Fossil Group, Inc. [FOSL] Filings

10-Q 1 fosl-20230401.htm 10-Q fosl-20230401

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: April 1, 2023


☐			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

__________________________________________________________________

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 class

Ticker Symbol

Name of each exchange on which registered

Common Stock, par value $0.01 per share

FOSL

The Nasdaq Stock Market LLC

7.00% Senior Notes due 2026

FOSLL

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ 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 3, 2023: 52,403,573

FOSSIL GROUP, INC.

FORM 10-Q

FOR THE FISCAL QUARTER ENDED APRIL 1, 2023

INDEX


		Page
PART I
Item 1.	Financial Statements	5
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)	6
	Condensed Consolidated Statements of Stockholders' Equity	7
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	26
	Results of Operations	28
	Liquidity and Capital Resources	34
	Forward-Looking Statements	37
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	38
PART II
Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 5.	Other Information	39
Item 6.	Exhibits	40
	SIGNATURES	41

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, MISFIT, ZODIAC, KATCHIN 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


	April 1, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	127,111	$	198,726
Accounts receivable - net of allowances for doubtful accounts of $14,297 and $14,647, respectively	168,947		206,133
Inventories	336,503		376,028
Prepaid expenses and other current assets	171,926		164,413
Total current assets	804,487		945,300
Property, plant and equipment - net of accumulated depreciation of $416,175 and $415,172, respectively	78,478		79,882
Operating lease right-of-use assets	147,179		156,947

Intangible and other assets-net	55,851		55,999
Total long-term assets	281,508		292,828
Total assets	$	1,085,995	$	1,238,128
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	120,124	$	191,141
Short-term debt	461		342
Accrued expenses:
Current operating lease liabilities	45,642		49,702
Compensation	40,755		44,259
Royalties	8,773		20,875
Customer liabilities	32,582		41,996
Transaction taxes	1,669		14,303
Other	42,967		40,424
Income taxes payable	12,166		22,878
Total current liabilities	305,139		425,920
Long-term income taxes payable	23,323		22,603
Deferred income tax liabilities	618		616
Long-term debt	234,579		216,132
Long-term operating lease liabilities	140,801		150,188
Other long-term liabilities	15,246		19,660
Total long-term liabilities	414,567		409,199
Commitments and contingencies (Note 13)
Stockholders’ equity:
Common stock, 51,841 and 51,836 shares issued and outstanding at April 1, 2023 and December 31, 2022, respectively	518		518
Additional paid-in capital	307,592		306,241
Retained earnings	134,229		175,491
Accumulated other comprehensive income (loss)	(73,207)		(76,318)
Total Fossil Group, Inc. stockholders’ equity	369,132		405,932
Noncontrolling interests	(2,843)		(2,923)
Total stockholders’ equity	366,289		403,009
Total liabilities and stockholders’ equity	$	1,085,995	$	1,238,128

See notes to the unaudited condensed consolidated financial statements.

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 April 1, 2023		For the 13 Weeks Ended April 2, 2022
Net sales	$	325,036	$	375,853
Cost of sales	164,319		191,540
Gross profit	160,717		184,313
Operating expenses:
Selling, general and administrative expenses	190,873		195,758

Other long-lived asset impairments	55		286
Restructuring expenses	7,097		2,551
Total operating expenses	198,025		198,595
Operating income (loss)	(37,308)		(14,282)
Interest expense	5,004		3,997
Other income (expense) - net	2,733		1,618
Income (loss) before income taxes	(39,579)		(16,661)
Provision for income taxes	1,603		4,687
Net income (loss)	(41,182)		(21,348)
Less: Net income (loss) attributable to noncontrolling interests	80		166
Net income (loss) attributable to Fossil Group, Inc.	$	(41,262)	$	(21,514)
Other comprehensive income (loss), net of taxes:
Currency translation adjustment	$	5,897	$	(7,885)
Cash flow hedges - net change	(2,786)		1,098

Total other comprehensive income (loss)	3,111		(6,787)
Total comprehensive income (loss)	(38,071)		(28,135)
Less: Comprehensive income (loss) attributable to noncontrolling interests	80		166
Comprehensive income (loss) attributable to Fossil Group, Inc.	$	(38,151)	$	(28,301)
Earnings (loss) per share:
Basic	$	(0.80)	$	(0.41)
Diluted	$	(0.80)	$	(0.41)
Weighted average common shares outstanding:
Basic	51,840		51,999
Diluted	51,840		51,999

See notes to the unaudited condensed consolidated financial statements.

FOSSIL GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

UNAUDITED

IN THOUSANDS


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

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


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




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


For the 13 Weeks Ended April 2, 2022
	Common Stock			Additional Paid-in Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Stockholders' Equity Attributable to Fossil Group, Inc.		Noncontrolling Interest		Total Stockholders' Equity
	Shares	Par Value
Balance, January 1, 2022	52,146	$	521	$	300,848	$	—	$	229,132	$	(67,275)	$	463,226	$	2,132	$	465,358


Acquisition of common stock	—	—		—		(10,000)		—		—		(10,000)		—		(10,000)
Retirement of common stock	(989)	(10)		(506)		10,000		(9,484)		—		—		—		—


Stock-based compensation	—	—		2,241		—		—		—		2,241		—		2,241
Net income (loss)	—	—		—		—		(21,514)		—		(21,514)		166		(21,348)
Other comprehensive income (loss)	—	—		—		—		—		(6,787)		(6,787)		—		(6,787)





Balance, April 2, 2022	51,157	$	511	$	302,583	$	—	$	198,134	$	(74,062)	$	427,166	$	2,298	$	429,464

See notes to the unaudited condensed consolidated financial statements.

FOSSIL GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED

IN THOUSANDS


	For the 13 Weeks Ended April 1, 2023		For the 13 Weeks Ended April 2, 2022
Operating Activities:
Net income (loss)	$	(41,182)	$	(21,348)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation, amortization and accretion	5,068		6,185
Non-cash lease expense	18,619		20,742
Stock-based compensation	1,362		2,241
Decrease in allowance for returns and markdowns	(6,320)		(3,975)

Property, plant and equipment and other long-lived asset impairment losses	55		286

Non-cash restructuring charges	—		92
Bad debt expense	395		2,094

Other non-cash items	(1,427)		2,100
Contingent consideration remeasurement	(347)		11

Changes in operating assets and liabilities:
Accounts receivable	39,644		51,069
Inventories	41,959		(41,947)
Prepaid expenses and other current assets	(10,171)		(18,963)
Accounts payable	(71,548)		(30,097)
Accrued expenses	(29,846)		(57,853)
Income taxes	(9,761)		(927)
Operating lease liabilities	(22,362)		(24,755)
Net cash used in operating activities	(85,862)		(115,045)
Investing Activities:
Additions to property, plant and equipment and other	(2,610)		(2,526)
(Increase) decrease in intangible and other assets	(109)		251


Net cash used in investing activities	(2,719)		(2,275)
Financing Activities:
Acquisition of common stock	(11)		(10,000)

Debt borrowings	40,136		46,167
Debt payments	(22,003)		(4,100)
Payment for shares of Fossil Accessories South Africa Pty. Ltd.	(1,660)		—

Net cash provided by financing activities	16,462		32,067
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	298		(3,502)
Net decrease in cash, cash equivalents, and restricted cash	(71,821)		(88,755)
Cash, cash equivalents, and restricted cash:
Beginning of period	204,075		264,572
End of period	$	132,254	$	175,817

See notes to the unaudited condensed consolidated financial statements.

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 April 1, 2023 (“First Quarter”) as compared to the thirteen-week period ended April 2, 2022 (“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 April 1, 2023, 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 31, 2022 (the “2022 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 2022 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.

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 April 1, 2023		For the 13 Weeks Ended April 2, 2022
Numerator:
Net income (loss) attributable to Fossil Group, Inc.	$	(41,262)	$	(21,514)
Denominator:
Basic EPS computation:
Basic weighted average common shares outstanding	51,840		51,999
Basic EPS	$	(0.80)	$	(0.41)
Diluted EPS computation:

Diluted weighted average common shares outstanding	51,840		51,999
Diluted EPS	$	(0.80)	$	(0.41)

At the end of the First 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 First Quarter.

At the end of the Prior Year Quarter, approximately 2.1 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 April 1, 2023 and April 2, 2022 that are presented in the condensed consolidated statement of cash flows (in thousands):


	April 1, 2023		April 2, 2022
Cash and cash equivalents	$	127,111	$	162,619
Restricted cash included in prepaid expenses and other current assets	107		117
Restricted cash included in intangible and other assets-net	5,036		13,081
Cash, cash equivalents and restricted cash	$	132,254	$	175,817

Recently Adopted Accounting Standards

In October 2021, the Financial Accounting Standards Board issued Accounting Standards Update 2021-08, Business Combinations – Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The guidance requires an acquirer to recognize and measure contract assets and liabilities acquired in a business combination as if they had originated the contracts, as opposed to at fair value on the acquisition date. The standard is effective for business combinations after January 1, 2023. The adoption of this standard did not have an impact on the Company's consolidated financial statements or related disclosures.

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

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


	For the 13 Weeks Ended April 2, 2022
	Americas		Europe		Asia		Corporate		Total
Product type
Watches:
Traditional watches	$	115,902	$	81,149	$	64,363	$	13	$	261,427
Smartwatches	17,272		12,686		8,024		2		37,984
Total watches	$	133,174	$	93,835	$	72,387	$	15	$	299,411
Leathers	19,236		7,369		7,580		—		34,185
Jewelry	7,936		21,135		5,625		—		34,696
Other	1,581		2,212		1,176		2,592		7,561
Consolidated	$	161,927	$	124,551	$	86,768	$	2,607	$	375,853

Timing of revenue recognition
Revenue recognized at a point in time	$	161,594	$	124,300	$	86,608	$	1,164	$	373,666
Revenue recognized over time	333		251		160		1,443		2,187
Consolidated	$	161,927	$	124,551	$	86,768	$	2,607	$	375,853

Contract Balances. As of April 1, 2023, 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) $1.1 million and $0.8 million as of April 1, 2023 and December 31, 2022, respectively, related to remaining performance obligations on licensing income, (ii) $1.9 million and $3.7 million as of April 1, 2023 and December 31, 2022, respectively, primarily related to remaining performance obligations on wearable technology products and (iii) $3.1 million as of both April 1, 2023 and December 31, 2022 related to gift cards issued.

3. INVENTORIES

Inventories consisted of the following (in thousands):


	April 1, 2023		December 31, 2022
Components and parts	$	13,868	$	20,998

Finished goods	322,635		355,030
Inventories	$	336,503	$	376,028

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 April 1, 2023		For the 13 Weeks Ended April 2, 2022
Beginning balance	$	13,623	$	19,159
Settlements in cash or kind	(2,282)		(2,905)
Warranties issued and adjustments to preexisting warranties (1)	1,528		1,652
Ending balance	$	12,869	$	17,906

_______________________________________________

(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 April 1, 2023			For the 13 Weeks Ended April 2, 2022
Income tax (benefit) expense	$	1,603		$	4,687
Effective tax rate	(4.1)		%	(28.1)		%

The effective tax rate in the First Quarter was favorable as compared to the Prior Year Quarter due to reduced foreign taxes. The First Quarter and Prior Year Quarter tax rates are negative because foreign income tax expense is accrued on certain foreign entities with positive taxable income when the consolidated results are a loss. 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 April 1, 2023, the Company's total amount of unrecognized tax benefits, excluding interest and penalties, was $24.5 million, of which $24.5 million would favorably impact the effective tax rate in future periods, if recognized. The Company is subject to examinations in various state and foreign jurisdictions for its 2013-2021 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 April 1, 2023, the Company had recorded $8.5 million of unrecognized tax benefits, excluding interest and penalties, for positions that are expected to be settled within the next twelve months. Consistent with its past practice, the Company recognizes interest and/or penalties related to income tax overpayments and income tax underpayments in income tax expense and income taxes receivable/payable. At April 1, 2023, the total amount of accrued income tax-related interest included in the condensed consolidated balance sheets

was $9.7 million. There were no accrued tax-related penalties. For the First Quarter, the Company accrued income tax related interest expense of $0.6 million.

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 51,841,146 and 51,836,456 shares issued and outstanding at April 1, 2023 and December 31, 2022, respectively. The Company has 1,000,000 shares of preferred stock, par value $0.01 per share, authorized, with none issued or outstanding at April 1, 2023 or December 31, 2022. 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 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 April 1, 2023 and December 31, 2022, all treasury stock had been effectively retired. As of April 1, 2023, the Company had $20.0 million of repurchase authorizations remaining under its repurchase program.

The following table reflects the Company's common stock repurchase activity for the periods indicated (in millions):


				For the 13 Weeks Ended April 1, 2023			For the 13 Weeks Ended April 2, 2022
Fiscal Year Authorized	Dollar Value Authorized		Termination Date	Number of Shares Repurchased	Dollar Value Repurchased		Number of Shares Repurchased	Dollar Value Repurchased

2010	$	30.0	None	—	$	—	1.0	$	10.0

7. EMPLOYEE BENEFIT PLANS

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


Stock Appreciation Rights	Shares	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
	(in Thousands)			(in Years)	(in Thousands)
Outstanding at December 31, 2022	101	$	55.31	0.9	$	—


Forfeited or expired	(26)	80.22
Outstanding at April 1, 2023	75	46.55		0.9	—
Exercisable at April 1, 2023	75	$	46.55	0.9	$	—

The aggregate intrinsic value shown in the table above is based on the exercise price for outstanding and exercisable rights at April 1, 2023.

Stock Appreciation Rights Outstanding and Exercisable. The following table summarizes information with respect to stock appreciation rights outstanding and exercisable at April 1, 2023:


Stock Appreciation Rights Outstanding					Stock Appreciation Rights Exercisable
Range of Exercise Prices	Number of Shares	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Number of Shares	Weighted- Average Exercise Price
	(in Thousands)			(in Years)	(in Thousands)
$36.73 - $55.09	75	$	46.55	0.9	75	$	46.55



Total	75	$	46.55	0.9	75	$	46.55

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 Shares	Weighted-Average Grant Date Fair Value Per Share
	(in Thousands)
Nonvested at December 31, 2022	1,967	$	10.08
Granted	—	—
Vested	(7)	10.28
Forfeited	(90)	10.61
Nonvested at April 1, 2023	1,870	$	10.05

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.

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 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 reclassifications	5,897		(3,126)		—		2,771
Tax (expense) benefit	—		444		—

Fossil Group, Inc. [FOSL] Filings

Fossil Group, Inc. [FOSLL] Filings