SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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Commission file number: ~~000-19848~~001-41040

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(Registrant’s telephone number, including area code)

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Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Ticker Symbol

Name of each exchange on which registered

Common Stock, par value $0.01 per share

FOSL

The Nasdaq Stock Market LLC

7.00% Senior Notes due 2026

FOSLL

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x ☒No o☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes x☒ No o☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act (check one):

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o☐ No x☒

The number of shares of the registrant’s common stock outstanding as of ~~November 2, 2017: 48,527,898~~

May 1, 2024: 52,933,239

Trademarks, service marks, trade names and copyrights

We use our FOSSIL, MICHELE, RELIC, SKAGEN and ZODIAC trademarks, as well as other trademarks, on watches, our FOSSIL and SKAGEN trademarks on jewelry, and our FOSSIL trademark on leather goods and other fashion accessories in the U.S. and in a significant number of foreign countries. We also use FOSSIL, SKAGEN, WATCH STATION INTERNATIONAL and WSI as trademarks on retail stores and FOSSIL, SKAGEN, WATCH STATION INTERNATIONAL, WSI, ZODIAC, and MICHELE as trademarks on online e-commerce sites. This filing may also contain other trademarks, service marks, trade names and copyrights of ours or of other companies with whom we have, for example, licensing agreements to produce, market and distribute products. Solely for convenience, the trademarks, service marks, trade names and copyrights referred to or incorporated by reference into this report may be listed without the TM, SM, © and ® symbols, as applicable, but we will assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors, if any, to these trademarks, service marks, trade names and copyrights.

Item 1. Financial Statements

See notes to the unaudited condensed consolidated financial statements.

Goodwill and trade name impairments

See notes to the unaudited condensed consolidated financial statements.


For the 13 Weeks Ended March 30, 2024
	Common Stock			Additional Paid-in Capital		Treasury Stock		Retained (Deficit) Earnings		Accumulated Other Comprehensive Income (Loss)		Stockholders' Equity Attributable to Fossil Group, Inc.		Noncontrolling Interest		Total Stockholders' Equity
	Shares	Par Value
Balance, December 30, 2023	52,487	$	525	$	311,709	$	—	$	18,403	$	(76,405)	$	254,232	$	(2,494)	$	251,738
Common stock issued upon exercise of stock options, stock appreciation rights and restricted stock units	7	—		—		—		—		—		—		—		—

Acquisition of common stock for employee tax withholding	—	—		—		(3)		—		—		(3)		—		(3)
Retirement of common stock	(2)	—		(3)		3		—		—		—		—		—


Stock-based compensation	—	—		1,011		—		—		—		1,011		—		1,011
Net income (loss)	—	—		—		—		(24,296)		—		(24,296)		(18)		(24,314)
Other comprehensive income (loss)	—	—		—		—		—		(1,859)		(1,859)		—		(1,859)




Balance, March 30, 2024	52,492	$	525	$	312,717	$	—	$	(5,893)	$	(78,264)	$	229,085	$	(2,512)	$	226,573


For the 13 Weeks Ended April 1, 2023
	Common Stock			Additional Paid-in Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Stockholders' Equity Attributable to Fossil Group, Inc.		Noncontrolling Interest		Total Stockholders' Equity
	Shares	Par Value
Balance, December 31, 2022	51,836	$	518	$	306,241	$	—	$	175,491	$	(76,318)	$	405,932	$	(2,923)	$	403,009
Common stock issued upon exercise of stock options, stock appreciation rights and restricted stock units	7	—		—		—		—		—		—		—		—

Acquisition of common stock for employee tax withholding		—		—		(11)		—		—		(11)		—		(11)
Retirement of common stock	(2)	—		(11)		11		—		—		—		—		—


Stock-based compensation	—	—		1,362		—		—		—		1,362		—		1,362
Net income (loss)	—	—		—		—		(41,262)		—		(41,262)		80		(41,182)
Other comprehensive income (loss)	—	—		—		—		—		3,111		3,111		—		3,111





Balance, April 1, 2023	51,841	$	518	$	307,592	$	—	$	134,229	$	(73,207)	$	369,132	$	(2,843)	$	366,289

See notes to the unaudited condensed consolidated financial statements.

For the 39 Weeks Ended September 30, 2017 For the 39 Weeks Ended October 1, 2016
Operating Activities:

Net income (loss) $ (395,367 ) $ 34,816
Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation, amortization and accretion 61,526
73,198
Stock-based compensation 22,384
23,894
Decrease in allowance for returns-net of inventory in transit (6,129 ) (14,955 )
Loss (gain) on disposal of assets 1,686
(9,866 )
Fixed asset and other long-lived asset impairment losses 2,726
2,213
Goodwill and trade name impairment losses 407,128
—
Non-cash restructuring charges 7,031
12,523
Increase (decrease) in allowance for doubtful accounts 4,161
(3,915 )
Deferred income taxes and other (111,177 ) (9,309 )
Changes in operating assets and liabilities, net of effect of acquisitions:

Accounts receivable 85,078
74,706
Inventories (116,002 ) (76,869 )
Prepaid expenses and other current assets (5,620 ) 17,640
Accounts payable 80,146
(16,887 )
Accrued expenses 20,863
(38,572 )
Income taxes payable 1,734
(9,257 )
Net cash provided by operating activities 60,168
59,360
Investing Activities:

Additions to property, plant and equipment (17,239 ) (53,524 )
Decrease in intangible and other assets 478
2,509
Misfit working capital settlement —
788
Proceeds from the sale of property, plant and equipment 533
44,584
Net investment hedge settlement —
752
Net cash used in investing activities (16,228 ) (4,891 )
Financing Activities:

Acquisition of common stock (947 ) (6,448 )
Distribution of noncontrolling interest earnings (428 ) (4,543 )
Debt borrowings 1,162,074
756,000
Debt payments (1,311,597 ) (839,629 )
Payment for shares of Fossil, S.L. —
(8,657 )
Debt issuance costs and other (5,579 ) (2,585 )
Net cash used in financing activities (156,477 ) (105,862 )
Effect of exchange rate changes on cash and cash equivalents (17,871 ) (1,930 )
Net decrease in cash and cash equivalents (130,408 ) (53,323 )
Cash and cash equivalents:

Beginning of period 297,330
289,275
End of period $ 166,922
$ 235,952

See notes to the unaudited condensed consolidated financial statements.

1. FINANCIAL STATEMENT POLICIES

Basis of Presentation. The condensed consolidated financial statements include the accounts of Fossil Group, Inc., a Delaware corporation, and its wholly and majority-owned subsidiaries (the “Company”).

The information presented herein includes the thirteen-week period ended March 30, 2024 (“First Quarter”) as compared to the thirteen-week period ended April 1, 2023 (“Prior Year Quarter”). The condensed consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary to present a fair statement of the Company’s financial position as of ~~September~~March 30, ~~2017,~~2024, and the results of operations for the ~~thirteen-week periods ended September 30, 2017 (“Third Quarter”)~~First Quarter and ~~October 1, 2016 (“~~Prior Year ~~Quarter”), respectively, and the thirty-nine week periods ended September 30, 2017 (“Year To Date Period”) and October 1, 2016 (“Prior Year YTD Period”).~~Quarter. All adjustments are of a normal, recurring nature.

These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Annual Report on Form 10-K filed by the Company pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), for the fiscal year ended December ~~31, 2016~~30, 2023, as amended (the ~~“2016~~“2023 Form 10-K”). Operating results for the ~~Third~~First Quarter are not necessarily indicative of the results to be achieved for the full fiscal year.

The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), which require the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the periods reported. We base our estimates on the information available at the time and various other assumptions believed to be reasonable under the circumstances. Actual results could differ from those estimates. The Company has not made any changes in its significant accounting policies from those disclosed in the ~~2016~~2023 Form ~~10-K other than the adoption of ASU 2017-04,~~ ~~Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment~~ ~~("ASU 2017-04").~~10-K.

Business. The Company isa global design, marketing and distribution company that specializes in consumer fashion accessories. Its principal offerings include an extensive line of men's and women's fashion watches and jewelry, handbags, small leather goods, belts and sunglasses. In the watch and jewelry product categories, the Company has a diverse portfolio of globally recognized owned and licensed brand names under which its products are marketed. The Company's products are distributed globally through various distribution channels, including wholesale in countries where it has a physical presence, direct to the consumer through its retail stores and commercial websites and through third-party distributors in countries where the Company does not maintain a physical presence. The Company's products are offered at varying price points to meet the needs of its customers, whether they are value-conscious or luxury oriented. Based on its extensive range of accessory products, brands, distribution channels and price points, the Company is able to target style-conscious consumers across a wide age spectrum on a global basis.

~~Hedging Instruments.~~ The Company is exposed to certain market risks relating to foreign exchange rates and interest rates. The Company actively monitors and attempts to mitigate but does not eliminate these exposures using derivative instruments including foreign exchange forward contracts ("forward contracts") and interest rate swaps. The Company’s foreign subsidiaries periodically enter into forward contracts to hedge the future payment of intercompany inventory transactions denominated in U.S. dollars. Additionally, the Company enters into forward contracts to manage fluctuations in Japanese yen exchange rates that will be used to settle future third-party inventory component purchases by a U.S. dollar functional currency subsidiary. If the Company was to settle its euro, Canadian dollar, British pound, Japanese yen, Mexican peso, Australian dollar and U.S dollar forward contracts as of September 30, 2017, the result would have been a net loss of approximately $12.1 million, net of taxes. This unrealized loss is recognized in other comprehensive income (loss), net of taxes on the Company's consolidated statements of income (loss) and comprehensive income (loss). Additionally, to the extent that any of these contracts are not considered to be perfectly effective in offsetting the change in the value of the cash flows being hedged, any changes in fair value relating to the ineffective portion of these contracts would be recognized in other income (expense)-net on the Company's consolidated statements of income (loss) and comprehensive income (loss). Also, the Company has entered into an interest rate swap agreement to effectively convert portions of its variable rate debt obligations to a fixed rate. Changes in the fair value of the interest rate swap is recorded as a component of accumulated other comprehensive income (loss) within stockholders' equity, and is recognized in interest expense in the period in which the payment is settled. To reduce exposure to changes in currency exchange rates adversely affecting the Company’s investment in foreign currency-denominated subsidiaries, the Company periodically enters into forward contracts designated as net investment hedges. Both realized and unrealized gains and losses from net investment hedges are recognized in the cumulative translation adjustment component of other comprehensive income (loss), and will be reclassified into earnings in the event the Company's underlying investments

are liquidated or disposed. The Company does not hold or issue derivative financial instruments for trading or speculative purposes. See “Note 10—Derivatives and Risk Management” for additional disclosures about the Company’s use of derivatives.

Operating Expenses. Operating expenses include selling, general and administrative ~~expenses (“~~("SG~~&A”~~&A"), ~~goodwill and trade name impairment~~other long-lived asset impairments and restructuring charges. SG&A expenses include selling and distribution expenses primarily consisting of sales and distribution labor costs, sales distribution center and warehouse facility costs, depreciation expense related to sales distribution and warehouse facilities, the four-wall operating costs of the ~~Company’s~~Company's retail stores, point-of-sale expenses, advertising expenses and art, and design and product development labor costs. SG&A also includes general and administrative expenses primarily consisting of administrative support labor and ~~“back office” or~~ support costs such as treasury, legal, information services, accounting, internal audit, human resources, executive management costs and costs associated with stock-based compensation. Restructuring charges include costs to ~~reorganize, refine~~reduce and optimize the Company’s infrastructure ~~as well as~~and store ~~closure expenses.~~closures. See "Note 16—Restructuring" for additional information on the Company’s restructuring plan.

Earnings (Loss) Per Share (“EPS”). Basic EPS is based on the weighted average number of common shares outstanding during each period. Diluted EPS adjusts basic EPS for the effects of dilutive common stock equivalents outstanding during each period using the treasury stock method.

The following table reconciles the numerators and denominators used in the computations of both basic and diluted EPS (in thousands, except per share data):


	For the 13 Weeks Ended March 30, 2024		For the 13 Weeks Ended April 1, 2023
Numerator:
Net income (loss) attributable to Fossil Group, Inc.	$	(24,296)	$	(41,262)
Denominator:
Basic EPS computation:
Basic weighted average common shares outstanding	52,491		51,840
Basic EPS	$	(0.46)	$	(0.80)
Diluted EPS computation:

Diluted weighted average common shares outstanding	52,491		51,840
Diluted EPS	$	(0.46)	$	(0.80)

For the 13 Weeks Ended September 30, 2017 For the 13 Weeks Ended October 1, 2016 For the 39 Weeks Ended September 30, 2017 For the 39 Weeks Ended October 1, 2016
Numerator:

Net income (loss) attributable to Fossil Group, Inc. $ (5,399 ) $ 17,356
$ (398,298 ) $ 29,170
Denominator:

Basic EPS computation:

Basic weighted average common shares outstanding 48,521
48,130
48,439
48,127
Basic EPS $ (0.11 ) $ 0.36
$ (8.22 ) $ 0.61
Diluted EPS computation:

Basic weighted average common shares outstanding 48,521
48,130
48,439
48,127
Effect of stock options, stock appreciation rights, restricted stock units and performance restricted stock units —
161
—
159
Diluted weighted average common shares outstanding 48,521
48,291
48,439
48,286
Diluted EPS $ (0.11 ) $ 0.36
$ (8.22 ) $ 0.60

At the end of the ~~Third~~First Quarter, ~~and Year To Date Period,~~ approximately ~~5.1 million and 4.4~~1.9 million weighted average shares issuable under stock-based awards ~~respectively,~~ were not included in the diluted EPS calculation because they were antidilutive. The total antidilutive weighted average shares included ~~approximately 1.2~~0.3 million weighted average performance-based shares at the end of ~~both~~ the ~~Third Quarter and Year To Date Period.~~First Quarter.

At the end of the Prior Year Quarter, ~~and Prior Year YTD Period,~~ approximately ~~1.6 million and 1.5~~2.0 million weighted average shares issuable under stock-based awards ~~respectively,~~ were not included in the diluted EPS calculation because they were antidilutive. ~~Approximately 1.1~~The total antidilutive weighted average shares included 0.3 million weighted average performance-based shares ~~were not included in the diluted EPS calculation~~ at the end of ~~both~~ the Prior Year ~~Quarter~~Quarter.

Cash, Cash Equivalents and ~~Prior Year YTD Period~~Restricted Cash. Restricted cash included in intangible and other-assets net was comprised primarily of pledged collateral to secure bank guarantees for the purpose of obtaining retail space. The following table provides a reconciliation of the cash, cash equivalents, and restricted cash balances as of March 30, 2024 and April 1, 2023 that are presented in the ~~performance targets were not met.~~condensed consolidated statement of cash flows (in thousands):


	March 30, 2024		April 1, 2023
Cash and cash equivalents	$	112,889	$	127,111
Restricted cash included in prepaid expenses and other current assets	78		107
Restricted cash included in intangible and other assets-net	3,896		5,036
Cash, cash equivalents and restricted cash	$	116,863	$	132,254

Recently Issued and Adopted Accounting Standards

In ~~August 2017,~~December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") ~~2017-12,~~ ~~Derivatives and Hedging~~, 2023-09, Income Taxes (Topic ~~815)~~740): ~~Targeted~~ Improvements to ~~Accounting for Hedging Activities~~ ~~("ASU 2017-12"). ASU 2017-12 amends~~Income Tax Disclosures, to enhance the transparency and ~~simplifies hedge accounting guidance in order~~decision usefulness of income tax disclosures through changes to ~~enable entities to better portray~~ the ~~economics of their risk management activities. The~~rate reconciliation and income taxes paid information. This guidance is effective for fiscal years beginning after December 15, ~~2018, including~~

~~interim periods within those periods. Early~~2024, with early adoption is permitted. The Company is ~~currently~~ evaluating the impact of ~~the standard~~adopting this guidance on its ~~consolidated~~ financial ~~statements and related~~statement disclosures.

In ~~May 2017,~~November 2023, the FASB issued ASU ~~2017-09,~~ ~~Compensation-Stock Compensation~~2023-07, Improvements to Reportable Segment Disclosures (Topic ~~718): Scope of Modification Accounting~~ ~~("ASU 2017-09"). ASU 2017-09 clarifies when~~280), to ~~account for a change~~improve reportable segment disclosures, primarily through enhanced disclosures about significant segment expenses. The amendments in this update will require public entities to disclose significant segment expenses that are regularly provided to the ~~terms or conditions~~Company's chief operating decision maker and included within segment profit and loss, an amount and description of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award changes as a result of the modification. Theits composition for other segment items, and expanded interim disclosures. This guidance is effective for ~~annual periods beginning after December 15, 2017, including interim periods within those periods. Early adoption is permitted. The Company is still evaluating the effect of adopting ASU 2017-09.~~

~~In January 2017, the FASB issued ASU 2017-01,~~ ~~Business Combinations (Topic 805): Clarifying the Definition of a Business~~ ("ASU 2017-01"). ASU 2017-01 clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The guidance is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. This standard will not have a material impact on the Company’s consolidated results of operations or financial position.

~~In November 2016, the FASB issued ASU 2016-18,~~ ~~Statement of Cash Flows (Topic 230): Restricted Cash~~ ("ASU 2016-18"). ASU 2016-18 requires that a statement of cash flows explain the change during the period in total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 is effective for annual periods, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted. This standard will not have a material impact on the Company’s consolidated results of operations or financial position.

~~In October 2016, the FASB issued ASU 2016-16,~~ ~~Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory~~ (“ASU 2016-16”). ASU 2016-16 requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. ASU 2016-16 is effective for fiscal years, and interim periods within those fiscal years beginning after December 15, ~~2017. Early adoption is permitted. This standard will not have a material impact on the Company’s consolidated results of operations or financial position.~~

~~In August 2016, the FASB issued ASU 2016-15,~~ ~~Statement of Cash Flows(Topic 230): Classification of Certain Cash Receipts and Cash Payments~~ (“ASU 2016-15”). ASU 2016-15 provides guidance on how certain cash receipts and cash payments should be presented and classified in the statement of cash flows with the objective of reducing existing diversity in practice with respect to these items. ASU 2016-15 is effective for annual periods,2023 and interim periods within ~~those~~fiscal years beginning after December 15, ~~2017. Early~~2024, with early adoption permitted. The Company is ~~permitted. This standard will not have a material~~evaluating the impact of adopting this guidance on ~~the Company’s consolidated results of operations or~~its financial ~~position.~~statement disclosures.

In ~~March 2016,~~October 2023, the FASB issued ASU ~~2016-04,~~ ~~Liabilities—Extinguishments of Liabilities (Subtopic 405-20)~~2023-06, Disclosure Improvements - ~~Recognition of Breakage for Certain Prepaid Stored-Value Products~~ ~~(“ASU 2016-04”). ASU 2016-04 entitles a company to derecognize amounts related to expected breakage~~Codification Amendments in Response to the ~~extent that it is probable~~SEC's Disclosure Update and Simplification Initiative ("ASU 2023-06"). The amendments in ASU 2023-06 modify the disclosure or presentation requirements of a ~~significant reversal~~variety of the recognized breakage amount will not subsequently occur. ASU 2016-04 is effective for annual periods, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted. This standard will not have a material impact on the Company’s consolidated results of operations or financial position.

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases (Topic 842): Amendments to~~topics in the FASB Accounting Standards ~~Codification®~~ ~~(“ASU 2016-02”~~Codification (the "Codification"), ~~which supersedes~~with the ~~existing guidance~~intention of clarifying or improving them and to align the requirements in the Codification with the

regulations of the U.S. Securities and Exchange Commission (the "SEC”). The effective date for ~~lease accounting,~~ ~~Leases (Topic 840)~~. ASU ~~2016-02 requires lessees to recognize leases~~2023-06 varies and is determined for each individual disclosure based on their balance sheets, and modifies accounting, presentation and disclosure for both lessors and lessees. ASU 2016-02 requires a modified retrospective approach for all leases existing at, or entered into after, the effective date of initial application, with an option to elect to use certain transition relief. ASU 2016-02 is effective for annual periods, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. Manythe SEC's removal of the ~~Company’s leases are considered operating leases and are~~related disclosure. ASU 2023-06 will not capitalized under ASC 840. Under ASC 842 the majority of these leases will qualify for capitalization and will result in the recognition of lease assets and lease liabilities once the new standard is adopted. The Company is in the process of reviewing lease contracts to determine the impact of adopting ASU 2016-02, but expects the standard to have ~~a material impact on the Company's financial position.~~

~~In May 2014, the FASB issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~ (“ASU 2014-09”). ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets, unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The FASB later amended ASU-2014-09 with the following:

•~~ASU 2015-14,~~ ~~Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date~~

~~ASU 2016-08~~ ~~Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)~~

~~ASU 2016-10~~ ~~Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing~~

~~ASU 2016-12~~ ~~Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients~~

•~~ASU 2016-20~~ ~~Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers~~

~~ASU 2017-13~~ ~~Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842)~~

The Company has performed a review of our revenue streams including reviewing key contracts and comparing current accounting policies and practices to the new standard to identify potential differences that could arise from the application of ASU 2014-09. The Company currently anticipates that the performance obligations underlying its core revenue streams (i.e., its retail and standard wholesale businesses) will remain substantially unchanged. Revenues for these businesses are generated through the sale of finished products, and will continue to be generally recognized at the point in time when merchandise is transferred to the customer and in an amount that considers the impacts of estimated allowances. The Company does anticipate some timing changes, including accelerated recognition of markdowns given to customers and a change in classification of certain customer considerations between gross profit and SG&A expenses. The Company does not believe these changes will have a material impact on the Company's financial position or results of operations.

The Organization for Economic Cooperation and Development ("OECD") and over 140 countries have agreed to enact a two-pillar solution to reform the international tax rules to address the challenges arising from the globalization and digitalization of the economy."The Pillar Two Global Anti-Base Erosion (GloBE) Rules" provide a coordinated system to ensure that multinational enterprises with revenues above 750 million euro pay a minimum effective tax rate of 15% tax on the income arising in each of the jurisdictions in which they operate. Many aspects of Pillar Two will be effective for tax years beginning in January 2024, with certain remaining impacts to be effective in 2025. Each country must enact its own legislation to apply the Pillar Two rules. The Company is currently finalizing its review of customer contracts. The standard will require additional disclosures about the nature of revenue as well as the judgment involved in the timing of revenue recognition. The Company will adopt ASU 2014-09 in the first quarter of fiscal 2018 and will use the modified retrospective approach.

~~Recently Adopted Accounting Standards~~

~~In January 2017, the FASB issued ASU 2017-04. Under ASU 2017-04, goodwill impairment testing is done by comparing the fair value of the reporting unit~~does not expect Pillar Two to its carrying value. If the carrying amount exceeds the fair value, the Company would recognize an impairment charge for the amount that the reporting unit's carrying value exceeds the fair value, not to exceed the total amount of goodwill allocated to that reporting unit. The Company concluded that ASU 2017-04 is preferable to the current guidance due to efficiency, since ASU 2017-04 eliminates the requirement to determine the fair value of individual assets and liabilities of a reporting unit to measure goodwill impairment. The Company early adopted ASU 2017-04 effective June 15, 2017 in conjunction with the interim impairment test of goodwill for all reporting units and goodwill impairment was recorded according to the new standard. The Company believes the adoption of ASU 2017-04 did not change the amount of impairment charges recorded in the second quarter of fiscal 2017. See “Note 2—Goodwill and Intangibles Impairment Charges” for additional information on our interim goodwill impairment test performed.

~~In March 2016, the FASB issued ASU 2016-09,~~ ~~Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting~~ (“ASU 2016-09”). ASU 2016-09 simplified several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. ASU 2016-09 was effective for the Company beginning fiscal year 2017 and did not have a material impact on ~~the Company’s consolidated~~its financial results, ~~of operations~~including its annual estimated effective tax rate or financial position. As a result of adoption, the Company now recognizes excess tax benefits or deficiencies associated with share-based compensation activity as an income tax expense or benefit in the period the shares vest or are settled. In addition, the Company now presents excess tax benefits from share-based compensation activity with other income tax cash flows as an operating activity on the statement of cash flows, which differs from the Company’s historical classification of excess tax benefits as a financing activity. The Company has electedliquidity for 2024, but will continue to apply this change in cash flow presentation on a prospective basis. The standard also permits the Company to make a policy election for how it accounts for forfeitures, and the Company has elected to continue estimating forfeitures.monitor future developments.

~~In July 2015, the FASB issued ASU 2015-11,~~ ~~Inventory (Topic 330): Simplifying the Measurement of Inventory~~ (“ASU 2015-11”). ASU 2015-11 requires that inventory be measured at the lower of cost and net realizable value. The standard was effective for the Company beginning fiscal year 2017 and did not have a material impact on the Company’s consolidated results of operations or financial position.

2. ~~GOODWILL AND INTANGIBLES IMPAIRMENT CHARGES~~REVENUE

Disaggregation of Revenue. The ~~Company evaluates its goodwill~~Company's revenue disaggregated by major product category and ~~intangible assets for impairment on an annual basis, or as facts and circumstances warrant. At the end~~timing of the fiscal year 2016, the Company's market capitalization exceeded the carrying amount of its net assets by 23%. At the end of the first quarter of fiscal 2017, the Company experienced a decline in market

~~capitalization and, as a result of the decline, the Company's market capitalization~~revenue recognition was 14% below the carrying amount of its net assets as of April 1, 2017. During the second quarter of fiscal 2017, the Company's market capitalization continued to decline, at which point the Company determined the decrease in stock price to be sustained and thus a strong indicator of impairment. Due to a change in key assumptions used in interim testing, including the decline in market capitalization and decline in sales projections, the Company believed that impairment of goodwill and trade names was probable as of June 15, 2017, and therefore performed interim tests for each reporting unit and trade name. Using a combination of discounted cash flow and guideline public company methodologies, the Company compared the fair value of each of its three reporting units with their carrying value and concluded that goodwill was fully impaired. Accordingly, in the second quarter of fiscal 2017, the Company recognized a pre-tax impairment charge in operations of $202.3 million, $114.3 million and $42.9 million in the Americas, Europe and Asia segments, respectively.

~~The changes in the carrying amount of goodwill were~~ as follows (in thousands):


	For the 13 Weeks Ended March 30, 2024
	Americas		Europe		Asia		Corporate		Total
Product type
Watches:
Traditional watches	$	78,706	$	57,132	$	50,723	$	—	$	186,561
Smartwatches	5,154		1,561		2,162		—		8,877
Total watches	$	83,860	$	58,693	$	52,885	$	—	$	195,438
Leathers	17,520		4,405		5,659		—		27,584
Jewelry	6,619		13,478		6,166		—		26,263
Other	2,018		2,144		828		609		5,599
Consolidated	$	110,017	$	78,720	$	65,538	$	609	$	254,884

Timing of revenue recognition
Revenue recognized at a point in time	$	109,909	$	78,560	$	65,425	$	609	$	254,503
Revenue recognized over time	108		160		113		—		381
Consolidated	$	110,017	$	78,720	$	65,538	$	609	$	254,884


	For the 13 Weeks Ended April 1, 2023
	Americas		Europe		Asia		Corporate		Total
Product type
Watches:
Traditional watches	$	91,357	$	71,803	$	62,266	$	—	$	225,426
Smartwatches	12,490		6,622		5,288		—		24,400
Total watches	$	103,847	$	78,425	$	67,554	$	—	$	249,826
Leathers	27,112		6,773		6,380		—		40,265
Jewelry	5,419		18,501		5,125		—		29,045
Other	1,553		1,974		1,077		1,296		5,900
Consolidated	$	137,931	$	105,673	$	80,136	$	1,296	$	325,036

Timing of revenue recognition
Revenue recognized at a point in time	$	137,467	$	105,484	$	80,026	$	1,021	$	323,998
Revenue recognized over time	464		189		110		275		1,038
Consolidated	$	137,931	$	105,673	$	80,136	$	1,296	$	325,036

Americas Europe Asia Total
Balance at December 31, 2016 $ 202,187
$ 110,291
$ 42,785
$ 355,263
Foreign currency changes 162
3,983
85
4,230
Impairment charges (202,349 ) (114,274 ) (42,870 ) $ (359,493 )
Balance at September 30, 2017 $ —
$ —
$ —
$ —

Contract Balances. As of March 30, 2024, the ~~second quarter~~Company had no material contract assets on the Company's condensed consolidated balance sheets and no deferred contract costs. The Company had contract liabilities of ~~fiscal 2017, the SKAGEN trade name with a carrying amount~~(i) $0.3 million as of ~~$55.6 million was written down~~March 30, 2024 and no contract liabilities as of December 30, 2023 related to its implied fair value of $27.3 million, resulting in a pre-tax impairment charge of $28.3 million; the MISFIT trade name with a carrying amount of $11.8 million was deemed not recoverable, resulting in a pre-tax impairment charge of $11.8remaining performance obligations on licensing income, (ii) $1.5 million and ~~the MICHELE trade name with a carrying amount~~$1.7 million as of ~~$18.5~~March 30, 2024 and December 30, 2023, respectively, primarily related to remaining performance obligations on wearable technology products and (iii) $2.5 million ~~was written down~~and $2.7 million as of March 30, 2024 and December 30, 2023, respectively, related to its implied fair value of $10.9 million, resulting in a pre-tax impairment charge of $7.6 million. The fair values of the Company's indefinite-lived SKAGEN and MICHELE trade names were estimated using the relief from royalty method. The fair value of the Company's definite-lived MISFIT trade name was estimated using a discounted cash flow methodology. A reduction in expected future cash flows negatively affected the valuation compared to previous valuation assumptions.gift cards issued.

Inventories consisted of the following (in thousands):


	March 30, 2024		December 30, 2023
Components and parts	$	15,580	$	18,931


Finished goods	208,557		233,903
Inventories	$	224,137	$	252,834

September 30, 2017 December 31, 2016
Components and parts $ 60,258
$ 49,438
Work-in-process 9,471
12,345
Finished goods 613,257
480,704
Inventories $ 682,986
$ 542,487

4. WARRANTY LIABILITIES

The Company’s warranty liability is recorded in accrued expenses-other in the Company’s condensed consolidated balance sheets. Warranty liability activity consisted of the following (in thousands):

Warranties issued and adjustments to preexisting warranties ⁽¹⁾

⁽¹⁾ Changes in cost estimates related to preexisting warranties are aggregated with accruals for new standard warranties issued and foreign currency changes.

The Company’s income tax (benefit) expense and related effective rates were as follows (in thousands, except percentage data):

The ~~higher~~ effective tax rate in the ~~Third~~First Quarter was favorable as compared to the Prior Year Quarter ~~is attributable~~due to ~~a higher structural rate resulting from an increased forecasted loss from~~ the ~~Company's U.S. operations which is tax-benefited at a higher tax rate than the tax rates used to calculate the tax expense on the profits from the Company's foreign operations. There were also~~Company recognizing $9.6 million of favorable discrete items, ~~occurring~~including the release of uncertain tax positions and additional

accrued interest income. The overall tax rate is impacted by the Global Intangible Low-Taxed Income (“GILTI”) provision of the Tax Cuts and Jobs Act, which requires the inclusion of certain foreign income in the ~~quarter. These positive impacts were partially offset by the increased~~ tax ~~expense resulting from all of the foreign and some of~~return which absorbs the U.S. ~~goodwill impairment charge being permanently nondeductible for tax purposes.~~net operating loss. Foreign income taxes are also paid on this same foreign income, resulting in double taxation. The ~~lower~~ effective tax rate ~~for the Year~~can vary from quarter-to-quarter due to Date Period as compared to the Prior Year YTD Period is primarily attributable to the increased tax expense resulting from all of the foreign and some of the U.S. goodwill impairment charge being permanently nondeductible for tax purposes and unfavorable discrete items that occurredchanges in the ~~Year to Date Period, mostly due to~~Company's global mix of earnings, the ~~additional~~resolution of income tax ~~expense resulting from the adoption of ASU 2016-09. See "Note 1-Financial Statement Policies" for additional disclosures about ASU 2016-09.~~audits and changes in tax law.

As of ~~September~~March 30, ~~2017,~~2024, the Company's total amount of unrecognized tax benefits, excluding interest and penalties, was ~~$21.7~~$17.3 million, all of which ~~$19.0 million~~ would favorably impact the effective tax rate in future periods, if recognized. The Company filed amended US income tax returns for 2014-2017 under the Coronavirus Aid, Relief and Economic Security Act (the “CARES

Act”) which included a provision for the carryback of U.S. NOLs. The IRS reviewed the Company’s 2019 and 2020 U.S. tax returns and resulting net operating losses, as well as the tax returns for 2014-2017, which were the carryback years. The Company received the income tax refund for the 2019 U.S tax NOL carryback in fiscal year 2021. On March 27, 2024, the Company was informed that its 2019, 2020, and NOL carryback claims were approved by the IRS and Joint Committee on Taxation. In April 2024, the Company received $57.3 million of tax refunds. The Company released corresponding uncertain tax positions of $8.8 million in the First Quarter. The Company reasonably expects that certain remaining uncertain tax positions will be resolved within the next twelve months, which if resolved favorably, would impact the tax rate by a benefit of approximately $14.5 million, including interest.

The Company is also subject to examinations in various state and foreign jurisdictions for its ~~2011-2016~~2013-2022 tax years, none of which the Company believes are significant, individually or in the aggregate. Tax audit outcomes and timing of tax audit settlements are subject to significant uncertainty.

The Company has classified uncertain tax positions as long-term income taxes payable, unless such amounts are expected to be ~~paid~~settled within twelve months of the condensed consolidated balance sheet date. As of ~~September~~March 30, ~~2017,~~2024, the Company ~~had~~has not recorded ~~$2.3 million of~~ unrecognized tax benefits, excluding interest and penalties, for positions that are expected to be settled within the next twelve months. Consistent with its past practice, the Company recognizes interest and/or penalties related to income tax overpayments and income tax underpayments in income tax expense and income taxes receivable/payable. At ~~September~~March 30, ~~2017,~~2024, the total amount of accrued income tax-related interest ~~and penalties~~ included in the condensed consolidated balance ~~sheet~~sheets was ~~$2.8~~$2.6 million ~~and $1.3~~of which $7.2 million ~~respectively. The income tax related~~is accrued interest expense and $4.6 million is accrued ~~in the Third Quarter was offset by reductions of~~ interest ~~expense associated with the derecognition of uncertain tax benefits. For the Year To Date Period, the Company~~income. There were no accrued ~~income~~ tax-related ~~interest expense $0.5 million.~~penalties.

An increase in long-term deferred tax assets is mostly attributable to the future tax amortization of the tax basis in goodwill and trade names which were impaired for GAAP purposes, as well as an increased amount of foreign tax credit carry forwards.

As of September 30, 2017, as a result of proposed U.S. Tax Reform and the planned refinancing of existing debt obligations, the Company is continuing to evaluate its current assertions with respect to certain undistributed earnings in various foreign jurisdictions. At present, the Company believes it can meet its future U.S. obligations through a combination of earnings not considered indefinitely reinvested, future current earnings of foreign subsidiaries, and distributions of earnings in jurisdictions within which no additional U.S. tax would be incurred as a result of excess foreign tax credits associated with such earnings. The Company will continue to monitor its indefinite reinvestment assertions with respect to all foreign jurisdictions as developments occur within proposed U.S. Tax Reform proposals and the planned refinancing of its existing debt obligations.

6. STOCKHOLDERS’ EQUITY

Common and Preferred Stock. The Company has 100,000,000 shares of common stock, par value $0.01 per share, authorized, with 52,491,710 and 52,487,020 shares issued and outstanding at March 30, 2024 and December 30, 2023, respectively. The Company has 1,000,000 shares of preferred stock, par value $0.01 per share, authorized, with none issued or outstanding at March 30, 2024 or December 30, 2023. Rights, preferences and other terms of preferred stock will be determined by the Board of Directors at the time of issuance.

Common Stock Repurchase Programs. Purchases of the Company’s common stock ~~have been~~are made from time to time pursuant to its repurchase programs, subject to market conditions and at prevailing market prices, through the open market. Repurchased shares of common stock are recorded at cost and become authorized but unissued shares which may be issued in the future for general corporate or other purposes. The Company may terminate or limit its stock repurchase program at any time. In the event the repurchased shares are ~~canceled,~~cancelled, the Company accounts for retirements by allocating the repurchase price to common stock, additional paid-in capital and retained (deficit) earnings. The repurchase price allocation is based upon the equity contribution associated with historical issuances. The repurchase programs ~~have been~~are conducted pursuant to Rule 10b-18 of the Exchange Act.

AtAs of March 30, 2024 and December ~~31, 2016 and September~~ 30, ~~2017,~~2023, all treasury stock had been effectively retired. As of ~~September~~March 30, ~~2017,~~2024, the Company had ~~$824.2~~$20.0 million of repurchase authorizations remaining under its ~~combined~~ repurchase ~~programs. However, under the Company's credit agreement, the~~program. The Company ~~is restricted from making open market repurchases of its common stock.~~

~~The following tables reflect the Company’s~~did not repurchase any common stock under its authorized stock repurchase ~~activity for~~plans during the ~~periods indicated (in millions):~~

For the 13 Weeks Ended September 30, 2017 For the 13 Weeks Ended October 1, 2016
Fiscal Year
Authorized
Dollar Value
Authorized
Termination Date
Number of
Shares
Repurchased

Dollar Value
Repurchased

Number of
Shares
Repurchased

Dollar Value
Repurchased
2014 $ 1,000.0
December 2018 —
$ —
—
$ —
2010 $ 30.0
None —
$ —
—
$ —
First Quarter or Prior Year Quarter.

For the 39 Weeks Ended September 30, 2017 For the 39 Weeks Ended October 1, 2016
Fiscal Year
Authorized
Dollar Value
Authorized
Termination Date
Number of
Shares
Repurchased

Dollar Value
Repurchased

Number of
Shares
Repurchased

Dollar Value
Repurchased
2014 $ 1,000.0
December 2018 —
$ —
0.1
$ 5.2
2010 $ 30.0
None —
$ —
—
$ —

~~Controlling and Noncontrolling Interest.~~ ~~The following tables summarize the changes in equity attributable to controlling and noncontrolling interest (in thousands):~~

7. EMPLOYEE BENEFIT PLANS

Stock-Based Compensation Plans. The following table summarizes ~~stock options and~~ stock appreciation rights activity during the ~~Third~~First Quarter:

Aggregate intrinsic value is before income taxes and is based on (i) the exercise price for outstanding and exercisable options/rights at September 30, 2017 and (ii) the fair market value of the Company’s common stock on the exercise date for options/rights that were exercised during the Third Quarter.

~~Stock Options and Stock Appreciation Rights Outstanding and Exercisable.~~ ~~The following tables summarize information with respect to stock options and stock appreciation rights outstanding and exercisable at September 30, 2017:~~

Cash Stock Appreciation Rights Outstanding Cash Stock Appreciation Rights Exercisable
Range of
Exercise Prices Number of
Shares Weighted-
Average
Exercise
Price Weighted-
Average
Remaining
Contractual
Term Number of
Shares Weighted- Average Exercise Price
(in Thousands) (in Years) (in Thousands)
$29.78 - $47.99 61
$ 36.73
6.2 11
$ 36.73
Total 61
$ 36.73
6.2 11
$ 36.73

Stock Options Outstanding Stock Options Exercisable
Range of
Exercise Prices

Number of
Shares

Weighted-
Average
Exercise
Price

Weighted-
Average
Remaining
Contractual
Term

Number of
Shares
Weighted-
Average
Exercise
Price
(in Thousands) (in Years) (in Thousands)
$13.65 - $29.49 35
$ 14.12
1.4 35
$ 14.12
$29.78 - $47.99 79
37.00
1.5 79
37.00
$55.04 - $83.83 91
80.80
3.2 91
80.80
$95.91 - $131.46 129
127.97
4.1 129
127.97
Total 334
$ 81.69
3.0 334
$ 81.69

Stock Appreciation Rights Outstanding Stock Appreciation Rights Exercisable
Range of
Exercise Prices Number of
Shares Weighted-
Average
Exercise
Price Weighted-
Average
Remaining
Contractual
Term Number of
Shares Weighted-
Average
Exercise
Price
(in Thousands) (in Years) (in Thousands)
$13.65 - $29.49 101
$ 29.49
6.8 34
$ 29.49
$29.78 - $47.99 1,485
38.07
6.2 310
38.91
$55.04 - $83.83 125
79.16
4.8 90
79.91
$95.91 - $131.46 103
114.46
3.7 103
114.46
Total 1,814
$ 44.78
6.0 537
$ 59.74

~~Restricted Stock,~~ Restricted Stock Units and Performance Restricted Stock Units. The following table summarizes restricted stock ~~restricted stock units~~unit and performance restricted stock ~~units~~unit activity during the ~~Third~~First Quarter:


Restricted Stock Units and Performance Restricted Stock Units					Restricted Stock Units and Performance Restricted Stock Units	Number of Shares	Weighted-Average Grant Date Fair Value Per Share
						(in Thousands)
Restricted Stock, Restricted Stock Units and Performance Restricted Stock Units	Number of Shares		Weighted-Average Grant Date Fair Value Per Share
	(in Thousands)
Nonvested at July 1, 2017	2,785		$	24.21
Nonvested at December 30, 2023
Granted	254		9.98
Vested	(17	)	37.81
Forfeited	(57	)	23.86
Nonvested at September 30, 2017	2,965		$	22.92
Nonvested at March 30, 2024

The total fair value of restricted stock ~~and restricted stock~~ units vested was less than $0.1 million during the ~~Third Quarter was approximately $0.2 million.~~First Quarter. Vesting of performance restricted stock units is based on achievement of operating margin growth and achievement of sales growth and operating margin targets in relation to the performance of a certain identified peer ~~group, particular sales growth~~group.

Long-Term Incentive Plans. On the date of the Company’s annual stockholders meeting, each non-employee director automatically receives a grant of restricted stock units which vest 100% on the earlier of one year from the date of grant or the date of the Company's next annual stockholders meeting, provided such director is providing services to the Company or a subsidiary of the Company on that date. Beginning with the grant in ~~relation~~fiscal year 2021, non-employee directors may elect to defer receipt of all or a ~~defined sales plan and achievement~~portion of ~~succession plans~~the restricted stock units settled in common stock of the Company upon the vesting date. In addition, beginning in fiscal year 2021, non-employee directors may defer the cash portion of their annual fees. Each participant may also elect to have the cash portion of his or her annual fees for ~~key talent.~~each calendar year treated as if invested in units of common stock of the Company.

8. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following tables ~~illustrate~~disclose changes in the balances of each component of accumulated other comprehensive income (loss), net of taxes (in thousands):


	For the 13 Weeks Ended March 30, 2024
	Currency Translation Adjustments		Cash Flow Hedges
			Forward Contracts		Pension Plan		Total
Beginning balance	$	(83,906)	$	1,688	$	5,813	$	(76,405)
Other comprehensive income (loss) before reclassifications	(2,486)		674		(19)		(1,831)
Tax (expense) benefit	—		76		—		76
Amounts reclassed from accumulated other comprehensive income (loss)	—		30		—		30
Tax (expense) benefit	—		74		—		74
Total other comprehensive income (loss)	(2,486)		646		(19)		(1,859)
Ending balance	$	(86,392)	$	2,334	$	5,794	$	(78,264)

See “Note 10—Derivatives and Risk Management” for additional disclosures about the Company’s use of derivatives.

9. SEGMENT INFORMATION

The Company reports segment information based on the “management ~~approach”.~~approach.” The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments.

The Company manages its business primarily on a geographic basis. The Company’s reportable operating segments are comprised of (i) Americas, (ii) Europe and (iii) Asia. Each reportable operating segment includes sales to wholesale and distributor customers, and sales through Company-owned retail stores and e-commerce activities based on the location of the selling entity. The Americas segment primarily includes sales to customers based in Canada, Latin America and the United States. The Europe segment primarily includes sales to customers based in European countries, the Middle East and Africa. The Asia segment primarily includes sales to customers based in Australia, greater China (including mainland China, Hong Kong, Macau and Taiwan), India, Indonesia, Japan, Malaysia, New Zealand, Singapore, South Korea ~~Taiwan~~ and Thailand. Each reportable operating segment provides similar products and services.

The Company evaluates the performance of its reportable segments based on net sales and operating income (loss). Net sales for geographic segments are based on the location of the selling entity. Operating income (loss) for each segment includes net sales to third parties, related cost of sales and operating expenses directly attributable to the segment. ~~Global strategic initiatives such as brand building~~Corporate includes peripheral revenue generating activities from factories and ~~omni-channel activities~~intellectual property and general corporate expenses, including certain administrative, legal, accounting, technology support costs, equity compensation costs, payroll costs attributable to

executive management, brand management, product development, art, creative/product design, marketing, strategy, compliance and back office supply chain expenses that are not allocated to the various segments because they are managed at the corporate ~~level.~~level internally. The Company does not include intercompany transfers between segments for management reporting purposes.

Summary information by operating segment was as follows (in thousands):


	For the 13 Weeks Ended March 30, 2024				For the 13 Weeks Ended April 1, 2023
	Net Sales		Operating Income (Loss)		Net Sales		Operating Income (Loss)
Americas	$	110,017	$	8,755	$	137,931	$	12,555
Europe	78,720		7,393		105,673		6,969
Asia	65,538		5,802		80,136		7,200
Corporate	609		(51,156)		1,296		(64,032)
Consolidated	$	254,884	$	(29,206)	$	325,036	$	(37,308)

The following ~~tables reflect~~table reflects net sales for each class of similar products in the periods presented (in thousands, except percentage data):


	For the 13 Weeks Ended March 30, 2024				For the 13 Weeks Ended April 1, 2023
	Net Sales		Percentage of Total		Net Sales		Percentage of Total
Watches:
Traditional watches	$	186,561	73.2	%	$	225,426	69.4	%
Smartwatches	8,877		3.5		24,400		7.5
Total watches	$	195,438	76.7	%	$	249,826	76.9	%
Leathers	27,584		10.8		40,265		12.4
Jewelry	26,263		10.3		29,045		8.9
Other	5,599		2.2		5,900		1.8
Total	$	254,884	100.0	%	$	325,036	100.0	%

For the 13 Weeks Ended September 30, 2017 For the 13 Weeks Ended October 1, 2016
Net Sales Percentage of Total Net Sales Percentage of Total
Watches $ 551,913
80.1 % $ 567,148
76.9 %
Leathers 75,660
11.0
93,338
12.6
Jewelry 47,729
6.9
60,237
8.2
Other 13,420
2.0
17,267
2.3
Total $ 688,722
100.0 % $ 737,990
100.0 %

10. DERIVATIVES AND RISK MANAGEMENT

Cash Flow Hedges. The primary risks managed by using derivative instruments are the fluctuations in global currencies that will ultimately be used by non-U.S. dollar functional currency subsidiaries to settle future payments of intercompany inventory transactions denominated in U.S. dollars. Specifically, the Company projects future intercompany purchases by its non-U.S. dollar functional currency subsidiaries generally over a period of up to 24 months. The Company enters into forward contracts, generally for up to 85% of the forecasted purchases, to manage fluctuations in global currencies that will ultimately be used to settle such U.S. dollar denominated inventory purchases. Additionally, the Company enters into forward contracts to manage fluctuations in Japanese yen exchange rates that will be used to settle future third-party inventory component purchases by a U.S. dollar functional currency subsidiary. Forward contracts represent agreements to exchange the currency of one country for the currency of another country at an agreed-upon settlement date and exchange rate. These forward contracts are designated as single cash flow hedges. Fluctuations in exchange rates will either increase or decrease the Company’s U.S. dollar equivalent cash flows from these inventory transactions, which will affect the Company’s U.S. dollar earnings. Gains or losses on the forward contracts are expected to offset these fluctuations to the extent the cash flows are hedged by the forward contracts.

These forward contracts meet the criteria for hedge accounting, which requires that they represent foreign currency-denominated forecasted transactions in which (i) the operating unit that has the foreign currency exposure is a party to the hedging instrument and (ii) the hedged transaction is denominated in a currency other than the hedging unit’s functional currency.

At the inception of each forward contract designated as a cash flow hedge, the hedging relationship is expected to be highly effective in achieving offsetting cash flows attributable to the hedged risk. The Company assesses hedge effectiveness under the critical terms matched method at inception and at least quarterly throughout the life of the hedging relationship. If the critical terms (i.e., amounts, currencies and settlement dates) of the forward contract match the terms of the forecasted transaction, the Company concludes that the hedge is effective.

For a derivative instrument that is designated and qualifies as a cash flow hedge, ~~the effective portion of~~ the gain or loss on the derivative is reported as a component of accumulated other comprehensive income (loss), net of taxes and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings. Due to the high degree of effectiveness between the hedging instruments and the underlying exposures being hedged, the Company’s hedges resulted in no ineffectiveness in the condensed consolidated statements of income (loss) and comprehensive income (loss), and there were no components excluded from the assessment of hedge effectiveness for the Third Quarter, Prior Year Quarter, Year To Date Period or Prior Year YTD Period.

All derivative instruments are recognized as either assets or liabilities at fair value in the condensed consolidated balance sheets. Derivatives designated as cash flow hedges are recorded at fair value at each balance sheet date and the change in fair value is recorded to accumulated other comprehensive income (loss) within the equity section of the Company’s condensed consolidated balance sheet until such derivative’s gains or losses become realized or the cash flow hedge relationship is terminated. If the cash flow hedge relationship is terminated, the derivative’s gains or losses that are recorded in accumulated other comprehensive income (loss) will be recognized in earnings when the hedged cash flows occur. However, for cash flow hedges that are terminated because the forecasted transaction is not expected to occur in the original specified time period, the derivative’s gains or losses are immediately recognized in earnings. There were no gains or losses reclassified into earnings as a result of the discontinuance of cash flow hedges in the Third Quarter, Prior Year Quarter, Year To Date Period or Prior Year YTD Period. Hedge accounting is discontinued if it is determined that the derivative is not highly effective. The Company records all forward contract hedge assets and liabilities on a gross basis as they do not meet the balance sheet netting criteria because the Company does not have master netting agreements established with the derivative counterparties that would allow for net settlement.

As of ~~September~~March 30, ~~2017,~~2024, the Company had the following outstanding forward contracts designated as cash flow hedges that were entered into to hedge ~~the~~ future payments of inventory transactions (in millions):


Functional Currency		Contract Currency
Type	Amount	Type	Amount
Euro	29.8	U.S. dollar	33.3
Canadian dollar	15.7	U.S. dollar	11.8
British pound	2.6	U.S. dollar	3.3
Mexican peso	39.6	U.S. dollar	2.2
Japanese yen	236.1	U.S. dollar	1.8
Australian dollar	1.8	U.S. dollar	1.2
U.S. dollar	2.2	Japanese yen	300.0

Functional Currency Contract Currency
Type Amount Type Amount
Euro 253.4
U.S. dollar 291.0
Canadian dollar 95.0
U.S. dollar 73.2
British pound 43.5
U.S. dollar 58.1
Japanese yen 4,636.4
U.S. dollar 42.8
Mexican peso 378.6
U.S. dollar 20.3
Australian dollar 21.2
U.S. dollar 16.5
U.S. dollar 41.1
Japanese yen 4,470.0

The Company is also exposed to interest rate risk related to its outstanding debt. To manage the interest rate risk related to its U.S.-based term loan (as amended and restated, the "Term Loan") which had an outstanding balance of $168.3 million net of debt issuance costs as of September 30, 2017, the Company entered into an interest rate swap agreement on July 26, 2013 with a term of approximately five years. The objective of this hedge is to offset the variability of future payments associated with interest rates on the Term Loan. The interest rate swap agreement hedges the 1-month London Interbank Offer Rate ("LIBOR") based variable rate debt obligations under the Term Loan. Under the terms of the swap, the Company pays a fixed interest rate of 1.288% per annum to the swap counterparty plus the LIBOR rate applicable margin of 3.50%. See “Note 14—Debt Activity” for additional disclosures about the Company’s Term Loan. The notional amount amortizes through May 17, 2018 and coincides with repayments on the underlying loan. The Company receives interest from the swap counterparty at a variable rate based on 1-month LIBOR. This hedge is designated as a cash flow hedge.

Non-designated Hedges. The Company also periodically enters into forward contracts to manage exchange rate risks associated with certain intercompany transactions and for which the Company does not elect hedge accounting treatment. As of ~~September~~March 30, ~~2017,~~2024, the Company did not have any non-designated forward contracts outstanding. As of December 30, 2023, the Company had non-designated forward contracts of ~~approximately $2.2~~$1.5 million on ~~28.3~~27.1 million rand associated with a South African rand-denominated foreign subsidiary. Changes in the fair value of derivatives not designated as hedging instruments are recognized in earnings when they occur.

The ~~effective portion of~~ gains and losses on cash flow hedges that were recognized in other comprehensive income (loss), net of taxes ~~during the Third Quarter, Prior Year Quarter, Year To Date Period and Prior Year YTD Period~~ are set forth below (in thousands):


	For the 13 Weeks Ended March 30, 2024		For the 13 Weeks Ended April 1, 2023
Cash flow hedges:
Forward contracts	$	750	$	(2,682)

Total gain (loss) recognized in other comprehensive income (loss), net of taxes	$	750	$	(2,682)

For the 13 Weeks Ended September 30, 2017 For the 13 Weeks Ended October 1, 2016
Cash flow hedges:

Forward contracts $ (13,923 ) $ 2,708
Interest rate swaps 3
296
Total gain (loss) recognized in other comprehensive income (loss), net of taxes $ (13,920 ) $ 3,004

For the 39 Weeks Ended September 30, 2017 For the 39 Weeks Ended October 1, 2016
Cash flow hedges:

Forward contracts $ (21,731 ) $ 2,488
Interest rate swaps 146
(1,217 )
Total gain (loss) recognized in other comprehensive income (loss), net of taxes $ (21,585 ) $ 1,271

The following ~~table illustrates~~tables disclose the ~~effective portion of~~ gains and losses on derivative instruments recorded in accumulated other comprehensive income (loss), net of taxes during the term of the hedging relationship and reclassified into earnings, and gains and losses on derivatives not designated as hedging instruments recorded directly to earnings ~~during the Third Quarter, Prior Year Quarter, Year To Date Period and Prior Year YTD Period~~ (in thousands):


Derivative Instruments	Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) Location	Effect of Derivative Instruments	For the 13 Weeks Ended March 30, 2024		For the 13 Weeks Ended April 1, 2023
Forward contracts designated as cash flow hedging instruments	Cost of sales	Total gain (loss) reclassified from accumulated other comprehensive income (loss)	$	(71)	$	432
Forward contracts designated as cash flow hedging instruments	Other income (expense)-net	Total gain (loss) reclassified from accumulated other comprehensive income (loss)	$	175	$	(328)
Forward contracts not designated as hedging instruments	Other income (expense)-net	Total gain (loss) recognized in income	$	5	$	25

Derivative Instruments
Condensed Consolidated
Statements of Income (Loss)
and Comprehensive
Income (Loss) Location

Effect of Derivative
Instruments
For the 13 Weeks Ended September 30, 2017 For the 13 Weeks Ended October 1, 2016
Forward contracts designated as cash flow hedging instruments Other income (expense)-net Total gain (loss) reclassified from accumulated other comprehensive income (loss) $ (4,133 ) $ 1,907
Forward contracts not designated as hedging instruments Other income (expense)-net Total gain (loss) recognized in income $ (12 ) $ 75
Interest rate swap designated as a cash flow hedging instrument Interest expense Total gain (loss) reclassified from accumulated other comprehensive income (loss) $ (16 ) $ (263 )

Derivative Instruments
Condensed Consolidated
Statements of Income (Loss)
and Comprehensive
Income (Loss) Location

Effect of Derivative
Instruments

For the 39 Weeks Ended
September 30, 2017

For the 39 Weeks Ended
October 1, 2016
Forward contracts designated as cash flow hedging instruments Other income (expense)-net Total gain (loss) reclassified from accumulated other comprehensive income (loss) $ 36
$ 6,858
Forward contracts not designated as hedging instruments Other income (expense)-net Total gain (loss) recognized in income $ 170
$ (222 )
Interest rate swap designated as a cash flow hedging instrument Interest expense Total gain (loss) reclassified from accumulated other comprehensive income (loss) $ (257 ) $ (846 )

The following table discloses the fair value amounts for the Company’s derivative instruments as separate asset and liability values, presents the fair value of derivative instruments on a gross basis, and identifies the line items in the condensed consolidated balance sheets in which the fair value amounts for these categories of derivative instruments are included (in thousands):


	Asset Derivatives						Liability Derivatives
	March 30, 2024			December 30, 2023			March 30, 2024			December 30, 2023
Derivative Instruments	Condensed Consolidated Balance Sheets Location	Fair Value		Condensed Consolidated Balance Sheets Location	Fair Value		Condensed Consolidated Balance Sheets Location	Fair Value		Condensed Consolidated Balance Sheets Location	Fair Value
Forward contracts designated as cash flow hedging instruments	Prepaid expenses and other current assets	$	1,286	Prepaid expenses and other current assets	$	339	Accrued expenses-other	$	394	Accrued expenses-other	$	1,044
Forward contracts not designated as cash flow hedging instruments	Prepaid expenses and other current assets	—		Prepaid expenses and other current assets	—		Accrued expenses-other	—		Accrued expenses-other	7



Forward contracts designated as cash flow hedging instruments	Intangible and other assets-net	—		Intangible and other assets-net	20		Other long-term liabilities	—		Other long-term liabilities	28

Total		$	1,286		$	359		$	394		$	1,079

Asset Derivatives Liability Derivatives
September 30, 2017 December 31, 2016 September 30, 2017 December 31, 2016
Derivative Instruments
Condensed
Consolidated
Balance Sheets
Location

Fair
Value

Condensed
Consolidated
Balance Sheets
Location

Fair
Value

Condensed
Consolidated
Balance Sheets
Location

Fair
Value

Condensed
Consolidated
Balance Sheets
Location

Fair
Value
Forward contracts designated as cash flow hedging instruments Prepaid expenses and other current assets $ 2,710
Prepaid expenses and other current assets $ 23,288
Accrued expenses- other $ 15,215
Accrued expenses- other $ 4,696
Forward contracts not designated as cash flow hedging instruments Prepaid expenses and other current assets 72
Prepaid expenses and other current assets —
Accrued expenses- other 1
Accrued expenses- other 2
Interest rate swap designated as a cash flow hedging instrument Prepaid expenses and other current assets 109
Prepaid expenses and other current assets —
Accrued expenses- other 15
Accrued expenses- other 613
Forward contracts designated as cash flow hedging instruments Intangible and other assets-net 448
Intangible and other assets-net 5,648
Other long-term liabilities 4,557
Other long-term liabilities 268
Interest rate swap designated as a cash flow hedging instrument Intangible and other assets-net —
Intangible and other assets-net 73
Other long-term liabilities —
Other long-term liabilities —
Total $ 3,339
$ 29,009
$ 19,788
$ 5,579

The following tables summarize the effects of the Company's derivative instruments on earnings (in thousands):


	Effect of Derivative Instruments
	For the 13 Weeks Ended March 30, 2024				For the 13 Weeks Ended April 1, 2023
	Cost of Sales		Other Income (Expense)-net		Cost of Sales		Other Income (Expense)-net
Total amounts of income and expense line items presented in the condensed consolidated statements of income (loss) and comprehensive income (loss) in which the effects of cash flow hedges are recorded	$	121,392	$	3,887	$	164,319	$	2,733
Gain (loss) on cash flow hedging relationships:
Forward contracts designated as cash flow hedging instruments:
Total gain (loss) reclassified from other comprehensive income (loss)	$	(71)	$	175	$	432	$	(328)
Forward contracts not designated as hedging instruments:
Total gain (loss) recognized in income	$	—	$	5	$	—	$	25

At the end of the ~~Third~~First Quarter, the Company had forward contracts designated as cash flow hedges with maturities extending through ~~June 2019.~~March 2025. As of ~~September~~March 30, ~~2017,~~2024, an estimated net ~~loss~~gain of ~~$9.2~~$1.0 million is expected to be reclassified into earnings within the next twelve months at prevailing foreign currency exchange rates. ~~See “Note 1—Financial Statement Policies” for additional disclosures on foreign currency hedging instruments.~~

11. FAIR VALUE MEASUREMENTS

The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date.

~~Accounting Standards Codification ("ASC")~~ASC 820, Fair Value Measurement and Disclosures (“ASC 820”), establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into three broad levels as follows:

•Level 1 — Quoted prices in active markets for identical assets or liabilities.

•Level 2 — Inputs, other than quoted prices in active markets, that are observable either directly or indirectly.

•Level 3 — Unobservable inputs based on the Company’s assumptions.

ASC 820 requires the use of observable market data if such data is available without undue cost and effort.

The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of ~~September~~March 30, ~~2017~~2024 (in thousands):


	Fair Value at September 30, 2017									Fair Value at March 30, 2024
	Level 1		Level 2		Level 3		Total			Level 1	Level 2	Level 3	Total
Assets:									Assets:
Forward contracts	$	—	$	3,230	$	—	$	3,230
Deferred compensation plan assets:
Investment in publicly traded mutual funds	2,605		—		—		2,605
Interest rate swap	—		109		—		109

Total

Total

Total	$	2,605	$	3,339	$	—	$	5,944
Liabilities:									Liabilities:

Forward contracts	$	—	$	19,773	—		$	19,773
Interest rate swap	—		15		—		15
Forward contracts
Forward contracts

Total	$	—	$	19,788	$	—	$	19,788
Total
Total

The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of December ~~31, 2016~~30, 2023 (in thousands):


	Fair Value at December 30, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Forward contracts	$	—	$	359	$	—	$	359



Total	$	—	$	359	$	—	$	359
Liabilities:
Contingent consideration	$	—	$	—	$	586	$	586
Forward contracts	—		1,079		—		1,079

Total	$	—	$	1,079	$	586	$	1,665

Fair Value at December 31, 2016
Level 1 Level 2 Level 3 Total
Assets:

Forward contracts $ —
$ 28,936
$ —
$ 28,936
Deferred compensation plan assets:

Investment in publicly traded mutual funds 2,385
—
—
2,385
Interest rate swap —
73
—
73
Total $ 2,385
$ 29,009
$ —
$ 31,394
Liabilities:

Forward contracts —
4,966
—
4,966
Interest rate swap —
613
—
613
Total $ —
$ 5,579
$ —
$ 5,579

The fair values of the Company’s deferred compensation plan assets are based on quoted prices. The deferred compensation plan assets are recorded in intangible and other assets-net in the Company’s condensed consolidated balance sheets. The fair values of the Company’s forward contracts are based on published quotations of spot currency rates and forward points, which are converted into implied forward currency rates. The fair values of the interest rate swap assets and liabilities are determined using valuation models based on market observable inputs, including forward curves, mid-market price and volatility levels. See ~~“Note~~"Note 10—Derivatives and Risk ~~Management”~~Management", for additional disclosures about the ~~interest rate swaps and~~ forward contracts.

As of ~~September~~March 30, ~~2017, debt,~~2024, the Company's Notes (as defined in Note 15— Debt Activity), excluding unamortized debt issuance costs, were recorded at cost and ~~capital leases,~~had a carrying value of $150.0 million and a fair value of approximately $67.5 million. The fair value of the Company's Notes was based on Level 1 inputs. The Company's Revolving Facility (as defined in Note 15—Debt Activity) was recorded at cost and had a carrying value of ~~$486.1~~$57.5 million and a fair value of approximately ~~$480.6~~$44.6 million. The fair value of ~~debt~~the Company's Revolving Facility was ~~obtained from a third-party~~ based on ~~observable market~~Level 2 inputs.

During the First Quarter, operating lease right-of-use ("ROU") assets with a carrying amount of $1.8 million and property, plant and equipment-net with a carrying value of $0.2 million were written down to a fair value of $1.5 million and $0.1 million, respectively, resulting in impairment charges of $0.4 million. During the Prior Year Quarter, $0.1 million of impairment charges were recorded for ROU assets with a carrying amount of $0.1 million.

The fair ~~value~~values of ~~goodwill~~operating lease ROU assets and ~~trade names are measured on a non-recurring basis~~fixed assets related to retail stores were determined using Level 3 inputs, including forecasted cash flows ~~discounts rates~~ and ~~implied royalty~~discount rates.

During the second quarter of fiscal 2017, the Company fully impaired its goodwill balance and recorded pre-tax impairment charges of $202.3 million, $114.3 million and $42.9 million in the Americas, Europe and Asia segments, respectively.

During the second quarter of fiscal 2017, the SKAGEN trade name with a carrying amount of $55.6 million was written down to its implied fair value of $27.3 million, resulting in a pre-tax impairment charge of $28.3 million; the MISFIT trade name with a carrying amount of $11.8 million was deemed not recoverable, resulting in a pre-tax impairment charge of $11.8 million and the MICHELE trade name with a carrying amount of $18.5 million was written down to its implied fair value of

$10.9 million, resulting in a pre-tax impairment charge of $7.6 million. Trade name impairment charges were recorded in the Corporate cost area. See “Note 2—Goodwill and Intangibles Impairment Charges” for additional disclosures about goodwill and trade name impairment.

~~In accordance with the provisions of ASC 360,~~ ~~Property, Plant and Equipment~~, property, plant and equipment-net with a carrying amount of $6.0 million related to retail store leasehold improvements and fixturing and related key money in the amount of $0.6 million were deemed not recoverable, resulting in an impairment charge of $6.6 million during the Year To Date Period.

~~The fair values of assets related to Company-owned retail stores were determined using Level 3 inputs.~~ Of the ~~$6.6~~$0.4 million impairment expense ~~$3.6~~in the First Quarter, $0.2 million ~~$1.4 million and $0.5 million were~~was recorded in ~~restructuring charges~~other long-lived asset impairments in the ~~Americas, Europe~~Asia segment and ~~Asia segments, respectively, and $0.8~~$0.2 million ~~and $0.3 million were~~was recorded in ~~SG&A~~other long-lived asset impairments in the Europe ~~and Asia segments, respectively.~~ segment. The $0.1 million impairment expense in the Prior Year Quarter, was recorded in other long-lived asset impairments in the Europe segment.

~~During the second quarter of fiscal 2017, the Company recorded a pre-tax impairment charge of $1.6 million related to the write off of a cost method investment.~~

12. INTANGIBLE AND OTHER ASSETS

The following table summarizes intangible and other assets (in thousands):


		March 30, 2024				December 30, 2023
	Useful	Gross		Accumulated		Gross		Accumulated
	Lives	Amount		Amortization		Amount		Amortization
Intangibles-subject to amortization:
Trademarks	10 yrs.	$	3,978	$	3,281	$	3,978	$	3,256

Patents	3 - 20 yrs.	850		552		850		546


Trade name	6 yrs.	4,502		3,376		4,502		3,189
Other	7 - 20 yrs.	341		246		341		236
Total intangibles-subject to amortization		9,671		7,455		9,671		7,227
Intangibles-not subject to amortization:
Trade names		8,886				8,919
Other assets:

Deposits		15,383				16,168

Deferred tax asset-net		20,984				21,426
Restricted cash		3,896				4,309






Debt issuance costs		2,331				2,490
Other		3,286				3,340
Total other assets		45,880				47,733
Total intangible and other assets		$	64,437	$	7,455	$	66,323	$	7,227
Total intangible and other assets-net				$	56,982			$	59,096

Key money is the amount of funds paid to a landlord or tenant to acquire the rights of tenancy under a commercial property lease for a certain property. Key money represents the “right to lease” with an automatic right of renewal. This right

can be subsequently sold by the Company or can be recovered should the landlord refuse to allow the automatic right of renewal to be exercised. Key money is amortized over the initial lease term, which ranges from approximately four to 18 years.

Amortization expense for intangible assets was approximately ~~$3.0~~$0.2 million and ~~$3.7~~$0.2 million for the ~~Third~~First Quarter and the Prior Year Quarter, ~~respectively, and $10.4 million and $11.2 million for the Year To Date Period and Prior Year YTD Period,~~ respectively. Estimated aggregate future amortization expense by fiscal year for intangible assets is as follows (in thousands):


Fiscal Year	Amortization Expense
2024 (remaining)	$	729
2025	$	720
2026	$	136
2027	$	116
2028	$	107
Thereafter	$	409

Fiscal Year
Amortization
Expense
2017 (remaining) $ 3,028
2018 $ 11,848
2019 $ 11,518
2020 $ 10,979
2021 $ 7,143
2022 $ 6,263

13. COMMITMENTS AND CONTINGENCIES

Litigation. The Company is occasionally subject to litigation or other legal proceedings in the normal course of its business. The Company does not believe that the outcome of any currently pending legal matters, individually or collectively, will have a material effect on the business or financial condition of the Company.

Some leases include one or more options to renew at the Company's discretion, with renewal terms that can extend the lease from approximately one to ten additional years. The renewal options are not included in the measurement of ROU assets and ROU liabilities unless the Company is reasonably certain to exercise the optional renewal periods. Short-term leases are leases having a term of twelve months or less at inception. The Company does not record a related lease asset or liability for short-term leases. The Company has certain leases containing lease and non-lease components which are accounted for as a single lease component. The Company has certain lease agreements where lease payments are based on a percentage of retail sales over contractual levels and others include rental payments adjusted periodically for inflation. The variable portion of these lease payments is not included in the Company's lease liabilities. The Company's lease agreements do not contain any significant restrictions or covenants other than those that are customary in such arrangements.

The components of lease expense were as follows (in thousands):


Lease Cost	Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) Location	For the 13 Weeks Ended March 30, 2024		For the 13 Weeks Ended April 1, 2023
Operating lease cost(1)	SG&A	$	16,309	$	17,877



Short-term lease cost	SG&A	$	286	$	215
Variable lease cost	SG&A	$	5,353	$	6,120

The following table discloses supplemental balance sheet information for the Company’s leases (in thousands):


Leases	Condensed Consolidated Balance Sheets Location	March 30, 2024		December 30, 2023
Assets
Operating	Operating lease ROU assets	$	142,292	$	151,000


Liabilities
Current:
Operating	Current operating lease liabilities	$	40,257	$	43,565

Noncurrent:
Operating	Long-term operating lease liabilities	$	129,131	$	137,644

The following table discloses the weighted-average remaining lease term and weighted-average discount rate for the Company's leases:

Lease Term and Discount Rate

March 30, 2024

December 30, 2023

Weighted-average remaining lease term:

Operating leases

6.4 years

Weighted-average discount rate:

Operating leases

15.0

14.9

Future minimum lease payments by year as of March 30, 2024 were as follows (in thousands):


Fiscal Year	Operating Leases
2024 (remaining)	$	51,361
2025	51,302
2026	39,159
2027	27,804
2028	17,709
Thereafter	85,617

Total lease payments	$	272,952
Less: Interest	103,564
Total lease obligations	$	169,388

Supplemental cash flow information related to leases was as follows (in thousands):


	For the 13 Weeks Ended March 30, 2024		For the 13 Weeks Ended April 1, 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	19,937	$	22,362



Leased assets obtained in exchange for new operating lease liabilities	4,288		6,263

As of March 30, 2024, the Company did not have any material operating or finance leases that have been signed but not commenced.

On ~~March 10, 2017,~~September 26, 2019, the Company and Fossil Partners L.P., as the U.S. borrowers, and Fossil Group Europe GmbH, Fossil Asia Pacific Limited, Fossil (Europe) GmbH, Fossil (UK) Limited and Fossil Canada Inc., as the non-U.S. borrowers, certain other subsidiaries of the Company from time to time party thereto designated as borrowers, and certain subsidiaries of the Company from time to time party thereto as guarantors, entered into a $275.0 million secured asset-based revolving credit agreement (the “Revolving Facility”) with JPMorgan Chase Bank, N.A. as administrative agent (the "ABL Agent"), J.P. Morgan AG, as French collateral agent, JPMorgan Chase Bank, N.A., Citizens Bank, N.A. and Wells Fargo Bank, National Association as joint bookrunners and joint lead arrangers, and Citizens Bank, N.A. and Wells Fargo Bank, National Association, as co-syndication agents and each of the lenders from time to time party thereto (the "ABL Lenders"). On November 8, 2022, the Company entered into ~~the Second~~ Amendment No. 4 (the "Amendment") to the ~~Amended and Restated Credit Agreement (the “Second Amendment”).~~Revolving Facility. The ~~Second~~ Amendment, reduced the Company's revolving credit facility (the "Revolving Credit Facility") available under the Company’s existing credit amendment from $1.05 billion to $850.0 million. The Second Amendment also removed the incremental term loan that was available under the credit agreement,among other things, (i) extended the maturity date of the credit ~~agreement~~facility to ~~May 17, 2019 and removed~~November 8, 2027 (provided, that if the ~~Company’s ability~~Company has any indebtedness in an amount in excess of $35 million that matures prior to ~~make offers to the lenders to extend~~November 8, 2027, the maturity date of the ~~Term Loan or~~credit facility shall be the ~~Revolving Credit Facility. The Second Amendment also amended~~91st day prior to the ~~repayment schedule~~maturity date of such other indebtedness) and (ii) changed the calculation methodology of the borrowing base to include the value of certain of the Company’s intellectual property in such methodology and to provide for ~~the Term Loan and requires~~seasonal increases to certain advance rates.

In November 2021, the Company sold $150.0 million aggregate principal amount of 7.00% senior notes due 2026 (the “Notes”), generating net proceeds of approximately $141.7 million. The Notes were issued pursuant to ~~make monthly payments~~an indenture (the "Base Indenture") and a first supplemental indenture (the "First Supplemental Indenture" and, together with the Base Indenture, the "Indenture") with The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee").

The Notes are general unsecured obligations of the Company and rank equally in right of payment with all of the Company’s existing and future senior unsecured and unsubordinated indebtedness, and will rank senior in right of payment to the Company’s future subordinated indebtedness, if any. The Notes are effectively subordinated to all of the Company’s existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, and the Notes are structurally subordinated to all existing and future indebtedness and other liabilities (including trade payables) of the

Company’s subsidiaries (excluding any amounts owed by such subsidiaries to the Company). The Notes bear interest at the rate of 7.00% per annum. Interest on the ~~last business day~~Notes is payable quarterly in arrears on February 28, May 31, August 31 and November 30 of each ~~month beginning April~~year. The Notes mature on November 30, ~~2018.~~2026.

The Revolving Facility is an asset-based facility, in which borrowing availability is subject to a borrowing base equal to:(a) with respect to the Company, the sum of (i) the lesser of (x) 90% of the appraised net orderly liquidation value of eligible U.S. finished goods inventory and ~~payable~~(y) 65% of the lower of cost or market value of eligible U.S. finished goods inventory, plus (ii) 85% of the eligible U.S. accounts receivable, plus (iii) 90% of eligible U.S. credit card accounts receivable, plus (iv) the lesser of (x) 40% of the appraised net orderly liquidation value of eligible U.S. intellectual property and (y) $20.0 million, minus (v) the aggregate amount of reserves, if any, established by the ABL Agent; (b) with respect to each non-U.S. borrower (except for the French Borrower), the sum of (i) the lesser of (x) 90% of the appraised net orderly liquidation value of eligible foreign finished goods inventory of such non-U.S. borrower and (y) 65% of the lower of cost or market value of eligible foreign finished goods inventory of such non-U.S. borrower, plus (ii) 85% of the eligible foreign accounts receivable of such non-U.S. borrower, minus (iii) the aggregate amount of reserves, if any, established by the ABL Agent; and (c) with respect to the French Borrower, (i) 85% of eligible French accounts receivable minus (ii) the aggregate amount of reserves, if any, established by the ABL Agent. Not more than 60% of the aggregate borrowing base under the Revolving Facility may consist of the non-U.S. borrowing bases. The above advance rates (other than the advance rates with respect to intellectual property) are seasonally increased by 5% (e.g. from 90% to 95%) during the period commencing on the date of delivery of the borrowing base certificate with respect to the second fiscal month of the Company and ending on the last day of the ~~applicable interest period; provided, that if such interest~~ period extends for over one month, then interest will be due and payable at the end of each one month interval during such interest period. The Second Amendment also amended the mandatory prepayment provisions under the credit agreement and provides that to the extent there are excess proceeds remaining from the issuance of debtcovered by the Company following the repayment in full of the Term Loan, the Company will be required to repay the Revolving Credit Facility in the amount of such excess proceeds, with a corresponding permanent reduction in the Revolving Credit Facility in the amount of up to $50.0 million. In accordance with the Second Amendment, dividends paid from foreign subsidiaries to U.S. subsidiaries or Fossil Group, Inc., must first be used to repay the Term Loan and then up to $50.0 million of the Revolving Credit Facility.

~~The Second Amendment amended the applicable margin used to calculate the interest rate that is applicable to~~borrowing base rate loans and LIBOR rate loans under the Company’s credit agreement. As of September 30, 2017, the interest rate margin for base rate loans was 2.50% per annum and the interest rate margin for LIBOR rate loans was 3.50% per annum. On October 1, 2017, the applicable margin on the Term Loan automatically increased to 2.75% per annum for base rate loans and 3.75% per annum for LIBOR rate loans. If the Term Loan has not been repaid in full on or prior to March 31, 2018, then on such date, the applicable margin will automatically increase to 3.25% per annum for base rate loans and 4.25% per annum for LIBOR rate loans. The Second Amendment also changed the commitment fee payable by the Companycertificate delivered with respect to the fifth fiscal month of the Company.

The Revolving Facility contains customary affirmative and negative covenants and events of default, such as compliance with annual audited and quarterly unaudited financial statements disclosures. Upon an event of default, the ABL Agent will have the right to declare the revolving loans and other obligations outstanding immediately due and payable and all commitments immediately terminated or reduced, subject to cure periods and grace periods set forth in ~~full on or prior to~~the Revolving Facility.

As of March ~~31, 2018. Furthermore, the Second Amendment changed the consolidated total leverage ratio that~~30, 2024, the Company ~~must comply with from 3.25 to 1.00 to the ratios as set forth below:~~

~~The Company made principal payments of $6.3~~had $150.0 million and ~~$18.8~~$57.5 million outstanding under the ~~Term Loan during the Third Quarter~~Notes and ~~Year To Date Period,~~Revolving Facility, respectively. The Company ~~also made~~had net payments of ~~$158.0 million and $131.3~~$4.6 million under the Revolving ~~Credit~~ Facility during the ~~Third Quarter and Year To Date Period, respectively.~~First Quarter. Amounts available under the Revolving ~~Credit~~ Facility ~~are~~were reduced by any amounts outstanding under standby ~~letters~~Letters of ~~credit.~~Credit. As of ~~September~~March 30, ~~2017,~~2024, the Company had available borrowing capacity of ~~$270.5~~$9.9 million under the Revolving ~~Credit~~ Facility. ~~The~~As of March 30, 2024, the Company had unamortized debt issuance costs of $4.6 million recorded in long-term debt and $2.3 million recorded in intangible and other assets-net on the Company's domestic subsidiary receives short-term loans from certain of its foreign subsidiaries at the end of each fiscal quarter which are used to reduce its external borrowings. These intercompany loans are repaid at the beginning of the following fiscal quarter. At the end of the Third Quarter, these intercompany loans totaled $411.8 million.consolidated balance sheets. The Company incurred approximately ~~$2.2~~$2.6 million and ~~$6.3~~$1.0 million of interest expense related to the ~~Term Loan~~Notes and Revolving Facility, respectively, during the ~~Third Quarter and Year To Date Period, respectively, including the impact of the related interest rate swap.~~First Quarter. The Company incurred approximately $8.1 million and $20.5 million of interest expense related to the Revolving Credit Facility during the Third Quarter and Year To Date Period, respectively. The Company incurred approximately $0.9 million and $2.7$0.6 million of interest expense related to the amortization of debt issuance costs during the ~~Third Quarter~~First Quarter. At March 30, 2024, the Company was in compliance with all debt covenants related to its credit facilities.

In fiscal year 2023, the Company announced its Transform and ~~Year To Date Period, respectively.~~

~~15. RESTRUCTURING~~

Grow strategy ("TAG") designed to reduce operating costs, improve operating margins, and advance the Company’s commitment to profitable growth. The Company ~~implemented~~expanded the scope and duration of TAG to focus on a ~~multi-year restructuring program that began in fiscal year 2016 called New World Fossil ("NWF"). As part~~more comprehensive review of ~~NWF,~~its global business operations. The expansion of TAG will put greater emphasis on initiatives to exit or minimize certain product offerings, brands and distribution, and to strengthen gross margin and increase the ~~Company targets~~level of operating expense efficiencies. TAG is estimated to ~~improve~~generate approximately $300 million of annualized operating ~~profit and support sales growth through a leaner infrastructure and an enhanced business model.~~benefits by the end of 2025. The Company ~~is working~~estimates approximately $100 million to ~~achieve greater efficiencies from production~~$120 million in total charges over the duration of TAG and estimates approximately $25 million in remaining charges associated with the TAG Plan to distribution through activities such as organizational changes, reducing its overall product assortment, optimizing its base cost structure and consolidating facilities. The Company also intends to build a quicker and more responsive operating platform. The Company is reducing its retail footprint to reflect the evolving shopping habits of today's consumer, which includes restructuring costs, such as store impairment, recorded lease obligations and termination fees and accelerated depreciation. Of the total estimated $150 million restructuring charges, approximately $27.8 million and $41.8 million were recordedbe incurred during fiscal year ~~2016~~2024. Aided by these measures, the Company's long-term goal is to achieve adjusted gross margins in the low to mid 50% range and ~~the Year To Date period, respectively. The Company estimates total fiscal year 2017 NWF restructuring charges~~adjusted operating margins of approximately ~~$45 million.~~10%.

The following table shows a summary of TAG plan charges (in thousands):

The following table shows a rollforward of the accrued liability related to the Company’s ~~restructuring~~TAG plan (in thousands):


	For the 13 Weeks Ended March 30, 2024
	Liabilities								Liabilities
	December 30, 2023		Charges		Cash Payments		Non-cash Items		March 30, 2024
Store closures	$	—	$	108	$	6	$	101	$	1
Professional services	117		2,484		2,390		—		211
Severance and employee-related benefits	8,117		7,461		7,099		—		8,479
Charges related to exits of certain product offerings	3,821		(241)		2,830		—		750
Total	$	12,055	$	9,812	$	12,325	$	101	$	9,441

~~Restructuring~~TAG plan restructuring charges by operating segment were as follows (in thousands):

In fiscal year 2022, the Company completed its New World Fossil 2.0 (“NWF 2.0”) restructuring program it launched in 2019. The following table shows a rollforward of the accrued liability related to the Company’s NWF 2.0 restructuring plan (in thousands):


	For the 13 Weeks Ended April 1, 2023
	Liabilities				Liabilities
	December 31, 2022		Cash Payments		April 1, 2023

Professional services	74		14		60
Severance and employee-related benefits	2,821		2,234		587
Total	$	2,895	$	2,248	$	647

For the 13 Weeks Ended September 30, 2017 For the 13 Weeks Ended October 1, 2016
Americas $ 2,771
$ 10,548
Europe 1,445
1,639
Asia 1,144
336
Corporate 409
1,950
Consolidated $ 5,769
$ 14,473

For the 39 Weeks Ended September 30, 2017 For the 39 Weeks Ended October 1, 2016
Americas $ 10,567
$ 10,548
Europe 9,127
1,639
Asia 9,283
336
Corporate 12,841
1,950
Consolidated $ 41,818
$ 14,473

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following is a discussion of the financial condition and results of operations of Fossil Group, Inc. and its subsidiaries for the thirteen ~~and thirty-nine~~ week ~~periods~~period ended ~~September~~March 30, ~~2017~~2024 (the ~~“Third~~“First Quarter” ~~and “Year To Date Period,” respectively)~~) as compared to the thirteen ~~and thirty-nine~~ week ~~periods~~period ended ~~October~~April 1, ~~2016~~2023 (the “Prior Year Quarter” ~~and “Prior Year YTD Period,” respectively)~~). This discussion should be read in conjunction with the condensed consolidated financial statements and the related notes thereto.

~~General~~Overview

We are a global design, marketing and distribution company that specializes in consumer fashion accessories. Our principal offerings include an extensive line of ~~men’s~~men's and ~~women’s~~women's fashion watches and jewelry, handbags, small leather goods, belts, and sunglasses. In the watch and jewelry product categories, we have a diverse portfolio of globally recognized owned and licensed brand names under which our products are marketed.

Our products are distributed globally through various distribution channels including wholesale in countries where we have a physical presence, direct to the consumer through our retail stores and commercial websites and through ~~third party~~third-party distributors in countries where we do not maintain a physical presence. Our products are offered at varying price points to meet the needs of our customers, whether they are ~~value conscious~~value-conscious or luxury oriented. Based on our ~~extensive~~ range of accessory products, brands, distribution channels and price points, we are able to target ~~style conscious~~style-conscious consumers across a wide age spectrum on a global basis.

~~Domestically,~~Known or Anticipated Trends

Based on our recent operating results and current perspectives on our operating environment, we ~~sell~~anticipate the following trends will continue to impact our ~~products through a diversified distribution network that~~operating results:

Economic Environment Impacting Consumer Spending Ability and Preferences: Macroeconomic factors, including inflation and increased interest rates, impacted customer behavior in fiscal year 2023. In 2024, macroeconomic headwinds are expected to continue. This includes ~~department stores, specialty retail locations, specialty watch~~persistent inflation and ~~jewelry stores, Company-owned retail and outlet stores, mass market stores and through our FOSSIL~~^® website. Our wholesale customer base includes, among others, Amazon, Best Buy, Dillard’s, JCPenney, Kohl’s, Macy’s, Neiman Marcus, Nordstrom, Saks Fifth Avenue, Target and Wal-Mart. In the United States, our network of Company-owned stores included 84 retail stores locatedelevated short term interest rates in ~~premier retail sites and 122 outlet stores located~~addition to slowing economic conditions in ~~major outlet malls as of September 30, 2017. In addition, we offer an extensive collection~~many of our ~~FOSSIL brand products~~major markets. While the impact of these macroeconomic factors are difficult to quantify, we expect these conditions to have a negative impact on ~~our website,~~ ~~www.fossil.com, as well as proprietary~~consumer confidence and ~~licensed watch and jewelry brands through other managed and affiliated websites.~~

~~Internationally, our products are sold to department stores, specialty retail stores and specialty watch and jewelry stores~~consumer demand for discretionary goods in approximately 150 countries worldwide through 23 Company-owned foreign sales subsidiaries and through a network of approximately 80 independent distributors. Internationally, our network of Company-owned stores included 216 retail stores and 134 outlet stores as of September 30, 2017. Our products are also sold through licensed and franchised FOSSIL retail stores, retail concessions operated by us and kiosks in certain international markets. In addition, we offer an extensive collectionmany of our ~~FOSSIL brand products~~major markets.

Inventory Levels: Throughout 2023 and into 2024, slower consumer demand across a wide array of discretionary goods has translated in some cases to excess inventory levels in key accounts and overall cautious buying patterns across our wholesale customers. With the challenging global macro environment, we expect many customers to continue to manage to leaner inventory levels than the prior year across our key categories to reduce inventory carrying risk. We will also continue to proactively manage our inventory purchases to mitigate our cash flow and inventory risks.

World Conflicts: We continuously monitor the direct and indirect impacts from the military conflicts between Russia and Ukraine and in the Middle East. Our operations in Russia and Israel consist of sales through third-party distributors, and sales to these distributors are currently on hold. Our sales in Russia and Israel are not material to our ~~websites~~financial results. We have no other operations, including supply chain, in ~~certain countries.~~Israel, Palestine, Russia or Ukraine. However, the continuation of the current military conflicts or an escalation of the conflicts beyond their current scope may continue to weaken the global economy, negatively impact consumer confidence, and could result in additional inflationary pressures and supply chain constraints.

Supply Chain:Our business is subject to economic cycles and retail industry conditions. Purchases of discretionary fashion accessories, such as our watches, handbags, sunglasses and other products, tend to decline during recessionary periods when disposable income is low and consumers are hesitant to use available credit. In addition, acts of terrorism, acts of war and military action both in the U.S. and abroad can have a significant effect on economic conditions and may negatively affect our ability to procure our products from manufacturers for sale to our customers. Any significant declines in general economic conditions, public safety concerns or uncertainties regarding future economic prospects that affect consumer spending habits could have a material adverse effect on consumer purchases of our products.

~~Our business is also~~ subject to the risks inherent in global sourcing supply. We rely on domestic and foreign suppliers to provide us with merchandise in a timely manner and at favorable prices. Certain key components in our products come from limited sources of supply, which exposes us to potential supply shortages that could disrupt the manufacture and sale of our products. Any interruption or delay in the supply of key components could significantly harm our ability to meet scheduled product deliveries to our customers and cause us to lose sales. ~~Interruptions or delays in supply may be caused by~~

Among our foreign suppliers, China is the source of a ~~number of factors that are outside~~substantial majority of our ~~and our contract manufacturers’ control.~~

Future sales and earnings growth are also contingent upon our ability to anticipate and respond to changing fashion trends and consumer preferences in a timely manner while continuing to develop innovative productsimports. A material increase in the ~~respective markets~~cost of our products or transportation without any offsetting price increases or a disruption in the flow of finished goods from China may significantly increase our costs.

Data: We depend on information technology systems, the Internet and computer networks for a substantial portion of our retail and e-commerce businesses, including credit card transaction authorization and processing. We also receive and store personal information about our customers and employees, the protection of which is critical to us. In the normal course of our business, we ~~compete. As is typical with new products,~~collect, retain, and transmit certain sensitive and confidential customer information, including credit card information, over public networks. Despite the security measures we currently have in place, our ~~lines~~facilities and systems and those of ~~connected accessories, market acceptance~~our third party service providers have been, and will continue to be, vulnerable to theft of ~~new designs~~physical information,

security breaches, hacking attempts, computer viruses and ~~products~~malware, ransomware, phishing, lost data and programming and/or human errors. To date, none of these risks, intrusions, attacks or human error have resulted in any material liability to us. While we carry insurance policies that would provide liability coverage for certain of these matters, if we ~~may introduce is~~experience a significant security incident, we could be subject to ~~uncertainty.~~liability or other damages that exceed our insurance coverage. In addition, we ~~generally~~cannot be certain that such insurance policies will continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim.

Business Strategies and Outlook: Our goal is to drive shareholder value and make ~~decisions regarding~~a positive impact on our people, planet and communities. We continue to operate in a very challenging business environment for our product ~~designs several months~~offerings. In early 2023, we initiated our Transform and Grow plan (“TAG”), which was designed primarily to reduce operating expenses in order to improve operating margins and advance our path to profitable growth. This initial phase of TAG was designed to deliver $100 million in annualized cost savings by the end of fiscal year 2024.

In August 2023, as a result of a more comprehensive review of our business operations, we expanded the scope of TAG to include seven key workstreams. Our goal in expanding TAG was to put additional emphasis on initiatives aimed at restructuring or optimizing our operations, exit or minimize certain product offerings, brands and distribution channels, strengthen gross margins through improvements in our sourcing and improve our working capital efficiency. Additionally, the board of directors has established a Special Board Committee to provide primary board oversight of our Transformation Office and drive accountability, timeliness and results in TAG. Approximately half of the ~~time when consumer acceptance can~~TAG workstreams are designed to structurally improve our gross margins. Our 300 basis point gross margin rate improvement in the First Quarter versus the Prior Year Quarter reflects our exit of the smartwatch category, lower freight costs and improved product margins in our core categories. Our TAG workstreams on product sourcing and supply chain are expected to generate incremental year-over-year gross margin improvement in the latter part of fiscal 2024. The remaining TAG workstreams are focused on removing costs from our expense structure with the goal of (i) re-calibrating our operating model for greater efficiency and lower fixed costs, (ii) driving savings in our procurement practices, and (iii) optimizing our direct channel operating costs. In the First Quarter, operating expenses declined 20% as compared to the Prior Year Quarter, reflecting savings across headcount, labor and services, which were initiated in fiscal 2023. We anticipate that our initiatives will continue to generate year-over-year operating expense savings in the remaining quarters of fiscal 2024.

Under the expanded plan, the Company increased the estimated economic benefits from the original $100 million in annualized cost savings target to be ~~measured.~~achieved by the end of fiscal 2024 to $300 million in annualized operating income benefits to be achieved by the end of fiscal 2025. Under the expanded program, we accelerated organizational restructuring, exited the smartwatch category, closed 45 underperforming stores in 2023 and expect to close approximately 50 underperforming stores in fiscal 2024. We believe that we can drive long-term growth with brand building, innovation through design, fashion and new materials and introducing new technology and functionality into our accessories, while continuing to provide a solid value proposition to consumershave also reduced sku complexity across all ofcategories in our ~~brands.~~

~~Our international operations are subject~~assortment. Additionally, in 2024, we have begun to ~~many risks, including foreign currency fluctuations~~implement key elements from our sourcing initiatives under TAG and ~~risks related~~expect to realize benefits in the ~~global economy. Generally, a strengthening~~second half of the ~~U.S. dollar~~year.

In connection with TAG, the Company expects to incur charges of approximately $100 million to $120 million over the duration of TAG and estimates approximately $25 million of charges for the remainder of fiscal year 2024.

In March 2024, the Company announced it would undertake a strategic review of its current business model and capital structure. This includes a broader set of efforts to optimize its business model and further reduce structural costs, monetize various assets, and could include additional debt and equity financing options.

As we execute against ~~currencies~~the entire scope of ~~other countries in which~~TAG, we ~~operate will reduce the translated amounts~~have an opportunity to improve our operating fundamentals, right size our cost structure, and return to sales growth. Aided by these measures, our long-term goal is to achieve adjusted gross margins above 50% and adjusted operating margins of ~~sales and operating expenses of our subsidiaries, which results in a reduction of our~~approximately 10%.

consolidated operating income. We manage these currency risks by using derivative instruments. The primary risks managed by using derivative instruments are the future payments by non-U.S. dollar functional currency subsidiaries of intercompany inventory transactions denominated in U.S. dollars. We enter into foreign exchange forward contracts ("forward contracts") to manage fluctuations in global currencies that will ultimately be used to settle such U.S. dollar denominated inventory purchases. We are also exposed to interest rate risk associated with our variable rate debt, which we manage with an interest rate swap.

For a more complete discussion of the risks facing our business, see “Part I, Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December ~~31, 2016~~30, 2023.

Operating Segments

We operate our business in three segments which are divided into geographies. Net sales for each geographic segment are based on the location of the selling entity, and ~~"Part II, Item 1A. Risk Factors" of this Quarter Report on Form 10-Q.~~each reportable segment provides similar products and services.

~~Results of Operations~~

~~Executive Summary.~~ During the Third Quarter, net sales decreased 7% (8% in constant currency), as compared to the Prior Year Quarter, driven by declines in traditional watches, leathers and jewelry, and partially offset by continued growth in wearables.Americas: The Third Quarter was favorably impacted by customers accelerating certain deliveries from the fourth quarter of fiscal year 2017 into the Third Quarter, primarily to take advantage of pending price increases. We estimate that this accelerationAmericas segment is comprised of sales ~~favorably impacted the Third Quarter sales growth rate by roughly three percentage points, and we expect this favorable impact will largely reverse~~from our operations in the ~~fourth quarter~~United States, Canada and Latin America. Sales are generated through diversified distribution channels that include wholesalers, distributors, and direct to consumer. Within each channel, we sell our products through a variety of ~~fiscal year 2017. While the overall business remains challenging~~physical points of sale, distributors and the retail environment remains in flux, we continue to bring innovative new products to the market and work towards operational efficiencies to ultimately enhance our profitability. We remain confident wearables can be one of the key catalysts that could eventually offset the sales declines we have seen in our traditional watch business for some time now. Wearables products accounted for approximately 10% of our net sales in the Third Quarter, compared to 7% and 9% in the first and second quarters of fiscal year 2017, respectively. Our third generation of connected devices, which are in the market now, add additional features through Android Wear 2.0, such as fitness and standalone applications. In addition, our latest generation wearables are thinner, and they have brighter screens and improved functionality. We are supporting these new products with our celebrity influencer campaigns to attract our wearable customers in the digital and social space.

During the Third Quarter, sales of FOSSIL branded products decreased 5% (7% in constant currency), as compared to the Prior Year Quarter. Effectively all of the decline in the FOSSIL branded sales was driven by weakness in our leathers and jewelry categories, partially offset by modest growth in watches led by wearables. Wearables positively impacted the FOSSIL watch category growth rate by approximately 11 percentage points in the Third Quarter. Sales of our SKAGEN branded products decreased 10% (12% in constant currency) as compared to the Prior Year Quarter, with growth in Asia more than offset by declines in the Americas and Europe. Growth in SKAGEN connected watches partially offset the decline in SKAGEN traditional watches.

Our multi-brand global watch portfolio decreased 3% (4% in constant currency) during the Third Quarter, as compared to the Prior Year Quarter, representing decreases in the majority of the brands in our portfolio. Growth in wearable products partially offset the declines in traditional watches.e-commerce channels. In the ~~MICHAEL KORS brand,~~direct to consumer channel, we launched next generation connected product in August and expanded the distribution channels later during the Third Quarter with positive results. EMPORIO ARMANI hybrid watches launched during the Third Quarter, driving positive sales growth overall for the brand. We launched DIESEL hybrid and display watches and EMPORIO ARMANI display watches on our wearable platform towardshad 135 Company-owned stores as of the end of the ~~Third~~First Quarter and ~~preliminary results have been favorable.~~an extensive collection of products available through our owned websites.

~~We plan~~Europe: The Europe segment is comprised of sales to ~~launch five more brands onto~~customers based in European countries, the ~~hybrid platform this year, including DKNY, MARC JACOBS, MICHELE, RELIC~~Middle East and ~~TORY BURCH. These new launches will bring us~~Africa. Sales are generated through diversified distribution channels that include wholesalers, distributors and direct to ~~a total of 14 brands in wearables and support our goal to at least double the wearables business in fiscal year 2017 from fiscal year 2016.~~

~~The following table presents as reported and constant currency net sales percentage change information for FOSSIL for the Third Quarter as compared to the Prior Year Quarter:~~

Growth Percentage

Brand As Reported Constant Currency
FOSSIL 5.2 % 7.0 %
SKAGEN 10.0 % 11.6 %

~~Global comparable retail sales (including e-commerce) decreased 6% during the Third Quarter, compared to~~consumer. Within each channel, we sell our products through a ~~decrease~~variety of 1% in the Prior Year Quarter, due to continued declines in retail store traffic trends partially offset by consistent growth in e-commerce. During the Third Quarter, we continued to improve conversion through promotional activity, but we were not able overcome the negative traffic we experienced in all regions. During the Third Quarter, our comparablephysical points of sale, distributors, and e-commerce ~~sales increased 26% compared to the Prior Year Quarter, led by the Americas, but with increases in all regions.~~

We continue to make progress on our New World Fossil ("NWF") initiative. The goal of NWF continues to be to build a leaner, more nimble operating platform that can support improved profitability in the future while better serving our customers and competing in the new retail environment. When we launched NWF in fiscal year 2016, we set a target to drive $200 million of profit improvements in the near term, and we are well on our way to delivering that. During a challenging retail environment, we continue to make strong progress on transforming Fossil. This year we expect our NWF initiatives to drive underlying improvement in our product costs as well as significant reductions in our expense structure that we estimate will be over $100 million this year on a run rate basis. We recognize this transformation will take time, but we are making significant progress to evolve our key categories and streamline our business to position us for profitable growth over the long term.

channels. In the ~~Third Quarter,~~direct to consumer channel, we managed our resources and capital tightly. We are also working to ensure that we have the proper capital structure needed to support our long-term financial objectives. Our goal continues to be to diversify our capital structure beyond just our existing bank partners with longer tenors to support our long term strategic objectives. We are taking the necessary steps to strengthen our financial position to further enable us to execute our strategies well into the future and position our business model for continued strong cash flow generation. During the past year, we have reduced our net debt by $170 million, reduced our net working capital by $230 million and generated positive cash flow from operations.

~~During the Third Quarter~~had 73 Company-owned stores as compared to the Prior Year Quarter, gross profit decreased due to lower sales and a decreased margin rate. The decrease in gross margin rate was primarily driven by the impact of connected products due to both lower connected margins as well as additional valuation charges. Our strategy this year has been to invest in margin to drive significant volume in wearables and leverage that volume to drive future cost efficiencies. So far this year, we have tripled our connected sales volumes compared to the same periods as last year and are well ahead of the ~~initial cost goals~~end of the First Quarter and an extensive collection of products available through our owned websites.

Asia: The Asia segment is comprised of sales to customers based in Australia, greater China (including mainland China, Hong Kong, Macau and Taiwan), India, Indonesia, Japan, Malaysia, New Zealand, Singapore, South Korea and Thailand. Sales are generated through diversified distribution channels that include wholesalers, distributors and direct to consumer. Within each channel, we ~~set for ourselves this year. However, we have not hit the aggressive sales goals that we set for ourselves this year in this new category~~sell our products through a variety of physical points of sale, distributors, and ~~are consequently carrying greater levels of connected products that we will need to clear and have deferred some receipts into the first quarter of fiscal year 2018.~~e-commerce channels. In the ~~Third~~direct to consumer channel, we had 69 Company-owned stores as of the end of the First Quarter ~~we recorded a $23 million valuation charge to support~~and an extensive collection of products available through our efforts to clear this inventory, which negatively impacted our overall gross margins by 330 basis points. The gross margin rate was also negatively impacted by ongoing promotional activity in our outletsowned websites.

Key Measures of Financial Performance and the e-commerce channel and by an unfavorable currency impact of approximately 60 basis points. Higher sales volumes through off-price channels also modestly reduced gross margins in the Third Quarter. Product cost benefits generated from our NWF supply chain initiatives partially offset these headwinds. Total operating expenses for the Third Quarter decreased to $320 million including $6 million of restructuring costs associated with our NWF initiative. Other income increased as a result of increased net foreign currency gains during the Third Quarter as compared to the Prior Year Quarter. The tax benefit in the Third Quarter was favorably impacted by the increased effective tax rate in the Third Quarter as compared to the Prior Year Quarter. During the Third Quarter, our financial performance resulted in a loss of $0.11 per diluted share.Key Non-GAAP Financial Measures

Constant Currency Financial ~~Information~~

Information: As a multinational enterprise, we are exposed to changes in foreign currency exchange rates. The translation of the operations of our foreign-based entities from their local currencies into U.S. dollars is sensitive to changes in foreign currency exchange rates and can have a significant impact on our reported financial results. In general, our overall financial results are affected positively by a weaker U.S. dollar and are affected negatively by a stronger U.S. dollar as compared to the foreign currencies in which we conduct our business.

As a result, in addition to presenting financial measures in accordance with accounting principles generally accepted in the United States of America ~~(“GAAP”~~("GAAP"), our ~~discussions contain~~discussion contains references to constant currency financial information, which is a non-GAAP financial measure. To calculate net sales on a constant currency basis, net sales for the current fiscal year for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the average rates during the comparable period of the prior fiscal year. We present constant currency information to provide investors with a basis to evaluate how our underlying business performed excluding the effects of foreign currency exchange rate fluctuations. The constant currency financial information presented herein should not be considered a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP. Reconciliations between constant currency financial information and the most directly comparable GAAP measure are included where applicable.

~~Quarterly Periods Ended September 30, 2017~~Adjusted EBITDA, Adjusted Operating Income (Loss), Adjusted Net Income (Loss) and ~~October 1, 2016~~

~~Consolidated Net Sales.~~ ~~Net sales decreased $49.3 million or 6.7% (8.0%~~Adjusted Earnings (Loss) per Share: Adjusted EBITDA, Adjusted operating income (loss), Adjusted net income (loss) and Adjusted earnings (loss) per share are non-GAAP financial measures. We define Adjusted EBITDA as our income (loss) before income taxes, plus interest expense, amortization and depreciation, impairment expense, other non-cash charges, stock-based compensation expense, restructuring expense and unamortized debt issuance costs included in ~~constant currency)~~loss on extinguishment of debt minus interest income. We define Adjusted operating income (loss) as operating income (loss) before impairment expense and restructuring expense. We define Adjusted net income (loss) and Adjusted earnings (loss) per share as net income (loss) attributable to Fossil Group, Inc. and diluted earnings (loss) per share, respectively, before impairment expense, restructuring expense and unamortized debt issuance costs included in loss on extinguishment of debt. We have included Adjusted EBITDA, Adjusted operating income (loss), Adjusted net income (loss) and Adjusted earnings (loss) per share herein because they are widely used by investors for ~~the Third Quarter as compared to the Prior Year Quarter. During the Third Quarter,~~valuation and for comparing our leathers products decreased $17.6 million or 18.9% (19.9% in constant currency) primarily as a result of the current product assortment not resonating well with consumers. Global watch sales decreased $15.3 million or 2.7% (4.1% in constant currency) driven by declines in traditional watches partially offset by increases in connected watches. Our jewelry business decreased $12.5 million or 20.8% (22.8% in constant currency).

~~Net sales information by product category is summarized as follows (dollars in millions):~~

For the 13 Weeks Ended September 30, 2017 For the 13 Weeks Ended October 1, 2016
Growth (Decline)
Net Sales
Percentage
of Total
Net Sales
Percentage
of Total
Dollars Percentage As Reported Percentage Constant Currency
Watches $ 551.9
80.1 % $ 567.2
76.9 % $ (15.3 ) (2.7 )% (4.1 )%
Leathers 75.7
11.0
93.3
12.6
(17.6 ) (18.9 ) (19.9 )
Jewelry 47.7
6.9
60.2
8.2
(12.5 ) (20.8 ) (22.8 )
Other 13.4
2.0
17.3
2.3
(3.9 ) (22.5 ) (23.6 )
Total $ 688.7
100.0 % $ 738.0
100.0 % $ (49.3 ) (6.7 )% (8.0 )%

In the Third Quarter, the translation of foreign-based net sales into U.S. dollars increased reported net sales by approximately $10.1 million, including favorable impacts of $9.2 million and $1.6 million in our Europe and Americas segments, respectively, and an unfavorable impact of $0.7 million in our Asia segment when compared to the Prior Year Quarter.

~~The following table sets forth consolidated net sales by segment (dollars in millions):~~

For the 13 Weeks Ended September 30, 2017 For the 13 Weeks Ended October 1, 2016 Growth (Decline)
Net Sales
Percentage
of Total
Net Sales
Percentage
of Total
Dollars Percentage As Reported Percentage Constant Currency
Americas $ 308.1
44.7 % $ 361.2
48.9 % $ (53.1 ) (14.7 )% (15.1 )%
Europe 247.2
35.9
243.2
33.0
4.0
1.6
(2.1 )
Asia 133.4
19.4
133.6
18.1
(0.2 ) (0.1 ) 0.4
Total $ 688.7
100.0 % $ 738.0
100.0 % $ (49.3 ) (6.7 )% (8.0 )%

~~Americas Net Sales.~~ Americas net sales decreased $53.1 million or 14.7% (15.1% in constant currency), during the Third Quarter in comparison to the Prior Year Quarter. During the Third Quarter, watches decreased $32.1 million or 11.7% (12.1% in constant currency), while our leathers business decreased $12.7 million or 21.6% (22.1% in constant currency) and our jewelry category decreased $6.6 million or 29.5% (29.9% in constant currency). Sales declines in the U.S. and Canada were partially offset by growth in Mexico. During the Third Quarter, most brands in the portfolio declined while our EMPORIO ARMANI watch business increasedfinancial performance with the ~~introduction~~performance of ~~EMPORIO ARMANI Connected. Decreases in traditional watches were partially offset by increases in connected watches, with~~our competitors. We also use these non-GAAP financial measures to monitor and compare the ~~strongest~~financial performance ~~coming from FOSSIL connected watches. While both~~of our ~~wholesale~~operations. Our presentation of Adjusted EBITDA, Adjusted operating income (loss), Adjusted net income (loss) and ~~retail businesses declined in the Third Quarter, our retail business was relatively stronger. Comparable retail sales including e-commerce declined moderately in the region as negative~~Adjusted earnings (loss) per share may not be comparable ~~sales in our stores were partially offset by positive comparable sales in our e-commerce business.~~

~~The following table sets forth product~~to similarly titled measures other companies report. Adjusted EBITDA, Adjusted operating income (loss), Adjusted net ~~sales for the Americas segment on a reported~~income (loss) and ~~constant currency basis (dollars in millions):~~

For the 13 Weeks Ended September 30, 2017 For the 13 Weeks Ended October 1, 2016
Growth (Decline)
Net Sales Net Sales Dollars
Percentage
As Reported

Percentage
Constant Currency
Watches $ 242.2
$ 274.3
$ (32.1 ) (11.7 )% (12.1 )%
Leathers 46.2
58.9
(12.7 ) (21.6 ) (22.1 )
Jewelry 15.8
22.4
(6.6 ) (29.5 ) (29.9 )
Other 3.9
5.6
(1.7 ) (30.4 ) (28.6 )
Total $ 308.1
$ 361.2
$ (53.1 ) (14.7 )% (15.1 )%

~~Europe Net Sales~~. Europe net sales increased $4.0 million or 1.6% (decreased 2.1% in constant currency) during the Third Quarter in comparison to the Prior Year Quarter. Watches increased $11.6 million or 6.4% (2.5% in constant currency), jewelry declined $3.6 million or 10.6% (13.5% in constant currency) and our leathers business decreased $2.3 million or 11.4% (14.4% in constant currency) in the Third Quarter. Third Quarter sales in Europe benefited from early deliveries to certain wholesale customers who opted to take shipments planned for the fourth quarter of fiscal year 2017, given price adjustments, which were requiredAdjusted earnings (loss) per share are not intended to be ~~announced~~used as alternatives to ~~customers~~any measure of our performance in advance. During the Third Quarter, sales growth was led by MICHAEL KORS watches, and we also experienced growth in EMPORIO ARMANI, ARMANI EXCHANGE, FOSSIL and DIESEL branded watches, as the watch category more than offset declines in leathers and jewelry. The sales increases in watches were primarily driven from wearables and benefited from our third generation product launching towards the end of the Third Quarter. Within the region, modest growth in the U.K. and Poland was more than offset by declines in the Middle East. accordance with GAAP.

Comparable ~~retail sales were moderately negative during the Third Quarter, as positive comparable e-commerce sales were more than offset by negative comparative retail store sales amid declining traffic.~~

~~The following table sets forth product net sales for the Europe segment on a reported and constant currency basis (dollars in millions):~~

For the 13 Weeks Ended September 30, 2017 For the 13 Weeks Ended October 1, 2016
Growth (Decline)
Net Sales Net Sales Dollars
Percentage
As Reported
Percentage Constant Currency
Watches $ 192.3
$ 180.7
$ 11.6
6.4 % 2.5 %
Leathers 17.9
20.2
(2.3 ) (11.4 ) (14.4 )
Jewelry 30.5
34.1
(3.6 ) (10.6 ) (13.5 )
Other 6.5
8.2
(1.7 ) (20.7 ) (25.3 )
Total $ 247.2
$ 243.2
$ 4.0
1.6 % (2.1 )%

~~Asia Net Sales.~~ Net sales in Asia decreased $0.2 million or 0.1% (increased 0.4% in constant currency), driven by declines in leathers and jewelry largely offset by growth in watches. Continued growth in India and China was offset by a decline in nearly all other countries. During the Third Quarter as compared to the Prior Year Quarter, our leathers category decreased $2.7 million or 19.0% (18.3% in constant currency), our jewelry category decreased $2.4 million or 63.2% (same in constant currency) while our watch category increased $5.2 million or 4.6% (5.2% in constant currency). The watch category was led by growth in wearables, FOSSIL and EMPORIO ARMANI brands in particular, while traditional watches continued to decline. Comparable retail sales in the region decreased moderately largely driven by traffic declines.

~~The following table sets forth product net sales for the Asia segment on a reported and constant currency basis (dollars in millions):~~

For the 13 Weeks Ended September 30, 2017 For the 13 Weeks Ended October 1, 2016
Growth (Decline)
Net Sales Net Sales Dollars
Percentage
As Reported
Percentage Constant Currency
Watches $ 117.3
$ 112.1
$ 5.2
4.6 % 5.2 %
Leathers 11.5
14.2
(2.7 ) (19.0 ) (18.3 )
Jewelry 1.4
3.8
(2.4 ) (63.2 ) (63.2 )
Other 3.2
3.5
(0.3 ) (8.6 ) (8.6 )
Total $ 133.4
$ 133.6
$ (0.2 ) (0.1 )% 0.4 %

~~The following table sets forth the number of stores by concept on the dates indicated below:~~

September 30, 2017
October 1, 2016
Americas
Europe
Asia
Total
Americas
Europe
Asia
Total
Full price accessory 112

109

61

282

128

122

66

316
Outlets 136

74

46

256

156

73

46

275
Full priced multi-brand —

8

10

18

—

7

12

19
Total stores 248

191

117

556

284

202

124

610

~~During the Third Quarter, we closed 8 stores and did not open any new stores.~~

Retail Sales:Both stores and e-commerce sites are included in comparable retail sales in the thirteenth month of operation. Stores that experience a gross square footage increase of 10% or more due to an expansion and/or relocation are removed from the comparable ~~retail~~store sales base, but are included in total sales. These stores are returned to the comparable ~~retail~~store sales base in the thirteenth month following the expansion and/or relocation. Comparable retail sales also exclude the effects of foreign currency fluctuations.

Store Counts: While macroeconomic factors have shifted sales away from traditional brick and mortar stores towards digital channels, store counts continue to provide a key metric for management. Over time, we have made progress right-sizing our fleet of stores, focusing on closing our least profitable stores, and the size and quality of our store fleet have a direct impact on our sales and profitability.

Total Liquidity: We define total liquidity as cash and cash equivalents plus available borrowings on our revolving credit facility. We monitor and forecast total liquidity to ensure we can meet our financial obligations.

Components of Results of Operations

Revenues from sales of our products, including those that are subject to inventory consignment agreements, are recognized when control of the product is transferred to the customer and in an amount that reflects the consideration we expect

to be entitled in exchange for the product. We accept limited returns from customers. We continually monitor returns and maintain a provision for estimated returns based upon historical experience and any specific issues identified. Our product returns are accounted for as reductions to revenue and cost of sales and an increase to customer liabilities and other current assets to the extent the returned product is resalable.

Cost of Sales includes raw material costs, assembly labor, assembly overhead including depreciation expense, assembly warehousing costs and shipping and handling costs related to the movement of finished goods from assembly locations to sales distribution centers and from sales distribution centers to customer locations. Additionally, cost of sales includes customs duties, product packaging cost, royalty cost associated with sales of licensed products, the cost of molding and tooling, inventory shrinkage and damages and restructuring charges.

Gross ~~Profit.~~Profit and gross profit margin are influenced by our diversified business model that includes, but is not limited to: (i) product categories that we distribute; (ii) the multiple brands, including both owned and licensed, we offer within several product categories; (iii) the geographical presence of our businesses; and (iv) the different distribution channels we sell to or through.

The attributes of this diversified business model produce varying ranges of gross profit margin. Generally, on a historical basis, our fashion branded traditional watch and jewelry offerings produce higher gross profit margins than our smartwatches and leather goods offerings. In addition, in most product categories that we offer, brands with higher retail price points generally produce higher gross profit margins compared to those of lower retail priced brands. However, smartwatches carry relatively lower margins than our other major product categories. Gross profit ~~of $319.9 million~~margins related to sales in our Europe and Asia businesses are historically higher than our Americas business, primarily due to the ~~Third Quarter decreased 16.9%~~following factors: (i) premiums charged in comparison to ~~$385.1 million~~retail prices on products sold in the ~~Prior Year Quarter driven by lower~~U.S.; (ii) the product sales mix in our international businesses, in comparison to our Americas business, is comprised more predominantly of watches and jewelry that generally produce higher gross profit margins than leather goods; and (iii) the watch sales mix in our Europe and Asia businesses, in comparison to our Americas business, are comprised more predominantly of higher priced licensed brands.

Operating Expenses include selling, general and administrative ("SG&A"), other long-lived asset impairments and restructuring charges. SG&A expenses include selling and distribution expenses primarily consisting of sales and distribution labor costs, sales distribution center and warehouse facility costs, depreciation expense related to sales distribution and warehouse facilities, the four-wall operating costs of our retail stores, point-of-sale expenses, advertising expenses and art, design and product development labor costs. SG&A also includes general and administrative expenses primarily consisting of administrative support labor and support costs such as treasury, legal, information services, accounting, internal audit, human resources, executive management costs and costs associated with stock-based compensation. Restructuring charges include costs to reorganize, refine and optimize our Company’s infrastructure and store closures under our TAG initiative.

Results of Operations

Quarterly Periods Ended March 30, 2024 and April 1, 2023

Consolidated Net Sales. Net sales decreased margin rates. Gross profit margin rate decreased 580 basis points to 46.4% in the Third Quarter compared to 52.2% in the Prior Year Quarter. The decrease in gross margin rate was primarily driven by the impact of connected products due to both lower connected margins as well as additional valuation charges. Our strategy this year has been to invest in margin to drive significant volume in wearables and leverage that volume to drive future cost efficiencies. So far this year, we have tripled our connected sales volumes and are well ahead of the initial cost goals that we set for ourselves this year. However, we have not hit the aggressive sales goals that we set for ourselves this year in this new category and are consequently carrying greater levels of connected products that we will need to clear and have deferred some receipts into the first quarter of fiscal 2018. In the Third Quarter, we recorded a $23 million valuation charge to support our efforts to clear this inventory, which negatively impacted our overall gross margins by 330 basis points. The gross margin rate was also negatively impacted by ongoing promotional activity in our outlets and the e-commerce channel and by an unfavorable currency impact of approximately 60 basis points. Higher sales volumes through off-price channels also modestly reduced gross margins in the Third Quarter. Product cost benefits generated from our NWF supply chain initiatives partially offset these headwinds.

~~Operating Expenses.~~ ~~Total operating expenses in the Third Quarter decreased by $33.5~~$70.1 million, or ~~9.5% to $320.4 million compared to $353.9 million~~21.6% (21.5% in constant currency), for the Prior Year Quarter. Third Quarter operating expenses included restructuring costs of $5.8 million under our NWF initiative, while the Prior Year Quarter included $14.5 million in restructuring costs as well as a $10 million benefit resulting from real estate gains.

In the Third Quarter, SG&A expenses were $24.8 million lower compared to the Prior Year Quarter primarily as a result of corporate and regional overhead reductions and lower retail store expenses, given the significant number of stores we have closed since the Prior Year Quarter. Advertising royalties were also lower in the Third Quarter driven by the decline in sales of licensed products. The translation of foreign-denominated expenses during the Third Quarter increased operating expenses by

~~approximately $4.1 million as a result of the weaker U.S. dollar. As a percentage of net sales, SG&A expenses decreased to 45.7% in the Third Quarter as compared to 46.0% in the Prior Year Quarter.~~

~~Consolidated Operating Income (Loss).~~ Operating income (loss) decreased to a loss of $0.5 million in the Third Quarter as compared to income of $31.2 million in the Prior Year Quarter, primarily driven by both decreased sales and gross margin rate. As a percentage of net sales, operating margin (loss) was (0.1%) in the Third Quarter compared to 4.2% in the Prior Year Quarter. Operating margin rate in the Third Quarter included a negative impact of approximately 50 basis points due to changes in foreign currencies. During the ThirdFirst Quarter as compared to the Prior Year Quarter, ~~we faced continued retail pressure, most significantly in our traditional businesses~~with sales decreases in all ~~segments. Additionally, the gross margin rate~~three regions. The sales decrease was largely driven by overall category, consumer and channel softness. Our exit of smartwatches and store closures as part of our TAG initiatives negatively impacted sales in the First Quarter by connected products, due to both lower connected margins as well as additional product valuation charges, and lower retail margins due to increased promotional activity in outlets and the e-commerce channel in all segments. Decreased restructuring costs incurred under our NWF plan, as well as corporate and regional overhead reductions and lower retail store expenses favorably impacted operating income (loss) during the Third Quarter$20.7 million as compared to the Prior Year Quarter.

~~Operating income (loss)~~ Wholesale sales declined 21.3% (same in constant currency), reflecting lower purchases by ~~segment is summarized as follows (dollars in millions):~~

For the 13 Weeks Ended September 30, 2017 For the 13 Weeks Ended October 1, 2016 Growth (Decline) Operating Margin %
Dollars Percentage 2017 2016
Americas $ 18.9
$ 56.4
$ (37.5 ) (66.5 )% 6.1 % 15.6 %
Europe 39.3
49.0
(9.7 ) (19.8 ) 15.9
20.2
Asia 22.0
23.7
(1.7 ) (7.2 ) 16.5
17.7
Corporate (80.7 ) (97.9 ) 17.2
(17.6 )
Total operating income (loss) $ (0.5 ) $ 31.2
$ (31.7 ) (101.6 )% (0.1 )% 4.2 %

~~Interest Expense.~~ ~~Interest expense increased by $5.1 million during the Third Quarter as a result of higher interest rate spreads~~wholesale accounts due to tighter management of inventories and lower end-consumer demand. Direct to consumer sales declined by 22.0% (21.7% in constant currency), due to a smaller store base and declines in our ~~amended credit facility.~~

~~Other Income (Expense)-Net.~~ ~~During~~comparable retail sales. We have reduced our store footprint by 50 stores (15%), since the ~~Third Quarter, other income (expense)-net increased by $2.3 million to $3.9 million in comparison to~~end of the Prior Year Quarter. ~~This change was primarily driven by more favorable foreign currency activity compared~~Global comparable retail sales decreased 14% due to decreases in both stores and our owned e-commerce websites. From a category perspective, traditional watch sales decreased 17.3% (same in constant currency). Net sales in smartwatches decreased 63.5% (63.6% in constant currency), as we exited the ~~Prior Year Quarter.~~

~~Provision for Income Taxes~~.category. The ~~income tax benefit for the Third Quarter was $3.2 million, resulting~~leathers category decreased 31.5% (31.3% in ~~an effective income tax rate of 37.1%. For the Prior Year Quarter, income tax expense was $6.5 million, resulting in an effective income tax rate of 25.0%. The higher effective tax rate~~constant currency) as we were less promotional in the ~~Third~~First Quarter as compared to the Prior Year Quarter, was attributable to a higher structural rate resulting from an increased forecasted loss from the Company's U.S. operations which was tax-benefited at a higher tax rate than the tax rates used to calculate the tax expense on the profits from the Company's foreign operations. There were also favorable discrete items occurring in the quarter. These positive impacts were partially offset by the increased tax expense resulting from all of the foreign and ~~some of the U.S. goodwill impairment charge being permanently nondeductible for tax purposes.~~

Additionally, income taxes are provided for under the asset and liability method for temporary differences in the recognition of assets and liabilities recognized for income tax and GAAP purposes. Deferred tax assets are periodically assessed for the likelihood of whether they are more likely than not to be realized. We have previously established a valuation allowance in those jurisdictions where we believe recovery is not more likely than not, which generally increases tax expense in the period such determination is made. For those jurisdictions with deferred tax assets not currently subject to a valuation allowance, including the U.S., we have determined that the realization of deferred tax assets continues to be more likely than not.

~~Net Income (Loss) Attributable to Fossil Group, Inc.~~ Third Quarter net income (loss) attributable to Fossil Group, Inc. decreased to $(5.4) million, or $(0.11) per diluted share, in comparison to $17.4 million, or $0.36 per diluted share, in the Prior Year Quarter. Diluted earnings (loss) per share in the Third Quarter included a restructuring charge of $0.08 as compared to a restructuring charge of $0.22 in the Prior Year Quarter. Excluding restructuring, the decline in diluted earnings (loss) per share in the Third Quarter as compared to the Prior Year Quarter was driven by lower sales and gross margins, mainly due to connected mix, and higher interest expenses, partially offset by lower operating expenses and taxes. The tax benefit in the Third Quarter was positively impacted by the increased effective tax rate in the Third Quarter as compared to the Prior Year Quarter. The translation impact of a stronger U.S. dollar decreased diluted earnings per share by approximately $0.02 year-over-year.

~~Fiscal Year To Date Periods Ended September 30, 2017 and October 1, 2016~~

~~Consolidated Net Sales.~~ ~~Net~~jewelry sales decreased ~~$215.8 million or 10.4% (10.0%~~9.3% (9.0% in constant currency)~~, for the Year To Date Period as compared to the Prior Year YTD Period. Global watch~~. From a brand perspective, sales decreased ~~$110.1 million or 7.0% (6.7% in constant currency) driven by~~throughout most of our brand portfolio, with the most predominant declines in ~~traditional watches partially offset~~FOSSIL, EMPORIO ARMANI and MICHAEL KORS brands.

The following table sets forth consolidated net sales by ~~increases~~segment (dollars in connected watches. Our leathers category decreased $61.0 million or 21.9% (21.6% in constant currency) primarily as a result of the current product assortment not resonating well with consumers, and our jewelry product category decreased $31.8 million or 18.5% (17.8% in constant currency) during the Year To Date Period as compared to the Prior Year YTD Period. Global comparable retail sales decreased 9% for the Year To Date Period representing declines in all product categories and all store concepts partially offset by strong e-commerce comparable sales growth.millions):


	For the 13 Weeks Ended March 30, 2024				For the 13 Weeks Ended April 1, 2023				Growth (Decline)
	Net Sales		Percentage of Total		Net Sales		Percentage of Total		Dollars		Percentage As Reported		Percentage Constant Currency
Americas	$	110.0	43.2	%	$	137.9	42.4	%	$	(27.9)	(20.2)	%	(20.8)	%
Europe	78.7		30.9		105.7		32.5		(27.0)		(25.5)		(26.5)
Asia	65.6		25.7		80.1		24.6		(14.5)		(18.1)		(15.5)
Corporate	0.6		0.2		1.3		0.5		(0.7)		(53.8)		(53.8)
Total	$	254.9	100.0	%	$	325.0	100.0	%	$	(70.1)	(21.6)	%	(21.5)	%

Net sales information by product category is summarized as follows (dollars in millions):


	For the 39 Weeks Ended September 30, 2017				For the 39 Weeks Ended October 1, 2016				Growth (Decline)
	Net Sales		Percentage of Total		Net Sales		Percentage of Total		Dollars			Percentage As Reported		Percentage Constant Currency
Watches	$	1,471.1	78.8	%	$	1,581.2	75.9	%	$	(110.1	)	(7.0	)%	(6.7	)%
																								Growth (Decline)
	Net Sales																			Net Sales					Percentage of Total				Net Sales				Percentage of Total					Dollars					Percentage As Reported				Percentage Constant Currency
Watches:
Traditional watches
Traditional watches
Traditional watches																	$	186.5			73.2		%			$	225.4			69.4	%			$	(38.9)					(17.3)	%			(17.3)	%
Smartwatches
Total watches
Leathers	218.0		11.7		279.0		13.4		(61.0		)	(21.9	)	(21.6	)
Jewelry	139.9		7.5		171.7		8.2		(31.8		)	(18.5	)	(17.8	)
Other	38.4		2.0		51.3		2.5		(12.9		)	(25.1	)	(24.8	)
Total	$	1,867.4	100.0	%	$	2,083.2	100.0	%	$	(215.8	)	(10.4	)%	(10.0	)%	Total	$	254.9	100.0			100.0		%			$	325.0	100.0		100.0	%				$	(70.1)		(21.6)			(21.6)	%			(21.5)	%

In the ~~Year To Date Period,~~First Quarter, the translation of foreign-based net sales into U.S. dollars decreased reported net sales by ~~approximately $6.6~~$0.3 million ~~including unfavorable impacts of $5.5 million, $0.6 million and $0.5 million in our Europe, Americas and Asia segments, respectively,~~(0.1%) as compared to the Prior Year ~~YTD Period.~~Quarter, including unfavorable impacts of $2.2 million in Asia partially offset by favorable impacts of $1.0 million and $0.9 million in our Europe and Americas segments, respectively.

Stores.The following table sets forth ~~consolidated net sales by segment (dollars in millions):~~the number of stores on the dates indicated below:


	April 1, 2023	Opened	Closed	March 30, 2024
Americas	149	2	16	135
Europe	99	2	28	73
Asia	79	0	10	69
Total stores	327	4	54	277

For the 39 Weeks Ended September 30, 2017 For the 39 Weeks Ended October 1, 2016 Growth (Decline)
Net Sales
Percentage
of Total
Net Sales
Percentage
of Total
Dollars Percentage As Reported Percentage Constant Currency
Americas $ 874.5
46.9 % $ 1,042.2
50.0 % $ (167.7 ) (16.1 )% (16.0 )%
Europe 637.6
34.1
669.1
32.1
(31.5 ) (4.7 ) (3.9 )
Asia 355.3
19.0
371.9
17.9
(16.6 ) (4.5 ) (4.3 )
Total $ 1,867.4
100.0 % $ 2,083.2
100.0 % $ (215.8 ) (10.4 )% (10.0 )%

Americas Net Sales. ~~For the Year To Date Period,~~ Americas net sales decreased ~~$167.7~~$27.9 million, or ~~16.1% (16.0%~~20.2% (20.8% in constant currency), ~~compared~~during the First Quarter in comparison to the Prior Year ~~YTD Period. During~~Quarter. Sales decreases were largely in the Year To Date Period, watches decreased $103.0 million or 13.1% (13.0% in constant currency). Our leathers and jewelry categories declined $41.5 million or 23.6% (23.6% in constant currency) and $16.8 million or 26.3% (26.6% in constant currency), respectively.FOSSIL brand. Sales declined in ~~the U.S. and Canada and were partially offset by sales increases in Mexico. During the Year To Date Period, nearly~~ all brands in the portfolio declined driven by decreases in traditional watches that were partially offset by increases in connected watches, with the strongest performance coming from MICHAEL KORS ACCESS and FOSSIL connected watches. Both wholesale and retail sales declined at similar rates.major channels. Comparable retail sales ~~declined moderately in~~decreased sharply during the ~~region~~First Quarter, with ~~negative comparable store~~ sales ~~partially offset by moderate increases in comparable sales~~declines in our ~~e-commerce business.~~stores and owned e-commerce.

The following table sets forth product net sales and the changes in product net sales on both a reported and constant-currency basis from period to period for the Americas segment ~~on a reported and constant currency basis~~ (dollars in millions):


	For the 13 Weeks Ended March 30, 2024				For the 13 Weeks Ended April 1, 2023
									Growth (Decline)
	Net Sales		Percentage of Total		Net Sales		Percentage of Total		Dollars		Percentage As Reported		Percentage Constant Currency
Watches:
Traditional watches	$	78.7	71.5	%	$	91.4	66.3	%	$	(12.7)	(13.9)	%	(14.8)	%
Smartwatches	5.2		4.7		12.5		9.1		(7.3)		(58.4)		(59.2)
Total watches	$	83.9	76.2	%	$	103.9	75.4	%	$	(20.0)	(19.2)		(20.0)
Leathers	17.5		15.9		27.1		19.7		(9.6)		(35.4)		(35.4)
Jewelry	6.6		6.0		5.4		3.9		1.2		22.2		22.2
Other	2.0		1.9		1.5		1.0		0.5		33.3		31.3
Total	$	110.0	100.0	%	$	137.9	100.0	%	$	(27.9)	(20.2)	%	(20.8)	%



	Page
PART I
Item 1.		Financial Statements	45
		Condensed Consolidated Balance Sheets	45
		Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)	56
		Condensed Consolidated Statements of Stockholders' Equity	7
		Condensed Consolidated Statements of Cash ~~Flow~~Flows	68
		Notes to Condensed Consolidated Financial Statements	79
Item 2.		Management's Discussion and Analysis of Financial Condition and Results of Operations	2826
		Results of Operations	2928
		Liquidity and Capital Resources	3834
		Forward-Looking Statements	4037
Item 3.		Quantitative and Qualitative Disclosures About Market Risk	4037
Item 4.		Controls and Procedures	4137
PART II
Item 1.		Legal Proceedings	4238
Item 1A.		Risk Factors	38
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	4238
Item 5.		Other Information	38
Item 6.		Exhibits	4339
		SIGNATURES	4440


	September 30, 2017			December 31, 2016
	March 30, 2024							March 30, 2024	December 30, 2023
Assets							Assets
Current assets:							Current assets:
Cash and cash equivalents	$	166,922		$	297,330
Accounts receivable - net of allowances of $70,081 and $79,707, respectively	310,895			375,520
Accounts receivable - net of allowances for doubtful accounts of $14,465 and $12,616, respectively
Inventories	682,986			542,487
Prepaid expenses and other current assets	125,533			131,953
Total current assets	1,286,336			1,347,290
Property, plant and equipment - net of accumulated depreciation of $453,894 and $414,761, respectively	243,448			273,851
Goodwill	—			355,263
Property, plant and equipment - net of accumulated depreciation of $379,768 and $384,688, respectively
Operating lease right-of-use assets

Intangible and other assets-net
Intangible and other assets-net
Intangible and other assets-net	220,588			210,493
Total long-term assets	464,036			839,607
Total assets	$	1,750,372		$	2,186,897
Liabilities and Stockholders’ Equity							Liabilities and Stockholders’ Equity
Current liabilities:							Current liabilities:
Accounts payable	$	248,824		$	163,644
Short-term and current portion of long-term debt	40,209			26,368
Short-term debt
Accrued expenses:							Accrued expenses:
Current operating lease liabilities
Compensation	64,862			52,993
Royalties	26,897			30,062
Co-op advertising	17,772			29,111
Customer liabilities
Transaction taxes	40,482			26,743
Other	101,390			69,565
Income taxes payable	13,077			16,099
Total current liabilities	553,513			414,585
Long-term income taxes payable	22,951			18,584
Deferred income tax liabilities	500			55,877
Long-term debt	444,303			609,961
Long-term operating lease liabilities
Other long-term liabilities	76,107			72,452
Total long-term liabilities	543,861			756,874
Commitments and contingencies (Note 13)							Commitments and contingencies (Note 13)
Stockholders’ equity:							Stockholders’ equity:
Common stock, 48,524 and 48,269 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively	485			483
Common stock, 52,492 and 52,487 shares issued and outstanding at March 30, 2024 and December 30, 2023 respectively
Additional paid-in capital	235,990			213,352
Retained earnings	489,528			887,825
Retained (deficit) earnings
Accumulated other comprehensive income (loss)	(84,710		)	(95,424		)
Total Fossil Group, Inc. stockholders’ equity	641,293			1,006,236
Noncontrolling interest	11,705			9,202
Noncontrolling interests
Total stockholders’ equity	652,998			1,015,438
Total liabilities and stockholders’ equity	$	1,750,372		$	2,186,897


	For the 13 Weeks Ended September 30, 2017			For the 13 Weeks Ended October 1, 2016		For the 39 Weeks Ended September 30, 2017			For the 39 Weeks Ended October 1, 2016
			For the 13 Weeks Ended March 30, 2024
			For the 13 Weeks Ended March 30, 2024
			For the 13 Weeks Ended March 30, 2024
Net sales
Net sales
Net sales	$	688,722		$	737,990	$	1,867,358		$	2,083,206
Cost of sales	368,829			352,910		956,600			994,039
Cost of sales
Cost of sales
Gross profit
Gross profit
Gross profit	319,893			385,080		910,758			1,089,167
Operating expenses:
Operating expenses:
Operating expenses:
Selling, general and administrative expenses	314,623			339,432		937,330			1,013,664
Goodwill and trade name impairments	—			—		407,128			—
Restructuring charges	5,769			14,473		41,818			14,473
Selling, general and administrative expenses
Selling, general and administrative expenses

Other long-lived asset impairments

Other long-lived asset impairments

Other long-lived asset impairments
Restructuring expenses
Restructuring expenses
Restructuring expenses
Total operating expenses
Total operating expenses
Total operating expenses	320,392			353,905		1,386,276			1,028,137
Operating income (loss)	(499		)	31,175		(475,518		)	61,030
Operating income (loss)
Operating income (loss)
Interest expense
Interest expense
Interest expense	12,070			6,967		32,096			19,386
Other income (expense) - net	3,860			1,591		11,501			6,402
Other income (expense) - net
Other income (expense) - net
Income (loss) before income taxes	(8,709		)	25,799		(496,113		)	48,046
Provision for income taxes	(3,230		)	6,451		(100,746		)	13,230
Income (loss) before income taxes
Income (loss) before income taxes
Provision (benefit) for income taxes
Provision (benefit) for income taxes
Provision (benefit) for income taxes
Net income (loss)	(5,479		)	19,348		(395,367		)	34,816
Less: Net income attributable to noncontrolling interest	(80		)	1,992		2,931			5,646
Net income (loss)
Net income (loss)
Less: Net income (loss) attributable to noncontrolling interests
Less: Net income (loss) attributable to noncontrolling interests
Less: Net income (loss) attributable to noncontrolling interests
Net income (loss) attributable to Fossil Group, Inc.
Net income (loss) attributable to Fossil Group, Inc.
Net income (loss) attributable to Fossil Group, Inc.	$	(5,399	)	$	17,356	$	(398,298	)	$	29,170
Other comprehensive income (loss), net of taxes:
Other comprehensive income (loss), net of taxes:
Other comprehensive income (loss), net of taxes:
Currency translation adjustment
Currency translation adjustment
Currency translation adjustment	$	5,222		$	1,662	$	32,078		$	9,383
Cash flow hedges - net change	(9,771		)	1,360		(21,364		)	(4,741		)
Cash flow hedges - net change
Cash flow hedges - net change
Pension plan activity
Pension plan activity
Pension plan activity	—			—		—			1,714
Total other comprehensive income (loss)	(4,549		)	3,022		10,714			6,356
Total other comprehensive income (loss)
Total other comprehensive income (loss)
Total comprehensive income (loss)	(10,028		)	22,370		(384,653		)	41,172
Less: Comprehensive income attributable to noncontrolling interest	(80		)	1,992		2,931			5,646
Total comprehensive income (loss)
Total comprehensive income (loss)
Less: Comprehensive income (loss) attributable to noncontrolling interests
Less: Comprehensive income (loss) attributable to noncontrolling interests
Less: Comprehensive income (loss) attributable to noncontrolling interests
Comprehensive income (loss) attributable to Fossil Group, Inc.
Comprehensive income (loss) attributable to Fossil Group, Inc.
Comprehensive income (loss) attributable to Fossil Group, Inc.	$	(9,948	)	$	20,378	$	(387,584	)	$	35,526
Earnings (loss) per share:
Earnings (loss) per share:
Earnings (loss) per share:
Basic
Basic
Basic	$	(0.11	)	$	0.36	$	(8.22	)	$	0.61
Diluted	$	(0.11	)	$	0.36	$	(8.22	)	$	0.60
Diluted
Diluted
Weighted average common shares outstanding:
Weighted average common shares outstanding:
Weighted average common shares outstanding:
Basic	48,521			48,130		48,439			48,127
Basic
Basic
Diluted	48,521			48,291		48,439			48,286
Diluted
Diluted


	For the 13 Weeks Ended March 30, 2024		For the 13 Weeks Ended April 1, 2023
Operating Activities:
Net income (loss)	$	(24,314)	$	(41,182)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation, amortization and accretion	4,475		5,068
Non-cash lease expense	16,771		18,619
Stock-based compensation	1,011		1,362
Decrease in allowance for returns and markdowns	(2,957)		(6,320)

Property, plant and equipment and other long-lived asset impairment losses	373		55

Non-cash restructuring charges	101		—
Bad debt expense	2,459		395

Other non-cash items	625		(1,427)
Contingent consideration remeasurement	(154)		(347)

Changes in operating assets and liabilities:
Accounts receivable	49,089		39,644
Inventories	25,015		41,959
Prepaid expenses and other current assets	(14,391)		(10,171)
Accounts payable	(3,270)		(71,548)
Accrued expenses	(25,543)		(29,846)
Income taxes	(8,731)		(9,761)
Operating lease liabilities	(19,937)		(22,362)
Net cash provided by (used in) operating activities	622		(85,862)
Investing Activities:
Additions to property, plant and equipment and other	(1,678)		(2,610)
Decrease (increase) in intangible and other assets	348		(109)


Net cash used in investing activities	(1,330)		(2,719)
Financing Activities:
Acquisition of common stock	(3)		(11)

Debt borrowings	13,815		40,136
Debt payments	(18,093)		(22,003)
Payment for shares of Fossil Accessories South Africa Pty. Ltd.	(422)		(1,660)

Net cash (used in) provided by financing activities	(4,703)		16,462
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	691		298
Net decrease in cash, cash equivalents, and restricted cash	(4,720)		(71,821)
Cash, cash equivalents, and restricted cash:
Beginning of period	121,583		204,075
End of period	$	116,863	$	132,254


	For the 39 Weeks Ended September 30, 2017			For the 39 Weeks Ended October 1, 2016
	For the 13 Weeks Ended March 30, 2024						For the 13 Weeks Ended March 30, 2024	For the 13 Weeks Ended April 1, 2023
Beginning balance	$	15,421		$	13,669
Settlements in cash or kind	(11,608		)	(7,338		)
Warranties issued and adjustments to preexisting warranties ⁽¹⁾	14,984			8,604
Ending balance	$	18,797		$	14,935


☒
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



				For the 13 Weeks Ended September 30, 2017			For the 13 Weeks Ended October 1, 2016
Fiscal Year Authorized	Dollar Value Authorized		Termination Date	Number of Shares Repurchased	Dollar Value Repurchased		Number of Shares Repurchased	Dollar Value Repurchased
2014	$	1,000.0	December 2018	—	$	—	—	$	—
2010	$	30.0	None	—	$	—	—	$	—



	Fossil Group, Inc. Stockholders’ Equity			Noncontrolling Interest			Total Stockholders’ Equity
Balance at December 31, 2016	$	1,006,236		$	9,202		$	1,015,438
Net income (loss)	(398,298		)	2,931			(395,367		)
Currency translation adjustment	32,078			—			32,078
Cash flow hedges - net change	(21,364		)	—			(21,364		)
Distribution of noncontrolling interest earnings	—			(428		)	(428		)
Acquisition of common stock	(947		)	—			(947		)
Stock-based compensation expense	23,588			—			23,588
Balance at September 30, 2017	$	641,293		$	11,705		$	652,998



Stock Options and Stock Appreciation Rights	Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
	(in Thousands)				(in Years)	(in Thousands)
Outstanding at July 1, 2017	2,236		$	50.29	5.8	$	—
Granted	—		—
Exercised	—		—			—
Forfeited or expired	(27	)	63.35
Outstanding at September 30, 2017	2,209		50.14		5.6	—
Exercisable at September 30, 2017	882		$	67.67	4.5	$	—


Stock Appreciation Rights	Shares	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
	(in Thousands)			(in Years)	(in Thousands)
Outstanding at December 30, 2023	39	$	47.99	0.2	$	—


Forfeited or expired	(39)	47.99
Outstanding at March 30, 2024	0	—		0.0	—
Exercisable at March 30, 2024	0	$	—	0.0	$	—



Cash Stock Appreciation Rights Outstanding					Cash Stock Appreciation Rights Exercisable
Range of Exercise Prices	Number of Shares	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Number of Shares	Weighted- Average Exercise Price
	(in Thousands)			(in Years)	(in Thousands)
$29.78 - $47.99	61	$	36.73	6.2	11	$	36.73
Total	61	$	36.73	6.2	11	$	36.73



Stock Options Outstanding					Stock Options Exercisable
Range of Exercise Prices	Number of Shares	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Number of Shares	Weighted- Average Exercise Price
	(in Thousands)			(in Years)	(in Thousands)
$13.65 - $29.49	35	$	14.12	1.4	35	$	14.12
$29.78 - $47.99	79	37.00		1.5	79	37.00
$55.04 - $83.83	91	80.80		3.2	91	80.80
$95.91 - $131.46	129	127.97		4.1	129	127.97
Total	334	$	81.69	3.0	334	$	81.69



Stock Appreciation Rights Outstanding					Stock Appreciation Rights Exercisable
Range of Exercise Prices	Number of Shares	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Number of Shares	Weighted- Average Exercise Price
	(in Thousands)			(in Years)	(in Thousands)
$13.65 - $29.49	101	$	29.49	6.8	34	$	29.49
$29.78 - $47.99	1,485	38.07		6.2	310	38.91
$55.04 - $83.83	125	79.16		4.8	90	79.91
$95.91 - $131.46	103	114.46		3.7	103	114.46
Total	1,814	$	44.78	6.0	537	$	59.74



	Fair Value at December 31, 2016
	Level 1		Level 2		Level 3		Total
Assets:
Forward contracts	$	—	$	28,936	$	—	$	28,936
Deferred compensation plan assets:
Investment in publicly traded mutual funds	2,385		—		—		2,385
Interest rate swap	—		73		—		73
Total	$	2,385	$	29,009	$	—	$	31,394
Liabilities:
Forward contracts	—		4,966		—		4,966
Interest rate swap	—		613		—		613
Total	$	—	$	5,579	$	—	$	5,579



Fiscal Year	Amortization Expense
2017 (remaining)	$	3,028
2018	$	11,848
2019	$	11,518
2020	$	10,979
2021	$	7,143
2022	$	6,263



~~Period~~		~~Maximum Ratio~~
~~July 2, 2017 through and including September 30, 2017~~		~~3.50 to 1.00~~
~~October 1, 2017 through and including March 31, 2018~~		~~3.25 to 1.00~~
~~April 1, 2018 through and including September 29, 2018~~		~~3.50 to 1.00~~
~~September 30, 2018 and thereafter~~		~~3.25 to 1.00~~



	Growth Percentage
	Growth Percentage
Brand	As Reported		Constant Currency
FOSSIL	5.2	%	7.0	%
SKAGEN	10.0	%	11.6	%



	September 30, 2017				October 1, 2016
	Americas	Europe	Asia	Total	Americas	Europe	Asia	Total
Full price accessory	112	109	61	282	128	122	66	316
Outlets	136	74	46	256	156	73	46	275
Full priced multi-brand	—	8	10	18	—	7	12	19
Total stores	248	191	117	556	284	202	124	610


	For the 13 Weeks Ended March 30, 2024		For the 13 Weeks Ended April 1, 2023		Change				Operating Margin %
					Dollars		Percentage		2024		2023
Americas	$	8.8	$	12.6	$	(3.8)	(30.2)	%	8.0	%	9.1	%
Europe	7.4		7.0		0.4		5.7		9.4		6.6
Asia	5.8		7.2		(1.4)		(19.4)		8.9		9.0
Corporate	(51.2)		(64.1)		12.9		20.1
Total operating income (loss)	$	(29.2)	$	(37.3)	$	8.1	21.7	%	(11.5)	%	(11.5)	%


	For the 13 Weeks Ended
	March 30, 2024				April 1, 2023
	Dollars		% of Net Sales		Dollars		% of Net Sales
Income (loss) before income taxes	$	(30.4)	(11.9)	%	$	(39.6)	(12.2)	%
Plus:
Interest expense	5.1				5.0
Amortization and depreciation	4.5				5.1
Impairment expense	0.4				0.1
Other non-cash charges	(0.1)				(0.2)
Stock-based compensation	1.0				1.4
Restructuring expenses	10.1				7.1
Restructuring cost of sales	(0.2)				5.3

Less:
Interest income	1.1				0.6
Adjusted EBITDA	$	(10.7)	(4.2)	%	$	(16.4)	(5.0)	%


	For the 13 Weeks Ended March 30, 2024
($ in millions, except per share data):	As Reported			Restructuring Cost of Sales		Other Long-Lived Asset Impairment		Restructuring Expenses		As Adjusted
Operating income (loss)	$	(29.2)		$	(0.2)	$	0.4	$	10.1	$	(18.9)
Operating margin (% of net sales)	(11.5)		%							(7.5)		%
Interest expense	5.1			—		—		—		5.1
Other income (expense) - net	3.9			—		—		—		3.9
Income (loss) before income taxes	(30.4)			(0.2)		0.4		10.1		(20.1)
Provision (benefit) for income taxes	(6.1)			—		0.1		2.1		(3.9)
Less: net income attributable to noncontrolling interest	—			—		—		—		—
Net income (loss) attributable to Fossil Group, Inc.	$	(24.3)		$	(0.2)	$	0.3	$	8.0	$	(16.2)
Diluted earnings (loss) per share	$	(0.46)		$	—	$	0.01	$	0.15	$	(0.30)


Exhibit Number		Document Description

~~Exhibit~~ ~~Number~~ 3.1		~~Document Description~~

~~3.1~~	Third Amended and Restated Certificate of Incorporation of Fossil, Inc. (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed on May 25, 2010).

3.2		Certificate of Amendment of the Third Amended and Restated Certificate of Incorporation of Fossil, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on May 28, 2013).

3.3		Fifth Amended and Restated Bylaws of Fossil Group, Inc. (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed on April 3, 2017).

~~10.1(1)(2)~~10.1		~~Restricted Stock Unit Award under the Fossil Group, Inc. 2016 Long-Term Incentive Plan~~

~~10.2(2)~~	~~Addendum to Executive Severance~~Consulting Agreement, dated March 13, 2024, by and between Fossil Group, Inc. and ~~Dennis R. Secor,~~Kosta N. Kartsotis.

10.2		Cooperation Agreement, dated as of ~~August 31, 2017 (incorporated~~March 24, 2024, by ~~reference to Exhibit 10.1 to~~and among the ~~Company's Current Report on Form 8-K filed on September 5, 2017).~~Company, Buxton Helmsley Active Value Fund, L.P. and Buxton Helmsley Capital Partners LLC.

31.1(1)		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.

31.2(1)		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.

~~32.1(3)~~32.1(2)		Certification of Chief Executive Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~32.2(3)~~32.2(2)		Certification of Chief Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~101.INS(1)~~101.INS		XBRL Instance ~~Document.~~Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

~~101.SCH(1)~~101.SCH		Inline XBRL Taxonomy Extension Schema Document.

~~101.DEF(1)~~101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.

~~101.CAL(1)~~101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.

~~101.LAB(1)~~101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.

~~101.PRE(1)~~101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).



	FOSSIL GROUP, INC.

~~November~~May 9, ~~2017~~2024		/S/ ~~JEFFREY N. BOYER~~SUNIL M. DOSHI
		~~Jeffrey N. Boyer~~Sunil M. Doshi
		Executive Vice President, Chief Financial Officer and Treasurer (Principal financial and accounting officer duly authorized to sign on behalf of the Registrant)