Company Quick10K Filing
Carters
Price95.46 EPS6
Shares45 P/E16
MCap4,290 P/FCF58
Net Debt616 EBIT332
TEV4,906 TEV/EBIT15
TTM 2019-09-28, in MM, except price, ratios
10-Q 2020-09-26 Filed 2020-10-23
10-Q 2020-06-27 Filed 2020-07-24
10-Q 2020-03-28 Filed 2020-05-06
10-K 2019-12-28 Filed 2020-02-24
10-Q 2019-09-28 Filed 2019-10-25
10-Q 2019-06-29 Filed 2019-07-25
10-Q 2019-03-30 Filed 2019-04-30
10-K 2018-12-29 Filed 2019-02-25
10-Q 2018-09-29 Filed 2018-10-25
10-Q 2018-06-30 Filed 2018-07-26
10-Q 2018-03-31 Filed 2018-04-26
10-K 2017-12-30 Filed 2018-02-27
10-Q 2017-09-30 Filed 2017-10-26
10-Q 2017-07-01 Filed 2017-07-27
10-Q 2017-04-01 Filed 2017-04-27
10-K 2016-12-31 Filed 2017-02-23
10-Q 2016-10-01 Filed 2016-10-27
10-Q 2016-07-02 Filed 2016-07-27
10-Q 2016-04-02 Filed 2016-04-28
10-K 2016-01-02 Filed 2016-02-26
10-Q 2015-10-03 Filed 2015-10-29
10-Q 2015-07-04 Filed 2015-07-29
10-Q 2015-04-04 Filed 2015-04-29
10-K 2015-01-03 Filed 2015-02-26
10-Q 2014-09-27 Filed 2014-10-23
10-Q 2014-06-28 Filed 2014-07-24
10-Q 2014-03-29 Filed 2014-04-28
10-K 2013-12-28 Filed 2014-02-26
10-Q 2013-09-28 Filed 2013-10-24
10-Q 2013-06-29 Filed 2013-07-26
10-Q 2013-03-30 Filed 2013-04-25
10-K 2012-12-29 Filed 2013-02-27
10-Q 2012-09-29 Filed 2012-11-02
10-Q 2012-06-30 Filed 2012-07-26
10-Q 2012-03-31 Filed 2012-04-27
10-K 2011-12-31 Filed 2012-02-29
10-Q 2011-10-01 Filed 2011-11-04
10-Q 2011-07-02 Filed 2011-08-01
10-Q 2011-04-02 Filed 2011-04-29
10-K 2011-01-01 Filed 2011-03-02
10-Q 2010-10-02 Filed 2010-11-01
10-Q 2010-07-03 Filed 2010-08-02
10-Q 2010-04-03 Filed 2010-05-05
10-K 2010-01-02 Filed 2010-03-02
10-Q 2009-10-03 Filed 2010-01-15
8-K 2021-01-29 Officers, Exhibits
8-K 2020-10-23
8-K 2020-07-24
8-K 2020-05-14
8-K 2020-05-11
8-K 2020-05-06
8-K 2020-05-06
8-K 2020-05-04
8-K 2020-04-06
8-K 2020-03-26
8-K 2020-03-18
8-K 2020-02-24
8-K 2019-12-02
8-K 2019-11-06
8-K 2019-10-24
8-K 2019-07-25
8-K 2019-07-03
8-K 2019-05-16
8-K 2019-04-30
8-K 2019-03-14
8-K 2019-02-28
8-K 2019-02-28
8-K 2019-02-25
8-K 2019-01-31
8-K 2019-01-25
8-K 2018-10-25
8-K 2018-09-21
8-K 2018-07-26
8-K 2018-05-17
8-K 2018-04-26
8-K 2018-02-22

CRI 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements
Note 1 - The Company
Note 2 - Basis of Presentation
Note 3 - Revenue Recognition
Note 4 - Leases
Note 5 - Accumulated Other Comprehensive Loss
Note 6 - Goodwill and Intangible Assets
Note 7 - Common Stock
Note 8 - Long - Term Debt
Note 9 - Stock - Based Compensation
Note 10 - Income Taxes
Note 11 - Fair Value Measurements
Note 12 - Earnings per Share
Note 13 - Other Current and Long - Term Liabilities
Note 14 - Commitments and Contingencies
Note 15 - Segment Information
Note 16 - Organizational Restructuring and Office Consolidation
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 cri-20200926exh311.htm
EX-31.2 cri-20200926exh312.htm
EX-32.0 cri-20200926exh320.htm

Carters Earnings 2020-09-26

Balance SheetIncome StatementCash Flow
2.92.31.71.20.60.02012201420172020
Assets, Equity
1.10.90.70.40.20.02012201420172020
Rev, G Profit, Net Income
0.30.20.10.0-0.1-0.22012201420172020
Ops, Inv, Fin

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 26, 2020
OR
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from         to         
Commission file number:
001-31829
CARTER’S, INC.
(Exact name of Registrant as specified in its charter)                            
Delaware
 
13-3912933
(State or other jurisdiction of
 
(I.R.S. Employer Identification No.)
incorporation or organization)
 
 

Phipps Tower,
3438 Peachtree Road NE, Suite 1800
Atlanta, Georgia 30326
(Address of principal executive offices, including zip code)
(678) 791-1000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol(s)
Name of Each Exchange on Which Registered
Common stock, par value $0.01 per share
CRI
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ☐



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer x Accelerated filer ☐
Non-accelerated filer ☐ Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes No x
As of October 16, 2020, there were 43,647,576 shares of the registrant's common stock outstanding.








CARTER’S, INC.
INDEX
 
 
 
 
Page
 
 
 
 
 
 
 
 
Unaudited Condensed Consolidated Balance Sheets as of September 26, 2020, December 28, 2019 and September 28, 2019
 
 
Unaudited Condensed Consolidated Statements of Operations for the fiscal quarter and three fiscal quarters ended September 26, 2020 and September 28, 2019
 
 
Unaudited Condensed Consolidated Statements of Comprehensive Income for the fiscal quarter and three fiscal quarters ended September 26, 2020 and September 28, 2019
 
 
Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity for the fiscal quarters ended September 26, 2020, June 27, 2020, March 28, 2020, September 28, 2019, June 29, 2019 and March 30, 2019
 
 
Unaudited Condensed Consolidated Statements of Cash Flows for the three fiscal quarters ended September 26, 2020 and September 28, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CARTER’S, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)
(unaudited)
 
September 26, 2020
 
December 28, 2019
 
September 28, 2019
ASSETS
 
 
 
 
 
Current assets:
 
 
 
 
 
Cash and cash equivalents
$
831,175

 
$
214,311

 
$
153,936

Accounts receivable, net of allowance for credit losses of $7,675, $6,354, $4,591, respectively
263,231

 
251,005

 
293,203

Finished goods inventories, net of inventory reserves of $30,053, $9,283, and $19,583, respectively
646,608

 
593,987

 
723,242

Prepaid expenses and other current assets
56,493

 
48,454

 
53,264

Total current assets
1,797,507

 
1,107,757

 
1,223,645

Property, plant, and equipment, net of accumulated depreciation of $576,123, $523,848, and $504,833, respectively
274,574

 
320,168

 
330,371

Operating lease assets
619,057

 
687,024

 
709,523

Tradenames, net
307,955

 
334,642

 
334,705

Goodwill
209,507

 
229,026

 
228,235

Customer relationships, net
38,147

 
41,126

 
41,890

Other assets
34,874

 
33,374

 
31,211

Total assets
$
3,281,621

 
$
2,753,117

 
$
2,899,580

 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
 
Current liabilities:
 
 
 
 
 
Accounts payable
$
473,473

 
$
183,641

 
$
205,782

Current operating lease liabilities
172,364

 
160,228

 
158,524

Other current liabilities
115,069

 
131,631

 
119,862

Total current liabilities
760,906

 
475,500

 
484,168

 
 
 
 
 
 
Long-term debt, net
989,086

 
594,672

 
769,525

Deferred income taxes
60,160

 
74,370

 
78,916

Long-term operating lease liabilities
587,099

 
664,372

 
691,717

Other long-term liabilities
62,489

 
64,073

 
62,520

Total liabilities
$
2,459,740

 
$
1,872,987

 
$
2,086,846

 
 
 
 
 
 
Commitments and contingencies - Note 14

 

 

 
 
 
 
 
 
Stockholders' equity:
 
 
 
 
 
Preferred stock; par value $.01 per share; 100,000 shares authorized; none issued or outstanding at September 26, 2020, December 28, 2019, and September 28, 2019
$

 
$

 
$

Common stock, voting; par value $.01 per share; 150,000,000 shares authorized; 43,648,671, 43,963,103 and 44,287,636 shares issued and outstanding at September 26, 2020, December 28, 2019, and September 28, 2019, respectively
436

 
440

 
443

Additional paid-in capital
9,258

 

 

Accumulated other comprehensive loss
(41,402
)
 
(35,634
)
 
(38,908
)
Retained earnings
853,589

 
915,324

 
851,199

Total stockholders' equity
821,881

 
880,130

 
812,734

Total liabilities and stockholders' equity
$
3,281,621

 
$
2,753,117

 
$
2,899,580

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
 
Three fiscal quarters ended
 
September 26, 2020
 
September 28, 2019
 
September 26, 2020
 
September 28, 2019
Net sales
$
865,080

 
$
943,322

 
$
2,034,437

 
$
2,418,764

Cost of goods sold
483,333

 
540,808

 
1,170,778

 
1,376,336

Adverse purchase commitments (inventory and raw materials), net
(1,968
)
 
303

 
16,166

 
1,354

Gross profit
383,715

 
402,211

 
847,493

 
1,041,074

Royalty income, net
9,063

 
9,192

 
19,989

 
27,371

Selling, general, and administrative expenses
279,251

 
296,733

 
767,237

 
828,540

Goodwill impairment

 

 
17,742

 

Intangible asset impairment

 
30,800

 
26,500

 
30,800

Operating income
113,527

 
83,870

 
56,003

 
209,105

Interest expense
16,347

 
9,966

 
40,523

 
28,667

Interest income
(330
)
 
(200
)
 
(1,217
)
 
(937
)
Other (income) expense, net
(2,758
)
 
483

 
2,647

 
474

Loss on extinguishment of debt

 

 

 
7,823

Income before income taxes
100,268

 
73,621

 
14,050

 
173,078

Income tax provision
19,027

 
13,369

 
3,347

 
34,423

Net income
$
81,241

 
$
60,252

 
$
10,703

 
$
138,655

 
 
 
 
 
 
 
 
Basic net income per common share
$
1.86

 
$
1.35

 
$
0.25

 
$
3.08

Diluted net income per common share
$
1.85

 
$
1.34

 
$
0.24

 
$
3.06

Dividend declared and paid per common share
$

 
$
0.50

 
$
0.60

 
$
1.50

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
 
Three fiscal quarters ended
 
September 26, 2020
 
September 28, 2019
 
September 26, 2020
 
September 28, 2019
Net income
$
81,241

 
$
60,252

 
$
10,703

 
$
138,655

Other comprehensive income (loss):
 
 
 
 
 
 
 
Foreign currency translation adjustments
3,643

 
(2,347
)
 
(5,768
)
 
3,431

Comprehensive income
$
84,884

 
$
57,905

 
$
4,935

 
$
142,086

See accompanying notes to the unaudited condensed consolidated financial statements.

3


CARTER’S, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(amounts in thousands, except share amounts)
(unaudited)
 
Common stock - shares
 
Common
stock - $
 
Additional
paid-in
capital
 
Accumulated other comprehensive
loss
 
Retained
earnings
 
Total
stockholders’
equity
Balance at December 29, 2018
45,629,014

 
$
456

 
$

 
$
(40,839
)
 
$
909,816

 
$
869,433

Exercise of stock options
72,192

 
1

 
4,779

 

 

 
4,780

Withholdings from vesting
of restricted stock
(43,844
)
 

 
(4,077
)
 

 

 
(4,077
)
Restricted stock activity
182,722

 
2

 
(2
)
 

 

 

Stock-based compensation expense

 

 
4,613

 

 

 
4,613

Repurchase of common stock
(460,257
)
 
(5
)
 
(5,313
)
 

 
(34,648
)
 
(39,966
)
Cash dividends declared and paid

 

 

 

 
(22,756
)
 
(22,756
)
Comprehensive income

 

 

 
2,911

 
34,466

 
37,377

Reclassification of tax effects(*)

 

 

 
(1,500
)
 
1,500

 

Balance at March 30, 2019
45,379,827

 
$
454

 
$

 
$
(39,428
)
 
$
888,378

 
$
849,404

Exercise of stock options
26,264

 

 
1,566

 

 

 
1,566

Withholdings from vesting
of restricted stock
(505
)
 

 
(49
)
 

 

 
(49
)
Restricted stock activity
8,597

 

 

 

 

 

Stock-based compensation expense

 

 
5,194

 

 

 
5,194

Repurchase of common stock
(545,620
)
 
(5
)
 
(6,711
)
 

 
(45,761
)
 
(52,477
)
Cash dividends declared and paid

 

 

 

 
(22,545
)
 
(22,545
)
Comprehensive income

 

 

 
2,867

 
43,937

 
46,804

Balance at June 29, 2019
44,868,563

 
$
449

 
$

 
$
(36,561
)
 
$
864,009

 
$
827,897

Exercise of stock options
8,490

 

 
535

 

 

 
535

Withholdings from vesting
of restricted stock
(1,013
)
 

 
(88
)
 

 

 
(88
)
Restricted stock activity
13,639

 

 

 

 

 

Stock-based compensation expense

 

 
3,733

 

 

 
3,733

Repurchase of common stock
(602,043
)
 
(6
)
 
(4,180
)
 

 
(50,835
)
 
(55,021
)
Cash dividends declared and paid

 

 

 

 
(22,227
)
 
(22,227
)
Comprehensive income

 

 

 
(2,347
)
 
60,252

 
57,905

Balance at September 28, 2019
44,287,636

 
$
443

 
$

 
$
(38,908
)
 
$
851,199

 
$
812,734

(*)
The Company reclassified $1.5 million of tax benefits from "Accumulated other comprehensive loss" to "Retained earnings" for the tax effects resulting from the December 22, 2017 enactment of the Tax Cuts and Jobs Act in accordance with the adoption of ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income in the first quarter of fiscal 2019.

4


 
Common stock - shares
 
Common
stock - $
 
Additional
paid-in
capital
 
Accumulated other comprehensive
loss
 
Retained
earnings
 
Total
stockholders’
equity
Balance at December 28, 2019
43,963,103

 
$
440

 
$

 
$
(35,634
)
 
$
915,324

 
$
880,130

Exercise of stock options
33,158

 

 
1,840

 

 

 
1,840

Withholdings from vesting
of restricted stock
(43,611
)
 

 
(4,712
)
 

 

 
(4,712
)
Restricted stock activity
132,759

 
1

 
(1
)
 

 

 

Stock-based compensation expense

 

 
1,945

 

 

 
1,945

Repurchase of common stock
(474,684
)
 
(5
)
 
928

 

 
(46,178
)
 
(45,255
)
Cash dividends declared and paid

 

 

 

 
(26,260
)
 
(26,260
)
Comprehensive loss

 

 

 
(12,992
)
 
(78,694
)
 
(91,686
)
Balance at March 28, 2020
43,610,725

 
$
436

 
$

 
$
(48,626
)
 
$
764,192

 
$
716,002

Exercise of stock options
14,180

 

 
1,076

 

 

 
1,076

Withholdings from vesting
of restricted stock
(1,016
)
 

 
(77
)
 

 

 
(77
)
Restricted stock activity
12,287

 

 

 

 

 

Stock-based compensation expense

 

 
4,540

 

 

 
4,540

Comprehensive income

 

 

 
3,581

 
8,156

 
11,737

Balance at June 27, 2020
43,636,176

 
$
436

 
$
5,539

 
$
(45,045
)
 
$
772,348

 
$
733,278

Exercise of stock options
12,811

 

 
812

 

 

 
812

Withholdings from vesting
of restricted stock
(1,744
)
 

 
(139
)
 

 

 
(139
)
Restricted stock activity
1,428

 

 

 

 

 

Stock-based compensation expense

 

 
3,046

 

 

 
3,046

Comprehensive income

 

 

 
3,643

 
81,241

 
84,884

Balance at September 26, 2020
43,648,671

 
$
436

 
$
9,258

 
$
(41,402
)
 
$
853,589

 
$
821,881


See accompanying notes to the unaudited condensed consolidated financial statements

5


CARTER’S, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
 
Three fiscal quarters ended
 
September 26, 2020
 
September 28, 2019
Cash flows from operating activities:
 
 
 
Net income
$
10,703

 
$
138,655

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation of property, plant, and equipment
66,985

 
68,005

Amortization of intangible assets
2,784

 
2,810

Provisions for (recoveries of) excess and obsolete inventory
20,912

 
4,567

Goodwill impairment
17,742

 

Intangible asset impairments
26,500

 
30,800

Other asset impairments and loss on disposal of property, plant and equipment, net of recoveries
9,395

 
407

Amortization of debt issuance costs
1,641

 
1,087

Stock-based compensation expense
9,531

 
13,540

Unrealized foreign currency exchange loss, net
1,354

 
176

Provisions for (recoveries of) doubtful accounts receivable from customers
7,702

 
(2,063
)
Loss on extinguishment of debt

 
7,823

Deferred income tax (benefit) expense
(16,697
)
 
8,300

Effect of changes in operating assets and liabilities:
 
 
 
Accounts receivable
(21,576
)
 
(32,792
)
Finished goods inventories
(76,739
)
 
(152,023
)
Prepaid expenses and other assets
(7,660
)
 
(16,688
)
Accounts payable and other liabilities
267,551

 
751

Net cash provided by operating activities
$
320,128

 
$
73,355

 
 
 
 
Cash flows from investing activities:
 
 
 
Capital expenditures
$
(25,212
)
 
$
(46,138
)
Disposals and recoveries from property, plant, and equipment

 
749

Net cash used in investing activities
$
(25,212
)
 
$
(45,389
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Proceeds from senior notes due 2025
$
500,000

 
$

Proceeds from senior notes due 2027

 
500,000

Payment of senior notes due 2021

 
(400,000
)
Premiums paid to extinguish debt

 
(5,252
)
Payment of debt issuance costs
(7,639
)
 
(5,793
)
Borrowings under secured revolving credit facility
644,000

 
265,000

Payments on secured revolving credit facility
(744,000
)
 
(186,000
)
Repurchases of common stock
(45,255
)
 
(147,464
)
Dividends paid
(26,260
)
 
(67,528
)
Withholdings from vestings of restricted stock
(4,928
)
 
(4,214
)
Proceeds from exercises of stock options
3,728

 
6,881

Net cash provided by (used in) financing activities
$
319,646

 
$
(44,370
)
 
 
 
 
Net effect of exchange rate changes on cash and cash equivalents
2,302

 
263

Net increase (decrease) in cash and cash equivalents
$
616,864

 
$
(16,141
)
Cash and cash equivalents, beginning of period
214,311

 
170,077

Cash and cash equivalents, end of period
$
831,175

 
$
153,936

See accompanying notes to the unaudited condensed consolidated financial statements.

6


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 accessories under the Carter's, OshKosh B'gosh ("OshKosh"), Skip Hop, Child of Mine, Just One You, Simple JoysPrecious Baby, Little Planet, and other brands. The Company's products are sourced through contractual arrangements with manufacturers worldwide for: 1) wholesale distribution to leading department stores, national chains, and specialty retailers domestically and internationally and 2) distribution to the Company's own retail stores and eCommerce sites that market its brand name merchandise and other licensed products manufactured by other companies.
NOTE 2BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") for interim financial information and the rules and regulations of the Securities and Exchange Commission (the "SEC"). All intercompany transactions and balances have been eliminated in consolidation.
In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all normal and recurring adjustments necessary to state fairly the consolidated financial condition, results of operations, comprehensive income (loss), statement of stockholders' equity, and cash flows of the Company for the interim periods presented. Except as otherwise disclosed, all such adjustments consist only of those of a normal recurring nature. Operating results for the fiscal quarter ended September 26, 2020 are not necessarily indicative of the results that may be expected for the current fiscal year ending January 2, 2021.
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 28, 2019 was derived from the Company's audited consolidated financial statements included in its most recently filed Annual Report on Form 10-K. Certain information and footnote disclosure normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC and the instructions to Form 10-Q.
Revision of Previously Issued Financial Statements
During the second quarter of fiscal year 2020, it was determined that there were amounts presented incorrectly in the statement of cash flows for the annual and interim year to date periods subsequent to the December 30, 2018 adoption of ASC 842, Leases, due to the presentation of the non-cash impact of the initial and subsequent recognition of the Right of Use ("ROU") assets and lease liabilities within the "Prepaid expenses and other assets" and "Accounts payable and other liabilities" line items, respectively, within operating cash flows. This incorrect presentation had no impact on net cash (used in) provided by operating activities for any of the periods. We assessed the materiality of the incorrect presentation and concluded that the previously issued financial statements were not materially misstated. The presentation errors resulted in an offsetting overstatement of cash used for prepaid expenses and other assets and cash provided by accounts payable and other liabilities of $739 million, $773 million and $815 million for the three, six and nine-months ended March 30, 2019, June 29, 2019 and September 28, 2019, respectively, $828 million for the year ended December 28, 2019 and $29 million for the three months ended March 28, 2020. The accompanying unaudited condensed consolidated statement of cash flows appropriately reflect the corrected presentation of these non-cash activities. In addition, the Company has reclassified and will reclassify prior comparable period amounts to present ROU asset amortization and lease liability payment activity on a net basis within the "Accounts payable and other liabilities" line item. The revisions to the year ended December 31, 2019 and three months ended March 31, 2020 will be presented in future Forms 10-Q and 10-K filings. We will continue to provide supplemental noncash cash flow disclosure information in the notes to the financial statements, as well as correct for the omission of such disclosure during the 2019 interim periods in connection with our 2020 quarterly filings.

7


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

COVID-19
In December 2019, an outbreak of a new strain of coronavirus ("COVID-19") began in Wuhan, China. In March 2020, the World Health Organization declared COVID-19 a pandemic and the President of the United States declared a national emergency. As a result of COVID-19, the Company temporarily closed its retail stores in North America and implemented several actions during fiscal 2020 to enhance liquidity and financial flexibility including the deferral of lease payments, reductions in discretionary spending, amending its revolving credit facility, issuing $500 million principal amount of senior notes, and suspending dividends and share repurchases.
Beginning in April 2020, the Company suspended rent payments under the leases for our temporarily closed stores in North America and has been in discussions with landlords to obtain rent concessions. The Company considered the Financial Accounting Standards Board's ("FASB") recent guidance regarding lease concessions as a result of the effects of the COVID-19 pandemic and has elected to treat these rent concessions as lease modifications. As of September 26, 2020, lease modifications resulting from COVID-19 related rent concessions were not material to the financial statements. The Company continues to negotiate lease concessions with landlords. As of the end of the fiscal quarter, the Company resumed making the required rent payments under these leases.
See Note 4, Leases, for further details on deferral of rent payments under these leases.
On May 4, 2020, the Company, through its wholly owned subsidiary, The William Carter Company ("TWCC"), successfully amended its revolving credit facility. This amendment provided for, among other things, a waiver of financial covenants through the balance of fiscal year 2020, revised covenant requirements through the third quarter of fiscal year 2021, and the ability to raise additional unsecured financing at the Company’s discretion. Additionally, on May 11, 2020, TWCC issued $500 million principal amount of senior notes at par, bearing interest at a rate of 5.500% per annum, and maturing on May 15, 2025. See Note 8, Long-Term Debt, for further details on the amendment to the revolving credit facility and the issuance of $500 million principal amount of senior notes.
The Company announced in the first half of fiscal 2020, that in connection with the COVID-19 pandemic, it suspended its common stock share repurchase program and its quarterly cash dividend. The Company's Board of Directors will evaluate future capital distributions, including dividend declarations, based on a number of factors, including restrictions under our revolving credit facility, business conditions, our financial performance, and other considerations.
The Company also assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to us and the unknown future impacts of COVID-19 as of September 26, 2020 and through the date of this report filing. The accounting matters assessed included, but were not limited to, our allowance for credit losses, inventory reserves, adverse inventory and fabric purchase commitments, stock based compensation, and the carrying value of our goodwill and other long-lived assets. Based on these assessments, in the third quarter of fiscal 2020, the Company recorded impairments on operating lease assets and other long-lived assets for our underperforming retail stores of $1.7 million, and a benefit in excess inventory and fabric purchase commitment charges of $8.5 million related to better than expected sales of inventory that were reserved for in the first fiscal quarter of 2020 due to COVID-19 related disruptions. For the three fiscal quarters ending September 26, 2020, the Company recorded impairments on operating lease assets and other long-lived assets for our underperforming retail stores of $6.7 million, incremental inventory reserve related charges of $20.9 million, adverse inventory and fabric purchase commitments of $16.2 million, intangible asset impairments of $26.5 million, and goodwill impairment of $17.7 million. There could be a further material impact to our consolidated financial statements in future reporting periods if, at a future date, the Company determines that these assessments of the magnitude and duration of COVID-19, as well as other factors, were incorrect.
Additional COVID-19 related charges in the third quarter of fiscal 2020 were $3.3 million, which primarily included costs associated with additional protective equipment and cleaning supplies of $2.5 million. COVID-19 related charges for the three fiscal quarters ending September 26, 2020 were $18.8 million, which primarily included incremental payroll continuation and employee related costs of $12.1 million, costs associated with additional protective equipment and cleaning supplies of $6.8 million, and restructuring costs of $2.3 million, partially offset by a payroll tax benefit of $3.5 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 changes to these accounting policies. New accounting pronouncements adopted at the beginning of fiscal 2020 are noted below.

8


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Credit Losses (ASU 2016-13)
At the beginning of fiscal 2020, the Company adopted Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). This new guidance changed how entities account for credit impairment for trade and other receivables, as well as for certain financial assets and other instruments. ASU 2016-13 replaced the previous "incurred loss" model with an "expected loss" model, that requires an entity to 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 Company estimates current expected credit losses based on collection history and management’s assessment of the current economic trends, business environment, customers’ financial condition, accounts receivable aging, and customer disputes that may impact the level of future credit losses. The effect of the adoption of ASU 2016-13 was not material to the Company's consolidated financial statements.
Goodwill Impairment Testing (ASU 2017-04)
At the beginning of fiscal 2020, the Company adopted ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). ASU 2017-04 eliminates 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 does not change the current guidance for completing step 1 of the goodwill impairment test, and an entity can still perform the current optional qualitative goodwill impairment assessment before determining whether to proceed to step 1. The effect of the adoption of ASU 2017-04 had no impact to the Company's consolidated financial statements. During the first quarter of fiscal 2020, the Company conducted an interim quantitative impairment assessment on the goodwill ascribed to the Other International reporting unit. As a result of this assessment and based on the application of ASU 2017-04, a goodwill impairment charge of $17.7 million was recorded to our Other International reporting unit. See Note 6, Goodwill and Intangible Assets, for further details on the impairment charge and valuation methodology.
Simplifying the Accounting for Income Taxes (Topic 740)
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"), as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. Amendments include removal of certain exceptions to the general principles of Topic 740, "Income Taxes," and simplification in several other areas. ASU 2019-12 is effective for annual reporting periods beginning after December 15, 2020, and interim periods therein, with early adoption permitted. The Company elected to early adopt this guidance in the first quarter of fiscal 2020. The Company retrospectively adopted the provision related to the classification of taxes partially based on income and has determined that the adoption of this standard did not have a material impact on its prior period financial statements. The provisions related to intra period tax allocation and interim recognition of enactment of tax laws are being adopted on a prospective basis. The effect of the adoption of ASU 2019-12 was not material to the Company's consolidated financial statements.

9


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 3 - REVENUE RECOGNITION
The Company’s revenues are earned from contracts or arrangements with retail and wholesale customers and licensees. Contracts include written agreements as well as arrangements that are implied by customary practices or law.
Disaggregation of Revenue
The Company sells its products directly to consumers ("direct-to-consumer") and to other retail companies and partners that subsequently sell the products directly to their own retail customers. The Company also earns royalties from certain of its licensees. Disaggregated revenues from these sources for the third quarter and three quarters ended fiscal 2020 and 2019 were as follows:
 
 
Fiscal quarter ended September 26, 2020
(dollars in thousands)
 
U.S. Retail
 
U.S. Wholesale
 
International
 
Total
Wholesale channel
 
$

 
$
302,135