CARTERS INC [CRI] Filings

10-Q 1 cri-20221001.htm 10-Q cri-20221001

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 October 1, 2022

☐ 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 21, 2022, there were 38,161,590 shares of the registrant’s common stock outstanding.

CARTER’S, INC.

INDEX



Part I. Financial Information			Page

	Item 1	Financial Statements
		Unaudited Condensed Consolidated Balance Sheets as of October 1, 2022, January 1, 2022 and October 2, 2021	1
		Unaudited Condensed Consolidated Statements of Operations for the fiscal quarter and three fiscal quarters ended October 1, 2022 and October 2, 2021	2
		Unaudited Condensed Consolidated Statements of Comprehensive Income for the fiscal quarter and three fiscal quarters ended October 1, 2022 and October 2, 2021	3
		Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the fiscal quarters ended October 1, 2022, July 2, 2022, April 2, 2022, October 2,2021, July 3, 2021 and April 3, 2021	4
		Unaudited Condensed Consolidated Statements of Cash Flows for the three fiscal quarters ended October 1, 2022 and October 2, 2021	6
		Notes to the Unaudited Condensed Consolidated Financial Statements	7
	Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
	Item 3	Quantitative and Qualitative Disclosures about Market Risk	30
	Item 4	Controls and Procedures	31

Part II. Other Information

	Item 1	Legal Proceedings	32
	Item 1A	Risk Factors	32
	Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	32
	Item 3	Defaults upon Senior Securities	32
	Item 4	Mine Safety Disclosures	32
	Item 5	Other Information	32
	Item 6	Exhibits	33

Signatures			34

Certifications

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CARTER’S, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data)

(unaudited)


	October 1, 2022		January 1, 2022		October 2, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	121,649	$	984,294	$	943,025
Accounts receivable, net of allowance for credit losses of $6,290, $7,281, and $8,678, respectively	265,593		231,354		261,182
Finished goods inventories, net of inventory reserves of $25,628, $14,378, and $23,698, respectively	899,326		647,742		722,396
Prepaid expenses and other current assets	73,578		50,131		56,182
Total current assets	1,360,146		1,913,521		1,982,785
Property, plant, and equipment, net of accumulated depreciation of $559,085, $528,926, and $557,164, respectively	181,575		216,004		218,828
Operating lease assets	491,863		487,748		510,051
Tradenames, net	307,456		307,643		307,705
Goodwill	208,454		212,023		212,016
Customer relationships, net	31,386		33,969		34,843
Other assets	30,687		30,889		28,028
Total assets	$	2,611,567	$	3,201,797	$	3,294,256

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	318,026	$	407,044	$	388,726
Current operating lease liabilities	155,199		147,537		153,339
Other current liabilities	92,394		176,449		132,400
Total current liabilities	565,619		731,030		674,465
Long-term debt, net	736,448		991,370		990,900
Deferred income taxes	48,930		40,910		52,967
Long-term operating lease liabilities	430,479		441,861		464,660
Other long-term liabilities	41,889		46,440		56,390
Total liabilities	$	1,823,365	$	2,251,611	$	2,239,382

Commitments and contingencies - Note 14

Stockholders’ equity:
Preferred stock; par value $0.01 per share; 100,000 shares authorized; none issued or outstanding at October 1, 2022, January 1, 2022, and October 2, 2021, respectively	$	—	$	—	$	—
Common stock, voting; par value $0.01 per share; 150,000,000 shares authorized; 38,456,219, 41,148,870, and 42,946,790 shares issued and outstanding at October 1, 2022, January 1, 2022, and October 2, 2021, respectively	385		411		429
Additional paid-in capital	—		—		—
Accumulated other comprehensive loss	(40,575)		(28,897)		(32,689)
Retained earnings	828,392		978,672		1,087,134
Total stockholders’ equity	788,202		950,186		1,054,874
Total liabilities and stockholders’ equity	$	2,611,567	$	3,201,797	$	3,294,256

See accompanying notes to the unaudited condensed consolidated financial statements.

CARTER’S, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in thousands, except per share data)

(unaudited)


	Fiscal quarter ended				Three fiscal quarters ended
	October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Net sales	$	818,624	$	890,586	$	2,300,603	$	2,424,347
Cost of goods sold	449,951		481,298		1,240,801		1,262,822
Adverse purchase commitments (inventory and raw materials), net	(1,855)		507		2,993		(7,923)
Gross profit	370,528		408,781		1,056,809		1,169,448
Royalty income, net	7,273		8,442		20,349		22,550
Selling, general, and administrative expenses	286,218		293,192		807,533		832,889


Operating income	91,583		124,031		269,625		359,109
Interest expense	9,712		15,196		33,496		45,839
Interest income	(257)		(335)		(867)		(761)
Other expense (income), net	1,270		844		776		(796)
Loss on extinguishment of debt	—		—		19,940		—
Income before income taxes	80,858		108,326		216,280		314,827
Income tax provision	15,901		23,350		46,421		72,052
Net income	$	64,957	$	84,976	$	169,859	$	242,775

Basic net income per common share	$	1.67	$	1.94	$	4.26	$	5.53
Diluted net income per common share	$	1.67	$	1.93	$	4.26	$	5.51
Dividend declared and paid per common share	$	0.75	$	0.40	$	2.25	$	0.80

See accompanying notes to the unaudited condensed consolidated financial statements.

CARTER’S, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(dollars in thousands)

(unaudited)


	Fiscal quarter ended				Three fiscal quarters ended
	October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Net income	$	64,957	$	84,976	$	169,859	$	242,775
Other comprehensive (loss) income:

Foreign currency translation adjustments	(8,372)		(5,426)		(11,677)		71
Comprehensive income	$	56,585	$	79,550	$	158,182	$	242,846

See accompanying notes to the unaudited condensed consolidated financial statements.

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 January 2, 2021	43,780,075	$	438	$	17,752	$	(32,760)	$	952,603	$	938,033
Exercise of stock options	12,065	—		811		—		—		811
Withholdings from vesting of restricted stock	(37,444)	—		(3,588)		—		—		(3,588)
Restricted stock activity	192,963	2		(2)		—		—		—
Stock-based compensation expense	—	—		6,931		—		—		6,931



Comprehensive income	—	—		—		1,226		86,196		87,422

Balance at April 3, 2021	43,947,659	$	440	$	21,904	$	(31,534)	$	1,038,799	$	1,029,609
Exercise of stock options	57,274	—		4,336		—		—		4,336
Withholdings from vesting of restricted stock	(1,057)	—		(110)		—		—		(110)
Restricted stock activity	7,204	—		—		—		—		—
Stock-based compensation expense	—	—		5,391		—		—		5,391
Cash dividends declared and paid of $0.40 per common share	—	—		—		—		(17,596)		(17,596)
Comprehensive income	—	—		—		4,271		71,603		75,874

Balance at July 3, 2021	44,011,080	$	440	$	31,521	$	(27,263)	$	1,092,806	$	1,097,504
Exercise of stock options	30,464	—		2,313		—		—		2,313
Withholdings from vesting of restricted stock	(1,885)	—		(199)		—		—		(199)
Restricted stock activity	3,030	—		—		—		—		—
Stock-based compensation expense	—	—		3,515		—		—		3,515

Repurchase of common stock	(1,095,899)	(11)		(37,150)		—		(73,101)		(110,262)
Cash dividends declared and paid of $0.40 per common share	—	—		—		—		(17,547)		(17,547)
Comprehensive (loss) income	—	—		—		(5,426)		84,976		79,550
Balance at October 2, 2021	42,946,790	$	429	$	—	$	(32,689)	$	1,087,134	$	1,054,874


	Common stock - shares	Common stock - $		Additional paid-in capital		Accumulated other comprehensive loss		Retained earnings		Total stockholders’ equity
Balance at January 1, 2022	41,148,870	$	411	$	—	$	(28,897)	$	978,672	$	950,186
Exercise of stock options	5,100	—		222		—		—		222
Withholdings from vesting of restricted stock	(70,452)	—		(6,623)		—		—		(6,623)
Restricted stock activity	265,412	3		(3)		—		—		—
Stock-based compensation expense	—	—		5,859		—		—		5,859
Repurchase of common stock	(793,008)	(8)		545		—		(75,033)		(74,496)
Cash dividends declared and paid of $0.75 per common share	—	—		—		—		(30,573)		(30,573)
Comprehensive income	—	—		—		2,782		67,933		70,715
Balance at April 2, 2022	40,555,922	$	406	$	—	$	(26,115)	$	940,999	$	915,290
Exercise of stock options	1,500	—		89		—		—		89
Withholdings from vesting of restricted stock	(705)	—		(58)		—		—		(58)
Restricted stock activity	30,731	—		—		—		—		—
Stock-based compensation expense	—	—		6,359		—		—		6,359
Repurchase of common stock	(1,272,354)	(13)		(6,390)		—		(95,407)		(101,810)
Cash dividends declared and paid of $0.75 per common share	—	—		—		—		(29,886)		(29,886)
Comprehensive income	—	—		—		(6,088)		36,970		30,882
Balance at July 2, 2022	39,315,094	$	393	$	—	$	(32,203)	$	852,676	$	820,866
Exercise of stock options	7,850	—		465		—		—		465
Withholdings from vesting of restricted stock	(2,065)	—		(169)		—		—		(169)
Restricted stock activity	12,459	—		—		—		—		—
Stock-based compensation expense	—	—		5,003		—		—		5,003
Repurchase of common stock	(877,119)	(8)		(5,299)		—		(60,138)		(65,445)
Cash dividends declared and paid of $0.75 per common share	—	—		—		—		(29,103)		(29,103)
Comprehensive income	—	—		—		(8,372)		64,957		56,585
Balance at October 1, 2022	38,456,219	$	385	$	—	$	(40,575)	$	828,392	$	788,202

See accompanying notes to the unaudited condensed consolidated financial statements.

CARTER’S, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(unaudited)


	Three fiscal quarters ended
	October 1, 2022		October 2, 2021
Cash flows from operating activities:
Net income	$	169,859	$	242,775
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation of property, plant, and equipment	46,011		65,269
Amortization of intangible assets	2,798		2,799
Provisions for excess and obsolete inventory	11,488		9,507


Other asset impairments and loss on disposal of property, plant and equipment, net of recoveries	251		1,988
Amortization of debt issuance costs	1,560		2,271
Stock-based compensation expense	17,221		15,837
Unrealized foreign currency exchange loss, net	268		95
(Recoveries of) provisions for doubtful accounts receivable from customers	(987)		2,754
Unrealized loss (gain) on investments	2,414		(1,910)
Loss on extinguishment of debt	19,940		—
Deferred income taxes expense	8,220		894
Other	919		—
Effect of changes in operating assets and liabilities:
Accounts receivable	(33,697)		(77,522)
Finished goods inventories	(270,696)		(132,999)
Prepaid expenses and other assets	(24,973)		2,483
Accounts payable and other liabilities	(168,076)		(126,922)
Net cash (used in) provided by operating activities	$	(217,480)	$	7,319

Cash flows from investing activities:
Capital expenditures	$	(26,862)	$	(28,663)
Proceeds from sale of investments	—		5,000

Net cash used in investing activities	$	(26,862)	$	(23,663)

Cash flows from financing activities:


Payment of senior notes due 2025	$	(500,000)	$	—
Premiums paid to extinguish debt	(15,678)		—
Payment of debt issuance costs	(2,420)		(223)
Borrowings under secured revolving credit facility	240,000		—

Repurchases of common stock	(241,751)		(110,262)
Dividends paid	(89,562)		(35,143)
Withholdings from vesting of restricted stock	(6,850)		(3,897)
Proceeds from exercises of stock options	776		7,460
Other	(919)		—
Net cash used in financing activities	$	(616,404)	$	(142,065)

Net effect of exchange rate changes on cash and cash equivalents	(1,899)		(889)
Net decrease in cash and cash equivalents	$	(862,645)	$	(159,298)
Cash and cash equivalents, beginning of period	984,294		1,102,323
Cash and cash equivalents, end of period	$	121,649	$	943,025

See accompanying notes to the unaudited condensed consolidated financial statements.

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”) design, source, and market branded childrenswear under the Carter’s, OshKosh B’gosh (or “OshKosh”), Skip Hop, Child of Mine, Just One You, Simple Joys, Carter’s My First Love, 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 2 – BASIS 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, 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 October 1, 2022 are not necessarily indicative of the results that may be expected for the current fiscal year ending December 31, 2022.

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

The accompanying condensed consolidated balance sheet as of January 1, 2022 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.

Inventories

Our inventories, which consist primarily of finished goods, are stated at the lower of cost (first-in, first-out basis for wholesale inventory and average cost for retail inventories) or net realizable value. Inventories at October 1, 2022 were $899.3 million compared to $722.4 million at October 2, 2021 and $647.7 million at January 1, 2022. The increase of $176.9 million, or 24.5%, at October 1, 2022 compared to October 2, 2021 is primarily due to planned earlier inventory ownership to offset transportation delays, longer holding periods for inventory to be sold in future periods, increased product costs, and lower than projected net sales. Due to the seasonal nature of our operations, the inventories balance at October 1, 2022 is not comparable to the inventories balance at January 1, 2022.

Inventory reserves at October 1, 2022 increased 8.2% compared to October 2, 2021. Although inventory levels have increased as of October 1, 2022, excess inventory reserve rates have remained relatively stable due to the overall quality and planned use of the inventory. The liability for adverse inventory and fabric purchase commitments increased from $0.8 million as of October 2, 2021 to $3.1 million as of October 1, 2022 primarily due to lower estimated customer demand.

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.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Recent Accounting Pronouncements

Supplier Finance Programs (ASU 2022-04)

In September 2022, the FASB issued ASU No. 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations (“ASU 2022-04”). This new guidance is designed to enhance transparency around supplier finance programs by requiring new disclosures that would allow a user of the financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude. ASU 2022-04 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. The effect of the adoption of ASU 2022-04 is not expected to be material to the Company’s consolidated financial statements.

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 2022 and 2021 were as follows:


	Fiscal quarter ended October 1, 2022
(dollars in thousands)	U.S. Retail		U.S. Wholesale		International		Total
Wholesale channel	$	—	$	288,454	$	50,489	$	338,943
Direct-to-consumer	408,209		—		71,472		479,681

	$	408,209	$	288,454	$	121,961	$	818,624

Royalty income, net	$	3,073	$	3,349	$	851	$	7,273


	Three fiscal quarters ended October 1, 2022
(dollars in thousands)	U.S. Retail		U.S. Wholesale		International		Total
Wholesale channel	$	—	$	819,772	$	137,940	$	957,712
Direct-to-consumer	1,153,664		—		189,227		1,342,891

	$	1,153,664	$	819,772	$	327,167	$	2,300,603

Royalty income, net	$	7,631	$	9,664	$	3,054	$	20,349


	Fiscal quarter ended October 2, 2021
(dollars in thousands)	U.S. Retail		U.S. Wholesale		International		Total
Wholesale channel	$	—	$	294,180	$	48,935	$	343,115
Direct-to-consumer	465,711		—		81,760		547,471

	$	465,711	$	294,180	$	130,695	$	890,586

Royalty income, net	$	2,500	$	5,226	$	716	$	8,442

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)


	Three fiscal quarters ended October 2, 2021
(dollars in thousands)	U.S. Retail		U.S. Wholesale		International		Total
Wholesale channel	$	—	$	809,186	$	125,337	$	934,523
Direct-to-consumer	1,296,405		—		193,419		1,489,824

	$	1,296,405	$	809,186	$	318,756	$	2,424,347

Royalty income, net	$	7,930	$	11,877	$	2,743	$	22,550

Accounts Receivable from Customers and Licensees

The components of Accounts receivable, net, were as follows:


(dollars in thousands)	October 1, 2022		January 1, 2022		October 2, 2021
Trade receivables from wholesale customers, net	$	260,635	$	233,928	$	262,770
Royalties receivable	6,823		5,769		7,932
Tenant allowances and other receivables	13,673		10,352		9,336
Total gross receivables	$	281,131	$	250,049	$	280,038
Less: Wholesale accounts receivable reserves(*)	(15,538)		(18,695)		(18,856)
Accounts receivable, net	$	265,593	$	231,354	$	261,182

(*)Includes allowance for credit losses of $6.3 million, $7.3 million, and $8.7 million for the periods ended October 1, 2022, January 1, 2022, and October 2, 2021, 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 a customer and has a future obligation to transfer goods to the customer. Total contract liabilities consisted of the following amounts:


(dollars in thousands)	October 1, 2022		January 1, 2022		October 2, 2021
Contract liabilities - current:
Unredeemed gift cards	$	21,217	$	21,619	$	18,948
Unredeemed customer loyalty rewards	7,527		5,659		6,677
Carter’s credit card - upfront bonus(1)	714		714		714
Total contract liabilities - current(2)	$	29,458	$	27,992	$	26,339

Contract liabilities - non-current(3)	$	1,607	$	2,143	$	2,321
Total contract liabilities	$	31,065	$	30,135	$	28,660

(1)The Company received an upfront signing bonus from a third-party financial institution, which will be recognized as revenue on a straight-line basis over the term of the agreement. This amount reflects the current portion of this bonus to be recognized as revenue over the next twelve months.

(2)Included with Other current liabilities on the Company’s consolidated balance sheet.

(3)This amount reflects the non-current portion of the Carter’s credit card upfront bonus.

NOTE 4 – LEASES

The Company has operating leases for retail stores, distribution centers, corporate offices, data centers, and certain equipment. The Company’s leases generally have initial terms ranging from 1 year to 10 years, some of which may include options to extend the leases for up to 5 years, and some of which may include options to early terminate the lease.

As of the periods presented, the Company’s finance leases were not material to the consolidated balance sheets, consolidated statements of operations, or consolidated statements of cash flows.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following components of lease expense are included in Selling, general, and administrative expenses on the Company’s consolidated statements of operations for the third quarter and first three quarters of fiscal 2022 and 2021:


	Fiscal quarter ended				Three fiscal quarters ended
(dollars in thousands)	October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Operating lease cost	$	40,231	$	40,917	$	118,857	$	125,715




Variable lease cost(*)	16,523		15,444		50,763		48,118
Net lease cost	$	56,754	$	56,361	$	169,620	$	173,833

(*)Includes short-term leases, which are not material, and operating lease asset impairment charges.

As of October 1, 2022, the weighted average remaining operating lease term was 4.7 years, and the weighted average discount rate for operating leases was 3.52%.

Cash paid for amounts included in the measurement of operating lease liabilities in the third quarter and first three quarters of fiscal 2022 were $43.2 million and $129.0 million, respectively.

Operating lease assets obtained in exchange for operating lease liabilities in the third quarter and first three quarters of fiscal 2022 were $77.8 million and $108.6 million, respectively.

As of October 1, 2022, the maturities of lease liabilities were as follows:


(dollars in thousands)	Operating leases
Remainder of 2022	$	43,809
2023	170,693
2024	143,252
2025	100,305
2026	67,797
2027	45,608