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HOU S A N
2 0 1 1
L E T T E R T O S T O C K H O L D E R S
Dear Stockholders,
Our fiscal 2011 results represented another year of excellent growth for Fossil
and considerable progress towards our long-term objectives. We generated
double-digit sales gains across all of our major brands, product categories and
geographies, which were driven by the continued success of our two global
growth initiatives - our FOSSIL brand and our multi-brand watch business.
Earnings rose 22% to $4.61 per diluted share from
$3.77 per diluted share, even as we invested in talent
and infrastructure to capitalize on the significant
opportunities that we see ahead of us. We attribute
our ongoing strength to the many advantages of our
owned distribution model, the incredible talent we
possess around the world and the compelling brands
and offerings in our portfolio.
OUR 2011 FISCAL YEAR INCLUDED SEVERAL
SIGNIFICANT MILESTONES:
Total sales surpassed $2.5 billion, increasing
by over $500 million, or 26%;
Sales of FOSSIL-branded products eclipsed
$1 billion, coming in just under $1.2 billion;
Sales from our multi-brand watch business
grew to over $1.8 billion;
We invested in our businesses in Asia to
capitalize on this game-changing growth
opportunity, attracting key talent and making
significant inroads into establishing the
infrastructure to accelerate our expansion
in this region;
We utilized the strength of our balance sheet
to aquire 6.2 million shares of our common
stock since announcing our buyback program in
August 2010; and
We were added to the Nasdaq 100.
Our FOSSIL brand continued its positive momentum
during fiscal 2011 with sales increasing by 20%, led
by a 19% increase in watches and a 31% increase
in leather sales. The brand continues to strengthen as
we present the image of American vintage with more
authenticity and clarity. Our FOSSIL brand presents
a strong offering on both the men’s and women’s
side of the business and has high appeal all over the
world. We believe the strength of the brand is further
evidenced by the nine consecutive quarters of double-
digit comparable store sales increases across our
global retail store base.
In our multi-brand watch business, we experienced
a sales increase of 30% for the 2011 fiscal year.
This impressive growth follows a 39% increase in
sales last fiscal year. Our portfolio of owned and
licensed brands represent many of the best global
lifestyle brands in the world and are leading us to
increased market share globally. During fiscal 2011,
some notable performances include MARC BY
MARC JACOBS doubling over the prior fiscal year
and MICHAEL KORS and ARMANI EXCHANGE
increasing over 70%, while DIESEL and BURBERRY
were both up 30% or more. In addition, we entered
into an agreement in January 2012 to acquire Skagen
Designs, Ltd., which we expect to close in April 2012,
subject to the receipt of regulatory approvals. We
are also preparing for the launch of our newest global
watch license, Karl Lagerfeld, in early 2013.
We are focused on building the FOSSIL brand around
the world as an accessories-based lifestyle brand.
With the addition of Karl Lagerfeld, we are also
expanding our leadership position in the aspirational
lifestyle watch business. We feel strongly that the
advantages of our accessories-based businesses,
including higher margins, shorter lead times and less
obsolescence than other categories, have us well-
positioned to drive increased sales and profitability.
As we begin 2012, we will continue to execute the
strategies that led to our success in fiscal 2011.
We have a talented team that is passionate about
achieving our mission. I would like to thank our more
than 13,000 employees around the world as well as
our customers, suppliers and stockholders for their
continued support and dedication.
Sincerely,
KOSTA N. KARTSOTIS
Chief Executive Officer
w w w . f o s s i l . c o m
3
2 0 1 1
F I N A N C I A L H I G H L I G H T S
FISCAL YEAR
(in thousands, except per share data)
Net sales
Gross profit
Operating income
Income before taxes attributable to Fossil, Inc.
Net income attributable to Fossil, Inc.
Earning per share:
Basic
Diluted
Weighted average common shares
and common equivalent shares outstanding:
Basic
Diluted
Working capital
Total assets
2011 2010
2009 2008
2007
$2,567,302
$2,030,690
$1,548,093
$1,583,242
$1,432,984
1,439,186
1,155,164
844,850
471,991
438,860
294,702
4.66
4.61
63,298
63,965
376,414
372,448
255,205
3.83
3.77
66,701
67,687
211,627
213,776
139,188
2.09
2.07
66,684
67,153
851,151
205,770
189,429
138,0971
2.051
2.021
67,525
68,323
742,031
186,485
187,526
123,2612
1.812
1.752
68,213
70,333
$844,124
$801,329
$701,193
$556,497
$546,410
1,642,922
1,467,573
1,276,483
1,087,296
1,122,628
Total long-term liabilities
134,798
76,377
Stockholders’ equity attributable to Fossil, Inc.
1,105,929
1,044,118
62,791
962,781
74,964
802,144
66,432
771,662
Return on average stockholders’ equity
attributable to Fossil, Inc.
28.0%
25.0%
16.2%
17.8%
18.3%
1
2
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.
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.
w w w . f o s s i l . c o m
4
2600
2450
2300
2150
2000
1850
1700
1550
1400
1250
0
475
445
415
385
355
325
295
265
235
205
175
0
300
275
250
225
200
175
150
125
100
75
0
1150
1100
1050
1000
950
900
850
800
750
700
0
07 08 09 10 11
07 08 09 10 11
07 08 09 10 11
07 08 09 10 11
NET SALES
(in thousands of dollars)
OPERATING INCOME
(in thousands of dollars)
NET INCOME
(in thousands of dollars)
STOCKHOLDERS’ EQUITY
(in thousands of dollars)
w w w . f o s s i l . c o m
5
CORPORATE INFORMATION
Transfer Agent and Registrar
Computershare Shareowner Services LLC
P. O. Box 358015
Pittsburgh, PA 15252-8015
Principal Independent Auditors
Deloitte & Touche LLP
2200 Ross Avenue
Dallas, TX 75201
Corporate Counsel
Haynes and Boone, LLP