CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jan. 01, 2011	Jan. 02, 2010
Current assets:
Cash and cash equivalents	$ 247,382	$ 335,041
Accounts receivable, net of reserve for doubtful accounts of $3,251 in fiscal 2010 and $2,616 in fiscal 2009	121,453	82,094
Finished goods inventories, net	298,509	214,000
Prepaid expenses and other current assets	17,372	11,114
Deferred income taxes	31,547	33,419
Total current assets	716,263	675,668
Property, plant, and equipment, net	94,968	86,077
Tradenames	305,733	305,733
Goodwill	136,570	136,570
Deferred debt issuance costs, net	3,332	2,469
Licensing agreements, net of accumulated amortization of $19,100 in fiscal 2010 and $17,323 in fiscal 2009	0	1,777
Other assets	316	305
Total assets	1,257,182	1,208,599
Current liabilities:
Current maturities of long-term debt	0	3,503
Accounts payable	116,481	97,546
Other current liabilities	66,891	69,568
Total current liabilities	183,372	170,617
Long-term debt	236,000	331,020
Deferred income taxes	113,817	110,676
Other long-term liabilities	44,057	40,262
Total liabilities	577,246	652,575
Commitments and contingencies
Stockholders' equity:
Preferred stock; par value $.01 per share; 100,000 shares authorized; none issued or outstanding at January 1, 2011 and January 2, 2010	0	0
Common stock, voting; par value $.01 per share; 150,000,000 shares authorized; 57,493,567 and 58,081,822 shares issued and outstanding at January 1, 2011 and January 2, 2010, respectively	575	581
Additional paid-in capital	210,600	235,330
Accumulated other comprehensive loss	(1,890)	(4,066)
Retained earnings	470,651	324,179
Total stockholders' equity	679,936	556,024
Total liabilities and stockholders' equity	$ 1,257,182	$ 1,208,599

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jan. 01, 2011	Jan. 02, 2010
Statement of Financial Position [Abstract]
Reserve for doubtful accounts	$ 3,251	$ 2,616
Accumulated amortization	$ 19,100	$ 17,323
Preferred stock; par value	$ 0.01	$ 0.01
Preferred stock; shares authorized	100,000	100,000
Preferred stock; none issued	0	0
Preferred stock; none outstanding	0	0
Common stock, voting; par value	$ 0.01	$ 0.01
Common stock, voting; shares authorized	150,000,000	150,000,000
Common stock, voting shares issued	57,493,567	58,081,822
Common stock, voting shares outstanding	57,493,567	58,081,822

CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Jan. 01, 2011	Jan. 02, 2010	Jan. 03, 2009
Income Statement [Abstract]
Net sales	$ 1,749,256	$ 1,589,677	$ 1,494,520
Cost of goods sold	1,075,384	985,323	975,999
Gross profit	673,872	604,354	518,521
Selling, general, and administrative expenses	468,192	428,674	404,274
Investigation expenses	0	5,717	0
Executive retirement charges	0	0	5,325
Workforce reduction, facility write-down, and closure costs	0	10,771	2,609
Royalty income	(37,576)	(36,421)	(33,685)
Operating income	243,256	195,613	139,998
Interest income	(575)	(219)	(1,491)
Interest expense	10,445	12,004	19,578
Income before income taxes	233,386	183,828	121,911
Provision for income taxes	86,914	68,188	44,007
Net income	$ 146,472	$ 115,640	$ 77,904
Basic net income per common share (Note 2)	$ 2.50	$ 2.03	$ 1.37
Diluted net income per common share (Note 2)	$ 2.46	$ 1.97	$ 1.33

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jan. 01, 2011	Jan. 02, 2010	Jan. 03, 2009
Cash flows from operating activities:
Net income	$ 146,472	$ 115,640	$ 77,904
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	31,727	32,274	30,158
Amortization of debt issuance costs	2,616	1,129	1,145
Non-cash stock-based compensation expense	7,303	6,775	8,652
Income tax benefit from exercised stock options	(9,249)	(11,750)	(3,531)
Non-cash asset impairment and facility write-down charges	0	4,669	2,609
(Gain) loss on disposal/sale of property, plant, and equipment	(118)	(962)	323
Deferred income taxes	4,370	2,270	(321)
Effect of changes in operating assets and liabilities
Accounts receivable	(39,359)	3,358	9,143
Inventories	(84,509)	(10,514)	22,008
Prepaid expenses and other assets	(6,269)	(1,363)	(2,043)
Accounts payable	18,935	19,155	19,840
Other liabilities	13,902	28,178	15,154
Net cash provided by operating activities	85,821	188,859	181,041
Cash flows from investing activities:
Capital expenditures	(39,782)	(33,600)	(34,947)
Proceeds from sale of property, plant, and equipment	286	4,084	0
Net cash used in investing activities	(39,496)	(29,516)	(34,947)
Cash flows from financing activities:
Payments on Term Loan (See Note 4)	(334,523)	(3,503)	(3,503)
Proceeds from revolving credit facility (see Note 4)	236,000	0	0
Payments of debt issuance costs	(3,479)	0	0
Repurchases of common stock	(50,000)		(33,637)
Income tax benefit from exercised stock options	9,249	11,750	3,531
Proceeds from exercise of stock options	8,769	5,102	852
Net cash (used in) provided by financing activities	(133,984)	13,349	(32,757)
Net (decrease) increase in cash and cash equivalents	(87,659)	172,692	113,337
Cash and cash equivalents, beginning of period	335,041	162,349	49,012
Cash and cash equivalents, end of period	$ 247,382	$ 335,041	$ 162,349

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (USD $) In Thousands, unless otherwise specified	Total	Common stock	Additional paid-in capital	Accumulated other comprehensive (loss) income	Retained earnings
Balance at Dec. 29, 2007	$ 366,238	$ 576	$ 232,356	$ 2,671	$ 130,635
Exercise of stock options	852	6	846	0	0
Income tax benefit from exercised stock options	3,531	0	3,531	0	0
Stock-based compensation expense	8,022	0	8,022	0	0
Issuance of common stock	630	1	629	0	0
Repurchases of common stock	(33,637)	(20)	(33,617)	0	0
Comprehensive income:
Net income	77,904	0	0	0	77,904
Unrealized gain (loss) on OshKosh defined benefit plan, net of tax	(9,996)	0	0	(9,996)	0
Unrealized gain on Carter's post-retirement benefit obligation, net of tax	844	0	0	844	0
Unrealized gain (loss) on interest rate swap agreements, net of tax	(1,026)	0	0	(1,026)	0
Unrealized gain on interest rate collar, net of tax	189	0	0	189	0
Total comprehensive income	67,915	0	0	(9,989)	77,904
Balance at Jan. 03, 2009	413,551	563	211,767	(7,318)	208,539
Exercise of stock options	5,102	15	5,087	0	0
Income tax benefit from exercised stock options	11,750	0	11,750	0	0
Restricted stock activity	0	3	(3)	0	0
Stock-based compensation expense	6,012	0	6,012	0	0
Issuance of common stock	717	0	717	0	0
Comprehensive income:
Net income	115,640	0	0	0	115,640
Unrealized gain (loss) on OshKosh defined benefit plan, net of tax	2,309	0	0	2,309	0
Unrealized gain on Carter's post-retirement benefit obligation, net of tax	131	0	0	131	0
Unrealized gain (loss) on interest rate swap agreements, net of tax	405	0	0	405	0
Realized gain on interest rate collar, net of tax	407	0	0	407	0
Total comprehensive income	118,892	0	0	3,252	115,640
Balance at Jan. 02, 2010	556,024	581	235,330	(4,066)	324,179
Exercise of stock options	8,769	13	8,756	0	0
Income tax benefit from exercised stock options	9,249	0	9,249	0	0
Restricted stock activity	0	1	(1)	0	0
Stock-based compensation expense	6,396	0	6,396	0	0
Issuance of common stock	850	0	850	0	0
Repurchases of common stock	(50,000)	(20)	(49,980)	0	0
Comprehensive income:
Net income	146,472	0	0	0	146,472
Unrealized gain (loss) on OshKosh defined benefit plan, net of tax	1,137	0	0	1,137	0
Unrealized gain on Carter's post-retirement benefit obligation, net of tax	185	0	0	185	0
Unrealized gain (loss) on interest rate swap agreements, net of tax	688	0	0	688	0
Realized gain on interest rate swap agreements, net of tax	166	0	0	166	0
Total comprehensive income	148,649	0	0	2,176	146,472
Balance at Jan. 01, 2011	$ 679,936	$ 575	$ 210,600	$ (1,890)	$ 470,651

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Jan. 01, 2011	Jan. 02, 2010	Jan. 03, 2009
Statement of Stockholders' Equity [Abstract]
Exercise of stock options	1,326,099	1,528,096	624,415
Tax on unrealized gain of interest rate swap agreements	$ 378	$ 238	$ 582
Tax on realized gain on intererst rate swap	97	0	0
Issuance of common stock	26,147	34,404	43,386
Repurchases of common stock	2,058,830	0	2,126,361
Unrealized gain (loss) on OshKosh defined benefit plan, tax	620	1,349	5,850
Other Comprehensive Income Postretirement Benefit Obligation Tax	100	100	494
Unrealized gain on interest rate collar, tax	0	0	122
Realized gain on interest rate collar, tax	$ 0	$ 216	$ 0

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Jan. 01, 2011

Notes to Financial Statements [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

PRINCIPLES OF CONSOLIDATION:

The accompanying audited consolidated financial statements include the accounts of Carter’s, Inc. and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

RECLASSIFICATIONS:

Certain prior year amounts have been reclassified for comparative purposes.

FISCAL YEAR:

Our fiscal year ends on the Saturday, in December or January, nearest the last day of December. The accompanying audited consolidated financial statements reflect our financial position as of January 1, 2011 and January 2, 2010 and results of operations for the fiscal years ended January 1, 2011, January 2, 2010, and January 3, 2009. The fiscal years ended January 1, 2011 (fiscal 2010) and January 2, 2010 (fiscal 2009), each contain 52 weeks. The fiscal year ended January 3, 2009 (fiscal 2008) contains 53 weeks.

USE OF ESTIMATES IN THE PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS:

The preparation of these consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities, at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS:

We consider all highly liquid investments that have original maturities of three months or less to be cash equivalents. Our cash and cash equivalents consist of deposit accounts, cash management funds invested in U.S. Treasury securities, and municipal obligations that provide income exempt from federal income taxes. We had cash deposits, in excess of deposit insurance limits, in three banks at January 1, 2011.

ACCOUNTS RECEIVABLE:

Approximately 82.9% of our gross accounts receivable at January 1, 2011 and 86.2% at January 2, 2010 were from our ten largest wholesale and mass channel customers. Of these customers, four had individual receivable balances in excess of 10% of our gross accounts receivable (but not more than 17%) at January 1, 2011. At January 2, 2010, three customers had individual receivable balances in excess of 10% of our gross accounts receivable (but not more than 27%). Sales to these customers represent 80.8% and 81.1% of total wholesale and mass channel net sales for fiscal 2010 and fiscal 2009, respectively. In fiscal 2010 and 2009, one customer accounted for approximately 10% of our consolidated net sales.

Components of accounts receivable as of January 1, 2011 and January 2, 2010 are as follows:

(dollars in thousands)	January 1, 2011		January 2, 2010
Trade receivables, net	$	107,804	$	70,827
Royalties receivable		9,531		8,958
Tenant allowances and other receivables		4,118		2,309
Total	$	121,453	$	82,094

INVENTORIES:

Inventories are stated at the lower of cost (first-in, first-out basis for wholesale and mass channel inventory and average cost for retail inventories) or market. We provide reserves for slow-moving inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions.

PROPERTY, PLANT, AND EQUIPMENT:

Property, plant, and equipment are stated at cost, less accumulated depreciation and amortization. When fixed assets are sold or otherwise disposed of, the accounts are relieved of the original cost of the assets, and the related accumulated depreciation and any resulting profit or loss is credited or charged to income. For financial reporting purposes, depreciation and amortization are computed on the straight-line method over the estimated useful lives of the assets as follows: buildings from 15 to 26 years and retail store fixtures, equipment, and computers from 3 to 10 years. Leasehold improvements and fixed assets purchased under capital leases, if any, are amortized over the lesser of the asset life or related lease term. We capitalize the cost of our fixtures designed and purchased for use at major wholesale and mass channel accounts. The cost of these fixtures is amortized over a three-year period.

GOODWILL AND OTHER INTANGIBILE ASSETS:

Goodwill as of January 1, 2011, represents the excess of the cost of the acquisition of Carter’s, Inc. by Berkshire Partners LLC which was consummated on August 15, 2001 (the “2001 Acquisition”) over the fair value of the net assets acquired. Our goodwill is not deductible for tax purposes. Our Carter’s goodwill and Carter’s and OshKosh tradenames are deemed to have indefinite lives and are not being amortized.

In connection with the acquisition of OshKosh on July 14, 2005 (the “Acquisition”), the Company recorded goodwill, tradename, licensing, and leasehold interest assets. During fiscal 2007, the Company recorded impairment charges of approximately $36.0 million and $106.9 million on the goodwill for the OshKosh wholesale and retail segments, respectively. In addition, an impairment charge of $12.0 million was recorded to reflect the impairment of the value ascribed to the OshKosh tradename asset.

The carrying values of the goodwill and tradename assets are subject to annual impairment reviews in accordance with accounting guidance on goodwill and other intangible assets, as of the last day of each fiscal year. Impairment reviews may also be triggered by any significant events or changes in circumstances affecting our business. Factors affecting such impairment reviews include the continued market acceptance of our offered products and the development of new products. Based upon our most recent assessment performed as of January 1, 2011, we determined that there is no impairment of our goodwill or tradename assets. We use discounted cash flow models to determine the fair value of these assets, using assumptions we believe hypothetical marketplace participants would use. For indefinite-lived intangible assets, if the carrying amount exceeds the fair value, an impairment charge is recognized in the amount equal to that excess.

We perform impairment tests of our goodwill at our reporting unit level, which is consistent with our operating segments. The goodwill impairment test consists of a two-step process, if necessary. The first step is to compare the fair value of a reporting unit to its carrying value, including goodwill. We use discounted cash flow models to determine the fair value of a reporting unit. The assumptions used in these models are consistent with those we believe hypothetical marketplace participants would use. If the fair value of a reporting unit is less than its carrying value, the second step of the impairment test must be performed in order to determine the amount of impairment loss, if any. The second step compares the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit’s goodwill exceeds its implied fair value, an impairment charge is recognized in an amount equal to that excess. The loss recognized cannot exceed the carrying amount of goodwill.

A deterioration of macroeconomic conditions may not only negatively impact the estimated operating cash flows used in our cash flow models, but may also negatively impact other assumptions used in our analyses, including, but not limited to, the estimated cost of capital and/or discount rates. Additionally, as discussed above, in accordance with accounting guidance, we are required to ensure that assumptions used to determine fair value in our analyses are consistent with the assumptions a hypothetical marketplace participant would use. As a result, the cost of capital and/or discount rates used in our analyses may increase or decrease based on market conditions and trends, regardless of whether our Company’s actual cost of capital has changed. Therefore, our Company may recognize an impairment of an intangible asset or assets even though realized actual cash flows are approximately equal to or greater than our previously forecasted amounts.

The Company’s intangible assets were as follows:

		Fiscal 2010						Fiscal 2009
(dollars in thousands)	Weighted-average useful life	Gross amount		Accumulated amortization		Net amount		Gross amount		Accumulated amortization		Net amount

Carter’s goodwill (1)	Indefinite	$	136,570	$	--	$	136,570	$	136,570	$	--	$	136,570
Carter’s tradename	Indefinite	$	220,233	$	--	$	220,233	$	220,233	$	--	$	220,233
OshKosh tradename	Indefinite	$	85,500	$	--	$	85,500	$	85,500	$	--	$	85,500
OshKosh licensing agreements	4.7 years	$	19,100	$	19,100	$	--	$	19,100	$	17,323	$	1,777

(1) $51.8 million of which relates to Carter’s wholesale segment, $82.0 million of which relates to Carter’s retail segment, and $2.7 million of which relates to Carter’s mass

channel segment.

Amortization expense for intangible assets subject to amortization was approximately $1.8 million for the fiscal year ended January 1, 2011, $3.7 million for the fiscal year ended January 2, 2010, and $4.1 million for the fiscal year ended January 3, 2009. All intangible assets subject to amortization were fully amortized as of January 1, 2011.

IMPAIRMENT OF OTHER LONG-LIVED ASSETS:

We review other long-lived assets, including property, plant, and equipment, and licensing agreements, for impairment whenever events or changes in circumstances indicate that the carrying amount of such an asset may not be recoverable. Management will determine whether there has been a permanent impairment on such assets held for use in the business by comparing anticipated undiscounted future cash flows from the use and eventual disposition of the asset or asset group to the carrying value of the asset. The amount of any resulting impairment will be calculated by comparing the carrying value to fair value, which may be estimated using the present value of the same cash flows. Long-lived assets that meet the definition of held for sale will be valued at the lower of carrying amount or fair value.

DEFERRED DEBT ISSUANCE COSTS:

Debt issuance costs are deferred and amortized to interest expense using the straight-line method, which approximates the effective interest method, over the life of the related debt. During the second quarter of fiscal 2010, the Company wrote off approximately $0.5 million of unamortized debt issuance costs related to the $100 million prepayment of a portion of its former term loan debt. On October 15, 2010, the Company entered into a new $375 million ($130 million sub-limit for letters of credit and a swing line sub-limit of $40 million) revolving credit facility with Bank of America as sole lead arranger and administrative agent, JP Morgan Chase Bank as syndication agent, and other financial institutions. The new revolving credit facility was immediately drawn upon to pay off the Company’s former term loan of $232.2 million and pay transaction fees and expenses of $3.8 million, leaving approximately $130 million available under the revolver for future borrowings (net of letters of credit of approximately $8.6 million). In connection with the repayment of the Company’s former term loan, in the fourth quarter of fiscal 2010 the Company wrote off approximately $1.2 million in unamortized debt issuance costs. In addition, in connection with the new revolving credit facility, the Company recorded $3.5 million of debt issuance costs to be amortized over the term of the new revolving credit facility (five years). Amortization approximated $0.9 million (exclusive of $1.7 million related to prepayments) for the fiscal year ended January 1, 2011 and $1.1 million for fiscal years ended January 2, 2010 and January 3, 2009.

CASH FLOW HEDGES:

Our former senior credit facility required us to hedge at least 25% of our variable rate debt under this facility. The Company entered into interest rate swap agreements in order to hedge the risk of interest rate fluctuations. These interest rate swap agreements were designated as cash flow hedges of the variable interest payments on a portion of our variable rate former term loan debt. Our interest rate swap agreements were traded in the over-the-counter market. Fair values were based on quoted market prices for similar assets or liabilities or determined using inputs that use as their basis readily observable market data that are actively quoted and can be validated through external sources, including third-party pricing services, brokers, and market transactions.

In connection with the repayment of the Company’s former term loan, the Company terminated its two remaining interest rate swap agreements totaling $100.0 million originally scheduled to mature in January 2011.

The unrealized gain related to the swap agreements, net of tax, was approximately $0.7 million for the fiscal year ended January 1, 2011 and $0.4 million for the fiscal year ended January 2, 2010. The unrealized loss related to the swap agreement, net of tax benefit, was approximately $1.0 million for the fiscal year ended January 3, 2009. The realized gain related to the swap agreements, net of tax, was approximately $0.2 million for the fiscal year ended January 1, 2011. These unrealized gains and losses and realized gain, net of tax, are included within accumulated other comprehensive (loss) income on the accompanying audited consolidated balance sheets. In fiscal 2010, 2009, and 2008, we recorded $1.7 million, $2.5 million, and $1.1 million, respectively, in interest expense related to the swap agreements.

On May 25, 2006, we entered into an interest rate collar agreement (the “collar”) with a LIBOR floor of 4.3% and a ceiling of 5.5%. The collar covered $100 million of our variable rate former term loan debt and was designated as a cash flow hedge of the variable interest payments on such debt. The collar matured on January 31, 2009. For the fiscal year ended January 2, 2010, the Company realized a gain of approximately $0.4 million, net of taxes, related to the collar. The unrealized gain, net of taxes, related to the collar was approximately $0.2 million for the fiscal year ended January 3, 2009. These realized and unrealized gains related to the collar, net of tax, are included within accumulated other comprehensive (loss) income on the accompanying audited consolidated balance sheets. In fiscal 2009, we recorded $0.5 million in interest expense related to the collar.

ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME:

Accumulated other comprehensive (loss) income, shown as a component of stockholders’ equity on the accompanying audited consolidated balance sheets, reflects realized gains and unrealized gains or losses on the Company’s interest rate swap and collar agreements, net of taxes, which are not included in the determination of net income. These realized gains and unrealized gains and losses are recorded directly into accumulated other comprehensive (loss) income and are referred to as comprehensive (loss) income items. Accumulated other comprehensive (loss) income also reflects adjustments to the Company’s defined benefit and post-retirement plan assets and liabilities as of the end of the year, and the gains and losses and prior service costs or credits, net of tax, that arise during the period but that are not recognized as components of net periodic benefit cost pursuant to accounting guidance on pensions and post-retirement benefits.

Accumulated other comprehensive income is summarized as follows:

(dollars in thousands)	Pension / post-retirement liability adjustment			Derivative hedging adjustment			Accumulated other comprehensive income

Balance at December 29, 2007	$	3,500		$	(829	)	$	2,671
Current year change		(9,152	)		(837	)		(9,989	)
Balance at January 3, 2009		(5,652	)		(1,666	)		(7,318	)
Current year change		2,440			812			3,252
Balance at January 2, 2010		(3,212	)		(854	)		(4,066	)
Current year change		1,322			854			2,176
Balance at January 1, 2011	$	(1,890	)	$	--		$	(1,890	)

As of January 1, 2011, other accumulated comprehensive income for the pension/post-retirement liability adjustment are net of tax benefit of $1.1 million.

REVENUE RECOGNITION:

Revenues consist of sales to customers, net of returns, accommodations, allowances, deductions, and cooperative advertising. We consider revenue realized or realizable and earned when the product has been shipped, when title passes, when all risks and rewards of ownership have transferred, the sales price is fixed or determinable, and collectability is reasonably assured. In certain cases, in which we retain the risk of loss during shipment, revenue recognition does not occur until the goods have reached the specified customer. In the normal course of business, we grant certain accommodations and allowances to our wholesale and mass channel customers. We provide accommodations and allowances to our major wholesale and mass channel customers in order to assist these customers with inventory clearance and promotions. Such amounts are reflected as a reduction of net sales and are recorded based on agreements with customers, historical trends, and annual forecasts. Retail store revenues are recognized at the point of sale. We reduce revenue for customer returns and deductions. We also maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make payments and other actual and estimated deductions. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, an additional allowance could be required. Past due balances over 90 days are reviewed individually for collectability. Our credit and collections department reviews all other balances regularly. Account balances are charged off against the allowance when we feel it is probable the receivable will not be recovered.

We contract with a third-party service to provide us with the fair value of cooperative advertising arrangements entered into with certain of our major wholesale and mass channel customers. Such fair value is determined based upon, among other factors, comparable market analysis for similar advertisements. In accordance with accounting guidance on consideration given by a vendor to a customer/reseller, we have included the fair value of these arrangements of approximately $4.0 million in fiscal 2010, $3.3 million in fiscal 2009, and $2.5 million in fiscal 2008 as a component of selling, general, and administrative expenses on the accompanying audited consolidated statement of operations rather than as a reduction of revenue. Amounts determined to be in excess of the fair value of these arrangements are recorded as a reduction of net sales.

ACCOUNTING FOR SHIPPING AND HANDLING FEES AND COSTS:

Shipping and handling costs include related labor costs, third-party shipping costs, shipping supplies, and certain distribution overhead. Such costs are generally absorbed by us and are included in selling, general, and administrative expenses. These costs amounted to approximately $33,285,000 for fiscal 2010, $31,914,000 for fiscal 2009, and $36,727,000 for fiscal 2008.

With respect to the freight component of our shipping and handling costs, certain customers arrange for shipping and pay the related freight costs directly to third parties. However, in the event that we arrange and pay the freight for these customers and bill them for this service, such amounts billed are included in revenue and the related cost is charged to cost of goods sold. In addition, shipping and handling costs billed to our eCommerce customers are included in revenue and the related cost is charged to cost of goods sold. For fiscal years 2010, 2009, and 2008, the Company billed customers approximately $1,521,000, $133,000, and $185,000, respectively.

ROYALTIES AND LICENSE FEES:

We license the Carter’s, Just One You, Precious Firsts, Child of Mine, OshKosh B’gosh, OshKosh, and Genuine Kids from OshKosh trademarks to other companies for use on baby and young children’s products, including bedding, outerwear, sleepwear, shoes, underwear, socks, room décor, toys, stationery, hair accessories, furniture, gear and related products. These royalties are recorded as earned, based upon the sales of licensed products by our licensees.

STOCK-BASED COMPENSATION ARRANGEMENTS:

In accordance with the fair value recognition provisions of accounting guidance on share-based payments, the Company recognizes stock-based compensation expense for its share-based payments based on the fair value of the awards at the grant date.

We determine the fair value of stock options using the Black-Scholes option pricing model, which requires the use of the following subjective assumptions:

Volatility – This is a measure of the amount by which a stock price has fluctuated or is expected to fluctuate. The Company uses actual monthly historical changes in the market value of our stock covering the expected life of options being valued. An increase in the expected volatility will increase stock-based compensation expense.

Risk-free interest rate – This is the U.S. Treasury rate as of the grant date having a term equal to the expected term of the option. An increase in the risk-free interest rate will increase stock-based compensation expense.

Expected term – This is the period of time over which the options granted are expected to remain outstanding and is based on historical experience and estimated future exercise behavior. Separate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. An increase in the expected term will increase stock-based compensation expense.

Dividend yield – The Company does not have plans to pay dividends in the foreseeable future. An increase in the dividend yield will decrease stock-based compensation expense.

Forfeitures – The Company estimates forfeitures of stock-based awards based on historical experience and expected future activity.

Changes in the subjective assumptions can materially affect the estimate of fair value of stock-based compensation and consequently, the related amount recognized in the accompanying audited consolidated statements of operations.

The Company accounts for its performance-based awards in accordance with accounting guidance on share-based payments and records stock-based compensation expense over the vesting term of the awards that are expected to vest based on whether it is probable that the performance criteria will be achieved. The Company reassesses the probability of vesting at each reporting period for awards with performance criteria and adjusts stock-based compensation expense based on its probability assessment.

The fair value of restricted stock is determined based on the quoted closing price of our common stock on the date of grant.

INCOME TAXES:

The accompanying audited consolidated financial statements reflect current and deferred tax provisions. The deferred tax provision is determined under the liability method. Deferred tax assets and liabilities are recognized based on differences between the book and tax bases of assets and liabilities using presently enacted tax rates. Valuation allowances are established when it is “more likely than not” that a deferred tax asset will not be recovered. The provision for income taxes is generally the sum of the amount of income taxes paid or payable for the year as determined by applying the provisions of enacted tax laws to the taxable income for that year, the net change during the year in our deferred tax assets and liabilities, and the net change during the year in any valuation allowances.

We assess our income tax positions and record tax benefits for all years subject to examination based upon management’s evaluation of the facts, circumstances, and information available at the reporting dates. For those uncertain tax positions where it is “more likely than not” that a tax benefit will be sustained, we have recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is not “more likely than not” that a tax benefit will be sustained, no tax benefit has been recognized in the consolidated financial statements. Where applicable, associated interest is also recognized.

SUPPLEMENTAL CASH FLOW INFORMATION:

Interest paid in cash approximated $7,787,000 for the fiscal year ended January 1, 2011, $10,515,000 for the fiscal year ended January 2, 2010, and $19,074,000 for the fiscal year ended January 3, 2009. Income taxes paid in cash approximated $71,745,000 for the fiscal year ended January 1, 2011, $54,580,000 for the fiscal year ended January 2, 2010, and $44,157,000 for the fiscal year ended January 3, 2009.

EARNINGS PER SHARE:

The Company calculates basic and diluted net income per common share in accordance with accounting guidance which requires earnings per share to be calculated pursuant to the two-class method for unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid).

Basic net income per share is calculated by dividing net income for the period by the weighted-average common shares outstanding for the period. Diluted net income per share includes the effect of dilutive instruments, such as stock options and restricted stock, and uses the average share price for the period in determining the number of shares that are to be added to the weighted-average number of shares outstanding.

For the fiscal years ended January 1, 2011 and January 2, 2010, antidilutive shares of 599,000 and 1,035,500, respectively, were excluded from the computations of diluted earnings per share. For the fiscal year ended January 3, 2009, antidilutive shares of 1,539,650 and performance-based stock options of 220,000 were excluded from the computations of diluted earnings per share.

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

	For the fiscal years ended
	January 1, 2011			January 2, 2010			January 3, 2009

Weighted-average number of common and common equivalent shares outstanding:
Basic number of common shares outstanding		58,135,868			56,653,460			56,309,454
Dilutive effect of unvested restricted stock		117,708			119,886			76,843
Dilutive effect of stock options		762,473			1,574,378			1,889,704
Diluted number of common and common equivalent shares outstanding		59,016,049			58,347,724			58,276,001

Basic net income per common share:
Net income	$	146,472,000		$	115,640,000		$	77,904,000
Income allocated to participating securities		(1,202,948	)		(910,980	)		(610,270	)
Net income available to common shareholders	$	145,269,052		$	114,729,020		$	77,293,730

Basic net income per common share	$	2.50		$	2.03		$	1.37

Diluted net income per common share:
Net income	$	146,472,000		$	115,640,000		$	77,904,000
Income allocated to participating securities		(1,187,501	)		(886,537	)		(590,605	)
Net income available to common shareholders	$	145,284,499		$	114,753,463		$	77,313,395

Diluted net income per common share	$	2.46		$	1.97		$	1.33

EMPLOYEE BENEFIT PLANS:

The Company accounts for its employee benefit plans in accordance with accounting guidance on defined benefit pension and other post-retirement plans which requires an employer to recognize the over-funded or under-funded status of a defined benefit post-retirement plan (other than a multi-employer plan) as an asset or liability on its balance sheet. It also requires an employer to recognize as a component of other comprehensive income, net of tax, the gains or losses and prior service costs or credits that arise during the period but are not recognized as components of net periodic benefit cost pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 715-30. These costs are then subsequently recognized as components of net periodic benefit cost in the consolidated statement of operations.

We adjusted accumulated other comprehensive (loss) income related to the Company’s post-retirement benefit obligations by approximately $0.3 million, or $0.2 million, net of tax, in fiscal 2010, $0.2 million, or $0.1 million, net of tax, in fiscal 2009, and $1.3 million, or $0.8 million, net of tax, in fiscal 2008 to reflect changes in underlying assumptions including projected claims and population. In addition, the Company recorded an unrealized gain of $1.8 million, or $1.1 million, net of tax, in fiscal 2010, an unrealized gain of $3.7 million, or $2.3 million, net of tax, during fiscal 2009, and an unrealized loss of $15.8 million, or $10.0 million, net of tax, during fiscal 2008 to the OshKosh pension plan asset and accumulated other comprehensive (loss) income to reflect changes in the funded status of this plan.

RECENT ACCOUNTING PRONOUNCEMENTS:

In January 2010, the FASB issued guidance to amend the disclosure requirements related to recurring and nonrecurring fair value measurements. The guidance requires new disclosures on the transfers of assets and liabilities between Level 1 (quoted prices in active market for identical assets or liabilities) and Level 2 (significant other observable inputs) of the fair value measurement hierarchy, including the reasons and the timing of the transfers. Additionally, the guidance requires a roll forward of activities on purchases, sales, issuance, and settlements of the assets and liabilities measured using significant unobservable inputs (Level 3 fair value measurements). The guidance became effective for the Company with the reporting period beginning January 3, 2010 (the first day of fiscal 2010), except for the disclosure on the roll forward activities for Level 3 fair value measurements, which will become effective for the Company with the reporting period beginning January 2, 2011 (the first day of fiscal 2011). The Company has included the required disclosures in Note 9.

In February 2010, new accounting guidance was issued related to subsequent events. This guidance amended guidance previously issued in May 2009 regarding subsequent events and states that an entity that is a Securities and Exchange Commission (“SEC”) filer is no longer required to disclose the date through which subsequent events have been evaluated. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

LONG-TERM DEBT

12 Months Ended

Jan. 01, 2011

Notes to Financial Statements [Abstract]

LONG-TERM DEBT

NOTE 4—LONG-TERM DEBT:

Long-term debt consisted of the following:

(dollars in thousands)	January 1, 2011		January 2, 2010
Revolving credit facility	$	236,000	$	--
Former term loan		--		334,523
Current maturities		--		(3,503	)
Total long-term debt	$	236,000	$	331,020

On October 15, 2010, the Company entered into a new $375 million ($130 million sub-limit for letters of credit and a swing line sub-limit of $40 million) revolving credit facility with Bank of America as sole lead arranger and administrative agent, JP Morgan Chase Bank as syndication agent, and other financial institutions. The new revolving credit facility was immediately drawn upon to pay off the Company’s former term loan of $232.2 million and pay transaction fees and expenses of $3.8 million, leaving approximately $130 million available under the revolver for future borrowings (net of letters of credit of approximately $8.6 million). In connection with the repayment of the Company’s former term loan, in the fourth quarter of fiscal 2010 the Company wrote off approximately $1.2 million in unamortized debt issuance costs. In addition, in connection with the new revolving credit facility, the Company recorded $3.5 million of debt issuance costs to be amortized over the term of the new revolving credit facility (five years). At January 1, 2011, we had approximately $236.0 million in revolver borrowings, exclusive of $8.6 million of outstanding letters of credit, at an effective interest rate of 2.51%.

The term of the new revolving credit facility expires October 15, 2015. This revolving credit facility provides for two pricing options for revolving loans: (i) revolving loans on which interest is payable quarterly at a base rate equal to the highest of (x) the Federal Funds Rate plus ½ of 1%, (y) the rate of interest in effect for such day as publicly announced from time to time by Bank of America, N.A. as its prime rate, or (z) the Eurodollar Rate plus 1%, plus, in each case, an applicable margin initially equal to 1.25%, which may be adjusted based upon a leverage-based pricing grid ranging from 1.00% to 1.50% and (ii) revolving loans on which interest accrues for one, two, three, six or if, generally available, nine or twelve month interest periods (but is payable not less frequently than every three months) at a rate of interest per annum equal to an adjusted British Bankers Association LIBOR rate, plus an applicable margin initially equal to 2.25%, which may be adjusted based upon a leverage-based pricing grid ranging from 2.00% to 2.50%. Amounts currently outstanding under the revolving credit facility initially accrue interest at a LIBOR rate plus 2.25%.

The new revolving credit facility contains and defines financial covenants, including a lease adjusted leverage ratio (defined as, with certain adjustments, the ratio of the Company’s consolidated indebtedness plus six times rent expense to consolidated net income before interest, taxes, depreciation, amortization, and rent expense (“EBITDAR”)) to exceed (x) if such period ends on or before December 31, 2014, 3.75:1.00 and (y) if such period ends after December 31, 2014, 3.50:1.00; and consolidated fixed charge coverage ratio (defined as, with certain adjustments, the ratio of consolidated EBITDAR to consolidated fixed charges (defined as interest plus rent expense)), for any such period to be less than 2.75:1.00.

Provisions in our new senior credit facility currently restrict the ability of our operating subsidiary, The William Carter Company (“TWCC”), from paying cash dividends to our parent company, Carter’s, Inc., in excess of $15.0 million unless TWCC and its consolidated subsidiaries meet certain leverage ratio and minimum availability requirements under the credit facility, which materially restricts Carter’s, Inc. from paying cash dividends on our common stock. We do not anticipate paying cash dividends on our common stock in the foreseeable future but intend to retain future earnings, if any, for reinvestment in the future operation and expansion of our business and related development activities. Any future decision to pay cash dividends will be at the discretion of our Board of Directors and will depend upon our financial condition, results of operations, terms of financing arrangements, capital requirements, and any other factors as our Board of Directors deems relevant.

The Company’s former senior credit facility was comprised of a $500 million term loan and a $125 million revolving credit facility (including a sub-limit for letters of credit of $80 million). The revolver was scheduled to expire on July 14, 2011 and the term loan was scheduled to expire July 14, 2012. As of January 2, 2010, principal borrowings under the term loan were due and payable in quarterly installments of $0.9 million with the remaining balance of $325.8 million due on July 14, 2012.

Amounts borrowed under the former term loan had an applicable rate of LIBOR + 1.50%, regardless of the Company’s overall leverage level. Interest was payable at the end of interest rate reset periods, which vary in length but in no case exceeded 12 months for LIBOR rate loans and quarterly for prime rate loans. The effective interest rates on former term loan borrowings as of January 2, 2010 and January 3, 2009 were 1.7% and 3.3%, respectively.

Amounts borrowed under the former revolver accrued interest at a prime rate or, at our option, a LIBOR rate plus 1.00% which is based upon a leverage-based pricing grid ranging from Prime or LIBOR plus 1.00% to Prime plus 1.00% or LIBOR plus 2.00%. There were no borrowings outstanding under the former revolver at January 2, 2010.

The former senior credit facility contained and defined financial covenants, including a minimum interest coverage ratio, maximum leverage ratio, and a minimum fixed charge coverage ratio. The former senior credit facility also set forth mandatory and optional prepayment conditions, including an annual excess cash flow requirement, as defined, that could have resulted in our use of cash to reduce our debt obligations. There was no excess cash flow payment required for fiscal 2009 or 2008. Our obligations under the former senior credit facility were collateralized by a first priority lien on substantially all of our assets, including the assets of our domestic subsidiaries.

On November 17, 2009, the Company obtained a waiver to its former senior credit facility which waived defaults resulting from the untimely filing of the Company’s third quarter of fiscal 2009 financial statements and the restatement of prior period financial statements. The waiver resulted in a fee of approximately $450,000 and required the Company to deliver to the lenders the restatement of prior period financial statements and the third quarter of fiscal 2009 financial statements by January 15, 2010. The Company complied with the terms of the waiver. The Company’s third quarter of fiscal 2009 financial statements and the prior period restated financial statements were filed with the SEC on January 15, 2010. The Company complied with the terms of the waiver and was in compliance with its debt covenants as of January 15, 2010.

The former senior credit facility required us to hedge at least 25% of our variable rate debt under the former term loan. The Company historically entered into interest rate swap agreements to hedge the risk of interest rate fluctuations. These interest rate swap agreements were designated as cash flow hedges of the variable interest payments on a portion of our variable rate former term loan debt. As of January 2, 2010, approximately $238.9 million of our $334.5 million of outstanding debt was hedged under interest rate swap agreements. In connection with the repayment of the Company’s former term loan, the Company terminated its two remaining interest rate swap agreements totaling $100.0 million originally scheduled to mature in January 2011. During fiscal 2010, 2009, and 2008, we recorded approximately $1.7 million, $2.5 million, and $1.1 million, respectively, in interest expense related to our swap agreements.

On May 25, 2006, we entered into an interest rate collar agreement with a floor of 4.3% and a ceiling of 5.5%. The collar covered $100 million of our variable rate former term loan debt and was designated as a cash flow hedge of the variable interest payments on such debt. The collar matured on January 31, 2009. In fiscal 2009 and 2008, we recorded $0.5 million and $1.2 million, respectively, in interest expense related to the collar.

STOCK-BASED COMPENSATION

12 Months Ended

Jan. 01, 2011

Notes to Financial Statements [Abstract]

STOCK-BASED COMPENSATION

NOTE 6—STOCK-BASED COMPENSATION:

Our Board of Directors may issue preferred stock from time to time. Subject to the provisions of our certificate of incorporation and limitations prescribed by law, the Board of Directors is expressly authorized to adopt resolutions to issue the shares, to fix the number of shares, and to change the number of shares constituting any series and to provide for or change the voting powers, designations, preferences and relative participating, optional or other special rights, qualifications, limitations or restrictions thereof, including dividend rights (including whether dividends are cumulative), dividend rates, terms of redemption (including sinking fund provisions), redemption prices, conversion rights, and liquidation preferences of the shares constituting any series of the preferred stock, in each case without any further action or vote by the shareholders.

Under the Company’s Amended and Restated 2003 Equity Incentive Plan (the “Plan”), the compensation committee of our Board of Directors may award incentive stock options (ISOs and non-ISOs), stock appreciation rights (SARs), restricted stock, unrestricted stock, stock deliverable on a deferred basis, performance-based stock awards, and cash payments intended to help defray the cost of awards.

At the Company’s May 14, 2009 shareholders’ meeting, the shareholders approved a proposal to amend the Plan to (i) increase the maximum number of shares of stock available under the Existing Plan by 565,000 shares from 11,488,392 shares to 12,053,392 shares; (ii) remove the limitation on the number of shares that may be used for awards other than stock options and replace it with a provision requiring any awards, with the exception of options and stock appreciation rights, to reduce the shares of stock available for issuance under the Plan by 1.46 shares for each share subject to the award granted; (iii) prohibit the ability to provide dividend equivalents for stock options or stock appreciation rights; and (iv) require that the number of shares of common stock available for issuance under the Plan be reduced by the aggregate number of shares subject to a stock appreciation right upon the exercise of the stock appreciation right. Under the Plan, the maximum number of shares for which stock options may be granted to any individual or which can be subject to SARs granted to any individual in any calendar year is 2,000,000. As of January 1, 2011, there are 1,257,571 shares available for grant under the Plan. The Plan makes provision for the treatment of awards upon termination of service or in the case of a merger or similar corporate transaction. Participation in the Plan is limited to Directors and those key employees selected by the compensation committee.

The limit on shares available under the Plan, the individual limits, and other award terms are subject to adjustment to reflect stock splits or stock dividends, combinations, and certain other events. All stock options issued under the Plan subsequent to the 2001 Acquisition expire no later than ten years from the date of grant. The Company believes that the current level of authorized shares is sufficient to satisfy future option exercises.

Stock options outstanding under the Plan consist of basic options. Basic options issued prior to May 12, 2005 vested in equal annual installments over a five-year period. Basic options granted on and subsequent to May 12, 2005 vest in equal annual installments over a four-year period.

In accordance with accounting guidance on share-based payments, the Company has recorded stock-based compensation expense (as a component of selling, general, and administrative expenses) in the amount of approximately $7.3 million, $6.8 million, and $8.7 million (including $2.2 million of accelerated performance-based stock option expense, see Note 17) related to stock awards for the fiscal years ended January 1, 2011, January 2, 2010, and January 3, 2009, respectively.

Basic Options

A summary of stock option activity under the Plan (in number of shares that may be purchased) is as follows for the fiscal year ended January 1, 2011:

	Basic stock options			Weighted- average exercise price per share		Weighted-average grant-date fair value

Outstanding, January 2, 2010		3,512,385		$	12.02	$	5.13

Granted		417,500		$	27.93	$	11.80
Exercised		(1,326,099	)	$	7.31	$	3.06
Forfeited		(113,100	)	$	19.31	$	8.07
Expired		(19,200	)	$	31.53	$	14.24

Outstanding, January 1, 2011		2,471,486		$	16.75	$	7.17

Exercisable, January 1, 2011		1,544,811		$	13.19	$	5.75

During fiscal 2010, the Company granted 417,500 basic stock options. In connection with these grants of basic stock options, the Company recognized approximately $954,000 in stock-based compensation expense during the fiscal year ended January 1, 2011.

A summary of basic stock options outstanding and exercisable at January 1, 2011 is as follows:

Outstanding										Exercisable
Range of exercise prices		Number		Weighted- average remaining contractual life		Weighted-average exercise price		Weighted-average grant-date fair value		Number		Weighted- average remaining contractual life		Weighted-average exercise price		Weighted-average grant-date fair value

	$ 3 – $ 5		555,386		0.65	$	3.08	$	1.30		555,386		0.65	$	3.08	$	1.30
	$ 6 – $ 7		83,000		2.71	$	6.98	$	4.88		83,000		2.71	$	6.98	$	4.88
	$13 – $19		931,200		6.51	$	16.44	$	6.95		507,200		5.28	$	15.62	$	6.72
	$20 – $30		801,900		7.71	$	25.51	$	10.74		308,225		6.05	$	23.13	$	9.66
	$31 – $35		100,000		5.32	$	33.35	$	14.97		91,000		4.92	$	33.34	$	15.07
			2,471,486		5.41	$	16.75	$	7.17		1,544,811		3.61	$	13.19	$	5.75

At January 1, 2011, the aggregate intrinsic value of all outstanding basic stock options was approximately $31.9 million and the aggregate intrinsic value of currently exercisable basic stock options was approximately $25.6 million. The intrinsic value of basic stock options exercised during the fiscal year ended January 1, 2011 was approximately $26.9 million. At January 1, 2011, the total estimated compensation cost related to non-vested basic stock options not yet recognized was approximately $6.3 million with a weighted-average expense recognition period of 2.59 years.

As a result of the retirement of an executive officer during fiscal 2008, the Company recognized approximately $2.2 million of stock-based compensation expense relating to the accelerated vesting of 400,000 performance-based stock options (see Note 17, “Executive Retirement Charges”).

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing method with the following weighted-average assumptions used for grants issued:

	For the fiscal years ended
	January 1, 2011			January 2, 2010			January 3, 2009

Volatility		34.57	%		35.75	%		34.16	%
Risk-free interest rate		3.02	%		2.54	%		3.48	%
Expected term (years)		7.0			7.0			5.6
Dividend yield		--			--			--

Restricted Stock

Restricted stock awards issued under the Plan vest based upon continued service or performance targets. Restricted stock awards vest in equal annual installments over a four-year period or cliff vest after a three- or four-year period. As noted above, the fair value of restricted stock is determined based on the quoted closing price of our common stock on the date of grant.

The following table summarizes our restricted stock award activity during the fiscal year ended January 1, 2011:

	Restricted stock			Weighted-average grant-date fair value

Outstanding, January 2, 2010		449,844		$	19.35
Granted		192,233		$	27.90
Vested		(117,764	)	$	21.17
Forfeited		(42,900	)	$	20.14
Outstanding, January 1, 2011		481,413		$	22.21

During the fiscal year ended January 1, 2011, the Company granted 192,233 shares of restricted stock to employees and Directors. Stock-based compensation expense recorded during the fiscal year ended January 1, 2011 for all restricted stock awards totaled approximately $3.4 million. The total amount of estimated compensation expense related to unvested restricted stock awards is approximately $7.1 million as of January 1, 2011.

During the fiscal year ended January 3, 2009, the Company granted our Chief Executive Officer 75,000 shares of restricted stock at a fair market value of $17.92. Vesting of these restricted shares is contingent upon meeting specific performance targets through fiscal 2010 as well as continued employment through fiscal 2012. Currently, the Company believes that these targets will be achieved and, accordingly, we will continue to record compensation expense until the restricted shares vest or the Company’s assessment of achievement of the performance criteria changes.

Unrecognized stock-based compensation expense related to outstanding unvested stock options and unvested restricted stock awards are expected to be recorded as follows:

(dollars in thousands)	Basic options		Restricted stock		Total

2011	$	2,708	$	3,119	$	5,827
2012		2,106		2,405		4,511
2013		1,282		1,405		2,687
2014		186		204		390
Total	$	6,282	$	7,133	$	13,415

EMPLOYEE BENEFIT PLANS

12 Months Ended

Jan. 01, 2011

Notes to Financial Statements [Abstract]

EMPLOYEE BENEFIT PLANS

NOTE 7—EMPLOYEE BENEFIT PLANS:

Under a defined benefit plan frozen in 1991, we offer a comprehensive post-retirement medical plan to current and certain future retirees and their spouses until they become eligible for Medicare or a Medicare Supplement Plan. We also offer life insurance to current and certain future retirees. Employee contributions are required as a condition of participation for both medical benefits and life insurance and our liabilities are net of these expected employee contributions.

The following is a reconciliation of the Accumulated Post-Retirement Benefit Obligation (“APBO”) under this plan:

	For the fiscal years ended
(dollars in thousands)	January 1, 2011			January 2, 2010
Benefit Obligation (APBO) at beginning of period	$	8,045		$	8,523
Service cost		73			91
Interest cost		426			452
Actuarial (gain) loss		(607	)		42
Curtailment gain		--			(579	)
Benefits paid		(532	)		(484	)

APBO at end of period	$	7,405		$	8,045

In conjunction with the closure of our Barnesville, Georgia distribution facility (as discussed in Note 15), the Company experienced a partial plan curtailment in fiscal 2009 for its post retirement medical plan for future retirees working in the facility prior to the plan becoming frozen in 1991. In conjunction with this partial curtailment, a curtailment gain of $0.6 million has been recognized as income in the fiscal year ended January 2, 2010.

Our contribution for these post-retirement benefit obligations was $532,016 in fiscal 2010, $484,078 in fiscal 2009, and $570,231 in fiscal 2008. We expect that our contribution and benefit payments for post-retirement benefit obligations each year from fiscal 2011 through fiscal 2015 will be approximately $550,000. We do not pre-fund this plan and as a result there are no plan assets. The measurement date used to determine the post-retirement benefit obligations is as of the end of the fiscal year.

Post-retirement benefit obligations under the plan are measured on a discounted basis at an assumed discount rate. The discount rate used at January 1, 2011 was determined with consideration given to Moody’s Aa Corporate Bond rate, the Barclay Capital Aggregate Bond index, and the Citigroup Pension Discount and Liability index, adjusted for the timing of expected plan distributions. The discount rate used at January 2, 2010 was determined with consideration given to Moody’s Aa Corporate Bond rate, adjusted for the timing of expected plan distributions. We believe these indexes reflect a risk-free rate with maturities that are comparable to the timing of the expected payments under the plan. The discount rates used in determining the APBO were as follows:

		January 1, 2011				January 2, 2010
Discount rates			5.5	%			5.5	%

The components of post-retirement benefit expense charged to operations are as follows:

	For the fiscal years ended
(dollars in thousands)	January 1, 2011			January 2, 2010			January 3, 2009
Service cost – benefits attributed to service during the period	$	73		$	91		$	88
Interest cost on accumulated post-retirement benefit obligation		426			452			454
Amortization of net actuarial gain		(22	)		(27	)		(7	)
Curtailment gain		--			(579	)		--
Total net periodic post-retirement benefit cost (gain)	$	477		$	(63	)	$	535

The discount rates used in determining the net periodic post-retirement benefit costs were as follows:

	For the fiscal years ended
	January 1, 2011			January 2, 2010			January 3, 2009
Discount rates		5.5	%		5.5	%		5.5	%

The effects on our plan of all future increases in health care costs are borne primarily by employees; accordingly, increasing medical costs are not expected to have any material effect on our future financial results.

We have an obligation under a defined benefit plan covering certain former officers and their spouses. At January 1, 2011 and January 2, 2010, the present value of the estimated remaining payments under this plan was approximately $0.6 million and $0.9 million, respectively, and is included in other current and long-term liabilities in the accompanying audited consolidated balance sheets.

The retirement benefits under the OshKosh B’Gosh pension plan were frozen as of December 31, 2005. The Company’s investment strategy is to invest in a well diversified portfolio consisting of 12-14 mutual funds or group annuity contracts that minimize concentration of risks by utilizing a variety of asset types, fund strategies, and fund managers. The target allocation for plan assets is 50% equity securities, 42% intermediate term debt securities, and 8% real estate investments.

Equity securities primarily include funds invested in large-cap and mid-cap companies, primarily located in the United States, with up to 5% of the plan assets invested in international equities. Fixed income securities include funds holding corporate bonds of companies from diverse industries, and U.S. Treasuries. Real estate funds include investments in actively managed commercial real estate projects located in the United States.

The fair value hierarchy for disclosure of fair value measurements is as follows:

Level 1	- Quoted prices in active markets for identical assets or liabilities

Level 2	- Quoted prices for similar assets and liabilities in active markets or inputs that are observable

Level 3	- Inputs that are unobservable (for example, cash flow modeling inputs based on assumptions)

The fair value of the Company’s pension plan assets at January 1, 2011 and January 2, 2010 by asset category were as follows:

	January 1, 2011						January 2, 2010

(dollars in thousands) Asset Category	Total		Quoted prices in active markets for identical assets (level 1)		Significant observable inputs (level 2)		Total		Quoted prices in active markets for identical assets (level 1)		Significant observable inputs (level 2)

Cash	$	90	$	--	$	90	$	--	$	--	$	--
Equity Securities:
U.S. Large-Cap (a)		11,217		7,485		3,732		3,552		--		3,552
U.S. Large-Cap growth		3,748		3,748		--		7,292		7,292		--
U.S. Large-Cap value		--		--		--		3,573		3,573		--
U.S. Mid-Cap blend		2,306		--		2,306		2,189		--		2,189
U.S. Small-Cap blend		2,280		2,280		--		2,165		--		2,165
International blend		2,161		2,161		--		2,018		2,018		--
Fixed income securities:
Corporate bonds (b)		17,684		17,684		--		8,038		8,038		--
Bond and mortgage funds (c)		--		--		--		8,800		--		8,800
Real estate (d)		3,632		1,164		2,468		2,127		--		2,127
	$	43,118	$	34,522	$	8,596	$	39,754	$	20,921	$	18,833

(a) This category comprises low-cost equity index funds not actively managed that track the S&P 500.

(b) This category invests in both U.S. Treasuries and mid-term corporate debt from U.S. issuers from diverse industries.

(d) This category invests in active management of U.S. commercial real estate projects.

During fiscal 2010, the Company reinvested approximately $10.2 million of Level 2 investments into Level 1 mutual funds to further diversify its investment portfolio and limit its investment in group annuity contracts.

Pension liabilities are measured on a discounted basis at an assumed discount rate. The discount rate used at January 1, 2011 was determined with consideration given to Moody’s Aa Corporate Bond rate, the Barclay Capital Aggregate Bond index, and the Citigroup Pension Discount and Liability index, adjusted for the timing of expected plan distributions. The discount rate used at January 2, 2010 was determined with consideration given to Moody’s Aa Corporate Bond rate, adjusted for the timing of expected plan distributions. We believe these indexes reflect a risk-free rate with maturities that are comparable to the timing of the expected payments under the plan. The expected long-term rate of return assumption considers historic returns adjusted for changes in overall economic conditions that may affect future returns and a weighting of each investment class. The actuarial computations utilized the following assumptions, using year-end measurement dates:

Benefit obligation	2010			2009
Discount rate		5.5	%		5.5	%


Net periodic pension cost		2010			2009		2008
Discount rate		5.5	%		5.5	%	5.5	%
Expected long-term rate of return on assets		7.5	%		8.0	%	8.0	%

The net periodic pension (benefit) cost included in the statement of operations was comprised of:

	For the fiscal years ended
(dollars in thousands)	January 1, 2011			January 2, 2010			January 3, 2009
Interest cost	$	2,392		$	2,270		$	2,248
Expected return on plan assets		(2,875	)		(2,612	)		(3,774	)
Recognized actuarial loss (gain)		135			411			(76	)
Net periodic pension (benefit) cost	$	(348	)	$	69		$	(1,602	)

A reconciliation of changes in the projected pension benefit obligation and plan assets is as follows:

	For the fiscal years ended
(dollars in thousands)	January 1, 2011			January 2, 2010
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	44,109		$	41,835
Interest cost		2,392			2,270
Actuarial loss		299			1,461
Benefits paid		(1,433	)		(1,457	)
Projected benefit obligation at end of year	$	45,367		$	44,109

Change in plan assets:
Fair value of plan assets at beginning of year	$	39,754		$	33,891
Actual return on plan assets		4,797			7,320
Benefits paid		(1,433	)		(1,457	)
Fair value of plan assets at end of year	$	43,118		$	39,754

Unfunded status:
Accrued benefit cost	$	(2,249	)	$	(4,355	)

A pension liability of approximately $2.2 million and $4.4 million is included in other long-term liabilities in the accompanying audited consolidated balance sheet for fiscal 2010 and 2009, respectively. We do not expect to make any contributions to the OshKosh defined benefit plan during fiscal 2011 as the plan's funding exceeds the minimum funding requirements.

The Company currently expects benefit payments for its defined benefit pension plans as follows for the next ten fiscal years.

(dollars in thousands) Fiscal Year
2011	$	1,490
2012	$	1,240
2013	$	1,470
2014	$	1,440
2015	$	1,720
2016-2020	$	12,670

We also sponsor a defined contribution plan within the United States. This plan covers employees who are at least 21 years of age and have completed three months of service, during which at least 250 hours were served. The plan provides for a discretionary employer match. Prior to April 2009, the plan provided for an employer match amounting to 100% on the first 3% employee contribution and 50% on the next 2% employee contribution. The Company’s expense for the defined contribution plan totaled approximately $4.3 million for the fiscal year ended January 1, 2011, $1.8 million for the fiscal year ended January 2, 2010, and $3.0 million for the fiscal year ended January 3, 2009.

- Definition

Description containing the entire pension and other postretirement benefits disclosure as a single block of text.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 158

-Paragraph 7, 21, 22

Reference 2: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 132R

-Paragraph 5, 6, 7, 8

Reference 3: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 132R

-Paragraph 8

-Subparagraph m

Reference 4: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 106

-Paragraph 518

Reference 5: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 87

-Paragraph 264

Reference 6: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 132R

-Paragraph 5

-Subparagraph b

Reference 7: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 132R

-Paragraph 5

-Subparagraph a

Reference 8: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 132R

-Paragraph 5

-Subparagraph h

Reference 9: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 132R

-Paragraph 5

-Subparagraph q

Reference 10: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name FASB Staff Position (FSP)

-Number FAS106-2

-Paragraph 20, 21, 22

Reference 11: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Emerging Issues Task Force (EITF)

-Number 03-2

-Paragraph 8

Reference 12: http://www.xbrl.org/2003/role/presentationRef

-Publisher AICPA

-Name Accounting Principles Board Opinion (APB)

-Number 30

-Paragraph 26

Reference 13: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Implementation Guide (Q and A)

-Number FAS88

-Paragraph 63

+ Details

INCOME TAXES

12 Months Ended

Jan. 01, 2011

Notes to Financial Statements [Abstract]

INCOME TAXES

NOTE 8—INCOME TAXES:

The provision for income taxes consisted of the following:

	For the fiscal years ended
(dollars in thousands)	January 1, 2011		January 2, 2010		January 3, 2009
Current tax provision:
Federal	$	74,310	$	57,740	$	38,813
State		7,332		7,453		4,908
Foreign		902		725		607
Total current provision		82,544		65,918		44,328
Deferred tax provision (benefit):
Federal		3,751		1,831		(937	)
State		619		439		616
Total deferred provision (benefit)		4,370		2,270		(321	)
Total provision	$	86,914	$	68,188	$	44,007

The foreign portion of the current tax position relates primarily to foreign tax withholdings related to our foreign royalty income.

There was no income or (loss) before taxes attributable to foreign income for the fiscal years ended January 1, 2011, January 2, 2010, and January 3, 2009.

The difference between our effective income tax rate and the federal statutory tax rate is reconciled below:

	For the fiscal years ended
	January 1, 2011			January 2, 2010			January 3, 2009

Statutory federal income tax rate		35.0	%		35.0	%		35.0	%
State income taxes, net of federal income tax benefit		2.6			2.9			3.0
Settlement of uncertain tax positions		(0.4	)		(0.8	)		(1.5	)
Federal tax-exempt income		--			--			(0.4	)
Total		37.2	%		37.1	%		36.1	%

The Company and its subsidiaries file income tax returns in the United States and in various states and local jurisdictions. During fiscal 2009, the Internal Revenue Service completed an income tax audit for fiscal 2006 and 2007. In most cases, the Company is no longer subject to state and local tax authority examinations for years prior to fiscal 2007.

In accordance with accounting guidance on uncertain tax positions, the following is a reconciliation of the beginning and ending amount of unrecognized tax benefits:

(dollars in thousands)
Balance at December 29, 2007	$	9,644
Additions based on tax positions related to fiscal 2008		1,900
Reductions for prior year tax positions		(150	)
Reductions for lapse of statute of limitations		(949	)
Reductions for prior year tax settlements		(3,171	)
Balance at January 3, 2009		7,274
Additions based on tax positions related to fiscal 2009		2,002
Reductions for prior year tax positions		--
Reductions for lapse of statute of limitations		(402	)
Reductions for prior year tax settlements		(1,143	)
Balance at January 2, 2010		7,731
Additions based on tax positions related to fiscal 2010		2,150
Reductions for prior year tax positions		--
Reductions for lapse of statute of limitations		(1,200	)
Reductions for prior year tax settlements		--
Balance at January 1, 2011	$	8,681

During fiscal 2008, we recognized approximately $1.9 million in tax benefits consisting of $1.6 million due to the completion of an Internal Revenue Service audit for fiscal 2004 and 2005 and approximately $0.3 million due to various statute closures, primary state and local jurisdictions. In addition, we recognized approximately $1.5 million of pre-Acquisition uncertainties previously reserved for consisting of approximately $0.9 million related to the completion of the Internal Revenue Service audit and $0.6 million related to the closure of applicable statute of limitations. These pre-Acquisition uncertainties have been reflected as a reduction in the OshKosh tradename asset in accordance with ASC 105.

During fiscal 2009, we recognized approximately $1.5 million in tax benefits consisting of $1.1 million due to the completion of the Internal Revenue Service audit for fiscal 2006 and 2007 and approximately $0.4 million due to various statute closures. During fiscal 2010, we recognized approximately $1.2 million in tax benefits due to various statute closures.

All of the Company’s reserve for unrecognized tax benefits as of January 1, 2011, if ultimately recognized, will impact the Company’s effective tax rate in the period settled. The Company has recorded tax positions for which the ultimate deductibility is highly certain, but for which there is uncertainty about the timing of such deductions. Because of deferred tax accounting, changes in the timing of these deductions would not impact the annual effective tax rate, but would accelerate the payment of cash to the taxing authorities.

Included in the reserves for unrecognized tax benefits are approximately $2.0 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 may impact our annual effective tax rate for fiscal 2011 and the effective tax rate in the quarter in which the benefits are recognized.

We recognize interest related to unrecognized tax benefits as a component of interest expense and penalties related to unrecognized tax benefits as a component of income tax expense. During the fiscal year ended January 1, 2011, the Company recognized a nominal amount of interest expense consisting of interest expense on unrecognized positions offset by the expiration of various state statute of limitations. During the fiscal year ended January 2, 2010, the Company recognized a net reduction in interest expense of approximately $0.1 million, primarily related to the successful resolution of the Internal Revenue Service audit for 2006 and 2007 in addition to the settlement of tax positions due to the expiration of the applicable statute of limitations. During the fiscal year ended January 3, 2009, the Company recognized a net reduction in interest expense of approximately $0.7 million, primarily related to the successful resolution of the Internal Revenue Service audit for 2004 and 2005 in addition to the settlement of tax positions due to the expiration of the applicable statute of limitations. The Company had approximately $0.6 million of interest accrued as of January 1, 2011 and January 2, 2010.

Components of deferred tax assets and liabilities were as follows:

(dollars in thousands)	January 1, 2011			January 2, 2010
Deferred tax assets:	Assets (Liabilities)
Accounts receivable allowance	$	8,664		$	10,954
Inventory		7,988			5,858
Accrued liabilities		10,024			10,929
Equity-based compensation		6,416			6,023
Deferred employee benefits		4,101			5,397
Deferred rent		6,137			4,304
Other		4,241			5,270
Total deferred tax assets	$	47,571		$	48,735

Deferred tax liabilities:
Depreciation	$	(14,074	)	$	(10,120	)
Tradename and licensing agreements		(113,891	)		(114,360	)
Other		(1,876	)		(1,512	)
Total deferred tax liabilities	$	(129,841	)	$	(125,992	)

The net deferred tax liability is classified on our accompanying audited consolidated balance sheets as follows:

(dollars in thousands)	January 1, 2011			January 2, 2010
	Assets (Liabilities)
Current net deferred tax asset	$	31,547		$	33,419
Non-current net deferred tax liability		(113,817	)		(110,676	)
Total deferred tax liability	$	(82,270	)	$	(77,257	)

FAIR VALUE MEASUREMENTS

12 Months Ended

Jan. 01, 2011

Notes to Financial Statements [Abstract]

FAIR VALUE MEASUREMENTS

NOTE 9—FAIR VALUE MEASUREMENTS:

The Company accounts for its fair value measurements in accordance with accounting guidance which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The fair value hierarchy for disclosure of fair value measurements is as follows:

Level 1	- Quoted prices in active markets for identical assets or liabilities

Level 2	- Quoted prices for similar assets and liabilities in active markets or inputs that are observable

Level 3	- Inputs that are unobservable (for example, cash flow modeling inputs based on assumptions)

The following table summarizes assets and liabilities measured at fair value on a recurring basis:

	January 1, 2011						January 2, 2010
(dollars in millions)	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3

Assets
Investments	$	226.5	$	--	$	--	$	--	$	130.0	$	--

Liabilities
Interest rate swaps	$	--	$	--	$	--	$	--	$	1.3	$	--

At January 1, 2011, we had approximately $151.5 million of cash invested in money market deposit accounts ($73.3 million in Bank of America and $78.2 million in JP Morgan) and $75.0 million in U.S. Treasury bills.

At January 2, 2010, we had approximately $130.0 million of cash invested in two Dreyfus Cash Management Funds. These funds consisted of the Dreyfus Treasury Prime Cash Management fund ($87.9 million) which invests only in U.S. Treasury Bills or U.S. Treasury Notes and the Dreyfus Tax Exempt Cash Management fund ($42.1 million) which invests in short-term, high quality municipal obligations that provide income exempt from federal taxes.

Our former senior credit facility required us to hedge at least 25% of our variable rate debt under this facility. The Company historically entered into interest rate swap agreements in order to hedge the risk of interest rate fluctuations. These interest rate swap agreements were designated as cash flow hedges of the variable interest payments on a portion of our variable rate former term loan debt. Our interest rate swap agreements were traded in the over-the-counter market. Fair values were based on quoted market prices for similar assets or liabilities or determined using inputs that use as their basis readily observable market data that are actively quoted and can be validated through external sources, including third-party pricing services, brokers, and market transactions. Our interest rate swap agreements were classified as current as their terms span less than one year.

As of January 2, 2010, approximately $238.9 million of our $334.5 million of outstanding debt was hedged under interest rate swap agreements.

In fiscal 2006, the Company entered into an interest rate collar agreement which covered $100 million of our variable rate former term loan debt and was designated as a cash flow hedge of the variable interest payments on such debt. The interest rate collar agreement matured on January 31, 2009.

The fair value of our derivative instruments in our accompanying audited consolidated balance sheets were as follows:

	Asset Derivatives			Liability Derivatives

(dollars in millions)	Balance sheet location	Fair value		Balance sheet location	Fair value

January 1, 2011	Prepaid expenses and other current assets	$	--	Other current liabilities	$	--

January 2, 2010	Prepaid expenses and other current assets	$	--	Other current liabilities	$	1.3

The effect of derivative instruments designated as cash flow hedges on our accompanying consolidated financial statements were as follows:

	For the year ended January 1, 2011					For the year ended January 2, 2010
(dollars in thousands)	Amount of gain (loss) recognized in accumulated other comprehensive income (loss) on effective hedges		Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into interest expense			Amount of gain (loss) recognized in accumulated other comprehensive income (loss) on effective hedges		Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into interest expense

Interest rate hedge agreements	$	3,042	$	(1,713	)	$	4,201	$	(2,935	)

- Definition

This element represents the disclosure related to the fair value measurement of assets and liabilities which includes [financial] instruments measured at fair value that are classified in stockholders' equity. Such assets and liabilities may be measured on a recurring or nonrecurring basis. The disclosures which may be required or desired include: (1) for assets and liabilities measured on a recurring basis, disclosure may include: (a) the fair value measurements at the reporting date; (b) the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets or liabilities (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3); (c) for fair value measurements using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (i) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (ii) purchases, sales, issuances, and settlements (net); (iii) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs); (d) the amount of the total gains or losses for the period in subparagraph (c) (i) above included in earnings (or changes in net assets) that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date and a description of where those unrealized gains or losses are reported in the statement of income (or activities); (e) the valuation technique(s) used to measure fair value and a discussion of changes in valuation techniques, if any, during the period and (2) for assets and liabilities that are measured at fair value on a nonrecurring basis (for example, impaired assets) disclosure may include, in addition to (a) above: (a) the reasons for the fair value measurements recorded; (b) the same as (b) above; (c) for fair value measurements using significant unobservable inputs (Level 3), a description of the inputs and the information used to develop the inputs; and (d) the valuation technique(s) used to measure fair value and a discussion of changes, if any, in the valuation technique(s) used to measure similar assets and/or liabilities in prior periods.

+ References+ Details

SEGMENT INFORMATION

12 Months Ended

Jan. 01, 2011

Notes to Financial Statements [Abstract]

SEGMENT INFORMATION

NOTE 14—SEGMENT INFORMATION:

We report segment information in accordance with accounting guidance on segment reporting which requires segment information to be disclosed based upon a “management approach.” The management approach refers to the internal reporting that is used by management for making operating decisions and assessing the performance of our reportable segments. We report our corporate expenses, workforce reduction, and facility write-down and closure costs separately as they are not included in the internal measures of segment operating performance used by the Company in order to measure the underlying performance of our reportable segments.

Segment results include the direct costs of each segment and all other costs are allocated based upon detailed estimates and analysis of actual time and expenses incurred to support the operations of each segment or units produced or sourced to support each segment’s revenue. Certain costs, including incentive compensation for certain employees, facility closure costs, and various other general corporate costs that are not specifically allocable to our segments, are included in other reconciling items below. Intersegment sales and transfers are recorded at cost and are treated as a transfer of inventory. The accounting policies of the segments are the same as those described in Note 2 to the consolidated financial statements.

The table below presents certain segment information for the periods indicated:

(dollars in thousands)	For the fiscal years ended
	January 1, 2011			% of Total			January 2, 2010			% of Total			January 3, 2009			% of Total
Net sales:

Wholesale-Carter’s	$	601,580			34.4	%	$	521,307			32.8	%	$	488,594			32.7	%
Retail-Carter’s (a)		546,233			31.2	%		489,740			30.8	%		422,436			28.3	%
Mass Channel-Carter’s		254,809			14.6	%		240,819			15.1	%		254,291			17.0	%
Carter’s total net sales		1,402,622			80.2	%		1,251,866			78.7	%		1,165,321			78.0	%

Wholesale-OshKosh		81,747			4.7	%		80,522			5.1	%		80,069			5.3	%
Retail-OshKosh (a)		264,887			15.1	%		257,289			16.2	%		249,130			16.7	%
OshKosh total net sales		346,634			19.8	%		337,811			21.3	%		329,199			22.0	%

Total net sales	$	1,749,256			100.0	%	$	1,589,677			100.0	%	$	1,494,520			100.0	%

Operating income (loss):				% of segment net sales						% of segment net sales						% of segment net sales

Wholesale-Carter’s	$	130,440			21.7	%	$	103,730			19.9	%	$	80,785			16.5	%
Retail-Carter’s (a)		115,104			21.1	%		97,349			19.9	%		67,013			15.9	%
Mass Channel-Carter’s		33,578			13.2	%		40,194			16.7	%		33,279			13.1	%

Carter’s operating income		279,122			19.9	%		241,273			19.3	%		181,077			15.5	%

Wholesale-OshKosh		5,996			7.3	%		7,025			8.7	%		1,379			1.7	%
Retail-OshKosh (a)		17,529			6.6	%		21,532			8.4	%		9,111			3.7	%
Mass Channel-OshKosh (b)		3,055			--			2,839			--			3,187			--

OshKosh operating income		26,580			7.7	%		31,396			9.3	%		13,677			4.2	%

Segment operating income		305,702			17.5	%		272,669			17.2	%		194,754			13.0	%

Corporate expenses (c)		(62,446	)		(3.6	%)		(59,603	)		(3.7	%)		(46,822	)		(3.1	%)

Workforce reduction, facility write-down, and closure costs (d)		--			--			(11,736	)		(0.7	%)		(2,609	)		(0.2	%)

Investigation expenses (e)		--			--			(5,717	)		(0.4	%)		--			--

Executive retirement charges (f)		--			--			--			--			(5,325	)		(0.4	%)

Net corporate expenses		(62,446	)		(3.6	%)		(77,056	)		(4.8	%)		(54,756	)		(3.7	%)

Total operating income	$	243,256			13.9	%	$	195,613			12.3	%	$	139,998			9.4	%

(a)	Includes eCommerce results.

(b)	OshKosh mass channel consists of a licensing agreement with Target Stores. Operating income consists of royalty income, net of related expenses.

(c)	Corporate expenses generally include expenses related to incentive compensation, stock-based compensation, executive management, severance and relocation, finance, building occupancy, information technology, certain legal fees, consulting, and audit fees.

(d)	Includes closure costs associated with our Barnesville, Georgia distribution facility and our Oshkosh, Wisconsin facility, write-down of the White House, Tennessee facility, and severance and other benefits related to the corporate workforce reduction.

(e)	Professional service fees related to the investigation of margin support commitments.

(f)	Charges associated with an executive officer’s retirement.

In fiscal 2010 and 2009, one customer accounted for approximately 10% of our consolidated net sales. In fiscal 2008, two customers accounted for approximately 10% of our consolidated net sales.

The table below represents inventory, net, by segment:

(dollars in thousands)	January 1, 2011		January 2, 2010		January 3, 2009
Wholesale-Carter’s	$	141,610	$	99,051	$	86,221
Wholesale-OshKosh		35,134		32,963		31,442
Retail-Carter’s		44,798		34,268		30,629
Retail-OshKosh		25,800		17,758		18,862
Mass Channel-Carter’s		51,167		29,960		36,332
Total	$	298,509	$	214,000	$	203,486

Wholesale inventories include inventory produced and warehoused for the retail segment.

All of our property, plant, and equipment, net, for the past three fiscal years have been located within the United States.

The following represents goodwill by segment:

(dollars in thousands)	Wholesale – Carter’s		Wholesale – OshKosh			Retail – Carter’s		Retail –OshKosh			Mass Channel – Carter’s		Total

Balance at January 3, 2009
Goodwill	$	51,814	$	35,995		$	82,025	$	106,891		$	2,731	$	279,456
Accumulated impairment losses		--		(35,995	)		--		(106,891	)		--		(142,886	)
	$	51,814	$	--		$	82,025	$	--		$	2,731	$	136,570

Balance at January 2, 2010
Goodwill	$	51,814	$	35,995		$	82,025	$	106,891		$	2,731	$	279,456
Accumulated impairment losses		--		(35,995	)		--		(106,891	)		--		(142,886	)
	$	51,814	$	--		$	82,025	$	--		$	2,731	$	136,570

Balance at January 1, 2011
Goodwill	$	51,814	$	35,995		$	82,025	$	106,891		$	2,731	$	279,456
Accumulated impairment losses		--		(35,995	)		--		(106,891	)		--		(142,886	)
	$	51,814	$	--		$	82,025	$	--		$	2,731	$	136,570

WORKFORCE REDUCTION AND FACILITY WRITE-DOWN, AND CLOSURE COSTS

12 Months Ended

Jan. 01, 2011

Notes to Financial Statements [Abstract]

WORKFORCE REDUCTION, FACILITY WRITE-DOWN, AND CLOSURE COSTS

NOTE 15—WORKFORCE REDUCTION, FACILITY WRITE-DOWN, AND CLOSURE COSTS:

Corporate Workforce Reduction

On April 21, 2009, the Company announced to affected employees a plan to reduce its corporate workforce (defined as excluding retail district managers, hourly retail store employees, and distribution center employees). Approximately 150 employees were affected under the plan. The plan included consolidating the majority of our operations performed in our Oshkosh, Wisconsin office into other Company locations. This consolidation has resulted in the addition of resources in our other locations.

As a result of this corporate workforce reduction, during fiscal 2009, we recorded net charges of $6.7 million consisting of $5.5 million in severance charges and other benefits ($3.3 million which related to corporate office positions in connection with our existing plan and $2.2 million of special one-time benefits provided to affected employees), and approximately $1.2 million in asset impairment charges net of a gain related to the closure and sale of our Oshkosh, Wisconsin office.

The following table summarizes restructuring reserves related to the corporate workforce reduction which are included in other current liabilities on the accompanying consolidated balance sheet:

(dollars in thousands)	Severance and other one-time benefits

Balance at April 4, 2009	$	3,300
Provision		2,200
Payments		(3,000	)
Balance at January 2, 2010		2,500
Provision		--
Payments		(2,200	)
Adjustment		(300	)
Balance at January 1, 2011	$	--

Barnesville Distribution Facility Closure

On April 2, 2009, the Company announced to affected employees a plan to close its Barnesville, Georgia distribution facility. Approximately 210 employees were affected by this closure. Operations at the Barnesville facility ceased on June 1, 2009.

In accordance with accounting guidance on accounting for the impairment or disposal of long-lived assets, under a held and used model, it was determined that the distribution facility assets became impaired during March 2009, when it became “more likely than not” that the expected life of the Barnesville, Georgia distribution facility would be significantly shortened. Accordingly, we wrote down the assets to their estimated recoverable fair value in March 2009. The adjusted asset values were subject to accelerated depreciation over their remaining estimated useful life.

In conjunction with the plan to close the Barnesville, Georgia distribution facility, the Company recorded approximately $4.3 million during fiscal 2009, consisting of severance of $1.7 million, asset impairment charges of $1.1 million related to the write-down of the related land, building, and equipment, $1.0 million of accelerated depreciation (included in selling, general, and administrative expenses), and $0.5 million of other closure costs. On February 21, 2011, the Company sold the facility for zero net proceeds.

The following table summarizes restructuring reserves related to the closure of the Barnesville, Georgia distribution facility which are included in other current liabilities on the accompanying consolidated balance sheet:

(dollars in thousands)	Severance			Other closure costs			Total

Balance at April 4, 2009	$	1,700		$	500		$	2,200
Provision		--			--			--
Payments		(1,250	)		--			(1,250	)
Adjustments		(400	)		--			(400	)
Balance at January 2, 2010		50			500			550
Provision		--			--			--
Payments		--			(100	)		(100	)
Adjustments		(50	)		--			(50	)
Balance at January 1, 2011	$	--		$	400		$	400

White House, Tennessee Distribution Facility

The Company continually evaluates opportunities to reduce its supply chain complexity and lower costs. In the first quarter of fiscal 2007, the Company determined that OshKosh brand products could be effectively distributed through its other distribution facilities and third-party logistics providers. On February 15, 2007, the Company’s Board of Directors approved management’s plan to close the Company’s OshKosh distribution facility, which was utilized to distribute the Company’s OshKosh brand products.

In accordance with accounting guidance on impairment or disposal of long-lived assets, under a held and used model, it was determined that the distribution facility assets were impaired as of the end of January 2007, as it became “more likely than not” that the expected life of the OshKosh distribution facility would be significantly shortened. Accordingly, we wrote down the assets to their estimated recoverable fair value as of the end of January 2007. The adjusted asset values were subject to accelerated depreciation over their remaining estimated useful life. Distribution operations at the OshKosh facility ceased as of April 5, 2007, at which point the land, building, and equipment assets of $6.1 million were reclassified as held for sale. For a majority of the affected employees, severance benefits were communicated on February 20, 2007. Approximately 215 employees were terminated. During fiscal 2007, we recorded costs of $7.4 million, consisting of asset impairment charges of $2.4 million related to a write-down of the related land, building, and equipment, $2.0 million of severance charges, $2.1 million of accelerated depreciation (included in selling, general, and administrative expenses), and $0.9 million of other closure costs. As of January 2, 2010, there were no remaining liabilities associated with this facility closure.

Due to declines in the commercial real estate market in 2008, the Company lowered the selling price of the facility during the third quarter of fiscal 2008 and wrote down the carrying value of the facility by $2.6 million to $3.5 million (classified as an asset held for sale within prepaid expenses and other current assets on the accompanying audited consolidated balance sheets) to reflect the new anticipated selling price. During fiscal 2009, the Company wrote down the carrying value of its White House, Tennessee distribution facility by approximately $0.7 million to $2.8 million to reflect the decrease in the fair market value. During the third quarter of fiscal 2009, the Company sold the facility for net proceeds of approximately $2.8 million.

Entity Information (USD $)	12 Months Ended
Entity Information (USD $)	Jan. 01, 2011	Mar. 02, 2011	Jul. 02, 2010
Entity Registrant Name	CARTERS INC
Entity Central Index Key	0001060822
Current Fiscal Year End Date	--01-01
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 1,557,312,424
Entity Common Stock, Shares Outstanding		57,570,015
Document Fiscal Year Focus	2010
Document Fiscal Period Focus	FY

THE COMPANY	12 Months Ended
THE COMPANY	Jan. 01, 2011
Notes to Financial Statements [Abstract]
THE COMPANY	NOTE 1—THE COMPANY: Carter’s, Inc. and its wholly owned subsidiaries (collectively, the “Company,” “we,” “us,” “its,” and “our”) design, source, and market branded childrenswear under the Carter’s, Child of Mine, Just One You, Precious Firsts, OshKosh, and related brands. Our products are sourced through contractual arrangements with manufacturers worldwide for wholesale distribution to major domestic retailers, including the mass channel, our 306 Carter’s and 180 OshKosh retail stores, and our eCommerce business that market our brand name merchandise and other licensed products manufactured by other companies.

COMMON STOCK	12 Months Ended
COMMON STOCK	Jan. 01, 2011
Notes to Financial Statements [Abstract]
COMMON STOCK	NOTE 5—COMMON STOCK: As of January 1, 2011, the total amount of Carter’s, Inc.’s authorized capital stock consisted of 150,000,000 shares of common stock, $0.01 par value per share, and 100,000 shares of preferred stock, $0.01 par value per share. As of January 1, 2011, 57,493,567 shares of common stock and no shares of preferred stock were outstanding. During fiscal 2010, the Company issued 24,032 and 2,115 shares of common stock at a fair market value of $33.29 and $23.65, respectively, to its non-management board members and recognized approximately $850,000 in stock-based compensation expense. During fiscal 2009, we issued 33,656 and 748 shares of common stock at a fair market value of $20.80 and $22.29, respectively, to its non-management board members and recognized $720,000 in stock-based compensation expense. During fiscal 2008, we issued 43,386 shares of our common stock at a fair market value of $14.52 to our non-management board members and recognized approximately $630,000 in compensation expense. We received no proceeds from the issuance of these shares. On February 16, 2007, the Company’s Board of Directors approved a share repurchase authorization, pursuant to which the Company was authorized to purchase up to $100 million of its outstanding common shares. On June 15, 2010, the Company’s Board of Directors approved a new share repurchase authorization, pursuant to which the Company is authorized to purchase up to an additional $100 million of its outstanding common shares. As of August 13, 2010, the Company had repurchased outstanding shares in the amount totaling the entire $100 million authorized by the Board of Directors on Februay 16, 2007. During fiscal 2010, the Company repurchased and retired 2,058,830 shares, or approximately $50.0 million, of its common stock at an average price of $24.29 per share. During fiscal 2009, the Company did not repurchase any shares of its common stock. Since inception of the repurchase program and through fiscal 2010, the Company repurchased and retired 6,658,410 shares, or approximately $141.1 million, of its common stock at an average price of $21.19 per share. We have reduced common stock by the par value of such shares repurchased and have deducted the remaining excess repurchase price over par value from additional paid-in capital. Future repurchases may occur from time to time in the open market, in negotiated transactions, or otherwise. The timing and amount of any repurchases will be determined by the Company’s management, based on its evaluation of market conditions, share price, other investment priorities, and other factors. The total remaining capacity under this authorization was approximately $58.9 million as of January 1, 2011. This authorization has no expiration date. The issued and outstanding shares of common stock are validly issued, fully paid, and nonassessable. Holders of our common stock are entitled to share equally, share for share, if dividends are declared on our common stock, whether payable in cash, property, or our securities. The shares of common stock are not convertible and the holders thereof have no preemptive or subscription rights to purchase any of our securities. Upon liquidation, dissolution, or winding up of our Company, the holders of common stock are entitled to share equally, share for share, in our assets which are legally available for distribution, after payment of all debts and other liabilities and subject to the prior rights of any holders of any series of preferred stock then outstanding. Each outstanding share of common stock is entitled to one vote on all matters submitted to a vote of stockholders. There is no cumulative voting. Except as otherwise required by law or the certificate of incorporation, the holders of common stock vote together as a single class on all matters submitted to a vote of stockholders.

COMMITMENTS AND CONTINGENCIES	12 Months Ended
COMMITMENTS AND CONTINGENCIES	Jan. 01, 2011
Notes to Financial Statements [Abstract]
COMMITMENTS AND CONTINGENCIES	NOTE 11—COMMITMENTS AND CONTINGENCIES: A shareholder class action lawsuit was filed on September 19, 2008 in the United States District Court for the Northern District of Georgia entitled Plymouth County Retirement System v. Carter’s, Inc., No. 1:08-CV-02940-JOF (the “Plymouth Action”). The Amended Complaint filed on May 12, 2009 in the Plymouth Action asserted claims under Sections 10(b), 20(a), and 20A of the 1934 Securities Exchange Act, and alleged that between February 1, 2006 and July 24, 2007, the Company and certain current and former executives made misrepresentations to investors regarding the successful integration of OshKosh into the Company’s business, and that the share price of the Company’s stock later fell when the market learned that the integration had not been as successful as represented. Defendants in the Plymouth Action filed a motion to dismiss the Amended Complaint for failure to state a claim under the federal securities laws on July 17, 2009, and briefing of that motion was complete on October 22, 2009. A separate shareholder class action lawsuit was filed on November 17, 2009 in the United States District Court for the Northern District of Georgia entitled Mylroie v. Carter’s, Inc., No. 1:09-CV-3196-JOF (the “Mylroie Action”). The initial Complaint in the Mylroie Action asserted claims under Sections 10(b) and 20(a) of the 1934 Securities Exchange Act, and alleged that between April 27, 2004 and November 10, 2009, the Company and certain current and former executives made misstatements to investors regarding the Company’s accounting for discounts offered to some wholesale customers. The Court consolidated the Plymouth Action and the Mylroie Action on November 24, 2009 (the “Consolidated Action”). On March 15, 2010, the plaintiffs in the Consolidated Action filed their amended and consolidated complaint. The Company filed a motion to dismiss on April 30, 2010, and briefing of the motion was complete on July 23, 2010. The parties are awaiting an oral argument date and/or a decision from the Court. The Company intends to vigorously defend against the claims in the Consolidated Action. A shareholder derivative lawsuit was filed on May 25, 2010 in the Superior Court of Fulton County, Georgia, entitled Alvarado v. Bloom, No. 2010-cv-186118 (the “Alvarado Action”). The Complaint in the Alvarado Action alleges, among other things, that certain current and former directors and executives of the Company breached their fiduciary duties to the Company in connection with the Company’s accounting for discounts offered to some wholesale customers. The Company is named solely as a nominal defendant against whom the plaintiff seeks no recovery. Pursuant to a series of stipulations among the parties, the Court has temporarily deferred the defendants’ obligation to respond to the Complaint pending timely resolution of the motions to dismiss filed in the Consolidated Action referenced above. We are subject to various federal, state, and local laws that govern activities or operations that may have adverse environmental effects. Noncompliance with these laws and regulations can result in significant liabilities, penalties, and costs. From time to time, our operations have resulted or may result in noncompliance with or liability pursuant to environmental laws. Generally, compliance with environmental laws has not had a material impact on our operations, but there can be no assurance that future compliance with such laws will not have a material adverse effect on our operations. We also have other commitments and contingent liabilities related to legal proceedings, self-insurance programs, and matters arising out of the normal course of business. We accrue contingencies based upon a range of possible outcomes. If no amount within this range is a better estimate than any other, then we accrue the minimum amount. Management does not anticipate that in the aggregate such losses would have a material adverse effect on the Company’s consolidated financial position or liquidity; however, it is possible that the final outcomes could have a significant impact on the Company’s reported results of operations in any given period. As of January 1, 2011, we have entered into various purchase order commitments with our suppliers for merchandise for resale that approximates $530.4 million. We can cancel these arrangements, although in some instances, we may be subject to a termination charge reflecting a percentage of work performed prior to cancellation.

INVESTIGATION EXPENSES	12 Months Ended
INVESTIGATION EXPENSES	Jan. 01, 2011
Notes to Financial Statements [Abstract]
INVESTIGATION EXPENSES	NOTE 16—INVESTIGATION EXPENSES: In connection with the investigation of customer margin support, the Company recorded pre-tax charges in the fourth quarter of fiscal 2009 of approximately $5.7 million in professional service fees.

EXECUTIVE RETIREMENT CHARGES	12 Months Ended
EXECUTIVE RETIREMENT CHARGES	Jan. 01, 2011
Notes to Financial Statements [Abstract]
EXECUTIVE RETIREMENT CHARGES	NOTE 17—EXECUTIVE RETIREMENT CHARGES: On June 11, 2008, the Company announced the retirement of an executive officer. In connection with this retirement, the Company recorded charges during the second quarter of fiscal 2008 of $5.3 million, $3.1 million of which related to the present value of severance and benefit obligations, and $2.2 million of which related to the accelerated vesting of stock options.

Document Information	12 Months Ended
Document Information	Jan. 01, 2011
Document Type	10-K
Amendment Flag	false
Document Period End Date	Jan. 01, 2011