NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
The effects of adoption of ASC 606 on the Company’s consolidated balance sheet at December 30, 2017 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
As Previously
Reported
|
|
ASC 606
Adjustments
|
|
|
As Amended for
ASC 606
|
ASSETS
|
|
|
|
|
|
|
Prepaid expenses and other current assets
|
$
|
49,892
|
|
|
$
|
3,043
|
|
(1)
|
|
$
|
52,935
|
|
Total current assets
|
$
|
1,017,669
|
|
|
$
|
3,043
|
|
|
|
$
|
1,020,712
|
|
Total assets
|
$
|
2,067,999
|
|
|
$
|
3,043
|
|
|
|
$
|
2,071,042
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Other current liabilities
|
$
|
146,510
|
|
|
$
|
2,624
|
|
(2)
|
|
$
|
149,134
|
|
Total current liabilities
|
$
|
328,624
|
|
|
$
|
2,624
|
|
|
|
$
|
331,248
|
|
Deferred income taxes
|
$
|
84,848
|
|
|
$
|
96
|
|
|
|
$
|
84,944
|
|
Total liabilities
|
$
|
1,210,906
|
|
|
$
|
2,720
|
|
|
|
$
|
1,213,626
|
|
|
|
|
|
|
|
|
Retained earnings
|
885,714
|
|
|
323
|
|
(3)
|
|
886,037
|
|
Total stockholder's equity
|
$
|
857,093
|
|
|
$
|
323
|
|
|
|
$
|
857,416
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
$
|
2,067,999
|
|
|
$
|
3,043
|
|
|
|
$
|
2,071,042
|
|
(1) Reclassification of estimated inventory expected to be returned by customers through future sales refund transactions. This amount was reclassified from the returns reserve (current liability) to a current asset. Prior to the Company's adoption of ASC 606, the Company's returns reserve (current liability) was reported net of the estimated inventory expected to be returned by customers through sales refund transactions.
(2) Amount includes a reclassification of approximately
$3.0 million
for estimated inventory expected to be returned by customers, partially offset by a reclassification of approximately
$0.4 million
for gift card liabilities.
(3) Cumulative impact of approximately
$0.6 million
for after-tax adjustments to retained earnings at the beginning of fiscal 2016, offset by ASC 606 effects on fiscal 2017 and fiscal 2016 results of operations.
The retrospective adoption of ASC 606 at the beginning of fiscal 2018 also had the following effects on the Company’s unaudited condensed consolidated balance sheet at April 1, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
As Previously
Reported
|
|
ASC 606
Adjustments
|
|
|
As Amended for
ASC 606
|
ASSETS
|
|
|
|
|
|
|
Prepaid expenses and other current assets
|
$
|
46,153
|
|
|
$
|
2,243
|
|
(1)
|
|
$
|
48,396
|
|
Total current assets
|
$
|
841,850
|
|
|
$
|
2,243
|
|
|
|
$
|
844,093
|
|
Total assets
|
$
|
1,885,463
|
|
|
$
|
2,243
|
|
|
|
$
|
1,887,706
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Other current liabilities
|
$
|
123,661
|
|
|
$
|
1,973
|
|
(2)
|
|
$
|
125,634
|
|
Total current liabilities
|
$
|
225,047
|
|
|
$
|
1,973
|
|
|
|
$
|
227,020
|
|
Deferred income taxes
|
$
|
133,552
|
|
|
$
|
100
|
|
|
|
133,652
|
|
Total liabilities
|
$
|
1,113,500
|
|
|
$
|
2,073
|
|
|
|
$
|
1,115,573
|
|
|
|
|
|
|
|
|
Retained earnings
|
$
|
805,271
|
|
|
$
|
170
|
|
(3)
|
|
$
|
805,441
|
|
Total stockholder's equity
|
$
|
771,963
|
|
|
$
|
170
|
|
|
|
$
|
772,133
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
$
|
1,885,463
|
|
|
$
|
2,243
|
|
|
|
$
|
1,887,706
|
|
(1) Reclassification of estimated inventory expected to be returned by customers through future sales refund transactions. This amount was reclassified from the returns reserve (current liability) to a current asset. Prior to the Company's adoption of ASC 606, the Company's returns reserve (current liability) was reported net of the estimated inventory expected to be returned by customers through sales refund transactions.
(2) Amount includes a reclassification of approximately
$2.2 million
for estimated inventory expected to be returned by customers, partially offset by an adjustment of approximately
$0.3 million
for gift card liabilities.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(3) Cumulative impact of approximately
$0.6 million
for after-tax adjustments to retained earnings at the beginning of fiscal 2016, offset by ASC 606 impact on fiscal 2017 and fiscal 2016 results of operations.
Disaggregation of Revenue
The Company's sells its products directly to consumers ("direct-to-consumer") and to other retail companies and partners that subsequently sell the products directly to their own retail customers. The Company also earns royalties from its licensees. Disaggregated revenues from these sources for the first quarters of fiscal 2018 and 2017 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter Fiscal 2018
|
(dollars in thousands)
|
|
U.S. Retail
|
|
U.S. Wholesale
|
|
International
|
|
Total
|
|
|
|
|
|
|
|
|
|
Wholesale channel
|
|
$
|
—
|
|
|
$
|
280,832
|
|
|
$
|
37,713
|
|
|
$
|
318,545
|
|
Direct-to-consumer
|
|
383,742
|
|
|
—
|
|
|
53,499
|
|
|
437,241
|
|
|
|
$
|
383,742
|
|
|
$
|
280,832
|
|
|
$
|
91,212
|
|
|
$
|
755,786
|
|
|
|
|
|
|
|
|
|
|
Royalty income
|
|
$
|
1,585
|
|
|
$
|
5,845
|
|
|
$
|
564
|
|
|
$
|
7,994
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter Fiscal 2017
|
(dollars in thousands)
|
|
U.S. Retail
|
|
U.S. Wholesale
|
|
International
|
|
Total
|
|
|
|
|
|
|
|
|
|
Wholesale channel
|
|
$
|
—
|
|
|
$
|
292,555
|
|
|
$
|
29,682
|
|
|
$
|
322,237
|
|
Direct-to-consumer
|
|
363,842
|
|
|
—
|
|
|
46,748
|
|
|
410,590
|
|
|
|
$
|
363,842
|
|
|
$
|
292,555
|
|
|
$
|
76,430
|
|
|
$
|
732,827
|
|
|
|
|
|
|
|
|
|
|
Royalty income
|
|
$
|
3,268
|
|
|
$
|
6,364
|
|
|
$
|
926
|
|
|
$
|
10,558
|
|
Accounts Receivable from Customers and Licensees
Accounts receivable, net of allowances, associated with revenue from customers and licensees were approximately
$210.2 million
,
$226.0 million
, and
$194.4 million
as of March 31, 2018, December 30, 2017, and April 1, 2017, respectively. Provisions for doubtful accounts receivable for the first quarter of fiscal 2018, full-year fiscal 2017, and first quarter of fiscal 2017 were approximately
$11.1 million
,
$8.2 million
, and
$(1.7) million
, respectively.
Contract Assets and Liabilities
The Company's contract assets are not material.
Contract Liabilities
The Company recognizes a contract liability when it has received consideration from the customer and has a future obligation to transfer goods to the customer. Total contract liabilities consisted of the following amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
March 31,
2018
|
|
December 30, 2017
|
|
April 1, 2017
|
|
|
|
|
|
|
Contract liabilities-current:
|
|
|
|
|
|
|
|
Unredeemed gift cards
|
$
|
10,903
|
|
|
$
|
11,945
|
|
|
$
|
10,569
|
|
Unredeemed customer loyalty program coupons
|
3,571
|
|
|
2,743
|
|
|
6,293
|
|
Total contract liabilities-current *
|
$
|
14,474
|
|
|
$
|
14,688
|
|
|
$
|
16,862
|
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
* Included with Other current liabilities on the Company's consolidated balance sheet.
In the first quarters of fiscal 2018 and 2017, the Company recognized revenue of approximately
$2.4 million
and
$5.7 million
related to its contract liabilities that existed at December 30, 2017 and December 31, 2016, respectively.
Composition of Contract Liabilities
Unredeemed gift cards - the Company is obligated to transfer goods in the future to customers who have purchased gift cards. Periodic changes in the gift card contract liability result from the redemption of gift cards by customers and the recognition of estimated breakage revenue for those gift card balances that are not expected to be redeemed. The majority of our gift cards do not have an expiration date; however, all outstanding gift card balances are classified by the Company as current liabilities since gift cards are redeemable on demand by the valid holder.
Unredeemed loyalty program coupons - coupons earned by customers under the Company’s loyalty programs represent stand-ready obligations of the Company to transfer goods to the customer upon coupon redemption. Periodic changes in the loyalty program contract liability result from coupon redemptions and expirations. The earning and redemption cycles for our loyalty program are under one year in duration.
Remaining Performance Obligations
For contracts that are greater than one year, the following table discloses: 1) the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied (or partially unsatisfied) at March 31, 2018, and 2) when the Company expects to recognize this revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2018
|
|
Fiscal 2019
|
Thereafter
|
|
Total
|
(in thousands)
|
|
|
|
|
|
|
Unearned gift card breakage
|
$
|
389
|
|
|
$
|
111
|
|
$
|
23
|
|
|
$
|
523
|
|
This disclosure does not include revenue related to performance obligations for the Company's loyalty program because the duration of the obligations is less than one year.
NOTE 4 – BUSINESS ACQUISITIONS IN FISCAL 2017
Based on their purchase prices and pre-acquisition operating results and assets, neither of the businesses acquired by the Company in fiscal 2017 met the materiality requirements for preparation and presentation of pro forma financial information, either individually or in the aggregate.
Skip Hop Acquisition
Carter's, Inc.'s wholly-owned subsidiary, The William Carter Company ("TWCC"), acquired
100%
of the voting equity interests of Skip Hop Holdings, Inc. and subsidiaries (collectively "Skip Hop") after the close of business on February 22, 2017. The Skip Hop purchase was deemed to be the acquisition of a business under the provisions of ASC No. 805,
Business Combinations
. The Company's consolidated financial statements reflect the consolidation of the financial position, results of operations and cash flows of Skip Hop beginning February 23, 2017.
In the Company's unaudited condensed consolidated balance sheet at April 1, 2017, the preliminary purchase price of approximately
$147.3 million
, net of
$0.8 million
cash acquired, was comprised of the following acquired assets and assumed liabilities:
$56.6 million
of goodwill including an assembled workforce;
$92.7 million
of intangible assets comprised of a tradename and acquired customer relationships;
$54.7 million
of tangible assets acquired, including finished goods inventory of
$28.6 million
, accounts receivable of
$20.4 million
, property and equipment of
$4.2 million
; and
$23.2 million
of liabilities in addition to
$33.5 million
of deferred income tax liabilities.
The measurement period (as defined in ASC 805) for Skip Hop was complete at the end of fiscal 2017 and all measurement periods adjustments were reflected in the Company's consolidated balance sheet as of December 30, 2017. As a result of the
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
measurement period adjustments recorded between the acquisition date and the end of fiscal 2017, the net assets acquired consisted of the following:
$46.0 million
of goodwill including an assembled workforce;
$104.1 million
of intangible assets comprised of a tradename and acquired customer relationships;
$53.9 million
of tangible assets acquired; and
$20.8 million
of liabilities in addition to
$36.3 million
of deferred income tax liabilities. The adjusted purchase price of approximately
$142.5 million
, net of
$0.8 million
of cash acquired, includes a
$3.6 million
change in the fair value of an estimated contingent earn out liability.
During the first quarter of fiscal 2017, the Company incurred approximately
$1.3 million
in acquisition-related costs for the Skip Hop transaction.
Acquisition of Mexican Licensee
On August 1, 2017, the Company, through certain of its wholly-owned subsidiaries, acquired the outstanding equity of the Company's licensee in Mexico and a related entity (collectively "Carter's Mexico"). Both entities are incorporated under Mexican law. Prior to the acquisition, Carter's Mexico was primarily a licensee and wholesale customer of the Company. The Carter's Mexico purchase was deemed to be the acquisition of a business under the provisions of ASC No. 805,
Business Combinations
. The Company's consolidated financial statements reflect the consolidation of the financial position, results of operations and cash flows of Carter's Mexico beginning August 1, 2017. Carter's Mexico became part of the Company's International reportable segment.
As of December 30, 2017, preliminary values assigned to assets acquired included inventories of approximately
$8.3 million
, a customer relationships intangible asset of approximately
$3.5 million
, and goodwill of approximately
$6.2 million
. Measurement period adjustments made in the first quarter of fiscal 2018 were not material. The measurement period, as defined under the provisions of ASC 805, is still open for this acquisition due primarily to a pending working capital settlement.
NOTE 5 – ACCUMULATED OTHER COMPREHENSIVE LOSS
The components of accumulated other comprehensive loss consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
March 31, 2018
|
|
December 30, 2017
|
|
April 1, 2017
|
Cumulative foreign currency translation adjustments
|
$
|
(23,047
|
)
|
|
$
|
(21,285
|
)
|
|
$
|
(26,677
|
)
|
Pension and post-retirement obligations (1)
|
(7,808
|
)
|
|
(7,808
|
)
|
|
(7,116
|
)
|
Total accumulated other comprehensive loss
|
$
|
(30,855
|
)
|
|
$
|
(29,093
|
)
|
|
$
|
(33,793
|
)
|
(1) Net of income taxes of
$4.4 million
,
$4.4 million
, and
$4.2 million
, respectively. The deferred income taxes associated with these obligations are subject to adjustments upon the Company's adoption of ASC 2018-02. See Note 16,
Pending Adoption of Recent Accounting Pronouncements
.
Changes in accumulated other comprehensive loss for the
first
quarter of fiscal
2018
consisted of other comprehensive losses of approximately
$1.8 million
for foreign currency translation adjustments. Changes in accumulated other comprehensive loss for the
first
quarter of fiscal
2017
consisted of other comprehensive income of approximately
$0.9 million
for foreign currency translation adjustments. During the first quarters of both fiscal
2018
and fiscal
2017
, no amounts were reclassified from accumulated other comprehensive loss to the statement of operations.
NOTE 6 – GOODWILL AND INTANGIBLE ASSETS
The Company's goodwill and intangible assets were as follows:
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2018
|
|
December 30, 2017
|
(dollars in thousands)
|
Weighted-average useful life
|
|
Gross amount
|
|
Accumulated amortization
|
|
Net amount
|
|
Gross amount
|
|
Accumulated amortization
|
|
Net amount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carter's goodwill
|
Indefinite
|
|
$
|
136,570
|
|
|
|
|
$
|
136,570
|
|
|
$
|
136,570
|
|
|
|
|
$
|
136,570
|
|
Canada goodwill
|
Indefinite
|
|
41,106
|
|
|
|
|
41,106
|
|
|
42,223
|
|
|
|
|
42,223
|
|
Skip Hop goodwill
|
Indefinite
|
|
46,022
|
|
|
|
|
46,022
|
|
|
45,997
|
|
|
|
|
45,997
|
|
Carter's Mexico goodwill
|
Indefinite
|
|
6,310
|
|
|
|
|
6,310
|
|
|
5,634
|
|
|
|
|
5,634
|
|
Total goodwill
|
|
|
$
|
230,008
|
|
|
|
|
$
|
230,008
|
|
|
$
|
230,424
|
|
|
|
|
$
|
230,424
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
Indefinite
|
|
56,800
|
|
|
|
|
56,800
|
|
|
56,800
|
|
|
|
|
56,800
|
|
Finite-life tradenames
|
2-20 years
|
|
3,550
|
|
|
$
|
577
|
|
|
2,973
|
|
|
3,550
|
|
|
$
|
532
|
|
|
3,018
|
|
Total tradenames, net
|
|
|
$
|
366,083
|
|
|
$
|
577
|
|
|
$
|
365,506
|
|
|
$
|
366,083
|
|
|
$
|
532
|
|
|
$
|
365,551
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Skip Hop customer relationships
|
15 years
|
|
$
|
47,300
|
|
|
$
|
3,098
|
|
|
$
|
44,202
|
|
|
$
|
47,300
|
|
|
$
|
2,304
|
|
|
$
|
44,996
|
|
Carter's Mexico customer relationships
|
10 years
|
|
3,384
|
|
|
217
|
|
|
3,167
|
|
|
3,135
|
|
|
135
|
|
|
3,000
|
|
Total customer relationships, net
|
|
|
$
|
50,684
|
|
|
$
|
3,315
|
|
|
$
|
47,369
|
|
|
$
|
50,435
|
|
|
$
|
2,439
|
|
|
$
|
47,996
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 1, 2017
|
(dollars in thousands)
|
Weighted-average useful life
|
|
Gross amount
|
|
Accumulated amortization
|
|
Net amount
|
|
|
|
|
|
|
|
|
Carter's goodwill
|
Indefinite
|
|
$
|
136,570
|
|
|
|
|
$
|
136,570
|
|
Canada goodwill
|
Indefinite
|
|
39,800
|
|
|
|
|
39,800
|
|
Skip Hop goodwill
|
Indefinite
|
|
56,555
|
|
|
|
|
56,555
|
|
Total goodwill
|
|
|
$
|
232,925
|
|
|
|
|
$
|
232,925
|
|
|
|
|
|
|
|
|
|
Carter's
tradename
|
Indefinite
|
|
$
|
220,233
|
|
|
|
|
$
|
220,233
|
|
OshKosh
tradename
|
Indefinite
|
|
85,500
|
|
|
|
|
85,500
|
|
Skip Hop
tradename
|
indefinite
|
|
56,800
|
|
|
|
|
56,800
|
|
Finite-life tradenames
|
2-20 years
|
|
42,009
|
|
|
$
|
38,858
|
|
|
3,151
|
|
Total tradenames, net
|
|
|
$
|
404,542
|
|
|
$
|
38,858
|
|
|
$
|
365,684
|
|
|
|
|
|
|
|
|
|
Skip Hop customer relationships, net
|
15 years
|
|
$
|
35,900
|
|
|
$
|
205
|
|
|
$
|
35,695
|
|
|
|
|
|
|
|
|
|
Amortization expense for intangible assets subject to amortization was approximately
$1.0 million
and
$0.3 million
for the first fiscal quarter ended March 31, 2018 and first fiscal quarter ended April 1, 2017, respectively. Future amortization expense is estimated to be approximately
$3.7 million
for each of the next five fiscal years.
NOTE 7 – COMMON STOCK
OPEN MARKET SHARE REPURCHASES
On February 22, 2018, the Company's Board of Directors authorized an additional
$500 million
of share repurchases. The total aggregate remaining capacity under outstanding repurchase authorizations as of
March 31, 2018
was approximately
$560.4 million
, based on settled repurchase transactions. The authorizations have no expiration date.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
The Company repurchased and retired shares in open market transactions in the following amounts for the fiscal periods indicated:
|
|
|
|
|
|
|
|
|
|
Fiscal quarter ended
|
|
March 31, 2018
|
|
April 1, 2017
|
Number of shares repurchased
|
221,313
|
|
|
543,944
|
|
Aggregate cost of shares repurchased (dollars in thousands)
|
$
|
25,195
|
|
|
$
|
46,627
|
|
Average price per share
|
$
|
113.84
|
|
|
$
|
85.72
|
|
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
March 31, 2018
and
April 1, 2017
, the Company paid cash dividends per share of $
0.45
and $
0.37
, 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 of 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 2017 fiscal year ended December 30, 2017.
NOTE 8 – LONG-TERM DEBT
Long-term debt consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
March 31, 2018
|
|
December 30, 2017
|
|
April 1, 2017
|
Senior notes at amounts repayable
|
$
|
400,000
|
|
|
$
|
400,000
|
|
|
$
|
400,000
|
|
Less unamortized issuance-related costs for senior notes
|
(3,459
|
)
|
|
(3,694
|
)
|
|
(4,379
|
)
|
Senior notes, net
|
396,541
|
|
|
396,306
|
|
|
395,621
|
|
Secured revolving credit facility
|
221,000
|
|
|
221,000
|
|
|
186,000
|
|
Total long-term debt, net
|
$
|
617,541
|
|
|
$
|
617,306
|
|
|
$
|
581,621
|
|
Secured Revolving Credit Facility
On August 25, 2017, The William Carter Company ("TWCC"), a wholly-owned subsidiary of the Company, and a syndicate of
lenders entered into a fourth amended and restated secured revolving credit agreement.
The secured revolving credit facility provides: (i) a term for the facility lasting through August 22, 2022 and (ii) an aggregate credit line of
$750 million
which includes a
$650 million
U.S. dollar facility and a
$100 million
multicurrency facility denominated in U.S. dollars, Canadian dollars, Euros, Pounds Sterling, or other currencies agreed to by the applicable lenders. The
$650 million
U.S. dollar facility is inclusive of a
$100 million
sub-limit for letters of credit and a swing line sub-limit of
$70 million
. The
$100 million
multicurrency facility is inclusive of a
$40 million
sub-limit for letters of credit and a swing line sub-limit of
$15 million
.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
In addition, the secured revolving credit facility includes the opportunity for incremental borrowing facilities up to
$425 million
, which is comprised of an incremental
$350 million
U.S. dollar revolving credit facility and an incremental
$75 million
multicurrency revolving credit facility. The incremental U.S. dollar revolving credit facility can increase to an unlimited borrowing amount so long as the consolidated first lien leverage ratio (as defined in the secured revolving credit facility) does not exceed
2.25
:1.00.
Under the secured credit facility, TWCC and its domestic subsidiaries have granted to the collateral agent, for the benefit of the lenders, valid and perfected first priority security interests in substantially all of their present and future assets, excluding certain customary exceptions, and guarantee the obligations of the borrowers. In addition, The Genuine Canadian Corp., as Canadian borrower, and Carter’s Holdings B.V., as Dutch borrower, have each guaranteed the obligations of the other.
As of
March 31, 2018
, the Company had
$221.0 million
in outstanding borrowings under its secured revolving credit facility, exclusive of
$4.5 million
of outstanding letters of credit. As of
March 31, 2018
, approximately
$524.5 million
remained available for future borrowing. All outstanding borrowings under the Company's secured revolving credit facility are classified as non-current liabilities on the Company's consolidated balance sheet because of the contractual repayment terms under the credit facility.
As of
March 31, 2018
, 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
March 31, 2018
, U.S. dollar borrowings outstanding under the secured revolving credit facility accrued interest at a
LIBOR
rate plus the applicable
base rate
, which resulted in a borrowing rate of
3.25%
. All outstanding Canadian dollar borrowings were repaid during the first quarter of fiscal 2017.
As of
March 31, 2018
, the Company was in compliance with the financial and other covenants under the secured revolving credit facility.
Senior Notes
As of
March 31, 2018
, 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 shown in the table above.
NOTE 9 – STOCK-BASED COMPENSATION
The Company recorded stock-based compensation expense as follows:
|
|
|
|
|
|
|
|
|
|
Fiscal quarter ended
|
(dollars in thousands)
|
March 31, 2018
|
|
April 1, 2017
|
Stock options
|
$
|
1,344
|
|
|
$
|
1,244
|
|
Restricted stock:
|
|
|
|
Time-based awards
|
2,284
|
|
|
2,312
|
|
Performance-based awards
|
1,316
|
|
|
1,223
|
|
Total
|
$
|
4,944
|
|
|
$
|
4,779
|
|
On February 21, 2018, 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:
233,748
stock options with an exercise price of
$120.25
and grant-date fair value of
$27.88
each;
311,528
shares of time-based restricted stock awards with a grant-date fair value of
$120.25
each; and
43,768
shares of performance-based restricted stock awards with a grant-date fair value of
$120.25
each.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
During the first quarter of fiscal 2018, a total of
132,292
restricted stock awards (time- and performance-based) vested.
NOTE 10 – INCOME TAXES
As of
March 31, 2018
, the Company had gross unrecognized income tax benefits of approximately
$13.9 million
, of which
$10.8 million
, if ultimately recognized, may affect the Company's effective income tax rate in the periods settled. The Company has recorded tax positions for which the ultimate deductibility is more likely than not, but for which there is uncertainty about the timing of such deductions.
Included in the reserves for unrecognized tax benefits at
March 31, 2018
were approximately
$1.8 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 income tax rate for fiscal 2018 or fiscal 2019 along with the effective income tax rate in the quarter in which the benefits are recognized.
The Company recognizes interest related to unrecognized tax benefits as a component of interest expense and recognizes penalties related to unrecognized income tax benefits as a component of income tax expense. During the fiscal quarters ended
March 31, 2018
and
April 1, 2017
, interest expense recorded on uncertain tax positions was not significant. The Company had approximately
$1.1 million
,
$1.0 million
, and
$1.0 million
of interest accrued on uncertain tax positions as of
March 31, 2018
,
December 30, 2017
, and
April 1, 2017
, respectively.
For the full fiscal year
2018
, the Company estimates that its consolidated effective income tax rate will be approximately
22.0%
.
U.S. Tax Reform
The provision for income taxes recognized by the Company during the fiscal fourth quarter of 2017 reflected certain provisional estimates for the accounting of the December 22, 2017 enactment of income tax law changes commonly known as the U.S. Tax Cuts and Jobs Act of 2017 (the "2017 Act"). The provisional accounting for the 2017 Act is permitted by SEC Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act, issued in late December 2017. Subsequent adjustments, if any, to the provisional accounting estimates must be reflected in income tax provisions/benefits during one or more periods in fiscal 2018.
During the fourth quarter of fiscal 2017, the Company recorded a provisional tax expense estimate for the one-time transition tax liability for all of its foreign subsidiaries, resulting in an increase in income tax expense of approximately
$10.4 million
related to foreign earnings. The one-time transition tax is based on the Company's total post-1986 earnings and profits ("E&P") that the Company previously deferred from United States income taxes. The Company has not yet completed its calculation of the total post-1986 E&P for these foreign subsidiaries. No adjustments were made to this provisional tax expense estimate during the first quarter of fiscal 2018. Further, the transition tax is based in part on the amount of those earnings held in cash and other specified assets. This amount may change when the Company finalizes the calculation of post-1986 foreign E&P previously deferred from U.S. federal taxation and finalizes the amounts held in cash or other specified assets. No additional income taxes have been provided for any remaining undistributed foreign earnings not subject to the transition tax, or any additional outside basis difference inherent in these entities, as these amounts continue to be indefinitely reinvested in foreign operations. Determining the amount of unrecognized deferred tax liability related to any remaining undistributed foreign earnings not subject to the transition tax and additional outside basis difference in these entities (i.e., basis difference in excess of that subject to the one-time transition tax) is not practicable, but the related cumulative temporary difference as of December 30, 2017 and March 31, 2018 would not result in a material incremental deferred tax liability.
NOTE 11 – FAIR VALUE MEASUREMENTS
The following table summarizes assets and liabilities that are remeasured at fair value each reporting period:
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2018
|
|
|
December 30, 2017
|
|
|
April 1, 2017
|
(dollars in millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments (1)
|
$
|
16.7
|
|
|
—
|
|
|
—
|
|
|
|
$
|
16.7
|
|
|
—
|
|
|
—
|
|
|
|
$
|
14.8
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingent consideration (2)
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
$
|
3.6
|
|
(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.
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 not material for the fiscal quarter ended
March 31, 2018
, and were
$0.7 million
for the fiscal quarter ended
April 1, 2017
. These amounts are included in Other income, net on the Company's consolidated statement of operations.
CONTINGENT CONSIDERATION
The estimated fair value of contingent consideration related to the Skip Hop acquisition was based on a weighted payout probability.
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) and are classified as Level 2 within the fair value hierarchy. At March 31, 2018 and December 31, 2017, the fair value of open foreign currency contracts was not material. At April 1, 2017, there were no open foreign currency contracts.
BORROWINGS
As of
March 31, 2018
, the fair value of the Company's
$221.0 million
in outstanding borrowings under its secured revolving credit facility approximated carrying value.
The fair value of the Company's senior notes at
March 31, 2018
was approximately
$410 million
. The fair value of these senior notes with a notional value and carrying value (gross of debt cost) of
$400 million
was estimated using a quoted price as provided in the secondary market, which considers
the Company's credit risk and market related conditions, and is therefore within Level 2 of the fair value hierarchy.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 12 – EARNINGS PER SHARE
The following is a reconciliation of basic common shares outstanding to diluted common and common equivalent shares outstanding:
|
|
|
|
|
|
|
|
|
|
Fiscal quarter ended
|
|
March 31, 2018
|
|
April 1, 2017
|
|
|
|
|
Weighted-average number of common and common equivalent shares outstanding:
|
|
|
|
Basic number of common shares outstanding
|
46,772,737
|
|
|
48,322,692
|
|
Dilutive effect of equity awards
|
618,678
|
|
|
554,994
|
|
Diluted number of common and common equivalent shares outstanding
|
47,391,415
|
|
|
48,877,686
|
|
|
|
|
|
Basic net income per common share (in thousands, except per share data):
|
|
|
|
Net income
|
$
|
42,469
|
|
|
$
|
46,595
|
|
Income allocated to participating securities
|
(325
|
)
|
|
(369
|
)
|
Net income available to common shareholders
|
$
|
42,144
|
|
|
$
|
46,226
|
|
|
|
|
|
Basic net income per common share
|
$
|
0.90
|
|
|
$
|
0.96
|
|
|
|
|
|
Diluted net income per common share (in thousands, except per share data):
|
|
|
|
Net income
|
$
|
42,469
|
|
|
$
|
46,595
|
|
Income allocated to participating securities
|
(323
|
)
|
|
(367
|
)
|
Net income available to common shareholders
|
$
|
42,146
|
|
|
$
|
46,228
|
|
|
|
|
|
Diluted net income per common share
|
$
|
0.89
|
|
|
$
|
0.95
|
|
|
|
|
|
Anti-dilutive awards excluded from diluted earnings per share computation
|
137,980
|
|
|
530,697
|
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 13 – 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)
|
March 31, 2018
|
|
December 30, 2017
|
|
April 1, 2017
|
Accrued bonuses and incentive compensation
|
$
|
3,322
|
|
|
$
|
27,566
|
|
|
$
|
2,924
|
|
Income taxes payable
|
12,101
|
|
|
16,252
|
|
|
25,960
|
|
Accrued salaries and wages
|
11,745
|
|
|
4,264
|
|
|
11,616
|
|
Unredeemed gift cards
|
10,903
|
|
|
11,945
|
|
|
10,569
|
|
Accrued employee benefits
|
9,443
|
|
|
21,735
|
|
|
8,453
|
|
Accrued and deferred rent
|
18,093
|
|
|
18,213
|
|
|
17,022
|
|
Other long-term liabilities that exceeded five percent of total liabilities, at the end of any comparable period, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
March 31, 2018
|
|
December 30, 2017
|
|
April 1, 2017
|
Deferred lease incentives
|
$
|
74,608
|
|
|
$
|
75,104
|
|
|
$
|
74,447
|
|
NOTE 14 – COMMITMENTS AND CONTINGENCIES
The Company is subject to various claims and pending or threatened lawsuits in the normal course of business. The Company is not currently a party to any legal proceedings that it believes would have a material adverse impact on its financial position, results of operations, or cash flows.
NOTE 15 – SEGMENT INFORMATION
The table below presents certain information for our reportable segments and unallocated corporate expenses for the periods indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal quarter ended
|
(dollars in thousands)
|
March 31,
2018
|
|
% of
Total Net Sales
|
|
April 1,
2017
|
|
% of
Total Net Sales
|
Net sales
:
|
|
|
|
|
|
|
|
U.S. Wholesale
|
$
|
280,832
|
|
|
37.1
|
%
|
|
$
|
292,555
|
|
|
39.9
|
%
|
U.S. Retail
|
383,742
|
|
|
50.8
|
%
|
|
363,843
|
|
|
49.7
|
%
|
International
|
91,212
|
|
|
12.1
|
%
|
|
76,429
|
|
|
10.4
|
%
|
Total net sales
|
$
|
755,786
|
|
|
100.0
|
%
|
|
$
|
732,827
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
Operating income (loss)
:
|
|
|
% of
Segment
Net Sales
|
|
|
|
% of
Segment
Net Sales
|
U.S. Wholesale (a)
|
$
|
50,272
|
|
|
17.9
|
%
|
|
$
|
69,695
|
|
|
23.8
|
%
|
U.S. Retail (b)
|
29,518
|
|
|
7.7
|
%
|
|
29,790
|
|
|
8.2
|
%
|
International
|
3,762
|
|
|
4.1
|
%
|
|
3,685
|
|
|
4.8
|
%
|
Corporate expenses (c) (d)
|
(23,243
|
)
|
|
|
|
|
(24,714
|
)
|
|
|
|
Total operating income
|
$
|
60,309
|
|
|
8.0
|
%
|
|
$
|
78,456
|
|
|
10.7
|
%
|
|
|
(a)
|
Includes approximately
$12.8 million
of charges related to a customer bankruptcy.
|
|
|
(b)
|
Includes insurance recoveries of approximately
$0.4 million
associated with storm-related store closures.
|
|
|
(c)
|
Corporate expenses include expenses related to incentive compensation, stock-based compensation, executive management, severance and relocation, finance, office occupancy, information technology, certain legal fees, consulting, and audit fees.
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(d) Includes the following charges:
|
|
|
|
|
|
|
|
Fiscal quarter ended
|
(dollars in millions)
|
|
April 1,
2017
|
Direct sourcing initiative
|
|
$
|
239
|
|
Acquisition-related costs
|
|
$
|
1,633
|
|
NOTE 16 – PENDING ADOPTION OF RECENT ACCOUNTING PRONOUNCEMENTS
Leases
(ASU 2016-02)
In February 2016, the FASB issued new lease accounting guidance in ASU No. 2016-02,
Leases-Topic 842,
which has been codified in ASC 842,
Leases
("ASC 842"). 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. 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 effects of ASC 842. The adoption of ASC 842 will require the Company to recognize material non-current assets and liabilities for right-of-use assets and operating lease liabilities on its consolidated balance sheet, but is not expected to have a material effect on the Company's results of operations or cash flows. ASC 842 will also require additional footnote disclosures to the Company's consolidated financial statements.
Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income
(ASU 2018-02)
In February 2018, the FASB issued ASU No. 2018-02,
Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income
("ASU 2018-02"). ASU 2018-02 permits a company to reclassify the income tax effects of the U.S. Tax Cuts and Jobs Act of 2017 (the "2017 Act") on items within accumulated other comprehensive income or loss (AOCI-L) to retained earnings. Because most items that are charged to AOCI-L are recorded net of applicable income taxes, the subsequent reclassification of these items from AOCI-L to the statement of operations will be at different income tax rates due to the 2017 Act, thereby leaving a "stranded" tax balance within AOCI-L. ASU 2018-02 will allow a company to transfer these "stranded" amounts from AOCI-L to retained earnings. ASU 2018-02 will be effective for the Company at the beginning of fiscal 2019, with early adoption permitted. The Company has amounts in its AOCI-L for defined benefit retirement plans that were recorded net of applicable income taxes, thus the Company anticipates the transfer of "stranded" tax amounts from its AOCI-L to retained earnings upon the adoption of ASU 2018-02. The effect of the adoption of ASU 2018-02 will not be material to the Company's financial position, and the adoption will have no impact on the Company's results of operations or cash flows.
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 will be effective for the Company at the beginning of fiscal 2020 with early adoption permitted for fiscal 2019, 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.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
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 affected 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 the Company will be effective for annual and interim impairment test performed beginning in fiscal 2020. 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.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 17 – GUARANTOR UNAUDITED CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
The Company’s senior notes constitute debt obligations of its wholly-owned subsidiary, The William Carter Company ("TWCC" or the "Subsidiary Issuer"), are unsecured and are fully and unconditionally guaranteed by Carter’s, Inc. (the "Parent"), by 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.
For additional information, refer to the Company's Annual Report on Form 10-K for the 2017 fiscal year ended December 30, 2017.
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.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
CARTER’S, INC.
Condensed Consolidating Balance Sheets (unaudited)
As of
March 31, 2018
(dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
84,566
|
|
|
$
|
28,738
|
|
|
$
|
66,952
|
|
|
$
|
—
|
|
|
$
|
180,256
|
|
Accounts receivable, net
|
—
|
|
|
177,579
|
|
|
29,451
|
|
|
14,156
|
|
|
—
|
|
|
221,186
|
|
Intercompany receivable
|
—
|
|
|
90,437
|
|
|
99,161
|
|
|
52,457
|
|
|
(242,055
|
)
|
|
—
|
|
Finished goods inventories
|
—
|
|
|
240,105
|
|
|
214,172
|
|
|
52,853
|
|
|
(27,786
|
)
|
|
479,344
|
|
Prepaid expenses and other current assets
|
—
|
|
|
18,973
|
|
|
20,813
|
|
|
14,511
|
|
|
—
|
|
|
54,297
|
|
Total current assets
|
—
|
|
|
611,660
|
|
|
392,335
|
|
|
200,929
|
|
|
(269,841
|
)
|
|
935,083
|
|
Property, plant, and equipment, net
|
—
|
|
|
144,384
|
|
|
185,172
|
|
|
39,508
|
|
|
—
|
|
|
369,064
|
|
Goodwill
|
—
|
|
|
136,570
|
|
|
45,369
|
|
|
48,069
|
|
|
—
|
|
|
230,008
|
|
Tradenames, net
|
—
|
|
|
223,206
|
|
|
142,300
|
|
|
—
|
|
|
—
|
|
|
365,506
|
|
Customer relationships, net
|
—
|
|
|
—
|
|
|
44,203
|
|
|
3,166
|
|
|
—
|
|
|
47,369
|
|
Other assets
|
—
|
|
|
23,849
|
|
|
2,558
|
|
|
1,769
|
|
|
—
|
|
|
28,176
|
|
Intercompany long-term receivable
|
—
|
|
|
—
|
|
|
460,544
|
|
|
—
|
|
|
(460,544
|
)
|
|
—
|
|
Intercompany long-term note receivable
|
—
|
|
|
100,000
|
|
|
—
|
|
|
—
|
|
|
(100,000
|
)
|
|
—
|
|
Investment in subsidiaries
|
854,814
|
|
|
1,061,836
|
|
|
238,525
|
|
|
—
|
|
|
(2,155,175
|
)
|
|
—
|
|
Total assets
|
$
|
854,814
|
|
|
$
|
2,301,505
|
|
|
$
|
1,511,006
|
|
|
$
|
293,441
|
|
|
$
|
(2,985,560
|
)
|
|
$
|
1,975,206
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
$
|
—
|
|
|
$
|
71,349
|
|
|
$
|
33,204
|
|
|
$
|
11,757
|
|
|
$
|
—
|
|
|
$
|
116,310
|
|
Intercompany payables
|
—
|
|
|
146,337
|
|
|
90,621
|
|
|
5,097
|
|
|
(242,055
|
)
|
|
—
|
|
Other current liabilities
|
—
|
|
|
(5,116
|
)
|
|
102,486
|
|
|
12,256
|
|
|
—
|
|
|
109,626
|
|
Total current liabilities
|
—
|
|
|
212,570
|
|
|
226,311
|
|
|
29,110
|
|
|
(242,055
|
)
|
|
225,936
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, net
|
—
|
|
|
617,541
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
617,541
|
|
Deferred income taxes
|
—
|
|
|
46,990
|
|
|
39,820
|
|
|
612
|
|
|
—
|
|
|
87,422
|
|
Intercompany long-term liability
|
—
|
|
|
460,544
|
|
|
—
|
|
|
—
|
|
|
(460,544
|
)
|
|
—
|
|
Intercompany long-term note payable
|
—
|
|
|
—
|
|
|
100,000
|
|
|
—
|
|
|
(100,000
|
)
|
|
—
|
|
Other long-term liabilities
|
—
|
|
|
81,260
|
|
|
92,390
|
|
|
15,843
|
|
|
—
|
|
|
189,493
|
|
Stockholders' equity
|
854,814
|
|
|
882,600
|
|
|
1,052,485
|
|
|
247,876
|
|
|
(2,182,961
|
)
|
|
854,814
|
|
Total liabilities and stockholders' equity
|
$
|
854,814
|
|
|
$
|
2,301,505
|
|
|
$
|
1,511,006
|
|
|
$
|
293,441
|
|
|
$
|
(2,985,560
|
)
|
|
$
|
1,975,206
|
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
As of
December 30, 2017
(dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
129,463
|
|
|
$
|
10,030
|
|
|
$
|
39,001
|
|
|
$
|
—
|
|
|
$
|
178,494
|
|
Accounts receivable, net
|
—
|
|
|
182,944
|
|
|
40,286
|
|
|
17,331
|
|
|
—
|
|
|
240,561
|
|
Intercompany receivable
|
—
|
|
|
87,702
|
|
|
162,007
|
|
|
58,980
|
|
|
(308,689
|
)
|
|
—
|
|
Finished goods inventories
|
—
|
|
|
296,065
|
|
|
206,556
|
|
|
66,569
|
|
|
(20,468
|
)
|
|
548,722
|
|
Prepaid expenses and other current assets
|
—
|
|
|
17,012
|
|
|
21,354
|
|
|
14,569
|
|
|
—
|
|
|
52,935
|
|
Total current assets
|
—
|
|
|
713,186
|
|
|
440,233
|
|
|
196,450
|
|
|
(329,157
|
)
|
|
1,020,712
|
|
Property, plant, and equipment, net
|
—
|
|
|
147,858
|
|
|
189,511
|
|
|
40,555
|
|
|
—
|
|
|
377,924
|
|
Goodwill
|
—
|
|
|
136,570
|
|
|
45,368
|
|
|
48,486
|
|
|
—
|
|
|
230,424
|
|
Tradenames, net
|
—
|
|
|
223,251
|
|
|
142,300
|
|
|
—
|
|
|
—
|
|
|
365,551
|
|
Customer relationships, net
|
—
|
|
|
—
|
|
|
44,996
|
|
|
3,000
|
|
|
—
|
|
|
47,996
|
|
Other assets
|
—
|
|
|
23,884
|
|
|
2,392
|
|
|
2,159
|
|
|
—
|
|
|
28,435
|
|
Intercompany long-term receivable
|
—
|
|
|
—
|
|
|
441,294
|
|
|
—
|
|
|
(441,294
|
)
|
|
—
|
|
Intercompany long-term note receivable
|
—
|
|
|
100,000
|
|
|
—
|
|
|
—
|
|
|
(100,000
|
)
|
|
—
|
|
Investment in subsidiaries
|
857,416
|
|
|
1,053,224
|
|
|
231,994
|
|
|
—
|
|
|
(2,142,634
|
)
|
|
—
|
|
Total assets
|
$
|
857,416
|
|
|
$
|
2,397,973
|
|
|
$
|
1,538,088
|
|
|
$
|
290,650
|
|
|
$
|
(3,013,085
|
)
|
|
$
|
2,071,042
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
$
|
—
|
|
|
$
|
115,658
|
|
|
$
|
49,313
|
|
|
$
|
17,143
|
|
|
$
|
—
|
|
|
$
|
182,114
|
|
Intercompany payables
|
—
|
|
|
215,573
|
|
|
91,697
|
|
|
1,419
|
|
|
(308,689
|
)
|
|
—
|
|
Other current liabilities
|
—
|
|
|
11,805
|
|
|
122,989
|
|
|
14,340
|
|
|
—
|
|
|
149,134
|
|
Total current liabilities
|
—
|
|
|
343,036
|
|
|
263,999
|
|
|
32,902
|
|
|
(308,689
|
)
|
|
331,248
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, net
|
—
|
|
|
617,306
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
617,306
|
|
Deferred income taxes
|
—
|
|
|
46,619
|
|
|
37,647
|
|
|
678
|
|
|
—
|
|
|
84,944
|
|
Intercompany long-term liability
|
—
|
|
|
441,294
|
|
|
—
|
|
|
—
|
|
|
(441,294
|
)
|
|
—
|
|
Intercompany long-term note payable
|
—
|
|
|
—
|
|
|
100,000
|
|
|
—
|
|
|
(100,000
|
)
|
|
—
|
|
Other long-term liabilities
|
—
|
|
|
71,834
|
|
|
92,570
|
|
|
15,724
|
|
|
—
|
|
|
180,128
|
|
Stockholders' equity
|
857,416
|
|
|
877,884
|
|
|
1,043,872
|
|
|
241,346
|
|
|
(2,163,102
|
)
|
|
857,416
|
|
Total liabilities and stockholders' equity
|
$
|
857,416
|
|
|
$
|
2,397,973
|
|
|
$
|
1,538,088
|
|
|
$
|
290,650
|
|
|
$
|
(3,013,085
|
)
|
|
$
|
2,071,042
|
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
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
|
|
|
20,129
|
|
|
11,881
|
|
|
—
|
|
|
48,396
|
|
Total current assets
|
—
|
|
|
578,813
|
|
|
332,069
|
|
|
113,472
|
|
|
(180,261
|
)
|
|
844,093
|
|
Property, plant, and equipment, net
|
—
|
|
|
154,119
|
|
|
196,876
|
|
|
35,280
|
|
|
—
|
|
|
386,275
|
|
Goodwill
|
—
|
|
|
136,570
|
|
|
56,072
|
|
|
40,283
|
|
|
—
|
|
|
232,925
|
|
Tradenames, net
|
—
|
|
|
223,384
|
|
|
142,300
|
|
|
—
|
|
|
—
|
|
|
365,684
|
|
Customer relationships, net
|
—
|
|
|
—
|
|
|
35,695
|
|
|
—
|
|
|
—
|
|
|
35,695
|
|
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
|
772,133
|
|
|
905,567
|
|
|
146,266
|
|
|
—
|
|
|
(1,823,966
|
)
|
|
—
|
|
Total assets
|
$
|
772,133
|
|
|
$
|
2,119,088
|
|
|
$
|
1,333,114
|
|
|
$
|
190,885
|
|
|
$
|
(2,527,514
|
)
|
|
$
|
1,887,706
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
59,849
|
|
|
8,461
|
|
|
—
|
|
|
125,634
|
|
Total current liabilities
|
—
|
|
|
185,991
|
|
|
183,198
|
|
|
21,513
|
|
|
(163,682
|
)
|
|
227,020
|
|
Long-term debt, net
|
—
|
|
|
581,621
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
581,621
|
|
Deferred income taxes
|
—
|
|
|
71,250
|
|
|
62,300
|
|
|
102
|
|
|
—
|
|
|
133,652
|
|
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
|
772,133
|
|
|
788,712
|
|
|
896,231
|
|
|
155,602
|
|
|
(1,840,545
|
)
|
|
772,133
|
|
Total liabilities and stockholders' equity
|
$
|
772,133
|
|
|
$
|
2,119,088
|
|
|
$
|
1,333,114
|
|
|
$
|
190,885
|
|
|
$
|
(2,527,514
|
)
|
|
$
|
1,887,706
|
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
CARTER’S, INC.
Condensed Consolidating Statements of Operations (unaudited)
For the fiscal quarter ended
March 31, 2018
(dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Subsidiary Issuer
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Consolidating Adjustments
|
|
Consolidated
|
Net sales
|
$
|
—
|
|
|
$
|
460,986
|
|
|
$
|
426,463
|
|
|
$
|
84,597
|
|
|
$
|
(216,260
|
)
|
|
$
|
755,786
|
|
Cost of goods sold
|
—
|
|
|
329,999
|
|
|
251,082
|
|
|
45,601
|
|
|
(203,373
|
)
|
|
423,309
|
|
Gross profit
|
—
|
|
|
130,987
|
|
|
175,381
|
|
|
38,996
|
|
|
(12,887
|
)
|
|
332,477
|
|
Royalty income, net
|
—
|
|
|
6,927
|
|
|
3,820
|
|
|
—
|
|
|
(2,753
|
)
|
|
7,994
|
|
Selling, general, and administrative expenses
|
—
|
|
|
41,816
|
|
|
215,166
|
|
|
31,502
|
|
|
(8,322
|
)
|
|
280,162
|
|
Operating income (loss)
|
—
|
|
|
96,098
|
|
|
(35,965
|
)
|
|
7,494
|
|
|
(7,318
|
)
|
|
60,309
|
|
Interest expense
|
—
|
|
|
7,975
|
|
|
1,327
|
|
|
10
|
|
|
(1,327
|
)
|
|
7,985
|
|
Interest income
|
—
|
|
|
(1,342
|
)
|
|
—
|
|
|
(151
|
)
|
|
1,327
|
|
|
(166
|
)
|
(Income) loss in subsidiaries
|
(42,469
|
)
|
|
26,012
|
|
|
(6,588
|
)
|
|
—
|
|
|
23,045
|
|
|
—
|
|
Other expense (income), net
|
—
|
|
|
21
|
|
|
11
|
|
|
(414
|
)
|
|
—
|
|
|
(382
|
)
|
Income (loss) before income taxes
|
42,469
|
|
|
63,432
|
|
|
(30,715
|
)
|
|
8,049
|
|
|
(30,363
|
)
|
|
52,872
|
|
Provision (benefit) for income taxes
|
—
|
|
|
13,645
|
|
|
(4,703
|
)
|
|
1,461
|
|
|
—
|
|
|
10,403
|
|
Net income (loss)
|
$
|
42,469
|
|
|
$
|
49,787
|
|
|
$
|
(26,012
|
)
|
|
$
|
6,588
|
|
|
$
|
(30,363
|
)
|
|
$
|
42,469
|
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
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
|
|
|
$
|
395,850
|
|
|
$
|
61,032
|
|
|
$
|
(177,570
|
)
|
|
$
|
732,827
|
|
Cost of goods sold
|
—
|
|
|
330,634
|
|
|
228,947
|
|
|
37,429
|
|
|
(179,875
|
)
|
|
417,135
|
|
Gross profit
|
—
|
|
|
122,881
|
|
|
166,903
|
|
|
23,603
|
|
|
2,305
|
|
|
315,692
|
|
Royalty income, net
|
—
|
|
|
8,430
|
|
|
4,125
|
|
|
—
|
|
|
(1,997
|
)
|
|
10,558
|
|
Selling, general, and administrative expenses
|
—
|
|
|
40,932
|
|
|
189,504
|
|
|
26,271
|
|
|
(8,913
|
)
|
|
247,794
|
|
Operating income (loss)
|
—
|
|
|
90,379
|
|
|
(18,476
|
)
|
|
(2,668
|
)
|
|
9,221
|
|
|
78,456
|
|
Interest expense
|
—
|
|
|
6,973
|
|
|
1,369
|
|
|
89
|
|
|
(1,327
|
)
|
|
7,104
|
|
Interest income
|
—
|
|
|
(1,439
|
)
|
|
—
|
|
|
(27
|
)
|
|
1,327
|
|
|
(139
|
)
|
(Income) loss in subsidiaries
|
(46,595
|
)
|
|
21,101
|
|
|
2,449
|
|
|
—
|
|
|
23,045
|
|
|
—
|
|
Other (income) expense, net
|
—
|
|
|
(368
|
)
|
|
368
|
|
|
(221
|
)
|
|
—
|
|
|
(221
|
)
|
Income (loss) before income taxes
|
46,595
|
|
|
64,112
|
|
|
(22,662
|
)
|
|
(2,509
|
)
|
|
(13,824
|
)
|
|
71,712
|
|
Provision (benefit) for income taxes
|
—
|
|
|
26,738
|
|
|
(1,559
|
)
|
|
(62
|
)
|
|
—
|
|
|
25,117
|
|
Net income (loss)
|
$
|
46,595
|
|
|
$
|
37,374
|
|
|
$
|
(21,103
|
)
|
|
$
|
(2,447
|
)
|
|
$
|
(13,824
|
)
|
|
$
|
46,595
|
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
CARTER’S, INC.
Condensed Consolidating Statements of Comprehensive Income (unaudited)
For the fiscal quarter ended
March 31, 2018
(dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Subsidiary Issuer
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Consolidating Adjustments
|
|
Consolidated
|
Net income (loss)
|
|
$
|
42,469
|
|
|
$
|
49,787
|
|
|
$
|
(26,012
|
)
|
|
$
|
6,588
|
|
|
$
|
(30,363
|
)
|
|
$
|
42,469
|
|
Foreign currency translation adjustments
|
|
(1,762
|
)
|
|
(1,762
|
)
|
|
(1,762
|
)
|
|
(1,762
|
)
|
|
5,286
|
|
|
(1,762
|
)
|
Comprehensive income (loss)
|
|
$
|
40,707
|
|
|
$
|
48,025
|
|
|
$
|
(27,774
|
)
|
|
$
|
4,826
|
|
|
$
|
(25,077
|
)
|
|
$
|
40,707
|
|
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)
|
|
$
|
46,595
|
|
|
$
|
37,374
|
|
|
$
|
(21,103
|
)
|
|
$
|
(2,447
|
)
|
|
$
|
(13,824
|
)
|
|
$
|
46,595
|
|
Foreign currency translation adjustments
|
|
947
|
|
|
947
|
|
|
947
|
|
|
947
|
|
|
(2,841
|
)
|
|
947
|
|
Comprehensive income (loss)
|
|
$
|
47,542
|
|
|
$
|
38,321
|
|
|
$
|
(20,156
|
)
|
|
$
|
(1,500
|
)
|
|
$
|
(16,665
|
)
|
|
$
|
47,542
|
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
CARTER’S, INC.
Condensed Consolidating Statements of Cash Flows (unaudited)
For the fiscal quarter ended
March 31, 2018
(dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Subsidiary Issuer
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Consolidating Adjustments
|
|
Consolidated
|
Cash flows provided by (used in) operating activities:
|
|
$
|
—
|
|
|
$
|
63,298
|
|
|
$
|
(19,112
|
)
|
|
$
|
19,921
|
|
|
$
|
—
|
|
|
$
|
64,107
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
—
|
|
|
(4,698
|
)
|
|
(7,569
|
)
|
|
(2,477
|
)
|
|
—
|
|
|
(14,744
|
)
|
Intercompany investing activity
|
|
48,253
|
|
|
(4,829
|
)
|
|
2,991
|
|
|
24
|
|
|
(46,439
|
)
|
|
—
|
|
Disposals and recoveries from property, plant, and equipment
|
|
—
|
|
|
—
|
|
|
369
|
|
|
4
|
|
|
—
|
|
|
373
|
|
Net cash provided by (used in) investing activities
|
|
48,253
|
|
|
(9,527
|
)
|
|
(4,209
|
)
|
|
(2,449
|
)
|
|
(46,439
|
)
|
|
(14,371
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Intercompany financing activity
|
|
—
|
|
|
(98,668
|
)
|
|
42,029
|
|
|
10,200
|
|
|
46,439
|
|
|
—
|
|
Borrowings under secured revolving credit facility
|
|
—
|
|
|
50,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
50,000
|
|
Payments on secured revolving credit facility
|
|
—
|
|
|
(50,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(50,000
|
)
|
Dividends paid
|
|
(21,244
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,244
|
)
|
Repurchases of common stock
|
|
(25,195
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(25,195
|
)
|
Withholdings from vestings of restricted stock
|
|
(6,583
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,583
|
)
|
Proceeds from exercises of stock options
|
|
4,769
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,769
|
|
Net cash (used in) provided by financing activities
|
|
(48,253
|
)
|
|
(98,668
|
)
|
|
42,029
|
|
|
10,200
|
|
|
46,439
|
|
|
(48,253
|
)
|
Effect of exchange rate changes on cash and cash equivalents
|
|
—
|
|
|
—
|
|
|
—
|
|
|
279
|
|
|
—
|
|
|
279
|
|
Net (decrease) increase in cash and cash equivalents
|
|
—
|
|
|
(44,897
|
)
|
|
18,708
|
|
|
27,951
|
|
|
—
|
|
|
1,762
|
|
Cash and cash equivalents, beginning of period
|
|
—
|
|
|
129,463
|
|
|
10,030
|
|
|
39,001
|
|
|
—
|
|
|
178,494
|
|
Cash and cash equivalents, end of period
|
|
$
|
—
|
|
|
$
|
84,566
|
|
|
$
|
28,738
|
|
|
$
|
66,952
|
|
|
$
|
—
|
|
|
$
|
180,256
|
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
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:
|
|
$
|
—
|
|
|
$
|
101,915
|
|
|
$
|
(13,680
|
)
|
|
$
|
(4,055
|
)
|
|
$
|
—
|
|
|
$
|
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
|
)
|
|
—
|
|
Acquisitions of businesses, 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
|
|
—
|
|
|
(87,078
|
)
|
|
23,657
|
|
|
(1,204
|
)
|
|
64,625
|
|
|
—
|
|
Borrowings under secured revolving credit facility
|
|
—
|
|
|
20,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,000
|
|
Payment 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
|
)
|
|
(67,078
|
)
|
|
23,657
|
|
|
(20,169
|
)
|
|
64,625
|
|
|
(67,516
|
)
|
Effect of exchange rate changes on cash and cash equivalents
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(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
|
|