Significant Accounting Policies (Policy)

12 Months Ended

Dec. 29, 2012

Significant Accounting Policies [Abstract]

Basis Of Presentation And Nature Of Operations

Basis of Presentation and Nature of Operations:  The consolidated financial statements include the accounts of A.T. Cross Company and its subsidiaries (the “Company”). Upon consolidation, intercompany accounts and transactions are eliminated.

The Company has two reportable segments: Cross Accessory Division (“CAD”), and Cross Optical Group (“COG”). The Company's CAD segment designs, manufactures and markets writing instruments throughout the world and is an OEM of writing instruments. Writing instrument products are sold under the Cross brand as well as the FranklinCovey brand. They include ball-point pens, fountain pens, Selectip rolling ball pens, mechanical pencils and writing instrument accessories such as refills and desk sets. Also under the Cross brand, CAD offers a variety of personal and business accessories including leather goods, reading glasses, desk sets and stationery.  The Company has license agreements with a third party to develop and sell Cross watches and cufflinks. The Company's COG segment designs, manufactures and markets sunglasses throughout the United States under the Costa and Native brand names. The Company evaluates segment performance based upon operating profit or loss. The Company's reportable segments are strategic business units that offer different product lines. They are managed separately, as each unit requires different technologies and marketing strategies.

The Company operates on a 52/53 week fiscal year, ending on the last Saturday closest to December 31.  A fiscal year usually consists of four 13 week fiscal quarters.  Fiscal 2008 was a 53 week year with 14 weeks in the fourth quarter.  Fiscalyears 2012, 2011, 2010 and 2009 were 52-week years ended December 29, 2012, December 31, 2011,January 1, 2011 and January 2, 2010, respectively.  The Company has historically recorded its highest sales in the fourth quarter.

The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated to the date of issuance of these financial statements.

The accounting policies of the Company are described in this summary of significant accounting policies.

Accounting For Estimates

Accounting for Estimates:  The preparation of financial statements, in accordance with accounting principles generally accepted in the United States of America (“GAAP”), requires the Company to make assumptions that affect the estimates reported in these consolidated financial statements. Actual results may differ from these estimates. The significant estimates in the Company's consolidated financial statements include sales returns and allowances, allowance for doubtful accounts receivable, realizable value of inventory, impairment of long-lived assets and goodwill, warranty, retirement obligations and income taxes.

Cash Equivalents And Short-Term Investments

Cash Equivalents and Short-Term Investments:  The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.  Short-term investments are stated at fair value.  Gains or losses on short-term investments, both realized and unrealized, are included in other (expense) income.  At December 29, 2012 and December 31, 2011, approximately 31% and  40%, respectively, of the Company's cash and cash equivalents were on deposit with one financial institution.

Allowance For Doubtful Accounts

Allowance for Doubtful Accounts:  The Company determines its allowance for doubtful accounts based on historical percentages of aged accounts receivable and specific customer accounts when, in management’s opinion, they are deemed uncollectable.  Following is a summary of the allowance for doubtful accounts for the three years ended December 29, 2012:

	YEARS ENDED
(THOUSANDS OF DOLLARS)	DECEMBER 29, 2012		DECEMBER 31, 2011		JANUARY 1, 2011
Allowance for Doubtful Accounts - Beginning of Year	$	1,020	$	1,069	$	1,129
(Credited) charged to bad debt expense		(206)		68		139
Deductions		(181)		(117)		(199)
Allowance for Doubtful Accounts - End of Year	$	633	$	1,020	$	1,069

Inventories

Inventories:  The Company’s inventories are valued at the lower of cost or market.  Cost is determined using the FIFO method.

Property, Plant And Equipment, And Related Depreciation

Property, Plant and Equipment, and Related Depreciation:Property, plant and equipment are stated at historical cost. Depreciation expense was $5.0 million, $5.3 million and $5.4 million in fiscal 2012, 2011 and 2010, respectively. Provisions for depreciation are computed using a combination of accelerated and straight-line methods, which are intended to depreciate the cost of such assets over their estimated useful lives, which are as follows:

Leasehold Improvements	3 to 15	years
Machinery & Equipment	2 to 10	years
Furniture & Fixtures	2 to 10	years
Vehicles, Tooling and Desktop PCs	2 to   5	years

The components of Property, Plant and Equipment are as follows:

		YEARS ENDED
(THOUSANDS OF DOLLARS)	DECEMBER 29, 2012		DECEMBER 31, 2011
Leasehold improvements	$	2,106	$	2,060
Machinery and equipment		110,795		105,873
		112,901		107,933
Less accumulated depreciation		98,525		94,227
Property, Plant and Equipment, Net	$	14,376	$	13,706

Long-Lived Assets

Long-Lived Assets:The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value, less the cost to sell.

Goodwill And Other Intangible Assets

Goodwill and Other Intangible Assets:Goodwill and certain intangible assets with indefinite lives are not amortized but are subject to annual impairment tests, more frequently if events or circumstances occur that would indicate a potential decline in their fair value. The Company has identified two reporting units, consisting of the CAD and COG segments. The Company performs the assessment annually during the fourth quarter and on an interim basis if potential impairment indicators arise. The Company determines the fair value of the reporting units using accepted accounting standard methodologies and the values of certain intangible assets with indefinite lives, consisting of two COG segment trade names, using a forward-looking relief from royalty model.

Warranty Costs

Warranty Costs:CAD's Cross-branded writing instruments are sold with a full warranty of unlimited duration against mechanical failure. CAD's accessories are sold with a one-year warranty against mechanical failure and defects in workmanship and timepieces are warranted for a period of two years.  Costa and Native sunglasses are sold with a lifetime warranty against defects in materials and workmanship. Estimated warranty costs are accrued at the time of sale. The most significant factors in the estimation of warranty cost liabilities include the operating efficiency and related cost of the service department, unit sales and the number of units that are eventually returned for warranty repair. The current portions of accrued warranty costs were $0.4 million at December 29, 2012 and $0.5 million at December 31, 2011, and were recorded in accrued expenses and other liabilities. The following chart reflects the activity in aggregate accrued warranty costs:

	YEARS ENDED
(THOUSANDS OF DOLLARS)	DECEMBER 29, 2012		DECEMBER 31, 2011		JANUARY 1, 2011
Accrued Warranty Costs - Beginning of Year	$	1,892	$	1,998	$	1,936
Warranty costs paid		(274)		(391)		(735)
Warranty costs accrued		376		423		423
Impact of changes in estimates and assumptions		(282)		(138)		374
Accrued Warranty Costs - End of Year	$	1,712	$	1,892	$	1,998

Revenue Recognition

Revenue Recognition:Revenue from sales is recognized when the following criteria are met: persuasive evidence of an arrangement exists, title to the goods has passed to the customer, the sales price is fixed or determinable, and collection of the sales price is reasonably assured. Provisions are made at the time the related revenue is recognized for estimated product returns, discounts and rebates.

Marketing Support Costs

Marketing Support Costs:The costs of marketing support, including advertising, are charged to expense as incurred and amounted to approximately $13.8 million, $13.7 million and  $12.3 million for fiscal 2012, 2011 and 2010, respectively. Accrued marketing support expenses were approximately $2.5 million at December 29, 2012 and $2.3 million at December 31, 2011 and are included in accrued expenses and other liabilities.

Derivatives

Derivatives:The Company has a program in place to manage foreign currency risk. As part of that program, the Company can enter into foreign currency exchange contracts to hedge anticipated foreign currency transactions or commitments, primarily purchases of materials and products from foreign suppliers, and certain foreign currency denominated balance sheet positions. The terms of the contracts are generally less than three months. Forward exchange contracts generally do not qualify for hedge accounting and gains and losses are included in SG&A expenses.

The Company also uses interest rate swaps to manage its exposure to changing interest rates that result from variable rate debt. These swaps effectively fix the interest rate on a portion of the Company's line of credit at 1.2%.

Realized and unrealized gains and losses on contracts intended to hedge specific forecasted transactions or commitments, if any, that are designated and qualify for hedge accounting are deferred and recorded as a component of accumulated other comprehensive loss and accounted for as part of the transaction. Contracts are recorded at fair value on the balance sheet as a component of other current assets or accrued expenses and other liabilities.

Stock-Based Compensation

Stock-Based Compensation:The Company recognizes stock-based employment compensation arrangements based on the estimated fair value of stock-based awards exchanged for employee services received and recognizes compensation cost based on the fair value of the award on the date of grant, recognized ratably over the requisite service period for awards expected to vest. The service period is the period over which the employee performs the related services, which is normally the same as the vesting period.

Income Taxes

Income Taxes:Provisions for Federal, state and non-U.S. income taxes are calculated on reported income before income taxes based on current tax law and also include, in the current period, the cumulative effect of any changes in tax rates from those used previously in determining deferred tax assets and liabilities. Such provisions differ from the amounts currently receivable or payable because certain items of income and expense are recognized in different time periods for financial reporting purposes than for income tax purposes. Significant judgment is required in determining income tax provisions and evaluating tax positions.

The Company records a liability associated with an uncertain income tax benefit, for a position taken or intended to be taken, if we determine that it is not more likely than not that such benefit will be sustained upon review of the taxing authority. The Company also records a tax position as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement.

Basic And Diluted Net Income Per Share

Basic and Diluted Net Income Per Share:Basic net income per share is computed by dividing net income by the weighted average number of total shares of Class A and Class B common stock outstanding during the year. Diluted net income per share is computed by dividing net income by diluted weighted average shares outstanding. Diluted weighted average shares reflect the dilutive effect, if any, of potential common shares. To the extent that their effect is dilutive, potential common shares include common stock options and non-vested equity shares based on the treasury stock method. There is no anti-dilutive effect of securities for the three years ended December 29, 2012.

Environmental Contingencies

Environmental Contingencies:The Company is subject to contingencies pursuant to environmental laws and regulations under various state, Federal and foreign laws, including CERCLA. The Company typically estimates potential costs based on information obtained from the U.S. Environmental Protection Agency, or counterpart state agency and/or studies prepared by independent consultants, including the total estimated costs for the site and the expected cost-sharing, if any, with other “potentially responsible parties,” and the Company accrues liabilities when they are probable and estimable.