Summer Infant (SUMR) 10-Q 2 May 18 2018 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2018	Apr. 30, 2018
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	Mar. 31, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-29
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		18,685,237
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q1

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 30, 2017
CURRENT ASSETS
Cash and cash equivalents	$ 812	$ 681
Trade receivables, net of allowance for doubtful accounts	29,223	36,640
Inventory, net	28,724	34,035
Prepaid and other current assets	1,786	950
TOTAL CURRENT ASSETS	60,545	72,306
Property and equipment, net	9,583	9,640
Other intangible assets, net	13,854	14,046
Deferred tax assets, net	1,929	1,935
Other assets	103	103
TOTAL ASSETS	86,014	98,030
CURRENT LIABILITIES
Accounts payable	22,305	24,642
Accrued expenses	6,189	9,818
Current portion of long-term debt	4,916	3,250
TOTAL CURRENT LIABILITIES	33,410	37,710
Long-term debt, less current portion and unamortized debt issuance costs	39,035	43,772
Other liabilities	2,587	2,906
TOTAL LIABILITIES	75,032	84,388
STOCKHOLDERS' EQUITY
Preferred Stock, $0.0001 par value, 1,000,000 authorized, none issued or outstanding at March 31, 2018 and December 30, 2017, respectively
Common Stock $0.0001 par value, authorized, issued and outstanding of 49,000,000, 18,956,886, and 18,685,237 at March 31, 2018 and 49,000,000, 18,901,386, and 18,629,737 at December 30, 2017, respectively	2	2
Treasury Stock at cost (271,649 shares at March 31, 2018 and December 30, 2017)	(1,283)	(1,283)
Additional paid-in capital	76,947	76,848
Accumulated deficit	(62,341)	(59,634)
Accumulated other comprehensive loss	(2,343)	(2,291)
TOTAL STOCKHOLDERS' EQUITY	10,982	13,642
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 86,014	$ 98,030

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2018	Dec. 30, 2017
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	18,956,886	18,901,386
Common Stock, outstanding	18,685,237	18,629,737
Treasury Stock at cost, shares	271,649	271,649

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017
Consolidated Statements of Operations
Net sales	$ 42,055	$ 47,340
Cost of goods sold	28,463	32,051
Gross profit	13,592	15,289
General and administrative expenses	12,588	9,272
Selling expense	2,678	3,911
Depreciation and amortization	1,001	1,056
Operating (loss) income	(2,675)	1,050
Interest expense, net	773	724
(Loss) income before income taxes	(3,448)	326
(Benefit) provision for income taxes	(741)	156
NET (LOSS) INCOME	$ (2,707)	$ 170
Net (loss) income per share:
BASIC (in dollars per share)	$ (0.15)	$ 0.01
DILUTED (in dollars per share)	$ (0.15)	$ 0.01
Weighted average shares outstanding:
BASIC (in shares)	18,649,415	18,510,631
DILUTED (in shares)	18,649,415	18,599,386

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017
Condensed Consolidated Statements of Comprehensive (Loss) Income
Net (loss) income	$ (2,707)	$ 170
Other comprehensive income:
Changes in foreign currency translation adjustments	(52)	90
Comprehensive (loss) income	$ (2,759)	$ 260

Condensed Consolidated Stateme6

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017
Cash flows from operating activities:
Net (loss) income	$ (2,707)	$ 170
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation and amortization	1,010	1,090
Stock-based compensation	99	85
Provision for (recovery of) allowance for doubtful accounts	2,355	(98)
Changes in assets and liabilities:
Decrease (increase) in trade receivables	4,834	(128)
Decrease (increase) in inventory	5,019	(684)
(Increase) decrease in prepaids and other assets	(862)	358
Decrease in accounts payable and accrued expenses	(6,084)	(1,412)
Net cash provided by (used in) operating activities	3,664	(619)
Cash flows from investing activities:
Acquisitions of property and equipment	(767)	(712)
Net cash used in investing activities	(767)	(712)
Cash flows from financing activities:
Repayment of Term Loan Facility	(500)	(1,000)
Net (repayment) borrowings on revolving facilities	(2,571)	1,970
Net cash (used in) provided by financing activities	(3,071)	970
Effect of exchange rate changes on cash and cash equivalents	305	86
Net increase (decrease) in cash and cash equivalents	131	(275)
Cash and cash equivalents, beginning of period	681	999
Cash and cash equivalents, end of period	812	724
Supplemental disclosure of cash flow information:
Cash paid for interest	$ 560	$ 714

BASIS OF PRESENTATION AND SUMMA

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	3 Months Ended
	Mar. 31, 2018
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 30, 2017 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 30, 2017 included in its Annual Report on Form 10-K filed with the SEC on February 20, 2018. 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 As of December 31, 2017, the Company adopted FASB ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”) . The new guidance sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed in U.S. GAAP. The underlying principle of the new standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects to receive in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in the prior accounting guidance. The Company reviewed all contracts at the date of initial application and elected to use the modified retrospective transition method, where the cumulative effect of the initial application is recognized as an adjustment to opening retained earnings at December 31, 2017. Therefore, comparative prior periods have not been adjusted and continue to be reported under FASB ASC Topic 605, Revenue Recognition, (“ASC 605”). The adoption of the new revenue recognition guidance was immaterial to the Company’s condensed consolidated statements of operations, comprehensive (loss) income, balance sheet, and cash flows as of and for the three months ending March 31, 2018. Refer to Note 2 for additional information regarding the Company’s adoption of ASC 606. The Company’s principal activities from which it generates its revenue is product sales. The Company has one reportable segment of business. Revenue is measured based on consideration specified in a contract with a customer. The Company recognizes revenue when it satisfies a performance obligation in a contract by transferring control over a product to a customer when product delivery occurs. Consideration is typically paid approximately 60 days from the time control is transferred. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in selling costs. A performance obligation is a promise in a contract to transfer a distinct product to the customer, which for the Company is transfer of juvenile products to its customers. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation. A transaction price is the amount of consideration the Company expects to receive under the arrangement. The Company is required to estimate variable consideration (if any) and to factor that estimation into the determination of the transaction price. The Company conducts its business with customers through valid purchase or sales orders which are considered contracts and are not interdependent on one another. Product transaction prices on a purchase or sale order are discrete and stand-alone. Purchase or sales orders may be issued under either a customer master service agreement or a reseller allowance agreement. Purchase or sales orders, master service agreements, and reseller allowance agreements which are specific and unique to each customer, may include product price discounts, markdown allowances, return allowances, and/or volume rebates which reduce the consideration due from customers. Variable consideration is estimated using the most likely amount method, which is based on our historical experience as well as current information such as sales forecasts. Contracts may also include cooperative advertising allowances, for which we receive a distinct benefit and fair value, and are recorded as selling expenses. 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 revenues, expenses, assets, 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 Trade receivables are carried at their outstanding unpaid principal balances reduced by an allowance for doubtful accounts. The Company estimates doubtful accounts based on historical bad debts, factors related to specific customers’ ability to pay and current economic trends. The Company writes off accounts receivable against the allowance when a balance is determined to be uncollectible. Amounts are considered to be uncollectable based upon historical experience and management’s evaluation of outstanding accounts receivable. Changes in the allowance for doubtful accounts are as follows: For the March 31, 2018 April 1, 2017 Allowance for doubtful accounts, beginning of period $ $ Charges to costs and expenses ) Allowance for doubtful accounts, end of period $ $ 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 February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” (“ASU 2016-02”). ASU 2016-02 which will supersede the current guidance for lease accounting and will requires lessees to recognize right-to-use assets and related lease liabilities on the balance sheet for leases with lease terms greater than twelve months and disclose key information about leasing arrangements. The effective date for the Company 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. 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.

REVENUE

REVENUE	3 Months Ended
	Mar. 31, 2018
REVENUE
REVENUE	2. REVENUE Disaggregation of Revenue The Company’s revenue is primarily from distinct fixed-price product sales in the juvenile product market, to similar customers and channels utilizing similar types of contracts that are short term in nature (less than one year). The Company does not sell service agreements or goods over a period of time and does not sell or utilize customer financing arrangements or time-and-material contracts. The following is a table that presents net sales by geographical area: For the March 31, 2018 April 1, 2017 United States $ $ All Other Net Sales $ $ All Other consists of Canada, Europe, South America, Mexico, Asia, and the Middle East. Contract Balances The Company does not have any contract assets such as work-in-process or contract liabilities such as customer advances. All trade receivables on the Company’s condensed consolidated balance sheet are from contracts with customers. Contract Costs Costs incurred to obtain a contract are capitalized unless short term in nature. As a practical expedient, costs to obtain a contract that are short term in nature are expensed as incurred.

DEBT

DEBT	3 Months Ended
	Mar. 31, 2018
DEBT
DEBT	3. DEBT Credit Facilities The Company and its wholly owned subsidiary, Summer Infant (USA), Inc., are parties to an amended and restated loan and security agreement with Bank of America, N.A., as agent, which provides for an asset-based credit facility. The amended and restated loan and security agreement was entered into in April 2015 and has been subsequently amended, with the most recent amendment dated April 24, 2018 as discussed in Note 8 below (as amended, 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 terminated April 21, 2018. 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 Company’s assets. In addition, Summer Infant Canada Limited and Summer Infant Europe Limited, subsidiaries of the Company, are guarantors under the Credit Facility. Borrowings under the Revolving Facility generally 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. As discussed in Note 8 below, from April 24, 2018 through May 21, 2018, interest on the Revolving Facility will accrue an additional 2.0% on the then applicable interest rate. 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, non-cash charges, and minus certain customary non-cash items increasing net income and other specified items. 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. In addition, the Credit Facility contains cash dominion provisions that apply if an event of default occurs or if the Company’s availability is less than an amount equal to 10% of the lesser of (i) the aggregate revolver commitments and (ii) the revolver borrowing base under the Credit Facility. For certain events of default relating to insolvency and receivership, all outstanding obligations immediately become due and payable. As of March 31, 2018, the rate on base-rate loans was 5.75% and the rate on LIBOR-rate loans was 4.50%. The amount outstanding on the Revolving Facility at March 31, 2018 was $39,203. Total borrowing capacity under the Revolving Facility at March 31, 2018 was $37,537 and permitted borrowing overdraft was $1,666. The amounts outstanding on the Term Loan Facility and FILO Facility at March 31, 2018 were $4,500 and $1,250, respectively. Aggregate maturities of bank debt related to the Credit Facility: Fiscal Year ending: 2018 2019 2020 $ Total $ Unamortized debt issuance costs were $1,002 at March 31, 2018 and $1,127 at December 30, 2017, and are presented as a direct deduction of long-term debt on the consolidated balance sheets.

INTANGIBLE ASSETS

INTANGIBLE ASSETS	3 Months Ended
	Mar. 31, 2018
INTANGIBLE ASSETS
INTANGIBLE ASSETS	4. INTANGIBLE ASSETS Intangible assets consisted of the following: March 31, December 30, 2018 2017 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 March 31, 2018 and December 30, 2017.

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	3 Months Ended
	Mar. 31, 2018
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES	5. 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	3 Months Ended
	Mar. 31, 2018
SHARE BASED COMPENSATION
SHARE BASED COMPENSATION	6. 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. 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 March 31, 2018 and April 1, 2017 of $99 and $85, respectively. Stock based compensation expense is included in 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 March 31, 2018, there were 1,151,830 stock options outstanding and 272,891 unvested restricted shares outstanding. During the three months ended March 31, 2018, the Company granted 142,240 stock options and 16,000 shares of restricted stock, respectively. The following table summarizes the weighted average assumptions used for stock options granted during the three months ended March 31, 2018 and April 1, 2017. 2018 2017 Expected life (in years) Risk-free interest rate % % Volatility % % Dividend yield % % Forfeiture rate % % As of March 31, 2018, there were 1,192,593 shares available to grant under the 2012 Plan. Restricted Stock Units On July 13, 2016, the Company granted 100,000 performance-based RSUs 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. In 2017, 50,000 of the RSUs expired as the performance metrics for 2017 were not achieved. The Company did not recognize any compensation expense in 2018 related to this award as it is unlikely that performance metrics will be achieved.

WEIGHTED AVERAGE COMMON SHARES

WEIGHTED AVERAGE COMMON SHARES	3 Months Ended
	Mar. 31, 2018
WEIGHTED AVERAGE COMMON SHARES
WEIGHTED AVERAGE COMMON SHARES	7. 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 months ended March 31, 2018 excluded 1,151,830 stock options and 272,891 shares of restricted stock outstanding. The computation of diluted common shares for the three months ended April 1, 2017 excluded 1,239,131 stock options and 294,907 shares of restricted stock outstanding.

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	3 Months Ended
	Mar. 31, 2018
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS	8. SUBSEQUENT EVENTS The Company has evaluated subsequent events through the filing date of this Quarterly Report on Form 10-Q 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 April 24, 2018, the Company 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 from time to time since November 29, 2017. The Loan Amendment also amended certain provisions of the Credit Facility, including amendments to (i) the definition of Availability Reserve to include the Liquidity Reserve and Past Due Reserve (each as described below); (ii) the definition of EBITDA with respect to writeoffs relating to Toys “R” Us accounts that can be added back to the calculation of EBITDA for purposes of calculating the leverage ratio and fixed charge coverage ratio under the Credit Facility effective for the quarter ended March 31, 2018; (iii) the definition of “Temporary Overadvance Amount” to provide for permitted overadvance amounts until May 22, 2018; (iv) add the definition of Liquidity Reserve, which provides that, from and after May 31, 2018, a reserve will be established equal to 50% of availability on such date (without giving effect to the Liquidity Reserve), to be reduced to zero from and after the date availability (without giving effect to the Liquidity Reserve) exceeds 12.5% of the borrowing base for 30 consecutive days; and (v) add the definition of Past Due Reserve, which provides for a reserve to be established on May 31, 2018, as adjusted by the agent, equal to the aggregate of accounts payable that are more than 60 days past due, book overdrafts and any other past due indebtedness. In addition, the Loan Amendment imposed additional reporting requirements on the Company, and provides that, from the date of the Loan Amendment through May 21, 2018, the interest rate on outstanding principal amounts on the Revolving Facility will accrue interest at the applicable rate plus 2.0%. The final installment payment on the Company’s FILO Facility was made in April 2018.

BASIS OF PRESENTATION AND SUM15

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	3 Months Ended
	Mar. 31, 2018
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition	Revenue Recognition As of December 31, 2017, the Company adopted FASB ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”) . The new guidance sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed in U.S. GAAP. The underlying principle of the new standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects to receive in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in the prior accounting guidance. The Company reviewed all contracts at the date of initial application and elected to use the modified retrospective transition method, where the cumulative effect of the initial application is recognized as an adjustment to opening retained earnings at December 31, 2017. Therefore, comparative prior periods have not been adjusted and continue to be reported under FASB ASC Topic 605, Revenue Recognition, (“ASC 605”). The adoption of the new revenue recognition guidance was immaterial to the Company’s condensed consolidated statements of operations, comprehensive (loss) income, balance sheet, and cash flows as of and for the three months ending March 31, 2018. Refer to Note 2 for additional information regarding the Company’s adoption of ASC 606. The Company’s principal activities from which it generates its revenue is product sales. The Company has one reportable segment of business. Revenue is measured based on consideration specified in a contract with a customer. The Company recognizes revenue when it satisfies a performance obligation in a contract by transferring control over a product to a customer when product delivery occurs. Consideration is typically paid approximately 60 days from the time control is transferred. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in selling costs. A performance obligation is a promise in a contract to transfer a distinct product to the customer, which for the Company is transfer of juvenile products to its customers. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation. A transaction price is the amount of consideration the Company expects to receive under the arrangement. The Company is required to estimate variable consideration (if any) and to factor that estimation into the determination of the transaction price. The Company conducts its business with customers through valid purchase or sales orders which are considered contracts and are not interdependent on one another. Product transaction prices on a purchase or sale order are discrete and stand-alone. Purchase or sales orders may be issued under either a customer master service agreement or a reseller allowance agreement. Purchase or sales orders, master service agreements, and reseller allowance agreements which are specific and unique to each customer, may include product price discounts, markdown allowances, return allowances, and/or volume rebates which reduce the consideration due from customers. Variable consideration is estimated using the most likely amount method, which is based on our historical experience as well as current information such as sales forecasts. Contracts may also include cooperative advertising allowances, for which we receive a distinct benefit and fair value, and are recorded as selling expenses.
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 revenues, expenses, assets, 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 Trade receivables are carried at their outstanding unpaid principal balances reduced by an allowance for doubtful accounts. The Company estimates doubtful accounts based on historical bad debts, factors related to specific customers’ ability to pay and current economic trends. The Company writes off accounts receivable against the allowance when a balance is determined to be uncollectible. Amounts are considered to be uncollectable based upon historical experience and management’s evaluation of outstanding accounts receivable. Changes in the allowance for doubtful accounts are as follows: For the March 31, 2018 April 1, 2017 Allowance for doubtful accounts, beginning of period $ $ Charges to costs and expenses ) Allowance for doubtful accounts, end of period $ $
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 February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” (“ASU 2016-02”). ASU 2016-02 which will supersede the current guidance for lease accounting and will requires lessees to recognize right-to-use assets and related lease liabilities on the balance sheet for leases with lease terms greater than twelve months and disclose key information about leasing arrangements. The effective date for the Company 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. 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.

BASIS OF PRESENTATION AND SUM16

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)	3 Months Ended
	Mar. 31, 2018
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Changes in the allowance for doubtful accounts	For the March 31, 2018 April 1, 2017 Allowance for doubtful accounts, beginning of period $ $ Charges to costs and expenses ) Allowance for doubtful accounts, end of period $ $

REVENUE (Tables)

REVENUE (Tables)	3 Months Ended
	Mar. 31, 2018
REVENUE
Schedule of net sales by geographical area	For the March 31, 2018 April 1, 2017 United States $ $ All Other Net Sales $ $

DEBT (Tables)

DEBT (Tables)	3 Months Ended
	Mar. 31, 2018
DEBT
Schedule of aggregate maturities of bank debt	Fiscal Year ending: 2018 2019 2020 $ Total $

INTANGIBLE ASSETS (Tables)

INTANGIBLE ASSETS (Tables)	3 Months Ended
	Mar. 31, 2018
INTANGIBLE ASSETS
Schedule of intangible assets	March 31, December 30, 2018 2017 Brand names $ $ Patents and licenses Customer relationships Other intangibles Less: Accumulated amortization ) ) Intangible assets, net $ $

SHARE BASED COMPENSATION (Table

SHARE BASED COMPENSATION (Tables)	3 Months Ended
	Mar. 31, 2018
SHARE BASED COMPENSATION
Summary of weighted average assumptions used for stock options granted	2018 2017 Expected life (in years) Risk-free interest rate % % Volatility % % Dividend yield % % Forfeiture rate % %

BASIS OF PRESENTATION AND SUM21

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue Recognition (Details)	3 Months Ended
	Mar. 31, 2018segment
Revenue Recognition
Number of reportable segment	1
Payment terms	60 days

BASIS OF PRESENTATION AND SUM22

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Allowance for Doubtful Accounts (Details) - USD ($)	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017
Changes in the allowance for doubtful accounts
Allowance for doubtful accounts, beginning of period	$ 1,622	$ 64
Charges to costs and expenses	2,355	(17)
Allowance for doubtful accounts, end of period	$ 3,977	$ 47

REVENUE - Disaggregation of Rev

REVENUE - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017
Net sales by geographical area
Net sales	$ 42,055	$ 47,340
United States
Net sales by geographical area
Net sales	35,091	38,804
All Other
Net sales by geographical area
Net sales	$ 6,964	$ 8,536

DEBT (Details)

DEBT (Details) - USD ($) $ in Thousands	1 Months Ended		3 Months Ended
	May 21, 2018	May 21, 2018	Mar. 31, 2018	Dec. 30, 2017
Aggregate maturities of bank debt
2,018			$ 4,416
2,019			2,000
2,020			38,537
Total			$ 44,953
Credit Facility
Credit Facilities
Number of most recent consecutive months used to measure fixed charge coverage ratio			12 months
Threshold for cash dominion provision			10.00%
Unamortized debt issuance costs			$ 1,002	$ 1,127
Credit Facility | Minimum
Credit Facilities
Fixed charge coverage ratio			1
Credit Facility | LIBOR
Credit Facilities
Interest rate basis			LIBOR
Interest rate during the period			4.50%
Credit Facility | Base rate
Credit Facilities
Interest rate during the period			5.75%
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			$ 39,203
Borrowing capacity			37,537
Permitted overdraft amount			1,666
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			1,250
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			$ 4,500
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
Credit Facilities
Interest rate basis			base rate
Interest Rate Option Two | Revolving Facility | Base rate | Minimum
Credit Facilities
Applicable margin (as a percent)			0.50%
Interest Rate Option Two | Revolving Facility | Base rate | Maximum
Credit Facilities
Applicable margin (as a percent)			1.00%
Interest Rate Option Two | FILO Facility and Term Loan Facility | Base rate
Credit Facilities
Interest rate on borrowings			2.75%
Subsequent Event | Credit Facility
Credit Facilities
Loan Amendment, additional interest rate		2.00%
Subsequent Event | Revolving Facility
Credit Facilities
Interest rate basis		applicable rate
Applicable margin (as a percent)	2.00%

INTANGIBLE ASSETS (Details)

INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Dec. 30, 2017
Intangible assets
Intangible assets, gross	$ 24,413	$ 24,413
Less: accumulated amortization	(10,559)	(10,367)
Intangible assets, net	13,854	14,046
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) - 2012 Plan - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017
SHARE BASED COMPENSATION
Number of shares authorized under the plan	1,700,000
Shares available to grant	1,192,593
Weighted average assumptions
Expected life (in years)	4 years 10 months 24 days	4 years 10 months 24 days
Risk-free interest rate (as a percent)	2.60%	1.90%
Volatility (as a percent)	64.20%	71.40%
Dividend yield (as a percent)	0.00%	0.00%
Forfeiture rate (as a percent)	23.20%	22.60%
General and Administrative Expense
SHARE BASED COMPENSATION
Share-based compensation expense	$ 99	$ 85
Stock options
SHARE BASED COMPENSATION
Stock options outstanding (in shares)	1,151,830
Stock options granted during the period (in shares)	142,240
Restricted Stock Awards
SHARE BASED COMPENSATION
Unvested restricted shares outstanding	272,891
Granted (in shares)	16,000

SHARE BASED COMPENSATION - Rest

SHARE BASED COMPENSATION - Restricted Stock Units (Details) - Restricted Stock Units - Chief Executive Officer - shares	Jul. 13, 2016	Dec. 30, 2017
SHARE BASED COMPENSATION
Granted (in shares)	100,000
Expired shares		50,000

WEIGHTED AVERAGE COMMON SHARES

WEIGHTED AVERAGE COMMON SHARES (Details) - shares	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017
Stock options
WEIGHTED AVERAGE COMMON SHARES
Anti-dilutive securities excluded from the computation of diluted earnings per share (in shares)	1,151,830	1,239,131
Restricted Stock Awards
WEIGHTED AVERAGE COMMON SHARES
Anti-dilutive securities excluded from the computation of diluted earnings per share (in shares)	272,891	294,907

SUBSEQUENT EVENTS (Details)

SUBSEQUENT EVENTS (Details) - Subsequent Event	May 31, 2018	May 21, 2018	May 21, 2018
Credit Facility
Subsequent events
Liquidity reserve, required percentage of availability when availability does not meet certain criteria	50.00%
Liquidity reserve, required percentage of availability when availability meets certain criteria	0.00%
Threshold for availability, as a percentage of borrowing base	12.50%
Threshold number of consecutive days	30 years
Number of days of accounts payables past due for which reserve is required	60 days
Revolving Facility
Subsequent events
Interest rate basis			applicable rate
Margin added to applicable rate (as a percent)		2.00%