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Debt | 12 Months Ended
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Dec. 29, 2012
Debt |
Debt | 11. Debt Short Term Foreign-Based. The Company's Japanese subsidiary, Fossil Japan, Inc. ("Fossil Japan"), entered into a 400 million Yen revolving credit facility agreement (the "Facility") on November 25, 2009. The Facility bears interest at the short-term prime rate (1.475% at fiscal year end 2012). On April 6, 2012, Fossil Japan repaid the entire outstanding balance of 300 million Yen, approximately $3.6 million. Yen-based borrowings, in U.S. dollars, under the Facility were approximately $2.6 million and $4.9 million at fiscal year end 2011 and 2010, respectively. The Company incurred approximately $13,000, $46,000, and $61,000 of interest expense related to borrowings under the Facility for fiscal years 2012, 2011 and 2010, respectively. The borrowings entered into by Fossil Japan were primarily used for working capital purposes. In April 2011, the Company's Korean subsidiary, Fossil (Korea) Limited ("Fossil Korea"), entered into a $20 million credit facility agreement (the "Agreement") with Bank of America, N.A. Seoul Branch. The Agreement bears interest based on a three month CD rate which is published by the Korea Securities Dealers Association (2.85% at fiscal year end 2012), plus 120 basis points for a one month period or plus 130 basis points for a three month period. On April 13, 2012, the Agreement was renewed under the same terms for a one year time period. On November 19, 2012, Fossil Korea repaid the entire outstanding balance of $1.8 million. Borrowings under the Facility were approximately $6.0 million at fiscal year end 2011. The Company incurred approximately $242,000, and $265,000 of interest expense related to borrowings under the Agreement for fiscal years 2012 and 2011, respectively. The borrowings entered into by Fossil Korea were primarily used for working capital purposes. On September 21, 2007, Fossil Group Europe, GmbH ("FGE"), a wholly owned subsidiary of the Company, entered into a long-term note payable with its primary bank (the "FGE Note") related to the purchase of a building in Basel, Switzerland. The FGE Note requires FGE to submit an annual balance sheet and income statement and is secured by the Company's building in Basel, Switzerland. The FGE Note has a variable interest rate (2% at fiscal year end 2012) with interest payments due quarterly. This note requires minimum principal payments of 100,000 Swiss Francs (approximately $109,000 U.S. dollars at fiscal year end 2012) per year with no stated maturity and no penalties for early payment. The principal payment for the subsequent fiscal year is included in short-term borrowings. Upon acquiring STP in April 2012, the Company assumed a 500,000 Swiss Franc short-term note payable (the "STP Note") with Eastime Limited that is used for working capital purposes. The STP Note has a fixed interest rate of 2% with interest payments due yearly and a maturity date of March 31, 2013. Swiss Franc-based borrowings, in U.S. dollars, under the STP Note were approximately $547,000 at the end of fiscal year 2012. On October 31, 2012, Swiss Technology Components AG ("STC"), a wholly owned subsidiary of the Company, entered into a 1.1 million Swiss Franc short-term note payable (the "STC Note") with New Civilization Limited, a corporation registered in Macau, China. The STC Note has a fixed interest rate of 3% with interest and principal due on October 31, 2013. The Swiss Franc-based borrowings, in U.S. dollars, under the STC Note were approximately $1.2 million at December 29, 2012. The borrowings entered into by STC were used to purchase real estate. Long Term U.S.-Based. On December 17, 2010, the Company entered into a three year Credit Agreement (the "Credit Agreement") with (i) Wells Fargo Bank, National Association ("Wells Fargo"), as administrative agent, swingline lender and issuing lender, (ii) Wells Fargo Securities, LLC, as sole lead arranger and sole book manager, and (iii) Bank of America, N.A., as lender. The Credit Agreement provides for revolving credit loans in the amount of $300 million (the "Revolver"), a swingline loan of $20 million, and letters of credit. On April 2, 2012, in connection with the Skagen Designs acquisition, the Credit Agreement was amended to, among other things, (i) increase the aggregate commitment of the lenders under the revolving credit facility from $300 million to $350 million, (ii) provide for an uncommitted $50 million incremental revolving credit commitment and (iii) extend the maturity date from December 17, 2013 to December 17, 2014. The Credit Agreement is guaranteed by all direct and indirect material domestic subsidiaries of the Company and secured by 65% of the outstanding voting capital stock and 100% of the non-voting capital of the following foreign subsidiaries of the Company: Fossil Europe B.V., Swiss Technology Holding GmbH and Fossil (East) Limited. In connection with entering into the Credit Agreement, the Company paid upfront fees of approximately $1.2 million, which are being amortized over the life of the Credit Agreement. In connection with the amendment on April 2, 2012, the Company paid upfront fees of $50,000 to increase the revolving credit commitment and an amendment fee of $175,000, which are also being amortized over the life of the Credit Agreement. Amounts outstanding under the Revolver bear interest at the Company's option of (i) the base rate (defined as the higher of (a) the prime rate publicly announced by Wells Fargo (3.25% at fiscal year end 2012), (b) the federal funds rate plus 1.50% and (c) the London Interbank Offer Rate ("LIBOR") (0.21% at fiscal year end 2012) plus 1.50%) plus the base rate applicable margin (which varies based upon the Company's consolidated leverage ratio (the "Ratio") from 0.25% if the Ratio is less than 1.00 to 1.00, to 1.00% if the 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 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). 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 base rate applicable margin. Interest based upon the base rate is payable quarterly in arrears. Interest based upon the LIBOR rate is payable either monthly or quarterly in arrears, depending on the interest period selected by the Company. The Revolver also includes a commitment fee ranging from 0.20% to 0.35% for any amounts not drawn under the Revolver. Loans under the Credit Agreement may be prepaid, in whole or in part, at the option of the Company, in minimum principal amounts of $2.0 million or increments of $1.0 million in excess thereof with respect to a base rate loan, $5.0 million or increments of $1.0 million in excess thereof with respect to a LIBOR rate loan and $100,000 or increments of $100,000 in excess thereof with respect to a swingline loan. Loans under the Credit Agreement must be repaid, or letter of credit obligations cash collateralized with the net proceeds of certain asset sales, 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. Wells Fargo can accelerate the repayment obligation 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. There were outstanding borrowings of $65 million under the Revolver as of December 29, 2012. Amounts available under the Revolver are reduced by any amounts outstanding under standby letters of credit. At December 29, 2012, the Company had available borrowings of approximately $284.1 million under the Revolver. The Company incurred approximately $2.6 million of interest expense related to the Revolver during fiscal year 2012. Financial covenants in the Credit Agreement require the Company to maintain (i) a consolidated leverage ratio no greater than 2.50 to 1.00, (ii) consolidated tangible net worth of no less than the sum of (a) $600 million plus (b) 25% of positive consolidated net income, (iii) consolidated net income that is not negative for any two consecutive fiscal quarters, and (iv) maximum capital expenditures not in excess of $200 million during fiscal year 2012, and $150 million during each fiscal year thereafter, subject to certain adjustments. The Credit Agreement contains representations, warranties, covenants, events of default and indemnities that are customary for agreements of this type. The Company was in compliance with all covenants in the Credit Agreement as of December 29, 2012. Long-Term Foreign Based. In addition to the annual principal payment of 100,000 Swiss Francs, which is classified as short-term borrowings, a portion of the FGE Note was classified as a long-term borrowing at the end of fiscal year 2012. The Company incurred approximately $98,000, $82,000, and $76,000 of interest expense related to the FGE Note during fiscal years 2012, 2011 and 2010, respectively. At the end of fiscal year 2012 and 2011, total current and long-term amounts outstanding under the FGE Note were $3.8 million. Letters of Credit. On May 11, 2012, the Company, LP, FGE and Fossil Asia Pacific Ltd. renewed their Letter of Credit Facility (the "LC Facility") with the Hongkong and Shanghai Banking Corporation Limited to allow for $80 million of commercial letters of credit. Prior to this renewal, the LC Facility allowed for $60 million of commercial letters of credit. At the end of fiscal years 2012 and 2011, the Company had outstanding letters of credit under the LC Facility of approximately $39.9 million and $36.9 million, respectively. Letters of credit issued under the LC Facility are primarily used for the purchase of inventory. Capital Lease Obligations. At the end of fiscal years 2012 and 2011, the Company had current capital lease obligations of $0.9 million and $0.3 million, respectively, and long-term capital lease obligations of $6.4 million and $2.5 million, respectively.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 19, 20, 22 -Article 5 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 129 -Paragraph 2, 4 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. + Details
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