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FAIR VALUE MEASUREMENTS | 9 Months Ended
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Oct. 03, 2020
Fair Value Disclosures [Abstract] |
FAIR VALUE MEASUREMENTS | 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. 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 October 3, 2020 (in thousands):
| Fair Value at October 3, 2020
| Level 1 |  | Level 2 |  | Level 3 |  | Total
Assets: |  |  |  |  |  |  |
Forward contracts | $ | — |  |  | $ | 329 |  |  | $ | — |  |  | $ | 329 |
Deferred compensation plan assets: |  |  |  |  |  |  |
Investment in publicly traded mutual funds | 5,540 |  |  | — |  |  | — |  |  | 5,540 |
Total | $ | 5,540 |  |  | $ | 329 |  |  | $ | — |  |  | $ | 5,869 |
Liabilities: |  |  |  |  |  |  |
Contingent consideration | $ | — |  |  | $ | — |  |  | $ | 1,517 |  |  | $ | 1,517 |
Forward contracts | — |  |  | 1,577 |  |  | — |  |  | 1,577 |
Total | $ | — |  |  | $ | 1,577 |  |  | $ | 1,517 |  |  | $ | 3,094 |
The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of December 28, 2019 (in thousands):
| Fair Value at December 28, 2019
| Level 1 |  | Level 2 |  | Level 3 |  | Total
Assets: |  |  |  |  |  |  |
Forward contracts | $ | — |  |  | $ | 3,348 |  |  | $ | — |  |  | $ | 3,348 |
Deferred compensation plan assets: |  |  |  |  |  |  |
Investment in publicly traded mutual funds | 5,243 |  |  | — |  |  | — |  |  | 5,243 |
Total | $ | 5,243 |  |  | $ | 3,348 |  |  | $ | — |  |  | $ | 8,591 |
Liabilities: |  |  |  |  |  |  |
Contingent consideration | $ | — |  |  | $ | — |  |  | $ | 1,141 |  |  | $ | 1,141 |
Forward contracts | — |  |  | 1,824 |  |  | — |  |  | 1,824 |
Total | $ | — |  |  | $ | 1,824 |  |  | $ | 1,141 |  |  | $ | 2,965 |
The fair values of the Company’s deferred compensation plan assets are based on quoted prices. The deferred compensation plan assets are recorded in intangible and other assets-net in the Company’s condensed consolidated balance sheets. 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 October 3, 2020, debt, excluding unamortized debt issuance costs and capital leases, was recorded at cost and had a carrying value of $257.0 million and had a fair value of approximately $245.0 million. The fair value of debt was based on observable market inputs. The fair value of trade names are measured on a non-recurring basis using Level 3 inputs, including forecasted cash flows, discount rates and implied royalty rates. During the first quarter of fiscal year 2020, the MICHELE® trade name with a carrying amount of $10.9 million was written down to its implied fair value of $8.4 million, resulting in a pre-tax impairment charge of $2.5 million in the Year To Date Period. The trade name impairment charge was recorded in the Corporate cost area. No trade name impairment was recorded during the Third Quarter. During the Year To Date Period, operating lease right-of-use ("ROU") assets with a carrying amount of $38.5 million and property, plant and equipment-net with a carrying amount of $5.8 million related to retail store leasehold improvements, fixturing and shop-in-shops were written down to a fair value of $14.5 million and $1.6 million, respectively, resulting in impairment charges of $28.2 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 $28.2 million impairment expense, $16.9 million, $6.5 million, and $1.0 million was recorded in SG&A in the Americas, Europe and Asia segments, respectively, and $2.0 million, $1.1 million, and $0.7 million was recorded in restructuring charges in the Americas, Europe and Asia segments, respectively. The fair value of the contingent consideration liability related to Fossil South Africa was determined using Level 3 inputs. The contingent consideration is based on Fossil South Africa's projected earnings and dividends. The present value of the contingent consideration liability was valued at $1.5 million as of October 3, 2020. The Company recorded $0.1 million of the variable consideration in accrued expenses-other and $1.4 million in other long-term liabilities in the condensed consolidated balance sheets at October 3, 2020.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=117815213&loc=d3e19207-110258 + Details
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