Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jul. 04, 2015 | Aug. 06, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | Fossil Group, Inc. | |
Entity Central Index Key | 883,569 | |
Document Type | 10-Q | |
Document Period End Date | Jul. 4, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --01-02 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 48,146,973 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jul. 04, 2015 | Jan. 03, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 249,864 | $ 276,261 |
Accounts receivable-net of allowances of $61,773 and $80,047, respectively | 254,517 | 430,498 |
Inventories | 669,334 | 597,281 |
Deferred income tax assets-net | 34,833 | 34,084 |
Prepaid expenses and other current assets | 157,791 | 151,730 |
Total current assets | 1,366,339 | 1,489,854 |
Property, plant and equipment-net of accumulated depreciation of $377,782 and $360,191, respectively | 329,160 | 345,606 |
Goodwill | 197,741 | 197,728 |
Intangible and other assets-net | 166,201 | 174,364 |
Total long-term assets | 693,102 | 717,698 |
Total assets | 2,059,441 | 2,207,552 |
Current liabilities: | ||
Accounts payable | 161,380 | 159,267 |
Short-term and current portion of long-term debt | 20,288 | 16,646 |
Accrued expenses: | ||
Compensation | 59,593 | 50,776 |
Royalties | 21,224 | 54,013 |
Co-op advertising | 17,504 | 28,591 |
Transaction taxes | 15,552 | 35,301 |
Other | 71,068 | 75,609 |
Income taxes payable | 15,301 | 26,626 |
Total current liabilities | 381,910 | 446,829 |
Long-term income taxes payable | 13,540 | 16,610 |
Deferred income tax liabilities | 87,395 | 87,860 |
Long-term debt | 674,445 | 613,659 |
Other long-term liabilities | 57,749 | 58,793 |
Total long-term liabilities | $ 833,129 | $ 776,922 |
Commitments and contingencies (Note 13) | ||
Stockholders' equity: | ||
Common stock, 48,291 and 50,771 shares issued and outstanding at July 4, 2015 and January 3, 2015, respectively | $ 483 | $ 508 |
Additional paid-in capital | 178,633 | 171,669 |
Retained earnings | 698,372 | 822,093 |
Accumulated other comprehensive income (loss) | (44,542) | (16,410) |
Total Fossil Group, Inc. stockholders' equity | 832,946 | 977,860 |
Noncontrolling interest | 11,456 | 5,941 |
Total stockholders' equity | 844,402 | 983,801 |
Total liabilities and stockholders' equity | $ 2,059,441 | $ 2,207,552 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Jul. 04, 2015 | Jan. 03, 2015 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable - allowances (in dollars) | $ 61,773 | $ 80,047 |
Property, plant and equipment, accumulated depreciation (in dollars) | $ 377,782 | $ 360,191 |
Common stock, shares issued | 48,291 | 50,771 |
Common stock, shares outstanding | 48,291 | 50,771 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jul. 04, 2015 | Jul. 05, 2014 | Jul. 04, 2015 | Jul. 05, 2014 | |||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | ||||||
Net sales | $ 739,975 | $ 773,820 | $ 1,465,060 | $ 1,550,365 | ||
Cost of sales | 330,510 | 329,218 | 654,870 | 662,542 | ||
Gross profit | 409,465 | 444,602 | 810,190 | 887,823 | ||
Operating expenses: | ||||||
Selling, general and administrative expenses | 332,560 | 359,844 | 665,042 | 698,366 | ||
Restructuring charges | 6,471 | [1] | 0 | 18,559 | [1] | 0 |
Total operating expenses | 339,031 | 359,844 | 683,601 | 698,366 | ||
Operating income | 70,434 | 84,758 | 126,589 | 189,457 | ||
Interest expense | 5,014 | 3,887 | 9,193 | 7,593 | ||
Other income (expense)-net | 14,294 | (1,097) | 21,479 | (1,448) | ||
Income before income taxes | 79,714 | 79,774 | 138,875 | 180,416 | ||
Provision for income taxes | 22,894 | 24,875 | 41,417 | 56,355 | ||
Net income | 56,820 | 54,899 | 97,458 | 124,061 | ||
Less: Net income attributable to noncontrolling interest | 2,172 | 2,382 | 4,740 | 5,201 | ||
Net income attributable to Fossil Group, Inc. | 54,648 | 52,517 | 92,718 | 118,860 | ||
Other comprehensive income (loss), net of taxes: | ||||||
Currency translation adjustment | 5,559 | 1,524 | (27,947) | 399 | ||
Derivative instruments-net change | (246) | (651) | (185) | (412) | ||
Pension plan activity | 0 | (3,293) | 0 | (3,293) | ||
Total other comprehensive income (loss) | 5,313 | (2,420) | (28,132) | (3,306) | ||
Total comprehensive income | 62,133 | 52,479 | 69,326 | 120,755 | ||
Less: Comprehensive income attributable to noncontrolling interest | 2,172 | 2,382 | 4,740 | 5,201 | ||
Comprehensive income attributable to Fossil Group, Inc. | $ 59,961 | $ 50,097 | $ 64,586 | $ 115,554 | ||
Earnings per share: | ||||||
Basic (in dollars per share) | $ 1.12 | $ 0.98 | $ 1.87 | $ 2.21 | ||
Diluted (in dollars per share) | $ 1.12 | $ 0.98 | $ 1.87 | $ 2.20 | ||
Weighted average common shares outstanding: | ||||||
Basic (in shares) | 48,634 | 53,494 | 49,464 | 53,821 | ||
Diluted (in shares) | 48,744 | 53,678 | 49,615 | 54,028 | ||
[1] | Charges to expense include changes in estimates |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jul. 04, 2015 | Jul. 05, 2014 | |
Operating Activities: | ||
Net income | $ 97,458 | $ 124,061 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation, amortization and accretion | 43,650 | 48,978 |
Stock-based compensation | 9,276 | 9,637 |
Decrease in allowance for returns-net of inventory in transit | (8,438) | (3,685) |
Loss on disposal of assets | 2,519 | 423 |
Impairment losses | 6,602 | 5,501 |
Decrease in allowance for doubtful accounts | (2,006) | (887) |
Excess tax benefits from stock-based compensation | (170) | (950) |
Deferred income taxes and other | 6,804 | (973) |
Changes in operating assets and liabilities, net of effect of acquisitions: | ||
Accounts receivable | 183,993 | 158,595 |
Inventories | (91,020) | (95,426) |
Prepaid expenses and other current assets | (19,666) | (36,280) |
Accounts payable | (1,040) | 9,377 |
Accrued expenses | (50,563) | (60,033) |
Income taxes payable | (14,898) | (2,842) |
Net cash provided by operating activities | 162,501 | 155,496 |
Investing Activities: | ||
Additions to property, plant and equipment | (32,464) | (43,440) |
Increase in intangible and other assets | (1,400) | (6,598) |
Skagen Designs arbitration settlement | 5,968 | 0 |
Business acquisitions-net of cash acquired | (4,820) | 0 |
Net investment hedge settlement | 0 | 410 |
Net cash used in investing activities | (32,716) | (49,628) |
Financing Activities: | ||
Acquisition of common stock | (218,659) | (187,158) |
Distribution of noncontrolling interest earnings and other | (5,056) | (5,392) |
Excess tax benefits from stock-based compensation | 170 | 950 |
Debt borrowings | 1,482,165 | 401,800 |
Debt payments | (1,419,161) | (363,694) |
Proceeds from exercise of stock options | 582 | 1,508 |
Net cash used in financing activities | (159,959) | (151,986) |
Effect of exchange rate changes on cash and cash equivalents | 3,777 | (1,719) |
Net decrease in cash and cash equivalents | (26,397) | (47,837) |
Cash and cash equivalents: | ||
Beginning of period | 276,261 | 320,479 |
End of period | $ 249,864 | $ 272,642 |
FINANCIAL STATEMENT POLICIES
FINANCIAL STATEMENT POLICIES | 6 Months Ended |
Jul. 04, 2015 | |
FINANCIAL STATEMENT POLICIES | |
FINANCIAL STATEMENT POLICIES | 1. FINANCIAL STATEMENT POLICIES Basis of Presentation. The condensed consolidated financial statements include the accounts of Fossil Group, Inc., a Delaware corporation, and its wholly and majority-owned subsidiaries (the “Company”). The 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 July 4, 2015, and the results of operations for the thirteen-week periods ended July 4, 2015 (“Second Quarter”) and July 5, 2014 (“Prior Year Quarter”), respectively, and the twenty-six week period ended July 4, 2015 (“Year To Date Period”) and the twenty-seven week period ended July 5, 2014 (“Prior Year YTD Period”). All adjustments are of a normal, recurring nature. The Company’s fiscal year periodically results in a 53-week year instead of a normal 52-week year. The prior fiscal year ended January 3, 2015 was a 53-week year, with the additional week included in the first quarter of the fiscal year. Accordingly, the information presented herein includes twenty-six weeks of operations for the Year To Date Period as compared to twenty-seven weeks included in the Prior Year YTD Period. Effective during the first quarter of the current fiscal year, the Company made changes to the presentation of its reportable segments to reflect changes in the way its chief operating decision maker evaluates the performance of its operations, develops strategy and allocates capital resources. The Company has realigned its operating structure. Strategic and brand directions are set centrally and regional management is now fully empowered and responsible to drive those strategies and brand directions across all brands and channels within their regions. As part of the new operating structure, the regional teams manage both the wholesale and retail businesses within their regions whereas previously the retail business was managed globally. Additionally, with the implementation of new reporting systems, the Company has the ability to extract discrete financial information that aligns with its operating structure and is consistent with how management now evaluates the business performance. The Company’s reportable segments now consist of the following: (i) Americas, (ii) Europe and (iii) Asia. Prior to the Company’s first quarter fiscal 2015 Form 10-Q, as reported in the 2014 Form 10-K (as defined below), the Company’s reportable segments consisted of the following: (i) North America wholesale, (ii) Europe wholesale, (iii) Asia Pacific wholesale and (iv) Direct to consumer. These changes to the Company’s reportable segments include the following: (1) Reclassification of the Company’s retail, e-commerce and catalog activities, all of which were previously recorded within the Company’s Direct to consumer segment, to the Americas, Europe and Asia segments based on the geographic location of the activities. (2) The Company’s wholesale operations in North America, Europe and Asia Pacific previously recorded within the North America wholesale, Europe wholesale and Asia Pacific wholesale segments, respectively, have been reclassified to the Americas, Europe and Asia segments, respectively. (3) Intercompany profit attributable to the Company’s factory operations was previously included in the Asia Pacific wholesale and Europe wholesale segments in accordance with the geographic location of the factories, and is now eliminated from all reporting segments. (4) Certain corporate costs are not allocated to the various segments because they are managed at the corporate level for internal purposes. Prior to the change in reporting segments, these expenses included, and after the change in reporting segments, continue to include, general corporate expenses, including certain administrative, legal, accounting, technology support costs, equity compensation costs and payroll costs attributable to executive management. Additionally, certain brand management, product development, art, creative/product design, marketing and back office supply chain expenses which were previously included in North America wholesale, Europe wholesale, Asia Pacific wholesale and Direct to consumer segments prior to the change in reporting segments are now reported in corporate. Conversely, certain back office costs reported in corporate prior to the change in reporting segments are now included in the various reporting segments in which they are now managed. The Company’s historical segment disclosures have been recast to be consistent with the current presentation. 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 3, 2015 (the “2014 Form 10-K”). Operating results for the Second 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 2014 Form 10-K. Certain prior year amounts have been reclassified to conform to the current year presentation. 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, sunglasses, soft accessories and select apparel. 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 currency forward contracts and interest rate swaps. The Company’s foreign subsidiaries periodically enter into foreign exchange forward contracts to hedge the future payment of intercompany inventory transactions denominated in U.S. dollars. If the Company was to settle its euro, British pound, Canadian dollar, Japanese yen, Australian dollar and Mexican peso forward contracts as of July 4, 2015 , the net result would have been a net gain of approximately $14.6 million, net of taxes. To help protect against adverse existing and forecasted fluctuations in interest rates, the Company has entered into interest rate swap agreements to effectively convert portions of its existing and forecasted variable rate debt obligations to fixed rates. To reduce exposure to changes in currency exchange rates adversely affecting the Company’s investment in a euro-denominated subsidiary , the Company entered into a forward contract designated as a net investment hedge that was settled during the Prior Year Quarter. 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. Op erating 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. See “Note 15—Restructuring” for additional information on the Company’s restructuring plan. 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 For the 13 For the 26 For the 27 Weeks Ended Weeks Ended Weeks Ended Weeks Ended July 4, 2015 July 5, 2014 July 4, 2015 July 5, 2014 Numerator: Net income attributable to Fossil Group, Inc $ $ $ $ Denominator: Basic EPS computation: Basic weighted average common shares outstanding Basic EPS $ $ $ $ Diluted EPS computation: Basic weighted average common shares outstanding Effect of stock options, stock appreciation rights, restricted stock units and performance restricted stock units Diluted weighted average common shares outstanding Diluted EPS $ $ $ $ Approximately 569,000, 400,000, 334,000 and 302,000 weighted average common shares issuable under stock-based awards were not included in the diluted EPS calculation at the end of the Second Quarter, Year To Date Period, Prior Year Quarter and Prior Year YTD Period, respectively, because they were antidilutive. Recently Issued Accounting Standards. In July 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 April 2015, FASB issued ASU 2015-04, Compensation—Retirement Benefits (Topic 715): Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets (“ASU 2015-04”). ASU 2015-04 provides an entity with a fiscal year-end that does not coincide with a month-end a practical expedient that allows the entity to measure defined benefit plan assets and obligations using the month-end that is closest to the entity’s fiscal year-end and apply that practical expedient consistently from year to year. If an entity has a significant event in an interim period that requires the remeasurement of defined benefit plan assets and obligations such as a partial settlement, ASU 2015-04 also provides a practical expedient that permits the entity to remeasure defined benefit plan assets and obligations using the month-end that is closest to the date of the significant event and adjust for any effects of the significant event not captured in the month-end measurement. If an entity applies the practical expedient and a contribution is made between the month-end date used for measurement and the entity’s fiscal year-end, the entity should disclose the amount of the contribution to allow reconciliation of the fair value of plan assets in the fair value hierarchy to the ending balance of the fair value of plan assets. ASU 2015-04 is effective for annual periods beginning after December 15, 2015 with early adoption permitted. This standard will not have a material impact on the Company’s consolidated results of operations or financial position. In April 2015, FASB issued ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. ASU 2015-03 is effective for annual periods beginning after December 15, 2015 with early adoption permitted. This standard will not have a material impact on the Company’s consolidated results of operations or financial position. In January 2015, FASB issued ASU 2015-01, Income Statement—Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items (“ASU 2015-01”). ASU 2015-01 eliminates from U.S. GAAP the concept of extraordinary items as part of its initiative to reduce complexity in accounting standards. As a result, an entity will no longer be required to segregate extraordinary items from the results of ordinary operations, to separately present an extraordinary item on its income statement, net of tax, after income from continuing operations or to disclose income taxes and earnings-per-share data applicable to an extraordinary item. However, ASU 2015-01 will still retain the presentation and disclosure guidance for items that are unusual in nature and occur infrequently. ASU 2015-01 is effective for annual periods beginning after December 15, 2015 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, 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 June 2014, FASB issued ASU 2014-12, Compensation—Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (“ASU 2014-12”). ASU 2014-12 requires that a performance target, that affects vesting and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. ASU 2014-12 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015, with early adoption permitted. The Company is evaluating the effect of adopting ASU 2014-12, but does not expect that adoption will have a material impact on the Company’s consolidated results of operations or financial position. In May 2014, 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 July 2015, FASB deferred 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. Early adoption is permitted for periods beginning after December 15, 2016. The Company is evaluating the effect of adopting ASU 2014-09, but does not expect that adoption will have a material impact on the Company’s consolidated results of operations or financial position. Recently Adopted Accounting Standards. In accordance with U.S. GAAP, the following provision, which had no material impact on the Company’s financial position, results of operations or cash flows, was adopted effective the first quarter of fiscal year 2015: ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. |
ACQUISITION AND GOODWILL
ACQUISITION AND GOODWILL | 6 Months Ended |
Jul. 04, 2015 | |
ACQUISITION AND GOODWILL | |
ACQUISITION AND GOODWILL | 2. ACQUISITION AND GOODWILL Fossil Accessories South Africa Acquisition. On February 1, 2015, the Company closed a share purchase agreement with S. Keren Watch Group (“SKWG”), pursuant to which the Company acquired 51% ownership in the Cape Town, South Africa-based distributor for approximately $4.8 million in cash, net of cash acquired and including working capital adjustments (the “SKWG Acquisition”). SKWG had been a distribution partner for the Company for over 23 years, representing all Fossil brands and most of the Company’s licensed brands in South Africa. Upon closing of the share purchase, SKWG was renamed Fossil Accessories South Africa Pty, Ltd. The Company recorded $4.5 million of goodwill related to the acquisition. Goodwill is the excess of the cost of an acquired entity over the net of the amounts assigned to assets acquired and liabilities assumed. The changes in the carrying amount of goodwill, which is not subject to amortization, were as follows (in thousands): Americas Europe Asia Total Balance at January 3, 2015 $ $ $ $ Acquisitions Foreign currency changes ) ) ) Balance at July 4, 2015 $ $ $ $ |
INVENTORIES
INVENTORIES | 6 Months Ended |
Jul. 04, 2015 | |
INVENTORIES | |
INVENTORIES | 3. INVENTORIES Inventories consisted of the following (in thousands): July 4, January 3, 2015 2015 Components and parts $ $ Work-in-process Finished goods Inventories $ $ |
WARRANTY LIABILITIES
WARRANTY LIABILITIES | 6 Months Ended |
Jul. 04, 2015 | |
WARRANTY LIABILITIES | |
WARRANTY LIABILITIES | 4. WARRANTY LIABILITIES The Company’s warranty liability is recorded in accrued expenses-other in the Company’s condensed consolidated balance sheets. Warranty liability activity consisted of the following (in thousands): For the 26 For the 27 Weeks Ended Weeks Ended July 4, 2015 July 5, 2014 Beginning balance $ $ Settlements in cash or kind ) ) Warranties issued and adjustments to preexisting warranties (1) Liabilities assumed in acquisition Ending balance $ $ (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 | 6 Months Ended |
Jul. 04, 2015 | |
INCOME TAXES | |
INCOME TAXES | 5. INCOME TAXES The Company’s income tax expense and related effective rate were as follows (in thousands, except percentage data): For the 13 For the 13 For the 26 For the 27 Weeks Ended Weeks Ended Weeks Ended Weeks Ended July 4, 2015 July 5, 2014 July 4, 2015 July 5, 2014 Income tax expense $ $ $ $ Income tax rate % % % % The lower effective tax rates in the Second Quarter and the Year to Date Period, as compared to the Prior Year Quarter and Prior Year YTD Period, respectively, was primarily attributable to the recognition of income tax benefits due to the settlement of audits. As of July 4, 2015, the total amount of unrecognized tax benefits, excluding interest and penalties, was $13.1 million, of which $10.3 million would favorably impact the effective tax rate in future periods, if recognized. During the Second Quarter, the U.S. Internal Revenue Service closed its examination of the Company’s 2010-2012 federal income tax returns, and the Company expects a refund of $2.2 million, which is recorded in prepaid expenses and other current assets in the Company’s condensed consolidated balance sheets. The Company is subject to examinations in various state and foreign jurisdictions for its 2007-2013 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 July 4, 2015, the Company had recorded $1.7 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, respectively. The total amount of accrued income tax-related interest and penalties included in the condensed consolidated balance sheets at July 4, 2015 was $1.7 million and $0.4 million, respectively. For the Second Quarter and Year To Date Period, the Company accrued income tax-related interest expense of $0.2 million and $0.4 million, respectively. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 6 Months Ended |
Jul. 04, 2015 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | 6. 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 cancelled, 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 Securities Exchange Act of 1934. During the Year To Date Period, the Company effectively retired 2.5 million shares of common stock repurchased under its repurchase programs. The effective retirement of repurchased common stock decreased common stock by approximately $25,500, additional paid-in capital by $0.6 million, retained earnings by $216.4 million and treasury stock by $217.0 million. At January 3, 2015 and July 4, 2015, all treasury stock had been effectively retired. As of July 4, 2015, the Company had $841.7 million of repurchase authorizations remaining under its combined repurchase programs. The following tables reflect the Company’s common stock repurchase activity for the periods indicated (in millions): For the 13 Weeks Ended For the 13 Weeks Ended July 4, 2015 July 5, 2014 Fiscal Year Authorized Dollar Value Authorized Termination Date Number of Shares Repurchased Dollar Value Repurchased Number of Shares Repurchased Dollar Value Repurchased 2014 $ December 2018 $ $ 2012 $ December 2016 (1) $ $ 2010 $ None $ $ For the 26 Weeks Ended For the 27 Weeks Ended July 4, 2015 July 5, 2014 Fiscal Year Authorized Dollar Value Authorized Termination Date Number of Shares Repurchased Dollar Value Repurchased Number of Shares Repurchased Dollar Value Repurchased 2014 $ December 2018 $ $ 2012 $ December 2016 (1) $ $ 2010 $ 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. Total Stockholders’ Noncontrolling Stockholders’ Equity Interest Equity Balance at January 3, 2015 $ $ $ Net income Currency translation adjustment ) ) Derivative instruments-net change ) ) Common stock issued upon exercise of stock options Tax expense derived from stock-based compensation ) ) Distribution of noncontrolling interest earnings ) ) Business acquisition Acquisition of common stock ) ) Stock-based compensation expense Balance at July 4, 2015 $ $ $ Fossil Group, Inc. Total Stockholders’ Noncontrolling Stockholders’ Equity Interest Equity Balance at December 28, 2013 $ $ $ Net income Currency translation adjustment Derivative instruments-net change ) ) Common stock issued upon exercise of stock options Tax benefit derived from stock-based compensation Distribution of noncontrolling interest earnings and other. ) ) Pension plan activity ) ) Acquisition of common stock ) ) Stock-based compensation expense Balance at July 5, 2014 $ $ $ |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 6 Months Ended |
Jul. 04, 2015 | |
EMPLOYEE BENEFIT PLANS | |
EMPLOYEE BENEFIT PLANS | 7. EMPLOYEE BENEFIT PLANS Stock-Based Compensation Plans. The following table summarizes stock options and stock appreciation rights activity during the Second Quarter: Weighted- Average Weighted- Remaining Aggregate Average Contractual Intrinsic Stock Options and Stock Appreciation Rights Shares Exercise Price Term Value (in Thousands) (in Years) (in Thousands) Outstanding at April 4, 2015 $ $ Granted Exercised ) Forfeited or expired ) Outstanding at July 4, 2015 Exercisable at July 4, 2015 $ $ 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 July 4, 2015 and (ii) the fair market value of the Company’s common stock on the exercise date for options/rights that were exercised during the Second 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 July 4, 2015: Stock Options Outstanding Stock Options Exercisable Weighted- Weighted- Average Weighted- Average Remaining Average Range of Number of Exercise Contractual Number of Exercise Exercise Prices Shares Price Term Shares Price (in Thousands) (in Years) (in Thousands) $13.65 - $21.51 $ $ $30.71 - $67.10 $69.53 - $106.40 $106.89 - $131.46 Total $ $ Stock Appreciation Rights Outstanding Stock Appreciation Rights Exercisable Weighted- Weighted- Average Weighted- Average Remaining Average Range of Number of Exercise Contractual Number of Exercise Exercise Prices Shares Price Term Shares Price (in Thousands) (in Years) (in Thousands) $13.65 - $21.51 $ $ $30.71 - $67.10 $69.53 - $106.40 $106.89 - $131.46 Total $ $ 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 Second Quarter: Weighted-Average Restricted Stock, Restricted Stock Units Grant Date Fair and Performance Restricted Stock Units Number of Shares Value (in Thousands) Nonvested at April 4, 2015 $ Granted Vested ) Forfeited ) Nonvested at July 4, 2015 $ The total fair value of restricted stock and restricted stock units vested during the Second Quarter was approximately $1.3 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. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 6 Months Ended |
Jul. 04, 2015 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 8. 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 July 4, 2015 Currency Cash Flow Hedges Translation Forward Interest Pension Adjustments Contracts Rate Swaps Plan Total Beginning balance $ ) $ $ ) $ ) $ ) Other comprehensive income (loss) before reclassifications Tax (expense) benefit ) ) Amounts reclassed from accumulated other comprehensive income Tax (expense) benefit ) ) ) Total other comprehensive income (loss) ) Ending balance $ ) $ $ ) $ ) $ ) For the 13 Weeks Ended July 5, 2014 Currency Cash Flow Hedges Net Translation Adjustments Forward Contracts Interest Rate Swap Pension Plan Investment Hedges Total Beginning balance $ $ ) $ ) $ $ $ Other comprehensive income (loss) before reclassifications ) ) ) ) Tax (expense) benefit ) ) Amounts reclassed from accumulated other comprehensive income ) ) ) Tax (expense) benefit Total other comprehensive income (loss) ) ) ) ) Ending balance $ $ ) $ ) $ ) $ $ For the 26 Weeks Ended July 4, 2015 Currency Cash Flow Hedges Translation Adjustments Forward Contracts Interest Rate Swaps Pension Plan Total Beginning balance $ ) $ $ ) $ ) $ ) Other comprehensive income (loss) before reclassifications ) ) Tax (expense) benefit ) ) ) Amounts reclassed from accumulated other comprehensive income Tax (expense) benefit ) ) ) Total other comprehensive income (loss) ) ) ) Ending balance $ ) $ $ ) $ ) $ ) For the 27 Weeks Ended July 5, 2014 Currency Cash Flow Hedges Net Translation Adjustments Forward Contracts Interest Rate Swap Pension Plan Investment Hedges Total Beginning balance $ $ ) $ ) $ $ $ Other comprehensive income (loss) before reclassifications ) ) ) ) Tax (expense) benefit ) ) Amounts reclassed from accumulated other comprehensive income ) ) ) Tax (expense) benefit Total other comprehensive income (loss) ) ) ) ) Ending balance $ $ ) $ ) $ ) $ $ See “Note 10—Derivatives and Risk Management” for additional disclosures about the Company’s use of derivatives. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 6 Months Ended |
Jul. 04, 2015 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | 9. 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. 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. Certain reclassifications have been made to prior year amounts to conform with current year presentation. Due to changes in the Company’s reportable segments as discussed in Note 1 to the condensed consolidated financial statements, segment results for fiscal year 2014 have been recast to present results on a comparable basis. Summary information by operating segment was as follows (in thousands): For the 13 Weeks Ended For the 13 Weeks Ended July 4, 2015 July 5, 2014 Net Sales Operating Income Net Sales Operating Income Americas $ $ $ $ Europe Asia Corporate ) ) Consolidated $ $ $ $ For the 26 Weeks Ended For the 27 Weeks Ended July 4, 2015 July 5, 2014 Net Sales Operating Income Net Sales Operating Income Americas $ $ $ $ Europe Asia Corporate ) ) Consolidated $ $ $ $ July 4, 2015 January 3, 2015 Long-Term Assets Total Assets Long-Term Assets Total Assets Americas $ $ $ $ Europe Asia Corporate Total $ $ $ $ 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 For the 13 Weeks Ended July 4, 2015 July 5, 2014 Net Sales Percentage of Total Net Sales Percentage of Total Watches $ % $ % Leathers Jewelry Other Total $ % $ % For the 26 Weeks Ended For the 27 Weeks Ended July 4, 2015 July 5, 2014 Net Sales Percentage of Total Net Sales Percentage of Total Watches $ % $ % Leathers Jewelry Other Total $ % $ % |
DERIVATIVES AND RISK MANAGEMENT
DERIVATIVES AND RISK MANAGEMENT | 6 Months Ended |
Jul. 04, 2015 | |
DERIVATIVES AND RISK MANAGEMENT | |
DERIVATIVES AND RISK MANAGEMENT | 10. DERIVATIVES AND RISK MANAGEMENT Cash Flow Hedges. The primary risks managed by using derivative instruments are the fluctuations in global currencies that will ultimately be used by non-U.S. dollar functional currency subsidiaries to settle future payments of intercompany inventory transactions denominated in U.S. dollars. Specifically, the Company projects future intercompany purchases by its non-U.S. dollar functional currency subsidiaries generally over a period of up to 24 months. The Company enters into foreign currency forward contracts (“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. 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 intercompany 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 inter-entity 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 Second 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 Second 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 July 4, 2015, the Company had the following outstanding forward contracts designated as cash flow hedges that were entered into to hedge the future payments of intercompany inventory transactions (in millions): Functional Currency Contract Currency Type Amount Type Amount Euro U.S. dollar British pound U.S. dollar Canadian dollar U.S. dollar Japanese yen U.S. dollar Mexican peso U.S. dollar Australian dollar U.S. dollar 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 (“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 1.25% if the Ratio is less than 1.00 to 1.00, to 2.00% if the Ratio is greater than or equal to 2.00 to 1.00). The notional amount will amortize over the remaining life of the Term Loan to coincide with the amortization of the underlying loan. The Company will receive interest from the swap counterparty at a variable rate based on 1-month LIBOR. This hedge is designated as a cash flow hedge. Additionally, to manage interest rate risk related to forecasted debt issuances, the Company entered into a forward starting interest rate swap agreement on March 20, 2015 with a term of approximately 10 years. The objective of this hedge was to offset the variability of future interest payments associated with forecasted debt issuances. The forecasted debt issuances did not occur, and in May 2015, the Company entered into an agreement to offset and unwind the forward starting interest rate swap. As a result of this transaction, a gain of $3.3 million net of taxes was reclassed out of accumulated other comprehensive income (loss) to other income (expense). Net Investment Hedge. The Company is also exposed to risk that adverse changes in foreign currency exchange rates could impact its net investment in foreign operations. To manage this risk, during the first quarter of fiscal year 2014, the Company entered into a forward contract designated as a net investment hedge to reduce exposure to changes in currency exchange rates on €25.0 million of its total investment in a wholly-owned euro-denominated foreign subsidiary. The hedge was settled in the Prior Year Quarter. 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 as a 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-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 non-inventory intercompany transactions and to which the Company does not elect hedge treatment. As of July 4, 2015, the Company had approximately $0.1 million in assets of outstanding forward exchange contracts acquired as part of the SKWG Acquisition, for which the Company did not elect hedge treatment. As of January 3, 2015, all of the Company’s outstanding forward contracts were designated as hedging instruments. 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 derivative instruments that were recognized in other comprehensive income (loss), net of taxes during the Second Quarter, Prior Year Quarter, Year To Date Period and Prior Year YTD Period are set forth below (in thousands): For the 13 For the 13 Weeks Ended Weeks Ended July 4, 2015 July 5, 2014 Cash flow hedges: Forward contracts $ $ ) Interest rate swaps ) Net investment hedge: Forward contract Total gain (loss) recognized in other comprehensive income (loss), net of taxes $ $ ) For the 26 For the 27 Weeks Ended Weeks Ended July 4, 2015 July 5, 2014 Cash flow hedges: Forward contracts $ $ ) Interest rate swaps ) Net investment hedge: Forward contract Total gain (loss) recognized in other comprehensive income (loss), net of taxes $ $ ) 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 Second Quarter, Prior Year Quarter, Year To Date Period and Prior Year YTD Period (in thousands): Condensed Consolidated Statements of Income For the 13 For the 13 and Comprehensive Effect of Derivative Weeks Ended Weeks Ended Derivative Instruments Income Location Instruments July 4, 2015 July 5, 2014 Forward contracts designated as cash flow hedging instruments Other income (expense)-net Total gain (loss) reclassified from other comprehensive income (loss) $ $ ) Forward contracts not designated as hedging instruments Other income (expense)-net Total gain (loss) recognized in income $ ) Interest rate swap designated as a cash flow hedging instrument Interest expense Total gain (loss) reclassified from other comprehensive income (loss) $ ) $ ) Interest rate swap designated as a cash flow hedging instrument Other income (expense)-net Total gain (loss) reclassified from other comprehensive income (loss) $ Condensed Consolidated Statements of Income For the 26 For the 27 and Comprehensive Effect of Derivative Weeks Ended Weeks Ended Derivative Instruments Income Location Instruments July 4, 2015 July 5, 2014 Forward contracts designated as cash flow hedging instruments Other income (expense)-net Total gain (loss) reclassified from other comprehensive income (loss) $ $ ) Forward contracts not designated as hedging instruments Other income (expense)-net Total gain (loss) recognized in income $ $ ) Interest rate swap designated as a cash flow hedging instrument Interest expense Total gain (loss) reclassified from other comprehensive income (loss) $ ) $ ) Interest rate swap designated as a cash flow hedging instrument Other income (expense)-net Total gain (loss) reclassified from other comprehensive income (loss) $ 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 July 4, 2015 January 3, 2015 July 4, 2015 January 3, 2015 Condensed Condensed Condensed Condensed Consolidated Consolidated Consolidated Consolidated Balance Sheets Fair Balance Sheets Fair Balance Sheets Fair Balance Sheets Fair Derivative Instruments Location Value Location Value Location Value Location Value Forward contracts designated as cash flow hedging instruments Prepaid expenses and other current assets $ Prepaid expenses and other current assets $ Accrued expenses- other $ Accrued expenses- other $ Forward contracts not designated as cash flow hedging instruments Prepaid expenses and other current assets Prepaid expenses and other current assets Accrued expenses- other Accrued expenses- other 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 Accrued expenses- other Forward contracts designated as cash flow hedging instruments Intangible and other assets-net Intangible and other assets-net Other long-term liabilities Other long-term liabilities Interest rate swap designated as a cash flow hedging instrument Intangible and other assets-net Intangible and other assets-net Other long-term liabilities Other long-term liabilities Total $ $ $ $ At the end of the Second Quarter, the Company had forward contracts with maturities extending through June 2017. As of July 4, 2015, an estimated net gain of $14.3 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 | 6 Months Ended |
Jul. 04, 2015 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | 11. FAIR VALUE MEASUREMENTS The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. 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 July 4, 2015 (in thousands): Fair Value at July 4, 2015 Level 1 Level 2 Level 3 Total Assets: Forward contracts $ $ $ $ Deferred compensation plan assets: Investment in publicly traded mutual funds Interest rate swaps Total $ $ $ $ Liabilities: Contingent consideration $ $ $ $ Forward contracts Interest rate swaps Total $ $ $ $ The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of January 3, 2015 (in thousands): Fair Value at January 3, 2015 Level 1 Level 2 Level 3 Total Assets: Forward contracts $ $ $ $ Deferred compensation plan assets: Investment in publicly traded mutual funds Interest rate swap Total $ $ $ $ Liabilities: Contingent consideration $ $ $ $ Interest rate swap Total $ $ $ $ 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 July 4, 2015 and January 3, 2015 and believes, based on the interest rates, related terms and maturities, that the carrying amounts of such instruments approximated their fair values. As of July 4, 2015 and January 3, 2015, 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. The fair value of the contingent consideration liability related to the acquisition of the Company’s joint venture company, Fossil, S.L. (“Fossil Spain”), was determined using Level 3 inputs. The contingent consideration recorded as of July 4, 2015 is based on Fossil Spain’s earnings for fiscal year 2014 and forecasted earnings for fiscal year 2015. During the Second Quarter, the Company made a 1.9 million euro payment towards the 2014 contingent consideration, leaving a remaining liability of 1.5 million euros (approximately $1.7 million) which will be paid during the remaining part of fiscal year 2015. The contingent consideration for calendar year 2015 will be paid upon the execution of the purchase agreement in 2016. The fair value of the contingent consideration was determined using present value techniques with forecasted future cash flows for Fossil Spain as the significant unobservable input. Future revenue growth based on management’s projections for the 2015 calendar year is approximately 18%. Operating expenses are projected to be approximately 25% of revenues for calendar year 2015. A discount rate of 19% was used to calculate the present value of the contingent consideration. The contingent consideration liability for calendar year 2015 is valued at the maximum annual variable price of 3.5 million euros (approximately $3.9 million). A decrease in future cash flows may result in a lower estimated fair value of the calendar year 2015 contingent consideration liability. Future changes in the estimated fair value of the contingent consideration liability, if any, will be reflected in earnings. In accordance with the provisions of ASC 360, Property, Plant and Equipment , property, plant and equipment—net with a carrying amount of $6.5 million, as of July 4, 2015, related to retail store leasehold improvements and fixturing was fully impaired, and related key money in the amount of $0.1 million was deemed not recoverable, resulting in an impairment charge of $6.6 million for the Year To Date Period. The fair values of assets related to the Company-owned retail stores were determined using Level 3 inputs. Of the $6.6 million impairment expense, $3.8 million, $0.8 million and $0.4 million was recorded in SG&A in the Europe, Americas and Asia segments, respectively, and $1.6 million was recorded in restructuring charges in the Americas segment. |
INTANGIBLE AND OTHER ASSETS
INTANGIBLE AND OTHER ASSETS | 6 Months Ended |
Jul. 04, 2015 | |
INTANGIBLE AND OTHER ASSETS | |
INTANGIBLE AND OTHER ASSETS | 12. INTANGIBLE AND OTHER ASSETS The following table summarizes intangible and other assets (in thousands): July 4, 2015 January 3, 2015 Useful Gross Accumulated Gross Accumulated At Fiscal Year End Lives Amount Amortization Amount Amortization Intangibles-subject to amortization: Trademarks 10 yrs. $ $ $ $ Customer lists 5-10 yrs. Patents 3-20 yrs. Noncompete agreement 6 yrs. Other 7-20 yrs. Total intangibles-subject to amortization Intangibles-not subject to amortization: Trade names Other assets: Key money deposits Other deposits Deferred compensation plan assets Deferred tax asset-net Restricted cash Shop-in-shop Interest rate swap Forward contracts Other Total other assets Total intangible and other assets $ $ $ $ Total intangible and other assets-net $ $ 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 $1.4 million and $1.3 million for the Second Quarter and Prior Year Quarter, respectively, and $2.5 million and $2.6 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 2015 (remaining) $ 2016 $ 2017 $ 2018 $ 2019 $ 2020 $ |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jul. 04, 2015 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 13. COMMITMENTS AND CONTINGENCIES Litigation. The Company is occasionally subject to litigation or other legal proceedings in the normal course of its business. The Company does not believe that the outcome of any currently pending legal matters, individually or collectively, will have a material effect on the business or financial condition of the Company. |
DEBT ACTIVITY
DEBT ACTIVITY | 6 Months Ended |
Jul. 04, 2015 | |
DEBT ACTIVITY | |
DEBT ACTIVITY | 14. DEBT ACTIVITY On March 9, 2015, the Company entered into an Amended and Restated Credit Agreement (the “Credit Agreement”). The Credit Agreement provides for (i) revolving credit loans in the amount of $1.05 billion (the “Revolving Credit Facility”), with an up to $20.0 million subfacility for swingline loans (the “Swingline Loan”), and an up to $10.0 million subfacility for letters of credit, and (ii) a term loan in the amount of $231.3 million (the “Term Loan”). The Credit Agreement expires and is due and payable on May 17, 2018. The Company’s obligations under the Credit Agreement are unsecured, and none of the Company’s subsidiaries are guarantors of the Company’s obligations under the Credit Agreement. Upon the occurrence of both (i) the Moody’s Investor Service, Inc. rating of the Company falling below Ba1 and (ii) the Standard & Poor’s Financial Services LLC rating of the Company falling below BB+, the Company’s obligations under the Credit Agreement will be required to be guaranteed by all direct and indirect material domestic subsidiaries of the Company, as provided in a subsidiary guaranty agreement, and secured by 65% of the total outstanding voting capital stock and 100% of the non-voting capital stock of the Company’s material first-tier foreign subsidiaries, pursuant to a pledge agreement. The Credit Agreement refinanced the indebtedness under the Prior Agreement (as defined below) and may be used (i) to finance the acquisition of capital assets, (ii) for ongoing working capital and other general corporate purposes and (iii) to repurchase the Company’s capital stock to the extent permitted under the Credit Agreement. The Credit Agreement amended and restated that certain credit agreement, dated as of May 17, 2013, as amended, which was scheduled to mature on May 17, 2018 (the “Prior Agreement”). Under the Prior Agreement, the Company incurred approximately $1.6 million and $1.0 million of interest expense during the first quarter of fiscal 2015 related to outstanding revolving credit loans and term loans, respectively, including the impact of the related interest rate swap. As of March 9, 2015, the Company had $555.0 million in aggregate principal amount of revolving credit loans (the “Prior Revolver”) outstanding and $231.3 million in aggregate principal amount of term loans (the “Prior Term Loan”) outstanding under the Prior Agreement, all of which was refinanced on March 9, 2015 with borrowings under the Credit Agreement. No penalties or other early termination fees were incurred in connection with the amendment and restatement of the Prior Agreement. Amounts outstanding under the Revolving Credit Facility and the Term Loan under the Credit Agreement bear interest, at the Company’s option, at (i) the base rate (defined as the highest of (a) the prime rate publicly announced by Wells Fargo, (b) the federal funds rate plus 0.5% and (c) LIBOR for an interest period of one month plus 1.0%) plus the base rate applicable margin (which varies, based upon the Company’s consolidated total leverage ratio, from 0.25%, if the consolidated total leverage ratio is less than 1.00 to 1.00, to 1.00%, if the consolidated total leverage ratio is greater than or equal to 2.00 to 1.00) or (ii) the LIBOR rate (defined as the quotient obtained by dividing (a) LIBOR by (b) 1.00 minus the Eurodollar reserve percentage) plus the LIBOR rate applicable margin (which varies, based upon the consolidated total leverage ratio, from 1.25%, if the consolidated total leverage ratio is less than 1.00 to 1.00, to 2.00%, if the consolidated total leverage ratio is greater than or equal to 2.00 to 1.00). Amounts outstanding under the Swingline Loan under the Credit Agreement or upon any drawing under a letter of credit bear interest at the base rate plus the applicable margin. Interest based upon the base rate is payable quarterly in arrears. Interest based upon the LIBOR rate is payable on the last day of the applicable interest period. Financial covenants governing the Credit Agreement require the Company to maintain (i) a consolidated total leverage ratio no greater than 2.50 to 1.00 and (ii) a consolidated interest coverage ratio no less than 3.50 to 1.00. The Credit Agreement contains representations, warranties, covenants, events of default and indemnities that are customary for agreements of this type. The Company is required to pay a commitment fee on the unused amounts of the commitments under the Revolving Credit Facility under the Credit Agreement, payable quarterly in arrears, ranging from 0.20% to 0.35%, based on the consolidated total leverage ratio. In connection with any letter of credit, the Company is required to pay (i) a letter of credit commission, payable quarterly in arrears, in an amount equal to the daily amount available to be drawn under such letter of credit multiplied by the applicable margin with respect to revolving credit loans that are LIBOR rate loans, (ii) a fronting fee, payable quarterly in arrears, as set forth in the applicable letter of credit application or as otherwise separately agreed by the Company and the issuing lender and (iii) normal and customary costs and expenses incurred or charged by the issuing lender in issuing, effecting payment under, amending or otherwise administering the letter of credit. Loans under the Credit Agreement may be prepaid, in whole or in part, at the option of the Company, in minimum principal amounts of (i) $2.0 million or increments of $1.0 million in excess thereof, with respect to a base rate loan under the Revolving Credit Facility, (ii) $5.0 million or increments of $1.0 million in excess thereof, with respect to a LIBOR rate loan under the Revolving Credit Facility, (iii) $5.0 million or increments of $1.0 million in excess thereof, with respect to the Term Loan and (iv) $0.1 million or increments of $0.1 million in excess thereof, with respect to a Swingline Loan. Loans under the Credit Agreement must be repaid with the net cash proceeds of certain asset sales or insurance and condemnation events. The Company may permanently reduce the revolving credit commitment at any time, in whole or in part, without premium or penalty, in a minimum aggregate principal amount of not less than $3.0 million or increments of $1.0 million in excess thereof. The repayment obligation under the Credit Agreement can be accelerated upon the occurrence of an event of default, including the failure to pay principal or interest, a material inaccuracy of a representation or warranty, violation of covenants, cross-default, change in control, bankruptcy events, failure of a loan document provision, certain ERISA events and material judgments. The Company made net principal payments of $3.1 million under the Term Loan during the Second Quarter and $6.3 million in the aggregate under the Term Loan and Prior Term Loan during the Year To Date Period. The Company had net borrowings of $51.7 million under the Revolving Credit Facility during the Second Quarter and $69.7 million in the aggregate under the Revolving Credit Facility and Prior Revolver during the Year To Date Period. Borrowings were primarily used to fund stock repurchases, capital expenditures and normal operating expenses. As of July 4, 2015, the Company had $225.0 million and $458.7 million outstanding under the Term Loan and the Revolving Credit Facility, respectively. Amounts available under the Revolving Credit Facility are reduced by any amounts outstanding under standby letters of credit. As of July 4, 2015, the Company had available borrowing capacity of approximately $590.4 million under the Revolving Credit Facility, which was favorably impacted by a $400.0 million international cash balance. The Company incurred approximately $1.5 million and $2.0 million of interest expense related to the Term Loan during the Second Quarter and Year To Date Period, respectively, including the impact of the related interest rate swap. The Company incurred approximately $2.8 million and $3.5 million of interest expense related to the Revolving Credit Facility during the Second Quarter and Year To Date Period, respectively. The Company was in compliance with all covenants in the Term Loan and Revolving Credit Facility as of July 4, 2015. |
RESTRUCTURING
RESTRUCTURING | 6 Months Ended |
Jul. 04, 2015 | |
RESTRUCTURING | |
RESTRUCTURING | 15. RESTRUCTURING The Company implemented a restructuring program in the first quarter of fiscal year 2015 to optimize its operating structure and store locations. The costs associated with this plan include various charges, including severance and other employment related costs, 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 July 4, 2015 Organizational Realignment Retail Profitability Total Balance at April 4, 2015 $ $ $ Charges to expense (1) Cash payments ) ) Non-cash items ) ) Balance at July 4, 2015 $ $ $ For the 26 Weeks ended July 4, 2015 Organizational Realignment Retail Profitability Total Balance at January 3, 2015 $ $ $ Charges to expense (1) Cash payments ) ) ) Non-cash items ) ) Balance at July 4, 2015 $ $ $ (1) Charges to expense include changes in estimates |
FINANCIAL STATEMENT POLICIES (P
FINANCIAL STATEMENT POLICIES (Policies) | 6 Months Ended |
Jul. 04, 2015 | |
FINANCIAL STATEMENT POLICIES | |
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 July 4, 2015, and the results of operations for the thirteen-week periods ended July 4, 2015 (“Second Quarter”) and July 5, 2014 (“Prior Year Quarter”), respectively, and the twenty-six week period ended July 4, 2015 (“Year To Date Period”) and the twenty-seven week period ended July 5, 2014 (“Prior Year YTD Period”). All adjustments are of a normal, recurring nature. The Company’s fiscal year periodically results in a 53-week year instead of a normal 52-week year. The prior fiscal year ended January 3, 2015 was a 53-week year, with the additional week included in the first quarter of the fiscal year. Accordingly, the information presented herein includes twenty-six weeks of operations for the Year To Date Period as compared to twenty-seven weeks included in the Prior Year YTD Period. Effective during the first quarter of the current fiscal year, the Company made changes to the presentation of its reportable segments to reflect changes in the way its chief operating decision maker evaluates the performance of its operations, develops strategy and allocates capital resources. The Company has realigned its operating structure. Strategic and brand directions are set centrally and regional management is now fully empowered and responsible to drive those strategies and brand directions across all brands and channels within their regions. As part of the new operating structure, the regional teams manage both the wholesale and retail businesses within their regions whereas previously the retail business was managed globally. Additionally, with the implementation of new reporting systems, the Company has the ability to extract discrete financial information that aligns with its operating structure and is consistent with how management now evaluates the business performance. The Company’s reportable segments now consist of the following: (i) Americas, (ii) Europe and (iii) Asia. Prior to the Company’s first quarter fiscal 2015 Form 10-Q, as reported in the 2014 Form 10-K (as defined below), the Company’s reportable segments consisted of the following: (i) North America wholesale, (ii) Europe wholesale, (iii) Asia Pacific wholesale and (iv) Direct to consumer. These changes to the Company’s reportable segments include the following: (1) Reclassification of the Company’s retail, e-commerce and catalog activities, all of which were previously recorded within the Company’s Direct to consumer segment, to the Americas, Europe and Asia segments based on the geographic location of the activities. (2) The Company’s wholesale operations in North America, Europe and Asia Pacific previously recorded within the North America wholesale, Europe wholesale and Asia Pacific wholesale segments, respectively, have been reclassified to the Americas, Europe and Asia segments, respectively. (3) Intercompany profit attributable to the Company’s factory operations was previously included in the Asia Pacific wholesale and Europe wholesale segments in accordance with the geographic location of the factories, and is now eliminated from all reporting segments. (4) Certain corporate costs are not allocated to the various segments because they are managed at the corporate level for internal purposes. Prior to the change in reporting segments, these expenses included, and after the change in reporting segments, continue to include, general corporate expenses, including certain administrative, legal, accounting, technology support costs, equity compensation costs and payroll costs attributable to executive management. Additionally, certain brand management, product development, art, creative/product design, marketing and back office supply chain expenses which were previously included in North America wholesale, Europe wholesale, Asia Pacific wholesale and Direct to consumer segments prior to the change in reporting segments are now reported in corporate. Conversely, certain back office costs reported in corporate prior to the change in reporting segments are now included in the various reporting segments in which they are now managed. The Company’s historical segment disclosures have been recast to be consistent with the current presentation. 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 3, 2015 (the “2014 Form 10-K”). Operating results for the Second 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 2014 Form 10-K. Certain prior year amounts have been reclassified to conform to the current year presentation. |
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, sunglasses, soft accessories and select apparel. 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 currency forward contracts and interest rate swaps. The Company’s foreign subsidiaries periodically enter into foreign exchange forward contracts to hedge the future payment of intercompany inventory transactions denominated in U.S. dollars. If the Company was to settle its euro, British pound, Canadian dollar, Japanese yen, Australian dollar and Mexican peso forward contracts as of July 4, 2015 , the net result would have been a net gain of approximately $14.6 million, net of taxes. To help protect against adverse existing and forecasted fluctuations in interest rates, the Company has entered into interest rate swap agreements to effectively convert portions of its existing and forecasted variable rate debt obligations to fixed rates. To reduce exposure to changes in currency exchange rates adversely affecting the Company’s investment in a euro-denominated subsidiary , the Company entered into a forward contract designated as a net investment hedge that was settled during the Prior Year Quarter. 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. Op erating 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. See “Note 15—Restructuring” for additional information on the Company’s restructuring plan. |
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. 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 For the 13 For the 26 For the 27 Weeks Ended Weeks Ended Weeks Ended Weeks Ended July 4, 2015 July 5, 2014 July 4, 2015 July 5, 2014 Numerator: Net income attributable to Fossil Group, Inc $ $ $ $ Denominator: Basic EPS computation: Basic weighted average common shares outstanding Basic EPS $ $ $ $ Diluted EPS computation: Basic weighted average common shares outstanding Effect of stock options, stock appreciation rights, restricted stock units and performance restricted stock units Diluted weighted average common shares outstanding Diluted EPS $ $ $ $ Approximately 569,000, 400,000, 334,000 and 302,000 weighted average common shares issuable under stock-based awards were not included in the diluted EPS calculation at the end of the Second Quarter, Year To Date Period, Prior Year Quarter and Prior Year YTD Period, respectively, because they were antidilutive. |
FINANCIAL STATEMENT POLICIES (T
FINANCIAL STATEMENT POLICIES (Tables) | 6 Months Ended |
Jul. 04, 2015 | |
FINANCIAL STATEMENT POLICIES | |
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 For the 13 For the 26 For the 27 Weeks Ended Weeks Ended Weeks Ended Weeks Ended July 4, 2015 July 5, 2014 July 4, 2015 July 5, 2014 Numerator: Net income attributable to Fossil Group, Inc $ $ $ $ Denominator: Basic EPS computation: Basic weighted average common shares outstanding Basic EPS $ $ $ $ Diluted EPS computation: Basic weighted average common shares outstanding Effect of stock options, stock appreciation rights, restricted stock units and performance restricted stock units Diluted weighted average common shares outstanding Diluted EPS $ $ $ $ |
ACQUISITION AND GOODWILL (Table
ACQUISITION AND GOODWILL (Tables) | 6 Months Ended |
Jul. 04, 2015 | |
ACQUISITION AND GOODWILL | |
Schedule of changes in the carrying amount of goodwill | . The changes in the carrying amount of goodwill, which is not subject to amortization, were as follows (in thousands): Americas Europe Asia Total Balance at January 3, 2015 $ $ $ $ Acquisitions Foreign currency changes ) ) ) Balance at July 4, 2015 $ $ $ $ |
INVENTORIES (Tables)
INVENTORIES (Tables) | 6 Months Ended |
Jul. 04, 2015 | |
INVENTORIES | |
Schedule of inventories | Inventories consisted of the following (in thousands): July 4, January 3, 2015 2015 Components and parts $ $ Work-in-process Finished goods Inventories $ $ |
WARRANTY LIABILITIES (Tables)
WARRANTY LIABILITIES (Tables) | 6 Months Ended |
Jul. 04, 2015 | |
WARRANTY LIABILITIES | |
Schedule of warranty liability activity | Warranty liability activity consisted of the following (in thousands): For the 26 For the 27 Weeks Ended Weeks Ended July 4, 2015 July 5, 2014 Beginning balance $ $ Settlements in cash or kind ) ) Warranties issued and adjustments to preexisting warranties (1) Liabilities assumed in acquisition Ending balance $ $ (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) | 6 Months Ended |
Jul. 04, 2015 | |
INCOME TAXES | |
Schedule of income tax expense and related effective rate | The Company’s income tax expense and related effective rate were as follows (in thousands, except percentage data): For the 13 For the 13 For the 26 For the 27 Weeks Ended Weeks Ended Weeks Ended Weeks Ended July 4, 2015 July 5, 2014 July 4, 2015 July 5, 2014 Income tax expense $ $ $ $ Income tax rate % % % % |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 6 Months Ended |
Jul. 04, 2015 | |
STOCKHOLDERS' EQUITY | |
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 For the 13 Weeks Ended July 4, 2015 July 5, 2014 Fiscal Year Authorized Dollar Value Authorized Termination Date Number of Shares Repurchased Dollar Value Repurchased Number of Shares Repurchased Dollar Value Repurchased 2014 $ December 2018 $ $ 2012 $ December 2016 (1) $ $ 2010 $ None $ $ For the 26 Weeks Ended For the 27 Weeks Ended July 4, 2015 July 5, 2014 Fiscal Year Authorized Dollar Value Authorized Termination Date Number of Shares Repurchased Dollar Value Repurchased Number of Shares Repurchased Dollar Value Repurchased 2014 $ December 2018 $ $ 2012 $ December 2016 (1) $ $ 2010 $ 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. Total Stockholders’ Noncontrolling Stockholders’ Equity Interest Equity Balance at January 3, 2015 $ $ $ Net income Currency translation adjustment ) ) Derivative instruments-net change ) ) Common stock issued upon exercise of stock options Tax expense derived from stock-based compensation ) ) Distribution of noncontrolling interest earnings ) ) Business acquisition Acquisition of common stock ) ) Stock-based compensation expense Balance at July 4, 2015 $ $ $ Fossil Group, Inc. Total Stockholders’ Noncontrolling Stockholders’ Equity Interest Equity Balance at December 28, 2013 $ $ $ Net income Currency translation adjustment Derivative instruments-net change ) ) Common stock issued upon exercise of stock options Tax benefit derived from stock-based compensation Distribution of noncontrolling interest earnings and other. ) ) Pension plan activity ) ) Acquisition of common stock ) ) Stock-based compensation expense Balance at July 5, 2014 $ $ $ |
EMPLOYEE BENEFIT PLANS (Tables)
EMPLOYEE BENEFIT PLANS (Tables) | 6 Months Ended |
Jul. 04, 2015 | |
EMPLOYEE BENEFIT PLANS | |
Summary of stock options and stock appreciation rights activity | The following table summarizes stock options and stock appreciation rights activity during the Second Quarter: Weighted- Average Weighted- Remaining Aggregate Average Contractual Intrinsic Stock Options and Stock Appreciation Rights Shares Exercise Price Term Value (in Thousands) (in Years) (in Thousands) Outstanding at April 4, 2015 $ $ Granted Exercised ) Forfeited or expired ) Outstanding at July 4, 2015 Exercisable at July 4, 2015 $ $ |
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 July 4, 2015: Stock Options Outstanding Stock Options Exercisable Weighted- Weighted- Average Weighted- Average Remaining Average Range of Number of Exercise Contractual Number of Exercise Exercise Prices Shares Price Term Shares Price (in Thousands) (in Years) (in Thousands) $13.65 - $21.51 $ $ $30.71 - $67.10 $69.53 - $106.40 $106.89 - $131.46 Total $ $ Stock Appreciation Rights Outstanding Stock Appreciation Rights Exercisable Weighted- Weighted- Average Weighted- Average Remaining Average Range of Number of Exercise Contractual Number of Exercise Exercise Prices Shares Price Term Shares Price (in Thousands) (in Years) (in Thousands) $13.65 - $21.51 $ $ $30.71 - $67.10 $69.53 - $106.40 $106.89 - $131.46 Total $ $ |
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 Second Quarter: Weighted-Average Restricted Stock, Restricted Stock Units Grant Date Fair and Performance Restricted Stock Units Number of Shares Value (in Thousands) Nonvested at April 4, 2015 $ Granted Vested ) Forfeited ) Nonvested at July 4, 2015 $ |
ACCUMULATED OTHER COMPREHENSI29
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 6 Months Ended |
Jul. 04, 2015 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | |
Schedule of changes in the balances of each component of accumulated other comprehensive income, 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 July 4, 2015 Currency Cash Flow Hedges Translation Forward Interest Pension Adjustments Contracts Rate Swaps Plan Total Beginning balance $ ) $ $ ) $ ) $ ) Other comprehensive income (loss) before reclassifications Tax (expense) benefit ) ) Amounts reclassed from accumulated other comprehensive income Tax (expense) benefit ) ) ) Total other comprehensive income (loss) ) Ending balance $ ) $ $ ) $ ) $ ) For the 13 Weeks Ended July 5, 2014 Currency Cash Flow Hedges Net Translation Adjustments Forward Contracts Interest Rate Swap Pension Plan Investment Hedges Total Beginning balance $ $ ) $ ) $ $ $ Other comprehensive income (loss) before reclassifications ) ) ) ) Tax (expense) benefit ) ) Amounts reclassed from accumulated other comprehensive income ) ) ) Tax (expense) benefit Total other comprehensive income (loss) ) ) ) ) Ending balance $ $ ) $ ) $ ) $ $ For the 26 Weeks Ended July 4, 2015 Currency Cash Flow Hedges Translation Adjustments Forward Contracts Interest Rate Swaps Pension Plan Total Beginning balance $ ) $ $ ) $ ) $ ) Other comprehensive income (loss) before reclassifications ) ) Tax (expense) benefit ) ) ) Amounts reclassed from accumulated other comprehensive income Tax (expense) benefit ) ) ) Total other comprehensive income (loss) ) ) ) Ending balance $ ) $ $ ) $ ) $ ) For the 27 Weeks Ended July 5, 2014 Currency Cash Flow Hedges Net Translation Adjustments Forward Contracts Interest Rate Swap Pension Plan Investment Hedges Total Beginning balance $ $ ) $ ) $ $ $ Other comprehensive income (loss) before reclassifications ) ) ) ) Tax (expense) benefit ) ) Amounts reclassed from accumulated other comprehensive income ) ) ) Tax (expense) benefit Total other comprehensive income (loss) ) ) ) ) Ending balance $ $ ) $ ) $ ) $ $ |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 6 Months Ended |
Jul. 04, 2015 | |
SEGMENT INFORMATION | |
Summary information by operating segment | Summary information by operating segment was as follows (in thousands): For the 13 Weeks Ended For the 13 Weeks Ended July 4, 2015 July 5, 2014 Net Sales Operating Income Net Sales Operating Income Americas $ $ $ $ Europe Asia Corporate ) ) Consolidated $ $ $ $ For the 26 Weeks Ended For the 27 Weeks Ended July 4, 2015 July 5, 2014 Net Sales Operating Income Net Sales Operating Income Americas $ $ $ $ Europe Asia Corporate ) ) Consolidated $ $ $ $ July 4, 2015 January 3, 2015 Long-Term Assets Total Assets Long-Term Assets Total Assets Americas $ $ $ $ Europe Asia Corporate Total $ $ $ $ |
Schedule of revenue 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 For the 13 Weeks Ended July 4, 2015 July 5, 2014 Net Sales Percentage of Total Net Sales Percentage of Total Watches $ % $ % Leathers Jewelry Other Total $ % $ % For the 26 Weeks Ended For the 27 Weeks Ended July 4, 2015 July 5, 2014 Net Sales Percentage of Total Net Sales Percentage of Total Watches $ % $ % Leathers Jewelry Other Total $ % $ % |
DERIVATIVES AND RISK MANAGEME31
DERIVATIVES AND RISK MANAGEMENT (Tables) | 6 Months Ended |
Jul. 04, 2015 | |
DERIVATIVES AND RISK MANAGEMENT | |
Schedule of outstanding forward contracts | As of July 4, 2015, the Company had the following outstanding forward contracts designated as cash flow hedges that were entered into to hedge the future payments of intercompany inventory transactions (in millions): Functional Currency Contract Currency Type Amount Type Amount Euro U.S. dollar British pound U.S. dollar Canadian dollar U.S. dollar Japanese yen U.S. dollar Mexican peso U.S. dollar Australian dollar U.S. dollar |
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 derivative instruments that were recognized in other comprehensive income (loss), net of taxes during the Second Quarter, Prior Year Quarter, Year To Date Period and Prior Year YTD Period are set forth below (in thousands): For the 13 For the 13 Weeks Ended Weeks Ended July 4, 2015 July 5, 2014 Cash flow hedges: Forward contracts $ $ ) Interest rate swaps ) Net investment hedge: Forward contract Total gain (loss) recognized in other comprehensive income (loss), net of taxes $ $ ) For the 26 For the 27 Weeks Ended Weeks Ended July 4, 2015 July 5, 2014 Cash flow hedges: Forward contracts $ $ ) Interest rate swaps ) Net investment hedge: Forward contract Total gain (loss) recognized in other comprehensive income (loss), net of taxes $ $ ) |
Schedule of effective portion of gains and losses on derivative instruments designated and qualifying as cash flow hedges 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 | 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 Second Quarter, Prior Year Quarter, Year To Date Period and Prior Year YTD Period (in thousands): Condensed Consolidated Statements of Income For the 13 For the 13 and Comprehensive Effect of Derivative Weeks Ended Weeks Ended Derivative Instruments Income Location Instruments July 4, 2015 July 5, 2014 Forward contracts designated as cash flow hedging instruments Other income (expense)-net Total gain (loss) reclassified from other comprehensive income (loss) $ $ ) Forward contracts not designated as hedging instruments Other income (expense)-net Total gain (loss) recognized in income $ ) Interest rate swap designated as a cash flow hedging instrument Interest expense Total gain (loss) reclassified from other comprehensive income (loss) $ ) $ ) Interest rate swap designated as a cash flow hedging instrument Other income (expense)-net Total gain (loss) reclassified from other comprehensive income (loss) $ Condensed Consolidated Statements of Income For the 26 For the 27 and Comprehensive Effect of Derivative Weeks Ended Weeks Ended Derivative Instruments Income Location Instruments July 4, 2015 July 5, 2014 Forward contracts designated as cash flow hedging instruments Other income (expense)-net Total gain (loss) reclassified from other comprehensive income (loss) $ $ ) Forward contracts not designated as hedging instruments Other income (expense)-net Total gain (loss) recognized in income $ $ ) Interest rate swap designated as a cash flow hedging instrument Interest expense Total gain (loss) reclassified from other comprehensive income (loss) $ ) $ ) Interest rate swap designated as a cash flow hedging instrument Other income (expense)-net Total gain (loss) reclassified from other comprehensive income (loss) $ |
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 July 4, 2015 January 3, 2015 July 4, 2015 January 3, 2015 Condensed Condensed Condensed Condensed Consolidated Consolidated Consolidated Consolidated Balance Sheets Fair Balance Sheets Fair Balance Sheets Fair Balance Sheets Fair Derivative Instruments Location Value Location Value Location Value Location Value Forward contracts designated as cash flow hedging instruments Prepaid expenses and other current assets $ Prepaid expenses and other current assets $ Accrued expenses- other $ Accrued expenses- other $ Forward contracts not designated as cash flow hedging instruments Prepaid expenses and other current assets Prepaid expenses and other current assets Accrued expenses- other Accrued expenses- other 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 Accrued expenses- other Forward contracts designated as cash flow hedging instruments Intangible and other assets-net Intangible and other assets-net Other long-term liabilities Other long-term liabilities Interest rate swap designated as a cash flow hedging instrument Intangible and other assets-net Intangible and other assets-net Other long-term liabilities Other long-term liabilities Total $ $ $ $ |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Jul. 04, 2015 | |
FAIR VALUE MEASUREMENTS | |
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 July 4, 2015 (in thousands): Fair Value at July 4, 2015 Level 1 Level 2 Level 3 Total Assets: Forward contracts $ $ $ $ Deferred compensation plan assets: Investment in publicly traded mutual funds Interest rate swaps Total $ $ $ $ Liabilities: Contingent consideration $ $ $ $ Forward contracts Interest rate swaps Total $ $ $ $ The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of January 3, 2015 (in thousands): Fair Value at January 3, 2015 Level 1 Level 2 Level 3 Total Assets: Forward contracts $ $ $ $ Deferred compensation plan assets: Investment in publicly traded mutual funds Interest rate swap Total $ $ $ $ Liabilities: Contingent consideration $ $ $ $ Interest rate swap Total $ $ $ $ |
INTANGIBLE AND OTHER ASSETS (Ta
INTANGIBLE AND OTHER ASSETS (Tables) | 6 Months Ended |
Jul. 04, 2015 | |
INTANGIBLE AND OTHER ASSETS | |
Schedule of intangible and other assets-net | The following table summarizes intangible and other assets (in thousands): July 4, 2015 January 3, 2015 Useful Gross Accumulated Gross Accumulated At Fiscal Year End Lives Amount Amortization Amount Amortization Intangibles-subject to amortization: Trademarks 10 yrs. $ $ $ $ Customer lists 5-10 yrs. Patents 3-20 yrs. Noncompete agreement 6 yrs. Other 7-20 yrs. Total intangibles-subject to amortization Intangibles-not subject to amortization: Trade names Other assets: Key money deposits Other deposits Deferred compensation plan assets Deferred tax asset-net Restricted cash Shop-in-shop Interest rate swap Forward contracts Other Total other assets Total intangible and other assets $ $ $ $ Total intangible and other assets-net $ $ |
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 2015 (remaining) $ 2016 $ 2017 $ 2018 $ 2019 $ 2020 $ |
RESTRUCTURING (Tables)
RESTRUCTURING (Tables) | 6 Months Ended |
Jul. 04, 2015 | |
RESTRUCTURING | |
Schedule of rollforward of the liability incurred for 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 July 4, 2015 Organizational Realignment Retail Profitability Total Balance at April 4, 2015 $ $ $ Charges to expense (1) Cash payments ) ) Non-cash items ) ) Balance at July 4, 2015 $ $ $ For the 26 Weeks ended July 4, 2015 Organizational Realignment Retail Profitability Total Balance at January 3, 2015 $ $ $ Charges to expense (1) Cash payments ) ) ) Non-cash items ) ) Balance at July 4, 2015 $ $ $ (1) Charges to expense include changes in estimates |
FINANCIAL STATEMENT POLICIES (D
FINANCIAL STATEMENT POLICIES (Details) - USD ($) $ / shares in Units, $ in Thousands | Jul. 04, 2015 | Jul. 04, 2015 | Jul. 05, 2014 | Jul. 04, 2015 | Jul. 05, 2014 |
Hedging Instruments | |||||
Unrealized net gain on foreign currency forward contracts, if settled | $ 14,600 | ||||
Numerator: | |||||
Net income attributable to Fossil Group, Inc. | $ 54,648 | $ 52,517 | $ 92,718 | $ 118,860 | |
Denominator: | |||||
Basic weighted average common shares outstanding | 48,634,000 | 53,494,000 | 49,464,000 | 53,821,000 | |
Basic EPS (in dollars per share) | $ 1.12 | $ 0.98 | $ 1.87 | $ 2.21 | |
Diluted EPS computation: | |||||
Basic weighted average common shares outstanding | 48,634,000 | 53,494,000 | 49,464,000 | 53,821,000 | |
Effect of stock options, stock appreciation rights, restricted stock units and performance restricted stock units | 110,000 | 184,000 | 151,000 | 207,000 | |
Diluted weighted average common shares outstanding | 48,744,000 | 53,678,000 | 49,615,000 | 54,028,000 | |
Diluted EPS (in dollars per share) | $ 1.12 | $ 0.98 | $ 1.87 | $ 2.20 | |
Other EPS Disclosures | |||||
Shares issuable under stock-based awards not included in the diluted EPS calculation | 569,000 | 334,000 | 400,000 | 302,000 |
ACQUISITION AND GOODWILL (Detai
ACQUISITION AND GOODWILL (Details) $ in Thousands, € in Millions | Feb. 01, 2015USD ($) | Jul. 04, 2015EUR (€) | Jul. 04, 2015USD ($) | Jan. 03, 2015USD ($) |
Business Acquisition | ||||
Goodwill | $ 197,741 | $ 197,728 | ||
Contingent consideration | € 1.5 | $ 1,700 | ||
Fossil Accessories South Africa | S Keren Watch Group (SKWG) | ||||
Business Acquisition | ||||
Percentage ownership acquired | 51.00% | |||
Purchase price paid in cash | $ 4,800 | |||
Period of partnership with Company | 23 years | |||
Goodwill | $ 4,500 |
ACQUISITION AND GOODWILL (Det37
ACQUISITION AND GOODWILL (Details 2) $ in Thousands | 6 Months Ended |
Jul. 04, 2015USD ($) | |
Changes in carrying amount of goodwill | |
Beginning Balance | $ 197,728 |
Acquisitions | 4,487 |
Foreign currency changes | (4,474) |
Ending Balance | 197,741 |
Americas | |
Changes in carrying amount of goodwill | |
Beginning Balance | 119,438 |
Acquisitions | 0 |
Foreign currency changes | (102) |
Ending Balance | 119,336 |
Europe | |
Changes in carrying amount of goodwill | |
Beginning Balance | 66,433 |
Acquisitions | 4,487 |
Foreign currency changes | (4,413) |
Ending Balance | 66,507 |
Asia | |
Changes in carrying amount of goodwill | |
Beginning Balance | 11,857 |
Acquisitions | 0 |
Foreign currency changes | 41 |
Ending Balance | $ 11,898 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Jul. 04, 2015 | Jan. 03, 2015 |
INVENTORIES | ||
Components and parts | $ 58,942 | $ 48,797 |
Work-in-process | 9,352 | 13,719 |
Finished goods | 601,040 | 534,765 |
Inventories | $ 669,334 | $ 597,281 |
WARRANTY LIABILITIES (Details)
WARRANTY LIABILITIES (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jul. 04, 2015 | Jul. 05, 2014 | ||
Warranty liability activity | |||
Beginning balance | $ 13,500 | $ 15,658 | |
Settlements in cash or kind | (4,019) | (5,576) | |
Warranties issued and adjustments to preexisting warranties (1) | [1] | 4,038 | 5,925 |
Liabilities assumed in acquisition | 44 | 0 | |
Ending balance | $ 13,563 | $ 16,007 | |
[1] | Changes in cost estimates related to preexisting warranties are aggregated with accruals for new standard warranties issued and foreign currency changes. |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 04, 2015 | Jul. 05, 2014 | Jul. 04, 2015 | Jul. 05, 2014 | |
INCOME TAXES | ||||
Income tax expense | $ 22,894 | $ 24,875 | $ 41,417 | $ 56,355 |
Income tax rate (as a percent) | 28.70% | 31.20% | 29.80% | 31.20% |
Unrecognized tax benefits | $ 13,100 | $ 13,100 | ||
Unrecognized tax benefits that would impact effective tax rate | 10,300 | 10,300 | ||
Unrecognized tax benefits excluding interest and penalties | 1,700 | 1,700 | ||
Total amount of accrued income tax-related interest | 1,700 | 1,700 | ||
Penalties accrued | 400 | 400 | ||
Accrued income tax-related interest expense | 200 | 400 | ||
Expected tax refund | $ 2,200 | $ 2,200 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - USD ($) shares in Millions | 3 Months Ended | 6 Months Ended | |||
Jul. 04, 2015 | Jul. 05, 2014 | Jul. 04, 2015 | Jul. 05, 2014 | ||
Common and Preferred Stock | |||||
Authorizations remaining | $ 841,700,000 | $ 841,700,000 | |||
Stock repurchase plans | Common stock | |||||
Common Stock Repurchase Programs | |||||
Treasury stock effectively retired (in shares) | 2.5 | ||||
Treasury stock effectively retired | $ 25,500 | ||||
Stock repurchase plans | Additional paid-in capital | |||||
Common Stock Repurchase Programs | |||||
Treasury stock effectively retired | 600,000 | ||||
Stock repurchase plans | Retained earnings | |||||
Common Stock Repurchase Programs | |||||
Treasury stock effectively retired | 216,400,000 | ||||
Stock repurchase plans | Treasury stock | |||||
Common Stock Repurchase Programs | |||||
Treasury stock effectively retired | 217,000,000 | ||||
Repurchase program with termination date of December 2018 | |||||
Common Stock Repurchase Programs | |||||
Common stock authorized amount, value | $ 1,000,000,000 | $ 1,000,000,000 | |||
Number of shares repurchased | 1.3 | 0 | 2.2 | 0 | |
Common stock repurchased, value | $ 102,500,000 | $ 0 | $ 188,200,000 | $ 0 | |
Repurchase program with termination date of December 2016 | |||||
Common Stock Repurchase Programs | |||||
Common stock authorized amount, value | [1] | $ 1,000,000,000 | $ 1,000,000,000 | ||
Number of shares repurchased | 0 | 0.6 | 0.3 | 1.6 | |
Common stock repurchased, value | $ 0 | $ 67,300,000 | $ 28,800,000 | $ 184,600,000 | |
Share repurchase plan with no termination date | |||||
Common Stock Repurchase Programs | |||||
Common stock authorized amount, value | $ 30,000,000 | $ 30,000,000 | |||
Number of shares repurchased | 0 | 0 | 0 | 0 | |
Common stock repurchased, value | $ 0 | $ 0 | $ 0 | $ 0 | |
[1] | In the first quarter of fiscal year 2015, the Company completed this repurchase plan. |
STOCKHOLDERS' EQUITY (Details 2
STOCKHOLDERS' EQUITY (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 04, 2015 | Jul. 05, 2014 | Jul. 04, 2015 | Jul. 05, 2014 | |
Summary of changes in equity attributable to controlling and noncontrolling interest | ||||
Balance | $ 983,801 | $ 1,075,367 | ||
Net income | $ 56,820 | $ 54,899 | 97,458 | 124,061 |
Currency translation adjustment | (27,947) | 399 | ||
Derivative instruments-net change | (246) | (651) | (185) | (412) |
Common stock issued upon exercise of stock options | 582 | 1,508 | ||
Tax (expense) benefit derived from stock-based compensation | (699) | 950 | ||
Distribution of noncontrolling interest earnings and other | (5,056) | (5,392) | ||
Pension plan activity | 0 | (3,293) | 0 | (3,293) |
Business acquisition | 5,831 | |||
Acquisition of common stock | (218,659) | (187,158) | ||
Stock-based compensation expense | 9,276 | 9,637 | ||
Balance | 844,402 | 1,015,667 | 844,402 | 1,015,667 |
Fossil Group, Inc. Stockholders' Equity | ||||
Summary of changes in equity attributable to controlling and noncontrolling interest | ||||
Balance | 977,860 | 1,068,677 | ||
Net income | 92,718 | 118,860 | ||
Currency translation adjustment | (27,947) | 399 | ||
Derivative instruments-net change | (185) | (412) | ||
Common stock issued upon exercise of stock options | 582 | 1,508 | ||
Tax (expense) benefit derived from stock-based compensation | (699) | 950 | ||
Distribution of noncontrolling interest earnings and other | 0 | 0 | ||
Pension plan activity | (3,293) | |||
Business acquisition | 0 | |||
Acquisition of common stock | (218,659) | (187,158) | ||
Stock-based compensation expense | 9,276 | 9,637 | ||
Balance | 832,946 | 1,009,168 | 832,946 | 1,009,168 |
Noncontrolling Interest | ||||
Summary of changes in equity attributable to controlling and noncontrolling interest | ||||
Balance | 5,941 | 6,690 | ||
Net income | 4,740 | 5,201 | ||
Currency translation adjustment | 0 | 0 | ||
Derivative instruments-net change | 0 | 0 | ||
Common stock issued upon exercise of stock options | 0 | 0 | ||
Tax (expense) benefit derived from stock-based compensation | 0 | 0 | ||
Distribution of noncontrolling interest earnings and other | (5,056) | (5,392) | ||
Pension plan activity | 0 | |||
Business acquisition | 5,831 | |||
Acquisition of common stock | 0 | 0 | ||
Stock-based compensation expense | 0 | 0 | ||
Balance | $ 11,456 | $ 6,499 | $ 11,456 | $ 6,499 |
EMPLOYEE BENEFIT PLANS (Details
EMPLOYEE BENEFIT PLANS (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Jul. 04, 2015 | Apr. 04, 2015 | |
Shares | ||
Beginning Balance, Shares | 775 | |
Granted (in shares) | 0 | |
Exercised (in shares) | (7) | |
Forfeited or expired (in shares) | (24) | |
Ending Balance, Shares | 744 | 775 |
Exercisable at end of period (in shares) | 540 | |
Weighted-Average Exercise Price Per Share | ||
Beginning Balance, Weighted-average Exercise Price (in dollars per share) | $ 84.93 | |
Exercised (in dollars per share) | 41.30 | |
Forfeited or expired (in dollars per share) | 98.15 | |
Ending Balance, Weighted-average Exercise Price (in dollars per share) | 84.94 | $ 84.93 |
Stock Options and Stock Appreciation Rights Exercisable, Weighted- Average Exercise Price (in dollars per share) | $ 83.20 | |
Weighted-Average Remaining Contractual Term | ||
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsAndStockAppreciationRightsOutstandingWeightedAverageRemainingContractualTerm | 5 years 6 months | 5 years 9 months 18 days |
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsAndStockAppreciationRightsOutstandingWeightedAverageRemainingContractualTerm | 5 years 6 months | 5 years 9 months 18 days |
Exercisable at end of period | 4 years 9 months 18 days | |
Aggregate Intrinsic Value | ||
Beginning of period | $ 10,714 | |
Exercised | 244 | |
End of period | 7,667 | $ 10,714 |
Exercisable at end of period | $ 7,664 |
EMPLOYEE BENEFIT PLANS (Detai44
EMPLOYEE BENEFIT PLANS (Details 2) - Jul. 04, 2015 - $ / shares shares in Thousands | Total |
Stock options | |
Stock-based compensation plans disclosures | |
Stock Options Outstanding, Number Of Shares | 405 |
Stock Options Outstanding, Weighted- Average Exercise Price (in dollars per share) | $ 81.56 |
Stock Options Outstanding, Weighted- Average Remaining Contractual Term | 5 years |
Stock Options Exercisable, Number Of Shares | 403 |
Stock Options Exercisable, Weighted- Average Exercise Price (in dollars per share) | $ 81.55 |
Stock appreciation rights | |
Stock-based compensation plans disclosures | |
Stock Appreciation Rights Outstanding, Number Of Shares | 339 |
Stock Appreciation Rights Outstanding, Weighted- Average Exercise Price (in dollars per share) | $ 88.98 |
Stock Appreciation Rights Outstanding, Weighted- Average Remaining Contractual Term | 6 years 1 month 6 days |
Stock Appreciation Rights Exercisable, Number Of Shares | 137 |
Stock Appreciation Rights Exercisable, Weighted- Average Exercise Price (in dollars per share) | $ 88.08 |
Range Of Exercise Prices $13.65 - $21.51 | 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) | $ 21.51 |
Stock Options Outstanding, Number Of Shares | 51 |
Stock Options Outstanding, Weighted- Average Exercise Price (in dollars per share) | $ 15.13 |
Stock Options Outstanding, Weighted- Average Remaining Contractual Term | 3 years |
Stock Options Exercisable, Number Of Shares | 51 |
Stock Options Exercisable, Weighted- Average Exercise Price (in dollars per share) | $ 15.13 |
Range Of Exercise Prices $13.65 - $21.51 | 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) | $ 21.51 |
Stock Appreciation Rights Outstanding, Number Of Shares | 17 |
Stock Appreciation Rights Outstanding, Weighted- Average Exercise Price (in dollars per share) | $ 13.65 |
Stock Appreciation Rights Outstanding, Weighted- Average Remaining Contractual Term | 1 year 8 months 12 days |
Stock Appreciation Rights Exercisable, Number Of Shares | 17 |
Stock Appreciation Rights Exercisable, Weighted- Average Exercise Price (in dollars per share) | $ 13.65 |
Range Of Exercise Prices $30.71 - $67.10 | Stock options | |
Stock-based compensation plans disclosures | |
Stock Options Outstanding, lower range (in dollars per share) | 30.71 |
Stock Options Outstanding, upper range (in dollars per share) | $ 67.10 |
Stock Options Outstanding, Number Of Shares | 93 |
Stock Options Outstanding, Weighted- Average Exercise Price (in dollars per share) | $ 36.32 |
Stock Options Outstanding, Weighted- Average Remaining Contractual Term | 3 years 6 months |
Stock Options Exercisable, Number Of Shares | 93 |
Stock Options Exercisable, Weighted- Average Exercise Price (in dollars per share) | $ 36.32 |
Range Of Exercise Prices $30.71 - $67.10 | Stock appreciation rights | |
Stock-based compensation plans disclosures | |
Stock Appreciation Rights Outstanding, lower range (in dollars per share) | 30.71 |
Stock Appreciation Rights Outstanding, upper range (in dollars per share) | $ 67.10 |
Stock Appreciation Rights Outstanding, Number Of Shares | 17 |
Stock Appreciation Rights Outstanding, Weighted- Average Exercise Price (in dollars per share) | $ 40.16 |
Stock Appreciation Rights Outstanding, Weighted- Average Remaining Contractual Term | 2 years 4 months 24 days |
Stock Appreciation Rights Exercisable, Number Of Shares | 17 |
Stock Appreciation Rights Exercisable, Weighted- Average Exercise Price (in dollars per share) | $ 38.71 |
Range Of Exercise Prices $69.53 - $106.40 | Stock options | |
Stock-based compensation plans disclosures | |
Stock Options Outstanding, lower range (in dollars per share) | 69.53 |
Stock Options Outstanding, upper range (in dollars per share) | $ 106.40 |
Stock Options Outstanding, Number Of Shares | 96 |
Stock Options Outstanding, Weighted- Average Exercise Price (in dollars per share) | $ 80.86 |
Stock Options Outstanding, Weighted- Average Remaining Contractual Term | 5 years 7 months 6 days |
Stock Options Exercisable, Number Of Shares | 94 |
Stock Options Exercisable, Weighted- Average Exercise Price (in dollars per share) | $ 80.79 |
Range Of Exercise Prices $69.53 - $106.40 | Stock appreciation rights | |
Stock-based compensation plans disclosures | |
Stock Appreciation Rights Outstanding, lower range (in dollars per share) | 69.53 |
Stock Appreciation Rights Outstanding, upper range (in dollars per share) | $ 106.40 |
Stock Appreciation Rights Outstanding, Number Of Shares | 197 |
Stock Appreciation Rights Outstanding, Weighted- Average Exercise Price (in dollars per share) | $ 84.25 |
Stock Appreciation Rights Outstanding, Weighted- Average Remaining Contractual Term | 6 years 10 months 24 days |
Stock Appreciation Rights Exercisable, Number Of Shares | 43 |
Stock Appreciation Rights Exercisable, Weighted- Average Exercise Price (in dollars per share) | $ 90.35 |
Range Of Exercise Prices $106.89 - $131.46 | Stock options | |
Stock-based compensation plans disclosures | |
Stock Options Outstanding, lower range (in dollars per share) | 106.89 |
Stock Options Outstanding, upper range (in dollars per share) | $ 131.46 |
Stock Options Outstanding, Number Of Shares | 165 |
Stock Options Outstanding, Weighted- Average Exercise Price (in dollars per share) | $ 128.10 |
Stock Options Outstanding, Weighted- Average Remaining Contractual Term | 6 years 2 months 12 days |
Stock Options Exercisable, Number Of Shares | 165 |
Stock Options Exercisable, Weighted- Average Exercise Price (in dollars per share) | $ 128.10 |
Range Of Exercise Prices $106.89 - $131.46 | Stock appreciation rights | |
Stock-based compensation plans disclosures | |
Stock Appreciation Rights Outstanding, lower range (in dollars per share) | 106.89 |
Stock Appreciation Rights Outstanding, upper range (in dollars per share) | $ 131.46 |
Stock Appreciation Rights Outstanding, Number Of Shares | 108 |
Stock Appreciation Rights Outstanding, Weighted- Average Exercise Price (in dollars per share) | $ 117.73 |
Stock Appreciation Rights Outstanding, Weighted- Average Remaining Contractual Term | 6 years |
Stock Appreciation Rights Exercisable, Number Of Shares | 60 |
Stock Appreciation Rights Exercisable, Weighted- Average Exercise Price (in dollars per share) | $ 121.69 |
EMPLOYEE BENEFIT PLANS (Detai45
EMPLOYEE BENEFIT PLANS (Details 3) - 3 months ended Jul. 04, 2015 - Restricted stock ,Restricted stock units and Performance restricted stock units - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | Total |
Nonvested, Number of Shares | |
Nonvested, beginning balance (in shares) | 446 |
Granted (in shares) | 23 |
Vested (in shares) | (16) |
Forfeited (in shares) | (16) |
Nonvested, ending balance (in shares) | 437 |
Nonvested, Weighted-Average Grant Date Fair Value | |
Nonvested, beginning balance (in dollars per share) | $ 90.39 |
Granted (in dollars per share) | 79.23 |
Vested (in dollars per share) | 103.84 |
Forfeited (in dollars per share) | 92.96 |
Nonvested, ending balance (in dollars per share) | $ 89.22 |
Fair value of restricted stock and restricted stock units, vested | $ 1.3 |
ACCUMULATED OTHER COMPREHENSI46
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 04, 2015 | Jul. 05, 2014 | Jul. 04, 2015 | Jul. 05, 2014 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax | ||||
Beginning balance | $ (49,855) | $ 35,805 | $ (16,410) | $ 36,691 |
Other comprehensive income (loss) before reclassifications | 18,720 | (4,013) | (3,431) | (5,997) |
Tax (expense) benefit | (3,559) | 121 | (7,078) | 256 |
Amounts reclassified from accumulated other comprehensive income | 15,159 | (2,261) | 26,916 | (3,823) |
Tax (expense) benefit | (5,311) | 789 | (9,293) | 1,388 |
Total other comprehensive income (loss) | 5,313 | (2,420) | (28,132) | (3,306) |
Ending balance | (44,542) | 33,385 | (44,542) | 33,385 |
Currency Translation Adjustments | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax | ||||
Beginning balance | (60,747) | 37,027 | (27,241) | 38,152 |
Other comprehensive income (loss) before reclassifications | 5,559 | 1,524 | (27,947) | 399 |
Tax (expense) benefit | 0 | 0 | 0 | 0 |
Amounts reclassified from accumulated other comprehensive income | 0 | 0 | 0 | 0 |
Tax (expense) benefit | 0 | 0 | 0 | 0 |
Total other comprehensive income (loss) | 5,559 | 1,524 | (27,947) | 399 |
Ending balance | (55,188) | 38,551 | (55,188) | 38,551 |
Derivatives Designated as Cash Flow Hedges | Forward contracts | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax | ||||
Beginning balance | 19,315 | (1,941) | 14,980 | (2,091) |
Other comprehensive income (loss) before reclassifications | 2,701 | (1,834) | 21,462 | (2,100) |
Tax (expense) benefit | 253 | 195 | (5,965) | 113 |
Amounts reclassified from accumulated other comprehensive income | 10,555 | (1,570) | 22,993 | (2,399) |
Tax (expense) benefit | (3,634) | 537 | (7,864) | 868 |
Total other comprehensive income (loss) | (3,967) | (606) | 368 | (456) |
Ending balance | 15,348 | (2,547) | 15,348 | (2,547) |
Derivatives Designated as Cash Flow Hedges | Interest rate swap | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax | ||||
Beginning balance | (4,776) | (179) | (502) | (106) |
Other comprehensive income (loss) before reclassifications | 10,460 | (912) | 3,054 | (1,760) |
Tax (expense) benefit | (3,812) | 333 | (1,113) | 643 |
Amounts reclassified from accumulated other comprehensive income | 4,604 | (691) | 3,923 | (1,424) |
Tax (expense) benefit | (1,677) | 252 | (1,429) | 520 |
Total other comprehensive income (loss) | 3,721 | (140) | (553) | (213) |
Ending balance | (1,055) | (319) | (1,055) | (319) |
Pension Plan | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax | ||||
Beginning balance | (3,647) | 736 | (3,647) | 736 |
Other comprehensive income (loss) before reclassifications | 0 | (2,946) | 0 | (2,946) |
Tax (expense) benefit | 0 | (347) | 0 | (347) |
Amounts reclassified from accumulated other comprehensive income | 0 | 0 | 0 | 0 |
Tax (expense) benefit | 0 | 0 | 0 | 0 |
Total other comprehensive income (loss) | 0 | (3,293) | 0 | (3,293) |
Ending balance | $ (3,647) | (2,557) | $ (3,647) | (2,557) |
Net Investment Hedges | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax | ||||
Beginning balance | 162 | 0 | ||
Other comprehensive income (loss) before reclassifications | 155 | 410 | ||
Tax (expense) benefit | (60) | (153) | ||
Amounts reclassified from accumulated other comprehensive income | 0 | 0 | ||
Tax (expense) benefit | 0 | 0 | ||
Total other comprehensive income (loss) | 95 | 257 | ||
Ending balance | $ 257 | $ 257 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jul. 04, 2015 | Jul. 05, 2014 | Jul. 04, 2015 | Jul. 05, 2014 | Jan. 03, 2015 | |
Summary information by operating segment | |||||
Net Sales | $ 739,975 | $ 773,820 | $ 1,465,060 | $ 1,550,365 | |
Operating Income | 70,434 | 84,758 | 126,589 | 189,457 | |
Long-Term Assets | 693,102 | 693,102 | $ 717,698 | ||
Total Assets | 2,059,441 | 2,059,441 | 2,207,552 | ||
Corporate | |||||
Summary information by operating segment | |||||
Net Sales | 0 | 0 | 0 | 0 | |
Operating Income | (77,968) | (77,970) | (156,147) | (155,747) | |
Long-Term Assets | 173,016 | 173,016 | 176,124 | ||
Total Assets | 584,477 | 584,477 | 602,637 | ||
Americas | |||||
Summary information by operating segment | |||||
Net Sales | 386,088 | 380,699 | 752,684 | 763,360 | |
Operating Income | 86,033 | 88,786 | 162,533 | 187,856 | |
Long-Term Assets | 262,507 | 262,507 | 263,324 | ||
Total Assets | 772,618 | 772,618 | 809,548 | ||
Europe | |||||
Summary information by operating segment | |||||
Net Sales | 227,923 | 258,987 | 462,179 | 519,340 | |
Operating Income | 41,814 | 46,770 | 79,152 | 99,278 | |
Long-Term Assets | 202,586 | 202,586 | 220,742 | ||
Total Assets | 488,965 | 488,965 | 561,486 | ||
Asia | |||||
Summary information by operating segment | |||||
Net Sales | 125,964 | 134,134 | 250,197 | 267,665 | |
Operating Income | 20,555 | $ 27,172 | 41,051 | $ 58,070 | |
Long-Term Assets | 54,993 | 54,993 | 57,508 | ||
Total Assets | $ 213,381 | $ 213,381 | $ 233,881 |
SEGMENT INFORMATION (Details 2)
SEGMENT INFORMATION (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 04, 2015 | Jul. 05, 2014 | Jul. 04, 2015 | Jul. 05, 2014 | |
Net sales for each class of similar products | ||||
Net sales | $ 739,975 | $ 773,820 | $ 1,465,060 | $ 1,550,365 |
Percentage of Total | 100.00% | 100.00% | 100.00% | 100.00% |
Watches | ||||
Net sales for each class of similar products | ||||
Net sales | $ 575,804 | $ 611,208 | $ 1,127,661 | $ 1,212,596 |
Percentage of Total | 77.80% | 79.00% | 77.00% | 78.20% |
Leathers | ||||
Net sales for each class of similar products | ||||
Net sales | $ 89,380 | $ 87,325 | $ 182,306 | $ 187,047 |
Percentage of Total | 12.10% | 11.30% | 12.40% | 12.10% |
Jewelry | ||||
Net sales for each class of similar products | ||||
Net sales | $ 55,780 | $ 56,183 | $ 118,767 | $ 112,701 |
Percentage of Total | 7.50% | 7.20% | 8.10% | 7.30% |
Other | ||||
Net sales for each class of similar products | ||||
Net sales | $ 19,011 | $ 19,104 | $ 36,326 | $ 38,021 |
Percentage of Total | 2.60% | 2.50% | 2.50% | 2.40% |
DERIVATIVES AND RISK MANAGEME49
DERIVATIVES AND RISK MANAGEMENT (Details) $ in Thousands, € in Millions, ¥ in Millions, £ in Millions, MXN in Millions, CAD in Millions, AUD in Millions | Mar. 20, 2015 | Jul. 04, 2015USD ($) | Jul. 05, 2014USD ($) | Jul. 04, 2015USD ($) | Jul. 05, 2014USD ($) | Jul. 04, 2015MXN | Jul. 04, 2015JPY (¥) | Jul. 04, 2015GBP (£) | Jul. 04, 2015EUR (€) | Jul. 04, 2015CAD | Jul. 04, 2015AUD | Jul. 04, 2015USD ($) | Mar. 09, 2015USD ($) |
DERIVATIVES AND RISK MANAGEMENT | |||||||||||||
Maximum period of future intercompany purchases | 24 months | ||||||||||||
Forecasted purchases to manage fluctuations (as a percent) | 85.00% | 85.00% | 85.00% | 85.00% | 85.00% | 85.00% | 85.00% | ||||||
Hedges resulted ineffectiveness | $ 0 | $ 0 | $ 0 | $ 0 | |||||||||
Derivatives | |||||||||||||
Gains or losses reclassified into earnings | 54,648 | 52,517 | 92,718 | 118,860 | |||||||||
Derivatives Designated as Cash Flow Hedges | |||||||||||||
Derivatives | |||||||||||||
Term of interest rate swap agreement | 10 years | ||||||||||||
Derivatives Designated as Cash Flow Hedges | Amount Reclassified from AOCI | |||||||||||||
Derivatives | |||||||||||||
Gains or losses reclassified into earnings | 0 | 0 | 0 | 0 | |||||||||
U.S. term loan | |||||||||||||
Derivatives | |||||||||||||
Maximum borrowing capacity | $ 231,300 | ||||||||||||
Forward contracts | Net Investment Hedges | |||||||||||||
Derivatives | |||||||||||||
Hedged amount | € | € 25 | ||||||||||||
Forward contracts | Designated as cash flow hedges | Euro | |||||||||||||
Derivatives | |||||||||||||
Notional amount | € 209.3 | $ 250,200 | |||||||||||
Forward contracts | Designated as cash flow hedges | British pound | |||||||||||||
Derivatives | |||||||||||||
Notional amount | £ 41.9 | 65,900 | |||||||||||
Forward contracts | Designated as cash flow hedges | Canadian dollar | |||||||||||||
Derivatives | |||||||||||||
Notional amount | CAD 51.5 | 42,900 | |||||||||||
Forward contracts | Designated as cash flow hedges | Japanese yen | |||||||||||||
Derivatives | |||||||||||||
Notional amount | ¥ 3,788.1 | 32,700 | |||||||||||
Forward contracts | Designated as cash flow hedges | Mexican peso | |||||||||||||
Derivatives | |||||||||||||
Notional amount | MXN 306.6 | 19,900 | |||||||||||
Forward contracts | Designated as cash flow hedges | Australian dollar | |||||||||||||
Derivatives | |||||||||||||
Notional amount | AUD 19 | $ 14,700 | |||||||||||
Forward contracts | Not designated as hedging instruments | |||||||||||||
Derivatives | |||||||||||||
Total gain recognized in income | $ (9) | $ 0 | $ 80 | $ (148) | |||||||||
Interest rate swap | Designated as cash flow hedges | |||||||||||||
Derivatives | |||||||||||||
Term of interest rate swap agreement | 5 years | ||||||||||||
Fixed interest rate swap (as a percent) | 1.288% | 1.288% | 1.288% | 1.288% | 1.288% | 1.288% | 1.288% | ||||||
Description of base rate | 1-month London Interbank Offer Rate ("LIBOR") based variable rate | ||||||||||||
Total gain recognized in income | $ 3,300 | ||||||||||||
S Keren Watch Group (SKWG) | Forward contracts | Not designated as hedging instruments | |||||||||||||
Derivatives | |||||||||||||
Fair value of derivative | $ 100 | ||||||||||||
Consolidated leverage ratio (the Ratio) less than 1.00 to 1.00 | Interest rate swap | Designated as cash flow hedges | |||||||||||||
Derivatives | |||||||||||||
Applicable margin based on the Company's consolidated leverage ratio (as a percent) | 1.25% | ||||||||||||
Consolidated leverage ratio used to calculate variable rate of debt (as a percent) | 1.00% | 1.00% | 1.00% | 1.00% | 1.00% | 1.00% | 1.00% | ||||||
Consolidated leverage ratio (the Ratio) greater than 2.00 to 1.00 | Interest rate swap | Designated as cash flow hedges | |||||||||||||
Derivatives | |||||||||||||
Applicable margin based on the Company's consolidated leverage ratio (as a percent) | 2.00% | ||||||||||||
Consolidated leverage ratio used to calculate variable rate of debt (as a percent) | 2.00% | 2.00% | 2.00% | 2.00% | 2.00% | 2.00% | 2.00% |
DERIVATIVES AND RISK MANAGEME50
DERIVATIVES AND RISK MANAGEMENT (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 04, 2015 | Jul. 05, 2014 | Jul. 04, 2015 | Jul. 05, 2014 | |
Derivatives | ||||
Total gain (loss) recognized in other comprehensive loss, net of taxes | $ 9,602 | $ (2,123) | $ 17,438 | $ (2,847) |
Cash flow hedges | Forward contracts | ||||
Derivatives | ||||
Total gain (loss) recognized in other comprehensive loss, net of taxes | 2,954 | (1,639) | 15,497 | (1,987) |
Cash flow hedges | Interest rate swap | ||||
Derivatives | ||||
Total gain (loss) recognized in other comprehensive loss, net of taxes | 6,648 | (579) | 1,941 | (1,117) |
Net Investment Hedges | Forward contracts | ||||
Derivatives | ||||
Total gain (loss) recognized in other comprehensive loss, net of taxes | $ 0 | $ 95 | $ 0 | $ 257 |
DERIVATIVES AND RISK MANAGEME51
DERIVATIVES AND RISK MANAGEMENT (Details 3) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 04, 2015 | Jul. 05, 2014 | Jul. 04, 2015 | Jul. 05, 2014 | |
Forward contracts | Designated as cash flow hedges | Cash flow hedges | ||||
Effective portion of gains and losses on derivative instruments | ||||
Total gain (loss) reclassified from other comprehensive income (loss) | $ 6,921 | $ (1,033) | $ 15,129 | $ (1,531) |
Forward contracts | Not designated as hedging instruments | ||||
Effective portion of gains and losses on derivative instruments | ||||
Total gain (loss) recognized in income | (9) | 0 | 80 | (148) |
Interest rate swap | Designated as cash flow hedges | ||||
Effective portion of gains and losses on derivative instruments | ||||
Total gain (loss) recognized in income | 3,300 | |||
Interest rate swap | Designated as cash flow hedges | Cash flow hedges | ||||
Effective portion of gains and losses on derivative instruments | ||||
Total gain (loss) reclassified from other comprehensive income (loss) | (404) | (439) | (837) | (904) |
Interest rate swap | Designated as cash flow hedges | 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) | $ 3,331 | $ 0 | $ 3,331 | $ 0 |
DERIVATIVES AND RISK MANAGEME52
DERIVATIVES AND RISK MANAGEMENT (Details 4) - USD ($) $ in Thousands | Jul. 04, 2015 | Jan. 03, 2015 |
Fair value of derivative instruments | ||
Asset Derivatives, Fair Value | $ 24,417 | $ 29,393 |
Liability Derivatives, Fair Value | 3,670 | 2,514 |
Estimated gain expected to be reclassified into earnings within the next twelve months | 14,300 | |
Forward contracts | Designated as cash flow hedges | Cash flow hedges | Prepaid expenses and other current assets | ||
Fair value of derivative instruments | ||
Asset Derivatives, Fair Value | 22,887 | 25,867 |
Forward contracts | Designated as cash flow hedges | Cash flow hedges | Intangible and other assets-net | ||
Fair value of derivative instruments | ||
Asset Derivatives, Fair Value | 664 | 1,802 |
Forward contracts | Designated as cash flow hedges | Cash flow hedges | Accrued expenses - other | ||
Fair value of derivative instruments | ||
Liability Derivatives, Fair Value | 1,021 | 0 |
Forward contracts | Designated as cash flow hedges | Cash flow hedges | Other long-term liabilities | ||
Fair value of derivative instruments | ||
Liability Derivatives, Fair Value | 246 | 0 |
Forward contracts | Not designated as hedging instruments | Cash flow hedges | Prepaid expenses and other current assets | ||
Fair value of derivative instruments | ||
Asset Derivatives, Fair Value | 123 | 0 |
Forward contracts | Not designated as hedging instruments | Cash flow hedges | Accrued expenses - other | ||
Fair value of derivative instruments | ||
Liability Derivatives, Fair Value | 0 | 0 |
Interest rate swap | Designated as cash flow hedges | Cash flow hedges | Prepaid expenses and other current assets | ||
Fair value of derivative instruments | ||
Asset Derivatives, Fair Value | 0 | 0 |
Interest rate swap | Designated as cash flow hedges | Cash flow hedges | Intangible and other assets-net | ||
Fair value of derivative instruments | ||
Asset Derivatives, Fair Value | 743 | 1,724 |
Interest rate swap | Designated as cash flow hedges | Cash flow hedges | Accrued expenses - other | ||
Fair value of derivative instruments | ||
Liability Derivatives, Fair Value | 1,991 | 2,157 |
Interest rate swap | Designated as cash flow hedges | Cash flow hedges | Other long-term liabilities | ||
Fair value of derivative instruments | ||
Liability Derivatives, Fair Value | $ 412 | $ 357 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) $ in Thousands, € in Millions | 3 Months Ended | 12 Months Ended | |||
Jul. 04, 2015EUR (€) | Jan. 02, 2016EUR (€) | Jan. 02, 2016USD ($) | Jul. 04, 2015USD ($) | Jan. 03, 2015USD ($) | |
Liabilities: | |||||
Contingent consideration | € 1.5 | $ 1,700 | |||
Payment towards contingent consideration | € | € 1.9 | ||||
Level 3 | Contingent consideration, Fossil Spain | |||||
Liabilities: | |||||
Contingent consideration | € 3.5 | $ 3,900 | |||
Projected operating expenses as a percentage of revenues | 25.00% | ||||
Discount rate (as a percent) | 19.00% | ||||
Level 3 | Minimum | Contingent consideration, Fossil Spain | |||||
Liabilities: | |||||
Future revenue growth for 2015 (as a percent) | 18.00% | ||||
Fair Value Measurement, Recurring Basis | Level 1 | |||||
Assets: | |||||
Forward contracts | 0 | $ 0 | |||
Investment in publicly traded mutual funds | 2,515 | 2,477 | |||
Interest rate swaps | 0 | 0 | |||
Total | 2,515 | 2,477 | |||
Liabilities: | |||||
Contingent consideration | 0 | 0 | |||
Forward contracts | 0 | ||||
Interest rate swaps | 0 | 0 | |||
Total | 0 | 0 | |||
Fair Value Measurement, Recurring Basis | Level 2 | |||||
Assets: | |||||
Forward contracts | 23,674 | 27,669 | |||
Investment in publicly traded mutual funds | 0 | 0 | |||
Interest rate swaps | 743 | 1,724 | |||
Total | 24,417 | 29,393 | |||
Liabilities: | |||||
Contingent consideration | 0 | 0 | |||
Forward contracts | 1,267 | ||||
Interest rate swaps | 2,403 | 2,514 | |||
Total | 3,670 | 2,514 | |||
Fair Value Measurement, Recurring Basis | Level 3 | |||||
Assets: | |||||
Forward contracts | 0 | 0 | |||
Investment in publicly traded mutual funds | 0 | 0 | |||
Interest rate swaps | 0 | 0 | |||
Total | 0 | 0 | |||
Liabilities: | |||||
Contingent consideration | 4,929 | 7,114 | |||
Forward contracts | 0 | ||||
Interest rate swaps | 0 | 0 | |||
Total | 4,929 | 7,114 | |||
Fair Value Measurement, Recurring Basis | Total | |||||
Assets: | |||||
Forward contracts | 23,674 | 27,669 | |||
Investment in publicly traded mutual funds | 2,515 | 2,477 | |||
Interest rate swaps | 743 | 1,724 | |||
Total | 26,932 | 31,870 | |||
Liabilities: | |||||
Contingent consideration | 4,929 | 7,114 | |||
Forward contracts | 1,267 | ||||
Interest rate swaps | 2,403 | 2,514 | |||
Total | $ 8,599 | $ 9,628 |
FAIR VALUE MEASUREMENTS (Deta54
FAIR VALUE MEASUREMENTS (Details 2) - USD ($) $ in Thousands | 6 Months Ended | ||
Jul. 04, 2015 | Jul. 05, 2014 | Jan. 03, 2015 | |
Fair value hierarchy for assets and liabilities measured at fair value on a nonrecurring basis | |||
Impairment losses | $ 6,602 | $ 5,501 | |
Property, plant and equipment - net | 329,160 | $ 345,606 | |
Specific Company-owned stores | |||
Fair value hierarchy for assets and liabilities measured at fair value on a nonrecurring basis | |||
Impairment losses | 6,600 | ||
Property, plant and equipment - net | 6,500 | ||
Key money, deemed not recoverable | 100 | ||
Level 3 | Specific Company-owned stores | |||
Fair value hierarchy for assets and liabilities measured at fair value on a nonrecurring basis | |||
Impairment losses | 6,600 | ||
Europe | Level 3 | Specific Company-owned stores | |||
Fair value hierarchy for assets and liabilities measured at fair value on a nonrecurring basis | |||
Impairment losses | 3,800 | ||
Americas | Level 3 | Specific Company-owned stores | |||
Fair value hierarchy for assets and liabilities measured at fair value on a nonrecurring basis | |||
Impairment losses | 800 | ||
Americas | Restructuring Charges | Level 3 | Specific Company-owned stores | |||
Fair value hierarchy for assets and liabilities measured at fair value on a nonrecurring basis | |||
Impairment losses | 1,600 | ||
Asia | Level 3 | Specific Company-owned stores | |||
Fair value hierarchy for assets and liabilities measured at fair value on a nonrecurring basis | |||
Impairment losses | $ 400 |
INTANGIBLE AND OTHER ASSETS (De
INTANGIBLE AND OTHER ASSETS (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jul. 04, 2015 | Jan. 03, 2015 | |
Intangible and other assets | ||
Total intangibles - subject to amortization | $ 52,940 | $ 50,358 |
Total intangibles-not subject to amortization, Carrying Amount | 83,634 | 83,610 |
Total other assets, Gross Amount | 84,114 | 92,218 |
Total intangible and other assets, Carrying Amount | 220,688 | 226,186 |
Total intangibles-subject to amortization, Accumulated Amortization | 25,783 | 23,501 |
Total other assets, Accumulated Amortization | 28,704 | 28,321 |
Total intangible and other assets, Accumulated Amortization | 54,487 | 51,822 |
Total intangible and other assets-net | 166,201 | 174,364 |
Key money deposits | ||
Intangible and other assets | ||
Total other assets, Gross Amount | 30,165 | 31,892 |
Total other assets, Accumulated Amortization | $ 19,117 | 18,661 |
Key money deposits | Minimum | ||
Intangible and other assets | ||
Amortization period based on initial lease term | 4 years | |
Key money deposits | Maximum | ||
Intangible and other assets | ||
Amortization period based on initial lease term | 18 years | |
Other deposits | ||
Intangible and other assets | ||
Total other assets, Gross Amount | $ 22,159 | 21,854 |
Deferred compensation plan assets | ||
Intangible and other assets | ||
Total other assets, Gross Amount | 2,515 | 2,477 |
Deferred tax asset-net | ||
Intangible and other assets | ||
Total other assets, Gross Amount | 7,617 | 8,583 |
Restricted cash | ||
Intangible and other assets | ||
Total other assets, Gross Amount | 529 | 575 |
Shop-in-shop | ||
Intangible and other assets | ||
Total other assets, Gross Amount | 12,655 | 16,333 |
Total other assets, Accumulated Amortization | 9,587 | 9,660 |
Interest rate swap | ||
Intangible and other assets | ||
Total other assets, Gross Amount | 743 | 1,724 |
Forward contracts | ||
Intangible and other assets | ||
Total other assets, Gross Amount | 664 | 1,802 |
Other | ||
Intangible and other assets | ||
Total other assets, Gross Amount | 7,067 | 6,978 |
Trademarks | ||
Intangible and other assets | ||
Total intangibles - subject to amortization | 4,175 | 4,174 |
Total intangibles-subject to amortization, Accumulated Amortization | $ 3,074 | 2,950 |
Useful Lives | 10 years | |
Customer lists | ||
Intangible and other assets | ||
Total intangibles - subject to amortization | $ 44,096 | 41,703 |
Total intangibles-subject to amortization, Accumulated Amortization | $ 19,211 | 17,457 |
Customer lists | Minimum | ||
Intangible and other assets | ||
Useful Lives | 5 years | |
Customer lists | Maximum | ||
Intangible and other assets | ||
Useful Lives | 10 years | |
Patents | ||
Intangible and other assets | ||
Total intangibles - subject to amortization | $ 2,273 | 2,273 |
Total intangibles-subject to amortization, Accumulated Amortization | $ 2,046 | 1,902 |
Patents | Minimum | ||
Intangible and other assets | ||
Useful Lives | 3 years | |
Patents | Maximum | ||
Intangible and other assets | ||
Useful Lives | 20 years | |
Noncompete agreement | ||
Intangible and other assets | ||
Total intangibles - subject to amortization | $ 1,823 | 1,855 |
Total intangibles-subject to amortization, Accumulated Amortization | $ 987 | 851 |
Useful Lives | 6 years | |
Other | ||
Intangible and other assets | ||
Total intangibles - subject to amortization | $ 573 | 353 |
Total intangibles-subject to amortization, Accumulated Amortization | $ 465 | $ 341 |
Other | Minimum | ||
Intangible and other assets | ||
Useful Lives | 7 years | |
Other | Maximum | ||
Intangible and other assets | ||
Useful Lives | 20 years |
INTANGIBLE AND OTHER ASSETS (56
INTANGIBLE AND OTHER ASSETS (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 04, 2015 | Jul. 05, 2014 | Jul. 04, 2015 | Jul. 05, 2014 | |
INTANGIBLE AND OTHER ASSETS | ||||
Amortization expense for intangible assets | $ 1,400 | $ 1,300 | $ 2,500 | $ 2,600 |
Estimated aggregate future amortization expense by fiscal year | ||||
2015 (remaining) | 2,441 | 2,441 | ||
2,016 | 4,871 | 4,871 | ||
2,017 | 4,613 | 4,613 | ||
2,018 | 4,258 | 4,258 | ||
2,019 | 4,163 | 4,163 | ||
2,020 | $ 3,655 | $ 3,655 |
DEBT ACTIVITY (Details)
DEBT ACTIVITY (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jul. 04, 2015USD ($) | Jul. 04, 2015USD ($)item | Mar. 09, 2015USD ($) | Jan. 03, 2015USD ($) | Jul. 05, 2014USD ($) | Dec. 28, 2013USD ($) | |
Debt Instrument | ||||||
Cash and Cash Equivalents, at Carrying Value | $ 249,864 | $ 249,864 | $ 276,261 | $ 272,642 | $ 320,479 | |
Credit Agreement | ||||||
Debt Instrument | ||||||
Increments in excess of minimum principal amount | 1,000 | |||||
Credit Agreement | Minimum | ||||||
Debt Instrument | ||||||
Minimum principal payments | 3,000 | $ 3,000 | ||||
Credit Agreement | Maximum | ||||||
Debt Instrument | ||||||
Consolidated leverage ratio required | item | 2.50 | |||||
Consolidated interest coverage ratio required | item | 3.50 | |||||
Credit Agreement | Fossil Europe B.V., Swiss Technology Holding GmbH and Fossil (East) Limited | ||||||
Debt Instrument | ||||||
Percentage of total outstanding non-voting capital stock | 100.00% | |||||
U.S. revolving line of credit | ||||||
Debt Instrument | ||||||
Maximum borrowing capacity | $ 1,050,000 | |||||
Percentage of total outstanding voting capital stock | 65.00% | |||||
Total borrowings | 51,700 | |||||
Debt outstanding | 458,700 | $ 458,700 | ||||
Available borrowing capacity | 590,400 | 590,400 | ||||
Cash and Cash Equivalents, at Carrying Value | 400,000 | 400,000 | ||||
Interest expense incurred | 2,800 | 3,500 | ||||
U.S. revolving line of credit | Base rate loans | ||||||
Debt Instrument | ||||||
Minimum principal payments | 2,000 | 2,000 | ||||
Increments in excess of minimum principal amount | 1,000 | |||||
U.S. revolving line of credit | LIBOR rate loans | ||||||
Debt Instrument | ||||||
Minimum principal payments | $ 5,000 | 5,000 | ||||
Increments in excess of minimum principal amount | 1,000 | |||||
U.S. revolving line of credit | Prior Agreement | ||||||
Debt Instrument | ||||||
Debt outstanding | 555,000 | |||||
Interest expense incurred | $ 1,600 | |||||
U.S. revolving line of credit | Minimum | ||||||
Debt Instrument | ||||||
Commitment fee (as a percent) | 0.20% | |||||
U.S. revolving line of credit | Maximum | ||||||
Debt Instrument | ||||||
Commitment fee (as a percent) | 0.35% | |||||
U.S. revolving line of credit | Consolidated leverage ratio (the Ratio) less than 1.00 to 1.00 | Base rate loans | ||||||
Debt Instrument | ||||||
Applicable margin based on the Company's consolidated leverage ratio (as a percent) | 0.25% | |||||
Consolidated leverage ratio used to calculate variable rate of debt (as a percent) | 1.00% | 1.00% | ||||
U.S. revolving line of credit | Consolidated leverage ratio (the Ratio) greater than 2.00 to 1.00 | Base rate loans | ||||||
Debt Instrument | ||||||
Applicable margin based on the Company's consolidated leverage ratio (as a percent) | 1.00% | |||||
Consolidated leverage ratio used to calculate variable rate of debt (as a percent) | 2.00% | 2.00% | ||||
U.S. revolving line of credit | Federal funds rate | Base rate loans | ||||||
Debt Instrument | ||||||
Description of base rate | federal funds rate | |||||
Basis spread on base rate (as a percent) | 0.50% | |||||
U.S. revolving line of credit | LIBOR | Base rate loans | ||||||
Debt Instrument | ||||||
Description of base rate | LIBOR | |||||
Basis spread on base rate (as a percent) | 1.00% | |||||
U.S. revolving line of credit | LIBOR | LIBOR rate loans | ||||||
Debt Instrument | ||||||
Description of base rate | LIBOR | |||||
LIBOR Rate, amount used to calculate quotient (as a percent) | 1.00% | 1.00% | ||||
U.S. revolving line of credit | LIBOR | Consolidated leverage ratio (the Ratio) less than 1.00 to 1.00 | LIBOR rate loans | ||||||
Debt Instrument | ||||||
Applicable margin based on the Company's consolidated leverage ratio (as a percent) | 1.25% | |||||
Consolidated leverage ratio used to calculate variable rate of debt (as a percent) | 1.00% | 1.00% | ||||
U.S. revolving line of credit | LIBOR | Consolidated leverage ratio (the Ratio) greater than 2.00 to 1.00 | LIBOR rate loans | ||||||
Debt Instrument | ||||||
Applicable margin based on the Company's consolidated leverage ratio (as a percent) | 2.00% | |||||
Consolidated leverage ratio used to calculate variable rate of debt (as a percent) | 2.00% | 2.00% | ||||
Swingline loan | ||||||
Debt Instrument | ||||||
Maximum borrowing capacity | 20,000 | |||||
Minimum principal payments | $ 100 | $ 100 | ||||
Increments in excess of minimum principal amount | 100 | |||||
LC Facility | ||||||
Debt Instrument | ||||||
Maximum borrowing capacity | 10,000 | |||||
U.S. term loan | ||||||
Debt Instrument | ||||||
Maximum borrowing capacity | 231,300 | |||||
Repayment of borrowings | 3,100 | |||||
Debt outstanding | 225,000 | 225,000 | ||||
Interest paid | 1,500 | 2,000 | ||||
Minimum principal payments | $ 5,000 | 5,000 | ||||
Increments in excess of minimum principal amount | 1,000 | |||||
U.S. term loan | Prior Agreement | ||||||
Debt Instrument | ||||||
Repayment of borrowings | 6,300 | |||||
Debt outstanding | $ 231,300 | |||||
Interest expense incurred | $ 1,000 | |||||
U.S. term loan | Consolidated leverage ratio (the Ratio) less than 1.00 to 1.00 | Base rate loans | ||||||
Debt Instrument | ||||||
Applicable margin based on the Company's consolidated leverage ratio (as a percent) | 0.25% | |||||
Consolidated leverage ratio used to calculate variable rate of debt (as a percent) | 1.00% | 1.00% | ||||
U.S. term loan | Consolidated leverage ratio (the Ratio) greater than 2.00 to 1.00 | Base rate loans | ||||||
Debt Instrument | ||||||
Applicable margin based on the Company's consolidated leverage ratio (as a percent) | 1.00% | |||||
Consolidated leverage ratio used to calculate variable rate of debt (as a percent) | 2.00% | 2.00% | ||||
U.S. term loan | Federal funds rate | Base rate loans | ||||||
Debt Instrument | ||||||
Description of base rate | federal funds rate | |||||
Basis spread on base rate (as a percent) | 0.50% | |||||
U.S. term loan | LIBOR | Base rate loans | ||||||
Debt Instrument | ||||||
Description of base rate | LIBOR | |||||
Basis spread on base rate (as a percent) | 1.00% | |||||
LIBOR Rate, amount used to calculate quotient (as a percent) | 1.00% | 1.00% | ||||
U.S. term loan | LIBOR | LIBOR rate loans | ||||||
Debt Instrument | ||||||
Description of base rate | LIBOR | |||||
U.S. term loan | LIBOR | Consolidated leverage ratio (the Ratio) less than 1.00 to 1.00 | LIBOR rate loans | ||||||
Debt Instrument | ||||||
Applicable margin based on the Company's consolidated leverage ratio (as a percent) | 1.25% | |||||
Consolidated leverage ratio used to calculate variable rate of debt (as a percent) | 1.00% | 1.00% | ||||
U.S. term loan | LIBOR | Consolidated leverage ratio (the Ratio) greater than 2.00 to 1.00 | LIBOR rate loans | ||||||
Debt Instrument | ||||||
Applicable margin based on the Company's consolidated leverage ratio (as a percent) | 2.00% | |||||
Consolidated leverage ratio used to calculate variable rate of debt (as a percent) | 2.00% | 2.00% | ||||
Prior revolving credit loans | Prior Agreement | ||||||
Debt Instrument | ||||||
Total borrowings | $ 69,700 |
RESTRUCTURING (Details)
RESTRUCTURING (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Jul. 04, 2015 | Jul. 05, 2014 | Jul. 04, 2015 | Jul. 05, 2014 | ||||
Restructuring Reserve | |||||||
Balance at beginning of the period | $ 3,075 | $ 0 | |||||
Charges to expense (1) | 6,471 | [1] | $ 0 | 18,559 | [1] | $ 0 | |
Cash payments | (3,763) | (12,280) | |||||
Non-cash items | (1,885) | (2,381) | |||||
Balance at the end of the period | 3,898 | 3,898 | |||||
Organizational Realignment | |||||||
Restructuring Reserve | |||||||
Balance at beginning of the period | 3,075 | 0 | |||||
Charges to expense (1) | [1] | 4,586 | 12,317 | ||||
Cash payments | (3,763) | (8,419) | |||||
Non-cash items | 0 | 0 | |||||
Balance at the end of the period | 3,898 | 3,898 | |||||
Retail Profitability | |||||||
Restructuring Reserve | |||||||
Balance at beginning of the period | 0 | 0 | |||||
Charges to expense (1) | [1] | 1,885 | 6,242 | ||||
Cash payments | 0 | (3,861) | |||||
Non-cash items | (1,885) | (2,381) | |||||
Balance at the end of the period | $ 0 | $ 0 | |||||
[1] | Charges to expense include changes in estimates |