Published: 2021-08-12 00:00:00 ET

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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 Company’s fiscal year periodically results in a 53-week year instead of a normal 52-week year. The fiscal year ended January 2, 2021 was a 53-week year, with the additional week being included in the first quarter. The information presented herein includes the thirteen-week periods ended July 3, 2021 (“Second Quarter”) and July 4, 2020 (“Prior Year Quarter”), respectively, and the twenty-six week period ended July 3, 2021 ("Year To Date Period") as compared to the twenty-seven week period ended July 4, 2020 (Prior Year YTD Period"). 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 July 3, 2021, and the results of operations for the Second Quarter, Prior Year Quarter, Year To Date Period and Prior Year YTD Period. All adjustments are of a normal, recurring nature.

Effective during fiscal year 2021, the Company made a change to the presentation of reportable segments to include all information technology costs within its Corporate cost area. The Company's historical segment disclosures have been recast to be consistent with its current presentation.

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/A filed by the Company pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), for the fiscal year ended January 2, 2021 (the “2020 Form 10-K/A”). Operating results for the Second 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, including estimates of the impact of the coronavirus (“COVID-19”) pandemic. Actual results could differ from those estimates, including the impact of the COVID-19 pandemic. The Company has not made any changes in its significant accounting policies from those disclosed in the 2020 Form 10-K/A.

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 expenses (“SG&A”), trade name impairments, 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, design and product development labor costs. SG&A also includes general and administrative expenses primarily consisting of administrative support labor and “back office” or 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 reorganize, refine and optimize the Company’s infrastructure as well as store closure expenses.

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.

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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 July 3, 2021						For the 13 Weeks Ended July 4, 2020						For the 26 Weeks Ended July 3, 2021						For the 27 Weeks Ended July 4, 2020
Numerator:
Net income (loss) attributable to Fossil Group, Inc.			$	(1,192)					$	(22,543)					$	(25,632)					$	(108,124)
Denominator:
Basic EPS computation:
Basic weighted average common shares outstanding			52,040						51,189						51,779						50,866
Basic EPS			$	(0.02)					$	(0.44)					$	(0.50)					$	(2.13)
Diluted EPS computation:
Basic weighted average common shares outstanding			52,040						51,189						51,779						50,866
Diluted weighted average common shares outstanding			52,040						51,189						51,779						50,866
Diluted EPS			$	(0.02)					$	(0.44)					$	(0.50)					$	(2.13)

At the end of the Second Quarter and Year To Date Period, approximately 2.1 million and 2.0 million weighted average shares issuable under stock-based awards, respectively, 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 Second Quarter and Year To Date Period.

At the end of each of the Prior Year Quarter and Prior Year YTD Period, 2.5 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 and Prior Year YTD Period.

Cash, Cash Equivalents and Restricted Cash. Restricted cash was comprised primarily of restricted cash balances for tax assessment amounts included in escrow and 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 July 3, 2021 and July 4, 2020 that are presented in the condensed consolidated statement of cash flows (in thousands):

			July 3, 2021						July 4, 2020
Cash and cash equivalents			$	252,251					$	277,561
Restricted cash included in prepaid expenses and other current assets			118						30
Restricted cash included in intangible and other assets-net			14,680						7,117
Cash, cash equivalents and restricted cash			$	267,049					$	284,708

Recently Issued Accounting Standards

In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04") and subsequent guidance that clarified the scope and application of its original guidance. ASU 2020-04 provides optional expedients and exceptions to the current guidance on contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update apply only to contracts and hedging relationships that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued due to reference rate reform. The guidance was effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2022. The Company will adopt these standards when LIBOR is discontinued and does not expect them to have a material impact on its condensed consolidated financial statements or related disclosures.

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Recently Adopted Accounting Standards

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to general principles in Income Taxes (Topic 740). It also clarifies and amends existing guidance to improve consistent application. The Company adopted ASU 2019-12 at the beginning of the first quarter of fiscal year 2021, and it did not have a material effect on the Company's condensed consolidated financial statements.

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 July 3, 2021
			Americas						Europe						Asia						Corporate						Total
Product type
Watches			$	142,321					$	95,060					$	90,958					$	1,066					$	329,405
Leathers			20,833						6,396						6,118						—						33,347
Jewelry			11,516						20,162						5,192						—						36,870
Other			2,045						2,779						1,224						5,269						11,317
Consolidated			$	176,715					$	124,397					$	103,492					$	6,335					$	410,939
Timing of revenue recognition
Revenue recognized at a point in time			$	176,289					$	124,046					$	103,328					$	4,580					$	408,243
Revenue recognized over time			426						351						164						1,755						2,696
Consolidated			$	176,715					$	124,397					$	103,492					$	6,335					$	410,939

			For the 13 Weeks Ended July 4, 2020
			Americas						Europe						Asia						Corporate						Total
Product type
Watches			$	84,474					$	62,188					$	62,832					$	5					$	209,499
Leathers			17,381						5,027						4,146						—						26,554
Jewelry			2,670						11,395						1,141						—						15,206
Other			1,224						935						1,129						4,462						7,750
Consolidated			$	105,749					$	79,545					$	69,248					$	4,467					$	259,009
Timing of revenue recognition
Revenue recognized at a point in time			$	105,156					$	79,218					$	69,085					$	2,364					$	255,823
Revenue recognized over time			593						327						163						2,103						3,186
Consolidated			$	105,749					$	79,545					$	69,248					$	4,467					$	259,009

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			For the 26 Weeks Ended July 3, 2021
			Americas						Europe						Asia						Corporate						Total
Product type
Watches			$	263,186					$	179,730					$	177,036					$	1,069					$	621,021
Leathers			40,462						12,702						14,287						—						67,451
Jewelry			22,174						36,438						8,128						—						66,740
Other			3,398						4,762						2,681						7,928						18,769
Consolidated			$	329,220					$	233,632					$	202,132					$	8,997					$	773,981
Timing of revenue recognition
Revenue recognized at a point in time			$	328,334					$	232,935					$	201,868					$	5,486					$	768,623
Revenue recognized over time			886						697						264						3,511						5,358
Consolidated			$	329,220					$	233,632					$	202,132					$	8,997					$	773,981

			For the 27 Weeks Ended July 4, 2020
			Americas						Europe						Asia						Corporate						Total
Product type
Watches			$	203,748					$	160,086					$	155,575					$	16					$	519,425
Leathers			45,371						14,457						14,033						—						73,861
Jewelry			6,693						28,902						2,827						—						38,422
Other			2,854						4,350						3,000						7,815						18,019
Consolidated			$	258,666					$	207,795					$	175,435					$	7,831					$	649,727
Timing of revenue recognition
Revenue recognized at a point in time			$	257,442					$	207,138					$	175,073					$	3,855					$	643,508
Revenue recognized over time			1,224						657						362						3,976						6,219
Consolidated			$	258,666					$	207,795					$	175,435					$	7,831					$	649,727

Inventories consisted of the following (in thousands):

			July 3, 2021						January 2, 2021
Components and parts			$	28,201					$	25,016
Work-in-process			365						7,913
Finished goods			323,424						262,367
Inventories			$	351,990					$	295,296

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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 26 Weeks Ended July 3, 2021						For the 27 Weeks Ended July 4, 2020
Beginning balance			$	21,916					$	23,095
Settlements in cash or kind			(4,828)						(7,129)
Warranties issued and adjustments to preexisting warranties (1)			4,311						7,161
Ending balance			$	21,399					$	23,127

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(1) Changes in cost estimates related to preexisting warranties are aggregated with accruals for new standard warranties issued and foreign currency changes.

The Company’s income tax (benefit) expense and related effective rates were as follows (in thousands, except percentage data):

			For the 13 Weeks Ended July 3, 2021						For the 13 Weeks Ended July 4, 2020						For the 26 Weeks Ended July 3, 2021						For the 27 Weeks Ended July 4, 2020
Income tax (benefit) expense			$	8,081					$	(20,840)					$	10,198					$	(84,491)
Effective tax rate			110.5		%				47.6		%				(68.4)		%				43.8		%

The effective tax rate in the Second Quarter was unfavorable as compared to the Prior Year Quarter since no tax benefit was accrued on the U.S. net operating loss ("NOL"), unlike in the Prior Year Quarter. The Global Intangible Low-Taxed Income (“GILTI”) provision of the Tax Cuts and Jobs Act requires the inclusion of certain foreign income in the tax return which will absorb most of the U.S. NOL. Foreign income taxes are also paid on this same foreign income, resulting in double taxation. The remaining U.S. NOL is offset with a valuation allowance since there is no certainty of any future tax benefit. The Prior Year Quarter tax rate benefited from the enactment of the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), which was signed into law on March 27, 2020. The CARES Act provided many beneficial income tax changes including a provision allowing net operating losses arising in tax years 2018, 2019 and 2020 to be carried back to prior years when the U.S. tax rate was 35%, which accounts for most of the Prior Year Quarter benefit.

The Year To Date Period effective tax rate was unfavorable to the Prior Year YTD Period due to the changes from the CARES Act allowing NOL carrybacks in the Prior Year YTD Period. The Year to Date Period effective tax rate was negative because income tax expense was accrued on foreign entities with positive taxable income, whereas no income tax benefit was recognized for U.S. and foreign entity losses.

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 July 3, 2021, the Company's total amount of unrecognized tax benefits, excluding interest and penalties, was $33.6 million, of which $27.2 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 2012-2020 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 July 3, 2021, the Company had recorded $16.2 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 July 3, 2021, the total amount of accrued income tax-related interest and penalties included in the condensed consolidated balance sheets was $7.7 million and $0.8 million, respectively. For the Second Quarter, the Company accrued income tax related interest expense of $0.5 million.

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Common and Preferred Stock. The Company has 100,000,000 shares of common stock, par value $0.01 per share, authorized, with 52,126,740 and 51,474,034 shares issued and outstanding at July 3, 2021 and January 2, 2021, respectively. The Company has 1,000,000 shares of preferred stock, par value $0.01 per share, authorized, with none issued or outstanding at July 3, 2021 or January 2, 2021. 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. At July 3, 2021 and January 2, 2021, all treasury stock had been effectively retired. As of July 3, 2021, the Company had $30.0 million of repurchase authorizations remaining under its repurchase program. The Company did not repurchase any common stock under its authorized stock repurchase plan during the Second Quarter, Prior Year Quarter, Year To Date Period or Prior Year YTD Period.

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

Stock Options and Stock Appreciation Rights						Shares						Weighted- Average Exercise Price						Weighted- Average Remaining Contractual Term						Aggregate Intrinsic Value
						(in Thousands)												(in Years)						(in Thousands)
Outstanding at April 3, 2021						286						$	72.78					2.2						$	—
Forfeited or expired						(3)						95.91
Outstanding at July 3, 2021						283						72.58						2.0						—
Exercisable at July 3, 2021						283						$	72.58					2.0						$	—

 

The aggregate intrinsic value shown in the table above is based on the exercise price for outstanding and exercisable options/rights at July 3, 2021.

Stock Options and Stock Appreciation Rights Outstanding and Exercisable. The following tables summarize information with respect to stock options and stock appreciation rights outstanding and exercisable at July 3, 2021:

Stock Options Outstanding																								Stock Options 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)
$101.37 - $131.46						58						$	128.13					0.7						58						$	128.13
Total						58						$	128.13					0.7						58						$	128.13

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)
$29.49 - $47.99						146						$	40.92					2.8						146						$	40.92
$55.04 - $82.55						48						77.43						1.8						48						77.43
$101.37 - $113.04						31						110.68						0.8						31						110.68
Total						225						$	58.28					2.3						225						$	58.28

 

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Restricted Stock Units and Performance Restricted Stock Units. The following table summarizes restricted stock unit and performance restricted stock unit activity during the Second Quarter:

Restricted Stock Units and Performance Restricted Stock Units						Number of Shares						Weighted-Average Grant Date Fair Value Per Share
						(in Thousands)
Nonvested at April 3, 2021						1,635						$	7.83
Granted						947						13.23
Vested						(755)						$	9.90
Forfeited						(1)						6.51
Nonvested at July 3, 2021						1,826						$	9.78

 

The total fair value of restricted stock units vested during the Second Quarter was approximately $9.3 million. 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.

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 July 3, 2021
			Currency Translation Adjustments						Cash Flow Hedges
									Forward Contracts												Pension Plan						Total
Beginning balance			$	(71,299)					$	2,592											$	1,428					$	(67,279)
Other comprehensive income (loss) before reclassifications			1,065						(679)												—						386
Tax (expense) benefit			—						18												—						18
Amounts reclassed from accumulated other comprehensive income (loss)			—						(404)												—						(404)
Tax (expense) benefit			—						(37)												—						(37)
Total other comprehensive income (loss)			1,065						(220)												—						845
Ending balance			$	(70,234)					$	2,372											$	1,428					$	(66,434)

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			For the 13 Weeks Ended July 4, 2020
			Currency Translation Adjustments						Cash Flow Hedges
									Forward Contracts												Pension Plan						Total
Beginning balance			$	(91,667)					$	9,225											$	(3,124)					$	(85,566)
Other comprehensive income (loss) before reclassifications			6,497						(847)												—						5,650
Tax (expense) benefit			—						217												—						217
Amounts reclassed from accumulated other comprehensive income (loss)			—						5,920												—						5,920
Tax (expense) benefit			—						(852)												—						(852)
Total other comprehensive income (loss)			6,497						(5,698)												—						799
Ending balance			$	(85,170)					$	3,527											$	(3,124)					$	(84,767)

			For the 26 Weeks Ended July 3, 2021
			Currency Translation Adjustments						Cash Flow Hedges
									Forward Contracts												Pension Plan						Total
Beginning balance			$	(61,178)					$	850											$	1,428					$	(58,900)
Other comprehensive income (loss) before reclassifications			(9,056)						613												—						(8,443)
Tax (expense) benefit			—						(219)												—						(219)
Amounts reclassed from accumulated other comprehensive income			—						(1,055)												—						(1,055)
Tax (expense) benefit			—						(73)												—						(73)
Total other comprehensive income (loss)			(9,056)						1,522												—						(7,534)
Ending balance			$	(70,234)					$	2,372											$	1,428					$	(66,434)

			For the 27 Weeks Ended July 4, 2020
			Currency Translation Adjustments						Cash Flow Hedges
									Forward Contracts												Pension Plan						Total
Beginning balance			$	(80,474)					$	2,983											$	(3,124)					$	(80,615)
Other comprehensive income (loss) before reclassifications			(4,696)						7,178												—						2,482
Tax (expense) benefit			—						(1,235)												—						(1,235)
Amounts reclassed from accumulated other comprehensive income (loss)			—						6,281												—						6,281
Tax (expense) benefit			—						(882)												—						(882)
Total other comprehensive income (loss)			(4,696)						544												—						(4,152)
Ending balance			$	(85,170)					$	3,527											$	(3,124)					$	(84,767)

See “Note 10—Derivatives and Risk Management” for additional disclosures about the Company’s use of derivatives.

The Company reports segment information based on the “management approach”. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments.

The Company manages its business primarily on a geographic basis. The Company’s reportable operating segments are comprised of (i) Americas, (ii) Europe and (iii) Asia. Each reportable operating segment includes sales to wholesale and distributor customers, and sales through Company-owned retail stores and e-commerce activities based on the location of the

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selling entity. The Americas segment primarily includes sales to customers based in Canada, Latin America and the United States. The Europe segment primarily includes sales to customers based in European countries, the Middle East and Africa. The Asia segment primarily includes sales to customers based in Australia, Greater China, India, Indonesia, Japan, Malaysia, New Zealand, Singapore, South Korea and Thailand. Each reportable operating segment provides similar products and services.

The Company evaluates the performance of its reportable segments based on net sales and operating income (loss). Net sales for geographic segments are based on the location of the selling entity. Operating income (loss) for each segment includes net sales to third parties, related cost of sales and operating expenses directly attributable to the segment. Corporate includes peripheral revenue generating activities from factories and intellectual property and general corporate expenses, including certain administrative, legal, accounting, technology support costs, equity compensation costs, payroll costs attributable to executive management, brand management, product development, art, creative/product design, marketing, strategy, compliance and back office supply chain expenses that are not allocated to the various segments because they are managed at the corporate level internally. The Company does not include intercompany transfers between segments for management reporting purposes.

Due to changes in the Company’s reportable segments as discussed in Note 1 to the Condensed Consolidated Financial Statements, segment results for the Prior Year Quarter and Prior Year YTD Period have been recast to present results on a comparable basis. These changes had no impact on the consolidated net sales or operating income (loss). Summary information by operating segment was as follows (in thousands):

			For the 13 Weeks Ended July 3, 2021												For the 13 Weeks Ended July 4, 2020
			Net Sales						Operating Income (Loss)						Net Sales						Operating Income (Loss)
Americas			$	176,715					$	36,553					$	105,749					$	4,792
Europe			124,397						22,040						79,545						(9,333)
Asia			103,492						14,834						69,248						7,120
Corporate			6,335						(59,080)						4,467						(39,384)
Consolidated			$	410,939					$	14,347					$	259,009					$	(36,805)

			For the 26 Weeks Ended July 3, 2021												For the 27 Weeks Ended July 4, 2020
			Net Sales						Operating Income (Loss)						Net Sales						Operating Income (Loss)
Americas			$	329,220					$	62,582					$	258,666					$	(32,324)
Europe			233,632						27,067						207,795						(10,538)
Asia			202,132						26,557						175,435						19,062
Corporate			8,997						(118,614)						7,831						(147,346)
Consolidated			$	773,981					$	(2,408)					$	649,727					$	(171,146)

The following tables reflect net sales for each class of similar products in the periods presented (in thousands, except percentage data):

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			For the 13 Weeks Ended July 3, 2021												For the 13 Weeks Ended July 4, 2020
			Net Sales						Percentage of Total						Net Sales						Percentage of Total
Watches			$	329,405					80.2		%				$	209,499					80.9		%
Leathers			33,347						8.1						26,554						10.3
Jewelry			36,870						9.0						15,206						5.9
Other			11,317						2.7						7,750						2.9
Total			$	410,939					100.0		%				$	259,009					100.0		%

			For the 26 Weeks Ended July 3, 2021												For the 27 Weeks Ended July 4, 2020
			Net Sales						Percentage of Total						Net Sales						Percentage of Total
Watches			$	621,021					80.3		%				$	519,425					79.9		%
Leathers			67,451						8.7						73,861						11.4
Jewelry			66,740						8.6						38,422						5.9
Other			18,769						2.4						18,019						2.8
Total			$	773,981					100.0		%				$	649,727					100.0		%

Cash Flow Hedges. The primary risks managed by using derivative instruments are the fluctuations in global currencies that will ultimately be used by non-U.S. dollar functional currency subsidiaries to settle future payments of intercompany inventory transactions denominated in U.S. dollars. Specifically, the Company projects future intercompany purchases by its non-U.S. dollar functional currency subsidiaries generally over a period of up to 24 months. The Company enters into forward contracts, generally for up to 85% of the forecasted purchases, to manage fluctuations in global currencies that will ultimately be used to settle such U.S. dollar denominated inventory purchases. Additionally, the Company enters into forward contracts to manage fluctuations in Japanese yen exchange rates that will be used to settle future third-party inventory component purchases by a U.S. dollar functional currency subsidiary. Forward contracts represent agreements to exchange the currency of one country for the currency of another country at an agreed-upon settlement date and exchange rate. These forward contracts are designated as single cash flow hedges. Fluctuations in exchange rates will either increase or decrease the Company’s U.S. dollar equivalent cash flows from these inventory transactions, which will affect the Company’s U.S. dollar earnings. Gains or losses on the forward contracts are expected to offset these fluctuations to the extent the cash flows are hedged by the forward contracts.

For a derivative instrument that is designated and qualifies as a cash flow hedge, the gain or loss on the derivative is reported as a component of accumulated other comprehensive income (loss), net of taxes and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.

As of July 3, 2021, the Company had the following outstanding forward contracts designated as cash flow hedges that were entered into to hedge future payments of inventory transactions (in millions):

Functional Currency												Contract Currency
Type						Amount						Type						Amount
Euro						103.6						U.S. dollar						125.3
Canadian dollar						20.3						U.S. dollar						16.2
British pound						8.8						U.S. dollar						12.1
Japanese yen						1,233.1						U.S. dollar						11.5
Mexican peso						169.2						U.S. dollar						8.4
Australian dollar						9.5						U.S. dollar						7.2
U.S. dollar						15.1						Japanese yen						1,675.0

Non-designated Hedges. The Company also periodically enters into forward contracts to manage exchange rate risks associated with certain intercompany transactions and for which the Company does not elect hedge accounting treatment. As of

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July 3, 2021, the Company had non-designated forward contracts of $1.4 million on 19.6 million rand associated with a South African rand-denominated foreign subsidiary. Changes in the fair value of derivatives not designated as hedging instruments are recognized in earnings when they occur.

The gains and losses on cash flow hedges that were recognized in other comprehensive income (loss), net of taxes are set forth below (in thousands):

			For the 13 Weeks Ended July 3, 2021						For the 13 Weeks Ended July 4, 2020
Cash flow hedges:
Forward contracts			$	(661)					$	(630)
Total gain (loss) recognized in other comprehensive income (loss), net of taxes			$	(661)					$	(630)

			For the 26 Weeks Ended July 3, 2021						For the 27 Weeks Ended July 4, 2020
Cash flow hedges:
Forward contracts			$	394					$	5,943
Total gain (loss) recognized in other comprehensive income (loss), net of taxes			$	394					$	5,943

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The following tables disclose the gains and losses on derivative instruments recorded in accumulated other comprehensive income (loss), net of taxes during the term of the hedging relationship and reclassified into earnings, and gains and losses on derivatives not designated as hedging instruments recorded directly to earnings (in thousands):

Derivative Instruments						Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) Location						Effect of Derivative Instruments						For the 13 Weeks Ended July 3, 2021						For the 13 Weeks Ended July 4, 2020
Forward contracts designated as cash flow hedging instruments						Cost of sales						Total gain (loss) reclassified from accumulated other comprehensive income (loss)						$	(432)					$	2,665
Forward contracts designated as cash flow hedging instruments						Other income (expense)-net						Total gain (loss) reclassified from accumulated other comprehensive income (loss)						$	(9)					$	2,403
Forward contracts not designated as hedging instruments						Other income (expense)-net						Total gain (loss) recognized in income						$	(14)					$	(113)

Derivative Instruments						Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) Location						Effect of Derivative Instruments						For the 26 Weeks Ended July 3, 2021						For the 27 Weeks Ended July 4, 2020
Forward contracts designated as cash flow hedging instruments						Cost of sales						Total gain (loss) reclassified from accumulated other comprehensive income (loss)						$	249					$	5,311
Forward contracts designated as cash flow hedging instruments						Other income (expense)-net						Total gain (loss) reclassified from accumulated other comprehensive income (loss)						$	(1,376)					$	88
Forward contracts not designated as hedging instruments						Other income (expense)-net						Total gain (loss) recognized in income						$	(73)					$	92

The following table discloses the fair value amounts for the Company’s derivative instruments as separate asset and liability values, presents the fair value of derivative instruments on a gross basis, and identifies the line items in the condensed consolidated balance sheets in which the fair value amounts for these categories of derivative instruments are included (in thousands):

						Asset Derivatives																								Liability Derivatives
						July 3, 2021												January 2, 2021												July 3, 2021												January 2, 2021
Derivative Instruments						Condensed Consolidated Balance Sheets Location						Fair Value						Condensed Consolidated Balance Sheets Location						Fair Value						Condensed Consolidated Balance Sheets Location						Fair Value						Condensed Consolidated Balance Sheets Location						Fair Value
Forward contracts designated as cash flow hedging instruments						Prepaid expenses and other current assets						$	2,288					Prepaid expenses and other current assets						$	345					Accrued expenses-other						$	435					Accrued expenses-other						$	2,178
Forward contracts not designated as cash flow hedging instruments						Prepaid expenses and other current assets						35						Prepaid expenses and other current assets						—						Accrued expenses-other						—						Accrued expenses-other						86
Forward contracts designated as cash flow hedging instruments						Intangible and other assets-net						113						Intangible and other assets-net						48						Other long-term liabilities						9						Other long-term liabilities						35
Total												$	2,436											$	393											$	444											$	2,299

 

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The following tables summarize the effects of the Company's derivative instruments on earnings (in thousands):

						Effect of Derivative Instruments
						For the 13 Weeks Ended July 3, 2021												For the 13 Weeks Ended July 4, 2020
						Cost of Sales						Other Income (Expense)-net						Cost of Sales						Other Income (Expense)-net
Total amounts of income and expense line items presented in the condensed consolidated statements of income (loss) and comprehensive income (loss) in which the effects of cash flow hedges are recorded						$	189,100					$	(500)					$	118,413					$	879
Gain (loss) on cash flow hedging relationships:
Forward contracts designated as cash flow hedging instruments:
Total gain (loss) reclassified from other comprehensive income (loss)						$	(432)					$	(9)					$	2,665					$	2,403
Forward contracts not designated as hedging instruments:
Total gain (loss) recognized in income						$	—					$	(14)					$	—					$	(113)

						Effect of Derivative Instruments
						For the 26 Weeks Ended July 3, 2021												For the 27 Weeks Ended July 4, 2020
						Cost of Sales						Other Income (Expense)-net						Cost of Sales						Other Income (Expense)-net
Total amounts of income and expense line items presented in the condensed consolidated statements of income (loss) and comprehensive income (loss) in which the effects of cash flow hedges are recorded						$	369,553					$	1,365					$	368,771					$	(6,411)
Gain (loss) on cash flow hedging relationships:
Forward contracts designated as cash flow hedging instruments:
Total gain (loss) reclassified from other comprehensive income (loss)						$	249					$	(1,376)					$	5,311					$	88
Forward contracts not designated as hedging instruments:
Total gain (loss) recognized in income						$	—					$	(73)					$	—					$	92

At the end of the Second Quarter, the Company had forward contracts designated as cash flow hedges with maturities extending through December 2022. As of July 3, 2021, an estimated net gain of $1.7 million is expected to be reclassified into earnings within the next twelve months at prevailing foreign currency exchange rates.

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:

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•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 July 3, 2021 (in thousands):

			Fair Value at July 3, 2021
			Level 1						Level 2						Level 3						Total
Assets:
Forward contracts			$	—					$	2,436					$	—					$	2,436
Total			$	—					$	2,436					$	—					$	2,436
Liabilities:
Contingent consideration			$	—					$	—					$	2,150					$	2,150
Forward contracts			—						444						—						444
Total			$	—					$	444					$	2,150					$	2,594

The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of January 2, 2021 (in thousands):

			Fair Value at January 2, 2021
			Level 1						Level 2						Level 3						Total
Assets:
Forward contracts			$	—					$	393					$	—					$	393
Deferred compensation plan assets:
Investment in publicly traded mutual funds			6,257						—						—						6,257
Total			$	6,257					$	393					$	—					$	6,650
Liabilities:
Contingent consideration			$	—					$	—					$	1,924					$	1,924
Forward contracts			—						2,299						—						2,299
Total			$	—					$	2,299					$	1,924					$	4,223

The Company's deferred compensation plan was terminated during the first quarter of fiscal year 2021, with the final distributions taking place in the Second Quarter. The deferred compensation plan assets at January 2, 2021 were recorded in intangible and other assets-net in the Company’s condensed consolidated balance sheets and the fair values were based on quoted prices.

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 July 3, 2021, the fair value of the Company's debt approximated its carrying amount. The fair value of debt was obtained using 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. No trade name impairment was recorded during the Year To Date Period.

During the Year To Date Period, operating lease right-of-use ("ROU") assets with a carrying amount of $13.2 million and property, plant and equipment-net with a carrying amount of $2.4 million related to retail store leasehold improvements and fixturing were written down to a fair value of $7.2 million and $0.9 million, respectively, resulting in impairment charges of $7.5 million.

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The following table summarizes intangible and other assets (in thousands):

												July 3, 2021												January 2, 2021
						Useful						Gross						Accumulated						Gross						Accumulated
						Lives						Amount						Amortization						Amount						Amortization
Intangibles-subject to amortization:
Trademarks						10 yrs.						$	3,775					$	3,273					$	3,775					$	3,198
Customer lists						5 - 10 yrs.						42,140						40,350						42,387						39,406
Patents						3 - 20 yrs.						2,371						1,995						2,371						1,973
Developed technology						7 yrs.						2,193						1,371						2,193						1,097
Trade name						6 yrs.						4,502						1,313						4,502						938
Other						7 - 20 yrs.						541						336						544						301
Total intangibles-subject to amortization												55,522						48,638						55,772						46,913
Intangibles-not subject to amortization:
Trade names												8,875												8,895
Other assets:
Deposits												18,966												19,762
Deferred compensation plan assets												—												6,257
Deferred tax asset-net												32,992												33,893
Restricted cash												14,680												8,159
Tax receivable												6,469												58,734
Investments												327												327
Other												1,957												2,303
Total other assets												75,391												129,435
Total intangible and other assets												$	139,788					$	48,638					$	194,102					$	46,913
Total intangible and other assets-net																		$	91,150											$	147,189

Amortization expense for intangible assets was approximately $0.8 million and $1.7 million for the Second Quarter and the Prior Year Quarter, respectively, and $2.0 million and $3.6 million for the Year To Date Period and Prior Year YTD Period, respectively. Estimated aggregate future amortization expense by fiscal year for intangible assets is as follows (in thousands):

Fiscal Year						Amortization Expense
2021 (remaining)						$	1,444
2022						$	2,506
2023						$	896
2024						$	884
2025						$	693
Thereafter						$	461

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The Company's leases consist primarily of retail space, offices, warehouses, distribution centers, equipment and vehicles. The Company determines if an agreement contains a lease at inception based on the Company's right to the economic benefits of the leased assets and its right to direct the use of the leased asset. ROU assets represent the Company's right to use an underlying asset, and ROU liabilities represent the Company's obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease term. As the Company's leases do not provide an implicit rate, the Company uses its estimated incremental borrowing rate based on the information available at the commencement date adjusted for the lease term and lease country to determine the present value of the lease payments.

Some leases include one or more options to renew at the Company's discretion, with renewal terms that can extend the lease from one to ten additional years. The renewal options are not included in the measurement of ROU assets and ROU liabilities unless the Company is reasonably certain to exercise the optional renewal periods. Short-term leases are leases having a term of twelve months or less at inception. The Company does not record a related lease asset or liability for short-term leases. The Company has certain leases containing lease and non-lease components which are accounted for as a single lease component. The Company has certain leases agreements where lease payments are based on a percentage of retail sales over contractual levels and others include rental payments adjusted periodically for inflation. The variable portion of these lease payments is not included in the Company's lease liabilities. The Company's lease agreements do not contain any significant restrictions or covenants other than those that are customary in such arrangements.

As a result of the COVID-19 pandemic, the Company received lease concessions from landlords in the form of rent deferrals and rent forgiveness. The Company chose the policy election provided by the FASB in April 2020 to record rent concessions as if no modifications to lease contracts were made, and thus no changes to the ROU assets and ROU liabilities were recorded with respect to these concessions. This guidance is only applicable to COVID-19 related lease concessions that do not result in a substantial increase in the rights of the lessor or the obligations of the lessee. As of July 3, 2021, the Company had outstanding deferred rent payments of $1.8 million, and the Company received rent forgiveness of $3.0 million for the Year to Date Period.

The components of lease expense were as follows (in thousands):

Lease Cost						Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) Location						For the 13 Weeks Ended July 3, 2021						For the 13 Weeks Ended July 4, 2020						For the 26 Weeks Ended July 3, 2021						For the 27 Weeks Ended July 4, 2020
Operating lease cost(1)(2)						SG&A						$	21,727					$	26,303					45,094						54,509
Finance lease cost:
Amortization of ROU assets						SG&A						$	112					$	135					233						236
Interest on lease liabilities						Interest expense						$	5					$	7					10						18
Short-term lease cost						SG&A						$	152					$	138					320						339
Variable lease cost						SG&A						$	5,373					$	3,485					10,780						11,178

_______________________________________________

(1) Includes sublease income, which was immaterial

(2) Excludes the impact of deferred or abated rent amounts

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The following table discloses supplemental balance sheet information for the Company’s leases (in thousands):

Leases						Condensed Consolidated Balance Sheets Location						July 3, 2021						January 2, 2021
Assets
Operating						Operating lease ROU assets						$	199,478					$	226,815
Finance						Property, plant and equipment - net of accumulated depreciation of $4,993 and $4,882, respectively						$	5,613					$	5,991
Liabilities
Current:
Operating						Current operating lease liabilities						$	60,596					$	64,851
Finance						Short-term and current portion of long-term debt						$	1,052					$	1,088
Noncurrent:
Operating						Long-term operating lease liabilities						$	203,027					$	230,635
Finance						Long-term debt						$	32					$	569

The following table discloses the weighted-average remaining lease term and weighted-average discount rate for the Company's leases:

Lease Term and Discount Rate

July 3, 2021

January 2, 2021

Weighted-average remaining lease term:

Operating leases

5.7 years

5.9 years

Finance leases

0.7 years

1.2 years

Weighted-average discount rate:

Operating leases

14.1

%

14.0

%

Finance leases

1.2

%

1.2

%

Future minimum lease payments by year as of July 3, 2021 were as follows (in thousands):

Fiscal Year						Operating Leases (1)						Finance Leases
2021 (remaining)						$	47,409					$	533
2022						88,748						559
2023						67,822						—
2024						46,496						—
2025						32,742						—
Thereafter						120,748						—
Total lease payments						$	403,965					$	1,092
Less: Interest						140,342						8
Total lease obligations						$	263,623					$	1,084

________________________________________________________________________

(1) Future minimum lease payments exclude the impact of deferred or abated rent amounts

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Future minimum lease payments by year as of January 2, 2021 were as follows (in thousands):

Fiscal Year						Operating Leases						Finance Leases
2021						$	101,507					$	1,095
2022						85,753						569
2023						66,909						—
2024						46,656						—
2025						33,012						—
Thereafter						122,318						—
Total lease payments						$	456,155					$	1,664
Less: Interest						160,669						6
Finance lease obligations						$	295,486					$	1,658

Supplemental cash flow information related to leases was as follows (in thousands):

			For the 26 Weeks Ended July 3, 2021						For the 27 Weeks Ended July 4, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases(1)			$	55,643					$	62,654
Operating cash flows from finance leases			10						18
Financing cash flows from finance leases			455						482
Leased assets obtained in exchange for new operating lease liabilities			8,474						19,177

________________________________________________________________________________

(1) Cash flows exclude the impact of deferred or abated rent amounts

On February 20, 2020, the Company entered into Amendment No. 1 to that certain Term Credit Agreement, dated as of September 26, 2019, by and among the Company, as borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders (the “Term Credit Agreement Lenders”) party thereto (as amended to date, the “Term Credit Agreement”). On May 12, 2020, the Company entered into Amendment No. 2 to the Term Credit Agreement to extend the deadline for delivery of the Company’s unaudited quarterly financial statements and related deliverables for the fiscal quarter ended April 4, 2020. On June 5, 2020, the Company entered into Amendment No. 3 (the “Third Amendment”) to the Term Credit Agreement to further modify certain terms of the Term Credit Agreement to address the financial impact of COVID-19.

Under the Term Credit Agreement: (i) amounts outstanding bear interest at (a) the adjusted LIBO rate plus 8.50% for Eurodollar loans, and (b) the alternate base rate plus 7.50% for alternate base rate loans; (ii) a quarterly amortization payment of $10.0 million is required; and (iii) a maximum total leverage ratio of (a) 2.25 to 1.00 is permitted as of the last day of each fiscal quarter ending April 3, 2021, July 3, 2021 and October 2, 2021, and (b) 1.50 to 1.00 as of the last day of each subsequent fiscal quarter. In connection with the Third Amendment, the quarterly test for maximum total leverage ratio was waived for the first three fiscal quarters of fiscal year 2021, and the Company is required to maintain specified minimum levels of EBITDA during such periods.

While the Third Amendment amended, among other things, certain of the financial covenants in the Term Credit Agreement to address the financial impact of COVID-19, any material further decreases to the Company’s revenues and cash flows, or the Company's inability to successfully achieve its cost reduction targets, could result in the Company not meeting one or more of the amended financial covenants under its Term Credit Agreement within the next twelve months.

On September 26, 2019, the Company and Fossil Partners L.P., as the U.S. borrowers, and Fossil Group Europe GmbH, Fossil Asia Pacific Limited, Fossil (Europe) GmbH, Fossil (UK) Limited and Fossil Canada Inc., as the non-U.S. borrowers, certain other subsidiaries of the Company from time to time party thereto designated as borrowers, and certain subsidiaries of

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the Company from time to time party thereto as guarantors, entered into a $275.0 million secured asset-based revolving credit agreement (the “Revolving Facility”) with JPMorgan Chase Bank, N.A. as administrative agent (the "ABL Agent"), J.P. Morgan AG, as French collateral agent, JPMorgan Chase Bank, N.A., Citizens Bank, N.A. and Wells Fargo Bank, National Association as joint bookrunners and joint lead arrangers, and Citizens Bank, N.A. and Wells Fargo Bank, National Association, as co-syndication agents and each of the lenders from time to time party thereto (the "ABL Lenders").

The Revolving Facility provides that the ABL Lenders may extend revolving loans in an aggregate principal amount not to exceed $275.0 million at any time outstanding (the “Revolving Credit Commitment”), of which up to $160.0 million is available under a U.S. facility, an aggregate of $70.0 million is available under a European facility, $30.0 million is available under a Hong Kong facility, $10.0 million is available under a French facility, and $5.0 million is available under a Canadian facility, in each case, subject to the borrowing base availability limitations described below. The Revolving Facility also includes an up to $45.0 million subfacility for the issuance of letters of credit (the “Letters of Credit”). The Revolving Facility expires and is due and payable on September 26, 2024, provided that, if on the date that is the 121st day prior to the final maturity date of any class or tranche of term loans under the Term Credit Agreement, any such term loans are outstanding on such date, then the maturity date of the Revolving Facility shall be such date. Unless the maturity of the term loans is extended beyond the current maturity date of September 26, 2024, the Revolving Facility will expire and be due and payable on May 28, 2024. The French facility includes a $1.0 million subfacility for swingline loans, and the European facility includes a $7.0 million subfacility for swingline loans. The Revolving Facility is subject to a line cap equal to the lesser of the total Revolving Credit Commitment and the aggregate borrowing bases under the U.S. facility, the European facility, the Hong Kong facility, the French facility and the Canadian facility. Loans under the Revolving Facility may be made in U.S. dollars, Canadian dollars, euros, Hong Kong dollars or pounds sterling.

The Revolving Facility is an asset-based facility, in which borrowing availability is subject to a borrowing base equal to:(a) with respect to the Company, the sum of (i) the lesser of (x) 90% of the appraised net orderly liquidation value of eligible U.S. finished goods inventory and (y) 65% of the lower of cost or market value of eligible U.S. finished goods inventory, plus (ii) 85% of the eligible U.S. accounts receivable, plus (iii) 90% of eligible U.S. credit card accounts receivable, minus (iv) the aggregate amount of reserves, if any, established by the ABL Agent; (b) with respect to each non-U.S. borrower (except for the French Borrower), the sum of (i) the lesser of (x) 90% of the appraised net orderly liquidation value of eligible foreign finished goods inventory of such non-U.S. borrower and (y) 65% of the lower of cost or market value of eligible foreign finished goods inventory of such non-U.S. borrower, plus (ii) 85% of the eligible foreign accounts receivable of such non-U.S. borrower, minus (iii) the aggregate amount of reserves, if any, established by the ABL Agent; and (c) with respect to the French Borrower, (i) 85% of eligible French accounts receivable minus (ii) the aggregate amount of reserves, if any, established by the ABL Agent. Not more than 60% of the aggregate borrowing base under the Revolving Facility may consist of the non-U.S. borrowing bases.

As of July 3, 2021, the Company had $128.7 million and $67.5 million outstanding under the Term Credit Agreement and Revolving Facility, respectively. The Company had net payments of $9.7 million and $23.3 million under the Term Credit Agreement during the Second Quarter and Year to Date Period, respectively. The Company had net payments of $10.0 million and $30.0 million under the Revolving Facility during the Second Quarter and Year To Date Period, respectively. Amounts available under the Revolving Facility were reduced by any amounts outstanding under standby letters of credit. As of July 3, 2021, the Company had available borrowing capacity of $42.1 million under the Revolving Facility. The Company incurred approximately $3.3 million and $7.1 million of interest expense related to the Term Credit Agreement during the Second Quarter and Year To Date Period, respectively. The Company incurred approximately $0.3 million and $0.7 million of interest expense related to the Revolving Facility during the Second Quarter and Year To Date Period, respectively. The Company incurred approximately $2.5 million and $5.3 million of interest expense related to the amortization of debt issuance costs and the original issue discount during the Second Quarter and Year To Date Period, respectively. At July 3, 2021, the Company was in compliance with all debt covenants related to its credit facilities.

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    In fiscal year 2019, the Company launched New World Fossil 2.0 - Transform to Grow Program (“NWF 2.0”), which is focused on optimizing the Company’s operating structure to be more efficient, with faster decision-making and a more customer-centric focus. In addition to optimizing the way the Company goes to market, the Company pursued additional gross margin expansion opportunities. The Company has taken a zero-based budgeting approach to adjust its business model to enable more investment in digital capabilities and marketing, move closer to the consumer and react more quickly to the ever-evolving consumer shopping patterns. The Company also changed its overall business processes and resources, creating a more centrally directed operating model, reducing complexity and redundancy, and operating at a lower cost base. The NWF 2.0 restructuring program was expanded to address additional challenges posed by COVID-19, including a number of cost saving measures such as store closures. Total NWF 2.0 charges since inception in fiscal year 2019 are $68.6 million, of which $13.3 million, $36.5 million and $18.8 million were recorded during the Year to Date Period, fiscal year 2020 and fiscal year 2019, respectively.

    The following table shows a rollforward of the accrued liability related to the Company’s NWF 2.0 restructuring plan (in thousands):

			For the 13 Weeks Ended July 3, 2021
			Liabilities																								Liabilities
			April 3, 2021						Charges						Cash Payments						Non-cash Items						July 3, 2021
Store closures			$	51					$	1,447					$	—					$	1,479					$	19
Professional services			541						2,821						1,286						—						2,076
Severance and employee-related benefits			8,552						1,481						4,277						—						5,756
Total			$	9,144					$	5,749					$	5,563					$	1,479					$	7,851

			For the 13 Weeks Ended July 4, 2020
			Liabilities																								Liabilities
			April 4, 2020						Charges						Cash Payments						Non-cash Items						July 4, 2020
Store closures			$	28					$	1,961					$	681					$	725					$	583
Professional services			2,050						1,473						3,200						—						323
Severance and employee-related benefits			3,910						7,098						4,660						—						6,348
Total			$	5,988					$	10,532					$	8,541					$	725					$	7,254

			For the 26 Weeks Ended July 3, 2021
			Liabilities																								Liabilities
			January 2, 2021						Charges						Cash Payments						Non-cash Items						July 3, 2021
Store closures			$	240					$	1,670					$	190					$	1,701					$	19
Professional services			2,280						3,407						3,611						—						2,076
Severance and employee-related benefits			7,741						8,193						10,178						—						5,756
Total			$	10,261					$	13,270					$	13,979					$	1,701					$	7,851

			For the 27 Weeks Ended July 4, 2020
			Liabilities																								Liabilities
			December 29, 2019						Charges						Cash Payments						Non-cash Items						July 4, 2020
Store closures			$	22					$	2,693					$	723					$	1,409					$	583
Professional services			$	2,824					$	4,662					$	7,163					—						$	323
Severance and employee-related benefits			4,238						12,552						10,442						—						6,348
Total			$	7,084					$	19,907					$	18,328					$	1,409					$	7,254

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    NWF 2.0 restructuring charges by operating segment were as follows (in thousands):

			For the 13 Weeks Ended July 3, 2021						For the 13 Weeks Ended July 4, 2020						For the 26 Weeks Ended July 3, 2021						For the 27 Weeks Ended July 4, 2020
Americas			$	707					$	2,821					$	1,379					$	3,957
Europe			1,781						2,916						7,044						3,682
Asia			895						2,822						1,806						4,445
Corporate			2,366						1,973						3,041						7,823
Consolidated			$	5,749					$	10,532					$	13,270					$	19,907

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