Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Oct. 01, 2016 | Nov. 03, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | Fossil Group, Inc. | |
Entity Central Index Key | 883,569 | |
Document Type | 10-Q | |
Document Period End Date | Oct. 1, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 48,132,991 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands | Oct. 01, 2016 | Jan. 02, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 235,952 | $ 289,275 |
Accounts receivable - net of allowances of $61,611 and $84,558, respectively | 321,289 | 370,761 |
Inventories | 699,648 | 625,344 |
Prepaid expenses and other current assets | 132,731 | 157,290 |
Total current assets | 1,389,620 | 1,442,670 |
Property, plant and equipment - net of accumulated depreciation of $422,126 and $398,068, respectively | 290,757 | 326,370 |
Goodwill | 364,647 | 359,394 |
Intangible and other assets-net | 212,586 | 227,227 |
Total long-term assets | 867,990 | 912,991 |
Total assets | 2,257,610 | 2,355,661 |
Current liabilities: | ||
Accounts payable | 193,560 | 208,083 |
Short-term and current portion of long-term debt | 26,382 | 23,159 |
Accrued expenses: | ||
Compensation | 60,928 | 61,496 |
Royalties | 25,756 | 38,359 |
Co-op advertising | 16,242 | 28,918 |
Transaction taxes | 25,564 | 44,425 |
Other | 75,704 | 76,592 |
Income taxes payable | 0 | 8,497 |
Total current liabilities | 424,136 | 489,529 |
Long-term income taxes payable | 20,912 | 20,634 |
Deferred income tax liabilities | 60,693 | 75,165 |
Long-term debt | 697,409 | 785,076 |
Other long-term liabilities | 69,541 | 52,714 |
Total long-term liabilities | 848,555 | 933,589 |
Commitments and contingencies (Note 13) | ||
Stockholders’ equity: | ||
Common stock, 48,131 and 48,125 shares issued and outstanding at October 1, 2016 and January 2, 2016, respectively | 481 | 481 |
Additional paid-in capital | 208,203 | 187,456 |
Retained earnings | 838,127 | 813,957 |
Accumulated other comprehensive income (loss) | (74,150) | (80,506) |
Total Fossil Group, Inc. stockholders’ equity | 972,661 | 921,388 |
Noncontrolling interest | 12,258 | 11,155 |
Total stockholders’ equity | 984,919 | 932,543 |
Total liabilities and stockholders’ equity | $ 2,257,610 | $ 2,355,661 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Oct. 01, 2016 | Jan. 02, 2016 |
Statement of Financial Position [Abstract] | ||
Accounts receivable - allowances | $ 61,611 | $ 84,558 |
Property, plant and equipment, accumulated depreciation | $ 422,126 | $ 398,068 |
Common stock, shares issued (in shares) | 48,131 | 48,125 |
Common stock, shares outstanding (in shares) | 48,131 | 48,125 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2016 | Oct. 03, 2015 | Oct. 01, 2016 | Oct. 03, 2015 | |
Income Statement [Abstract] | ||||
Net sales | $ 737,990 | $ 771,303 | $ 2,083,206 | $ 2,236,363 |
Cost of sales | 352,910 | 353,569 | 994,039 | 1,008,439 |
Gross profit | 385,080 | 417,734 | 1,089,167 | 1,227,924 |
Operating expenses: | ||||
Selling, general and administrative expenses | 339,432 | 338,888 | 1,013,664 | 1,003,931 |
Restructuring charges | 14,473 | 3,141 | 14,473 | 21,700 |
Total operating expenses | 353,905 | 342,029 | 1,028,137 | 1,025,631 |
Operating income | 31,175 | 75,705 | 61,030 | 202,293 |
Interest expense | 6,967 | 5,103 | 19,386 | 14,295 |
Other income (expense) - net | 1,591 | 6,830 | 6,402 | 28,310 |
Income before income taxes | 25,799 | 77,432 | 48,046 | 216,308 |
Provision for income taxes | 6,451 | 17,303 | 13,230 | 58,721 |
Net income | 19,348 | 60,129 | 34,816 | 157,587 |
Less: Net income attributable to noncontrolling interest | 1,992 | 2,595 | 5,646 | 7,335 |
Net income attributable to Fossil Group, Inc. | 17,356 | 57,534 | 29,170 | 150,252 |
Other comprehensive income (loss), net of taxes: | ||||
Currency translation adjustment | 1,662 | (7,435) | 9,383 | (35,382) |
Cash flow hedges - net change | 1,360 | (5,258) | (4,741) | (5,443) |
Pension plan activity | 0 | 0 | 1,714 | 0 |
Total other comprehensive income (loss) | 3,022 | (12,693) | 6,356 | (40,825) |
Total comprehensive income | 22,370 | 47,436 | 41,172 | 116,762 |
Less: Comprehensive income attributable to noncontrolling interest | 1,992 | 2,595 | 5,646 | 7,335 |
Comprehensive income attributable to Fossil Group, Inc. | $ 20,378 | $ 44,841 | $ 35,526 | $ 109,427 |
Earnings per share: | ||||
Basic (in dollars per share) | $ 0.36 | $ 1.19 | $ 0.61 | $ 3.06 |
Diluted (in dollars per share) | $ 0.36 | $ 1.19 | $ 0.60 | $ 3.06 |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 48,130 | 48,153 | 48,127 | 49,027 |
Diluted (in shares) | 48,291 | 48,242 | 48,286 | 49,148 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 01, 2016 | Oct. 03, 2015 | |
Operating Activities: | ||
Net income | $ 34,816 | $ 157,587 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation, amortization and accretion | 73,198 | 63,421 |
Stock-based compensation | 23,894 | 13,997 |
Decrease in allowance for returns-net of inventory in transit | (14,955) | (7,981) |
(Gain) loss on disposal of assets - net | (9,866) | 2,164 |
Impairment losses | 2,213 | 5,587 |
Non-cash restructuring charges | 12,523 | 2,381 |
Decrease in allowance for doubtful accounts | (3,915) | (1,867) |
Excess tax benefits from stock-based compensation | (5) | (176) |
Deferred income taxes and other | (9,304) | 7,458 |
Contingent consideration remeasurement | 0 | (114) |
Changes in operating assets and liabilities, net of effect of acquisitions: | ||
Accounts receivable | 74,706 | 103,259 |
Inventories | (76,869) | (172,746) |
Prepaid expenses and other current assets | 17,640 | (20,669) |
Accounts payable | (16,887) | 17,871 |
Accrued expenses | (38,572) | (18,618) |
Income taxes payable | (9,257) | (17,064) |
Net cash provided by operating activities | 59,360 | 134,490 |
Investing Activities: | ||
Additions to property, plant and equipment | (53,524) | (53,171) |
Decrease (increase) in intangible and other assets | 2,509 | (737) |
Skagen Designs arbitration settlement | 0 | 5,968 |
Misfit working capital settlement | 788 | 0 |
Proceeds from the sale of property, plant and equipment | 44,584 | 0 |
Business acquisitions-net of cash acquired | 0 | (4,820) |
Net investment hedge settlement | 752 | 0 |
Net cash used in investing activities | (4,891) | (52,760) |
Financing Activities: | ||
Acquisition of common stock | (6,448) | (231,220) |
Distribution of noncontrolling interest earnings | (4,543) | (5,257) |
Excess tax benefits from stock-based compensation | 5 | 176 |
Debt borrowings | 756,000 | 1,867,550 |
Debt payments | (839,629) | (1,691,139) |
Proceeds from exercise of stock options | 57 | 658 |
Payment for shares of Fossil, S.L. | (8,657) | (2,097) |
Other financing activities | (2,647) | 0 |
Net cash used in financing activities | (105,862) | (61,329) |
Effect of exchange rate changes on cash and cash equivalents | (1,930) | 4,907 |
Net decrease in cash and cash equivalents | (53,323) | 25,308 |
Cash and cash equivalents: | ||
Beginning of period | 289,275 | 276,261 |
End of period | $ 235,952 | $ 301,569 |
FINANCIAL STATEMENT POLICIES
FINANCIAL STATEMENT POLICIES | 9 Months Ended |
Oct. 01, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
FINANCIAL STATEMENT POLICIES | 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 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 October 1, 2016 , and the results of operations for the thirteen-week periods ended October 1, 2016 (“ Third Quarter”) and October 3, 2015 (“Prior Year Quarter”), respectively, and the thirty-nine week periods ended October 1, 2016 (“Year To Date Period”) and October 3, 2015 (“Prior Year YTD Period”). 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 January 2, 2016 (the “ 2015 Form 10-K”). Operating results for the Third Quarter and Year To Date Period 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. Actual results could differ from those estimates. The Company has not made any changes in its significant accounting policies from those disclosed in the 2015 Form 10-K. Business. The Company is a 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 manage 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, during the first quarter of fiscal year 2016, the Company entered 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, British pound, Canadian dollar, Japanese yen, Mexican peso, Australian dollar and U.S dollar forward contracts as of October 1, 2016 , the result would have been a net gain of approximately $3.6 million , net of taxes. This unrealized gain is recognized in other comprehensive income (loss), net of taxes on the Company's consolidated statements of income and comprehensive income. 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 and comprehensive income. Also, the Company has entered into interest rate swap agreements to effectively convert portions of its variable rate debt obligations to fixed rates. Changes in the fair value of the interest rate swaps are recorded as a component of accumulated other comprehensive income (loss) within stockholders' equity, and are 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”) 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 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 “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 and optimize the Company’s infrastructure and store closures. Earnings 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 October 1, 2016 For the 13 Weeks Ended October 3, 2015 For the 39 Weeks Ended October 1, 2016 For the 39 Weeks Ended October 3, 2015 Numerator: Net income attributable to Fossil Group, Inc. $ 17,356 $ 57,534 $ 29,170 $ 150,252 Denominator: Basic EPS computation: Basic weighted average common shares outstanding 48,130 48,153 48,127 49,027 Basic EPS $ 0.36 $ 1.19 $ 0.61 $ 3.06 Diluted EPS computation: Basic weighted average common shares outstanding 48,130 48,153 48,127 49,027 Effect of stock options, stock appreciation rights, restricted stock units and performance restricted stock units 161 89 159 121 Diluted weighted average common shares outstanding 48,291 48,242 48,286 49,148 Diluted EPS $ 0.36 $ 1.19 $ 0.60 $ 3.06 Approximately 1.6 million, 1.5 million , 0.6 million and 0.5 million weighted shares issuable under stock-based awards were not included in the diluted EPS calculation at the end of the Third Quarter, Year To Date Period, Prior Year Quarter, and Prior Year YTD Period, respectively, because they were antidilutive. Approximately 1.1 million weighted performance shares were not included in the diluted EPS calculation at the end of the Third Quarter and Year to Date Period as the performance targets were not met. Recently Issued Accounting Standards. In October 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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. The Company is still evaluating the effect of adopting ASU 2016-16. 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 2016-05 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 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 is intended to simplify 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 is effective for annual periods, and interim periods within those years, beginning after December 15, 2016. Early adoption is permitted. The Company is still evaluating the effect of adopting ASU 2016-09, but the adoption may create volatility in the Company's effective tax rate. In March 2016, the FASB issued ASU 2016-04, Liabilities—Extinguishments of Liabilities (Subtopic 405-20)- 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 to the extent that it is probable a significant reversal 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. The Company is still evaluating the effect of adopting ASU 2016-04. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842): Amendments to the FASB Accounting Standards Codification® (“ASU 2016-02”), which supersedes the existing guidance for lease accounting, Leases (Topic 840) . ASU 2016-02 requires lessees to recognize leases 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 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. Many of the Company’s leases are considered operating leases and are 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. In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory (“ASU 2015-11”). ASU 2015-11 affects reporting entities that measure inventory using first-in, first-out or average cost. Specifically, ASU 2015-11 requires that inventory be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. ASU 2015-11 is effective for annual periods beginning after December 15, 2016, with early adoption permitted. This standard will not have a material impact on the Company’s consolidated results of operations or financial position. In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”), to provide guidance on management’s responsibility to perform interim and annual assessments of an entity’s ability to continue as a going concern and to provide related disclosure. ASU 2014-15 applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. This standard will not have a material impact on the Company’s consolidated results of operations or 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. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date (“ASU 2015-14”), deferring the effective date of ASU 2014-09. The new revenue standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 and allows either a full retrospective adoption to all periods presented or a modified retrospective adoption approach with the cumulative effect of initial application of the revised guidance recognized at the date of initial application. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (“ASU 2016-08”). ASU 2016-08 is intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing (“ASU 2016-10”). ASU 2016-10 clarifies the implementation guidance on identifying performance obligations. Early adoption is permitted for periods beginning after December 15, 2016. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”). ASU 2016-12 clarifies three aspects of Topic 606, including the objective of the collectability criterion, the measurement date for noncash consideration and the requirements for a completed contract. ASU 2016-12 also includes a practical expedient for contract modifications. Additionally, the amendments allow an entity to exclude all sales taxes collected from customers from the transaction price. The Company expects to identify similar performance obligations under ASC 606 as compared to current guidance under ASC 605. As a result, we expect the timing of our revenue recognition to remain substantially unchanged. Recently Adopted Accounting Standards. In accordance with U.S. GAAP, the following provisions, which had no material impact on the Company’s financial position, results of operations or cash flows, were adopted effective the first quarter of fiscal year 2016: • ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis • ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period |
ACQUISITIONS AND GOODWILL
ACQUISITIONS AND GOODWILL | 9 Months Ended |
Oct. 01, 2016 | |
Business Combinations [Abstract] | |
ACQUISITIONS AND GOODWILL | ACQUISITIONS AND GOODWILL Fossil Spain Acquisition. On August 10, 2012, the Company’s joint venture company, Fossil, S.L. (“Fossil Spain”), entered into a Framework Agreement (the “Framework Agreement”) with several related and unrelated parties, including General De Relojeria, S.A. (“General De Relojeria”), the Company’s joint venture partner. Pursuant to the Framework Agreement, Fossil Spain was granted the right to acquire the outstanding 50% of its shares owned by General De Relojeria upon the expiration of the joint venture agreement on December 31, 2015. The Company completed the acquisition of these shares in the second quarter of fiscal year 2016, at which time Fossil Spain became a wholly-owned subsidiary of the Company. During the second quarter of fiscal year 2016, the fixed and previously remaining variable components of the purchase price were settled in the amounts of 4.3 million euros (approximately $4.8 million as of the settlement date) and 3.5 million euros (approximately $3.9 million as of the settlement date), respectively. As of January 1, 2013, pursuant to the Framework Agreement, the Company assumed control over the board of directors and the day-to-day management of Fossil Spain, and began consolidating Fossil Spain, instead of treating it as an equity method investment. Misfit, Inc. Acquisition. On December 22, 2015, the Company acquired Misfit, Inc. ("Misfit"), an innovator and distributor of wearable technology and stylish connected devices. Misfit was a U.S.-based, privately held company. The primary purpose of the acquisition was to acquire a scalable technology platform that can be integrated across the Company's multi-brand portfolio, a native wearable technology brand and a pipeline of innovative products. Misfit’s position in the wearable technology space combined with their software and hardware engineering teams enables the Company to expand its addressable market with new distribution channels, products, brands and enterprise partnerships. The purchase price was $215.4 million in cash, net of cash acquired and subject to working capital adjustments, and $1.7 million in replacement awards attributable to precombination service. At closing, $12.5 million of the cash payment was placed into an escrow fund for the Company for working capital adjustments and indemnification obligations of the seller incurred within 12 months from the closing date. The Company received $0.8 million from the escrow during the second quarter of fiscal year 2016 as a working capital settlement and has recorded a receivable for additional claims incurred. To fund the cash purchase price, the Company utilized cash on hand and approximately $60 million of availability under its $1.05 billion revolving line of credit. The results of Misfit's operations have been included in the Company’s consolidated financial statements since December 22, 2015. Assets acquired and liabilities assumed in the transaction were recorded at their acquisition date fair values, while transaction costs of $8.4 million associated with the acquisition were expensed as incurred during the fourth quarter of fiscal year 2015. Because the total purchase price exceeded the fair values of the tangible and intangible assets acquired, goodwill was recorded equal to the difference. The element of goodwill that is not separable into identifiable intangible assets represents expected synergies. The following table summarizes the allocation of the purchase price to the preliminary estimated fair value of the assets acquired and the liabilities assumed as of December 22, 2015, the effective date of the acquisition (in thousands): Cash paid, net of cash acquired $ 215,370 Replacement awards attributable to precombination service 1,709 Working capital and other adjustments (3,788 ) Total transaction consideration $ 213,291 Inventories $ 7,011 Prepaid expenses and other current assets 25 Property, plant and equipment and other long-term assets 1,190 Goodwill 168,021 Amortizing Intangibles: Useful Lives Trade name 6 yrs. 15,700 Customer lists 5 yrs. 10,800 Developed technology 7 yrs. 36,100 Noncompete agreements 3 yrs. 700 Current liabilities (17,019 ) Long-term liabilities (9,237 ) Total net assets acquired $ 213,291 Purchase accounting adjustments during the Year To Date Period include a $5.9 million reduction to inventories, $4.0 million increase to current liabilities, $3.8 million reduction to total transaction consideration, $3.7 million reduction to long-term liabilities, $3.6 million increase to goodwill and a $1.2 million reduction to accounts receivable. The amounts shown above may change in the near term as management continues to assess the fair value of acquired assets and liabilities. A change in this valuation may also impact the income tax related accounts and goodwill. The goodwill recognized from the acquisition has an indefinite useful life and will be included in the Company’s annual impairment testing. Goodwill. The changes in the carrying amount of goodwill were as follows (in thousands): Americas Europe Asia Total Balance at January 2, 2016 $ 283,598 $ 63,981 $ 11,815 $ 359,394 Segment allocation and acquisition adjustments (1) (78,197 ) 49,760 32,053 3,616 Currency (166 ) 1,742 61 1,637 Balance at October 1, 2016 $ 205,235 $ 115,483 $ 43,929 $ 364,647 __________________________________________________________________________________ (1) All goodwill resulting from the Misfit acquisition was recorded in the Americas segment as of January 2, 2016, on a preliminary basis. This line item includes an allocation of the goodwill across reporting segments and also purchase accounting adjustments made during the Year To Date Period. |
INVENTORIES
INVENTORIES | 9 Months Ended |
Oct. 01, 2016 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | INVENTORIES Inventories consisted of the following (in thousands): October 1, 2016 January 2, 2016 Components and parts $ 74,535 $ 49,539 Work-in-process 10,353 12,213 Finished goods 614,760 563,592 Inventories $ 699,648 $ 625,344 |
WARRANTY LIABILITIES
WARRANTY LIABILITIES | 9 Months Ended |
Oct. 01, 2016 | |
Product Warranties Disclosures [Abstract] | |
WARRANTY LIABILITIES | 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): For the 39 Weeks Ended October 1, 2016 For the 39 Weeks Ended October 3, 2015 Beginning balance $ 13,669 $ 13,500 Settlements in cash or kind (7,338 ) (6,627 ) Warranties issued and adjustments to preexisting warranties (1) 8,604 7,305 Liabilities assumed in acquisition — 44 Ending balance $ 14,935 $ 14,222 _______________________________________________ (1) Changes in cost estimates related to preexisting warranties are aggregated with accruals for new standard warranties issued and foreign currency changes. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Oct. 01, 2016 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company’s income tax expense and related effective rates were as follows (in thousands, except percentage data): For the 13 Weeks Ended October 1, 2016 For the 13 Weeks Ended October 3, 2015 For the 39 Weeks Ended October 1, 2016 For the 39 Weeks Ended October 3, 2015 Income tax expense $ 6,451 $ 17,303 $ 13,230 $ 58,721 Effective tax rate 25.0 % 22.3 % 27.5 % 27.1 % The higher effective tax rate in the Third Quarter as compared to the Prior Year Quarter is primarily attributable to favorable differences between the income tax returns filed and the tax provisions made for those tax liabilities. These differences were recorded as discrete items in the Prior Year Quarter that more than offset the higher structural rate. The higher effective tax rate in the Year To Date Period as compared to the Prior Year YTD Period is primarily attributable to the recognition of income tax benefits due to the settlement of audits and favorable differences between the income tax returns filed and the tax provisions made for those tax liabilities in the Prior Year YTD Period that more than offset the higher structural rate. The lower projected structural rate for 2016 is largely due to the projected shift in earnings mix towards foreign income which is taxed at lower statutory rates. As of October 1, 2016 , the total amount of unrecognized tax benefits, excluding interest and penalties, was $22.2 million , of which $19.5 million would favorably impact the effective tax rate in future periods, if recognized. The Company is subject to examinations in various state and foreign jurisdictions for its 2009-2015 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 within twelve months of the condensed consolidated balance sheet date. As of October 1, 2016 , the Company had recorded $0.5 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 October 1, 2016 , the total amount of accrued income tax-related interest and penalties included in the condensed consolidated balance sheet was $2.1 million and $1.4 million , respectively. For the Third Quarter and Year To Date Period, the Company accrued income tax-related interest expense of $0.2 million and $0.7 million , respectively. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Oct. 01, 2016 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY | STOCKHOLDERS’ EQUITY Common Stock Repurchase Programs. Purchases of the Company’s common stock 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, the Company accounts for retirements by allocating the repurchase price to common stock, additional paid-in capital and retained earnings. The repurchase price allocation is based upon the equity contribution associated with historical issuances. The repurchase programs are conducted pursuant to Rule 10b-18 of the Exchange Act. During the Year to Date period, the Company effectively retired 0.1 million shares of common stock repurchased under its repurchase programs. The effective retirement of repurchased common stock decreased common stock by $1,100 , additional paid-in capital by $0.2 million , retained earnings by $5.0 million and treasury stock by $5.2 million . At January 2, 2016 and October 1, 2016 , all treasury stock had been effectively retired. As of October 1, 2016 , the Company had $824.2 million of repurchase authorizations remaining under its combined repurchase programs. However, under the Company's First Amendment to the Amended and Restated Credit Agreement (the "First Amendment"), the Company is restricted from making open market repurchases of its common stock. See "Note 14—Debt Activity" for additional disclosures about the First Amendment. The following tables reflect the Company’s common stock repurchase activity for the periods indicated (in millions): For the 13 Weeks Ended October 1, 2016 For the 13 Weeks Ended October 3, 2015 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 — $ — 0.2 $ 12.4 2012 $ 1,000.0 December 2016 (1) — $ — — $ — 2010 $ 30.0 None — $ — — $ — For the 39 Weeks Ended October 1, 2016 For the 39 Weeks Ended October 3, 2015 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 2.4 $ 200.7 2012 $ 1,000.0 December 2016 (1) — $ — 0.3 $ 28.8 2010 $ 30.0 None — $ — — $ — __________________________________________________________________________________ (1) In the first quarter of fiscal year 2015, the Company completed this repurchase plan. Controlling and Noncontrolling Interest. The following tables summarize the changes in equity attributable to controlling and noncontrolling interest (in thousands): Fossil Group, Inc. Stockholders’ Equity Noncontrolling Interest Total Stockholders’ Equity Balance at January 2, 2016 $ 921,388 $ 11,155 $ 932,543 Net income 29,170 5,646 34,816 Currency translation adjustment 9,383 — 9,383 Cash flow hedges - net change (4,741 ) — (4,741 ) Pension plan activity 1,714 — 1,714 Common stock issued upon exercise of stock options 57 — 57 Tax expense derived from stock-based compensation (1,756 ) — (1,756 ) Distribution of noncontrolling interest earnings — (4,543 ) (4,543 ) Acquisition of common stock (6,448 ) — (6,448 ) Stock-based compensation expense 23,894 — 23,894 Balance at October 1, 2016 $ 972,661 $ 12,258 $ 984,919 Fossil Group, Inc. Stockholders’ Equity Noncontrolling Interest Total Stockholders’ Equity Balance at January 3, 2015 $ 977,860 $ 5,941 $ 983,801 Net income 150,252 7,335 157,587 Currency translation adjustment (35,382 ) — (35,382 ) Cash flow hedges - net change (5,443 ) — (5,443 ) Common stock issued upon exercise of stock options 658 — 658 Tax expense derived from stock-based compensation (930 ) — (930 ) Distribution of noncontrolling interest earnings — (5,257 ) (5,257 ) Business acquisition — 5,831 5,831 Acquisition of common stock (231,220 ) — (231,220 ) Stock-based compensation expense 13,997 — 13,997 Balance at October 3, 2015 $ 869,792 $ 13,850 $ 883,642 |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 9 Months Ended |
Oct. 01, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
EMPLOYEE BENEFIT PLANS | EMPLOYEE BENEFIT PLANS Stock-Based Compensation Plans. The following table summarizes stock options and stock appreciation rights activity during the Third Quarter: 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 2, 2016 2,206 $ 51.59 6.7 $ 791 Granted 101 29.49 Exercised — Forfeited or expired (10 ) 56.26 Outstanding at October 1, 2016 2,297 50.60 6.5 715 Exercisable at October 1, 2016 542 $ 84.18 4.1 $ 715 The aggregate intrinsic value shown in the table above is before income taxes and is based on (i) the exercise price for outstanding and exercisable options/rights at October 1, 2016 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 October 1, 2016 : 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- (in Thousands) (in Years) (in Thousands) $13.65 - $29.49 41 $ 14.40 2.4 41 $ 14.40 $29.78 - $47.99 91 36.29 2.3 91 36.29 $55.04 - $83.83 92 80.80 4.5 92 80.80 $95.91 - $131.46 144 127.98 5.4 144 127.98 Total 368 $ 80.95 4.1 368 $ 80.95 Stock Appreciation Rights Outstanding Stock Appreciation Rights Exercisable Range of Number of Weighted- Weighted- Number of Weighted- (in Thousands) (in Years) (in Thousands) $13.65 - $29.49 113 $ 27.72 7.0 13 $ 13.65 $29.78 - $47.99 1,566 38.15 7.2 9 38.40 $55.04 - $83.83 141 79.03 5.8 64 80.18 $95.91 - $131.46 109 114.42 4.7 88 115.01 Total 1,929 $ 44.82 7.0 174 $ 90.99 Restricted Stock, Restricted Stock Units and Performance Restricted Stock Units. The following table summarizes restricted stock, restricted stock unit and performance restricted stock unit activity during the Third Quarter: 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 2, 2016 1,524 $ 40.95 Granted 61 29.50 Vested (5 ) 84.82 Forfeited (16 ) 46.51 Nonvested at October 1, 2016 1,564 $ 40.30 The total fair value of restricted stock and restricted stock units vested during the Third Quarter was approximately $0.2 million . Vesting of performance restricted stock units is based on achievement of sales growth and operating margin targets in relation to the performance of a certain identified peer group, particular sales growth in relation to a defined sales plan and achievement of succession plans for key talent. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 9 Months Ended |
Oct. 01, 2016 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The following tables illustrate changes in the balances of each component of accumulated other comprehensive income (loss), net of taxes (in thousands): For the 13 Weeks Ended October 1, 2016 Currency Translation Adjustments Cash Flow Hedges Forward Contracts Interest Rate Swaps Pension Plan Total Beginning balance $ (73,986 ) $ 2,943 $ (1,623 ) $ (4,506 ) $ (77,172 ) Other comprehensive income (loss) before reclassifications 1,942 3,313 466 — 5,721 Tax (expense) benefit (280 ) (605 ) (170 ) — (1,055 ) Amounts reclassed from accumulated other comprehensive income — 2,621 (413 ) — 2,208 Tax (expense) benefit — (714 ) 150 — (564 ) Total other comprehensive income (loss) 1,662 801 559 — 3,022 Ending balance $ (72,324 ) $ 3,744 $ (1,064 ) $ (4,506 ) $ (74,150 ) For the 13 Weeks Ended October 3, 2015 Currency Translation Adjustments Cash Flow Hedges Forward Contracts Interest Rate Swaps Pension Plan Total Beginning balance $ (55,188 ) $ 15,348 $ (1,055 ) $ (3,647 ) $ (44,542 ) Other comprehensive income (loss) before reclassifications (7,435 ) 3,825 (2,044 ) — (5,654 ) Tax (expense) benefit — (1,177 ) 745 — (432 ) Amounts reclassed from accumulated other comprehensive income — 10,553 (623 ) — 9,930 Tax (expense) benefit — (3,549 ) 226 — (3,323 ) Total other comprehensive income (loss) (7,435 ) (4,356 ) (902 ) — (12,693 ) Ending balance $ (62,623 ) $ 10,992 $ (1,957 ) $ (3,647 ) $ (57,235 ) For the 39 Weeks Ended October 1, 2016 Currency Translation Adjustments Cash Flow Hedges Forward Contracts Interest Rate Swaps Pension Plan Total Beginning balance $ (81,707 ) $ 8,114 $ (693 ) $ (6,220 ) $ (80,506 ) Other comprehensive income (loss) before reclassifications 9,767 2,055 (1,915 ) 2,010 11,917 Tax (expense) benefit (280 ) 433 698 (296 ) 555 Amounts reclassed from accumulated other comprehensive income 104 9,888 (1,331 ) — 8,661 Tax (expense) benefit — (3,030 ) 485 — (2,545 ) Total other comprehensive income (loss) 9,383 (4,370 ) (371 ) 1,714 6,356 Ending balance $ (72,324 ) $ 3,744 $ (1,064 ) $ (4,506 ) $ (74,150 ) For the 39 Weeks Ended October 3, 2015 Currency Translation Adjustments Cash Flow Hedges Forward Contracts Interest Rate Swap Pension Plan Total Beginning balance $ (27,241 ) $ 14,980 $ (502 ) $ (3,647 ) $ (16,410 ) Other comprehensive income (loss) before reclassifications (35,382 ) 25,287 1,010 — (9,085 ) Tax (expense) benefit — (7,142 ) (368 ) — (7,510 ) Amounts reclassed from accumulated other comprehensive income — 33,546 3,300 — 36,846 Tax (expense) benefit — (11,413 ) (1,203 ) — (12,616 ) Total other comprehensive income (loss) (35,382 ) (3,988 ) (1,455 ) — (40,825 ) Ending balance $ (62,623 ) $ 10,992 $ (1,957 ) $ (3,647 ) $ (57,235 ) See “Note 10—Derivatives and Risk Management” for additional disclosures about the Company’s use of derivatives. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
Oct. 01, 2016 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION The Company reports segment information based on the “management 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, China, 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. Net sales for geographic segments are based on the location of the selling entity. Operating income 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 and omni channel activities 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 are not allocated to the various segments because they are managed at the corporate 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 October 1, 2016 For the 13 Weeks Ended October 3, 2015 Net Sales Operating Income Net Sales Operating Income Americas $ 361,226 $ 56,455 $ 391,201 $ 84,353 Europe 243,139 49,013 260,263 58,577 Asia 133,625 23,654 119,839 14,173 Corporate — (97,947 ) — (81,398 ) Consolidated $ 737,990 $ 31,175 $ 771,303 $ 75,705 For the 39 Weeks Ended October 1, 2016 For the 39 Weeks Ended October 3, 2015 Net Sales Operating Income Net Sales Operating Income Americas $ 1,042,223 $ 168,352 $ 1,143,885 $ 246,886 Europe 669,076 109,193 722,442 137,729 Asia 371,907 60,519 370,036 55,223 Corporate — (277,034 ) — (237,545 ) Consolidated $ 2,083,206 $ 61,030 $ 2,236,363 $ 202,293 The following tables reflect net sales for each class of similar products in the periods presented (in thousands, except percentage data): For the 13 Weeks Ended October 1, 2016 For the 13 Weeks Ended October 3, 2015 Net Sales Percentage of Total Net Sales Percentage of Total Watches $ 567,148 76.9 % $ 581,069 75.3 % Leathers 93,338 12.6 104,777 13.6 Jewelry 60,237 8.2 66,984 8.7 Other 17,267 2.3 18,473 2.4 Total $ 737,990 100.0 % $ 771,303 100.0 % For the 39 Weeks Ended October 1, 2016 For the 39 Weeks Ended October 3, 2015 Net Sales Percentage of Total Net Sales Percentage of Total Watches $ 1,581,233 75.9 % $ 1,708,730 76.4 % Leathers 278,995 13.4 287,083 12.8 Jewelry 171,709 8.2 185,751 8.3 Other 51,269 2.5 54,799 2.5 Total $ 2,083,206 100.0 % $ 2,236,363 100.0 % |
DERIVATIVES AND RISK MANAGEMENT
DERIVATIVES AND RISK MANAGEMENT | 9 Months Ended |
Oct. 01, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVES AND RISK MANAGEMENT | 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, during the first quarter of fiscal year 2016, the Company entered 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 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 and comprehensive income, 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 October 1, 2016 , 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 255.8 U.S. dollar 290.6 British pound 52.9 U.S. dollar 77.0 Canadian dollar 84.2 U.S. dollar 64.1 Japanese yen 4,234.3 U.S. dollar 38.6 Mexican peso 339.8 U.S. dollar 18.0 Australian dollar 22.2 U.S. dollar 16.6 U.S. dollar 41.3 Japanese yen 4,250.0 The Company is also exposed to interest rate risk related to its outstanding debt. To manage the interest rate risk related to its $231.3 million U.S.-based term loan (as amended and restated on March 9, 2015, the "Term Loan”), 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 (which varies based upon the Company’s consolidated leverage ratio (the “Ratio”) from 1.50% if the Ratio is less than 1.00 to 1.00 , to 2.75% if the Ratio is greater than or equal to 3.00 to 1.00 ). The notional amount amortizes over the remaining life of the Term Loan to coincide 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. Net Investment Hedges. The Company is also exposed to risk that adverse changes in foreign currency exchange rates could impact its net investment in foreign operations. During the first quarter of fiscal year 2016, the Company entered into a forward contract designated as a net investment hedge to reduce exposure to changes in currency exchange rates on 45.0 million euros of its total investment in a wholly-owned, euro-denominated foreign subsidiary. The hedge was settled during the second quarter of fiscal year 2016 resulting in a net gain of $0.5 million net of taxes that was recognized in the currency translation component of accumulated other comprehensive income (loss). The effective portion of derivatives designated as net investment hedges are recorded at fair value at each balance sheet date and the change in fair value is recorded in the cumulative translation adjustment component of other comprehensive income (loss) in the Company’s condensed consolidated statements of income and comprehensive income. The Company uses the hypothetical derivative method to assess the ineffectiveness of net investment hedges. Should any portion of a net investment hedge become ineffective, the ineffective portion will be reclassified to other income (expense)-net on the Company’s condensed consolidated statements of income and comprehensive income. Gains and losses reported in accumulated other comprehensive income (loss) will not be reclassified into earnings until the Company’s underlying investment is liquidated or dissolved. 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 October 1, 2016 , the Company had non-designated forward contracts of approximately $2.0 million on 28.0 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 October 1, 2016 For the 13 Weeks Ended October 3, 2015 Cash flow hedges: Forward contracts $ 2,708 $ 2,648 Interest rate swaps 296 (1,299 ) Total gain (loss) recognized in other comprehensive income (loss), net of taxes $ 3,004 $ 1,349 For the 39 Weeks Ended October 1, 2016 For the 39 Weeks Ended October 3, 2015 Cash flow hedges: Forward contracts $ 2,488 $ 18,145 Interest rate swaps (1,217 ) 642 Total gain (loss) recognized in other comprehensive income (loss), net of taxes $ 1,271 $ 18,787 The following table illustrates the effective portion of gains and losses on derivative instruments recorded in 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 and Comprehensive Income Location Effect of Derivative Instruments For the 13 Weeks Ended October 1, 2016 For the 13 Weeks Ended October 3, 2015 Forward contracts designated as cash flow hedging instruments Other income (expense)-net Total gain (loss) reclassified from other comprehensive income (loss) $ 1,907 $ 7,004 Forward contracts not designated as hedging instruments Other income (expense)-net Total gain (loss) recognized in income $ 75 $ (205 ) Interest rate swap designated as a cash flow hedging instrument Interest expense Total gain (loss) reclassified from other comprehensive income (loss) $ (263 ) $ (397 ) Derivative Instruments Condensed Consolidated Statements of Income and Comprehensive Income Location Effect of Derivative Instruments For the 39 Weeks Ended October 1, 2016 For the 39 Weeks Ended October 3, 2015 Forward contracts designated as cash flow hedging instruments Other income (expense)-net Total gain (loss) reclassified from other comprehensive income (loss) $ 6,858 $ 22,133 Forward contracts not designated as hedging instruments Other income (expense)-net Total gain (loss) recognized in income $ (222 ) $ (125 ) Interest rate swap designated as a cash flow hedging instrument Interest expense Total gain (loss) reclassified from other comprehensive income (loss) $ (846 ) $ (1,234 ) Interest rate swap designated as a cash flow hedging instrument Other income (expense)-net Total gain (loss) reclassified from other comprehensive income (loss) $ — $ 3,331 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 October 1, 2016 January 2, 2016 October 1, 2016 January 2, 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 $ 9,867 Prepaid expenses and other current assets $ 13,184 Accrued expenses- other $ 5,459 Accrued expenses- other $ 477 Forward contracts not designated as cash flow hedging instruments Prepaid expenses and other current assets — Prepaid expenses and other current assets 167 Accrued expenses- other 60 Accrued expenses- other 71 Interest rate swap designated as a cash flow hedging instrument Prepaid expenses and other current assets — Prepaid expenses and other current assets — Accrued expenses- other 1,190 Accrued expenses- other 1,273 Forward contracts designated as cash flow hedging instruments Intangible and other assets-net 2,083 Intangible and other assets-net 2,785 Other long-term liabilities 1,276 Other long-term liabilities 250 Interest rate swap designated as a cash flow hedging instrument Intangible and other assets-net — Intangible and other assets-net 311 Other long-term liabilities 483 Other long-term liabilities 128 Total $ 11,950 $ 16,447 $ 8,468 $ 2,199 At the end of the Third Quarter, the Company had forward contracts designated as cash flow hedges with maturities extending through September 2018. As of October 1, 2016 , an estimated net gain of $3.1 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. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Oct. 01, 2016 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | 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") 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 October 1, 2016 (in thousands): Fair Value at October 1, 2016 Level 1 Level 2 Level 3 Total Assets: Forward contracts $ — $ 11,950 $ — $ 11,950 Deferred compensation plan assets: Investment in publicly traded mutual funds 2,452 — — 2,452 Total $ 2,452 $ 11,950 $ — $ 14,402 Liabilities: Forward contracts $ — $ 6,795 — $ 6,795 Interest rate swap — 1,673 — 1,673 Total $ — $ 8,468 $ — $ 8,468 The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of January 2, 2016 (in thousands): Fair Value at January 2, 2016 Level 1 Level 2 Level 3 Total Assets: Forward contracts $ — $ 16,136 $ — $ 16,136 Deferred compensation plan assets: Investment in publicly traded mutual funds 2,406 — — 2,406 Interest rate swap — 311 — 311 Total $ 2,406 $ 16,447 $ — $ 18,853 Liabilities: Contingent consideration $ — $ — $ 3,643 $ 3,643 Forward contracts — 798 — 798 Interest rate swap — 1,401 — 1,401 Total $ — $ 2,199 $ 3,643 $ 5,842 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 10—Derivatives and Risk Management” for additional disclosures about the interest rate swaps and forward contracts . The Company has evaluated its short-term and long-term debt as of October 1, 2016 and January 2, 2016 and believes, based on the interest rates, related terms and maturities, that the fair values of such instruments approximated their carrying amounts. As of October 1, 2016 and January 2, 2016 , the carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximated their fair values due to the short-term maturities of these accounts. In accordance with the provisions of ASC 360, Property, Plant and Equipment , property, plant and equipment-net with a carrying amount of $13.1 million related to retail store leasehold improvements and fixturing was written down to a fair value of $0.6 million , and related key money in the amount of $2.0 million was deemed not recoverable, resulting in an impairment charge of $14.5 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 $14.5 million impairment expense, $10.3 million , $1.6 million and $0.4 million were recorded in restructuring charges in the Americas, Europe, and Asia segments, respectively, and $2.2 million was recorded in SG&A in the Europe segment. |
INTANGIBLE AND OTHER ASSETS
INTANGIBLE AND OTHER ASSETS | 9 Months Ended |
Oct. 01, 2016 | |
INTANGIBLE AND OTHER ASSETS | |
INTANGIBLE AND OTHER ASSETS | INTANGIBLE AND OTHER ASSETS The following table summarizes intangible and other assets (in thousands): October 1, 2016 January 2, 2016 Useful Gross Accumulated Gross Accumulated Lives Amount Amortization Amount Amortization Intangibles-subject to amortization: Trademarks 10 yrs. $ 4,310 $ 3,382 $ 4,175 $ 3,195 Customer lists 5-10 yrs. 54,208 25,744 53,825 21,001 Patents 3-20 yrs. 2,325 2,091 2,273 2,064 Noncompete agreement 3-6 yrs. 2,527 1,545 2,515 1,134 Developed technology 7 yrs. 36,100 3,868 36,100 — Trade name 6 yrs. 15,700 1,963 15,700 — Other 7-20 yrs. 258 218 256 206 Total intangibles-subject to amortization 115,428 38,811 114,844 27,600 Intangibles-not subject to amortization: Trade names 74,506 74,493 Other assets: Key money deposits 28,878 23,136 29,357 19,805 Other deposits 20,724 21,684 Deferred compensation plan assets 2,452 2,406 Deferred tax asset-net 21,283 18,602 Restricted cash 530 512 Shop-in-shop 9,267 7,917 9,985 8,262 Interest rate swap — 311 Forward contracts 2,083 2,785 Investments 2,397 2,396 Other 4,902 5,519 Total other assets 92,516 31,053 93,557 28,067 Total intangible and other assets $ 282,450 $ 69,864 $ 282,894 $ 55,667 Total intangible and other assets-net $ 212,586 $ 227,227 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 $3.7 million and $1.2 million for the Third Quarter and Prior Year Quarter, respectively, and $11.2 million and $3.7 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 2016 (remaining) $ 3,751 2017 $ 14,753 2018 $ 14,398 2019 $ 14,069 2020 $ 13,556 2021 $ 9,730 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Oct. 01, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 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. Sale-leaseback. During the Third Quarter, the Company entered into a sale-leaseback agreement for its approximately 518,000 square foot warehouse and distribution center in Dallas, Texas. The sales price was $33.0 million . The transaction resulted in a gain of $6.7 million net of taxes and fees in the Third Quarter and a deferred gain of $13.2 million to be amortized to rent expense over the initial lease term. The leaseback has a 10 -year term with two 5 -year renewal options and is classified as an operating lease. As of October 1, 2016, the estimated future minimum lease payments under the lease were as follows (in thousands): Fiscal Year 2016 remaining $ 485 2017 1,950 2018 1,989 2019 2,029 2020 2,070 Thereafter 12,726 Total $ 21,249 |
DEBT ACTIVITY
DEBT ACTIVITY | 9 Months Ended |
Oct. 01, 2016 | |
Debt Disclosure [Abstract] | |
DEBT ACTIVITY | DEBT ACTIVITY On August 8, 2016, the Company entered into the First Amendment. The First Amendment adds two new levels to the applicable margin pricing grid used to calculate the interest rate that is applicable to base rate loans and LIBOR rate loans under the Company’s credit facility and increases the applicable margin at each pricing level for LIBOR rate loans by 25 basis points and for base rate loans by 25 basis points. Additionally, the First Amendment provides for the net cash proceeds from certain debt issuances by the Company in excess of $25.0 million to be applied, first, to prepay the term loans under the Company’s credit facility and, for the excess, if any, to prepay the revolving credit loans under the Company’s credit facility with a corresponding reduction in the revolving credit commitment by the amount of such excess proceeds. The First Amendment also modifies the negative covenant on restricted payments set forth in the credit facility in such a manner as to prohibit the Company's ability to make open market repurchases of the Company's common stock. Furthermore, the First Amendment changes the consolidated total leverage ratio that the Company must comply with for fiscal quarters ending on or after June 30, 2016 from 2.50 :1.00 to 3.25 :1.00. In connection with the First Amendment, the Company and certain of its material domestic subsidiaries entered into a Collateral Agreement in favor of Wells Fargo Bank, National Association, as administrative agent, pursuant to which the Company and such subsidiaries granted liens on all or substantially all of their assets in order to secure the Company’s obligations under the Amended and Restated Credit Agreement, dated March 9, 2015 (as amended, restated or otherwise modified, including pursuant to the First Amendment, the “Credit Agreement”) and the other loan documents (the “Obligations”). Additionally, certain of the Company’s domestic subsidiaries entered into a Guaranty Agreement in favor of Wells Fargo Bank, National Association, as administrative agent, pursuant to which such subsidiaries guarantee the payment and performance of the Obligations. The Company made principal payments of $6.3 million and $15.6 million under its Term Loan during the Third Quarter and Year To Date Period, respectively. The Company also made net payments of $3.0 million and $67.0 million under its U.S. revolving line of credit (the "Revolving Credit Facility") during the Third Quarter and Year To Date Period, respectively. Borrowings were primarily used to fund capital expenditures, normal operating expenses and stock repurchases and were more than offset by payments on debt. Amounts available under the Revolving Credit Facility are reduced by any amounts outstanding under standby letters of credit. As of October 1, 2016 , the Company had available borrowing capacity of $299.7 million under the Revolving Credit Facility, which was favorably impacted by a $176.8 million international cash balance. The Company incurred approximately $1.7 million and $4.9 million of interest expense related to the Term Loan during the Third Quarter and Year To Date Period, respectively, including the impact of the related interest rate swap. The Company incurred approximately $4.1 million and $11.5 million of interest expense related to the Revolving Credit Facility during the Third Quarter and Year To Date Period, respectively. The Company incurred approximately $0.6 million and $1.2 million of interest expense related to the amortization of debt issuance costs during the Third Quarter and Year To Date Period, respectively. |
RESTRUCTURING
RESTRUCTURING | 9 Months Ended |
Oct. 01, 2016 | |
Restructuring and Related Activities [Abstract] | |
RESTRUCTURING | RESTRUCTURING The Company implemented a multi-year restructuring program in the Third Quarter to reinvent the Company, strengthen the foundation of the Company for the future and support long-term sales growth and profitability objectives. The program is intended to touch all aspects of the business, enhance operating capabilities, create greater efficiencies and take advantage of the Company's considerable scale. The Company will review and adjust its overall structure with the goal of streamlining the Company's ability to respond to the changing needs and demands of customers, and will examine and adjust its store fleet to reflect the evolving shopping habits of today's consumer. The Company is in the early phases of the program, although the Company estimates total restructuring charges of up to approximately $150.0 million will be recorded predominantly during fiscal years 2017 and 2018, with some charges recognized in the current fiscal year. The costs incurred in the Third Quarter include professional services and costs related to store closures. The following tables show a rollforward of the liability incurred for the Company’s restructuring plan (in thousands): For the 13 Weeks Ended October 1, 2016 Organizational Retail Total Balance at July 2, 2016 $ — $ — $ — Charges to expense 1,950 12,523 14,473 Cash payments (1,300 ) — (1,300 ) Non-cash items — (12,523 ) (12,523 ) Balance at October 1, 2016 $ 650 $ — $ 650 For the 13 Weeks Ended October 3, 2015 Organizational Retail Total Balance at July 4, 2015 $ 3,898 $ — $ 3,898 Charges to expense (1) 2,250 891 3,141 Cash payments (4,961 ) (891 ) (5,852 ) Non-cash items — — — Balance at October 3, 2015 $ 1,187 $ — $ 1,187 For the 39 Weeks Ended October 1, 2016 Organizational Retail Total Balance at January 2, 2016 $ — $ — $ — Charges to expense 1,950 12,523 14,473 Cash payments (1,300 ) — (1,300 ) Non-cash items — (12,523 ) (12,523 ) Balance at October 1, 2016 $ 650 $ — $ 650 For the 39 Weeks Ended October 3, 2015 Organizational Retail Total Balance at January 3, 2015 $ — $ — $ — Charges to expense (1) 14,567 7,133 21,700 Cash payments (13,380 ) (4,752 ) (18,132 ) Non-cash items — (2,381 ) (2,381 ) Balance at October 3, 2015 $ 1,187 $ — $ 1,187 _________________________________________________ (1) Charges to expense include changes in estimates. Restructuring charges by operating segment were as follows (in thousands): For the 13 Weeks Ended October 1, 2016 For the 13 Weeks Ended October 3, 2015 Americas $ 10,548 $ 891 Europe 1,639 514 Asia 336 90 Corporate 1,950 1,646 Consolidated $ 14,473 $ 3,141 For the 39 Weeks Ended October 1, 2016 For the 39 Weeks Ended October 3, 2015 Americas $ 10,548 $ 7,133 Europe 1,639 3,149 Asia 336 210 Corporate 1,950 11,208 Consolidated $ 14,473 $ 21,700 |
FINANCIAL STATEMENT POLICIES (P
FINANCIAL STATEMENT POLICIES (Policies) | 9 Months Ended |
Oct. 01, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | 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 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 October 1, 2016 , and the results of operations for the thirteen-week periods ended October 1, 2016 (“ Third Quarter”) and October 3, 2015 (“Prior Year Quarter”), respectively, and the thirty-nine week periods ended October 1, 2016 (“Year To Date Period”) and October 3, 2015 (“Prior Year YTD Period”). 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 January 2, 2016 (the “ 2015 Form 10-K”). Operating results for the Third Quarter and Year To Date Period 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. Actual results could differ from those estimates. The Company has not made any changes in its significant accounting policies from those disclosed in the 2015 Form 10-K. |
Business | Business. The Company is a 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 | 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 manage 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, during the first quarter of fiscal year 2016, the Company entered 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, British pound, Canadian dollar, Japanese yen, Mexican peso, Australian dollar and U.S dollar forward contracts as of October 1, 2016 , the result would have been a net gain of approximately $3.6 million , net of taxes. This unrealized gain is recognized in other comprehensive income (loss), net of taxes on the Company's consolidated statements of income and comprehensive income. 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 and comprehensive income. Also, the Company has entered into interest rate swap agreements to effectively convert portions of its variable rate debt obligations to fixed rates. Changes in the fair value of the interest rate swaps are recorded as a component of accumulated other comprehensive income (loss) within stockholders' equity, and are 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. |
Operating expenses | Operating expenses. Operating expenses include selling, general and administrative expenses (“SG&A”) 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 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 “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 and optimize the Company’s infrastructure and store closures. |
Earnings Per Share ("EPS") | Earnings 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. |
Recently Issued Accounting Standards and Recently Adopted Accounting Standards | Recently Issued Accounting Standards. In October 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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. The Company is still evaluating the effect of adopting ASU 2016-16. 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 2016-05 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 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 is intended to simplify 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 is effective for annual periods, and interim periods within those years, beginning after December 15, 2016. Early adoption is permitted. The Company is still evaluating the effect of adopting ASU 2016-09, but the adoption may create volatility in the Company's effective tax rate. In March 2016, the FASB issued ASU 2016-04, Liabilities—Extinguishments of Liabilities (Subtopic 405-20)- 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 to the extent that it is probable a significant reversal 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. The Company is still evaluating the effect of adopting ASU 2016-04. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842): Amendments to the FASB Accounting Standards Codification® (“ASU 2016-02”), which supersedes the existing guidance for lease accounting, Leases (Topic 840) . ASU 2016-02 requires lessees to recognize leases 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 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. Many of the Company’s leases are considered operating leases and are 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. In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory (“ASU 2015-11”). ASU 2015-11 affects reporting entities that measure inventory using first-in, first-out or average cost. Specifically, ASU 2015-11 requires that inventory be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. ASU 2015-11 is effective for annual periods beginning after December 15, 2016, with early adoption permitted. This standard will not have a material impact on the Company’s consolidated results of operations or financial position. In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”), to provide guidance on management’s responsibility to perform interim and annual assessments of an entity’s ability to continue as a going concern and to provide related disclosure. ASU 2014-15 applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. This standard will not have a material impact on the Company’s consolidated results of operations or 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. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date (“ASU 2015-14”), deferring the effective date of ASU 2014-09. The new revenue standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 and allows either a full retrospective adoption to all periods presented or a modified retrospective adoption approach with the cumulative effect of initial application of the revised guidance recognized at the date of initial application. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (“ASU 2016-08”). ASU 2016-08 is intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing (“ASU 2016-10”). ASU 2016-10 clarifies the implementation guidance on identifying performance obligations. Early adoption is permitted for periods beginning after December 15, 2016. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”). ASU 2016-12 clarifies three aspects of Topic 606, including the objective of the collectability criterion, the measurement date for noncash consideration and the requirements for a completed contract. ASU 2016-12 also includes a practical expedient for contract modifications. Additionally, the amendments allow an entity to exclude all sales taxes collected from customers from the transaction price. The Company expects to identify similar performance obligations under ASC 606 as compared to current guidance under ASC 605. As a result, we expect the timing of our revenue recognition to remain substantially unchanged. Recently Adopted Accounting Standards. In accordance with U.S. GAAP, the following provisions, which had no material impact on the Company’s financial position, results of operations or cash flows, were adopted effective the first quarter of fiscal year 2016: • ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis • ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period |
FINANCIAL STATEMENT POLICIES (T
FINANCIAL STATEMENT POLICIES (Tables) | 9 Months Ended |
Oct. 01, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Numerators and denominators used in the computations of both basic and diluted EPS | 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 October 1, 2016 For the 13 Weeks Ended October 3, 2015 For the 39 Weeks Ended October 1, 2016 For the 39 Weeks Ended October 3, 2015 Numerator: Net income attributable to Fossil Group, Inc. $ 17,356 $ 57,534 $ 29,170 $ 150,252 Denominator: Basic EPS computation: Basic weighted average common shares outstanding 48,130 48,153 48,127 49,027 Basic EPS $ 0.36 $ 1.19 $ 0.61 $ 3.06 Diluted EPS computation: Basic weighted average common shares outstanding 48,130 48,153 48,127 49,027 Effect of stock options, stock appreciation rights, restricted stock units and performance restricted stock units 161 89 159 121 Diluted weighted average common shares outstanding 48,291 48,242 48,286 49,148 Diluted EPS $ 0.36 $ 1.19 $ 0.60 $ 3.06 |
ACQUISITIONS AND GOODWILL (Tabl
ACQUISITIONS AND GOODWILL (Tables) | 9 Months Ended |
Oct. 01, 2016 | |
Business Combinations [Abstract] | |
Schedule of business acquisitions, by acquisition | The following table summarizes the allocation of the purchase price to the preliminary estimated fair value of the assets acquired and the liabilities assumed as of December 22, 2015, the effective date of the acquisition (in thousands): Cash paid, net of cash acquired $ 215,370 Replacement awards attributable to precombination service 1,709 Working capital and other adjustments (3,788 ) Total transaction consideration $ 213,291 Inventories $ 7,011 Prepaid expenses and other current assets 25 Property, plant and equipment and other long-term assets 1,190 Goodwill 168,021 Amortizing Intangibles: Useful Lives Trade name 6 yrs. 15,700 Customer lists 5 yrs. 10,800 Developed technology 7 yrs. 36,100 Noncompete agreements 3 yrs. 700 Current liabilities (17,019 ) Long-term liabilities (9,237 ) Total net assets acquired $ 213,291 |
Schedule of changes in the carrying amount of goodwill | The changes in the carrying amount of goodwill were as follows (in thousands): Americas Europe Asia Total Balance at January 2, 2016 $ 283,598 $ 63,981 $ 11,815 $ 359,394 Segment allocation and acquisition adjustments (1) (78,197 ) 49,760 32,053 3,616 Currency (166 ) 1,742 61 1,637 Balance at October 1, 2016 $ 205,235 $ 115,483 $ 43,929 $ 364,647 __________________________________________________________________________________ (1) All goodwill resulting from the Misfit acquisition was recorded in the Americas segment as of January 2, 2016, on a preliminary basis. This line item includes an allocation of the goodwill across reporting segments and also purchase accounting adjustments made during the Year To Date Period. |
INVENTORIES (Tables)
INVENTORIES (Tables) | 9 Months Ended |
Oct. 01, 2016 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | Inventories consisted of the following (in thousands): October 1, 2016 January 2, 2016 Components and parts $ 74,535 $ 49,539 Work-in-process 10,353 12,213 Finished goods 614,760 563,592 Inventories $ 699,648 $ 625,344 |
WARRANTY LIABILITIES (Tables)
WARRANTY LIABILITIES (Tables) | 9 Months Ended |
Oct. 01, 2016 | |
Product Warranties Disclosures [Abstract] | |
Schedule of warranty liability activity | Warranty liability activity consisted of the following (in thousands): For the 39 Weeks Ended October 1, 2016 For the 39 Weeks Ended October 3, 2015 Beginning balance $ 13,669 $ 13,500 Settlements in cash or kind (7,338 ) (6,627 ) Warranties issued and adjustments to preexisting warranties (1) 8,604 7,305 Liabilities assumed in acquisition — 44 Ending balance $ 14,935 $ 14,222 _______________________________________________ (1) Changes in cost estimates related to preexisting warranties are aggregated with accruals for new standard warranties issued and foreign currency changes. |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 9 Months Ended |
Oct. 01, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of income tax expense and related effective rate | The Company’s income tax expense and related effective rates were as follows (in thousands, except percentage data): For the 13 Weeks Ended October 1, 2016 For the 13 Weeks Ended October 3, 2015 For the 39 Weeks Ended October 1, 2016 For the 39 Weeks Ended October 3, 2015 Income tax expense $ 6,451 $ 17,303 $ 13,230 $ 58,721 Effective tax rate 25.0 % 22.3 % 27.5 % 27.1 % |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 9 Months Ended |
Oct. 01, 2016 | |
Stockholders' Equity Note [Abstract] | |
Schedule of common stock repurchase activity | The following tables reflect the Company’s common stock repurchase activity for the periods indicated (in millions): For the 13 Weeks Ended October 1, 2016 For the 13 Weeks Ended October 3, 2015 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 — $ — 0.2 $ 12.4 2012 $ 1,000.0 December 2016 (1) — $ — — $ — 2010 $ 30.0 None — $ — — $ — For the 39 Weeks Ended October 1, 2016 For the 39 Weeks Ended October 3, 2015 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 2.4 $ 200.7 2012 $ 1,000.0 December 2016 (1) — $ — 0.3 $ 28.8 2010 $ 30.0 None — $ — — $ — __________________________________________________________________________________ (1) In the first quarter of fiscal year 2015, the Company completed this repurchase plan. |
Summary of changes in equity attributable to controlling and noncontrolling interest | The following tables summarize the changes in equity attributable to controlling and noncontrolling interest (in thousands): Fossil Group, Inc. Stockholders’ Equity Noncontrolling Interest Total Stockholders’ Equity Balance at January 2, 2016 $ 921,388 $ 11,155 $ 932,543 Net income 29,170 5,646 34,816 Currency translation adjustment 9,383 — 9,383 Cash flow hedges - net change (4,741 ) — (4,741 ) Pension plan activity 1,714 — 1,714 Common stock issued upon exercise of stock options 57 — 57 Tax expense derived from stock-based compensation (1,756 ) — (1,756 ) Distribution of noncontrolling interest earnings — (4,543 ) (4,543 ) Acquisition of common stock (6,448 ) — (6,448 ) Stock-based compensation expense 23,894 — 23,894 Balance at October 1, 2016 $ 972,661 $ 12,258 $ 984,919 Fossil Group, Inc. Stockholders’ Equity Noncontrolling Interest Total Stockholders’ Equity Balance at January 3, 2015 $ 977,860 $ 5,941 $ 983,801 Net income 150,252 7,335 157,587 Currency translation adjustment (35,382 ) — (35,382 ) Cash flow hedges - net change (5,443 ) — (5,443 ) Common stock issued upon exercise of stock options 658 — 658 Tax expense derived from stock-based compensation (930 ) — (930 ) Distribution of noncontrolling interest earnings — (5,257 ) (5,257 ) Business acquisition — 5,831 5,831 Acquisition of common stock (231,220 ) — (231,220 ) Stock-based compensation expense 13,997 — 13,997 Balance at October 3, 2015 $ 869,792 $ 13,850 $ 883,642 |
EMPLOYEE BENEFIT PLANS (Tables)
EMPLOYEE BENEFIT PLANS (Tables) | 9 Months Ended |
Oct. 01, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of stock options and stock appreciation rights activity | The following table summarizes stock options and stock appreciation rights activity during the Third Quarter: 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 2, 2016 2,206 $ 51.59 6.7 $ 791 Granted 101 29.49 Exercised — Forfeited or expired (10 ) 56.26 Outstanding at October 1, 2016 2,297 50.60 6.5 715 Exercisable at October 1, 2016 542 $ 84.18 4.1 $ 715 |
Summary of 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 October 1, 2016 : 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- (in Thousands) (in Years) (in Thousands) $13.65 - $29.49 41 $ 14.40 2.4 41 $ 14.40 $29.78 - $47.99 91 36.29 2.3 91 36.29 $55.04 - $83.83 92 80.80 4.5 92 80.80 $95.91 - $131.46 144 127.98 5.4 144 127.98 Total 368 $ 80.95 4.1 368 $ 80.95 Stock Appreciation Rights Outstanding Stock Appreciation Rights Exercisable Range of Number of Weighted- Weighted- Number of Weighted- (in Thousands) (in Years) (in Thousands) $13.65 - $29.49 113 $ 27.72 7.0 13 $ 13.65 $29.78 - $47.99 1,566 38.15 7.2 9 38.40 $55.04 - $83.83 141 79.03 5.8 64 80.18 $95.91 - $131.46 109 114.42 4.7 88 115.01 Total 1,929 $ 44.82 7.0 174 $ 90.99 |
Summary of restricted stock, restricted stock units and performance restricted stock units activity | The following table summarizes restricted stock, restricted stock unit and performance restricted stock unit activity during the Third Quarter: 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 2, 2016 1,524 $ 40.95 Granted 61 29.50 Vested (5 ) 84.82 Forfeited (16 ) 46.51 Nonvested at October 1, 2016 1,564 $ 40.30 |
ACCUMULATED OTHER COMPREHENSI29
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 9 Months Ended |
Oct. 01, 2016 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Schedule of changes in the balances of each component of accumulated other comprehensive income (loss), net of taxes | The following tables illustrate changes in the balances of each component of accumulated other comprehensive income (loss), net of taxes (in thousands): For the 13 Weeks Ended October 1, 2016 Currency Translation Adjustments Cash Flow Hedges Forward Contracts Interest Rate Swaps Pension Plan Total Beginning balance $ (73,986 ) $ 2,943 $ (1,623 ) $ (4,506 ) $ (77,172 ) Other comprehensive income (loss) before reclassifications 1,942 3,313 466 — 5,721 Tax (expense) benefit (280 ) (605 ) (170 ) — (1,055 ) Amounts reclassed from accumulated other comprehensive income — 2,621 (413 ) — 2,208 Tax (expense) benefit — (714 ) 150 — (564 ) Total other comprehensive income (loss) 1,662 801 559 — 3,022 Ending balance $ (72,324 ) $ 3,744 $ (1,064 ) $ (4,506 ) $ (74,150 ) For the 13 Weeks Ended October 3, 2015 Currency Translation Adjustments Cash Flow Hedges Forward Contracts Interest Rate Swaps Pension Plan Total Beginning balance $ (55,188 ) $ 15,348 $ (1,055 ) $ (3,647 ) $ (44,542 ) Other comprehensive income (loss) before reclassifications (7,435 ) 3,825 (2,044 ) — (5,654 ) Tax (expense) benefit — (1,177 ) 745 — (432 ) Amounts reclassed from accumulated other comprehensive income — 10,553 (623 ) — 9,930 Tax (expense) benefit — (3,549 ) 226 — (3,323 ) Total other comprehensive income (loss) (7,435 ) (4,356 ) (902 ) — (12,693 ) Ending balance $ (62,623 ) $ 10,992 $ (1,957 ) $ (3,647 ) $ (57,235 ) For the 39 Weeks Ended October 1, 2016 Currency Translation Adjustments Cash Flow Hedges Forward Contracts Interest Rate Swaps Pension Plan Total Beginning balance $ (81,707 ) $ 8,114 $ (693 ) $ (6,220 ) $ (80,506 ) Other comprehensive income (loss) before reclassifications 9,767 2,055 (1,915 ) 2,010 11,917 Tax (expense) benefit (280 ) 433 698 (296 ) 555 Amounts reclassed from accumulated other comprehensive income 104 9,888 (1,331 ) — 8,661 Tax (expense) benefit — (3,030 ) 485 — (2,545 ) Total other comprehensive income (loss) 9,383 (4,370 ) (371 ) 1,714 6,356 Ending balance $ (72,324 ) $ 3,744 $ (1,064 ) $ (4,506 ) $ (74,150 ) For the 39 Weeks Ended October 3, 2015 Currency Translation Adjustments Cash Flow Hedges Forward Contracts Interest Rate Swap Pension Plan Total Beginning balance $ (27,241 ) $ 14,980 $ (502 ) $ (3,647 ) $ (16,410 ) Other comprehensive income (loss) before reclassifications (35,382 ) 25,287 1,010 — (9,085 ) Tax (expense) benefit — (7,142 ) (368 ) — (7,510 ) Amounts reclassed from accumulated other comprehensive income — 33,546 3,300 — 36,846 Tax (expense) benefit — (11,413 ) (1,203 ) — (12,616 ) Total other comprehensive income (loss) (35,382 ) (3,988 ) (1,455 ) — (40,825 ) Ending balance $ (62,623 ) $ 10,992 $ (1,957 ) $ (3,647 ) $ (57,235 ) |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 9 Months Ended |
Oct. 01, 2016 | |
Segment Reporting [Abstract] | |
Summary information by operating segment | Summary information by operating segment was as follows (in thousands): For the 13 Weeks Ended October 1, 2016 For the 13 Weeks Ended October 3, 2015 Net Sales Operating Income Net Sales Operating Income Americas $ 361,226 $ 56,455 $ 391,201 $ 84,353 Europe 243,139 49,013 260,263 58,577 Asia 133,625 23,654 119,839 14,173 Corporate — (97,947 ) — (81,398 ) Consolidated $ 737,990 $ 31,175 $ 771,303 $ 75,705 For the 39 Weeks Ended October 1, 2016 For the 39 Weeks Ended October 3, 2015 Net Sales Operating Income Net Sales Operating Income Americas $ 1,042,223 $ 168,352 $ 1,143,885 $ 246,886 Europe 669,076 109,193 722,442 137,729 Asia 371,907 60,519 370,036 55,223 Corporate — (277,034 ) — (237,545 ) Consolidated $ 2,083,206 $ 61,030 $ 2,236,363 $ 202,293 |
Schedule of net sales for each class of similar products | The following tables reflect net sales for each class of similar products in the periods presented (in thousands, except percentage data): For the 13 Weeks Ended October 1, 2016 For the 13 Weeks Ended October 3, 2015 Net Sales Percentage of Total Net Sales Percentage of Total Watches $ 567,148 76.9 % $ 581,069 75.3 % Leathers 93,338 12.6 104,777 13.6 Jewelry 60,237 8.2 66,984 8.7 Other 17,267 2.3 18,473 2.4 Total $ 737,990 100.0 % $ 771,303 100.0 % For the 39 Weeks Ended October 1, 2016 For the 39 Weeks Ended October 3, 2015 Net Sales Percentage of Total Net Sales Percentage of Total Watches $ 1,581,233 75.9 % $ 1,708,730 76.4 % Leathers 278,995 13.4 287,083 12.8 Jewelry 171,709 8.2 185,751 8.3 Other 51,269 2.5 54,799 2.5 Total $ 2,083,206 100.0 % $ 2,236,363 100.0 % |
DERIVATIVES AND RISK MANAGEME31
DERIVATIVES AND RISK MANAGEMENT (Tables) | 9 Months Ended |
Oct. 01, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of outstanding forward contracts | As of October 1, 2016 , 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 255.8 U.S. dollar 290.6 British pound 52.9 U.S. dollar 77.0 Canadian dollar 84.2 U.S. dollar 64.1 Japanese yen 4,234.3 U.S. dollar 38.6 Mexican peso 339.8 U.S. dollar 18.0 Australian dollar 22.2 U.S. dollar 16.6 U.S. dollar 41.3 Japanese yen 4,250.0 |
Schedule of effective portion of gains and losses on derivative instruments recognized in other comprehensive income (loss), net of taxes | 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 October 1, 2016 For the 13 Weeks Ended October 3, 2015 Cash flow hedges: Forward contracts $ 2,708 $ 2,648 Interest rate swaps 296 (1,299 ) Total gain (loss) recognized in other comprehensive income (loss), net of taxes $ 3,004 $ 1,349 For the 39 Weeks Ended October 1, 2016 For the 39 Weeks Ended October 3, 2015 Cash flow hedges: Forward contracts $ 2,488 $ 18,145 Interest rate swaps (1,217 ) 642 Total gain (loss) recognized in other comprehensive income (loss), net of taxes $ 1,271 $ 18,787 |
Schedule of effective portion of gains and losses on derivative instruments recognized in other comprehensive income (loss), net of taxes reclassified into earnings and derivatives not designated as hedging instruments recorded directly to earnings | The following table illustrates the effective portion of gains and losses on derivative instruments recorded in 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 and Comprehensive Income Location Effect of Derivative Instruments For the 13 Weeks Ended October 1, 2016 For the 13 Weeks Ended October 3, 2015 Forward contracts designated as cash flow hedging instruments Other income (expense)-net Total gain (loss) reclassified from other comprehensive income (loss) $ 1,907 $ 7,004 Forward contracts not designated as hedging instruments Other income (expense)-net Total gain (loss) recognized in income $ 75 $ (205 ) Interest rate swap designated as a cash flow hedging instrument Interest expense Total gain (loss) reclassified from other comprehensive income (loss) $ (263 ) $ (397 ) Derivative Instruments Condensed Consolidated Statements of Income and Comprehensive Income Location Effect of Derivative Instruments For the 39 Weeks Ended October 1, 2016 For the 39 Weeks Ended October 3, 2015 Forward contracts designated as cash flow hedging instruments Other income (expense)-net Total gain (loss) reclassified from other comprehensive income (loss) $ 6,858 $ 22,133 Forward contracts not designated as hedging instruments Other income (expense)-net Total gain (loss) recognized in income $ (222 ) $ (125 ) Interest rate swap designated as a cash flow hedging instrument Interest expense Total gain (loss) reclassified from other comprehensive income (loss) $ (846 ) $ (1,234 ) Interest rate swap designated as a cash flow hedging instrument Other income (expense)-net Total gain (loss) reclassified from other comprehensive income (loss) $ — $ 3,331 |
Schedule of fair value amounts for derivative instruments as separate asset and liability values on a gross basis and their location on condensed consolidated balance sheets | 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 October 1, 2016 January 2, 2016 October 1, 2016 January 2, 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 $ 9,867 Prepaid expenses and other current assets $ 13,184 Accrued expenses- other $ 5,459 Accrued expenses- other $ 477 Forward contracts not designated as cash flow hedging instruments Prepaid expenses and other current assets — Prepaid expenses and other current assets 167 Accrued expenses- other 60 Accrued expenses- other 71 Interest rate swap designated as a cash flow hedging instrument Prepaid expenses and other current assets — Prepaid expenses and other current assets — Accrued expenses- other 1,190 Accrued expenses- other 1,273 Forward contracts designated as cash flow hedging instruments Intangible and other assets-net 2,083 Intangible and other assets-net 2,785 Other long-term liabilities 1,276 Other long-term liabilities 250 Interest rate swap designated as a cash flow hedging instrument Intangible and other assets-net — Intangible and other assets-net 311 Other long-term liabilities 483 Other long-term liabilities 128 Total $ 11,950 $ 16,447 $ 8,468 $ 2,199 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Oct. 01, 2016 | |
Fair Value Disclosures [Abstract] | |
Schedule of the fair value hierarchy of assets and liabilities measured at fair value on a recurring basis | The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of October 1, 2016 (in thousands): Fair Value at October 1, 2016 Level 1 Level 2 Level 3 Total Assets: Forward contracts $ — $ 11,950 $ — $ 11,950 Deferred compensation plan assets: Investment in publicly traded mutual funds 2,452 — — 2,452 Total $ 2,452 $ 11,950 $ — $ 14,402 Liabilities: Forward contracts $ — $ 6,795 — $ 6,795 Interest rate swap — 1,673 — 1,673 Total $ — $ 8,468 $ — $ 8,468 The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of January 2, 2016 (in thousands): Fair Value at January 2, 2016 Level 1 Level 2 Level 3 Total Assets: Forward contracts $ — $ 16,136 $ — $ 16,136 Deferred compensation plan assets: Investment in publicly traded mutual funds 2,406 — — 2,406 Interest rate swap — 311 — 311 Total $ 2,406 $ 16,447 $ — $ 18,853 Liabilities: Contingent consideration $ — $ — $ 3,643 $ 3,643 Forward contracts — 798 — 798 Interest rate swap — 1,401 — 1,401 Total $ — $ 2,199 $ 3,643 $ 5,842 |
INTANGIBLE AND OTHER ASSETS (Ta
INTANGIBLE AND OTHER ASSETS (Tables) | 9 Months Ended |
Oct. 01, 2016 | |
INTANGIBLE AND OTHER ASSETS | |
Schedule of intangible and other assets-net | The following table summarizes intangible and other assets (in thousands): October 1, 2016 January 2, 2016 Useful Gross Accumulated Gross Accumulated Lives Amount Amortization Amount Amortization Intangibles-subject to amortization: Trademarks 10 yrs. $ 4,310 $ 3,382 $ 4,175 $ 3,195 Customer lists 5-10 yrs. 54,208 25,744 53,825 21,001 Patents 3-20 yrs. 2,325 2,091 2,273 2,064 Noncompete agreement 3-6 yrs. 2,527 1,545 2,515 1,134 Developed technology 7 yrs. 36,100 3,868 36,100 — Trade name 6 yrs. 15,700 1,963 15,700 — Other 7-20 yrs. 258 218 256 206 Total intangibles-subject to amortization 115,428 38,811 114,844 27,600 Intangibles-not subject to amortization: Trade names 74,506 74,493 Other assets: Key money deposits 28,878 23,136 29,357 19,805 Other deposits 20,724 21,684 Deferred compensation plan assets 2,452 2,406 Deferred tax asset-net 21,283 18,602 Restricted cash 530 512 Shop-in-shop 9,267 7,917 9,985 8,262 Interest rate swap — 311 Forward contracts 2,083 2,785 Investments 2,397 2,396 Other 4,902 5,519 Total other assets 92,516 31,053 93,557 28,067 Total intangible and other assets $ 282,450 $ 69,864 $ 282,894 $ 55,667 Total intangible and other assets-net $ 212,586 $ 227,227 |
Schedule of estimated aggregate future amortization expense by fiscal year for intangible assets | Estimated aggregate future amortization expense by fiscal year for intangible assets is as follows (in thousands): Fiscal Year Amortization Expense 2016 (remaining) $ 3,751 2017 $ 14,753 2018 $ 14,398 2019 $ 14,069 2020 $ 13,556 2021 $ 9,730 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 9 Months Ended |
Oct. 01, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Lease Payments | As of October 1, 2016, the estimated future minimum lease payments under the lease were as follows (in thousands): Fiscal Year 2016 remaining $ 485 2017 1,950 2018 1,989 2019 2,029 2020 2,070 Thereafter 12,726 Total $ 21,249 |
RESTRUCTURING (Tables)
RESTRUCTURING (Tables) | 9 Months Ended |
Oct. 01, 2016 | |
Restructuring and Related Activities [Abstract] | |
Rollforward of liability incurred on restructuring plan | The following tables show a rollforward of the liability incurred for the Company’s restructuring plan (in thousands): For the 13 Weeks Ended October 1, 2016 Organizational Retail Total Balance at July 2, 2016 $ — $ — $ — Charges to expense 1,950 12,523 14,473 Cash payments (1,300 ) — (1,300 ) Non-cash items — (12,523 ) (12,523 ) Balance at October 1, 2016 $ 650 $ — $ 650 For the 13 Weeks Ended October 3, 2015 Organizational Retail Total Balance at July 4, 2015 $ 3,898 $ — $ 3,898 Charges to expense (1) 2,250 891 3,141 Cash payments (4,961 ) (891 ) (5,852 ) Non-cash items — — — Balance at October 3, 2015 $ 1,187 $ — $ 1,187 For the 39 Weeks Ended October 1, 2016 Organizational Retail Total Balance at January 2, 2016 $ — $ — $ — Charges to expense 1,950 12,523 14,473 Cash payments (1,300 ) — (1,300 ) Non-cash items — (12,523 ) (12,523 ) Balance at October 1, 2016 $ 650 $ — $ 650 For the 39 Weeks Ended October 3, 2015 Organizational Retail Total Balance at January 3, 2015 $ — $ — $ — Charges to expense (1) 14,567 7,133 21,700 Cash payments (13,380 ) (4,752 ) (18,132 ) Non-cash items — (2,381 ) (2,381 ) Balance at October 3, 2015 $ 1,187 $ — $ 1,187 _________________________________________________ (1) Charges to expense include changes in estimates. |
Schedule of restructuring charges by operating segment | Restructuring charges by operating segment were as follows (in thousands): For the 13 Weeks Ended October 1, 2016 For the 13 Weeks Ended October 3, 2015 Americas $ 10,548 $ 891 Europe 1,639 514 Asia 336 90 Corporate 1,950 1,646 Consolidated $ 14,473 $ 3,141 For the 39 Weeks Ended October 1, 2016 For the 39 Weeks Ended October 3, 2015 Americas $ 10,548 $ 7,133 Europe 1,639 3,149 Asia 336 210 Corporate 1,950 11,208 Consolidated $ 14,473 $ 21,700 |
FINANCIAL STATEMENT POLICIES (D
FINANCIAL STATEMENT POLICIES (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2016 | Oct. 03, 2015 | Oct. 01, 2016 | Oct. 03, 2015 | |
Hedging Instruments | ||||
Unrealized net gain on foreign currency forward contracts, if settled | $ 3,600 | |||
Numerator: | ||||
Net income attributable to Fossil Group, Inc. | $ 17,356 | $ 57,534 | $ 29,170 | $ 150,252 |
Denominator: | ||||
Basic weighted average common shares outstanding (in shares) | 48,130 | 48,153 | 48,127 | 49,027 |
Basic EPS (in dollars per share) | $ 0.36 | $ 1.19 | $ 0.61 | $ 3.06 |
Diluted EPS computation: | ||||
Basic weighted average common shares outstanding (in shares) | 48,130 | 48,153 | 48,127 | 49,027 |
Effect of stock options, stock appreciation rights, restricted stock units and performance restricted stock units (in shares) | 161 | 89 | 159 | 121 |
Diluted weighted average common shares outstanding (in shares) | 48,291 | 48,242 | 48,286 | 49,148 |
Diluted EPS (in dollars per share) | $ 0.36 | $ 1.19 | $ 0.60 | $ 3.06 |
Other EPS Disclosures | ||||
Weighted shares issuable under stock-based awards not included in the diluted EPS calculation (in shares) | 1,600 | 1,500 | 600 | 500 |
Performance Shares | ||||
Other EPS Disclosures | ||||
Weighted shares issuable under stock-based awards not included in the diluted EPS calculation (in shares) | 1,100 | 1,100 |
ACQUISITIONS AND GOODWILL (Narr
ACQUISITIONS AND GOODWILL (Narratives) (Details) € in Millions | Dec. 22, 2015USD ($) | Aug. 10, 2012 | Jul. 02, 2016USD ($) | Jan. 02, 2016USD ($) | Oct. 01, 2016USD ($) | Oct. 03, 2015USD ($) | Jul. 02, 2016EUR (€) | Jul. 02, 2016USD ($) |
Business Acquisition [Line Items] | ||||||||
Cash paid, net of cash acquired | $ 0 | $ 4,820,000 | ||||||
Revolving Credit Facility | ||||||||
Business Acquisition [Line Items] | ||||||||
Maximum borrowing capacity | 1,050,000,000 | |||||||
Misfit Inc. | ||||||||
Business Acquisition [Line Items] | ||||||||
Cash paid, net of cash acquired | $ 215,370,000 | |||||||
Replacement awards attributable to precombination service | 1,709,000 | |||||||
Portion of cash payment placed into escrow | 12,500,000 | |||||||
Amount received from escrow | $ 800,000 | |||||||
Liabilities incurred | $ 60,000,000 | |||||||
Acquisition related expenses for legal, accounting and valuation services | $ 8,400,000 | |||||||
Reduction in inventory | 5,900,000 | |||||||
Increase to current liabilities | 4,000,000 | |||||||
Reduction to total transaction consideration | 3,800,000 | |||||||
Reduction to long-term liabilities | 3,700,000 | |||||||
Increase to goodwill | 3,600,000 | |||||||
Reduction to accounts receivable | $ 1,200,000 | |||||||
Fossil Spain S L | General De Relojeria S A | ||||||||
Business Acquisition [Line Items] | ||||||||
Voting interest that may be acquired upon expiration of joint venture agreement | 50.00% | |||||||
Fixed purchase price | € 4.3 | $ 4,800,000 | ||||||
Variable purchase price | € 3.5 | $ 3,900,000 |
ACQUISITIONS AND GOODWILL (Misf
ACQUISITIONS AND GOODWILL (Misfit, Inc. Acquisition) (Details) - USD ($) $ in Thousands | Dec. 22, 2015 | Oct. 01, 2016 | Oct. 03, 2015 | Jan. 02, 2016 |
Business Acquisition [Line Items] | ||||
Cash paid, net of cash acquired | $ 0 | $ 4,820 | ||
Goodwill | $ 364,647 | $ 359,394 | ||
Trade name | ||||
Business Acquisition [Line Items] | ||||
Useful Lives | 6 years | |||
Developed technology | ||||
Business Acquisition [Line Items] | ||||
Useful Lives | 7 years | |||
Misfit Inc. | ||||
Business Acquisition [Line Items] | ||||
Cash paid, net of cash acquired | $ 215,370 | |||
Replacement awards attributable to precombination service | 1,709 | |||
Working capital and other adjustments | (3,788) | |||
Total transaction consideration | 213,291 | |||
Inventories | 7,011 | |||
Prepaid expenses and other current assets | 25 | |||
Property, plant and equipment and other long-term assets | 1,190 | |||
Goodwill | 168,021 | |||
Current liabilities | (17,019) | |||
Long-term liabilities | (9,237) | |||
Total net assets acquired | 213,291 | |||
Misfit Inc. | Trade name | ||||
Business Acquisition [Line Items] | ||||
Intangible assets | $ 15,700 | |||
Useful Lives | 6 years | |||
Misfit Inc. | Customer lists | ||||
Business Acquisition [Line Items] | ||||
Intangible assets | $ 10,800 | |||
Useful Lives | 5 years | |||
Misfit Inc. | Developed technology | ||||
Business Acquisition [Line Items] | ||||
Intangible assets | $ 36,100 | |||
Useful Lives | 7 years | |||
Misfit Inc. | Noncompete agreement | ||||
Business Acquisition [Line Items] | ||||
Intangible assets | $ 700 | |||
Useful Lives | 3 years |
ACQUISITIONS AND GOODWILL (Sche
ACQUISITIONS AND GOODWILL (Schedule of Changes in the Carrying Amount of Goodwill) (Details) $ in Thousands | 9 Months Ended |
Oct. 01, 2016USD ($) | |
Goodwill [Roll Forward] | |
Balance at beginning of year | $ 359,394 |
Segment allocation and acquisition adjustment | 3,616 |
Currency | 1,637 |
Balance at end of period | 364,647 |
Americas | |
Goodwill [Roll Forward] | |
Balance at beginning of year | 283,598 |
Segment allocation and acquisition adjustment | (78,197) |
Currency | (166) |
Balance at end of period | 205,235 |
Europe | |
Goodwill [Roll Forward] | |
Balance at beginning of year | 63,981 |
Segment allocation and acquisition adjustment | 49,760 |
Currency | 1,742 |
Balance at end of period | 115,483 |
Asia | |
Goodwill [Roll Forward] | |
Balance at beginning of year | 11,815 |
Segment allocation and acquisition adjustment | 32,053 |
Currency | 61 |
Balance at end of period | $ 43,929 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Oct. 01, 2016 | Jan. 02, 2016 |
Inventory Disclosure [Abstract] | ||
Components and parts | $ 74,535 | $ 49,539 |
Work-in-process | 10,353 | 12,213 |
Finished goods | 614,760 | 563,592 |
Inventories | $ 699,648 | $ 625,344 |
WARRANTY LIABILITIES (Details)
WARRANTY LIABILITIES (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 01, 2016 | Oct. 03, 2015 | |
Warranty liability activity [Roll Forward] | ||
Beginning balance | $ 13,669 | $ 13,500 |
Settlements in cash or kind | (7,338) | (6,627) |
Warranties issued and adjustments to preexisting warranties | 8,604 | 7,305 |
Liabilities assumed in acquisition | 0 | 44 |
Ending balance | $ 14,935 | $ 14,222 |
INCOME TAXES (Schedule of Incom
INCOME TAXES (Schedule of Income Tax Expense and Related Effective Rate) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2016 | Oct. 03, 2015 | Oct. 01, 2016 | Oct. 03, 2015 | |
Income Tax Disclosure [Abstract] | ||||
Income tax expense | $ 6,451 | $ 17,303 | $ 13,230 | $ 58,721 |
Effective tax rate | 25.00% | 22.30% | 27.50% | 27.10% |
INCOME TAXES (Narratives) (Deta
INCOME TAXES (Narratives) (Details) $ in Millions | 3 Months Ended | 9 Months Ended |
Oct. 01, 2016USD ($) | Oct. 01, 2016USD ($) | |
Income Tax Disclosure [Abstract] | ||
Unrecognized tax benefits | $ 22.2 | $ 22.2 |
Unrecognized tax benefits that would impact effective tax rate | 19.5 | 19.5 |
Unrecognized tax benefits excluding interest and penalties | 0.5 | 0.5 |
Total amount of accrued income tax-related interest | 2.1 | 2.1 |
Penalties accrued | 1.4 | 1.4 |
Accrued income tax-related interest expense | $ 0.2 | $ 0.7 |
STOCKHOLDERS' EQUITY (Common St
STOCKHOLDERS' EQUITY (Common Stock Repurchase Programs) (Details) - USD ($) shares in Millions | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2016 | Oct. 03, 2015 | Oct. 01, 2016 | Oct. 03, 2015 | |
Common Stock Repurchase Programs | ||||
Authorizations remaining | $ 824,200,000 | $ 824,200,000 | ||
Repurchase program with termination date of December 2018 | ||||
Common Stock Repurchase Programs | ||||
Dollar Value Authorized | $ 1,000,000,000 | $ 1,000,000,000 | ||
Number of Shares Repurchased (in shares) | 0 | 0.2 | 0.1 | 2.4 |
Dollar Value Repurchased | $ 0 | $ 12,400,000 | $ 5,200,000 | $ 200,700,000 |
Repurchase program with termination date of December 2016 | ||||
Common Stock Repurchase Programs | ||||
Dollar Value Authorized | $ 1,000,000,000 | $ 1,000,000,000 | ||
Number of Shares Repurchased (in shares) | 0 | 0 | 0 | 0.3 |
Dollar Value Repurchased | $ 0 | $ 0 | $ 0 | $ 28,800,000 |
Share repurchase plan with no termination date | ||||
Common Stock Repurchase Programs | ||||
Dollar Value Authorized | $ 30,000,000 | $ 30,000,000 | ||
Number of Shares Repurchased (in shares) | 0 | 0 | 0 | 0 |
Dollar Value Repurchased | $ 0 | $ 0 | $ 0 | $ 0 |
Common stock | Stock repurchase plans | ||||
Common Stock Repurchase Programs | ||||
Treasury stock effectively retired (in shares) | 0.1 | |||
Treasury stock effectively retired | $ 1,100 | |||
Additional paid-in capital | Stock repurchase plans | ||||
Common Stock Repurchase Programs | ||||
Treasury stock effectively retired | 200,000 | |||
Retained earnings | Stock repurchase plans | ||||
Common Stock Repurchase Programs | ||||
Treasury stock effectively retired | 5,000,000 | |||
Treasury stock | Stock repurchase plans | ||||
Common Stock Repurchase Programs | ||||
Treasury stock effectively retired | $ 5,200,000 |
STOCKHOLDERS' EQUITY (Controlli
STOCKHOLDERS' EQUITY (Controlling and Noncontrolling Interest) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2016 | Oct. 03, 2015 | Oct. 01, 2016 | Oct. 03, 2015 | |
Stockholders' Equity Attributable to Controlling and Noncontrolling Interest [Roll Forward] | ||||
Beginning balance | $ 932,543 | $ 983,801 | ||
Net income | $ 19,348 | $ 60,129 | 34,816 | 157,587 |
Currency translation adjustment | 9,383 | (35,382) | ||
Cash flow hedges - net change | 1,360 | (5,258) | (4,741) | (5,443) |
Pension plan activity | 0 | 0 | 1,714 | 0 |
Common stock issued upon exercise of stock options | 57 | 658 | ||
Tax expense derived from stock-based compensation | (1,756) | (930) | ||
Distribution of noncontrolling interest earnings | (4,543) | (5,257) | ||
Business acquisition | 5,831 | |||
Acquisition of common stock | (6,448) | (231,220) | ||
Stock-based compensation expense | 23,894 | 13,997 | ||
Ending balance | 984,919 | 883,642 | 984,919 | 883,642 |
Fossil Group, Inc. Stockholders’ Equity | ||||
Stockholders' Equity Attributable to Controlling and Noncontrolling Interest [Roll Forward] | ||||
Beginning balance | 921,388 | 977,860 | ||
Net income | 29,170 | 150,252 | ||
Currency translation adjustment | 9,383 | (35,382) | ||
Cash flow hedges - net change | (4,741) | (5,443) | ||
Pension plan activity | 1,714 | |||
Common stock issued upon exercise of stock options | 57 | 658 | ||
Tax expense derived from stock-based compensation | (1,756) | (930) | ||
Distribution of noncontrolling interest earnings | 0 | 0 | ||
Business acquisition | 0 | |||
Acquisition of common stock | (6,448) | (231,220) | ||
Stock-based compensation expense | 23,894 | 13,997 | ||
Ending balance | 972,661 | 869,792 | 972,661 | 869,792 |
Noncontrolling Interest | ||||
Stockholders' Equity Attributable to Controlling and Noncontrolling Interest [Roll Forward] | ||||
Beginning balance | 11,155 | 5,941 | ||
Net income | 5,646 | 7,335 | ||
Currency translation adjustment | 0 | 0 | ||
Cash flow hedges - net change | 0 | 0 | ||
Pension plan activity | 0 | |||
Common stock issued upon exercise of stock options | 0 | 0 | ||
Tax expense derived from stock-based compensation | 0 | 0 | ||
Distribution of noncontrolling interest earnings | (4,543) | (5,257) | ||
Business acquisition | 5,831 | |||
Acquisition of common stock | 0 | 0 | ||
Stock-based compensation expense | 0 | 0 | ||
Ending balance | $ 12,258 | $ 13,850 | $ 12,258 | $ 13,850 |
EMPLOYEE BENEFIT PLANS (Summary
EMPLOYEE BENEFIT PLANS (Summary of Stock Options and Stock Appreciation Rights Activity) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended |
Oct. 01, 2016 | Jul. 02, 2016 | Oct. 01, 2016 | |
Shares | |||
Outstanding at beginning of period (in shares) | 2,206 | ||
Granted (in shares) | 101 | ||
Exercised (in shares) | 0 | ||
Forfeited or expired (in shares) | (10) | ||
Outstanding at end of period (in shares) | 2,297 | 2,206 | 2,297 |
Exercisable at end of period (in shares) | 542 | 542 | |
Weighted- Average Exercise Price | |||
Outstanding at beginning of period (in dollars per share) | $ 51.59 | ||
Granted (in dollars per share) | 29.49 | ||
Forfeited or expired (in dollars per share) | 56.26 | ||
Outstanding at end of period (in dollars per share) | 50.60 | $ 51.59 | $ 50.60 |
Exercisable at end of period (in dollars per share) | $ 84.18 | $ 84.18 | |
Weighted- Average Remaining Contractual Term | |||
Outstanding (in years) | 6 years 8 months 12 days | 6 years 6 months | |
Exercisable at end of period (in years) | 4 years 1 month 6 days | ||
Aggregate Intrinsic Value | |||
Aggregate intrinsic value outstanding | $ 715 | $ 791 | $ 715 |
Exercisable at end of period | $ 715 | $ 715 |
EMPLOYEE BENEFIT PLANS (Summa47
EMPLOYEE BENEFIT PLANS (Summary of Stock Options and Stock Appreciation Rights Outstanding and Exercisable) (Details) shares in Thousands | 9 Months Ended |
Oct. 01, 2016$ / sharesshares | |
Stock options | |
Stock-based compensation plans disclosures | |
Stock Options Outstanding, Number Of Shares (in shares) | shares | 368 |
Stock Options Outstanding, Weighted- Average Exercise Price (in dollars per share) | $ 80.95 |
Stock Options Outstanding, Weighted- Average Remaining Contractual Term | 4 years 1 month 6 days |
Stock Options Exercisable, Number Of Shares (in shares) | shares | 368 |
Stock Options Exercisable, Weighted- Average Exercise Price (in dollars per share) | $ 80.95 |
Stock appreciation rights | |
Stock-based compensation plans disclosures | |
Stock Appreciation Rights Outstanding, Number Of Shares (in shares) | shares | 1,929 |
Stock Appreciation Rights Outstanding, Weighted- Average Exercise Price (in dollars per share) | $ 44.82 |
Stock Appreciation Rights Outstanding, Weighted- Average Remaining Contractual Term | 7 years |
Stock Appreciation Rights Exercisable, Number Of Shares (in shares) | shares | 174 |
Stock Appreciation Rights Exercisable, Weighted- Average Exercise Price (in dollars per share) | $ 90.99 |
$13.65 - $29.49 | Stock options | |
Stock-based compensation plans disclosures | |
Stock Options Outstanding, lower range (in dollars per share) | 13.65 |
Stock Options Outstanding, upper range (in dollars per share) | $ 29.49 |
Stock Options Outstanding, Number Of Shares (in shares) | shares | 41 |
Stock Options Outstanding, Weighted- Average Exercise Price (in dollars per share) | $ 14.40 |
Stock Options Outstanding, Weighted- Average Remaining Contractual Term | 2 years 4 months 24 days |
Stock Options Exercisable, Number Of Shares (in shares) | shares | 41 |
Stock Options Exercisable, Weighted- Average Exercise Price (in dollars per share) | $ 14.40 |
$13.65 - $29.49 | Stock appreciation rights | |
Stock-based compensation plans disclosures | |
Stock Appreciation Rights Outstanding, lower range (in dollars per share) | 13.65 |
Stock Appreciation Rights Outstanding, upper range (in dollars per share) | $ 29.49 |
Stock Appreciation Rights Outstanding, Number Of Shares (in shares) | shares | 113 |
Stock Appreciation Rights Outstanding, Weighted- Average Exercise Price (in dollars per share) | $ 27.72 |
Stock Appreciation Rights Outstanding, Weighted- Average Remaining Contractual Term | 7 years |
Stock Appreciation Rights Exercisable, Number Of Shares (in shares) | shares | 13 |
Stock Appreciation Rights Exercisable, Weighted- Average Exercise Price (in dollars per share) | $ 13.65 |
$29.78 - $47.99 | Stock options | |
Stock-based compensation plans disclosures | |
Stock Options Outstanding, lower range (in dollars per share) | 29.78 |
Stock Options Outstanding, upper range (in dollars per share) | $ 47.99 |
Stock Options Outstanding, Number Of Shares (in shares) | shares | 91 |
Stock Options Outstanding, Weighted- Average Exercise Price (in dollars per share) | $ 36.29 |
Stock Options Outstanding, Weighted- Average Remaining Contractual Term | 2 years 3 months 18 days |
Stock Options Exercisable, Number Of Shares (in shares) | shares | 91 |
Stock Options Exercisable, Weighted- Average Exercise Price (in dollars per share) | $ 36.29 |
$29.78 - $47.99 | Stock appreciation rights | |
Stock-based compensation plans disclosures | |
Stock Appreciation Rights Outstanding, lower range (in dollars per share) | 29.78 |
Stock Appreciation Rights Outstanding, upper range (in dollars per share) | $ 47.99 |
Stock Appreciation Rights Outstanding, Number Of Shares (in shares) | shares | 1,566 |
Stock Appreciation Rights Outstanding, Weighted- Average Exercise Price (in dollars per share) | $ 38.15 |
Stock Appreciation Rights Outstanding, Weighted- Average Remaining Contractual Term | 7 years 2 months 12 days |
Stock Appreciation Rights Exercisable, Number Of Shares (in shares) | shares | 9 |
Stock Appreciation Rights Exercisable, Weighted- Average Exercise Price (in dollars per share) | $ 38.40 |
$55.04 - $83.83 | Stock options | |
Stock-based compensation plans disclosures | |
Stock Options Outstanding, lower range (in dollars per share) | 55.04 |
Stock Options Outstanding, upper range (in dollars per share) | $ 83.83 |
Stock Options Outstanding, Number Of Shares (in shares) | shares | 92 |
Stock Options Outstanding, Weighted- Average Exercise Price (in dollars per share) | $ 80.80 |
Stock Options Outstanding, Weighted- Average Remaining Contractual Term | 4 years 6 months |
Stock Options Exercisable, Number Of Shares (in shares) | shares | 92 |
Stock Options Exercisable, Weighted- Average Exercise Price (in dollars per share) | $ 80.80 |
$55.04 - $83.83 | Stock appreciation rights | |
Stock-based compensation plans disclosures | |
Stock Appreciation Rights Outstanding, lower range (in dollars per share) | 55.04 |
Stock Appreciation Rights Outstanding, upper range (in dollars per share) | $ 83.83 |
Stock Appreciation Rights Outstanding, Number Of Shares (in shares) | shares | 141 |
Stock Appreciation Rights Outstanding, Weighted- Average Exercise Price (in dollars per share) | $ 79.03 |
Stock Appreciation Rights Outstanding, Weighted- Average Remaining Contractual Term | 5 years 9 months 18 days |
Stock Appreciation Rights Exercisable, Number Of Shares (in shares) | shares | 64 |
Stock Appreciation Rights Exercisable, Weighted- Average Exercise Price (in dollars per share) | $ 80.18 |
$95.91 - $131.46 | Stock options | |
Stock-based compensation plans disclosures | |
Stock Options Outstanding, lower range (in dollars per share) | 95.91 |
Stock Options Outstanding, upper range (in dollars per share) | $ 131.46 |
Stock Options Outstanding, Number Of Shares (in shares) | shares | 144 |
Stock Options Outstanding, Weighted- Average Exercise Price (in dollars per share) | $ 127.98 |
Stock Options Outstanding, Weighted- Average Remaining Contractual Term | 5 years 4 months 24 days |
Stock Options Exercisable, Number Of Shares (in shares) | shares | 144 |
Stock Options Exercisable, Weighted- Average Exercise Price (in dollars per share) | $ 127.98 |
$95.91 - $131.46 | Stock appreciation rights | |
Stock-based compensation plans disclosures | |
Stock Appreciation Rights Outstanding, lower range (in dollars per share) | 95.91 |
Stock Appreciation Rights Outstanding, upper range (in dollars per share) | $ 131.46 |
Stock Appreciation Rights Outstanding, Number Of Shares (in shares) | shares | 109 |
Stock Appreciation Rights Outstanding, Weighted- Average Exercise Price (in dollars per share) | $ 114.42 |
Stock Appreciation Rights Outstanding, Weighted- Average Remaining Contractual Term | 4 years 8 months 12 days |
Stock Appreciation Rights Exercisable, Number Of Shares (in shares) | shares | 88 |
Stock Appreciation Rights Exercisable, Weighted- Average Exercise Price (in dollars per share) | $ 115.01 |
EMPLOYEE BENEFIT PLANS (Summa48
EMPLOYEE BENEFIT PLANS (Summary of Restricted Stock, Restricted Stock Units and Performance Restricted Stock Units Activity) (Details) - Restricted Stock, Restricted Stock Units and Performance Restricted Stock Units $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended |
Oct. 01, 2016USD ($)$ / sharesshares | |
Number of Shares | |
Nonvested at beginning of period (in shares) | shares | 1,524 |
Granted (in shares) | shares | 61 |
Vested (in shares) | shares | (5) |
Forfeited (in shares) | shares | (16) |
Nonvested at end of period (in shares) | shares | 1,564 |
Weighted-Average Grant Date Fair Value Per Share | |
Nonvested at beginning of period (in dollars per share) | $ / shares | $ 40.95 |
Granted (in dollars per share) | $ / shares | 29.50 |
Vested (in dollars per share) | $ / shares | 84.82 |
Forfeited (in dollars per share) | $ / shares | 46.51 |
Nonvested at end of period (in dollars per share) | $ / shares | $ 40.30 |
Fair value of restricted stock and restricted stock units vested | $ | $ 0.2 |
ACCUMULATED OTHER COMPREHENSI49
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2016 | Oct. 03, 2015 | Oct. 01, 2016 | Oct. 03, 2015 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax | ||||
Beginning balance | $ 932,543 | $ 983,801 | ||
Total other comprehensive income (loss) | $ 3,022 | $ (12,693) | 6,356 | (40,825) |
Ending balance | 984,919 | 883,642 | 984,919 | 883,642 |
Currency Translation Adjustments | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax | ||||
Beginning balance | (73,986) | (55,188) | (81,707) | (27,241) |
Other comprehensive income (loss) before reclassifications | 1,942 | (7,435) | 9,767 | (35,382) |
Tax (expense) benefit | (280) | 0 | (280) | 0 |
Amounts reclassed from accumulated other comprehensive income | 0 | 0 | 104 | 0 |
Tax (expense) benefit | 0 | 0 | 0 | 0 |
Total other comprehensive income (loss) | 1,662 | (7,435) | 9,383 | (35,382) |
Ending balance | (72,324) | (62,623) | (72,324) | (62,623) |
Cash Flow Hedges | Forward Contracts | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax | ||||
Beginning balance | 2,943 | 15,348 | 8,114 | 14,980 |
Other comprehensive income (loss) before reclassifications | 3,313 | 3,825 | 2,055 | 25,287 |
Tax (expense) benefit | (605) | (1,177) | 433 | (7,142) |
Amounts reclassed from accumulated other comprehensive income | 2,621 | 10,553 | 9,888 | 33,546 |
Tax (expense) benefit | (714) | (3,549) | (3,030) | (11,413) |
Total other comprehensive income (loss) | 801 | (4,356) | (4,370) | (3,988) |
Ending balance | 3,744 | 10,992 | 3,744 | 10,992 |
Cash Flow Hedges | Interest Rate Swaps | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax | ||||
Beginning balance | (1,623) | (1,055) | (693) | (502) |
Other comprehensive income (loss) before reclassifications | 466 | (2,044) | (1,915) | 1,010 |
Tax (expense) benefit | (170) | 745 | 698 | (368) |
Amounts reclassed from accumulated other comprehensive income | (413) | (623) | (1,331) | 3,300 |
Tax (expense) benefit | 150 | 226 | 485 | (1,203) |
Total other comprehensive income (loss) | 559 | (902) | (371) | (1,455) |
Ending balance | (1,064) | (1,957) | (1,064) | (1,957) |
Pension Plan | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax | ||||
Beginning balance | (4,506) | (3,647) | (6,220) | (3,647) |
Other comprehensive income (loss) before reclassifications | 0 | 0 | 2,010 | 0 |
Tax (expense) benefit | 0 | 0 | (296) | 0 |
Amounts reclassed from accumulated other comprehensive income | 0 | 0 | 0 | 0 |
Tax (expense) benefit | 0 | 0 | 0 | 0 |
Total other comprehensive income (loss) | 0 | 0 | 1,714 | 0 |
Ending balance | (4,506) | (3,647) | (4,506) | (3,647) |
Total | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax | ||||
Beginning balance | (77,172) | (44,542) | (80,506) | (16,410) |
Other comprehensive income (loss) before reclassifications | 5,721 | (5,654) | 11,917 | (9,085) |
Tax (expense) benefit | (1,055) | (432) | 555 | (7,510) |
Amounts reclassed from accumulated other comprehensive income | 2,208 | 9,930 | 8,661 | 36,846 |
Tax (expense) benefit | (564) | (3,323) | (2,545) | (12,616) |
Total other comprehensive income (loss) | 3,022 | (12,693) | 6,356 | (40,825) |
Ending balance | $ (74,150) | $ (57,235) | $ (74,150) | $ (57,235) |
SEGMENT INFORMATION (Summary In
SEGMENT INFORMATION (Summary Information by Operating Segment) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2016 | Oct. 03, 2015 | Oct. 01, 2016 | Oct. 03, 2015 | |
Summary information by operating segment | ||||
Net Sales | $ 737,990 | $ 771,303 | $ 2,083,206 | $ 2,236,363 |
Operating Income | 31,175 | 75,705 | 61,030 | 202,293 |
Operating segments | Americas | ||||
Summary information by operating segment | ||||
Net Sales | 361,226 | 391,201 | 1,042,223 | 1,143,885 |
Operating Income | 56,455 | 84,353 | 168,352 | 246,886 |
Operating segments | Europe | ||||
Summary information by operating segment | ||||
Net Sales | 243,139 | 260,263 | 669,076 | 722,442 |
Operating Income | 49,013 | 58,577 | 109,193 | 137,729 |
Operating segments | Asia | ||||
Summary information by operating segment | ||||
Net Sales | 133,625 | 119,839 | 371,907 | 370,036 |
Operating Income | 23,654 | 14,173 | 60,519 | 55,223 |
Corporate | ||||
Summary information by operating segment | ||||
Operating Income | $ (97,947) | $ (81,398) | $ (277,034) | $ (237,545) |
SEGMENT INFORMATION (Schedule o
SEGMENT INFORMATION (Schedule of Net Sales for Each Class of Similar Products) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2016 | Oct. 03, 2015 | Oct. 01, 2016 | Oct. 03, 2015 | |
Net sales for each class of similar products | ||||
Net sales | $ 737,990 | $ 771,303 | $ 2,083,206 | $ 2,236,363 |
Percentage of Total | 100.00% | 100.00% | 100.00% | 100.00% |
Watches | ||||
Net sales for each class of similar products | ||||
Net sales | $ 567,148 | $ 581,069 | $ 1,581,233 | $ 1,708,730 |
Percentage of Total | 76.90% | 75.30% | 75.90% | 76.40% |
Leathers | ||||
Net sales for each class of similar products | ||||
Net sales | $ 93,338 | $ 104,777 | $ 278,995 | $ 287,083 |
Percentage of Total | 12.60% | 13.60% | 13.40% | 12.80% |
Jewelry | ||||
Net sales for each class of similar products | ||||
Net sales | $ 60,237 | $ 66,984 | $ 171,709 | $ 185,751 |
Percentage of Total | 8.20% | 8.70% | 8.20% | 8.30% |
Other | ||||
Net sales for each class of similar products | ||||
Net sales | $ 17,267 | $ 18,473 | $ 51,269 | $ 54,799 |
Percentage of Total | 2.30% | 2.40% | 2.50% | 2.50% |
DERIVATIVES AND RISK MANAGEME52
DERIVATIVES AND RISK MANAGEMENT (Cash Flow Hedges) (Details) € in Millions, ¥ in Millions, £ in Millions, MXN in Millions, CAD in Millions, AUD in Millions | Jul. 26, 2013 | Oct. 01, 2016USD ($) | Oct. 03, 2015USD ($) | Oct. 01, 2016USD ($) | Oct. 03, 2015USD ($) | Oct. 01, 2016EUR (€) | Oct. 01, 2016USD ($) | Oct. 01, 2016GBP (£) | Oct. 01, 2016AUD | Oct. 01, 2016MXN | Oct. 01, 2016CAD | Oct. 01, 2016JPY (¥) | Mar. 09, 2015USD ($) |
Derivative [Line Items] | |||||||||||||
Foreign currency cash flow hedge maximum length of projection term | 24 months | ||||||||||||
Forecasted purchases to manage fluctuations (up to) (as a percent) | 85.00% | 85.00% | 85.00% | 85.00% | 85.00% | 85.00% | 85.00% | ||||||
Hedges resulted in ineffectiveness | $ 0 | $ 0 | $ 0 | $ 0 | |||||||||
Gain (loss) reclassified into earnings | 17,356,000 | 57,534,000 | $ 29,170,000 | 150,252,000 | |||||||||
U.S. term loan | |||||||||||||
Derivative [Line Items] | |||||||||||||
Maximum borrowing capacity | $ 231,300,000 | ||||||||||||
Designated as cash flow hedges | Forward Contracts | Euro | |||||||||||||
Derivative [Line Items] | |||||||||||||
Notional amount | € 255.8 | $ 290,600,000 | |||||||||||
Designated as cash flow hedges | Forward Contracts | British pound | |||||||||||||
Derivative [Line Items] | |||||||||||||
Notional amount | 77,000,000 | £ 52.9 | |||||||||||
Designated as cash flow hedges | Forward Contracts | Canadian dollar | |||||||||||||
Derivative [Line Items] | |||||||||||||
Notional amount | 64,100,000 | CAD 84.2 | |||||||||||
Designated as cash flow hedges | Forward Contracts | Japanese yen | |||||||||||||
Derivative [Line Items] | |||||||||||||
Notional amount | 38,600,000 | ¥ 4,234.3 | |||||||||||
Designated as cash flow hedges | Forward Contracts | Mexican peso | |||||||||||||
Derivative [Line Items] | |||||||||||||
Notional amount | 18,000,000 | MXN 339.8 | |||||||||||
Designated as cash flow hedges | Forward Contracts | Australian dollar | |||||||||||||
Derivative [Line Items] | |||||||||||||
Notional amount | 16,600,000 | AUD 22.2 | |||||||||||
Designated as cash flow hedges | Forward Contracts | U.S. dollar | |||||||||||||
Derivative [Line Items] | |||||||||||||
Notional amount | $ 41,300,000 | ¥ 4,250 | |||||||||||
Designated as cash flow hedges | Interest Rate Swaps | |||||||||||||
Derivative [Line Items] | |||||||||||||
Derivative, term of contract | 5 years | ||||||||||||
Fixed interest rate (as a percent) | 1.288% | 1.288% | 1.288% | 1.288% | 1.288% | 1.288% | 1.288% | ||||||
Designated as cash flow hedges | Interest Rate Swaps | Consolidated leverage ratio (the Ratio) less than 1.00 to 1.00 | |||||||||||||
Derivative [Line Items] | |||||||||||||
Applicable margin based on the Company's consolidated leverage ratio (as a percent) | 1.50% | ||||||||||||
Consolidated leverage ratio used to calculate variable rate of debt (as a percent) | 1 | 1 | 1 | 1 | 1 | 1 | 1 | ||||||
Designated as cash flow hedges | Interest Rate Swaps | Consolidated leverage ratio (the Ratio) greater than 2.00 to 1.00 | |||||||||||||
Derivative [Line Items] | |||||||||||||
Applicable margin based on the Company's consolidated leverage ratio (as a percent) | 2.75% | ||||||||||||
Consolidated leverage ratio used to calculate variable rate of debt (as a percent) | 3 | 3 | 3 | 3 | 3 | 3 | 3 | ||||||
Amount Reclassified from AOCI | Cash Flow Hedges | |||||||||||||
Derivative [Line Items] | |||||||||||||
Gain (loss) reclassified into earnings | $ 0 | $ 0 | $ 0 | $ 0 |
DERIVATIVES AND RISK MANAGEME53
DERIVATIVES AND RISK MANAGEMENT (Net Investment Hedges) (Details) - Forward Contracts € in Millions, $ in Millions | 3 Months Ended | |
Jul. 02, 2016USD ($) | Apr. 02, 2016EUR (€) | |
Currency Translation Adjustments | ||
Derivative [Line Items] | ||
Gain (loss) on derivative used in net investment hedge, net of tax | $ | $ 0.5 | |
Net investment hedges | ||
Derivative [Line Items] | ||
Hedged amount | € | € 45 |
DERIVATIVES AND RISK MANAGEME54
DERIVATIVES AND RISK MANAGEMENT (Non-designated Hedges) (Details) - Oct. 01, 2016 - Forward Contracts - Forward contracts not designated as hedging instruments ZAR in Millions, $ in Millions | USD ($) | ZAR |
Derivative [Line Items] | ||
Fair value of designated forward contracts | $ | $ 2 | |
Hedged amount | ZAR | ZAR 28 |
DERIVATIVES AND RISK MANAGEME55
DERIVATIVES AND RISK MANAGEMENT (Derivative Instruments Recognized in Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2016 | Oct. 03, 2015 | Oct. 01, 2016 | Oct. 03, 2015 | |
Derivative [Line Items] | ||||
Total gain (loss) recognized in other comprehensive income (loss), net of taxes | $ 3,004 | $ 1,349 | $ 1,271 | $ 18,787 |
Cash flow hedges | Forward Contracts | ||||
Derivative [Line Items] | ||||
Total gain (loss) recognized in other comprehensive income (loss), net of taxes | 2,708 | 2,648 | 2,488 | 18,145 |
Cash flow hedges | Interest Rate Swaps | ||||
Derivative [Line Items] | ||||
Total gain (loss) recognized in other comprehensive income (loss), net of taxes | $ 296 | $ (1,299) | $ (1,217) | $ 642 |
DERIVATIVES AND RISK MANAGEME56
DERIVATIVES AND RISK MANAGEMENT (Derivative Instruments Designated and Qualifying as Cash Flow Hedges) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2016 | Oct. 03, 2015 | Oct. 01, 2016 | Oct. 03, 2015 | |
Forward Contracts | Forward contracts designated as cash flow hedging instruments | Cash flow hedges | ||||
Effective portion of gains and losses on derivative instruments | ||||
Total gain (loss) reclassified from other comprehensive income (loss) | $ 1,907 | $ 7,004 | $ 6,858 | $ 22,133 |
Forward Contracts | Forward contracts not designated as hedging instruments | ||||
Effective portion of gains and losses on derivative instruments | ||||
Total gain (loss) recognized in income | 75 | (205) | (222) | (125) |
Interest Rate Swaps | Forward contracts designated as cash flow hedging instruments | Cash flow hedges | ||||
Effective portion of gains and losses on derivative instruments | ||||
Total gain (loss) reclassified from other comprehensive income (loss) | $ (263) | $ (397) | (846) | (1,234) |
Interest Rate Swaps | Forward contracts designated as cash flow hedging instruments | Cash flow hedges | Amount Reclassified from AOCI | ||||
Effective portion of gains and losses on derivative instruments | ||||
Total gain (loss) reclassified from other comprehensive income (loss) | $ 0 | $ 3,331 |
DERIVATIVES AND RISK MANAGEME57
DERIVATIVES AND RISK MANAGEMENT (Fair Value Amounts for Derivative Instruments) (Details) - USD ($) $ in Thousands | Oct. 01, 2016 | Jan. 02, 2016 |
Fair value of derivative instruments | ||
Asset Derivatives, Fair Value | $ 11,950 | $ 16,447 |
Liability Derivatives, Fair Value | 8,468 | 2,199 |
Net gain expected to be reclassified into earnings within the next twelve months | 3,100 | |
Forward Contracts | Forward contracts designated as cash flow hedging instruments | Cash flow hedges | Prepaid expenses and other current assets | ||
Fair value of derivative instruments | ||
Asset Derivatives, Fair Value | 9,867 | 13,184 |
Forward Contracts | Forward contracts designated as cash flow hedging instruments | Cash flow hedges | Intangible and other assets-net | ||
Fair value of derivative instruments | ||
Asset Derivatives, Fair Value | 2,083 | 2,785 |
Forward Contracts | Forward contracts designated as cash flow hedging instruments | Cash flow hedges | Accrued expenses- other | ||
Fair value of derivative instruments | ||
Liability Derivatives, Fair Value | 5,459 | 477 |
Forward Contracts | Forward contracts designated as cash flow hedging instruments | Cash flow hedges | Other long-term liabilities | ||
Fair value of derivative instruments | ||
Liability Derivatives, Fair Value | 1,276 | 250 |
Forward Contracts | Forward contracts not designated as hedging instruments | Prepaid expenses and other current assets | ||
Fair value of derivative instruments | ||
Asset Derivatives, Fair Value | 0 | 167 |
Forward Contracts | Forward contracts not designated as hedging instruments | Accrued expenses- other | ||
Fair value of derivative instruments | ||
Liability Derivatives, Fair Value | 60 | 71 |
Interest Rate Swaps | Forward contracts designated as cash flow hedging instruments | Cash flow hedges | Prepaid expenses and other current assets | ||
Fair value of derivative instruments | ||
Asset Derivatives, Fair Value | 0 | 0 |
Interest Rate Swaps | Forward contracts designated as cash flow hedging instruments | Cash flow hedges | Intangible and other assets-net | ||
Fair value of derivative instruments | ||
Asset Derivatives, Fair Value | 0 | 311 |
Interest Rate Swaps | Forward contracts designated as cash flow hedging instruments | Cash flow hedges | Accrued expenses- other | ||
Fair value of derivative instruments | ||
Liability Derivatives, Fair Value | 1,190 | 1,273 |
Interest Rate Swaps | Forward contracts designated as cash flow hedging instruments | Cash flow hedges | Other long-term liabilities | ||
Fair value of derivative instruments | ||
Liability Derivatives, Fair Value | $ 483 | $ 128 |
FAIR VALUE MEASUREMENTS (Fair V
FAIR VALUE MEASUREMENTS (Fair Value Hierarchy of Assets and Liabilities Measured at Fair Value on a Recurring Basis) (Details) - Fair Value Measurement, Recurring Basis - USD ($) $ in Thousands | Oct. 01, 2016 | Jan. 02, 2016 |
Total | ||
Assets: | ||
Forward contracts | $ 11,950 | $ 16,136 |
Investment in publicly traded mutual funds | 2,452 | 2,406 |
Interest rate swap | 311 | |
Total | 14,402 | 18,853 |
Liabilities: | ||
Contingent consideration | 3,643 | |
Forward contracts | 6,795 | 798 |
Interest rate swap | 1,673 | 1,401 |
Total | 8,468 | 5,842 |
Level 1 | ||
Assets: | ||
Forward contracts | 0 | 0 |
Investment in publicly traded mutual funds | 2,452 | 2,406 |
Interest rate swap | 0 | |
Total | 2,452 | 2,406 |
Liabilities: | ||
Contingent consideration | 0 | |
Forward contracts | 0 | 0 |
Interest rate swap | 0 | 0 |
Total | 0 | 0 |
Level 2 | ||
Assets: | ||
Forward contracts | 11,950 | 16,136 |
Investment in publicly traded mutual funds | 0 | 0 |
Interest rate swap | 311 | |
Total | 11,950 | 16,447 |
Liabilities: | ||
Contingent consideration | 0 | |
Forward contracts | 6,795 | 798 |
Interest rate swap | 1,673 | 1,401 |
Total | 8,468 | 2,199 |
Level 3 | ||
Assets: | ||
Forward contracts | 0 | 0 |
Investment in publicly traded mutual funds | 0 | 0 |
Interest rate swap | 0 | |
Total | 0 | 0 |
Liabilities: | ||
Contingent consideration | 3,643 | |
Forward contracts | 0 | 0 |
Interest rate swap | 0 | 0 |
Total | $ 0 | $ 3,643 |
FAIR VALUE MEASUREMENTS (Narrat
FAIR VALUE MEASUREMENTS (Narrative) (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Oct. 01, 2016 | Oct. 03, 2015 | Jan. 02, 2016 | |
Fair value hierarchy for assets and liabilities measured at fair value on a recurring basis | |||
Property, plant and equipment - net | $ 290,757 | $ 326,370 | |
Impairment charges | 2,213 | $ 5,587 | |
Specific Company Owned Stores | |||
Fair value hierarchy for assets and liabilities measured at fair value on a recurring basis | |||
Property, plant and equipment - net | 13,100 | ||
Property, plant, and equipment - net, fair value | 600 | ||
Key amount not recoverable | 2,000 | ||
Impairment charges | 14,500 | ||
Restructuring Charges | Americas | Specific Company Owned Stores | Level 3 | |||
Fair value hierarchy for assets and liabilities measured at fair value on a recurring basis | |||
Impairment charges | 10,300 | ||
Restructuring Charges | Europe | Specific Company Owned Stores | Level 3 | |||
Fair value hierarchy for assets and liabilities measured at fair value on a recurring basis | |||
Impairment charges | 1,600 | ||
Restructuring Charges | Asia | Specific Company Owned Stores | Level 3 | |||
Fair value hierarchy for assets and liabilities measured at fair value on a recurring basis | |||
Impairment charges | 400 | ||
Selling, General and Administrative | Europe | Specific Company Owned Stores | Level 3 | |||
Fair value hierarchy for assets and liabilities measured at fair value on a recurring basis | |||
Impairment charges | $ 2,200 |
INTANGIBLE AND OTHER ASSETS (In
INTANGIBLE AND OTHER ASSETS (Intangible and Other Assets) (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 01, 2016 | Jan. 02, 2016 | |
Intangibles-subject to amortization: | ||
Gross Amount | $ 115,428 | $ 114,844 |
Accumulated Amortization | 38,811 | 27,600 |
Intangibles-not subject to amortization: | ||
Gross Amount | 74,506 | 74,493 |
Other assets: | ||
Gross Amount | 92,516 | 93,557 |
Accumulated Amortization | 31,053 | 28,067 |
Gross Amount | 282,450 | 282,894 |
Accumulated Amortization | 69,864 | 55,667 |
Total intangible and other assets-net | 212,586 | 227,227 |
Key money deposits | ||
Other assets: | ||
Gross Amount | 28,878 | 29,357 |
Accumulated Amortization | $ 23,136 | 19,805 |
Key money deposits | Minimum | ||
Other assets: | ||
Amortization period based on initial lease term | 4 years | |
Key money deposits | Maximum | ||
Other assets: | ||
Amortization period based on initial lease term | 18 years | |
Other deposits | ||
Other assets: | ||
Gross Amount | $ 20,724 | 21,684 |
Deferred compensation plan assets | ||
Other assets: | ||
Gross Amount | 2,452 | 2,406 |
Deferred tax asset-net | ||
Other assets: | ||
Gross Amount | 21,283 | 18,602 |
Restricted cash | ||
Other assets: | ||
Gross Amount | 530 | 512 |
Shop-in-shop | ||
Other assets: | ||
Gross Amount | 9,267 | 9,985 |
Accumulated Amortization | 7,917 | 8,262 |
Interest Rate Swaps | ||
Other assets: | ||
Gross Amount | 0 | 311 |
Forward contracts | ||
Other assets: | ||
Gross Amount | 2,083 | 2,785 |
Investments | ||
Other assets: | ||
Gross Amount | 2,397 | 2,396 |
Other | ||
Other assets: | ||
Gross Amount | $ 4,902 | 5,519 |
Trademarks | ||
Intangibles-subject to amortization: | ||
Useful Lives | 10 years | |
Gross Amount | $ 4,310 | 4,175 |
Accumulated Amortization | 3,382 | 3,195 |
Customer lists | ||
Intangibles-subject to amortization: | ||
Gross Amount | 54,208 | 53,825 |
Accumulated Amortization | $ 25,744 | 21,001 |
Customer lists | Minimum | ||
Intangibles-subject to amortization: | ||
Useful Lives | 5 years | |
Customer lists | Maximum | ||
Intangibles-subject to amortization: | ||
Useful Lives | 10 years | |
Patents | ||
Intangibles-subject to amortization: | ||
Gross Amount | $ 2,325 | 2,273 |
Accumulated Amortization | $ 2,091 | 2,064 |
Patents | Minimum | ||
Intangibles-subject to amortization: | ||
Useful Lives | 3 years | |
Patents | Maximum | ||
Intangibles-subject to amortization: | ||
Useful Lives | 20 years | |
Noncompete agreement | ||
Intangibles-subject to amortization: | ||
Gross Amount | $ 2,527 | 2,515 |
Accumulated Amortization | $ 1,545 | 1,134 |
Noncompete agreement | Minimum | ||
Intangibles-subject to amortization: | ||
Useful Lives | 3 years | |
Noncompete agreement | Maximum | ||
Intangibles-subject to amortization: | ||
Useful Lives | 6 years | |
Developed technology | ||
Intangibles-subject to amortization: | ||
Useful Lives | 7 years | |
Gross Amount | $ 36,100 | 36,100 |
Accumulated Amortization | $ 3,868 | 0 |
Trade name | ||
Intangibles-subject to amortization: | ||
Useful Lives | 6 years | |
Gross Amount | $ 15,700 | 15,700 |
Accumulated Amortization | 1,963 | 0 |
Other | ||
Intangibles-subject to amortization: | ||
Gross Amount | 258 | 256 |
Accumulated Amortization | $ 218 | $ 206 |
Other | Minimum | ||
Intangibles-subject to amortization: | ||
Useful Lives | 7 years | |
Other | Maximum | ||
Intangibles-subject to amortization: | ||
Useful Lives | 20 years |
INTANGIBLE AND OTHER ASSETS (Am
INTANGIBLE AND OTHER ASSETS (Amortization Expense) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2016 | Oct. 03, 2015 | Oct. 01, 2016 | Oct. 03, 2015 | |
INTANGIBLE AND OTHER ASSETS | ||||
Amortization expense for intangible assets | $ 3,700 | $ 1,200 | $ 11,200 | $ 3,700 |
Estimated aggregate future amortization expense by fiscal year | ||||
2016 (remaining) | 3,751 | 3,751 | ||
2,017 | 14,753 | 14,753 | ||
2,018 | 14,398 | 14,398 | ||
2,019 | 14,069 | 14,069 | ||
2,020 | 13,556 | 13,556 | ||
2,021 | $ 9,730 | $ 9,730 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Narrative (Details) - Warehouse and Distribution Center [Member] ft² in Thousands, $ in Millions | 3 Months Ended |
Oct. 01, 2016USD ($)ft²renewal_option | |
Sale Leaseback Transaction [Line Items] | |
Square footage of warehouse and distribution center | ft² | 518 |
Sales price | $ 33 |
Gain recognized from sale-leaseback transaction | 6.7 |
Deferred gain from sale-leaseback transaction | $ 13.2 |
Leaseback term | 10 years |
Number of lease renewal options | renewal_option | 2 |
Term of lease renewal | 5 years |
COMMITMENTS AND CONTINGENCIES63
COMMITMENTS AND CONTINGENCIES - Future Minimum Lease Payments (Details) - Warehouse and Distribution Center [Member] $ in Thousands | Oct. 01, 2016USD ($) |
Sale Leaseback Transaction [Line Items] | |
2016 remaining | $ 485 |
2,017 | 1,950 |
2,018 | 1,989 |
2,019 | 2,029 |
2,020 | 2,070 |
Thereafter | 12,726 |
Total | $ 21,249 |
DEBT ACTIVITY (Details)
DEBT ACTIVITY (Details) | Aug. 08, 2016USD ($) | Oct. 01, 2016USD ($) | Oct. 03, 2015USD ($) | Jul. 02, 2016 | Oct. 01, 2016USD ($) | Oct. 03, 2015USD ($) | Jan. 02, 2016USD ($) | Jan. 03, 2015USD ($) |
Debt Instrument [Line Items] | ||||||||
Prepayments of debt threshold (in excess) | $ 25,000,000 | |||||||
International cash balance | $ 235,952,000 | $ 301,569,000 | $ 235,952,000 | $ 301,569,000 | $ 289,275,000 | $ 276,261,000 | ||
Interest paid | 6,967,000 | $ 5,103,000 | 19,386,000 | $ 14,295,000 | ||||
Interest expense relate to amortization of debt issuance costs | 600,000 | 1,200,000 | ||||||
First Amendment | ||||||||
Debt Instrument [Line Items] | ||||||||
Consolidated leverage ratio | 3.25 | 2.50 | ||||||
U.S. term loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Repayment of borrowings | 6,300,000 | 15,600,000 | ||||||
Interest paid | 1,700,000 | 4,900,000 | ||||||
U.S. revolving line of credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Total borrowings | 3,000,000 | 67,000,000 | ||||||
Available borrowing capacity | 299,700,000 | 299,700,000 | ||||||
International cash balance | 176,800,000 | 176,800,000 | ||||||
Interest expense incurred | $ 4,100,000 | $ 11,500,000 | ||||||
London Interbank Offered Rate (LIBOR) | First Amendment | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread | 0.25% | |||||||
Base Rate | First Amendment | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread | 0.25% |
RESTRUCTURING - Liability Incur
RESTRUCTURING - Liability Incurred for Restructuring Plan (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2016 | Oct. 03, 2015 | Oct. 01, 2016 | Oct. 03, 2015 | |
Restructuring and Related Activities [Abstract] | ||||
Total estimated restructuring charges (up to) | $ 150,000 | $ 150,000 | ||
Restructuring Reserve [Roll Forward] | ||||
Beginning balance | 0 | $ 3,898 | 0 | $ 0 |
Restructuring charges | 14,473 | 3,141 | 14,473 | 21,700 |
Payments for Restructuring | (1,300) | (5,852) | (1,300) | (18,132) |
Non-cash items | (12,523) | 0 | (12,523) | (2,381) |
Ending balance | 650 | 1,187 | 650 | 1,187 |
Organizational Realignment | ||||
Restructuring Reserve [Roll Forward] | ||||
Beginning balance | 0 | 3,898 | 0 | 0 |
Restructuring charges | 1,950 | 2,250 | 1,950 | 14,567 |
Payments for Restructuring | (1,300) | (4,961) | (1,300) | (13,380) |
Non-cash items | 0 | 0 | 0 | 0 |
Ending balance | 650 | 1,187 | 650 | 1,187 |
Retail Profitability | ||||
Restructuring Reserve [Roll Forward] | ||||
Beginning balance | 0 | 0 | 0 | 0 |
Restructuring charges | 12,523 | 891 | 12,523 | 7,133 |
Payments for Restructuring | 0 | (891) | 0 | (4,752) |
Non-cash items | (12,523) | 0 | (12,523) | (2,381) |
Ending balance | $ 0 | $ 0 | $ 0 | $ 0 |
RESTRUCTURING - Restructuring C
RESTRUCTURING - Restructuring Charges by Operating Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2016 | Oct. 03, 2015 | Oct. 01, 2016 | Oct. 03, 2015 | |
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | $ 14,473 | $ 3,141 | $ 14,473 | $ 21,700 |
Operating segments | Americas | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | 10,548 | 891 | 10,548 | 7,133 |
Operating segments | Europe | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | 1,639 | 514 | 1,639 | 3,149 |
Operating segments | Asia | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | 336 | 90 | 336 | 210 |
Corporate | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | $ 1,950 | $ 1,646 | $ 1,950 | $ 11,208 |