Summer Infant (SUMR) 10-Q 1 Nov 17 2017 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Nov. 01, 2017
Document and Entity Information
Entity Registrant Name	Summer Infant, Inc.
Entity Central Index Key	1,314,772
Document Type	10-Q
Document Period End Date	Sep. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-30
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		18,613,903
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q3

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
CURRENT ASSETS
Cash and cash equivalents	$ 761	$ 999
Trade receivables, net of allowance for doubtful accounts	31,230	34,137
Inventory, net	37,344	36,140
Prepaid and other current assets	1,447	1,737
TOTAL CURRENT ASSETS	70,782	73,013
Property and equipment, net	9,439	9,965
Other intangible assets, net	14,237	14,813
Deferred tax assets, net	3,900	3,848
Other assets	107	98
TOTAL ASSETS	98,465	101,737
CURRENT LIABILITIES
Accounts payable	25,111	30,684
Accrued expenses	6,683	7,757
Current portion of long term debt	4,500	4,500
TOTAL CURRENT LIABILITIES	36,294	42,941
Long-term debt, less current portion and unamortized debt issuance costs	43,930	41,206
Other liabilities	2,856	2,770
TOTAL LIABILITIES	83,080	86,917
STOCKHOLDERS' EQUITY
Preferred Stock, $0.0001 par value, 1,000,000 authorized, none issued or outstanding at September 30, 2017 and December 31, 2016, respectively
Common Stock $0.0001 par value, authorized, issued and outstanding of 49,000,000, 18,885,552, and 18,613,903 at September 30, 2017 and 49,000,000, 18,778,266, and 18,506,617 at December 31, 2016, respectively	2	2
Treasury Stock at cost (271,649 shares at September 30, 2017 and December 31, 2016)	(1,283)	(1,283)
Additional paid-in capital	76,729	76,348
Accumulated deficit	(57,917)	(57,385)
Accumulated other comprehensive loss	(2,146)	(2,862)
TOTAL STOCKHOLDERS' EQUITY	15,385	14,820
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 98,465	$ 101,737

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2017	Dec. 31, 2016
Condensed Consolidated Balance Sheets
Preferred Stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred Stock, authorized	1,000,000	1,000,000
Preferred Stock, issued	0	0
Preferred Stock, outstanding	0	0
Common Stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common Stock, authorized	49,000,000	49,000,000
Common Stock, issued	18,885,552	18,778,266
Common Stock, outstanding	18,613,903	18,506,617
Treasury Stock at cost, shares	271,649	271,649

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Oct. 01, 2016	Sep. 30, 2017	Oct. 01, 2016
Condensed Consolidated Statements of Operations
Net sales	$ 43,134	$ 48,552	$ 143,053	$ 148,797
Cost of goods sold	29,502	33,026	96,816	101,344
Gross profit	13,632	15,526	46,237	47,453
General & administrative expenses	10,536	9,735	30,060	30,469
Selling expense	3,117	3,667	11,248	11,484
Depreciation and amortization	1,023	1,127	3,120	3,443
Operating (loss) income	(1,044)	997	1,809	2,057
Interest expense, net	748	633	2,206	1,901
(Loss) income before income taxes	(1,792)	364	(397)	156
(Benefit) provision for income taxes	(549)	131	135
NET (LOSS) INCOME	$ (1,243)	$ 233	$ (532)	$ 156
Net (loss) income per share:
BASIC (in dollars per share)	$ (0.07)	$ 0.01	$ (0.03)	$ 0.01
DILUTED (in dollars per share)	$ (0.07)	$ 0.01	$ (0.03)	$ 0.01
Weighted average shares outstanding:
BASIC (in shares)	18,606,427	18,465,749	18,557,175	18,424,484
DILUTED (in shares)	18,606,427	18,581,824	18,557,175	18,454,926

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Oct. 01, 2016	Sep. 30, 2017	Oct. 01, 2016
Condensed Consolidated Statements of Comprehensive (Loss) Income
Net (loss) income	$ (1,243)	$ 233	$ (532)	$ 156
Other comprehensive income (loss):
Changes in foreign currency translation adjustments	383	(151)	716	(69)
Comprehensive (loss) income	$ (860)	$ 82	$ 184	$ 87

Condensed Consolidated Stateme6

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Oct. 01, 2016
Cash flows from operating activities:
Net (loss) income	$ (532)	$ 156
Adjustments to reconcile net (loss) income to net cash provided by operating activities
Depreciation and amortization	3,150	3,495
Stock-based compensation expense	375	394
Bad debt expense	2,178	(107)
Changes in assets and liabilities:
Decrease in trade receivables	959	3,183
(Increase) decrease in inventory	(812)	4,345
Decrease in prepaids and other assets	246	27
(Decrease) in accounts payable and accrued expenses	(6,785)	(6,094)
Net cash (used in) provided by operating activities	(1,221)	5,399
Cash flows from investing activities:
Acquisitions of property and equipment	(2,011)	(1,631)
Net cash used in investing activities	(2,011)	(1,631)
Cash flows from financing activities:
Proceeds from exercise of stock options	6
Repayment of Term Loan Facility	(1,000)	(1,500)
Repayment of FILO facility	(1,250)
Net borrowings (repayment) on revolving facilities	4,974	(2,334)
Net cash provided by (used in) financing activities	2,730	(3,834)
Effect of exchange rate changes on cash and cash equivalents	264	154
Net (decrease) increase in cash and cash equivalents	(238)	88
Cash and cash equivalents, beginning of period	999	923
Cash and cash equivalents, end of period	761	1,011
Supplemental disclosure of cash flow information:
Cash paid for interest	1,684	1,624
Cash paid for income taxes	$ 25	$ 241

BASIS OF PRESENTATION AND SUMMA

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	9 Months Ended
	Sep. 30, 2017
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations The Company designs, markets and distributes branded juvenile health, safety and wellness products that are sold globally to large national retailers as well as independent retailers, primarily in North America. The Company currently markets its products in several product categories including monitoring, safety, nursery, baby gear, and feeding products. Most products are sold under our core brand names of Summer Infant®, SwaddleMe®, and Born Free®. When used herein, the terms the “Company,” we,” “us,” and “our” mean Summer Infant, Inc. and its consolidated subsidiaries. Basis of Presentation and Principles of Consolidation The accompanying interim, condensed consolidated financial statements of the Company are unaudited, but in the opinion of management, reflect all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the results for the interim periods. Accordingly, they do not include all information and notes required by generally accepted accounting principles in the United States of America (“GAAP”) for complete financial statements. The results of operations for interim periods are not necessarily indicative of results to be expected for the entire fiscal year or any other period. The balance sheet at December 31, 2016 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. These interim condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes for the year ended December 31, 2016 included in its Annual Report on Form 10-K filed with the SEC on February 22, 2017. It is the Company’s policy to prepare its financial statements on the accrual basis of accounting in conformity with GAAP. The interim condensed consolidated financial statements include the accounts of its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in the consolidation. All dollar amounts included in the Notes to Condensed Consolidated Financial Statements are in thousands of U.S. dollars, except share and per share amounts. Revenue Recognition The Company records revenue when all of the following occur: persuasive evidence of an arrangement exists, product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. Sales are recorded net of provisions for returns and allowances, customer discounts, and other sales-related discounts. The Company bases its estimates for discounts, returns and allowances on negotiated customer terms and historical experience. Customers do not have the right to return products unless the products are defective. The Company records a reduction of sales for estimated future defective product deductions based on contractual terms and historical experience. Sales incentives or other consideration given by the Company to customers that are considered adjustments to the selling price of the Company’s products, such as markdowns, are reflected as reductions of revenue. Sales incentives and other consideration that represent costs incurred by the Company for assets or services received, such as the appearance of the Company’s products in a customer’s national circular ad, are reflected as selling expenses in the accompanying interim Condensed Consolidated Statements of Operations. Use of Estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and related disclosures. These estimates are based on management’s best knowledge as of the date the financial statements are published of current events and actions the Company may undertake in the future. Accordingly, actual results could differ from those estimates. Allowance for Doubtful Accounts The allowance for doubtful accounts represents adjustments to customer trade accounts receivable for amounts deemed uncollectible. The allowance for doubtful accounts increases general and administrative expenses and reduces gross trade receivables to their estimated net realizable value. The allowance is based on our assessment of the business environment, customers’ financial condition, historical trends, customer payment practices, receivable aging and customer disputes. The allowance for doubtful accounts was $2,241 at September 30, 2017 and $63 at December 31, 2016. We will continue to proactively review our credit risks and adjust customer terms to reflect the current environment. Inventory Valuation Inventory is comprised mostly of finished goods and some component parts and is stated at the lower of cost using the first-in, first-out (“FIFO”) method, or net realizable value. The Company regularly reviews slow-moving and excess inventories, and writes down inventories to net realizable value if the expected net proceeds from the disposals of excess inventory are less than the carrying cost of the merchandise. Income Taxes Income taxes are computed using the asset and liability method of accounting. Under the asset and liability method, a deferred income tax asset or liability is recognized for estimated future tax effects attributable to temporary differences and carry-forwards. The measurement of deferred income tax assets is adjusted by a valuation allowance, if necessary, to recognize future tax benefits only to the extent, based on available evidence, that it is more likely than not that such benefits will be realized. The net deferred tax assets and liabilities are presented as noncurrent. The Company follows the appropriate guidance relative to uncertain tax positions. This standard provides detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the financial statements. Uncertain tax positions must meet a recognition threshold of more-likely-than-not in order for those tax positions to be recognized in the financial statements. Net (Loss) Income Per Share Basic (loss) earnings per share for the Company are computed by dividing net (loss) income by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share includes the dilutive impact of outstanding stock options and unvested restricted shares. Translation of Foreign Currencies All assets and liabilities of the Company’s foreign subsidiaries, each of whose functional currency is in its local currency, are translated into U.S. dollars at the exchange rate in effect at the end of the quarter and the income and expense accounts of these affiliates have been translated at average rates prevailing during each respective quarter. Resulting translation adjustments are made to a separate component of stockholders’ equity within accumulated other comprehensive (loss) income. Foreign exchange transaction gains and losses are included in the accompanying interim, condensed consolidated statement of operations. Recently Issued Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” providing new accounting guidance related to revenue recognition. This guidance was originally proposed to be effective for reporting periods beginning after December 15, 2016, however in July 2015, the FASB approved the delay in this guidance until reporting periods beginning after December 15, 2017. The Company is still finalizing its analysis to quantify the adoption impact of the provisions of the new standard, but does not currently expect it to have a material impact on the Company’s consolidated financial position or results of operations. Based on the evaluation of the Company’s current contracts and revenue streams, most will be recorded consistently under both the current and new standard. Accordingly, the Company has elected to use the Modified Retrospective Transition Method to apply the new guidance. The FASB has issued, and may issue in the future, interpretive guidance which may cause the Company’s evaluation to change. The Company believes it is following an appropriate timeline to allow for proper recognition, presentation and disclosure upon adoption effective the beginning of fiscal year 2018. In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory.” This guidance requires inventory within the scope of ASU 2015-11 to be measured at the lower of cost and net realizable value. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This guidance is effective for fiscal years beginning after December 15, 2016. The Company adopted this guidance in the first quarter of 2017 and the impact on its consolidated financial statements was immaterial. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” (“ASU 2016-02”). ASU 2016-02 requires lessees to recognize assets and liabilities on the balance sheet for leases with lease terms greater than twelve months and disclose key information about leasing arrangements. The effective date will be the first quarter of fiscal year 2019, with early adoption permitted. The Company is evaluating the impact that adoption of this new standard will have on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, “Compensation — Stock Compensation: Improvements to Employee Share-Based Payment Accounting.” The guidance simplified the accounting and financial reporting of the income tax impact of stock-based compensation arrangements. This guidance required excess tax benefits to be recorded as a discrete item within income tax expense rather than additional paid-in-capital. In addition, excess tax benefits are required to be classified as cash from operating activities rather than cash from financing activities. The Company adopted this guidance as of the beginning of fiscal 2017. The Company also elected to continue to estimate forfeitures, as permitted by ASU 2016-09, rather than electing to account for forfeitures as they occur. The impact of adopting this guidance in the first quarter of 2017 was immaterial to the Company’s consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (A Consensus of the FASB Emerging Issues Task Force). In an effort to reduce diversity in practice, ASU 2016-15 provides solutions for eight specific statement of cash flow classification issues. The ASU is effective for public companies beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company has evaluated the impact this guidance will have on its consolidated financial statements and expects the impact to be immaterial. Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.

DEBT

DEBT	9 Months Ended
	Sep. 30, 2017
DEBT
DEBT	2. DEBT Credit Facilities In April 2015, Summer Infant, Inc. and its wholly owned subsidiary, Summer Infant (USA), Inc. (“Summer USA”), entered into an amended and restated loan and security agreement with Bank of America, N.A., as agent, providing for an asset-based credit facility. The amended and restated credit facility replaced the Company’s prior credit facility with Bank of America. The amended and restated credit facility was subsequently amended in December 2015 and May 2016 to (i) modify the interest rate under each of the Revolving Facility, FILO Facility and Term Loan Facility (each as defined below), (ii) modify the maximum leverage ratio financial covenant; (iii) amend the definition of EBITDA with respect to certain fees and expenses included within the definition; (iv) modify certain reporting requirements and (v) remove the occurrence of an event having a material adverse effect on the Company as an event of default. In February 2017, Summer Infant, Inc. and Summer USA entered into an amendment and waiver to the credit facility pursuant to which the lenders waived the existing delivery date by which the Company must deliver projections for the 2017 fiscal year, and extended the date to March 1, 2017, and certain amendments were made to provide additional flexibility to the Company during fiscal 2017, including (i) amending the definitions of “Availability,” “Availability Reserve” and “Eligible Account”; (ii) amending the definition of EBITDA with respect to bonus payments and certain fees and expenses that can be added back to the calculation of EBITDA; and (iii) amending the definition of “Fixed Charges” and revised the maximum leverage ratio financial covenant to be maintained as of the end of each fiscal quarter (as amended, the “Credit Facility”). As discussed in Note 7, on October 16, 2017, the Company entered into a fourth amendment to the Credit Facility. The Credit Facility consists of a $60,000 asset-based revolving credit facility, with a $10,000 letter of credit sub-line facility (the “Revolving Facility”), a $5,000 “first in last out” (FILO) revolving credit facility (the “FILO Facility”) and a $10,000 term loan facility (the “Term Loan Facility”). Pursuant to an accordion feature, the Credit Facility includes the ability to increase the Revolving Facility by an additional $15,000 upon the Company’s request and the agreement of the lenders participating in the increase. The total borrowing capacity under the Revolving Facility is based on a borrowing base, generally defined as 85% of the value of eligible accounts plus the lesser of (i) 70% of the value of eligible inventory or (ii) 85% of the net orderly liquidation value of eligible inventory, less reserves. The total borrowing capacity under the FILO Facility is based on a borrowing base, generally defined as a specified percentage of the value of eligible accounts that steps down over time, plus a specified percentage of the value of eligible inventory that steps down over time. The scheduled maturity date of the loans under the Revolving Facility and the Term Loan Facility is April 21, 2020, and loans under the FILO Facility terminate April 21, 2018, subject in each case to customary early termination provisions. Any termination of the Revolving Facility would require termination of the Term Loan Facility and the FILO Facility. All obligations under the Credit Facility are secured by substantially all of the assets of Summer Infant, Inc. and Summer USA. In addition, Summer Infant Canada Limited and Summer Infant Europe Limited, subsidiaries of the Company, are guarantors under the Credit Facility. Proceeds from the loans were used to (i) repay the Company’s then outstanding term loan, (ii) pay fees and transaction expenses associated with the closing of the Credit Facility, (iii) pay obligations under the Credit Facility, and (iv) pay for lawful corporate purposes, including working capital. Borrowings under the Revolving Facility bear interest, at the Company’s option, at a base rate or at LIBOR, plus applicable margins based on average quarterly availability and ranging between 2.0% and 2.5% on LIBOR borrowings and 0.5% and 1.0% on base rate borrowings. Loans under the FILO Facility and Term Loan Facility will bear interest, at the Company’s option, at a base rate or at LIBOR, plus a margin of 4.25% on LIBOR borrowings and 2.75% on base rate borrowings. Beginning on July 1, 2015, the Company was required to begin repaying the Term Loan Facility in quarterly installments of $500. Beginning with the fiscal year ending January 2, 2016, the Company was required to prepay the Term Loan Facility in an amount equal to 50% of the Company’s “excess cash flow,” as such term is defined in the Credit Facility, at the end of each fiscal year. Under the Credit Facility, the Company must comply with certain financial covenants, including that the Company (i) maintain a fixed charge coverage ratio of at least 1.0 to 1.0 for the twelve consecutive fiscal months most recently ended and (ii) maintain a certain leverage ratio at the end of each fiscal quarter. For purposes of the financial covenants, consolidated EBITDA is defined as net income before interest, taxes, depreciation and amortization, plus certain customary expenses, fees, and non-cash charges, and minus certain customary non-cash items increasing net income and other specified items. In addition, the Credit Facility contains cash dominion provisions that are imposed if an event of default has occurred and is continuing or if availability under the Credit Facility falls below a certain amount. The Credit Facility contains customary affirmative and negative covenants. Among other restrictions, the Company is restricted in its ability to incur additional debt, make acquisitions or investments, dispose of assets, or make distributions unless in each case certain conditions are satisfied. The Credit Facility also contains customary events of default, including the occurrence of a change of control. In the event of a default, all of the Company’s obligations under the Credit Facility may be declared immediately due and payable. For certain events of default relating to insolvency and receivership, all outstanding obligations immediately become due and payable. As of September 30, 2017, the rate on base-rate loans was 5.25% and the rate on LIBOR-rate loans was 3.875%. The amount outstanding on the Revolving Facility at September 30, 2017 was $41,464. Total borrowing capacity under the Revolving Facility at September 30, 2017 was $45,014 and borrowing availability was $3,550. The borrowing capacity and borrowing availability reflect the results of the October 16, 2017 amendment to the Credit Facility. The amounts outstanding on the Term Loan Facility and FILO Facility at September 30, 2017 were $5,500 and $2,500, respectively. Aggregate maturities of bank debt related to the Credit Facility: Fiscal Year ending: 2017 2018 2019 2020 $ Total $ Unamortized debt issuance costs were $1,034 at September 30, 2017 and $1,226 at December 31, 2016, and are presented as a direct deduction of long-term debt on the consolidated balance sheets.

INTANGIBLE ASSETS

INTANGIBLE ASSETS	9 Months Ended
	Sep. 30, 2017
INTANGIBLE ASSETS
INTANGIBLE ASSETS	3. INTANGIBLE ASSETS Intangible assets consisted of the following: September 30, December 31, 2017 2016 Brand names $ $ Patents and licenses Customer relationships Other intangibles Less: Accumulated amortization ) ) Intangible assets, net $ $ The amortization period for the majority of the intangible assets ranges from 5 to 20 years for those assets that have an estimated life; certain of the assets have indefinite lives (brand names). Total of intangibles not subject to amortization amounted to $8,400 as of September 30, 2017 and December 31, 2016.

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	9 Months Ended
	Sep. 30, 2017
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES	4. COMMITMENTS AND CONTINGENCIES Litigation The Company is a party to routine litigation and administrative complaints incidental to its business. The Company does not believe that the resolution of any or all of such routine litigation and administrative complaints is likely to have a material adverse effect on the Company’s financial condition or results of operations.

SHARE BASED COMPENSATION

SHARE BASED COMPENSATION	9 Months Ended
	Sep. 30, 2017
SHARE BASED COMPENSATION
SHARE BASED COMPENSATION	5. SHARE BASED COMPENSATION The Company is currently authorized to issue up to 1,700,000 shares for equity awards under the Company’s 2012 Incentive Compensation Plan (as amended, “2012 Plan”). Periodically, the Company may also grant equity awards outside of its 2012 Plan as inducement grants for new hires. The Company was authorized to issue up to 3,000,000 shares for equity awards under its 2006 Performance Equity Plan (“2006 Plan”). In March 2017, the 2006 Plan expired and no additional equity awards can be granted under the 2006 Plan. Under the 2012 Plan, awards may be granted to participants in the form of non-qualified stock options, incentive stock options, restricted stock, deferred stock, restricted stock units and other stock-based awards. Subject to the provisions of the plans, awards may be granted to employees, officers, directors, advisors and consultants who are deemed to have rendered or are able to render significant services to the Company or its subsidiaries and who are deemed to have contributed or to have the potential to contribute to the Company’s success. The Company accounts for options under the fair value recognition standard. The application of this standard resulted in share-based compensation expense for the three months ended September 30, 2017 and October 1, 2016 of $100 and $176, respectively, and share-based compensation expense for the nine months ended September 30, 2017 and October 1, 2016 of $375 and $394, respectively. Stock based compensation expense is included in selling, general and administrative expenses. The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model that uses the assumptions noted in the table below. The Company uses the simplified method to estimate the expected term of the options, but used an estimate for grants of “plain vanilla” stock options based on a formula prescribed by the Securities and Exchange Commission. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Share-based compensation expense recognized in the consolidated financial statements is based on awards that are ultimately expected to vest. As of September 30, 2017, there were 1,078,726 stock options outstanding and 448,516 unvested restricted shares outstanding. During the nine months ended September 30, 2017, the Company granted 390,500 stock options and granted 234,000 shares of restricted stock, respectively. The following table summarizes the weighted average assumptions used for stock options granted during the nine months ended September 30, 2017 and October 1, 2016. 2017 2016 Expected life (in years) Risk-free interest rate % % Volatility % % Dividend yield % % Forfeiture rate % % As of September 30, 2017, there were no shares available to grant under the 2006 Plan and 1,336,083 shares available to grant under the 2012 Plan. Restricted Stock Units On July 13, 2016, the Company granted 100,000 performance-based restricted stock units to its new Chief Executive Officer. The RSUs represent the right to receive shares of the Company’s common stock upon achievement of specified performance metrics, and only vest if such performance metrics are achieved for fiscal year 2017 and fiscal year 2018. The RSUs expire if the performance metrics are not achieved or if employment is terminated. The fair value of the RSUs will be recognized as it is earned and when it is probable that the performance conditions will be met. The Company has not recognized any compensation expense related to this award.

WEIGHTED AVERAGE COMMON SHARES

WEIGHTED AVERAGE COMMON SHARES	9 Months Ended
	Sep. 30, 2017
WEIGHTED AVERAGE COMMON SHARES
WEIGHTED AVERAGE COMMON SHARES	6. WEIGHTED AVERAGE COMMON SHARES Basic and diluted earnings or loss per share (“EPS”) is based upon the weighted average number of common shares outstanding during the period. Diluted weighted average number of common shares outstanding also included common stock equivalents such as stock options and restricted shares. The Company does not include the anti-dilutive effect of common stock equivalents in the calculation of dilutive common shares outstanding. The computation of diluted common shares for the three and nine months ended September 30, 2017 excluded 1,078,726 stock options and 348,516 shares of restricted stock outstanding. The computation of diluted common shares for the three months ended October 1, 2016 excluded 1,109,294 stock options and 179,907 shares of restricted stock outstanding. The computation of diluted common shares for the nine months ended October 1, 2016 excluded 1,267,594 stock options and 270,807 shares of restricted stock outstanding.

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	9 Months Ended
	Sep. 30, 2017
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS	7. SUBSEQUENT EVENTS The Company has evaluated subsequent events through the filing date of this Quarterly Report and determined that no subsequent events occurred that would require recognition in the consolidated financial statements or disclosure in the notes thereto, except the following. On October 16, 2017, Summer Infant, Inc. and its subsidiaries, Summer Infant (USA), Inc., Summer Infant Canada, Limited and Summer Infant Europe Limited, entered into an amendment and waiver (the “Loan Amendment”) to the Credit Facility with Bank of America, N.A., as agent (the “Agent”), and certain financial institutions party to the agreement from time to time as lenders. Pursuant to the Loan Amendment, the lenders waived any violations of the Credit Facility that may have occurred as a result of overadvances made to the Company following the bankruptcy filing by Toys R Us. The Loan Amendment also amended certain provisions of the Credit Facility, including amendments to (i) the definition of EBITDA with respect to payments owed to the Company from Toys “R” Us accounts prior to September 18, 2017 that can be added back to the calculation of EBITDA; (ii) the definition of Eligible Account in order to (A) increase the amount of eligible accounts owing from Walmart or Amazon and (B) to permit the Agent, in its discretion, to include Toys R Us accounts as Eligible Accounts; and (iii) the definition of “Revolver Borrowing Base” to include a temporary overadvance amount to be added into the calculation of the Revolver Borrowing Base. The Loan Amendment also amended the covenant regarding the maximum leverage ratio for the fiscal quarters ending September 30 and December 30, 2017.

BASIS OF PRESENTATION AND SUM14

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
	Sep. 30, 2017
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition	Revenue Recognition The Company records revenue when all of the following occur: persuasive evidence of an arrangement exists, product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. Sales are recorded net of provisions for returns and allowances, customer discounts, and other sales-related discounts. The Company bases its estimates for discounts, returns and allowances on negotiated customer terms and historical experience. Customers do not have the right to return products unless the products are defective. The Company records a reduction of sales for estimated future defective product deductions based on contractual terms and historical experience. Sales incentives or other consideration given by the Company to customers that are considered adjustments to the selling price of the Company’s products, such as markdowns, are reflected as reductions of revenue. Sales incentives and other consideration that represent costs incurred by the Company for assets or services received, such as the appearance of the Company’s products in a customer’s national circular ad, are reflected as selling expenses in the accompanying interim Condensed Consolidated Statements of Operations.
Use of Estimates	Use of Estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and related disclosures. These estimates are based on management’s best knowledge as of the date the financial statements are published of current events and actions the Company may undertake in the future. Accordingly, actual results could differ from those estimates.
Allowance for Doubtful Accounts	Allowance for Doubtful Accounts The allowance for doubtful accounts represents adjustments to customer trade accounts receivable for amounts deemed uncollectible. The allowance for doubtful accounts increases general and administrative expenses and reduces gross trade receivables to their estimated net realizable value. The allowance is based on our assessment of the business environment, customers’ financial condition, historical trends, customer payment practices, receivable aging and customer disputes. The allowance for doubtful accounts was $2,241 at September 30, 2017 and $63 at December 31, 2016. We will continue to proactively review our credit risks and adjust customer terms to reflect the current environment.
Inventory Valuation	Inventory Valuation Inventory is comprised mostly of finished goods and some component parts and is stated at the lower of cost using the first-in, first-out (“FIFO”) method, or net realizable value. The Company regularly reviews slow-moving and excess inventories, and writes down inventories to net realizable value if the expected net proceeds from the disposals of excess inventory are less than the carrying cost of the merchandise.
Income taxes	Income Taxes Income taxes are computed using the asset and liability method of accounting. Under the asset and liability method, a deferred income tax asset or liability is recognized for estimated future tax effects attributable to temporary differences and carry-forwards. The measurement of deferred income tax assets is adjusted by a valuation allowance, if necessary, to recognize future tax benefits only to the extent, based on available evidence, that it is more likely than not that such benefits will be realized. The net deferred tax assets and liabilities are presented as noncurrent. The Company follows the appropriate guidance relative to uncertain tax positions. This standard provides detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the financial statements. Uncertain tax positions must meet a recognition threshold of more-likely-than-not in order for those tax positions to be recognized in the financial statements.
Net (Loss) Income Per Share	Net (Loss) Income Per Share Basic (loss) earnings per share for the Company are computed by dividing net (loss) income by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share includes the dilutive impact of outstanding stock options and unvested restricted shares.
Translation of Foreign Currencies	Translation of Foreign Currencies All assets and liabilities of the Company’s foreign subsidiaries, each of whose functional currency is in its local currency, are translated into U.S. dollars at the exchange rate in effect at the end of the quarter and the income and expense accounts of these affiliates have been translated at average rates prevailing during each respective quarter. Resulting translation adjustments are made to a separate component of stockholders’ equity within accumulated other comprehensive (loss) income. Foreign exchange transaction gains and losses are included in the accompanying interim, condensed consolidated statement of operations.
Recently Issued Accounting Pronouncements	Recently Issued Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” providing new accounting guidance related to revenue recognition. This guidance was originally proposed to be effective for reporting periods beginning after December 15, 2016, however in July 2015, the FASB approved the delay in this guidance until reporting periods beginning after December 15, 2017. The Company is still finalizing its analysis to quantify the adoption impact of the provisions of the new standard, but does not currently expect it to have a material impact on the Company’s consolidated financial position or results of operations. Based on the evaluation of the Company’s current contracts and revenue streams, most will be recorded consistently under both the current and new standard. Accordingly, the Company has elected to use the Modified Retrospective Transition Method to apply the new guidance. The FASB has issued, and may issue in the future, interpretive guidance which may cause the Company’s evaluation to change. The Company believes it is following an appropriate timeline to allow for proper recognition, presentation and disclosure upon adoption effective the beginning of fiscal year 2018. In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory.” This guidance requires inventory within the scope of ASU 2015-11 to be measured at the lower of cost and net realizable value. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This guidance is effective for fiscal years beginning after December 15, 2016. The Company adopted this guidance in the first quarter of 2017 and the impact on its consolidated financial statements was immaterial. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” (“ASU 2016-02”). ASU 2016-02 requires lessees to recognize assets and liabilities on the balance sheet for leases with lease terms greater than twelve months and disclose key information about leasing arrangements. The effective date will be the first quarter of fiscal year 2019, with early adoption permitted. The Company is evaluating the impact that adoption of this new standard will have on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, “Compensation — Stock Compensation: Improvements to Employee Share-Based Payment Accounting.” The guidance simplified the accounting and financial reporting of the income tax impact of stock-based compensation arrangements. This guidance required excess tax benefits to be recorded as a discrete item within income tax expense rather than additional paid-in-capital. In addition, excess tax benefits are required to be classified as cash from operating activities rather than cash from financing activities. The Company adopted this guidance as of the beginning of fiscal 2017. The Company also elected to continue to estimate forfeitures, as permitted by ASU 2016-09, rather than electing to account for forfeitures as they occur. The impact of adopting this guidance in the first quarter of 2017 was immaterial to the Company’s consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (A Consensus of the FASB Emerging Issues Task Force). In an effort to reduce diversity in practice, ASU 2016-15 provides solutions for eight specific statement of cash flow classification issues. The ASU is effective for public companies beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company has evaluated the impact this guidance will have on its consolidated financial statements and expects the impact to be immaterial. Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.

DEBT (Tables)

DEBT (Tables)	9 Months Ended
	Sep. 30, 2017
DEBT
Schedule of aggregate maturities of bank debt	Fiscal Year ending: 2017 2018 2019 2020 $ Total $

INTANGIBLE ASSETS (Tables)

INTANGIBLE ASSETS (Tables)	9 Months Ended
	Sep. 30, 2017
INTANGIBLE ASSETS
Schedule of intangible assets	September 30, December 31, 2017 2016 Brand names $ $ Patents and licenses Customer relationships Other intangibles Less: Accumulated amortization ) ) Intangible assets, net $ $

SHARE BASED COMPENSATION (Table

SHARE BASED COMPENSATION (Tables)	9 Months Ended
	Sep. 30, 2017
SHARE BASED COMPENSATION
Schedule of weighted average assumptions used for stock options granted	The following table summarizes the weighted average assumptions used for stock options granted during the nine months ended September 30, 2017 and October 1, 2016. 2017 2016 Expected life (in years) Risk-free interest rate % % Volatility % % Dividend yield % % Forfeiture rate % %

BASIS OF PRESENTATION AND SUM18

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Allowances for doubtful accounts	$ 2,241	$ 63

DEBT (Details)

DEBT (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2017USD ($)	Dec. 31, 2016USD ($)
Credit Facilities
Unamortized debt issuance costs	$ 1,034	$ 1,226
Aggregate maturities of bank debt
2,017	1,750
2,018	3,250
2,019	2,000
2,020	42,464
Total	$ 49,464
Credit Facility
Credit Facilities
Number of most recent consecutive months used to measure fixed charge coverage ratio	12 months
Credit Facility | Minimum
Credit Facilities
Fixed charge coverage ratio	1
Credit Facility | LIBOR
Credit Facilities
Applicable margin (as a percent)	3.875%
Interest rate basis	LIBOR
Credit Facility | Base rate
Credit Facilities
Interest rate during the period	5.25%
Revolving Facility
Credit Facilities
Maximum amount of credit available	$ 60,000
Additional borrowing capacity available upon Company request	$ 15,000
Borrowing base as a percentage of eligible receivables	85.00%
Borrowing base as a percentage of eligible inventory	70.00%
Borrowing base as a percentage of net orderly liquidation value of eligible inventory and less reserves	85.00%
Amount outstanding on credit facility	$ 41,464
Borrowing capacity	45,014
Borrowing availability	3,550
Letter of Credit
Credit Facilities
Maximum amount of credit available	10,000
FILO Facility
Credit Facilities
Maximum amount of credit available	5,000
Amount outstanding on credit facility	2,500
Term Loan Facility
Credit Facilities
Maximum amount of credit available	10,000
Quarterly payment due beginning July 1, 2015	$ 500
Required prepayment amount of excess cash flow beginning with fiscal year ending January 2, 2016 (as a percent)	50.00%
Amount outstanding, term loan	$ 5,500
Interest Rate Option One | Revolving Facility | LIBOR
Credit Facilities
Interest rate basis	LIBOR
Interest Rate Option One | Revolving Facility | LIBOR | Minimum
Credit Facilities
Applicable margin (as a percent)	2.00%
Interest Rate Option One | Revolving Facility | LIBOR | Maximum
Credit Facilities
Applicable margin (as a percent)	2.50%
Interest Rate Option One | FILO Facility and Term Loan Facility | LIBOR
Credit Facilities
Applicable margin (as a percent)	4.25%
Interest Rate Option Two | Revolving Facility | Base rate | Minimum
Credit Facilities
Base rate, interest rate on borrowings	0.50%
Interest Rate Option Two | Revolving Facility | Base rate | Maximum
Credit Facilities
Base rate, interest rate on borrowings	1.00%
Interest Rate Option Two | FILO Facility and Term Loan Facility | Base rate
Credit Facilities
Base rate, interest rate on borrowings	2.75%

INTANGIBLE ASSETS (Details)

INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Intangible assets
Intangible assets, gross	$ 24,413	$ 24,413
Less: Accumulated amortization	(10,176)	(9,600)
Intangible assets, net	14,237	14,813
Intangibles not subject to amortization	$ 8,400	8,400
Minimum
Intangible assets
Amortization period of intangible assets	5 years
Maximum
Intangible assets
Amortization period of intangible assets	20 years
Patents and licenses
Intangible assets
Intangible assets, gross	$ 3,766	3,766
Customer relationships
Intangible assets
Intangible assets, gross	6,946	6,946
Other intangibles
Intangible assets
Intangible assets, gross	1,882	1,882
Brand names
Intangible assets
Intangible assets, gross	$ 11,819	$ 11,819

SHARE BASED COMPENSATION - Summ

SHARE BASED COMPENSATION - Summary of Plans and Stock Option Info (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Oct. 01, 2016	Sep. 30, 2017	Oct. 01, 2016
Weighted average assumptions
Expected life (in years)			4 years 10 months 24 days	5 years 3 months 18 days
Risk-free interest rate (as a percent)			1.90%	1.60%
Volatility (as a percent)			71.40%	64.00%
Dividend yield (as a percent)			0.00%	0.00%
Forfeiture rate (as a percent)			22.60%	11.60%
2006 Plan and 2012 Plan | Selling, General and Administrative Expenses
SHARE BASED COMPENSATION
Share-based compensation expense	$ 100	$ 176	$ 375	$ 394
2006 Plan and 2012 Plan | Stock options
SHARE BASED COMPENSATION
Stock options outstanding (in shares)	1,078,726		1,078,726
Stock options granted during the period (in shares)			390,500
2006 Plan and 2012 Plan | Restricted Stock Awards
SHARE BASED COMPENSATION
Unvested restricted shares outstanding	448,516		448,516
Granted (in shares)			234,000
2006 Plan
SHARE BASED COMPENSATION
Number of shares authorized under the plan	3,000,000		3,000,000
Shares available to grant	0		0
2012 Plan
SHARE BASED COMPENSATION
Number of shares authorized under the plan	1,700,000		1,700,000
Shares available to grant	1,336,083		1,336,083

SHARE BASED COMPENSATION - Rest

SHARE BASED COMPENSATION - Restricted Stock Units (Details)	Jul. 13, 2016shares
Restricted Stock Units | Chief Executive Officer
SHARE BASED COMPENSATION
Granted (in shares)	100,000

WEIGHTED AVERAGE COMMON SHARES

WEIGHTED AVERAGE COMMON SHARES (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Oct. 01, 2016	Sep. 30, 2017	Oct. 01, 2016
Stock options
WEIGHTED AVERAGE COMMON SHARES
Anti-dilutive securities excluded from the computation of diluted earnings per share (in shares)	1,078,726	1,109,294	1,078,726	1,267,594
Restricted Stock Awards
WEIGHTED AVERAGE COMMON SHARES
Anti-dilutive securities excluded from the computation of diluted earnings per share (in shares)	348,516	179,907	348,516	270,807