10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended: April 4, 2015

OR

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

For the transition period from                     to                    

Commission file number: 000-19848

FOSSIL GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware	75-2018505
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
901 S. Central Expressway, Richardson, Texas	75080
(Address of principal executive offices)	(Zip Code)

(972) 234-2525

(Registrant’s telephone number, including area code)

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 o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (check one):

Large accelerated filer x	Accelerated filer o
Non-accelerated filer o	Smaller reporting company o
(Do not check if a smaller reporting company)

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

The number of shares of the registrant’s common stock outstanding as of April 30, 2015: 48,810,385

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

FOSSIL GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

UNAUDITED

IN THOUSANDS

	April 4,			January 3,
	2015			2015
Assets
Current assets:
Cash and cash equivalents	$	236,843		$	276,261
Accounts receivable - net of allowances of $74,845 and $80,047, respectively	266,139			430,498
Inventories	630,590			597,281
Deferred income tax assets-net	33,460			34,084
Prepaid expenses and other current assets	178,292			151,730
Total current assets	1,345,324			1,489,854
Property, plant and equipment - net of accumulated depreciation of $363,260 and $360,191, respectively	331,665			345,606
Goodwill	196,040			197,728
Intangible and other assets-net	170,436			174,364
Total long-term assets	698,141			717,698
Total assets	$	2,043,465		$	2,207,552
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	154,806		$	159,267
Short-term and current portion of long-term debt	18,471			16,646
Accrued expenses:
Compensation	58,242			50,776
Royalties	20,094			54,013
Co-op advertising	18,630			28,591
Transaction taxes	15,127			35,301
Other	77,325			75,609
Income taxes payable	20,844			26,626
Total current liabilities	383,539			446,829
Long-term income taxes payable	16,683			16,610
Deferred income tax liabilities	79,081			87,860
Long-term debt	626,373			613,659
Other long-term liabilities	57,528			58,793
Total long-term liabilities	779,665			776,922
Commitments and contingencies (Note 13)
Stockholders’ equity:
Common stock, 49,527 and 50,771 shares issued and outstanding at April 4, 2015 and January 3, 2015, respectively	495			508
Additional paid-in capital	174,201			171,669
Retained earnings	746,081			822,093
Accumulated other comprehensive income (loss)	(49,855		)	(16,410		)
Total Fossil Group, Inc. stockholders’ equity	870,922			977,860
Noncontrolling interest	9,339			5,941
Total stockholders’ equity	880,261			983,801
Total liabilities and stockholders’ equity	$	2,043,465		$	2,207,552

See notes to the condensed consolidated financial statements.

2

FOSSIL GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

UNAUDITED

IN THOUSANDS, EXCEPT PER SHARE DATA

	For the 13			For the 14
	Weeks Ended			Weeks Ended
	April 4,			April 5,
	2015			2014
Net sales	$	725,085		$	776,544
Cost of sales	324,361			333,324
Gross profit	400,724			443,220
Operating expenses:
Selling, general and administrative expenses	332,482			338,522
Restructuring charges	12,088			0
Total operating expenses	344,570			338,522
Operating income	56,154			104,698
Interest expense	4,178			3,706
Other income (expense) - net	7,186			(351		)
Income before income taxes	59,162			100,641
Provision for income taxes	18,524			31,480
Net income	40,638			69,161
Less: Net income attributable to noncontrolling interest	2,568			2,818
Net income attributable to Fossil Group, Inc.	$	38,070		$	66,343
Other comprehensive income (loss), net of taxes:
Currency translation adjustment	$	(33,506	)	$	(1,125	)
Derivative instruments-net change	61			239
Total other comprehensive income (loss)	(33,445		)	(886		)
Total comprehensive income	7,193			68,275
Less: Comprehensive income attributable to noncontrolling interest	2,568			2,818
Comprehensive income attributable to Fossil Group, Inc.	$	4,625		$	65,457
Earnings per share:
Basic	$	0.76		$	1.23
Diluted	$	0.75		$	1.22
Weighted average common shares outstanding:
Basic	50,294			54,125
Diluted	50,467			54,351

See notes to the condensed consolidated financial statements.

3

FOSSIL GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED

IN THOUSANDS

	For the 13			For the 14
	Weeks Ended			Weeks Ended
	April 4,			April 5,
	2015			2014
Operating Activities:
Net income	$	40,638		$	69,161
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	22,113			23,377
Stock-based compensation	4,346			4,978
Decrease in allowance for returns-net of inventory in transit	(869		)	(1,525		)
Loss (gain) on disposal of assets	2,202			(31		)
Impairment losses	1,270			282
Decrease in allowance for doubtful accounts	(1,320		)	(1,063		)
Excess tax benefits from stock-based compensation	(354		)	(938		)
Deferred income taxes and other	247			(440		)
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable	158,594			167,760
Inventories	(49,087		)	(32,002		)
Prepaid expenses and other current assets	(30,391		)	(38,439		)
Accounts payable	(5,718		)	(17,879		)
Accrued expenses	(50,900		)	(80,095		)
Income taxes payable	(5,801		)	3,829
Net cash provided by operating activities	84,970			96,975
Investing Activities:
Additions to property, plant and equipment	(16,860		)	(21,505		)
Increase in intangible and other assets	(1,402		)	(2,165		)
Skagen Designs arbitration settlement	5,968			0
Business acquisitions-net of cash acquired	(4,970		)	0
Net cash used in investing activities	(17,264		)	(23,670		)
Financing Activities:
Acquisition of common stock	(116,047		)	(119,715		)
Distribution of noncontrolling interest earnings and other	(5,056		)	(5,391		)
Excess tax benefits from stock-based compensation	354			938
Debt borrowings	1,070,363			196,200
Debt payments	(1,055,584		)	(162,456		)
Proceeds from exercise of stock options	444			759
Net cash used in financing activities	(105,526		)	(89,665		)
Effect of exchange rate changes on cash and cash equivalents	(1,598		)	(701		)
Net decrease in cash and cash equivalents	(39,418		)	(17,061		)
Cash and cash equivalents:
Beginning of period	276,261			320,479
End of period	$	236,843		$	303,418

See notes to the condensed consolidated financial statements.

4

FOSSIL GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

1. FINANCIAL STATEMENT POLICIES

Basis of Presentation. The condensed consolidated financial statements include the accounts of Fossil Group, Inc., a Delaware corporation, and its wholly and majority-owned subsidiaries (the “Company”).

The Company’s fiscal year periodically results in a 53-week year instead of a normal 52-week year. The prior fiscal year ending January 3, 2015 was a 53-week year, with the additional week included in the first quarter. Accordingly, the information presented herein includes thirteen weeks of operations for the quarter ended April 4, 2015 (“First Quarter”) as compared to fourteen weeks included in the quarter ended April 5, 2014 (“Prior Year Quarter”). The condensed consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary to present a fair statement of the Company’s financial position as of April 4, 2015, and the results of operations for the First Quarter and Prior Year Quarter. All adjustments are of a normal, recurring nature.

Effective during the First Quarter, the Company made changes to the presentation of its reportable segments to reflect changes in the way its chief operating decision maker evaluates the performance of its operations, develops strategy and allocates capital resources. The Company has realigned its operating structure. Strategic and brand directions are set centrally and regional management is now fully empowered and responsible to drive those strategies and brand directions across all brands and channels within their regions. As part of the new operating structure the regional teams manage both the wholesale and retail businesses within their regions whereas previously the retail business was managed globally. Additionally, with the implementation of new reporting systems, the Company has the ability to extract discrete financial information that aligns with its operating structure and is consistent with how management now evaluates the business performance. The Company’s reportable segments now consist of the following: (i) Americas, (ii) Europe and (iii) Asia. Prior to the First Quarter 2015 Form 10-Q, as reported in the 2014 Form 10-K, the Company’s reportable segments consisted of the following: (i) North America wholesale, (ii) Europe wholesale, (iii) Asia Pacific wholesale and (iv) Direct to consumer.

These changes to the Company’s reportable segments include the following:

(1)   Reclassification of the Company’s retail, e-commerce and catalog activities, all of which were previously recorded within the Company’s Direct to consumer segment, to the Americas, Europe and Asia segments based on the geographic location of the activities.

(2)   The Company’s wholesale operations in North America, Europe and Asia Pacific previously recorded within the North America wholesale, Europe wholesale and Asia Pacific wholesale segments, respectively, have been reclassified to the Americas, Europe and Asia segments, respectively.

(3)   Intercompany profit attributable to the Company’s factory operations was previously included in the Asia Pacific wholesale and Europe wholesale segments in accordance with the geographic location of the factories, and is now eliminated from all reporting segments.

(4)   Certain corporate costs are not allocated to the various segments because they are managed at the corporate level for internal purposes. Prior to the change in reporting segments, these expenses included, and after the change in reporting segments, continue to include, general corporate expenses, including certain administrative, legal, accounting, technology support costs, equity compensation costs, and payroll costs attributable to executive management. Additionally, certain brand management, product development, art, creative/product design, marketing and back office supply chain expenses which were previously included in North America wholesale, Europe wholesale, Asia Pacific wholesale and Direct to consumer segments prior to the change in reporting segments are now reported in corporate. Conversely, certain back office costs reported in corporate prior to the change in reporting segments are now included in the various reporting segments in which they are now managed.

The Company’s historical segment disclosures have been recast to be consistent with the current presentation.

These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Annual Report on Form 10-K filed by the Company pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), for the fiscal year ended January 3, 2015 (the “2014 Form 10-K”). Operating results for the First Quarter are not necessarily indicative of the results to be achieved for the full fiscal year.

The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), which require the Company 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 condensed consolidated financial statements and the reported amounts of revenues and expenses during the periods reported. Actual results could differ from those estimates. The Company has not made any changes in its significant accounting policies from those disclosed in the 2014 Form 10-K. Certain prior year amounts have been reclassified to conform to the current year presentation.

Business. The Company is a global design, marketing and distribution company that specializes in consumer fashion accessories. Its principal offerings include an extensive line of men’s and women’s fashion watches and jewelry, handbags, small leather goods, belts, sunglasses, soft accessories and select apparel. In the watch and jewelry product categories, the Company has a diverse portfolio of globally recognized owned and licensed brand names under which its products are marketed. The Company’s products are distributed globally through various distribution channels, including wholesale in countries where it has a physical presence, direct to the consumer through its retail stores and commercial websites and through third-party distributors in countries where the Company does not maintain a physical presence. The Company’s products are offered at varying price points to meet the needs of its customers, whether they are value-conscious or luxury oriented. Based on its extensive range of accessory products, brands, distribution channels and price points, the Company is able to target style-conscious consumers across a wide age spectrum on a global basis.

5

Hedging Instruments. The Company is exposed to certain market risks relating to foreign exchange rates and interest rates. The Company actively monitors and attempts to manage these exposures using derivative instruments including foreign currency forward contracts and interest rate swaps. The Company’s foreign subsidiaries periodically enter into foreign exchange forward contracts to hedge the future payment of intercompany inventory transactions denominated in U.S. dollars. If the Company was to settle its euro, British pound, Canadian dollar, Japanese yen, Australian dollar, and Mexican peso forward contracts as of April 4, 2015, the net result would have been a net gain of approximately $21.9 million, net of taxes. To help protect against adverse existing and forecasted fluctuations in interest rates, the Company has entered into interest rate swap agreements to effectively convert portions of its existing and forecasted variable rate debt obligations to fixed rates. To reduce exposure to changes in currency exchange rates adversely affecting the Company’s investment in a euro-denominated subsidiary, the Company entered into a forward contract designated as a net investment hedge that was settled during the second quarter of fiscal year 2014. The Company does not hold or issue derivative financial instruments for trading or speculative purposes. See “Note 10—Derivatives and Risk Management” for additional disclosures about the Company’s use of derivatives.

Operating expenses.Operating expenses include selling, general and administrative expenses (“SG&A”), 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 “back office” or 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 the Company’s infrastructure and store closures.

Earnings Per Share (“EPS”). Basic 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):

	For the 13		For the 14
	Weeks Ended		Weeks Ended
	April 4,		April 5,
	2015		2014
Numerator:
Net income attributable to Fossil Group, Inc.	$	38,070	$	66,343
Denominator:
Basic EPS computation:
Basic weighted average common shares outstanding	50,294		54,125
Basic EPS	$	0.76	$	1.23
Diluted EPS computation:
Basic weighted average common shares outstanding	50,294		54,125
Effect of stock options, stock appreciation rights, restricted stock units and performance restricted stock units	173		226
Diluted weighted average common shares outstanding	50,467		54,351
Diluted EPS	$	0.75	$	1.22

Approximately 352,400 and 273,400 weighted average common shares issuable under stock-based awards were not included in the diluted EPS calculation at the end of the First Quarter and Prior Year Quarter, respectively, because they were antidilutive.

Recently Issued Accounting Standards. In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-04, Compensation—Retirement Benefits (Topic 715): Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets (“ASU 2015-04”). ASU 2015-04 provides an entity with a fiscal year-end that does not coincide with a month-end a practical expedient that allows the entity to measure defined benefit plan assets and obligations using the month-end that is closest to the entity’s fiscal year-end and apply that practical expedient consistently from year to year. If an entity has a significant event in an interim period that requires the remeasurement of defined benefit plan assets and obligations such as a partial settlement, ASU 2015-04 also provides a practical expedient that permits the entity to remeasure defined benefit plan assets and obligations using the month-end that is closest to the date of the significant event and adjust for any effects of the significant event not captured in the month-end measurement.  If an entity applies the practical expedient and a contribution is made between the month-end date used for measurement and the entity’s fiscal year-end, the entity should disclose the amount of the contribution to allow reconciliation of the fair value of plan assets in the fair value hierarchy to the ending balance of the fair value of plan assets. ASU 2015-04 is effective for annual periods beginning after December 15, 2015 with early adoption permitted. This standard will not have a material impact on the Company’s consolidated results of operations or financial position.

In April 2015, FASB issued ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. ASU 2015-03 is effective for annual periods beginning after December 15, 2015 with early adoption permitted. This standard will not have a material impact on the Company’s consolidated results of operations or financial position.

In January 2015, FASB issued ASU 2015-01, Income Statement—Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items (“ASU 2015-01”). ASU 2015-01 eliminates from U.S. GAAP the concept of extraordinary items as part of its initiative to reduce complexity in accounting standards. As a result, an entity will no longer be required to segregate extraordinary items from the results of ordinary operations, to separately present an extraordinary item on its income statement, net of tax, after income from continuing operations or to disclose income taxes and earnings-per-share data applicable to an extraordinary item. However, ASU 2015-01 will still retain the presentation and disclosure guidance for items that are unusual in nature and occur infrequently. ASU 2015-01 is effective for annual periods beginning after December 15, 2015 with early adoption permitted. This standard will not have a material impact on the Company’s consolidated results of operations or financial position.

           In August 2014, FASB issued ASU 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”), to provide guidance on management’s responsibility to perform interim and annual assessments of an entity’s ability to continue as a going concern and to provide related disclosure. ASU 2014-15 applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. This standard will not have a material impact on the Company’s consolidated results of operations or financial position.

6

In June 2014, FASB issued ASU 2014-12, Compensation—Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (“ASU 2014-12”). ASU 2014-12 requires that a performance target, that affects vesting and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. ASU 2014-12 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015, with early adoption permitted. The Company is evaluating the effect of adopting ASU 2014-12, but does not expect that adoption will have a material impact on the Company’s consolidated results of operations or financial position.

In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets, unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 provides alternative methods of retrospective adoption and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption is not permitted. The Company is evaluating the effect of adopting ASU 2014-09, but does not expect that adoption will have a material impact on the Company’s consolidated results of operations or financial position.

Recently Adopted Accounting Standards. In accordance with U.S. GAAP, the following provision, which had no material impact on the Company’s financial position, results of operations or cash flows, was adopted effective for the First Quarter: ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.

2. ACQUISITION AND GOODWILL

Fossil Accessories South Africa Acquisition. On February 1, 2015, the Company closed on a share purchase agreement with S. Keren Watch Group (“SKWG”), by which the Company acquired majority ownership in the Cape Town, South Africa-based distributor for approximately $5.0 million in cash-net of cash acquired, subject to working capital adjustments. SKWG has been a distribution partner for the Company for over 23 years, representing all Fossil brands and most of the Company’s licensed brands in South Africa. Upon execution of the joint venture agreement, SKWG was renamed Fossil Accessories South Africa Pty, Ltd. The Company recorded $3.7 million of goodwill related to the acquisition.

Goodwill is the excess of the cost of an acquired entity over the net of the amounts assigned to assets acquired and liabilities assumed. The changes in the carrying amount of goodwill, which is not subject to amortization, were as follows (in thousands):

	Americas			Europe			Asia		Total
Balance at January 3, 2015	$	119,438		$	66,433		$	11,857	$	197,728
Acquisitions	0			3,711			0		3,711
Foreign currency changes	(59		)	(5,378		)	38		(5,399		)
Balance at April 4, 2015	$	119,379		$	64,766		$	11,895	$	196,040

3. INVENTORIES

Inventories consisted of the following (in thousands):

	April 4,		January 3,
	2015		2015
Components and parts	$	42,270	$	48,797
Work-in-process	10,805		13,719
Finished goods	577,515		534,765
Inventories	$	630,590	$	597,281

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4. WARRANTY LIABILITIES

Warranty liability activity consisted of the following (in thousands):

	For the 13			For the 14
	Weeks Ended			Weeks Ended
	April 4,			April 5,
	2015			2014
Beginning balance	$	13,500		$	15,658
Settlements in cash or kind	(2,102		)	(3,163		)
Warranties issued and adjustments to preexisting warranties (1)	2,016			3,364
Liabilities assumed in acquisition	44			0
Ending balance	$	13,458		$	15,859

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

5. INCOME TAXES

The Company’s income tax expense and related effective rate were as follows (in thousands, except percentage data):

	For the 13			For the 14
	Weeks Ended			Weeks Ended
	April 4,			April 5,
	2015			2014
Income tax expense	$	18,524		$	31,480
Income tax rate	31.3		%	31.3		%

The lower structural rate in the First Quarter was offset by unfavorable discrete items applied to a lower income base, resulting in the effective tax rate being the same as the effective tax rate in the Prior Year Quarter.

As of April 4, 2015, the total amount of unrecognized tax benefits, excluding interest and penalties, was $20.9 million, of which $13.2 million would favorably impact the effective tax rate in future periods, if recognized. During the Prior Year Quarter, the U.S. Internal Revenue Service began its examination of the Company’s 2010-2012 federal income tax returns. The Company is subject to examinations in various state and foreign jurisdictions for its 2007-2013 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 of the condensed consolidated balance sheet date. As of April 4, 2015, the Company had recorded $5.9 million of unrecognized tax benefits, excluding interest and penalties, for positions that are expected to be settled 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 and penalties included in the condensed consolidated balance sheets at April 4, 2015 was $2.0 million and $0.4 million, respectively. For the First Quarter, the Company accrued income tax-related interest expense of $0.2 million.

6. STOCKHOLDERS’ EQUITY

Common Stock Repurchase Programs. Purchases of the Company’s common stock are 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. The Company may terminate or limit its stock repurchase program at any time. In the event the repurchased shares are cancelled, 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 are conducted pursuant to Rule 10b-18 of the Securities Exchange Act of 1934.

8

During the First Quarter, the Company effectively retired 1.3 million shares of common stock repurchased under its repurchase programs. The effective retirement of repurchased common stock decreased common stock by approximately $13,000, additional paid-in capital by $0.4 million, retained earnings by $114.1 million and treasury stock by $114.5 million. At January 3, 2105 and April 4, 2015, all treasury stock had been effectively retired. As of April 4, 2015, the Company had $944.2 million of repurchase authorizations remaining under its combined repurchase programs.

The following tables reflect the Company’s common stock repurchase activity for the periods indicated (in millions):

					For the 13 Weeks Ended			For the 14 Weeks Ended
					April 4, 2015			April 5, 2014
Fiscal Year Authorized	Dollar Value Authorized		Termination Date		Number of Shares Repurchased	Dollar Value Repurchased		Number of Shares Repurchased	Dollar Value Repurchased
2014	$	1,000.0	December 2018		1.0	$	85.7	0.0	$	0.0
2012	$	1,000.0	December 2016	(1)	0.3	$	28.8	1.0	$	117.3
2010	$	30.0	None		0.0	$	0.0	0.0	$	0.0

(1)  In the First Quarter, we completed this repurchase plan.

Controlling and Noncontrolling Interest. The following tables summarize the changes in equity attributable to controlling and noncontrolling interest (in thousands):

	Fossil Group, Inc.						Total
	Stockholders’			Noncontrolling			Stockholders’
	Equity			Interest			Equity
Balance at January 3, 2015	$	977,860		$	5,941		$	983,801
Net income	38,070			2,568			40,638
Currency translation adjustment	(33,506		)	0			(33,506		)
Derivative instruments-net change	61			0			61
Common stock issued upon exercise of stock options	444			0			444
Tax expense derived from stock-based compensation	(306		)	0			(306		)
Distribution of noncontrolling interest earnings	0			(5,056		)	(5,056		)
Business acquisition	0			5,886			5,886
Acquisition of common stock	(116,047		)	0			(116,047		)
Stock-based compensation expense	4,346			0			4,346
Balance at April 4, 2015	$	870,922		$	9,339		$	880,261

	Fossil Group, Inc.						Total
	Stockholders’			Noncontrolling			Stockholders’
	Equity			Interest			Equity
Balance at December 28, 2013	$	1,068,677		$	6,690		$	1,075,367
Net income	66,343			2,818			69,161
Currency translation adjustment	(1,125		)	0			(1,125		)
Derivative instruments - net change	239			0			239
Common stock issued upon exercise of stock options	759			0			759
Tax benefit derived from stock-based compensation	938			0			938
Distribution of noncontrolling interest earnings and other.	0			(5,391		)	(5,391		)
Acquisition of common stock	(119,715		)	0			(119,715		)
Stock-based compensation expense	4,978			0			4,978
Balance at April 5, 2014	$	1,021,094		$	4,117		$	1,025,211

9

7. EMPLOYEE BENEFIT PLANS

Stock-Based Compensation Plans. The following table summarizes stock options and stock appreciation rights activity during the First Quarter:

					Weighted-
					Average
			Weighted-		Remaining	Aggregate
			Average		Contractual	Intrinsic
Stock Options and Stock Appreciation Rights	Shares		Exercise Price		Term	Value
	(in Thousands)				(in Years)	(in Thousands)
Outstanding at January 3, 2015	663		$	85.08	5.6	$	20,751
Granted	147		80.22
Exercised	(19	)	32.11			1,052
Forfeited or expired	(16	)	111.84
Outstanding at April 4, 2015	775		84.93		5.8	10,714
Exercisable at April 4, 2015	551		$	82.90	5.1	$	10,297

The aggregate intrinsic value shown in the table above is before income taxes and is based on (i) the exercise price for outstanding and exercisable options/rights at April 4, 2015 and (ii) the fair market value of the Company’s common stock on the exercise date for options/rights that were exercised during the First Quarter.

Stock Options and Stock Appreciation Rights Outstanding and Exercisable. The following table summarizes information with respect to stock options and stock appreciation rights outstanding and exercisable at April 4, 2015:

Stock Options Outstanding					Stock Options Exercisable
				Weighted-
		Weighted-		Average		Weighted-
		Average		Remaining		Average
Range of	Number of	Exercise		Contractual	Number of	Exercise
Exercise Prices	Shares	Price		Term	Shares	Price
	(in Thousands)			(in Years)	(in Thousands)
$13.65 - $21.51	54	$	15.12	3.3	54	$	15.12
$30.71 - $67.10	96	36.26		3.7	96	36.26
$69.53 - $106.40	96	80.86		5.9	94	80.79
$106.89 - $131.46	166	128.10		6.5	163	128.06
Total	412	$	80.99	5.3	407	$	80.71
Stock Appreciation Rights Outstanding					Stock Appreciation Rights Exercisable
				Weighted-
		Weighted-		Average		Weighted-
		Average		Remaining		Average
Range of	Number of	Exercise		Contractual	Number of	Exercise
Exercise Prices	Shares	Price		Term	Shares	Price
	(in Thousands)			(in Years)	(in Thousands)
$13.65 - $21.51	18	$	13.65	2.0	18	$	13.65
$30.71 - $67.10	17	40.16		2.6	17	38.71
$69.53 - $106.40	213	84.29		7.1	45	90.52
$106.89 - $131.46	115	117.80		6.2	64	121.94
Total	363	$	89.40	6.3	144	$	89.15

10

Restricted Stock, Restricted Stock Units and Performance Restricted Stock Units. The following table summarizes restricted stock, restricted stock unit and performance restricted stock unit activity during the First Quarter:

			Weighted-Average
Restricted Stock, Restricted Stock Units			Grant Date Fair
and Performance Restricted Stock Units	Number of Shares		Value
	(in Thousands)
Nonvested at January 3, 2015	255		$	110.17
Granted	288		80.38
Vested	(85	)	113.06
Forfeited	(12	)	110.75
Nonvested at April 4, 2015	446		$	90.39

The total fair value of restricted stock and restricted stock units vested during the First Quarter was approximately $6.9 million. Vesting of performance restricted stock units is based on achievement of sales growth and operating margin targets.

8. 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):

	For the 13 Weeks Ended April 4, 2015
	Currency			Cash Flow Hedges
	Translation Adjustments			Forward Contracts			Interest Rate Swaps			Pension Plan			Total
Beginning balance	$	(27,241	)	$	14,980		$	(502	)	$	(3,647	)	$	(16,410	)
Other comprehensive income (loss) before reclassifications	(33,506		)	18,760			(7,406		)	0			(22,152		)
Tax (expense) benefit	0			(6,217		)	2,699			0			(3,518		)
Amounts reclassed from accumulated other comprehensive income	0			12,439			(681		)	0			11,758
Tax (expense) benefit	0			(4,231		)	248			0			(3,983		)
Total other comprehensive income (loss)	(33,506		)	4,335			(4,274		)	0			(33,445		)
Ending balance	$	(60,747	)	$	19,315		$	(4,776	)	$	(3,647	)	$	(49,855	)

	For the 14 Weeks Ended April 4, 2014
	Currency			Cash Flow Hedges								Net
	Translation Adjustments			Forward Contracts			Interest Rate Swap			Pension Plan		Investment Hedges		Total
Beginning balance	$	38,152		$	(2,091	)	$	(106	)	$	736	$	0	$	36,691
Other comprehensive income (loss) before reclassifications	(1,125		)	(266		)	(908		)	0		162		(2,137		)
Tax (expense) benefit	0			(82		)	370			0		0		288
Amounts reclassed from accumulated other comprehensive income	0			(828		)	(732		)	0		0		(1,560		)
Tax (expense) benefit	0			330			267			0		0		597
Total other comprehensive income (loss)	(1,125		)	150			(73		)	0		162		(886		)
Ending balance	$	37,027		$	(1,941	)	$	(179	)	$	736	$	162	$	35,805

See “Note 10—Derivatives and Risk Management” for additional disclosures about the Company’s use of derivatives.

11

9. 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, India, Indonesia, Japan, Malaysia, New Zealand, Singapore, South Korea, Taiwan 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. Net sales for geographic segments are based on the location of the selling entity. Operating income for each segment includes net sales to third parties, related cost of sales and operating expenses directly attributable to the segment. 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 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.

Certain reclassifications have been made to prior year amounts to conform with current year presentation.  Due to changes in the Company’s reportable segments as discussed in Note 1 to the condensed consolidated financial statements, segment results for fiscal year 2014 have been recast to present results on a comparable basis.

Summary information by operating segment was as follows (in thousands):

	For the 13 Weeks Ended					For the 14 Weeks Ended
	April 4, 2015					April 5, 2014
	Net Sales		Operating Income			Net Sales		Operating Income
Americas	$	366,596	$	76,722		$	382,660	$	99,069
Europe	234,256		33,302			260,353		52,508
Asia	124,233		24,308			133,531		30,898
Corporate			(78,178		)			(77,777		)
Consolidated	$	725,085	$	56,154		$	776,544	$	104,698
	April 4, 2015					January 3, 2015
	Long-Term Assets		Total Assets			Long-Term Assets		Total Assets
Americas	$	263,887	$	765,691		$	263,324	$	809,548
Europe	202,704		470,671			220,742		561,486
Asia	56,670		222,387			57,508		233,881
Corporate	174,880		584,716			176,124		602,637
Total	$	698,141	$	2,043,465		$	717,698	$	2,207,552

The following tables reflect net sales for each class of similar products in the periods presented (in thousands, except percentage data):

	For the 13 Weeks Ended				For the 14 Weeks Ended
	April 4, 2015				April 5, 2014
	Net Sales		Percentage of Total		Net Sales		Percentage of Total
Watches	$	551,857	76.1	%	$	601,388	77.5	%
Leathers	92,926		12.8		99,722		12.8
Jewelry	62,987		8.7		56,518		7.3
Other	17,315		2.4		18,916		2.4
Total	$	725,085	100.0	%	$	776,544	100.0	%

12

10. 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 18 months. The Company enters into foreign currency forward contracts (“forward contracts”) generally for up to 65% of the forecasted purchases to manage fluctuations in global currencies that will ultimately be used to settle such U.S. dollar denominated inventory purchases. 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 intercompany 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.

These forward contracts meet the criteria for hedge accounting, which requires that they represent foreign-currency-denominated forecasted inter-entity transactions in which (i) the operating unit that has the foreign currency exposure is a party to the hedging instrument and (ii) the hedged transaction is denominated in a currency other than the hedging unit’s functional currency.

At the inception of each forward contract designated as a cash flow hedge, the hedging relationship is expected to be highly effective in achieving offsetting cash flows attributable to the hedged risk. The Company assesses hedge effectiveness under the critical terms matched method at inception and at least quarterly throughout the life of the hedging relationship. If the critical terms (i.e., amounts, currencies and settlement dates) of the forward contract match the terms of the forecasted transaction, the Company concludes that the hedge is effective.

For a derivative instrument that is designated and qualifies as a cash flow hedge, the effective portion of 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. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings. Due to the high degree of effectiveness between the hedging instruments and the underlying exposures being hedged, the Company’s hedges resulted in no ineffectiveness in the condensed consolidated statements of income and comprehensive income, and there were no components excluded from the assessment of hedge effectiveness for the First Quarter or Prior Year Quarter.

All derivative instruments are recognized as either assets or liabilities at fair value in the condensed consolidated balance sheets. Derivatives designated as cash flow hedges are recorded at fair value at each balance sheet date and the change in fair value is recorded to accumulated other comprehensive income (loss) within the equity section of the Company’s condensed consolidated balance sheet until such derivative’s gains or losses become realized or the cash flow hedge relationship is terminated. If the cash flow hedge relationship is terminated, the derivative’s gains or losses that are recorded in accumulated other comprehensive income (loss) will be recognized in earnings when the hedged cash flows occur. However, for cash flow hedges that are terminated because the forecasted transaction is not expected to occur in the original specified time period, the derivative’s gains or losses are immediately recognized in earnings. There were no gains or losses reclassified into earnings as a result of the discontinuance of cash flow hedges in the First Quarter or Prior Year Quarter. Hedge accounting is discontinued if it is determined that the derivative is not highly effective. The Company records all forward contract hedge assets and liabilities on a gross basis as they do not meet the balance sheet netting criteria because the Company does not have master netting agreements established with the derivative counterparties that would allow for net settlement.

As of April 4, 2015, the Company had the following outstanding forward contracts that were entered into to hedge the future payments of intercompany inventory transactions (in millions):

Functional Currency		Contract Currency
Type	Amount	Type	Amount
Euro	174.1	U.S. dollar	217.6
British pound	27.5	U.S. dollar	43.5
Canadian dollar	40.1	U.S. dollar	34.3
Japanese yen	2,935.0	U.S. dollar	26.4
Mexican peso	173.3	U.S. dollar	12.0
Australian dollar	14.2	U.S. dollar	11.5

The Company is also exposed to interest rate risk related to both its outstanding debt and forecasted debt issuances. To manage the interest rate risk related to its $231.3 million U.S.-based term loan, as amended on March 9, 2015 (“Term Loan”), the Company entered into an interest rate swap agreement on July 26, 2013 with a term of approximately five years. The objective of this hedge is to offset the variability of future payments associated with interest rates on the Term Loan. The interest rate swap agreement hedges the 1-month London Interbank Offer Rate (“LIBOR”) based variable rate debt obligations under the Term Loan. Under the terms of the swap, the Company pays a fixed interest rate of 1.288% per annum to the swap counterparty plus the LIBOR rate applicable margin (which varies based upon the Ratio from 1.25% if the Ratio is less than 1.00 to 1.00, to 2.00% if the Ratio is greater than or equal to 2.00 to 1.00). The notional amount will amortize over the remaining life of the Term Loan to coincide with the amortization of the underlying loan. The Company will receive interest from the swap counterparty at a variable rate based on 1-month LIBOR. This hedge is designated as a cash flow hedge. Additionally, to manage interest rate risk related to forecasted debt issuances, the Company entered into a forward starting interest rate swap agreement on March 20, 2015 with a term of approximately 10 years. The objective of this hedge is to offset the variability of future interest payments associated with forecasted debt issuances. Under the terms of the swap, the Company pays a fixed interest rate of 2.14% per annum to the swap counterparty. This hedge is designated as a cash flow hedge.

13

Net Investment Hedge. The Company is also exposed to risk that adverse changes in foreign currency exchange rates could impact its net investment in foreign operations. To manage this risk, during the first quarter of fiscal year 2014, the Company entered into a forward contract designated as a net investment hedge to reduce exposure to changes in currency exchange rates on €25.0 million of its total investment in a wholly-owned euro-denominated foreign subsidiary. The hedge was settled in the second quarter of fiscal year 2014. The effective portion of derivatives designated as net investment hedges are recorded at fair value at each balance sheet date and the change in fair value is recorded as a component of other comprehensive income (loss) in the Company’s condensed consolidated statements of income and comprehensive income. The Company uses the hypothetical derivative method to assess the ineffectiveness of net investment hedges. Should any portion of a net investment hedge become ineffective, the ineffective portion will be reclassified to other income-net on the Company’s condensed consolidated statements of income and comprehensive income. Gains and losses reported in accumulated other comprehensive income (loss) will not be reclassified into earnings until the Company’s underlying investment is liquidated or dissolved.

Non-designated Hedges. The Company also periodically enters into forward contracts to manage exchange rate risks associated with certain non-inventory intercompany transactions and to which the Company does not elect hedge treatment. All of the Company’s outstanding forward contracts were designated as hedging instruments as of April 4, 2015 and January 3, 2015. 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 derivative instruments that were recognized in other comprehensive income (loss), net of taxes during the First Quarter and Prior Year Quarter are set forth below (in thousands):

	For the 13			For the 14
	Weeks Ended			Weeks Ended
	April 4, 2015			April 5, 2014
Cash flow hedges:
Forward contracts	$	12,543		$	(348	)
Interest rate swaps	(4,707		)	(538		)
Net investment hedge:
Forward contract	0			162
Total gain (loss) recognized in other comprehensive income (loss), net of taxes	$	7,836		$	(724	)

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 the First Quarter and Prior Year Quarter (in thousands):

	Condensed Consolidated
	Statements of Income		For the 13			For the 14
	and Comprehensive	Effect of Derivative	Weeks Ended			Weeks Ended
Derivatives Instruments	Income Location	Instruments	April 4, 2015			April 5, 2014
Forward contracts designated as cash flow hedging instruments	Other income (expense)-net	Total gain (loss) reclassified from other comprehensive income (loss)	$	8,208		$	(498	)
Forward contracts not designated as hedging instruments	Other income (expense)-net	Total gain (loss) recognized in income	$	89		$	(148	)
Interest rate swap designated as a cash flow hedging instrument	Interest expense	Total gain (loss) reclassified from other comprehensive income (loss)	$	(433	)	$	(465	)

14

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 condensed consolidated balance sheets in which the fair value amounts for these categories of derivative instruments are included (in thousands):

Asset Derivatives

Liability Derivatives

April 4, 2015

January 3, 2015

April 4, 2015

January 3, 2015

Condensed

Condensed

Condensed

Condensed

Consolidated

Consolidated

Consolidated

Consolidated

Balance Sheets

Fair

Balance Sheets

Fair

Balance Sheets

Fair

Balance Sheets

Fair

Derivatives Instruments

Location

Value

Location

Value

Location

Value

Location

Value

Forward contracts designated as cash flow hedging instruments

Prepaid expenses and other current assets

$

32,927

Prepaid expenses and other current assets

$

25,867

Accrued expenses- other

$

373

Accrued expenses- other

$

0

Interest rate swap designated as a cash flow hedging instrument

Prepaid expenses and other current assets

0

Prepaid expenses and other current assets

0

Accrued expenses- other

7,059

Accrued expenses- other

2,157

Forward contracts designated as cash flow hedging instruments

Intangible and other assets-net

1,155

Intangible and other assets-net

1,802

Other long-term liabilities

133

Other long-term liabilities

0

Interest rate swap designated as a cash flow hedging instrument

Intangible and other assets-net

343

Intangible and other assets-net

1,724

Other long-term liabilities

799

Other long-term liabilities

357

Total

$

34,425

$

29,393

$

8,364

$

2,514

At the end of the First Quarter, the Company had forward contracts with maturities extending through September 2016. As of April 4, 2015, an estimated net gain of $21.3 million is expected to be reclassified into earnings within the next twelve months at prevailing foreign currency exchange rates. See “Note 1—Financial Statement Policies” for additional disclosures on foreign currency hedging instruments.

11. 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.

15

The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of April 4, 2015 (in thousands):

	Fair Value at April 4, 2015
	Level 1		Level 2		Level 3		Total
Assets:
Forward contracts	$	0	$	34,082	$	0	$	34,082
Deferred compensation plan assets:
Investment in publicly traded mutual funds	2,510		0		0		2,510
Interest rate swaps	0		343		0		343
Total	$	2,510	$	34,425	$	0	$	36,935
Liabilities:
Contingent consideration	$	0	$	0	$	6,878	$	6,878
Forward contracts	0		506		0		506
Interest rate swaps	0		7,858		0		7,858
Total	$	0	$	8,364	$	6,878	$	15,242

The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of January 3, 2015 (in thousands):

	Fair Value at January 3, 2015
	Level 1		Level 2		Level 3		Total
Assets:
Forward contracts	$	0	$	27,669	$	0	$	27,669
Deferred compensation plan assets:
Investment in publicly traded mutual funds	2,477		0		0		2,477
Interest rate swap	0		1,724		0		1,724
Total	$	2,477	$	29,393	$	0	$	31,870
Liabilities:
Contingent consideration	$	0	$	0	$	7,114	$	7,114
Interest rate swap	0		2,514		0		2,514
Total	$	0	$	2,514	$	7,114	$	9,628

The fair values of the Company’s deferred compensation plan assets are based on quoted prices. The deferred compensation plan assets are recorded in intangible and other assets-net in the Company’s condensed consolidated balance sheets. 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.  The fair values of the interest rate swap assets and liabilities are determined using valuation models based on market observable inputs, including forward curves, mid market price and volatility levels. See “Note 10—Derivatives and Risk Management” for additional disclosures about the interest rate swaps and forward contracts.

The Company has evaluated its short-term and long-term debt as of April 4, 2015 and January 3, 2015 and believes, based on the interest rates, related terms and maturities, that the fair values of such instruments approximated their carrying amounts. As of April 4, 2015 and January 3, 2015, the carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximated their values due to the short-term maturities of these accounts.

The fair value of the contingent consideration liability related to the acquisition of the Company’s joint venture company, Fossil, S.L. (“Fossil Spain”), was determined using Level 3 inputs. The contingent consideration recorded as of April 4, 2015 is based on Fossil Spain’s earnings for fiscal year 2014 and forecasted earnings for fiscal year 2015. The contingent consideration for calendar year 2014 will be paid during the remaining part of fiscal year 2015. The contingent consideration for calendar year 2015 will be paid upon the execution of the purchase agreement in 2016. The fair value of the contingent consideration was determined using present value techniques with forecasted future cash flows for Fossil Spain as the significant unobservable input. Future revenue growth based on management’s projections for the 2015 calendar year is approximately 17%. Operating expenses are projected to be approximately 25% of revenues for calendar year 2015. A discount rate of 19% was used to calculate the present value of the contingent consideration. The contingent consideration liability for calendar year 2014 is valued at 3.4 million euros (approximately $3.7 million) and the contingent consideration liability for calendar year 2015 is valued at the maximum annual variable price of 3.5 million euros (approximately $3.8 million). A decrease in future cash flows may result in a lower estimated fair value of the calendar year 2015 contingent consideration liability. Future changes in the estimated fair value of the contingent consideration liability, if any, will be reflected in earnings.

16

In accordance with the provisions of ASC 360, Property, Plant and Equipment, property, plant and equipment—net with a carrying amount of $1.2 million, as of April 4, 2015, related to retail store leasehold improvements and fixturing was fully impaired, and related key money in the amount of $0.1 million was deemed not recoverable, resulting in an impairment charge of $1.3 million for the First Quarter.

The fair values of assets related to the Company-owned retail stores were determined using Level 3 inputs. $1.0 million of the impairment expense was recorded in the Europe segment and $0.3 million was recorded in the Americas segment in SG&A.

12. INTANGIBLE AND OTHER ASSETS

The following table summarizes intangible and other assets (in thousands):

		April 4, 2015				January 3, 2015
	Useful	Gross		Accumulated		Gross		Accumulated
At Fiscal Year End	Lives	Amount		Amortization		Amount		Amortization
Intangibles-subject to amortization:
Trademarks	10 yrs.	$	4,175	$	3,013	$	4,174	$	2,950
Customer lists	5-10 yrs.	43,461		17,987		41,703		17,457
Patents	3-20 yrs.	2,273		2,037		2,273		1,902
Noncompete agreement	6 yrs.	1,816		908		1,855		851
Other	7-20 yrs.	501		394		353		341
Total intangibles-subject to amortization		52,226		24,339		50,358		23,501
Intangibles-not subject to amortization:
Trade names		83,627				83,610
Other assets:
Key money deposits		29,438		18,107		31,892		18,661
Other deposits		22,182				21,854
Deferred compensation plan assets		2,510				2,477
Deferred tax asset-net		7,581				8,583
Restricted cash		522				575
Shop-in-shop		14,807		10,267		16,333		9,660
Interest rate swap		343				1,724
Forward contracts		1,155				1,802
Other		8,758				6,978
Total other assets		87,296		28,374		92,218		28,321
Total intangible and other assets		$	223,149	$	52,713	$	226,186	$	51,822
Total intangible and other assets-net				$	170,436			$	174,364

Key money is the amount of funds paid to a landlord or tenant to acquire the rights of tenancy under a commercial property lease for a certain property. Key money represents the “right to lease” with an automatic right of renewal. This right can be subsequently sold by the Company or can be recovered should the landlord refuse to allow the automatic right of renewal to be exercised. Key money is amortized over the initial lease term, which ranges from approximately four to 18 years.

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Amortization expense for intangible assets was approximately $1.2 million and $1.3 million for the First Quarter and Prior Year Quarter. Estimated aggregate future amortization expense by fiscal year for intangible assets is as follows (in thousands):

Fiscal Year	Amortization Expense
2015 (remaining)	$	3,751
2016	$	4,880
2017	$	4,621
2018	$	4,267
2019	$	4,172
2020	$	3,674

13. COMMITMENTS AND CONTINGENCIES

Litigation. The Company is occasionally subject to litigation or other legal proceedings in the normal course of its business. The Company does not believe that 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.

Operating lease obligations.  As of April 4, 2015, the Company had operating lease obligations of approximately $886.7 million. The Company recognized rent expense of $49.0 million and $44.4 million during the First Quarter and Prior Year Quarter, respectively.

14. DEBT ACTIVITY

On March 9, 2015, the Company entered into an Amended and Restated Credit Agreement (the “Credit Agreement”). The Credit Agreement provides for (i) revolving credit loans in the amount of $1.05 billion (the “Revolving Credit Facility”), with an up to $20.0 million subfacility for swingline loans (the “Swingline Loan”), and an up to $10.0 million subfacility for letters of credit, and (ii) a term loan in the amount of $231.3 million (the “Term Loan”). The Credit Agreement expires and is due and payable on May 17, 2018.

The Company’s obligations under the Credit Agreement are unsecured, and none of the Company’s subsidiaries are guarantors of the Company’s obligations under the Credit Agreement. Upon the occurrence of both (a) the Moody’s Investor Service, Inc. rating of the Company falling below Ba1 and (b) the Standard & Poor’s Financial Services LLC rating of the Company falling below BB+, the Company’s obligations under the Credit Agreement will be required to be guaranteed by all direct and indirect material domestic subsidiaries of the Company, as provided in a subsidiary guaranty agreement, and secured by 65% of the total outstanding voting capital stock and 100% of the non-voting capital stock of the Company’s material first-tier foreign subsidiaries, pursuant to a pledge agreement. The Credit Agreement may be used (a) to refinance the indebtedness under the Prior Agreement (as defined below), (b) to finance the acquisition of capital assets, (c) for ongoing working capital and other general corporate purposes, and (d) to repurchase the Company’s capital stock to the extent permitted under the Credit Agreement.

The Credit Agreement amends and restates that certain credit agreement, dated as of May 17, 2013, as amended, which was scheduled to mature on May 17, 2018 (the “Prior Agreement”). Under the Prior Agreement, the Company incurred approximately $1.6 million and $1.0 million of interest expense during the First Quarter related to outstanding revolving credit loans and term loans, respectively, including the impact of the related interest rate swap, respectively. As of March 9, 2015, the Company had $555.0 million in aggregate principal amount of revolving credit loans outstanding and $231.3 million in aggregate principal amount of term loans outstanding under the Prior Agreement, all of which was refinanced on March 9, 2015 with borrowings under the Credit Agreement. No penalties or other early termination fees were incurred in connection with the amendment and restatement of the Prior Agreement.

Amounts outstanding under the Revolving Credit Facility and the Term Loan under the Credit Agreement bear interest, at the Company’s option, at (i) the base rate (defined as the highest of (a) the prime rate publicly announced by Wells Fargo, (b) the federal funds rate plus 0.5%, and (c) LIBOR for an interest period of one month plus 1.0%) plus the base rate applicable margin (which varies, based upon the Company’s consolidated total leverage ratio, from 0.25%, if the consolidated total leverage ratio is less than 1.00 to 1.00, to 1.00%, if the consolidated total leverage ratio is greater than or equal to 2.00 to 1.00) or (ii) the LIBOR rate (defined as the quotient obtained by dividing (a) LIBOR by (b) 1.00 minus the Eurodollar reserve percentage) plus the LIBOR rate applicable margin (which varies, based upon the consolidated total leverage ratio, from 1.25%, if the consolidated total leverage ratio is less than 1.00 to 1.00, to 2.00%, if the consolidated total leverage ratio is greater than or equal to 2.00 to 1.00). Amounts outstanding under the Swingline Loan under the Credit Agreement or upon any drawing under a letter of credit bear interest at the base rate plus the applicable margin. Interest based upon the base rate is payable quarterly in arrears. Interest based upon the LIBOR rate is payable on the last day of the applicable interest period.

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Financial covenants governing the Credit Agreement require the Company to maintain (i) a consolidated total leverage ratio no greater than 2.50 to 1.00 and (ii) a consolidated interest coverage ratio no less than 3.50 to 1.00. The Credit Agreement contains representations, warranties, covenants, events of default and indemnities that are customary for agreements of this type.

The Company is required to pay a commitment fee on the unused amounts of the commitments under the Revolving Credit Facility under the Credit Agreement, payable quarterly in arrears, ranging from 0.20% to 0.35%, based on the consolidated total leverage ratio. In connection with any letter of credit, the Company is required to pay (i) a letter of credit commission, payable quarterly in arrears, in an amount equal to the daily amount available to be drawn under such letter of credit multiplied by the applicable margin with respect to revolving credit loans that are LIBOR rate loans, (ii) a fronting fee, payable quarterly in arrears, as set forth in the applicable letter of credit application or as otherwise separately agreed by the Company and the issuing lender, and (iii) normal and customary costs and expenses incurred or charged by the issuing lender in issuing, effecting payment under, amending or otherwise administering the letter of credit.

Loans under the Credit Agreement may be prepaid, in whole or in part, at the option of the Company, in minimum principal amounts of (i) $2.0 million or increments of $1.0 million in excess thereof, with respect to a base rate loan under the Revolving Credit Facility, (ii) $5.0 million or increments of $1.0 million in excess thereof, with respect to a LIBOR rate loan under the Revolving Credit Facility, (iii) $5.0 million or increments of $1.0 million in excess thereof, with respect to the Term Loan, and (iv) $0.1 million or increments of $0.1 million in excess thereof, with respect to a Swingline Loan. Loans under the Credit Agreement must be repaid with the net cash proceeds of certain asset sales or insurance and condemnation events. The Company may permanently reduce the revolving credit commitment at any time, in whole or in part, without premium or penalty, in a minimum aggregate principal amount of not less than $3.0 million or increments of $1.0 million in excess thereof.

The repayment obligation under the Credit Agreement can be accelerated upon the occurrence of an event of default, including the failure to pay principal or interest, a material inaccuracy of a representation or warranty, violation of covenants, cross-default, change in control, bankruptcy events, failure of a loan document provision, certain ERISA events and material judgments.

The Company made net principal payments of $3.1 million under its current Term Loan and term loan under the Prior Credit Agreement during the First Quarter. The Company had net borrowings of $18.0 million under its current Revolving Credit Facility and revolving credit loans under the Prior Credit Agreement during the First Quarter. Borrowings were primarily used to fund stock repurchases, capital and normal operating expenses. As of April 4, 2015, $228.1 million and $407.0 million were outstanding under the Term Loan and the Revolving Credit Facility, respectively. Amounts available under the Revolving Credit Facility are reduced by any amounts outstanding under standby letters of credit. As of April 4, 2015, the Company had available borrowing capacity of approximately $642.1 million under the Revolving Credit Facility. The Company incurred approximately $0.6 million of interest expense related to the Term Loan during the First Quarter, including the impact of the related interest rate swap. The Company incurred approximately $0.6 million of interest expense related to the Revolving Credit Facility during the First Quarter. The Company was in compliance with all covenants in the Term Loan and Revolving Credit Facility as of April 4, 2015.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following is a discussion of the financial condition and results of operations of Fossil Group, Inc. and its subsidiaries for the thirteen week period ended April 4, 2015 (the “First Quarter”) as compared to the fourteen week period ended April 5, 2014 (the “Prior Year Quarter”). The Company’s fiscal year periodically results in a 53-week year instead of a normal 52-week year. The prior fiscal year, ended January 3, 2015, was a 53-week year, with the additional week included in the first quarter. Accordingly, the information presented herein includes thirteen weeks of operations for the First Quarter as compared to fourteen weeks in the Prior Year Quarter. This discussion should be read in conjunction with the condensed consolidated financial statements and the related notes thereto.

General

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, sunglasses, soft accessories and select apparel. 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 extensive 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.

Domestically, we sell our products through a diversified distribution network that includes department stores, specialty retail locations, specialty watch and jewelry stores, Company-owned retail and outlet stores, mass market stores, and through our FOSSIL® website. Our wholesale customer base includes, among others, Dillard’s, JCPenney, Kohl’s, Macy’s, Neiman Marcus, Nordstrom, Saks Fifth Avenue, Target and Wal-Mart. In the United States, our network of Company-owned stores included 120 retail stores located in premier retail sites and 132 outlet stores located in major outlet malls as of April 4, 2015. In addition, we offer an extensive collection of our FOSSIL brand products on our website, www.fossil.com, as well as proprietary and licensed watch and jewelry brands through other managed and affiliate websites.

Internationally, our products are sold to department stores, specialty retail stores and specialty watch and jewelry stores in approximately 150 countries worldwide through 26 Company-owned foreign sales subsidiaries and through a network of approximately 75 independent distributors. Our products are offered on airlines and cruise ships and in international Company-owned retail stores. Internationally, our network of Company-owned stores included 244 retail stores and 118 outlet stores in select international markets as of April 4, 2015. Our products are also sold through licensed and franchised FOSSIL retail stores, retail concessions operated by us and kiosks in certain international markets, as well as our websites in certain countries.

Our business is subject to economic cycles and consumer spending conditions. Purchases of discretionary fashion accessories, such as our watches, handbags, jewelry and other products, tend to decline during recessionary periods when disposable income is lower and consumers are hesitant to use available credit. If economic conditions worsen, or if the global or regional economies slip back into a recession, our revenues and earnings could be negatively impacted.

Our business is also subject to the risks inherent in global sourcing of supply. 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. Interruptions or delays in supply may be caused by a number of factors that are outside of our and our contract manufacturers’ control, such as natural disasters like the earthquake and tsunami in Japan in early fiscal year 2011.

Future sales and earnings growth are also contingent upon our ability to anticipate and respond to changing fashion trends and consumer preferences in a timely manner while continuing to develop innovative products in the respective markets in which we compete. As is typical with new products, market acceptance of new designs and products that we may introduce 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. We believe our historical sales growth is the result of our ability to design innovative watch products that not only differentiate us from our competition but also continue to provide a solid value proposition to consumers across all of our brands.

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The majority of our products are sold at price points ranging from $85 to $600. We believe that the price/value relationship and the differentiation and innovation of our products, in comparison to those of our competitors, will allow us to maintain or grow our market share in those markets in which we compete. Historically, during recessionary periods, the strength of our balance sheet, our strong operating cash flow and the relative size of our business with our wholesale customers, in comparison to that of our competitors, have allowed us to weather recessionary periods for longer periods of time and generally resulted in market share gains to us.

Our international operations are subject to many risks, including foreign currency fluctuations and risks related to the global economy. Generally, a strengthening of the U.S. dollar against currencies of other countries in which we operate will reduce the translated amounts of sales and operating expenses of our subsidiaries, which results in a reduction of our consolidated operating income. We manage these currency risks by using derivative instruments. The primary risks managed by using derivative instruments are the future payments by non-U.S. dollar functional currency subsidiaries of intercompany inventory transactions denominated in U.S. dollars. We enter into foreign exchange forward contracts to manage fluctuations in global currencies that will ultimately be used to settle such U.S. dollar denominated inventory purchases.

For a more complete discussion of the risks facing our business, see “Part I, Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended January 3, 2015.

Results of Operations

Executive Summary. During the First Quarter, net sales decreased 7% (increased 5% in constant currency and comparable calendar), as compared to the Prior Year Quarter which included an extra week as fiscal 2014 was a 53-week year compared to a 52-week year for fiscal 2015. In the following discussion, certain amounts are presented on a comparable calendar basis by removing an estimated week of activity from the Prior Year Quarter. On a constant currency and comparable calendar basis, we experienced growth across each of our regions and continued to expand our international presence, with particular strength in Europe. During the First Quarter, sales of our FOSSIL branded products decreased 7% (increased 6% constant currency and comparable calendar), and our SKAGEN® branded products increased 7% (24% in constant currency and comparable calendar), while our multi-brand global watch portfolio decreased 8% (increased 3% in constant currency and comparable calendar). During the First Quarter, FOSSIL brand sales expanded across all regions with strong growth in both watches and leathers and a slight decrease in jewelry products on a constant currency and comparable calendar basis, as compared to the Prior Year Quarter. SKAGEN brand sales accelerated during the First Quarter with double-digit growth across each region led by watches on a constant currency and comparable calendar basis. We are also seeing positive responses to both our newer SKAGEN leather and jewelry lines. During the First Quarter, Europe led the growth in our multi-brand global watch portfolio, excluding currency and calendar impacts and we believe our international markets represent an opportunity to gain market share and benefit from global category growth. Global comparable store sales increased 1.8% in our owned retail stores normalized for the 53-week calendar. Positive comparable store sales results in the Americas and Europe were partially offset by a decline in Asia. From a product category perspective, comparable sales gains in leathers and watches were partially offset by a decline in jewelry.

During the First Quarter, gross profit decreased and the gross margin rate contracted as compared to the Prior Year Quarter primarily driven by changes in foreign currencies. The favorable impact of regional distribution mix given the growth in international markets and our initial fiscal 2014 price initiatives offset the impact of continued outlet promotions as we adjusted our strategy late in fiscal year 2014 primarily related to Watch Station outlets in the U.S. Our operating margin contracted during the First Quarter primarily as a result of the planned higher operating expense rate including restructuring charges and the unfavorable impact of currencies.

During the First Quarter, we invested $114.5 million to repurchase 1.3 million shares of our common stock. Our financial performance including the unfavorable impacts of currencies and restructuring charges combined with our repurchase activity resulted in earnings of $0.75 per diluted share.

Quarterly Periods Ended April 4, 2015 and April 5, 2014

Consolidated Net Sales. Net sales decreased $51.5 million or 6.6% (increased 5% in constant currency and comparable calendar), for the First Quarter as compared to the Prior Year Quarter, which included an extra week as fiscal 2014 was a 53-week year compared to a 52-week year for fiscal 2015. Global watch sales decreased $49.5 million or 8.2% (increased 3% in constant currency and comparable calendar). Our jewelry product category contributed favorably to the First Quarter net sales, increasing $6.5 million or 11.4% (30% in constant currency and comparable calendar), as a result of a strong performance in licensed jewelry, partially offset by a decrease in FOSSIL branded products. Our leathers category declined $6.8 million or 6.8% (increased 4% in constant currency and comparable calendar), during the First Quarter as compared to the Prior Year Quarter. Net sales information by product category is summarized as follows (dollars in millions):

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	For the 13 Weeks Ended				For the 14 Weeks Ended
	April 4, 2015				April 5, 2014				Growth (Decline)
			Percentage				Percentage
	Net Sales		of Total		Net Sales		of Total		Dollars			Percentage
Watches	$	551.9	76.1	%	$	601.4	77.5	%	$	(49.5	)	(8.2	)%
Leathers	92.9		12.8		99.7		12.8		(6.8		)	(6.8	)
Jewelry	63.0		8.7		56.5		7.3		6.5			11.5
Other	17.3		2.4		18.9		2.4		(1.6		)	(8.5	)
Total	$	725.1	100.0	%	$	776.5	100.0	%	$	(51.4	)	(6.6	)%

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. 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. In the First Quarter, the translation of foreign-based net sales into U.S. dollars decreased reported net sales by approximately $45.2 million, including unfavorable impacts of $33.7 million, $7.3 million and $4.2 million in our Europe, Asia and Americas segments, respectively.

The following table sets forth consolidated net sales by segment (dollars in millions):

	For the 13 Weeks Ended				For the 14 Weeks Ended
	April 4, 2015				April 5, 2014				Growth (Decline)
	Amounts		Percentage of Total		Amounts		Percentage of Total		Dollars			Percentage
Americas	$	366.6	50.6	%	$	382.6	49.3	%	$	(16.0	)	(4.2	)%
Europe	234.3		32.3		260.4		33.5		(26.1		)	(10.0	)
Asia	124.2		17.1		133.5		17.2		(9.3		)	(7.0	)
Total net sales	$	725.1	100.0	%	$	776.5	100.0	%	$	(51.4	)	(6.6	)%

Americas Net Sales. Americas net sales decreased $16.0 million or 4.2% (increased 3% in constant currency and comparable calendar), during the First Quarter in comparison to the Prior Year Quarter. The sales increase on a constant currency and comparable calendar basis was mainly driven by our retail channel. Comparable store sales increased modestly in our owned retail stores (normalized for the 53-week calendar) with conversion improving due to compelling promotions in the outlet channel. Wholesale sales increased slightly as international increases offset declines in off-price sales and U.S. department store sell-in on a constant currency and comparable calendar basis. During the First Quarter, our jewelry category increased $8.2 million or 48.6% (60% in constant currency and comparable calendar), while our multi-brand watch portfolio decreased $21.0 million or 7.2% (roughly flat in constant currency and comparable calendar), and our leather category decreased $2.8 million or 4.4% (increased 2% in constant currency and comparable calendar). During the First Quarter, the Americas region continued to benefit from the launch of Tory Burch® watches in the back half of fiscal 2014.

Europe Net Sales. Europe net sales decreased $26.1 million or 10.0% (increased 9% in constant currency and comparable calendar) with Germany, France and the United Kingdom delivering the strongest performances. From a product category perspective, sales performance was led by (i) a $19.4 million or 10.1% decrease (9% increase in constant currency and comparable calendar), in our multi-brand watch portfolio, (ii) a $1.6 million or 4.2% decrease (18% increase in constant currency and comparable calendar), in jewelry and (iii) a $4.2 million or 18.7% decrease (3% increase in constant currency and comparable calendar), in leather products, during the First Quarter as compared to the Prior Year Quarter. Comparable store sales increased modestly in our owned retail stores (normalized for the 53-week calendar) with the strongest performance in the outlet channel and the full-price accessory stores also contributing to the increase.

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Asia Net Sales. Net sales in Asia decreased $9.3 million or 7.0% (increased 4% in constant currency and comparable calendar). Excluding the currency and calendar impacts, increases in India, Japan and Australia were partially offset by decreases in other markets, including South Korea where the business remains challenging and our distributor business decreased. Our watch and jewelry categories decreased $9.1 million or 7.9% (increased 3% in constant currency and comparable calendar) and $0.2 million or 7.8% (increased 3% in constant currency and comparable calendar), respectively, while our leathers business increased $0.2 million or 1.5% (18% in constant currency and comparable calendar) during the First Quarter as compared to the Prior Year Quarter. Comparable store sales in the region decreased modestly in our owned retail stores (normalized for the 53-week calendar) with the strongest performance in the outlet channel. Comparable concession sales decreased modestly in the region during the First Quarter. The following table sets forth the number of stores by concept on the dates indicated below:

Constant Currency and Comparable Calendar Financial Information. The following table presents our business segment and product net sales on a constant currency and comparable calendar basis.  To calculate net sales on a constant currency basis, net sales for the First Quarter for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the average rates during the Prior Year Quarter.  To calculate net sales on a comparable calendar basis, we have estimated the impact on net sales of the extra week in the Prior Year Quarter.

Our presentations of net sales on a constant currency and comparable calendar basis are non-GAAP financial measures.  We present net sales on a constant currency and comparable calendar basis because we believe that such information is useful to certain investors as a measure of our results of operations year-over-year without the effects of foreign currency fluctuations and the extra week in the Prior Year Quarter.

	Net Sales For the 13 Weeks EndedApril 4, 2015							Net Sales For the 14 Weeks EndedApril 5, 2014
(in millions)	As Reported		Impact of Foreign Currency Exchange Rates			Constant Currency		As Reported		EstimatedImpact of Extra Week			Estimated Comparable Calendar
Segment:
Americas	$	366.6	$	(4.2	)	$	370.8	$	382.6	$	(21.8	)	$	360.8
Europe	234.3		(33.7		)	268.0		260.4		(15.1		)	245.3
Asia	124.2		(7.3		)	131.5		133.5		(7.7		)	125.8
Total net sales	$	725.1	$	(45.2	)	$	770.3	$	776.5	$	(44.6	)	$	731.9

	Net Sales For the 13 Weeks EndedApril 4, 2015							Net Sales For the 14 Weeks EndedApril 5, 2014
(in millions)	As Reported		Impact of Foreign Currency Exchange Rates			Constant Currency		As Reported		Estimated Impact of Extra Week			Estimated Comparable Calendar
Product Sales:
Watches	$	551.9	$	(33.0	)	$	584.9	$	601.4	$	(34.5	)	$	566.9
Leathers	92.9		(4.9		)	97.8		99.7		(5.8		)	93.9
Jewelry	63.0		(6.2		)	69.2		56.5		(3.2		)	53.3
Other	17.3		(1.1		)	18.4		18.9		(1.1		)	17.8
Total net sales	$	725.1	$	(45.2	)	$	770.3	$	776.5	$	(44.6	)	$	731.9

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

	Apri l 4, 2015				Apri l 5, 2014
	Americas	Europe	Asia	Total	Americas	Europe	Asia	Total
Full price accessory	119	124	60	303	111	111	49	271
Outlets	144	64	42	250	127	47	35	209
Clothing	27	2	0	29	30	2	0	32
Full priced multi-brand	4	6	22	32	6	6	18	30
Total stores	294	196	124	614	274	166	102	542

During the First Quarter, we opened five new stores and closed eight stores. In addition, we acquired 24 new stores as a result of the Fossil Accessories South Africa Pty, Ltd. acquisition. For fiscal year 2015, we anticipate opening approximately 42 additional retail stores and closing approximately 23 retail stores globally.

A store is included in comparable store 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.

Gross Profit. Gross profit decreased by 9.6% to $400.7 million in the First Quarter compared to $443.2 million in the Prior Year Quarter as a result of decreased sales and gross profit margin contraction. Gross profit margin decreased 180 basis points to 55.3% in the First Quarter compared to 57.1% in the Prior Year Quarter primarily driven by changes in foreign currencies. The favorable impact of regional distribution mix given the growth in international markets and our initial fiscal 2014 price initiatives offset the impact of continued outlet promotions as we adjusted our strategy late in fiscal year 2014 primarily related to Watch Station outlets in the U.S.

Operating Expenses. Total operating expenses in the First Quarter increased by $6.0 million and, as a percentage of net sales, increased to 47.5% as compared to 43.6% in the Prior Year Quarter. The translation of foreign-denominated expenses in the First Quarter decreased operating expenses by approximately $24.0 million as a result of the stronger U.S. dollar. Operating expense increases were primarily due to the impact of restructuring costs of $12.1 million, corporate marketing and brand building expenses and the impact of the fiscal 2014 store and international infrastructure additions, partially offset by the impact of foreign currency changes, the extra week included in the Prior Year Quarter and a reduction in corporate back office expenses.

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Consolidated Operating Income. Operating income decreased by $48.5 million, or 46.4%, in the First Quarter compared to the Prior Year Quarter as the impact of the comparable sales increase on a constant currency and comparable calendar basis was more than offset by the unfavorable impact of currencies, restructuring charges and planned higher operating expenses including marketing and brand building expenses, as well as the impact of the fiscal 2014 store and international infrastructure additions.  As a percentage of net sales, operating margin decreased to 7.7% in the First Quarter compared to 13.5% of net sales in the Prior Year Quarter, primarily as a result of unfavorable changes in foreign currencies and the planned higher operating expense rate.

Sales and gross margins were negatively impacted by currencies in all regional segments. On a constant currency and comparable calendar basis, sales grew in each regional segment and gross margins expanded modestly in Europe and Asia with a slight contraction in the Americas due to promotions and growth in the outlet stores. Operating expenses deleveraged in all regions due to planned higher operating expenses which included store investments made in fiscal 2014 and increased marketing in all regions.  In addition, the Americas increased expenses were driven by restructuring activities largely related to store closures while Europe and Asia expenses included infrastructure investments incurred late in fiscal 2014.

During the First Quarter, operating income was approximately $15.7 million lower due to the translation of foreign-based sales and expenses into U.S. dollars. Operating income by segment is summarized as follows (dollars in millions):

	For the 13			For the 14
	Weeks Ended			Weeks Ended			Growth (Decline)					Operating Margin %
	April 4, 2015			April 5, 2014			Dollars			Percentage		2015		2014
Americas	$	76.8		$	99.1		$	(22.3	)	(22.5	)%	20.9	%	25.9	%
Europe	33.3			52.5			(19.2		)	(36.6	)	14.2		20.2
Asia	24.3			30.9			(6.6		)	(21.4	)	19.6		23.1
Corporate	(78.2		)	(77.8		)	(0.4		)	(0.5	)
Total operating income	$	56.2		$	104.7		$	(48.5	)	(46.3	)%	7.7	%	13.5	%

Interest Expense. Interest expense increased by $0.5 million during the First Quarter as a result of increased debt levels in comparison to the Prior Year Quarter.

Other Income (Expense)-Net. During the First Quarter, other income (expense)-net increased by $7.5 million to $7.2 million in comparison to the Prior Year Quarter. This increase was primarily driven by net foreign currency gains resulting from mark-to-market hedging and other transactional activities as compared to net losses in the Prior Year Quarter.

Provision for Income Taxes. Income tax expense for the First Quarter was $18.5 million, resulting in an effective income tax rate of 31.3%. For the Prior Year Quarter, income tax expense was $31.5 million, resulting in an effective income tax rate of 31.3%. The lower structural rate in the First Quarter was offset by unfavorable discrete items applied to a lower income base, resulting in the effective tax rate being the same as the effective tax rate in the Prior Year Quarter.

Net Income Attributable to Fossil Group, Inc. First Quarter net income attributable to Fossil Group, Inc. decreased by 42.6% to $38.1 million, or $0.75 per diluted share, in comparison to $66.3 million, or $1.22 per diluted share, in the Prior Year Quarter. The decrease in diluted earnings per share resulted from decreased operating income, partially offset by a reduction in average shares outstanding.

Liquidity and Capital Resources

Historically, our business operations have not required substantial cash during the first several months of our fiscal year. 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 the number of new stores we open, other capital expenditures and strategic investments such as acquisitions and stock repurchases. Our cash and cash equivalents balance at the end of the First Quarter was $236.8 million, including $220.8 million held in banks outside the U.S., in comparison to cash and cash equivalents of $303.4 million at the end of the Prior Year Quarter and $276.3 million at the end of fiscal year 2014. We believe cash from operating activities as well as amounts available under our U.S. credit facilities are sufficient to meet our cash needs in the U.S. for the next 12 months.

For the First Quarter, we generated operating cash flow of $85.0 million. This operating cash flow combined with cash on hand and $14.8 million in net borrowings on our credit facilities was utilized to fund $116.0 million of common stock repurchases and $16.9 million of capital expenditures. Cash flows provided by operations were largely attributable to a $158.6 million decrease in accounts receivable and $40.6 million in net income, partially offset by a net increase of $141.9 million in other working capital items.

Accounts receivable, net of allowances, decreased by 8.3% to $266.1 million at the end of the First Quarter compared to $290.1 million at the end of the Prior Year Quarter, primarily as a result of increased collection efforts. Days sales outstanding for our wholesale businesses for the First Quarter decreased to 43 days, compared to 47 days in the Prior Year Quarter.

Inventory at the end of the First Quarter was $630.6 million, representing an increase of 4.6% from the Prior Year Quarter inventory balance of $601.9 million.

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The following tables reflect our common stock repurchase activity under our repurchase programs for the periods indicated (in millions):

					For the 13 Weeks Ended			For the 14 Weeks Ended
					April 4, 2015			April 5, 2014
Fiscal Year Authorized	Dollar Value Authorized		Termination Date		Number of Shares Repurchased	Dollar Value Repurchased		Number of Shares Repurchased	Dollar Value Repurchased
2014	$	1,000.0	December 2018		1.0	$	85.7	0.0	$	0.0
2012	$	1,000.0	December 2016	(1)	0.3	$	28.8	1.0	$	117.3
2010	$	30.0	None		0.0	$	0.0	0.0	$	0.0

(1)In the First Quarter, we completed this repurchase plan.

We effectively retired 1.3 million shares of common stock repurchased under our repurchase plans during the First Quarter. We account for the retirements by allocating the repurchase price, which is based upon the equity contribution associated with historical issuances, to common stock, additional paid-in capital and retained earnings. The effective retirement of common stock repurchased during the First Quarter decreased common stock by approximately $13,000, additional paid-in capital by $0.4 million, retained earnings by $114.1 million and treasury stock by $114.5 million. We effectively retired 1.0 million shares of our common stock during the Prior Year Quarter that was repurchased under our repurchase programs. The effective retirement of common stock repurchased during the Prior Year Quarter decreased common stock by approximately $10,000, additional paid-in capital by $0.8 million, retained earnings by $116.5 million and treasury stock by $117.3 million. At January 3, 2015 and April 4, 2015, all treasury stock had been effectively retired. As of April 4, 2015, we had a total of $944.2 million of repurchase authorizations remaining under our combined repurchase programs.

At the end of the First Quarter, we had working capital of $961.8 million compared to working capital of $976.1 million at the end of the Prior Year Quarter. Additionally, at the end of the First Quarter, we had approximately $18.5 million of short-term borrowings and $626.4 million in long-term debt.

On March 9, 2015, we entered into an Amended and Restated Credit Agreement (the “Credit Agreement”). The Credit Agreement provides for (i) revolving credit loans in the amount of $1.05 billion (the “Revolving Credit Facility”), with an up to $20.0 million subfacility for swingline loans (the “Swingline Loan”), and an up to $10.0 million subfacility for letters of credit, and (ii) a term loan in the amount of $231.3 million (the “Term Loan”). The Credit Agreement expires and is due and payable on May 17, 2018. The Credit Agreement amends and restates that certain credit agreement, dated as of May 17, 2013, as amended (the “Prior Credit Agreement”).

Our obligations under the Credit Agreement are unsecured, and none of our subsidiaries are guarantors of our obligations under the Credit Agreement. Upon the occurrence of both (a) the Moody’s Investor Service, Inc. rating of us falling below Ba1 and (b) the Standard & Poor’s Financial Services LLC rating of us falling below BB+, our obligations under the Credit Agreement will be required to be guaranteed by all of our direct and indirect material domestic subsidiaries, as provided in a subsidiary guaranty agreement, and secured by 65% of the total outstanding voting capital stock and 100% of the non-voting capital stock of our material first-tier foreign subsidiaries, pursuant to a pledge agreement. The Credit Agreement may be used (a) to refinance the indebtedness under the Prior Agreement (as defined below), (b) to finance the acquisition of capital assets, (c) for ongoing working capital and other general corporate purposes, and (d) to repurchase our capital stock to the extent permitted under the Credit Agreement.

Amounts outstanding under the Revolving Credit Facility and the Term Loan under the Credit Agreement bear interest, at our option, at (i) the base rate (defined as the highest of (a) the prime rate publicly announced by Wells Fargo, (b) the federal funds rate plus 0.5%, and (c) LIBOR for an interest period of one month plus 1.0%) plus the base rate applicable margin (which varies, based upon our consolidated total leverage ratio, from 0.25%, if the consolidated total leverage ratio is less than 1.00 to 1.00, to 1.00%, if the consolidated total leverage ratio is greater than or equal to 2.00 to 1.00) or (ii) the LIBOR rate (defined as the quotient obtained by dividing (a) LIBOR by (b) 1.00 minus the Eurodollar reserve percentage) plus the LIBOR rate applicable margin (which varies, based upon the consolidated total leverage ratio, from 1.25%, if the consolidated total leverage ratio is less than 1.00 to 1.00, to 2.00%, if the consolidated total leverage ratio is greater than or equal to 2.00 to 1.00). Amounts outstanding under the Swingline Loan under the Credit Agreement or upon any drawing under a letter of credit bear interest at the base rate plus the applicable margin. Interest based upon the base rate is payable quarterly in arrears. Interest based upon the LIBOR rate is payable on the last day of the applicable interest period.

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Financial covenants in the Credit Agreement require us to maintain (i) a consolidated total leverage ratio no greater than 2.50 to 1.00, and (ii) a consolidated interest coverage ratio no less than 3.50 to 1.00.

During the First Quarter, we made net principal payments of $3.1 million under the current Term Loan and term loan under the Prior Credit Agreement. Additionally, we had net borrowings of $18.0 million under the current Revolving Credit Facility and revolving credit loans under the Prior Credit Agreement at an average annual interest rate of 1.44%. As of April 4, 2015, we had $228.1 million and $407.0 million outstanding under the Term Loan and the Revolving Credit Facility, respectively. In addition, we had $0.9 million of outstanding standby letters of credit at April 4, 2015. Amounts available under the Revolving Credit Facility are reduced by any amounts outstanding under standby letters of credit. As of April 4, 2015, we had $642.1 million available for borrowing under the Revolving Credit Facility. Borrowings under the Revolving Credit Facility were mainly used to fund common stock repurchases, capital expenditures and normal operating expenses.

At April 4, 2015, we were in compliance with all debt covenants related to all of our credit facilities.

For fiscal year 2015, we expect total capital expenditures to be approximately $110 million to $120 million. These capital expenditures will be primarily related to global retail store expansion and renovation and investment in technological infrastructure. We believe that cash flows from operations combined with existing cash on hand and amounts available under the Revolving Credit Facility will be sufficient to fund our working capital needs, common stock repurchases and planned capital expenditures for the next twelve months.

Contractual Obligations

As of April 4, 2015, there were no material changes to our contractual obligations set forth in our Annual Report on Form 10-K for the fiscal year ended January 3, 2015.

Off Balance Sheet Arrangements

As of April 4, 2015, there were no material changes to our off balance sheet arrangements as set forth in commitments and contingencies in our Annual Report on Form 10-K for the fiscal year ended January 3, 2015.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) 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 condensed consolidated financial statements and the reported amounts of revenues and expenses during the periods reported. On an on-going basis, we evaluate our estimates and judgments, including those related to product returns, bad debt, inventories, long-lived asset impairment, impairment of goodwill and trade names, income taxes, warranty costs, hedge accounting, litigation reserves and stock-based compensation. 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. There have been no changes to the critical accounting policies disclosed in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the fiscal year ended January 3, 2015.

Forward-Looking Statements

The statements contained and incorporated by reference in this Quarterly Report on Form 10-Q that are not historical facts, including, but not limited to, statements regarding our expected financial position, results of operations, business and financing plans found in this “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 3. Quantitative and Qualitative Disclosures About Market Risk,” 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 words “may,” “believes,” “expects,” “plans,” “intends,” “estimates,” “anticipates” and similar expressions identify forward-looking statements. 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: the effect of worldwide economic conditions; significant changes in consumer spending patterns or preferences; interruptions or delays in the supply of key components; acts of war or acts of terrorism; changes in foreign currency valuations in relation to the U.S. dollar; lower levels of consumer spending resulting from a general economic downturn or generally reduced shopping activity caused by public safety or consumer confidence concerns; the performance of our products within the prevailing retail environment; customer acceptance of both new designs and newly-introduced product lines; financial difficulties encountered by customers; the effects of vigorous competition in the markets in which we operate; the integration of the organizations and operations of any acquired businesses into our existing organization and operations; the termination or non-renewal of material licenses, foreign operations and manufacturing; changes in the costs of materials, labor and advertising; government regulation; our ability to secure and protect trademarks and other intellectual property rights; and the outcome of current and possible future litigation.

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In addition to the factors listed above, our actual results may differ materially due to the other risks and uncertainties discussed in this Quarterly Report on Form 10-Q and the risks and uncertainties set forth in our Annual Report on Form 10-K for the fiscal year ended January 3, 2015. Accordingly, readers of this Quarterly Report on Form 10-Q should consider these facts in evaluating the information and are cautioned not to place undue reliance on the forward-looking statements contained herein. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Item 3.Quantitative and Qualitative Disclosures About Market Risk

Foreign Currency Exchange Rate Risk

As a multinational enterprise, we are exposed to changes in foreign currency exchange rates. Our most significant foreign currency risk relates to the euro, and to a lesser extent, the British pound, Canadian dollar, Japanese yen, Mexican peso and Australian dollar as compared to the U.S. dollar. Due to our vertical nature whereby a significant portion of goods are sourced from our owned facilities, the foreign currency risks relate primarily to the necessary current settlement of intercompany inventory transactions. We employ a variety of operating practices to manage these market risks relative to foreign currency exchange rate changes and, where deemed appropriate, utilize foreign exchange forward contracts. These operating practices include, among others, our ability to convert foreign currency into U.S. dollars at spot rates and to maintain U.S. dollar pricing relative to sales of our products to certain distributors located outside the U.S. The use of foreign exchange forward contracts allows us to offset exposure to rate fluctuations because the gains or losses incurred on the derivative instruments will offset, in whole or in part, losses or gains on the underlying foreign currency exposure. We use derivative instruments only for risk management purposes and do not use them for speculation or for trading. There were no significant changes in how we managed foreign currency transactional exposure in the First Quarter, and management does not anticipate any significant changes in such exposures or in the strategies we employ to manage such exposure in the near future.

The following table shows our outstanding forward contracts at April 4, 2015 and their expiration dates (in millions):

Functional Currency		Contract Currency
Type	Amount	Type	Amount	Expiration Date
Euro	174.1	U.S. dollar	217.6	August 2016
British pound	27.5	U.S. dollar	43.5	September 2016
Canadian dollar	40.1	U.S. dollar	34.3	September 2016
Japanese yen	2,935.0	U.S. dollar	26.4	September 2016
Mexican peso	173.3	U.S. dollar	12.0	December 2015
Australian dollar	14.2	U.S. dollar	11.5	December 2015

If we were to settle our euro, British pound, Canadian dollar, Japanese yen, Mexican peso, and Australian dollar based forward contracts as of April 4, 2015, the net result would have been a net gain of approximately $21.9 million, net of taxes. As of April 4, 2015, a 10% unfavorable change in the U.S. dollar strengthening against foreign currencies to which we have balance sheet transactional exposures, would have decreased net pre-tax income by $7.3 million. The translation of the balance sheets of our foreign-based operations from their local currencies into U.S. dollars is also sensitive to changes in foreign currency exchange rates. As of April 4, 2015, a 10% unfavorable change in the exchange rate of the U.S. dollar strengthening against the foreign currencies to which we have exposure would have reduced consolidated stockholders’ equity by approximately $79.2 million. In our view, these hypothetical changes resulting from these assumed changes in foreign currency exchange rates are not material to our consolidated financial position, results of operations or cash flows.

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Interest Rate Risk

We are subject to interest rate volatility with regard to existing and future debt borrowings. Effective July 26, 2013, we entered into an interest rate swap agreement with a term of approximately five years to manage our exposure to interest rate fluctuations on our Term Loan. Additionally, on March 20, 2015, we entered into an additional interest rate swap agreement with a term of approximately 10 years to manage our exposure to interest rate fluctuations on forecasted future debt issuances. We will continue to evaluate our interest rate exposure and the use of interest rate swaps in future periods to mitigate our risk associated with adverse fluctuations in interest rates.

Based on our variable-rate debt outstanding as of April 4, 2015, excluding our $228.1 million Term Loan debt hedged with an interest rate swap agreement, a 100 basis point increase in interest rates would increase annual interest expense by approximately $4.1 million.

Item 4.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 Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this Quarterly Report on Form 10-Q. The Disclosure Controls evaluation was done under the supervision and with the participation of management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“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 as of April 4, 2015.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the First Quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings

There are no legal proceedings to which we are a party or to which our properties are subject, other than routine litigation incidental to our business, which is not material to our consolidated financial condition, results of operations or cash flows.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table shows our common stock repurchases based on settlement date for the Fiscal Quarter:

ISSUER PURCHASES OF EQUITY SECURITIES

	Total	Average		Total Number of Shares	Approximate Dollar
	Number	Price		Purchased as Part	Value of Shares that
	of Shares	Paid per		of Publically	May Yet Be Purchased
Period	Purchased (1)	Share		Announced Programs	Under the Programs (2)
January 4, 2015 - January 31, 2015	253,128	$	102.76	252,786	$	1,032,808,893
February 1, 2015 - February 28, 2015	140,667	$	98.74	140,667	$	1,018,919,505
March 1, 2015 - April 4, 2015	910,653	$	82.85	900,944	$	944,246,690
Total	1,304,448			1,294,397

(1)During the First Quarter, 10,051 shares of common stock were acquired from grantees in connection with income tax withholding obligations arising from vesting of restricted stock grants. These shares were not part of our publicly announced program to repurchase shares of common stock.

(2)On August 10, 2010, we announced 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. In December 2012, we announced a common stock repurchase program pursuant to which up to $1.0 billion could be used to repurchase outstanding shares of our common stock. The $1.0 billion repurchase program was completed during the First Quarter. In November 2014, we announced an additional common stock repurchase program pursuant to which up an additional $1.0 billion could be used to repurchase outstanding shares of our common stock. The second $1.0 billion repurchase program has a termination date of December 2018. During the First Quarter, approximately 1.3 million shares of our common stock were repurchased pursuant to the $1.0 billion repurchase plans at a cost of $114.5 million. As of April 4, 2015, we had $944.2 million of repurchase authorizations remaining under the second $1.0 billion repurchase plan.

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Item 6. Exhibits

(a)Exhibits

Exhibit Number	Document Description
3.1	Third Amended and Restated Certificate of Incorporation of Fossil, Inc. (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed on May 25, 2010).
3.2	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).
3.3	Fourth Amended and Restated Bylaws of Fossil Group, Inc. (incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K filed on May 28, 2013).
3.4	Amendment No. 1 to Fourth Amended and Restated Bylaws of Fossil Group, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on March 20, 2014).
10.1(1)	Amendment Number Three to the Fossil Group, Inc. 2008 Long-Term Incentive Plan.
10.2(1)	Form of Performance Restricted Stock Unit Award under the Fossil Group, Inc. 2008 Long-Term Incentive Plan.
12.1(1)	Ratio of Earnings to Fixed Charges.
31.1(1)	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.
31.2(1)	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.
32.1(2)	Certification of Chief Executive Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2(2)	Certification of Chief Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS(1)	XBRL Instance Document.
101.SCH(1)	XBRL Taxonomy Extension Schema Document.
101.DEF(1)	XBRL Taxonomy Extension Definition Linkbase Document.
101.CAL(1)	XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB(1)	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE(1)	XBRL Taxonomy Extension Presentation Linkbase Document.

(1)Filed herewith.

(2)Furnished herewith.

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SIGNATURES

Pursuant to the requirements 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.

	FOSSIL GROUP, INC.
May 7, 2015	/S/ DENNIS R. SECOR
	Dennis R. Secor
	Executive Vice President, Chief Financial Officer and Treasurer (Principal financial and accounting officer duly authorized to sign on behalf of the Registrant)

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EXHIBIT INDEX

ExhibitNumber	Document Description
3.1	Third Amended and Restated Certificate of Incorporation of Fossil, Inc. (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed on May 25, 2010).
3.2	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).
3.3	Fourth Amended and Restated Bylaws of Fossil Group, Inc. (incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K filed on May 28, 2013).
3.4	Amendment No. 1 to Fourth Amended and Restated Bylaws of Fossil Group, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on March 20, 2014).
10.1(1)	Amendment Number Three to the Fossil Group, Inc. 2008 Long-Term Incentive Plan.
10.2(1)	Form of Performance Restricted Stock Unit Award under the Fossil Group, Inc. 2008 Long-Term Incentive Plan.
12.1(1)	Ratio of Earnings to Fixed Charges.
31.1(1)	Certification of Chief Executive Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
31.2(1)	Certification of Chief Financial Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
32.1(2)	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.
32.2(2)	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.
101.INS(1)	XBRL Instance Document.
101.SCH(1)	XBRL Taxonomy Extension Schema Document.
101.DEF(1)	XBRL Taxonomy Extension Definition Linkbase Document.
101.CAL(1)	XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB(1)	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE(1)	XBRL Taxonomy Extension Presentation Linkbase Document.

(1)Filed herewith.

(2)Furnished herewith.

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EX-10.1

Exhibit 10.1

AMENDMENT NUMBER THREE TO THE

FOSSIL GROUP, INC. 2008 LONG-TERM INCENTIVE PLAN

This AMENDMENT NUMBER THREE TO THE FOSSIL GROUP, INC. 2008 LONG-TERM INCENTIVE PLAN (this “Amendment”), dated as of March 1, 2015, is made and entered into by Fossil Group, Inc., a Delaware corporation (the “Company”).  Terms used in this Amendment with initial capital letters that are not otherwise defined herein shall have the meanings ascribed to such terms in the Fossil Group, Inc. 2008 Long-Term Incentive Plan (the “Plan”).

RECITALS

WHEREAS, Article 10 of the Plan provides that the Board of Directors of the Company (the “Board”) may amend the Plan at any time;

WHEREAS, the Board desires to amend the Plan to modify the automatic annual grants made to Outside Directors under Article 7 of the Plan; and

NOW, THEREFORE, in accordance with Article 10 of the Plan, the Company hereby amends the Plan as follows:

1.Section 7.1 of the Plan is hereby amended, effective March 15, 2015, by replacing the reference in Section 7.1(a) to $120,000 with $130,000.

2.Except as expressly amended by this Amendment, the Plan shall continue in full force and effect in accordance with the provisions thereof.

IN WITNESS WHEREOF, the Company has caused this Amendment to be duly executed as of the date first written above.

FOSSIL GROUP, INC.
By:	/s/ Kosta N. Kartsotis
Name: Kosta N. Kartsotis
Title: Chairman and Chief Executive Officer

EX-10.2

Exhibit 10.2

PERFORMANCE RESTRICTED STOCK UNIT AWARD

Under the Fossil Group, Inc. 2008 Long-Term Incentive Plan

NOTICE OF GRANT

Unless otherwise defined herein, the terms defined in the Fossil Group, Inc. 2008 Long-Term Incentive Plan (the “Long-Term Incentive Plan”) shall have the same defined meanings in this Notice of Grant.

Name and Address of the Participant

You have been granted Performance Restricted Stock Units of the Company, subject to the terms and conditions of the Long-Term Incentive Plan and this Performance Restricted Stock Unit Award, as follows:

Date of Grant

Vesting Commencement Date

Target Units Granted

Maximum Awarded Units Granted

Vesting Schedule and Forfeiture:

Except as specifically provided in this Notice of Grant or in the Performance Restricted Stock Unit Award, your Performance Restricted Stock Units will vest on the third anniversary of the Date of Grant (the “Vesting Date”), subject to the achievement of the performance goals and vesting schedule as set forth in Exhibit A.

Unvested Maximum Awarded Units shall be forfeited on the earlier of (i) the Vesting Date, to the extent the performance conditions set forth in Exhibit A have not been satisfied and the Awarded Units have not vested in accordance with the vesting schedule set forth in Exhibit A, and (ii) upon your Termination of Service for any reason other (1) your death or (2) your Termination of Service on your Retirement Date (as defined in the Performance Restricted Stock Unit Award). The Performance Restricted Stock Units will become fully vested upon a Change in Control and your death.

Exhibit A

1.Subject to the restrictions and conditions set forth in the Long-Term Incentive Plan and the Performance Restricted Stock Unit Award, if, on the Vesting Date, the Company’s Percentile Rank (defined below) within the Peer Group (defined below) exceeds the applicable threshold below, then the corresponding number of your Performance Restricted Stock Units shall vest on the Vesting Date, in accordance with the following schedule:

Performance Goal Achievement (Sales Growth) [Percentile Rank Among Peer Group]	Percentage of Target Units Vested (Sales Growth)
Threshold:
25.00%	10.00%
31.25%	20.00%
37.50%	30.00%
43.75%	40.00%
Target:
50.00%	50.00%
56.25%	56.25%
62.50%	62.50%
68.75%	68.75%
75.00%	75.00%
82.25%	81.25%
87.50%	87.50%
93.75%	93.75%
Maximum:
100.00%	100.00%

Performance Goal Achievement (Operating Income Margin Rate) [Percentile Rank Among Peer Group]	Percentage of Target Units Vested (Operating Income Margin Rate)
Threshold, Target, and Maximum:
68.75% and above	50.00%

The Committee shall calculate your aggregate vested percentage of Performance Restricted Stock Units by adding the percentage of Target Units vested for each individual Performance Goal.  For example, if the Performance Goal for Operating Income Margin Rate is met, so that 50% of the Target Units are vested, but the threshold Performance Goal for Sales Growth is not achieved (so no vesting relates to Sales Growth) you would vest in 50% of the Target Units.

2.The Committee shall calculate the Sales Growth and Operating Income Margin Rate for the Company and each component company in the Peer Group over the Measurement Period (defined below).  The Company and each company within the Peer Group shall be ranked from lowest to highest based on the Sales Growth and the Operating Income Margin Rate for each component company.  The percentile rank of the Company will then be determined relative to the ranking of each component company in the Peer Group for each of the Performance Goals (the “Company’s Percentile Rank”).

3.The determination by the Company with respect to the achievement of the Company’s Percentile Rank for vesting of your Performance Restricted Stock Units shall occur as soon as administratively practicable after the Vesting Date (and in any event on or before the date that is sixty (60) days following the Vesting Date).

2

4.For purposes of this Exhibit A, unless the context requires otherwise, the following terms shall have the meanings indicated:

a.“Company’s Percentile Rank” shall have the meaning set forth in Section 2.

b.“Measurement Period” shall mean the period commencing on and including the Date of Grant and ending on the Vesting Date.

c.“Operating Income Margin Rate” shall be calculated by dividing operating income for the Measurement Period by net sales for the Measurement Period.  Operating income and net sales shall be calculated in accordance with generally accepted accounting principles.

d.“Peer Group” shall be comprised of the following companies:

Abercrombie & Fitch Co.	Michael Kors Holdings Limited
American Eagle Outfitters, Inc.	PVH Corp.
Ann Inc.	Ralph Lauren Corporation
Chicos FAS, Inc.	Under Armour, Inc.
Coach, Inc.	Urban Outfitters Inc.
Columbia Sportswear Company	VF Corporation
Deckers Outdoor Corporation	Wolverine World Wide, Inc.
Guess?, Inc.

The determination of the Peer Group on the Vesting Date shall be subject to the following adjustments:

·Only component companies in the Peer Group for the entire Measurement Period will be used to determine Sales Growth and Operating Income Margin Rate percentile ranks.

·If during the Measurement Period two component companies of the Peer Group merge or otherwise combine into a single company, the surviving company shall remain a component company of the Peer Group and the non-surviving company shall be removed from the Peer Group.

·If during the Measurement Period a component company of the Peer Group merges into or otherwise combines with an entity that is not a component company of the Peer Group, and the surviving company is not in the Peer Group or the surviving company is no longer publicly traded, then such surviving company will be removed from the Peer Group.

·If during the Measurement Period a component company of the Peer Group merges into or otherwise combines with an entity that is not a component company of the Peer Group, and the surviving company is in the Peer Group, then such surviving company will be included in the Peer Group.

·Based on the number of component companies that are in the Peer Group at the end of the Measurement Period, the scale set forth in Section 1 will be recalibrated, in the Committee’s discretion; provided that, such scale will reflect (1) for Sales Growth, a threshold payout with the Company’s Percentile Rank at 25.00%, a target payout with the Company’s Percentile Rank at 50.00%, and a maximum payout with the Company’s Percentile Rank at 100.00%; and (2) for Operating Income Margin Rate, threshold, target and maximum payout with the Company’s Percentile Rank at 68.75% or above.

3

e.“Sales Growth” means the difference between a company’s sales at the beginning of the Measurement Period and such company’s sales at the end of the Measurement Period, determined by the Committee in its reasonable discretion.

5.The Committee shall have the right to amend any condition of the Award, including the vesting conditions set forth in Section 1 above.

4

Restricted Stock Unit Award

under the Fossil Group, Inc. 2008 Long-Term Incentive Plan

This RESTRICTED STOCK UNIT AWARD (the “Award”), is entered into effect as of the date of the grant (the “Effective Date”).

W I T N E S S E T H:

WHEREAS, Fossil, Inc., a Delaware corporation (the “Company”) has adopted the Fossil, Inc. 2008 Long-Term Incentive Plan (the “Long-Term Incentive Plan”), effective as of the Effective Date (as defined in the Long-Term Incentive Plan), with the objective of advancing the best interests of the Company, its Subsidiaries and its stockholders in order to attract, retain and motivate key employees with additional incentives through the award of Restricted Stock Units; and

WHEREAS, the Long-Term Incentive Plan provides that Eligible Participants of the Company or its Subsidiaries, as determined in the judgment of the Committee, may be granted an Award which may consist of grants of restricted units of common stock, par value $.01 per share (“Common Stock”), of the Company;

NOW, THEREFORE, the Participant identified in the Notice of Grant is hereby awarded Restricted Stock Units in accordance with the following terms:

1.Grant of Award; Restricted Stock Units.  Subject to the terms and conditions set forth in the Long-Term Incentive Plan, this Award and in the Notice of Grant, the Company hereby grants to the Participant an award of those Restricted Stock Units specified in the Notice of Grant, subject to adjustment from time to time as provided in Articles 12, 13 and 14 of the Long-Term Incentive Plan.  Each Restricted Stock Unit shall consist of the right to receive, upon the Vesting Date and subject to achievement of the performance goals set forth in the Notice of Grant, a share of Common Stock for each vested Unit, which shall be electronically registered by the Company in the name of the Participant as promptly as practicable following the Vesting Date.

2.Vesting.  If the Participant remains continuously employed by the Company or a Subsidiary through each Vesting Date set forth in the Notice of Grant, the Restricted Stock Units shall vest (it being understood that Units shall vest cumulatively) based upon the achievement of the performance goals and vesting schedule as set forth in the Notice of Grant and the Company shall electronically register one share of Common Stock in the Participant’s name for each vested Unit.  Any Restricted Stock Unit that does not vest on the Vesting Date shall be forfeited.

Notwithstanding the vesting conditions set forth in the Notice of Grant, for the twelve (12) month period immediately following the Participant’s Retirement Date (the “RSU Vesting Continuation Period”), the then-outstanding Restricted Stock Units shall continue to vest, and shall be electronically converted into shares of Common Stock on the Vesting Date, subject to and based upon the achievement of the performance goals and vesting schedule set forth in the Notice of Grant, to the same extent such Restricted Stock Units would have otherwise vested had the Participant remained employed during such period, and, on the last day of the RSU Vesting Continuation Period, a pro rata portion of the Restricted Stock Units that would have vested on the Vesting Date immediately following such date shall vest and be electronically converted into shares of Common Stock, based on the number of whole or partial calendar months between the immediately prior vesting date, and the last day of the RSU Vesting Continuation Period.  For purposes of this Award, “Retirement Date” shall have the meaning set forth in that certain Executive Retirement Agreement between the Company and the Participant dated [INSERT DATE] (the “Retirement Agreement”), and the Participant’s right to continued vesting following his Retirement Date shall be subject to the terms and conditions of the Retirement Agreement.

5

Notwithstanding the vesting conditions set forth in the Notice of Grant and this Section 2: (i) the Committee may in its discretion at any time accelerate the vesting of Restricted Stock Units or otherwise waive or amend any conditions of a grant of a Restricted Stock Units; and (ii) all of the Restricted Stock Units shall vest upon a Change in Control of the Company or upon the death of the Participant.

3.Termination in Event of Nonemployment.  Except as provided in Section 2 of the Award, in the event that the Participant ceases to be employed by the Company or any of its Subsidiaries before a Vesting Date for any reason other than death, the unvested Restricted Stock Units granted pursuant to this Agreement shall be forfeited.

4.Stock Certificates.  Except as provided in Section 2 of this Award, shares of Common Stock evidencing the conversion of Restricted Stock Units into shares of Common Stock shall be electronically registered in the Participant’s name as of (or as promptly as practicable after) each Vesting Date.  No stock certificate or certificates shall be issued with respect to such shares of Common Stock, unless, the Participant requests delivery of the certificate or certificates by submitting a written request to the General Counsel requesting deliver of the certificates.  Subject to Section 5 of this Award, the Company shall deliver the certificates requested by the Participant to the Participant as soon as administratively practicable following the Company’s receipt of such request. Upon registration (or issuance) of any shares hereunder,  the Participant may be required to enter into such written representations, warranties and agreements as the Company may reasonably request in order to comply with applicable securities laws, the Long-Term Incentive Plan or with the Notice of Grant.  Notwithstanding the foregoing, to the extent (i) the Participant is deemed as of his Retirement Date to be a “specified employee” under Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”); and (ii) on the Retirement Date the Company is publicly traded (as defined in Section 409A of the Code), then, to the extent required by Section 409A of the Code, no Restricted Stock Unit shall vest, or be converted into shares of Common Stock, until the earlier of (x) the first day of the seventh month following the Participant’s Retirement Date or (y) the date of the Participant’s death following such Retirement Date.  Upon the expiration of the applicable deferral period, any Restricted Stock Units which would have otherwise been vested and converted into shares of Common Stock during that period (whether in a single sum or in installments) shall be converted into shares of Common Stock and transferred to the Participant or the Participant’s beneficiary in one lump sum.

5.Tax Withholding Obligations.  The Participant shall be required to deposit with the Company an amount of cash equal to the amount determined by the Company to be required with respect to any withholding taxes, FICA contributions, or the like under any federal, state, or local statute, ordinance, rule, or regulation in connection with the award or settlement of the Restricted Stock Units.  Alternatively, the Company may, at its sole election, (i) withhold the required amounts from the Participant’s pay during the pay periods next following the date on which any such applicable tax liability otherwise arises, or (ii) withhold a number of shares of Common Stock otherwise deliverable having a Fair Market Value sufficient to satisfy the statutory minimum of all or part of the Participant’s estimated total federal, state, and local tax obligations associated with vesting or settlement of the Restricted Stock Units.  The Company shall not deliver any of the shares of Common Stock until and unless the Participant has made the deposit required herein or proper provision for required withholding has been made.

6.Assignability.  Until the Restricted Stock Units are vested as provided above, they may not be sold, transferred, pledged, assigned, or otherwise alienated other than by will or the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by Code or Title I of the Employee Retirement Income Security Act of 1974, as amended.  Any attempt to do so contrary to the provisions hereof shall be null and void.  No assignment of the Restricted Stock Units herein granted shall be effective to bind the Company unless the Company shall have been furnished with written notice thereof and a copy of such documents and evidence as the Company may deem necessary to establish the validity of the assignment and the acceptance by the assignee or assignees of the terms and conditions hereof.

6

7.No Stockholder Rights.  The Participant shall have no rights as a stockholder of the Company with respect to the Restricted Stock Units unless and until certificates evidencing shares of Common Stock shall have been issued by the Company to the Participant.  Until such time, the Participant shall not be entitled to dividends or distributions in respect of any shares or to vote such shares on any matter submitted to the stockholders of the Company.  In addition, except as to adjustments that may from time to time be made by the Committee in accordance with the Long-Term Incentive Plan, no adjustment shall be made or required to be made in respect of dividends (ordinary or extraordinary, whether in cash, securities or any other property) or distributions paid or made by the Company or any other rights granted in respect of any shares for which the record date for such payment, distribution or grant is prior to the date upon which certificates evidencing such shares shall have been issued by the Company.

8.Administration.  The Committee shall have the power to interpret the Long-Term Incentive Plan, the Notice of Grant and this Award, and to adopt such rules for the administration, interpretation, and application of the Long-Term Incentive Plan as are consistent therewith and to interpret or revoke any such rules.  All actions taken and all interpretations and determinations made by the Committee shall be final and binding upon the Participant, the Company, and all other interested persons.  No member of the Committee shall be personally liable for any action, determination, or interpretation made in good faith with respect to the Long-Term Incentive Plan or this Award.

9.Restrictions and Related Representations. Upon the acquisition of any shares of Common Stock pursuant to the vesting of the Restricted Stock Units granted pursuant hereto, the Participant may be required to enter into such written representations, warranties and agreements as the Company may reasonably request in order to comply with applicable securities laws, the Long-Term Incentive Plan or with this Award.  In addition, to the extent a certificate or certificates are issued representing any shares, the certificate or certificates will be stamped or otherwise imprinted with a legend in such form as the Company may require with respect to any applicable restrictions on sale or transfer, and the stock transfer records of the Company will reflect stop-transfer instructions, as appropriate, with respect to such shares.

10.Notices and Electronic Delivery.  Unless otherwise provided herein, any notice or other communication hereunder shall be in writing and shall be given by registered or certified mail unless the Company, in its sole discretion, decides to deliver any documents relating to the Award or future awards that may be granted under the Long-Term Incentive Plan by electronic means or to request the Participant’s consent to participate in the Long-Term Incentive Plan by electronic means.  The Participant hereby consents to receive such documents by electronic delivery and, if requested, to agree to participate in the Long-Term Incentive Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.  All notices by the Participant hereunder shall be directed to Fossil Group, Inc., Attention: Secretary, at the Company’s then current address unless the Company, in writing or electronically, directs the Participant otherwise.  Any notice given by the Company to the Participant directed to him at his address on file with the Company shall be effective to bind any other person who shall acquire rights hereunder.  The Participant shall be deemed to have familiarized himself with all matters contained herein and in the Long-Term Incentive Plan which may affect any of the Participant’s rights or privileges hereunder.

7

11.Scope of Certain Terms.  Whenever the term “Participant” is used herein under circumstances applicable to any other person or persons to whom this Award may be assigned in accordance with the provisions of Paragraph 6 (Assignability) of this Agreement, it shall be deemed to include such person or persons.  The term “Long-Term Incentive Plan” as used herein shall be deemed to include the Long-Term Incentive Plan and any subsequent amendments thereto, together with any administrative interpretations which have been adopted thereunder by the Committee pursuant to Section 3.3 of the Long-Term Incentive Plan. Unless otherwise indicated, defined terms herein shall have the meaning ascribed to them in the Long-Term Incentive Plan.

12.General Restrictions.  This Award is subject to the requirement that, if at any time the Committee shall determine that (a) the listing, registration or qualification of the shares of Common Stock subject or related thereto upon any securities exchange or under any state or federal law; (b) the consent or approval of any government regulatory body; or (c) an agreement by the recipient of an Award with respect to the disposition of shares of Common Stock, is necessary or desirable (in connection with any requirement or interpretation of any federal or state securities law, rule or regulation) as a condition of, or in connection with, the granting of such Award or the issuance, purchase or delivery of shares of Common Stock thereunder, such Award may not be consummated in whole or in part unless such listing, registration, qualification, consent, approval or agreement shall have been effected or obtained free of any conditions not acceptable to the Committee.

13.Adjustments for Changes in Capitalization.  The number of Restricted Stock Units covered by this Award shall be subject to adjustment in accordance with Articles 12-14 of the Long-Term Incentive Plan.

14.No Right of Employment. Neither the granting of the Restricted Stock Units, the exercise of any part hereof, nor any provision of the Long-Term Incentive Plan or this Award shall constitute or be evidence of any understanding, express or implied, on the part of the Company or any Subsidiary to employ the Participant for any specified period.

15.Amendment.  This Award may be amended only by a writing executed by the Company and the Participant which specifically states that it is amending this Award.  Notwithstanding the foregoing, this Award may be amended solely by the Committee by a writing which specifically states that it is amending this Award, so long as a copy of such amendment is delivered to the Participant, and provided that no such amendment adversely affecting the rights of the Participant hereunder may be made without the Participant’s written consent.  Without limiting the foregoing, the Committee reserves the right to change, by written notice to the Participant, the provisions of the Restricted Stock Units or this Award in any way it may deem necessary or advisable to carry out the purpose of the grant as a result of any change in applicable laws or regulations or any future law, regulation, ruling, or judicial decision, provided that any such change shall be applicable only to Restricted Stock Units which are then subject to restrictions as provided herein.

16.Precondition of Legality.  Notwithstanding anything to the contrary contained herein, the Participant agrees that the Company will not be obligated to issue any shares pursuant to this Award, if the issuance of such shares would constitute a violation by the Participant or by the Company of any provision of any law or regulation of any governmental authority or any national securities exchange or transaction quotation system.

17.Incorporation of the Long-Term Incentive Plan. This Award is subject to the Long-Term Incentive Plan, a copy of which has been furnished to the Participant and for which the Participant acknowledges receipt.  The terms and provisions of the Long-Term Incentive Plan are incorporated by reference herein.  In the event of a conflict between any term or provision contained here in and a term or provision of the Long-Term Incentive Plan, the applicable terms and provisions of the Long-Term Incentive Plan shall govern and prevail.

8

18.Severability.  If one or more of the provisions of this Award shall be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and the invalid, illegal or unenforceable provisions shall be deemed null and void; however, to the extent permissible by law, any provisions which could be deemed null and void shall first be construed, interpreted or revised retroactively to permit this Award to be construed so as to first the intent of this Award and the Long-Term Incentive Plan.

19.Construction.  The Restricted Stock Units are being issued pursuant to Section 6.6 of the Long-Term Incentive Plan and are subject to the terms of the Long-Term Incentive Plan.  A copy of the Long-Term Incentive Plan has been given to the Participant, and additional copies of the Long-Term Incentive Plan are available upon request during normal business hours at the principal executive offices of the Company.  To the extent that any provision of this Award violates or is inconsistent with an express provision of the Long-Term Incentive Plan, the Long-Term Incentive Plan provision shall govern and any inconsistent provision in this Award shall be of no force or effect.

20.Governing Law.  The Restricted Stock Unit grant and the provisions of this Award are governed by, and subject to, the laws of the State of Delaware, as provided in the Long-Term Incentive Plan.

9

EX-12.1

Exhibit 12.1

FOSSIL GROUP, INC.

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

	13 weeks ended			Fiscal year ended
	April 4, 2015			2014			2013			2012			2011			2010
				(Amounts in dollars, except ratios)
Pre-tax income from continuing operations before adjustment for income or loss from equity investees	$	59,161,905		$	558,078,636		$	561,467,029		$	492,222,231		$	451,559,247		$	384,209,882
Equity Adjustments:
Distributed income of equity investees	—			—			—			1,870,000			2,226,000			4,726,000
Noncontrolling interest in pretax income of subsidiaries that have not incurred fixed charges	(2,568,148		)	(9,904,472		)	(9,896,015		)	(10,858,201		)	(12,700,055		)	(9,685,000		)
Fixed Charges:
Interest expensed, amortized premiums, and discounts related to indebtedness	4,177,984			15,898,258			9,548,183			5,159,961			2,390,759			1,119,004
Estimate of the interest within rental expense (1)	17,622,720			68,506,714			58,083,173			47,283,331			38,581,611			31,865,555
Total Fixed Charges	21,800,704			84,404,972			67,631,356			52,443,292			40,972,370			32,984,559
Earnings before income taxes and fixed charges	$	78,394,461		$	632,579,136		$	619,202,371		$	535,677,321		$	482,057,563		$	412,235,442
Ratio of Earnings to Fixed Charges	3.60		x	7.49		x	9.16		x	10.21		x	11.77		x	12.50		x

(1)  Interest portion of rental expense represents 35.95% of rental expense, which we deem to be a reasonable approximation of the interest factor.

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Kosta N. Kartsotis, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Fossil Group, Inc.;

2. 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;

3. 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;

4. 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:

a. 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;

b. 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;

c. 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

d. 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

5. 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):

a. 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

b. 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.

May 7, 2015	/s/ KOSTA N. KARTSOTIS
	Kosta N. Kartsotis
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Dennis R. Secor, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Fossil Group, Inc.;

2.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;

3.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;

4.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:

a. 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;

b. 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;

c. 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

d. 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

5. 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):

a. 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

b. 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.

May 7, 2015	/s/ Dennis R. Secor
	Dennis R. Secor
	Executive Vice President, Chief Financial Officer and Treasurer

EX-32.1

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

I, Kosta N. Kartsotis, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge, the Quarterly Report of Fossil Group, Inc. on Form 10-Q for the quarter ended April 4, 2015, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Fossil Group, Inc.

Dated: May 7, 2015	By:	/s/ Kosta N. Kartsotis
	Name:	Kosta N. Kartsotis
	Title:	Chief Executive Officer

The foregoing certification is being furnished as an exhibit to the Form 10-Q 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-Q 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.

EX-32.2

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

I, Dennis R. Secor, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge, the Quarterly Report of Fossil Group, Inc. on Form 10-Q for the quarter ended April 4, 2015, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Fossil Group, Inc.

Dated: May 7, 2015	By:	/s/ Dennis R. Secor
	Name:	Dennis R. Secor
	Title:	Executive Vice President, Chief Financial Officer and Treasurer

The foregoing certification is being furnished as an exhibit to the Form 10-Q 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-Q 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.

XML

STOCKHOLDERS' EQUITY (Details) (USD $) Share data in Millions, unless otherwise specified	3 Months Ended
	Apr. 04, 2015		Apr. 05, 2014
Common and Preferred Stock
Authorizations remaining	$ 944,200,000
Stock repurchase plans | Common stock
Common Stock Repurchase Programs
Treasury stock effectively retired (in shares)	1.3
Treasury stock effectively retired	13,000
Stock repurchase plans | Additional paid-in capital
Common Stock Repurchase Programs
Treasury stock effectively retired	400,000
Stock repurchase plans | Retained earnings
Common Stock Repurchase Programs
Treasury stock effectively retired	114,100,000
Stock repurchase plans | Treasury stock
Common Stock Repurchase Programs
Treasury stock effectively retired	114,500,000
Repurchase program with termination date of December 2018
Common Stock Repurchase Programs
Common stock authorized amount, value	1,000,000,000
Number of shares repurchased	1.0		0
Common stock repurchased, value	85,700,000		0
Repurchase program with termination date of December 2016
Common Stock Repurchase Programs
Common stock authorized amount, value	1,000,000,000	[1]
Number of shares repurchased	0.3		1.0
Common stock repurchased, value	28,800,000		117,300,000
Share repurchase plan with no termination date
Common Stock Repurchase Programs
Common stock authorized amount, value	30,000,000
Number of shares repurchased	0		0
Common stock repurchased, value	$ 0		$ 0

[1] In the first quarter of fiscal year 2015, we completed this repurchase plan.

XML

INTANGIBLE AND OTHER ASSETS (Details 2) (USD $)	3 Months Ended
	Apr. 04, 2015	Apr. 05, 2014
INTANGIBLE AND OTHER ASSETS
Amortization expense for intangible assets	$ 1,200,000	$ 1,300,000
Estimated aggregate future amortization expense by fiscal year
2015 (remaining)	3,751,000
2016	4,880,000
2017	4,621,000
2018	4,267,000
2019	4,172,000
2020	$ 3,674,000

XML

DERIVATIVES AND RISK MANAGEMENT (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Apr. 04, 2015	Apr. 05, 2014
Derivatives
Total gain (loss) recognized in other comprehensive loss, net of taxes	$ 7,836	$ (724)
Cash flow hedges | Forward contract
Derivatives
Total gain (loss) recognized in other comprehensive loss, net of taxes	12,543	(348)
Cash flow hedges | Interest rate swaps
Derivatives
Total gain (loss) recognized in other comprehensive loss, net of taxes	(4,707)	(538)
Net Investment Hedges | Forward contract
Derivatives
Total gain (loss) recognized in other comprehensive loss, net of taxes	$ 0	$ 162

XML

COMMITMENTS AND CONTINGENCIES (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Apr. 04, 2015	Apr. 05, 2014
COMMITMENTS AND CONTINGENCIES
Capital lease obligations	$ 886.7
Rent expense	$ 49.0	$ 44.4

XML

SEGMENT INFORMATION (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Apr. 04, 2015	Apr. 05, 2014
Net sales for each class of similar products
Net sales	$ 725,085	$ 776,544
Percentage of Total	100.00%	100.00%
Watches
Net sales for each class of similar products
Net sales	551,857	601,388
Percentage of Total	76.10%	77.50%
Leathers
Net sales for each class of similar products
Net sales	92,926	99,722
Percentage of Total	12.80%	12.80%
Jewelry
Net sales for each class of similar products
Net sales	62,987	56,518
Percentage of Total	8.70%	7.30%
Other
Net sales for each class of similar products
Net sales	$ 17,315	$ 18,916
Percentage of Total	2.40%	2.40%

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FINANCIAL STATEMENT POLICIES (Details) (USD $)	0 Months Ended	3 Months Ended
	Apr. 04, 2015	Apr. 04, 2015	Apr. 05, 2014
Hedging Instruments
Unrealized net loss on foreign currency forward contracts, if settled	$ 21,900,000
Numerator:
Net income attributable to Fossil Group, Inc.		$ 38,070,000	$ 66,343,000
Denominator:
Basic weighted average common shares outstanding		50,294,000	54,125,000
Basic EPS (in dollars per share)		$ 0.76	$ 1.23
Diluted EPS computation:
Basic weighted average common shares outstanding		50,294,000	54,125,000
Effect of stock options, stock appreciation rights, restricted stock units and performance restricted stock units		173,000	226,000
Diluted weighted average common shares outstanding		50,467,000	54,351,000
Diluted EPS (in dollars per share)		$ 0.75	$ 1.22
Other EPS Disclosures
Shares issuable under stock-based awards not included in the diluted EPS calculation		352,400	273,400

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INCOME TAXES (Tables)

3 Months Ended

Apr. 04, 2015

INCOME TAXES

Schedule of income tax expense and related effective rate

The Company’s income tax expense and related effective rate were as follows (in thousands, except percentage data):

	For the 13			For the 14
	Weeks Ended			Weeks Ended
	April 4,			April 5,
	2015			2014
Income tax expense	$	18,524		$	31,480
Income tax rate	31.3		%	31.3		%

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DERIVATIVES AND RISK MANAGEMENT (Details 4) (USD $)	Apr. 04, 2015	Jan. 03, 2015
Fair value of derivative instruments
Asset Derivatives, Fair Value	$ 34,425,000	$ 29,393,000
Liability Derivatives, Fair Value	8,364,000	2,514,000
Estimated gain expected to be reclassified into earnings within the next twelve months	21,300,000
Forward contract | Designated as cash flow hedges | Cash flow hedges | Prepaid expenses and other current assets
Fair value of derivative instruments
Asset Derivatives, Fair Value	32,927,000	25,867,000
Forward contract | Designated as cash flow hedges | Cash flow hedges | Intangible and other assets-net
Fair value of derivative instruments
Asset Derivatives, Fair Value	1,155,000	1,802,000
Forward contract | Designated as cash flow hedges | Cash flow hedges | Accrued expenses - other
Fair value of derivative instruments
Liability Derivatives, Fair Value	373,000	0
Forward contract | Designated as cash flow hedges | Cash flow hedges | Other long-term liabilities
Fair value of derivative instruments
Liability Derivatives, Fair Value	133,000	0
Interest rate contracts | Designated as cash flow hedges | Cash flow hedges | Prepaid expenses and other current assets
Fair value of derivative instruments
Asset Derivatives, Fair Value	0	0
Interest rate contracts | Designated as cash flow hedges | Cash flow hedges | Intangible and other assets-net
Fair value of derivative instruments
Asset Derivatives, Fair Value	343,000	1,724,000
Interest rate contracts | Designated as cash flow hedges | Cash flow hedges | Accrued expenses - other
Fair value of derivative instruments
Liability Derivatives, Fair Value	7,059,000	2,157,000
Interest rate contracts | Designated as cash flow hedges | Cash flow hedges | Other long-term liabilities
Fair value of derivative instruments
Liability Derivatives, Fair Value	$ 799,000	$ 357,000

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EMPLOYEE BENEFIT PLANS (Details 2) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Apr. 04, 2015
Stock options
Stock-based compensation plans disclosures
Stock Options Outstanding, Number Of Shares	412
Stock Options Outstanding, Weighted- Average Exercise Price (in dollars per share)	$ 80.99
Stock Options Outstanding, Weighted- Average Remaining Contractual Term	5 years 3 months 18 days
Stock Options Exercisable, Number Of Shares	407
Stock Options Exercisable, Weighted- Average Exercise Price (in dollars per share)	$ 80.71
Stock appreciation rights
Stock-based compensation plans disclosures
Stock Appreciation Rights Outstanding, Number Of Shares	363
Stock Appreciation Rights Outstanding, Weighted- Average Exercise Price (in dollars per share)	$ 89.40
Stock Appreciation Rights Outstanding, Weighted- Average Remaining Contractual Term	6 years 3 months 18 days
Stock Appreciation Rights Exercisable, Number Of Shares	144
Stock Appreciation Rights Exercisable, Weighted- Average Exercise Price (in dollars per share)	$ 89.15
Range Of Exercise Prices $13.65 - $21.51 | Stock options
Stock-based compensation plans disclosures
Stock Options Outstanding, lower range (in dollars per share)	$ 13.65
Stock Options Outstanding, upper range (in dollars per share)	$ 21.51
Stock Options Outstanding, Number Of Shares	54
Stock Options Outstanding, Weighted- Average Exercise Price (in dollars per share)	$ 15.12
Stock Options Outstanding, Weighted- Average Remaining Contractual Term	3 years 3 months 18 days
Stock Options Exercisable, Number Of Shares	54
Stock Options Exercisable, Weighted- Average Exercise Price (in dollars per share)	$ 15.12
Range Of Exercise Prices $13.65 - $21.51 | Stock appreciation rights
Stock-based compensation plans disclosures
Stock Appreciation Rights Outstanding, lower range (in dollars per share)	$ 13.65
Stock Appreciation Rights Outstanding, upper range (in dollars per share)	$ 21.51
Stock Appreciation Rights Outstanding, Number Of Shares	18
Stock Appreciation Rights Outstanding, Weighted- Average Exercise Price (in dollars per share)	$ 13.65
Stock Appreciation Rights Outstanding, Weighted- Average Remaining Contractual Term	2 years
Stock Appreciation Rights Exercisable, Number Of Shares	18
Stock Appreciation Rights Exercisable, Weighted- Average Exercise Price (in dollars per share)	$ 13.65
Range Of Exercise Prices $30.71 - $67.10 | Stock options
Stock-based compensation plans disclosures
Stock Options Outstanding, lower range (in dollars per share)	$ 30.71
Stock Options Outstanding, upper range (in dollars per share)	$ 67.10
Stock Options Outstanding, Number Of Shares	96
Stock Options Outstanding, Weighted- Average Exercise Price (in dollars per share)	$ 36.26
Stock Options Outstanding, Weighted- Average Remaining Contractual Term	3 years 8 months 12 days
Stock Options Exercisable, Number Of Shares	96
Stock Options Exercisable, Weighted- Average Exercise Price (in dollars per share)	$ 36.26
Range Of Exercise Prices $30.71 - $67.10 | Stock appreciation rights
Stock-based compensation plans disclosures
Stock Appreciation Rights Outstanding, lower range (in dollars per share)	$ 30.71
Stock Appreciation Rights Outstanding, upper range (in dollars per share)	$ 67.10
Stock Appreciation Rights Outstanding, Number Of Shares	17
Stock Appreciation Rights Outstanding, Weighted- Average Exercise Price (in dollars per share)	$ 40.16
Stock Appreciation Rights Outstanding, Weighted- Average Remaining Contractual Term	2 years 7 months 6 days
Stock Appreciation Rights Exercisable, Number Of Shares	17
Stock Appreciation Rights Exercisable, Weighted- Average Exercise Price (in dollars per share)	$ 38.71
Range Of Exercise Prices $69.53 - $106.40 | Stock options
Stock-based compensation plans disclosures
Stock Options Outstanding, lower range (in dollars per share)	$ 69.53
Stock Options Outstanding, upper range (in dollars per share)	$ 106.40
Stock Options Outstanding, Number Of Shares	96
Stock Options Outstanding, Weighted- Average Exercise Price (in dollars per share)	$ 80.86
Stock Options Outstanding, Weighted- Average Remaining Contractual Term	5 years 10 months 24 days
Stock Options Exercisable, Number Of Shares	94
Stock Options Exercisable, Weighted- Average Exercise Price (in dollars per share)	$ 80.79
Range Of Exercise Prices $69.53 - $106.40 | Stock appreciation rights
Stock-based compensation plans disclosures
Stock Appreciation Rights Outstanding, lower range (in dollars per share)	$ 69.53
Stock Appreciation Rights Outstanding, upper range (in dollars per share)	$ 106.40
Stock Appreciation Rights Outstanding, Number Of Shares	213
Stock Appreciation Rights Outstanding, Weighted- Average Exercise Price (in dollars per share)	$ 84.29
Stock Appreciation Rights Outstanding, Weighted- Average Remaining Contractual Term	7 years 1 month 6 days
Stock Appreciation Rights Exercisable, Number Of Shares	45
Stock Appreciation Rights Exercisable, Weighted- Average Exercise Price (in dollars per share)	$ 90.52
Range Of Exercise Prices $106.89 - $131.46 | Stock options
Stock-based compensation plans disclosures
Stock Options Outstanding, lower range (in dollars per share)	$ 106.89
Stock Options Outstanding, upper range (in dollars per share)	$ 131.46
Stock Options Outstanding, Number Of Shares	166
Stock Options Outstanding, Weighted- Average Exercise Price (in dollars per share)	$ 128.10
Stock Options Outstanding, Weighted- Average Remaining Contractual Term	6 years 6 months
Stock Options Exercisable, Number Of Shares	163
Stock Options Exercisable, Weighted- Average Exercise Price (in dollars per share)	$ 128.06
Range Of Exercise Prices $106.89 - $131.46 | Stock appreciation rights
Stock-based compensation plans disclosures
Stock Appreciation Rights Outstanding, lower range (in dollars per share)	$ 106.89
Stock Appreciation Rights Outstanding, upper range (in dollars per share)	$ 131.46
Stock Appreciation Rights Outstanding, Number Of Shares	115
Stock Appreciation Rights Outstanding, Weighted- Average Exercise Price (in dollars per share)	$ 117.80
Stock Appreciation Rights Outstanding, Weighted- Average Remaining Contractual Term	6 years 2 months 12 days
Stock Appreciation Rights Exercisable, Number Of Shares	64
Stock Appreciation Rights Exercisable, Weighted- Average Exercise Price (in dollars per share)	$ 121.94

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WARRANTY LIABILITIES (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Apr. 04, 2015		Apr. 05, 2014
Warranty liability activity
Beginning balance	$ 13,500		$ 15,658
Settlements in cash or kind	(2,102)		(3,163)
Warranties issued and adjustments to preexisting warranties (1)	2,016	[1]	3,364	[1]
Liabilities assumed in acquisition	44		0
Ending balance	$ 13,458		$ 15,859

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

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FAIR VALUE MEASUREMENTS (Details 2) (USD $)	3 Months Ended
	Apr. 04, 2015	Apr. 05, 2014	Jan. 03, 2015
Fair value hierarchy for assets and liabilities measured at fair value on a nonrecurring basis
Impairment losses	$ 1,270,000	$ 282,000
Property, plant and equipment - net	331,665,000		345,606,000
Specific Company-owned stores
Fair value hierarchy for assets and liabilities measured at fair value on a nonrecurring basis
Impairment losses	1,300,000
Property, plant and equipment - net	1,200,000
Key money, deemed not recoverable	100,000
Americas | Level 3 | Specific Company-owned stores
Fair value hierarchy for assets and liabilities measured at fair value on a nonrecurring basis
Impairment losses	300,000
Europe | Level 3 | Specific Company-owned stores
Fair value hierarchy for assets and liabilities measured at fair value on a nonrecurring basis
Impairment losses	$ 1,000,000

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DERIVATIVES AND RISK MANAGEMENT (Details)	3 Months Ended																	3 Months Ended
	Apr. 04, 2015 USD ($)	Apr. 05, 2014 USD ($)	Apr. 04, 2015 Derivatives Designated as Cash Flow Hedges Amount Reclassified from AOCI USD ($)	Apr. 05, 2014 Derivatives Designated as Cash Flow Hedges Amount Reclassified from AOCI USD ($)	Apr. 04, 2015 Forward contract Net Investment Hedges EUR (€)	Apr. 04, 2015 Forward contract Designated as cash flow hedges Euro USD ($)	Apr. 04, 2015 Forward contract Designated as cash flow hedges Euro EUR (€)	Apr. 04, 2015 Forward contract Designated as cash flow hedges British pound USD ($)	Apr. 04, 2015 Forward contract Designated as cash flow hedges British pound GBP (£)	Apr. 04, 2015 Forward contract Designated as cash flow hedges Canadian dollar USD ($)	Apr. 04, 2015 Forward contract Designated as cash flow hedges Canadian dollar CAD	Apr. 04, 2015 Forward contract Designated as cash flow hedges Japanese yen USD ($)	Apr. 04, 2015 Forward contract Designated as cash flow hedges Japanese yen JPY (¥)	Apr. 04, 2015 Forward contract Designated as cash flow hedges Mexican peso USD ($)	Apr. 04, 2015 Forward contract Designated as cash flow hedges Mexican peso MXN	Apr. 04, 2015 Forward contract Designated as cash flow hedges Australian dollar USD ($)	Apr. 04, 2015 Forward contract Designated as cash flow hedges Australian dollar AUD	Apr. 04, 2015 Interest rate swaps Designated as cash flow hedges	Apr. 04, 2015 Consolidated leverage ratio (the Ratio) less than 1.00 to 1.00 Interest rate swaps Designated as cash flow hedges	Apr. 04, 2015 Consolidated leverage ratio (the Ratio) greater than 2.00 to 1.00 Interest rate swaps Designated as cash flow hedges
DERIVATIVES AND RISK MANAGEMENT
Maximum period of future intercompany purchases	18 months
Forecasted purchases to manage fluctuations (as a percent)	65.00%
Hedges resulted ineffectiveness	$ 0	$ 0
Derivatives
Gains or losses reclassified into earnings	38,070,000	66,343,000	0	0
Notional amount						217,600,000	174,100,000	43,500,000	27,500,000	34,300,000	40,100,000	26,400,000	2,935,000,000	12,000,000	173,300,000	11,500,000	14,200,000
Term of interest rate swap agreement																		5 years
Fixed interest rate swap (as a percent)																		1.288%
Description of base rate																		1-month London Interbank Offer Rate ("LIBOR") based variable rate
Applicable margin based on the Company's consolidated leverage ratio (as a percent)																			1.25%	2.00%
Consolidated leverage ratio used to calculate variable rate of debt (as a percent)																			1.00%	2.00%
Hedged amount					€ 25,000,000

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WARRANTY LIABILITIES

3 Months Ended

Apr. 04, 2015

WARRANTY LIABILITIES

WARRANTY LIABILITIES

4. WARRANTY LIABILITIES

Warranty liability activity consisted of the following (in thousands):

	For the 13			For the 14
	Weeks Ended			Weeks Ended
	April 4,			April 5,
	2015			2014
Beginning balance	$	13,500		$	15,658
Settlements in cash or kind	(2,102		)	(3,163		)
Warranties issued and adjustments to preexisting warranties (1)	2,016			3,364
Liabilities assumed in acquisition	44			0
Ending balance	$	13,458		$	15,859

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

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EMPLOYEE BENEFIT PLANS (Details 3) (Restricted stock ,Restricted stock units and Performance restricted stock units, USD $) In Millions, except Share data in Thousands, unless otherwise specified	3 Months Ended
	Apr. 04, 2015
Restricted stock ,Restricted stock units and Performance restricted stock units
Nonvested, Number of Shares
Nonvested, beginning balance (in shares)	255
Granted (in shares)	288
Vested (in shares)	(85)
Forfeited (in shares)	(12)
Nonvested, ending balance (in shares)	446
Nonvested, Weighted-Average Grant Date Fair Value
Nonvested, beginning balance (in dollars per share)	$ 110.17
Granted (in dollars per share)	$ 80.38
Vested (in dollars per share)	$ 113.06
Forfeited (in dollars per share)	$ 110.75
Nonvested, ending balance (in dollars per share)	$ 90.39
Fair value of restricted stock and restricted stock units, vested	$ 6.9

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SEGMENT INFORMATION (Tables)

3 Months Ended

Apr. 04, 2015

SEGMENT INFORMATION

Summary information by operating segment

Summary information by operating segment was as follows (in thousands):

	For the 13 Weeks Ended					For the 14 Weeks Ended
	April 4, 2015					April 5, 2014
	Net Sales		Operating Income			Net Sales		Operating Income
Americas	$	366,596	$	76,722		$	382,660	$	99,069
Europe	234,256		33,302			260,353		52,508
Asia	124,233		24,308			133,531		30,898
Corporate			(78,178		)			(77,777		)
Consolidated	$	725,085	$	56,154		$	776,544	$	104,698
	April 4, 2015					January 3, 2015
	Long-Term Assets		Total Assets			Long-Term Assets		Total Assets
Americas	$	263,887	$	765,691		$	263,324	$	809,548
Europe	202,704		470,671			220,742		561,486
Asia	56,670		222,387			57,508		233,881
Corporate	174,880		584,716			176,124		602,637
Total	$	698,141	$	2,043,465		$	717,698	$	2,207,552

Schedule of revenue for each class of similar products

The following tables reflect net sales for each class of similar products in the periods presented (in thousands, except percentage data):

	For the 13 Weeks Ended				For the 14 Weeks Ended
	April 4, 2015				April 5, 2014
	Net Sales		Percentage of Total		Net Sales		Percentage of Total
Watches	$	551,857	76.1	%	$	601,388	77.5	%
Leathers	92,926		12.8		99,722		12.8
Jewelry	62,987		8.7		56,518		7.3
Other	17,315		2.4		18,916		2.4
Total	$	725,085	100.0	%	$	776,544	100.0	%

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables)

3 Months Ended

Apr. 04, 2015

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Schedule of changes in the balances of each component of accumulated other comprehensive income, net of taxes

The following table illustrates changes in the balances of each component of accumulated other comprehensive income (loss), net of taxes (in thousands):

	For the 13 Weeks Ended April 4, 2015
	Currency			Cash Flow Hedges
	Translation Adjustments			Forward Contracts			Interest Rate Swaps			Pension Plan			Total
Beginning balance	$	(27,241	)	$	14,980		$	(502	)	$	(3,647	)	$	(16,410	)
Other comprehensive income (loss) before reclassifications	(33,506		)	18,760			(7,406		)	0			(22,152		)
Tax (expense) benefit	0			(6,217		)	2,699			0			(3,518		)
Amounts reclassed from accumulated other comprehensive income	0			12,439			(681		)	0			11,758
Tax (expense) benefit	0			(4,231		)	248			0			(3,983		)
Total other comprehensive income (loss)	(33,506		)	4,335			(4,274		)	0			(33,445		)
Ending balance	$	(60,747	)	$	19,315		$	(4,776	)	$	(3,647	)	$	(49,855	)

	For the 14 Weeks Ended April 4, 2014
	Currency			Cash Flow Hedges								Net
	Translation Adjustments			Forward Contracts			Interest Rate Swap			Pension Plan		Investment Hedges		Total
Beginning balance	$	38,152		$	(2,091	)	$	(106	)	$	736	$	0	$	36,691
Other comprehensive income (loss) before reclassifications	(1,125		)	(266		)	(908		)	0		162		(2,137		)
Tax (expense) benefit	0			(82		)	370			0		0		288
Amounts reclassed from accumulated other comprehensive income	0			(828		)	(732		)	0		0		(1,560		)
Tax (expense) benefit	0			330			267			0		0		597
Total other comprehensive income (loss)	(1,125		)	150			(73		)	0		162		(886		)
Ending balance	$	37,027		$	(1,941	)	$	(179	)	$	736	$	162	$	35,805

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DEBT ACTIVITY (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Apr. 04, 2015	Mar. 09, 2015
Credit Agreement
Debt Instrument
Increments in excess of minimum principal amount	$ 1.0
Credit Agreement | Minimum
Debt Instrument
Minimum principal payments	3.0
Credit Agreement | Maximum
Debt Instrument
Consolidated leverage ratio required	2.50
Consolidated interest coverage ratio required	3.50
Credit Agreement | Fossil Europe B.V., Swiss Technology Holding GmbH and Fossil (East) Limited
Debt Instrument
Percentage of total outstanding non-voting capital stock	100.00%
U.S. revolving line of credit
Debt Instrument
Maximum borrowing capacity		1,050.0
Percentage of total outstanding voting capital stock	65.00%
Total borrowings	18.0
Debt outstanding	407.0
Available borrowing capacity	642.1
Interest expense incurred	0.6
U.S. revolving line of credit | Base rate loans
Debt Instrument
Minimum principal payments	2.0
Increments in excess of minimum principal amount	1.0
U.S. revolving line of credit | LIBOR rate loans
Debt Instrument
Minimum principal payments	5.0
Increments in excess of minimum principal amount	1.0
U.S. revolving line of credit | Prior Agreement
Debt Instrument
Debt outstanding		555.0
Interest expense incurred	1.6
U.S. revolving line of credit | Minimum
Debt Instrument
Commitment fee (as a percent)	0.20%
U.S. revolving line of credit | Maximum
Debt Instrument
Commitment fee (as a percent)	0.35%
U.S. revolving line of credit | Consolidated leverage ratio (the Ratio) less than 1.00 to 1.00 | Base rate loans
Debt Instrument
Applicable margin based on the Company's consolidated leverage ratio (as a percent)	0.25%
Consolidated leverage ratio used to calculate variable rate of debt (as a percent)	1.00%
U.S. revolving line of credit | Consolidated leverage ratio (the Ratio) greater than 2.00 to 1.00 | Base rate loans
Debt Instrument
Applicable margin based on the Company's consolidated leverage ratio (as a percent)	1.00%
Consolidated leverage ratio used to calculate variable rate of debt (as a percent)	2.00%
U.S. revolving line of credit | Federal funds rate | Base rate loans
Debt Instrument
Description of base rate	federal funds rate
Basis spread on base rate (as a percent)	0.50%
U.S. revolving line of credit | LIBOR | Base rate loans
Debt Instrument
Description of base rate	LIBOR
Basis spread on base rate (as a percent)	1.00%
U.S. revolving line of credit | LIBOR | LIBOR rate loans
Debt Instrument
Description of base rate	LIBOR
LIBOR Rate, amount used to calculate quotient (as a percent)	1.00%
U.S. revolving line of credit | LIBOR | Consolidated leverage ratio (the Ratio) less than 1.00 to 1.00 | LIBOR rate loans
Debt Instrument
Applicable margin based on the Company's consolidated leverage ratio (as a percent)	1.25%
Consolidated leverage ratio used to calculate variable rate of debt (as a percent)	1.00%
U.S. revolving line of credit | LIBOR | Consolidated leverage ratio (the Ratio) greater than 2.00 to 1.00 | LIBOR rate loans
Debt Instrument
Applicable margin based on the Company's consolidated leverage ratio (as a percent)	2.00%
Consolidated leverage ratio used to calculate variable rate of debt (as a percent)	2.00%
Swingline loan
Debt Instrument
Maximum borrowing capacity		20.0
Minimum principal payments	0.1
Increments in excess of minimum principal amount	0.1
LC Facility
Debt Instrument
Maximum borrowing capacity		10.0
U.S. term loan
Debt Instrument
Maximum borrowing capacity		231.3
Repayment of borrowings	3.1
Debt outstanding	228.1
Interest paid	0.6
Minimum principal payments	5.0
Increments in excess of minimum principal amount	1.0
U.S. term loan | Prior Agreement
Debt Instrument
Debt outstanding		231.3
Interest expense incurred	$ 1.0
U.S. term loan | Consolidated leverage ratio (the Ratio) less than 1.00 to 1.00 | Base rate loans
Debt Instrument
Applicable margin based on the Company's consolidated leverage ratio (as a percent)	0.25%
Consolidated leverage ratio used to calculate variable rate of debt (as a percent)	1.00%
U.S. term loan | Consolidated leverage ratio (the Ratio) greater than 2.00 to 1.00 | Base rate loans
Debt Instrument
Applicable margin based on the Company's consolidated leverage ratio (as a percent)	1.00%
Consolidated leverage ratio used to calculate variable rate of debt (as a percent)	2.00%
U.S. term loan | Federal funds rate | Base rate loans
Debt Instrument
Description of base rate	federal funds rate
Basis spread on base rate (as a percent)	0.50%
U.S. term loan | LIBOR | Base rate loans
Debt Instrument
Description of base rate	LIBOR
Basis spread on base rate (as a percent)	1.00%
LIBOR Rate, amount used to calculate quotient (as a percent)	1.00%
U.S. term loan | LIBOR | LIBOR rate loans
Debt Instrument
Description of base rate	LIBOR
U.S. term loan | LIBOR | Consolidated leverage ratio (the Ratio) less than 1.00 to 1.00 | LIBOR rate loans
Debt Instrument
Applicable margin based on the Company's consolidated leverage ratio (as a percent)	1.25%
Consolidated leverage ratio used to calculate variable rate of debt (as a percent)	1.00%
U.S. term loan | LIBOR | Consolidated leverage ratio (the Ratio) greater than 2.00 to 1.00 | LIBOR rate loans
Debt Instrument
Applicable margin based on the Company's consolidated leverage ratio (as a percent)	2.00%
Consolidated leverage ratio used to calculate variable rate of debt (as a percent)	2.00%

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Apr. 04, 2015	Apr. 05, 2014
Accumulated Other Comprehensive Income (Loss), Net of Tax
Beginning balance	$ (16,410)	$ 36,691
Other comprehensive income (loss) before reclassifications	(22,152)	(2,137)
Tax (expense) benefit	(3,518)	288
Amounts reclassed from accumulated other comprehensive income	11,758	(1,560)
Tax (expense) benefit	(3,983)	597
Total other comprehensive income (loss)	(33,445)	(886)
Ending balance	(49,855)	35,805
Currency Translation Adjustments
Accumulated Other Comprehensive Income (Loss), Net of Tax
Beginning balance	(27,241)	38,152
Other comprehensive income (loss) before reclassifications	(33,506)	(1,125)
Tax (expense) benefit	0	0
Amounts reclassed from accumulated other comprehensive income	0	0
Tax (expense) benefit	0	0
Total other comprehensive income (loss)	(33,506)	(1,125)
Ending balance	(60,747)	37,027
Derivatives Designated as Cash Flow Hedges | Forward contract
Accumulated Other Comprehensive Income (Loss), Net of Tax
Beginning balance	14,980	(2,091)
Other comprehensive income (loss) before reclassifications	18,760	(266)
Tax (expense) benefit	(6,217)	(82)
Amounts reclassed from accumulated other comprehensive income	12,439	(828)
Tax (expense) benefit	(4,231)	330
Total other comprehensive income (loss)	4,335	150
Ending balance	19,315	(1,941)
Derivatives Designated as Cash Flow Hedges | Interest rate swaps
Accumulated Other Comprehensive Income (Loss), Net of Tax
Beginning balance	(502)	(106)
Other comprehensive income (loss) before reclassifications	(7,406)	(908)
Tax (expense) benefit	2,699	370
Amounts reclassed from accumulated other comprehensive income	(681)	(732)
Tax (expense) benefit	248	267
Total other comprehensive income (loss)	(4,274)	(73)
Ending balance	(4,776)	(179)
Pension Plan
Accumulated Other Comprehensive Income (Loss), Net of Tax
Beginning balance	(3,647)	736
Other comprehensive income (loss) before reclassifications	0	0
Tax (expense) benefit	0	0
Amounts reclassed from accumulated other comprehensive income	0	0
Tax (expense) benefit	0	0
Total other comprehensive income (loss)	0	0
Ending balance	(3,647)	736
Net Investment Hedges
Accumulated Other Comprehensive Income (Loss), Net of Tax
Beginning balance		0
Other comprehensive income (loss) before reclassifications		162
Tax (expense) benefit		0
Amounts reclassed from accumulated other comprehensive income		0
Tax (expense) benefit		0
Total other comprehensive income (loss)		162
Ending balance		$ 162

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DERIVATIVES AND RISK MANAGEMENT (Tables)

3 Months Ended

Apr. 04, 2015

DERIVATIVES AND RISK MANAGEMENT

Schedule of outstanding forward contracts

As of April 4, 2015, the Company had the following outstanding forward contracts that were entered into to hedge the future payments of intercompany inventory transactions (in millions):

Functional Currency		Contract Currency
Type	Amount	Type	Amount
Euro	174.1	U.S. dollar	217.6
British pound	27.5	U.S. dollar	43.5
Canadian dollar	40.1	U.S. dollar	34.3
Japanese yen	2,935.0	U.S. dollar	26.4
Mexican peso	173.3	U.S. dollar	12.0
Australian dollar	14.2	U.S. dollar	11.5

Schedule of effective portion of gains and losses on derivative instruments recognized in other comprehensive income (loss), net of taxes

The effective portion of gains and losses on derivative instruments that were recognized in other comprehensive income (loss), net of taxes during the First Quarter and Prior Year Quarter are set forth below (in thousands):

	For the 13			For the 14
	Weeks Ended			Weeks Ended
	April 4, 2015			April 5, 2014
Cash flow hedges:
Forward contracts	$	12,543		$	(348	)
Interest rate swaps	(4,707		)	(538		)
Net investment hedge:
Forward contract	0			162
Total gain (loss) recognized in other comprehensive income (loss), net of taxes	$	7,836		$	(724	)

Schedule of effective portion of gains and losses on derivative instruments designated and qualifying as cash flow hedges 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

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 the First Quarter and Prior Year Quarter (in thousands):

	Condensed Consolidated
	Statements of Income		For the 13			For the 14
	and Comprehensive	Effect of Derivative	Weeks Ended			Weeks Ended
Derivatives Instruments	Income Location	Instruments	April 4, 2015			April 5, 2014
Forward contracts designated as cash flow hedging instruments	Other income (expense)-net	Total gain (loss) reclassified from other comprehensive income (loss)	$	8,208		$	(498	)
Forward contracts not designated as hedging instruments	Other income (expense)-net	Total gain (loss) recognized in income	$	89		$	(148	)
Interest rate swap designated as a cash flow hedging instrument	Interest expense	Total gain (loss) reclassified from other comprehensive income (loss)	$	(433	)	$	(465	)

Schedule of fair value amounts for derivative instruments as separate asset and liability values on a gross basis and their location on condensed consolidated balance sheets

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 condensed consolidated balance sheets in which the fair value amounts for these categories of derivative instruments are included (in thousands):

Asset Derivatives

Liability Derivatives

April 4, 2015

January 3, 2015

April 4, 2015

January 3, 2015

Condensed

Condensed

Condensed

Condensed

Consolidated

Consolidated

Consolidated

Consolidated

Balance Sheets

Fair

Balance Sheets

Fair

Balance Sheets

Fair

Balance Sheets

Fair

Derivatives Instruments

Location

Value

Location

Value

Location

Value

Location

Value

Forward contracts designated as cash flow hedging instruments

Prepaid expenses and other current assets

$

32,927

Prepaid expenses and other current assets

$

25,867

Accrued expenses- other

$

373

Accrued expenses- other

$

0

Interest rate swap designated as a cash flow hedging instrument

Prepaid expenses and other current assets

0

Prepaid expenses and other current assets

0

Accrued expenses- other

7,059

Accrued expenses- other

2,157

Forward contracts designated as cash flow hedging instruments

Intangible and other assets-net

1,155

Intangible and other assets-net

1,802

Other long-term liabilities

133

Other long-term liabilities

0

Interest rate swap designated as a cash flow hedging instrument

Intangible and other assets-net

343

Intangible and other assets-net

1,724

Other long-term liabilities

799

Other long-term liabilities

357

Total

$

34,425

$

29,393

$

8,364

$

2,514

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FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Apr. 04, 2015

FAIR VALUE MEASUREMENTS

Schedule of the fair value hierarchy of assets and liabilities measured at fair value on a recurring basis

The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of April 4, 2015 (in thousands):

	Fair Value at April 4, 2015
	Level 1		Level 2		Level 3		Total
Assets:
Forward contracts	$	0	$	34,082	$	0	$	34,082
Deferred compensation plan assets:
Investment in publicly traded mutual funds	2,510		0		0		2,510
Interest rate swaps	0		343		0		343
Total	$	2,510	$	34,425	$	0	$	36,935
Liabilities:
Contingent consideration	$	0	$	0	$	6,878	$	6,878
Forward contracts	0		506		0		506
Interest rate swaps	0		7,858		0		7,858
Total	$	0	$	8,364	$	6,878	$	15,242

The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of January 3, 2015 (in thousands):

	Fair Value at January 3, 2015
	Level 1		Level 2		Level 3		Total
Assets:
Forward contracts	$	0	$	27,669	$	0	$	27,669
Deferred compensation plan assets:
Investment in publicly traded mutual funds	2,477		0		0		2,477
Interest rate swap	0		1,724		0		1,724
Total	$	2,477	$	29,393	$	0	$	31,870
Liabilities:
Contingent consideration	$	0	$	0	$	7,114	$	7,114
Interest rate swap	0		2,514		0		2,514
Total	$	0	$	2,514	$	7,114	$	9,628

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INVENTORIES

3 Months Ended

Apr. 04, 2015

INVENTORIES

INVENTORIES

3. INVENTORIES

Inventories consisted of the following (in thousands):

	April 4,		January 3,
	2015		2015
Components and parts	$	42,270	$	48,797
Work-in-process	10,805		13,719
Finished goods	577,515		534,765
Inventories	$	630,590	$	597,281

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INTANGIBLE AND OTHER ASSETS (Tables)

3 Months Ended

Apr. 04, 2015

INTANGIBLE AND OTHER ASSETS

Schedule of intangible and other assets-net

The following table summarizes intangible and other assets (in thousands):

		April 4, 2015				January 3, 2015
	Useful	Gross		Accumulated		Gross		Accumulated
At Fiscal Year End	Lives	Amount		Amortization		Amount		Amortization
Intangibles-subject to amortization:
Trademarks	10 yrs.	$	4,175	$	3,013	$	4,174	$	2,950
Customer lists	5-10 yrs.	43,461		17,987		41,703		17,457
Patents	3-20 yrs.	2,273		2,037		2,273		1,902
Noncompete agreement	6 yrs.	1,816		908		1,855		851
Other	7-20 yrs.	501		394		353		341
Total intangibles-subject to amortization		52,226		24,339		50,358		23,501
Intangibles-not subject to amortization:
Trade names		83,627				83,610
Other assets:
Key money deposits		29,438		18,107		31,892		18,661
Other deposits		22,182				21,854
Deferred compensation plan assets		2,510				2,477
Deferred tax asset-net		7,581				8,583
Restricted cash		522				575
Shop-in-shop		14,807		10,267		16,333		9,660
Interest rate swap		343				1,724
Forward contracts		1,155				1,802
Other		8,758				6,978
Total other assets		87,296		28,374		92,218		28,321
Total intangible and other assets		$	223,149	$	52,713	$	226,186	$	51,822
Total intangible and other assets-net				$	170,436			$	174,364

Schedule of estimated aggregate future amortization expense by fiscal year for intangible assets

Estimated aggregate future amortization expense by fiscal year for intangible assets is as follows (in thousands):

Fiscal Year	Amortization Expense
2015 (remaining)	$	3,751
2016	$	4,880
2017	$	4,621
2018	$	4,267
2019	$	4,172
2020	$	3,674

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STOCKHOLDERS' EQUITY (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Apr. 04, 2015	Apr. 05, 2014
Summary of changes in equity attributable to controlling and noncontrolling interest
Balance	$ 983,801	$ 1,075,367
Net income	40,638	69,161
Currency translation adjustment	(33,506)	(1,125)
Derivative instruments-net change	61	239
Common stock issued upon exercise of stock options	444	759
Tax (expense) benefit derived from stock-based compensation	(306)	938
Distribution of noncontrolling interest earnings and other	(5,056)	(5,391)
Business acquisition	5,886
Acquisition of common stock	(116,047)	(119,715)
Stock-based compensation expense	4,346	4,978
Balance	880,261	1,025,211
Fossil Group, Inc. Stockholders' Equity
Summary of changes in equity attributable to controlling and noncontrolling interest
Balance	977,860	1,068,677
Net income	38,070	66,343
Currency translation adjustment	(33,506)	(1,125)
Derivative instruments-net change	61	239
Common stock issued upon exercise of stock options	444	759
Tax (expense) benefit derived from stock-based compensation	(306)	938
Distribution of noncontrolling interest earnings and other	0	0
Business acquisition	0
Acquisition of common stock	(116,047)	(119,715)
Stock-based compensation expense	4,346	4,978
Balance	870,922	1,021,094
Noncontrolling Interest
Summary of changes in equity attributable to controlling and noncontrolling interest
Balance	5,941	6,690
Net income	2,568	2,818
Currency translation adjustment	0	0
Derivative instruments-net change	0	0
Common stock issued upon exercise of stock options	0	0
Tax (expense) benefit derived from stock-based compensation	0	0
Distribution of noncontrolling interest earnings and other	(5,056)	(5,391)
Business acquisition	5,886
Acquisition of common stock	0	0
Stock-based compensation expense	0	0
Balance	$ 9,339	$ 4,117

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INTANGIBLE AND OTHER ASSETS (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Apr. 04, 2015	Jan. 03, 2015
Intangible and other assets
Total intangibles - subject to amortization	$ 52,226	$ 50,358
Total intangibles-not subject to amortization, Carrying Amount	83,627	83,610
Total other assets, Gross Amount	87,296	92,218
Total intangible and other assets, Carrying Amount	223,149	226,186
Total intangibles-subject to amortization, Accumulated Amortization	24,339	23,501
Total other assets, Accumulated Amortization	28,374	28,321
Total intangible and other assets, Accumulated Amortization	52,713	51,822
Total intangible and other assets-net	170,436	174,364
Key money deposits
Intangible and other assets
Total other assets, Gross Amount	29,438	31,892
Total other assets, Accumulated Amortization	18,107	18,661
Key money deposits | Minimum
Intangible and other assets
Amortization period based on initial lease term	4 years
Key money deposits | Maximum
Intangible and other assets
Amortization period based on initial lease term	18 years
Other deposits
Intangible and other assets
Total other assets, Gross Amount	22,182	21,854
Deferred compensation plan assets
Intangible and other assets
Total other assets, Gross Amount	2,510	2,477
Deferred tax asset-net
Intangible and other assets
Total other assets, Gross Amount	7,581	8,583
Restricted cash
Intangible and other assets
Total other assets, Gross Amount	522	575
Shop-in-shop
Intangible and other assets
Total other assets, Gross Amount	14,807	16,333
Total other assets, Accumulated Amortization	10,267	9,660
Interest rate swaps
Intangible and other assets
Total other assets, Gross Amount	343	1,724
Forward contracts
Intangible and other assets
Total other assets, Gross Amount	1,155	1,802
Other assets
Intangible and other assets
Total other assets, Gross Amount	8,758	6,978
Trademarks
Intangible and other assets
Total intangibles - subject to amortization	4,175	4,174
Total intangibles-subject to amortization, Accumulated Amortization	3,013	2,950
Useful Lives	10 years
Customer lists
Intangible and other assets
Total intangibles - subject to amortization	43,461	41,703
Total intangibles-subject to amortization, Accumulated Amortization	17,987	17,457
Customer lists | Minimum
Intangible and other assets
Useful Lives	5 years
Customer lists | Maximum
Intangible and other assets
Useful Lives	10 years
Patents
Intangible and other assets
Total intangibles - subject to amortization	2,273	2,273
Total intangibles-subject to amortization, Accumulated Amortization	2,037	1,902
Patents | Minimum
Intangible and other assets
Useful Lives	3 years
Patents | Maximum
Intangible and other assets
Useful Lives	20 years
Noncompete agreement
Intangible and other assets
Total intangibles - subject to amortization	1,816	1,855
Total intangibles-subject to amortization, Accumulated Amortization	908	851
Useful Lives	6 years
Other
Intangible and other assets
Total intangibles - subject to amortization	501	353
Total intangibles-subject to amortization, Accumulated Amortization	$ 394	$ 341
Other | Minimum
Intangible and other assets
Useful Lives	7 years
Other | Maximum
Intangible and other assets
Useful Lives	20 years

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Apr. 04, 2015	Jan. 03, 2015
Current assets:
Cash and cash equivalents	$ 236,843	$ 276,261
Accounts receivable-net of allowances of $74,845 and $80,047, respectively	266,139	430,498
Inventories	630,590	597,281
Deferred income tax assets-net	33,460	34,084
Prepaid expenses and other current assets	178,292	151,730
Total current assets	1,345,324	1,489,854
Property, plant and equipment-net of accumulated depreciation of $363,260 and $360,191, respectively	331,665	345,606
Goodwill	196,040	197,728
Intangible and other assets-net	170,436	174,364
Total long-term assets	698,141	717,698
Total assets	2,043,465	2,207,552
Current liabilities:
Accounts payable	154,806	159,267
Short-term and current portion of long-term debt	18,471	16,646
Accrued expenses:
Compensation	58,242	50,776
Royalties	20,094	54,013
Co-op advertising	18,630	28,591
Transaction taxes	15,127	35,301
Other	77,325	75,609
Income taxes payable	20,844	26,626
Total current liabilities	383,539	446,829
Long-term income taxes payable	16,683	16,610
Deferred income tax liabilities	79,081	87,860
Long-term debt	626,373	613,659
Other long-term liabilities	57,528	58,793
Total long-term liabilities	779,665	776,922
Commitments and contingencies (Note 13)
Stockholders' equity:
Common stock, 49,527 and 50,771 shares issued and outstanding at April 4, 2015 and January 3, 2015, respectively	495	508
Additional paid-in capital	174,201	171,669
Retained earnings	746,081	822,093
Accumulated other comprehensive income (loss)	(49,855)	(16,410)
Total Fossil Group, Inc. stockholders' equity	870,922	977,860
Noncontrolling interest	9,339	5,941
Total stockholders' equity	880,261	983,801
Total liabilities and stockholders' equity	$ 2,043,465	$ 2,207,552

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SEGMENT INFORMATION (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Apr. 04, 2015	Apr. 05, 2014	Jan. 03, 2015
Summary information by operating segment
Net Sales	$ 725,085	$ 776,544
Operating Income	56,154	104,698
Long-Term Assets	698,141		717,698
Total Assets	2,043,465		2,207,552
Corporate
Summary information by operating segment
Operating Income	(78,178)	(77,777)
Long-Term Assets	174,880		176,124
Total Assets	584,716		602,637
Americas
Summary information by operating segment
Net Sales	366,596	382,660
Operating Income	76,722	99,069
Long-Term Assets	263,887		263,324
Total Assets	765,691		809,548
Europe
Summary information by operating segment
Net Sales	234,256	260,353
Operating Income	33,302	52,508
Long-Term Assets	202,704		220,742
Total Assets	470,671		561,486
Asia
Summary information by operating segment
Net Sales	124,233	133,531
Operating Income	24,308	30,898
Long-Term Assets	56,670		57,508
Total Assets	$ 222,387		$ 233,881

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FINANCIAL STATEMENT POLICIES

3 Months Ended

Apr. 04, 2015

FINANCIAL STATEMENT POLICIES

FINANCIAL STATEMENT POLICIES

1. FINANCIAL STATEMENT POLICIES

Basis of Presentation. The condensed consolidated financial statements include the accounts of Fossil Group, Inc., a Delaware corporation, and its wholly and majority-owned subsidiaries (the “Company”).

The Company’s fiscal year periodically results in a 53-week year instead of a normal 52-week year. The prior fiscal year ending January 3, 2015 was a 53-week year, with the additional week included in the first quarter. Accordingly, the information presented herein includes thirteen weeks of operations for the quarter ended April 4, 2015 (“First Quarter”) as compared to fourteen weeks included in the quarter ended April 5, 2014 (“Prior Year Quarter”). The condensed consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary to present a fair statement of the Company’s financial position as of April 4, 2015, and the results of operations for the First Quarter and Prior Year Quarter. All adjustments are of a normal, recurring nature.

Effective during the First Quarter, the Company made changes to the presentation of its reportable segments to reflect changes in the way its chief operating decision maker evaluates the performance of its operations, develops strategy and allocates capital resources. The Company has realigned its operating structure. Strategic and brand directions are set centrally and regional management is now fully empowered and responsible to drive those strategies and brand directions across all brands and channels within their regions. As part of the new operating structure the regional teams manage both the wholesale and retail businesses within their regions whereas previously the retail business was managed globally. Additionally, with the implementation of new reporting systems, the Company has the ability to extract discrete financial information that aligns with its operating structure and is consistent with how management now evaluates the business performance. The Company’s reportable segments now consist of the following: (i) Americas, (ii) Europe and (iii) Asia. Prior to the First Quarter 2015 Form 10-Q, as reported in the 2014 Form 10-K, the Company’s reportable segments consisted of the following: (i) North America wholesale, (ii) Europe wholesale, (iii) Asia Pacific wholesale and (iv) Direct to consumer.

These changes to the Company’s reportable segments include the following:

(1) Reclassification of the Company’s retail, e-commerce and catalog activities, all of which were previously recorded within the Company’s Direct to consumer segment, to the Americas, Europe and Asia segments based on the geographic location of the activities.

(2) The Company’s wholesale operations in North America, Europe and Asia Pacific previously recorded within the North America wholesale, Europe wholesale and Asia Pacific wholesale segments, respectively, have been reclassified to the Americas, Europe and Asia segments, respectively.

(3) Intercompany profit attributable to the Company’s factory operations was previously included in the Asia Pacific wholesale and Europe wholesale segments in accordance with the geographic location of the factories, and is now eliminated from all reporting segments.

(4) Certain corporate costs are not allocated to the various segments because they are managed at the corporate level for internal purposes. Prior to the change in reporting segments, these expenses included, and after the change in reporting segments, continue to include, general corporate expenses, including certain administrative, legal, accounting, technology support costs, equity compensation costs, and payroll costs attributable to executive management. Additionally, certain brand management, product development, art, creative/product design, marketing and back office supply chain expenses which were previously included in North America wholesale, Europe wholesale, Asia Pacific wholesale and Direct to consumer segments prior to the change in reporting segments are now reported in corporate. Conversely, certain back office costs reported in corporate prior to the change in reporting segments are now included in the various reporting segments in which they are now managed.

The Company’s historical segment disclosures have been recast to be consistent with the current presentation.

These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Annual Report on Form 10-K filed by the Company pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), for the fiscal year ended January 3, 2015 (the “2014 Form 10-K”). Operating results for the First Quarter are not necessarily indicative of the results to be achieved for the full fiscal year.

The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), which require the Company 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 condensed consolidated financial statements and the reported amounts of revenues and expenses during the periods reported. Actual results could differ from those estimates. The Company has not made any changes in its significant accounting policies from those disclosed in the 2014 Form 10-K. Certain prior year amounts have been reclassified to conform to the current year presentation.

Business. The Company is a global design, marketing and distribution company that specializes in consumer fashion accessories. Its principal offerings include an extensive line of men’s and women’s fashion watches and jewelry, handbags, small leather goods, belts, sunglasses, soft accessories and select apparel. In the watch and jewelry product categories, the Company has a diverse portfolio of globally recognized owned and licensed brand names under which its products are marketed. The Company’s products are distributed globally through various distribution channels, including wholesale in countries where it has a physical presence, direct to the consumer through its retail stores and commercial websites and through third-party distributors in countries where the Company does not maintain a physical presence. The Company’s products are offered at varying price points to meet the needs of its customers, whether they are value-conscious or luxury oriented. Based on its extensive range of accessory products, brands, distribution channels and price points, the Company is able to target style-conscious consumers across a wide age spectrum on a global basis.

Hedging Instruments. The Company is exposed to certain market risks relating to foreign exchange rates and interest rates. The Company actively monitors and attempts to manage these exposures using derivative instruments including foreign currency forward contracts and interest rate swaps. The Company’s foreign subsidiaries periodically enter into foreign exchange forward contracts to hedge the future payment of intercompany inventory transactions denominated in U.S. dollars. If the Company was to settle its euro, British pound, Canadian dollar, Japanese yen, Australian dollar, and Mexican peso forward contracts as of April 4, 2015, the net result would have been a net gain of approximately $21.9 million, net of taxes. To help protect against adverse existing and forecasted fluctuations in interest rates, the Company has entered into interest rate swap agreements to effectively convert portions of its existing and forecasted variable rate debt obligations to fixed rates. To reduce exposure to changes in currency exchange rates adversely affecting the Company’s investment in a euro-denominated subsidiary, the Company entered into a forward contract designated as a net investment hedge that was settled during the second quarter of fiscal year 2014. The Company does not hold or issue derivative financial instruments for trading or speculative purposes. See “Note 10—Derivatives and Risk Management” for additional disclosures about the Company’s use of derivatives.

Operating expenses.Operating expenses include selling, general and administrative expenses (“SG&A”), 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 “back office” or 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 the Company’s infrastructure and store closures.

Earnings Per Share (“EPS”). Basic 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):

	For the 13		For the 14
	Weeks Ended		Weeks Ended
	April 4,		April 5,
	2015		2014
Numerator:
Net income attributable to Fossil Group, Inc.	$	38,070	$	66,343
Denominator:
Basic EPS computation:
Basic weighted average common shares outstanding	50,294		54,125
Basic EPS	$	0.76	$	1.23
Diluted EPS computation:
Basic weighted average common shares outstanding	50,294		54,125
Effect of stock options, stock appreciation rights, restricted stock units and performance restricted stock units	173		226
Diluted weighted average common shares outstanding	50,467		54,351
Diluted EPS	$	0.75	$	1.22

Approximately 352,400 and 273,400 weighted average common shares issuable under stock-based awards were not included in the diluted EPS calculation at the end of the First Quarter and Prior Year Quarter, respectively, because they were antidilutive.

Recently Issued Accounting Standards. In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-04, Compensation—Retirement Benefits (Topic 715): Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets (“ASU 2015-04”). ASU 2015-04 provides an entity with a fiscal year-end that does not coincide with a month-end a practical expedient that allows the entity to measure defined benefit plan assets and obligations using the month-end that is closest to the entity’s fiscal year-end and apply that practical expedient consistently from year to year. If an entity has a significant event in an interim period that requires the remeasurement of defined benefit plan assets and obligations such as a partial settlement, ASU 2015-04 also provides a practical expedient that permits the entity to remeasure defined benefit plan assets and obligations using the month-end that is closest to the date of the significant event and adjust for any effects of the significant event not captured in the month-end measurement.  If an entity applies the practical expedient and a contribution is made between the month-end date used for measurement and the entity’s fiscal year-end, the entity should disclose the amount of the contribution to allow reconciliation of the fair value of plan assets in the fair value hierarchy to the ending balance of the fair value of plan assets. ASU 2015-04 is effective for annual periods beginning after December 15, 2015 with early adoption permitted. This standard will not have a material impact on the Company’s consolidated results of operations or financial position.

In April 2015, FASB issued ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. ASU 2015-03 is effective for annual periods beginning after December 15, 2015 with early adoption permitted. This standard will not have a material impact on the Company’s consolidated results of operations or financial position.

In January 2015, FASB issued ASU 2015-01, Income Statement—Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items (“ASU 2015-01”). ASU 2015-01 eliminates from U.S. GAAP the concept of extraordinary items as part of its initiative to reduce complexity in accounting standards. As a result, an entity will no longer be required to segregate extraordinary items from the results of ordinary operations, to separately present an extraordinary item on its income statement, net of tax, after income from continuing operations or to disclose income taxes and earnings-per-share data applicable to an extraordinary item. However, ASU 2015-01 will still retain the presentation and disclosure guidance for items that are unusual in nature and occur infrequently. ASU 2015-01 is effective for annual periods beginning after December 15, 2015 with early adoption permitted. This standard will not have a material impact on the Company’s consolidated results of operations or financial position.

In August 2014, FASB issued ASU 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”), to provide guidance on management’s responsibility to perform interim and annual assessments of an entity’s ability to continue as a going concern and to provide related disclosure. ASU 2014-15 applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. This standard will not have a material impact on the Company’s consolidated results of operations or financial position.

In June 2014, FASB issued ASU 2014-12, Compensation—Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (“ASU 2014-12”). ASU 2014-12 requires that a performance target, that affects vesting and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. ASU 2014-12 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015, with early adoption permitted. The Company is evaluating the effect of adopting ASU 2014-12, but does not expect that adoption will have a material impact on the Company’s consolidated results of operations or financial position.

In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets, unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 provides alternative methods of retrospective adoption and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption is not permitted. The Company is evaluating the effect of adopting ASU 2014-09, but does not expect that adoption will have a material impact on the Company’s consolidated results of operations or financial position.

Recently Adopted Accounting Standards. In accordance with U.S. GAAP, the following provision, which had no material impact on the Company’s financial position, results of operations or cash flows, was adopted effective for the First Quarter: ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.

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ACQUISITION AND GOODWILL (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Apr. 04, 2015
Changes in carrying amount of goodwill
Beginning Balance	$ 197,728
Acquisitions	3,711
Foreign currency changes	(5,399)
Ending Balance	196,040
Americas
Changes in carrying amount of goodwill
Beginning Balance	119,438
Acquisitions	0
Foreign currency changes	(59)
Ending Balance	119,379
Europe
Changes in carrying amount of goodwill
Beginning Balance	66,433
Acquisitions	3,711
Foreign currency changes	(5,378)
Ending Balance	64,766
Asia
Changes in carrying amount of goodwill
Beginning Balance	11,857
Acquisitions	0
Foreign currency changes	38
Ending Balance	$ 11,895

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ACQUISITION AND GOODWILL (Tables)

3 Months Ended

Apr. 04, 2015

ACQUISITION AND GOODWILL

Schedule of changes in the carrying amount of goodwill

The changes in the carrying amount of goodwill, which is not subject to amortization, were as follows (in thousands):

	Americas			Europe			Asia		Total
Balance at January 3, 2015	$	119,438		$	66,433		$	11,857	$	197,728
Acquisitions	0			3,711			0		3,711
Foreign currency changes	(59		)	(5,378		)	38		(5,399		)
Balance at April 4, 2015	$	119,379		$	64,766		$	11,895	$	196,040

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INVENTORIES (Details) (USD $) In Thousands, unless otherwise specified	Apr. 04, 2015	Jan. 03, 2015
INVENTORIES
Components and parts	$ 42,270	$ 48,797
Work-in-process	10,805	13,719
Finished goods	577,515	534,765
Inventories	$ 630,590	$ 597,281

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WARRANTY LIABILITIES (Tables)

3 Months Ended

Apr. 04, 2015

WARRANTY LIABILITIES

Schedule of warranty liability activity

Warranty liability activity consisted of the following (in thousands):

	For the 13			For the 14
	Weeks Ended			Weeks Ended
	April 4,			April 5,
	2015			2014
Beginning balance	$	13,500		$	15,658
Settlements in cash or kind	(2,102		)	(3,163		)
Warranties issued and adjustments to preexisting warranties (1)	2,016			3,364
Liabilities assumed in acquisition	44			0
Ending balance	$	13,458		$	15,859

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

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ACQUISITION AND GOODWILL

3 Months Ended

Apr. 04, 2015

ACQUISITION AND GOODWILL

ACQUISITION AND GOODWILL

2. ACQUISITION AND GOODWILL

Fossil Accessories South Africa Acquisition. On February 1, 2015, the Company closed on a share purchase agreement with S. Keren Watch Group (“SKWG”), by which the Company acquired majority ownership in the Cape Town, South Africa-based distributor for approximately $5.0 million in cash-net of cash acquired, subject to working capital adjustments. SKWG has been a distribution partner for the Company for over 23 years, representing all Fossil brands and most of the Company’s licensed brands in South Africa. Upon execution of the joint venture agreement, SKWG was renamed Fossil Accessories South Africa Pty, Ltd. The Company recorded $3.7 million of goodwill related to the acquisition.

Goodwill is the excess of the cost of an acquired entity over the net of the amounts assigned to assets acquired and liabilities assumed. The changes in the carrying amount of goodwill, which is not subject to amortization, were as follows (in thousands):

	Americas			Europe			Asia		Total
Balance at January 3, 2015	$	119,438		$	66,433		$	11,857	$	197,728
Acquisitions	0			3,711			0		3,711
Foreign currency changes	(59		)	(5,378		)	38		(5,399		)
Balance at April 4, 2015	$	119,379		$	64,766		$	11,895	$	196,040

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, unless otherwise specified	Apr. 04, 2015	Jan. 03, 2015
CONDENSED CONSOLIDATED BALANCE SHEETS
Accounts receivable - allowances (in dollars)	$ 74,845	$ 80,047
Property, plant and equipment, accumulated depreciation (in dollars)	$ 363,260	$ 360,191
Common stock, shares issued	49,527	50,771
Common stock, shares outstanding	49,527	50,771

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INTANGIBLE AND OTHER ASSETS

3 Months Ended

Apr. 04, 2015

INTANGIBLE AND OTHER ASSETS

INTANGIBLE AND OTHER ASSETS

12. INTANGIBLE AND OTHER ASSETS

The following table summarizes intangible and other assets (in thousands):

		April 4, 2015				January 3, 2015
	Useful	Gross		Accumulated		Gross		Accumulated
At Fiscal Year End	Lives	Amount		Amortization		Amount		Amortization
Intangibles-subject to amortization:
Trademarks	10 yrs.	$	4,175	$	3,013	$	4,174	$	2,950
Customer lists	5-10 yrs.	43,461		17,987		41,703		17,457
Patents	3-20 yrs.	2,273		2,037		2,273		1,902
Noncompete agreement	6 yrs.	1,816		908		1,855		851
Other	7-20 yrs.	501		394		353		341
Total intangibles-subject to amortization		52,226		24,339		50,358		23,501
Intangibles-not subject to amortization:
Trade names		83,627				83,610
Other assets:
Key money deposits		29,438		18,107		31,892		18,661
Other deposits		22,182				21,854
Deferred compensation plan assets		2,510				2,477
Deferred tax asset-net		7,581				8,583
Restricted cash		522				575
Shop-in-shop		14,807		10,267		16,333		9,660
Interest rate swap		343				1,724
Forward contracts		1,155				1,802
Other		8,758				6,978
Total other assets		87,296		28,374		92,218		28,321
Total intangible and other assets		$	223,149	$	52,713	$	226,186	$	51,822
Total intangible and other assets-net				$	170,436			$	174,364

Key money is the amount of funds paid to a landlord or tenant to acquire the rights of tenancy under a commercial property lease for a certain property. Key money represents the “right to lease” with an automatic right of renewal. This right can be subsequently sold by the Company or can be recovered should the landlord refuse to allow the automatic right of renewal to be exercised. Key money is amortized over the initial lease term, which ranges from approximately four to 18 years.

Amortization expense for intangible assets was approximately $1.2 million and $1.3 million for the First Quarter and Prior Year Quarter. Estimated aggregate future amortization expense by fiscal year for intangible assets is as follows (in thousands):

Fiscal Year	Amortization Expense
2015 (remaining)	$	3,751
2016	$	4,880
2017	$	4,621
2018	$	4,267
2019	$	4,172
2020	$	3,674

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Document and Entity Information	3 Months Ended
	Apr. 04, 2015	Apr. 30, 2015
Document and Entity Information
Entity Registrant Name	Fossil Group, Inc.
Entity Central Index Key	0000883569
Document Type	10-Q
Document Period End Date	Apr. 04, 2015
Amendment Flag	false
Current Fiscal Year End Date	--01-02
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		48,810,385
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q1

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Apr. 04, 2015

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

13. COMMITMENTS AND CONTINGENCIES

Litigation. The Company is occasionally subject to litigation or other legal proceedings in the normal course of its business. The Company does not believe that 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.

Operating lease obligations.  As of April 4, 2015, the Company had operating lease obligations of approximately $886.7 million. The Company recognized rent expense of $49.0 million and $44.4 million during the First Quarter and Prior Year Quarter, respectively.

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CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Apr. 04, 2015	Apr. 05, 2014
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
Net sales	$ 725,085	$ 776,544
Cost of sales	324,361	333,324
Gross profit	400,724	443,220
Operating expenses:
Selling, general and administrative expenses	332,482	338,522
Restructuring charges	12,088
Total operating expenses	344,570	338,522
Operating income	56,154	104,698
Interest expense	4,178	3,706
Other income (expense)-net	7,186	(351)
Income before income taxes	59,162	100,641
Provision for income taxes	18,524	31,480
Net income	40,638	69,161
Less: Net income attributable to noncontrolling interest	2,568	2,818
Net income attributable to Fossil Group, Inc.	38,070	66,343
Other comprehensive income (loss), net of taxes:
Currency translation adjustment	(33,506)	(1,125)
Derivative instruments-net change	61	239
Total other comprehensive income (loss)	(33,445)	(886)
Total comprehensive income	7,193	68,275
Less: Comprehensive income attributable to noncontrolling interest	2,568	2,818
Comprehensive income attributable to Fossil Group, Inc.	$ 4,625	$ 65,457
Earnings per share:
Basic (in dollars per share)	$ 0.76	$ 1.23
Diluted (in dollars per share)	$ 0.75	$ 1.22
Weighted average common shares outstanding:
Basic (in shares)	50,294	54,125
Diluted (in shares)	50,467	54,351

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EMPLOYEE BENEFIT PLANS

3 Months Ended

Apr. 04, 2015

EMPLOYEE BENEFIT PLANS

EMPLOYEE BENEFIT PLANS

7. EMPLOYEE BENEFIT PLANS

Stock-Based Compensation Plans. The following table summarizes stock options and stock appreciation rights activity during the First Quarter:

					Weighted-
					Average
			Weighted-		Remaining	Aggregate
			Average		Contractual	Intrinsic
Stock Options and Stock Appreciation Rights	Shares		Exercise Price		Term	Value
	(in Thousands)				(in Years)	(in Thousands)
Outstanding at January 3, 2015	663		$	85.08	5.6	$	20,751
Granted	147		80.22
Exercised	(19	)	32.11			1,052
Forfeited or expired	(16	)	111.84
Outstanding at April 4, 2015	775		84.93		5.8	10,714
Exercisable at April 4, 2015	551		$	82.90	5.1	$	10,297

The aggregate intrinsic value shown in the table above is before income taxes and is based on (i) the exercise price for outstanding and exercisable options/rights at April 4, 2015 and (ii) the fair market value of the Company’s common stock on the exercise date for options/rights that were exercised during the First Quarter.

Stock Options and Stock Appreciation Rights Outstanding and Exercisable. The following table summarizes information with respect to stock options and stock appreciation rights outstanding and exercisable at April 4, 2015:

Stock Options Outstanding					Stock Options Exercisable
				Weighted-
		Weighted-		Average		Weighted-
		Average		Remaining		Average
Range of	Number of	Exercise		Contractual	Number of	Exercise
Exercise Prices	Shares	Price		Term	Shares	Price
	(in Thousands)			(in Years)	(in Thousands)
$13.65 - $21.51	54	$	15.12	3.3	54	$	15.12
$30.71 - $67.10	96	36.26		3.7	96	36.26
$69.53 - $106.40	96	80.86		5.9	94	80.79
$106.89 - $131.46	166	128.10		6.5	163	128.06
Total	412	$	80.99	5.3	407	$	80.71
Stock Appreciation Rights Outstanding					Stock Appreciation Rights Exercisable
				Weighted-
		Weighted-		Average		Weighted-
		Average		Remaining		Average
Range of	Number of	Exercise		Contractual	Number of	Exercise
Exercise Prices	Shares	Price		Term	Shares	Price
	(in Thousands)			(in Years)	(in Thousands)
$13.65 - $21.51	18	$	13.65	2.0	18	$	13.65
$30.71 - $67.10	17	40.16		2.6	17	38.71
$69.53 - $106.40	213	84.29		7.1	45	90.52
$106.89 - $131.46	115	117.80		6.2	64	121.94
Total	363	$	89.40	6.3	144	$	89.15

Restricted Stock, Restricted Stock Units and Performance Restricted Stock Units. The following table summarizes restricted stock, restricted stock unit and performance restricted stock unit activity during the First Quarter:

			Weighted-Average
Restricted Stock, Restricted Stock Units			Grant Date Fair
and Performance Restricted Stock Units	Number of Shares		Value
	(in Thousands)
Nonvested at January 3, 2015	255		$	110.17
Granted	288		80.38
Vested	(85	)	113.06
Forfeited	(12	)	110.75
Nonvested at April 4, 2015	446		$	90.39

The total fair value of restricted stock and restricted stock units vested during the First Quarter was approximately $6.9 million. Vesting of performance restricted stock units is based on achievement of sales growth and operating margin targets.

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STOCKHOLDERS' EQUITY

3 Months Ended

Apr. 04, 2015

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

6. STOCKHOLDERS’ EQUITY

Common Stock Repurchase Programs. Purchases of the Company’s common stock are 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. The Company may terminate or limit its stock repurchase program at any time. In the event the repurchased shares are cancelled, 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 are conducted pursuant to Rule 10b-18 of the Securities Exchange Act of 1934.

During the First Quarter, the Company effectively retired 1.3 million shares of common stock repurchased under its repurchase programs. The effective retirement of repurchased common stock decreased common stock by approximately $13,000, additional paid-in capital by $0.4 million, retained earnings by $114.1 million and treasury stock by $114.5 million. At January 3, 2105 and April 4, 2015, all treasury stock had been effectively retired. As of April 4, 2015, the Company had $944.2 million of repurchase authorizations remaining under its combined repurchase programs.

The following tables reflect the Company’s common stock repurchase activity for the periods indicated (in millions):

					For the 13 Weeks Ended			For the 14 Weeks Ended
					April 4, 2015			April 5, 2014
Fiscal Year Authorized	Dollar Value Authorized		Termination Date		Number of Shares Repurchased	Dollar Value Repurchased		Number of Shares Repurchased	Dollar Value Repurchased
2014	$	1,000.0	December 2018		1.0	$	85.7	0.0	$	0.0
2012	$	1,000.0	December 2016	(1)	0.3	$	28.8	1.0	$	117.3
2010	$	30.0	None		0.0	$	0.0	0.0	$	0.0

(1)  In the First Quarter, we completed this repurchase plan.

Controlling and Noncontrolling Interest. The following tables summarize the changes in equity attributable to controlling and noncontrolling interest (in thousands):

	Fossil Group, Inc.						Total
	Stockholders’			Noncontrolling			Stockholders’
	Equity			Interest			Equity
Balance at January 3, 2015	$	977,860		$	5,941		$	983,801
Net income	38,070			2,568			40,638
Currency translation adjustment	(33,506		)	0			(33,506		)
Derivative instruments-net change	61			0			61
Common stock issued upon exercise of stock options	444			0			444
Tax expense derived from stock-based compensation	(306		)	0			(306		)
Distribution of noncontrolling interest earnings	0			(5,056		)	(5,056		)
Business acquisition	0			5,886			5,886
Acquisition of common stock	(116,047		)	0			(116,047		)
Stock-based compensation expense	4,346			0			4,346
Balance at April 4, 2015	$	870,922		$	9,339		$	880,261

	Fossil Group, Inc.						Total
	Stockholders’			Noncontrolling			Stockholders’
	Equity			Interest			Equity
Balance at December 28, 2013	$	1,068,677		$	6,690		$	1,075,367
Net income	66,343			2,818			69,161
Currency translation adjustment	(1,125		)	0			(1,125		)
Derivative instruments - net change	239			0			239
Common stock issued upon exercise of stock options	759			0			759
Tax benefit derived from stock-based compensation	938			0			938
Distribution of noncontrolling interest earnings and other.	0			(5,391		)	(5,391		)
Acquisition of common stock	(119,715		)	0			(119,715		)
Stock-based compensation expense	4,978			0			4,978
Balance at April 5, 2014	$	1,021,094		$	4,117		$	1,025,211

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INVENTORIES (Tables)

3 Months Ended

Apr. 04, 2015

INVENTORIES

Schedule of inventories

Inventories consisted of the following (in thousands):

	April 4,		January 3,
	2015		2015
Components and parts	$	42,270	$	48,797
Work-in-process	10,805		13,719
Finished goods	577,515		534,765
Inventories	$	630,590	$	597,281

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DEBT ACTIVITY

3 Months Ended

Apr. 04, 2015

DEBT ACTIVITY

DEBT ACTIVITY

14. DEBT ACTIVITY

On March 9, 2015, the Company entered into an Amended and Restated Credit Agreement (the “Credit Agreement”). The Credit Agreement provides for (i) revolving credit loans in the amount of $1.05 billion (the “Revolving Credit Facility”), with an up to $20.0 million subfacility for swingline loans (the “Swingline Loan”), and an up to $10.0 million subfacility for letters of credit, and (ii) a term loan in the amount of $231.3 million (the “Term Loan”). The Credit Agreement expires and is due and payable on May 17, 2018.

The Company’s obligations under the Credit Agreement are unsecured, and none of the Company’s subsidiaries are guarantors of the Company’s obligations under the Credit Agreement. Upon the occurrence of both (a) the Moody’s Investor Service, Inc. rating of the Company falling below Ba1 and (b) the Standard & Poor’s Financial Services LLC rating of the Company falling below BB+, the Company’s obligations under the Credit Agreement will be required to be guaranteed by all direct and indirect material domestic subsidiaries of the Company, as provided in a subsidiary guaranty agreement, and secured by 65% of the total outstanding voting capital stock and 100% of the non-voting capital stock of the Company’s material first-tier foreign subsidiaries, pursuant to a pledge agreement. The Credit Agreement may be used (a) to refinance the indebtedness under the Prior Agreement (as defined below), (b) to finance the acquisition of capital assets, (c) for ongoing working capital and other general corporate purposes, and (d) to repurchase the Company’s capital stock to the extent permitted under the Credit Agreement.

The Credit Agreement amends and restates that certain credit agreement, dated as of May 17, 2013, as amended, which was scheduled to mature on May 17, 2018 (the “Prior Agreement”). Under the Prior Agreement, the Company incurred approximately $1.6 million and $1.0 million of interest expense during the First Quarter related to outstanding revolving credit loans and term loans, respectively, including the impact of the related interest rate swap, respectively. As of March 9, 2015, the Company had $555.0 million in aggregate principal amount of revolving credit loans outstanding and $231.3 million in aggregate principal amount of term loans outstanding under the Prior Agreement, all of which was refinanced on March 9, 2015 with borrowings under the Credit Agreement. No penalties or other early termination fees were incurred in connection with the amendment and restatement of the Prior Agreement.

Amounts outstanding under the Revolving Credit Facility and the Term Loan under the Credit Agreement bear interest, at the Company’s option, at (i) the base rate (defined as the highest of (a) the prime rate publicly announced by Wells Fargo, (b) the federal funds rate plus 0.5%, and (c) LIBOR for an interest period of one month plus 1.0%) plus the base rate applicable margin (which varies, based upon the Company’s consolidated total leverage ratio, from 0.25%, if the consolidated total leverage ratio is less than 1.00 to 1.00, to 1.00%, if the consolidated total leverage ratio is greater than or equal to 2.00 to 1.00) or (ii) the LIBOR rate (defined as the quotient obtained by dividing (a) LIBOR by (b) 1.00 minus the Eurodollar reserve percentage) plus the LIBOR rate applicable margin (which varies, based upon the consolidated total leverage ratio, from 1.25%, if the consolidated total leverage ratio is less than 1.00 to 1.00, to 2.00%, if the consolidated total leverage ratio is greater than or equal to 2.00 to 1.00). Amounts outstanding under the Swingline Loan under the Credit Agreement or upon any drawing under a letter of credit bear interest at the base rate plus the applicable margin. Interest based upon the base rate is payable quarterly in arrears. Interest based upon the LIBOR rate is payable on the last day of the applicable interest period.

Financial covenants governing the Credit Agreement require the Company to maintain (i) a consolidated total leverage ratio no greater than 2.50 to 1.00 and (ii) a consolidated interest coverage ratio no less than 3.50 to 1.00. The Credit Agreement contains representations, warranties, covenants, events of default and indemnities that are customary for agreements of this type.

The Company is required to pay a commitment fee on the unused amounts of the commitments under the Revolving Credit Facility under the Credit Agreement, payable quarterly in arrears, ranging from 0.20% to 0.35%, based on the consolidated total leverage ratio. In connection with any letter of credit, the Company is required to pay (i) a letter of credit commission, payable quarterly in arrears, in an amount equal to the daily amount available to be drawn under such letter of credit multiplied by the applicable margin with respect to revolving credit loans that are LIBOR rate loans, (ii) a fronting fee, payable quarterly in arrears, as set forth in the applicable letter of credit application or as otherwise separately agreed by the Company and the issuing lender, and (iii) normal and customary costs and expenses incurred or charged by the issuing lender in issuing, effecting payment under, amending or otherwise administering the letter of credit.

Loans under the Credit Agreement may be prepaid, in whole or in part, at the option of the Company, in minimum principal amounts of (i) $2.0 million or increments of $1.0 million in excess thereof, with respect to a base rate loan under the Revolving Credit Facility, (ii) $5.0 million or increments of $1.0 million in excess thereof, with respect to a LIBOR rate loan under the Revolving Credit Facility, (iii) $5.0 million or increments of $1.0 million in excess thereof, with respect to the Term Loan, and (iv) $0.1 million or increments of $0.1 million in excess thereof, with respect to a Swingline Loan. Loans under the Credit Agreement must be repaid with the net cash proceeds of certain asset sales or insurance and condemnation events. The Company may permanently reduce the revolving credit commitment at any time, in whole or in part, without premium or penalty, in a minimum aggregate principal amount of not less than $3.0 million or increments of $1.0 million in excess thereof.

The repayment obligation under the Credit Agreement can be accelerated upon the occurrence of an event of default, including the failure to pay principal or interest, a material inaccuracy of a representation or warranty, violation of covenants, cross-default, change in control, bankruptcy events, failure of a loan document provision, certain ERISA events and material judgments.

The Company made net principal payments of $3.1 million under its current Term Loan and term loan under the Prior Credit Agreement during the First Quarter. The Company had net borrowings of $18.0 million under its current Revolving Credit Facility and revolving credit loans under the Prior Credit Agreement during the First Quarter. Borrowings were primarily used to fund stock repurchases, capital and normal operating expenses. As of April 4, 2015, $228.1 million and $407.0 million were outstanding under the Term Loan and the Revolving Credit Facility, respectively. Amounts available under the Revolving Credit Facility are reduced by any amounts outstanding under standby letters of credit. As of April 4, 2015, the Company had available borrowing capacity of approximately $642.1 million under the Revolving Credit Facility. The Company incurred approximately $0.6 million of interest expense related to the Term Loan during the First Quarter, including the impact of the related interest rate swap. The Company incurred approximately $0.6 million of interest expense related to the Revolving Credit Facility during the First Quarter. The Company was in compliance with all covenants in the Term Loan and Revolving Credit Facility as of April 4, 2015.

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DERIVATIVES AND RISK MANAGEMENT

3 Months Ended

Apr. 04, 2015

DERIVATIVES AND RISK MANAGEMENT

DERIVATIVES AND RISK MANAGEMENT

10. 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 18 months. The Company enters into foreign currency forward contracts (“forward contracts”) generally for up to 65% of the forecasted purchases to manage fluctuations in global currencies that will ultimately be used to settle such U.S. dollar denominated inventory purchases. 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 intercompany 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.

These forward contracts meet the criteria for hedge accounting, which requires that they represent foreign-currency-denominated forecasted inter-entity transactions in which (i) the operating unit that has the foreign currency exposure is a party to the hedging instrument and (ii) the hedged transaction is denominated in a currency other than the hedging unit’s functional currency.

At the inception of each forward contract designated as a cash flow hedge, the hedging relationship is expected to be highly effective in achieving offsetting cash flows attributable to the hedged risk. The Company assesses hedge effectiveness under the critical terms matched method at inception and at least quarterly throughout the life of the hedging relationship. If the critical terms (i.e., amounts, currencies and settlement dates) of the forward contract match the terms of the forecasted transaction, the Company concludes that the hedge is effective.

For a derivative instrument that is designated and qualifies as a cash flow hedge, the effective portion of 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. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings. Due to the high degree of effectiveness between the hedging instruments and the underlying exposures being hedged, the Company’s hedges resulted in no ineffectiveness in the condensed consolidated statements of income and comprehensive income, and there were no components excluded from the assessment of hedge effectiveness for the First Quarter or Prior Year Quarter.

All derivative instruments are recognized as either assets or liabilities at fair value in the condensed consolidated balance sheets. Derivatives designated as cash flow hedges are recorded at fair value at each balance sheet date and the change in fair value is recorded to accumulated other comprehensive income (loss) within the equity section of the Company’s condensed consolidated balance sheet until such derivative’s gains or losses become realized or the cash flow hedge relationship is terminated. If the cash flow hedge relationship is terminated, the derivative’s gains or losses that are recorded in accumulated other comprehensive income (loss) will be recognized in earnings when the hedged cash flows occur. However, for cash flow hedges that are terminated because the forecasted transaction is not expected to occur in the original specified time period, the derivative’s gains or losses are immediately recognized in earnings. There were no gains or losses reclassified into earnings as a result of the discontinuance of cash flow hedges in the First Quarter or Prior Year Quarter. Hedge accounting is discontinued if it is determined that the derivative is not highly effective. The Company records all forward contract hedge assets and liabilities on a gross basis as they do not meet the balance sheet netting criteria because the Company does not have master netting agreements established with the derivative counterparties that would allow for net settlement.

As of April 4, 2015, the Company had the following outstanding forward contracts that were entered into to hedge the future payments of intercompany inventory transactions (in millions):

Functional Currency		Contract Currency
Type	Amount	Type	Amount
Euro	174.1	U.S. dollar	217.6
British pound	27.5	U.S. dollar	43.5
Canadian dollar	40.1	U.S. dollar	34.3
Japanese yen	2,935.0	U.S. dollar	26.4
Mexican peso	173.3	U.S. dollar	12.0
Australian dollar	14.2	U.S. dollar	11.5

The Company is also exposed to interest rate risk related to both its outstanding debt and forecasted debt issuances. To manage the interest rate risk related to its $231.3 million U.S.-based term loan, as amended on March 9, 2015 (“Term Loan”), the Company entered into an interest rate swap agreement on July 26, 2013 with a term of approximately five years. The objective of this hedge is to offset the variability of future payments associated with interest rates on the Term Loan. The interest rate swap agreement hedges the 1-month London Interbank Offer Rate (“LIBOR”) based variable rate debt obligations under the Term Loan. Under the terms of the swap, the Company pays a fixed interest rate of 1.288% per annum to the swap counterparty plus the LIBOR rate applicable margin (which varies based upon the Ratio from 1.25% if the Ratio is less than 1.00 to 1.00, to 2.00% if the Ratio is greater than or equal to 2.00 to 1.00). The notional amount will amortize over the remaining life of the Term Loan to coincide with the amortization of the underlying loan. The Company will receive interest from the swap counterparty at a variable rate based on 1-month LIBOR. This hedge is designated as a cash flow hedge. Additionally, to manage interest rate risk related to forecasted debt issuances, the Company entered into a forward starting interest rate swap agreement on March 20, 2015 with a term of approximately 10 years. The objective of this hedge is to offset the variability of future interest payments associated with forecasted debt issuances. Under the terms of the swap, the Company pays a fixed interest rate of 2.14% per annum to the swap counterparty. This hedge is designated as a cash flow hedge.

Net Investment Hedge. The Company is also exposed to risk that adverse changes in foreign currency exchange rates could impact its net investment in foreign operations. To manage this risk, during the first quarter of fiscal year 2014, the Company entered into a forward contract designated as a net investment hedge to reduce exposure to changes in currency exchange rates on €25.0 million of its total investment in a wholly-owned euro-denominated foreign subsidiary. The hedge was settled in the second quarter of fiscal year 2014. The effective portion of derivatives designated as net investment hedges are recorded at fair value at each balance sheet date and the change in fair value is recorded as a component of other comprehensive income (loss) in the Company’s condensed consolidated statements of income and comprehensive income. The Company uses the hypothetical derivative method to assess the ineffectiveness of net investment hedges. Should any portion of a net investment hedge become ineffective, the ineffective portion will be reclassified to other income-net on the Company’s condensed consolidated statements of income and comprehensive income. Gains and losses reported in accumulated other comprehensive income (loss) will not be reclassified into earnings until the Company’s underlying investment is liquidated or dissolved.

Non-designated Hedges. The Company also periodically enters into forward contracts to manage exchange rate risks associated with certain non-inventory intercompany transactions and to which the Company does not elect hedge treatment. All of the Company’s outstanding forward contracts were designated as hedging instruments as of April 4, 2015 and January 3, 2015. 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 derivative instruments that were recognized in other comprehensive income (loss), net of taxes during the First Quarter and Prior Year Quarter are set forth below (in thousands):

	For the 13			For the 14
	Weeks Ended			Weeks Ended
	April 4, 2015			April 5, 2014
Cash flow hedges:
Forward contracts	$	12,543		$	(348	)
Interest rate swaps	(4,707		)	(538		)
Net investment hedge:
Forward contract	0			162
Total gain (loss) recognized in other comprehensive income (loss), net of taxes	$	7,836		$	(724	)

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 the First Quarter and Prior Year Quarter (in thousands):

	Condensed Consolidated
	Statements of Income		For the 13			For the 14
	and Comprehensive	Effect of Derivative	Weeks Ended			Weeks Ended
Derivatives Instruments	Income Location	Instruments	April 4, 2015			April 5, 2014
Forward contracts designated as cash flow hedging instruments	Other income (expense)-net	Total gain (loss) reclassified from other comprehensive income (loss)	$	8,208		$	(498	)
Forward contracts not designated as hedging instruments	Other income (expense)-net	Total gain (loss) recognized in income	$	89		$	(148	)
Interest rate swap designated as a cash flow hedging instrument	Interest expense	Total gain (loss) reclassified from other comprehensive income (loss)	$	(433	)	$	(465	)

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 condensed consolidated balance sheets in which the fair value amounts for these categories of derivative instruments are included (in thousands):

Asset Derivatives

Liability Derivatives

April 4, 2015

January 3, 2015

April 4, 2015

January 3, 2015

Condensed

Condensed

Condensed

Condensed

Consolidated

Consolidated

Consolidated

Consolidated

Balance Sheets

Fair

Balance Sheets

Fair

Balance Sheets

Fair

Balance Sheets

Fair

Derivatives Instruments

Location

Value

Location

Value

Location

Value

Location

Value

Forward contracts designated as cash flow hedging instruments

Prepaid expenses and other current assets

$

32,927

Prepaid expenses and other current assets

$

25,867

Accrued expenses- other

$

373

Accrued expenses- other

$

0

Interest rate swap designated as a cash flow hedging instrument

Prepaid expenses and other current assets

0

Prepaid expenses and other current assets

0

Accrued expenses- other

7,059

Accrued expenses- other

2,157

Forward contracts designated as cash flow hedging instruments

Intangible and other assets-net

1,155

Intangible and other assets-net

1,802

Other long-term liabilities

133

Other long-term liabilities

0

Interest rate swap designated as a cash flow hedging instrument

Intangible and other assets-net

343

Intangible and other assets-net

1,724

Other long-term liabilities

799

Other long-term liabilities

357

Total

$

34,425

$

29,393

$

8,364

$

2,514

At the end of the First Quarter, the Company had forward contracts with maturities extending through September 2016. As of April 4, 2015, an estimated net gain of $21.3 million is expected to be reclassified into earnings within the next twelve months at prevailing foreign currency exchange rates. See “Note 1—Financial Statement Policies” for additional disclosures on foreign currency hedging instruments.

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

3 Months Ended

Apr. 04, 2015

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

8. 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):

	For the 13 Weeks Ended April 4, 2015
	Currency			Cash Flow Hedges
	Translation Adjustments			Forward Contracts			Interest Rate Swaps			Pension Plan			Total
Beginning balance	$	(27,241	)	$	14,980		$	(502	)	$	(3,647	)	$	(16,410	)
Other comprehensive income (loss) before reclassifications	(33,506		)	18,760			(7,406		)	0			(22,152		)
Tax (expense) benefit	0			(6,217		)	2,699			0			(3,518		)
Amounts reclassed from accumulated other comprehensive income	0			12,439			(681		)	0			11,758
Tax (expense) benefit	0			(4,231		)	248			0			(3,983		)
Total other comprehensive income (loss)	(33,506		)	4,335			(4,274		)	0			(33,445		)
Ending balance	$	(60,747	)	$	19,315		$	(4,776	)	$	(3,647	)	$	(49,855	)

	For the 14 Weeks Ended April 4, 2014
	Currency			Cash Flow Hedges								Net
	Translation Adjustments			Forward Contracts			Interest Rate Swap			Pension Plan		Investment Hedges		Total
Beginning balance	$	38,152		$	(2,091	)	$	(106	)	$	736	$	0	$	36,691
Other comprehensive income (loss) before reclassifications	(1,125		)	(266		)	(908		)	0		162		(2,137		)
Tax (expense) benefit	0			(82		)	370			0		0		288
Amounts reclassed from accumulated other comprehensive income	0			(828		)	(732		)	0		0		(1,560		)
Tax (expense) benefit	0			330			267			0		0		597
Total other comprehensive income (loss)	(1,125		)	150			(73		)	0		162		(886		)
Ending balance	$	37,027		$	(1,941	)	$	(179	)	$	736	$	162	$	35,805

See “Note 10—Derivatives and Risk Management” for additional disclosures about the Company’s use of derivatives.

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SEGMENT INFORMATION

3 Months Ended

Apr. 04, 2015

SEGMENT INFORMATION

SEGMENT INFORMATION

9. 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, India, Indonesia, Japan, Malaysia, New Zealand, Singapore, South Korea, Taiwan 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. Net sales for geographic segments are based on the location of the selling entity. Operating income for each segment includes net sales to third parties, related cost of sales and operating expenses directly attributable to the segment. 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 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.

Certain reclassifications have been made to prior year amounts to conform with current year presentation.  Due to changes in the Company’s reportable segments as discussed in Note 1 to the condensed consolidated financial statements, segment results for fiscal year 2014 have been recast to present results on a comparable basis.

Summary information by operating segment was as follows (in thousands):

	For the 13 Weeks Ended					For the 14 Weeks Ended
	April 4, 2015					April 5, 2014
	Net Sales		Operating Income			Net Sales		Operating Income
Americas	$	366,596	$	76,722		$	382,660	$	99,069
Europe	234,256		33,302			260,353		52,508
Asia	124,233		24,308			133,531		30,898
Corporate			(78,178		)			(77,777		)
Consolidated	$	725,085	$	56,154		$	776,544	$	104,698
	April 4, 2015					January 3, 2015
	Long-Term Assets		Total Assets			Long-Term Assets		Total Assets
Americas	$	263,887	$	765,691		$	263,324	$	809,548
Europe	202,704		470,671			220,742		561,486
Asia	56,670		222,387			57,508		233,881
Corporate	174,880		584,716			176,124		602,637
Total	$	698,141	$	2,043,465		$	717,698	$	2,207,552

The following tables reflect net sales for each class of similar products in the periods presented (in thousands, except percentage data):

	For the 13 Weeks Ended				For the 14 Weeks Ended
	April 4, 2015				April 5, 2014
	Net Sales		Percentage of Total		Net Sales		Percentage of Total
Watches	$	551,857	76.1	%	$	601,388	77.5	%
Leathers	92,926		12.8		99,722		12.8
Jewelry	62,987		8.7		56,518		7.3
Other	17,315		2.4		18,916		2.4
Total	$	725,085	100.0	%	$	776,544	100.0	%

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FAIR VALUE MEASUREMENTS

3 Months Ended

Apr. 04, 2015

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

11. 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 April 4, 2015 (in thousands):

	Fair Value at April 4, 2015
	Level 1		Level 2		Level 3		Total
Assets:
Forward contracts	$	0	$	34,082	$	0	$	34,082
Deferred compensation plan assets:
Investment in publicly traded mutual funds	2,510		0		0		2,510
Interest rate swaps	0		343		0		343
Total	$	2,510	$	34,425	$	0	$	36,935
Liabilities:
Contingent consideration	$	0	$	0	$	6,878	$	6,878
Forward contracts	0		506		0		506
Interest rate swaps	0		7,858		0		7,858
Total	$	0	$	8,364	$	6,878	$	15,242

The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of January 3, 2015 (in thousands):

	Fair Value at January 3, 2015
	Level 1		Level 2		Level 3		Total
Assets:
Forward contracts	$	0	$	27,669	$	0	$	27,669
Deferred compensation plan assets:
Investment in publicly traded mutual funds	2,477		0		0		2,477
Interest rate swap	0		1,724		0		1,724
Total	$	2,477	$	29,393	$	0	$	31,870
Liabilities:
Contingent consideration	$	0	$	0	$	7,114	$	7,114
Interest rate swap	0		2,514		0		2,514
Total	$	0	$	2,514	$	7,114	$	9,628

The fair values of the Company’s deferred compensation plan assets are based on quoted prices. The deferred compensation plan assets are recorded in intangible and other assets-net in the Company’s condensed consolidated balance sheets. 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.  The fair values of the interest rate swap assets and liabilities are determined using valuation models based on market observable inputs, including forward curves, mid market price and volatility levels. See “Note 10—Derivatives and Risk Management” for additional disclosures about the interest rate swaps and forward contracts.

The Company has evaluated its short-term and long-term debt as of April 4, 2015 and January 3, 2015 and believes, based on the interest rates, related terms and maturities, that the fair values of such instruments approximated their carrying amounts. As of April 4, 2015 and January 3, 2015, the carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximated their values due to the short-term maturities of these accounts.

The fair value of the contingent consideration liability related to the acquisition of the Company’s joint venture company, Fossil, S.L. (“Fossil Spain”), was determined using Level 3 inputs. The contingent consideration recorded as of April 4, 2015 is based on Fossil Spain’s earnings for fiscal year 2014 and forecasted earnings for fiscal year 2015. The contingent consideration for calendar year 2014 will be paid during the remaining part of fiscal year 2015. The contingent consideration for calendar year 2015 will be paid upon the execution of the purchase agreement in 2016. The fair value of the contingent consideration was determined using present value techniques with forecasted future cash flows for Fossil Spain as the significant unobservable input. Future revenue growth based on management’s projections for the 2015 calendar year is approximately 17%. Operating expenses are projected to be approximately 25% of revenues for calendar year 2015. A discount rate of 19% was used to calculate the present value of the contingent consideration. The contingent consideration liability for calendar year 2014 is valued at 3.4 million euros (approximately $3.7 million) and the contingent consideration liability for calendar year 2015 is valued at the maximum annual variable price of 3.5 million euros (approximately $3.8 million). A decrease in future cash flows may result in a lower estimated fair value of the calendar year 2015 contingent consideration liability. Future changes in the estimated fair value of the contingent consideration liability, if any, will be reflected in earnings.

In accordance with the provisions of ASC 360, Property, Plant and Equipment, property, plant and equipment—net with a carrying amount of $1.2 million, as of April 4, 2015, related to retail store leasehold improvements and fixturing was fully impaired, and related key money in the amount of $0.1 million was deemed not recoverable, resulting in an impairment charge of $1.3 million for the First Quarter.

The fair values of assets related to the Company-owned retail stores were determined using Level 3 inputs. $1.0 million of the impairment expense was recorded in the Europe segment and $0.3 million was recorded in the Americas segment in SG&A.

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ACQUISITION AND GOODWILL (Details) (USD $)	0 Months Ended
	Feb. 01, 2015	Apr. 04, 2015	Jan. 03, 2015
Business Acquisition
Goodwill		$ 196,040,000	$ 197,728,000
Fossil Accessories South Africa | S Keren Watch Group (SKWG)
Business Acquisition
Purchase price paid in cash	5,000,000
Period of partnership with Company	23 years
Goodwill	$ 3,700,000

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FAIR VALUE MEASUREMENTS (Details) In Thousands, unless otherwise specified	12 Months Ended				12 Months Ended
	Jan. 02, 2016 Level 3 Contingent consideration, Fossil Spain USD ($)	Jan. 02, 2016 Level 3 Contingent consideration, Fossil Spain EUR (€)	Jan. 03, 2015 Level 3 Contingent consideration, Fossil Spain USD ($)	Jan. 03, 2015 Level 3 Contingent consideration, Fossil Spain EUR (€)	Jan. 02, 2016 Level 3 Minimum Contingent consideration, Fossil Spain	Apr. 04, 2015 Fair Value Measurement, Recurring Basis Level 1 USD ($)	Jan. 03, 2015 Fair Value Measurement, Recurring Basis Level 1 USD ($)	Apr. 04, 2015 Fair Value Measurement, Recurring Basis Level 2 USD ($)	Jan. 03, 2015 Fair Value Measurement, Recurring Basis Level 2 USD ($)	Apr. 04, 2015 Fair Value Measurement, Recurring Basis Level 3 USD ($)	Jan. 03, 2015 Fair Value Measurement, Recurring Basis Level 3 USD ($)	Apr. 04, 2015 Fair Value Measurement, Recurring Basis Total USD ($)	Jan. 03, 2015 Fair Value Measurement, Recurring Basis Total USD ($)
Assets:
Forward contracts						$ 0	$ 0	$ 34,082	$ 27,669	$ 0	$ 0	$ 34,082	$ 27,669
Investment in publicly traded mutual funds						2,510	2,477	0	0	0	0	2,510	2,477
Interest rate swaps						0	0	343	1,724	0	0	343	1,724
Total						2,510	2,477	34,425	29,393	0	0	36,935	31,870
Liabilities:
Contingent consideration	3,800	3,500	3,700	3,400		0	0	0	0	6,878	7,114	6,878	7,114
Forward contracts						0		506		0		506
Interest rate swaps						0	0	7,858	2,514	0	0	7,858	2,514
Total						$ 0	$ 0	$ 8,364	$ 2,514	$ 6,878	$ 7,114	$ 15,242	$ 9,628
Future revenue growth for 2015 (as a percent)					17.00%
Projected operating expenses as a percentage of revenues	25.00%	25.00%
Discount rate (as a percent)	19.00%	19.00%

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FINANCIAL STATEMENT POLICIES (Tables)

3 Months Ended

Apr. 04, 2015

FINANCIAL STATEMENT POLICIES

Numerators and denominators used in the computations of both basic and diluted EPS

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

	For the 13		For the 14
	Weeks Ended		Weeks Ended
	April 4,		April 5,
	2015		2014
Numerator:
Net income attributable to Fossil Group, Inc.	$	38,070	$	66,343
Denominator:
Basic EPS computation:
Basic weighted average common shares outstanding	50,294		54,125
Basic EPS	$	0.76	$	1.23
Diluted EPS computation:
Basic weighted average common shares outstanding	50,294		54,125
Effect of stock options, stock appreciation rights, restricted stock units and performance restricted stock units	173		226
Diluted weighted average common shares outstanding	50,467		54,351
Diluted EPS	$	0.75	$	1.22

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STOCKHOLDERS' EQUITY (Tables)

3 Months Ended

Apr. 04, 2015

STOCKHOLDERS' EQUITY

Schedule of common stock repurchase activity

The following tables reflect the Company’s common stock repurchase activity for the periods indicated (in millions):

					For the 13 Weeks Ended			For the 14 Weeks Ended
					April 4, 2015			April 5, 2014
Fiscal Year Authorized	Dollar Value Authorized		Termination Date		Number of Shares Repurchased	Dollar Value Repurchased		Number of Shares Repurchased	Dollar Value Repurchased
2014	$	1,000.0	December 2018		1.0	$	85.7	0.0	$	0.0
2012	$	1,000.0	December 2016	(1)	0.3	$	28.8	1.0	$	117.3
2010	$	30.0	None		0.0	$	0.0	0.0	$	0.0

(1)  In the First Quarter, we completed this repurchase plan.

Summary of changes in equity attributable to controlling and noncontrolling interest

The following tables summarize the changes in equity attributable to controlling and noncontrolling interest (in thousands):

	Fossil Group, Inc.						Total
	Stockholders’			Noncontrolling			Stockholders’
	Equity			Interest			Equity
Balance at January 3, 2015	$	977,860		$	5,941		$	983,801
Net income	38,070			2,568			40,638
Currency translation adjustment	(33,506		)	0			(33,506		)
Derivative instruments-net change	61			0			61
Common stock issued upon exercise of stock options	444			0			444
Tax expense derived from stock-based compensation	(306		)	0			(306		)
Distribution of noncontrolling interest earnings	0			(5,056		)	(5,056		)
Business acquisition	0			5,886			5,886
Acquisition of common stock	(116,047		)	0			(116,047		)
Stock-based compensation expense	4,346			0			4,346
Balance at April 4, 2015	$	870,922		$	9,339		$	880,261

	Fossil Group, Inc.						Total
	Stockholders’			Noncontrolling			Stockholders’
	Equity			Interest			Equity
Balance at December 28, 2013	$	1,068,677		$	6,690		$	1,075,367
Net income	66,343			2,818			69,161
Currency translation adjustment	(1,125		)	0			(1,125		)
Derivative instruments - net change	239			0			239
Common stock issued upon exercise of stock options	759			0			759
Tax benefit derived from stock-based compensation	938			0			938
Distribution of noncontrolling interest earnings and other.	0			(5,391		)	(5,391		)
Acquisition of common stock	(119,715		)	0			(119,715		)
Stock-based compensation expense	4,978			0			4,978
Balance at April 5, 2014	$	1,021,094		$	4,117		$	1,025,211

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DERIVATIVES AND RISK MANAGEMENT (Details 3) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Apr. 04, 2015	Apr. 05, 2014
Forward contract | Designated as cash flow hedges | Cash flow hedges
Effective portion of gains and losses on derivative instruments
Total gain (loss) reclassified from other comprehensive income (loss)	$ 8,208	$ (498)
Forward contract | Not designated as hedging instruments
Effective portion of gains and losses on derivative instruments
Total gain (loss) recognized in income	89	(148)
Interest rate swaps | Designated as cash flow hedges | Cash flow hedges
Effective portion of gains and losses on derivative instruments
Total gain (loss) reclassified from other comprehensive income (loss)	$ (433)	$ (465)

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EMPLOYEE BENEFIT PLANS (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Apr. 04, 2015	Jan. 03, 2015
Shares
Beginning Balance, Shares	663
Granted (in shares)	147
Exercised (in shares)	(19)
Forfeited or expired (in shares)	(16)
Ending Balance, Shares	775	663
Exercisable at end of period (in shares)	551
Weighted-Average Exercise Price Per Share
Beginning Balance, Weighted-average Exercise Price (in dollars per share)	$ 85.08
Granted (in dollars per share)	$ 80.22
Exercised (in dollars per share)	$ 32.11
Forfeited or expired (in dollars per share)	$ 111.84
Ending Balance, Weighted-average Exercise Price (in dollars per share)	$ 84.93	$ 85.08
Stock Options and Stock Appreciation Rights Exercisable, Weighted- Average Exercise Price (in dollars per share)	$ 82.90
Weighted-Average Remaining Contractual Term
Beginning of period	5 years 9 months 18 days	5 years 7 months 6 days
End of period	5 years 9 months 18 days	5 years 7 months 6 days
Exercisable at end of period	5 years 1 month 6 days
Aggregate Intrinsic Value
Beginning of period	$ 20,751
Exercised	1,052
End of period	10,714	20,751
Exercisable at end of period	$ 10,297

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Apr. 04, 2015	Apr. 05, 2014
Operating Activities:
Net income	$ 40,638	$ 69,161
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	22,113	23,377
Stock-based compensation	4,346	4,978
Decrease in allowance for returns-net of inventory in transit	(869)	(1,525)
Loss (gain) on disposal of assets	2,202	(31)
Impairment losses	1,270	282
Decrease in allowance for doubtful accounts	(1,320)	(1,063)
Excess tax benefits from stock-based compensation	(354)	(938)
Deferred income taxes and other	247	(440)
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable	158,594	167,760
Inventories	(49,087)	(32,002)
Prepaid expenses and other current assets	(30,391)	(38,439)
Accounts payable	(5,718)	(17,879)
Accrued expenses	(50,900)	(80,095)
Income taxes payable	(5,801)	3,829
Net cash provided by operating activities	84,970	96,975
Investing Activities:
Additions to property, plant and equipment	(16,860)	(21,505)
Increase in intangible and other assets	(1,402)	(2,165)
Skagen Designs arbitration settlement	5,968
Business acquisitions-net of cash acquired	(4,970)
Net cash used in investing activities	(17,264)	(23,670)
Financing Activities:
Acquisition of common stock	(116,047)	(119,715)
Distribution of noncontrolling interest earnings and other	(5,056)	(5,391)
Excess tax benefits from stock-based compensation	354	938
Debt borrowings	1,070,363	196,200
Debt payments	(1,055,584)	(162,456)
Proceeds from exercise of stock options	444	759
Net cash used in financing activities	(105,526)	(89,665)
Effect of exchange rate changes on cash and cash equivalents	(1,598)	(701)
Net decrease in cash and cash equivalents	(39,418)	(17,061)
Cash and cash equivalents:
Beginning of period	276,261	320,479
End of period	$ 236,843	$ 303,418

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INCOME TAXES

3 Months Ended

Apr. 04, 2015

INCOME TAXES

INCOME TAXES

5. INCOME TAXES

The Company’s income tax expense and related effective rate were as follows (in thousands, except percentage data):

	For the 13			For the 14
	Weeks Ended			Weeks Ended
	April 4,			April 5,
	2015			2014
Income tax expense	$	18,524		$	31,480
Income tax rate	31.3		%	31.3		%

The lower structural rate in the First Quarter was offset by unfavorable discrete items applied to a lower income base, resulting in the effective tax rate being the same as the effective tax rate in the Prior Year Quarter.

As of April 4, 2015, the total amount of unrecognized tax benefits, excluding interest and penalties, was $20.9 million, of which $13.2 million would favorably impact the effective tax rate in future periods, if recognized. During the Prior Year Quarter, the U.S. Internal Revenue Service began its examination of the Company’s 2010-2012 federal income tax returns. The Company is subject to examinations in various state and foreign jurisdictions for its 2007-2013 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 of the condensed consolidated balance sheet date. As of April 4, 2015, the Company had recorded $5.9 million of unrecognized tax benefits, excluding interest and penalties, for positions that are expected to be settled 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 and penalties included in the condensed consolidated balance sheets at April 4, 2015 was $2.0 million and $0.4 million, respectively. For the First Quarter, the Company accrued income tax-related interest expense of $0.2 million.

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EMPLOYEE BENEFIT PLANS (Tables)

3 Months Ended

Apr. 04, 2015

EMPLOYEE BENEFIT PLANS

Summary of stock options and stock appreciation rights activity

The following table summarizes stock options and stock appreciation rights activity during the First Quarter:

					Weighted-
					Average
			Weighted-		Remaining	Aggregate
			Average		Contractual	Intrinsic
Stock Options and Stock Appreciation Rights	Shares		Exercise Price		Term	Value
	(in Thousands)				(in Years)	(in Thousands)
Outstanding at January 3, 2015	663		$	85.08	5.6	$	20,751
Granted	147		80.22
Exercised	(19	)	32.11			1,052
Forfeited or expired	(16	)	111.84
Outstanding at April 4, 2015	775		84.93		5.8	10,714
Exercisable at April 4, 2015	551		$	82.90	5.1	$	10,297

Summary of stock options and stock appreciation rights outstanding and exercisable

The following table summarizes information with respect to stock options and stock appreciation rights outstanding and exercisable at April 4, 2015:

Stock Options Outstanding					Stock Options Exercisable
				Weighted-
		Weighted-		Average		Weighted-
		Average		Remaining		Average
Range of	Number of	Exercise		Contractual	Number of	Exercise
Exercise Prices	Shares	Price		Term	Shares	Price
	(in Thousands)			(in Years)	(in Thousands)
$13.65 - $21.51	54	$	15.12	3.3	54	$	15.12
$30.71 - $67.10	96	36.26		3.7	96	36.26
$69.53 - $106.40	96	80.86		5.9	94	80.79
$106.89 - $131.46	166	128.10		6.5	163	128.06
Total	412	$	80.99	5.3	407	$	80.71
Stock Appreciation Rights Outstanding					Stock Appreciation Rights Exercisable
				Weighted-
		Weighted-		Average		Weighted-
		Average		Remaining		Average
Range of	Number of	Exercise		Contractual	Number of	Exercise
Exercise Prices	Shares	Price		Term	Shares	Price
	(in Thousands)			(in Years)	(in Thousands)
$13.65 - $21.51	18	$	13.65	2.0	18	$	13.65
$30.71 - $67.10	17	40.16		2.6	17	38.71
$69.53 - $106.40	213	84.29		7.1	45	90.52
$106.89 - $131.46	115	117.80		6.2	64	121.94
Total	363	$	89.40	6.3	144	$	89.15

Summary of restricted stock, restricted stock units and performance restricted stock units activity

The following table summarizes restricted stock, restricted stock unit and performance restricted stock unit activity during the First Quarter:

			Weighted-Average
Restricted Stock, Restricted Stock Units			Grant Date Fair
and Performance Restricted Stock Units	Number of Shares		Value
	(in Thousands)
Nonvested at January 3, 2015	255		$	110.17
Granted	288		80.38
Vested	(85	)	113.06
Forfeited	(12	)	110.75
Nonvested at April 4, 2015	446		$	90.39

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INCOME TAXES (Details) (USD $)	3 Months Ended
	Apr. 04, 2015	Apr. 05, 2014
INCOME TAXES
Income tax expense	$ 18,524,000	$ 31,480,000
Income tax rate (as a percent)	31.30%	31.30%
Unrecognized tax benefits	20,900,000
Unrecognized tax benefits that would impact effective tax rate	13,200,000
Unrecognized tax benefits excluding interest and penalties	5,900,000
Total amount of accrued income tax-related interest	2,000,000
Penalties accrued	400,000
Accrued income tax-related interest expense	$ 200,000

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FINANCIAL STATEMENT POLICIES (Policies)

3 Months Ended

Apr. 04, 2015

FINANCIAL STATEMENT POLICIES

Basis of Presentation

Basis of Presentation. The condensed consolidated financial statements include the accounts of Fossil Group, Inc., a Delaware corporation, and its wholly and majority-owned subsidiaries (the “Company”).

The Company’s fiscal year periodically results in a 53-week year instead of a normal 52-week year. The prior fiscal year ending January 3, 2015 was a 53-week year, with the additional week included in the first quarter. Accordingly, the information presented herein includes thirteen weeks of operations for the quarter ended April 4, 2015 (“First Quarter”) as compared to fourteen weeks included in the quarter ended April 5, 2014 (“Prior Year Quarter”). The condensed consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary to present a fair statement of the Company’s financial position as of April 4, 2015, and the results of operations for the First Quarter and Prior Year Quarter. All adjustments are of a normal, recurring nature.

Effective during the First Quarter, the Company made changes to the presentation of its reportable segments to reflect changes in the way its chief operating decision maker evaluates the performance of its operations, develops strategy and allocates capital resources. The Company has realigned its operating structure. Strategic and brand directions are set centrally and regional management is now fully empowered and responsible to drive those strategies and brand directions across all brands and channels within their regions. As part of the new operating structure the regional teams manage both the wholesale and retail businesses within their regions whereas previously the retail business was managed globally. Additionally, with the implementation of new reporting systems, the Company has the ability to extract discrete financial information that aligns with its operating structure and is consistent with how management now evaluates the business performance. The Company’s reportable segments now consist of the following: (i) Americas, (ii) Europe and (iii) Asia. Prior to the First Quarter 2015 Form 10-Q, as reported in the 2014 Form 10-K, the Company’s reportable segments consisted of the following: (i) North America wholesale, (ii) Europe wholesale, (iii) Asia Pacific wholesale and (iv) Direct to consumer.

These changes to the Company’s reportable segments include the following:

(1) Reclassification of the Company’s retail, e-commerce and catalog activities, all of which were previously recorded within the Company’s Direct to consumer segment, to the Americas, Europe and Asia segments based on the geographic location of the activities.

(2) The Company’s wholesale operations in North America, Europe and Asia Pacific previously recorded within the North America wholesale, Europe wholesale and Asia Pacific wholesale segments, respectively, have been reclassified to the Americas, Europe and Asia segments, respectively.

(3) Intercompany profit attributable to the Company’s factory operations was previously included in the Asia Pacific wholesale and Europe wholesale segments in accordance with the geographic location of the factories, and is now eliminated from all reporting segments.

(4) Certain corporate costs are not allocated to the various segments because they are managed at the corporate level for internal purposes. Prior to the change in reporting segments, these expenses included, and after the change in reporting segments, continue to include, general corporate expenses, including certain administrative, legal, accounting, technology support costs, equity compensation costs, and payroll costs attributable to executive management. Additionally, certain brand management, product development, art, creative/product design, marketing and back office supply chain expenses which were previously included in North America wholesale, Europe wholesale, Asia Pacific wholesale and Direct to consumer segments prior to the change in reporting segments are now reported in corporate. Conversely, certain back office costs reported in corporate prior to the change in reporting segments are now included in the various reporting segments in which they are now managed.

The Company’s historical segment disclosures have been recast to be consistent with the current presentation.

These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Annual Report on Form 10-K filed by the Company pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), for the fiscal year ended January 3, 2015 (the “2014 Form 10-K”). Operating results for the First Quarter are not necessarily indicative of the results to be achieved for the full fiscal year.

The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), which require the Company 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 condensed consolidated financial statements and the reported amounts of revenues and expenses during the periods reported. Actual results could differ from those estimates. The Company has not made any changes in its significant accounting policies from those disclosed in the 2014 Form 10-K. Certain prior year amounts have been reclassified to conform to the current year presentation.

Business

Business. The Company is a global design, marketing and distribution company that specializes in consumer fashion accessories. Its principal offerings include an extensive line of men’s and women’s fashion watches and jewelry, handbags, small leather goods, belts, sunglasses, soft accessories and select apparel. In the watch and jewelry product categories, the Company has a diverse portfolio of globally recognized owned and licensed brand names under which its products are marketed. The Company’s products are distributed globally through various distribution channels, including wholesale in countries where it has a physical presence, direct to the consumer through its retail stores and commercial websites and through third-party distributors in countries where the Company does not maintain a physical presence. The Company’s products are offered at varying price points to meet the needs of its customers, whether they are value-conscious or luxury oriented. Based on its extensive range of accessory products, brands, distribution channels and price points, the Company is able to target style-conscious consumers across a wide age spectrum on a global basis.

Hedging Instruments

Hedging Instruments. The Company is exposed to certain market risks relating to foreign exchange rates and interest rates. The Company actively monitors and attempts to manage these exposures using derivative instruments including foreign currency forward contracts and interest rate swaps. The Company’s foreign subsidiaries periodically enter into foreign exchange forward contracts to hedge the future payment of intercompany inventory transactions denominated in U.S. dollars. If the Company was to settle its euro, British pound, Canadian dollar, Japanese yen, Australian dollar, and Mexican peso forward contracts as of April 4, 2015, the net result would have been a net gain of approximately $21.9 million, net of taxes. To help protect against adverse existing and forecasted fluctuations in interest rates, the Company has entered into interest rate swap agreements to effectively convert portions of its existing and forecasted variable rate debt obligations to fixed rates. To reduce exposure to changes in currency exchange rates adversely affecting the Company’s investment in a euro-denominated subsidiary, the Company entered into a forward contract designated as a net investment hedge that was settled during the second quarter of fiscal year 2014. The Company does not hold or issue derivative financial instruments for trading or speculative purposes. See “Note 10—Derivatives and Risk Management” for additional disclosures about the Company’s use of derivatives.

Operating expenses

Operating expenses.Operating expenses include selling, general and administrative expenses (“SG&A”), 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 “back office” or 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 the Company’s infrastructure and store closures.

Earnings Per Share ("EPS")

Earnings Per Share (“EPS”). Basic 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):

	For the 13		For the 14
	Weeks Ended		Weeks Ended
	April 4,		April 5,
	2015		2014
Numerator:
Net income attributable to Fossil Group, Inc.	$	38,070	$	66,343
Denominator:
Basic EPS computation:
Basic weighted average common shares outstanding	50,294		54,125
Basic EPS	$	0.76	$	1.23
Diluted EPS computation:
Basic weighted average common shares outstanding	50,294		54,125
Effect of stock options, stock appreciation rights, restricted stock units and performance restricted stock units	173		226
Diluted weighted average common shares outstanding	50,467		54,351
Diluted EPS	$	0.75	$	1.22

Approximately 352,400 and 273,400 weighted average common shares issuable under stock-based awards were not included in the diluted EPS calculation at the end of the First Quarter and Prior Year Quarter, respectively, because they were antidilutive.