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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
__________________________________________________________________ 
FORM 10-Q 
__________________________________________________________________
 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended: March 30, 2024
 
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to                    
 
Commission file number: 001-41040 
__________________________________________________________________ 
logo2a04.gif
FOSSIL GROUP, INC.
(Exact name of registrant as specified in its charter)
 __________________________________________________________________
Delaware 75-2018505
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
   
901 S. Central Expressway,Richardson,Texas 75080
(Address of principal executive offices) (Zip Code)
(972) 234-2525
(Registrant’s telephone number, including area code) 
__________________________________________________________________ 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTicker SymbolName of each exchange on which registered
Common Stock, par value $0.01 per shareFOSLThe Nasdaq Stock Market LLC
7.00% Senior Notes due 2026FOSLLThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No 
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No 




 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act (check one):
Large accelerated filer Accelerated filer
   
Non-accelerated filer  Smaller reporting company
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No 

The number of shares of the registrant’s common stock outstanding as of May 1, 2024: 52,933,239




FOSSIL GROUP, INC.
FORM 10-Q
FOR THE FISCAL QUARTER ENDED MARCH 30, 2024
INDEX





























Trademarks, service marks, trade names and copyrights

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





PART I—FINANCIAL INFORMATION

Item 1. Financial Statements
FOSSIL GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
UNAUDITED
IN THOUSANDS
March 30, 2024December 30, 2023
Assets  
Current assets:  
Cash and cash equivalents$112,889 $117,197 
Accounts receivable - net of allowances for doubtful accounts of $14,465 and $12,616, respectively
134,362 187,942 
Inventories224,137 252,834 
Prepaid expenses and other current assets165,875 152,717 
Total current assets637,263 710,690 
Property, plant and equipment - net of accumulated depreciation of $379,768 and $384,688, respectively
54,435 57,244 
Operating lease right-of-use assets 142,292 151,000 
Intangible and other assets-net56,982 59,096 
Total long-term assets253,709 267,340 
Total assets$890,972 $978,030 
Liabilities and Stockholders’ Equity  
Current liabilities:  
Accounts payable$142,908 $147,161 
Short-term debt482 480 
Accrued expenses:  
Current operating lease liabilities40,257 43,565 
Compensation37,252 44,789 
Royalties6,333 15,880 
Customer liabilities 32,143 37,584 
Transaction taxes5,917 10,412 
Other22,641 27,811 
Income taxes payable7,491 14,795 
Total current liabilities295,424 342,477 
Long-term income taxes payable18,975 20,409 
Deferred income tax liabilities681 698 
Long-term debt202,866 206,983 
Long-term operating lease liabilities129,131 137,644 
Other long-term liabilities17,322 18,081 
Total long-term liabilities368,975 383,815 
Commitments and contingencies (Note 13)
Stockholders’ equity:  
Common stock, 52,492 and 52,487 shares issued and outstanding at March 30, 2024 and December 30, 2023 respectively
525 525 
Additional paid-in capital312,717 311,709 
Retained (deficit) earnings(5,893)18,403 
Accumulated other comprehensive income (loss)(78,264)(76,405)
Total Fossil Group, Inc. stockholders’ equity229,085 254,232 
Noncontrolling interests(2,512)(2,494)
Total stockholders’ equity226,573 251,738 
Total liabilities and stockholders’ equity$890,972 $978,030 
 
See notes to the unaudited condensed consolidated financial statements.
5



FOSSIL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
UNAUDITED
IN THOUSANDS, EXCEPT PER SHARE DATA
 
For the 13 Weeks Ended March 30, 2024For the 13 Weeks Ended April 1, 2023
Net sales$254,884 $325,036 
Cost of sales121,392 164,319 
Gross profit133,492 160,717 
Operating expenses:  
Selling, general and administrative expenses152,272 190,873 
Other long-lived asset impairments373 55 
Restructuring expenses10,053 7,097 
Total operating expenses162,698 198,025 
Operating income (loss)(29,206)(37,308)
Interest expense5,112 5,004 
Other income (expense) - net3,887 2,733 
Income (loss) before income taxes(30,431)(39,579)
Provision (benefit) for income taxes(6,117)1,603 
Net income (loss)(24,314)(41,182)
Less: Net income (loss) attributable to noncontrolling interests(18)80 
Net income (loss) attributable to Fossil Group, Inc.$(24,296)$(41,262)
Other comprehensive income (loss), net of taxes:  
Currency translation adjustment$(2,486)$5,897 
Cash flow hedges - net change646 (2,786)
Pension plan activity(19) 
Total other comprehensive income (loss)(1,859)3,111 
Total comprehensive income (loss)(26,173)(38,071)
Less: Comprehensive income (loss) attributable to noncontrolling interests(18)80 
Comprehensive income (loss) attributable to Fossil Group, Inc.$(26,155)$(38,151)
Earnings (loss) per share:  
Basic$(0.46)$(0.80)
Diluted$(0.46)$(0.80)
Weighted average common shares outstanding:  
Basic52,491 51,840 
Diluted52,491 51,840 
 
See notes to the unaudited condensed consolidated financial statements.
6



FOSSIL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
UNAUDITED
IN THOUSANDS

For the 13 Weeks Ended March 30, 2024
 Common StockAdditional
Paid-in
Capital
Treasury
Stock
Retained (Deficit)
Earnings
Accumulated
Other
Comprehensive
Income
(Loss)
Stockholders'
Equity
Attributable
to Fossil
Group, Inc.
Noncontrolling InterestTotal Stockholders' Equity
SharesPar
Value
Balance, December 30, 202352,487 $525 $311,709 $ $18,403 $(76,405)$254,232 $(2,494)$251,738 
Common stock issued upon exercise of stock options, stock appreciation rights and restricted stock units7 — — — — — — — — 
Acquisition of common stock for employee tax withholding— — — (3)— — (3)— (3)
Retirement of common stock(2)— (3)3 — — — —  
Stock-based compensation— — 1,011 — — — 1,011 — 1,011 
Net income (loss)— — — — (24,296)— (24,296)(18)(24,314)
Other comprehensive income (loss)— — — — — (1,859)(1,859)— (1,859)
Balance, March 30, 202452,492 $525 $312,717 $ $(5,893)$(78,264)$229,085 $(2,512)$226,573 

For the 13 Weeks Ended April 1, 2023
 Common StockAdditional
Paid-in
Capital
Treasury
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Income
(Loss)
Stockholders'
Equity
Attributable
to Fossil
Group, Inc.
Noncontrolling InterestTotal Stockholders' Equity
SharesPar
Value
Balance, December 31, 202251,836 $518 $306,241 $ $175,491 $(76,318)$405,932 $(2,923)$403,009 
Common stock issued upon exercise of stock options, stock appreciation rights and restricted stock units7 — — — — — — — — 
Acquisition of common stock for employee tax withholding— — (11)— — (11)— (11)
Retirement of common stock(2)— (11)11 — — — —  
Stock-based compensation— — 1,362 — — — 1,362 — 1,362 
Net income (loss)— — — — (41,262)— (41,262)80 (41,182)
Other comprehensive income (loss)— — — — — 3,111 3,111 — 3,111 
Balance, April 1, 202351,841 $518 $307,592 $ $134,229 $(73,207)$369,132 $(2,843)$366,289 

See notes to the unaudited condensed consolidated financial statements.

7




FOSSIL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
IN THOUSANDS
For the 13 Weeks Ended March 30, 2024For the 13 Weeks Ended April 1, 2023
Operating Activities:  
Net income (loss)$(24,314)$(41,182)
Adjustments to reconcile net loss to net cash used in operating activities:  
Depreciation, amortization and accretion4,475 5,068 
Non-cash lease expense 16,771 18,619 
Stock-based compensation1,011 1,362 
Decrease in allowance for returns and markdowns(2,957)(6,320)
Property, plant and equipment and other long-lived asset impairment losses373 55 
Non-cash restructuring charges101  
Bad debt expense2,459 395 
Other non-cash items 625 (1,427)
Contingent consideration remeasurement(154)(347)
Changes in operating assets and liabilities:  
Accounts receivable49,089 39,644 
Inventories25,015 41,959 
Prepaid expenses and other current assets(14,391)(10,171)
Accounts payable(3,270)(71,548)
Accrued expenses(25,543)(29,846)
Income taxes(8,731)(9,761)
Operating lease liabilities(19,937)(22,362)
Net cash provided by (used in) operating activities622 (85,862)
Investing Activities:  
Additions to property, plant and equipment and other(1,678)(2,610)
Decrease (increase) in intangible and other assets348 (109)
Net cash used in investing activities(1,330)(2,719)
Financing Activities:  
Acquisition of common stock(3)(11)
Debt borrowings13,815 40,136 
Debt payments(18,093)(22,003)
Payment for shares of Fossil Accessories South Africa Pty. Ltd.(422)(1,660)
Net cash (used in) provided by financing activities(4,703)16,462 
Effect of exchange rate changes on cash, cash equivalents, and restricted cash691 298 
Net decrease in cash, cash equivalents, and restricted cash(4,720)(71,821)
Cash, cash equivalents, and restricted cash:  
Beginning of period121,583 204,075 
End of period$116,863 $132,254 

See notes to the unaudited condensed consolidated financial statements.
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FOSSIL GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
 
1. FINANCIAL STATEMENT POLICIES
Basis of Presentation. The condensed consolidated financial statements include the accounts of Fossil Group, Inc., a Delaware corporation, and its wholly and majority-owned subsidiaries (the “Company”).
The information presented herein includes the thirteen-week period ended March 30, 2024 (“First Quarter”) as compared to the thirteen-week period ended April 1, 2023 (“Prior Year Quarter”). The condensed consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary to present a fair statement of the Company’s financial position as of March 30, 2024, and the results of operations for the First Quarter and Prior Year Quarter. All adjustments are of a normal, recurring nature.
These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Annual Report on Form 10-K filed by the Company pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), for the fiscal year ended December 30, 2023, as amended (the “2023 Form 10-K”). Operating results for the First Quarter are not necessarily indicative of the results to be achieved for the full fiscal year.
The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), which require the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the periods reported. We base our estimates on the information available at the time and various other assumptions believed to be reasonable under the circumstances. Actual results could differ from those estimates. The Company has not made any changes in its significant accounting policies from those disclosed in the 2023 Form 10-K.
Business. The Company is a global design, marketing and distribution company that specializes in consumer fashion accessories. Its principal offerings include an extensive line of men's and women's fashion watches and jewelry, handbags, small leather goods, belts and sunglasses. In the watch and jewelry product categories, the Company has a diverse portfolio of globally recognized owned and licensed brand names under which its products are marketed. The Company's products are distributed globally through various distribution channels, including wholesale in countries where it has a physical presence, direct to the consumer through its retail stores and commercial websites and through third-party distributors in countries where the Company does not maintain a physical presence. The Company's products are offered at varying price points to meet the needs of its customers, whether they are value-conscious or luxury oriented. Based on its extensive range of accessory products, brands, distribution channels and price points, the Company is able to target style-conscious consumers across a wide age spectrum on a global basis.
Operating Expenses. Operating expenses include selling, general and administrative ("SG&A"), other long-lived asset impairments and restructuring charges. SG&A expenses include selling and distribution expenses primarily consisting of sales and distribution labor costs, sales distribution center and warehouse facility costs, depreciation expense related to sales distribution and warehouse facilities, the four-wall operating costs of the Company's retail stores, point-of-sale expenses, advertising expenses and art, and design and product development labor costs. SG&A also includes general and administrative expenses primarily consisting of administrative support labor and 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 reduce and optimize the Company’s infrastructure and store closures. See "Note 16—Restructuring" for additional information on the Company’s restructuring plan.
Earnings (Loss) Per Share (“EPS”). Basic EPS is based on the weighted average number of common shares outstanding during each period. Diluted EPS adjusts basic EPS for the effects of dilutive common stock equivalents outstanding during each period using the treasury stock method.
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The following table reconciles the numerators and denominators used in the computations of both basic and diluted EPS (in thousands, except per share data):
For the 13 Weeks Ended March 30, 2024For the 13 Weeks Ended April 1, 2023
Numerator:  
Net income (loss) attributable to Fossil Group, Inc.$(24,296)$(41,262)
Denominator: 
Basic EPS computation: 
Basic weighted average common shares outstanding52,491 51,840 
Basic EPS$(0.46)$(0.80)
Diluted EPS computation: 
Diluted weighted average common shares outstanding52,491 51,840 
Diluted EPS$(0.46)$(0.80)

At the end of the First Quarter, approximately 1.9 million weighted average shares issuable under stock-based awards were not included in the diluted EPS calculation because they were antidilutive. The total antidilutive weighted average shares included 0.3 million weighted average performance-based shares at the end of the First Quarter.
At the end of the Prior Year Quarter, approximately 2.0 million weighted average shares issuable under stock-based awards were not included in the diluted EPS calculation because they were antidilutive. The total antidilutive weighted average shares included 0.3 million weighted average performance-based shares at the end of the Prior Year Quarter.
Cash, Cash Equivalents and Restricted Cash. Restricted cash included in intangible and other-assets net was comprised primarily of pledged collateral to secure bank guarantees for the purpose of obtaining retail space. The following table provides a reconciliation of the cash, cash equivalents, and restricted cash balances as of March 30, 2024 and April 1, 2023 that are presented in the condensed consolidated statement of cash flows (in thousands):
March 30, 2024April 1, 2023
Cash and cash equivalents$112,889 $127,111 
Restricted cash included in prepaid expenses and other current assets78 107 
Restricted cash included in intangible and other assets-net3,896 5,036 
Cash, cash equivalents and restricted cash$116,863 $132,254 
Recently Issued and Adopted Accounting Standards
In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU"), 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to enhance the transparency and decision usefulness of income tax disclosures through changes to the rate reconciliation and income taxes paid information. This guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is evaluating the impact of adopting this guidance on its financial statement disclosures.
In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures (Topic 280), to improve reportable segment disclosures, primarily through enhanced disclosures about significant segment expenses. The amendments in this update will require public entities to disclose significant segment expenses that are regularly provided to the Company's chief operating decision maker and included within segment profit and loss, an amount and description of its composition for other segment items, and expanded interim disclosures. This guidance is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is evaluating the impact of adopting this guidance on its financial statement disclosures.
In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements - Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative ("ASU 2023-06"). The amendments in ASU 2023-06 modify the disclosure or presentation requirements of a variety of topics in the FASB Accounting Standards Codification (the "Codification"), with the intention of clarifying or improving them and to align the requirements in the Codification with the
10



regulations of the U.S. Securities and Exchange Commission (the "SEC”). The effective date for ASU 2023-06 varies and is determined for each individual disclosure based on the effective date of the SEC's removal of the related disclosure. ASU 2023-06 will not have an impact on the Company's financial position or results of operations.
The Organization for Economic Cooperation and Development ("OECD") and over 140 countries have agreed to enact a two-pillar solution to reform the international tax rules to address the challenges arising from the globalization and digitalization of the economy. "The Pillar Two Global Anti-Base Erosion (GloBE) Rules" provide a coordinated system to ensure that multinational enterprises with revenues above 750 million euro pay a minimum effective tax rate of 15% tax on the income arising in each of the jurisdictions in which they operate. Many aspects of Pillar Two will be effective for tax years beginning in January 2024, with certain remaining impacts to be effective in 2025. Each country must enact its own legislation to apply the Pillar Two rules. The Company does not expect Pillar Two to have a material impact on its financial results, including its annual estimated effective tax rate or liquidity for 2024, but will continue to monitor future developments.
2. REVENUE
Disaggregation of Revenue. The Company's revenue disaggregated by major product category and timing of revenue recognition was as follows (in thousands):
For the 13 Weeks Ended March 30, 2024
AmericasEuropeAsiaCorporate Total
Product type
Watches:
     Traditional watches$78,706 $57,132 $50,723 $ $186,561 
     Smartwatches5,154 1,561 2,162  8,877 
Total watches$83,860 $58,693 $52,885 $ $195,438 
Leathers17,520 4,405 5,659  27,584 
Jewelry6,619 13,478 6,166  26,263 
Other 2,018 2,144 828 609 5,599 
Consolidated $110,017 $78,720 $65,538 $609 $254,884 
Timing of revenue recognition
Revenue recognized at a point in time $109,909 $78,560 $65,425 $609 $254,503 
Revenue recognized over time 108 160 113  381 
Consolidated$110,017 $78,720 $65,538 $609 $254,884 

For the 13 Weeks Ended April 1, 2023
AmericasEuropeAsiaCorporate Total
Product type
Watches:
     Traditional watches$91,357 $71,803 $62,266 $ $225,426 
Smartwatches12,490 6,622 5,288  24,400 
Total watches$103,847 $78,425 $67,554 $ $249,826 
Leathers27,112 6,773 6,380  40,265 
Jewelry5,419 18,501 5,125  29,045 
Other 1,553 1,974 1,077 1,296 5,900 
Consolidated $137,931 $105,673 $80,136 $1,296 $325,036 
Timing of revenue recognition
Revenue recognized at a point in time $137,467 $105,484 $80,026 $1,021 $323,998 
Revenue recognized over time 464 189 110 275 1,038 
Consolidated$137,931 $105,673 $80,136 $1,296 $325,036 
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Contract Balances. As of March 30, 2024, the Company had no material contract assets on the Company's condensed consolidated balance sheets and no deferred contract costs. The Company had contract liabilities of (i) $0.3 million as of March 30, 2024 and no contract liabilities as of December 30, 2023 related to remaining performance obligations on licensing income, (ii) $1.5 million and $1.7 million as of March 30, 2024 and December 30, 2023, respectively, primarily related to remaining performance obligations on wearable technology products and (iii) $2.5 million and $2.7 million as of March 30, 2024 and December 30, 2023, respectively, related to gift cards issued.

3. INVENTORIES
Inventories consisted of the following (in thousands):
March 30, 2024December 30, 2023
Components and parts$15,580 $18,931 
Finished goods208,557 233,903 
Inventories$224,137 $252,834 

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 13 Weeks Ended March 30, 2024For the 13 Weeks Ended April 1, 2023
Beginning balance$10,122 $13,623 
Settlements in cash or kind(1,389)(2,282)
Warranties issued and adjustments to preexisting warranties (1)
276 1,528 
Ending balance$9,009 $12,869 
_______________________________________________
(1) Changes in cost estimates related to preexisting warranties are aggregated with accruals for new standard warranties issued and foreign currency changes.
 
5. INCOME TAXES
The Company’s income tax (benefit) expense and related effective rates were as follows (in thousands, except percentage data):
For the 13 Weeks Ended March 30, 2024For the 13 Weeks Ended April 1, 2023
Income tax (benefit) expense$(6,117)$1,603 
Effective tax rate20.1 %(4.1)%
The effective tax rate in the First Quarter was favorable as compared to the Prior Year Quarter due to the Company recognizing $9.6 million of favorable discrete items, including the release of uncertain tax positions and additional
accrued interest income. The overall tax rate is impacted by the Global Intangible Low-Taxed Income (“GILTI”) provision of the Tax Cuts and Jobs Act, which requires the inclusion of certain foreign income in the tax return which absorbs the U.S. net operating loss. Foreign income taxes are also paid on this same foreign income, resulting in double taxation. The effective tax rate can vary from quarter-to-quarter due to changes in the Company's global mix of earnings, the resolution of income tax audits and changes in tax law.
As of March 30, 2024, the Company's total amount of unrecognized tax benefits, excluding interest and penalties, was $17.3 million, all of which would favorably impact the effective tax rate in future periods, if recognized. The Company filed amended US income tax returns for 2014-2017 under the Coronavirus Aid, Relief and Economic Security Act (the “CARES
12



Act”) which included a provision for the carryback of U.S. NOLs. The IRS reviewed the Company’s 2019 and 2020 U.S. tax returns and resulting net operating losses, as well as the tax returns for 2014-2017, which were the carryback years. The Company received the income tax refund for the 2019 U.S tax NOL carryback in fiscal year 2021. On March 27, 2024, the Company was informed that its 2019, 2020, and NOL carryback claims were approved by the IRS and Joint Committee on Taxation. In April 2024, the Company received $57.3 million of tax refunds. The Company released corresponding uncertain tax positions of $8.8 million in the First Quarter. The Company reasonably expects that certain remaining uncertain tax positions will be resolved within the next twelve months, which if resolved favorably, would impact the tax rate by a benefit of approximately $14.5 million, including interest.
The Company is also subject to examinations in various state and foreign jurisdictions for its 2013-2022 tax years, none of which the Company believes are significant, individually or in the aggregate. Tax audit outcomes and timing of tax audit settlements are subject to significant uncertainty.
The Company has classified uncertain tax positions as long-term income taxes payable, unless such amounts are expected to be settled within twelve months of the condensed consolidated balance sheet date. As of March 30, 2024, the Company has not recorded unrecognized tax benefits, excluding interest and penalties, for positions that are expected to be settled within the next twelve months. Consistent with its past practice, the Company recognizes interest and/or penalties related to income tax overpayments and income tax underpayments in income tax expense and income taxes receivable/payable. At March 30, 2024, the total amount of accrued income tax-related interest included in the condensed consolidated balance sheets was $2.6 million of which $7.2 million is accrued interest expense and $4.6 million is accrued interest income. There were no accrued tax-related penalties.
6. STOCKHOLDERS’ EQUITY
Common and Preferred Stock. The Company has 100,000,000 shares of common stock, par value $0.01 per share, authorized, with 52,491,710 and 52,487,020 shares issued and outstanding at March 30, 2024 and December 30, 2023, respectively. The Company has 1,000,000 shares of preferred stock, par value $0.01 per share, authorized, with none issued or outstanding at March 30, 2024 or December 30, 2023. Rights, preferences and other terms of preferred stock will be determined by the Board of Directors at the time of issuance.
Common Stock Repurchase Programs. Purchases of the Company’s common stock 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 (deficit) earnings. The repurchase price allocation is based upon the equity contribution associated with historical issuances. The repurchase programs are conducted pursuant to Rule 10b-18 of the Exchange Act.
As of March 30, 2024 and December 30, 2023, all treasury stock had been effectively retired. As of March 30, 2024, the Company had $20.0 million of repurchase authorizations remaining under its repurchase program. The Company did not repurchase any common stock under its authorized stock repurchase plans during the First Quarter or Prior Year Quarter.


7. EMPLOYEE BENEFIT PLANS
Stock-Based Compensation Plans. The following table summarizes stock appreciation rights activity during the First Quarter:
Stock Appreciation RightsSharesWeighted-
Average
Exercise Price
Weighted-
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value
 (in Thousands) (in Years)(in Thousands)
Outstanding at December 30, 202339 $47.99 0.2$ 
Forfeited or expired(39)47.99 
Outstanding at March 30, 20240  0.0 
Exercisable at March 30, 20240 $ 0.0$ 
 
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Restricted Stock Units and Performance Restricted Stock Units. The following table summarizes restricted stock unit and performance restricted stock unit activity during the First Quarter:
Restricted Stock Units
and Performance Restricted Stock Units
Number of SharesWeighted-Average
Grant Date Fair
Value Per Share
 (in Thousands) 
Nonvested at December 30, 20231,918 $6.19 
Granted12 0.92 
Vested(7)10.28 
Forfeited(89)7.16 
Nonvested at March 30, 20241,834 $6.09 
 
The total fair value of restricted stock units vested was less than $0.1 million during the First Quarter. Vesting of performance restricted stock units is based on achievement of operating margin growth and achievement of sales growth and operating margin targets in relation to the performance of a certain identified peer group.
Long-Term Incentive Plans. On the date of the Company’s annual stockholders meeting, each non-employee director automatically receives a grant of restricted stock units which vest 100% on the earlier of one year from the date of grant or the date of the Company's next annual stockholders meeting, provided such director is providing services to the Company or a subsidiary of the Company on that date. Beginning with the grant in fiscal year 2021, non-employee directors may elect to defer receipt of all or a portion of the restricted stock units settled in common stock of the Company upon the vesting date. In addition, beginning in fiscal year 2021, non-employee directors may defer the cash portion of their annual fees. Each participant may also elect to have the cash portion of his or her annual fees for each calendar year treated as if invested in units of common stock of the Company.

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8. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

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

 For the 13 Weeks Ended April 1, 2023
 Currency
Translation
Adjustments
Cash Flow Hedges  
 Forward
Contracts
Pension
Plan
Total
Beginning balance$(90,681)$2,397 $11,966 $(76,318)
Other comprehensive income (loss) before reclassifications5,897 (3,126) 2,771 
Tax (expense) benefit 444  444 
Amounts reclassed from accumulated other comprehensive income (loss)  (175) (175)
Tax (expense) benefit 279  279 
Total other comprehensive income (loss)5,897 (2,786) 3,111 
Ending balance$(84,784)$(389)$11,966 $(73,207)
See “Note 10—Derivatives and Risk Management” for additional disclosures about the Company’s use of derivatives.

9. SEGMENT INFORMATION
The Company reports segment information based on the “management approach.” The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments.
The Company manages its business primarily on a geographic basis. The Company’s reportable operating segments are comprised of (i) Americas, (ii) Europe and (iii) Asia. Each reportable operating segment includes sales to wholesale and distributor customers, and sales through Company-owned retail stores and e-commerce activities based on the location of the selling entity. The Americas segment primarily includes sales to customers based in Canada, Latin America and the United States. The Europe segment primarily includes sales to customers based in European countries, the Middle East and Africa. The Asia segment primarily includes sales to customers based in Australia, greater China (including mainland China, Hong Kong, Macau and Taiwan), India, Indonesia, Japan, Malaysia, New Zealand, Singapore, South Korea and Thailand. Each reportable operating segment provides similar products and services.
The Company evaluates the performance of its reportable segments based on net sales and operating income (loss). Net sales for geographic segments are based on the location of the selling entity. Operating income (loss) for each segment includes net sales to third parties, related cost of sales and operating expenses directly attributable to the segment. Corporate includes peripheral revenue generating activities from factories and intellectual property and general corporate expenses, including certain administrative, legal, accounting, technology support costs, equity compensation costs, payroll costs attributable to
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executive management, brand management, product development, art, creative/product design, marketing, strategy, compliance and back office supply chain expenses that are not allocated to the various segments because they are managed at the corporate level internally. The Company does not include intercompany transfers between segments for management reporting purposes.
Summary information by operating segment was as follows (in thousands):
For the 13 Weeks Ended March 30, 2024For the 13 Weeks Ended April 1, 2023
 Net SalesOperating Income (Loss)Net SalesOperating Income (Loss)
Americas$110,017 $8,755 $137,931 $12,555 
Europe78,720 7,393 105,673 6,969 
Asia65,538 5,802 80,136 7,200 
Corporate609 (51,156)1,296 (64,032)
Consolidated$254,884 $(29,206)$325,036 $(37,308)
The following table reflects net sales for each class of similar products in the periods presented (in thousands, except percentage data):
For the 13 Weeks Ended March 30, 2024For the 13 Weeks Ended April 1, 2023
 Net SalesPercentage of TotalNet SalesPercentage of Total
Watches:
    Traditional watches $186,561 73.2 %$225,426 69.4 %
    Smartwatches8,877 3.5 24,400 7.5 
Total watches$195,438 76.7 %$249,826 76.9 %
Leathers27,584 10.8 40,265 12.4 
Jewelry26,263 10.3 29,045 8.9 
Other5,599 2.2 5,900 1.8 
Total$254,884 100.0 %$325,036 100.0 %


10. DERIVATIVES AND RISK MANAGEMENT
Cash Flow Hedges. The primary risks managed by using derivative instruments are the fluctuations in global currencies that will ultimately be used by non-U.S. dollar functional currency subsidiaries to settle future payments of intercompany inventory transactions denominated in U.S. dollars. Specifically, the Company projects future intercompany purchases by its non-U.S. dollar functional currency subsidiaries generally over a period of up to 24 months. The Company enters into forward contracts, generally for up to 85% of the forecasted purchases, to manage fluctuations in global currencies that will ultimately be used to settle such U.S. dollar denominated inventory purchases. Additionally, the Company enters into forward contracts to manage fluctuations in Japanese yen exchange rates that will be used to settle future third-party inventory component purchases by a U.S. dollar functional currency subsidiary. Forward contracts represent agreements to exchange the currency of one country for the currency of another country at an agreed-upon settlement date and exchange rate. These forward contracts are designated as single cash flow hedges. Fluctuations in exchange rates will either increase or decrease the Company’s U.S. dollar equivalent cash flows from these inventory transactions, which will affect the Company’s U.S. dollar earnings. Gains or losses on the forward contracts are expected to offset these fluctuations to the extent the cash flows are hedged by the forward contracts.
For a derivative instrument that is designated and qualifies as a cash flow hedge, the gain or loss on the derivative is reported as a component of accumulated other comprehensive income (loss), net of taxes and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.
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As of March 30, 2024, the Company had the following outstanding forward contracts designated as cash flow hedges that were entered into to hedge future payments of inventory transactions (in millions):
Functional CurrencyContract Currency
TypeAmountTypeAmount
Euro29.8 U.S. dollar33.3 
Canadian dollar15.7 U.S. dollar11.8 
British pound2.6 U.S. dollar3.3 
Mexican peso39.6 U.S. dollar2.2 
Japanese yen236.1 U.S. dollar1.8 
Australian dollar1.8 U.S. dollar1.2 
U.S. dollar2.2 Japanese yen300.0 
Non-designated Hedges. The Company also periodically enters into forward contracts to manage exchange rate risks associated with certain intercompany transactions and for which the Company does not elect hedge accounting treatment. As of March 30, 2024, the Company did not have any non-designated forward contracts outstanding. As of December 30, 2023, the Company had non-designated forward contracts of $1.5 million on 27.1 million rand associated with a South African rand-denominated foreign subsidiary. Changes in the fair value of derivatives not designated as hedging instruments are recognized in earnings when they occur.
The gains and losses on cash flow hedges that were recognized in other comprehensive income (loss), net of taxes are set forth below (in thousands):
For the 13 Weeks Ended March 30, 2024For the 13 Weeks Ended April 1, 2023
Cash flow hedges:  
Forward contracts$750 $(2,682)
Total gain (loss) recognized in other comprehensive income (loss), net of taxes$750 $(2,682)
The following tables disclose the gains and losses on derivative instruments recorded in accumulated other comprehensive income (loss), net of taxes during the term of the hedging relationship and reclassified into earnings, and gains and losses on derivatives not designated as hedging instruments recorded directly to earnings (in thousands):
Derivative Instruments Condensed Consolidated
Statements of Income (Loss)
and Comprehensive
Income (Loss) Location
Effect of Derivative
Instruments
For the 13 Weeks Ended March 30, 2024For the 13 Weeks Ended April 1, 2023
Forward contracts designated as cash flow hedging instrumentsCost of salesTotal gain (loss) reclassified from accumulated other comprehensive income (loss)$(71)$432 
Forward contracts designated as cash flow hedging instrumentsOther income (expense)-netTotal gain (loss) reclassified from accumulated other comprehensive income (loss)$175 $(328)
Forward contracts not designated as hedging instrumentsOther income (expense)-netTotal gain (loss) recognized in income$5 $25 
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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 DerivativesLiability Derivatives
 March 30, 2024December 30, 2023March 30, 2024December 30, 2023
Derivative InstrumentsCondensed
Consolidated
Balance Sheets
Location
Fair
Value
Condensed
Consolidated
Balance Sheets
Location
Fair
Value
Condensed
Consolidated
Balance Sheets
Location
Fair
Value
Condensed
Consolidated
Balance Sheets
Location
Fair
Value
Forward contracts designated as cash flow hedging instrumentsPrepaid expenses and other current assets$1,286 Prepaid expenses and other current assets$339 Accrued expenses-other$394 Accrued expenses-other$1,044 
Forward contracts not designated as cash flow hedging instrumentsPrepaid expenses and other current assets Prepaid expenses and other current assets Accrued expenses-other Accrued expenses-other7 
Forward contracts designated as cash flow hedging instrumentsIntangible and other assets-net Intangible and other assets-net20 Other long-term liabilities Other long-term liabilities28 
Total $1,286  $359  $394  $1,079 

The following tables summarize the effects of the Company's derivative instruments on earnings (in thousands):
Effect of Derivative Instruments
For the 13 Weeks Ended March 30, 2024For the 13 Weeks Ended April 1, 2023
Cost of SalesOther Income (Expense)-netCost of SalesOther Income (Expense)-net
Total amounts of income and expense line items presented in the condensed consolidated statements of income (loss) and comprehensive income (loss) in which the effects of cash flow hedges are recorded$121,392 $3,887 $164,319 $2,733 
Gain (loss) on cash flow hedging relationships:
Forward contracts designated as cash flow hedging instruments:
Total gain (loss) reclassified from other comprehensive income (loss)
$(71)$175 $432 $(328)
Forward contracts not designated as hedging instruments:
Total gain (loss) recognized in income$ $5 $ $25 
At the end of the First Quarter, the Company had forward contracts designated as cash flow hedges with maturities extending through March 2025. As of March 30, 2024, an estimated net gain of $1.0 million is expected to be reclassified into earnings within the next twelve months at prevailing foreign currency exchange rates.
11. FAIR VALUE MEASUREMENTS
The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date.
ASC 820, Fair Value Measurement and Disclosures (“ASC 820”), establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into three broad levels as follows:
Level 1 — Quoted prices in active markets for identical assets or liabilities.
Level 2 — Inputs, other than quoted prices in active markets, that are observable either directly or indirectly.
Level 3 — Unobservable inputs based on the Company’s assumptions.
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ASC 820 requires the use of observable market data if such data is available without undue cost and effort.
The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of March 30, 2024 (in thousands):
 Fair Value at March 30, 2024
 Level 1Level 2Level 3Total
Assets:    
Forward contracts$ $1,286 $ $1,286 
Total$ $1,286 $ $1,286 
Liabilities:    
Forward contracts 394  394 
Total$ $394 $ $394 
The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of December 30, 2023 (in thousands):
 Fair Value at December 30, 2023
 Level 1Level 2Level 3Total
Assets:    
Forward contracts$ $359 $ $359 
Total$ $359 $ $359 
Liabilities:    
Contingent consideration$ $ $586 $586 
Forward contracts 1,079  1,079 
Total$ $1,079 $586 $1,665 
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. See "Note 10—Derivatives and Risk Management", for additional disclosures about the forward contracts.
As of March 30, 2024, the Company's Notes (as defined in Note 15— Debt Activity), excluding unamortized debt issuance costs, were recorded at cost and had a carrying value of $150.0 million and a fair value of approximately $67.5 million. The fair value of the Company's Notes was based on Level 1 inputs. The Company's Revolving Facility (as defined in Note 15—Debt Activity) was recorded at cost and had a carrying value of $57.5 million and a fair value of approximately $44.6 million. The fair value of the Company's Revolving Facility was based on Level 2 inputs.
During the First Quarter, operating lease right-of-use ("ROU") assets with a carrying amount of $1.8 million and property, plant and equipment-net with a carrying value of $0.2 million were written down to a fair value of $1.5 million and $0.1 million, respectively, resulting in impairment charges of $0.4 million. During the Prior Year Quarter, $0.1 million of impairment charges were recorded for ROU assets with a carrying amount of $0.1 million.
The fair values of operating lease ROU assets and fixed assets related to retail stores were determined using Level 3 inputs, including forecasted cash flows and discount rates. Of the $0.4 million impairment expense in the First Quarter, $0.2 million was recorded in other long-lived asset impairments in the Asia segment and $0.2 million was recorded in other long-lived asset impairments in the Europe segment. The $0.1 million impairment expense in the Prior Year Quarter, was recorded in other long-lived asset impairments in the Europe segment.



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12. INTANGIBLE AND OTHER ASSETS
 
The following table summarizes intangible and other assets (in thousands):
  March 30, 2024December 30, 2023
 UsefulGrossAccumulatedGross