Fossil Group, Inc.FOSL
Fossil Group, Inc. Fair Value Disclosure
Fair Value Measurements
The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date.
ASC 820, Fair Value Measurement and Disclosures ("ASC 820"), establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into three broad levels as follows:
•Level 1—Quoted prices in active markets for identical assets or liabilities.
•Level 2—Inputs, other than quoted prices in active markets, that are observable either directly or indirectly.
•Level 3—Unobservable inputs based on the Company's assumptions.
ASC 820 requires the use of observable market data if such data is available without undue cost and effort.
As of January 3, 2026, the Company did not have any assets or liabilities measured at fair value on a recurring basis.
The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of December 28, 2024 (in thousands):
| Fair Value at December 28, 2024 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Forward contracts | $ | — | $ | 580 | $ | — | $ | 580 | |||||||||||||||
| Total | $ | — | $ | 580 | $ | — | $ | 580 | |||||||||||||||
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.
As of January 3, 2026, the Company's First-Out and Second-Out Notes (as defined in Note 10— Debt), excluding unamortized debt issuance costs and original issue discount, were recorded at cost and had a carrying value of $185.1 million and their fair value approximated their carrying value. The Company's New Revolving Credit Facility (as defined in Note 10—Debt) was recorded at cost and had a carrying value of $16.0 million and its fair value approximated its carrying value. The fair value of the Company's First-Out Notes, Second-Out Notes and New Revolving Credit Facility was based on Level 3 inputs.
Operating lease right-of-use assets with a carrying amount of $1.6 million were written down to a fair value of $1.0 million and property, plant and equipment—net with a carrying amount of $0.4 million related to fixturing were fully impaired, resulting in total pre-tax impairment charges of $1.0 million for fiscal year 2025.
The fair values of operating lease right-of-use ("ROU") assets and fixed assets related to retail stores were determined using Level 3 inputs, including forecasted cash flows and discount rates. Of the $1.0 million impairment expense, $0.7 million and $0.3 million were recorded in long-lived asset impairments in the Americas and Europe segments, respectively.
In fiscal year 2024, operating lease right-of-use assets with a carrying amount of $12.3 million and property, plant and equipment—net with a carrying amount of $1.9 million related to retail store leasehold improvements, and fixturing were written down to a fair value of $5.0 million and $0.4 million, respectively, resulting in total pre-tax impairment charges of $8.8 million. Of the $8.8 million impairment expense, $4.6 million and $2.0 million were recorded in restructuring charges in the Asia and Europe segments, respectively, and $1.0 million, $0.8 million and $0.4 million were recorded in long-lived asset impairments in the Asia, Europe and Americas segments, respectively.
The fair value of trade names are measured on a non-recurring basis using Level 3 inputs, including forecasted cash flows, discounts rates and implied royalty rates. No trade name impairment was recorded to the MICHELE or SKAGEN tradenames during fiscal years 2025 or 2024. The Zodiac tradename with a carrying amount of $0.5 million was considered fully impaired, resulting in a pre-tax impairment charge of $0.5 million for fiscal year 2025.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | Mar 12, 2026 | Showing above |
| 2024 | Mar 12, 2025 | |
| 2023 | Mar 13, 2024 | |
| 2022 | Mar 9, 2023 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.