Revenue

12 Months Ended

Dec. 28, 2019

Revenue from Contract with Customer [Abstract]

REVENUE

The Company’s revenue consists of sales of finished products to customers through wholesale and retail channels. Revenue from the sale of products, including those that are subject to inventory consignment agreements, is recognized when control of the product is transferred to the customer and in an amount that reflects the consideration the Company expects to be entitled in exchange for the product. The Company generally considers control to transfer either when products ship or when products are delivered depending on the shipping terms in the agreement or purchase order. The Company considers control to have transferred upon shipment or delivery because the Company has a present right to payment, the customer has legal title to the product, the Company has transferred physical possession of the product, and the customer has the significant risks and rewards of the product. Taxes imposed by governmental authorities on the Company's revenue-producing activities with customers, such as sales taxes and value added taxes, are excluded from net sales.

Markdowns. The Company provides markdowns to certain customers in order to facilitate sales of select styles. Markdowns are estimated at the time of sale using historical data and are recorded as a reduction to revenue. The Company's policy is to record its markdown allowance as a reduction of accounts receivable.

Returns. The Company accepts limited returns from customers. The Company continually monitors returns and maintains a provision for estimated returns based upon historical experience and any specific issues identified. Product returns are accounted for as reductions to revenue, cost of sales, customer liabilities and an increase to other current assets to the extent the returned product is resalable. While returns have historically been within management's expectations and the provisions established, future return rates may differ from those experienced in the past. In the event that the Company's products are performing poorly in the retail market and/or it experiences product damages or defects at a rate significantly higher than the historical rate, the resulting returns could have an adverse impact on the operating results for the period or periods in which such returns occur.

Cooperative Advertising. The Company participates in cooperative advertising programs with its major retail customers, whereby the Company shares the cost of certain of their advertising and promotional expenses. Certain advertising expenses which are not considered separate performance obligations are recorded as sales discounts. All other cooperative advertising expenses are recorded in SG&A.

Multiple Performance Obligations. The Company enters into contracts with customers for its wearable technology that includes multiple performance obligations. Each distinct performance obligation was determined by whether the customer could benefit from the good or service on its own or together with readily available resources. The Company allocates revenue to each performance obligation based on its relative standalone selling price. The Company’s process for determining standalone selling price considers multiple factors including the Company’s internal pricing model and market trends that may vary depending upon the facts and circumstances related to each performance obligation. Revenue allocated to the hardware and software essential to the functionality of the product represents the majority of the arrangement consideration and is recognized at the time of product delivery, provided the other conditions for revenue recognition have been met. Revenue allocated to free software services provided through the Company's online dashboard and mobile apps as well as revenue allocated to the right to receive future unspecified software updates is deferred and recognized on a straight-line basis over the product's estimated usage period of two years.

Licensing Income. In fiscal year 2018, the Company entered into a seven year agreement to provide hybrid smartwatch technology and related support to its customer, Citizen Watch Co, Ltd. The Company determined the material rights in the contract, which include the infrastructure setup to design and manufacture hybrid watches, are one performance obligation. The contract contains fixed consideration related to upfront setup and access to the technology. The contract also contains variable consideration related to maintenance and royalties. The total variable consideration was estimated using a probability-weighted range of possible consideration amounts. The transfer of services takes place at varying times over the duration of the contract. The Company uses the input method, using projected labor hours as its measure of progress, to recognize revenue associated with this contract. The Company has determined the input method best reflects the Company's progress towards the completion of its performance obligation. When this input method is applied, the allocation of revenue is mostly recorded early in the agreement, when the specialization and setup work is being performed, as opposed to later on in the agreement when only the regular ongoing services are provided.

Disaggregation of Revenue. The Company's revenue disaggregated by major product category and timing of revenue recognition was as follows (in thousands):



	Fiscal Year 2019
	Americas		Europe		Asia		Corporate		Total
Product Type
Watches	$	769,581	$	557,460	$	475,361	$	79	$	1,802,481
Leathers	145,632		47,308		45,679		—		238,619
Jewelry	24,826		92,935		5,416		—		123,177
Other	9,926		17,791		8,700		17,018		53,435
Consolidated	$	949,965	$	715,494	$	535,156	$	17,097	$	2,217,712

Timing of Revenue Recognition
Revenue recognized at a point in time	$	947,353	$	714,056	$	534,403	$	6,145	$	2,201,957
Revenue recognized over time	2,612		1,438		753		10,952		15,755
Consolidated	$	949,965	$	715,494	$	535,156	$	17,097	$	2,217,712



	Fiscal Year 2018
	Americas		Europe		Asia		Corporate		Total
Product Type
Watches	$	936,875	$	656,948	$	439,029	$	169	$	2,033,021
Leathers	171,808		67,264		50,313		—		289,385
Jewelry	50,266		111,603		5,906		—		167,775
Other	15,558		20,476		10,225		5,048		51,307
Consolidated	$	1,174,507	$	856,291	$	505,473	$	5,217	$	2,541,488

Timing of Revenue Recognition
Revenue recognized at a point in time	$	1,172,200	$	855,219	$	504,956	$	4,477	$	2,536,852
Revenue recognized over time	2,307		1,072		517		740		4,636
Consolidated	$	1,174,507	$	856,291	$	505,473	$	5,217	$	2,541,488

Contract Balances. As of December 28, 2019, the Company had no material contract assets on the consolidated balance sheets and no deferred contract costs. The Company had contract liabilities of (i) $13.4 million and $21.8 million as of December 28, 2019 and December 29, 2018, respectively, related to remaining performance obligations on licensing income, (ii) $5.3 million and $6.2 million as of December 28, 2019 and December 29, 2018, respectively, primarily related to remaining performance obligations on wearable technology products and (iii) $3.3 million and $3.8 million as of December 28, 2019 and December 29, 2018, respectively, related to gift cards issued.

Shipping and Handling Fees. The Company accounts for shipping and handling activities that occur after control of the related good transfers as fulfillment activities instead of assessing such activities as performance obligations.