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BRP- TWO THOUSAND AND TEN - 2000 1900 1800 1700 1600 1500 1400 1300 1200 1100 0 375 350 325 300 275 250 225 200 175 150 125 0 250 225 200 175 150 125 100 75 50 25 0 1000 900 800 700 600 500 400 300 200 100 0 06 07 08 09 10 NET SALES (in thousands of dollars) 06 07 08 09 10 OPERATING INCOME (in thousands of dollars) 06 07 08 09 10 NET INCOME (in thousands of dollars) 06 07 08 09 10 STOCKHOLDERS’ EQUITY (in thousands of dollars) Fiscal year [In Thousands, Except Per Share Data] Net sales Gross profit Operating income Income before taxes attributable to Fossil, Inc. 2010 2009 2008 2007 2006 $2,030,690 $1,548,093 $1,583,242 $1,432,984 $1,213,965 1,155,164 844,850 851,151 742,031 608,919 376,414 372,448 211,627 213,776 205,770 186,485 123,325 189,429 187,526 118,795 Net income attributable to Fossil, Inc. 255,205 139,188 138,0971 123,2612 77,582 Earning per share: Basic Diluted Weighted average common shares and common equivalent shares outstanding: 3.83 3.77 2.09 2.07 2.051 2.021 1,812 1.752 1.15 1.13 Basic Diluted 66,701 67,687 66,684 67,153 67,525 68,323 68,213 70,333 67,177 68,817 Working capital $ 801,329 $701,193 $556,497 $546,410 $357,608 Total assets 1,467,573 1,276,483 1,087,296 1,122,628 852,597 Total long-term liabilities 76,377 62,791 74,964 66,432 22,914 Stockholders’ equity attributable to Fossil, Inc. 1,044,118 962,781 802,144 771,662 602,201 Return on average stockholders’ equity attributable to Fossil, Inc. 25.0 % 16.2 % 17.8% 18.3% 14.2% (1) Includes a $20.8 million benefit in income tax expense related to the reduction of certain current and long-term tax liabilities in connection with completion of prior year income tax audits. (2) Includes $8.6 million in expenses, net of tax, relating to our voluntary evaluation of our accounting for equity-based compensation, including the appropriateness of accounting measurement dates used to determine the amounts of compensation charges and related tax effects which have been previously disclosed in filings with the Securities and Exchange Commission. Dear Stockholders, 2010 was a truly remarkable year with explosive growth across our FOSSIL brand of products and multi-brand watch portfolio. Continued product innovation, increased marketing initiatives and continuing momentum in the overall watch market culminated in sales exceeding a new milestone of $2 billion. FOSSIL brand product sales, combined across all product lines and geographies, were up 24% for fiscal year 2010 as well as the 4th quarter, while our global multi-brand watch business grew at an astounding rate of 40% for fiscal year 2010 and 42% in the 4th quarter. Our growth was broad-based store count of approximately 55 doors while also launching several commerce-based websites outside of the U.S. We are also exploring the opportunities within our multi-brand portfolio to expand our watch concession footprint, primarily in the Asia Pacific market, in addition to leveraging our Watch Station retail format. The broad-based growth we achieved last year opened increasing avenues of growth for our company. Given the strength of the FOSSIL brand combined with our resources and positioning in the global watch market, we have a much larger opportunity than we thought just a short time ago. This is especially true in Asia, which we believe could represent one-third of our sales over time versus just 13% of sales currently. With FOSSIL and our portfolio of fashion brand watches, we have a huge runway ahead of us all over the world. Our focus in fiscal 2011 will be to continue to capitalize on all our opportunities while continuing to build our capabilities to maximize the long-term growth of the company. across all geographies and brands underscoring the Finally, we would like to thank our 10,500 significant strength of our business model and the employees worldwide as well as our customers, strong execution of our team. Our consistent ability suppliers and stockholders for their continued to lead the market with innovative use of materials support and dedication. and designs continues to resonate with our customers and allows us to compete in a full price manner, strengthening brand value and profitability. Sincerely, k o s ta n . k a r t s o t i s Chairman of the Board and Chief Executive Officer For our core FOSSIL brand, targeted marketing initiatives including catalogs, internet advertising, search and social media accelerated sales in our wholesale, online and owned retail channels of distribution. These initiatives drove Fossil same store sales growth of 19% for the year, in addition to 50% growth in ecommerce sales. We ended fiscal year 2010 with 364 stores, a net add of 10 doors from last fiscal year, with all of the net pick up in store growth taking place outside of the U.S. During fiscal 2011, it is our intent to leverage FOSSIL’s brand strength and owned store economics through a net increase in E X EC U T I V E OF F IC E R S & DI R EC TOR S Kosta N. Kartsotis Chairman of the Board and Chief Executive Officer Jal S. Shroff Director Livio Galanti Executive Vice President Mike L. Kovar Executive Vice President, Chief Financial Officer and Treasurer Jennifer Pritchard President, Retail Division Mark D. Quick Vice Chairman Elaine Agather Director Jeffrey N. Boyer Director Elysia Holt Ragusa Director James E. Skinner Director Michael Steinberg Director Donald J. Stone Director James M. Zimmerman Director COR P OR AT E I N FOR M AT ION Transfer Agent and Registrar Principal Independent Auditors Corporate Counsel Mellon Investor Services LLC P. O. Box 358015 Pittsburgh, PA 15252-8015 Deloitte & Touche LLP 2200 Ross Avenue Dallas, TX 75201 Haynes and Boone, LLP 2323 Victory Avenue | Suite 700 Dallas, TX 75219 OU R W E B S I T E The Company maintains a website at the worldwide internet address of www.fossil.com. Certain product, event, and investor relations information concerning the Company is available at the site. A N N UA L M E E T I NG The Annual Meeting of Stockholders will be held on Wednesday, May 25, 2011, at 9:00 am at the Company’s headquarters, 2280 N. Greenville Ave., Richardson, Texas. COM PA N Y I N FOR M AT ION A copy of the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission, and the Annual Report to Stockholders, in addition to other Company information, is available to stockholders without charge upon written request to Fossil, Investor Relations, 2280 N. Greenville Ave., Richardson, Texas 75082-4412, or online at www.fossil.com.
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