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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
__________________________________________________________________ 
FORM 10-Q 
__________________________________________________________________
 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended: October 1, 2022
 
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to                    
 
Commission file number: 001-41040 
__________________________________________________________________ 
fosl-20221001_g1.gif
FOSSIL GROUP, INC.
(Exact name of registrant as specified in its charter)
 __________________________________________________________________
Delaware   75-2018505
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)
     
901 S. Central Expressway, Richardson, Texas   75080
(Address of principal executive offices)   (Zip Code)
(972) 234-2525
(Registrant’s telephone number, including area code) 
__________________________________________________________________ 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Ticker Symbol Name of each exchange on which registered
Common Stock, par value $0.01 per share FOSL The Nasdaq Stock Market LLC
7.00% Senior Notes due 2026 FOSLL The Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No 
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No 




 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act (check one):
Large accelerated filer   Accelerated filer
     
Non-accelerated filer   Smaller reporting company
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No 

The number of shares of the registrant’s common stock outstanding as of November 2, 2022: 51,836,456




FOSSIL GROUP, INC.
FORM 10-Q
FOR THE FISCAL QUARTER ENDED OCTOBER 1, 2022
INDEX
    Page
5
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6
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Trademarks, service marks, trade names and copyrights

We use our FOSSIL, MICHELE, RELIC, SKAGEN and ZODIAC trademarks, as well as other trademarks, on certain watches and smartwatches, our FOSSIL and SKAGEN trademarks on jewelry, and our FOSSIL trademark on leather goods and other fashion accessories in the U.S. and in a significant number of foreign countries. We also use FOSSIL, SKAGEN, WATCH STATION INTERNATIONAL and WSI as trademarks on retail stores and FOSSIL, SKAGEN, WATCH STATION INTERNATIONAL, WSI, MISFIT, ZODIAC and MICHELE as trademarks on online e-commerce sites. This filing may also contain other trademarks, service marks, trade names and copyrights of ours or of other companies with whom we have, for example, licensing agreements to produce, market and distribute products. Solely for convenience, the trademarks, service marks, trade names and copyrights referred to or incorporated by reference into this report may be listed without the TM, SM, © and ® symbols, as applicable, but we will assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors, if any, to these trademarks, service marks, trade names and copyrights.




PART I—FINANCIAL INFORMATION

Item 1. Financial Statements
FOSSIL GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
UNAUDITED
IN THOUSANDS
October 1, 2022 January 1, 2022
Assets    
Current assets:    
Cash and cash equivalents $ 162,612  $ 250,844 
Accounts receivable - net of allowances for doubtful accounts of $15,025 and $16,388, respectively
214,987  255,131 
Inventories 452,747  346,850 
Prepaid expenses and other current assets 184,964  169,930 
Total current assets 1,015,310  1,022,755 
Property, plant and equipment - net of accumulated depreciation of $418,090 and $436,663, respectively
77,379  89,767 
Operating lease right-of-use assets 156,448  177,597 
Intangible and other assets-net 65,849  78,600 
Total long-term assets 299,676  345,964 
Total assets $ 1,314,986  $ 1,368,719 
Liabilities and Stockholders’ Equity    
Current liabilities:    
Accounts payable $ 204,040  $ 229,877 
Short-term and current portion of long-term debt 354  554 
Accrued expenses:    
Current operating lease liabilities 48,238  58,721 
Compensation 40,072  73,595 
Royalties 21,380  38,714 
Customer liabilities 34,671  40,886 
Transaction taxes 8,293  17,147 
Other 43,430  46,675 
Income taxes payable 28,249  29,478 
Total current liabilities 428,727  535,647 
Long-term income taxes payable 24,069  20,452 
Deferred income tax liabilities 458  504 
Long-term debt 293,583  141,354 
Long-term operating lease liabilities 151,928  174,520 
Other long-term liabilities 25,988  30,884 
Total long-term liabilities 496,026  367,714 
Commitments and contingencies (Note 13)
Stockholders’ equity:    
Common stock, 51,827 and 52,146 shares issued and outstanding at October 1, 2022 and January 1, 2022, respectively
518  521 
Additional paid-in capital 304,498  300,848 
Retained earnings 184,909  229,132 
Accumulated other comprehensive income (loss) (96,876) (67,275)
Total Fossil Group, Inc. stockholders’ equity 393,049  463,226 
Noncontrolling interests (2,816) 2,132 
Total stockholders’ equity 390,233  465,358 
Total liabilities and stockholders’ equity $ 1,314,986  $ 1,368,719 
 
See notes to the unaudited condensed consolidated financial statements.
5



FOSSIL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
UNAUDITED
IN THOUSANDS, EXCEPT PER SHARE DATA
 
For the 13 Weeks Ended October 1, 2022 For the 13 Weeks Ended October 2, 2021 For the 39 Weeks Ended October 1, 2022 For the 39 Weeks Ended October 2, 2021
Net sales $ 436,271  $ 491,827  $ 1,183,292  $ 1,265,808 
Cost of sales 216,651  232,305  588,010  601,857 
Gross profit 219,620  259,522  595,282  663,951 
Operating expenses:    
Selling, general and administrative expenses 196,530  205,718  591,521  593,522 
Other long-lived asset impairments 608  551  1,060  6,314 
Restructuring charges —  5,447  5,438  18,716 
Total operating expenses 197,138  211,716  598,019  618,552 
Operating income (loss) 22,482  47,806  (2,737) 45,399 
Interest expense 5,127  6,422  13,445  20,284 
Other income (expense) - net (1,859) (482) (1,915) 882 
Income (loss) before income taxes 15,496  40,902  (18,097) 25,997 
Provision for income taxes 9,214  8,978  15,904  19,177 
Net income (loss) 6,282  31,924  (34,001) 6,820 
Less: Net income (loss) attributable to noncontrolling interests 433  504  738  1,032 
Net income (loss) attributable to Fossil Group, Inc. $ 5,849  $ 31,420  $ (34,739) $ 5,788 
Other comprehensive income (loss), net of taxes:    
Currency translation adjustment $ (13,465) $ (3,237) $ (37,437) $ (12,293)
Cash flow hedges - net change 3,668  2,085  7,836  3,607 
Total other comprehensive income (loss) (9,797) (1,152) (29,601) (8,686)
Total comprehensive income (loss) (3,515) 30,772  (63,602) (1,866)
Less: Comprehensive income (loss) attributable to noncontrolling interests 432  504  738  1,032 
Comprehensive income (loss) attributable to Fossil Group, Inc. $ (3,947) $ 30,268  $ (64,340) $ (2,898)
Earnings (loss) per share:    
Basic $ 0.11  $ 0.60  $ (0.67) $ 0.11 
Diluted $ 0.11  $ 0.60  $ (0.67) $ 0.11 
Weighted average common shares outstanding:    
Basic 51,825  52,141  51,843  51,900 
Diluted 52,052  52,766  51,843  52,738 
 
See notes to the unaudited condensed consolidated financial statements.
6



FOSSIL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
UNAUDITED
IN THOUSANDS

For the 13 Weeks Ended October 1, 2022
  Common stock Additional
paid-in
capital
Treasury
stock
Retained
earnings
Accumulated
other
comprehensive
income
(loss)
Stockholders'
equity
attributable
to Fossil
Group, Inc.
Noncontrolling interest Total stockholders' equity
Shares Par
value
Balance, July 2, 2022 51,807  $ 518  $ 304,775  $ —  $ 179,060  $ (87,079) $ 397,274  $ (3,249) $ 394,025 
Common stock issued upon exercise of stock options, stock appreciation rights and restricted stock units 22  —  —  —  —  —  —  —  — 
Acquisition of common stock for employee tax withholding (13) —  —  (13) —  (13)
Retirement of common stock (2) —  (13) 13  —  —  —  —  — 
Stock-based compensation —  —  (264) —  —  —  (264) —  (264)
Net income (loss) —  —  —  —  5,849  —  5,849  433  6,282 
Other comprehensive income (loss) —  —  —  —  —  (9,797) (9,797) —  (9,797)
Balance, October 1, 2022 51,827  $ 518  $ 304,498  $ —  $ 184,909  $ (96,876) $ 393,049  $ (2,816) $ 390,233 

For the 13 Weeks Ended October 2, 2021
  Common stock Additional
paid-in
capital
Treasury
stock
Retained
earnings
Accumulated
other
comprehensive
income
(loss)
Stockholders'
equity
attributable
to Fossil
Group, Inc.
Noncontrolling interest Total stockholders' equity
Shares Par
value
Balance, July 3, 2021 52,127  $ 521  $ 295,704  $ —  $ 178,066  $ (66,434) $ 407,857  $ 1,470  $ 409,327 
Common stock issued upon exercise of stock options, stock appreciation rights and restricted stock units 21  —  —  —  —  —  —  —  — 
Acquisition of common stock for employee tax withholding —  —  —  (56) —  —  (56) —  (56)
Retirement of common stock (5) —  (56) 56  —  —  —  —  — 
Stock-based compensation —  —  2,857  —  —  —  2,857  —  2,857 
Net income (loss) —  —  —  —  31,420  —  31,420  504  31,924 
Other comprehensive income (loss) —  —  —  —  —  (1,152) (1,152) —  (1,152)
Balance, October 2, 2021 52,143  $ 521  $ 298,505  $ —  $ 209,486  $ (67,586) $ 440,926  $ 1,974  $ 442,900 
For the 39 Weeks Ended October 1, 2022
  Common stock Additional
paid-in
capital
Treasury
stock
Retained
earnings
Accumulated
other
comprehensive
income
(loss)
Stockholders'
equity
attributable
to Fossil
Group, Inc.
Noncontrolling interest Total stockholders' equity
Shares Par
value
Balance, January 1, 2022 52,146  $ 521  $ 300,848  $ —  $ 229,132  $ (67,275) $ 463,226  $ 2,132  $ 465,358 
Common stock issued upon exercise of stock options, stock appreciation rights and restricted stock units 896  (9) —  —  —  —  —  — 
Acquisition of common stock for employee tax withholding —  —  —  (12,443) —  —  (12,443) —  (12,443)
Retirement of common stock (1,215) (12) (2,947) 12,443  (9,484) —  —  —  — 
Stock-based compensation —  —  6,606  —  —  —  6,606  —  6,606 
Net income (loss) —  —  —  —  (34,739) —  (34,739) 738  (34,001)
Other comprehensive income (loss) —  —  —  —  —  (29,601) (29,601) (29,601)
Distribution of noncontrolling interest earnings —  —  —  —  —  —  —  (5,686) (5,686)
Balance, October 1, 2022 51,827  $ 518  $ 304,498  $ —  $ 184,909  $ (96,876) $ 393,049  $ (2,816) $ 390,233 
7



For the 39 Weeks Ended October 2, 2021
  Common stock Additional
paid-in
capital
Treasury
stock
Retained
earnings
Accumulated
other
comprehensive
income
(loss)
Stockholders'
equity
attributable
to Fossil
Group, Inc.
Noncontrolling interest Total stockholders' equity
Shares Par
value
Balance, January 2, 2021 51,474  $ 515  $ 293,777  $ —  $ 203,698  $ (58,900) $ 439,090  $ 942  $ 440,032 
Common stock issued upon exercise of stock options, stock appreciation rights and restricted stock units 857  (8) —  —  —  —  —  — 
Acquisition of common stock for employee tax withholding —  —  —  (2,405) —  —  (2,405) —  (2,405)
Retirement of common stock (188) (2) (2,403) 2,405  —  —  —  —  — 
Stock-based compensation —  —  7,139  —  —  —  7,139  —  7,139 
Net income (loss) —  —  —  —  5,788  —  5,788  1,032  6,820 
Other comprehensive income (loss) —  —  —  —  —  (8,686) (8,686) —  (8,686)
Balance, October 2, 2021 52,143  $ 521  $ 298,505  $ —  $ 209,486  $ (67,586) $ 440,926  $ 1,974  $ 442,900 

See notes to the unaudited condensed consolidated financial statements.

8




FOSSIL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
IN THOUSANDS
For the 39 Weeks Ended October 1, 2022 For the 39 Weeks Ended October 2, 2021
Operating Activities:    
Net income (loss) $ (34,001) $ 6,820 
Adjustments to reconcile net loss to net cash provided used in operating activities:    
Depreciation, amortization and accretion 17,587  23,410 
Non-cash lease expense 60,073  68,920 
Stock-based compensation 5,821  7,139 
Decrease in allowance for returns and markdowns (8,519) (11,838)
Gain on disposal of assets (448) (5,169)
Property, plant and equipment and other long-lived asset impairment losses 1,060  6,322 
Non-cash restructuring charges 876  1,747 
Bad debt expense 5,611  961 
Other non-cash items 9,973  10,975 
Changes in operating assets and liabilities:    
Accounts receivable 22,677  (25,571)
Inventories (137,244) (111,673)
Prepaid expenses and other current assets (16,091) 31,732 
Accounts payable (19,151) 70,156 
Accrued expenses (56,944) (30,007)
Income taxes 2,470  2,523 
Operating lease liabilities (68,533) (83,443)
Net cash used in operating activities (214,783) (36,996)
Investing Activities:    
Additions to property, plant and equipment (8,717) (6,739)
Decrease in intangible and other assets 993  6,903 
Proceeds from the sale of property, plant and equipment and other 28  11,360 
Net cash (used in) provided by investing activities (7,696) 11,524 
Financing Activities:    
Acquisition of common stock (12,444) (2,405)
Distribution of noncontrolling interest earnings and other (6,069) (232)
Debt borrowings 261,983  85,182 
Debt payments (111,237) (179,997)
Net cash provided by (used in) financing activities 132,233  (97,452)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash (644) (5,564)
Net decrease in cash, cash equivalents, and restricted cash (90,890) (128,488)
Cash, cash equivalents, and restricted cash:    
Beginning of period 264,572  324,246 
End of period $ 173,682  $ 195,758 

See notes to the unaudited condensed consolidated financial statements.
9



FOSSIL GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
 
1. FINANCIAL STATEMENT POLICIES
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 information presented herein includes the thirteen-week period ended October 1, 2022 (“Third Quarter”) as compared to the thirteen-week period ended October 2, 2021 (“Prior Year Quarter”), and the thirty-nine week period ended October 1, 2022 ("Year To Date Period") as compared to the thirty-nine week period ended October 2, 2021 ("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 October 1, 2022, and the results of operations for the Third 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 product net sales to include third-party smartwatch bands within the smartwatch product type. Third-party smartwatch bands were previously reported within the jewelry product type. The Company's historical 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 filed by the Company pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), for the fiscal year ended January 1, 2022 (the “2021 Form 10-K”). Operating results for the Third 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 2021 Form 10-K.
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 ("SG&A"), 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, and design and product development labor costs. SG&A also includes general and administrative expenses primarily consisting of administrative support labor and 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 and store closures. See Note 16—Restructuring for additional information on the Company’s restructuring plan.
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.
10



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 October 1, 2022 For the 13 Weeks Ended October 2, 2021 For the 39 Weeks Ended October 1, 2022 For the 39 Weeks Ended October 2, 2021
Numerator:    
Net income (loss) attributable to Fossil Group, Inc. $ 5,849  $ 31,420  $ (34,739) $ 5,788 
Denominator:      
Basic EPS computation:    
Basic weighted average common shares outstanding 51,825  52,141  51,843  51,900 
Basic EPS $ 0.11  $ 0.60  $ (0.67) $ 0.11 
Diluted EPS computation:    
Effect of stock options, stock appreciation rights, restricted stock units and performance restricted stock units 227  625  —  838 
Diluted weighted average common shares outstanding 52,052  52,766  51,843  52,738 
Diluted EPS $ 0.11  $ 0.60  $ (0.67) $ 0.11 

At the end of the Third Quarter and Year To Date Period, approximately 1.7 million and 2.2 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 12,900 and 26,100 weighted average performance-based shares at the end of the Third Quarter and Year To Date Period, respectively. Additionally, 73,500 weighted average performance-based shares were not included in the diluted EPS calculation at the end of the Third Quarter because performance targets were not met.
At the end of each of the Prior Year Quarter and Prior Year YTD Period, approximately 0.3 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 12,900 weighted average performance-based shares at the end of each of the Prior Year Quarter and Prior Year YTD Period. Additionally, 48,400 and 30,300 weighted average performance-based shares were not included in the diluted EPS calculation at the end of the Prior Year Quarter and Prior Year YTD Period, respectively, because performance targets were not met.
Cash, Cash Equivalents and Restricted Cash. Restricted cash included in intangible and other-assets net was comprised primarily of restricted cash balances for appealed tax assessments held in escrow and for 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 October 1, 2022 and October 2, 2021 that are presented in the condensed consolidated statement of cash flows (in thousands):
October 1, 2022 October 2, 2021
Cash and cash equivalents $ 162,612  $ 181,782 
Restricted cash included in prepaid expenses and other current assets 106  118 
Restricted cash included in intangible and other assets-net 10,964  13,858 
Cash, cash equivalents and restricted cash $ 173,682  $ 195,758 

Recently Issued Accounting Standards
In November 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance ("ASU 2021-10"). The new standard increases transparency of government assistance by focusing on the types of assistance given, an entity's accounting for the assistance, and the effect of the assistance on the entity's financial statements to allow for more comparable information for investors and other financial statement users. This standard is effective for financial statements issued for annual periods beginning after December 15, 2021, but early adoption is permitted. This standard will not have a material impact on the Company's consolidated financial statements or related disclosures.
11



In October 2021, FASB issued ASU 2021-08, Business Combinations – Accounting for Contract Assets and Contract Liabilities from Contracts with Customers ("ASU 2021-08"). The guidance is intended to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice. The guidance requires an acquirer to recognize and measure contract assets and liabilities acquired in a business combination in accordance with Topic 606 as if they had originated the contracts, as opposed to at fair value on the acquisition date. The standard will be effective for business combinations that occur after January 1, 2023. Early adoption is permitted. The guidance will be applied prospectively to acquisitions occurring on or after the effective date. While the impact of this amendment is dependent on the nature of any future transactions, the Company currently does not expect this standard to have a material impact on the Company's consolidated financial statements or related disclosures.
In March 2020, FASB issued 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 it to have a material impact on its consolidated financial statements or related disclosures.
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 fiscal year 2022, and it did not have a material effect on the Company's condensed consolidated financial statements.

2. REVENUE
Disaggregation of Revenue. Due to changes in the Company’s product types as discussed in Note 1 to the Condensed Consolidated Financial Statements, product results for the Prior Year Quarter and Prior Year YTD Period have been recast to present results on a comparable basis. The Company's revenue disaggregated by major product category and timing of revenue recognition was as follows (in thousands):
For the 13 Weeks Ended October 1, 2022
Americas Europe Asia Corporate Total
Product type
Watches:
     Traditional watches $ 132,077  $ 102,142  $ 75,970  $ $ 310,198 
     Smartwatches 14,578  10,401  8,327  —  33,306 
Total watches $ 146,655  $ 112,543  $ 84,297  $ $ 343,504 
Leathers 27,262  5,683  8,150  —  41,095 
Jewelry 8,353  22,955  6,560  —  37,868 
Other 2,056  2,498  1,205  8,045  13,804 
Consolidated $ 184,326  $ 143,679  $ 100,212  $ 8,054  $ 436,271 
Timing of revenue recognition
Revenue recognized at a point in time $ 183,900  $ 143,453  $ 100,076  $ 800  $ 428,229 
Revenue recognized over time 426  226  136  7,254  8,042 
Consolidated $ 184,326  $ 143,679  $ 100,212  $ 8,054  $ 436,271 

12



For the 13 Weeks Ended October 2, 2021
Americas Europe Asia Corporate Total
Product type
Watches:
      Traditional watches $ 130,988  $ 113,501  $ 101,275  $ —  $ 345,764 
      Smartwatches 25,205  16,344  12,528  54,085 
Total watches $ 156,193  $ 129,845  $ 113,803  $ $ 399,849 
Leathers 23,389  7,231  5,770  —  36,390 
Jewelry 12,285  25,554  8,486  —  46,325 
Other 1,895  3,257  1,435  2,676  9,263 
Consolidated $ 193,762  $ 165,887  $ 129,494  $ 2,684  $ 491,827 
Timing of revenue recognition
Revenue recognized at a point in time $ 193,367  $ 165,598  $ 129,313  $ 1,004  $ 489,282 
Revenue recognized over time 395  289  181  1,680  2,545 
Consolidated $ 193,762  $ 165,887  $ 129,494  $ 2,684  $ 491,827 

For the 39 Weeks Ended October 1, 2022
Americas Europe Asia Corporate Total
Product type
Watches:
      Traditional watches $ 366,714  $ 253,728  $ 209,857  $ 23  $ 830,322 
      Smartwatches 47,228  33,347  24,134  —  104,709 
Total watches $ 413,942  $ 287,075  $ 233,991  $ 23  $ 935,031 
Leathers 69,091  18,372  23,763  —  111,226 
Jewelry 25,548  62,730  18,217  —  106,495 
Other 5,944  7,933  3,592  13,071  30,540 
Consolidated $ 514,525  $ 376,110  $ 279,563  $ 13,094  $ 1,183,292 
Timing of revenue recognition
Revenue recognized at a point in time $ 513,393  $ 375,433  $ 279,193  $ 3,032  $ 1,171,051 
Revenue recognized over time 1,132  677  370  10,062  12,241 
Consolidated $ 514,525  $ 376,110  $ 279,563  $ 13,094  $ 1,183,292 
13



For the 39 Weeks Ended October 2, 2021
Americas Europe Asia Corporate Total
Product type
Watches:
      Traditional watches $ 349,024  $ 266,316  $ 262,416  $ 1,053  $ 878,809 
      Smartwatches 78,308  43,277  28,477  24  150,086 
Total watches $ 427,332  $ 309,593  $ 290,893  $ 1,077  $ 1,028,895 
Leathers 63,851  19,933  20,057  —  103,841 
Jewelry 26,506  61,974  16,560  —  105,040 
Other 5,294  8,019  4,115  10,604  28,032 
Consolidated $ 522,983  $ 399,519  $ 331,625  $ 11,681  $ 1,265,808 
Timing of revenue recognition
Revenue recognized at a point in time $ 521,702  $ 398,533  $ 331,180  $ 6,490  $ 1,257,905 
Revenue recognized over time 1,281  986  445  5,191  7,903 
Consolidated $ 522,983  $ 399,519  $ 331,625  $ 11,681  $ 1,265,808 
Contract Balances. As of October 1, 2022, the Company had no material contract assets on the Company's condensed consolidated balance sheets and no deferred contract costs. The Company had contract liabilities of (i) $0.9 million and $4.9 million as of October 1, 2022 and January 1, 2022, respectively, related to remaining performance obligations on licensing income, (ii) $3.4 million and $3.0 million as of October 1, 2022 and January 1, 2022, respectively, primarily related to remaining performance obligations on wearable technology products and (iii) $2.8 million and $3.6 million as of October 1, 2022 and January 1, 2022, respectively, related to gift cards issued.


3. INVENTORIES
Inventories consisted of the following (in thousands):
October 1, 2022 January 1, 2022
Components and parts $ 22,546  $ 23,668 
Work-in-process
Finished goods 430,197  323,180 
Inventories $ 452,747  $ 346,850 

4. WARRANTY LIABILITIES
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 39 Weeks Ended October 1, 2022 For the 39 Weeks Ended October 2, 2021
Beginning balance $ 19,159  $ 21,916 
Settlements in cash or kind (5,465) (8,096)
Warranties issued and adjustments to preexisting warranties (1)
(148) 5,296 
Ending balance $ 13,546  $ 19,116 
_______________________________________________
(1) Changes in cost estimates related to preexisting warranties are aggregated with accruals for new standard warranties issued and foreign currency changes.
 
14



5. INCOME TAXES
The Company’s income tax expense and related effective rates were as follows (in thousands, except percentage data):
For the 13 Weeks Ended October 1, 2022 For the 13 Weeks Ended October 2, 2021 For the 39 Weeks Ended October 1, 2022 For the 39 Weeks Ended October 2, 2021
Income tax (benefit) expense $ 9,214  $ 8,978  $ 15,904  $ 19,177 
Effective tax rate 59.5  % 22.0  % (87.9) % 73.8  %
The effective tax rate in the Third Quarter was unfavorable as compared to the Prior Year Quarter due to a higher level of foreign losses for which no tax benefit could be accrued. The Prior Year Quarter tax rate also benefited from favorable discrete items. The overall tax rate is impacted by the Global Intangible Low-Taxed Income (“GILTI”) provision of the Tax Cuts and Jobs Act which requires the inclusion of certain foreign income in the tax return which absorbs all of the U.S. net operating loss ("NOL"). Foreign income taxes are also paid on this same foreign income, resulting in double taxation.
The Year To Date Period effective tax rate is negative due to the overall pre-tax loss whereas the Prior Year YTD Period effective tax rate was positive since the Prior Year YTD Period income was positive. Both effective rates are high since income tax was accrued on foreign entities with positive taxable income and no tax benefit can be realized on the U.S. NOL.

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 October 1, 2022, the Company's total amount of unrecognized tax benefits, excluding interest and penalties, was $28.9 million, of which $23.9 million would favorably impact the effective tax rate in future periods, if recognized. In the second quarter of fiscal year 2022, the U.S. Internal Revenue Service opened an examination of the Company's 2019 federal income tax return to review the refund claim filed under provisions of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) which allowed carrybacks of NOLs for that year. The Company is subject to examinations in various state and foreign jurisdictions for its 2013-2021 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 October 1, 2022, the Company had recorded $11.6 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 October 1, 2022, the total amount of accrued income tax-related interest included in the condensed consolidated balance sheets was $9.4 million. There was no accrued tax-related penalties. For the Third Quarter, the Company accrued income tax-related interest expense of $0.5 million.
6. STOCKHOLDERS’ EQUITY
Common and Preferred Stock. The Company has 100,000,000 shares of common stock, par value $0.01 per share, authorized, with 51,827,267 and 52,145,738 shares issued and outstanding at October 1, 2022 and January 1, 2022, respectively. The Company has 1,000,000 shares of preferred stock, par value $0.01 per share, authorized, with none issued or outstanding at October 1, 2022 or January 1, 2022. 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 Exchange Act.

During the first quarter of fiscal year 2022, the Company effectively retired 1.0 million shares of common stock repurchased under its repurchase programs. The effective retirement of repurchased common stock decreased common stock by $10,000, additional paid-in capital by $0.5 million, retained earnings by $9.5 million and treasury stock by $10.0 million. At
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October 1, 2022 and January 1, 2022, all treasury stock had been effectively retired. As of October 1, 2022, the Company had $20.0 million of repurchase authorizations remaining under its repurchase program.

The following table reflects the Company's common stock repurchase activity for the periods indicated (in millions):

For the 39 Weeks Ended October 1, 2022 For the 39 Weeks Ended October 2, 2021
Fiscal Year
Authorized
Dollar Value
Authorized
Termination Date Number of
Shares
Repurchased
Dollar Value
Repurchased
Number of
Shares
Repurchased
Dollar Value
Repurchased
2010 $ 30.0  None 1.0 $ 10.0  —  $ — 

7. EMPLOYEE BENEFIT PLANS
Stock-Based Compensation Plans. The following table summarizes stock options and stock appreciation rights activity during the Third Quarter:
Stock Appreciation Rights Shares Weighted-
Average
Exercise Price
Weighted-
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value
  (in Thousands)   (in Years) (in Thousands)
Outstanding at July 2, 2022 199  $ 51.21  0.8 $ — 
Granted —  — 
Exercised —  —  — 
Forfeited or expired (98) 46.98 
Outstanding at October 1, 2022 101  55.31  1.1 — 
Exercisable at October 1, 2022 101  $ 55.31  1.1 $ — 
 
The aggregate intrinsic value shown in the table above is based on the exercise price for outstanding and exercisable options/rights at October 1, 2022.
Stock Appreciation Rights Outstanding and Exercisable. The following tables summarize information with respect to stock options and stock appreciation rights outstanding and exercisable at October 1, 2022:


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)  
$36.73 - $80.22
101  $ 55.31  1.1 101  $ 55.31 
Total 101  $ 55.31  1.1 101  $ 55.31 
 
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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 Third Quarter:
Restricted Stock Units
and Performance Restricted Stock Units
Number of Shares Weighted-Average
Grant Date Fair
Value Per Share
  (in Thousands)  
Nonvested at July 2, 2022 2,016  $ 10.16 
Granted —  — 
Vested (23) 7.68 
Forfeited (26) 9.95 
Nonvested at October 1, 2022 1,967  $ 10.19 
 
The total fair value of restricted stock units vested was $131,002 during the Third Quarter. 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.
Long-Term Incentive Plans. On the date of the Company’s annual stockholders meeting, each non-employee director automatically receives a grant of restricted stock units with a fair market value of approximately $130,000, which vest 100% on the earlier of one year from the date of grant or the date of the Company's next annual stockholders meeting, provided such director is providing services to the Company or a subsidiary of the Company on that date. Beginning with the grant in fiscal year 2021, non-employee directors could elect to defer receipt of all or a portion of the restricted stock units. As of October 1, 2022, the Company had 30,000 shares of restricted stock units that had vested but were deferred in connection with non-employee director compensation. In addition, beginning in fiscal year 2021, non-employee directors may defer the cash portion of their annual fees. Each participant may also elect to have the cash portion of his or her annual fees for each calendar year treated as if invested in units of common stock of the Company.


8. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

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 October 1, 2022
  Currency
Translation
Adjustments
Cash Flow Hedges    
  Forward
Contracts
Pension
Plan
Total
Beginning balance $ (99,573) $ 8,512  $ 3,982  $ (87,079)
Other comprehensive income (loss) before reclassifications (13,465) 7,950  —  (5,515)
Tax (expense) benefit —  261  —  261 
Amounts reclassed from accumulated other comprehensive income (loss) —  4,310  —  4,310 
Tax (expense) benefit —  233  —  233 
Total other comprehensive income (loss) (13,465) 3,668  —  (9,797)
Ending balance $ (113,038) $ 12,180  $ 3,982  $ (96,876)

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  For the 13 Weeks Ended October 2, 2021
  Currency
Translation
Adjustments
Cash Flow Hedges    
  Forward
Contracts
Pension
Plan
Total
Beginning balance $ (70,234) $ 2,372  $ 1,428  $ (66,434)
Other comprehensive income (loss) before reclassifications (3,237) 3,320  —  83 
Tax (expense) benefit —  (29) —  (29)
Amounts reclassed from accumulated other comprehensive income (loss) —  1,263  —  1,263 
Tax (expense) benefit —  (57) —  (57)
Total other comprehensive income (loss) (3,237) 2,085  —  (1,152)
Ending balance $ (73,471) $ 4,457  $ 1,428  $ (67,586)
  For the 39 Weeks Ended October 1, 2022
  Currency
Translation
Adjustments
Cash Flow Hedges    
  Forward
Contracts
Pension
Plan
Total
Beginning balance $ (75,601) $ 4,344  $ 3,982  $ (67,275)
Other comprehensive income (loss) before reclassifications (37,437) 16,151  —  (21,286)
Tax (expense) benefit —  790  —  790 
Amounts reclassed from accumulated other comprehensive income —  8,512  —  8,512 
Tax (expense) benefit —  593  —  593 
Total other comprehensive income (loss) (37,437) 7,836  —  (29,601)
Ending balance $ (113,038) $ 12,180  $ 3,982  $ (96,876)
  For the 39 Weeks Ended October 2, 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 (12,293) 3,934  —  (8,359)
Tax (expense) benefit —  (247) —  (247)
Amounts reclassed from accumulated other comprehensive income (loss) —  210  —  210 
Tax (expense) benefit —  (130) —  (130)
Total other comprehensive income (loss) (12,293) 3,607  —  (8,686)
Ending balance $ (73,471) $ 4,457  $ 1,428  $ (67,586)

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

9. SEGMENT INFORMATION
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 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
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Asia segment primarily includes sales to customers based in Australia, China (including Hong Kong, Macau and Taiwan), 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.
Summary information by operating segment was as follows (in thousands):
For the 13 Weeks Ended October 1, 2022 For the 13 Weeks Ended October 2, 2021
  Net Sales Operating Income (Loss) Net Sales Operating Income (Loss)
Americas $ 184,326  $ 33,403  $ 193,762  $ 46,589 
Europe 143,679  31,076  165,887  40,549 
Asia 100,212  17,515  129,494  23,996 
Corporate 8,054  (59,512) 2,684  (63,328)
Consolidated $ 436,271  $ 22,482  $ 491,827  $ 47,806 
For the 39 Weeks Ended October 1, 2022 For the 39 Weeks Ended October 2, 2021
  Net Sales Operating Income (Loss) Net Sales Operating Income (Loss)
Americas $ 514,525  $ 87,966  $ 522,983  $ 109,172 
Europe 376,110  65,489  399,519  67,616 
Asia 279,563  38,807  331,625  50,553 
Corporate 13,094  (194,999) 11,681  (181,942)
Consolidated $ 1,183,292  $ (2,737) $ 1,265,808  $ 45,399 
Due to changes in the Company’s product types as discussed in Note 1 to the Condensed Consolidated Financial Statements, product results for the Prior Year Quarter and Prior Year YTD Period have been recast to present results on a comparable basis. The following table reflects 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 October 1, 2022 For the 13 Weeks Ended October 2, 2021
  Net Sales Percentage of Total Net Sales Percentage of Total
Watches:
    Traditional watches $ 310,198  71.1  % $ 345,764  70.3  %
    Smartwatches 33,306  7.6  54,085  11.0 
Total watches $ 343,504  78.7  % $ 399,849  81.3  %
Leathers 41,095  9.4  36,390  7.4 
Jewelry 37,868  8.7  46,325  9.4 
Other 13,804  3.2  9,263  1.9 
Total $ 436,271  100.0  % $ 491,827  100.0  %

For the 39 Weeks Ended October 1, 2022 For the 39 Weeks Ended October 2, 2021
  Net Sales Percentage of Total Net Sales Percentage of Total
Watches:
    Traditional watches $ 830,322  70.2  % $ 878,809  69.4  %
    Smartwatches 104,709  8.8  150,086  11.9 
Total watches $ 935,031  79.0  % $ 1,028,895  81.3  %
Leathers 111,226  9.4  103,841  8.2 
Jewelry 106,495  9.0  105,040  8.3 
Other 30,540  2.6  28,032  2.2 
Total $ 1,183,292  100.0  % $ 1,265,808  100.0  %

 
10. DERIVATIVES AND RISK MANAGEMENT
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.
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As of October 1, 2022, 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 105.1  U.S. dollar 113.6 
Canadian dollar 44.7  U.S. dollar 34.9 
Mexican peso 302.3  U.S. dollar 14.7 
British pound 7.9  U.S. dollar 10.0 
Japanese yen 847.6  U.S. dollar 7.0 
Australian dollar 9.6  U.S. dollar 6.8 
U.S. dollar 13.4  Japanese yen 1,730.0 
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 October 1, 2022, the Company did not have any non-designated forward contracts. 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 October 1, 2022 For the 13 Weeks Ended October 2, 2021
Cash flow hedges:    
Forward contracts $ 8,211  $ 3,292 
Total gain (loss) recognized in other comprehensive income (loss), net of taxes $ 8,211  $ 3,292 
For the 39 Weeks Ended October 1, 2022 For the 39 Weeks Ended October 2, 2021
Cash flow hedges:    
Forward contracts $ 16,941  $ 3,687 
Total gain (loss) recognized in other comprehensive income (loss), net of taxes $ 16,941  $ 3,687 
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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 October 1, 2022 For the 13 Weeks Ended October 2, 2021
Forward contracts designated as cash flow hedging instruments Cost of sales Total gain (loss) reclassified from accumulated other comprehensive income (loss) $ 3,158  $ 689 
Forward contracts designated as cash flow hedging instruments Other income (expense)-net Total gain (loss) reclassified from accumulated other comprehensive income (loss) $ 1,385  $ 518 
Forward contracts not designated as hedging instruments Other income (expense)-net Total gain (loss) recognized in income $ (3) $ 61 
Derivative Instruments Condensed Consolidated
Statements of Income (Loss)
and Comprehensive
Income (Loss) Location
Effect of Derivative
Instruments
For the 39 Weeks Ended October 1, 2022 For the 39 Weeks Ended October 2, 2021
Forward contracts designated as cash flow hedging instruments Cost of sales Total gain (loss) reclassified from accumulated other comprehensive income (loss) $ 6,198  $ 938 
Forward contracts designated as cash flow hedging instruments Other income (expense)-net Total gain (loss) reclassified from accumulated other comprehensive income (loss) $ 2,907  $ (858)
Forward contracts not designated as hedging instruments Other income (expense)-net Total gain (loss) recognized in income $ 63  $ (12)
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
  October 1, 2022 January 1, 2022 October 1, 2022 January 1, 2022
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 $ 13,418  Prepaid expenses and other current assets $ 3,452  Accrued expenses-other $ 1,290  Accrued expenses-other $ 177 
Forward contracts designated as cash flow hedging instruments Intangible and other assets-net 1,171  Intangible and other assets-net —  Other long-term liabilities —  Other long-term liabilities — 
Total   $ 14,589    $ 3,452    $ 1,290    $ 177 
 

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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 October 1, 2022 For the 13 Weeks Ended October 2, 2021
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 $ 216,651  $ (1,859) $ 232,305  $ (482)
Gain (loss) on cash flow hedging relationships:
Forward contracts designated as cash flow hedging instruments:
Total gain (loss) reclassified from other comprehensive income (loss)
$ 3,158  $ 1,385  $ 689  $ 518 
Forward contracts not designated as hedging instruments:
Total gain (loss) recognized in income $ —  $ (3) $ —  $ 61 
Effect of Derivative Instruments
For the 39 Weeks Ended October 1, 2022 For the 39 Weeks Ended October 2, 2021
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 $ 588,010  $ (1,915) $ 601,857  $ 882 
Gain (loss) on cash flow hedging relationships:
Forward contracts designated as cash flow hedging instruments:
Total gain (loss) reclassified from other comprehensive income (loss)
$