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Stockholders' Equity and Benefit Plans | 12 Months Ended
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Dec. 29, 2012
Stockholders' Equity and Benefit Plans |
Stockholders' Equity and Benefit Plans | 15. Stockholders' Equity and Benefit Plans Common and Preferred Stock. The Company has 100,000,000 shares of common stock, par value $0.01 per share, authorized, with 59,631,459 and 68,370,020 shares issued at fiscal year end 2012 and 2011, respectively. The Company has 1,000,000 shares of preferred stock, par value $0.01 per share, authorized, with none issued or outstanding. 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 Securities Exchange Act of 1934. During the period from the announcement of the Company's $750 million buyback authorization in August 2010 until the end of the fiscal year 2012 the Company has repurchased approximately $711.4 million of its common stock, representing approximately 9.2 million shares. The Company has not repurchased any shares under the $30 million repurchase plan that was authorized in 2010. During fiscal year 2012, the Company effectively retired 9.3 million shares of common stock repurchased under its repurchase programs during fiscal years 2012, 2011, and 2010. During fiscal year 2012, the effective retirement of these shares of common stock decreased common stock by $93,000, additional paid-in capital by $50.1 million, retained earnings by $661.8 million and treasury stock by $712.0 million. The following table reflects the Company's common stock repurchase activity for the periods indicated (in millions):
|  |  |  |  |  | For the 2012 Fiscal Year |  | For the 2011 Fiscal Year |
--- | --- | --- | --- | --- | --- | --- | --- | --- | ---
Fiscal Year Authorized |  | Dollar Value Authorized |  | Termination Date |  | Number of Shares Repurchased |  | Dollar Value Repurchased |  | Number of Shares Repurchased |  | Dollar Value Repurchased |
2012 |  | $ | 1,000.0 |  | December 2016 |  |  | 0.0 |  | $ | 0.0 |  |  | 0.0 |  | $ | 0.0 |
2010 |  | $ | 30.0 |  | None |  |  | 0.0 |  | $ | 0.0 |  |  | 0.0 |  | $ | 0.0 |
2010 |  | $ | 750.0 |  | December 2013 |  |  | 3.0 |  | $ | 261.3 |  |  | 3.1 |  | $ | 270.9 |
Noncontrolling Interest. In October 2012, the Company acquired the outstanding minority interest shares in Fossil Mexico, S.A. de C.V. ("Fossil Mexico") and Servicios Fossil Mexico, S.A. de C.V. ("Fossil Servicios"), representing the entire noncontrolling interest in these subsidiaries, for approximately $14.1 million in cash. The transaction was accounted for as an equity transaction, and the Company's ownership interest in both Fossil Mexico and Fossil Servicios increased to 100%. The following table summarizes the effects of changes in the Company's ownership interest in its subsidiaries on stockholders' equity (in thousands):
Fiscal Year |  | 2012 |  | 2011 |  | 2010 |
--- | --- | --- | --- | --- | --- | --- | ---
Net income attributable to Fossil, Inc. |  | $ | 343,401 |  | $ | 294,702 |  | $ | 255,205 |
Transfers to noncontrolling interest: |  |  |  |  |  |  |  |  |  |
Decrease in Fossil, Inc.'s additional paid-in capital for purchases of 49 common shares of Fossil Mexico and 49 common shares of Fossil Servicios |  |  | (7,332 | ) |  | 0 |  |  | 0 |
Decrease in Fossil, Inc.'s additional paid-in capital for purchases of 371 common shares of Fossil Taiwan |  |  | 0 |  |  | 0 |  |  | (711 | )
Net transfers to noncontrolling interest |  |  | (7,332 | ) |  | 0 |  |  | (711 | )
Change from net income attributable to Fossil, Inc. and transfers to noncontrolling interest |  | $ | 336,069 |  | $ | 294,702 |  | $ | 254,494 |
Deferred Compensation and Savings Plans. The Company has a defined contribution savings plan (the "401(k) Plan") for substantially all U.S.-based full-time employees of the Company. The Company's common stock is one of several investment alternatives available under the 401(k) Plan. Effective January 1, 2012, the Company added a Roth 401(k) option to the 401(k) Plan. The Company has a discretionary match for the 401(k) Plan. After one year of service (minimum of 1,000 hours worked), the Company matches 50% of employee contributions up to 3% of their compensation and 25% of employee contributions between 4% and 6% of their compensation. Effective January 1, 2012, after ninety 90 days of service (minimum of 250 hours worked), the Company increased its match to 50% of employee contributions up to 6% of their compensation. Matching contributions made by the Company to the 401(k) Plan totaled approximately $2.7 million, $1.6 million and $1.3 million for fiscal years 2012, 2011 and 2010, respectively. The Company also has the right to make additional matching contributions not to exceed 15% of employee compensation. The Company did not make any additional matching contributions during fiscal years 2012, 2011 and 2010. In December 1998, the Company adopted the Fossil, Inc. and Affiliates Deferred Compensation Plan (the "Deferred Plan"). Eligible participants may elect to defer up to 50% of their salary or up to 100% of any bonuses paid pursuant to the terms and conditions of the Deferred Plan. In addition, the Company may make employer contributions to participants under the Deferred Plan from time to time. The Company made no contributions to the Deferred Plan during fiscal years 2012, 2011 and 2010. The Company has made payments pursuant to the Deferred Plan into a Rabbi Trust. The funds held in the Rabbi Trust are directed to certain investments available through life insurance products and accounted for in accordance with ASC 710, Compensation—General ("ASC 710"). As of December 29, 2012, the Company had an asset of $3.2 million related to the Company's invested balances recorded in intangible and other assets—net and a liability of $2.8 million related to the participants' invested balances recorded in accrued expenses—other, each on the Company's consolidated balance sheets. Stock-Based Compensation Plans. The Company accounts for stock-based compensation in accordance with the provisions of ASC 718, using the Black-Scholes option pricing model to determine the fair value of stock options and stock appreciation rights at the date of grant. The Company's grants under its current stock-based compensation plans generally include: (i) stock options and restricted stock for its international employees, (ii) restricted stock units for its non-employee directors and (iii) stock appreciation rights, restricted stock and restricted stock units for its U.S.-based employees. As of December 29, 2012, there was approximately $26.5 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Company's incentive plans. This cost is expected to be recognized over a weighted-average period of approximately one and one-half years. Long-Term Incentive Plans. An aggregate of 4,685,030 shares of the Company's common stock were reserved for issuance pursuant to the Company's 2008 Long-Term Incentive Plan ("2008 LTIP"), adopted in March 2008. Designated employees of the Company, including officers, certain contractors, and outside directors of the Company are eligible to receive (i) stock options, (ii) stock appreciation rights, (iii) restricted or non-restricted stock awards, (iv) restricted stock units, (v) cash awards, or (vi) any combination of the foregoing. The 2008 LTIP is administered by the Compensation Committee of the Company's Board of Directors (the "Compensation Committee"). Each award issued under the 2008 LTIP terminates at the time designated by the Compensation Committee, not to exceed ten years. The current outstanding stock options, stock appreciation rights, restricted stock and restricted stock units issued under the 2008 LTIP have original vesting periods that predominately range from three to five years. All stock appreciation rights and restricted stock units are settled in shares of the Company's common stock. Effective January 1, 2012, the Company's Board of Directors approved changes to the equity compensation package for nonemployee directors. Each nonemployee director receives restricted stock units valued at $120,000 on the date of the Company's annual stockholders' meeting. These grants vest on the earlier of one year from the date of grant or the Company's next annual stockholders' meeting date. Prior to the Company establishing the 2008 LTIP, stock-based compensation awards were made to employees and nonemployee directors pursuant to the Company's initial Long-Term Incentive Plan ("LTIP") and Nonemployee Director Stock Option Plan ("Nonemployee Plan"), respectively. Each award issued under the LTIP terminates at the time designated by the Compensation Committee, not to exceed ten years. The currently outstanding options, stock appreciation rights, restricted stock and restricted stock units issued under the LTIP and Nonemployee Plan have original vesting periods that predominately range from three to five years. All stock appreciation rights and restricted stock units are settled in shares of the Company's common stock. The exercise prices of stock options granted under the Nonemployee Plan were not less than the fair market value of the Company's common stock at the date of grant. Pursuant to the Nonemployee Plan, 50% of the options granted became exercisable on the first anniversary of the date of grant and in two additional installments of 25% each on the second and third anniversaries. On March 26, 2008, the Company's Board of Directors elected to terminate these prior plans. The termination of the LTIP and the Nonemployee Plan did not impair outstanding awards representing 268,281 shares and 37,000 shares, respectively, of the Company's common stock at December 29, 2012 which continued in accordance with their original terms. Stock Options and Stock Appreciation Rights. The fair value of stock options and stock appreciation rights granted under the Company's stock-based compensation plans was estimated on the date of grant using the Black-Scholes option pricing model. The table below outlines the weighted average assumptions for these award grants:
Fiscal Year |  | 2012 |  | 2011 |  | 2010 |
--- | --- | --- | --- | --- | --- | --- | ---
Risk-free interest rate |  |  | 1.1 | % |  | 1.1 | % |  | 1.4 | %
Expected term (in years) |  |  | 5.1 |  |  | 4.7 |  |  | 5.8 |
Expected volatility |  |  | 51.1 | % |  | 45.2 | % |  | 50.4 | %
Expected dividend yield |  |  | 0.0 | % |  | 0.0 | % |  | 0.0 | %
Estimated fair value per option/stock appreciation right granted |  | $ | 56.08 |  | $ | 33.10 |  | $ | 18.60 |
The expected term of the options represent the estimated period of time until exercise and is based on historical experience of similar awards. Expected stock price volatility is based on the historical volatility of the Company's common stock. The risk-free interest rate is based on the implied yield available on U.S. Treasury issues with an equivalent remaining term. The Company receives a tax deduction for certain stock option exercises/restricted stock vestings when the options/restricted shares are exercised/vested. Generally for stock options, the tax deduction is related to the excess of the stock price at the time the stock options are exercised over the exercise price of the stock options. For restricted shares, the tax deduction is the fair market value of the Company's common stock on the date the restricted shares vest. Excess tax benefits from stock-based compensation on the Company's consolidated statements of cash flows for fiscal years 2012, 2011 and 2010 amounted to approximately $11.7 million, $10.0 million and $12.0 million, respectively. The following table summarizes stock option and stock appreciation rights activity:
Stock Options and Stock Appreciation Rights |  | Shares |  | Weighted- Average Exercise Price |  | Weighted- Average Remaining Contractual Term (years) |  | Aggregate Intrinsic Value |
--- | --- | --- | --- | --- | --- | --- | --- | --- | ---
|  | in thousands |  |  |  |  |  | in thousands |
Outstanding at January 2, 2010 |  |  | 2,811 |  | $ | 21.21 |  |  | 5.3 |  | $ | 35,217 |
Granted |  |  | 325 |  |  | 38.37 |  |  |  |  |  |  |
Exercised |  |  | (1,496 | ) |  | 19.98 |  |  |  |  |  | 47,073 |
Forfeited or expired |  |  | (240 | ) |  | 26.82 |  |  |  |  |  |  |
Outstanding at January 1, 2011 |  |  | 1,400 |  |  | 25.55 |  |  | 5.8 |  |  | 62,889 |
Granted |  |  | 303 |  |  | 87.73 |  |  |  |  |  |  |
Exercised |  |  | (461 | ) |  | 23.95 |  |  |  |  |  | 33,267 |
Forfeited or expired |  |  | (22 | ) |  | 47.44 |  |  |  |  |  |  |
Outstanding at December 31, 2011 |  |  | 1,220 |  |  | 41.20 |  |  | 5.8 |  |  | 49,125 |
Granted |  |  | 279 |  |  | 124.61 |  |  |  |  |  |  |
Exercised |  |  | (386 | ) |  | 30.28 |  |  |  |  |  | 32,201 |
Forfeited or expired |  |  | (74 | ) |  | 98.53 |  |  |  |  |  |  |
Outstanding at December 29, 2012 |  |  | 1,039 |  |  | 63.56 |  |  | 6.4 |  |  | 36,708 |
Exercisable at December 29, 2012 |  |  | 400 |  |  | 34.85 |  |  | 4.6 |  |  | 21,988 |
Nonvested at December 29, 2012 |  |  | 639 |  |  | 81.55 |  |  | 7.4 |  |  | 14,720 |
Expected to vest |  |  | 576 |  | $ | 81.55 |  |  | 7.4 |  | $ | 13,400 |
The aggregate intrinsic value in the table above is before income taxes and is based on the exercise price for outstanding and exercisable options/rights at December 29, 2012 and based on the fair market value of the Company's common stock on the exercise date for options/rights that have been exercised during the fiscal year. Stock Options and Stock Appreciation Rights Outstanding and Exercisable. The following table summarizes information with respect to options and stock appreciation rights outstanding and exercisable at December 29, 2012:
Stock Options and Stock Appreciation Rights Outstanding |  | Stock Options and Stock Appreciation Rights Exercisable |
--- | --- | --- | ---
Range of Exercise Prices |  | Number of Shares |  | Weighted- Average Exercise Price |  | Weighted- Average Remaining Contractual Term (Years) |  | Number of Shares |  | Weighted- Average Exercise Price |
|  | in thousands |  |  |  |  |  | in thousands |  |  |
$ 11.66 - $ 13.15 |  |  | 4 |  | $ | 11.69 |  |  | 0.2 |  |  | 4 |  | $ | 11.69 |
$ 13.15 - 26.29 |  |  | 271 |  |  | 18.32 |  |  | 4.0 |  |  | 184 |  |  | 20.44 |
$ 26.29 - 39.44 |  |  | 256 |  |  | 34.78 |  |  | 5.5 |  |  | 129 |  |  | 33.94 |
$ 39.44 - 52.58 |  |  | 32 |  |  | 43.12 |  |  | 5.0 |  |  | 32 |  |  | 43.12 |
$ 65.73 - 78.88 |  |  | 7 |  |  | 68.59 |  |  | 8.6 |  |  | 1 |  |  | 69.53 |
$ 78.88 - 92.02 |  |  | 209 |  |  | 81.45 |  |  | 7.8 |  |  | 43 |  |  | 81.23 |
$ 92.02 - 105.17 |  |  | 3 |  |  | 93.29 |  |  | 5.7 |  |  | 2 |  |  | 93.29 |
$118.31 - 131.46 |  |  | 257 |  |  | 128.02 |  |  | 8.8 |  |  | 5 |  |  | 128.29 |
Total |  |  | 1,039 |  | $ | 63.56 |  |  | 6.4 |  |  | 400 |  | $ | 34.85 |
Restricted Stock and Restricted Stock Units. The following table summarizes restricted stock and restricted stock unit activity:
Restricted Stock and Restricted Stock Units |  | Number of Shares |  | Weighted- Average Grant-Date Fair Value |
--- | --- | --- | --- | --- | ---
|  | in thousands |  |  |
Nonvested at January 2, 2010 |  |  | 493 |  | $ | 21.54 |
Granted |  |  | 215 |  |  | 38.83 |
Vested |  |  | (150 | ) |  | 21.66 |
Forfeited |  |  | (128 | ) |  | 25.35 |
Nonvested at January 1, 2011 |  |  | 430 |  |  | 29.03 |
Granted |  |  | 105 |  |  | 86.80 |
Vested |  |  | (172 | ) |  | 29.29 |
Forfeited |  |  | (11 | ) |  | 42.98 |
Nonvested at December 31, 2011 |  |  | 352 |  |  | 45.70 |
Granted |  |  | 102 |  |  | 110.72 |
Vested |  |  | (161 | ) |  | 45.14 |
Forfeited |  |  | (16 | ) |  | 67.62 |
Nonvested at December 29, 2012 |  |  | 277 |  |  | 68.69 |
Expected to vest |  |  | 250 |  | $ | 68.69 |
The total fair value of shares/units vested during fiscal years 2012, 2011 and 2010 was $19.1 million, $14.7 million and $5.8 million, respectively.

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- Definition The entire disclosure for accounts comprising shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, if any, including other comprehensive income (as applicable). Also includes disclosure of compensation-related costs for equity-based compensation which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details, and employee stock purchase plan details. + References No definition available. + Details
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