentive compensation	$ 2,924	$ 16,834	$ 4,148
Income taxes payable	25,960	8,458	19,195
Accrued customer loyalty program reserve	11,120	10,510	10,276
Accrued salaries and wages	11,616	4,312	10,284
Unredeemed gift cards	10,839	11,441	9,996
Accrued employee benefits	8,453	17,165	8,157
Accrued and deferred rent	$ 17,022	$ 15,632	$ 13,409

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OTHER CURRENT AND LONG-TERM LIABILITIES (Other Long-Term Liabilities) (Details) - USD ($) $ in Thousands	Apr. 01, 2017	Dec. 31, 2016	Apr. 02, 2016
Other Liabilities Disclosure [Abstract]
Deferred lease incentives	$ 74,447	$ 74,015	$ 72,086

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SEGMENT INFORMATION (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 01, 2017	Apr. 02, 2016
Segment Reporting Information [Line Items]
Net sales	$ 732,755	$ 724,085
Operating Income (Loss)	$ 78,566	$ 93,008
Operating income (loss) as percentage of segment net sales	10.70%	12.80%
H.W. Carter and Sons Tradename [Member]
Segment Reporting Information [Line Items]
Amortization of tradenames		$ 1,000
Operating Segments [Member]
Segment Reporting Information [Line Items]
Net sales	$ 732,755	$ 724,085
Percentage of total net sales	100.00%	100.00%
Operating Segments [Member] | Wholesale [Member]
Segment Reporting Information [Line Items]
Net sales	$ 292,555	$ 292,054
Percentage of total net sales	39.90%	40.30%
Operating Income (Loss)	$ 69,695	$ 68,411
Operating income (loss) as percentage of segment net sales	23.80%	23.40%
Operating Segments [Member] | Retail [Member]
Segment Reporting Information [Line Items]
Net sales	$ 363,771	$ 354,089
Percentage of total net sales	49.60%	48.90%
Operating Income (Loss)	$ 29,900	$ 39,469
Operating income (loss) as percentage of segment net sales	8.20%	11.10%
Operating Segments [Member] | International [Member]
Segment Reporting Information [Line Items]
Net sales	$ 76,429	$ 77,942
Percentage of total net sales	10.50%	10.80%
Operating Income (Loss)	$ 3,685	$ 8,441
Operating income (loss) as percentage of segment net sales	4.80%	10.80%
Corporate [Member]
Segment Reporting Information [Line Items]
Corporate expenses	$ (24,714)	$ (23,313)
Skip Hop [Member]
Segment Reporting Information [Line Items]
Net sales	10,400
Operating Income (Loss)	300
Corporate expenses	(1,300)
Amortization of tradenames	200
Sourcing Relocation [Member]
Segment Reporting Information [Line Items]
Corporate expenses	$ (200)

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GUARANTOR UNAUDITED CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (Balance Sheets) (Details) - USD ($) $ in Thousands	Apr. 01, 2017	Dec. 31, 2016	Apr. 02, 2016	Jan. 02, 2016
Current assets:
Cash and cash equivalents	$ 154,278	$ 299,358	$ 395,141	$ 381,209
Accounts receivable, net	206,707	202,471	192,569
Intercompany receivable	0	0	0
Intercompany Loan Receivables			0
Finished goods inventories	434,712	487,591	376,499
Prepaid expenses and other current assets	46,153	32,180	36,791
Deferred income taxes	0	35,486	31,841
Total current assets	841,850	1,057,086	1,032,841
Property, plant, and equipment, net of accumulated depreciation of $365,733, $345,907, and $307,449, respectively	386,275	385,874	377,273
Goodwill	232,925	176,009	177,238
Tradenames and other intangible assets, net	401,379	308,928	309,853
Other assets	23,034	18,700	15,258
Intercompany long term receivable	0	0	0
Intercompany long term note receivable	0	0	0
Investment in subsidiaries	0	0	0
Total assets	1,885,463	1,946,597	1,912,463
Current liabilities:
Accounts payable	101,386	158,432	90,387
Intercompany Loan Payables			0
Intercompany payables	0	0	0
Other current liabilities	123,661	119,177	102,494
Total current liabilities	225,047	277,609	192,881
Long-term debt, net	581,621	580,376	580,319
Deferred income taxes	133,552	130,656	128,815
Intercompany long term liability	0	0	0
Intercompany long term note payable	0	0	0
Other long-term liabilities	173,280	169,832	161,731
Total stockholders' equity	771,963	788,124	848,717
Total liabilities and stockholders' equity	1,885,463	1,946,597	1,912,463
Consolidation, Eliminations [Member]
Current assets:
Cash and cash equivalents	0	0	0	0
Accounts receivable, net	0	0	0
Intercompany receivable	(163,682)	(145,184)	(193,261)
Intercompany Loan Receivables			0
Finished goods inventories	(16,579)	(25,800)	(40,048)
Prepaid expenses and other current assets	0	0	0
Deferred income taxes		0	0
Total current assets	(180,261)	(170,984)	(233,309)
Property, plant, and equipment, net of accumulated depreciation of $365,733, $345,907, and $307,449, respectively	0	0	0
Goodwill	0	0	0
Tradenames and other intangible assets, net	0	0	0
Other assets	0	0	0
Intercompany long term receivable	(423,287)	(428,436)	(294,017)
Intercompany long term note receivable	(100,000)	(100,000)	(100,000)
Investment in subsidiaries	(1,823,626)	(1,686,953)	(1,631,609)
Total assets	(2,527,174)	(2,386,373)	(2,258,935)
Current liabilities:
Accounts payable	0	0	0
Intercompany Loan Payables			0
Intercompany payables	(163,682)	(145,184)	(193,261)
Other current liabilities	0	0	0
Total current liabilities	(163,682)	(145,184)	(193,261)
Long-term debt, net	0	0	0
Deferred income taxes	0	0	0
Intercompany long term liability	(423,287)	(428,436)	(294,017)
Intercompany long term note payable	(100,000)	(100,000)	(100,000)
Other long-term liabilities	0	0	0
Total stockholders' equity	(1,840,205)	(1,712,753)	(1,671,657)
Total liabilities and stockholders' equity	(2,527,174)	(2,386,373)	(2,258,935)
Parent [Member]
Current assets:
Cash and cash equivalents	0	0	0	0
Accounts receivable, net	0	0	0
Intercompany receivable	0	0	0
Intercompany Loan Receivables			0
Finished goods inventories	0	0	0
Prepaid expenses and other current assets	0	0	0
Deferred income taxes		0	0
Total current assets	0	0	0
Property, plant, and equipment, net of accumulated depreciation of $365,733, $345,907, and $307,449, respectively	0	0	0
Goodwill	0	0	0
Tradenames and other intangible assets, net	0	0	0
Other assets	0	0	0
Intercompany long term receivable	0	0	0
Intercompany long term note receivable	0	0	0
Investment in subsidiaries	771,963	788,124	848,717
Total assets	771,963	788,124	848,717
Current liabilities:
Accounts payable	0	0	0
Intercompany Loan Payables			0
Intercompany payables	0	0	0
Other current liabilities	0	0	0
Total current liabilities	0	0	0
Long-term debt, net	0	0	0
Deferred income taxes	0	0	0
Intercompany long term liability	0	0	0
Intercompany long term note payable	0	0	0
Other long-term liabilities	0	0	0
Total stockholders' equity	771,963	788,124	848,717
Total liabilities and stockholders' equity	771,963	788,124	848,717
Subsidiary Issuer [Member]
Current assets:
Cash and cash equivalents	108,944	229,056	331,672	325,771
Accounts receivable, net	168,560	176,825	166,843
Intercompany receivable	87,901	55,902	67,203
Intercompany Loan Receivables			0
Finished goods inventories	197,022	278,696	189,225
Prepaid expenses and other current assets	16,386	11,402	17,879
Deferred income taxes		18,476	14,766
Total current assets	578,813	770,357	787,588
Property, plant, and equipment, net of accumulated depreciation of $365,733, $345,907, and $307,449, respectively	154,119	155,187	162,110
Goodwill	136,570	136,570	136,570
Tradenames and other intangible assets, net	223,384	223,428	224,353
Other assets	20,635	17,771	14,164
Intercompany long term receivable	0	0	0
Intercompany long term note receivable	100,000	100,000	100,000
Investment in subsidiaries	905,397	753,753	676,350
Total assets	2,118,918	2,157,066	2,101,135
Current liabilities:
Accounts payable	56,871	97,103	58,626
Intercompany Loan Payables			0
Intercompany payables	71,796	85,894	124,763
Other current liabilities	57,324	16,473	23,801
Total current liabilities	185,991	199,470	207,190
Long-term debt, net	581,621	561,399	560,751
Deferred income taxes	71,250	87,116	83,925
Intercompany long term liability	423,287	428,436	294,017
Intercompany long term note payable	0	0	0
Other long-term liabilities	68,227	66,721	66,487
Total stockholders' equity	788,542	813,924	888,765
Total liabilities and stockholders' equity	2,118,918	2,157,066	2,101,135
Guarantor Subsidiaries [Member]
Current assets:
Cash and cash equivalents	12,992	11,817	19,802	14,652
Accounts receivable, net	32,642	18,315	20,212
Intercompany receivable	60,971	74,681	120,901
Intercompany Loan Receivables			0
Finished goods inventories	205,335	174,542	186,901
Prepaid expenses and other current assets	18,288	16,028	14,273
Deferred income taxes		15,440	14,696
Total current assets	330,228	310,823	376,785
Property, plant, and equipment, net of accumulated depreciation of $365,733, $345,907, and $307,449, respectively	196,876	194,691	184,548
Goodwill	56,072	0	0
Tradenames and other intangible assets, net	177,995	85,500	85,500
Other assets	549	605	795
Intercompany long term receivable	423,287	428,436	294,017
Intercompany long term note receivable	0	0	0
Investment in subsidiaries	146,266	145,076	106,542
Total assets	1,331,273	1,165,131	1,048,187
Current liabilities:
Accounts payable	34,820	41,947	19,554
Intercompany Loan Payables			0
Intercompany payables	88,529	55,257	65,188
Other current liabilities	58,278	90,718	68,514
Total current liabilities	181,627	187,922	153,256
Long-term debt, net	0	0	0
Deferred income taxes	62,200	43,540	44,890
Intercompany long term liability	0	0	0
Intercompany long term note payable	100,000	100,000	100,000
Other long-term liabilities	91,385	89,252	83,027
Total stockholders' equity	896,061	744,417	667,014
Total liabilities and stockholders' equity	1,331,273	1,165,131	1,048,187
Non-Guarantors Subsidiaries [Member]
Current assets:
Cash and cash equivalents	32,342	58,485	43,667	$ 40,786
Accounts receivable, net	5,505	7,331	5,514
Intercompany receivable	14,810	14,601	5,157
Intercompany Loan Receivables			0
Finished goods inventories	48,934	60,153	40,421
Prepaid expenses and other current assets	11,479	4,750	4,639
Deferred income taxes		1,570	2,379
Total current assets	113,070	146,890	101,777
Property, plant, and equipment, net of accumulated depreciation of $365,733, $345,907, and $307,449, respectively	35,280	35,996	30,615
Goodwill	40,283	39,439	40,668
Tradenames and other intangible assets, net	0	0	0
Other assets	1,850	324	299
Intercompany long term receivable	0	0	0
Intercompany long term note receivable	0	0	0
Investment in subsidiaries	0	0	0
Total assets	190,483	222,649	173,359
Current liabilities:
Accounts payable	9,695	19,382	12,207
Intercompany Loan Payables			0
Intercompany payables	3,357	4,033	3,310
Other current liabilities	8,059	11,986	10,179
Total current liabilities	21,111	35,401	25,696
Long-term debt, net	0	18,977	19,568
Deferred income taxes	102	0	0
Intercompany long term liability	0	0	0
Intercompany long term note payable	0	0	0
Other long-term liabilities	13,668	13,859	12,217
Total stockholders' equity	155,602	154,412	115,878
Total liabilities and stockholders' equity	$ 190,483	$ 222,649	$ 173,359

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GUARANTOR UNAUDITED CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (Income Statement) (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 01, 2017	Apr. 02, 2016
Condensed Income Statements, Captions [Line Items]
Net sales	$ 732,755	$ 724,085
Cost of goods sold	416,953	413,156
Gross profit	315,802	310,929
Selling, general, and administrative expenses	247,794	228,996
Royalty income	(10,558)	(11,075)
Operating income	78,566	93,008
Interest expense	7,104	6,739
Interest income	(139)	(207)
(Income) loss in subsidiaries	0	0
Other (income) expense, net	(221)	3,193
Income before income taxes	71,822	83,283
Provision for income taxes	25,158	29,303
Net income	46,664	53,980
Consolidation, Eliminations [Member]
Condensed Income Statements, Captions [Line Items]
Net sales	(177,570)	(164,221)
Cost of goods sold	(179,875)	(152,063)
Gross profit	2,305	(12,158)
Selling, general, and administrative expenses	(8,913)	(9,110)
Royalty income	1,997	2,208
Operating income	9,221	(5,256)
Interest expense	(1,327)	(817)
Interest income	1,327	817
(Income) loss in subsidiaries	23,184	44,144
Other (income) expense, net	0	0
Income before income taxes	(13,963)	(49,400)
Provision for income taxes	0	0
Net income	(13,963)	(49,400)
Parent [Member]
Condensed Income Statements, Captions [Line Items]
Net sales	0	0
Cost of goods sold	0	0
Gross profit	0	0
Selling, general, and administrative expenses	0	0
Royalty income	0	0
Operating income	0	0
Interest expense	0	0
Interest income	0	0
(Income) loss in subsidiaries	(46,664)	(53,980)
Other (income) expense, net	0	0
Income before income taxes	46,664	53,980
Provision for income taxes	0	0
Net income	46,664	53,980
Subsidiary Issuer [Member]
Condensed Income Statements, Captions [Line Items]
Net sales	453,515	451,196
Cost of goods sold	330,633	321,100
Gross profit	122,882	130,096
Selling, general, and administrative expenses	40,932	42,587
Royalty income	(8,430)	(9,072)
Operating income	90,380	96,581
Interest expense	6,973	6,608
Interest income	(1,439)	(985)
(Income) loss in subsidiaries	21,031	6,496
Other (income) expense, net	(368)	200
Income before income taxes	64,183	84,262
Provision for income taxes	26,740	25,026
Net income	37,443	59,236
Guarantor Subsidiaries [Member]
Condensed Income Statements, Captions [Line Items]
Net sales	395,779	381,280
Cost of goods sold	228,766	211,028
Gross profit	167,013	170,252
Selling, general, and administrative expenses	189,504	172,142
Royalty income	(4,125)	(4,211)
Operating income	(18,366)	2,321
Interest expense	1,369	845
Interest income	0	0
(Income) loss in subsidiaries	2,449	3,340
Other (income) expense, net	368	(214)
Income before income taxes	(22,552)	(1,650)
Provision for income taxes	(1,520)	4,846
Net income	(21,032)	(6,496)
Non-Guarantors Subsidiaries [Member]
Condensed Income Statements, Captions [Line Items]
Net sales	61,031	55,830
Cost of goods sold	37,429	33,091
Gross profit	23,602	22,739
Selling, general, and administrative expenses	26,271	23,377
Royalty income	0	0
Operating income	(2,669)	(638)
Interest expense	89	103
Interest income	(27)	(39)
(Income) loss in subsidiaries	0	0
Other (income) expense, net	(221)	3,207
Income before income taxes	(2,510)	(3,909)
Provision for income taxes	(62)	(569)
Net income	$ (2,448)	$ (3,340)

XML

GUARANTOR UNAUDITED CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (Comprehensive Income) (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 01, 2017	Apr. 02, 2016
Condensed Financial Statements, Captions [Line Items]
Net income	$ 46,664	$ 53,980
Foreign currency translation adjustments	947	5,286
Comprehensive income	47,611	59,266
Parent [Member]
Condensed Financial Statements, Captions [Line Items]
Net income	46,664	53,980
Foreign currency translation adjustments	947	5,286
Comprehensive income	47,611	59,266
Subsidiary Issuer [Member]
Condensed Financial Statements, Captions [Line Items]
Net income	37,443	59,236
Foreign currency translation adjustments	947	5,286
Comprehensive income	38,390	64,522
Guarantor Subsidiaries [Member]
Condensed Financial Statements, Captions [Line Items]
Net income	(21,032)	(6,496)
Foreign currency translation adjustments	947	5,286
Comprehensive income	(20,085)	(1,210)
Non-Guarantors Subsidiaries [Member]
Condensed Financial Statements, Captions [Line Items]
Net income	(2,448)	(3,340)
Foreign currency translation adjustments	947	5,286
Comprehensive income	(1,501)	1,946
Consolidation, Eliminations [Member]
Condensed Financial Statements, Captions [Line Items]
Net income	(13,963)	(49,400)
Foreign currency translation adjustments	(2,841)	(15,858)
Comprehensive income	$ (16,804)	$ (65,258)

XML

GUARANTOR UNAUDITED CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (Cash Flows) (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 01, 2017	Apr. 02, 2016
Condensed Cash Flow Statements, Captions [Line Items]
Net Cash Provided by (Used in) Operating Activities	$ 84,180	$ 128,282
Cash flows from investing activities:
Capital expenditures	(17,991)	(25,552)
Intercompany investing activity	0	0
Acquisition of business, net of cash acquired	(143,704)	0
Net cash used in investing activities	(161,695)	(25,552)
Cash flows from financing activities:
Intercompany financing activity	0	0
Borrowing under secured revolving credit facility	20,000	0
Payments on secured revolving credit facility	(18,965)	0
Dividends paid	(17,998)	(17,032)
Repurchases of common stock	(46,627)	(71,561)
Income tax benefit from stock-based compensation	0	3,144
Withholdings from vestings of restricted stock	(5,552)	(8,454)
Proceeds from exercises of stock options	1,626	3,747
Net cash (used in) provided by financing activities	(67,516)	(90,156)
Effect of exchange rate changes on cash and cash equivalents	(49)	1,358
Net increase (decrease) in cash and cash equivalents	(145,080)	13,932
Cash and cash equivalents, beginning of period	299,358	381,209
Cash and cash equivalents, end of period	154,278	395,141
Excess Tax Benefit from Share-based Compensation, Operating Activities	0	3,144
Gain (Loss) on Disposition of Property Plant Equipment	(189)	(192)
Amortization of debt issuance costs	373	361
Non-cash stock-based compensation expense	4,779	4,556
Parent [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Net Cash Provided by (Used in) Operating Activities	0	0
Cash flows from investing activities:
Capital expenditures	0	0
Intercompany investing activity	68,551	93,300
Acquisition of business, net of cash acquired	0
Net cash used in investing activities	68,551	93,300
Cash flows from financing activities:
Intercompany financing activity	0	0
Borrowing under secured revolving credit facility	0
Payments on secured revolving credit facility	0
Dividends paid	(17,998)	(17,032)
Repurchases of common stock	(46,627)	(71,561)
Income tax benefit from stock-based compensation		0
Withholdings from vestings of restricted stock	(5,552)	(8,454)
Proceeds from exercises of stock options	1,626	3,747
Net cash (used in) provided by financing activities	(68,551)	(93,300)
Effect of exchange rate changes on cash and cash equivalents	0	0
Net increase (decrease) in cash and cash equivalents	0	0
Cash and cash equivalents, beginning of period	0	0
Cash and cash equivalents, end of period	0	0
Subsidiary Issuer [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Net Cash Provided by (Used in) Operating Activities	101,914	117,433
Cash flows from investing activities:
Capital expenditures	(6,503)	(8,825)
Intercompany investing activity	(3,926)	(3,250)
Acquisition of business, net of cash acquired	(144,520)
Net cash used in investing activities	(154,949)	(12,075)
Cash flows from financing activities:
Intercompany financing activity	(87,077)	(101,144)
Borrowing under secured revolving credit facility	20,000
Payments on secured revolving credit facility	0
Dividends paid	0	0
Repurchases of common stock	0	0
Income tax benefit from stock-based compensation		1,687
Withholdings from vestings of restricted stock	0	0
Proceeds from exercises of stock options	0	0
Net cash (used in) provided by financing activities	(67,077)	(99,457)
Effect of exchange rate changes on cash and cash equivalents	0	0
Net increase (decrease) in cash and cash equivalents	(120,112)	5,901
Cash and cash equivalents, beginning of period	229,056	325,771
Cash and cash equivalents, end of period	108,944	331,672
Guarantor Subsidiaries [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Net Cash Provided by (Used in) Operating Activities	(13,678)	8,504
Cash flows from investing activities:
Capital expenditures	(9,548)	(15,433)
Intercompany investing activity	0	(1,457)
Acquisition of business, net of cash acquired	746
Net cash used in investing activities	(8,802)	(16,890)
Cash flows from financing activities:
Intercompany financing activity	23,655	12,079
Borrowing under secured revolving credit facility	0
Payments on secured revolving credit facility	0
Dividends paid	0	0
Repurchases of common stock	0	0
Income tax benefit from stock-based compensation		1,457
Withholdings from vestings of restricted stock	0	0
Proceeds from exercises of stock options	0	0
Net cash (used in) provided by financing activities	23,655	13,536
Effect of exchange rate changes on cash and cash equivalents	0	0
Net increase (decrease) in cash and cash equivalents	1,175	5,150
Cash and cash equivalents, beginning of period	11,817	14,652
Cash and cash equivalents, end of period	12,992	19,802
Non-Guarantors Subsidiaries [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Net Cash Provided by (Used in) Operating Activities	(4,056)	2,345
Cash flows from investing activities:
Capital expenditures	(1,940)	(1,294)
Intercompany investing activity	0	0
Acquisition of business, net of cash acquired	70
Net cash used in investing activities	(1,870)	(1,294)
Cash flows from financing activities:
Intercompany financing activity	(1,203)	472
Borrowing under secured revolving credit facility	0
Payments on secured revolving credit facility	(18,965)
Dividends paid	0	0
Repurchases of common stock	0	0
Income tax benefit from stock-based compensation		0
Withholdings from vestings of restricted stock	0	0
Proceeds from exercises of stock options	0	0
Net cash (used in) provided by financing activities	(20,168)	472
Effect of exchange rate changes on cash and cash equivalents	(49)	1,358
Net increase (decrease) in cash and cash equivalents	(26,143)	2,881
Cash and cash equivalents, beginning of period	58,485	40,786
Cash and cash equivalents, end of period	32,342	43,667
Consolidation, Eliminations [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Net Cash Provided by (Used in) Operating Activities	0	0
Cash flows from investing activities:
Capital expenditures	0	0
Intercompany investing activity	(64,625)	(88,593)
Acquisition of business, net of cash acquired	0
Net cash used in investing activities	(64,625)	(88,593)
Cash flows from financing activities:
Intercompany financing activity	64,625	88,593
Borrowing under secured revolving credit facility	0
Payments on secured revolving credit facility	0
Dividends paid	0	0
Repurchases of common stock	0	0
Income tax benefit from stock-based compensation		0
Withholdings from vestings of restricted stock	0	0
Proceeds from exercises of stock options	0	0
Net cash (used in) provided by financing activities	64,625	88,593
Effect of exchange rate changes on cash and cash equivalents	0	0
Net increase (decrease) in cash and cash equivalents	0	0
Cash and cash equivalents, beginning of period	0	0
Cash and cash equivalents, end of period	$ 0	$ 0