Fossil, Inc. Reports Record Fourth Quarter and Fiscal Year 2012 Results

Fossil, Inc. Reports Record Fourth Quarter and Fiscal Year 2012 Results

        Fourth Quarter Net Sales Increase 14% to a Record $948 Million

Fourth Quarter EPS Increases 34% to a Record $2.51; Adjusted EPS Reaches $2.27

               Provides First Quarter and Fiscal 2013 Guidance

RICHARDSON, Texas, Feb. 12, 2013 (GLOBE NEWSWIRE) -- Fossil, Inc.
(Nasdaq:FOSL) (the "Company") today reported its financial results for the
fourth quarter and fiscal year ended December 29, 2012.

Fourth Quarter Operating Highlights

  *Net sales grew in all segments, compared to the prior fiscal year period:

    *North America wholesale sales increased 15%
    *Europe wholesale sales increased 4%
    *Asia wholesale sales increased 19%
    *Direct to consumer sales increased 20%

  *Global retail comps increased 2.4%, the 19^th consecutive quarter of
    positive comps
  *Operating income increased 17% and operating margin expanded 60 basis
    points to 21.6%

Full Fiscal Year 2012 Operating Highlights

  *Net sales increased in all segments compared to the prior fiscal year
  *Global retail comps increased 3.1%
  *Operating income grew 4% and operating margin declined 130 basis points to
    17.1%
  *Invested $261 million to repurchase 3.0 million shares of Fossil common
    stock
  *EPS increased 21%, reaching a record of $5.59

The Company reported record net earnings of $151.1 million for the fourth
quarter of fiscal 2012, a 28% increase compared to $117.9 million for the
fourth quarter of fiscal 2011. Diluted earnings per share increased 34% to
$2.51, also a record, compared to $1.87 for the prior fiscal year fourth
quarter.

"We are pleased to report strong fourth quarter sales and earnings, concluding
another record year of growth and significant progress toward our long-term
goals," stated Kosta Kartsotis, Chief Executive Officer. "During the quarter,
we grew sales in each of our major geographies and improved the overall
profitability of our business, validating the strength of our business model
and driven by our compelling portfolio of brands. Globally, consumers
recognize Fossil for design innovation, and that drove our 19th consecutive
quarter of comparable store sales increases. The year was equally strong, with
Asia delivering our highest growth rate, as we continue to focus our resources
on the long-term potential of this region. We achieved our third consecutive
year of double-digit watch sales growth, successfully integrated and
positioned our newly-acquired SKAGEN^® brand for long term growth and added
key management talent to our global team. We managed our resources tightly and
once again generated strong cash flows, allowing us to continue to invest
substantial capital in our share repurchase program."

"Last year's accomplishments position us well for the future," continued Mr.
Kartsotis. "Our global distribution and supply chain, our design and
management talent and our dynamic portfolio of brands afford us a significant
competitive advantage. We see many markets around the world with compelling
prospects to leverage that advantage and gain market share. We remain
positioned to capitalize on our opportunities and deliver sustained and
consistent growth, as we grow our watch business and our FOSSIL^® and SKAGEN
lifestyle brands around the world.We will continue to invest in our
infrastructure and build a world-class management team, dedicated to enhancing
productivity and profitability.Above all, our goal is to build a diversified,
scalable and predictable business model that generates solid cash flows and
delivers outstanding returns for our shareholders."

Operating Results

The translation impact of a stronger U.S. dollar decreased the Company's
reported net sales by approximately $5.8 million and $56.7 million during the
fourth quarter and full fiscal year, respectively. The following discussion of
the Company's net sales is based on constant dollar performance. 

Fourth quarter fiscal 2012 worldwide net sales rose 14.8% or $122.7 million,
as sales grew in each segment compared to the prior fiscal year's fourth
quarter. The net sales growth was driven by the continued double-digit
expansion of the global watch portfolio.Additionally, the April 2012 SKAGEN
brand acquisition generated $43.5 million of net sales in the fourth quarter.
Sales in the Company's jewelry category increased modestly, while sales in
other categories, including leathers, declined in the quarter.For the full
fiscal year, worldwide net sales increased by 13.5% or $347.0 million, with
sales increasing in each segment. SKAGEN branded sales contributed $93.8
million to fiscal 2012.

Net sales from the North America wholesale segment in the fiscal 2012 fourth
quarter increased 15.0%, or $46.0 million, which included the anticipated
positive impact of a shift in certain wholesale customer shipments to the
fourth quarter from the third quarter.The North American sales growth
resulted from an increase in watch sales, the addition of the SKAGEN brand,
where sales reached $15.0 million, and a modest increase in jewelry
sales.These improvements were partially offset by lower shipments in other
categories, including leathers.Wholesale shipments increased in the U.S.,
Canada and Mexico as well as to third party distributors.

Europe wholesale net sales rose 7.6%, or $17.0 million, in the fiscal 2012
fourth quarter compared to the prior fiscal year period.Sales growth was
driven by increases in the watch category as well as the addition of the
SKAGEN brand, which generated sales of $19.2 million.Sales in other
categories declined in the quarter, as shipments were affected by overall
economic conditions as well as the repositioning of the FOSSIL jewelry
product.Growth was strongest in the UK and France, while shipments declined
in Germany and Italy.

Asia Pacific wholesale net sales rose 18.6%, or $16.1 million, in the fiscal
2012 fourth quarter in comparison to the prior fiscal year fourth quarter,
including $4.5 million from the SKAGEN brand.The period-over-period growth in
sales was driven primarily by the strong performance of the watch category.

Direct to consumer net sales for the fiscal 2012 fourth quarter increased by
20.4%, or $43.6 million, compared to the prior fiscal year fourth quarter.The
sales increase was primarily driven by expansion of the global retail store
base coupled with a 2.4% increase in comparable store sales.Growth in watches
and leathers drove the sales increase, along with higher sales from the
Company's repositioned jewelry products.

The Company's fourth quarter fiscal 2012 operating profit increased 17.4%, or
$30.4 million, compared to the prior fiscal year period, including a negative
impact of $13.9 million related to foreign currency translation.Fourth
quarter operating margin expanded 60 basis points to 21.6%, compared to 21.0%
for the same period a year earlier.Despite currency headwinds, gross margin
expanded as a result of fewer off-price sales, as the Company grows its outlet
channel, select price increases across certain business, production
efficiencies and the favorable net impact of product and segment mix. In
addition, the Company's operating expense rate increased 20 basis points to
35.3% compared to 35.1% in the prior fiscal year quarter.In the fiscal 2012
fourth quarter, operating expenses increased in comparison to the prior fiscal
year quarter, primarily as a result of the addition of Skagen, expansion of
the Company's store base and infrastructure investments in the Asia Pacific
region and in corporate.Fiscal 2012 fourth quarter operating expenses also
benefited $6.4 million as a result of the revaluation of the Company's
liability related to the Skagen purchase.

For the full fiscal year, operating profit increased 3.6%, or $16.8 million,
compared to the prior fiscal year, including a negative impact of $43.8
million related to foreign currency translation.Full fiscal 2012 operating
margin declined 130 basis points to 17.1%, compared to 18.4% a year
earlier.Full fiscal 2012 gross margin increased slightly as the impact of
outlet expansion, select price increases, product mix, production efficiencies
and the increase in the direct to consumer and Asia Pacific wholesale
distribution channels more than offset the negative impact of foreign currency
translation.The Company's operating expense rate increased for the full 2012
fiscal year, as infrastructure investments to drive growth in newer markets
and support the Company's global initiatives, including the expansion of
retail stores, more than offset leverage on the Company's existing expense
structure.

Other income expense, net, which primarily relates to gains and losses on
foreign currency contracts and account balances was $2.4 million in the fiscal
2012 fourth quarter, compared to a $4.5 million net charge in the prior fiscal
year quarter.For the full 2012 fiscal year, other net income, net was $8.5
million, compared to an $18.0 million net charge for fiscal 2011. The
Company's effective income tax rate declined from 27.3% in the fiscal 2011
fourth quarter, to 25.6% in the fiscal 2012 fourth quarter, including a $10.8
million audit settlement benefit.The full year effective income tax rate
declined from 31.9% in fiscal 2011, to 28.0% in fiscal 2012.

Share Repurchase

During the fourth quarter of fiscal 2012, the Company invested $65.0 million
in repurchasing 744,000 shares of the Company's common stock at an average
price of $87.33 per share.As of December 29, 2012, the Company had remaining
authority to purchase $1.068 billion of its common stock.

Sales and Earnings Guidance

For the first quarter of fiscal 2013, the Company expects:

  oNet sales to increase approximately 10%
  oOperating margin in a range of 12.5% to 13.5%
  oDiluted earnings per share in a range of $0.93 to $0.98

For the full fiscal year 2013, the Company expects:

  *Net sales to increase between 10% and 11%
  *Operating margin in a range of 16.5% to 17.0%
  *Diluted earnings per share in a range of $5.85 to $6.15

The Company's expectations assume that current foreign currency exchange rates
that affect the Company's financial results remain at prevailing levels.The
Company's first quarter and full fiscal year 2013 diluted earnings per share
guidance includes a negative $0.05 per share impact related to this year's
misalignment between the Company's fiscal calendar and the National Retail
Federation calendar, on which many of the Company's customers operate.

Safe Harbor

Certain statements contained herein that are not historical facts constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 and involve a number of risks and
uncertainties.The actual results of the future events described in such
forward-looking statements could differ materially from those stated in such
forward-looking statements.Among the factors that could cause actual results
to differ materially are: changes in economic trends and financial
performance, changes in consumer demands, tastes and fashion trends, lower
levels of consumer spending resulting from a general economic downturn, shifts
in market demand resulting in inventory risks, changes in foreign currency
exchange rates, and the outcome of current and possible future litigation, as
well as the risks and uncertainties set forth in the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 2011 and its Quarterly
Reports on Form 10‑Q filed with the Securities and Exchange Commission (the
"SEC").

About Fossil

Fossil is a global design, marketing and distribution company that specializes
in consumer fashion accessories.The Company's principal offerings include an
extensive line of men's and women's fashion watches and jewelry sold under
proprietary and licensed brands, handbags, small leather goods, belts,
sunglasses, soft accessories, shoes and clothing. In the watch and jewelry
product categories, the Company's offerings include a diverse portfolio of
globally recognized proprietary and licensed brand names under which its
products are marketed. The Company's extensive range of accessory products,
brands, distribution channels and price points allows it to target
style-conscious consumers across a wide age spectrum on a global basis.The
Company's products are sold to department stores, specialty retail stores and
specialty watch and jewelry stores in the U.S. and in approximately 130
countries worldwide through 23 Company-owned foreign sales subsidiaries and a
network of over 60 independent distributors.The Company also distributes its
products in over 400 Company-owned and operated retail stores and through
international e-commerce websites and the Company's U.S. e-commerce website at
www.fossil.com, where certain product, press release and SEC filing
information concerning the Company are also available.

The Fossil, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=3296

                                                               
Consolidated Income                                             
Statement Data (in         For the 13    For the 13    For the 52  For the 52
millions, except per share Weeks Ended   Weeks Ended   Weeks Ended Weeks Ended
data):
                          December 29, December 31, December   December
                          2012          2011          29,         31,
                                                       2012        2011
                                                               
Net sales                  $ 947.7     $ 830.8     $ 2,857.5 $ 2,567.3
                                                               
Cost of sales              408.0         364.9         1,251.0     1,128.1
                                                               
Gross profit               539.7         465.9         1,606.5     1,439.2
                                                               
Selling and distribution   255.9         220.2         826.9       715.4
expenses
                                                               
General and administrative 79.0          71.3          290.8       251.8
expenses
                                                               
Operating income           204.8         174.4         488.8       472.0
                                                               
Interest expense           1.5           1.1           5.1         2.4
                                                               
Other income (expense)–   2.4           (4.5)         8.5         (18.0)
net
                                                               
Income before income taxes 205.7         168.8         492.2       451.6
                                                               
Tax provision              52.8          46.0          137.9       144.2

Less:Net income           1.8           4.9           10.9        12.7
attributable to
noncontrolling interest
Net income attributable to                                      
Fossil, Inc.               $ 151.1     $ 117.9     $ 343.4   $ 294.7
                                                               
Basic earnings per share   $2.53     $1.88     $5.63    $4.66
                                                               
Diluted earnings per share $2.51      $1.87      $5.59    $4.61

Weighted average common                                         
shares outstanding:
                                                               
Basic                     59.8         62.6         61.0        63.3
                                                               
Diluted                   60.2          63.2          61.4       64.0

                                                                
                                                                
                                                                
                                                    December 29, December 31,
Consolidated Balance Sheet Data (in millions):       2012         2011
                                                    $ 737.3   $ 844.1
Working capital

Cash, cash equivalents and securities available      177.4        287.7
forsale
                                                    363.5        302.5
Accounts receivable, net of allowances
                                                    506.3        489.0
Inventories
                                                    1,842.0      1,642.9
Total assets
                                                    2.8          9.0
Short-term debt
                                                    75.1         6.2
Long-term debt
                                                    119.6        128.6
Deferred taxes and other long-term liabilities
                                                    1,240.5      1,116.8
Stockholders' equity

                                               
                                               
Business Segment Sales Amounts                   Percentage of Total
($ in millions)        For the 13 Weeks Ended    For the 13 Weeks Ended
                      December 29, December 31, December 29, December 31,
                       2012         2011         2012         2011
Wholesale:                                                 
North America          $ 354.7    $ 307.1    37.4%        37.0%
Europe                 232.9      223.5      24.6%        26.9%
Asia Pacific           102.8      86.4        10.9%        10.4%
Total wholesale        690.4      617.0      72.9%      74.3%
                                                          
Direct to consumer     257.3        213.8        27.1%        25.7%
Total net sales                                100.0%       100.0%
                       $947.7     $830.8

                                               
                                               
                                               
Business Segment Sales Amounts                   Percentage of Total
($ in millions)        For the 52 Weeks Ended    For the 52 Weeks Ended
                      December 29, December 31, December 29, December 31,
                       2012         2011         2012         2011
Wholesale:                                                 
North America          $ 1,083.5 $ 967.5    37.9%        37.7%
Europe                 697.0      695.4      24.4%        27.1%
Asia Pacific           361.5       297.0       12.7%        11.5%
Total wholesale        2,142.0    1,959.9    75.0%      76.3%
                                                          
Direct to consumer     715.5        607.4        25.0%        23.7%
Total net sales                                100.0%       100.0%
                       $2,857.5   $2,567.3

                                         
                                         
Product Category Information              
                                         
Product Sales   Amounts                   Amounts
(in millions)   For the 13 Weeks Ended    For the 52 Weeks Ended
               December 29, December 31, December 29, December 31,
                2012         2011         2012         2011
Watches         $ 729.3    $607.1     $2,141.5    $1,843.9
Leathers        132.2       136.9        440.1       427.8
Jewelry         64.7         62.5         181.6       190.1
Other           21.5         24.3         94.3        105.5
Total net sales $947.7     $ 830.8     $2,857.5    $2,567.3

                                                  
                                                  
Store Count Information                            

                     Fourth Quarter Fiscal 2012   Fourth Quarter Fiscal 2011
                     North   Other         Total North   Other         
                      America International        America International Total
Full price accessory  106    145         251   103    142          245
Outlets               99     58           157   75     29           104
Clothing              31     2            33    32     4            36
Full price            5       13           18    2      11           13
multi-brand
SKAGEN branded        6       8             14    --   --       --
Total stores          247    226          473   212    186          398

Constant Currency Financial Information

The following table presents the Company's business segment sales on a
constant currency basis.To calculate net sales on a constant currency basis,
net sales for the current fiscal year period for entities reporting in
currencies other than the U.S. dollar are translated into U.S. dollars at the
actual effective rates during the comparable period of the prior fiscal year.

                 Net Sales                    Net Sales
(in millions)   For the 13 Weeks Ended       For the 52 Weeks Ended
                 December 29, 2012            December 29, 2012
                          Impact of                    Impact of 
                 As      Foreign             As        Foreign
                Reported Currency   Constant Reported   Currency   Constant
                          Exchange   Currency            Exchange   Currency
                          Rates                          Rates
Wholesale:                                                     
North America   $354.7 $1.6     $353.1 $1,083.5 $(2.2)   $1,085.7
Europe           232.9   (7.6)     240.5   697.0     (43.2)    740.2
Asia Pacific     102.8    0.3       102.5   361.5      (3.2)    364.7
Total wholesale  690.4   (5.7)     696.1   2,142.0   (48.6)    2,190.6
                                                              
Direct to        257.3   (0.1)     257.4   715.5      (8.1)     723.6
consumer
                                                              
Total net sales  $947.7  $(5.8)    $953.5 $2,857.5 $(56.7)  $2,914.2

Non-GAAP Financial Information

The information below has been presented on a GAAP basis and on an as adjusted
basis excluding the impact of costs related to the acquisition of Skagen and
an income tax audit settlement.These adjusted presentations are non-GAAP
financial measures.Management believes these measures provide investors with
useful supplemental information regarding the Company's underlying business
trends and the performance of the Company's ongoing operations and are useful
for period-over-period comparisons and projected earnings of such operations.
In addition, management uses these non-GAAP financial measures internally in
its budgeting and review process.

While management believes that these non-GAAP financial measures are useful in
evaluating the Company's business, this information should be considered as
supplemental in nature and should be viewed in addition to, and not in lieu of
or superior to, the Company's operating performance measures calculated in
accordance with GAAP.In addition, these non-GAAP financial measures may not
be the same as similarly titled measures presented by other companies.

                           For the 13 Weeks Ended  For the 52 Weeks Ended
                             December 29, 2012       December 29, 2012
                             Amounts     As a        Amounts     As a
                           (in        Percentage   (in        Percentage
                             millions)   of Net       millions)   of Net Sales
                                         Sales
                                                              
Pretax income, as reported   $205.7     21.7%        $492.2      17.2%
under GAAP
                                                              
Skagen acquisition items:                                      
Acquisition-related
transaction and transition   1.4        0.2%         8.7         0.3%
costs
Mark-to-market of liability
related to contingent        (6.4)       (0.7%)       (9.9)       (0.3%)
purchase price

Pretax income, as adjusted   $200.7     21.2%        $491.0      17.2%

                                                                
                                                                
                                                     For the 13   For the 52
                                                    Weeks Ended  Weeks Ended
                                                     December 29, December 29,
                                                     2012        2012
                                                                
Diluted earnings per share, as reported under GAAP   $2.51        $5.59
                                                                 
Skagen acquisition items (net of tax):                            
Acquisition-related transaction and transition costs 0.02         0.10
Mark-to-market of liability related to contingent    (0.08)       (0.12)
purchase price
Income tax benefit from prior year audit settlements (0.18)       (0.18)
                                                                
Diluted earnings per share, as adjusted              $2.27        $5.39

CONTACT: Dennis Secor
         Chief Financial Officer
         Fossil, Inc.
         (972) 699-6820
        
         Investor Relations:
         Allison Malkin
         ICR, Inc.
         (203) 682-8225

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