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FOSSIL ANNUAL REPORT
T W O T H O U S A N D A N D T W E L V E
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FOSSIL IS AN
AMERICAN
LIFESTYLE BRAND,
CREATIVELY
ROOTED IN
AUTHENTIC
VINTAGE AND
CLASSIC DESIGN.
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L E T T E R T O S T O C K H O L D E R S
D E A R S T O C K H O L D E R S ,
We are pleased to share with you another record financial performance in 2012 and to report significant progress
on many of our long-term strategic objectives. In 2012, we generated net sales of $2.9 billion, increasing 11.3%
from 2011 with growth across our major geographies and ongoing strength in our watch category. Earnings per
diluted share rose 21% to $5.59. Our results reflect our ongoing ability to capitalize on the strength of our global
design, distribution and sales infrastructure to increase our geographic reach across our core businesses.
Our strong balance sheet and robust cash
flow generation provides us the opportunity
to invest in support of our future growth
and return value to our stockholders. During
the year, we invested our capital to acquire
Skagen Designs, Ltd., increase our direct
ownership in countries of interest, and invest
in support of our opportunities in Asia.
In 2012, we also continued to invest in our
share repurchase program, as we repurchased
three million shares of our common stock
under our $750 million share repurchase
program. In March 2012, we were added to
the S&P 500 index. For the year, our share
price rose 13%.
During the year, we focused on growing our
three core businesses, FOSSIL, SKAGEN
and our watch portfolio while developing and
implementing three key enablers to drive
those businesses.
In 2012, we restructured the FOSSIL brand
under a common global leadership.
We generated increased sales in our largest
category - watches. We repositioned our
FOSSIL jewelry line to a global assortment
and continued to expand our accessories
business. In addition, we grew our direct-to-
consumer presence, opening a net six new
accessory stores and 53 outlet locations,
and delivered comparable store sales growth.
We integrated and positioned our newly
acquired SKAGEN brand to achieve its long
term growth potential. SKAGEN provides us
with a complimentary brand that possesses
a rich Danish heritage and contemporary
design with global appeal. As we begin 2013,
we are now well-positioned to benefit from
operating SKAGEN through our owned
subsidiaries. We plan to expand into more
categories, starting with a jewelry line
scheduled to launch in the spring of 2013.
Our strong PORTFOLIO of watch brands
generated a third consecutive year of
double-digit watch growth. This increase
included strength across multiple
long-standing and newer brands as we
consistently delivered compelling styles
to the market, increased our geographic reach
and commanded a greater market share.
Our portfolio approach to the watch business
affords us the opportunity to identify and
add compelling new brands. We introduced
our Karl Lagerfeld watch business in the
first quarter of 2013 to select retail doors
around the world and we plan to launch
our Tory Burch licensed watches in time for
holiday 2014. We are very excited about
both opportunities, which are consistent with
our strategy to align with terrific brands that
have global appeal.
Globalization is our first key enabler to
our growth, and central to our strategy, with
Asia being integral to our growth strategy.
Last year, we grew our Asia business by more
than 20%. Our strong performance in key
markets like Japan, Korea and China, and the
success of our concession business is an
indication of the current strength we have in
the Asian marketplace. In 2013, we have
plans in place to continue our expansion. Asia’s
rapidly growing middle class has an affinity
for watches and jewelry, and in particular, our
portfolio of brands. This opportunity in Asia,
combined with the significant talent and
infrastructure we have developed, has us
well-positioned to meet our goal to eventually
grow Asia to one-third of our total sales.
As Asia also represents our highest margin
region, it is a high return opportunity for us
as well.
Our second enabler to long-term and sustainable
growth is to increase our efficiency. We believe
that our biggest hindrance to growth is
complexity and, as a result, we have taken
steps to simplify our processes and to speed
the flow of information and product across
the Company.
Our third and final enabler is our management
team. Building a solid and enlightened
leadership team is critical to our success.
We have promoted many of our top
performing managers and have also added
several new members to the management
team from outside the Company to help us
build a world-class organization utilizing
benchmarking, best practices, and technology
practices from larger global entities.
In summary, the advantages of our portfolio
approach to the watch category,
the nimbleness with which we operate,
the incredible talent of our design teams,
and our brands’ proven success around
the world provide us with a powerful
platform in the accessory category to deliver
long-term sustainable growth. Above all,
our goal is to continue to build a diversified,
scalable, and predictable business model
that generates solid cash flows and delivers
outstanding returns for our stockholders.
In closing, we want to thank all of our
employees and partners globally for another
record year and we look forward to another
strong year in 2013.
Sincerely,
K O S T A N . K A R T S O T I S
Chief Executive Officer
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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.
Earnings per share:
Basic
Diluted
Weighted average common shares
and common equivalent shares outstanding:
Basic
Diluted
Working capital
Total assets
2012 2011
2010
2009
2008
$2,857,508
$2,567,302
$2,030,690
$1,548,093
$1,583,242
1,606,543
1,439,186
1,155,164
844,850
488,840
478,726
343,4011
471,991
438,860
294,702
376,414
372,448
255,205
211,627
213,776
139,188
851,151
205,770
189,429
138,0972
5.631
5.591
4.66
4.61
3.83
3.77
2.09
2.07
2.052
2.022
60,959
61,400
63,298
63,965
66,701
67,687
66,684
67,153
67,525
68,323
$737,334
$844,124
$801,329
$701,193
$556,497
1,841,989
1,642,922
1,467,573
1,276,483
1,087,296
Total long-term liabilities
194,747
134,798
76,377
Stockholders’ equity attributable to Fossil, Inc.
1,233,535
1,105,929
1,044,118
62,791
962,781
74,964
802,144
Return on average stockholders’ equity
attributable to Fossil, Inc.
29.9% 3
28.0% 3
25.0% 3
16.2% 3
17.8%3
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Includes a $10.8 million benefit in income tax expense in connection with the completion of income tax audits.
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 income tax audits.
Calculated by dividing the five quarter average stockholders’ equity attributable to Fossil, Inc. by net income attributable to Fossil, Inc.
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08 09 10 11 12
NET SALES
(in thousands of dollars)
08 09 10 11 12
OPERATING INCOME
(in thousands of dollars)
08 09 10 11 12
NET INCOME
(in thousands of dollars)
3000
2850
2700
2550
2400
2250
2000
1850
1700
1550
0
500
470
440
410
380
350
320
290
260
230
200
0
350
325
300
275
250
225
200
175
150
125
0
1250
1200
1150
1100
1050
1000
950
900
850
800
0
08 09 10 11 12
STOCKHOLDERS’ EQUITY
(in thousands of dollars)
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C O R P O R A T E I N F O R M A T I O N
E X E C U T I V E O F F I C E R S
& D I R E C T O R S
KOSTA N. KARTSOTIS
Chairman of the Board
and Chief Executive Officer
LIVIO GALANTI
Executive Vice President
DARREN E. HART
Executive Vice President, HR
THOMAS M. KENNEDY
Executive Vice President,
Fossil Brand
JENNIFER PRITCHARD
President,
Retail Division
DENNIS R. SECOR
Executive Vice President,
Chief Financial Officer
and Treasurer
JAL S. SHROFF
Director
JAMES E. SKINNER
Director
MICHAEL STEINBERG
Director
DONALD J. STONE
Director
JAMES M. ZIMMERMAN
Director
JOHN A. WHITE
Executive Vice President
and Chief Operating Officer
ELAINE AGATHER
Director
JEFFREY N. BOYER
Director
DIANE L. NEAL
Director
THOMAS M. NEALON
Director
MARK D. QUICK
Director
ELYSIA HOLT RAGUSA
Director
C O R P O R A T E I N F O R M A T I O N
Transfer Agent and Registrar
Computershare
P. O. Box 43006
Providence, RI 02940-3006
Principal Independent Auditors
Deloitte & Touche LLP
2200 Ross Avenue
Dallas, TX 75201
Corporate Counsel
Akin Gump Strauss Hauer & Feld LLP
1700 Pacific Avenue | Suite 4100
Dallas, TX 75201
O U 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 U A L M E E T I N G
The Annual Meeting of Stockholders will be held on Wednesday, May 22, 2013, at 9:00 am at the
Company’s headquarters, 901 S. Central Expressway, Richardson, Texas.
C O M P A N Y I N F O R M A T I O N
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,
901 S. Central Expressway, Richardson, Texas 75080-7302, or online at www.fossil.com.
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www.fossil.com