Fossil Group, Inc. Annual Report 2023

← All annual reports

FY2023 Annual Report · Fossil Group, Inc.

Loading PDF…

Use these links to rapidly review the document

TABLE OF CONTENTS

PART IV

Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

_________________________________________

FORM 10-K

(Mark One)

☐

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year EndedDecember 30, 2023

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-41040

FOSSIL GROUP, INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)

901 S. Central Expressway, Richardson,

(Address of principal executive offices)

Texas

75-2018505
(I.R.S. Employer
Identification No.)

75080
(Zip Code)

Registrant's telephone number, including area code: (972) 234-2525

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Common Stock, $0.01 par value
7.00% Senior Notes due 2026

Ticker Symbol
FOSL
FOSLL

Name of each exchange on which registered
The Nasdaq Stock Market LLC
The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No X

_________________________________________

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No X

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405

of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes X No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.

See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial

accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial

reporting under Section 404(b) of the Sarbanes Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. X

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the

correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the

registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No X

The aggregate market value of common stock, $0.01 par value per share, held by non-affiliates of the registrant, based on the last sale price of the common stock as reported by
the NASDAQ Global Select Market on July 1, 2023 was $116.7 million. For purposes of this computation, all officers, directors and 10% non-passive beneficial owners of the registrant
are deemed to be affiliates. Such determination should not be deemed an admission that such officers, directors or 10% non-passive beneficial owners are, in fact, affiliates of the
registrant.

As of March 1, 2024, 52,491,710 shares of common stock were outstanding.

_________________________________________

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's proxy statement to be furnished to shareholders in connection with its 2024 Annual Meeting of Stockholders are incorporated by reference in Part III,

Items 10-14 of this Annual Report on Form 10-K.

Table of Contents

Item 1.
Item 1A.
Item 1B.
Item 1C.
Item 2.
Item 3.
Item 4.

Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.

Item 10.
Item 11.
Item 12.
Item 13.
Item 14.

Item 15.
Item 16.

FOSSIL GROUP, INC.
FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 30, 2023
INDEX

Business
Risk Factors
Unresolved Staff Comments
Cybersecurity
Properties
Legal Proceedings
Mine Safety Disclosures

PART I

PART II

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
[Reserved]
Management's Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures about Market Risk
Consolidated Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services

PART III

Exhibits and Consolidated Financial Statement Schedules
Form 10-K Summary

PART IV

Page

1
14
31
32
33
33
33

34
34
35
47
48
86
86
88
88

88
88
88
88
88

89
89

Table of Contents

In this Annual Report, references to "we,” "our,” "us,” "Fossil" and the "Company” refer to Fossil Group, Inc., including its consolidated subsidiaries as of December 30, 2023
("fiscal 2023"), December 31, 2022 ("fiscal 2022") and January 1, 2022 ("fiscal 2021").

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K ("Annual Report"), including the sections entitled "Management’s Discussion and Analysis of Financial Condition and Results of Operations,”

"Risk Factors” and "Business,” contains forward-looking statements based on our management’s beliefs and assumptions and on information currently available to our management.
Forward-looking statements include all statements that are not historical facts and generally may be identified by terms such as "believe,” "may,” "will,” "should,” "seek,” "forecast,”
"outlook,” "estimate,” "continue,” "anticipate,” "intend,” "could,” "would,” "project,” "predict,” "potential,” "plan,” "expect” or the negative or plural of these words or similar
expressions. Forward-looking statements by their nature address matters that are, to different degrees, uncertain, and these forward-looking statements are only predictions and are
subject to risks, uncertainties, and assumptions that are difficult to predict. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking
statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in this Annual Report under the section entitled "Risk Factors” in
Item 1A of Part I and elsewhere, and in other reports we file with the U.S. Securities and Exchange Commission (the "SEC"). In addition, many of the foregoing risks and uncertainties are,
and could be, exacerbated by pandemics and any worsening of the global business and economic environment. While forward-looking statements are based on reasonable expectations
of our management at the time that they are made, you should not rely on them. We undertake no obligation to revise or update publicly any forward-looking statements for any reason,
except as required by applicable law.

Summary Risk Factors

Our business is subject to a number of risks and uncertainties that may affect our business, results of operations and financial condition, or the trading price of our common stock.
These risk factors may not be exhaustive. We operate in a continually changing business environment, and new risks and uncertainties emerge from time to time. Management cannot
predict such new risks and uncertainties, nor can it assess the extent to which any of the risk factors below or any such new risks and uncertainties, or any combination thereof, may
impact our business. These risks are more fully described in Part I, Item 1A. "Risk Factors". These risks include, among others, the following:

Pandemic and Public Health Risks

•

any impacts from pandemics and actions taken by governments, businesses, and individuals in response to pandemics.

Strategic Risks

•
•
•
•
•
•
•
•

our restructuring program may not be successful or we may not fully realize the expected cost savings and/or operating efficiencies from our restructuring plans;
our ability to anticipate and respond to changing fashion, functionality and product trends;
our ability to continue to develop innovative products;
our ability to execute our e-commerce business;
consumer acceptance of new products, features or technology;
our ability to grow our sales is dependent on our business strategy;
the cost and stakeholder approval of our sustainability practices;
climate change and other environmental impacts.

Operational Risks

supply chain disruptions resulting from changes in U.S. trade policy with China or as a result of a pandemic;
loss of any of our license agreements for globally recognized fashion brand names;
effectively managing our retail store operations;
supply shortages for certain key components in our products;
seasonality of our business;
the success of the shopping malls and retail centers in which our stores are located;
loss of key facilities;
fluctuations in the price, availability and quality of raw materials and any impact of inflation;
problems with, or loss of, our assembly factories or manufacturing sources;

•
•
•
•
•
•
•
•
•
• we do not maintain long-term contracts with our customers;

Table of Contents

• we face intense competition in the specialty retail and e-commerce industries and some competitors are substantially larger than us;
• we face competition from traditional competitors as well as competitors in the wearable technology category;
•
•
•
•

any material disruption of our information systems;
factors affecting international commerce and our international operations;
changes in economic and social conditions in Asia, particularly China, and disruptions in international travel and shipping;
loss of key senior management or failure to attract and retain key employees.

Risks related to our Indebtedness

our failure to comply with the covenants contained in our debt agreements;
our borrowings may fluctuate significantly;
our indebtedness could adversely affect our financial condition and prevent us from fulfilling our obligations;
our ability to generate sufficient cash flows to meet our debt service obligations;

• we are highly leveraged;
•
•
•
•
• we may incur significantly more debt, including secured debt;
• we could face a downgrade in our debt ratings;
•
• we have restrictive covenants in our secured asset-based revolving credit agreement.

our indebtedness exposes us to interest rate risk;

Financial Risks

• we may not achieve consistent profitability or positive cash flows;
•
•
•
•
•
•
•

a significant portion of our cash, cash equivalents and investments are held by our foreign subsidiaries;
changes in the mix of product sales demand;
impact of potential changes to international tax rules;
incurring impairment charges;
increased competition from online only retailers and a highly promotional retail environment;
our license agreements may require minimum royalty commitments, regardless of the level of product sales under these agreements;
foreign currency fluctuations;

Legal, Compliance and Reputational Risks

•
•
•
•
•
•

a data security or privacy breach;
violations of laws and regulations, or changes to existing laws or regulations in the U.S. or internationally;
tariffs or other restrictions placed on imports from China and any retaliatory trade measures taken by China;
loss of our intellectual property rights;
infringing the intellectual property rights of others;
failure by an independent manufacturer or license partner to use acceptable labor practices, otherwise comply with laws or suffer reputation harm.

Risks Relating to our Common Stock

•
•
•
•
•

failure to meet the continued listing requirements of Nasdaq could result in a delisting of our securities;
activist shareholders could negatively affect our business;
rapid and substantial increases or decreases in our stock price, regardless of developments in our business;
our organizational documents contain anti-takeover provisions;
failure to meet our financial guidance or achieve other forward-looking statements we have provided to the public.

General Risks

•
•
•
•

any deterioration in the global economic environment, and any resulting declines in consumer confidence and spending;
the effects of economic cycles, terrorism, acts of war and retail industry conditions;
foreign government regulations and U.S. trade policy;
inherent limitations in control systems could lead to error or fraud that is not detected.

Trademarks, service marks, trade names and copyrights

Table of Contents

We use our FOSSIL, MICHELE, RELIC, SKAGEN and ZODIAC trademarks, as well as other trademarks, on watches, our FOSSIL and SKAGEN trademarks on jewelry, and our FOSSIL
trademark on leather goods and other fashion accessories in the U.S. and in a significant number of foreign countries. We also use FOSSIL, WATCH STATION INTERNATIONAL and
WSI as trademarks on retail stores and FOSSIL, SKAGEN, WATCH STATION INTERNATIONAL, WSI, ZODIAC and MICHELE as trademarks on online e-commerce sites. This Annual
Report may also contain other trademarks, service marks, trade names and copyrights of ours or of other companies with whom we have, for example, licensing agreements to produce,
market and distribute products. Solely for convenience, the trademarks, service marks, trade names and copyrights referred to in this Annual Report may be listed without the TM, SM,
© and ® symbols, as applicable, but we will assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors, if any, to these trademarks, service marks,
trade names and copyrights.

Table of Contents

Item 1. Business

Company

PART I

We are a design, innovation and distribution company specializing in consumer fashion accessories. Our products include watches, jewelry, handbags, small leather goods, belts

and sunglasses. We design, develop, market and distribute products under our owned brands FOSSIL, SKAGEN, MICHELE, RELIC and ZODIAC and licensed brands ARMANI
EXCHANGE, DIESEL, DKNY, EMPORIO ARMANI, KATE SPADE NEW YORK, MICHAEL KORS, and TORY BURCH. Based on our range of accessory products, brands, distribution
channels and price points, we are able to target style-conscious consumers across a wide age spectrum on a global basis.

Operating Strategy

Our goal is to drive shareholder value and make a positive impact on our people, planet and communities. We continue to operate in a very challenging business environment for

our product offerings. In early 2023, we initiated our Transform and Grow plan ("TAG”), which was initially designed to reduce operating expenses, improve operating margins and
advance our path to profitable growth. In August 2023, as a result of a more comprehensive business review, we expanded TAG to address a broader transformation and capture a
greater level of benefits.

Under the expanded program, the "Transform” aspect of TAG focuses on optimizing our core categories, brands, geographies and channels. Through this wider lens, we intend to

restructure our operations to achieve improved gross margins, lower operating expenses and to reduce our working capital requirements. This comprehensive initiative encompasses
various domains such as:

•
•
•
•
•
•
•

organization and operating model optimization;
sourcing and cost of goods sold opportunities;
pricing, promotion, and markdown improvements;
end-to-end product planning and inventory management enhancements;
indirect procurement efficiencies, including marketing and information technology areas;
logistics and distribution center operations efficiencies;
store rationalization and optimization programs.

Under TAG, the Company is targeting approximately $300 million of annualized operating income benefits by the end of 2025. In addition to the economic benefits of TAG, the
Company expects to significantly improve its operating model, moving from a decentralized, regional focused organization to a global brand and commercial model. We expect these
changes will enable us to:

•
•
•

adapt our operations to more effectively address challenges through enhanced global focus, top-down alignment, and decision-making rigor;
instigate an ongoing, sustainable operating model, underscored by a culture of enhanced accountability;
establish a more effective and efficient leadership structure.

The "Growth” aspect of TAG consists of investing in three key growth pillars to drive sustained and profitable revenue growth. These growth pillars are: (1) revitalizing the
FOSSIL brand, (2) maximizing our licensed brand portfolio in watches and jewelry and (3) growing our premium watch offerings. We believe that these growth pillars are best enabled by
our digital transformation, marketing capabilities and technology investments.

To execute TAG, we have established a Transformation Office. The Transformation Office is composed of members of our senior management supported by a leading management
consulting firm specializing in assisting companies in complex reorganizations. Additionally, the Board of Directors has established a Special Board Committee to provide primary board
oversight of the Transformation Office and drive accountability, timeliness and results of the program.

As we execute against the entire scope of TAG, we have an opportunity to improve our operating fundamentals, right size our cost structure, and return to sales growth. Aided by these
measures, our long-term goal is to achieve adjusted gross margins above 50% and adjusted operating margins of approximately 10%.

Segments

Table of Contents

We report segment information based on the "management approach”. The management approach designates the internal reporting used by management for making decisions and

assessing performance as the source of the Company's reportable segments.

We manage our business primarily on a geographic basis. The Company's reportable operating segments are comprised of (i) Americas, (ii) Europe and (iii) Asia. Each reportable

operating segment includes sales to wholesale and distributor customers, and sales through Company-owned retail stores and e-commerce activities based on the location of the selling
entity. The Americas segment primarily includes sales to customers based in Canada, Latin America and the United States. The Europe segment primarily includes sales to customers
based in European countries, the Middle East and Africa. The Asia segment primarily includes sales to customers based in Australia, Greater China, India, Indonesia, Japan, Malaysia,
New Zealand, Singapore, South Korea and Thailand. Each reportable operating segment provides similar products and services.

Brands

We are home to a collection of world-class owned and licensed brands that share our passion for design, innovation and doing good. We make distinctive watches and lifestyle
accessories, bringing each brand to life through an extensive global channel and distribution network. We believe that the way we use our time matters, and we’ve made it our goal to
create lasting change at the intersection of fashion and technology, while investing in the communities around the world where we live, work and play.

Our consumer-first mindset drives every decision we make. By capitalizing on fashion trends and leveraging proprietary data and insights, we are able to deliver relevant, high-

value products and experiences to consumers across a diverse range of price points, style preferences and geographies.

Brand Building

Our ambition is to capture a greater share of the growing global accessories market with a collection of the world's most distinctive brands. We are investing in and strengthening each
brand within our diverse owned and licensed portfolio, connecting with customers across price point, channel, geography and styles.

The ability to build and activate strong lifestyle brands is key to our success. Our multi–channel model delivers engaging experiences directly to our consumers through our
owned channels of distribution, direct 1P marketplaces and via third party distributors. Being consumer-first means we walk in their shoes, learning from first party data, as well as
fashion and style trends, to deliver relevant and memorable brand experiences.

Proprietary Brands

Our owned brands include FOSSIL, SKAGEN, MICHELE, RELIC and ZODIAC.

FOSSIL

FOSSIL is a leading global lifestyle accessories brand inspired by creativity and ingenuity, dedicated to connecting people to what matters most: time. FOSSIL takes pride in

creating timeless and exceptionally crafted watches, leather goods and jewelry designed to accompany you on every journey life presents. Today, we are on a mission, continuing our
decade-long commitment to "Make Time For Good," while building a dynamic, multi-channel organization connecting with customers all over the world.

SKAGEN

Since 1989, SKAGEN has been inspired by the city of Skagen and the Danish coastline. SKAGEN embraced Danish minimalism, creating slim styles and color combinations that

reflect coastal living—an understated style that’s still authentic to the brand today. Denmark has much to celebrate. As SKAGEN honors its heritage, the brand is expanding its range of
influence to include areas of relevance that are of the moment.

MICHELE

MICHELE timepieces are an extension and reflection of the women who wear them. Every MICHELE watch is built to celebrate feminine ambition and boldness—a reminder of all a

woman has accomplished as she builds her legacy. MICHELE's beautifully-feminine timepieces use precise Swiss movements, genuine gemstones and diamonds, and premium

Table of Contents

finishes. Each luxury timepiece is distinctly and recognizably MICHELE with signature elements and bold art deco-inspired details.

RELIC

RELIC by Fossil is an American watch and lifestyle brand creatively delivering accessible, updated casual designs. With each of our signature watches and accessories, we

create styles that fit your everyday lifestyle.

ZODIAC

With a rich legacy dating back to 1882, ZODIAC is dedicated to excellence in precision, bold design and craftsmanship with authentic Swiss horology. Today, ZODIAC

creates exclusive watches that maintain historical authenticity to vintage models while incorporating contemporary updates, proprietary movements and always-improving functionality.

Licensed Brands

Our main licensed brands include ARMANI EXCHANGE, DIESEL, DKNY, EMPORIO ARMANI, KATE SPADE NEW YORK, MICHAEL KORS, and TORY BURCH. As a result of
our vertical integration, we are uniquely positioned to launch an accessory category, such as watches, in partnership with a licensor in a timely and consistent manner. All of our major
licensing relationships are exclusive for the brands we license and include traditional watches, and for certain other brands, smartwatches and/or jewelry.

Products

We design, develop, market and distribute accessories across a variety of product categories: traditional watches, jewelry, handbags, small leather goods, belts and sunglasses.
Additionally, we manufacture and/or distribute private label brands, as well as branded products purchased for resale in certain of our other branded retail stores. The following table
sets forth certain information with respect to the breakdown of our net sales and percentage change among proprietary, licensed and other brands for the fiscal years indicated (in
millions, except for percentage data):

Net sales

Proprietary
Licensed
Other

Total

Traditional Watches

2023

Fiscal Year

2022

Dollars

% Change

Dollars

% Change

2021
Dollars

720.4
631.0
61.0
1,412.4

(10.8)% $
(19.3)
(34.4)
(16.0)% $

807.7
781.7
93.0
1,682.4

(6.0)% $
(17.2)
40.1
(10.0)% $

859.3
944.3
66.4
1,870.0

Watches are our core global business. Sales of watches for fiscal years 2023, 2022 and 2021 accounted for approximately 77.6%, 77.9% and 80.9%, respectively, of our consolidated

net sales.

Licensed Brands

We have entered into multi-year, worldwide exclusive license agreements for the manufacture, distribution and sale of watches bearing the brand names of certain globally

recognized fashion brands. The following table sets forth information with respect to our primary watch licenses:

Table of Contents

Brand
ARMANI EXCHANGE
DIESEL
DKNY
EMPORIO ARMANI
KATE SPADE NEW YORK
MICHAEL KORS
TORY BURCH

Expiration
Date
12/31/2026
12/31/2027
12/31/2024
12/31/2026
12/31/2025
12/31/2025
12/30/2028

___________________________________________________________________

(1) Subject to early termination in certain circumstances

We also license certain internationally known brand names, such as Skechers, for limited distribution in select markets. Our license agreement with DKNY expires at the end of

2024, and we do not plan to renew the license.

Fashion Accessories

In addition to our core watch business, we also design and create handbags, small leather goods, and belts across certain of our owned brands and jewelry under our owned
brands and certain licensed brands. In the U.S. and certain international markets, we generally market our fashion accessory lines through the same distribution channels as our watches
using similar marketing approaches. Our fashion accessories are typically sold in locations adjacent to watch departments, in store or online, which may lead to purchases by persons
who are familiar with our watch brands. Sales of our accessory lines accounted for 20.5%, 19.8% and 16.9% of our consolidated net sales in fiscal years 2023, 2022 and 2021, respectively.

The following table sets forth information about our fashion accessories:

Brand
DIESEL
EMPORIO ARMANI
FOSSIL

MICHAEL KORS
SKAGEN

Accessory Category

Jewelry
Jewelry
Handbags, small leather goods, belts,
eyewear, jewelry
Jewelry
Jewelry

Licensed Eyewear

We have a license agreement with the Safilo Group for both FOSSIL branded sunglasses and optical frames worldwide, which expires on December 31, 2028. The license agreement

provides for royalties to be paid to us based on a percentage of net sales and includes certain guaranteed minimum royalties. Sales of licensed eyewear accounted for approximately
0.6%, 0.5% and 0.4% of our consolidated net sales for fiscal years 2023, 2022 and 2021, respectively.

Stores

Our products are sold across approximately 150 countries worldwide through 23 Company-owned sales subsidiaries and through a network of 65 independent distributors. Our

network of Company-owned stores included 130 retail stores and 172 outlet stores as of December 30, 2023. In certain international markets, our products are also sold through licensed
and franchised FOSSIL retail stores, retail concessions operated by us and kiosks.

We also operate stores under the WATCH STATION and WSI brands, in which we partner with some of the world's most iconic brands to curate a unique collection of designer
watches and jewelry for women and men. We offer a robust online and in-store experience in the United States, Europe and Asia that connects our customers to the stories, trends and
latest innovations in the world of watches.

Table of Contents

Marketing

Our marketing approach meets the consumer wherever they are, both online and offline. We create the best possible brand experience through a blend of art and science, which

means that we prioritize both data-driven decision-making and creativity in our marketing approach. At our core, we are storytellers and demand generators and have the ability to craft
beautiful products and deliver brand experiences worth talking about.

We have an in-house global marketing team with representation across our regions serving both our owned and licensed brands, to better connect with consumers and drive

sustained engagement and awareness. This capability works across channels, including digital marketing, social media, social commerce, email marketing, Customer Relationship
Management, partner marketing and brand and performance media. We are also experienced brand builders, with in-house brand development, PR, content and integrated marketing
teams, in addition to a dynamic global creative studio.

We have built proprietary algorithms to support the profitable flow-through of marketing investment, optimized across channels, brands and countries. We deliver increasingly

better personalization through ongoing test-and-learn methods as well as through consumer insights and predictive analytics capabilities we have built over the past few years.

We are strategically increasing our marketing investment and are telling fewer stories better so that our consumers understand the enduring role our brands play in their lives.

Distribution

We distribute our products globally through regional warehouses with our warehouse in Dallas, Texas serving the Americas, our warehouse in Eggstätt, Germany serving Europe
and our warehouse in Hong Kong serving Asia. For those countries in which our products are distributed, but where we don’t have a physical presence, we use third-party distributors.
From our regional warehouses, our products are shipped to subsidiary warehouses, distributors, wholesale accounts or directly to customers in selected markets. Our extensive
distribution network allows us to reach a diverse global customer base. We sell our products through a range of channels including e-commerce, Company-owned retail stores,
department and specialty retail stores, airlines, mass markets and concessions.

Digital

Our holistic e-commerce efforts include three forms of digital channels. First, our owned global e-commerce websites for our brands deliver mobile-friendly experiences,

personalized content, and seamless omni-channel integration with retail stores, including buy online pick up in store, curbside pickup and ship from store. Second, we sell our products
to leading third-party online retailers and our wholesalers’ e-commerce websites. Third, we directly sell to consumers on major third-party platforms.

Our e-commerce capabilities and total revenue contribution continue to grow as a part of our total business. In fiscal year 2023, our digital sales comprised 38% of consolidated net
sales. This included sustained positive comps on our owned e-commerce channels year-over-year. We will continue to invest in growing our e-commerce capabilities in fiscal year 2024,
with a focus on improving the end-to-end consumer experience, creating stronger CRM journeys via first party data and bringing more engaging and accessible experiences across our
channels.

Manufacturing and Sourcing

The vast majority of our products are sourced internationally. Most watch product sourcing is coordinated through our Hong Kong subsidiary, Fossil (East) Limited ("Fossil
East”). We have some limited watch assembly operations through owned facilities in India and Switzerland. Although we do not have long-term contracts with our unrelated watch and
accessory manufacturers, we maintain long-term relationships with several manufacturers. These relationships developed due to the significant length of time we have conducted
business with the same manufacturers. We believe that we are able to exert some operational control with regard to our principal watch assemblers because of our long-standing
relationships. In addition, we believe that the relative size of our business with watch manufacturers gives us priority within their production schedules. Furthermore, the manufacturers
understand our quality standards, which allow us to produce quality products supporting overall operating margins.

Our quality control program attempts to ensure that our products meet the standards established by our product development and quality staff. Development samples of products

are inspected by us prior to placing orders with factories to ensure compliance with our designs. We also typically inspect or audit inspections of "top of production" samples of each
product for compliance before or at the start of commencing production. The operations of the Hong Kong and Chinese

Table of Contents

factories that produce our products are monitored on a periodic basis by Fossil East, and the operations of our Swiss factories are monitored on a periodic basis by Montres Antima SA,
one of our foreign operating subsidiaries.

Intellectual Property

We use our FOSSIL, MICHELE, RELIC, SKAGEN and ZODIAC trademarks, as well as other trademarks, on watches, our FOSSIL and SKAGEN trademarks on jewelry, and our

FOSSIL trademark on leather goods and other fashion accessories in the U.S. and in a significant number of foreign countries. We also use FOSSIL, WATCH STATION
INTERNATIONAL, and WSI as trademarks on retail stores and FOSSIL, SKAGEN, WATCH STATION INTERNATIONAL, WSI, ZODIAC and MICHELE as trademarks on online e-
commerce sites. We have taken steps to establish or provide additional protection for our trademarks by registering or applying to register our trademarks for relevant classes of
products in each country where our products are sold in addition to certain foreign countries where it is our intent to market our products in the future. We also have rights in certain
copyrights and designs both in the United States and in other countries where our products are principally sold.

We continue to explore innovations in the design and assembly of our products. As a result, we have been granted, and have pending, various U.S. and international design and

utility patents related to certain product designs, features, and technologies. As of December 30, 2023, none of our patents were material to our business.

We rely upon unpatented trade secrets, know-how, and continuing technological innovation to develop and maintain our competitive position. We strive to protect our trade secrets
and other proprietary information through agreements with current and prospective product development partners, confidentiality agreements with employees, consultants and others
that may have access to our proprietary information and through the use of other security measures.

We aggressively protect our trademarks and trade dress and pursue infringement claims both domestically and internationally. We also pursue counterfeiters both domestically

and internationally through third-party online monitoring tools and through leads generated internally, as well as through our business partners worldwide.

Seasonality

Our business has a seasonal pattern, with a significant portion of our sales occurring during the end-of-year holiday period.

Significant Customer

No customer accounted for 10% or more of our consolidated net sales in fiscal years 2023, 2022 or 2021.

Competition

The businesses in which we compete are highly competitive and fragmented. Our traditional watch business generally competes with a number of established manufacturers,
importers and distributors, including Armitron, Citizen, Gucci, Guess?, Kenneth Cole, LVMH Group, Movado, Raymond Weil, Seiko, Swatch, Swiss Army, TAG Heuer and Timex. In
addition, our leather goods, sunglasses, and jewelry businesses compete with a large number of established companies that have significant experience developing, marketing and
distributing such products. Our competitors include distributors that import watches and accessories from abroad, U.S. companies that have established foreign manufacturing
relationships and companies that produce accessories domestically.

In addition, we face intense competition in the watch market from smartwatches from technology brands such as Apple, Garmin and Samsung, and from fitness brands such as
Fitbit. Many of these brands have significantly more resources than we do in areas such as product development and marketing. While we did compete in the smartwatch category for a
number of years, we recently decided to exit this category to focus our resources on our traditional watch offerings. We believe our design and branding are strong competitive
advantages in the traditional watch market.

Although the level and nature of competition varies among our product categories and geographic regions, we compete on the basis of style and technical features, price, value,

quality, brand name, advertising, marketing, distribution and customer service. Our ability to identify and respond to changing fashion trends and consumer preferences, to maintain
existing relationships and develop new relationships with manufacturing sources, to deliver quality merchandise in a timely manner, to manage the retail sales process, and to continue
to integrate technology into our business model are important factors in our ability to compete. Our distinctive business model of owning the distribution in many key markets and
offering a globally recognized portfolio of proprietary and licensed products allows for many competitive advantages over smaller, regional or

Table of Contents

local competitors. This allows us to bypass a local distributor's cost structure in certain countries, resulting in more competitively priced products, while also generating higher product
and operating margins.

Governmental Regulation

Imports and Import Restrictions

Most of our products are assembled or manufactured overseas. As a result, the U.S. and countries in which our products are sourced or sold may from time to time modify existing
or impose new quotas, duties (including anti-dumping or countervailing duties), tariffs or other restrictions in a manner that adversely affects us. For example, our products imported for
distribution in the U.S. are subject to U.S. customs duties, and in the ordinary course of our business, we may from time to time be subject to claims by the U.S. Customs Service for
duties and other charges. Factors that may influence the modification or imposition of these restrictions include the determination by the U.S. Trade Representative that a country has
denied adequate intellectual property rights or fair and equitable market access to U.S. firms that rely on intellectual property, trade disputes between the U.S. and a country that leads to
withdrawal of "most favored nation" status for that country and economic and political changes within a country that are viewed unfavorably by the U.S. government. We cannot
predict the effect these events would have on our operations, if any, especially in light of the concentration of our assembly and manufacturing operations in Hong Kong, and mainland
China.

General

We are subject to laws regarding customs, tax, employment, privacy, truth-in-advertising, consumer product safety, zoning and occupancy and other laws and regulations that

regulate and/or govern the importation, promotion and sale of consumer products and our corporate, retail and distribution operations.

Compliance and Trade

Code of Conduct for Manufacturers ("Manufacturer Code")

We are committed to ethical and responsible conduct in all of our operations and respect for the rights of all individuals. We strive to ensure that human rights are upheld for all

workers involved in our supply chain, and that individuals experience safe, fair and non-discriminatory working conditions. In 2021, we launched the Fossil Group Human Rights Policy.
This further supports our commitment to human rights within our entire supply chain.

In addition, we are committed to compliance with applicable environmental requirements and are committed to seeing that all of our products are manufactured and distributed in

compliance with applicable environmental laws and regulations. We expect that our business partners will share these commitments, which we enforce through our Manufacturer Code.

Our Manufacturer Code specifically requires our manufacturers to not use child, forced or involuntary labor and to comply with applicable environmental laws and regulations. We

provide training to our factories related to our Manufacturer Code and the applicable laws in the country in which the factory is located. The training provides the factories with a more
in-depth explanation of our Manufacturer Code.

In addition to the contractual obligation, we evaluate our suppliers' compliance with our Manufacturer Code through audits conducted both by our employees and third-party
compliance auditing firms. In most cases, the audits are announced. If we believe that a supplier is failing to live up to the standards of our Manufacturer Code, we may terminate the
supplier or provide the supplier with an opportunity to remedy the non-compliance through the implementation of a corrective action plan.

Trade

Our warehouse and distribution facility in Dallas, Texas operates in a special purpose sub-zone established by the U.S. Department of Commerce Foreign Trade Zone Board. This

sub-zone provides the following economic and operational advantages to us: (i) we do not have to pay duty on imported merchandise until it leaves the sub-zone and enters the U.S.
market; (ii) we do not have to pay any U.S. duty on merchandise if the imported merchandise is subsequently shipped to locations outside the U.S.; and (iii) we do not have to pay local
property tax on inventory located within the sub-zone.

Information Systems

Enterprise Resource Planning

We utilize SAP ERP in our U.S. operations and throughout most of our European operations to support our human resources, sales and distribution, inventory planning, retail

merchandising and operational and financial reporting systems of

Table of Contents

our business, and Navision in our Asian operations to support many of the same functions on a local country level. We also use tools provided by salesforce.com, inc. to globally
support our brand websites, marketing and customer initiatives.

Enterprise Performance Management Systems

We have implemented customized Hyperion financial reporting software from Oracle Corporation. The software increases the efficiency of our consolidation and reporting process

and provides a more dynamic way to view and analyze data. The Hyperion planning tool also provides more dynamic and robust budgeting and forecasting capabilities.

Point-of-Sale System

We began the global implementation of a new point-of-sale system in 2023 at our retail stores beginning in Europe with additional implementation in the Americas and Asia
planned in 2024. This point-of-sale system will significantly enhance our omni-channel capabilities allowing us to better serve our customers across channels with inventory and
fulfillment.

Customer Data Platform

We utilize a next generation, cloud-based Customer Data Platform (CDP) to better capture, identify, and manage our customer narrative and further enable our sales programs and

interactive marketing initiatives in a more personalized, secure and dynamic manner.

Customer Master Data Migration

We transitioned our master customer data from an on-premise, proprietary data repository to a cloud native, industry standard design based on the Google Cloud Platform (GCP)

architecture, in order to better secure and improve the long-term performance and integration for future key marketing, analytics, AI, and sales systems.

Human Capital Resources

As of December 30, 2023, our global team consisted of approximately 6,100 people, with 4,300 based in our international subsidiaries.

None of our domestic or foreign-based employees are represented by a trade union. However, certain European-based employees are represented by work councils, which include

a number of our current employees who negotiate with management on behalf of all the applicable employees.

Our Commitment

We pride ourselves on being a purpose driven consumer-centric organization where our employees have the opportunity to thrive. We aim to attract, develop and retain top talent

through compelling employment opportunities, competitive compensation, and benefits, and fostering personal development within a purposeful work environment.

Workforce Composition

Our global presence spans the Americas (38%), Europe (30%), and Asia-Pacific (32%), with a diverse workforce where 62% are women and 38% are men. In the U.S., including

corporate, retail, and distribution employees, 59% of employees identify as black and indigenous people of color ("BIPOC”), 40% identify as white, and 1% did not self-identify.

We're dedicated to fostering an environment where diversity, equity, and inclusion (DE&I) propel both our employees and the company forward. Our commitment to DE&I is guided

by our five key objectives:

1. Growing our knowledge. We understand DE&I is a continuous journey, centralizing our efforts on education through various platforms like online communities, Employee

Resource Groups (ERGs), and mandatory training on unconscious bias and inclusion. Celebrating cultural moments and fostering open discussions on DE&I issues are also
pivotal.

Increasing our Diversity. Our aim to increase BIPOC and female representation has led to nearly 50% of our external hires being BIPOC the past year, a 4% increase over the
previous year. Initiatives like the WINGEd! (Women Inspired to Network and Grow through Education) program, which focuses on growing skills around self-awareness,
confidence, the value of risk, and career ownership, is one of the key items that has helped us to have 54% of our global leaders and 46% of senior leadership being female.

Table of Contents

3. Creating a more inclusive and equitable environment for all employees. For four years, the Human Rights Campaign has recognized us as a top employer for LGBTQ+

employees. We've seen a 30% increase in ERG participation, emphasizing support across diverse employee groups. Our ERGs have organized over 71 events, engaging more
than 12,000 participants.

4. Driving accountability. We've linked executive compensation to DE&I achievements and integrated DE&I into our leadership programs, aiming for transparency in our DE&I

goals.

5. Leveraging our diversity to benefit external stakeholders. Our influence extends beyond our company. We actively participate in industry DE&I councils and initiatives like the
Black in Fashion Council and CEO Action for Diversity and Inclusion. Our efforts include creating products supporting causes like the HBCU 20x20 program and organizing
career development events for students.

Through these efforts, we're not just promoting diversity and inclusion internally but also making a meaningful impact in the community and industry.

Engaging the Fossil Group Workforce

We are committed to fostering a vibrant workplace where engagement thrives. Our aim is to cultivate a high-performance culture enriched with individuals possessing the necessary

skills and behaviors to drive company success and achieve personal excellence daily.

By regularly surveying our employees, we gain valuable insights into their viewpoints, motivations, and the areas where we, as an organization, can enhance our operations. This

process is crucial for building and maintaining genuine engagement. Our findings consistently highlight the importance of career growth and development, effective communication,
recognition, a clear understanding of the company's future, attractive compensation and benefits, and the chance to contribute to something greater.

To align our employees' aspirations with our business objectives, we have developed a workplace culture that includes:

Employee development programs that foster value creation;

•
Comprehensive health and wellness benefits;
• Dynamic two-way communication strategies;
•
• A performance management system that encourages growth opportunities through company support;
• Meaningful recognition mechanisms;
• A values-driven culture and workplace environment.

To maintain our status as a competitive and fair employer where every individual feels esteemed, we employ a standardized compensation framework. This system ensures equitable

pay by defining, documenting, and benchmarking positions against local market standards, utilizing third-party, leading-edge salary data to establish fair pay ranges for each role.

The Future of the Fossil Group Workforce

In our journey toward shaping the future of work, this past year has been pivotal for us in listening and learning how to craft the optimal employee experience while propelling our
business forward. We have continued with a hybrid working model, thoughtfully balancing the demand for flexibility with the necessity of face-to-face interactions that spur creativity,
efficient execution, and personal development. Additionally, we have streamlined our operational framework, transitioning from a regionally dispersed model to a more unified structure,
enhancing our overall efficiency.

In line with our commitment to a direct-to-consumer strategy, we have significantly increased our digital investments, achieving notable strides in assembling a worldwide team and

substantially boosting our technical ability. Our ongoing investment in our Digital U program underscores our dedication to equipping our employees with advanced digital skills,
ensuring they are well-versed in the latest digital practices.

Oversight

Our Board of Directors and related board committees are actively involved in areas associated with excellence in human resource management and related oversight of certain
policies, practices, and outcomes – including compensation, DE&I, employee development, engagement, and succession planning. We share our employee survey results with our
Board of Directors to keep them apprised of related sentiments, interests, and concerns. The Nominating and Corporate Governance

Table of Contents

Committee helps to oversee ESG matters. The Audit Committee regularly participates in discussions with our leadership team to ensure oversight of enterprise-level risks and mitigation
plans on various topics, including those associated with human capital risk. The Audit Committee also engages in regular review of the Company’s monitoring and enforcement of our
Code of Conduct and Ethics and compliance. The Compensation and Talent Management Committee reviews and approves matters associated with compensation, benefits, and equity
awards for qualifying employees. This work includes oversight of executive compensation and company goals that are part of executives’ annual performance reviews. These same goals
serve as the foundation for the Company’s employee annual cash bonus plan. Our Board of Directors also established in 2023 a Special Committee of the Board to oversee the
Company's strategic transformation initiatives, including those relating to our organizational structure.

We take pride in the strides we have made toward creating a work environment that is not only rewarding, but also deeply engaging and inspiring for our team members. In a world
that evolves rapidly, our commitment to cultivating our culture remains steadfast. To surpass our goals and realize our ambitions, we are dedicated to a cycle of listening, learning, and
collaboration. We aim to set impactful objectives, foster innovation, and maintain transparency about our journey, including both our achievements and the challenges we face. This
approach solidifies our position as a prime choice for talented individuals who are both high-performing and highly engaged.

Corporate Social Responsibility

As a global business, we are aware of our environmental and social impact. Our corporate social responsibility (CSR) strategy, "Make Time for Good," aims to drive positive change

across our operations and beyond. It sets measurable objectives in key areas of environmental and social sustainability.

"Make Time for Good" focuses on three pillars:

a. Good for Planet: Reducing our environmental footprint through sustainable design and operations.

b. Good for Communities: Supporting empowerment initiatives and improving community well-being.

c. Good for People: Promoting inclusion within our workforce.

Our latest CSR report, also serving as our UN Global Compact Communication on Progress, outlines our achievements and future goals. Access the report at

https://www.fossilgroup.com/sustainability/ to see how we are making a difference.

Available Information

Our website address is www.fossilgroup.com. The information on our website (including the CSR report) is not, and shall not be deemed to be, a part of this Annual Report on Form
10-K or incorporated into any other filings we make with the SEC. Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to
those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, (the "Exchange Act”), are available free of charge on our website
as soon as reasonably practicable after we electronically file them with, or furnish them to, the SEC. In addition, the SEC maintains a website at www.sec.gov that contains reports, proxy
and information statements, and other information regarding issuers, including Fossil Group, that are electronically filed with the SEC.

General

We are a Delaware corporation formed in 1991 and are the successor to a Texas corporation formed in 1984. Our principal executive offices are located at 901 S. Central
Expressway, Richardson, Texas 75080, and our telephone number at that address is (972) 234-2525. Our common stock is traded on the NASDAQ Global Select Market under the trading
symbol FOSL.

Table of Contents

Item 1A. Risk Factors

In addition to the risks described elsewhere in this report, set forth below is a summary of the material risks related to an investment in our securities. These risks, some of which

have occurred and/or are occurring and any of which could occur in the future, are not the only ones we face. Additional risks not presently known to us or that we currently deem
immaterial may also have an adverse effect on us. If any of these risks actually occur, our business, results of operations, cash flows and financial condition could be materially and
adversely impacted, which might cause the value of our securities to decline.

Pandemic and Public Health Risks

A pandemic has had in the past, and may have in the future, a material adverse impact on our business, operations, liquidity, financial condition and results of operations.

The recent COVID-19 pandemic caused global uncertainty and disruption in the geographic regions in which we run our business and where our suppliers, third-party

manufacturers, retail stores, wholesale customers and consumers are located, particularly in China.

Future public health epidemics or outbreaks could also adversely impact our business. The extent to which a new public health epidemic or outbreak impacts our operations will

depend on future developments, including the duration of the outbreak, the severity of the outbreak and the actions to contain the outbreak or treat its impact, among others. Depending
on the severity of a future outbreak, we may experience significant disruptions to our business operations. In addition, the spread and impact of an outbreak could adversely impact
demand for our products, our ability to operate our stores and warehouse facilities, or our supply chain, all of which could adversely affect our future sales, operating results and overall
financial performance. In addition, to the extent an outbreak adversely affects our business and financial results, it may also have the effect of heightening many of the other risks
described in the risk factors included herein, or may affect our operating and financial results in a manner that is not presently known to us.

Strategic Risks

Our restructuring program may not be successful or we may not fully realize the expected cost savings and/or operating efficiencies from our restructuring plans.

In February 2023, we announced that we had implemented a restructuring plan entitled "Transform and Grow”. In August 2023, we expanded the financial goals of TAG beyond
operating expense reductions to include gross margin improvements, which are expected to drive incremental operating income benefits over the next three years. The expanded TAG
plan is expected to generate approximately $300 million of annualized operating income benefits by the end of 2025. Restructuring plans present significant potential risks that may impair
our ability to achieve anticipated operating enhancements and/or cost reductions, or otherwise harm our business, including higher than anticipated costs in implementing TAG,
management distraction and employee attrition in excess of headcount reductions. If this program is not successful, then our results of operations and financial condition could be
materially adversely affected.

Our success depends upon our ability to anticipate and respond to changing fashion, functionality and product trends.

Our success depends upon our ability to anticipate and respond to changing fashion, functionality and product trends and consumer preferences in a timely manner. The

purchasing decisions of consumers are highly subjective and can be influenced by many factors, such as brand image, marketing programs, functionality, and product features and
design. Our success depends, in part, on our ability to anticipate, gauge and respond to these changing consumer preferences in a timely manner while preserving the authenticity and
the quality of our brands. Although we attempt to stay abreast of emerging lifestyle and fashion trends affecting accessories, any failure by us to identify and respond to such trends
could adversely affect consumer acceptance of our existing brand names and product lines, which in turn could result in inventory valuation reserves and adversely affect sales of our
products. If we misjudge the market for our products, we may be faced with a significant amount of unsold finished goods inventory, which could adversely affect our results of
operations. In recent years, we have experienced decreasing net sales across certain of our product categories; in particular, net sales of watches have declined, reflecting the decline in
the traditional watch market. If we are unable to adjust our product offerings and reverse the decrease in net sales, our results of operations and financial condition could be adversely
affected.

Our success depends upon our ability to continue to develop innovative products.

Our success depends upon our ability to continue to develop innovative products in the respective markets in which we compete. The process of developing new products is

complex and uncertain, and involves time, substantial costs and risks. Our

Table of Contents

inability or the inability of our partners, for technological or other reasons, some of which may be beyond our or our partners' control, to enhance, develop, manufacture, distribute and
monetize products in a timely manner, or at all, in response to changing consumer preferences could have a material adverse effect on our business, results of operations and financial
condition or could result in our products not achieving market acceptance or becoming obsolete. If we are unable to successfully introduce new products, or if our competitors introduce
new or superior products, customers may purchase increasing amounts of products from our competitors, which could adversely affect our sales and results of operations.

If we are unable to effectively execute our e-commerce business strategy and provide a reliable digital experience for our customers, our reputation and operating results may be
harmed.

E-commerce has increasingly comprised a larger portion of our net revenues and was particularly impacted by the COVID-19 pandemic, which drove an acceleration in the shift to
online shopping. The success of our e-commerce business depends, in part, on third parties and factors over which we have limited control, including changing consumer preferences,
both domestically and abroad, and promotional or other advertising initiatives employed by our wholesale customers or other third parties on their e-commerce sites. Any failure on our
part, or on the part of our third-party digital partners, to provide attractive, reliable, secure and user-friendly e-commerce platforms could negatively impact our consumers’ shopping
experience, resulting in reduced website traffic, diminished loyalty to our brands and lost sales.

The success of our business also depends on our ability to continue to develop and maintain a reliable digital experience for our customers. We strive to give our customers a
seamless omni-channel experience both in stores and online across devices. Potential friction points in the consumer experience could negatively impact our ability to compete with
other brands, which could adversely impact our business.

In addition, we must keep up to date with competitive technology trends, including the use of new applications, enhancements and releases, and digital marketing tools. Failure to

innovate and keep abreast of technology and improving the consumer experience could adversely affect digital sales and damage our brand and reputation.

Additionally, the success of our e-commerce business and the satisfaction of our consumers depend on their timely receipt of our products. The efficient flow of our products

requires that our distribution facilities have adequate capacity to support the current level of e-commerce operations and any anticipated increased levels that may follow from the
growth of our e-commerce business. If we encounter difficulties with our distribution facilities, or if any such facilities were to shut down or be limited in capacity for any reason,
including as a result of fire, other natural disaster, labor disruption, cyberattack or pandemic (including as a consequence of public health directives, quarantine policies or social
distancing measures resulting from a pandemic), we could face shortages of inventory, and we could experience disruption or delay, or incur significantly higher costs and longer lead
times for distributing our products to our consumers which could result in customer dissatisfaction. Any of these issues could have an adverse effect on our business and harm our
reputation.

We regularly develop new products and features, and new products introduced by us may not achieve consumer acceptance comparable to that of our existing product lines.

We regularly update our product offerings. As is typical with new products, market acceptance of new designs, features, and products is subject to uncertainty. In addition, we

generally make decisions regarding product designs several months in advance of the time when consumer acceptance can be measured. If trends shift away from our products, if we are
not able to develop and introduce new compelling products or if we misjudge the market for our product lines, we may be faced with significant amounts of unsold inventory or other
conditions which could have a material adverse effect on our financial condition and results of operations.

The failure of new product designs or new product lines to gain market acceptance could also adversely affect our business and the image of our brands. Achieving market
acceptance for new products may also require substantial marketing efforts and expenditures to generate consumer demand. These requirements could strain our management, financial
and operational resources. If we do not continue to develop innovative products that provide better design and features than the products of our competitors and that are accepted by
consumers, or if our future product lines misjudge consumer demands, we may lose consumer loyalty, which could result in a decline in our sales and market share.

Our ability to grow our sales is dependent upon the implementation of our business strategy, which we may not be able to achieve.

Our ability to grow our sales is dependent on the successful implementation of our business strategy. This includes diversification and innovation of our product offerings,
driving our core brands and improving our omni-channel and digital capabilities. If we are not successful in the expansion or development of our product offerings, our new products are
not profitable or do not generate sales comparable to those of our existing businesses, we are unable to achieve our digital

Table of Contents

transformation goals or our restructuring and savings initiative does not achieve our desired results, our results of operations could be negatively impacted.

We also operate FOSSIL brand stores and other watch stores globally to further strengthen our brand image. As of December 30, 2023, we operated 302 stores worldwide. The

costs associated with leasehold improvements to current stores and the costs associated with opening new stores and closing low performing stores, particularly those stores that have
seen a significant reduction in traffic, could materially increase our costs of operation and result in impairment charges.

Increased scrutiny from investors and others regarding our corporate social responsibility initiatives, including environmental, social and other matters of significance relating to
sustainability, could result in additional costs or risks and adversely impact our reputation.

Investor advocacy groups, large and influential institutional investors, investment funds, other market participants, shareholders and customers have increasingly focused on the
environmental, social and governance ("ESG") or "sustainability” practices of companies. These parties have placed increased importance on the implications of the social cost of their
investments. If our ESG practices do not meet investor or other industry stakeholder expectations and standards, which continue to evolve, our brand, reputation and customer and
employee retention may be negatively impacted. Any sustainability report that we publish or other sustainability disclosure we make may include our policies, practices, metrics or
targets on a variety of social and ethical matters, including corporate governance, environmental compliance, employee health and safety practices, human capital management, product
quality, supply chain management, and workforce inclusion and diversity. It is possible that stakeholders may not be satisfied with our ESG practices or the speed of adoption. We could
also incur additional costs and require additional resources to monitor, report and comply with various ESG practices. Also, our failure, or perceived failure, to meet the standards
included in any sustainability disclosure could negatively impact our reputation, employee retention and the willingness of our customers and suppliers to do business with us.

The risks associated with climate change and other environmental impacts and increased focus by stakeholders on corporate responsibility issues, including those associated with
climate change, could negatively affect our business and operations.

Our business is susceptible to risks associated with climate change, including through disruption to our supply chain, potentially impacting the production and distribution of our

products and availability and cost of raw materials. Increased frequency and intensity of weather events due to climate change could increase the risk of a significant disruption to our
operations, including at our global offices and warehouses and transportation and manufacturing partners. There is also increased focus from our stakeholders, including large
institutional investors, consumers and employees, on corporate responsibility matters. While we are addressing climate-related issues impacting our business, there can be no assurance
that our stakeholders will agree with our strategy or that we will be successful in achieving our goals. In addition, concern over climate change may result in new or additional legal,
legislative and regulatory requirements to reduce or mitigate the effects of climate change on the environment. Failure to implement our strategy or achieve our goals could damage our
reputation, causing our investors, consumers or employees to lose confidence in our Company and brands, and negatively impact our operations.

Operational Risks

Our supply chain may be disrupted by changes in U.S. trade policy with China or as a result of a pandemic.

We rely on domestic and foreign suppliers to provide us with merchandise in a timely manner and at favorable prices. Among our foreign suppliers, China is the source of a

substantial majority of our imports.

We recently experienced increased international transit times and increased shipping costs for a majority of our products, primarily as a result of the COVID-19 pandemic. While

our transit times and shipping costs have improved, any future disruption in the flow of our imported merchandise from China or a material increase in the cost of those goods or
transportation without any offsetting price increases may significantly decrease our profits.

New U.S. tariffs or other actions against China and any responses by China, could impair our ability to meet customer demand and could result in lost sales or an increase in our

cost of merchandise. This would have a material adverse impact on our business and results of operations.

The loss of any of our license agreements for globally recognized fashion brand names may result in the loss of significant revenues and may adversely affect our business.

We have entered into multi-year, worldwide exclusive license agreements for the manufacture, distribution and sale of products bearing the brand names of certain globally
recognized fashion brands. We sell products under certain licensed brands, including, but not limited to, ARMANI EXCHANGE, DIESEL, DKNY, EMPORIO ARMANI, KATE SPADE
NEW YORK, MICHAEL KORS, and TORY BURCH. Sales of our licensed products accounted for 44.7% of our consolidated net sales for

Table of Contents

fiscal year 2023, including MICHAEL KORS product sales, which accounted for 17.6% of our consolidated net sales, and ARMANI product sales, which accounted for 14.0% of our
consolidated net sales.

Our significant third-party fashion brand license agreements have various expiration dates between the years 2024 and 2028. In addition, many of these license agreements require

us to make minimum royalty payments, spend minimum amounts on marketing, subject us to restrictive covenants or require us to comply with certain other obligations and may be
terminated by the licensor if these or other conditions are not met or upon certain events. For example, our license agreement with MICHAEL KORS provides the licensor with a right to
terminate some or all of the licensing rights if we fail to meet certain net sales thresholds for two consecutive years. For fiscal year 2023, we met the net sales thresholds for MICHAEL
KORS. If we are unable to achieve the minimum net sales thresholds, minimum marketing spend, restrictive covenants and/or other obligations of a license, we would need to seek a
waiver of the non-compliance from the applicable licensor or amend the agreement to modify the thresholds, covenants or obligations or face the possibility that the licensor could
terminate the license agreement before its expiration date. Though waivers may be obtained for non-compliance, we, or the licensor, may instead elect to modify or terminate the license
agreement.

In addition, we may be unable to renew our existing license agreements beyond the current term or obtain new license agreements to replace any lost license agreements on similar

economic terms or at all. The failure by us to maintain or renew one or more of our existing license agreements could result in a significant decrease in our sales and have a material
adverse effect on our results of operations.

Our inability to effectively manage our retail store operations could adversely affect our results of operations.

During fiscal year 2023, our global comparable retail store sales decreased 2%. During fiscal year 2024, we anticipate closing approximately 60 stores globally, depending on lease

negotiations, and opening a limited number of additional retail stores. The success of our retail business depends, in part, on our ability to close low performing stores and renew our
existing store leases on terms that meet our financial targets. Our ability to open new stores on schedule or at all, to close low performing stores and to renew existing store leases on
favorable terms or to operate them on a profitable basis will depend on various factors, including our ability to:

•
•

identify suitable markets for new stores and available store locations;
negotiate acceptable lease terms for new locations or renewal terms for existing locations, particularly for those existing locations that have experienced a significant reduction
in traffic;
hire and train qualified sales associates;
develop new merchandise and manage inventory effectively to meet the needs of new and existing stores on a timely basis; and

•
•
• maintain favorable relationships with major developers and other landlords.

Our plans to manage our store base may not be successful and the opening of new stores in the future may not result in an increase in our net sales even though they increase our

costs. Our inability to effectively manage our retail store base could have a material adverse effect on the amount of net sales we generate and on our financial condition and results of
operations.

Certain key components in our products come from limited sources of supply, which exposes us to potential supply shortages that could disrupt the manufacture and sale of our
products.

We and our contract manufacturers currently purchase a number of key components used to manufacture our products from limited sources of supply for which alternative
sources may not be readily available. Any interruption or delay in the supply of any of these components could significantly harm our ability to meet scheduled product deliveries to our
customers and cause us to lose sales. Interruptions or delays in supply may be caused by a number of factors that are outside of our and our contract manufacturers' control. In
addition, the purchase of these components on a limited source basis subjects us to risks of price increases and potential quality assurance problems. An increase in the cost of
components could make our products less competitive and result in lower gross margins. In the event that we can no longer obtain materials from these limited sources of supply, we
might not be able to qualify or identify alternative suppliers in a timely fashion. Any extended interruption in the supply of any of the key components currently obtained from a limited
source or delay in transitioning to a replacement supplier could disrupt our operations and significantly harm our business in any given period. If our supply of certain components is
disrupted, our lead times are extended or the cost of our components increases, our business, operating results and financial condition could be materially affected.

Seasonality of our business may adversely affect our net sales, operating income and liquidity.

Our quarterly results of operations have fluctuated in the past and will continue to fluctuate as a result of a number of factors, including seasonal cycles, timing of new product
introductions, timing of orders by our customers and mix of product sales demand. Our business is seasonal by nature. A significant portion of our net sales and operating income are
generated

Table of Contents

during the third and fourth quarters of our fiscal year, which includes the "back to school" and holiday seasons. The amount of net sales and operating income generated during our
fiscal fourth quarter depends upon the anticipated level of retail sales during the holiday season, as well as general economic conditions and other factors beyond our control. In
addition, the amount of net sales and operating income generated during our fiscal first quarter depends in part upon the actual level of retail sales during the previous holiday season.
The seasonality of our business may adversely affect our net sales, operating income and liquidity during the first and fourth quarters of our fiscal year.

The amount of traffic to our retail stores depends heavily on the success of the shopping malls and retail centers in which our stores are located.

There continues to be a decrease in traffic in many of the shopping malls and retail centers in which our stores are located, which was accelerated by the impact of COVID-19, and

has resulted in a decrease in traffic to our stores. The resulting decrease in customers for our retail stores has had an adverse effect on our results of operations. Additionally, several
national department store anchors have closed or will be closing a number of their locations in shopping malls, which is likely to further decrease traffic and put increasing financial
strain on the operators of those shopping mall locations. The loss of an anchor or other significant tenant in a shopping mall in which we have a store, continued declines in traffic to
shopping malls or the closure of a significant number of shopping malls in which we have stores, may have a material adverse effect on our results of operations.

We have key facilities in the U.S. and overseas, the loss or shut down of any of which could harm our business.

Our administrative, information technology and distribution operations in the U.S. are conducted primarily from two separate facilities located in the Dallas, Texas area. Our

operations internationally are conducted from various administrative, distribution and assembly facilities outside of the U.S., particularly in China, Germany, Hong Kong, India and
Switzerland. The complete or temporary loss of use of all or part of these facilities could have a material adverse effect on our business.

Our warehouse and distribution facilities in the Dallas, Texas area are operated in a special purpose sub-zone established by the U.S. Department of Commerce Foreign Trade Zone

Board. Although the sub-zone allows us certain tax advantages, the sub-zone is highly regulated by the U.S. Customs Service. This level of regulation may cause disruptions or delays
in the distribution of our products out of these facilities. Under some circumstances, the U.S. Customs Service has the right to shut down the entire sub-zone and, therefore, our entire
warehouse and distribution facilities. During the time that the sub-zone is shut down, we may be unable to adequately meet the supply requests of our customers and our Company-
owned retail stores, which could have an adverse effect on our sales, relationships with our customers, and results of operations, especially if the shutdown were to occur during our
third or fourth quarter.

Fluctuations in the price, availability and quality of raw materials could cause delays and increase costs.

Fluctuations in the price, availability and quality of the raw materials used in our products could have a material adverse effect on our cost of sales or ability to meet our customers'

demand. The price and availability of such raw materials may fluctuate significantly, depending on many factors, including natural resources, increased freight costs, increased labor
costs, especially in China, increased component costs and weather conditions. Recently inflation rates in the U.S. and certain international markets reached levels not seen in decades.
While we have recently increased the prices of a number of our products as a result and may implement other price increases in the future, we may not be able to pass on all, or a
significant portion of, such higher raw materials prices to our customers or such price increases may not be accepted by our customers, which could impact our margins or result in lost
revenues.

We rely on third-party assembly factories and manufacturers; and problems with, or loss of, our assembly factories or manufacturing sources could harm our business and results
of operations.

The majority of our watch and jewelry products are currently assembled or manufactured to our specifications by independent entities in China. All of our handbags, small leather

goods, belts and soft accessories are produced by independent manufacturers. We have no long-term contracts with these independent assembly factories or manufacturers and
compete with other companies for production facilities. All transactions between us and our independent assembly factories or manufacturers are conducted on the basis of purchase
orders. We face the risk that these independent assembly factories or manufacturers may not produce and deliver our products on a timely basis, or at all. As a result, we cannot be
certain that these assembly factories or manufacturers will continue to assemble or manufacture products for us or that we will not experience operational difficulties with our
manufacturers, such as reductions in the availability of production capacity, errors in complying with product specifications, insufficient quality control, shortages of raw materials,
failures to meet production deadlines, increases in manufacturing costs or pandemic-related delays. Our future success will depend upon our ability to maintain close relationships with
our current assembly factories and manufacturers and to develop long-term relationships with other manufacturers that satisfy our requirements for price, quality and production
flexibility. Our ability to establish new manufacturing relationships

Table of Contents

involves numerous uncertainties, including those relating to payment terms, costs of manufacturing, adequacy of manufacturing capacity, quality control and timeliness of delivery. Any
failure by us to maintain long-term relationships with our current assembly factories and manufacturers or to develop relationships with other manufacturers could have a material
adverse effect on our ability to manufacture and distribute our products.

We do not maintain long-term contracts with our customers and are unable to control their purchasing decisions.

We do not maintain long-term purchasing contracts with our customers and therefore have no contractual leverage over their purchasing decisions. A decision by a major
department store or other significant customer to decrease the amount of merchandise purchased from us or to cease carrying our products could have a material adverse effect on our
net sales and operating strategy.

We face intense competition in the specialty retail and e-commerce industries and the size and resources of some of our competitors are substantially greater than ours, which may
allow them to compete more effectively.

We face intense competition in the specialty retail and e-commerce industry where we compete primarily with specialty retailers, department stores and e-commerce businesses

that engage in the retail sale of watches and accessories. We believe that the principal basis upon which we compete is the quality and design of merchandise and the quality of
customer service. We also believe that price is an important factor in our customers' decision-making processes. Many of our competitors are, and many of our potential competitors may
be, larger and have greater financial, marketing and other resources than we have and therefore may be able to adapt to changes in customer requirements more quickly, devote greater
resources to the marketing and sale of their products and generate greater national brand recognition than we can, especially in the developing area of omni-channel retailing. Omni-
channel retailing may include retail stores, e-commerce sites, mobile channels and other direct-to-consumer points of contact that enhance the consumer’s ability to interact with a
retailer in the research, purchase, returning and serving of products. The intense competition and greater size and resources of some of our competitors could have a material adverse
effect on the amount of net sales we generate and on our results of operations.

We face competition from traditional accessory competitors as well as competitors in the wearable technology category.

There is intense competition in each of the businesses in which we compete. In all of our businesses, we compete with numerous manufacturers, importers and distributors who
may have significantly greater financial, distribution, advertising and marketing resources than us. Our competitors include distributors that import watches and accessories from abroad,
U.S. companies that have established foreign manufacturing relationships and companies that produce accessories domestically. In addition, we face continuing competition from
technology companies in the smartwatch category, such as Apple, Garmin and Samsung. Many of these technology competitors have significantly greater financial, distribution,
advertising and marketing resources than us. In addition, the impact of wearable technology products on sales of our traditional product lines may be materially adverse. Our results of
operations and market position may be adversely affected by our competitors and their competitive pressures in the watch, wearable technology and fashion accessory industries.

Any material disruption of our information systems could disrupt our business and reduce our sales.

We are increasingly dependent on information systems to operate our websites, process transactions, manage inventory, monitor sales and purchase, sell and ship goods on a
timely basis. We utilize SAP ERP in our U.S. operations and throughout most of our European operations to support our human resources, sales and distribution, inventory planning,
retail merchandising and operational and financial reporting systems of our business, and Navision in our Asian operations to support many of the same functions on a local country
level. We also use tools provided by salesforce.com, inc. in our CRM initiatives. In fiscal year 2023, we began to implement a new global point of sale system beginning with our
European retail stores. We may experience operational problems with our information systems as a result of system failures, viruses, ransomware, computer "hackers" or other causes.
These risks may be heightened as a result of our workforce that works remotely. Any material disruption or slowdown of our systems could cause information, including data related to
customer orders, to be lost, unavailable or delayed, which could result in delays in the delivery of merchandise to our stores and customers or lost sales, which could reduce demand for
our merchandise and cause our sales to decline. Moreover, the failure to maintain, or a disruption in, financial and management control systems could have a material adverse effect on
our ability to respond to trends in our target markets, market our products and meet our customers' requirements.

In addition, we have e-commerce and other websites in the U.S. and internationally. In addition to changing consumer preferences and buying trends relating to Internet usage, we

are vulnerable to certain additional risks and uncertainties associated with the Internet, including changes in required technology interfaces, website downtime and other technical
failures, security breaches, and consumer privacy concerns. Our failure to successfully respond to these risks and uncertainties could reduce e-commerce sales, increase costs and
damage the reputation of our brands.

Table of Contents

Factors affecting international commerce and our international operations may seriously harm our financial condition.

During fiscal year 2023, we generated 63.6% of our net sales from outside of the U.S. Our international operations are directly related to, and dependent on, the volume of
international trade and foreign market conditions. International commerce and our international operations are subject to many risks, some of which are discussed in more detail,
including:

•
•

recessions in foreign economies;
political instability or uncertainty, including as a result of elections, economic instability, geopolitical events and tensions, wars and military conflicts, such as the war in
Ukraine, the Israel-Hamas war and tensions between China and Taiwan;
the adoption and expansion of trade restrictions or the occurrence of trade wars;
limitations on repatriation of earnings;
difficulties in protecting our intellectual property or enforcing our intellectual property rights under the laws of other countries;
longer receivables collection periods and greater difficulty in collecting accounts receivable;
difficulties in managing foreign operations;
social, political and economic instability;
restrictions on travel to and from international locations;
political tensions between the U.S. and foreign countries;
compliance with, changes in or adoption of current, new or expanded regulatory requirements;
our ability to finance foreign operations;
tariffs and other trade barriers;

•
•
•
•
•
•
•
•
•
•
•
• U.S. government licensing requirements for exports; and
•

the impact of a pandemic.

The occurrence or consequences of any of these risks may restrict our ability to operate in the affected regions and decrease the profitability of our international operations,

which may seriously harm our financial condition.

Because we depend on foreign manufacturing, we are vulnerable to changes in economic and social conditions in Asia, particularly China, and disruptions in international travel
and shipping.

Because a substantial portion of our watches and jewelry and certain of our handbags, sunglasses and other products are assembled or manufactured in China, our success will

depend to a significant extent upon future economic and social conditions existing in China. If these factories in China are disrupted for any reason, we would need to arrange for the
manufacture and shipment of products by alternative sources. While we do have initiatives in place to diversify certain of our manufacturing outside of China, because the
establishment of new manufacturing relationships involves numerous uncertainties, including those relating to payment terms, costs of manufacturing, adequacy of manufacturing
capacity, quality control and timeliness of delivery, we are unable to predict whether such new relationships would be on terms that we regard as satisfactory. Any significant disruption
in our relationships with our manufacturing sources located in China would have a material adverse effect on our ability to manufacture and distribute our products. In addition,
restrictions on travel to and from this and other regions, such as the travel restrictions that occurred with COVID-19, and any delays or cancellations of customer orders or the
manufacture or shipment of our products, including on account of a pandemic or other health crises, could have a material adverse effect on our ability to meet customer deadlines and
timely distribute our products in order to match consumer expectations.

The loss of key senior management personnel or our failure to attract and retain qualified personnel could negatively affect our business.

We depend on our senior management and other key personnel. We do not have "key person" life insurance policies for any of our personnel. Competition for qualified
personnel in the fashion industry is intense. Our ability to attract and retain employees, especially in the competitive market for employees with digital experience, is influenced by our
ability to offer competitive compensation and benefits, employee morale, our reputation, recruitment by other employers, perceived internal opportunities, non-competition and non-
solicitation agreements and macro unemployment rates. The loss of any of our executive officers or other key employees could harm our business.

We must also attract, develop, motivate and retain a sufficient number of qualified retail and distribution center personnel. Historically, competition for talent has been intense and

the turnover rate in the retail industry is generally high. There can be no assurance that we will be able to attract or retain a sufficient number of qualified employees in future periods to
execute on our business objectives. Additionally, our ability to meet our labor needs while also controlling costs is subject to external factors such as unemployment levels, prevailing
wage rates, minimum wage legislation and overtime regulations. If we

Table of Contents

are unable to attract, develop, motivate and retain talented employees with the necessary skills and experience, or if changes to our organizational structure, operating results, or
business model adversely affect morale, hiring and/or retention, we may not achieve our objectives and our results of operations could be adversely impacted.

Risks Related to our Indebtedness

We are highly leveraged. Our substantial indebtedness and cash flow used in operating activities could adversely affect our ability to service debt or obtain additional financing if
necessary.

As of December 30, 2023, we had $212.6 million of outstanding indebtedness, not including $5.1 million of debt issuance costs. We also had $64.0 million of additional borrowing

capacity under our Revolving Facility. During fiscal year 2023, we used $59.5 million of cash flows in operating activities.

Our high level of indebtedness and recent negative operating cash flows will continue to restrict our operations. Among other things, our indebtedness will:

•
•
•
•
•

limit our flexibility in planning for, or reacting to, changes in the markets in which we compete;
place us at a competitive disadvantage relative to our competitors with less indebtedness;
limit our ability to reinvest in our business;
render us more vulnerable to general adverse economic, regulatory and industry conditions; and
require us to dedicate a substantial portion of our cash flow to service our debt.

Our ability to meet our cash requirements, including our debt service obligations, is dependent upon our ability to maintain and improve our operating performance, which is
subject to general economic and competitive conditions and to financial, business and other factors, many of which are beyond our control. Although we believe we have sufficient
sources of liquidity to meet our anticipated requirements for working capital, debt service and capital expenditures through at least the next twelve months, if our operating results do not
meet our expectations or if we experience adverse financial, business and other factors that we do not currently anticipate, we could face liquidity constraints.

If we are unable to service our debt or experience a significant reduction in our liquidity, we could be forced to sell assets, restructure or refinance our debt or raise additional
capital through sales of equity or debt, and we may be unable to take any of these actions on satisfactory terms or in a timely manner. Any of these actions may not be sufficient to allow
us to service our debt obligations or may have an adverse impact on our business. Our existing debt agreements limit our ability to take certain of these actions. Our failure to generate
sufficient operating cash flow to pay our debt obligations could have a material adverse effect on us.

Our debt agreements subject us to certain covenants, which may restrict our ability to operate our business and to pursue our business strategies. Our failure to comply with the
covenants contained in our debt agreements, including as a result of events beyond our control, could result in an event of default which could materially and adversely affect our
operating results and our financial condition.

On September 26, 2019, the Company and Fossil Partners L.P., as the U.S. borrowers, and Fossil Group Europe GmbH, Fossil Asia Pacific Limited, Fossil (Europe) GmbH, Fossil
(UK) Limited and Fossil Canada Inc., as the non-U.S. borrowers, certain other subsidiaries of the Company from time to time party thereto designated as borrowers, and certain
subsidiaries of the Company from time to time party thereto as guarantors, entered into a secured asset-based revolving credit agreement (the "Revolving Facility”) with JPMorgan
Chase Bank, N.A. as administrative agent, J.P. Morgan AG, as French collateral agent, JPMorgan Chase Bank, N.A., Citizens Bank, N.A. and Wells Fargo Bank, National Association as
joint bookrunners and joint lead arrangers, and Citizens Bank, N.A. and Wells Fargo Bank, National Association, as co-syndication agents and each of the lenders from time to time
party thereto.

The Revolving Facility imposes, and future financing agreements are likely to impose, affirmative and negative covenants that restrict our activities. These restrictions limit or

prohibit our ability to, among other things:

incur additional indebtedness or issue certain types of stock;
pay dividends or make other distributions, repurchase or redeem our stock;

•
•
• make certain investments;
•
•
•
•
•

prepay, redeem, or repurchase certain debt;
sell assets and issue capital stock of our restricted subsidiaries;
incur liens;
enter into agreements restricting our restricted subsidiaries’ ability to pay dividends, make loans to other related entities or restrict the ability to incur liens;
enter into transactions with affiliates; and

Table of Contents

•

consolidate or merge.

These restrictions on our ability to operate our business, along with restrictions that may be contained in agreements evidencing or governing future indebtedness, could
seriously harm our business and our ability to grow in accordance with our growth strategy by, among other things, limiting our ability to take advantage of merger and acquisition and
other corporate opportunities. In addition, the limitations imposed by financing agreements on our ability to incur additional debt and liens might significantly impair our ability to obtain
other financing.

As a result of these restrictions, we may be:

•
•
•

limited in how we conduct our business;
unable to raise additional debt or equity financing to operate during general economic or business downturns; or
unable to compete effectively or to take advantage of new business opportunities.

The Revolving Facility also requires us to maintain a specified financial ratio in certain circumstances. The Revolving Facility contains a fixed charge coverage ratio covenant if our
Availability (as defined in the Revolving Facility) falls below a certain threshold. See Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations”
under the heading "Sources of Liquidity” for an additional discussion of the financial covenants contained in the Revolving Facility.

Various risks, uncertainties and events beyond our control could affect our ability to comply with any of the covenants in our existing or future financing agreements, which could
result in a default under those agreements and under other agreements containing cross-default provisions. A default would permit lenders to accelerate the maturity of the debt under
these agreements. Under these circumstances, we might not have sufficient funds or other resources to satisfy all of our obligations. We cannot know for certain that we will be granted
waivers or amendments to these agreements if for any reason we are unable to comply with these agreements or that we will be able to refinance our debt on terms acceptable to us, or at
all. In addition, an event of default under the Revolving Facility would permit the lenders to terminate all commitments to extend further credit under the Revolving Facility and to
accelerate the maturity of all outstanding loans under the Revolving Facility. Furthermore, the Revolving Facility is secured by liens on our assets. If we were unable to repay the
amounts due and payable under our Revolving Facility, the applicable lenders could proceed against the collateral granted to them to secure that indebtedness.

The Revolving Facility provides the administrative agent considerable discretion to impose reserves and to determine that certain assets are not eligible for inclusion in our

borrowing base, which could materially reduce the maximum amount that we are able to borrow at any one time under the Revolving Facility. The administrative agent has imposed
reserves previously and may impose reserves in the future. There can be no assurance that the administrative agent under the Revolving Facility will not take such actions. If they do so,
the resulting impact of such actions could materially and adversely impair our ability to meet our other obligations as they become due, among other matters.

The maximum amount that we are permitted to borrow under the Revolving Facility is limited, is subject to seasonal fluctuations and is subject to the discretion of the lenders,
which may adversely affect our liquidity, results of operations and financial position.

The maximum amount that we are permitted to borrow at any time under the Revolving Facility is limited by a borrowing base that is recalculated monthly or, in some

circumstances, more frequently. The borrowing base is a function of, among other things, our eligible accounts receivable, inventory and certain intellectual property. As a result, our
access to credit under the Revolving Facility fluctuates depending on the value of the borrowing base eligible assets as of any measurement date. Because our business is seasonal and
generates higher net sales and accounts receivable in the third and fourth quarters, our borrowing base is also seasonal and is typically lower during our second and third quarters,
which can adversely affect our liquidity during these quarters. In addition, the administrative agent under the Revolving Facility has the discretionary right to impose reserves or to
determine that certain assets are not eligible for inclusion in our borrowing base. The administrative agent’s discretionary changes could materially reduce the maximum amount that we
are able to borrow at any one time under the Revolving Facility. Our accounts receivable, inventory and intellectual property are pledged to secure our obligations under the Revolving
Facility and cannot be used as collateral for any other financings unless we refinance or terminate the Revolving Facility. These limitations on our ability to borrow under the Revolving
Facility or another financing may adversely affect our liquidity, results of operations and financial position.

Our indebtedness could adversely affect our financial condition and prevent us from fulfilling our obligations.

The Revolving Facility provides that the lenders thereunder may extend revolving loans in an aggregate principal amount not to exceed $225.0 million at any time outstanding,

subject to the borrowing base availability limitations. As of December 31, 2023, we had $62.1 million outstanding under the Revolving Facility. The covenants under the Revolving
Facility allow us to incur additional indebtedness from other sources in certain circumstances. On November 8, 2021, we sold $150 million aggregate principal amount of our 7.00% Senior
Notes due 2026 (the "Senior Notes”). The Senior Notes are general unsecured

Table of Contents

obligations of the Company and rank equally in right of payment with all of our existing and future senior unsecured and unsubordinated indebtedness, and rank senior in right of
payment to any future subordinated indebtedness. The Senior Notes are effectively subordinated to all of our existing and future secured indebtedness, to the extent of the value of the
assets securing such indebtedness, and the Senior Notes are structurally subordinated to all existing and future indebtedness and other liabilities (including trade payables) of our
subsidiaries (excluding any amounts owed by such subsidiaries to us).

The base indenture and first supplemental indenture that govern the Senior Notes contain customary events of default and cure provisions. If an event of default (other than an

event of default of the type described in the following sentence) occurs and is continuing with respect to the Senior Notes, the trustee may, and at the direction of the registered holders
of at least 25% in aggregate principal amount of the outstanding Senior Notes shall, declare the principal of all Senior Notes, together with all accrued and unpaid interest, to be due and
payable immediately. If an event of default relating to certain events of bankruptcy, insolvency or reorganization of the Company occurs, the principal of all Senior Notes, together with
all accrued and unpaid interest, will become due and payable immediately without further action or notice by the trustee or any holder of the Senior Notes.

A portion of our cash flow will be required to pay interest and principal on our outstanding indebtedness, and we may be unable to generate sufficient cash flow from operations

or borrow additional funds under our Revolving Facility or otherwise, to enable us to meet our debt service obligations and fund our other liquidity needs.

Our level of indebtedness could have other important consequences, including the following:

it limits our ability to borrow money or sell stock to fund our working capital, capital expenditures, acquisitions and debt service requirements;
it may limit our flexibility in planning for, or reacting to, changes in our business and future business opportunities;

•
•
• we are more highly leveraged than some of our competitors, which may place us at a competitive disadvantage;
•
•
•

it may make us more vulnerable to a downturn in our business or the economy;
it may increase our cost of borrowing and;
there would be a material adverse effect on our business and financial condition if we were unable to service our indebtedness or obtain additional financing as needed.

We may not be able to generate sufficient cash flows to meet our debt service obligations and may be forced to take other actions to satisfy our obligations under our indebtedness,
which may not be successful.

Our ability to make payments on and to refinance our indebtedness and to fund operations and planned capital expenditures and other investments in our business will depend
on our ability to generate cash from our operations in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors
that are beyond our control. During the fiscal year ended December 30, 2023, we used $59.5 million of cash flows in our operations.

In the future, our business may not generate sufficient cash flow from operations and future sources of capital under the Revolving Facility or otherwise may not be available to

us in an amount sufficient to enable us to pay our debt service obligations and to fund our other liquidity needs.

If we complete an acquisition, our debt service requirements could increase. If we cannot service our indebtedness, we may have to take actions such as selling assets, seeking

additional equity, reducing or delaying capital expenditures, strategic acquisitions, investments and alliances or restructuring or refinancing our indebtedness.

The Revolving Facility restricts our ability to take such actions, and in some cases imposes limitations on the use of proceeds that we might receive from such actions. We may

not be able to consummate asset sales or other transactions at prices and on terms that we believe are commercially reasonable, or at all, and any proceeds that we do receive may not be
available for, or adequate to meet, any debt service obligations then due. These alternative measures may not be successful and may not permit us to meet our debt service obligations.

The maximum amount that we are permitted to borrow at any time under the Revolving Facility is limited by a borrowing base that is recalculated monthly or, in some

circumstances, more frequently. If the borrowing base declines or is reduced by the administrative agent to an amount below the then-outstanding amount of loans under the Revolving
Facility, we are required to prepay the outstanding loans under the Revolving Facility in an amount that will result in the aggregate amount of outstanding loans being less than the
amount of the borrowing base. We may not have sufficient funds to make any such prepayments.

We will need to repay, refinance or restructure all of our debt obligations on or before their respective maturity dates. The maturity date of the Revolving Facility is November 8,

2027, but if the Company has any indebtedness in an amount in

Table of Contents

excess of $35.0 million that matures prior to November 8, 2027, the maturity date of the Revolving Facility will be the 91st day prior to the maturity date of such other indebtedness. The
maturity date of the Company’s $150.0 million of Senior Notes is November 30, 2026. If the Senior Notes are not repaid or refinanced to a later maturity date in a manner that reduces the
balance due on November 30, 2026 to $35.0 million or less, the maturity date of the Revolving Facility will be August 31, 2026. We may not be able to repay, refinance or restructure any
of our indebtedness, including the Revolving Facility, on commercially reasonable terms, or at all. Any refinancing of our debt could be at higher interest rates and may require us to
comply with more onerous covenants.

The occurrence of certain specified change of control events would cause an event of default under the Revolving Facility. In such event, we may not be able to repay, refinance

or restructure the Revolving Facility, or obtain a waiver of such event of default, on commercially reasonable terms, or at all.

If we cannot meet our debt service obligations or repay, refinance or restructure our debt obligations on or before their respective maturity dates, or are otherwise in default under

our debt agreements, the holders of our debt may accelerate any debt that is not yet due, demand payment of our debt, and, to the extent such debt is secured, foreclose on the assets
securing that debt. In any such event, we may not have sufficient assets to repay all of our debt, and the interests of our equity holders and other stakeholders may be materially
adversely affected.

We may be able to incur significantly more debt, including secured debt. This could intensify already-existing risks related to our indebtedness.

The terms of the Revolving Facility contain restrictions on our ability to incur additional indebtedness. However, these restrictions are subject to a number of important
qualifications and exceptions, and the indebtedness incurred in compliance with these restrictions could be substantial. Accordingly, we could incur significant additional secured
indebtedness in the future under the Revolving Facility and significant additional secured and unsecured indebtedness under other debt instruments permitted by the Revolving
Facility. As of December 30, 2023, our Revolving Facility provided for unused borrowing capacity under the Revolving Facility of up to $64.0 million. If new debt is added to our current
debt levels, the related risks that we now face could intensify.

If we experience liquidity concerns, we could face a downgrade in our debt ratings which could restrict our access to, and negatively impact the terms of, current or future
financings or trade credit.

Our ability to obtain financings and trade credit and the terms of any financings or trade credit is, in part, dependent on the credit ratings assigned to our debt by independent
credit rating agencies. We cannot provide assurance that any of our current ratings will remain in effect for any given period of time or that a rating will not be lowered or withdrawn
entirely by a rating agency if, in its judgment, circumstances so warrant. A ratings downgrade could adversely impact our ability to access financings or trade credit and increase our
borrowing costs.

Our indebtedness exposes us to interest rate risk.

Our earnings are exposed to interest rate risk associated with borrowings under the Revolving Facility. The terms of the Revolving Facility provide for interest on borrowings at a

floating rate that is tied to SOFR. SOFR tends to fluctuate based on multiple facts, including general short-term interest rates, rates set by the U.S. Federal Reserve, and other central
banks and general economic conditions. We have not hedged our interest rate exposure with respect to our floating rate debt. During fiscal year 2023, our average interest rate on
borrowings under the Revolving Facility was 6.5%. If interest rates increase, so will our interest costs, which may have a material adverse effect on our results of operations and financial
condition.

The Senior Notes bear interest at a fixed rate of 7.00% per annum. If interest rates decrease, the interest rate on the Senior Notes would not change, and we would not be able to
obtain the benefit of reduced interest rates unless we refinanced the Senior Notes. This could put us at a competitive disadvantage to other companies that have floating rate debt. We
may not be able to refinance the Senior Notes on commercially reasonable terms, or at all. Any redemption of the Senior Notes prior to November 30, 2025 would trigger a redemption
premium. Prior to November 30, 2024, the redemption price would be $25.50 for each $25.00 of Senior Notes, and from November 30, 2024 until November 29, 2025, the redemption price
would be $25.25 for each $25.00 of Senior Notes. In addition, any refinancing could be at higher interest rates and may require us to comply with more onerous covenants.

The restrictive covenants in the Revolving Facility are subject to a number of important qualifications, exceptions and limitations, and to amendment.

The restrictive covenants in the Revolving Facility are subject to a number of important qualifications, exceptions and limitations. We may be able to engage in some of the

restricted activities, in limited amounts, or in certain circumstances, in unlimited amounts, notwithstanding the restrictive covenants. For example, subject to the satisfaction of certain
tests specified in the Revolving Facility, we are permitted to make unlimited distributions to our equity holders. Further, the restrictive

Table of Contents

covenants in the Revolving Facility can be amended or waived with the consent of the lenders under the Revolving Facility, who may have interests that are opposed to the interests of
our equity holders, the holders of our other debt obligations, and other stakeholders. There can be no assurance that the restrictive covenants in the Revolving Facility will limit our
activities.

Financial Risks

We have a recent history of net losses and negative cash flow and may not achieve consistent profitability or positive cash flow in the future.

We have incurred substantial losses and negative cash flow in recent fiscal years. During fiscal years 2023 and 2022, we generated a net loss attributable to Fossil Group, Inc. of
$157.1 million and $44.2 million, respectively, and we used $59.5 million and $110.9 million of cash flows in operating activities, respectively. In addition, our cash and cash equivalents
have declined from $198.7 million at December 31, 2022 to $117.2 million at December 30, 2023. We will need to generate and sustain increased net sales levels in future periods and
reduce expenses in order to become profitable and generate positive cash flow, and even if we do, we may not be able to maintain or increase our level of profitability and cash flow. If
we cannot become profitable or generate positive cash flow, our business, results of operations and financial condition could be materially and adversely affected.

A significant portion of our cash, cash equivalents and investments are held by our foreign subsidiaries, which could negatively affect future liquidity needs.

As of December 30, 2023, $104.4 million, or approximately 89% of our cash and cash equivalents were held by our foreign subsidiaries. While we intend to use some of the cash
held outside the U.S. to fund our international operations, when we encounter a significant need for liquidity in the U.S. or other location that we cannot fulfill through other internal or
external sources, our liquidity requirements could necessitate transfers of existing cash balances between our subsidiaries or to the U.S. Some of our subsidiaries are located in
jurisdictions that require foreign government approval before a cash repatriation can occur. If we are unable to transfer existing cash balances in such a situation, our business, results of
operations and financial condition could be materially and adversely affected.

Changes in the mix of product sales demand could negatively impact our gross profit margins.

Our gross profit margins are impacted by our sales mix as follows:

Sales channel mix: sales from our direct retail and e-commerce channels typically provide gross margins in excess of our historical consolidated gross profit margins, while sales

from our distributor, mass market and off-price channels typically provide gross margins below our historical consolidated gross profit margins.

Product mix: traditional watch and jewelry sales typically provide gross margins in excess of historical consolidated gross profit margins, while leather goods and private label

products typically provide gross margins below our historical consolidated gross profit margins.

Geographic mix: international sales typically produce gross margins in excess of our historical consolidated gross profit margins, while domestic sales typically provide gross

margins below our historical consolidated gross profit margins.

If future sales from our higher gross margin businesses do not increase at a faster rate than our lower gross margin businesses, our gross profit margins may grow at a slower

pace, cease to grow, or decrease relative to our historical consolidated gross profit margin.

The global implementation of Pillar Two may adversely affect our business, results of operations, financial condition and cash flow.

Under The Organization for Economic Cooperation and Development ("OECD") Inclusive Framework, 140 countries agreed to enact a two-pillar solution to reform the
international tax rules to address the challenges arising from the globalization and digitalization of the economy. The Pillar Two Global Anti-Base Erosion (GloBE) Rules provide a
coordinated system to ensure that multinational enterprises with revenues above EUR 750 million pay a minimum effective tax rate of 15% tax on the income arising in each of the
jurisdictions in which they operate. They will be liable to pay a top-up tax for the difference between their GloBE effective tax rate per jurisdiction and the 15% minimum rate. It is the
ultimate parent entity of the multinational enterprise that is primarily liable for the GLoBE top-up tax in its jurisdiction’s territory. Therefore, some countries may engage in domestic tax
policy reforms in anticipation of the GloBE rules becoming effective and enact their own domestic minimum tax rates to avoid "tax leakage”. Notwithstanding any new local minimum tax
regime which may be designed to reduce or eliminate the GloBE top-up tax, additional top-up tax under GLoBE may still be due. This will depend on the local effective tax rate calculation
according to the specific rules set out in the Pillar Two implementation guidance. The

Table of Contents

technical aspects of the calculation are still being developed. Any increase in corporate tax rates or rules regarding the calculation of taxable income for the top-up tax could adversely
affect our business, results of operations, financial condition and cash flow.

We have recorded impairment charges in the past and may record impairment charges in the future.

We are required, at least annually, or as facts and circumstances warrant, to test trade names to determine if impairment has occurred. We are also required to test property plant

and equipment and other long lived assets for impairment as facts and circumstances warrant. Impairment may result from any number of factors, including adverse changes in
assumptions used for valuation purposes, such as actual or projected net sales, growth rates, profitability or discount rates, or other variables. If the testing indicates that impairment
has occurred, we are required to record a non-cash impairment charge. Should the value of trade names, property plant and equipment and other long lived assets become impaired, it
could have an adverse effect on our results of operations.

Increased competition from online only retailers and a highly promotional retail environment may increase pressure on our margins.

The continued increase in e-commerce competitors for retail sales and slowing mall traffic has resulted in significant pricing pressure and a highly promotional retail environment,

which was heightened by the impact of COVID-19. These factors may cause us to be more promotional with our sales prices to retailers and consumers, which could cause our gross
margin to decline if we are unable to appropriately manage inventory levels and/or otherwise offset any price reductions with comparable reductions in our costs. If we have to reduce
our sales prices for competitive purposes and we fail to sufficiently reduce our product costs or operating expenses, our profitability will decline. This could have a material adverse
effect on our business, results of operations, and financial condition.

Our license agreements may require minimum royalty commitments regardless of the level of product sales under these agreements.

Under our license agreements, we have in the past experienced, and could again in the future experience, instances where our minimum royalty commitments exceeded the
royalties payable based upon our sales of the licensed products. Payments of minimum royalties in excess of the royalties based on our sales of the licensed products reduce our
margins and could adversely affect our results of operations.

Foreign currency fluctuations could adversely impact our financial condition.

We generally purchase our products in U.S. dollars. However, we source a significant amount of our products overseas and, as such, the cost of these products may be affected

by changes in the value of the currencies of these countries, including the Australian dollar, British pound, Canadian dollar, Chinese yuan, Danish krone, euro, Hong Kong dollar, Indian
rupee, Japanese yen, South Korean won, Malaysian ringgit, Mexican peso, Norwegian kroner, Singapore dollar, Swedish krona and Swiss franc. Due to our dependence on
manufacturing operations in China, changes in the value of the Chinese yuan may have a material impact on our supply channels and manufacturing costs, including component and
assembly costs.

In addition, changes in currency exchange rates may also affect the prices at which we sell products in foreign markets. For fiscal years 2023, 2022 and 2021, 63.6%, 63.1% and

63.5% of our consolidated net sales were generated outside of the U.S. In general, our overall financial results are affected positively by a weaker U.S. dollar and are affected negatively
by a stronger U.S. dollar as compared to the foreign currencies in which we conduct our business. For example, due to a stronger U.S. dollar in fiscal year 2023, the translation of foreign-
based net sales into U.S. dollars decreased our reported net sales by approximately $2.1 million compared to fiscal year 2022. If the value of the U.S. dollar remains at its current levels or
strengthens against foreign currencies, particularly against the euro, Chinese yuan, Indian rupee, Canadian dollar, South Korean won, British pound and Japanese yen, our financial
condition and results of operations could be materially and adversely impacted. As a result, foreign currency fluctuations may have a material adverse impact on our financial condition
and results of operations.

Legal, Compliance and Reputational risks

A data security or privacy breach could damage our reputation, harm our customer relationships, expose us to litigation or government actions, and result in a material adverse
effect to our business, financial condition and results of operations.

We depend on information technology systems, the Internet and computer networks for a substantial portion of our retail and e-commerce businesses, including credit card

transaction authorization and processing. We also receive and store personal information about our customers and employees, the protection of which is critical to us. In the normal
course of our business, we collect, retain, and transmit certain sensitive and confidential customer information, including credit card information, over public networks. Our customers
have a high expectation that we will adequately protect their personal information. In addition,

Table of Contents

personal information is highly regulated at the international, federal and state level. While we and our third-party service providers have safeguards in place to defend our systems
against intrusions and attacks and to protect our data, we cannot be certain that these measures are sufficient to counter all current and emerging technology threats. Despite the
security measures we currently have in place, our facilities and systems and those of our third party service providers have been, and will continue to be, vulnerable to theft of physical
information, security breaches, hacking attempts, computer viruses and malware, ransomware, phishing, lost data and programming and/or human errors. To date, none of these risks,
intrusions, attacks or human error have resulted in any material liability to us. While we carry insurance policies that would provide liability coverage for certain of these matters, if we
experience a significant security incident, we could be subject to liability or other damages that exceed our insurance coverage, and we cannot be certain that such insurance policies will
continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim. Any electronic or physical security breach
involving the misappropriation, loss, or other unauthorized disclosure of confidential or personally identifiable information, including penetration of our network security or those of our
third party service providers, could disrupt our business, severely damage our reputation and our customer relationships, expose us to litigation and liability, subject us to governmental
investigations, fines and enforcement actions, result in negative media coverage and distraction to management and result in a material adverse effect to our business, financial
condition, and results of operations. In addition, as a result of security breaches at a number of prominent retailers and other companies, the media and public scrutiny of information
security and privacy has become more intense and the regulatory environment related thereto has become more uncertain. As a result, we may incur significant costs in complying with
new and existing state, federal, and foreign laws regarding protection of, and unauthorized disclosure of, personal information. A successful ransomware attack on our systems could
make them inaccessible for a period of time pending the payment of a ransom to unlock the systems or our ability to otherwise restore our access to our systems.

We are subject to laws and regulations in the U.S. and the many countries in which we operate. Violations of laws and regulations, or changes to existing laws or regulations,
could have a material adverse effect on our financial condition or results of operations.

Our operations are subject to domestic and international laws and regulations in a number of areas, including, but not limited to, labor, advertising, consumer protection, real
estate, product safety, e-commerce, promotions, intellectual property, tax, import and export, anti-corruption, anti-bribery, foreign exchange controls and cash repatriation, data privacy,
anti-competition, environmental, health and safety. Compliance with these numerous laws and regulations is complicated, time consuming and expensive, and the laws and regulations
may be inconsistent from jurisdiction to jurisdiction, further increasing the difficulty and cost to comply with them. New laws and regulations, or changes to existing laws and
regulations, could individually or in the aggregate make our products more costly to produce, delay the introduction of new products in one or more regions, cause us to change or limit
our business practices, or affect our financial condition and results of operations. We have implemented policies and procedures designed to ensure compliance with the numerous laws
and regulations affecting our business, but there can be no assurance that our employees, contractors, or agents will not violate such laws, regulations or our policies related thereto.
Any such violations could have a material adverse effect on our financial condition or operating results.

Tariffs or other restrictions placed on imports from China and any retaliatory trade measures taken by China could materially harm our revenue and results of operations.

Beginning in July 2018, certain of our products have been subject to additional ad valorem duties imposed by the U.S. government on products of China under Section 301 of the
Trade Act of 1974. These tariffs, imposed via four successive "Lists” were the result of an April 2018 determination by the Office of the U.S. Trade Representative ("USTR”) that China’s
acts, practices, and policies with respect to technology transfer, intellectual property, and innovation are unreasonable or discriminatory and burden or restrict U.S. commerce. In
particular, certain of our packaging and handbag products have been subject to an additional 25% ad valorem tariff, based on the first sale export price as imported into the U.S., since
July 2018 ("List 1”). Certain of our handbag and wallet products were subject to an additional 10% ad valorem tariff, based on the first sale export price as imported into the U.S.,
beginning in September 2018, a rate that was then raised to 25% ad valorem from June 2019 to present ("List 3”). Finally, smartwatches, certain jewelry products, and several of our
traditional watch products were subject to an additional 15% ad valorem tariff, based on the first sale export price as imported into the U.S., beginning in September 2019, a rate that was
lowered to 7.5% ad valorem from February 2020 to present ("List 4A”).

USTR is currently conducting a statutory review of these tariffs, but they remain in place during that review and Biden Administration officials have publicly signaled that
modifications to the tariffs may not be extensive. Any modifications USTR may make, which are expected by the end of May 2024, could also further impact our products. We continue
to monitor these developments for potential risks. We have also joined litigation before the U.S. Court of International Trade challenging the legality of the Section 301 List 3 and List 4A
tariffs and seeking refunds of duties paid on imports that were subject to those tariffs. That litigation is ongoing in appeal stages. As a result, it is difficult to accurately estimate the
impact on our business from these tariff actions or similar actions. However, assuming no further offsets from price increases, sourcing changes, or

Table of Contents

other changes to trade policy and regulatory rulings, all of which are currently under review, the estimated gross profit exposure from the Section 301 tariffs is approximately $2.4 million
in fiscal year 2024.

If the tariffs continue or increase, we may be required to raise our prices, which may result in the loss of customers and harm our operating performance. Alternatively, we may

seek to shift production outside of China or otherwise change our sourcing strategy for these products, resulting in significant costs and disruption to our operations. Even if the U.S.
further modifies these tariffs, it is always possible that new products we introduce could be impacted by the changes, or that our business will be impacted by retaliatory trade measures
taken by China or other countries in response to existing or future tariffs, causing us to raise prices or make changes to our operations, any of which could materially harm our revenue
or operating results.

The loss of our intellectual property rights may harm our business.

Our trademarks, patents and other intellectual property rights are important to our success and competitive position. We are devoted to the establishment and protection of our
trademarks, patents and other intellectual property rights in those countries where we believe it is important to our ability to sell our products. However, we cannot be certain that the
actions we have taken will result in enforceable rights, will be adequate to protect our products in every country where we may want to sell our products, will be adequate to prevent
imitation of our products by others or will be adequate to prevent others from seeking to prevent sales of our products as a violation of the trademarks, patents or other intellectual
property rights of others. Additionally, we rely on the patent, trademark and other intellectual property laws of the U.S. and other countries to protect our proprietary rights. Even if we
are successful in obtaining appropriate trademark, patent and other intellectual property rights, we may be unable to prevent third parties from using our intellectual property without our
authorization, particularly in those countries where the laws do not protect our proprietary rights as fully as in the U.S. Because we sell our products internationally and are dependent
on foreign manufacturing in China, we are significantly dependent on foreign countries to protect our intellectual property rights. The use of our intellectual property or similar
intellectual property by others could reduce or eliminate any competitive advantage we have developed, causing us to lose sales or otherwise harm our business. Further, if it became
necessary for us to resort to litigation to protect our intellectual property rights, any proceedings could be burdensome and costly and we may not prevail. The failure to obtain or
maintain trademark, patent or other intellectual property rights could materially harm our business.

Our products may infringe the intellectual property rights of others, which may cause us to incur unexpected costs or prevent us from selling certain of our products.

We cannot be certain that our products do not and will not infringe upon the intellectual property rights of others. The wearable technology space is rapidly developing with new
innovation, resulting in a number of domestic and international patent filings for new technology. As a result, wearable technology companies may be subject to an increasing number of
claims that their products infringe the intellectual property rights of competitors or non-practicing entities. We have been, are and may in the future be subject to legal proceedings
involving claims of alleged infringement of the intellectual property rights of third parties by us and our customers in connection with the marketing and sale of our products. Any such
claims, whether or not meritorious, could result in costly litigation and divert the efforts of our personnel. Moreover, should we be found liable for infringement, we may be required to
enter into agreements (if available on acceptable terms or at all) or to pay damages and cease making or selling certain products. Moreover, we may need to redesign or rename some of
our products to avoid future infringement liability. Any of the foregoing could cause us to incur significant costs and prevent us from manufacturing or selling certain of our products.

If an independent manufacturer or license partner of ours fails to use acceptable labor practices or otherwise comply with laws or suffers reputation harm, our business could
suffer.

While we have a code of conduct for our manufacturing partners, we have no control over the ultimate actions or labor practices of our independent manufacturers. The violation

of labor or other laws by one of our independent manufacturers, or by one of our license partners, or the divergence of an independent manufacturer’s or license partner’s labor
practices from those generally accepted as ethical in the U.S. or other countries in which the violation or divergence occurred, could interrupt or otherwise disrupt the shipment of
finished products to us or damage our reputation. In addition, certain of our license agreements are with named globally recognized fashion designers. Should one of these fashion
designers, or any or our licensor companies, conduct themselves inappropriately or make controversial statements, the underlying brand, and consequently our business under that
brand, could suffer. Any of these, in turn, could have a material adverse effect on our financial condition and results of operations. As a result, should one of our independent
manufacturers or licensors be found in violation of state or international laws or receive negative publicity, we could suffer financial or other unforeseen consequences.

Risks Relating to our Common Stock

Our failure to meet the continued listing requirements of Nasdaq could result in a delisting of our securities.

Table of Contents

If we fail to satisfy the continued listing requirements of Nasdaq, such as the corporate governance requirements or the minimum closing bid price requirement, Nasdaq may take

steps to delist our securities. Our Common Stock has recently closed below the $1.00 closing bid requirement for Nasdaq. Such a delisting would likely have a negative effect on the
price of our securities and would impair stockholder’s ability to sell or purchase our securities. In the event of a delisting, we can provide no assurance that any action taken by us to
restore compliance with listing requirements would allow our securities to become listed again, stabilize the market price or improve the liquidity of our securities, prevent our securities
from dropping below the Nasdaq minimum bid price requirement or prevent future non-compliance with Nasdaq’s listing requirements. Additionally, if our securities are not listed on, or
become delisted from, Nasdaq for any reason, and are quoted on the OTC Bulletin Board, an inter-dealer automated quotation system for equity securities that is not a national securities
exchange, the liquidity and price of our securities may be more limited than if we were quoted or listed on Nasdaq or another national securities exchange. Holders of our stock may be
unable to sell their securities unless a market can be established or sustained.

Our business could be negatively affected as a result of actions of activist stockholders, and such activism could impact the trading value of our securities.

Stockholders may, from time to time, engage in proxy solicitations or advance stockholder proposals, or otherwise attempt to effect changes and assert influence on our board of

directors and management. For example, in February 2024, an activist stockholder nominated four directors for election at our 2024 annual meeting of stockholders. Activist campaigns
that contest or conflict with our strategic direction or seek changes in the composition of our board of directors could have an adverse effect on our operating results and financial
condition. A proxy contest would require us to incur significant legal and advisory fees, proxy solicitation expenses and administrative and associated costs and require significant time
and attention by our board of directors and management, diverting their attention from the pursuit of our business strategy. Any perceived uncertainties as to our future direction and
control, our ability to execute on our strategy, or changes to the composition of our board of directors or senior management team arising from a proxy contest could lead to the
perception of a change in the direction of our business or instability which may result in the loss of potential business opportunities, make it more difficult to pursue our strategic
initiatives, or limit our ability to attract and retain qualified personnel, any of which could adversely affect our business and operating results. If individuals are ultimately elected to our
board of directors with a specific goal, it may adversely affect our ability to effectively implement our business strategy and create additional value for our stockholders. We may choose
to initiate, or may become subject to, litigation as a result of a proxy contest or matters arising from the proxy contest, which would serve as a further distraction to our board of directors
and management and would require us to incur significant additional costs. In addition, actions such as those described above could cause significant fluctuations in our stock price
based upon temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business.

We may continue to incur rapid and substantial increases or decreases in our stock price in the foreseeable future that may not coincide in timing with the disclosure of news or
developments by or affecting us. Accordingly, the market price of our common stock may fluctuate dramatically, and may decline rapidly, regardless of any developments in our
business.

Overall, there are various factors, many of which are beyond our control, that could negatively affect the market price of our common stock or result in fluctuations in the price or

trading volume of our common stock, including:

•
•

the impact of any future pandemic;
actual or anticipated variations in our annual or quarterly results of operations, including our earnings estimates and whether we meet market expectations with regard to our
earnings and liquidity;
our decision not to, or our current inability to, pay dividends or other distributions;
publication of research reports by analysts or others about us or the specialty retail industry, which may be unfavorable, inaccurate, inconsistent or not disseminated on a
regular basis;
changes in market valuations of similar companies;

•
• market reaction to any additional equity, debt or other securities that we may issue in the future, and which may or may not dilute the holdings of our existing stockholders;
•
•
•
•
•
•
•
•

additions or departures of key personnel;
actions by activist and institutional or significant stockholders;
short interest in our stock and the market response to such short interest;
a dramatic increase in the number of individual holders of our stock and their participation in social media platforms targeted at speculative investing;
speculation in the press or investment community about our company or industry;
financial results reported by certain of our significant public licensing partners;
strategic actions by us or our competitors, such as acquisitions or other investments;
legislative, administrative, regulatory or other actions affecting our business, our industry, including positions taken by the Internal Revenue Service ("IRS”);

Table of Contents

•
•
•
•

investigations, proceedings, or litigation that involve or affect us;
general market and economic conditions;
a downgrade in our debt ratings; and
the other risks identified herein.

Our organizational documents contain anti-takeover provisions that could discourage a proposal for a takeover.

Our certificate of incorporation and bylaws, as well as the General Corporation Law of the State of Delaware, contain provisions that may have the effect of discouraging a
proposal for a takeover. These include a provision in our certificate of incorporation authorizing the issuance of "blank check" preferred stock and provisions in our bylaws establishing
advance notice procedures with respect to certain stockholder proposals. Our bylaws may be amended by a vote of 80% of the Board of Directors, subject to repeal by a vote of 80% of
the stockholders. In addition, Delaware law limits the ability of a Delaware corporation to engage in certain business combinations with interested stockholders. Finally, Mr. Kartsotis
has the ability, by virtue of his stock ownership, to influence a vote regarding a change in control.

Failure to meet our financial guidance or achieve other forward-looking statements we have provided to the public could result in a decline in our stock price.

From time to time, we provide public guidance on our expected financial results or disclose other forward-looking information for future periods. We manage our business to

maximize our growth and profitability and not to achieve financial or operating targets for any particular reporting period. Although we believe that public guidance may provide
investors with a better understanding of our expectations for the future and is useful to our existing and potential stockholders, such guidance is subject to risks, uncertainties and
assumptions. Any such guidance or other forward-looking statements are predictions based on our then-existing expectations and projections about future events that we believe are
reasonable. Actual events or results may differ materially from our expectations, and as such, our actual results may not be in line with guidance we have provided. We are under no
duty to update any of our forward-looking statements to conform to actual results or to changes in our expectations, except as required by federal securities laws. If our financial results
for a particular period do not meet our guidance or the expectations of investors, or if we reduce our guidance for future periods, the market price of our common stock may decline and
stockholders could be adversely affected. Investors who rely on these predictions when making investment decisions with respect to our securities do so at their own risk. In addition,
our stock price may also decline if we fail to meet securities research analysts' projections. Similarly, if one or more of the analysts who covers us downgrades our stock or publishes
inaccurate or unfavorable research about our business, our stock price could decline.

General Risks

Any deterioration in the global economic environment, and any resulting declines in consumer confidence and spending, could have an adverse effect on our operating results and
financial condition.

Uncertainty in global markets, slowing economic growth, high levels of unemployment, a pandemic, inflation, rising interest rates and eroding consumer confidence can

negatively impact the level of consumer spending for discretionary items. This can affect our business as it is dependent on consumer demand for our products. Global economic
conditions remain uncertain, and the possibility remains that domestic or global economies, or certain industry sectors of those economies that are key to our sales, may slow or
deteriorate, which could result in a corresponding decrease in demand for our products and negatively impact our results of operations and financial condition.

The effects of economic cycles, terrorism, acts of war and retail industry conditions may adversely affect our business.

Our business is subject to economic cycles and retail industry conditions. Purchases of discretionary fashion accessories, such as our watches, jewelry, handbags, sunglasses

and other products, tend to decline during recessionary periods when disposable income is low and consumers are hesitant to use available credit. In addition, acts of terrorism, acts of
war and military action both in the U.S. and abroad can have a significant effect on economic conditions and may negatively affect our ability to procure our products from
manufacturers for sale to our customers. Any significant declines in general economic conditions, public safety concerns or uncertainties regarding future economic prospects that
affect consumer spending habits could have a material adverse effect on consumer purchases of our products.

Risks associated with foreign government regulations and U.S. trade policy may affect our foreign operations and sourcing.

Our businesses are subject to risks generally associated with doing business abroad, such as foreign governmental regulation in the countries in which our manufacturing

sources are located, primarily China. While we have not experienced any material issues with foreign governmental regulations that would impact our arrangements with our foreign
manufacturing sources, we believe that this issue is of particular concern with regard to China due to the less mature nature of the Chinese

Table of Contents

market economy, the historical involvement of the Chinese government in the industry and recent trade tensions between China and the United States. If regulations or other factors
were to render the conduct of business in a particular country undesirable or impracticable, or if our current foreign manufacturing sources were for any other reason to cease doing
business with us, such a development could have a material adverse effect on our product sales and on our supply, manufacturing and distribution channels.

Our business is also subject to risks associated with U.S. and foreign legislation and regulations relating to imports, including quotas, duties, tariffs or taxes, and other charges or
restrictions on imports, which could adversely affect our operations and our ability to import products at current or increased levels. Substantially all of our import operations are subject
to customs duties imposed by the governments where our production facilities are located on imported products, including raw materials. We cannot predict whether additional U.S. and
foreign customs quotas, duties (including antidumping or countervailing duties), tariffs, taxes or other charges or restrictions, requirements as to whether raw materials must be
purchased, additional workplace regulations or other restrictions on our imports will be imposed upon the importation of our products in the future or adversely modified, or what effect
such actions would have on our costs of operations. For example, our products imported for distribution in the United States are subject to U.S. customs duties, and in the ordinary
course of our business, we may from time to time be subject to claims by U.S. Customs and Border Protection for duties and other charges. Factors that may influence the modification or
imposition of these restrictions may include determinations by the Office of the U.S. Trade Representative that a country has denied adequate intellectual property rights or fair and
equitable market access to U.S. firms, trade disputes between the United States and another country that leads to withdrawal of "most favored nation” status for that country and
economic and political changes within a country that are viewed unfavorably by the U.S. government, resulting in trade policy changes towards that country. Future quotas, duties, or
tariffs may have a material adverse effect on our business, financial condition and results of operations. Future trade agreements could also provide our competitors with an advantage
over us, or increase our costs, either of which could have a material adverse effect on our business, financial condition and results of operations.

There are inherent limitations in all control systems, and misstatements due to error or fraud may occur and not be detected.

We are subject to the ongoing internal control provisions of Section 404 of the Sarbanes-Oxley Act of 2002. These provisions provide for the identification of material weaknesses

in internal control over financial reporting, which is a process to provide reasonable assurance regarding the reliability of financial reporting for external purposes in accordance with
accounting principles generally accepted in the United States of America. Our management, including our CEO and Chief Financial Officer ("CFO"), does not expect that our internal
controls and disclosure controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance
that the objectives of the control system are met. In addition, the design of a control system must reflect the fact that there are resource constraints and the benefit of controls must be
relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if
any, in our Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of
simple errors or mistakes. Further, controls can be circumvented by individual acts, by collusion of two or more persons, or by management override of the controls. The design of any
system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its
stated goals under all potential future conditions. Over time, a control may be inadequate because of changes in conditions, such as growth of the Company or increased transaction
volume, or the degree of compliance with the policies or procedures may deteriorate. Because of inherent limitations in a cost-effective control system, misstatements due to error or
fraud may occur and not be detected.

In addition, discovery and disclosure of a material weakness, by definition, could have a material adverse impact on our financial statements. Such an occurrence could discourage

certain customers or suppliers from doing business with us, result in higher borrowing costs and affect how our stock trades. This could in turn negatively affect our ability to access
public debt or equity markets for capital.

Item 1B. Unresolved Staff Comments

None.

Table of Contents

Item 1C. Cybersecurity

Risk Management and Strategy

We have implemented and maintain various information security processes designed to identify, assess and manage material risks from cybersecurity threats to our critical computer

networks, third party hosted services, communications systems, hardware and software, and our critical data, including intellectual property and data related to our customers,
consumers and employees. Our cybersecurity risk management program leverages the National Institute of Standards and Technology Cyber Security Framework, which organizes
cybersecurity risks into five categories: identify, protect, detect, respond and recover. Our cyber security team regularly reviews enterprise risk management-level cybersecurity risks,
and key cybersecurity risks are incorporated into our Enterprise Risk Management program. In addition, we have a set of Company-wide policies and procedures concerning
cybersecurity matters, which include cyber security guidelines as well as other policies that directly or indirectly relate to cybersecurity, such as policies related to encryption standards,
antivirus protection, remote access, multi factor authentication, confidential information and the use of the Internet, social media, email and wireless devices.

Our Chief Information Security Officer ("CISO"), our information security team, and third-party service providers help identify, assess, and manage our cybersecurity threats and
risks, including through the use of our cybersecurity risk assessment program. Our CISO along with this team, as applicable, identifies and assesses risks from cybersecurity threats by
monitoring and evaluating our threat environment and our risk profile using various methods, including automated and manual tools, third-party threat feeds, internal audits, access
control assessments, and evaluating threats reported to us by various third-party enterprise threat reporting services.

As part of our cybersecurity program, we regularly test our cyber defenses by performing simulations and drills at a technical level with third-party experts, internal user
susceptibility testing and reviewing our operational policies and procedures. Our cyber security team monitors alerts and meets to discuss threat levels, risk ranking, trends and
remediation. Further, we conduct regular external penetration tests, red team testing and maturity testing to assess our processes and procedures and the threat landscape. We conduct
security assessments on additions and changes to our systems and applications including third-party service providers. In addition, our Audit Services group conducts periodic
reviews of cyber security controls, procedures, and applications and monitors remediation activities. Our assessment of risks associated with use of third-party providers is part of our
overall cybersecurity risk management framework.

We face a number of cybersecurity risks in connection with our business. Although such risks have not materially affected us, including our business strategy, results of

operations or financial condition, to date, we have, from time to time, experienced threats to and breaches of our data and systems, including malware and computer virus attacks. For a
description of the risks from cybersecurity threats that may materially affect us and how they may do so, see our risk factors under Part 1. Item 1A. Risk Factors in this Annual Report on
Form 10-K, including "Any material disruption of our information systems could disrupt our business and reduce our sales" and "A data security or privacy breach could damage our
reputation, harm our customer relationships, expose us to litigation or government actions, and result in a material adverse effect to our business, financial condition and results of
operations.”

Governance

Our Board of Directors addresses our cybersecurity risk management as part of its general oversight function and has delegated to our Audit Committee responsibility for

overseeing our cybersecurity risk management processes, including oversight and mitigation of risks from cybersecurity threats.

The CISO is responsible for developing and implementing our information security program and reporting on cybersecurity matters to the Audit Committee of the Board. Our CISO
has two decades of experience leading cyber security oversight with ten years in a multinational company environment. Members of the security team have cybersecurity experience and
certifications, such as the Certified Information Systems Security Professional certification. We regularly conduct training and/or simulations to ensure employees are aware of current
cyber threats. Additionally, tabletop exercises at a management level incorporate external advisors. All employees are required to complete cybersecurity training annually. We also
require employees in certain roles to complete additional role-based, specialized cybersecurity training.

Our cybersecurity incident response process is designed to escalate certain cybersecurity incidents to members of management depending on the circumstances including our
CISO, our Chief Financial Officer and our General Counsel. In addition, our incident response process includes reporting to the Audit Committee for certain cybersecurity incidents.

The Audit Committee receives reports quarterly from our CISO concerning our significant cybersecurity threats and risk and the processes we have implemented to address them.

Our Board of Directors also receives periodic reports from our CISO or Audit Committee regarding our overall cybersecurity program.

Table of Contents

Item 2. Properties

Company Facilities

As of the end of fiscal year 2023, we owned or leased the following material facilities in connection with our U.S. and international operations:

Location

Use

Eggstätt, Germany
Richardson, Texas
Dallas, Texas
Hong Kong
Basel, Switzerland
Bangalore, India
Nalagarh, India
Hong Kong

Retail Store Facilities

Office, warehouse and distribution
Corporate headquarters
Office, warehouse and distribution
Warehouse and distribution
Europe headquarters
Office
Factory
Asia headquarters

Approximate
Square
Footage

Owned / Leased

383,000 Owned
383,000 Lease expiring in 2036
518,000 Lease expiring in 2026
171,000 Lease expiring in 2027
115,000 Lease expiring in 2036
58,000 Lease expiring in 2025
40,000 Lease expiring in 2025
40,000 Lease expiring in 2026

As of the end of fiscal year 2023, we had 299 lease agreements for retail space for the sale of our products. The leases, including renewal options, expire at various times through

2036. The leases provide for minimum annual rentals and, in certain cases, for the payment of additional rent when sales exceed specified net sales amounts. We are also generally
required to pay our pro rata share of common area maintenance costs, real estate taxes, insurance, maintenance expenses and utilities.

We believe that our material existing facilities are well maintained, in good operating condition, and are adequate for our needs.

Item 3. Legal Proceedings

Information in response to this item is provided in "Part II - Item 8. Note 14, Commitments and Contingencies” and is incorporated by reference into Part I of this Annual Report.

Item 4. Mine Safety Disclosures

Not applicable.

Table of Contents

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

General

Our common stock is listed on the Nasdaq Global Select Market under the symbol "FOSL."

PART II

As of March 1, 2024, there were 62 holders of record of our shares of common stock (including nominee holders such as banks and brokerage firms who hold shares for beneficial

owners), although we believe that the number of beneficial owners is much higher.

We have not declared or paid any dividends since our formation and currently do not intend to pay dividends for the foreseeable future. Our current business plan is to retain any

future earnings to finance the growth of our business.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

In August 2010, our Board of Directors approved a common stock repurchase program pursuant to which up to $30 million could be used to repurchase outstanding shares of our

common stock. The $30 million repurchase program has no termination date. As of December 30, 2023, the Company had $20.0 million of repurchase authorizations remaining under its
repurchase program.

Period
February 27, 2022 - April 2, 2022………
Total………………………………..........

Total Number
of Shares Purchased
989,186
989,186

Average Price

Paid per Share
$

10.11

Total Number of Shares

Purchased as Part of
Publically Announced
Programs

989,186
989,186

Approximate Dollar Value of
Shares that May Yet Be Purchased
Under the Program

19,999,982

During fiscal 2022, 1.0 million shares of our common stock were repurchased at a cost of $10.0 million. There were no repurchases of common stock during fiscal years 2023 and

2021.

Item 6. [Reserved]

Table of Contents

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with Item 1. Business, Item 1A. Risk Factors and our consolidated financial statements and accompanying notes included
elsewhere in this Annual Report on Form 10-K. Our actual results of operations may differ materially from those discussed in forward-looking statements as a result of various
factors, including but not limited to those included in Item 1A. Risk Factors and other portions of this Annual Report on Form 10-K.

Overview

We are a global design, marketing and distribution company that specializes in consumer fashion accessories. Our principal offerings include an extensive line of men's and
women's fashion watches and jewelry, handbags, small leather goods, belts, and sunglasses. In the watch and jewelry product categories, we have a diverse portfolio of globally
recognized owned and licensed brand names under which our products are marketed.

Our products are distributed globally through various distribution channels including wholesale in countries where we have a physical presence, direct to the consumer through

our retail stores and commercial websites and through third-party distributors in countries where we do not maintain a physical presence. Our products are offered at varying price
points to meet the needs of our customers, whether they are value-conscious or luxury oriented. Based on our range of accessory products, brands, distribution channels and price
points, we are able to target style-conscious consumers across a wide age spectrum on a global basis.

Known or Anticipated Trends

Based on our recent operating results and current perspectives on our operating environment, we anticipate the following trends will continue to impact our operating results:

Economic Environment Impacting Consumer Spending Ability and Preferences: Macroeconomic factors, including inflation and increased interest rates, impacted customer
behavior in fiscal year 2023. In addition, our wholesale customers have shown caution in placing advance orders for merchandise. We expect interest rates to remain close to recent
highs, along with continued economic uncertainty. While the impact of these macroeconomic factors are difficult to quantify, we expect continued negative impacts on consumer
confidence and consumer demand in fiscal year 2024 in many of our major markets.

Inventory Levels: In fiscal year 2023, a slowing of consumer demand in our core categories, in part due to macro-economic factors such as higher inflation, resulted in excess
inventory with many of our wholesale customers. With higher marketplace inventories and a worsening economic environment, retailers placed increased emphasis on rationalizing their
inventory needs. With the challenging global macro environment, we expect many customers to continue to manage to leaner inventory levels than the prior year across our key
categories. We will also continue to proactively manage our inventory purchases to mitigate our cash flow and inventory risks.

World Conflicts: We continuously monitor the direct and indirect impacts from the military conflicts between Russia and Ukraine and in the Middle East. Our operations in Russia

and Israel consist of sales through third-party distributors, and sales to these distributors are currently on hold. Our sales in Russia and Israel are not material to our financial results.
We have no other operations, including supply chain, in Israel, Palestine, Russia or Ukraine. However, the continuation of the current military conflicts and/or an escalation of the
conflicts beyond their current scope may continue to weaken the global economy and could result in additional inflationary pressures and supply chain constraints.

Supply Chain: Our business is subject to the risks inherent in global sourcing supply. We rely on domestic and foreign suppliers to provide us with merchandise in a timely

manner and at favorable prices. Certain key components in our products come from limited sources of supply, which exposes us to potential supply shortages that could disrupt the
manufacture and sale of our products. Any interruption or delay in the supply of key components could significantly harm our ability to meet scheduled product deliveries to our
customers and cause us to lose sales.

Among our foreign suppliers, China is the source of a substantial majority of our imports. A material increase in the cost of our products or transportation without any offsetting

price increases or a disruption in the flow of finished goods from China may significantly increase our costs.

Data: We depend on information technology systems, the Internet and computer networks for a substantial portion of our retail and e-commerce businesses, including credit card

transaction authorization and processing. We also receive and store personal information about our customers and employees, the protection of which is critical to us. In the normal
course of our business, we collect, retain, and transmit certain sensitive and confidential customer information, including credit card information, over public networks. Despite the
security measures we currently have in place, our facilities and systems and

Table of Contents

those of our third party service providers have been, and will continue to be, vulnerable to theft of physical information, security breaches, hacking attempts, computer viruses and
malware, ransomware, phishing, lost data and programming and/or human errors. To date, none of these risks, intrusions, attacks or human error have resulted in any material liability to
us. While we carry insurance policies that would provide liability coverage for certain of these matters, if we experience a significant security incident, we could be subject to liability or
other damages that exceed our insurance coverage. In addition, we cannot be certain that such insurance policies will continue to be available to us on economically reasonable terms, or
at all, or that any insurer will not deny coverage as to any future claim.

Business Strategies and Outlook: Our goal is to drive shareholder value and make a positive impact on our people, planet and communities. We continue to operate in a very

challenging business environment for our product offerings. In early 2023, we initiated Our Transform and Grow plan ("TAG”), which was designed to reduce operating expenses,
improve operating margins and advance our path to profitable growth. This initial phase of TAG was designed to deliver $100 million in annualized cost savings by the end of fiscal year
2024.

In August 2023, as a result of a more comprehensive review of our business operations, we expanded the scope of TAG. Our goal in expanding TAG is to put additional emphasis

on a broader set of initiatives aimed at restructuring or optimizing our operations, exit or minimize certain product offerings, brands and distribution, strengthen gross margins and
improve our working capital efficiency.

Under the expanded plan, the Company increased the estimated economic benefits from the original $100 million in annualized cost savings target to be achieved by the end of
fiscal 2024 to $300 million in annualized operating income benefits to be achieved by the end of fiscal 2025. Under the expanded program, we accelerated organizational restructuring,
began exiting the smartwatch category, and reduced sku complexity in 2023. In 2024, we will continue to execute on all facets of TAG, including capturing benefits in our sourcing and
operating costs. In connection with TAG, the Company expects to incur charges of approximately $100 million to $120 million over the duration of TAG and estimates approximately $35
million of charges in fiscal year 2024.

The Company has announced a strategic review of its current business model and capital structure. This includes efforts to optimize its business model with additional changes to
its operations as well as further structural cost reductions under consideration. The Company expects this effort will further expand on TAG and could include additional debt and equity
financing options, including monetization of various assets.

As we execute against the entire scope of TAG, we have an opportunity to improve our operating fundamentals, right size our cost structure, and return to sales growth. Aided by

these measures, our long-term goal is to achieve adjusted gross margins above 50% and adjusted operating margins of approximately 10%.

Operating Segments

We operate our business in three segments which are divided into geographies. Net sales for each geographic segment are based on the location of the selling entity and each

reportable segment provides similar products and services.

Americas: The Americas segment is comprised of sales from our operations in the United States, Canada and Latin America. Sales are generated through diversified distribution

channels that include wholesalers, distributors, and direct to consumer. Within each channel, we sell our products through a variety of physical point of sale, distributors and e-
commerce channels. In the direct to consumer channel, we had 143 Company-owned stores as of the end of fiscal 2023 and an extensive collection of products available through our
owned websites. As of the end of fiscal 2023, net sales in the Americas segment accounted for 45.4% of our consolidated revenue.

Europe: The Europe segment is comprised of sales to customers based in European countries, the Middle East and Africa. Sales are generated through diversified distribution

channels that include wholesalers, distributors and direct to consumer. Within each channel, we sell our products through a variety of physical points of sale, distributors, and e-
commerce channels. In the direct to consumer channel, we had 86 Company-owned stores as of the end of fiscal 2023 and an extensive collection of products available through our
owned websites. As of the end of fiscal 2023, net sales in the Europe segment accounted for 31.0% of our consolidated revenue.

Asia: The Asia segment is comprised of sales to customers based in Australia, China (including Hong Kong, Macau, and Taiwan), India, Indonesia, Japan, Malaysia, New
Zealand, Singapore, South Korea and Thailand. Sales are generated through diversified distribution channels that include wholesalers, distributors and direct to consumer. Within each
channel, we sell our products through a variety of physical points of sale, distributors, and e-commerce channels. In the direct to consumer channel,

Table of Contents

we had 73 Company-owned stores as of the end of fiscal 2023 and an extensive collection of products available through our owned websites. As of the end of fiscal 2023, net sales in the
Asia segment accounted for 23.2% of our consolidated revenue.

Critical Accounting Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires us to make estimates and assumptions

that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported
amounts of revenues and expenses during the reporting period. On an ongoing basis, we evaluate our estimates and judgments, including those related to product returns, bad debt,
inventories, long-lived asset impairment, impairment of trade names, income taxes, warranty costs and litigation liabilities. We base our estimates and judgments on historical experience
and on various other factors that we believe to be reasonable under the circumstances. Our estimates form the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical
accounting subjects require the most significant estimates and judgments.

Product Returns. We monitor customer returns and maintain a provision for estimated returns based upon historical experience, current information and any specific issues
identified. While returns have historically been within our expectations and the provisions established, future return rates may differ from those experienced in the past. In the event that
our products are performing poorly in the retail market and/or we experience product damages or defects at a rate significantly higher than our historical rate, the resulting returns could
have an adverse impact on the operating results for the period or periods in which such returns occur. If our allowance for product returns were to change by 10%, the impact, excluding
taxes, would have been an approximate $1.6 million change to net income (loss).

Inventory. We account for estimated obsolescence or unmarketable inventory equal to the difference between the average cost of inventory and the estimated net realizable
value based upon assumptions about forecasted sales demand, market conditions and available liquidation channels. Valuation of existing smartwatch inventory can be negatively
impacted by the emergence of newer generation product. If actual future demand or market conditions are less favorable than those projected by management, or if liquidation channels
are not readily available, additional inventory valuation reductions may be required. We assess our off-price sales on an ongoing basis and update our estimates accordingly. For every
1% of additional inventory valuation reductions as of fiscal year end 2023, we would have recorded an additional cost of sales of approximately $0.2 million.

Property, Plant and Equipment and Lease Impairment. We test for asset impairment of property, plant and equipment and lease assets whenever events or conditions indicate

that the carrying value of an asset might not be recoverable based on expected undiscounted cash flows related to the asset. In evaluating long-lived assets for recoverability, we
calculate fair value using our best estimate of future cash flows expected to result from the use of the asset and its eventual disposition. When undiscounted cash flows estimated to be
generated through the operations of our Company-owned retail stores are less than the carrying value of the underlying assets, the assets are impaired. If it is determined that assets are
impaired, an impairment loss is recognized for the amount that the asset's book value exceeds its fair value. Should actual results or market conditions differ from those anticipated,
additional losses may be recorded. We recorded impairment losses in long-lived asset impairments of $1.7 million, $2.1 million and $7.5 million in fiscal years 2023, 2022 and 2021,
respectively, related to lease assets. We recorded impairment losses in long-lived asset impairments of $0.4 million, $0.2 million and $1.7 million in fiscal years 2023, 2022 and 2021,
respectively, related to property, plant and equipment. We recorded impairment losses in restructuring charges of $0.7 million in fiscal year 2021 related to lease assets. We recorded
impairment losses in restructuring charges of $0.1 million and $0.2 million in fiscal years 2022 and 2021, respectively, related to property, plant and equipment. In fiscal year 2023, an
increase of 100 basis points to the discount rate would not have resulted in an increase to property, plant and equipment and lease impairment expense. A 10% decrease in future
expected cash flows would have increased impairment expense by $1.1 million.

Income Taxes. We record valuation allowances against our deferred tax assets, when necessary, in accordance with ASC 740, Income Taxes ("ASC 740"). Realization of deferred
tax assets is dependent on future taxable earnings and is therefore uncertain. At least quarterly, we assess the likelihood that our deferred tax asset balance will be recovered from future
taxable income. To the extent we believe that recovery is not likely, we establish a valuation allowance against our deferred tax asset, increasing our income tax expense in the period
such determination is made. The valuation allowance for fiscal years 2023, 2022 and 2021 was $192.6 million, $143.3 million and $123.0 million, respectively.

Our continuing practice is to recognize interest and penalties related to income tax matters in income tax expense. We accrue an amount for our estimate of additional income tax
liability which we believe we are more likely than not to incur as a result of the ultimate resolution of tax audits ("uncertain tax positions"). We review and update the estimates used in
the accrual

Table of Contents

for uncertain tax positions as more definitive information becomes available from taxing authorities upon completion of tax audits, expiration of statutes of limitation, or occurrence of
other events. The results of operations and financial position for future periods could be impacted by changes in assumptions or resolutions of tax audits.

The GILTI provisions of the Tax Cuts and Jobs Act of 2017 (the "TCJ Act”) requiring the inclusion of certain foreign earnings in U.S. taxable income will continue to have an
adverse impact on our effective tax rate. The GILTI impact will be accounted for as incurred under the period cost method. In addition, our valuation allowance analysis is affected by
various aspects of the TCJ Act, including the limitation on the deductibility of interest expense and the impact of the GILTI.

The Organization for Economic Cooperation and Development ("OECD") and over 140 countries have agreed to enact a two-pillar solution to reform the international tax rules to

address the challenges arising from the globalization and digitalization of the economy. "The Pillar Two Global Anti-Base Erosion (GloBE) Rules" provide a coordinated system to
ensure that multinational enterprises with revenues above 750 million euro pay a minimum effective tax rate of 15% tax on the income arising in each of the jurisdictions in which they
operate. The technical aspects of the calculation are still being developed. Implementation of these rules is scheduled for 2024, at which point we can determine the impact on our income
tax expense and effective tax rate.

Key Measures of Financial Performance and Key Non-GAAP Financial Measures

Constant Currency Financial Information: As a multinational enterprise, we are exposed to changes in foreign currency exchange rates. The translation of the operations of our
foreign-based entities from their local currencies into U.S. dollars is sensitive to changes in foreign currency exchange rates and can have a significant impact on our reported financial
results. In general, our overall financial results are affected positively by a weaker U.S. dollar and are affected negatively by a stronger U.S. dollar as compared to the foreign currencies
in which we conduct our business.

As a result, in addition to presenting financial measures in accordance with accounting principles generally accepted in the United States of America ("GAAP”), our discussion
contains references to constant currency financial information, which is a non-GAAP financial measure. To calculate net sales on a constant currency basis, net sales for the current
fiscal year for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the average rates during the comparable period of the prior fiscal year. We
present constant currency information to provide investors with a basis to evaluate how our underlying business performed excluding the effects of foreign currency exchange rate
fluctuations. The constant currency financial information presented herein should not be considered a substitute for, or superior to, the measures of financial performance prepared in
accordance with GAAP. Reconciliations between constant currency financial information and the most directly comparable GAAP measure are included where applicable.

Adjusted EBITDA, Adjusted Operating Income (Loss), Adjusted Net Income (Loss) and Adjusted Earnings per Share: Adjusted EBITDA, Adjusted operating income (loss),
Adjusted net income (loss) and Adjusted earnings (loss) per share are non-GAAP financial measures. We define Adjusted EBITDA as our income (loss) before income taxes, plus
interest expense, amortization and depreciation, impairment expense, other non-cash charges, stock-based compensation expense, restructuring cost of sales and expense and
unamortized debt issuance costs included in loss on extinguishment of debt minus interest income. We define Adjusted operating income (loss) as operating income (loss) before
impairment expense and restructuring cost of sales and expense. We define Adjusted net income (loss) and Adjusted earnings (loss) per share as net income attributable to Fossil
Group, Inc. and diluted earnings per share, respectively, before impairment expense, restructuring cost of sales and expense and unamortized debt issuance costs included in loss on
extinguishment of debt. We have included Adjusted EBITDA, Adjusted operating income (loss), Adjusted net income (loss) and Adjusted earnings (loss) per share herein because they
are widely used by investors for valuation and for comparing our financial performance with the performance of our competitors. We also use these non-GAAP financial measures to
monitor and compare the financial performance of our operations. Our presentation of Adjusted EBITDA, Adjusted operating income (loss), Adjusted net income (loss) and Adjusted
earnings (loss) per share may not be comparable to similarly titled measures other companies report. Adjusted EBITDA, Adjusted operating income (loss), Adjusted net income (loss)
and Adjusted earnings (loss) per share are not intended to be used as alternatives to any measure of our performance in accordance with GAAP.

Comparable Retail Sales: Both stores and e-commerce sites are included in comparable retail sales in the thirteenth month of operation. Stores that experience a gross square
footage increase of 10% or more due to an expansion and/or relocation are removed from the comparable store sales base, but are included in total sales. These stores are returned to the
comparable store sales base in the thirteenth month following the expansion and/or relocation. Comparable retail sales exclude the effects of foreign currency fluctuations.

Store Counts: While macro-economic factors have shifted sales away from traditional brick and mortar stores towards digital channels, store counts continue to provide a key

metric for management. Both the size and quality of our store fleet have

Table of Contents

a direct impact on our sales and profitability. Over time, we have made progress right-sizing our fleet of stores by focusing on closing our least profitable stores.

Total Liquidity: We define total liquidity as cash and cash equivalents plus available borrowings on our revolving credit facility. We monitor and forecast total liquidity to ensure

we can meet our financial obligations.

Components of Results of Operations

Revenues from sales of our products, including those that are subject to inventory consignment arrangements, are recognized when control of the product is transferred to the
customer and in an amount that reflects the consideration we expect to be entitled in exchange for the product. We accept limited returns from customers. We continually monitor returns
and maintain a provision for estimated returns based upon historical experience and any specific issues identified. Our product returns provision is accounted for as a reduction to
revenue and cost of sales and an increase to customer liabilities and other current assets to the extent the returned product is resalable.

Cost of Sales includes raw material costs, assembly labor, assembly overhead including depreciation expense, assembly warehousing costs and shipping and handling costs

related to the movement of finished goods from assembly locations to sales distribution centers and from sales distribution centers to customer locations. Additionally, cost of sales
includes customs duties, product packaging cost, royalty cost associated with sales of licensed products, the cost of molding and tooling, inventory shrinkage and damages and
restructuring charges.

Gross Profit and gross profit margin are influenced by our diversified business model that includes, but is not limited to: (i) product categories that we distribute; (ii) the multiple
brands, including both owned and licensed, we offer within several product categories; (iii) the geographical presence of our businesses; and (iv) the different distribution channels we
sell to or through.

The attributes of this diversified business model produce varying ranges of gross profit margin. Generally, on a historical basis, our fashion branded traditional watch and jewelry

offerings produce higher gross profit margins than our smartwatches and leather goods offerings. In addition, in most product categories that we offer, brands with higher retail price
points generally produce higher gross profit margins compared to those of lower retail priced brands. However, smartwatches carry relatively lower margins than our other major product
categories. Gross profit margins related to sales in our Europe and Asia businesses are historically higher than our Americas business, primarily due to the following factors: (i)
premiums charged in comparison to retail prices on products sold in the U.S.; (ii) the product sales mix in our international businesses, in comparison to our Americas business, is
comprised more predominantly of watches and jewelry that generally produce higher gross profit margins than leather goods; and (iii) the watch sales mix in our Europe and Asia
businesses, in comparison to our Americas business, are comprised more predominantly of higher priced licensed brands.

Operating Expenses include selling, general and administrative ("SG&A"), long-lived asset impairments and restructuring charges. SG&A expenses include selling and distribution

expenses primarily consisting of sales and distribution labor costs, sales distribution center and warehouse facility costs, depreciation expense related to sales distribution and
warehouse facilities, the four-wall operating costs of our retail stores, point-of-sale expenses, advertising expenses and art, design and product development labor costs. SG&A also
includes general and administrative expenses primarily consisting of administrative support labor and support costs such as treasury, legal, information services, accounting, internal
audit, human resources, executive management costs and costs associated with stock-based compensation. Restructuring charges include costs to reorganize, refine and optimize our
Company’s infrastructure and store closures under our TAG and New World Fossil initiatives.

Table of Contents

Results of Operations

Fiscal Year 2023 Compared to Fiscal Year 2022

Consolidated Net Sales. Net sales decreased $270.0 million or 16.0% (15.9% in constant currency) for fiscal year 2023, as compared to fiscal year 2022. Sales declined in all three
regions. Corporate revenue decreased due to sales declines in revenue recognized over time, based on the timing of progress in completing performance obligations under a licensing
agreement. The sales decrease was largely driven by declines in our wholesale channel, and to a lesser extent, declines in smartwatch sales and our store rationalization initiatives.
Wholesale sales declined 21.2% (21.4% in constant currency), reflecting lower purchases by wholesale accounts due to tighter management of inventories and lower end-consumer
demand. Direct to consumer sales decreased 7.5% (6.9% in constant currency), mainly due to a smaller store base. We have reduced our store footprint by 40 stores (12%), since the end
of the fiscal year 2022. Comparable retail sales decreased 2% during fiscal year 2023, compared to fiscal year 2022 with growth in e-commerce more than offset by declines in stores. From
a category perspective, traditional watch sales decreased 12.4% (12.2% in constant currency). Sales of smartwatches declined 46.6% (46.5% in constant currency) as we have shifted our
focus away from the category as part of our product rationalization initiatives. Leathers declined 11.3% (10.7% in constant currency) and jewelry declined 14.7% (15.4% in constant
currency). From a brand perspective, sales decreased throughout most of our brand portfolio, with the most predominant declines in MICHAEL KORS, FOSSIL and EMPORIO
ARMANI.

The following table sets forth consolidated net sales by segment and the changes in net sales by segment on both a reported and constant currency basis from period to period

(dollars in millions):

Fiscal Year

2023

2022

Growth (Decline)

Amounts

Percentage
of Total

Amounts

Percentage
of Total

Dollars

Percentage as
Reported

640.8
437.4
328.2
6.0
1,412.4

45.4 % $
31.0
23.2
0.4

100.0 % $

744.0
541.3
377.6
19.5
1,682.4

44.2 % $
32.2
22.4
1.2

100.0 % $

(103.2)
(103.9)
(49.4)
(13.5)
(270.0)

(13.9) %
(19.2)
(13.1)
(69.2)
(16.0) %

Percentage
Constant Currency
(14.2) %
(20.8)
(9.6)
(69.2)
(15.9) %

Americas
Europe
Asia
Corporate
Total net sales

Table of Contents

The following table sets forth product net sales and the changes in product net sales on both a reported and constant currency basis from period to period (dollars in millions):

Fiscal Year

2023

2022

Growth (Decline)

Amounts

Percentage
of Total

Amounts

Percentage
of Total

Dollars

Percentage as
Reported

Percentage
Constant Currency

1,015.1
80.9
1,096.0
158.4
131.4
26.6
1,412.4

71.9 % $
5.7
77.6 % $
11.2
9.3
1.9

100.0 % $

1,158.9
151.6
1,310.5
178.5
154.1
39.3
1,682.4

68.9 % $
9.0
77.9 % $
10.6
9.2
2.3

100.0 % $

(143.8)
(70.7)
(214.5)
(20.1)
(22.7)
(12.7)
(270.0)

(12.4) %
(46.6)
(16.4) %
(11.3)
(14.7)
(32.3)
(16.0) %

(12.2) %
(46.5)
(16.2) %
(10.7)
(15.4)
(32.6)
(15.9) %

Watches:
Traditional watches
Smartwatches
Total watches
Leathers
Jewelry
Other
Total net sales

The following table sets forth the number of stores on the dates indicated below:

Americas
Europe
Asia
Total stores

December 31,

2022

Opened

Closed

December 30,

2023

151
111
80
342

2
2
1
5

10
27
8
45

143
86
73
302

Americas Net Sales. Americas net sales decreased $103.2 million or 13.9% (14.2% in constant currency) for fiscal year 2023 as compared to fiscal year 2022. Sales decreased in
almost all brands with the biggest decreases in MICHAEL KORS and FOSSIL. Sales decreases in our wholesale and stores channel were partially offset by growth in our owned e-
commerce sales. Comparable retail sales declined slightly during fiscal year 2023, with growth in e-commerce more than offset by declines in stores.

The following table sets forth product net sales and the changes in product net sales on both a reported and constant currency basis from period to period for the Americas

segment (dollars in millions):

Net Sales
Fiscal Year

Growth (Decline)

2023

2022

Dollars

Percentage as
Reported

Percentage
Constant Currency

456.7 $
37.7
494.4 $
104.8
33.4
8.2
640.8 $

519.0
65.6
584.6
115.3
35.7
8.4
744.0

$(62.3)
(27.9)
$(90.2)
(10.5)
(2.3)
(0.2)
$(103.2)

(12.0) %
(42.5)
(15.4) %
(9.1)
(6.4)
(2.4)
(13.9) %

(12.5) %
(42.8)
(15.9) %
(8.7)
(6.2)
(1.2)
(14.2) %

Watches:
Traditional watches
Smartwatches
Total watches
Leathers
Jewelry
Other
Total

Europe Net Sales. During fiscal year 2023, Europe net sales decreased $103.9 million or 19.2% (20.8% in constant currency) in comparison to fiscal year 2022. The greatest sales

decreases were in the MICHAEL KORS and FOSSIL brands. Sales declined in our wholesale and stores channels, while owned e-commerce sales increased. Comparable retail sales
increased slightly during fiscal year 2023, with growth in store and owned e-commerce sales.

Table of Contents

The following table sets forth product net sales and the changes in product net sales on both a reported and constant currency basis from period to period for the Europe

segment (dollars in millions):

Net Sales
Fiscal Year

Growth (Decline)

2023

2022

Dollars

Percentage as
Reported

Percentage

Constant Currency

296.1
26.3
322.4
25.9
78.9
10.2
437.4

354.8
53.2
408.0
29.4
93.6
10.3
541.3

(58.7)
(26.9)
(85.6)
(3.5)
(14.7)
(0.1)
(103.9)

(16.5)
(50.6)
(21.0)
(11.9)
(15.7)
(1.0)
(19.2)

(18.0)
(51.9)
(22.5)
(13.6)
(17.8)
(2.9)
(20.8)

Watches:
Traditional

watches

Smartwatches
Total watches
Leathers
Jewelry
Other
Total

Asia Net Sales. In fiscal year 2023, Asia net sales decreased $49.4 million or 13.1% (9.6% in constant currency) in comparison to fiscal 2022. Sales decreased across the majority of

regions, most notably in greater China, while sales in India increased in constant currency. Sales declines were primarily in the EMPORIO ARMANI and FOSSIL brands. Comparable
retail sales decreased moderately during fiscal year 2023.

The following table sets forth product net sales and the changes in product net sales on both a reported and constant currency basis from period to period for the Asia segment

(dollars in millions):

Net Sales
Fiscal Year

Growth (Decline)

2023

2022

Dollars

Percentage as
Reported

Percentage

Constant Currency

260.3
17.0
277.3
27.8
19.1
4.0
328.2

281.6
32.7
314.3
33.8
24.8
4.7
377.6

(21.3)
(15.7)
(37.0)
(6.0)
(5.7)
(0.7)
(49.4)

(7.6)
(48.0)
(11.8)
(17.8)
(23.0)
(14.9)
(13.1)

(4.0)
(45.0)
(8.2)
(15.4)
(19.0)
(10.6)
(9.6)

Watches:
Traditional

watches

Smartwatches
Total watches
Leathers
Jewelry
Other
Total

Gross Profit. Gross profit of $679.6 million in fiscal year 2023 decreased $151.1 million, or 18.2%, in comparison to $830.7 million in fiscal year 2022, driven mainly by the decrease in
sales. The gross profit margin rate decreased to 48.1% in fiscal year 2023 compared to 49.4% in fiscal year 2022, largely due to increased promotions and licensor minimum royalty costs
and unfavorable currency and product mix impacts, driven by connected products. These costs were partially offset by reduced freight costs.

Operating Expenses. For fiscal year 2023, total operating expenses decreased to $822.6 million or 58.2% of net sales, compared to $832.2 million or 49.5% of net sales in fiscal year
2022. SG&A expenses were $777.2 million in fiscal year 2023 compared to $823.7 million in fiscal year 2022. As a percentage of net sales, SG&A expenses increased to 55.0% in fiscal year
2023 as compared to 49.0% in fiscal year 2022, mainly driven by decreased sales. During fiscal year 2023, we incurred $43.3 million in restructuring charges as compared to $6.1 million in
fiscal year 2022.

Operating Income (Loss). Operating income (loss) was a loss of $143.0 million in fiscal year 2023, as compared to a loss of $1.5 million in the prior fiscal year. The operating loss in
fiscal year 2023 was primarily due to deleveraging of expenses with the decline in net sales. As a percentage of net sales, operating margin was (10.1)% in fiscal year 2023 as compared to
(0.1)% in fiscal year 2022 and was negatively impacted by 70 basis points due to changes in foreign currencies.

Table of Contents

Operating income (loss) by operating segment is summarized as follows (dollars in millions):

Americas
Europe
Asia
Corporate

Total operating income (loss)

Fiscal Year

Growth (Decline)

Operating Margin %

2023

2022

Dollars

Percentage

2023

2022

82.7 $
41.0
38.2
(304.9)
(143.0) $

116.4 $
91.1
52.1
(261.1)

(1.5) $

(33.7)
(50.1)
(13.9)
(43.8)
(141.5)

(29.0)%
(55.0)
(26.7)
(16.8)
(9,433.3)%

12.9 %
9.4
11.6

(10.1)%

15.6 %
16.8
13.8

(0.1)%

Interest Expense. Interest expense increased by $2.6 million in fiscal year 2023, primarily driven by increased interest rates compared to fiscal year 2022.

Other Income (Expense)—Net. During fiscal year 2023, other income (expense) - net was income of $8.7 million compared to expense of $1.4 million in the prior fiscal year. The
change in other income (expense)-net was largely reflective of net currency gains in fiscal year 2023 as compared to net currency losses in fiscal year 2022 and increased interest income
in fiscal year 2023.

Provision for Income Taxes. During fiscal year 2023, there was an income tax expense of $0.5 million, resulting in an effective tax rate of (0.3)%, compared to (96.7)% in fiscal year

2022. The 2023 effective rate was favorably impacted by reduced foreign income taxes, release of reserves for uncertain tax positions and the accrual of interest income on tax
receivables, whereas the 2022 effective rate was unfavorably impacted by the low level of pre-tax earnings and valuation allowances on deferred tax assets.

Net Income (Loss) Attributable to Fossil Group, Inc. Fiscal year 2023, net income (loss) attributable to Fossil Group, Inc. was a net loss of $157.1 million, or $3.00 per diluted share,

in comparison to a net loss of $44.2 million, or $0.85 per diluted share, in the prior fiscal year. During fiscal year 2023, currency fluctuations unfavorably impacted diluted earnings (loss)
per share by $0.10.

Adjusted EBITDA. The following table reconciles Adjusted EBITDA to the most directly comparable GAAP financial measure, which is income (loss) before income taxes. Certain

line items presented in the table below, when aggregated, may not foot due to rounding (dollars in millions).

Income (loss) before income

taxes

Plus:

Interest expense
Amortization and

depreciation

Impairment expense
Other non-cash charges
Stock-based compensation
Restructuring expense
Restructuring cost of sales
Unamortized debt issuance

costs included in loss on
extinguishment of debt

Less:

Interest income
Adjusted EBITDA

2023

2022

Dollars

% of Net Sales

Dollars

% of Net Sales

Fiscal Year

(156.1)

(11.1)

(22.1)

(1.3)

19.2

23.3
2.4
(1.1)
8.0
6.1
—

1.1

0.8
36.1

2.1

(4.4)

21.8

19.1
2.2
(0.9)
5.7
43.3
5.5

—

3.2
(62.6)

Table of Contents

Adjusted Operating Income (Loss), Adjusted Net Income (Loss) and Adjusted Earnings (Loss) per Share. The following tables reconcile Adjusted operating income (loss),
Adjusted net income (loss) and Adjusted earnings (loss) per share to the most directly comparable GAAP financial measures, which are operating income (loss), net income (loss)
attributable to Fossil Group, Inc. and diluted earnings (loss) per share, respectively. Certain line items presented in the table below, when aggregated, may not foot due to rounding.

($ in millions, except per share

data):

Operating income (loss)
Operating margin (% of net sales)
Interest expense
Other income (expense) - net
Income (loss) before income

taxes

Provision for income taxes

Less: net income attributable

to noncontrolling interest

Net income (loss) attributable

to Fossil Group, Inc.

Diluted earnings (loss) per share

($ in millions, except per share

data):

Operating income (loss)
Operating margin (% of net sales)
Interest expense
Other income (expense) - net
Income (loss) before income taxes
Provision for income taxes

Less: net income attributable

to noncontrolling interest

Net income (loss) attributable to

Fossil Group, Inc.

Diluted earnings (loss) per share

$
$

As Reported
(143.0)
(10.1)
21.8
8.7

(156.1)
0.5

0.4

(157.1)
(3.00)

As Reported

(1.5)
(0.1)
19.2
(1.4)
(22.1)
21.4

0.6

(44.2)
(0.85)

Restructuring Cost

of Sales

$
$

5.5

—
—

5.5
1.2

—

4.3
0.08

Fiscal Year 2023
Long-lived Asset
Impairment
$

2.2

Restructuring
Expenses

43.3

—
—

43.3
9.1

—

34.2
0.65

$
$

As Adjusted
(92.0)
(6.5)
21.8
8.7

(105.1)
11.3

0.4

(116.9)
(2.24)

—
—

2.2
0.5

—

1.7
0.03

Long-lived Asset
Impairment
$

2.4

—
—
2.4
0.5

—

1.9
0.04

$
$

Fiscal Year 2022

Restructuring
Expenses

Unamortized Debt

Issuance Costs Included in
Loss on Extinguishment of
Debt

6.1

—
—
6.1
1.3

—

4.8
0.09

$
$

—

—
1.1
1.1
0.2

—

0.9
0.01

$
$

As Adjusted

7.0
0.4
19.2
(0.3)
(12.5)
23.4

0.6

(36.6)
(0.71)

$
$

Fiscal Year 2022 Compared to Fiscal Year 2021

For a discussion of our results of operations in fiscal year 2022 compared to fiscal year 2021, please see Item 7 of our Annual Report on Form 10-K for the fiscal year ended

December 31, 2022 filed with the SEC, which is incorporated herein by reference.

Table of Contents

Liquidity and Capital Resources

Our cash and cash equivalents balance at the end of fiscal year 2023 was $117.2 million, including $104.4 million held by foreign subsidiaries outside the U.S., in comparison to
$198.7 million at the end of fiscal year 2022, including $195.8 million held by foreign subsidiaries outside the U.S. Generally, starting in the third quarter, our cash needs begin to increase,
typically reaching a peak in the September-November time frame as we increase inventory levels in advance of the holiday season. Our quarterly cash requirements are also impacted by
debt repayments, restructuring charges and capital expenditures.

At the end of fiscal year 2023, we had working capital of $368.2 million compared to working capital of $519.4 million at the end of the prior fiscal year. At the end of fiscal year 2023,

we had $0.5 million of outstanding short-term borrowings and $207.0 million in long-term debt including unamortized issuance costs compared to $0.3 million of short-term borrowings
and $216.1 million in long-term debt including unamortized issuance costs at the end of fiscal year 2022.

Operating Activities. Cash used in operating activities is net income (loss) adjusted for certain non-cash items and changes in assets and liabilities. Cash used in operating
activities of $59.5 million in fiscal year 2023 decreased from cash used of $110.9 million in fiscal year 2022, primarily due to proactively managing our inventory levels down in fiscal year
2023, and partially offset by decreased earnings in fiscal year 2023 as compared to fiscal year 2022.

Investing Activities. Investing cash flows primarily consist of capital expenditures and are offset by proceeds from the sale of property, plant and equipment.

Financing Activities. Financing cash flows primarily consist of borrowings and repayments of debt. The decrease in financing cash flows in fiscal year 2023 compared to fiscal year

2022 was reflective of net debt payments in fiscal year 2023 as compared to net debt borrowings in fiscal year 2022.

Material Cash Requirements. We have various payment obligations as part of our ordinary course of business. Our material cash requirements include: (1) operating lease
obligations (see Note 13 Leases within the Consolidated Financial Statements); (2) debt repayments (see Note 10 Debt within the Consolidated Financial Statements); (3) non-cancellable
purchase obligations (see Note 14 Commitments and Contingencies within the Consolidated Financial Statements), (4) minimum royalty payments (see Note 14 Commitments and
Contingencies within the Consolidated Financial Statements); and (5) employee wages, benefits, and incentives. The expected timing of payments of our obligations is estimated based
on current information. Timing of payments and actual amounts paid may be different, depending on the timing of receipt of goods or services, or changes to agreed-upon amounts for
some obligations. In addition, some of our purchasing requirements are not current obligations and are therefore not included above. For example, some of these requirements are not
handled through binding contracts or are fulfilled by vendors on a purchase order basis within short time horizons. Moreover, we may be subject to additional material cash
requirements that are contingent upon the occurrence of certain events, e.g., legal contingencies, uncertain tax positions (see Note 12 Taxes within the Consolidated Financial
Statements), pensions (see Note 16 Employee Benefit Plans within the Consolidate Financial Statements) and other matters.

For the fiscal year ending December 28, 2024, we expect total capital expenditures to be approximately $10 million. Our capital expenditure budget is an estimate and is subject to

change.

Sources of Liquidity. We believe cash flows from operations, combined with existing cash on hand and amounts available under our credit facilities will be sufficient to fund our

cash needs for at least the next twelve months. Although we believe we have adequate sources of liquidity, the success of our operations, in light of the market volatility and
uncertainty, among other factors, could impact our business and liquidity.

The following table shows our sources of liquidity (in millions):

Cash and cash equivalents
Revolver availability
Total liquidity

Fiscal Year End

2023

2022

117.2
64.0
181.2

198.7
141.2
339.9

We are assessing potential sources of supplemental liquidity in light of our operating performance, the timing of the expected benefits of our TAG plan and other relevant
considerations. In the event our liquidity becomes insufficient, we may be required to limit our spending or sell assets. In addition, we may seek additional deleveraging or refinancing
transactions, including entering into transactions to exchange debt for other debt securities (including additional secured debt), issuance of equity (including preferred stock and
convertible securities), repurchase or redemption of outstanding indebtedness, or may

Table of Contents

otherwise seek transactions to reduce interest expense, extend debt maturities and improve our capital structure. Any of these transactions could impact our financial results, including
additional expenses, charges and cancellation of indebtedness income. We cannot assure you whether any of such transactions will be consummated, whether we will achieve the
benefits of any such transaction, or whether our cost of capital will increase, any of which could have an impact on our future liquidity. Additionally, we currently have a $56.5 million
(including interest) U.S. tax refund that is expected to be received in fiscal year 2024, however the timing of the refund is uncertain.

Notes: In November 2021, we sold $150.0 million aggregate principal amount of our 7.00% senior notes due 2026 (the "Notes"), generating net proceeds of approximately $141.7

million.

The Notes are our general unsecured obligations. The Notes bear interest at the rate of 7.00% per annum. Interest on the Notes is payable quarterly in arrears on February 28, May

31, August 31 and November 30 of each year. The Notes mature on November 30, 2026. We may redeem the Notes for cash in whole or in part at any time at our option at the following
prices: (i) after November 30, 2023 and prior to November 30, 2024, at a price equal to $25.50 per $25.00 principal amount of Notes, (ii) on or after November 30, 2024 and prior to
November 30, 2025, at a price equal to $25.25 per $25.00 principal amount of Notes and (iii) on or after November 30, 2025, at a price equal to $25.00 per $25.00 principal amount of Notes,
plus (in each case noted above) accrued and unpaid interest, if any, to, but excluding, the date of redemption.

Revolving Facility: On September 26, 2019, we and Fossil Partners L.P., as the U.S. borrowers, and Fossil Group Europe GmbH, Fossil Asia Pacific Limited, Fossil (Europe) GmbH,

Fossil (UK) Limited and Fossil Canada Inc., as the non-U.S. borrowers, certain other of our subsidiaries from time to time party thereto designated as borrowers, and certain of our
subsidiaries from time to time party thereto as guarantors, entered into a secured asset-based revolving credit agreement (as amended from time to time, the "Revolving Facility") with
JPMorgan Chase Bank, N.A. as administrative agent (the "ABL Agent"), J.P. Morgan AG, as French collateral agent, JPMorgan Chase Bank, N.A., Citizens Bank, N.A. and Wells Fargo
Bank, National Association as joint bookrunners and joint lead arrangers, and Citizens Bank, N.A. and Wells Fargo Bank, National Association, as co-syndication agents and each of
the lenders from time to time party thereto (the "ABL Lenders"). On November 8, 2022 we entered into Amendment No. 4 (the "Amendment”) to the Revolving Facility. The Amendment,
among other things, (i) extends the maturity date of the credit facility to November 8, 2027 (provided, that if we have any indebtedness in an amount in excess of $35 million that matures
prior to November 8, 2027, the maturity date of the credit facility shall be the 91st day prior to the maturity date of such other indebtedness) and (ii) changes the calculation methodology
of the borrowing base to include the value of certain of our intellectual property in such methodology and to provide for seasonal increases to certain advance rates.

The Revolving Facility provides that the ABL Lenders may extend revolving loans in an aggregate principal amount not to exceed $225.0 million at any time outstanding (the

"Revolving Credit Commitment”), of which up to $125.0 million is available under a U.S. facility, an aggregate of $80.0 million is available under a European facility, $10.0 million is
available under a Hong Kong facility, $5.0 million is available under a French facility, and $5.0 million is available under a Canadian facility, in each case, subject to the borrowing base
availability limitations described below. The Revolving Facility also includes an up to $45.0 million subfacility for the issuance of letters of credit (the "Letters of Credit”). The French
facility includes a $1.0 million subfacility for swingline loans, and the European facility includes a $7.0 million subfacility for swingline loans. The Revolving Facility is subject to a line
cap equal to the lesser of the total Revolving Credit Commitment and the aggregate borrowing bases under the U.S. facility, the European facility, the Hong Kong facility, the French
facility and the Canadian facility. Loans under the Revolving Facility may be made in U.S. dollars, Canadian dollars, euros, Hong Kong dollars or pounds sterling.

The Revolving Facility is an asset-based facility, in which borrowing availability is subject to a borrowing base equal to: (a) with respect to us, the sum of (i) the lesser of (x) 90% of

the appraised net orderly liquidation value of eligible U.S. finished goods inventory and (y) 65% of the lower of cost or market value of eligible U.S. finished goods inventory, plus (ii)
85% of the eligible U.S. accounts receivable, plus (iii) 90% of eligible U.S. credit card accounts receivable, plus (iv) the lesser of (x) 40% of the appraised net orderly liquidation value of
eligible U.S. intellectual property and (y) $20.0 million, minus (y) the aggregate amount of reserves, if any, established by the ABL Agent; (b) with respect to each non-U.S. borrower
(except for the French Borrower), the sum of (i) the lesser of (x) 90% of the appraised net orderly liquidation value of eligible foreign finished goods inventory of such non-U.S. borrower
and (y) 65% of the lower of cost or market value of eligible foreign finished goods inventory of such non-U.S. borrower, plus (ii) 85% of the eligible foreign accounts receivable of such
non-U.S. borrower, minus (iii) the aggregate amount of reserves, if any, established by the ABL Agent; and (c) with respect to the French Borrower, (i) 85% of eligible French accounts
receivable minus (ii) the aggregate amount of reserves, if any, established by the ABL Agent. Not more than 60% of the aggregate borrowing base under the Revolving Facility may
consist of the non-U.S. borrowing bases.

The above advance rates (other than the advance rate with respect to intellectual property) are seasonally increased by 5%

Table of Contents

(e.g. from 90% to 95%) during the period commencing on the date of delivery of the borrowing base certificate with respect to the second fiscal month of the Company and ending on the
last day of the period covered by the borrowing base certificate delivered with respect to the fifth fiscal month of the Company.

Fiscal Year 2023 Activity: We had payments net of borrowings of $10.9 million under the Revolving Facility during fiscal year 2023 at an average interest rate of 6.5%. As of

December 30, 2023, we had $150.0 million outstanding under the Notes and $62.1 million outstanding under the Revolving Facility. As of December 30, 2023, we had unamortized debt
issuance costs of $5.1 million recorded in long-term debt and $2.5 million recorded in intangible and other assets-net on our consolidated balance sheets. In addition, we had $4.5 million
of outstanding standby letters of credit at December 30, 2023. Amounts available under the Revolving Facility are reduced by any amounts outstanding under standby letters of credit.
As of December 30, 2023, we had $64.0 million available for borrowing under the Revolving Facility. At December 30, 2023, we were in compliance with all debt covenants related to our
debt agreement.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Not applicable.

Table of Contents

Item 8. Consolidated Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of Fossil Group, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Fossil Group, Inc. and subsidiaries (the "Company") as of December 30, 2023 and December 31, 2022, and the related
consolidated statements of income (loss) and comprehensive income (loss), stockholders' equity, and cash flows for each of the three years in the period ended December 30, 2023, and
the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material
respects, the financial position of the Company as of December 30, 2023 and December 31, 2022, and the results of its operations and its cash flows for each of the three years in the
period ended December 30, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial
reporting as of December 30, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission and our report dated March 13, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits.
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the
financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the
amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the
audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter
below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Inventories – Valuation —Refer to Notes 1 and 3 of the financial statements
Critical Audit Matter Description

Inventories are stated at the lower of cost and net realizable value, including any applicable duty and freight charges. The Company accounts for estimated obsolescence or
unmarketable inventory equal to the difference between the average cost of inventory and the estimated net realizable value based upon assumptions about future demand, market
conditions and available liquidation channels through the establishment of an inventory excess and obsolescence valuation adjustment. Changes in these assumptions could have a
significant impact on the inventory excess and obsolescence valuation adjustment.

We identified inventory valuation for smartwatch products as a critical audit matter because of the significant judgments made by management to estimate future demand, market
conditions, and available liquidation channels which are used to arrive at the net realizable value. This required a high degree of auditor judgment and an increased extent of effort when
performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions within the inventory excess and obsolescence allowance.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the inventory excess and obsolescence allowance for smartwatch products included the following, among others:

• We tested the effectiveness of controls over the inventory excess and obsolescence valuation adjustment, specifically the control over the estimation of the net realizable value

of inventory.

Table of Contents

• We evaluated management’s ability to estimate net realizable value by comparing management’s estimates to subsequent transactions, taking into account changes in market
• We evaluated the method and assumptions used by management to estimate net realizable value by:

conditions subsequent to December 30, 2023.

reports.

Tested the completeness of the inventory valuation adjustment by:

Testing the underlying data that served as the basis for the assumptions.
Evaluating the appropriateness of the inputs to the estimate, including future demand, market conditions, and available liquidation channels.

–
–
– Comparing management’s prior-year estimate of demand to actual results for the year.
– Comparing management’s estimate of future demand to historical results and forecasted information included in the Company’s press releases, as well as industry
– Comparing actual sales values realized subsequent to the balance sheet date to the recorded amounts, net of the inventory excess and obsolescence allowance.
Identifying slow-moving inventory with a turnover of less than one and comparing to management’s analysis and investigating the rationale for no adjustment if
–
required.
Inquiring of brand management and performing corroborative inquiry about returns, inventory that is under-performing, and anticipated trends based on market
–
reaction and comparing to management’s analysis.
– Comparing inventory sold at a loss or to liquidators to management’s analysis.
Testing a sample of inventory items to determine if the inventory excess and obsolescence allowance is reasonable through evaluations of historical margin data,
–
obtaining evidence of past or future product orders, and other qualitative factors for each selection.

Tested the mathematical accuracy of the inventory excess and obsolescence allowance by recalculating the net realizable value and comparing our recalculation to the recorded
balance.
Compared management’s prior-year estimate of the inventory excess and obsolescence allowance for a sample of inventory items to the recorded sales price to identify potential
bias for determination of the inventory excess and obsolescence allowance.

•

•
•

/s/ Deloitte & Touche LLP

Dallas, Texas
March 13, 2024

We have served as the Company's auditor since 1988.

FOSSIL GROUP, INC.

CONSOLIDATED BALANCE SHEETS

IN THOUSANDS

Table of Contents

Assets
Current assets:

Cash and cash equivalents
Accounts receivable-net
Inventories
Prepaid expenses and other current assets

Total current assets

Property, plant and equipment-net
Operating lease right-of-use assets
Intangible and other assets-net
Total long-term assets

Total assets

Liabilities and Stockholders' Equity
Current liabilities:

Accounts payable
Short-term debt
Accrued expenses:

Current operating lease liabilities
Compensation
Royalties
Customer liabilities
Transaction taxes
Other

Income taxes payable

Total current liabilities

Long-term income taxes payable
Deferred income tax liabilities
Long-term debt
Long-term operating lease liabilities
Other long-term liabilities

Total long-term liabilities

Commitments and contingencies (Note 14)
Stockholders' equity:

Common stock, 52,487 and 51,836 shares issued and outstanding at December 30, 2023 and December 31, 2022, respectively
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income (loss)
Total Fossil Group, Inc. stockholders' equity
Noncontrolling interest
Total stockholders' equity
Total liabilities and stockholders' equity

See notes to the consolidated financial statements.

December 30,
2023

December 31,
2022

117,197
187,942
252,834
152,717
710,690
57,244
151,000
59,096
267,340
978,030

147,161
480

43,565
44,789
15,880
37,584
10,412
27,811
14,795
342,477
20,409
698
206,983
137,644
18,081
383,815

525
311,709
18,403
(76,405)
254,232
(2,494)
251,738
978,030

198,726
206,133
376,028
164,413
945,300
79,882
156,947
55,999
292,828
1,238,128

191,141
342

49,702
44,259
20,875
41,996
14,303
40,424
22,878
425,920
22,603
616
216,132
150,188
19,660
409,199

518
306,241
175,491
(76,318)
405,932
(2,923)
403,009
1,238,128

Table of Contents

FOSSIL GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)

IN THOUSANDS, EXCEPT PER SHARE DATA

Fiscal Year
Net sales
Cost of sales
Gross profit
Operating expenses:
Selling, general and administrative expenses
Long-lived asset impairments
Restructuring expenses
Total operating expenses
Operating income (loss)
Interest expense
Other income (expense) - net
Income (loss) before income taxes
Provision for income taxes

Net income (loss)
Less: Net income attributable to noncontrolling interest

Net income (loss) attributable to Fossil Group, Inc.
Other comprehensive income (loss), net of taxes:

Currency translation adjustment
Cash flow hedges - net change
Pension plan activity

Total other comprehensive income (loss)
Total comprehensive income (loss)

Less: Comprehensive income attributable to noncontrolling interest

Comprehensive income (loss) attributable to Fossil Group, Inc.
Earnings (loss) per share:

Basic
Diluted

Weighted average common shares outstanding:

Basic
Diluted

$
$

2023

2022

2021

1,412,384 $
732,803
679,581

1,682,439 $
851,760
830,679

1,870,036
903,662
966,374

777,167
2,159
43,279
822,605
(143,024)
21,778
8,665
(156,137)
522
(156,659)
429
(157,088) $

6,775 $
(709)
(6,153)
(87)
(156,746)
429
(157,175) $

(3.00) $
(3.00) $

52,284
52,284

823,689
2,342
6,121
832,152
(1,473)
19,237
(1,416)
(22,126)
21,400
(43,526)
631
(44,157) $

(15,080) $
(1,947)
7,984
(9,043)
(52,569)
631
(53,200) $

(0.85) $
(0.85) $

51,841
51,841

842,625
9,223
21,889
873,737
92,637
25,086
(14,500)
53,051
26,427
26,624
1,190
25,434

(14,423)
3,494
2,554
(8,375)
18,249
1,190
17,059

0.49
0.48

51,961
52,777

See notes to the consolidated financial statements.

FOSSIL GROUP, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

AMOUNTS IN THOUSANDS

Common Stock

Par
Value

Additional
Paid-in
Capital

Treasury
Stock

Retained
Earnings

Accumulated
Other
Comprehensive
Income
(Loss)

Stockholders'
Equity
Attributable
to Fossil
Group, Inc.

51,474

515

293,777

—

203,698

(58,900)

861
—
(189)
—
—
—
52,146

906
—
(1,216)
—
—
—
—
51,836

816
—
(165)
—
—
—
52,487

8
—
(2)
—
—
—
521

9
—
(12)
—
—
—
—
518

8
—
(1)
—
—
—
525

(8)
—
(2,418)
9,497
—
—
300,848

(9)
—
(2,951)
8,353
—
—
—
306,241

(8)
—
(529)
6,005
—
—
311,709

—
(2,420)
2,420
—
—
—
—

—
(12,447)
12,447
—
—
—
—
—

—
(530)
530
—
—
—
—

—
—
—
—
25,434
—
229,132

—
—
(9,484)
—
(44,157)
—
—
175,491

—
—
—
—
(157,088)
—
18,403

—
—
—
—
—
(8,375)
(67,275)

—
—
—
—
—
(9,043)
—
(76,318)

—
—
—
—
—
(87)
(76,405)

439,090

—
(2,420)
—
9,497
25,434
(8,375)
463,226

—
(12,447)
—
8,353
(44,157)
(9,043)
—
405,932

—
(530)
—
6,005
(157,088)
(87)
254,232

Noncontrolling Interest
942
$

—
—
—
—
1,190
—
2,132

—
—
—
—
631
—
(5,686)
(2,923)

—
—
—
—
429
—
(2,494)

Total Stockholders'
Equity

440,032

—
(2,420)
—
9,497
26,624
(8,375)
465,358

—
(12,447)
—
8,353
(43,526)
(9,043)
(5,686)
403,009

—
(530)
—
6,005
(156,659)
(87)
251,738

Balance, January 2, 2021
Common stock issued upon exercise of stock options and stock appreciation rights and
restricted stock units
Acquisition of common stock
Retirement of common stock
Stock-based compensation
Net income (loss)
Other comprehensive income (loss)
Balance, January 1, 2022
Common stock issued upon exercise of stock options and stock appreciation rights and
restricted stock units
Acquisition of common stock
Retirement of common stock
Stock-based compensation
Net income (loss)
Other comprehensive income (loss)
Distribution of noncontrolling interest earnings and other
Balance, December 31, 2022
Common stock issued upon exercise of stock options and stock appreciation rights and
restricted stock units
Acquisition of common stock
Retirement of common stock
Stock-based compensation
Net income (loss)
Other comprehensive income (loss)
Balance, December 30, 2023

See notes to consolidated financial statements.

FOSSIL GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

AMOUNTS IN THOUSANDS

Fiscal Year
Operating Activities:
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation, amortization and accretion
Non-cash lease expense
Stock-based compensation
Decrease in allowance for returns and markdowns
Gain on disposal of assets
Property, plant and equipment and other long-lived asset impairment losses
Non-cash restructuring charges
Bad debt expense
Other non cash items
Loss on extinguishment of debt
Contingent consideration remeasurement

Changes in operating assets and liabilities:

Accounts receivable
Inventories
Prepaid expenses and other current assets
Accounts payable
Accrued expenses
Income taxes
Operating lease liabilities

Net cash (used in) provided by operating activities

Investing Activities:

Additions to property, plant and equipment and other
(Increase) decrease in intangible and other assets
Proceeds from the sale of property, plant and equipment

Net cash (used in) provided by investing activities

Financing Activities:

Acquisition of common stock
Distribution of noncontrolling interest earnings
Debt borrowings
Debt payments
Payment for shares of Fossil Accessories South Africa Pty. Ltd.
Debt issuance costs and other

Net cash (used in) provided by financing activities

Effect of exchange rate changes on cash and cash equivalents, and restricted cash
Net decrease in cash and cash equivalents, and restricted cash
Cash and cash equivalents, and restricted cash:
Beginning of year
End of year

2023

2022

2021

(156,659) $

(43,526) $

19,099
74,813
5,686
(2,604)
(6,398)
2,159
7,563
3,535
(7,080)
—
(348)

19,945
125,766
18,758
(42,889)
(24,473)
(9,858)
(86,474)
(59,459)

(8,528)
(1,365)
23
(9,870)

(530)
—
172,827
(183,607)
(2,316)
—
(13,626)
463
(82,492)

23,333
79,274
8,060
(6,729)
(460)
2,642
779
6,305
12,456
1,060
2,363

41,621
(46,031)
(3,954)
(35,422)
(55,055)
(4,496)
(93,076)
(110,856)

(13,262)
1,719
2,990
(8,553)

(12,447)
(5,686)
386,067
(314,200)
—
(744)
52,990
5,922
(60,497)

204,075
121,583 $

264,572
204,075 $

26,624

29,606
90,250
9,497
(6,420)
(5,218)
9,223
655
3,070
17,861
13,005
347

(35,453)
(62,261)
20,920
53,934
(12,927)
3,085
(105,769)
50,029

(10,293)
6,031
11,369
7,107

(2,420)
—
254,717
(354,389)
—
(10,479)
(112,571)
(4,239)
(59,674)

324,246
264,572

See notes to the consolidated financial statements.

Table of Contents

FOSSIL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Significant Accounting Policies

Consolidated Financial Statements include the accounts of Fossil Group, Inc., a Delaware corporation, and its subsidiaries (the "Company"). The Company is a leader in the
design, development, marketing and distribution of contemporary, high quality fashion accessories on a global basis. The Company's products are sold primarily through department
stores, specialty retailers, Company-owned retail stores and commercial websites worldwide. The Company reports on a fiscal year reflecting the retail-based calendar (containing 4-4-
5 week calendar quarters). References to fiscal years 2023, 2022 and 2021 are for the fiscal years ended December 30, 2023, December 31, 2022 and January 1, 2022, respectively. All
intercompany balances and transactions are eliminated in consolidation.

Use of Estimates is required in the preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America.
Management makes estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates its estimates and judgments,
including those related to product returns, bad debt, inventories, long-lived asset impairment, impairment of trade names, income taxes, warranty costs and litigation liabilities.
Management bases its estimates and judgments on the information available at the time and various other assumptions believed to be reasonable under the circumstances. Management
estimates form the basis for making judgments about the carrying value of the assets and liabilities that are not readily apparent from other sources. Actual results could differ from
those estimates.

Concentration of Risk involves financial instruments that potentially expose the Company to concentration of credit risk and consist primarily of cash investments and accounts
receivable. The Company places its cash investments with high-credit quality financial institutions and currently invests primarily in corporate debt securities and money market funds
with major banks and financial institutions. Accounts receivable are generally diversified due to the number of entities comprising the Company's customer base and their dispersion
across many geographic regions. The Company believes no significant concentration of credit risk exists with respect to these cash investments and accounts receivable.

A significant portion of sales of the Company's products are supplied by manufacturers located outside of the U.S., primarily in Asia. While the Company is not dependent on any

single manufacturer outside the U.S., the Company could be adversely affected by political, economic or other disruptions affecting the business or operations of third-party
manufacturers located outside of the U.S.

The Company has entered into multi-year, worldwide exclusive license agreements for the manufacture, distribution and sale of products bearing the brand names of certain
globally recognized fashion companies. Sales of the Company's licensed products amounted to 44.7%, 46.5% and 50.5% of the consolidated net sales for fiscal years 2023, 2022 and 2021,
respectively, of which MICHAEL KORS product sales accounted for 17.6%, 19.2% and 20.9% of the consolidated net sales for fiscal years 2023, 2022 and 2021, respectively, and
EMPORIO ARMANI product sales accounted for 14.0%, 14.6% and 18.4% of the consolidated net sales for fiscal years 2023, 2022 and 2021, respectively.

Cash Equivalents are considered all highly liquid investments with original maturities of three months or less.

Restricted Cash was comprised primarily of pledged collateral to secure bank guarantees for the purpose of obtaining retail space. The following table provides a reconciliation of
the cash, cash equivalents, and restricted cash balances as of December 30, 2023, December 31, 2022 and January 1, 2022 that are presented in the consolidated statement of cash flows
(in thousands):

Cash and cash equivalents
Restricted cash included in prepaid expenses and other current assets
Restricted cash included in intangible and other assets-net
Cash, cash equivalents and restricted cash

December 30, 2023

December 31, 2022

January 1, 2022

117,197
77
4,309
121,583

198,726
106
5,243
204,075

250,844
117
13,611
264,572

Accounts Receivable at the end of fiscal years 2023 and 2022 are stated net of doubtful accounts of approximately $12.6 million and $14.6 million, respectively.

Inventories are stated at the lower of cost and net realizable value, including any applicable duty and freight charges. Inventory held at consignment locations is included in the

Company's finished goods inventory, and at the end of fiscal years 2023 and 2022, was $19.8 million and $25.3 million, respectively.

Lease assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. These
assets and liabilities are initially recognized based on the present value of lease payments over the lease term calculated using the Company's incremental borrowing rate, adjusted for
the lease term and lease country, unless the implicit rate is readily determinable. Lease assets also include any upfront lease payments made and are reduced by lease incentives. Some
lease terms include options to extend or terminate the lease and they are included in the measurement of the lease assets and lease liabilities if the Company is reasonably certain that
those options will be exercised. Variable lease payments are expensed as incurred and include certain index-based changes in rent and certain non-lease components such as
maintenance and other services provided by the lessor to the extent the charges are variable. The Company evaluates contractual arrangements at inception to determine if individual
agreements are a lease or contain an identifiable lease component as defined by Accounting Standards Codification ("ASC") 842, Leases ("ASC 842"). When evaluating contracts to
determine appropriate classification and recognition under ASC 842, judgment may be necessary to determine, among other criteria, if an embedded leasing arrangement exists, the
length of the term, classification as either an operating or financing lease and whether renewal or termination options are reasonably certain to be exercised. Leases with an initial term of
12 months or less are not recorded on the balance sheet. Lease agreements with lease and non-lease components are combined as a single lease component for all classes of underlying
assets. The depreciable life of lease assets and leasehold improvements is limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of
exercise.

Lease assets are evaluated for impairment whenever events or conditions indicate that the carrying value of an asset may not be recoverable based on expected undiscounted cash

flows related to the asset. Lease impairment losses of $1.7 million, $2.1 million and $7.5 million were recorded in long-lived asset impairments in fiscal years 2023, 2022 and 2021,
respectively. No lease impairment losses were recorded in restructuring charges in fiscal year 2023 and 2022, and lease impairment losses of $0.7 million were recorded in restructuring
charges in fiscal year 2021.

Property, Plant and Equipment is stated at cost less accumulated depreciation and amortization. Depreciation is calculated using the straight-line method over the estimated useful

lives of the assets of 30 years for buildings, generally five years for machinery and equipment and furniture and fixtures and two to seven years for computer equipment and software.
Leasehold improvements are amortized over the shorter of the lease term or the asset's estimated useful life.

Property, plant and equipment is evaluated for impairment whenever events or conditions indicate that the carrying value of an asset may not be recoverable based on expected
undiscounted cash flows related to the asset. Property, plant and equipment impairment losses of underperforming Company-owned retail stores of $0.4 million, $0.2 million and $1.7
million were recorded in long-lived asset impairments. No impairment losses were recorded in restructuring charges in fiscal year 2023, and impairment losses of $0.1 million and $0.2
million were recorded in restructuring charges in fiscal years 2022 and 2021, respectively.

Other Intangible Assets include trademarks, trade names, customer lists and patents. Trademarks, trade names with finite lives, customer lists and patents are amortized using the
straight-line method over their estimated useful lives, which are generally three to 20 years. Indefinite-lived trade names are evaluated for impairment annually as of the end of the fiscal
year. Additionally, if events or conditions were to indicate an intangible asset may not be recoverable, the Company would evaluate the asset for impairment at that time. Impairment
testing compares the carrying amount of an intangible asset with its fair value. When the carrying amount of an intangible asset exceeds its fair value, an impairment charge is recorded.

The fair value of the Company's MICHELE trade name was estimated using the relief from royalty method. No impairment charges were recorded to the MICHELE trade name
during fiscal years 2023, 2022 or 2021. The SKAGEN trade name is being fully amortized on a straight-line basis over its estimated remaining useful life of two years as of December 30,
2023. No impairment charges were recorded to the SKAGEN trade name during fiscal years 2023, 2022 or 2021.

Accrued Expenses includes liabilities relating to employee compensation, operating lease liabilities, royalties, warranties, duty, gift cards, foreign exchange forward contracts

("forward contracts") and other accrued liabilities which are current in nature.

Other Long-Term Liabilities includes obligations relating to asset retirements, forward contracts and defined benefits relating to certain international employees and other

liabilities that are not current in nature.

Cumulative Translation Adjustment is included as a component of accumulated other comprehensive income (loss) and reflects the adjustments resulting from translating the
financial statements of foreign subsidiaries into U.S. dollars. The functional currency of the Company's foreign subsidiaries is the currency of the primary economic environment in
which the entity operates, which is generally the local currency of the country. Accordingly, assets and liabilities of the foreign subsidiaries are translated to U.S. dollars at fiscal year-
end exchange rates. Income and expense items are translated at average monthly exchange rates. Cumulative translation adjustments remain in accumulated other comprehensive income
(loss) and are reclassified into earnings in the event the related foreign subsidiary is sold or liquidated.

Foreign Transaction Gains and Losses are those changes in exchange rates of currencies not considered the functional currency that affects cash flows and the related
receivables or payables. The Company incurred a net foreign currency transaction gain of approximately $3.0 million for fiscal year 2023 and net foreign currency transaction losses of
$0.2 million and $4.0 million for fiscal years 2022 and 2021, respectively. These net gains and losses have been included in other income (expense)—net in the Company's consolidated
statements of income (loss) and comprehensive income (loss).

Revenues from sales of the Company's products are recognized when control of the product is transferred to the customer and in an amount that reflects the consideration the
Company expects to be entitled in exchange for the product. The Company accepts limited returns from customers. The Company continually monitors returns and maintains a provision
for estimated returns based upon historical experience and any specific issues identified. Product returns are accounted for as reductions to revenue and cost of sales and increases to
customer liabilities and other current assets to the extent the returned product is resalable. The Company recorded an estimated returns provision of $33.4 million and $35.8 million in
accrued expenses as of the end of fiscal years 2023 and 2022, respectively. Taxes imposed by governmental authorities on the Company's revenue-producing activities with customers,
such as sales taxes and value added taxes, are excluded from net sales. See Note 2—Revenue, for more information regarding the Company's revenue recognition policy.

Cost of Sales includes raw material costs, assembly labor, assembly overhead including depreciation expense, assembly warehousing costs, shipping and handling costs related to
the movement of finished goods from assembly locations to sales distribution centers and from sales distribution centers to customer locations and restructuring charges. Additionally,
cost of sales includes customs duties, product packaging cost, royalty cost associated with sales of licensed products, the cost of molding and tooling and inventory shrinkage and
damages.

Operating Expenses include selling, general and administrative ("SG&A"), long-lived asset impairments and restructuring charges. SG&A expenses include selling and distribution

expenses primarily consisting of sales and distribution labor costs, sales distribution center and warehouse facility costs, depreciation expense related to sales distribution and
warehouse facilities, the four-wall operating costs of the Company's retail stores, point-of-sale expenses, advertising expenses and art, design and product development labor costs.
SG&A also includes general and administrative expenses primarily consisting of administrative support labor and support costs such as treasury, legal, information services, accounting,
internal audit, human resources, executive management costs and costs associated with stock-based compensation. Restructuring charges include costs to reduce and optimize the
Company’s infrastructure and store closures. See Note 20—Restructuring for additional information on the Company’s restructuring plan. The Company recorded $3.6 million,
$4.0 million and $16.1 million, during fiscal years 2023, 2022 and 2021, respectively, related to government assistance and subsidies. These amounts mostly relate to payroll expense and
were recorded as a reduction of selling, general and administrative expenses.

Advertising Costs for digital marketing and in-store advertising as well as co-op advertising, product displays, show/exhibit costs, advertising royalties related to the sales of
licensed brands, internet costs associated with affiliation fees and sample costs are expensed as incurred within SG&A. Advertising costs were $157.3 million, $154.6 million and $168.4
million for fiscal years 2023, 2022 and 2021, respectively.

Warranty Costs are included in SG&A. The Company records an estimate for future warranty costs based on historical repair costs and adjusts the liability as required. Warranty
costs have historically been within the Company's expectations and the provisions established. If such costs were to substantially exceed estimates, this could have an adverse effect
on the Company's operating results. See Note 4—Warranty Liabilities, for more information regarding warranties.

Research and Development Costs are incurred primarily through the Company's in-house engineering team as well as third party consulting and labor and consist primarily of
personnel-related expenses, tooling and prototype materials and overhead costs. The Company’s research and development ("R&D") expenses are related to designing and developing
new products and features and improving existing products. The Company's R&D expenses are recorded in SG&A and were $19.4 million, $29.1 million and $27.2 million in fiscal years
2023, 2022 and 2021, respectively.

Noncontrolling Interest is recognized as equity in the Company's consolidated balance sheets, is reflected in net income attributable to noncontrolling interest in the consolidated

statements of income (loss) and comprehensive income (loss) and is captured within the summary of changes in equity attributable to controlling and noncontrolling interests.
Noncontrolling interests represent ownership interests in the Company's subsidiaries held by third parties.

Other Comprehensive Income (Loss) which is reported in the consolidated statements of income (loss) and comprehensive income (loss) and consolidated statements of
stockholders' equity, consists of net income and other gains and losses affecting equity that are excluded from net income. The components of other comprehensive income (loss)
primarily consist of foreign currency translation gains and losses and net realized and unrealized gains and losses on the following: (i) derivatives designated as cash flow hedges and
(ii) the Company's defined benefit plans.

Earnings (Loss) Per Share ("EPS") is based on the weighted average number of common shares outstanding during each period. Diluted EPS adjusts basic EPS for the effects of

dilutive common stock equivalents outstanding during each period using the treasury stock method.

The following table reconciles the numerators and denominators used in the computations of both basic and diluted EPS (in thousands except per share data):

Fiscal Year
Numerator:

Net income (loss) attributable to Fossil Group, Inc.

Denominator:

Basic EPS computation:
Basic weighted average common shares outstanding

Basic EPS

Diluted EPS computation:

Basic weighted average common shares outstanding
Diluted weighted average common shares outstanding

Diluted EPS

2023

2022

2021

(157,088) $

(44,157) $

25,434

52,284
(3.00) $

52,284
52,284
(3.00) $

51,841
(0.85) $

51,841
51,841
(0.85) $

51,961
0.49

51,961
52,777
0.48

Approximately 2.1 million, 2.1 million and 0.3 million weighted average shares issuable under stock-based awards were not included in the diluted EPS calculation in fiscal years
2023, 2022 and 2021, respectively, because they were anti-dilutive, including approximately 0.3 million, 0.3 million and 13,000 weighted performance-based shares in fiscal years 2023, 2022
and 2021, respectively.

Income Taxes are provided for under the asset and liability method for temporary differences in assets and liabilities recognized for income tax and financial reporting purposes.
Deferred tax assets are periodically assessed for the likelihood of whether they are more likely than not to be realized. Tax benefits associated with uncertain tax positions are recognized
in the period in which one of the following conditions is satisfied: (i) the more likely than not recognition threshold is satisfied; (ii) the position is ultimately settled through negotiation
or litigation; or (iii) the statute of limitations for the taxing authority to examine and challenge the position has expired. Tax benefits associated with an uncertain tax position are
derecognized in the period in which the more likely than not recognition threshold is no longer satisfied.

The Global Intangible Low-Taxed Income ("GILTI”) provisions of the Tax Cuts and Jobs Act (the "Tax Act") requiring the inclusion of certain foreign earnings in U.S. taxable

income first applied in fiscal year 2018. The GILTI tax was accounted for as incurred under the period cost method. The Company's valuation allowance analysis is affected by various
aspects of the

Tax Act, including the new limitation on the deductibility of interest expense and the impact of GILTI. Those adjustments may materially impact the provision for income taxes and the
effective tax rate in the period in which the adjustments are made.

Recently Issued Accounting Standards

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU"), 2023-09, Income Taxes (Topic 740): Improvements to

Income Tax Disclosures, to enhance the transparency and decision usefulness of income tax disclosures through changes to the rate reconciliation and income taxes paid information.
This guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is evaluating the impact of adopting this guidance on its
financial statement disclosures.

In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures (Topic 280), to improve reportable segment disclosures, primarily through

enhanced disclosures about significant segment expenses. The amendments in this update will require public entities to disclose significant segment expenses that are regularly
provided to the Company's chief operating decision maker and included within segment profit and loss, an amount and description of its composition for other segment items, and
expanded interim disclosures. This guidance is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with
early adoption permitted. The Company is evaluating the impact of adopting this guidance on its financial statement disclosures.

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements - Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative

("ASU 2023-06"). The amendments in ASU 2023-06 modify the disclosure or presentation requirements of a variety of topics in the FASB Accounting Standards Codification (the
"Codification"), with the intention of clarifying or improving them and to align the requirements in the Codification with the regulations of the U.S. Securities and Exchange Commission
(the "SEC”). The effective date for ASU 2023-06 varies and is determined for each individual disclosure based on the effective date of the SEC's removal of the related disclosure. ASU
2023-06 will not have an impact on the Company's financial position or results of operation.

The Organization for Economic Cooperation and Development ("OECD") and over 140 countries have agreed to enact a two-pillar solution to reform the international tax rules to

address the challenges arising from the globalization and digitalization of the economy. "The Pillar Two Global Anti-Base Erosion (GloBE) Rules" provide a coordinated system to
ensure that multinational enterprises with revenues above 750 million euro pay a minimum effective tax rate of 15% tax on the income arising in each of the jurisdictions in which they
operate. The technical aspects of the calculation are still being developed. Implementation of these rules is scheduled for 2024, at which point the Company can determine the impact on
its income tax expense and effective tax rate.

Recently Adopted Accounting Standards

In October 2021, the FASB issued ASU 2021-08, Business Combinations – Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The guidance
requires an acquirer to recognize and measure contract assets and liabilities acquired in a business combination as if they had originated the contracts, as opposed to at fair value on the
acquisition date. The standard is effective for business combinations after January 1, 2023. The adoption of this standard did not have an impact on the Company's consolidated
financial statements or related disclosures.

2. Revenue

The Company’s revenue consists of sales of finished products to customers through wholesale and retail channels. Revenue from the sale of products, including those that are
subject to inventory consignment agreements, is recognized when control of the product is transferred to the customer and in an amount that reflects the consideration the Company
expects to be entitled in exchange for the product. The Company generally considers control to transfer either when products ship or when products are delivered depending on the
shipping terms in the agreement or purchase order. The Company considers control to have transferred upon shipment or delivery because the Company has a present right to payment,
the customer has legal title to the product, the Company has transferred physical possession of the product, and the customer has the significant risks and rewards of the product. Taxes
imposed by governmental authorities on the Company's revenue-producing activities with customers, such as sales taxes and value added taxes, are excluded from net sales.

Markdowns. The Company provides markdowns to certain customers in order to facilitate sales of select styles. Markdowns are estimated at the time of sale using historical data

and are recorded as a reduction to revenue. The Company's policy is to record its markdown allowance as a reduction of accounts receivable.

Returns. The Company accepts limited returns from customers. The Company continually monitors returns and maintains a provision for estimated returns based upon historical

experience, any specific issues identified and current information. Product returns are accounted for as reductions to revenue, cost of sales and customer liabilities and an increase to
other current assets to the extent the returned product is resalable.

Cooperative Advertising. The Company participates in cooperative advertising programs with its major retail customers, whereby the Company shares the cost of certain of their
advertising and promotional expenses. Certain advertising expenses which are not considered separate performance obligations are recorded as sales discounts. All other cooperative
advertising expenses are recorded in SG&A.

Multiple Performance Obligations. The Company enters into contracts with customers for its wearable technology that include multiple performance obligations. Each distinct

performance obligation was determined by whether the customer could benefit from the good or service on its own or together with readily available resources. The Company allocates
revenue to each performance obligation based on its relative standalone selling price. The Company's process for determining standalone selling price considers multiple factors
including the Company's internal pricing model and market trends that may vary depending upon the facts and circumstances related to each performance obligation. Revenue allocated
to the hardware and software essential to the functionality of the product represents the majority of the arrangement consideration and is recognized at the time of product delivery,
provided the other conditions for revenue recognition have been met. Revenue allocated to free software services provided through the Company's online dashboard and mobile apps
as well as revenue allocated to the right to receive future unspecified software updates is deferred and recognized on a straight-line basis over the product's estimated usage period of
two years.

Licensing Income. The Company previously had agreements with certain customers to provide smartwatch technology, design, support and procurement, which expired in fiscal

year 2023.

Disaggregation of Revenue. The Company's revenue disaggregated by major product category and timing of revenue recognition was as follows (in thousands):

Americas

Europe

Fiscal Year 2023
Asia

Corporate

Total

Product Type
Watches:
Traditional watches
Smartwatches
Total watches
Leathers
Jewelry
Other
Consolidated

Timing of Revenue Recognition
Revenue recognized at a point in time
Revenue recognized over time
Consolidated

296,133
26,251
322,384
25,877
78,946
10,151
437,358

436,610
748
437,358

260,244
17,038
277,282
27,790
19,097
4,029
328,198

327,747
451
328,198

1,955
—
1,955
—
—
4,094
6,049

4,677
1,372
6,049

1,015,077
80,949
1,096,026
158,427
131,410
26,521
1,412,384

1,409,225
3,159
1,412,384

456,745 $
37,660
494,405 $
104,760
33,367
8,247
640,779 $

640,191 $
588
640,779 $

Product Type
Watches:
Traditional watches
Smartwatches
Total watches
Leathers
Jewelry
Other
Consolidated

Timing of Revenue Recognition
Revenue recognized at a point in time
Revenue recognized over time
Consolidated

Product Type
Watches:
Traditional watches
Smartwatches
Total watches
Leathers
Jewelry
Other
Consolidated

Timing of Revenue Recognition
Revenue recognized at a point in time
Revenue recognized over time
Consolidated

Americas

Europe

Fiscal Year 2022
Asia

Corporate

Total

518,995 $
65,649
584,644 $
115,300
35,695
8,388
744,027 $

742,436 $
1,591
744,027 $

354,799
53,239
408,038
29,414
93,614
10,277
541,343

540,465
878
541,343

281,550
32,712
314,262
33,828
24,796
4,714
377,600

377,107
493
377,600

3,545
2
3,547
—
—
15,922
19,469

7,350
12,119
19,469

1,158,889
151,602
1,310,491
178,542
154,105
39,301
1,682,439

1,667,358
15,081
1,682,439

Americas

Europe

Fiscal Year 2021
Asia

Corporate

Total

531,392 $
110,726
642,118 $
95,197
41,350
7,258
785,923 $

784,287 $
1,636
785,923 $

396,787
74,888
471,675
31,809
95,995
10,738
610,217

608,946
1,271
610,217

359,266
38,261
397,527
30,636
21,500
5,494
455,157

454,558
599
455,157

1,054
24
1,078
—
—
17,661
18,739

8,328
10,411
18,739

1,288,499
223,899
1,512,398
157,642
158,845
41,151
1,870,036

1,856,119
13,917
1,870,036

Contract Balances. As of December 30, 2023, the Company had no material contract assets on the consolidated balance sheets and no deferred contract costs. The Company had
contract liabilities of (i) $0.0 million and $0.8 million as of December 30, 2023 and December 31, 2022, respectively, related to remaining performance obligations on licensing income, (ii)
$1.7 million and $3.7 million as of December 30, 2023 and December 31, 2022, respectively, primarily related to remaining performance obligations on wearable technology products and
(iii) $2.7 million and $3.1 million as of December 30, 2023 and December 31, 2022, respectively, related to gift cards issued.

Shipping and Handling Fees. The Company accounts for shipping and handling activities that occur after control of the related good transfers as fulfillment activities instead of

assessing such activities as performance obligations.

3. Inventories

Inventories consisted of the following (in thousands):

At Fiscal Year End
Components and parts
Finished goods
Inventories

4. Warranty Liabilities

2023

2022

18,931 $
233,903
252,834 $

20,998
355,030
376,028

The Company's warranty liabilities are primarily related to watch products and are included in accrued expenses—other in the consolidated balance sheets. The Company's watch
products are covered by limited warranties of various lengths against defects in materials or workmanship. The Company's warranty liability is estimated using historical warranty repair
expense. As changes occur in sales volumes and warranty costs, the warranty accrual is adjusted as necessary. Due to the nature of smartwatch products, their warranty costs are
usually more than traditional products. A shift in product mix from smartwatch to traditional products generally results in a decrease in the Company's warranty liabilities. Warranty
liability activity consisted of the following (in thousands):

Fiscal Year
Beginning balance
Settlements in cash or kind
Warranties issued and adjustments to preexisting warranties
Ending balance

(1)

2023

2022

2021

13,623 $
(6,956)
3,455
10,122 $

19,159 $
(8,630)
3,094
13,623 $

21,916
(10,263)
7,506
19,159

____________________________________________
(1)

Changes in cost estimates related to preexisting warranties are aggregated with accruals for new standard warranties issued and foreign currency changes.

5. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):

At Fiscal Year End
Prepaid royalties
Prepaid taxes
Current income tax receivable
Other receivables
Forward contracts
Inventory returns
Property held for sale
Short term deposits
Other
Prepaid expenses and other current assets

6. Property, Plant and Equipment

Property, plant and equipment—net consisted of the following (in thousands):

At Fiscal Year End
Land
Buildings
Machinery and equipment
Furniture and fixtures
Computer equipment and software
Leasehold improvements
Construction in progress

Less accumulated depreciation and amortization
Property, plant and equipment-net

2023

2022

17,143 $
34,917
56,491
824
339
9,757
9,394
568
23,284
152,717 $

2023

2022

1,004 $
7,589
36,046
68,467
193,604
131,502
3,720
441,932
384,688
57,244 $

34,114
36,081
52,618
1,488
2,783
10,833
—
1,786
24,710
164,413

4,180
23,404
36,654
73,721
198,206
153,161
5,728
495,054
415,172
79,882

7. Intangible and Other Assets

Intangible and other assets-net consisted of the following (in thousands):

At Fiscal Year End
Intangibles-subject to amortization:

Trademarks
Customer lists
Patents
Trade name
Other

Total intangibles-subject to amortization
Intangibles-not subject to amortization:

Trade names
Other assets:

Other deposits
Deferred tax asset-net
Restricted cash
Debt issuance costs
Other

Total other assets
Total intangible and other assets
Total intangible and other assets-net

Useful
Lives

Gross
Amount

Accumulated
Amortization

Gross
Amount

Accumulated
Amortization

2023

2022

10 yrs. $

5 - 10 yrs.
3 - 20 yrs.
6 yrs.
7 - 20 yrs.

3,978 $
—
850
4,502
341
9,671

8,919

16,168
21,426
4,309
2,490
3,340
47,733
66,323 $
$

3,256
—
546
3,189
236
7,227

7,227
59,096

3,728 $
279
867
4,502
342
9,718

8,876

16,487
17,262
5,243
3,124
1,969
44,085
62,679 $
$

3,243
266
537
2,439
195
6,680

6,680
55,999

Amortization expense for intangible assets was $0.9 million, $2.5 million, and $3.4 million for fiscal years 2023, 2022 and 2021. Estimated aggregate future amortization expense by

fiscal year for intangible assets is as follows (in thousands):

Fiscal Year
2024
2025
2026
2027
2028
Thereafter

Amortization
Expense

924
733
142
124
118
403

8. Derivatives and Risk Management

Cash Flow Hedges. The primary risks managed by using derivative instruments are the fluctuations in global currencies that will ultimately be used by non-U.S. dollar functional
currency subsidiaries to settle future payments of intercompany inventory transactions denominated in U.S. dollars. Specifically, the Company projects future intercompany purchases
by its non-U.S. dollar functional currency subsidiaries generally over a period of up to 24 months. The Company may enter into forward contracts for up to 85% of its forecasted
purchases to manage fluctuations in global currencies that will ultimately be used to settle such U.S. dollar denominated inventory purchases. Additionally, the Company may enter into
forward contracts to manage fluctuations in Japanese yen exchange rates that will be used to settle future third-party inventory component purchases by a U.S. dollar functional
currency subsidiary. Forward contracts represent agreements to exchange the currency of one country for the currency of another country at an agreed-upon settlement date and
exchange rate. These forward contracts are designated as single cash flow hedges. Fluctuations in exchange rates will either increase or decrease the Company’s U.S. dollar equivalent
cash flows from these inventory transactions, which will affect the Company’s U.S. dollar earnings. Gains or losses on the forward contracts are expected to offset these fluctuations to
the extent the cash flows are hedged by the forward contracts.

For a derivative instrument that is designated and qualifies as a cash flow hedge, the gain or loss on the derivative is reported as a component of other comprehensive income

(loss), net of taxes and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.

As of December 30, 2023, the Company had the following outstanding forward contracts designated as cash flow hedges that were entered into to hedge the future payments of

intercompany inventory transactions (in millions):

Functional Currency

Contract Currency

Type
Euro
Canadian dollar
Mexican peso
British pound
Japanese yen
Australian dollar
U.S. dollar

Amount

50.9
25.3
121.1
4.5
395.5
3.8
3.5

Type
U.S. dollar
U.S. dollar
U.S. dollar
U.S. dollar
U.S. dollar
U.S. dollar
Japanese Yen

Amount

56.3
19.0
6.8
5.7
3.0
2.5
480.0

Non-designated Hedges. The Company also periodically enters into forward contracts to manage exchange rate risks associated with certain intercompany transactions and for

which the Company does not elect hedge accounting treatment. As of December 30, 2023, the Company had non-designated forward contracts of $1.5 million on 27.1 million rand
associated with a South African rand-denominated foreign subsidiary. As of December 31, 2022, the Company had non-designated forward contracts of $0.7 million on 12.1 million rand
associated with a South African rand-denominated foreign subsidiary. Changes in the fair value of derivatives not designated as hedging instruments are recognized in earnings when
they occur.

The effective portion of gains and losses on cash flow hedges that were recognized in other comprehensive income (loss), net of taxes during fiscal years 2023, 2022 and 2021 are

set forth below (in thousands):

Fiscal Year
Cash flow hedges:
Forward contracts
Total gain (loss) recognized in other comprehensive income (loss), net of taxes

2023

2022

2021

$
$

(708) $
(708) $

12,176 $
12,176 $

5,868
5,868

The following table illustrates the effective portion of gains and losses on derivative instruments recorded in other comprehensive income (loss), net of taxes during the term of

the hedging relationship and reclassified into earnings, and gains and losses on derivatives not designated as hedging instruments recorded directly to earnings during fiscal years
2023, 2022 and 2021 (in thousands):

Derivative Instruments
Forward contracts designated as cash flow
hedging instruments

Consolidated
Statements of Income (Loss)
and Comprehensive
Income (Loss) Location

Cost of sales

Forward contracts designated as cash flow
hedging instruments

Other income (expense)-net

Forward contracts not designated as
hedging instruments

Other income (expense)-net

Effect of Derivative
Instruments

Fiscal Year
2023

Fiscal Year
2022

Fiscal Year 2021

Total gain (loss) reclassified from
accumulated other comprehensive income
(loss)
Total gain (loss) reclassified from
accumulated other comprehensive income
(loss)
Total gain (loss) recognized in income

(1,001) $

10,789 $

2,429

1,002 $

83 $

3,334 $

128 $

(55)

The following table discloses the fair value amounts for the Company's derivative instruments as separate asset and liability values, presents the fair value of derivative

instruments on a gross basis, and identifies the line items in the consolidated balance sheets in which the fair value amounts for these categories of derivative instruments are included
(in thousands):

December 30, 2023

December 31, 2022

December 30, 2023

December 31, 2022

Asset Derivatives

Liability Derivatives

Forward contracts
designated as cash flow
hedging instruments
Forward contracts not
designated as cash flow
hedging instruments
Forward contracts
designated as cash flow
hedging instruments
Total

Consolidated
Balance Sheets
Location

Prepaid expenses and
other current assets

Intangible and other
assets-net

Fair Value

Consolidated
Balance Sheets
Location

Fair Value

Consolidated
Balance Sheets
Location

Fair Value

Consolidated
Balance Sheets
Location

Fair Value

339 Prepaid expenses and

other current assets

— Prepaid expenses and

other current assets

Intangible and other
assets-net

2,783 Accrued expenses-other

1,044 Accrued expenses-other

2,659

— Accrued expenses-other

7 Accrued expenses-other

112 Other long-term liabilities

28 Other long-term liabilities

318

359

2,895

1,079

2,993

The following table summarizes the effects of the Company's derivative instruments on earnings (in thousands):

Total amounts of income and expense line
items presented in the consolidated statements
of income (loss) and comprehensive income
(loss) in which the effects of cash flow hedges
are recorded
Gain (loss) on cash flow hedging relationships:
Forward contracts designated as cash flow
hedging instruments:

Total gain (loss) reclassified from other
comprehensive income (loss)

Forward contracts not designated as cash
flow hedging instruments:

Total gain (loss) recognized in income

Effect of Derivative Instruments

Fiscal Year 2023

Fiscal Year 2022

Cost of Sales

Other Income
(Expense)-net

Cost of Sales

Other Income
(Expense)-net

732,803

8,665

851,760

(1,416)

(1,001)

1,002

10,789

3,334

—

128

At the end of fiscal year 2023, the Company had forward contracts designated as cash flow hedges with maturities extending through March 2025. As of December 30, 2023, an

estimated net loss of $0.6 million is expected to be reclassified into earnings within the next twelve months at prevailing foreign currency exchange rates.

9. 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.

The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of December 30, 2023 (in thousands):

Assets:

Forward contracts

Total
Liabilities:

Contingent consideration
Forward contracts

Total

Fair Value at December 30, 2023

Level 1

Level 2

Level 3

Total

$
$

—
—

—
—
—

$
$

359 $
359 $

— $

1,079
1,079 $

— $
— $

586 $
—
586 $

The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of December 31, 2022 (in thousands):

Assets:

Forward contracts

Total
Liabilities:

Contingent consideration
Forward contracts

Total

Fair Value at December 31, 2022

Level 1

Level 2

Level 3

Total

$
$

—
—

—
—
—

$
$

2,895 $
2,895 $

— $

2,993
2,993 $

— $
— $

3,630 $
—
3,630 $

359
359

586
1,079
1,665

2,895
2,895

3,630
2,993
6,623

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 December 30, 2023, the Company's senior notes (as defined in Note 4— Debt), excluding unamortized debt issuance costs, was recorded at cost and had a carrying value of
$150.0 million and had a fair value of approximately $92.5 million. The fair value of the Company's senior notes was based on Level 1 inputs. The Company's revolving credit agreement
(as defined in Note 4—Debt) was recorded at cost and had a carrying value of $62.1 million and had a fair value of approximately $49.6 million. The fair value of the Company's revolving
credit agreement was based on Level 2 inputs.

Operating lease right-of-use assets with a carrying amount of $4.3 million and property, plant and equipment—net with a carrying amount of $1.1 million related to retail store
leasehold improvements and fixturing were written down to a fair value of $2.7 million and $0.5 million, respectively, resulting in total pre-tax impairment charges of $2.2 million for fiscal
year 2023.

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 $2.2 million impairment expense, $1.5 million and $0.7 million were recorded in long-lived asset impairments in the Europe and Americas segments, respectively.

In fiscal year 2022, operating lease right-of-use assets with a carrying amount of $5.7 million and property, plant and equipment—net with a carrying amount of $0.8 million related

to retail store leasehold improvements, fixturing and shop-in-shops were written down to a fair value of $3.6 million and $0.4 million, respectively, resulting in total pre-tax impairment
charges of $2.5 million. Of the $2.5 million impairment expense, $1.3 million, $0.7 million and $0.4 million were recorded in long-lived asset impairments in the Europe, Americas and Asia
segments, respectively, and $0.1 million was recorded in restructuring charges in the Europe segment.

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 during fiscal year 2023 or fiscal year 2022.

10. Debt

The Company's debt consisted of the following, excluding finance lease obligations, (in millions):

Revolving facility
Notes
Other international

(1)

Total debt

Less current portion
Long-term debt

December 30, 2023

December 31, 2022

62.1 $
150.0
0.5
212.6 $
0.5
212.1 $

73.0
150.0
0.3
223.3
0.3
223.0

___________________________________________
(1)

Excludes debt issuance costs of $5.1 million and $6.9 million at December 30, 2023 and December 31, 2022, respectively.

U.S.-Based. On September 26, 2019, the Company and Fossil Partners L.P., as the U.S. borrowers, and Fossil Group Europe GmbH, Fossil Asia Pacific Limited, Fossil (Europe)

GmbH, Fossil (UK) Limited and Fossil Canada Inc., as the non-U.S. borrowers, certain other subsidiaries of the Company from time to time party thereto designated as borrowers, and
certain subsidiaries of the Company from time to time party thereto as guarantors, entered into a $275.0 million secured asset-based revolving credit agreement (the "Revolving Facility")
with JPMorgan Chase Bank, N.A. as administrative agent (the "ABL Agent"), J.P. Morgan AG, as French collateral agent, JPMorgan Chase Bank, N.A., Citizens Bank, N.A. and Wells
Fargo Bank, National Association as joint bookrunners and joint lead arrangers, and Citizens Bank, N.A. and Wells Fargo Bank, National Association, as co-syndication agents and
each of the lenders from time to time party thereto (the "ABL Lenders"). On November 8, 2022 the Company entered into Amendment No. 4 (the "Amendment”) to the Revolving Facility.
The Amendment, among other things, (i) extended the maturity date of the credit facility to November 8, 2027 (provided, that if the Company has any indebtedness in an amount in
excess of $35 million that matures prior to November 8, 2027, the maturity date of the credit facility shall be the 91st day prior to the maturity date of such other indebtedness) and (ii)
changed the calculation methodology of the borrowing base to include the value of certain of the Company’s intellectual property in such methodology and to provide for seasonal
increases to certain advance rates.

In November 2021, the Company sold $150.0 million aggregate principal amount of 7.00% senior notes due 2026 (the "Notes"), generating net proceeds of approximately
$141.7 million. The Notes were issued pursuant to an indenture (the "Base Indenture") and a first supplemental indenture (the "First Supplemental Indenture" and, together with the
Base Indenture, the "Indenture") with The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee").

The Notes are general unsecured obligations of the Company and rank equally in right of payment with all of the Company’s existing and future senior unsecured and

unsubordinated indebtedness, and will rank senior in right of payment to the Company’s future subordinated indebtedness, if any. The Notes are effectively subordinated to all of the
Company’s

existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, and the Notes are structurally subordinated to all existing and future
indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries (excluding any amounts owed by such subsidiaries to the Company). The Notes bear interest
at the rate of 7.00% per annum. Interest on the Notes is payable quarterly in arrears on February 28, May 31, August 31 and November 30 of each year. The Notes mature on November
30, 2026.

The Company may redeem the Notes for cash in whole or in part at any time at its option. On and after November 30, 2023, the Company may redeem the Notes at the following

prices: (i) after November 30, 2023 and prior to November 30, 2024, at a price equal to $25.50 per $25.00 principal amount of Notes, (ii) on or after November 30, 2024 and prior to
November 30, 2025, at a price equal to $25.25 per $25.00 principal amount of Notes and (iii) on or after November 30, 2025, at a price equal to $25.00 per $25.00 principal amount of Notes,
plus (in each case noted above) accrued and unpaid interest, if any, to, but excluding, the date of redemption.

The Indenture contains customary events of default and cure provisions. If an event of default (other than an event of default of the type described in the following sentence)
occurs and is continuing with respect to the Notes, the Trustee may, and at the direction of the registered holders of at least 25% in aggregate principal amount of the outstanding debt
securities of the Notes shall, declare the principal amount plus accrued and unpaid interest, premium and additional amounts, if any, on the Notes to be due and payable immediately. If
an event of default relating to certain events of bankruptcy, insolvency or reorganization of the Company occurs, the principal amount plus accrued and unpaid interest, and premium, if
any, on the Notes will become immediately due and payable without any action on the part of the Trustee or any holder of the Notes.

The Revolving Facility provides that the ABL Lenders may extend revolving loans in an aggregate principal amount not to exceed $225.0 million at any time outstanding (the

The Revolving Facility is an asset-based facility, in which borrowing availability is subject to a borrowing base equal to: (a) with respect to the Company, the sum of (i) the lesser

of (x) 90% of the appraised net orderly liquidation value of eligible U.S. finished goods inventory and (y) 65% of the lower of cost or market value of eligible U.S. finished goods
inventory, plus (ii) 85% of the eligible U.S. accounts receivable, plus (iii) 90% of eligible U.S. credit card accounts receivable, plus (iv) the lesser of (x) 40% of the appraised net orderly
liquidation value of eligible U.S. intellectual property and (y) $20.0 million, minus (iv) the aggregate amount of reserves, if any, established by the ABL Agent; (b) with respect to each
non-U.S. borrower (except for the French Borrower), the sum of (i) the lesser of (x) 90% of the appraised net orderly liquidation value of eligible foreign finished goods inventory of such
non-U.S. borrower and (y) 65% of the lower of cost or market value of eligible foreign finished goods inventory of such non-U.S. borrower, plus (ii) 85% of the eligible foreign accounts
receivable of such non-U.S. borrower, minus (iii) the aggregate amount of reserves, if any, established by the ABL Agent; and (c) with respect to the French Borrower, (i) 85% of eligible
French accounts receivable minus (ii) the aggregate amount of reserves, if any, established by the ABL Agent. Not more than 60% of the aggregate borrowing base under the Revolving
Facility may consist of the non-U.S. borrowing bases. The above advance rates (other than the advance rates with respect to intellectual property) are seasonally increased by 5% (e.g.
from 90% to 95%) during the period commencing on the date of delivery of the borrowing base certificate with respect to the second fiscal month of the Company and ending on the last
day of the period covered by the borrowing base certificate delivered with respect to the fifth fiscal month of the Company.

The Revolving Facility also includes a commitment fee, payable quarterly in arrears, of 0.250% or 0.375% determined by reference to the average daily unused portion of the overall

commitment under the Revolving Facility. The ABL Borrowers will pay the ABL Agent, on the account of the issuing ABL Lenders, an issuance fee of 0.125% for any issued Letters of
Credit.

The ABL Borrowers have the right to request an increase to the commitments under the Revolving Facility or any subfacility in an aggregate principal amount not to exceed

$75.0 million in increments no less than $10.0 million, subject to certain terms and conditions as defined in the Revolving Facility.

The Revolving Facility is secured by guarantees by the Company and certain of its domestic subsidiaries. Additionally, the Company and such subsidiaries have granted liens on
all or substantially all of their assets in order to secure the obligations under the Revolving Facility. In addition, the Swiss Borrower, the Hong Kong Borrower, the French Borrower, the
German Borrower and the Canadian Borrower, and the other non-U.S. borrowers from time to time party to the Revolving Facility are required to enter into security instruments with
respect to all or substantially all of their assets that can be pledged under applicable local law, and certain of their respective subsidiaries may guarantee the respective non-U.S.
obligations under the Revolving Facility.

The Revolving Facility contains customary affirmative and negative covenants and events of default, such as compliance with annual audited and quarterly unaudited financial

statements disclosures. Upon an event of default, the ABL Agent will have the right to declare the revolving loans and other obligations outstanding immediately due and payable and
all commitments immediately terminated or reduced, subject to cure periods and grace periods set forth in the Revolving Facility.

The Company had payments net of borrowings of $10.9 million under the Revolving Facility during fiscal year 2023. As of December 30, 2023, the Company had available
borrowing capacity of approximately $64.0 million under the Revolving Facility. As of December 30, 2023, the Company had unamortized debt issuance costs of $5.1 million recorded in
long-term debt and $2.5 million recorded in intangible and other assets-net on the Company's consolidated balance sheets. The Company incurred $10.5 million and $5.6 million of
interest expense related to the Notes and Revolving Facility, respectively, during fiscal year 2023. The Company incurred approximately $2.4 million of interest expense related to the
amortization of debt issuance costs during fiscal year 2023. At December 30, 2023, the Company was in compliance with all debt covenants related to its credit facilities.

Foreign-Based. Fossil South Africa entered into a 20 million South African rand short-term note with First National Bank (the "Fossil South Africa Note") that is used for working
capital purposes. The Fossil South Africa Note bears interest at the bank's prime rate, which was 10.5% as of year end 2023, plus 0.5%. The Fossil South Africa note is reviewed annually
for renewal. South African rand-based borrowings, in U.S. dollars, under the Fossil South Africa Note were approximately $0.5 million as of December 30, 2023.

The Company's debt as of December 30, 2023, excluding finance lease obligations, matures as follows (in millions):

Less than 1 Year
Year 2
Year 3
Year 4
Year 5
Principal amounts repayable
Debt issuance costs

Total debt outstanding

11. Other Income (Expense)—Net

Other income (expense)—net consisted of the following (in thousands):

Fiscal Year
Interest income
Contingent consideration remeasurement
Equity in losses of unconsolidated investment
Extinguishment of debt
Net currency (losses) gains
Other net gains
Other income (expense) - net

2023

2022

2021

3,184 $
348
(11)
—
3,023
2,121
8,665 $

772 $

(2,363)
(132)
(1,060)
(218)
1,585
(1,416) $

0.5
—
212.1
—
—
212.6
(5.1)
207.5

407
(347)
(349)
(13,005)
(4,016)
2,810
(14,500)

12. Taxes

Income Taxes. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes

and the amounts used for income tax purposes. Significant components of the consolidated deferred tax assets and liabilities were (in thousands):

Fiscal Year
Deferred income tax assets:

Inventory
Compensation
Property, plant and equipment
Trade names and customer lists
Goodwill
Foreign accruals
Loss carryforwards
Tax credit carryforwards
Capitalized research and development
Interest disallowance
Lease liabilities
Other

Deferred income tax assets total

Deferred income tax liabilities:

Right-of-use assets
Other

Deferred income tax liabilities total

Valuation allowance

Net deferred income tax assets

Deferred income tax assets - net
Deferred income tax liabilities - net

Net deferred income tax assets

2023

2022

1,940 $
6,368
4,611
2,489
6,712
6,785
128,055
11,134
6,882
15,143
40,633
15,207
245,959 $

(32,531)
(97)
(32,628) $

2,985
7,936
2,120
3,819
8,867
4,538
79,130
5,717
6,066
12,701
47,354
15,862
197,095

(36,821)
(281)
(37,102)

(192,603)

(143,347)

20,728 $

21,426 $
(698)
20,728 $

16,646

17,262
(616)
16,646

Operating Loss Carryforwards. At December 30, 2023, the consolidated balance sheets included $74.1 million of deferred tax assets for net operating losses of foreign

subsidiaries. The amounts and the fiscal year of expiration of the loss carryforwards are (in thousands):

Expires 2024 through 2028
Expires 2029 through 2033
Expires 2034 through 2038
Expires 2039 through 2043
Indefinite
Total loss carryforwards

29,334
86,962
37,126
102,217
64,770
320,409

At December 30, 2023, the consolidated balance sheets included $15.5 million of deferred tax assets for state income tax net operating losses. The state apportioned amounts and

the fiscal year of expiration of the loss carryforwards are (in thousands):

Expires 2024 through 2028
Expires 2029 through 2033
Expires 2034 through 2038
Expires 2039 through 2043
Indefinite
Total loss carryforwards

7,975
26,267
49,802
124,558
64,326
272,928

At December 30, 2023, the consolidated balance sheets included $38.5 million of deferred tax assets for federal income tax net operating losses. In the U.S., federal income tax net

operating losses can be carried forward indefinitely, but are limited to 80% of taxable income.

The following table identifies income (loss) before income taxes for the Company's U.S. and non-U.S. based operations for the fiscal years indicated (in thousands):

Fiscal Year
U.S.
Non-U.S.
Total

2023

2022

2021

(130,620) $
(25,517)
(156,137) $

(43,927) $
21,801
(22,126) $

(32,423)
85,474
53,051

The Company's provision for income taxes consisted of the following for the fiscal years indicated (in thousands):

Fiscal Year
Current provision:

U.S. federal
Non-U.S
State and local
Total current

Deferred provision (benefit):

Non-U.S
Total deferred

Provision for income taxes

2023

2022

2021

(3,798) $
8,315
(120)
4,397

(3,875)
(3,875)

522 $

5,901 $
9,944
(98)
15,747

5,653
5,653
21,400 $

1,714
17,027
(274)
18,467

7,960
7,960
26,427

A reconciliation of the U.S. federal statutory income tax rates to the Company's effective tax rate is as follows:

Fiscal Year
Tax at statutory rate
Permanent differences
State, net of federal tax benefit
Foreign rate differential
Withholding taxes
GILTI tax-net of foreign tax credits
U.S. tax on foreign income-net of foreign tax credits
Income tax contingencies
Federal Interest on IRS Refund
Valuation allowances
R&D/Foreign Tax Credits
Deficiencies (Benefits) on employee stock awards
APB23 Assertion
Return to provision true-up
Non deductible foreign equity awards
Non deductible officer compensation
Foreign currency hedges
Adjustments related to intercompany
Other
Provision for income taxes

2023

2022

2021

21.0 %
0.1
2.3
1.8
(2.0)
—
0.3
0.4
2.5
(32.5)
3.5
(0.6)
(0.1)
2.7
(0.2)
(0.1)
—
—
0.6
(0.3)%

21.0 %
(4.9)
8.6
21.5
(19.3)
—
—
(4.8)
—
(110.6)
—
(2.7)
0.6
4.8
(2.0)
(3.4)
1.2
(5.9)
(0.8)
(96.7)%

21.0 %
(2.5)
(2.0)
(3.8)
7.5
5.7
—
3.9
—
31.9
(5.6)
(0.3)
(6.9)
—
0.8
1.0
0.7
0.4
(2.0)
49.8 %

The fiscal year 2023 effective tax rate was unfavorably impacted by foreign withholding tax and valuation allowances on deferred tax assets, partially offset by favorable benefit

from the accrual of interest on tax receivables.

The Company records a valuation allowance against its deferred tax assets when recovery of those amounts on a jurisdictional basis is not more likely than not. The Company's
U.S. valuation allowance analysis was increased by $35.7 million and the foreign valuation allowance on NOL's and deferred tax assets was increased by $13.5 million as compared to
December 31, 2022. The total valuation allowance of $192.6 million at December 30, 2023 was comprised of $111.3 million and $81.3 million attributable to the U.S. and foreign operations,
respectively.

The Company will not indefinitely reinvest $160.3 million of previously taxed and undistributed earnings and profits of its foreign subsidiaries as of December 30, 2023. Since there

will be no additional federal income tax when these amounts are repatriated, the Company has only accrued tax on foreign exchange gains with an offsetting valuation allowance.
Deferred U.S. federal and state income taxes and foreign taxes are not recorded on the remaining $501.3 million of undistributed earnings and profits of foreign subsidiaries where
management plans to continue reinvesting these earnings outside the U.S. As the majority of these earnings have previously been taxed in the U.S., the distribution of the earnings
considered indefinitely reinvested would generally be subject only to local country withholding and U.S. state income taxes when distributed, the amount of which is not material.

The total amount of unrecognized tax benefits, excluding interest and penalties that would favorably impact the effective tax rate in future periods if recognized, was $23.6 million,

$24.0 million and $24.8 million for fiscal years 2023, 2022 and 2021, respectively. The Company filed amended income tax returns for 2014-2017 under the Coronavirus Aid, Relief, and
Economic Security Act (the "CARES Act”) which included a provision for the carryback of U.S. NOLs. The IRS is reviewing the Company’s 2019 and 2020 U.S. tax returns and resulting
net operating losses as well as the tax returns for 2014-2017 which are the carryback years. The Company has received the income tax refund for the 2019 U.S. tax NOL carryback and
expects to receive a tax refund of $56.5 million (including interest) for the 2020 U.S. tax NOL carryback in 2024. Fiscal years 2014-2022

remain open for federal income tax examination. The Company is also subject to examinations in various state and foreign jurisdictions for its 2013-2022 tax years, none of which the
Company believes are significant, individually or in the aggregate. Tax audit outcomes and timing of tax audit settlements are subject to significant uncertainty.

The Company has classified uncertain tax positions as long-term income taxes payable unless such amounts are expected to be paid within twelve months from December 30, 2023.
As of December 30, 2023, the Company had recorded $9.6 million of unrecognized tax benefits, excluding interest and penalties, for positions that could be settled or not assessed within
the next twelve months. Consistent with its past practice, the Company recognizes interest and/or penalties related to income tax overpayments and income tax underpayments in income
tax expense and income taxes receivable/payable, respectively. The total amount of accrued income tax-related interest in the Company's consolidated balance sheets was $5.1 million, of
which $8.9 million is accrued interest expense and $3.8 million is accrued interest income at December 30, 2023; compared to $9.1 million of interest expense at December 31, 2022. The
Company accrued no income tax-related penalties in the Company's consolidated balance sheets at December 30, 2023. The Company accrued income tax-related interest
expense/(income) of $(4.0) million, $0.9 million and $1.5 million in fiscal years 2023, 2022 and 2021, respectively.

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits for the fiscal years indicated (in thousands):

Fiscal Year
Balance at beginning of year
Gross increases—tax positions in prior years
Gross decreases—tax positions in prior years
Gross increases—tax positions in current year
Settlements
Lapse in statute of limitations
Change due to currency revaluation
Balance at end of year

13. Leases

2023

2022

2021

23,998 $
214
—
1,006
(1,583)
(173)
177
23,639 $

29,833 $
1,069
(1,395)
1,275
(5,350)
(171)
(1,263)
23,998 $

31,540
2,266
(3,016)
1,120
(630)
(1,188)
(259)
29,833

The Company's leases consist primarily of retail space, offices, warehouses, distribution centers, equipment and vehicles. The Company determines if an agreement contains a
lease at inception based on the Company's right to the economic benefits of the leased asset and its right to direct the use of the leased asset. ROU assets represent the Company's right
to use an underlying asset, and ROU liabilities represent the Company's obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease
commencement date based on the present value of the lease payments over the lease term. As the Company's leases do not provide an implicit rate, the Company uses its estimated
collateralized incremental borrowing rate, which is based on the yield curve for the respective lease terms and adjusted for each lease country to determine the present value of the lease
payments.

Some leases include one or more options to renew at the Company's discretion, with renewal terms that can extend the lease from one to ten additional years. The renewal options

are not included in the measurement of ROU assets and ROU liabilities unless the Company is reasonably certain to exercise the optional renewal periods. Short-term leases are leases
having a term of twelve months or less at inception. The Company does not record a related lease asset or liability for short-term leases. The Company has certain leases containing
lease and non-lease components which are accounted for as a single lease component. The Company has certain lease agreements where lease payments are based on a percentage of
retail sales over contractual levels and others include rental payments adjusted periodically for inflation. The variable portion of these lease payments is not included in the Company's
lease liabilities. The Company's lease agreements do not contain any significant restrictions or covenants other than those that are customary in such arrangements.

The components of lease expense were as follows (in thousands):

Lease Cost

(1)

Operating lease cost
Short-term lease cost
Variable lease cost

SG&A
SG&A
SG&A

_______________________________________________

(1)

Includes sublease income, which was immaterial.

Consolidated
Statements of Income (Loss)
and Comprehensive
Income (Loss) Location

Fiscal Year 2023

Fiscal Year 2022

$
$
$

72,296
1,145
23,181

$
$
$

76,528
802
27,606

The following table discloses supplemental balance sheet information for the Company’s leases (in thousands):

Leases

Consolidated Balance Sheets Location

December 30, 2023

December 31, 2022

Assets
Operating

Liabilities
Current:

Operating
Noncurrent:
Operating

Operating lease ROU assets

Current operating lease liabilities

Long-term operating lease liabilities

151,000

156,947

43,565

137,644

49,702

150,188

The following table discloses the weighted-average remaining lease term and weighted-average discount rate for the Company's leases:

Lease Term and Discount Rate

December 30, 2023

December 31, 2022

Weighted-average remaining lease term:

Operating leases

Weighted-average discount rate:

Operating leases

Future minimum lease payments by year as of December 30, 2023 were as follows (in thousands):

Fiscal Year
2024
2025
2026
2027
2028
Thereafter
Total lease payments
Less: Interest
Total lease obligations

6.4 years

14.9 %

5.6 years

14.1 %

Operating Leases

70,125
50,188
38,594
27,775
17,693
87,328
291,703
110,494
181,209

Supplemental cash flow information related to leases was as follows (in thousands):

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

Leased assets obtained in exchange for new operating lease liabilities

Fiscal Year 2023

Fiscal Year 2022

86,474 $
41,430

93,245
34,248

As of December 30, 2023, the Company did not have any material operating or finance leases that have been signed but not commenced.

14. Commitments and Contingencies

License Agreements. The Company has various license agreements to market watches and jewelry bearing certain trademarks or incorporating certain technology owned by

third parties. In accordance with these agreements, the Company incurred royalty expense of $129.5 million, $140.5 million and $157.8 million in fiscal years 2023, 2022 and 2021,
respectively. These amounts are included in the Company's cost of sales or, if advertising-related, in SG&A. These license agreements have expiration dates between fiscal years 2024
and 2028 and require the Company to pay royalties ranging from 5% to 22% of defined net sales. The Company has future minimum royalty commitments through fiscal year 2028 under
these license agreements as follows by fiscal year (in thousands):

Fiscal Year
2024
2025
2026
2027
2028
Total

Minimum Royalty
Commitments

111,604
16,205
14,348
14,348
1,448
157,953

These minimum royalty commitments do not include amounts owed under these license agreements for obligations of the Company to pay the licensors a percentage of net sales

of these licensed products.

Purchase Obligations. As of December 30, 2023, the Company had purchase obligations totaling $192.1 million that consisted primarily of open non-cancelable purchase orders.

Asset Retirement Obligations. ASC 410, Asset Retirement and Environmental Obligations requires (i) that the fair value of a liability for an asset retirement obligation be
recognized in the period in which it is incurred if a reasonable estimate of fair value can be made and (ii) that the associated asset retirement costs be capitalized as part of the carrying
amount of the long-lived asset. The Company's asset retirement obligations relate to costs associated with the retirement of leasehold improvements under office leases and retail store
leases within the Americas, Europe and Asia segments.

The following table summarizes the changes in the Company's asset retirement obligations (in thousands):

Fiscal Year
Beginning asset retirement obligation
Additions and changes in estimate
Liabilities settled during the period
Accretion expense
Currency translation
Ending asset retirement obligations

2023

2022

11,547 $
1,356
(1,636)
296
195
11,758 $

13,161
412
(1,608)
308
(726)
11,547

Litigation. The Company is occasionally subject to litigation or other legal proceedings in the normal course of its business. In addition, from time to time, the Company receives

communications from government or regulatory agencies concerning investigations or allegations of noncompliance with laws or regulations in jurisdictions in which the Company
operates. The Company does not believe the outcome of any currently pending legal matters, individually or collectively, will have a material effect on the business or financial condition
of the Company.

15. Stockholders' Equity

Common and Preferred Stock. The Company has 100,000,000 shares of common stock, par value $0.01 per share, authorized, with 52,487,020 and 51,836,456 shares issued and
outstanding at fiscal year end 2023 and 2022, respectively. The Company has 1,000,000 shares of preferred stock, par value $0.01 per share, authorized, with none issued or outstanding
at fiscal year-end 2023 and 2022. Rights, preferences and other terms of preferred stock will be determined by the Board of Directors at the time of issuance.

Common Stock Repurchase Programs. Purchases of the Company's common stock have been made from time to time pursuant to its repurchase programs, subject to market

conditions and at prevailing market prices, through the open market. Repurchased shares of common stock are recorded at cost and become authorized but unissued shares which may
be issued in the future for general corporate or other purposes. In the event the repurchased shares are canceled, the Company accounts for retirements by allocating the repurchase
price to common stock, additional paid-in capital and retained earnings. The repurchase price allocation is based upon the equity contribution associated with historical issuances. The
repurchase programs have been conducted pursuant to Rule 10b-18 of the Securities Exchange Act of 1934.

In August 2010, the Board of Directors approved a common stock repurchase program pursuant to which up to $30 million could be used to repurchase outstanding shares of our

common stock. The $30 million repurchase program has no termination date. During fiscal year 2022, the Company effectively retired 1.0 million shares of common stock repurchased
under its repurchase programs. The effective retirement of repurchased common stock decreased common stock by $10,000, additional paid-in capital by $0.5 million, retained earnings
by $9.5 million and treasury stock by $10.0 million. At December 30, 2023 and December 31, 2022, all treasury stock had been effectively retired. As of December 30, 2023, the Company
had $20.0 million of repurchase authorizations remaining under its repurchase plan.

16. Employee Benefit Plans

Savings Plans. The Company has a defined contribution savings plan (the "401(k) Plan") for substantially all U.S.-based full-time employees of the Company, which includes a
Roth 401(k) option. The Company's common stock is one of several investment alternatives available under the 401(k) Plan. The Company has a discretionary match for the 401(k) Plan.
Matching contributions made by the Company to the 401(k) Plan totaled approximately $2.5 million, $2.6 million and $2.3 million for fiscal years 2023, 2022 and 2021, respectively. The
Company also has the right to make additional matching contributions not to exceed 15% of employee compensation. The Company did not make any additional matching contributions
during fiscal years 2023, 2022 and 2021.

Stock-Based Compensation Plans. The Company’s grants under its current stock-based compensation plans generally include: (i) stock options, restricted stock units, and

performance restricted stock units for its international employees, (ii) restricted stock units for its nonemployee directors, and (iii) stock appreciation rights, performance stock
appreciation rights, restricted stock, restricted stock units, and performance restricted stock units for its U.S.-based employees. As of

December 30, 2023, the Company had approximately $5.6 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under
the Company's stock-based compensation plans. This cost is expected to be recognized over a weighted-average period of 1.4 years. All time-based or performance-based stock
appreciation rights and restricted stock units are settled in shares of the Company's common stock.

Long-Term Incentive Plans. An aggregate of 3,000,000 shares of the Company's common stock were reserved for issuance pursuant to the Company's 2016 Long-Term Incentive

Plan ("2016 Plan"), adopted in March 2016. Pursuant to the First Amendment to the Company’s 2016 Long-Term Incentive Plan, which was approved by our stockholders on May 23,
2018, the number of shares of the Company’s common stock authorized for issuance under the Company’s 2016 Plan was increased from 3,000,000 to 10,288,468, such additional shares
consisting of (i) 5,000,000 additional shares of common stock and (ii) up to 2,288,468 shares of common stock subject to awards under the Company’s 2008 Long-Term Incentive Plan
(the "2008 Plan”) that were outstanding on March 31, 2018 and, on or after March 31, 2018, are forfeited, expire or are canceled.

Under the 2016 Plan, designated employees of the Company, including officers, certain contractors, and non-employee directors of the Company, are eligible to receive (i) stock
options, (ii) stock appreciation rights, (iii) restricted or non-restricted stock awards, (iv) restricted stock units, (v) performance awards, (vi) cash awards, or (vii) any combination of the
foregoing. The 2016 Plan is administered by The Compensation and Talent Management Committee (the "Compensation Committee"). Each award issued under the 2016 Plan terminates
at the time designated by the Compensation Committee, not to exceed ten years. The current outstanding stock options, stock appreciation rights, performance stock appreciation rights,
restricted stock, restricted stock units and performance restricted stock units issued under the 2016 Plan predominantly have original vesting periods of three years. Time-based or
performance-based stock appreciation rights and restricted stock units are predominately settled in shares of the Company's common stock. On the date of the Company’s annual
stockholders meeting, each non-employee director automatically receives restricted stock units which vest 100% on the earlier of one year from the date of grant or the date of the
Company's next annual stockholders meeting, provided such director is providing services to the Company or a subsidiary of the Company on that date. Beginning with the grant in
fiscal year 2021, non-employee directors may elect to defer receipt of all or a portion of the restricted stock units settled in common stock of the Company upon the vesting date. In
addition, beginning in fiscal year 2021, non-employee directors may defer the cash portion of their annual fees. Each participant may also elect to have the cash portion of his or her
annual fees for each calendar year treated as if invested in units of common stock of the Company.

Stock Appreciation Rights. The fair value of stock appreciation rights granted under the Company's stock-based compensation plans were estimated on the date of grant using

the Black-Scholes option pricing model.

Expected stock price volatility is based on the historical volatility of the Company’s common stock. The risk-free interest rate is based on the implied yield available on U.S.

Treasury securities with an equivalent remaining term. The Company did not issue stock options, stock appreciation rights and performance stock appreciation rights in fiscal years
2023, 2022 and 2021.

The following table summarizes stock appreciation rights activity:

Stock Appreciation Rights

Outstanding at January 2, 2021
Granted
Exercised
Forfeited or expired
Outstanding at January 1, 2022
Granted
Exercised
Forfeited or expired
Outstanding at December 31, 2022
Granted
Exercised
Forfeited or expired
Outstanding at December 30, 2023
Exercisable at December 30, 2023

Shares
in thousands

Weighted-Average
Exercise Price

Weighted-Average
Remaining
Contractual
Term (Years)

Aggregate
Intrinsic
Value
in thousands

383
—
—
(101)
282
—
—
(181)
101
—
—
(62)
39
39

75.05
—
—
82.57
72.34
—
—
81.57
55.31
—
—
59.92
47.99
47.99

1.9 $

1.5

0.9

0.2
0.2 $

—

—
—

The aggregate intrinsic value in the table above is before income taxes and is based on the exercise price for outstanding and exercisable options/rights at December 30, 2023 and

based on the fair market value of the Company's common stock on the exercise date for options/rights that were exercised during the fiscal year.

Stock Appreciation Rights Outstanding and Exercisable. The following table summarizes information with respect to stock appreciation rights outstanding and exercisable at

December 30, 2023:

Range of Exercise Prices

$47.99 - $71.98

Total

Stock Appreciation Rights Outstanding

Number of
Shares
in thousands

Weighted-Average
Exercise Price

39
39

$
$

47.99
47.99

Weighted-Average
Remaining
Contractual
Term (Years)

Stock Appreciation
Rights Exercisable

Number of
Shares
in thousands

Weighted-
Average
Exercise
Price

0.2
0.2

39
39

$
$

47.99
47.99

Table of Contents

FOSSIL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Restricted Stock Units and Performance Restricted Stock Units. The following table summarizes restricted stock, restricted stock unit and performance restricted stock unit

activity:

Restricted Stock Units and Performance Restricted Stock Units

Nonvested at January 2, 2021
Granted
Vested
Forfeited
Nonvested at January 1, 2022
Granted
Vested
Forfeited
Nonvested at December 31, 2022
Granted
Vested
Forfeited
Nonvested at December 30, 2023

Number of
Shares
in thousands

Weighted-Average
Grant Date Fair
Value Per Share

1,736
1,033
(861)
(68)
1,840
1,292
(936)
(229)
1,967
1,367
(845)
(571)
1,918

7.90
13.19
9.80
9.42
9.93
10.52
10.16
10.79
10.08
3.04
8.60
8.48
6.19

The total fair value of shares/units vested during fiscal years 2023, 2022 and 2021 was $2.6 million, $9.4 million and $10.4 million, respectively.

Other Retirement Plans. The Company maintains a defined benefit plan for its employees located in Switzerland. The plan is funded through payments to an insurance company.
The payments are determined by periodic actuarial calculations. During fiscal years 2023, 2022 and 2021, the Company recorded pension gains (expenses) of $5.5 million, $0.2 million and
($0.6) million, respectively, related to this plan. The liability for the Company's defined benefit plan was $4.8 million and $4.0 million at the end of fiscal years 2023 and 2022, respectively.
This liability is recorded in other long-term liabilities on the Company's consolidated balance sheets.

Under French law, the Company is required to maintain a defined benefit plan for its employees located in France, which is referred to as a "retirement indemnity." The amount of
the retirement indemnity is based on the employee's last salary and duration of employment with the Company. The employee's right to receive the retirement indemnity is subject to the
employee remaining with the Company until retirement. During fiscal years 2023, 2022 and 2021, the Company recorded pension gains (expenses) of $0.1 million, ($46,000), and $0.1
million, respectively, for its retirement indemnity obligations. The liability for the Company's retirement indemnity was $0.9 million and $1.0 million at the end of fiscal years 2023 and 2022,
respectively. This liability is recorded in other long-term liabilities on the Company's consolidated balance sheets.

17. Supplemental Cash Flow Information

The following table summarizes supplemental cash flow information (in thousands):

Fiscal Year
Cash paid during the year for:

Interest
Income taxes, net of refunds

Supplemental disclosures of non-cash investing and financing activities:

Additions to property, plant and equipment included in accounts payable
Additions to property, plant and equipment acquired under finance leases

2023

2022

2021

$
$

27,297 $
20,162 $

943 $
— $

17,501 $
5,836 $

1,039 $
— $

16,078
(16,695)

581
9

Table of Contents

FOSSIL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

18. Supplemental Disclosure for Accumulated Other Comprehensive Income (Loss)

The following table illustrates changes in the balances of each component of accumulated other comprehensive income (loss), net of taxes (in thousands):

Beginning balance

Other comprehensive income (loss) before reclassifications
Tax (expense) benefit
Amounts reclassed from accumulated other comprehensive income (loss)
Tax (expense) benefit

Total other comprehensive income (loss)
Ending balance

Beginning balance

Other comprehensive income (loss) before reclassifications
Tax (expense) benefit
Amounts reclassed from accumulated other comprehensive income (loss)
Tax (expense) benefit

Total other comprehensive income (loss)
Ending balance

Beginning balance

Other comprehensive income (loss) before reclassifications
Tax (expense) benefit
Amounts reclassed from accumulated other comprehensive income (loss)
Tax (expense) benefit

Total other comprehensive income (loss)
Ending balance

December 30, 2023

Cash Flow Hedges

Currency
Translation
Adjustments

Forward
Contracts

Pension
Plan

Total

(90,681) $
6,775
—
—
—
6,775
(83,906) $

2,397 $
(1,461)
753
(788)
789
(709)
1,688 $

11,966 $
(6,209)
56
—
—
(6,153)
5,813 $

(76,318)
(895)
809
(788)
789
(87)
(76,405)

December 31, 2022

Cash Flow Hedges

Currency
Translation
Adjustments

Forward
Contracts

Pension
Plan

Total

(75,601) $
(15,080)
—
—
—
(15,080)
(90,681) $

4,344 $
11,097
1,079
13,145
978
(1,947)
2,397 $

3,982 $
8,050
(66)
—
—
7,984
11,966 $

(67,275)
4,067
1,013
13,145
978
(9,043)
(76,318)

January 1, 2022

Cash Flow Hedges

Currency
Translation
Adjustments

Forward
Contracts

Pension
Plan

Total

850 $

5,860
8
2,374
—
3,494
4,344 $

1,428 $
2,859
(305)
—
—
2,554
3,982 $

(58,900)
(5,704)
(297)
2,374
—
(8,375)
(67,275)

(61,178) $
(14,423)
—
—
—
(14,423)
(75,601) $

Table of Contents

FOSSIL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

19. Major Customer, Segment and Geographic Information

Major Customer

Wholesale customers of the Company consist principally of major department stores and specialty retail stores located throughout the world. No individual customer accounts for

10% or more of the Company's net sales.

Segment Information

The Company reports segment information based on the "management approach". The management approach designates the internal reporting used by management for making

decisions and assessing performance as the source of the Company's reportable segments.

The Company manages its business primarily on a geographic basis. The Company's reportable operating segments are comprised of (i) Americas, (ii) Europe and (iii) Asia. Each

reportable operating segment includes sales to wholesale and distributor customers, and sales through Company-owned retail stores and e-commerce activities based on the location of
the selling entity. The Americas segment primarily includes sales to customers based in Canada, Latin America and the United States. The Europe segment primarily includes sales to
customers based in European countries, the Middle East and Africa. The Asia segment primarily includes sales to customers based in Australia, China (including Hong Kong, Macau
and Taiwan), India, Indonesia, Japan, Malaysia, New Zealand, Singapore, South Korea and Thailand. Each reportable operating segment provides similar products and services.

The Company evaluates the performance of its reportable segments based on net sales and operating income (loss). Net sales for geographic segments are based on the location of

the selling entity. Operating income (loss) for each segment includes net sales to third parties, related cost of sales and operating expenses directly attributable to the segment.
Corporate includes peripheral revenue generating activities from factories and intellectual property and general corporate expenses, including certain administrative, legal, accounting,
technology support costs, equity compensation costs, payroll costs attributable to executive management, brand management, product development, art, creative/product design,
marketing, strategy, compliance and back office supply chain expenses that are not allocated to the various segments because they are managed at the corporate level internally. The
Company does not include intercompany transfers between segments for management reporting purposes.

Summary information by operating segment was as follows (in thousands):

Americas
Europe
Asia
Corporate
Consolidated

Net Sales

Operating
Income (Loss)

Fiscal Year 2023
Depreciation
and
Amortization

640,779 $
437,358
328,198
6,049
1,412,384 $

82,746 $
40,962
38,162
(304,894)
(143,024) $

3,734
4,907
2,508
13,279
24,428

Net Sales

Operating
Income (Loss)

744,027 $
541,343
377,600
19,469
1,682,439 $

116,401 $
91,087
52,090
(261,051)

(1,473) $

Fiscal Year 2022
Depreciation
and
Amortization

4,834
5,856
3,071
8,870
22,631

Long-term
Assets

Total Assets

72,512 $
76,115
58,192
60,521
267,340 $

266,691
213,929
191,886
305,524
978,030

Long-term
Assets

Total Assets

84,247 $
86,200
48,054
74,327
292,828 $

343,556
269,097
206,925
418,550
1,238,128

Table of Contents

Americas
Europe
Asia
Corporate
Consolidated

FOSSIL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Net Sales

Operating
Income

785,923 $
610,217
455,157
18,739
1,870,036 $

157,012 $
109,964
70,949
(245,288)

92,637 $

Fiscal Year 2021
Depreciation
and
Amortization

Long-term
Assets

Total Assets

6,227
9,000
3,969
9,912
29,108

91,840 $
102,437
60,373
91,314
345,964 $

332,822
329,579
215,611
490,707
1,368,719

The following table shows revenue for each class of similar products for fiscal years 2023, 2022 and 2021 (in thousands):

Watches:
Traditional watches
Smartwatches
Total watches
Leathers
Jewelry
Other
Total

Geographic Information

Fiscal Year 2023

Fiscal Year 2022

Fiscal Year 2021

Net Sales

Percentage
of Total

Net Sales

Percentage
of Total

Net Sales

Percentage
of Total

1,015,077
80,949
1,096,026
158,427
131,410
26,521
1,412,384

71.9 % $
5.7
77.6 % $
11.2
9.3
1.9

100.0 % $

1,158,889
151,602
1,310,491
178,542
154,105
39,301
1,682,439

68.9 % $
9.0
77.9 % $
10.6
9.2
2.3

100.0 % $

1,288,499
223,899
1,512,398
157,642
158,845
41,151
1,870,036

68.9 %
12.0
80.9 %
8.4
8.5
2.2
100.0 %

Net sales and long-term assets related to the Company's operations in the U.S., Europe, Asia and all other international markets were as follows (in thousands):

United States
Europe
Asia
All other international
Consolidated

Fiscal Year 2023

Net Sales

(1)
514,666
438,148
330,869
128,701
1,412,384

(2)
(3)

Fiscal Year 2022

Net Sales

(1)
619,981
543,585
381,845
137,028
1,682,439

(2)
(3)

Long-term
Assets

107,085
85,575
64,211
10,469
267,340

Long-term
Assets

133,100
96,365
53,050
10,313
292,828

Table of Contents

United States
Europe
Asia
All other international
Consolidated

FOSSIL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Fiscal Year 2021

Net Sales

(1)
682,900
614,249
458,241
114,646
1,870,036

(2)
(3)

Long-term
Assets

150,119
117,713
65,693
12,439
345,964

_______________________________________________________________________________

(1)
(2)

(3)

Net sales are based on the location of the selling entity (including exports).
Net sales from Germany (including exports) accounted for more than 10% of the Company's consolidated net sales and were approximately $173.3 million, $194.1 million and
$237.1 million in fiscal years 2023, 2022 and 2021, respectively.
Net sales from China (including Hong Kong, Macau and Taiwan and exports) accounted for more than 10% of the Company's consolidated net sales and were approximately
$140.4 million, $174.2 million and $261.4 million in fiscal years 2023, 2022 and 2021, respectively.

20. Restructuring

In the first quarter of fiscal year 2023, the Company announced its Transform and Grow plan ("TAG") designed to reduce operating costs, improve operating margins, and advance the
Company’s commitment to profitable growth. The Company has now expanded the scope and duration of TAG to focus on a more comprehensive review of its global business
operations. The expansion of TAG will put greater emphasis on initiatives to exit or minimize certain product offerings, brands and distribution, and to strengthen gross margin and
increase the level of operating expense efficiencies. TAG is estimated to generate approximately $300 million of annualized operating income benefits by the end of 2025. The Company
estimates approximately $100 million to $120 million in total charges over the duration of TAG and estimates approximately $35 million of charges in fiscal year 2024. Aided by these
measures, the Company's long-term goal is to achieve adjusted gross margins in the low to mid 50% range and adjusted operating margins of approximately 10%.

The following table shows a summary of TAG plan charges (in thousands):

Fiscal Year
Cost of sales
Selling, general and administrative

expenses

Consolidated

Fiscal Year 2023

5,537

43,279
48,816

The following table shows a rollforward of the accrued liability related to the Company’s TAG plan (in thousands):

Fiscal Year 2023

Stores and facilities closures
Professional services
Severance and employee-related benefits
Charges related to exits of certain product offerings
Total

$
$

Liabilities

December 31, 2022

Charges

Cash Payments

Non-cash Items

December 30, 2023

—
—
—
—
—

$
$

7,245 $
6,648
29,386
5,537 $
48,816 $

— $

6,531
20,951
1,716 $
29,198 $

7,245 $
—
318
— $
7,563 $

—
117
8,117
3,821
12,055

TAG plan restructuring charges by operating segment were as follows (in thousands):

Table of Contents

FOSSIL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Americas
Europe
Asia
Corporate
Consolidated

2023

4,582
9,812
12,519
21,903
48,816

In fiscal year 2022, the Company completed its New World Fossil 2.0 ("NWF 2.0”) restructuring program it launched in 2019. The following tables show a rollforward of the accrued

liability related to the Company’s NWF 2.0 restructuring plan (in thousands):

Professional services
Severance and employee-
related benefits
Total

Fiscal Year 2023

Liabilities

December 31, 2022
74

Cash Payments
74

December 30, 2023
—

2,821
2,895

—
—

Fiscal Year 2022

Store closures
Professional services
Severance and employee-related benefits
Total

Liabilities

January 1, 2022

Charges

Cash Payments

Non-cash Items

December 31, 2022

Liabilities

300
643
4,388
5,331

787 $
166
5,168
6,121 $

612 $
735
6,431
7,778 $

475 $
—
304
779 $

—
74
2,821
2,895

Fiscal Year 2021

Liabilities

January 2, 2021

Charges

Cash Payments

Non-cash Items

January 1, 2022

Liabilities

240 $

2,280
7,741
10,261 $

1,215 $
5,695
14,979
21,889 $

500 $

7,332
18,332
26,164 $

655 $
—
—
655 $

300
643
4,388
5,331

Table of Contents

NWF 2.0 restructuring charges by operating segment were as follows (in thousands):

Americas
Europe
Asia
Corporate
Consolidated

2022

2021

234 $

1,754
1,610
2,523
6,121 $

2,356
9,868
5,072
4,593
21,889

Table of Contents

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We conducted an evaluation of the effectiveness of our "disclosure controls and procedures" ("Disclosure Controls"), as defined by Rules 13a-15(e) and 15d-15(e) of the

Exchange Act as of December 30, 2023, the end of the period covered by this Annual Report on Form 10-K. The Disclosure Controls evaluation was done under the supervision and with
the participation of management, including our CEO and CFO. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures. Accordingly, even
effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.

Based upon this evaluation, our CEO and CFO have concluded that our Disclosure Controls were effective at the reasonable assurance level as of December 30, 2023.

Management's Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.

The Company's internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the
consolidated financial statements for external reporting purposes in accordance with generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of the effectiveness of

internal control over financial reporting to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance
with the policies or procedures may deteriorate over time.

Management, including our CEO and our CFO, assessed the effectiveness of the Company's internal control over financial reporting as of December 30, 2023. In making this
assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013).
Based on its assessment and those criteria, management has concluded that the Company maintained effective internal control over financial reporting as of December 30, 2023.

Deloitte & Touche LLP, the independent registered public accounting firm that audited the Company's consolidated financial statements included in this Annual Report on

Form 10-K, has issued an attestation report on the Company's internal control over financial reporting, which is included herein.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended December 30, 2023 that materially affected, or are reasonably likely to materially

affect, our internal control over financial reporting.

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of Fossil Group, Inc.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Fossil Group, Inc. and subsidiaries (the "Company”) as of December 30, 2023, based on criteria established in Internal
Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all
material respects, effective internal control over financial reporting as of December 30, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by
COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements and
financial statement schedule as of and for the year ended December 30, 2023, of the Company and our report, dated March 13, 2024, expressed an unqualified opinion on those
consolidated financial statements and financial statement schedule.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial
reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal
control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such
other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and
that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte & Touche LLP

Dallas, Texas
March 13, 2024

Table of Contents

Item 9B. Other Information

None of the Company’s directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the Company’s quarter

ended December 30, 2023.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information under the headings "Directors and Nominees," "Executive Officers," "Delinquent Section 16(a) Reports" and "Board Committees and Meetings" in our proxy

statement to be filed with the SEC pursuant to Regulation 14A, not later than 120 days after the end of the fiscal year covered by this report, is incorporated herein by reference.

We have adopted a code of ethics that applies to all our directors and employees, including the principal executive officer, principal financial officer, principal accounting officer

and controller. The full text of our Code of Conduct and Ethics is published on the Investors section of our website at www.fossilgroup.com. We intend to disclose any future
amendments to certain provisions of the Code of Conduct and Ethics, or waivers of such provisions granted to executive officers and directors, on this website within five business
days following the date of any such amendment or waiver.

Item 11. Executive Compensation

The information required in response to this Item is incorporated herein by reference to our proxy statement to be filed with the SEC pursuant to Regulation 14A, not later than

120 days after the end of the fiscal year covered by this report.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required in response to this Item is incorporated herein by reference to our proxy statement to be filed with the SEC pursuant to Regulation 14A, not later than

120 days after the end of the fiscal year covered by this report.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required in response to this Item is incorporated herein by reference to our proxy statement to be filed with the SEC pursuant to Regulation 14A, not later than

120 days after the end of the fiscal year covered by this report.

Item 14. Principal Accountant Fees and Services

The information required in response to this Item is incorporated herein by reference to our proxy statement to be filed with the SEC pursuant to Regulation 14A, not later than

120 days after the end of the fiscal year covered by this report.

Table of Contents

Item 15. Exhibits and Consolidated Financial Statement Schedules

(a) Documents filed as part of Report.

PART IV

1. Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34)

Consolidated Balance Sheets
Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
Consolidated Statements of Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements

2. Consolidated Financial Statement Schedule: See "Schedule II"
3. Exhibits required to be filed by Item 601 of Regulation S-K

The exhibits required to be filed by this Item 15 are set forth in the Exhibit Index accompanying this report.

Item 16. Form 10-K Summary

None.

Page

48
50
51
52
53
54
91
92

Table of Contents

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,

thereunto duly authorized.

March 13, 2024

FOSSIL GROUP, INC.

SIGNATURES

/s/ JEFFREY N. BOYER
Jeffrey N. Boyer,
Interim Chief Executive Officer and Director

________________________________________________________________________________________________________________________

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities

and on the dates indicated.

Signature

/s/ JEFFREY N. BOYER
Jeffrey N. Boyer

/s/ SUNIL M. DOSHI
Sunil M. Doshi
/s/ MARK R. BELGYA
Mark R. Belgya
/s/ WILLIAM B. CHIASSON
William B. Chiasson
/s/ SUZANNE M. COULTER
Suzanne M. Coulter
/s/ KIM HARRIS JONES
Kim Harris Jones
/s/ KEVIN MANSELL
Kevin Mansell
/s/ MARC R. Y. REY
Marc R. Y. Rey
/s/ GAIL B. TIFFORD
Gail B. Tifford

Interim Chief Executive Officer and Director (Principal Executive Officer)

March 13, 2024

Capacity

Date

Executive Vice President, Chief Financial Officer
and Treasurer (Principal Financial and Accounting Officer)

Director

Chairman of the Board of Directors

Director

March 13, 2024

Table of Contents

Classification
Fiscal Year 2021:

Account receivable allowances:

Bad debts
Markdowns

Sales returns
Deferred tax asset valuation allowance

Fiscal Year 2022:

Account receivable allowances:

Bad debts
Markdowns

Sales returns
Deferred tax asset valuation allowance

Fiscal Year 2023:

Account receivable allowances:

Bad debts
Markdowns

Sales returns
Deferred tax asset valuation allowance

SCHEDULE II
FOSSIL GROUP, INC. AND SUBSIDIARIES
VALUATIONS AND QUALIFYING ACCOUNTS
Fiscal Years 2021, 2022 and 2023
(in thousands)

Balance at
Beginning of
Period

Charged
to
Operations

Charged to Other
Accounts

Additions

Deductions
Actual
Returns or
Writeoffs

Balance at
End of Period

$
$
$
$

20,774 $
15,613 $
49,826 $
109,250 $

16,388 $
13,768 $
40,121 $
122,953 $

14,647 $
8,461 $
35,820 $
143,346 $

3,070 $
27,385 $
75,936 $
20,535 $

6,305 $
23,736 $
90,092 $
14,794 $

3,535 $
31,325 $
95,812 $
50,493 $

— $
— $
— $
(2,706) $

— $
— $
— $
5,599 $

— $
— $
— $
1,769 $

7,456
29,230
85,641
4,126

8,046
29,043
94,393
—

5,566
32,243
98,234
3,005

$
$
$
$

16,388
13,768
40,121
122,953

14,647
8,461
35,820
143,346

12,616
7,543
33,398
192,603

Table of Contents

Exhibit
Number

EXHIBIT INDEX

Description

3.1

3.2

3.3

3.4

4.1

4.2
4.3

4.4
10.1 (2)

10.2 (2)

10.3

10.4

10.5 (2)

10.6 (2)

10.7 (2)

10.8

10.9

10.10 (2)

10.11 (2)
10.12 (2)

10.13 (2)

Third Amended and Restated Certificate of Incorporation of Fossil Group, Inc. (incorporated by reference to Exhibit 3.1 to the Company's Current
Report on Form 8-K filed on May 25, 2010).
Certificate of Amendment of the Third Amended and Restated Certificate of Incorporation of Fossil, Inc. (incorporated by reference to Exhibit 3.1 to
the Company's Current Report on Form 8-K filed on May 28, 2013).
Certificate of Amendment of the Third Amended and Restated Certificate of Incorporation of Fossil, Inc. (incorporated by reference to Exhibit 3.1 to
the Company's Current Report on Form 8-K/A filed on June 28, 2023).
Sixth Amended and Restated Bylaws of Fossil Group, Inc. (incorporated by reference to Exhibit 3.4 of the Company's Quarterly Report on Form 10-Q
filed on November 9, 2023).
The description of Fossil Group, Inc.’s Common Stock (incorporated by reference to Exhibit 4.1 to the Company's Annual Report on Form 10-K filed
on February 27, 2020).
Indenture, dated as of November 8, 2021, by and between Fossil Group, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee.
First Supplemental Indenture, dated as of November 8, 2021, by and between Fossil Group, Inc. and The Bank of New York Mellon Trust Company,
N.A., as trustee.
Form of 7.00% Senior Notes due 2026 (included in Exhibit 4.2).
Fossil Group, Inc. Savings and Retirement Plan (incorporated by reference to Exhibit 10.1 to the Company's Annual Report on Form 10-K filed on
March 2, 2018).
Fossil Group, Inc. 2008 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on
May 23, 2008).
Master License Agreement dated as of August 30, 1994, by and between Fossil Group, Inc. and Fossil Partners, L.P. (incorporated by reference to
Exhibit 10.6 to the Company's Annual Report on Form 10-K filed on March 2, 2011).
Agreement of Limited Partnership of Fossil Partners, L.P. (incorporated by reference to Exhibit 10.7 to the Company's Annual Report on Form 10-K
filed on March 2, 2011).
Form of Executive Severance Agreement (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on January 8,
2016).

Fossil Group, Inc. 2016 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.27 to the Company's Annual Report on Form 10-K filed on
March 1, 2017).
First Amendment to the Fossil Group, Inc. 2016 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company's Quarterly
Report on Form 10-Q filed August 9, 2018).
Credit Agreement, dated as of September 26, 2019, by and among Fossil Group, Inc., Fossil Partners, L.P., Fossil Group Europe GmbH, Fossil Asia
Pacific Limited, Fossil (Europe) GmbH, Fossil (UK) Limited, Fossil Canada Inc. and certain lenders party thereto, JPMorgan Chase Bank, N.A., as
administrative agent and an issuing lender, J.P. Morgan AG, as French collateral agent, JPMorgan Chase Bank, N.A., Citizens Bank, N.A. and Wells
Fargo Bank, National Association, as joint bookrunners and joint lead arrangers and Citizens Bank, N.A. and Wells Fargo Bank, National
Association, as co-syndication agents (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on October 1,
2019).
Amendment No. 2 to the Credit Agreement, dated as of April 24, 2020, by and among Fossil Group, Inc., Fossil Partners, L.P., Fossil Group Europe
GmbH, Fossil Asia Pacific Limited, Fossil (Europe) GmbH, Fossil (UK) Limited, Fossil Canada Inc., Fossil France S.A., the lenders party thereto and
JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed on
April 27, 2020).
Fossil Group, Inc. 2020 Cash Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January
3, 2020).
Fossil Group, Inc. 2021 Deferred Plan for Director Fees
Performance Restricted Stock Unit Award Under the Fossil Group, Inc. 2016 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to
the Company’s Quarterly Report on Form 10-Q filed on May 13, 2021).
Restricted Stock Unit Award Under the Fossil Group, Inc. 2016 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company’s
Quarterly Report on Form 10-Q filed on May 13, 2021).

Exhibit
Number

10.14 (2)

10.15

10.16 (2)

10.17 (2)

10.18 (2)

10.19 (2)

10.20 (2)

10.21 (2)

21.1 (1)
23.1 (1)
31.1 (1)
31.2 (1)
32.1 (3)

32.2 (3)

97 (1)(2)

101.INS (1)
101.SCH(1)
101.DEF (1)
101.CAL(1)
101.LAB(1)
101.PRE(1)
104

Description
Restricted Stock Unit Award for Outside Directors Under the Fossil Group, Inc. 2016 Long-Term Incentive Plan (incorporated by reference to Exhibit
10.3 to the Company’s Quarterly Report on Form 10-Q filed on May 13, 2021).
Amendment No. 4, dated as of November 8, 2022, among Fossil Group, Inc., Fossil Partners, L.P., Fossil Intermediate, Inc., Fossil Stores I, Inc., Fossil
Trust, Fossil Group GmbH, Fossil Asia Pacific Limited, Fossil (Europe) GmbH, Fossil (UK) Limited, Fossil Canada Inc., Fossil France SAS, Fossil
Stores France SAS, FAST Europe SARL, and JPMorgan Chase Bank, N.A., as administrative agent, and the other agents and lenders party thereto
(incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on November 10, 2022).
Performance Restricted Stock Unit Award Under the Fossil Group, Inc. 2016 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 of
the Company’s Quarterly Report on Form 10-Q filed on May 12, 2022)
Restricted Stock Unit Award Under the Fossil Group, Inc. 2016 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2 of the Company’s
Quarterly Report on Form 10-Q filed on May 12, 2022)
Amendment No. 1 to the Fossil Group, Inc. 2020 Cash Incentive Plan (incorporated by reference to Exhibit 10.18 of the Company's Annual Report on
Form 10-K filed on March 9, 2023).
Amendment Number Two to the Fossil Group, Inc. 2020 Cash Incentive Plan (incorporated by reference to Exhibit 10.1 of the Company's Quarterly
Report on Form 10-Q filed on November 9, 2023).
Form of Indemnification Agreement signed by directors and executive officers (incorporated by reference to Exhibit 10.2 of the Company's Quarterly
Report on Form 10-Q filed on November 9, 2023).
Severance Agreement, dated as of November 6, 2023, by and between the Company and Sunil M. Doshi (incorporated by reference to Exhibit 10.3 of
the Company's Quarterly Report on Form 10-Q filed on November 9, 2023)
Subsidiaries of Fossil Group, Inc.
Consent of Independent Registered Public Accounting Firm.
Certification of Chief Executive Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
Certification of Chief Executive Officer Pursuant to Section 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
Certification of Chief Financial Officer Pursuant to Section 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
Fossil Group, Inc. Compensation Recovery Policy
Inline XBRL Instance Document.
Inline XBRL Taxonomy Extension Schema Document.
Inline XBRL Taxonomy Extension Definition Linkbase Document.
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
Inline XBRL Taxonomy Extension Label Linkbase Document.
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

________________________________________________________________________

(1)
(2)
(3)

Filed herewith.
Management contract or compensatory plan or arrangement.
Furnished herewith.

Subsidiaries of Fossil Group, Inc.
as of December 30, 2023

EXHIBIT 21.1

Name of Subsidiary

Fossil Intermediate, Inc.
Fossil Stores I, Inc.
Fossil Canada, Inc.
Fossil Europe B.V.
Fossil Japan, Inc
Fossil Holdings, LLC
Fossil (Gibraltar) Ltd.
Fossil International Holdings, Inc.
Fossil (East) Limited
Swiss Technology Holding GmbH
Fossil Trust
Fossil Partners, L.P.
Fossil Mexico, S.A. de C.V.
Servicios Fossil Mexico, S.A. de C.V.
Fossil Luxembourg Sarl
Pulse Time Center Company, Ltd.
Fossil (Hong Kong) Ltd
Fossil Singapore Pte. Ltd.
FDT, Ltd.
Fossil (Australia) Pty Ltd.
Fossil Time Malaysia Sdn. Bhd.
Fossil Industries Ltd.
Fossil Trading (Shanghai) Company Ltd.
Fossil (Korea) Limited
Fossil India Private Ltd.
Fossil Asia Pacific Ltd.
Fossil Commercial (Shanghai) Company Ltd.
Fossil Vietnam LLC
Fossil Services (Shenzhen) Co. Ltd.
Fossil (New Zealand) Limited
Pulse Time Center (Shenzhen) Co. Ltd.
Fossil (Macau) Limited
Fossil Europe GmbH
Fossil Italia, S.r.l.
Fossil S.L.U.
Fossil U.K. Holdings Ltd.
FESCO GmbH
Fossil Switzerland GmbH

Place of
Incorporation
Delaware
Delaware
Canada
the Netherlands
Japan
Delaware
Gibraltar
Delaware
Hong Kong
Switzerland
Delaware
Texas
Mexico
Mexico
Luxembourg
Hong Kong
Hong Kong
Singapore
Hong Kong
Australia
Malaysia
Hong Kong
China
Korea
India
Hong Kong
China
Vietnam
China
New Zealand
China
Macau
Germany
Italy
Spain
United Kingdom
Germany
Switzerland

Fossil (Austria) GmbH
Fossil Sweden AB
Fossil Stores Belgium BVBA
Fossil Belgium BVBA
Fossil Accessories South Africa Pty Ltd
Fossil Poland Spolka ZOO
Fossil France SAS
Fast Europe Sarl
Fossil Norway AS
Fossil Denmark A/S
Fossil Stores France SAS
Fossil Stores S.r.l.
Fossil U.K. Ltd.
Montres Antima SA
In Time-Distribuicao de Relogios, SUL
Fossil Group Europe, GmbH
Swiss Technology Production SA
Latin America Services, Ltd
Fossil Shared Services GmbH
Fossil Services LLC
Fossil Global Services India LLP
Katchin GmbH
Katchin Inc
Fossil Trading (Beijing) Company Ltd.

Austria
Sweden
Belgium
Belgium
South Africa
Poland
France
France
Norway
Denmark
France
Italy
United Kingdom
Switzerland
Portugal
Switzerland
Switzerland
British Virgin Islands
Germany
Delaware
India
Switzerland
USA
China

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement Nos. 33-65980, 333-151645, 333-212293, 333-225667 on Form S-8 and Registration Statement No. 333-259352 on
Form S-3 of our reports dated March 13, 2024, relating to the financial statements of Fossil Group, Inc. and subsidiaries and the effectiveness of Fossil Group, Inc. and subsidiaries’
internal control over financial reporting, appearing in this Annual Report on Form 10-K of Fossil Group, Inc. for the year ended December 30, 2023.

EXHIBIT 23.1

/s/ Deloitte & Touche LLP

Dallas, Texas
March 13, 2024

EXHIBIT 31.1

I, Jeffrey N. Boyer, certify that:

CERTIFICATION

I have reviewed this Annual Report on Form 10-K of Fossil Group, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which
this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles;

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the
registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over
financial reporting; and

The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the
audit committee of the registrant's board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the
registrant's ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

March 13, 2024

/s/ JEFFREY N. BOYER
Jeffrey N. Boyer
Interim Chief Executive Officer and Director

QuickLinks

EXHIBIT 31.1

CERTIFICATION

EXHIBIT 31.2

I, Sunil M. Doshi, certify that:

CERTIFICATION

I have reviewed this Annual Report on Form 10-K of Fossil Group, Inc.;

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

March 13, 2024

/s/ SUNIL M. DOSHI
Sunil M. Doshi
Executive Vice President, Chief Financial Officer
and Treasurer (Principal Financial and Accounting Officer)

QuickLinks

EXHIBIT 31.2

CERTIFICATION

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

EXHIBIT 32.1

In connection with the Annual Report of Fossil Group, Inc. (the "Company") on Form 10-K for the fiscal year ended December 30, 2023 as filed with the Securities and Exchange

Commission on the date hereof (the "Form 10-K"), I, Jeffrey N. Boyer, Interim Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to
§906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1)

(2)

The Form 10-K fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: March 13, 2024

/s/ JEFFREY N. BOYER
Jeffrey N. Boyer
Interim Chief Executive Officer and Director

A signed original of this written statement required by Section 906 has been provided to Fossil Group, Inc. and will be retained by Fossil Group, Inc. and furnished to the

Securities and Exchange Commission or its staff upon request.

The foregoing certification is being furnished as an exhibit to the Form 10-K pursuant to Item 601(b)(32) of Regulation S-K and Section 906 of the Sarbanes-Oxley Act of 2002

(subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and, accordingly, is not being filed as part of the Form 10-K for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any
general incorporation language in such filing.

QuickLinks

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

EXHIBIT 32.2

In connection with the Annual Report of Fossil Group, Inc. (the "Company") on Form 10-K for the fiscal year ended December 30, 2023 as filed with the Securities and Exchange
Commission on the date hereof (the "Form 10-K"), I, Sunil M. Doshi, Senior Vice President, Chief Financial Officer and Treasurer of the Company, hereby certify, pursuant to 18 U.S.C.
§1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1)

(2)

The Form 10-K fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: March 13, 2024

/s/ SUNIL M. DOSHI
Sunil M. Doshi
Executive Vice President, Chief Financial Officer
and Treasurer (Principal Financial and Accounting Officer)

A signed original of this written statement required by Section 906 has been provided to Fossil Group, Inc. and will be retained by Fossil Group, Inc. and furnished to the

Securities and Exchange Commission or its staff upon request.

The foregoing certification is being furnished as an exhibit to the Form 10-K pursuant to Item 601(b)(32) of Regulation S-K and Section 906 of the Sarbanes-Oxley Act of 2002

QuickLinks

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Fossil Group, Inc.
Compensation Recovery Policy
(As adopted August 29, 2023)

Exhibit 97

This Compensation Recovery Policy (this "Policy”) of Fossil Group, Inc.(the "Company”) is hereby adopted as of August 29, 2023 to be effective October 2, 2023 (the
"Effective Date”) by the Compensation and Talent Management Committee (the "Committee”) of the Board of Directors of the Company (the "Board”) in
compliance with Section 10D of the Securities Exchange Act of 1934 and Rule 5608 of the Nasdaq Listing Rules. Certain terms shall have the meanings set forth in
"Section 3. Definitions” below.

Section 1. Recovery Requirement

Subject to Section 4 of this Policy, in the event the Company is required to prepare an Accounting Restatement, then the Committee hereby directs the Company, to the
fullest extent permitted by governing law, to recover from each Executive Officer the amount received by an Executive Officer, if any, of Erroneously Awarded
Compensation, with such recovery occurring reasonably promptly after the Restatement Date relating to such Accounting Restatement. An Executive Officer shall be
deemed to have "received” Incentive-Based Compensation in the Company’s fiscal period during which the Financial Reporting Measure specified in the Incentive-
Based Compensation award is attained, even if the payment or grant of the Incentive-Based Compensation occurs after the end of that fiscal period.

The Committee may effect recovery in any manner consistent with applicable law including, but not limited to, (a) seeking reimbursement of all or part of any
Erroneously Awarded Compensation previously received by an Executive Officer and to the extent that the Executive Officer does not reimburse such Erroneously
Awarded Compensation, suing and enforcing recovery against the Executive Officer for repayment of the Erroneously Awarded Compensation, together with any
expenses incurred by the Company in enforcing such recovery, (b) cancelling prior grants of Incentive-Based Compensation, whether vested or unvested, restricted or
deferred, or paid or unpaid, and through the forfeiture of previously vested equity awards, (c) cancelling or setting-off against planned future grants of Incentive-Based
Compensation, (d) deducting all or any portion of such Erroneously Awarded Compensation from any other remuneration payable by the Company to such Executive
Officer, and (e) any other method authorized by applicable law or contract.

The Company’s right to recovery pursuant to this Policy is not dependent on if or when the Accounting Restatement is filed with the Securities and Exchange
Commission.

Section 2. Incentive-Based Compensation Subject to this Policy.

This Policy applies to all Incentive-Based Compensation received by each Executive Officer on or after the Effective Date:

(i) if such Incentive-Based Compensation was received on and after the date such person became an Executive Officer of the Company;

(ii) if such Executive Officer served as an Executive Officer at any time during the performance period for that Incentive-Based Compensation; and

(iii) if such Incentive-Based Compensation was received during the three completed fiscal years immediately preceding the Restatement Date (including any
transition period that results from a change in the Company’s fiscal year that is within or immediately following those three completed fiscal years; provided that a
transition period of nine to 12 months is deemed to be a completed fiscal year).

This Policy shall apply and govern Incentive-Based Compensation received by any Executive Officer, notwithstanding any contrary or supplemental term or condition in
any document, plan or agreement including without limitation any employment contract, indemnification agreement, equity agreement, or equity plan document.

Section 3. Definitions:

For purposes of this Policy, the following terms have the meanings set forth below:

•

"Accounting Restatement” means an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement
under the securities laws, including any required accounting restatement to correct an error (i) in previously issued financial statements that is material to the
previously issued financial statements (commonly referred to as a "Big R” restatement) or (ii) that would result in a material misstatement if the error were
corrected in the current period or left uncorrected in the current period (commonly referred to as a "little r” restatement).

"Erroneously Awarded Compensation” means the amount of Incentive-Based Compensation received that exceeds the amount of Incentive-Based
Compensation that otherwise would have been received by the Executive Officer had it been determined based on the restated amounts in the Accounting
Restatement (computed without regard to any taxes paid). For Incentive-Based Compensation based on stock price or total shareholder return ("TSR”), where
the amount of Erroneously Awarded Compensation is not subject to mathematical recalculation directly from the information in the Accounting Restatement the
Company shall: (i) base the calculation of the amount on a reasonable estimate of the effect of the Accounting Restatement on the stock price or TSR upon
which the Incentive-Based Compensation received was based; and (ii) retain documentation of the determination of that reasonable estimate and provide such
documentation to the Nasdaq Stock Market or, if a class of securities of the Company is no longer listed on the Nasdaq Stock Market, such other national
securities exchange or national securities association on which a class of the Company’s securities is then listed for trading.

"Executive Officer” has the meaning set forth in Rule 5608(d) of the Nasdaq Listing Rules.

"Financial Reporting Measures” has the meaning set forth in Rule 5608(d) of the Nasdaq Listing Rules.

"Incentive-Based Compensation” means any compensation that is granted, earned, or vested based wholly or in part upon the attainment of a Financial
Reporting Measure (including, without limitation, stock price or TSR), including, any short-term or long-term incentive awards, cash bonuses, restricted stock
awards or restricted stock unit awards that vest based on achievement of a Financial Reporting Measure. Equity awards that vest exclusively upon completion
of a specified employment period, without any performance condition, and bonus awards that are discretionary or based on subjective goals or goals unrelated
to Financial Reporting Measures, do not constitute Incentive-Based Compensation.

"Restatement Date” means the earlier to occur of (i) the date the Board or the Committee (or an officer or officers of the Company authorized to take such
action if Board action is not required) concludes, or reasonably should have concluded, that the Company is required to prepare an Accounting Restatement and
(ii) the date a court, regulator, or other legally authorized body directs the Company to prepare an Accounting Restatement.

Section 4. Exceptions to Recovery

Notwithstanding the foregoing, the Company is not required to recover Erroneously Awarded Compensation to the extent that the Committee has made a determination
that recovery would be impracticable and that:

(i) the direct expense paid to a third party to assist in enforcing this Policy would exceed the amount to be recovered (provided, that, before concluding that it would
be impracticable to recover based on the expense of enforcement, the Company must make a reasonable attempt to recover such Erroneously Awarded
Compensation and must document such attempts and provide such documentation has to the Nasdaq Stock Market);

(ii) recovery would violate one or more laws of the home country that were adopted prior to November 28, 2022 (provided, that, before concluding that it would be
impracticable to recover based on violation of home country law, the Company must obtain an opinion of home country counsel, acceptable to the Nasdaq Stock
Market, that recovery would result in a such a violation and provide a copy of such opinion to the Nasdaq Stock Market);

(iii) recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of the Company and its

subsidiaries, to fail to meet the requirements of 26 U.S.C. 401(a)(13) or 26 U.S.C. 411(a) and regulations thereunder; or

(iv) any other exception permitted under Rule 5608 of the Nasdaq Listing Rules.

Section 5. No Right to Indemnification or Insurance

The Company shall not indemnify any Executive Officer against the loss of Erroneously Awarded Compensation or losses arising from any claims relating to the
Company’s enforcement of this Policy. In addition, the Company shall not pay, or reimburse any Executive Officer for, any premiums for a third-party insurance policy
purchased by the Executive Officer or any other party that would fund any of the Executive Officer’s potential recovery obligations under this Policy.
Section 6. Award Agreements and Plan Documents
The Committee further directs the Company to include clawback language in each of the Company’s incentive compensation plans such that each individual who
receives Incentive-Based Compensation under those plans understands and agrees that all or any portion of such Incentive-Based Compensation may be subject to
recovery by the Company, and such individual may be required to repay all or any portion of such Incentive-Based Compensation, if (i) recovery of such Incentive-
Based Compensation is required by this Policy, (ii) such Incentive-Based Compensation is determined to be based on materially inaccurate financial and/or performance
information (which includes, but is not limited to, statements of earnings, revenues or gains); or (iii) repayment of such Incentive-Based Compensation is required by
applicable federal or state securities and/or banking laws.
Section 7. Interpretation and Amendment of this Policy

The Committee, in its discretion, shall have the sole authority to interpret and make any determinations regarding this Policy. Any interpretation, determination, or other
action made or taken by the Committee shall be final, binding, and conclusive on all interested parties. The determination of the Committee need not be uniform with
respect to one or more officers. The Committee may amend this Policy from time to time in its discretion and shall amend the Policy to comply applicable law or with
any rules or standards adopted by the Nasdaq Stock Market or any national securities exchange on which the Company’s securities are then listed. The Committee
may terminate this Policy at any time.

Section 8. Other Recoupment Rights.
The Company intends that this Policy will be applied to the fullest extent of the law. Any right of recoupment under this Policy is in addition to, and not in lieu of, any
other remedies or rights of recoupment that may be available to the Company pursuant to the terms of any similar policy in any employment agreement, equity award
agreement, or similar agreement and any other remedies available to the Company under applicable law. Without by implication limiting the foregoing, following a
restatement of the Company’s financial statements, the Company also shall be entitled to recover any compensation received by the Chief Executive Officer and Chief
Financial Officer that is required to be recovered by Section 304 of the Sarbanes-Oxley Act of 2002.