Fossil Group, Inc.FOSL

Fossil Group, Inc. Commitments Disclosure

10-KFiled Mar 12, 20262 min read
Commitments and Contingencies
License Agreements.    The Company has various license agreements to market watches and jewelry bearing certain trademarks or incorporating certain technology owned by third parties. In accordance with these agreements, the Company incurred royalty expense of $112.5 million, $119.1 million and $129.5 million in fiscal years 2025, 2024 and 2023, respectively. These amounts are included in the Company's cost of sales or, if advertising-related, in SG&A. These license agreements have expiration dates between fiscal years 2026 and 2029 and require the Company to pay royalties ranging from 3% to 22% of defined net sales. The Company has future minimum royalty commitments through fiscal year 2028 under these license agreements as follows by fiscal year (in thousands):
Fiscal YearMinimum Royalty
Commitments
2026$73,311 
202748,907 
20281,448 
Total$123,666 
These minimum royalty commitments do not include amounts owed under these license agreements for obligations of the Company to pay the licensors a percentage of net sales of these licensed products.
Purchase Obligations.  As of January 3, 2026, the Company had purchase obligations totaling $140.6 million that consisted primarily of open non-cancelable purchase orders.
Asset Retirement Obligations.    ASC 410, Asset Retirement and Environmental Obligations requires (i) that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made and (ii) that the associated asset retirement costs be capitalized as part of the carrying amount of the long-lived asset. The Company's asset retirement obligations relate to costs associated with the retirement of leasehold improvements under office leases and retail store leases within the Americas, Europe and Asia segments.
The following table summarizes the changes in the Company's asset retirement obligations (in thousands):
Fiscal Year20252024
Beginning asset retirement obligation$10,644 $11,758 
Additions and changes in estimate896 559 
Liabilities settled during the period(1,680)(1,453)
Accretion expense208 304 
Currency translation909 (524)
Ending asset retirement obligations$10,977 $10,644 

Litigation.    The Company is occasionally subject to litigation or other legal proceedings in the normal course of its business. In addition, from time to time, the Company receives communications from government or regulatory agencies concerning investigations or allegations of noncompliance with laws or regulations in jurisdictions in which the Company operates. The Company does not believe the outcome of any currently pending legal matters, individually or collectively, will have a material effect on the business or financial condition of the Company.

Historical Timeline

Fiscal YearFiled
2026Mar 12, 2026Showing above
2024Mar 12, 2025
2023Mar 13, 2024
2022Mar 9, 2023

About Commitments Disclosures

Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.

Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.

Other Available Disclosures

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