XML 51 R27.htm IDEA: XBRL DOCUMENT v3.25.4
EMPLOYEE BENEFIT PLANS
 12 Months Ended
Jan. 03, 2026
Retirement Benefits [Abstract]  
EMPLOYEE BENEFIT PLANS EMPLOYEE BENEFIT PLANS
The Company maintains defined contribution plans, a deferred compensation plan, and two defined benefit plans. The two defined benefit plans include the OshKosh B’Gosh pension plan and a post-retirement life and medical plan.
OshKosh B’Gosh Pension Plan
Pension Plan Settlement
In fiscal 2024, the Board authorized the termination of the pension plan, with an effective date of November 30, 2024, through single-sum distributions and the purchase of annuity contracts. During the third quarter of fiscal 2025, the Company substantially completed the process of settling its pension obligations under the pension plan. In August 2025, the pension plan used existing pension plan assets to purchase non-participating annuity contracts from an insurance company and to make single-sum payments to certain plan participants, thereby settling its existing pension benefit obligations. In the first quarter of fiscal 2026, the Company distributed the surplus plan assets, net of final plan expenses and adjustments, in accordance with the terms of the plan and regulatory requirements.
These settlement transactions had no cash impact on the Company (as they were funded by pension plan assets) but did result in a non-cash pre-tax pension settlement charge of $8.8 million in fiscal 2025, recorded within Pension plan settlement on the Company’s consolidated statement of operations. The charge reflects the recognition of $5.4 million of deferred losses associated with its pension obligations, which were released from Accumulated other comprehensive income, and a $3.4 million charge related to the recognition of prior service cost in connection with the settlement and subsequent distribution of surplus plan assets in the first quarter of fiscal 2026.
During the third quarter of fiscal 2024, the pension plan made lump sum payments to certain participants, thereby reducing its pension benefit obligations. The transaction had no cash impact on the Company but did result in a non-cash pre-tax partial
pension settlement charge of $0.9 million, which is included in Pension plan settlement on the Company’s consolidated statement of operations.
Funded Status
The retirement benefits under the pension plan were frozen as of December 31, 2005. A reconciliation of changes in the projected pension benefit obligation and plan assets is as follows:
For the period endedFiscal year ended
(dollars in thousands)
August 31, 2025(*)
December 28, 2024
Change in projected benefit obligation:
Projected benefit obligation at beginning of year$43,077 $54,785 
Interest cost1,519 2,401 
Actuarial gain(1,010)(4,202)
Benefits paid(2,059)(3,021)
Settlements(41,527)(6,886)
Amendment to distribute excess assets to participants3,381 — 
Projected benefit obligation at end of period$3,381 $43,077 
Change in plan assets:
Fair value of plan assets at beginning of year$45,549 $55,959 
Actual return on plan assets1,418 (503)
Benefits paid(2,059)(3,021)
Effect of settlement(41,527)(6,886)
Fair value of plan assets at end of period$3,381 $45,549 
Funded status$— $2,472 
(*)Reconciliation is presented based on a measurement date of August 31, 2025. Since the pension plan was effectively settled, the Company did not remeasure the projected benefit obligation as of January 3, 2026.
As of January 3, 2026, the remaining benefit obligation for the pension plan was fully offset by surplus plan assets. In the first quarter of fiscal 2026, the Company distributed these surplus plan assets, net of final plan expenses and adjustments, in accordance with the terms of the plan and regulatory requirements. The accumulated benefit obligation was equal to the projected benefit obligation as of December 28, 2024 because the plan was frozen. As of December 28, 2024, the plan’s net funded status was an asset and was included in Other assets in the Company’s consolidated balance sheet.
The actuarial gain in fiscal 2025 was primarily attributable to the settlement of benefit obligations. The actuarial gain in fiscal 2024 was primarily attributable to increased discount rates and the settlement of obligations for participants electing to receive single-sum distributions from the pension plan.
Net Periodic Pension Cost and Changes Recognized in Other Comprehensive Income
The components of net periodic pension cost recognized in the statement of operations and changes recognized in other comprehensive income were as follows:
Fiscal year ended
(dollars in thousands)January 3, 2026December 28, 2024December 30, 2023
Recognized in the statement of operations:
Interest cost$1,519 $2,401 $2,617 
Expected return on plan assets(1,318)(2,176)(2,372)
Amortization of net loss(*)
76 148 189 
Pension plan settlement charge(*)
8,777 949 — 
Net periodic pension cost$9,054 $1,322 $434 
Changes recognized in other comprehensive income:
Net gain arising during the fiscal year$(1,109)$(1,523)$(21)
Prior service cost3,381 — — 
Amortization of net loss(*)
(76)(148)(189)
Pension plan settlement charge(*)
(8,777)(949)— 
Total changes recognized in other comprehensive income$(6,581)$(2,620)$(210)
Total net periodic pension cost (benefit) and changes recognized in other comprehensive income$2,473 $(1,298)$224 
(*)Represents pre-tax amounts reclassified from Accumulated other comprehensive loss into the statement of operations, including amounts recognized as a result of the pension plan settlement.
Assumptions
The actuarial assumptions used in determining the benefit obligation and net periodic pension cost for our pension plan are presented in the following table:
Benefit obligation(1)
20252024
Discount rate(1)
n/a5.50%
Net periodic pension cost(2)
202520242023
Discount rate5.50%4.75%5.00%
Expected long-term rate of return on plan assets5.50%4.75%5.00%
(1)As of January 3, 2026, the remaining benefit obligation relates solely to surplus plan assets, which were distributed in the first quarter of fiscal 2026.
(2)Net periodic pension cost for fiscal 2025 reflects assumptions applied through the settlement date (August 31, 2025).
The discount rates used at December 28, 2024, and December 30, 2023 were determined with consideration given to the FTSE Pension Liability Index and the Bloomberg US Aggregate AA Bond Index, adjusted for the timing of expected plan distributions. The Company believed these indexes reflected a risk-free rate consistent with a portfolio of high quality debt instruments with maturities that are comparable to the timing of the expected payments under the plan. The expected long-term rate of return assumption was equal to the assumed discount rate.
Plan Assets
As of January 3, 2026, the fair value of the surplus plan assets were $2.8 million and were held in cash and cash equivalents (Level 1). These surplus assets, net of final plan expenses and adjustments, were distributed in the first quarter of fiscal 2026 in accordance with the terms of the plan and regulatory requirements. As of December 28, 2024, the fair value of pension plan assets were $45.5 million and were held in fixed income securities, including U.S. Treasuries and corporate bonds of companies from diverse industries (Level 1).
Post-retirement Life and Medical Plan
The Company maintains a post-retirement life and medical plan that is frozen to a closed group of retirees and employees hired before July 1, 1991 (and their spouses). Employee contributions are required as a condition of participation for medical benefits and the Company’s liabilities are net of these expected employee contributions. The effects on the Company’s plan of all future
increases in health care costs are borne by employees; accordingly, increasing medical costs are not expected to have any material effect on the Company’s future financial results. The Company does not pre-fund the plan and, as a result, there are no plan assets.
Net periodic post-retirement benefit was $0.2 million, $0.3 million, and $0.3 million for fiscal years 2025, 2024, and 2023, respectively. The accumulated post-retirement benefit obligation (“APBO”) was $1.1 million and $1.5 million as of January 3, 2026 and December 28, 2024, respectively. $1.0 million and $1.3 million of the APBO as of January 3, 2026 and December 28, 2024, respectively, were classified as Other long-term liabilities in the Company’s consolidated balance sheets. The Company’s expected future contributions and benefit payments are not expected to be material.
Deferred Compensation Plan
During the third quarter of fiscal 2025, the Board approved the termination of The William Carter Company Deferred Compensation Plan (the “Deferred Compensation Plan”), effective as of September 30, 2025 (the “Termination Date”). In connection with the termination, all participants will receive a single lump-sum distribution of their account balances on a final payment date, expected to occur in the fourth quarter of fiscal 2026. Until the final payment date, the Deferred Compensation Plan will continue to operate in the ordinary course. This includes maintaining investment allocations and processing scheduled distributions; however, all employee contributions ceased as of the Termination Date.
The Deferred Compensation Plan permitted eligible employees to defer salary and incentive compensation in accordance with the Internal Revenue Code. Participant deferrals earn investment returns based on a select number of investment options, including equity, debt, and real estate mutual funds. Deferred compensation plan liabilities are recognized in Other current liabilities on the Company’s consolidated balance sheets. Changes in the balance, excluding those related to contributions or payments, are included in Other expense (income), net on the Company’s consolidated statement of operations. The Company invests comparable amounts in marketable securities to approximate the participants’ return on selected investment options.
Defined Contribution Plan
The Company sponsors defined contribution savings plans in several countries, including the U.S. The U.S. plan, which represents the substantial majority of related expense, covers employees who are at least 21 years of age and have completed one calendar month of service and, if part-time, have worked a minimum of one thousand hours within the first year of employment or during any subsequent calendar year or worked for five hundred hours in 2 consecutive 12-month periods.
Under the U.S. plan, the Company previously provided a discretionary employer match of employee contributions. The Company’s expense for the U.S. defined contribution savings plan totaled $9.5 million, $8.6 million, and $8.1 million for the fiscal years ended January 3, 2026, December 28, 2024, and December 30, 2023, respectively. Effective beginning in fiscal 2026, the Company amended its U.S. defined contribution savings plan to replace the discretionary employer contribution with an employer matching contribution calculated and paid each pay period.