8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 7, 2015

FOSSIL GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware	0-19848	75-2018505
(State or other jurisdiction of	(Commission File Number)	(I.R.S. Employer
incorporation or organization)		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)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2 below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 8.01 Other Events

Fossil Group, Inc., a Delaware corporation, and its wholly and majority-owned subsidiaries (the “Company”) has filed this Current Report on Form 8-K in order to update financial statements and other affected financial information for all periods presented in the Company’s Annual Report on Form 10-K for the year ended January 3, 2015 filed with the United States Securities and Exchange Commission (the “Commission”) on February 20, 2015 (the “2014 Form 10-K”), to reflect the changes described below.

As previously reported in the Company’s Quarterly Report on Form 10-Q for the quarter ended April 4, 2015 filed with the Commission on May 7, 2015 (the “First Quarter 2015 Form 10-Q”), during the first quarter of fiscal 2015 the Company made changes to the presentation of 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 is providing as exhibits to this Form 8-K reclassified applicable segment information in Item 1, “Business,” Item 1A, “Risk Factors,” Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Item 8, “Consolidated Financial Statements and Supplementary Data,” for each of the prior periods reported in the 2014 Form 10-K. The Company’s historical segment disclosures have been recast to be consistent with the current presentation.

The information included in this Form 8-K is presented for informational purposes only in connection with the above-described segment reporting change. There is no change to the Company’s previously reported consolidated net operating results, financial position or cash flows. This Form 8-K does not reflect events occurring subsequent to the filing of the 2014 Form 10-K, and does not modify or update the disclosures therein in any way, other than as required to reflect the change in reporting segments as described above and set forth in Exhibits 99.1, 99.2 and 99.3 attached hereto. For information on developments regarding the Company since the filing of the 2014 Form 10-K, please refer to the Company’s reports filed with the Commission, including the First Quarter 2015 Form 10-Q.

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Item 9.01 Financial Statements and Exhibits.

Exhibit No.	Description
23.1	Consent of Independent Registered Public Accounting Firm.
99.1	Business and Risk Factors
99.2	Management’s Discussion and Analysis of Financial Condition and Results of Operations
99.3	Consolidated Financial Statements and Supplementary Data
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.DEF	XBRL Taxonomy Extension Definition Link Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

3

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

Exhibit No.	Description
23.1	Consent of Independent Registered Public Accounting Firm.
99.1	Business and Risk Factors
99.2	Management’s Discussion and Analysis of Financial Condition and Results of Operations
99.3	Consolidated Financial Statements and Supplementary Data
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.DEF	XBRL Taxonomy Extension Definition Link Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

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EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Post-Effective Amendment No. 1 to Registration Statement No. 33-77526 and Registration Statement Nos. 33-65980, 333-70477, and 333-151645 on Form S-8, and Registration Statement Nos. 333-189408, 333-196739, 333-202599 and 333-203293 on Form S-3 of our report dated February 20, 2015 (May 7, 2015 as to Notes 1, 2, 9, 13, and 18), relating to the consolidated financial statements of Fossil Group, Inc., and subsidiaries appearing in this Current Report on Form 8-K of Fossil Group, Inc. dated May 7, 2015.

/s/ DELOITTE & TOUCHE LLP

Dallas, Texas

May 7, 2015

EX-99.1

Exhibit 99.1

PART I

Item 1.  Business

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 (“U.S.”), our network of Company-owned stores included 153 retail stores located in premier retail sites and 143 outlet stores located in major outlet malls as of January 3, 2015. In addition, we offer an extensive collection of our FOSSIL brand products through our website at 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 25 Company-owned foreign sales subsidiaries and through a network of over 60 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 197 retail stores and 100 outlet stores as of January 3, 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.

We are a Delaware corporation formed in 1991 and are the successor to a Texas corporation formed in 1984. In 1993, we completed an initial public offering of 13,972,500 shares of our common stock. Domestically, we conduct a majority of our operations through Fossil Partners, L.P., a Texas limited partnership formed in 1994 of which we are the sole general partner. We also conduct operations domestically and in certain international markets through various owned subsidiaries. Our principal executive offices are located at 901 S. Central Expressway, Richardson, Texas 75080, and our telephone number at that address is (972) 234-2525. Our European headquarters is located in Basel, Switzerland, and our Asia headquarters is located in Hong Kong. Our common stock is traded on the NASDAQ Global Select Market under the trading symbol FOSL. We make available free of charge through our website at www.fossilgroup.com our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(a) of the Securities Exchange Act of 1934 as soon as reasonably practicable after such materials are electronically filed with, or furnished to, the U.S. Securities and Exchange Commission (“SEC”). You may also obtain any materials we file with, or furnish to, the SEC on its website at www.sec.gov.

Business segments

Our operations and financial reporting are primarily divided into three distinct geographic segments: (i) Americas; (ii) Europe; and (iii) Asia. Each segment includes wholesale, retail, e-commerce and catalog activities based on the geographic location of those activities. Except to the extent that differences between operating segments are material to an understanding of our business taken as a whole, the description of our business in this report is presented on a consolidated basis. Corporate expenses include 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. For financial information about our operating segments and geographic areas, refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations set forth in Part II, Item 7 and Note 18. Major Customer, Segment and Geographic Information to our consolidated financial statements set forth in Part II, Item 8 of this Annual Report on Form 10-K.

Business strengths

We believe that we have several business strengths which allow us to differentiate ourselves and achieve our key operating and financial goals. These business strengths include:

Brand strength.  We believe a brand’s image, individuality, consistency and connection with its customers is paramount in building and sustaining the brand. We believe that our FOSSIL brand name is recognized on a global basis as a vintage-inspired aspirational lifestyle brand with a focus on fashion accessories. The FOSSIL brand has developed from its origin as a watch brand to encompass other accessory categories, including handbags, belts, small leather goods, jewelry, soft accessories, sunglasses and clothing. We believe the FOSSIL brand is one of our most valuable assets, serves as a foundational piece of our business and remains very marketable across product lines, geographic areas and distribution channels. Since our inception in 1984, we have continued to develop, acquire or license other nationally or internationally recognized brand names, such as ADIDAS®, ARMANI EXCHANGE®, BURBERRY®, DIESEL®, DKNY®, EMPORIO ARMANI®, KARL LAGERFELD®, MARC BY MARC JACOBS™, MICHAEL KORS®, MICHELE®, RELIC®, SKAGEN®, TORY BURCH® and ZODIAC®, in order to appeal to a wide range of consumers. Our industry is highly competitive and subject to changing preferences in style, taste and price points. The success of our business model depends upon offering a wide range of branded products that appeal to the various tastes and fashion preferences of our customers. We must also maintain the relevance of these products by continually anticipating customer needs and desires as they relate to both the brands and categories of products we offer. We have teams of designers and brand specialists assigned to each of our brands. The objectives of these designers and brand specialists are to immerse themselves in their assigned brand and product area, identify their customers’ preferences, interpret global fashion trends and develop style-right offerings to generate volume purchasing. By owning the vast majority of our global distribution, we are also able to create and execute consistent pricing strategies and brand image presentations that protect and enhance our proprietary brands and those of our licensors.

Licensing strength.  Since 1997, we have attracted highly recognized and respected brand names to license within our watch and jewelry portfolios. We believe we attract such quality brands due to our ability to provide them with access to our global design, production, distribution and marketing infrastructure. As a result of our vertical integration, we, unlike many of our competitors, can offer an integrated solution to launch or increase an accessory category presence on a worldwide basis in a consistent, timely and focused manner. All of our major licensing relationships are exclusive to us and the licensors, which substantially minimizes risks to the licensor associated with dealing with multiple licensees in different geographic regions. Additionally, in order to develop a broader relationship and maintain brand consistency across the accessory categories, we have broadened our infrastructure, allowing us to expand our licensing activities to products beyond the watch category, including our DIESEL, DKNY, EMPORIO ARMANI and MICHAEL KORS jewelry product lines.

Breadth of brands and retail price points.  Through the multiple brands we distribute, we have developed a broad spectrum of retail price points. Within our watch collections, core retail price points vary from approximately $7 in the mass market channel up to retail price points of $4,990 in the luxury distribution channel, although the majority of our collections focus on price points ranging from $85 to $600. The breadth of our brands allows us to anchor a brand to a given price point range and distribution channel, thereby maintaining a consistent brand image while focusing on the quality/value relationship important to the customer and not diluting the brand through overlapping distribution channels. The breadth of price points allows us to cater to various age and income groups while continuing to participate in sales consistently, regardless of a shift in income or the price/value preferences of our customers.

International penetration.  Since our initial public offering in 1993, we have continued to extend our reach beyond the U.S. by forming and acquiring internationally-based subsidiaries, licensing and developing internationally recognized brands and investing in the growth of our business within many major countries of the world. For fiscal years 2014, 2013 and 2012, 54.7%, 53.2% and 52.6% of our consolidated net sales were generated outside of the U.S., respectively.

Breadth of distribution channels.  Our products are sold through multiple distribution channels including department stores, specialty retail stores, specialty watch and jewelry stores, mass market stores, cruise ships, airlines, Company-owned retail stores, licensed and franchised FOSSIL stores, retail concessions operated by us and e-commerce sites. As we expand our presence in existing distribution channels and add new distribution channels, as well as develop new product lines and expand our geographic reach, our revenues have become less dependent on any one distribution channel or geographic region. Our Company-owned retail stores, websites and catalog venues allow us to enhance the related brand image by offering a targeted message to the customer, showcasing the array of product availability, influencing the merchandising and presentation of the products and testing new product introductions.

In-house creative team.  Since our inception, we have developed a talented pool of creative individuals who design our retail stores, websites, products, packaging, graphics, presentation displays and marketing materials, allowing us to deliver

a unique and cohesive style and image for each of our brands. We believe our emphasis on constant innovation and distinctive design has made us a leader in the branded accessory category. The breadth of talent and vertical integration of our design teams allows us to minimize the need for, and associated expense of, outside creative talent and advertising agencies.

International sourcing.  The vast majority of our products are sourced internationally. Most watch product sourcing from Asia is coordinated through our Hong Kong subsidiary, Fossil (East) Limited (“Fossil East”). During fiscal 2014, approximately 57% of our non-Swiss made watch production was assembled through wholly or majority owned factories. This vertical integration of our business allows for better flow of communication, consistent quality, product design protection and improved supply chain speed, while still allowing us to utilize non-owned production facilities for their unique capabilities and to cover production needs over internal capacities. Establishing our watch assembly facilities near the component manufacturers also allows us to operate a more efficient supply chain. We have also been successful in leveraging our jewelry production needs through our watch assembly factory infrastructure. Our other accessory and apparel products are purchased from many third-party manufacturers with whom we have long-standing relationships and, in the case of our leathers business, we typically represent a meaningful portion of their businesses.

Operating cash flow.  Our business model has historically generated strong operating cash flows, including $387.9 million in fiscal year 2014, and $1.3 billion and $1.7 billion over the past three fiscal years and five fiscal years, respectively. This strong cash flow has allowed us to fund capital expenditures, Company-owned retail store growth, product line expansions, common stock repurchase programs and acquisitions.

Information systems.  Operating and managing a global company requires sophisticated and reliable management information systems to assist in the planning, order processing, production and distribution functions and accounting of each relevant business. We mainly operate an SAP Enterprise Resource Planning system (“ERP”) in the U.S. and most of Europe. For our subsidiaries in Asia, we operate Microsoft’s Dynamics Navision Enterprise Resource Planning System (“Navision”). Our e-commerce platform is based on IBM’s WebSphere Commerce platform and we continued to invest in other parts our e-commerce infrastructure, which will allow us to leverage the success of our U.S.-based web business across many of the countries where we currently distribute products. We have also implemented SAP’s IS Retail platform combined with the WINCOR point-of-sale and the SAP point-of-sale systems to improve our ability to manage our growing Company-owned retail stores globally. Our products are principally distributed from three primary warehouses, one located in Texas near our headquarters, one located in southern Germany and the other located in Hong Kong. Our facilities in Texas and Germany utilize sophisticated automated material handling equipment and software designed to improve accuracy, speed and quality in our warehousing operations.

During fiscal year 2014, we implemented the following financial software solutions from Oracle Corporation: Hyperion Financial Management, Essbase and Hyperion Planning. This software was implemented to increase the overall efficiency of our consolidation and financial reporting process, provide an analytical application to view and interpret data, and to improve predictability in the budgeting and forecasting process.

Growth strategy

In order to expand our global market share in a profitable manner, we continually establish and implement business initiatives that we believe will build brand equity, increase revenues and improve profitability across three distinct areas of the business—FOSSIL, SKAGEN and our multi-brand watch portfolio. Our strategy for growing the business includes the following:

FOSSIL.  Realizing the full potential of this vintage American lifestyle brand is a key element of our long-term growth strategy. Our goal is to continue to grow the brand through innovation and increasing global awareness.

SKAGEN.  Growing SKAGEN into a multi-category lifestyle brand by leveraging the Fossil Group infrastructure, proving a unique brand experience and delivering great Danish-inspired product is an important element of our long-term growth strategy.

Portfolio.  Our multi-brand watch portfolio is a powerful tool enabling us to gain share in the growing global watch market. Our innovation, design, supply chain and global distribution network provide us the opportunity to work with lifestyle brands around the world and position them across a broad spectrum of market segments. Our goal is to employ all of our strategic advantages to realize the full potential of our brands.

Global Diversification.  International expansion and gaining market share are key elements in expanding the distribution of our brands. We have continued to increase our penetration of the international market by building brand name

recognition, broadening the selection of merchandise through existing distribution channels by introducing new products or brands, extending product categories under our existing portfolio of brands, purchasing former distributors to gain increased control over international businesses, establishing owned, franchised or licensed retail stores, expanding into retail concessions operated by us and entering new geographic markets through owned subsidiary or third-party distributor relationships. For example, on December 31, 2012, we acquired substantially all the assets of our largest third-party distributor, Bentrani Watches, LLC. Bentrani was a distributor of watch products in 16 Latin American countries and was based in Miami, Florida. Additionally, effective January 1, 2013, we assumed control over the board of directors and day-to-day management of Fossil, S.L. (“Fossil Spain”). The results of Fossil Spain have been included in our consolidated financial statements since January 1, 2013.

Leverage existing infrastructure.  We have built our design, marketing, assembly and distribution infrastructure to allow us to manage and grow our businesses. As we continue to develop additional products, acquire or license additional brands and seek additional businesses to complement our existing offering, we believe we will be able to leverage our infrastructure and continue to increase the efficiency of our operations over the long-term.

Extend product categories of existing brands.  We frequently introduce new accessory product categories within our existing proprietary and licensed brands to further leverage our branded portfolio. For example, we introduced jewelry collections under the DIESEL, DKNY, EMPORIO ARMANI, FOSSIL and MICHAEL KORS brands after first establishing a market for the brands in watches. Wearable technology is an opportunity to extend the reach of our brands and offer customers new functionality with accessories, including jewelry and smart watches. While this is an emerging / new category, we anticipate developing capabilities in conjunction with our partnerships with Google and Intel ahead of releasing new products in 2015.

Introduce new brands.  We have introduced new brands through the development or acquisition of proprietary brands and licensing agreements related to recognizable global fashion lifestyle brands to attract a wide range of consumers with differing tastes and lifestyles. Our current portfolio of proprietary and licensed watch brands allows us to compete for market share from the luxury branded market to the mass market level. In 2011, we entered into an exclusive global licensing agreement with Karl Lagerfeld for watches, which launched globally in the first quarter of 2013. In April 2012, we completed the acquisition of Skagen Designs, Ltd. (“Skagen Designs”) and certain of its international subsidiaries. Skagen Designs is an international company offering contemporary Danish design accessories including watches, jewelry, sunglasses and clocks. In February 2013, we announced an exclusive global licensing agreement with Tory Burch for watches, which we launched globally in the third quarter of 2014.

Expand retail locations.  Historically, we have expanded our Company-owned retail and outlet locations each year. Distribution through our Company-owned retail stores has allowed us to raise awareness of the FOSSIL brand and showcase a broad assortment of FOSSIL branded products in a warm and inviting atmosphere. Our FOSSIL retail stores, combined with our FOSSIL branded catalogs and website, have continued to build brand equity, present a consistent brand image, influence the merchandising and presentation of our products at other retailers and have allowed us to test new product categories and designs. With the level of awareness we have achieved for the FOSSIL brand worldwide and the expansion of product categories offered under the brand, we have been able to accelerate our FOSSIL retail store growth. Of the 593 Company-owned retail stores open as of January 3, 2015, 469 of these stores are FOSSIL branded stores. We also sell certain of our proprietary and licensed watch products, as well as upscale watch brands of other companies, such as Citizen and Swiss Army, at our Company-owned Watch Station International full-price retail and outlet stores. As of January 3, 2015, we operated 99 Watch Station International stores. We plan to open approximately 44 to 55 additional stores in fiscal 2015, depending upon available retail locations and lease terms that meet our requirements, the majority of which will be our FOSSIL full-price accessory and outlet concepts. During fiscal 2015, we also expect to close approximately 40 stores.

Operating strategy

Fashion orientation and design innovation.  We are able to market our products to consumers with differing tastes and lifestyles by offering a wide range of brands and product categories at varying price points. We attempt to stay abreast of emerging fashion and lifestyle trends affecting accessories and clothing, and we respond to these trends by making adjustments in our product lines several times each year. We differentiate our products from those of our competitors principally through innovations in fashion details, including variations in both the materials and treatments used for dials, crystals, cases, straps and bracelets for our watches, and innovative treatments and details in our other accessories.

Coordinated product promotion.  We internally coordinate product design, packaging, advertising, websites, catalogs and in-store presentations to effectively communicate to our target markets the themes and images associated with our brands. For example, many of our watch products and certain of our accessory products are packaged in metal tins decorated with

designs consistent with our marketing strategy and product image. In certain parts of the world, we market our non-watch fashion accessory lines through the same distribution channels as our watch lines, using similar in-store presentations, graphics and packaging.

Captive suppliers.  The three entities that assemble the majority of our Asia watch production volume are majority owned by us. In addition, although we do not have long-term contracts with our unrelated accessory manufacturers, we maintain long-term relationships with several manufacturers. These relationships developed due to the significant length of time we have conducted business with the same manufacturers. We believe that we are able to exert significant operational control with regard to our principal watch assemblers because of our level of ownership and long standing relationships. In addition, we believe that the relative size of our business with non-owned watch manufacturers gives us priority within their production schedules. Furthermore, the manufacturers understand our quality standards, which allow us to produce quality products and reduce the delivery time to market, improving overall operating margins.

Actively manage retail sales.  We manage the retail sales process with some of our wholesale customers by monitoring consumer purchases and retail inventory levels by product category and style, primarily through electronic data interchange, and by assisting some of our wholesale customers in the conception, development and implementation of their marketing programs. Through our merchandising unit, we work with some retailers to ensure that our products are properly stocked and displayed in accordance with our visual standards. As a result, we believe we enjoy close relationships with some of our principal wholesale customers, often allowing us to influence the mix, quantity and timing of their purchasing decisions.

Centralized distribution.  We distribute substantially all of our products sold in North America from our warehouse and distribution centers located in Texas. In Europe, we distribute our products primarily through our warehouse and distribution center located in Germany. In Asia, we primarily distribute our products through our distribution warehouse located in Hong Kong and through smaller distribution warehouses in those countries where we maintain a physical presence. We believe our centralized distribution capabilities in the U.S. and Europe enable us to reduce inventory risk, increase flexibility in achieving delivery requirements of our customers and maintain cost advantages as compared to our competitors.

Industry overview

Watch products

We believe that the current market for watches generally can be divided into four segments. One segment of the market consists of fine watches characterized by internationally known brand names such as Audemars Piguet, Cartier, Omega, Patek Philippe, Piaget and Rolex. Watches offered in this segment are usually made of precious metals or stainless steel and may be set with precious gems. These watches are almost exclusively manufactured in Switzerland and are sold by trade jewelers and in the fine jewelry departments of better department stores and other purveyors of luxury goods at retail prices ranging from $4,000 to in excess of $20,000. Selected limited editions of our BURBERRY and MICHELE lines compete in this market. A second segment of the market consists of fine premium branded and designer watches produced in Switzerland and the Far East such as Gucci, Movado, Raymond Weil, Seiko, TAG Heuer and Tissot. These watches are sold at retail prices generally ranging from $495 to $4,000. Our BURBERRY, EMPORIO ARMANI, EMPORIO ARMANI Swiss, FOSSIL Swiss, MICHELE, TORY BURCH and ZODIAC lines generally compete in this market segment. A third segment of the market consists of watches sold by mass marketers, which typically consist of digital and analog watches manufactured in the Far East. Well-known brands in this segment include Armitron, Casio and Timex. Retail prices in this segment range from $7 to $60. We compete in this segment through the design and production of private label watch products for Target and Wal-Mart.

The fourth segment of the market consists of moderately priced watches characterized by contemporary fashion and well known fashion brand names. Moderately priced watches are typically produced in China or Hong Kong and are sold by department stores and specialty stores at retail prices ranging from $60 to $1,000. This market segment is targeted by us with our FOSSIL, RELIC and SKAGEN lines and by our principal competitors, including the companies that market watches under the Anne Klein II, Guess?, Kenneth Cole and Swatch brand names, whose products attempt to reflect emerging fashion trends in accessories and clothing. Our ARMANI EXCHANGE, DIESEL, DKNY, KARL LAGERFELD, MARC BY MARC JACOBS, and MICHAEL KORS lines generally compete in this segment as well. We compete in the sports specialty area of this segment with our ADIDAS line of women’s and men’s sport timepieces. We believe that a number of consumers regard branded fashion watches not only as timepieces, but also as fashion accessories, and that has historically resulted in consumers owning multiple watches that may differ significantly in terms of style, features and cost.

Watches typically utilize either a mechanical or quartz-analog movement to maintain their time keeping function. Mechanical watches utilize intricate arrangements of wheels, jewels and winding and regulating mechanisms to keep time, while quartz-analog watches are precisely calibrated to the regular frequency of the vibration of a quartz crystal powered by a

battery. Although quartz-analog movements typically maintain their time keeping functions more precisely than mechanical movements, mechanical movements are prized for their craftsmanship and are generally associated with high-end luxury timepieces.

Fashion accessories

In addition to watches, the fashion accessories market also includes an array of products such as small leather goods, handbags, belts, sunglasses, neckwear, jewelry and gloves. We believe that a number of consumers view accessories as fashion statements, and as a result, purchase brand name, quality items that complement other fashion items. These fashion accessory products are generally marketed through department stores, specialty retailers and mass merchandisers, depending upon price and quality. Higher price point items include products offered by fashion names such as Louis Vuitton and Prada.

Moderately priced fashion accessories are typically marketed in department stores and are characterized by contemporary fashion and well-known brand names at reasonable price points, such as our FOSSIL and RELIC brands. We currently offer small leather goods, handbags, belts, sunglasses and soft accessories for both men and women through department stores and specialty retailers in the moderate to upper-moderate price ranges. Our competitors in this market include companies such as Coach, Guess?, Kenneth Cole, Liz Claiborne and Nine West. In addition, we currently offer fashion jewelry sold under the DIESEL, DKNY, EMPORIO ARMANI, FOSSIL, MICHAEL KORS and SKAGEN brands.

Our products

We design, develop, market and distribute fashion accessories, including limited apparel, belts, handbags, jewelry, small leather goods, sunglasses, soft accessories and watches under proprietary and licensed brand names. Additionally, we manufacture or distribute private label brands as well as branded products we purchase for resale in certain of our non-FOSSIL retail stores. The following table sets forth certain information with respect to the breakdown of our net sales and percentage of growth between proprietary, licensed and other brands for the fiscal years indicated (in millions, except for percentage data).

	Fiscal Year
	2014				2013				2012
	Dollars		% Growth		Dollars		% Growth		Dollars
Proprietary	1,516.7		0.9		1,503.2		6.8		1,407.0
Licensed	1,876.7		14.0		1,646.2		21.4		1,355.5
Other	116.3		5.2		110.6		16.4		95.0
Total	$	3,509.7	7.7	%	$	3,260.0	14.1	%	$	2,857.5

Watch products

We offer an extensive line of branded lifestyle watches under our proprietary brands and, pursuant to license agreements, under some of the most prestigious brands in the world. Sales of watches for fiscal years 2014, 2013 and 2012 accounted for approximately 78.0%, 77.1% and 74.9%, respectively, of our consolidated net sales.

Proprietary brands.  The following table sets forth information about our primary proprietary brand watches:

Brand	Suggested Retail Price Point Range	Primary Distribution Channels
FOSSIL	$75 - 995	U.S. department stores (Belk, Dillard’s, Macy’s and Nordstrom), U.S. specialty retailers (The Buckle), better European department stores (Debenhams, El Corte Ingles, Galeries Lafayette, Harrod’s, House of Fraser, Karstadt, Kaufhof and Printemps), better European specialty stores (Christ, Ernest Jones, Goldsmith, H. Samuel, Histoire d’Or as, and Louis Pion), Canadian department stores (Hudson Bay), Australian department stores (Myers), Chinese department stores (Sogo), independently-owned watch and jewelry stores worldwide, www.amazon.com, www.fossil.com, www.watchstation.com, our catalog and Fossil stores worldwide
MICHELE	$295 - 4,990	U.S. department stores (Bloomingdales, Neiman Marcus, Nordstrom and Saks Fifth Avenue), watch specialty stores, jewelry stores, www.michele.com and www.watchstation.com
RELIC	$60 - 150	U.S. department stores (JCPenney, Kohl’s, Sears and Stage Stores) and www.relicbrand.com
SKAGEN	$95 - 275	U.S. department stores (Belk, Bloomingdales, Bon Ton, Dillard’s, Lord and Taylor, Macy’s, Nordstrom and Von Maur), U.S. specialty and independent retailers, U.S. military, better European department stores (Galeries Lafayette, House of Fraser, Karstadt and Kaufhof), European specialty stores (Christ) and independent retailers, Asian specialty stores (City Chain, On Time and Tic Tac) and independent retailers, Company-owned stores (Skagen, Watch Station International retail stores and outlets), www.watchstation.com and www.skagen.com
ZODIAC	$795 - 1,395	Watch specialty jewelry stores worldwide, www.nordstrom.com, www.amazon.com and www.watchstation.com

Licensed brands.  We have entered into multi-year, worldwide exclusive license agreements for the manufacture, distribution and sale of watches bearing the brand names of certain globally recognized fashion companies. The following table sets forth information with respect to our primary licensed watch products:

Brand	Suggested Retail Price Point Range	Expiration Date	Primary Distribution Channels
ADIDAS	$50 - 195	12/31/2017	Department stores, major sports stores, specialty retailers, adidas outlets, adidas boutiques worldwide and www.watchstation.com
ARMANI EXCHANGE	$100 - 260	12/31/2023	Department stores, specialty retailers, duty free stores worldwide, Armani Exchange boutiques worldwide, www.armaniexchange.com and www.watchstation.com
BURBERRY	$395 - 3,995	12/31/2017	Department stores, specialty retailers, duty free stores worldwide and Burberry boutiques worldwide
DIESEL	$100 - 495	12/31/2015	Department stores, specialty retailers, Diesel boutiques worldwide, www.diesel.com and www.watchstation.com
DKNY	$75 - 275	12/31/2019	Department stores, jewelry stores, specialty retailers, DKNY boutiques worldwide and www.watchstation.com
EMPORIO ARMANI	$145 - 545	12/31/2023	Department stores, specialty retailers, major jewelry and watch stores, Emporio Armani boutiques worldwide, duty free stores worldwide, www.emporioarmaniwatches.com and www.watchstation.com
KARL LAGERFELD	$150 - 595	12/31/2017	Department stores, Karl Lagerfeld boutiques, watch and jewelry specialty stores, and www.watchstation.com
MARC BY MARC JACOBS	$150 - 600	12/31/2020	Department stores, specialty retailers, Marc by Marc Jacobs boutiques worldwide and www.watchstation.com
MICHAEL KORS	$195 - 550	12/31/2024	Department stores, specialty retailers, jewelry stores, duty free stores, retail websites, Michael Kors boutiques worldwide and www.watchstation.com
TORY BURCH	$350 - 995	12/31/2018	Department stores, specialty retailers, jewelry stores, duty free stores, retail websites, Tory Burch boutiques worldwide and www.watchstation.com

Sales of our licensed watch products accounted for 49.2% of our consolidated net sales for fiscal year 2014. Our MICHAEL KORS product sales, including jewelry, accounted for 26.3% of our consolidated net sales for fiscal year 2014. In fiscal year 2011, we entered into an exclusive global licensing agreement with Karl Lagerfeld for watches, which launched worldwide in the first quarter of 2013. In February 2013, we announced an exclusive global licensing agreement with Tory Burch for watches, which launched globally in late 2014. We launched EMPORIO ARMANI Swiss made watches in the first quarter of 2014.

Private label and other.  We design, market and source manufacturing of certain retailers’ private label and owned brand watches or as premium and incentive items for use in various corporate events. Under these arrangements, we perform design and product development functions, as well as act as a sourcing agent for our customers by contracting for and managing the manufacturing process, purchasing and inspecting the finished product and arranging for shipment. Participation in the private label and premium businesses provides us with certain advantages, including increased assembly volume, which may reduce the costs of assembling our other products, and the strengthening of business relationships with our manufacturing sources.

Fashion accessories

In order to leverage our design and marketing expertise and our close relationships with our principal retail customers, primarily in the U.S. and Europe, we have developed a line of fashion accessories for both men and women, including belts, handbags, jewelry, small leather goods and sunglasses. Our handbags are made of a variety of fine leathers and other materials that emphasize classic styles and incorporate a variety of creative designs. Our small leather goods are typically made of fine leathers or other man-made materials and include items such as coin purses, cosmetic bags, mini-bags and wallets. Our jewelry lines include bracelets, cufflinks, earrings, necklaces and rings marketed under the DIESEL, DKNY, EMPORIO ARMANI, FOSSIL, MICHAEL KORS and SKAGEN brands and typically include materials such as base metals, stainless steel, semi-precious stones and sterling silver. We offer 100% UV protected fashion sunglasses in the FOSSIL brand. We currently sell our fashion accessories through a number of our existing major department store and specialty retail store customers, as well as our Company-owned retail stores, www.fossil.com and other internationally-owned e-commerce sites. In the U.S. and certain international markets, we generally market our fashion accessory lines through the same distribution channels as our watches using similar in-store presentations, graphics and packaging. These fashion accessories are typically sold in locations adjacent to watch departments, which may lead to purchases by persons who are familiar with our watch brands. Sales of our accessory lines for fiscal years 2014, 2013 and 2012 accounted for approximately 20.2%, 21.1% and 22.9%, respectively, of our consolidated net sales.

The following table sets forth information about our fashion accessories:

Brand	Accessory Category	Suggested Retail Price Point Range	Primary Distribution Channel
DIESEL	Jewelry	$75 - 150	Department stores, domestic and international specialty retailers and Diesel retail stores worldwide
DKNY	Jewelry	$40 - 200	International department stores, specialty retailers, jewelry stores and DKNY boutiques
EMPORIO ARMANI	Jewelry	$75 - 295	Department stores, specialty retailers, major jewelry stores, Emporio Armani boutiques worldwide, duty free stores worldwide and www.emporioarmani.com
FOSSIL	Handbags Small Leather Goods Belts Gifts Eyewear Jewelry	$78 - 398 $25 - 118 $24 - 48 $24 - 158 $55 - 135 $18 - 128	U.S. department stores (Belk, Dillard’s, Macy’s and Nordstrom), specialty retailers (The Buckle), better European specialty and department stores (Christ, Debenhams, Galeries Lafayette, House of Fraser, Karstadt and Kaufhof), www.amazon.com, Company-owned stores, our catalogs and www.fossil.com
MICHAEL KORS	Jewelry	$65 - 595	Department stores, specialty retailers, jewelry stores, duty free stores worldwide and Michael Kors boutiques nationwide
RELIC	Handbags Small Leather Goods Belts	$40 - 78 $22 - 40 $18 - 30	U.S. department stores (JCPenney, Kohl’s, Sears and Stage Stores) and www.relicbrand.com
SKAGEN	Jewelry Leather bags and Accessories	$30 - 100 $25 - 445	U.S. department stores (Macy’s, Nordstrom, Dillards, Hudson Bay), U.S. specialty and independent retailers, better European department stores (Galeries Lafayette, House of Fraser, Karstadt and Kaufhof), European specialty stores (Christ) and independent retailers, Asian independent retailers, Company-owned stores (Skagen, Watch Station International retail stores and outlets), and www.skagen.com

Apparel

Our limited assortment of Fossil apparel is designed for both men and women. The products’ unique vintage-inspired style, packaging and graphics capture the energy and spirit of the FOSSIL brand. As of January 3, 2015, FOSSIL apparel was offered through select distribution in 30 Company-owned retail stores in the U.S and internationally and at www.fossil.com. Sales for FOSSIL apparel for fiscal years 2014, 2013 and 2012 accounted for approximately 0.3%, 0.5% and 0.7%, respectively, of our consolidated net sales.

Licensed eyewear

In fiscal year 2013, our FOSSIL and RELIC brands were licensed to the Safilo Group, who manufactured, marketed, and sold optical frames under the FOSSIL and RELIC brands in the U.S. and Canada. Effective January 1, 2014, we expanded our license agreement with the Safilo Group to include both FOSSIL branded sunglasses and optical frames worldwide. The license agreement provides for royalties to be paid to us based on a percentage of net sales and includes certain guaranteed minimum royalties. Sales of licensed eyewear for fiscal years 2014 and 2013 accounted for approximately 0.4% and 0.7%, respectively, of our consolidated net sales.

Design and development

We believe one of our key strengths is our internal creative team. Our watch, accessory and select apparel products are created and developed by our in-house design staff primarily located in the U.S., Germany, Hong Kong and Switzerland. When developing products under our various licensed brands, we often coordinate our efforts with our licensors’ design teams to provide for a more fluid design approval process and to fully incorporate the image of the respective brand into the product. Product design ideas are drawn from various sources and are reviewed and modified by our design staff to ensure consistency with our existing product offerings and the themes and images associated with our brands. Senior management is actively involved in the design process.

In order to respond effectively to changing consumer preferences, we attempt to stay abreast of emerging lifestyle and fashion trends impacting our product categories. In addition, we attempt to take advantage of the constant flow of information from our customers and our retail stores and e-commerce sites regarding the retail performance of our products. We review weekly sales reports provided by a substantial number of our customers, as well as daily sales reports generated from our Company-owned retail stores and e-commerce sites, containing information with respect to sales and inventories by product category and style. Once a trend in the retail performance of a product category or style has been identified, our design and marketing staffs review their product design decisions to ensure that key features of successful products are incorporated into future designs. Other factors having an influence on the design process include the availability of components, the capabilities of the factories that will manufacture the products for us and the anticipated retail prices and profit margins for the products. Our creative teams have access to our product design archives and are regularly updated on all the various new components, hardware and materials that become available. Over the last few years, our focus has been on transforming our approach in design and development from an assortment-rich offering to an iconic platform presentation. This has enhanced our ability to develop and share compelling stories within the platforms through a narrower range of product offerings, thereby reducing inventory risk and improving lead times. We initially developed this approach in our watch business, and we are now in the early stages of applying a similar approach to our leather and jewelry businesses.

We differentiate our products from those of our competitors principally by incorporating into our product designs innovations in fashion details, including variations in the materials and treatments used for dials, crystals, cases, straps and bracelets for our watches, and innovative details and treatments in our other accessories. We also incorporate certain proprietary technology or integrate our suppliers’ technologies in certain of our watch products. In some instances, we believe that such innovations have allowed us to achieve significant improvements in consumer acceptance of our product offerings. We believe that the substantial experience of our design staff will assist us in maintaining our current leadership position in the watch category, continuing to enhance our handbag offering and expanding the scope of our product offerings.

Marketing and promotion

Our marketing strategy for each of our proprietary brands is to deliver a coordinated and consistent brand image to the consumer regardless of where the consumer comes into contact with the brand. This includes point of sale merchandise displays, print and media advertising, our websites, our catalogs, retail stores, and the product packaging to the product itself. We identify our advertising themes and coordinate our packaging, advertising and point of sale material around these themes. These themes are carefully coordinated in order to convey American vintage styling and the aspirational viewpoint that we associate with our products. Our vintage-inspired tin packaging concept for many of our watch products and certain of our accessories is an example of these marketing themes. While our marketing themes typically change each year, the core image of the brand is designed to endure, only changing slightly to keep it fresh and relevant to our targeted consumer. For our licensed brands, we incorporate many of the same concepts but derive the themes generally from the licensors.

We participate in cooperative advertising programs with our major retail customers, whereby we share the cost of certain of their advertising and promotional expenses. An important aspect of the marketing process involves the use of in-store visual support and other merchandising materials, including packages, signs, posters and fixtures. Through the use of these materials, we attempt to differentiate the space used to sell our products from other areas of our customers’ stores. We also promote the use of our shop-in-shop concept for watches, jewelry, handbags and small leather goods and, primarily in Asia and Europe, watch and jewelry concessions. Our shop-in-shop concept involves the use of dedicated space within a customer’s store to create a brand “shop” featuring our products and visual displays. The concessions we run allow us to essentially operate all or a portion of the watch and jewelry department within our customers’ stores, thereby permitting us to control merchandising, inventory levels, build-out and branding decisions and, more importantly, the interaction with the end consumer. We also provide our customers with a large number of preprinted customized advertising inserts and from time to time stage promotional events designed to focus public attention on our products.

Our in-house art department designs, develops and implements all of the packaging, advertising, marketing and other promotional aspects of our products. The art staff uses computer-aided design techniques to generate the images presented on product packaging and other advertising materials. Senior management is involved in monitoring our advertising and promotional activities to ensure that themes and ideas are communicated in a cohesive manner to our target audience.

Sales and customers

General.  Domestically, we sell our products in retail locations in the U.S. through a diversified distribution network that includes department stores, specialty retail locations, specialty watch and jewelry stores and mass market stores. For our FOSSIL, MICHELE and licensed branded products, our primary department store customers include Bloomingdales, Dillard’s, Neiman Marcus, Nordstrom, Macy’s and Saks Fifth Avenue. For our RELIC brand, our primary customers include JCPenney

and Kohl’s. For our SKAGEN brand, our primary customers include Dillard’s, Macy’s and Nordstrom. Many of our licensed branded products are also sold through each respective licensor’s boutique stores and websites. We maintain sales offices in several major cities across the U.S. staffed with sales associates to assist in managing our department and specialty store accounts and employ a nationwide staff of merchandise coordinators who work with the stores to ensure that our products are displayed appropriately. We also sell certain of our FOSSIL branded products at Company-owned FOSSIL retail stores and outlet stores located throughout the U.S., and through our website at www.fossil.com. In addition, we sell certain of our proprietary and licensed watch products, as well as upscale watch brands of other companies, such as Citizen and Swiss Army, at our Company-owned Watch Station International retail stores in the U.S. and through our website at www.watchstation.com.

We maintain subsidiary offices in Australia, Austria, Belgium, Canada, China, Denmark, France, Germany, Hong Kong, India, Italy, Japan, Macau, Malaysia, Mexico, the Netherlands, Norway, Singapore, South Korea, Spain, Sweden, Switzerland, Taiwan and the United Kingdom. Our European headquarters is located in Basel, Switzerland, and our Asia headquarters is located in Hong Kong.

Internationally, our products are sold to department stores and specialty retail stores in approximately 150 countries worldwide through 25 Company-owned foreign subsidiaries, a network of over 60 independent distributors, Company-owned retail stores and websites and licensed or franchised FOSSIL retail stores, retail concessions operated by us and kiosks. Foreign distributors generally purchase products from us at uniform prices established by us for all international sales and resell them to department stores and specialty retail stores. We generally receive payment from our foreign distributors in U.S. dollars. We generally do not have long-term contracts with any of our retail customers. All transactions between us and our retail customers are conducted on the basis of purchase orders, which generally require payment of amounts due to us on a net 30 day basis for most of our U.S.-based customers and up to 120 days for certain international customers. No customer accounted for 10% or more of our consolidated net sales in fiscal years 2014, 2013 or 2012. Net sales for geographic segments are based on the location of the selling entity. For more information on our geographic segments, see Note 18—Major Customer, Segment and Geographic Information to our consolidated financial statements set forth in Part II, Item 8 of this Annual Report on Form 10-K.

United States sales.  For fiscal years 2014, 2013 and 2012, U.S. sales accounted for 45.3%, 46.8% and 47.4% of our consolidated net sales, respectively, and the aggregate sales to our 10 largest customers in the U.S. represented approximately 18.9%, 20.5% and 20.8% of consolidated net sales, respectively.

International sales.  For fiscal years 2014, 2013 and 2012, Europe sales accounted for 34.1%, 32.3% and 30.8% of consolidated net sales, respectively, Asia sales accounted for 16.1%, 15.4% and 15.7% of consolidated net sales, respectively, and other international sales accounted for 4.5%, 5.5% and 6.1% of consolidated net sales, respectively.

Company-owned stores

Our various retail store formats focus on creating emotional connections with our customers through an intense branding experience and personalized customer service. We strive to provide an inviting and welcoming environment for our customers that enhance our brand image and seek brand loyalty by continually delivering innovative vintage-inspired products that meet our customers’ tastes.

The following table sets forth the number of stores by concept as of January 3, 2015 and December 28, 2013:

	January 3, 2015				December 28, 2013
	Americas	Europe	Asia	Total	Americas	Europe	Asia	Total
Full price accessory	119	111	59	289	112	113	51	276
Outlets	143	58	42	243	125	46	35	206
Clothing	28	2	0	30	30	2	0	32
Full priced multi-brand	6	3	22	31	6	6	17	29
Total stores	296	174	123	593	273	167	103	543

Accessory stores

We operate full-price FOSSIL and SKAGEN accessory retail stores (“Accessory Stores”) in order to broaden the recognition of our brand names. Accessory Stores carry a full assortment of FOSSIL or SKAGEN watches and other accessories that are generally sold at the suggested retail price. We believe our Accessory Stores present a key growth strategy

for us on a worldwide basis. At the end of fiscal 2014, the average size of our Accessory Stores was 1,496 square feet, but each store can vary in size based on its geographic location. For example, our international-based stores are generally smaller in square footage than our U.S.-based stores due to smaller retail store configurations generally available in international markets. The table below sets forth information about our Accessory Stores for the last five fiscal years:

Fiscal Year	Open At Beginning of Period	Opened During Period	Closed During Period	Open at End of Period	Total Gross Square Footage (in thousands)	Percentage Increase in Square Footage		Average Gross Square Footage Per Retail Store
2010	218	20	8	230	311.4	5.1	%	1,354
2011	230	22	7	245	337.7	8.4	%	1,378
2012	245	25	10	260	363.4	7.6	%	1,398
2013	260	30	14	276	402.3	10.7	%	1,458
2014	276	29	16	289	432.2	7.4	%	1,496

Outlet stores

The majority of our outlet stores are FOSSIL branded and operate at selected major outlet malls throughout the U.S. and certain international locations. We also operate outlets under the SKAGEN and Watch Station International names. Our outlets operating under the FOSSIL and SKAGEN names not only increase our brand awareness, but also enable us to liquidate excess inventory generally at significantly better prices than we would obtain through third-party liquidators. We generally discount products in our outlet stores from 25% to 75% off our suggested retail price. The table below sets forth information about our outlet stores during the last five fiscal years:

Fiscal Year	Open At Beginning of Period	Opened During Period	Closed During Period	Open at End of Period	Total Gross Square Footage (in thousands)	Percentage Increase in Square Footage		Average Gross Square Footage Per Retail Store
2010	90	9	6	93	221.1	4.0	%	2,377
2011	93	15	4	104	238.3	7.8	%	2,291
2012	104	59	1	162	356.3	49.5	%	2,199
2013	162	46	2	206	427.9	20.1	%	2,077
2014	206	41	4	243	497.4	16.2	%	2,047

Other retail and e-commerce

We offer FOSSIL brand select apparel through specially designed Company-owned apparel stores. Our apparel stores carry our full apparel line along with an assortment of certain FOSSIL watch and accessory products. We sell certain of our proprietary and licensed brand watches, as well as watches manufactured by other companies in our Watch Station International stores.

We have an agreement with the House of Fraser (“HOF”), a U.K.-based department store, which allows us to operate the watch department in certain HOF stores. Under this agreement, we own the inventory within the HOF store, provide the labor to operate the department and pay HOF a commission on the retail watch sales generated in the stores. As of January 3, 2015, we operated the watch department in 46 HOF stores, although we do not include the number of locations associated with this arrangement in our retail store count.

Internet sales.  Our U.S. e-commerce website for FOSSIL branded products is www.fossil.com. We also operate e-commerce websites in Australia, China, France, Germany, Japan, South Korea and the United Kingdom. In October 2012, we began shipping to Canada and Mexico through our U.S. e-commerce website. Each website features a full selection of geographically specific FOSSIL branded products. Certain of our websites also provide customer service, company news and shareholder information. Our websites are continually updated to provide a fresh look and an easy-to-navigate interface that enhances our brand image, while allowing consumers a pleasing shopping experience or a preview of what they may find at their local store carrying the brand. Since its launch, the www.fossil.com website has been promoted consistently in support of online brand and direct sales goals. Our online marketing efforts include the following: search/keyword marketing programs through major search partners including Google, Bing and Yahoo!; regular e-mail communications sent using our email service provider to over one million registered consumers; product and promotional banners presented on affiliate networks and display banner networks; and online brand initiatives through social networks such as Facebook, Twitter, Instagram, Pinterest and YouTube in support of viral and traditional brand initiatives. We have leveraged our e-commerce infrastructure by opening

websites to support our licensed and owned brands, including www.michele.com, www.skagen.com, and www.watchstation.com, as well as our international FOSSIL brand website located at www.fossilglobal.com.

Catalogs.  In fiscal year 2014, we distributed approximately 3.1 million FOSSIL catalogs in the U.S., a decrease from 5.0 million in fiscal year 2013, and we distributed 0.2 million FOSSIL catalogs internationally, a decrease from 0.7 million in fiscal year 2013. These distribution decreases were the result of a change in our communication and advertising strategy to optimize circulation by distributing more smaller promotional pieces, such as self-mailers and postcards, and distributing fewer large catalogs. We continue to distribute several versions of our catalog each year with approximately half the catalogs being distributed during our fourth quarter. We continue to utilize our customer relationship management database to optimize and reduce our global circulation strategy, resulting in reduced costs. We continue to view our catalogs as a key communication and advertising tool for the FOSSIL brand, further enhancing and focusing the brand image, as well as promoting sales across all of our distribution channels.

Facilitating our wholesale distribution

We utilize an in-house sales staff and, to a lesser extent, independent sales representatives to promote the sale of our products to retail accounts. Our in-house sales personnel receive a salary and, in some cases, a commission based on a percentage of sales attributable to specified accounts. Independent sales representatives generally do not sell competing product lines and are under contracts with us that are generally terminable by either party upon notice ranging from 15 days to six months. These independent contractors are primarily compensated on a commission basis.

We have developed an approach to managing the retail sales process that involves monitoring our customers’ sales and inventories by product category and style, primarily through electronic data interchange. We review weekly selling and inventory information to ensure our products are properly stocked and replenished on a timely basis. We also assist many of our customers in the conception, development and implementation of their marketing programs. We also participate in cooperative advertising programs with our major retail customers. We believe that management of the retail sales process has resulted in close relationships with our principal wholesale customers, often allowing us to influence the mix, quantity and timing of their purchasing decisions.

We believe that our sales approach has historically accounted for high retail turnover in our products, which can result in attractive profit margins for our wholesale customers. We believe that the resulting profit margins for our wholesale customers encourage them to devote greater selling space to our products within their stores. We are also able to work closely with buyers for our wholesale customers in determining the mix of products a store should carry. In addition, we believe that the buyers’ familiarity with our sales approach has facilitated, and should continue to facilitate, the introduction of new products through our existing distribution network.

We permit the return of damaged or defective products. In addition, although we have no obligation to do so, we accept limited amounts of product returns from our wholesale customers in other instances. Accordingly, we provide allowances for the estimated amount of product returns. The allowances for product returns as of the end of fiscal years 2014, 2013 and 2012 were $68.2 million, $63.1 million and $65.3 million, respectively. We have not historically experienced returns in excess of our aggregate allowances.

Backlog

It is the practice of a substantial number of our customers not to confirm orders by delivering a formal purchase order until a relatively short time prior to the shipment of goods. As a result, the amount of unfilled customer orders includes confirmed orders and orders that we believe will be confirmed by delivery of a formal purchase order. A majority of such amounts represent orders that have been confirmed. The remainder of such amounts represents orders that we believe, based on industry practice and prior experience, will be confirmed in the ordinary course of business. Our backlog at a particular time is affected by a number of factors, including seasonality and the scheduling of the manufacture and shipment of our products. Accordingly, a comparison of backlog from period to period is not necessarily meaningful and may not be indicative of eventual actual shipments. At the end of fiscal year 2014, we had unfilled customer orders of approximately $185.1 million, compared to $194.5 million and $203.0 million at the end of fiscal years 2013 and 2012, respectively.

Manufacturing

During fiscal 2014, approximately 57% of the watches we procured from Asia were assembled through our two majority-owned entities. The remaining watches we procured from Asia were assembled by approximately 44 unrelated factories located primarily in China and Hong Kong, which includes almost all the production and assembly of our digital and

mass market watches. During fiscal year 2014, our Swiss-made watches were assembled primarily by one of our majority-owned entities and three third-party factories in Switzerland. During fiscal year 2014, approximately 58% of our jewelry products were manufactured by one of our majority-owned entities. The remaining 42% of our jewelry products were manufactured by approximately 20 factories located primarily in China. Although we have no ownership interest in these unrelated watch and jewelry factories, Fossil East maintains oversight and control of the supply chain from design through final delivery of the finished product as it does with our related factories. We believe substantial ownership of the assembly factories that produce a majority of our fashion watches and jewelry is critical to our operating model, as we believe this allows us to keep our designs proprietary, control the size of our production runs and vertically manage our supply chain.

The principal components used in the assembly of our watches are cases, crystals, dials, movements, hands, bracelets and straps. These components are obtained from a large number of suppliers located principally in China, Hong Kong, India, Italy, Japan, South Korea, Switzerland and Thailand. The majority of the movements, cases, dials, bracelets and hands used in the assembly of our watches are supplied by eight principal vendors. During fiscal years 2014, 2013 and 2012, one vendor was responsible for supplying approximately 41%, 36% and 28% of our case and bracelet components, respectively. Additionally, two vendors were responsible for supplying approximately 87%, 86% and 88% of our movements in fiscal years 2014, 2013 and 2012, respectively. The principal materials used in the manufacture of our jewelry products are base metals, stainless steel, semi-precious stones or silver jewelry with 18K gold plating on top. These components are primarily obtained from the same factories that we use for our watches. Except for the one case and bracelet vendor and the two movement vendors noted above, we do not believe that our business is materially dependent on any single component supplier.

We believe that we have established and maintain close relationships with a number of component manufacturers and assembly factories primarily located in China, Hong Kong and Switzerland. The loss of any one of these manufacturers could temporarily disrupt shipments of certain of our watch and jewelry products. In addition, we believe that losing one or more of the component vendors, watch assembly factories or jewelry manufacturers could have a material impact on our ability to source these products and meet our sales plans. Our future success will generally depend upon our ability to maintain close relationships with, or ownership of, our current watch assembly and jewelry manufacturing factories and to develop long-term relationships with other vendors and manufacturers that satisfy our requirements for price, quality and production flexibility.

During fiscal year 2014, all of the manufacturing of our handbags, small leather goods, belts, sunglasses and apparel was outsourced. We believe that our policy of outsourcing the production of these product categories allows us flexibility in selecting our suppliers while avoiding significant capital expenditures, build-ups of work-in-process inventory and the costs of managing a substantial production work force. We have a Code of Conduct for Manufacturers (“Manufacturer Code”) that sets forth the corporate responsibility requirements for our suppliers, including compliance with international labor and human rights standards and environmental laws and regulations. Before supplying products to us, our manufacturers sign an agreement that includes a commitment to abide by our Manufacturer Code. For more information on our Manufacturer Code, see “Code of Conduct for Manufacturers.”

Our products are assembled or manufactured according to plans that reflect management’s estimates of product performance based on recent sales results, current economic conditions and prior experience with manufacturing sources. The average lead time from the commitment to purchase products through the production and shipment thereof ranges from two to four months for our watches, leather goods, jewelry, sunglasses and apparel. We believe that the close relationships, including ownership interests in some cases, we have established and maintain with our principal assembly or manufacturing sources constitute a significant competitive advantage and allow us to quickly and efficiently introduce innovative product designs and alter production in response to the retail performance of our products.

Code of Conduct for Manufacturers

We are committed to ethical and responsible conduct in all of our operations and respect for the rights of all individuals. We strive to ensure that human rights are upheld for all workers involved in our supply chain, and that individuals experience safe, fair and non-discriminatory working conditions. In addition, we are committed to compliance with applicable environmental requirements and are committed to seeing that all of our products are manufactured and distributed in compliance with applicable environmental laws and regulations. We expect that our business partners will share these commitments, which we enforce through our Manufacturer Code.

Our Manufacturer Code specifically requires our manufacturers to not use child, forced or involuntary labor and to comply with applicable environmental laws and regulations. We provide training to our factories related to our Manufacturer Code and the applicable laws in the country in which the factory is located. The training provides the factories with a more in-depth explanation of our Manufacturer Code.

In addition to the contractual obligation, we evaluate our suppliers’ compliance with our Manufacturer Code through audits conducted both by our employees and third-party compliance auditing firms. In most cases, the audits are announced. If we believe that a supplier is failing to live up to the standards of our Manufacturer Code, we may terminate the supplier or provide the supplier with an opportunity to remedy the non-compliance through the implementation of a corrective action plan. For those suppliers on a corrective action plan, we will work with the supplier as necessary to help them understand the non-compliance and provide advice on how to remedy the non-compliance. We usually conduct a follow-up audit to confirm compliance after the implementation of the corrective action plan. Should the supplier continue to fail to meet our standards, we may seek to eliminate such supplier from our supply chain.

Quality control

Our quality control program attempts to ensure that our products meet the standards established by our product development staff. Samples of products are inspected by us prior to placing orders with factories to ensure compliance with our technical design specifications. We also typically inspect “top of production” prototypes of each product before commencing production. The operations of our Hong Kong and Chinese factories are monitored on a periodic basis by Fossil East, and the operations of our Swiss factories are monitored on a periodic basis by Montres Antima SA, one of our foreign operating subsidiaries. Substantially all of our watches, jewelry and certain of our other accessories are inspected by personnel of Fossil East or by the assembly/manufacturing facility prior to shipment to our distribution centers. Final inspections, on a sampling basis, occur when the products are received in our distribution centers. We believe that our policy of inspecting our products at the assembly/manufacturing facility, upon receipt at our distribution facilities and prior to shipment to our customers is important to maintain the quality, consistency and reputation of our products.

Distribution

Upon completion of assembly/manufacturing, the majority of our products are shipped to one of our warehousing and distribution centers in Texas, Germany or Hong Kong, from which they are shipped to subsidiary warehouses or directly to customers in selected markets. Our centralized warehouse and distribution facilities allow us to maximize our inventory management and distribution capabilities and more readily meet the varying distribution requirements placed on us by our customers at a lower cost. Our facilities in Texas and Germany are equipped with automated material handling equipment operated by world-class software from SAP and Manhattan Associates. The automated equipment and operating systems, in conjunction with the continual sampling of our outgoing orders prior to shipment, are important in maintaining the quality, accuracy, speed and reputation of our products and distribution service.

Our warehouse and distribution facilities in Texas operate in a special purpose sub-zone established by the U.S. Department of Commerce Foreign Trade Zone Board. This sub-zone provides the following economic and operational advantages to us: (i) we do not have to pay duty on imported merchandise until it leaves the sub-zone and enters the U.S. market, (ii) we do not have to pay any U.S. duty on merchandise if the imported merchandise is subsequently shipped to locations outside the U.S. and (iii) we do not have to pay local property tax on inventory located within the sub-zone.

Information technology systems

General.  We believe that automation, reliable and scalable systems, accurate reporting and rapid flow of communication is essential to maintain our competitive position and support our key operating and financial goals. Therefore, we continue to invest in computer hardware, system applications and telecommunication networks. Our information technology systems consist of a wide spectrum of financial, distribution, human resources, merchandising, planning, point of sale, supply chain and other solutions. Where possible and cost effective, we leverage our various systems on a global basis, which enhances the accuracy, timeliness and accessibility of the relevant data.

Inventory control.  We maintain inventory control systems at our facilities that enable us to track each product from the time it is shipped from our factory through shipment to our customers, or consumer in the case of our retail stores, concessions and websites. To facilitate this tracking, a significant number of products sold by us are pre-ticketed and bar coded. Our inventory control systems report shipping, sales and individual stock keeping unit level inventory information. We manage the retail sales process by monitoring customer sales and inventory levels of our products by product category and style, primarily through electronic data interchange. We believe that our distribution capabilities enable us to reduce inventory risk and increase flexibility in responding to the delivery requirements of our customers. Our management believes that our electronic data interchange efforts will continue to grow in the future as customers focus further on increasing operating efficiencies. In addition, we maintain systems that are designed to track inventory movement through our Company-owned stores. Detailed sales transaction records are accumulated on each store’s point-of-sale system and polled by us.

Enterprise resource planning.  We have implemented SAP ERP in our U.S. operations and throughout most of Europe. This software is installed on a single site platform located in our U.S. headquarters facility. The software currently supports the human resources, sales and distribution, inventory planning, retail merchandising and operational and financial reporting systems of our U.S. businesses and most subsidiary operations in Europe. It also supports manufacturing operations in India and Europe. Additionally, we have implemented other non-SAP systems for the purpose of merchandise planning and product lifecycle management.

We continue to monitor the growth of our subsidiary sales operations in Asia and will migrate these operations at the appropriate time to effectively benefit from our global SAP platform. However, we do operate SAP human resource, financial planning and warehouse management modules in Hong Kong to provide efficiencies to further support our regional warehouse in Hong Kong and the related supply chain associated with our local country operations, including our Company-owned retail stores throughout Asia. We have implemented Navision as our standard system throughout most of our Asia distribution and manufacturing subsidiary operations. The Navision system supports many of the same functions as our SAP system on a local country level.

Enterprise Performance Management Systems.  We have implemented customized Hyperion financial reporting software from Oracle Corporation. The software increases the efficiency of our consolidation and reporting process, and provides a more dynamic way to view and analyze data. The Hyperion planning tool also improves budgeting and forecasting processes, resulting in more predictability in our business.

Product Lifecycle Management.  We have implemented Dassault Systemes Enovia in our product development function. This system enables our global product development process across our multiple brands and product categories. Besides aligning this process, the platform will enable a global solution for collaboration, sample management, design tool integration, and calendar management.

Cyber/Data security.  Our business involves the receipt and storage of personal information about customers and employees, the protection of which is critical to us. If we experience a significant breach of customer, employee, and/or company data it could attract a substantial amount of media attention, damage our customer relationships and reputation and result in lost sales, fines, or lawsuits. Our Board of Directors and/or our Audit Committee reviews our data security risks and strategy on a quarterly basis, and we have obtained insurance liability coverage for certain data security or privacy breaches.

Warranty and repair

Our FOSSIL watch products sold in the U.S. are covered by a limited warranty against defects in materials or workmanship for a period of 11 years from the date of purchase. Our RELIC watch products sold in the U.S. are covered by a comparable 12 year warranty, while other watches sold by us in the U.S. are covered by a comparable two year limited warranty. SKAGEN branded watches are covered by a lifetime warranty against defects due to faulty material or workmanship, subject to normal conditions of use. Generally, all of our watch products sold in Canada, Asia and Europe are covered by a comparable two year limited warranty. The majority of our defective watch products returned by consumers in the Americas are processed at our repair facilities in Texas while defective watch products returned by consumers in Europe are processed at our repair facilities in France. We also maintain repair facilities at a majority of our subsidiaries, as well as through our network of third-party distributors to handle repairs which are minor in nature or are not convenient to one of our centralized repair facilities. In most cases, defective products under warranty are repaired by our personnel or third-party distributors. We attempt to retain adequate levels of component parts to facilitate after-sales service of our watches, even after specific styles are discontinued. We have a component parts system that tracks the inventory of our various component replacement parts that can be utilized by our repair facilities for identifying stock levels and availability for procurement. Watch and non-watch products under warranty that cannot be repaired in a cost-effective manner are replaced by us at no cost to the customer. Our warranty liability at the end of fiscal years 2014, 2013 and 2012 was $13.5 million, $15.7 million and $13.4 million, respectively. Repair services accounted for approximately 1.0% of our consolidated net sales in both fiscal years 2014 and 2013 and 0.9% in fiscal year 2012.

Governmental regulations

Imports and import restrictions.  Most of our products are assembled or manufactured overseas. As a result, the U.S. and countries in which our products are sourced or sold may from time to time modify existing or impose new quotas, duties (including antidumping or countervailing duties), tariffs or other restrictions in a manner that adversely affects us. For example, our products imported to the U.S. are subject to U.S. customs duties and, in the ordinary course of our business, we may from time to time be subject to claims by the U.S. Customs Service for duties and other charges. Factors that may influence the modification or imposition of these restrictions include the determination by the U.S. Trade Representative that a country has

denied adequate intellectual property rights or fair and equitable market access to U.S. firms that rely on intellectual property, trade disputes between the U.S. and a country that leads to withdrawal of “most favored nation” status for that country and economic and political changes within a country that are viewed unfavorably by the U.S. government. We cannot predict the effect these events would have on our operations, if any, especially in light of the concentration of our assembly and manufacturing operations in Hong Kong and China.

General.  We are subject to laws regarding customs, tax, employment, privacy, truth-in-advertising, consumer product safety, zoning and occupancy and other laws and regulations that regulate and/or govern the importation, promotion and sale of consumer products and our corporate, retail and distribution operations.

Intellectual property

Trademarks.  We use our FOSSIL, MICHELE, RELIC, SKAGEN and ZODIAC trademarks, as well as other trademarks, on certain of our watches, leather goods, apparel and other fashion accessories in the U.S. and in a significant number of foreign countries. We also use FOSSIL, SKAGEN, WATCH STATION INTERNATIONAL®, and WSI as trademarks on retail stores and online e-commerce sites. We have taken steps to establish or provide additional protection for our trademarks by registering or applying to register our trademarks for relevant classes of products in each country where our products are sold in addition to certain foreign countries where it is our intent to market our products in the future. Each registered trademark may be renewable indefinitely, so long as we continue to use the mark in the applicable jurisdiction and make the appropriate filings when required. We aggressively protect our trademarks and trade dress and pursue infringement both domestically and internationally. We also pursue counterfeiters both domestically and internationally through leads generated internally, as well as through our business partners worldwide. In certain cases, we track serial numbers of our products or we etch microscopic identification markings on certain of our watches in order to identify potential customers who might be diverting product into a parallel market.

Patents.  We continue to explore innovations in the design and assembly of our watch products. As a result, we have been granted, and have pending, various U.S. and international design and utility patents related to certain of our watch designs and features. We also have been granted, and have pending, various U.S. patents related to certain of our other products and technologies. As of January 3, 2015, none of our patents were material to our business.

License agreements.  A significant portion of our growth in sales and net income is, and is expected to continue to be, derived from the sales of products produced under licensing agreements with third-parties. Under these license agreements, we generally have the right to produce, market and distribute certain products utilizing the brand names of other companies. Our significant license agreements have various expiration dates between 2015 and 2024. In 2011, we entered into an exclusive global licensing agreement with Karl Lagerfeld for watches, which launched globally in the first quarter of 2013. In February 2013, we announced an exclusive global licensing agreement with Tory Burch for watches, which launched globally in late 2014.

Seasonality

Although the majority of our products are not seasonal, our business is seasonal by nature. A significant portion of our net sales and operating income is generated during the third and fourth quarters of our fiscal year, which includes the “back to school” and Christmas seasons. Additionally, as our retail and e-commerce sales continue to increase as a percentage of our sales mix, they will benefit our sales and profitability in our fiscal fourth quarter, generally at the expense of our fiscal first and second quarters when it is more difficult to leverage our retail and e-commerce expenses against the related sales. The amount of net sales and operating income generated during our fiscal fourth quarter also depends upon the anticipated level of retail sales during the Christmas season, as well as general economic conditions and other factors beyond our control. In addition, the amount of net sales and operating income generated during our fiscal first quarter depends in part upon the actual level of retail sales during the Christmas season. For example, lower levels of inventory held by our wholesale customers at the end of the Christmas season may result in higher levels of restocking orders placed by them during our fiscal first quarter.

Competition

The businesses in which we compete are highly competitive and fragmented. We believe that the current market for watches can be divided into four segments, ranging from lower price point watches that are typically distributed through mass market channels to luxury watches at higher price points that are typically distributed through fine watch departments of upscale department stores or upscale specialty watch and fine jewelry stores. Our watch business generally competes in these segments with a number of established manufacturers, importers and distributors, including Armitron, Citizen, Gucci, Guess?, Kenneth Cole, LVMH Group, Movado, Raymond Weil, Seiko, Swatch, Swiss Army, TAG Heuer and Timex. In addition, our

leather goods, sunglasses, jewelry and apparel businesses compete with a large number of established companies that have significant experience developing, marketing and distributing such products. In all of our businesses, we compete with numerous manufacturers, importers and distributors who may have significantly greater financial, distribution, advertising and marketing resources than us. Our competitors include distributors that import watches, accessories and clothing from abroad, U.S. companies that have established foreign manufacturing relationships and companies that produce accessories and apparel domestically.

Although the level and nature of competition varies among our product categories and geographic regions, we believe that we compete on the basis of style, price, value, quality, brand name, advertising, marketing, distribution and customer service. We believe that our ability to identify and respond to changing fashion trends and consumer preferences, to maintain existing relationships and develop new relationships with manufacturing sources, to deliver quality merchandise in a timely manner and to manage the retail sales process are important factors in our ability to compete. We also believe that our distinctive business model of owning the distribution in many key markets and offering a globally recognized portfolio of proprietary and licensed products allows for many competitive advantages over smaller, regional or local competitors. This “ownership of the market” allows us in certain countries to bypass the local distributor’s cost structure resulting in more competitively priced products while also generating higher product and operating margins.

We believe the risk of significant new competitors is mitigated to some extent by barriers to entry such as high startup costs and the development of long-term relationships with customers and manufacturing sources. During the past few years, it has been our experience that better department stores and other major retailers have been increasingly unwilling to purchase products from suppliers who are not well capitalized or do not have a demonstrated ability to deliver quality merchandise in a timely manner. There can be no assurance, however, that significant new competitors will not emerge in the future.

Employees

As of January 3, 2015, we employed approximately 15,200 persons, including approximately 7,500 persons employed by our foreign operating subsidiaries.

None of our domestic or foreign-based employees are represented by a trade union. However, certain European-based employees are represented by work councils, which include certain of our current employees who negotiate with management on behalf of all the employees. We have never experienced a work stoppage and consider our working relationship with our employees and work councils to be good.

Item 1A.  Risk Factors

The statements contained in this Annual Report on Form 10-K 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 Item 1. Business and Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, 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”, “anticipates” and similar expressions identify forward-looking statements. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. The actual results of the future events described in such forward-looking statements could differ materially from those stated in such forward-looking statements.

Our actual results may differ materially due to the risks and uncertainties discussed in this Annual Report on Form 10-K, including those discussed below. Accordingly, readers of this Annual Report on Form 10-K should consider these factors in evaluating, 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.

Risk Factors Relating to Our Business

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

In recent years, the global economic environment has been challenging. Depressed real estate values, reduced lending by banks, solvency concerns of major financial institutions and certain foreign countries and high levels of unemployment negatively impacted the level of consumer spending for discretionary items. This can affect our business as it is dependent on consumer demand for our products. Global economic conditions remain fragile, and the possibility remains that domestic or global economies, or certain industry sectors of those economies that are key to our sales, may slow or deteriorate, which could result in a corresponding decrease in demand for our products and negatively impact our results of operations and financial condition.

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

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

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

Our success depends upon our ability to anticipate and respond to changing fashion trends and consumer preferences in a timely manner. The purchasing decisions of consumers are highly subjective and can be influenced by many factors, such as brand image, marketing programs and product design. Our success depends, in part, on our ability to anticipate, gauge and respond to these changing consumer preferences in a timely manner while preserving the authenticity and the quality of our brands. Although we attempt to stay abreast of emerging lifestyle and fashion trends affecting accessories and clothing, any failure by us to identify and respond to such trends could adversely affect consumer acceptance of our existing brand names and product lines, which in turn could adversely affect sales of our products. If we misjudge the market for our products, we may be faced with a significant amount of unsold finished goods inventory, which could adversely affect our results of operations.

The loss of any of our license agreements, pursuant to which a number of our products are produced, may result in the loss of significant revenues and may adversely affect our business.

A significant portion of our growth in sales and net income is, and is expected to continue to be, derived from the sales of products produced under license agreements with third parties. Under these license agreements, we generally have the right

to produce, market and distribute certain products utilizing the brand names of other companies. We sell products under certain licensed brands, including, but not limited to, ADIDAS, ARMANI EXCHANGE, BURBERRY, DIESEL, DKNY, EMPORIO ARMANI, KARL LAGERFELD, MARC BY MARC JACOBS, MICHAEL KORS, and TORY BURCH. Sales of our licensed products amounted to approximately 53.5% of our consolidated net sales for fiscal year 2014, including MICHAEL KORS product sales, which accounted for approximately 26.3% of our consolidated net sales. Our significant license agreements have various expiration dates between 2015 and 2024. In addition, certain license agreements may require us to make minimum royalty payments, subject us to restrictive covenants or require us to comply with certain other obligations and may be terminated by the licensor if these or other conditions are not met or upon certain events. We may not be able to continue to meet our obligations or fulfill the conditions under these agreements in the future. In addition, we may be unable to renew our existing license agreements beyond the current term or obtain new license agreements to replace any lost license agreements on similar economic terms or at all. The failure by us to maintain or renew one or more of our existing license agreements could result in a significant decrease in our sales and have a material adverse effect on our results of operations.

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

We and our contract manufacturers currently purchase a number of key components used to manufacture our products from limited sources of supply for which alternative sources may not be readily available. Any interruption or delay in the supply of any of these components could significantly harm our ability to meet scheduled product deliveries to our customers and cause us to lose sales. Interruptions or delays in supply may be caused by a number of factors that are outside of our and our contractor manufacturers’ control, such as natural disasters like the March 2011 earthquake and tsunami in Japan. In addition, the purchase of these components on a limited source basis subjects us to risks of price increases and potential quality assurance problems. An increase in the cost of components could make our products less competitive and result in lower gross margins. In the event that we can no longer obtain materials from these limited sources of supply, we might not be able to qualify or identify alternative suppliers in a timely fashion. Any extended interruption in the supply of any of the key components currently obtained from a limited source or delay in transitioning to a replacement supplier could disrupt our operations and significantly harm our business in any given period. If our supply of certain components is disrupted, our lead times are extended or the cost of our components increases, our business, operating results and financial condition could be materially affected.

The loss of key senior management personnel could negatively affect our business.

We depend on our senior management and other key personnel, particularly Kosta N. Kartsotis, our CEO and Chairman. We do not have “key person” life insurance policies for any of our personnel. The loss of any of our executive officers or other key employees could harm our business.

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

We depend on information technology systems, the Internet and computer networks for a substantial portion of our retail and e-commerce businesses, including credit card transaction authorization and processing. We also receive and store personal information about our customers and employees, the protection of which is critical to us. In the normal course of our business, we collect, retain, and transmit certain sensitive and confidential customer information, including credit card information, over public networks. Our customers have a high expectation that we will adequately protect their personal information. In addition, personal information is highly regulated at the international, federal and state level.

Despite the security measures we currently have in place, our facilities and systems and those of our third-party service providers may be vulnerable to theft of physical information, security breaches, hacking attempts, computer viruses and malware, lost data and programming and/or human errors. Any electronic or physical security breach involving the misappropriation, loss, or other unauthorized disclosure of confidential or personally identifiable information, including penetration of our network security or those of our third-party service providers, could disrupt our business, severely damage our reputation and our customer relationships, expose us to litigation and liability, subject us to governmental investigations, fines and enforcement actions, result in negative media coverage and distraction to management and result in a material adverse effect to our business, financial condition, and results of operations. In addition, as a result of recent security breaches at a number of prominent retailers and other companies, the media and public scrutiny of information security and privacy has become more intense and the regulatory environment related thereto has become more uncertain. As a result, we may incur significant costs in complying with new and existing state, federal, and foreign laws regarding protection of, and unauthorized disclosure of, personal information.

Our success depends upon our ability to continue to develop innovative products, including wearable technology.

Our success depends upon our ability to continue to develop innovative products in the respective markets in which we compete. Wearable technology is an emerging category of fashion that offers customers new functionality with accessories, including jewelry and smart watches. Our ability to respond to consumer preferences for wearable technology will depend in part on establishing successful partnerships with companies that are involved in developing wearable technology. If we are unable to establish such partnerships, this could negatively impact our ability to meet customer demands for wearable technology. Additionally, we may be unable to enhance and develop our products to satisfy consumer demands for wearable technology or we may fail to do so in a timely manner or at competitive prices. The process of developing new products is complex and uncertain, and involves time, substantial costs and risks, which are further magnified when the development process involves a transition to a new technology platform. Our inability or the inability of our partners, for technological or other reasons, some of which may be beyond our or our partners’ control, to enhance, develop, introduce and monetize wearable technology products in a timely manner, or at all, in response to changing consumer preferences for wearable technology, could have a material adverse effect on our business, results of operations and financial condition or could result in our products not achieving market acceptance or becoming obsolete. If we are unable to successfully introduce new products, or if our competitors introduce new or superior products, customers may purchase increasing amounts of products from our competitors, which could adversely affect our sales and results of operations.

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

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

Reduced lending by banks could have a negative impact on our customers, suppliers and business partners, which in turn could materially and adversely affect our results of operations and liquidity.

The reduction in lending by banks has had, and may continue to have, a significant negative impact on businesses around the world. Although we believe that our cash provided by operations and available borrowing capacity under our U.S. credit facility will provide us with sufficient liquidity for the foreseeable future, the impact of reduced lending on our customers, business partners and suppliers cannot be predicted and may be quite severe. A disruption in the ability of our significant customers or distributors to access liquidity could cause serious disruptions or an overall deterioration of their businesses, which could lead to a significant reduction in their future orders of our products and the inability or failure on their part to meet their payment obligations to us, any of which could have a material adverse effect on our financial condition and results of operations and liquidity.

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

Our quarterly results of operations have fluctuated in the past and may continue to fluctuate as a result of a number of factors, including seasonal cycles, timing of new product introductions, timing of orders by our customers and mix of product sales demand. Our business is seasonal by nature. A significant portion of our net sales and operating income are generated during the third and fourth quarters of our fiscal year, which includes the “back to school” and Christmas seasons. The amount of net sales and operating income generated during our fiscal fourth quarter depends upon the anticipated level of retail sales during the Christmas season, as well as general economic conditions and other factors beyond our control. In addition, the amount of net sales and operating income generated during our fiscal first quarter depends in part upon the actual level of retail sales during the Christmas season. The seasonality of our business may adversely affect our net sales and operating income during the first and fourth quarters of our fiscal year.

Our plan to significantly increase our store base may not be successful, and implementation of this plan may divert our operational, managerial and administrative resources, which could impact our competitive position.

Each year, we have historically expanded our store base. During fiscal year 2015, we intend to further expand our store base by opening approximately 44 to 55 new stores globally and close approximately 40 stores. Thereafter, in the near term, we plan to continue to expand our store base annually. The success of our business depends, in part, on our ability to open new stores and renew our existing store leases on terms that meet our financial targets. Our ability to open new stores on schedule or at all, to renew existing store leases on favorable terms or to operate them on a profitable basis will depend on various factors, including our ability to:

·identify suitable markets for new stores and available store locations;

·negotiate acceptable lease terms for new locations or renewal terms for existing locations;

·manage and expand our infrastructure to accommodate growth;

·hire and train qualified sales associates;

·develop new merchandise and manage inventory effectively to meet the needs of new and existing stores on a timely basis;

·foster current relationships and develop new relationships with vendors that are capable of supplying a greater volume of merchandise; and

·avoid construction delays and cost overruns in connection with the build-out of new stores.

Our plans to expand our store base may not be successful and the implementation of these plans may not result in an increase in our net sales even though they increase our costs. Additionally, implementing our plans to expand our store base will place increased demands on our operational, managerial and administrative resources. The increased demands of operating additional stores could cause us to operate less effectively, which could cause the performance of our existing stores and our wholesale operations to suffer materially. Any of these outcomes of our attempted expansion of our store base could have a material adverse effect on the amount of net sales we generate and on our financial condition and results of operations.

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

Our administrative, information technology and distribution operations in the U.S. are conducted primarily from two separate facilities located in the Dallas, Texas area. Our operations internationally are conducted from various administrative, distribution and assembly facilities outside of the U.S., particularly in China, Germany, Hong Kong and Switzerland. The complete or temporary loss of use of all or part of these facilities could have a material adverse effect on our business.

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

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

Since our public offering in 1993, we have experienced substantial growth in net sales. Our ability to continue this growth is dependent on the successful implementation of our business strategy. This includes diversification of our product offerings, expansion of our Company-owned store locations and strategic acquisitions. If we are not successful in the expansion of our product offerings or our new products are not profitable or do not generate sales comparable to those of our existing businesses, our results of operations could be negatively impacted. Another element of our business strategy is to place

increased emphasis on growth in selected international markets. If our brand names and products do not achieve a high degree of consumer acceptance in these markets, our net sales could be adversely affected.

We also operate FOSSIL brand stores and other non-FOSSIL branded stores and have historically expanded our Company-owned accessory and outlet locations to further strengthen our brand image. As of January 3, 2015, we operated 593 stores worldwide. The costs associated with leasehold improvements to current stores and the costs associated with opening new stores could materially increase our costs of operation.

We have recently expanded and intend to further expand the scope of our product offerings, and new products introduced by us may not achieve consumer acceptance comparable to that of our existing product lines.

We have recently expanded and intend to further expand the scope of our product offerings. As is typical with new products, market acceptance of new designs and products is subject to uncertainty. In addition, we generally make decisions regarding product designs several months in advance of the time when consumer acceptance can be measured. If trends shift away from our products, or if we misjudge the market for our product lines, we may be faced with significant amounts of unsold inventory or other conditions which could have a material adverse effect on our financial condition and results of operations.

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

Our business could be harmed if we fail to maintain proper inventory levels.

We maintain an inventory of selected products that we anticipate will be in high demand. We may be unable to sell the products we have ordered in advance from manufacturers or that we have in our inventory. Inventory levels in excess of customer demand may result in inventory write-downs or the sale of excess inventory at prices below our standard levels. These events could significantly harm our operating results and impair the image of our brands. Conversely, if we underestimate consumer demand for our products or if our manufacturers fail to supply quality products in a timely manner, we may experience inventory shortages, which might result in unfilled orders, negatively impact customer relationships, diminish brand loyalty and result in lost revenues, any of which could harm our business.

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

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

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

Fluctuations in the price, availability and quality of the raw materials used in our products could have a material adverse effect on our cost of sales or ability to meet our customers’ demands. The price and availability of such raw materials may fluctuate significantly, depending on many factors, including natural resources, increased freight costs, increased labor costs, especially in China, and weather conditions. In the future, we may not be able to pass on all, or a portion of, such higher raw materials prices to our customers.

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

The majority of our watch products are currently assembled, and a majority of our jewelry products are manufactured, to our specifications by our majority- owned entities in China, with the remainder assembled or manufactured by independent entities. All of our apparel, sunglasses, handbags, small leather goods, belts and soft accessories are produced by independent manufacturers. We have no long-term contracts with these independent assembly factories or manufacturers and compete with other companies for production facilities. All transactions between us and our independent assembly factories or manufacturers

are conducted on the basis of purchase orders. We face the risk that these independent assembly factories or manufacturers may not produce and deliver our products on a timely basis, or at all. As a result, we cannot be certain that these assembly factories or manufacturers will continue to assemble or manufacture products for us or that we will not experience operational difficulties with our manufacturers, such as reductions in the availability of production capacity, errors in complying with product specifications, insufficient quality control, shortages of raw materials, failures to meet production deadlines or increases in manufacturing costs. Our future success will depend upon our ability to maintain close relationships with, or ownership of, our current assembly factories and manufacturers and to develop long-term relationships with other manufacturers that satisfy our requirements for price, quality and production flexibility. Our ability to establish new manufacturing relationships involves numerous uncertainties, including those relating to payment terms, costs of manufacturing, adequacy of manufacturing capacity, quality control and timeliness of delivery. Any failure by us to maintain long-term relationships with, or ownership of, our current assembly factories and manufacturers or to develop relationships with other manufacturers could have a material adverse effect on our ability to manufacture and distribute our products.

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

We have no control over the ultimate actions or labor practices of our independent manufacturers. The violation of labor or other laws by one of our independent manufacturers, or by one of our license partners, or the divergence of an independent manufacturer’s or license partner’s labor practices from those generally accepted as ethical in the U.S. or other countries in which the violation or divergence occurred, could interrupt or otherwise disrupt the shipment of finished products to us or damage our reputation. Any of these, in turn, could have a material adverse effect on our financial condition and results of operations. As a result, should one of our independent manufacturers or licensors be found in violation of state or international laws, we could suffer financial or other unforeseen consequences.

We extend unsecured credit to our customers and are therefore vulnerable to any financial difficulties they may face.

We sell our merchandise primarily to department stores, specialty retail stores and distributors worldwide. We extend credit based on an evaluation of each customer’s financial condition, usually without requiring collateral. Should any of our larger customers experience financial difficulties, we could curtail business with such customers or assume more credit risk relating to such customers’ receivables. Our inability to collect on our trade accounts receivable relating to such customers could have a material adverse effect on our operating cash flows, financial condition and results of operations.

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

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

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

We face intense competition in the specialty retail and e-commerce industry where we compete primarily with specialty retailers, department stores and internet businesses that engage in the retail sale of watches, accessories and apparel. We believe that the principal basis upon which we compete is the quality and design of merchandise and the quality of customer service. We also believe that price is an important factor in our customers’ decision-making processes. Many of our competitors are, and many of our potential competitors may be, larger and have greater financial, marketing and other resources than we have and therefore may be able to adapt to changes in customer requirements more quickly, devote greater resources to the marketing and sale of their products and generate greater national brand recognition than we can. This intense competition and greater size and resources of some of our competitors could have a material adverse effect on the amount of net sales we generate and on our results of operations.

We could be negatively impacted if we fail to successfully integrate the businesses we acquire.

As part of our growth strategy, we have made certain acquisitions, domestically and internationally, including acquisitions of certain watch brands and acquisitions of independent distributors of our products. The integration of any future acquisitions may not be successful or generate sales increases. When we have acquired businesses, we have acquired businesses

that we believe could enhance our business opportunities and our growth prospects. All acquisitions involve risks that could materially affect our business, financial condition and operating results. These risks include:

·distraction of management from our business operations;

·loss of key personnel and other employees;

·costs, delays, and inefficiencies associated with integrating acquired operations and personnel;

·the impairment of acquired assets and goodwill; and

·acquiring the contingent and other liabilities of the businesses we acquire.

In addition, acquired businesses may not provide us with increased business opportunities or result in the growth that we anticipate. Furthermore, integrating acquired operations is a complex, time-consuming and expensive process. Combining acquired operations with our current operations may result in lower overall operating margins, greater stock price volatility and quarterly earnings fluctuations. Cultural incompatibilities, career uncertainties and other factors associated with such acquisitions may also result in the loss of employees. Failure to acquire and successfully integrate complementary practices, or failure to achieve the business synergies or other anticipated benefits, could materially adversely affect our business, financial condition and results of operations.

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

There is intense competition in each of the businesses in which we compete. In all of our businesses, we compete with numerous manufacturers, importers and distributors who may have significantly greater financial, distribution, advertising and marketing resources than us. Our competitors include distributors that import watches, accessories and clothing from abroad, U.S. companies that have established foreign manufacturing relationships and companies that produce accessories and clothing domestically. In addition, we face new competition from technology companies that are launching smart watch products and other wearable technology. These new competitors have not historically competed with us, and many have significantly greater financial, distribution, advertising and marketing resources than us. The impact of the introduction of smart watch products and other wearable technology on sales of our traditional product lines, and watches in particular, is currently unknown, but could be materially adverse. Our results of operations and market position may be adversely affected by our competitors and their competitive pressures in the watch, wearable technology, fashion accessory and clothing industries.

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

We are increasingly dependent on information systems to operate our websites, process transactions, manage inventory, monitor sales and purchase, sell and ship goods on a timely basis. We also utilize SAP ERP in our U.S. operations and throughout most of our European operations to support our human resources, sales and distribution, inventory planning, retail merchandising and operational and financial reporting systems of our business, and Navision in our Asian operations to support many of the same functions on a local country level. We may experience operational problems with our information systems as a result of system failures, viruses, computer “hackers” or other causes. Any material disruption or slowdown of our systems could cause information, including data related to customer orders, to be lost or delayed which could result in delays in the delivery of merchandise to our stores and customers or lost sales, which could reduce demand for our merchandise and cause our sales to decline. Moreover, the failure to maintain, or a disruption in, financial and management control systems could have a material adverse effect on our ability to respond to trends in our target markets, market our products and meet our customers’ requirements.

In addition, we have e-commerce and other websites in the U.S. and internationally. In addition to changing consumer preferences and buying trends relating to Internet usage, we are vulnerable to certain additional risks and uncertainties associated with the Internet, including changes in required technology interfaces, website downtime and other technical failures, security breaches, and consumer privacy concerns. Our failure to successfully respond to these risks and uncertainties could reduce Internet sales, increase costs and damage the reputation of our brands.

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

Our gross profit margins are impacted by our sales mix. Sales from our retail and e-commerce businesses and international and licensed watch businesses generally provide gross margins in excess of our historical consolidated gross profit

margin, while accessory products generally provide gross profit margins below our historical consolidated gross profit margin. If future sales from our retail and e-commerce businesses and international and licensed watch businesses do not increase at a faster rate than our accessory business, our gross profit margins may grow at a slower pace, cease to grow, or decrease relative to our historical consolidated gross profit margin. We also distribute private label products to the mass market channel at gross profit margins significantly lower than our historical consolidated gross profit margin. Future growth in this channel at rates in excess of our consolidated net sales growth rate could negatively impact our consolidated gross profit margins.

Our industry is subject to pricing pressures that may adversely impact our financial performance.

We assemble or source many of our products offshore because they generally cost less to make overseas, due primarily to lower labor costs. Many of our competitors also source their product requirements offshore to achieve lower costs, possibly in locations with lower costs than our offshore operations, and those competitors may use these cost savings to reduce prices. To remain competitive, we must adjust our prices from time to time in response to these industry-wide pricing pressures. Our financial performance may be negatively affected by these pricing pressures if we are forced to reduce our prices and we cannot reduce our production costs or our production costs increase and we cannot increase our prices.

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

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

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

We cannot be certain that our products do not and will not infringe upon the intellectual property rights of others. We may be subject to legal proceedings and claims in the ordinary course of our business, including claims of alleged infringement of the intellectual property rights of third parties by us or our customers in connection with their use of our products. Any such claims, whether or not meritorious, could result in costly litigation and divert the efforts of our personnel. Moreover, should we be found liable for infringement, we may be required to enter into licensing agreements (if available on acceptable terms or at all) or to pay damages and cease making or selling certain products. Moreover, we may need to redesign or rename some of our products to avoid future infringement liability. Any of the foregoing could cause us to incur significant costs and prevent us from manufacturing or selling certain of our products.

An increase in product returns could negatively impact our operating results.

We accept limited returns and will request that a customer return a product if we feel the customer has an excess of any style that we have identified as being a poor performer for that customer or geographic location. We continually monitor returns and maintain a provision for estimated returns based upon historical experience and any specific issues identified. While returns have historically been within our expectations and the provisions established, future return rates may differ from those experienced in the past. In the event that our products are performing poorly in the retail market and/or we experience product damages or defects at a rate significantly higher than our historical rate, the resulting credit returns could have an adverse impact on our operating results for the period or periods in which such returns occur.

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

We are subject to the ongoing internal control provisions of Section 404 of the Sarbanes-Oxley Act of 2002. These provisions provide for the identification of material weaknesses in internal control over financial reporting, which is a process to provide reasonable assurance regarding the reliability of financial reporting for external purposes in accordance with accounting principles generally accepted in the United States of America. Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our internal controls and disclosure controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. In addition, the design of a control system must reflect the fact that there are resource constraints and the benefit of controls must be relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, in our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. Further, controls can be circumvented by individual acts of some persons, by collusion of two or more persons, or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, a control may be inadequate because of changes in conditions, such as growth of the Company or increased transaction volume, or the degree of compliance with the policies or procedures may deteriorate. Because of inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

In addition, discovery and disclosure of a material weakness, by definition, could have a material adverse impact on our financial statements. Such an occurrence could discourage certain customers or suppliers from doing business with us, result in higher borrowing costs and affect how our stock trades. This could in turn negatively affect our ability to access public debt or equity markets for capital.

Risk Factors Relating to Our International Operations

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

During fiscal 2014, we generated 54.7% of our net sales from outside of the U.S., and we anticipate that revenue from our international operations could account for an increasingly larger portion of our net sales in the future. Our international operations are directly related to, and dependent on, the volume of international trade and foreign market conditions. International commerce and our international operations are subject to many risks, some of which are discussed in more detail below, including:

·recessions in foreign economies;

·the adoption and expansion of trade restrictions;

·limitations on repatriation of earnings;

·difficulties in protecting our intellectual property or enforcing our intellectual property rights under the laws of other countries;

·longer receivables collection periods and greater difficulty in collecting accounts receivable;

·difficulties in managing foreign operations;

·social, political and economic instability;

·unexpected changes in regulatory requirements;

·our ability to finance foreign operations;

·tariffs and other trade barriers; and

·U.S. government licensing requirements for exports.

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

Foreign currency fluctuations could adversely impact our financial condition.

We generally purchase our products in U.S. dollars. However, we source a significant amount of our products overseas and, as such, the cost of these products may be affected by changes in the value of the currencies of these countries, including the Australian dollar, British pound, Canadian dollar, Chilean peso, Chinese yuan, Danish krone, euro, Hong Kong dollar, Indian rupee, Japanese yen, Korean won, Malaysian ringgit, Mexican peso, Norwegian kroner, Singapore dollar, Swedish krona, Swiss franc and Taiwanese dollar. Due to our dependence on manufacturing operations in China, changes in the value of the Chinese yuan may have a material impact on our supply channels and manufacturing costs, including component and assembly costs.

In addition, changes in currency exchange rates also affect the prices at which we sell products in foreign markets. For fiscal years 2014, 2013 and 2012, 54.7%, 53.2% and 52.6% of our consolidated net sales were generated outside of the U.S., In general, our overall financial results are affected positively by a weaker U.S. dollar and are affected negatively by a stronger U.S. dollar as compared to the foreign currencies in which we conduct our business. For example, due to a generally stronger U.S. dollar in fiscal year 2014, the translation of foreign based net sales into U.S. dollars reduced our reported net sales by approximately $17.1 million. If the value of the U.S. dollar remains at its current levels or strengthens further against foreign currencies, particularly against the euro, British pound, Canadian dollar, Japanese yen, Australian dollar and Mexican peso, our financial condition and results of operations could be materially and adversely impacted. Although we utilize forward contracts to mitigate foreign currency risks (mostly relating to the euro, British pound, Japanese yen, Mexican peso, Canadian dollar and Australian dollar), if we are unsuccessful in mitigating these risks, foreign currency fluctuations may have a material adverse impact on our financial condition and results of operations.

The ongoing European economic problems and debt crisis could adversely impact our financial condition.

The European economic situation and debt crisis have contributed to instability in the global credit markets and have caused the value of the euro to fall 17% against the U.S. dollar since July 1, 2014 and may cause the value of the euro to deteriorate further in the future. During fiscal 2014, we generated 34.1% of our consolidated net sales from our Europe segment. If global economic and market conditions, or economic conditions in Europe become uncertain or deteriorate, the value of the euro could decline. The general financial instability in the stressed European countries could have a contagion effect on the region and contribute to the general instability and uncertainty in the European Union. If this were to occur or if the value of the euro were to weaken against the U.S. dollar, our financial condition and results of operations could be materially and adversely impacted.

We depend on independent distributors to sell our products in certain international markets.

Our products are sold in certain international markets through independent distributors. If a distributor fails to meet annual sales goals, it may be difficult and costly to locate an acceptable substitute distributor. If a change in our distributors becomes necessary, we may experience increased costs, as well as a substantial disruption in, and a resulting loss of, sales and profits.

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

Because a substantial portion of our watches and jewelry and certain of our handbags, sunglasses and other products are assembled or manufactured in China, our success will depend to a significant extent upon future economic and social conditions existing in China. If the factories in China were disrupted for any reason, we would need to arrange for the manufacture and shipment of products by alternative sources. Because the establishment of new manufacturing relationships involves numerous uncertainties, including those relating to payment terms, costs of manufacturing, adequacy of manufacturing capacity, quality control and timeliness of delivery, we are unable to predict whether such new relationships would be on terms that we regard as satisfactory. Any significant disruption in our relationships with our manufacturing sources located in China would have a material adverse effect on our ability to manufacture and distribute our products. In addition, restrictions on travel to and from this and other regions, similar to those imposed during the outbreak of Severe Acute Respiratory Syndrome in 2003, commonly known as SARS, and any delays or cancellations of customer orders or the

manufacture or shipment of our products could have a material adverse effect on our ability to meet customer deadlines and timely distribute our products in order to match consumer tastes.

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

Our businesses are subject to risks generally associated with doing business abroad, such as foreign governmental regulation in the countries in which our manufacturing sources are located, primarily China. While we have not experienced any material issues with foreign governmental regulations that would impact our arrangements with our foreign manufacturing sources, we believe that this issue is of particular concern with regard to China due to the less mature nature of the Chinese market economy and the historical involvement of the Chinese government in industry. If regulations were to render the conduct of business in a particular country undesirable or impracticable, or if our current foreign manufacturing sources were for any other reason to cease doing business with us, such a development could have a material adverse effect on our product sales and on our supply, manufacturing and distribution channels.

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

·quotas imposed by bilateral textile agreements between the countries where our clothing-producing facilities are located and foreign countries; and

·customs duties imposed by the governments where our apparel-producing facilities are located on imported products, including raw materials.

Our apparel business is also subject to the effects of international trade agreements and regulations such as the North American Free Trade Agreement, and the activities and regulations of the World Trade Organization, referred to as the WTO. Generally, such trade agreements benefit our apparel business by reducing or eliminating the duties and/or quotas assessed on products manufactured in a particular country. However, trade agreements can also impose requirements that negatively impact our apparel business, such as limiting the countries from which we can purchase raw materials and setting quotas on products that may be imported into the U.S. from a particular country. In addition, the WTO may commence a new round of trade negotiations that liberalize textile trade. This increased competition could have a material adverse effect on our business, results of operations and financial condition.

Risk Factors Relating to Our Common Stock

Many factors may cause our net sales, operating results and cash flows to fluctuate and possibly decline, which may result in declines in our stock price.

Our net sales, operating results and cash flows may fluctuate significantly because of a number of factors, many of which are outside of our control. These factors may include, but may not be limited to, the following:

·fluctuations in market demand for our products;

·increased competition and pricing pressures;

·our ability to anticipate changing customer demands and preferences;

·our failure to efficiently manage our inventory levels;

·our inability to manage and maintain our debt obligations;

·seasonality in our business;

·changes in our, and our competitors’, business strategy or pricing;

·the successful expansion of our Company-owned retail stores;

·the timing of certain selling, general and administrative expenses;

·completing acquisitions and the costs of integrating acquired operations;

·international currency fluctuations, operating challenges and trade regulations;

·acts of terrorism or acts of war; and

·government regulation.

One or more of the foregoing factors, as well as any other risk factors discussed in this Annual Report on Form 10-K, may cause our operating expenses to be unexpectedly high or result in a decrease in our net sales during any given period. If these or any other variables or unknowns were to cause a shortfall in revenues or earnings, an increase in our operating costs or otherwise cause a failure to meet public market expectations, our stock price may decline and our business could be adversely affected.

Our CEO owns approximately 12% of our outstanding common stock.

Mr. Kosta Kartsotis owns approximately 12% of our common stock as of January 3, 2015. As a result, he is in a position to influence the outcome of elections of our directors, the adoption, amendment or repeal of our bylaws and any other actions requiring the vote or consent of our stockholders, and to otherwise influence our affairs.

Because the interests of Mr. Kartsotis may not coincide with the interests of other stockholders, Mr. Kartsotis may influence the Company to enter into transactions or agreements that other stockholders would not approve or make decisions with which other stockholders may disagree.

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

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

Future sales of our common stock in the public market could adversely affect our stock price.

The shares of our common stock beneficially owned by Mr. Kartsotis may be sold in the open market in the future, subject to any volume restrictions and other limitations under the Securities Act of 1933 and Rule 144 thereunder. We may also decide to file a registration statement enabling Mr. Kartsotis to sell additional shares. Any sales by Mr. Kartsotis of substantial amounts of our common stock in the open market, or the availability of his shares for sale, could adversely affect the price of our common stock. The market price of our common stock could decline as a result of sales of substantial amounts of our common stock in the public market, or the perception that those sales could occur. These sales or the possibility that they may occur also could make it more difficult for us to raise funds in any equity offering in the future at a time and price that we deem appropriate.

EX-99.2

Exhibit 99.2

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

Summary

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 153 retail stores located in premier retail sites and 143 outlet stores located in major outlet malls as of January 3, 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 affiliated websites.

Internationally, our products are sold to department stores, specialty retail stores and specialty watch and jewelry stores in approximately 150 countries worldwide through 25 Company-owned foreign sales subsidiaries and through a network of over 60 independent distributors. Internationally, our network of Company-owned stores included 197 retail stores and 100 outlet stores as of January 3, 2015. Our products are also sold through licensed and franchised FOSSIL retail stores, retail concessions operated by us and kiosks in certain international markets. In addition, we offer an extensive collection of our FOSSIL brand products on our websites in certain countries.

Our consolidated gross profit margin is impacted by our diversified business model that includes but is not limited to: (i) a significant number of product categories we distribute, (ii) the multiple brands we offer within several product categories, (iii) the geographical presence of our businesses and (iv) the different distribution channels we sell to or through. The components of this diversified business model produce varying ranges of gross profit margin. Generally, on a historical basis, our fashion branded watch and jewelry offerings produce higher gross profit margins than our leather goods offerings. In addition, in most product categories that we offer, brands with higher retail price points generally produce higher gross profit margins compared to those of lower retail priced brands. Gross profit margins related to sales in our Europe and Asia businesses are historically higher than our Americas business primarily due to the following factors: (i) premiums charged in comparison to retail prices on products sold in the U.S.; (ii) the product sales mix in our international businesses, in comparison to our Americas business, is comprised more predominantly of watches and jewelry that generally produce higher gross profit margins than leather goods; and (iii) the watch sales mix in our Europe and Asia businesses, in comparison to our Americas business, are comprised more predominantly of higher priced licensed brands.

Our business is subject to the risks inherent in global sourcing 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 contractor manufacturers’ control.

This discussion should be read in conjunction with our consolidated financial statements and the related notes included therewith.

Critical Accounting Policies and Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we evaluate our estimates and judgments, including those related to product returns, bad debt, inventories, long-lived asset impairment, impairment of 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. We believe the following critical accounting policies require the most significant estimates and judgments.

Product Returns. We accept limited returns and may request that a customer return a product if we feel the customer has an excess of any style that we have identified as being a poor performer for that customer or geographic location. We monitor returns and maintain a provision for estimated returns based upon historical experience and any specific issues identified. While returns have historically been within our expectations and the provisions established, future return rates may differ from those experienced in the past. In the event that our products are performing poorly in the retail market and/or we experience product damages or defects at a rate significantly higher than our historical rate, the resulting returns could have an adverse impact on the operating results for the period or periods in which such returns occur. If our allowance for product returns were to change by 10%, the result would have been a $2.7 million change to net income, net of taxes.

Inventories. Inventories are stated at the lower of average cost, including any applicable duty and freight charges, or market. We account for estimated obsolescence or unmarketable inventory equal to the difference between the average cost of inventory and the estimated market value based upon assumptions about future demand, market conditions and available liquidation channels. If actual future demand or market conditions are less favorable than those projected by management, or if liquidation channels are not readily available, additional inventory valuation reductions may be required. We assess our off-price sales on an ongoing basis and update our estimates accordingly. Revenue from sales of our products that are subject to inventory consignment agreements is recognized when title and risk of loss transfers, delivery has occurred, the price to the buyer is determinable and collectability is reasonably assured. Inventory held at consignment locations is included in our finished goods inventory.

Long-lived Asset Impairment. We test for asset impairment of property, plant and equipment and other long-lived assets whenever events or conditions indicate that the carrying value of an asset might not be recoverable based on expected undiscounted cash flows related to the asset. In evaluating long-lived assets for recoverability, we calculate fair value using our best estimate of future cash flows expected to result from the use of the asset and its eventual disposition. When undiscounted cash flows estimated to be generated through the operations of our Company-owned retail stores are less than the carrying value of the underlying assets, the assets are impaired. If it is determined that assets are impaired, an impairment loss is recognized for the amount the asset’s book value exceeds its fair value. Impairment losses are recorded in selling, general and administrative expenses. Should actual results or market conditions differ from those anticipated, additional losses may be recorded. We recorded impairment losses on long-lived assets of approximately $9.3 million, $5.8 million and $1.2 million in fiscal years 2014, 2013 and 2012, respectively. An increase of 100 basis points to the discount rate used in our impairment testing would have increased impairment expense by $0.3 million. A 10% decrease in future expected cash flows would have increased impairment expense by $0.2 million.

Impairment of Goodwill and Trade Names. We evaluate goodwill for impairment annually as of the end of the fiscal year by comparing the fair value of the reporting unit to its recorded value. Additionally, if events or conditions were to indicate the carrying value of a reporting unit may not be recoverable, we would evaluate goodwill for impairment at that time. We have three reporting units for which we evaluate goodwill for impairment: Americas, Europe and Asia. The fair value of each reporting unit is estimated using market comparable information and discounted cash flows. If the estimated fair value of a reporting unit exceeds its carrying value, no impairment charge is recorded. As of January 3, 2015, the fair value of each of these reporting units exceeded their carrying value by over 200%.

We evaluate trade names by comparing the fair value of the asset to its recorded value annually as of the end of the fiscal year and whenever events or conditions indicate that the carrying value of the trade name may not be recoverable. The fair value of the asset is estimated using discounted cash flow methodologies. The MICHELE trade name represented approximately 22% of our total trade name balances at the end of fiscal years 2014, 2013 and 2012. The SKAGEN trade name represented approximately 77% of our total trade name balance at the end of fiscal years 2014, 2013 and 2012. We performed the required annual impairment test and recorded no impairment charges in fiscal years 2014, 2013 and 2012. As of January 3, 2015, the fair values of the MICHELE and SKAGEN trade names exceeded their carrying values by approximately 86% and 47%, respectively. If we were to increase our discount rate 100 basis points, or if we were to decrease forecasted cash flows by 10%, no additional impairment charges would have resulted from our impairment test. Due to the inherent uncertainties involved in making the estimates and assumptions used in the fair value analysis, actual results may differ which could alter the fair value of the trade names and possibly cause impairment charges to occur in future periods.

Judgments and assumptions are inherent in our estimate of future cash flows used to determine the estimate of the reporting unit’s fair value. The most significant assumptions associated with the fair value calculations include net sales growth

rates and discount rates. If the actual future sales results do not meet the assumed growth rates, future impairments of goodwill and trade names may be incurred.

Income Taxes. We record valuation allowances against our deferred tax assets, when necessary, in accordance with ASC 740, Income Taxes (“ASC 740”). Realization of deferred tax assets is dependent on future taxable earnings and is therefore uncertain. At least quarterly, we assess the likelihood that our deferred tax asset balance will be recovered from future taxable income. To the extent we believe that recovery is not likely, we establish a valuation allowance against our deferred tax asset, increasing our income tax expense in the period such determination is made. In addition, we have not recorded U.S. income tax expense for foreign earnings that we have determined to be indefinitely reinvested outside the U.S.

Our continuing practice is to recognize interest and penalties related to income tax matters in income tax expense. We accrue an amount for our estimate of additional income tax liability which we believe we are more likely than not to incur as a result of the ultimate resolution of tax audits (“uncertain tax positions”). We review and update the estimates used in the accrual for uncertain tax positions as more definitive information becomes available from taxing authorities, upon completion of tax audits, upon expiration of statutes of limitation, or upon occurrence of other events. The results of operations and financial position for future periods could be impacted by changes in assumptions or resolutions of tax audits.

Warranty Costs. Our FOSSIL watch products sold in the U.S. are covered by a limited warranty against defects in materials or workmanship for a period of 11 years from the date of purchase. RELIC watch products sold in the U.S. are covered by a comparable 12 year limited warranty, while all other watch brands sold in the U.S. are covered by a comparable two year limited warranty. SKAGEN branded watches are covered by a lifetime warranty against defects due to faulty material or workmanship, subject to normal conditions of use. Generally, all of our watch products sold in Canada, Asia and Europe are covered by a comparable two year limited warranty. We determine our warranty liability using historical warranty repair experience. As changes occur in sales volumes and warranty experience, the warranty accrual is adjusted as necessary. The year-end warranty liability for fiscal years 2014, 2013 and 2012 was $13.5 million, $15.7 million and $13.4 million, respectively.

Hedge Accounting. We operate in foreign countries, which exposes us to market risk associated with foreign currency exchange rate fluctuations. We have entered into certain foreign exchange forward contracts (“forward contracts”) to hedge the risk of foreign currency rate fluctuations. Our main objective is to hedge the variability in forecasted cash flows due to the foreign currency risks primarily associated with certain anticipated inventory purchases. Changes in the fair value of forward contracts designated as cash flow hedges are recorded as a component of accumulated other comprehensive income (cumulative translation adjustment) within stockholders’ equity, and are recognized in other income-net in the period which the intercompany cash payment for inventory is made. To reduce exposure to changes in currency exchange rates adversely affecting our investment in a euro-denominated subsidiary, in fiscal year 2014, we entered into a forward contract designated as a net investment hedge. Changes in the fair value of the net investment hedge were recorded as a component of accumulated other comprehensive income and will be recognized in other income-net when the subsidiary is sold or dissolved. Also, the Company has entered into an interest rate swap agreement to effectively convert a portion of variable rate debt obligations from a floating rate to a fixed rate. Changes in the fair value of the interest rate swap are recorded as a component of accumulated other comprehensive income within stockholders’ equity, and are recognized in interest expense in the period in which the payment is settled. We have elected to apply the hedge accounting rules as required by ASC 815, Derivatives and Hedging, for these hedges.

Stock-Based Compensation. We utilize the Black-Scholes model to determine the fair value of stock options and stock appreciation rights on the date of grant. The model requires us to make assumptions concerning (i) the length of time employees will retain their vested stock options and stock appreciation rights before exercising them (“expected term”), (ii) the volatility of our common stock price over the expected term and (iii) the number of stock options and stock appreciation rights that will be forfeited. Changes in these assumptions can materially affect the estimate of fair value of stock-based compensation and, consequently, the related expense amounts recognized on our consolidated statements of income and comprehensive income. If the fair value of our stock-based compensation were to change by 10%, the result would have been a $1.3 million change to net income, net of taxes.

Results of Operations

Executive Summary

During fiscal year 2014, net sales rose 8% as compared to the prior fiscal year, representing growth across each of our geographic regions with particular strength in Europe and Asia. In addition, fiscal 2014 included an extra week of operations, resulting in a 53-week year as compared to a 52-week year for fiscal 2013. Both of our proprietary lifestyle brands, FOSSIL and SKAGEN, as well as our multi-brand global watch portfolio experienced growth across each region in which we operate. FOSSIL grew 2% during fiscal 2014, led by the continued strength of watches, partially offset by decreases in the jewelry and leather categories. We continue to believe FOSSIL jewelry is an opportunity for growth and after spending this past year repositioning distribution in the U.S., we believe we are well positioned to capitalize on the synergies that FOSSIL jewelry shares with watches. During fiscal 2014, we repositioned our FOSSIL leathers business and saw improved performance in the category, particularly women’s handbags, where we concentrated efforts to add to our design team and bolstered our products to gain broader customer appeal. Our elevated assortment is resonating with customers, particularly in our retail stores where we have the best opportunity to clearly communicate the brand story to the customer and in improved presentations through shop-in-shops within U.S. department stores. SKAGEN grew 13% during fiscal year 2014, with watches and jewelry each posting double-digit gains. Our two new high profile store locations in Frankfurt and New York along with our remodeled stores in London allow us to showcase the full array of SKAGEN’s products in an environment that reflects the differentiated and unique positioning of the brand. Our multi-brand global watch portfolio grew 9% during fiscal year 2014, which included growth across multiple brands, with the strongest gains occurring internationally. Additionally, we advanced our Swiss initiative with the spring launch of EMPORIO ARMANI Swiss Made and with the launch of the TORY BURCH assortment in the last six months of fiscal 2014. Global comparable store sales were 2.0% in our owned retail stores normalized for the 53-week calendar. Positive comparable store sales results in Europe and Asia were partially offset by a very slight decline in the Americas, primarily as a result of traffic declines in the U.S. that were only partially offset by higher conversion rates.

Gross profit increased during fiscal year 2014, while the gross margin rate was relatively consistent with the prior fiscal year. During fiscal 2014, our gross margin rate was favorably impacted by our regional distribution mix given the growth in international markets. However, this benefit was offset by increased promotional activity in our retail channel, primarily in our U.S. outlet stores. Our operating margin contracted during fiscal year 2014 primarily due to planned operating expense deleveraging in the first half of the year as we invested in retail and concession expansion and infrastructure to support growth and global initiatives. These reductions in operating expense leverage were partially offset by increased operating expense leverage in the back half of the year as we managed infrastructure spending tightly and drove leverage in more mature areas of our business, redeploying some of the capacity to invest in growth initiatives and customer facing activities.

During fiscal year 2014, we invested $435 million to repurchase 4.1 million shares of our common stock. Our financial performance combined with our repurchase activity resulted in earnings of $7.10 per diluted share.

Fiscal Year 2014 Compared to Fiscal Year 2013

Consolidated Net Sales. Net sales increased 7.7%, representing sales growth in each of our geographic segments. Global watch sales made the most significant contribution, increasing $223.4 million or 8.9%, in fiscal year 2014. We believe that we continue to gain market share in the watch category given our powerful portfolio of global lifestyle brands, design innovation and our global production and distribution advantages. Our jewelry product category also contributed favorably to the current fiscal year net sales growth, increasing $47.7 million, or 20.8%, as a result of a strong performance in licensed jewelry, partially offset by a decrease in FOSSIL branded products. Our leathers category declined $16.9 million or 3.9% during the year as we anniversaried high clearance volumes in fiscal year 2013.

We believe our diverse global distribution network, our design and marketing capabilities and continued investments in our owned brands to increase brand awareness, drive demand and accelerate growth, will allow us to continue to take market share from local and regional brands. We also believe that investments we have made in certain emerging markets will facilitate higher levels of growth in the Europe and Asia segments in comparison to the larger and more mature Americas segment.

Net sales information by product category is summarized as follows (dollars in millions):

	Fiscal Year
	2014				2013				Growth (Decline)
	Amounts		Percentage of Total		Amounts		Percentage of Total		Dollars			Percentage
Watches	$	2,736.5	78.0	%	$	2,513.1	77.1	%	$	223.4		8.9	%
Leathers	419.4		11.9		436.3		13.4		(16.9		)	(3.9	)
Jewelry	276.5		7.9		228.8		7.0		47.7			20.8
Other	77.3		2.2		81.8		2.5		(4.5		)	(5.5	)
Total net sales	$	3,509.7	100.0	%	$	3,260.0	100.0	%	$	249.7		7.7	%

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 fiscal year 2014, the translation of foreign-based net sales into U.S. dollars reduced reported net sales by approximately $17.1 million, including unfavorable impacts of $11.5 million and $8.9 million in our Asia and Americas segments, respectively, partially offset by a favorable impact of $3.3 million in our Europe segment.

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

	Fiscal Year
	2014				2013				Growth (Decline)
	Amounts		Percentage  of Total		Amounts		Percentage  of Total		Dollars		Percentage
Americas	$	1,747.5	49.8	%	$	1,703.3	52.2	%	$	44.2	2.6	%
Europe	1,195.9		34.1		1,052.5		32.3		143.4		13.6
Asia	566.3		16.1		504.2		15.5		62.1		12.3
Total net sales	$	3,509.7	100.0	%	$	3,260.0	100.0	%	$	249.7	7.7	%

Americas Net Sales. Americas net sales increased $44.2 million or 2.6% ($53.1 million or 3.1% in constant currency), during fiscal year 2014, representing growth in the U.S. and Canada, partially offset by a decline in Latin America. In constant currency, both the jewelry and watch categories contributed favorably to fiscal year 2014, as jewelry sales increased $21.6 million or 30.6% and watches increased $53.1 million or 4.1%. These sales gains were partially offset by sales declines in our leathers products of $15.6 million or 5.4%, as the leather category has proven to be highly competitive and promotional. The department store channel has been challenging due to the continuing promotional retail environment and due to retail partners managing to lower inventory levels. Sales growth in our owned retail stores was partially offset by a slight comparable store sales decrease, primarily driven by the U.S. stores where conversion rates improved but not enough to offset the impact of significant mall traffic declines and promotional activity in our outlet stores.

Europe Net Sales. During fiscal 2014, Europe net sales rose $143.4 million or 13.6% ($140.1 million or 13.3% in constant currency), representing sales gains across nearly all markets in which we operate. In Europe, we continue to benefit from our scale, as we leverage our extensive European infrastructure and distribution to drive growth. Key markets performed well as we have seen positive results from partnering with customers to focus on door productivity and to influence assortments and replenishment. Sales growth was particularly strong in the United Kingdom, Germany and France, while Italy experienced a sales decline during fiscal year 2014 as a result of the challenging market conditions. From a product category perspective, on a constant currency basis, sales growth was led by a $115.1 million or 14.8% increase in our watch category and a $28.1 million or 18.8% increase in jewelry, partially offset by a $3.9 million or 4.0% decrease in leather products. Comparable store sales in our owned retail stores in the European region increased modestly, which also contributed favorably to fiscal year 2014.

Asia Net Sales. In fiscal year 2014, Asia net sales increased $62.1 million or 12.3% ($73.6 million or 14.6% in constant currency). We experienced sales growth across the majority of the markets in the Asia region led by Japan, India, Australia and China, while sales in South Korea decreased as market conditions there remained weak. Our watch category made the greatest contribution, increasing $67.4 million or 15.6% in constant currency. At the end of fiscal year 2014, we operated 334 concession locations in the Asia region, with a net 25 new concessions opened during the last twelve months. For the 2014 fiscal year, Asia concession sales increased as a result of new door growth, as comparable year-over-year concession sales

declined. We believe these concessions represent a large opportunity for us because they allow us to control the brand presentation and customer experience at the point of sale and capture the full retail price.

The following table sets forth the number of stores by concept for the fiscal years ended below:

	January 3, 2015				December 28, 2013
	Americas	Europe	Asia	Total	Americas	Europe	Asia	Total
Full price accessory	119	111	59	289	112	113	51	276
Outlets	143	58	42	243	125	46	35	206
Clothing	28	2	0	30	30	2	0	32
Full priced multi-brand	6	3	22	31	6	6	17	29
Total stores	296	174	123	593	273	167	103	543

During fiscal year 2014, we opened 76 new stores and closed 26 stores. During fiscal year 2015, we anticipate opening approximately 44 to 55 additional retail stores and closing approximately 40 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 of $2.0 billion in fiscal year 2014 increased 7.5% in comparison to $1.9 billion in fiscal year 2013 as a result of increased sales, partially offset by a slight decrease in gross profit margin. Gross profit margin decreased 10 basis points to 57.0% in fiscal year 2014 compared to 57.1% in the prior fiscal year. The gross margin rate decline was primarily driven by the impact of increased promotional activity, primarily in our U.S. outlet stores, as compared to the prior fiscal year. Partially offsetting this decrease was the impact of a favorable regional distribution mix from the growth in international markets.

Selling, General and Administrative Expenses (“SG&A”). Total SG&A expenses increased by $134.5 million, and as a percentage of net sales, increased to 40.9% in fiscal year 2014 compared to 39.9% in fiscal year 2013. The translation of foreign-based expenses in fiscal year 2014 increased SG&A expenses by approximately $0.6 million as a result of the weaker U.S. dollar. SG&A expense increases were primarily attributable to continued investments in our retail store and concession base, infrastructure investments to support growth and global initiatives, marketing expenses, including advertising royalties, and investments in brand building and customer engagement activities, partially offset by the reversal of incentive compensation accruals. In addition, fiscal year 2014 included a $9.3 million non-cash asset impairment charge to write down certain long-lived assets associated with our retail stores as compared to a $5.8 million charge incurred in fiscal year 2013.

Consolidated Operating Income. During fiscal year 2014, operating income increased by $4.9 million, or 0.9%, as compared to the prior fiscal year. As a percentage of net sales, operating income decreased to 16.1% in fiscal year 2014 as compared to 17.2% in fiscal year 2013, primarily as a result of decreased SG&A expense leverage. The decreased leverage in SG&A expenses was largely driven by brand building and marketing activities in our corporate costs area and advertising royalties, rent and facility-related expenses in our commercial businesses. Gross profit margin expansion in Europe was largely offset by decreased gross profit margin in the Americas and Asia segments. The Europe segment benefited from the currency impact of a stronger euro in the purchase of inventory, while the Asia segment was negatively impacted by the currency impact of a weaker Japanese yen and Australian dollar as well as an increased sales mix of lower margin products within the watch category. Gross profit margin in the Americas was negatively impacted by lower margins in our U.S. outlet stores due to effective promotions that drove increased gross profit dollars, but put pressure on the gross margin rate and an increase in sales to off-price partners. Operating income for the 2014 fiscal year included approximately $12.1 million of net currency losses related to the translation of foreign-based sales and expenses into U.S. dollars. Operating income by operating segment is summarized as follows (dollars in millions):

	Fiscal Year						Growth (Decline)					Operating Margin %
	2014			2013			Dollars			Percentage		2014		2013
Americas	$	463.2		$	472.8		$	(9.6	)	(2.0	)%	26.5	%	27.8	%
Europe	288.0			238.6			49.4			20.7		24.1		22.7
Asia	116.3			115.8			0.5			0.4		20.5		23.0
Corporate	(301.0		)	(265.6		)	(35.4		)	13.3
Total net sales	$	566.5		$	561.6		$	4.9		0.9	%	16.1	%	17.2	%

Interest Expense. Interest expense increased by $6.4 million in fiscal year 2014 as a result of increased debt levels in comparison to the prior fiscal year.

Other Income—Net. During fiscal year 2014, other income—net decreased by approximately $2.0 million, largely driven by decreased net foreign currency gains resulting from mark-to-market hedging and other transactional activities as compared to fiscal year 2013. Additionally, fiscal year 2014 other income-net included an arbitration judgment gain of $6.0 million related to the purchase price for Skagen Designs, while the fiscal year 2013 other income-net amount included a $6.5 million non-cash, mark-to-market valuation gain related to our assumption of control of Fossil Spain, our Spanish joint venture.

Provision for Income Taxes. Income tax expense for fiscal year 2014 was $171.5 million, resulting in an effective tax rate of 30.7%, compared to 30.9% in fiscal year 2013.

Net Income Attributable to Fossil Group, Inc. Fiscal year 2014 net income attributable to Fossil Group, Inc. was $7.10 per diluted share in comparison to $6.56 per diluted share in the prior fiscal year and included a $0.57 per diluted share benefit as a result of a lower outstanding share count due to common stock repurchases under our ongoing stock repurchase program and net foreign currency losses of $0.17 per diluted share. Net income attributable to Fossil Group, Inc. was relatively flat at $376.7 million for fiscal year 2014 in comparison to $378.2 million in the prior year. Fiscal year 2014 results included a $6.0 million arbitration judgment gain related to the purchase price for Skagen Designs, which benefitted earnings by $0.08 per diluted share, while fiscal year 2013 results included a $6.5 million non-cash, non-operating gain, which benefitted earnings by $0.11 per diluted share, related to our assumption of control of Fossil Spain in connection with our right to acquire in 2015 the remaining 50% of Fossil Spain.

Fiscal Year 2013 Compared to Fiscal Year 2012

Consolidated Net Sales. Net sales increased 14.1%, representing sales growth across each of our geographic segments. Global watch sales made the most significant contribution, increasing $371.6 million or 17.4%, in fiscal year 2013. Our jewelry product category also contributed favorably to fiscal year 2013 net sales growth, increasing $47.2 million, or 26.0%, as our new global assortment resonated well with consumers. Our leather business decreased slightly during the year.

Net sales information by product category is summarized as follows (dollars in millions):

	Fiscal Year
	2013				2012				Growth (Decline)
	Amounts		Percentage of Total		Amounts		Percentage of Total		Dollars			Percentage
Watches	$	2,513.1	77.1	%	$	2,141.5	74.9	%	$	371.6		17.4	%
Leathers	436.3		13.4		440.1		15.4		(3.8		)	(0.9	)
Jewelry	228.8		7.0		181.6		6.4		47.2			26.0
Other	81.8		2.5		94.3		3.3		(12.5		)	(13.3	)
Total net sales	$	3,260.0	100.0	%	$	2,857.5	100.0	%	$	402.5		14.1	%

In fiscal year 2013, the translation of foreign-based net sales into U.S. dollars reduced reported net sales by approximately $0.6 million including a favorable impact of $22.7 million in our Europe segment offset by unfavorable impacts of $22.2 million and $1.1 million in our Asia and Americas segments, respectively.

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

	Fiscal Year
	2013				2012				Growth
	Amounts		Percentage of Total		Amounts		Percentage of Total		Dollars		Percentage
Americas	$	1,703.3	52.2	%	$	1,529.2	53.5	%	$	174.1	11.4	%
Europe	1,052.5		32.3		880.0		30.8		172.5		19.6
Asia	504.2		15.5		448.3		15.7		55.9		12.5
Total net sales	$	3,260.0	100.0	%	$	2,857.5	100.0	%	$	402.5	14.1	%

Americas Net Sales. Net sales in the Americas increased $174.1 million or 11.4% during fiscal year 2013, representing growth across the U.S., Canada and Latin America. Watch sales led the growth, increasing $183.5 million or 16.4%, while jewelry sales also contributed favorably, increasing $15.4 million or 27.9%. These sales gains were partially offset by sales volume declines in our leathers products of $9.5 million or 3.2% as a result of decreased sell-through rates at retail. The discontinuation of our footwear line and the transition to a licensing model in our eyewear line also negatively impacted fiscal year 2013 net sales by approximately $6.5 million and $5.4 million, respectively. Additionally, fiscal year 2013 was negatively impacted by approximately $10.0 million as a result of the misalignment of our fiscal calendar with the National Retail Federation (“NRF”) calendar, on which many of our customers operate. The NRF calendar included an extra week in January 2013 as compared to our fiscal calendar. The extra week on our fiscal calendar took place in January 2014 at which time our fiscal calendar re-aligned with the NRF calendar. Comparable store sales in our owned retail stores decreased with weak traffic and a highly promotional environment in the U.S.

Europe Net Sales. Net sales for Europe rose $172.5 million or 19.6% ($149.8 million or 17.0% in constant currency) representing sales gains across multiple geographies within the region. The United Kingdom, Germany, Spain, the Middle East and France delivered the strongest growth, while Italy experienced a sales decline during fiscal 2013 and continued to be our most challenging European market. From a product category perspective, on a constant currency basis, sales growth was led by a $118.4 million or 18.5% increase in our watch category, a $27.2 million or 23.1% increase in jewelry, and a $2.4 million or 2.6% increase in leather products. Comparable store sales in our owned retail stores in the Europe segment increased modestly, which also contributed favorably to fiscal year 2013.

Asia Net Sales. In fiscal year 2013, Asia net sales increased $55.9 million or 12.5% ($78.1 million or 17.4% in constant currency). We experienced sales growth across most markets in the Asia region led by China, Japan and India. Our watch category made the most significant impact, increasing $71.8 million or 19.0% in constant currency. At the end of fiscal year 2013, we operated 309 concession locations in the Asia region with a net 39 new concessions opened during the last twelve months. For the 2013 fiscal year, Asia concession sales increased primarily as a result of new door growth and a modestly positive comp.

Gross Profit. Gross profit of $1.9 billion in fiscal year 2013 increased 15.9% in comparison to $1.6 billion in fiscal year 2012 as a result of increased sales and gross profit margin expansion. Gross profit margin increased 90 basis points to 57.1% in fiscal year 2013 compared to 56.2% in the prior fiscal year. Gross margins benefitted from a greater sales mix of higher margin watch and jewelry products, growth in our international markets, and direct distribution in Latin America, Spain and Portugal as a result of acquisitions during fiscal year 2013. Partially offsetting these increases were the unfavorable impacts of promotional activities to drive traffic and clear prior seasons’ products, especially in U.S. outlet stores.

SG&A. SG&A expenses increased by $182.4 million, and as a percentage of net sales, increased to 39.9% in fiscal year 2013 compared to 39.1% in fiscal year 2012. The translation of foreign-based expenses in fiscal year 2013 decreased SG&A expenses by approximately $0.4 million as a result of the stronger U.S. dollar. SG&A expense increases were primarily attributable to continued investments in our retail store and concession expansion, performance based compensation, infrastructure investments to support growth and global initiatives, enhancements to our marketing programs and the impact of newly acquired businesses. In addition, fiscal year 2013 included a $5.8 million non-cash asset impairment charge to write down certain long-lived assets associated with our retail stores.

Consolidated Operating Income. During fiscal year 2013, operating income increased by $72.8 million, or 14.9%, in comparison to fiscal year 2012. As a percentage of net sales, operating income increased to 17.2% as compared to 17.1% in the prior fiscal year as a result of gross profit margin expansion largely offset by decreased operating expense leverage. Gross margin rate expansion was primarily a result of a favorable shift in sales to higher margin geographic regions and an increase in sales mix to sales of higher margin watch and jewelry products, partially offset by the unfavorable impact of the liquidation of prior seasons’ leather products and outlet promotional activity. Decreased SG&A expense leverage was largely driven by performance based compensation, infrastructure investments to support growth and global initiatives, enhancements to our marketing programs and continued investments in our Asia region. Operating margin was also negatively impacted by a $5.8 million non-cash asset impairment charge to write down certain long-lived assets associated with our retail stores primarily in the Americas.

Operating income for the 2013 fiscal year included approximately $2.3 million of net currency losses related to the translation of foreign-based sales and expenses into U.S. dollars. Operating income by operating segment is summarized as follows (dollars in millions):

	Fiscal Year						Growth (Decline)					Operating Margin %
	2013			2012			Dollars			Percentage		2013		2012
Americas	$	472.8		$	404.4		$	68.4		16.9	%	27.8	%	26.4	%
Europe	238.6			180.9			57.7			31.9		22.7		20.6
Asia	115.8			114.0			1.8			1.6		23.0		25.4
Corporate	(265.6		)	(210.5		)	(55.1		)	26.2
Total net sales	$	561.6		$	488.8		$	72.8		14.9	%	17.2	%	17.1	%

Interest Expense. Interest expense increased by $4.4 million in fiscal year 2013 primarily as a result of increased debt levels.

Other Income—Net. During fiscal year 2013, other income—net changed favorably by approximately $0.9 million. This increase was primarily driven by a $6.5 million non-cash, mark-to-market valuation gain related to our assumption of control of Fossil Spain, our Spanish joint venture that is 50% owned by General De Relojeria, S.A., partially offset by decreased net foreign currency gains resulting from mark-to-market hedging and other transactional activities as compared to fiscal year 2012.

Provision for Income Taxes. Income tax expense for fiscal year 2013 was $173.4 million, resulting in an effective tax rate of 30.9%, compared to 28.0% in fiscal year 2012. Fiscal year 2012 income tax expense was favorably impacted by management’s determination in fiscal 2012 to reinvest undistributed earnings and profits of certain foreign subsidiaries and the recognition of previously unrecognized income tax benefits in connection with the completion of prior year income tax audits during the fiscal year.

Net Income Attributable to Fossil Group, Inc. Fiscal year 2013 net income attributable to Fossil Group, Inc. increased 10.1% to $378.2 million, or $6.56 per diluted share, in comparison to $343.4 million, or $5.59 per diluted share, in the prior fiscal year. Fiscal year 2013 results included a $6.5 million non-cash, non-operating gain, which benefitted earnings by $0.11 per diluted share, related to our assumption of control of Fossil Spain in connection with our right to acquire in 2015 the remaining 50% of Fossil Spain. Additionally, net income attributable to Fossil Group, Inc. for fiscal year 2013 included a $0.40 per diluted share benefit as a result of a 6.1% lower outstanding share count due to common stock repurchases under our ongoing stock repurchase program and net foreign currency losses of $0.08 per diluted share.

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 the amount of any discretionary stock repurchases we make. Our cash and cash equivalents balance at the end of fiscal year 2014 was $276.3 million, including $262.4 million held by foreign subsidiaries outside the U.S., in comparison to $320.5 million at the end of fiscal year 2013.

Net cash provided by operating activities of $387.9 million in fiscal year 2014 was more than offset by the aggregate amount of cash used in investing and financing activities of $103.2 million and $325.2 million, respectively, resulting in a $44.2 million decrease in cash and cash equivalents since the end of fiscal year 2013. During fiscal year 2014, net cash provided by operating activities consisted primarily of net income of $386.6 million, non-cash activities of $131.1 million and an unfavorable increase in net operating assets and liabilities of $129.9 million. During fiscal year 2014, net cash used in investing activities was primarily driven by $94.8 million related to capital expenditures. During fiscal year 2014, net cash used in financing activities was principally comprised of $437.9 million of common stock acquisitions, partially offset by $122.3 million of net borrowings on notes payable. Net borrowings primarily consisted of draws and repayments made under our $1.1 billion revolving line of credit and term loan.

Accounts receivable decreased by 5.3% to $430.5 million during fiscal year 2014 compared to $454.8 million at the end of the prior fiscal year, due to the timing of sales and shipments as well as the translation of foreign-based balances as a result of the stronger U.S. dollar. Average days sales outstanding for our wholesale business for fiscal year 2014 was 52 days compared to 49 days in the prior fiscal year.

Inventory at the end of fiscal year 2014 was $597.3 million, representing an increase of 4.7% from the prior fiscal year inventory balance of $570.7 million. Due to our effort to manage inventory levels and the impact of foreign currency fluctuations, our inventory growth was slightly below our sales growth.

On November 10, 2014, the Company’s board of directors authorized a new $1.0 billion share repurchase program with an expiration date of December 2018.

The following table reflects our common stock repurchase activity for the periods indicated (in millions):

				For the 2014 Fiscal Year			For the 2013 Fiscal Year
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	0.0	$	0.0	0.0	$	0.0
2012	$	1,000.0	December 2016	4.1	$	435.0	4.9	$	536.3
2010	$	30.0	None	0.0	$	0.0	0.0	$	0.0
2010	$	750.0	December 2013(1)	0.0	$	0.0	0.4	$	38.6

(1)In the first quarter of fiscal year 2013, the Company completed this repurchase plan.

We effectively retired 4.1 million shares of repurchased common stock under our repurchase programs during fiscal 2014. 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 fiscal year 2014 decreased common stock by $41,000, additional paid-in capital by $3.2 million, retained earnings by $431.7 million and treasury stock by $435.0 million. The effective retirement of common stock repurchased during the 2013 fiscal year decreased common stock by $53,000, additional paid-in capital by $7.6 million, retained earnings by $567.2 million and treasury stock by $574.8 million. At December 28, 2013 and January 3, 2015, all treasury stock had been effectively retired. As of January 3, 2015, we had $1.1 billion of repurchase authorizations remaining under our repurchase programs.

At the end of the fiscal year 2014, we had working capital of $1.0 billion compared to working capital of $987.6 million at the end of the prior fiscal year. Additionally, we had approximately $16.6 million of outstanding short-term borrowings and $613.7 million in long-term debt.

On May 17, 2013, we entered into a five year Credit Agreement (the “Credit Agreement”) which provided for revolving credit loans in the amount of $750 million (the “Revolver”), a swingline subfacility up to $20 million, an up to $10 million subfacility for letters of credit and a term loan in the amount of $250 million (the “Term Loan”). On May 23, 2014, we entered into a First Amendment (the “Amendment”) to the Credit Agreement. The Amendment increased the credit limit on the

Revolver by $300 million to $1,050 million. Amounts outstanding under the Revolver and Term Loan bear interest at our option of (i) the base rate (defined as the higher of (a) the prime rate publicly announced by Wells Fargo (3.25% at fiscal year-end 2014), (b) the federal funds rate plus 0.5% and (c) the London Interbank Offer Rate (“LIBOR”) (0.16% at fiscal year-end 2014) for an interest period of one month plus 1.00%) plus the base rate applicable margin (which varies based upon our consolidated leverage ratio (the “Ratio”) from 0.25% if the Ratio is less than 1.00 to 1.00, to 1.00% if the 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 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). Amounts outstanding under the swingline subfacility under the Credit Agreement or upon any drawing under a letter of credit bear interest at the base rate plus the base rate applicable margin. Interest based upon the base rate is payable quarterly in arrears. Interest based upon the LIBOR rate is payable either monthly or quarterly in arrears, depending on the interest period selected by us. The Revolver also contains a commitment fee, determined based upon the Ratio, which varies from 0.20%, if the Ratio is less than 1.00 to 1.00, to 0.35%, if the Ratio is greater than or equal to 2.00 to 1.00.

The Credit Agreement is guaranteed by all of our direct and indirect material domestic subsidiaries and secured by 65% of the total outstanding voting capital stock and 100% of the non-voting capital stock of Fossil Europe B.V., Fossil (East) Limited and Swiss Technology Holding GmbH, certain of our foreign subsidiaries, pursuant to a pledge agreement.

Financial covenants in the Credit Agreement require us to maintain (i) a consolidated total leverage ratio no greater than 2.50 to 1.00, (ii) a consolidated interest coverage ratio no less than 3.50 to 1.00 and (iii) maximum capital expenditures not in excess of (x) $200.0 million during each of fiscal years 2014 and 2015 and (y) $250.0 million during each fiscal year thereafter, subject to certain adjustments.

During fiscal year 2014, we repaid $15.6 million on the Term Loan and had no additional borrowings. The average interest rate during fiscal year 2014 for borrowings under the Term Loan including the impact of the interest rate swap was 2.5%. During fiscal year 2014, we borrowed $961.0 million under the Revolver at an average rate of 1.4% and repaid $822.0 million. As of January 3, 2015, we had $231.3 million and $389.0 million outstanding under the Term Loan and the Revolver, respectively. In addition, we had $0.9 million of outstanding standby letters of credit at January 3, 2015. Amounts available under the Revolver are reduced by any amounts outstanding under standby letters of credit. As of January 3, 2015, we had $660.1 million available for borrowing under the Revolver. Borrowings under the Revolver were mainly used to fund common stock repurchases and normal operating expenses.

At January 3, 2015, we were in compliance with debt covenants related to all of our credit facilities.

As of January 3, 2015, we do not consider $484.0 million of undistributed earnings of our foreign subsidiaries to be indefinitely reinvested. As such, we have accrued taxes on these amounts net of applicable foreign tax credits. We have not provided for U.S. federal and state income taxes on the remaining $800.6 million of undistributed earnings of our foreign subsidiaries because we consider such earnings to be indefinitely reinvested outside the U.S. The determination of the amount of incremental tax that would be due in the event these earnings are repatriated in the future is not practicable. However, our intent is to keep these funds indefinitely reinvested outside of the U.S., and our current plans do not indicate a need to repatriate them to fund our U.S. operations.

For the fiscal year ending January 2, 2016, we expect total capital expenditures to be in a range of $110 million to $120 million. These capital expenditures will be primarily related to global concession and retail store expansion and renovation as well as investment in technological infrastructure and strategic investments. We believe that cash flows from operations combined with existing cash on hand and amounts available under the Revolver will be sufficient to fund our working capital needs, common stock repurchases and planned capital expenditures for the next twelve months.

Contractual Obligations

The following table identifies our contractual obligations as of January 3, 2015 (in thousands):

	Total		Less than 1 Year		1 - 3 Years		3 - 5 Years		More than 5 Years
Debt obligations(1)	$	623,556	$	15,725	$	40,825	$	564,200	$	2,806
Interest payments on debt(2)	36,692		11,443		21,350		3,786		113
Minimum royalty payments(3)	509,252		226,363		197,515		85,374		—
Capital lease obligations	7,218		1,039		2,024		1,967		2,188
Operating lease obligations	919,913		158,692		256,278		188,834		316,109
Purchase obligations(4)	310,360		297,203		13,157		—		—
Uncertain tax positions(5)	5,288		5,288		—		—		—
Total contractual obligations(6)	$	2,412,279	$	715,753	$	531,149	$	844,161	$	321,216

(1)Consists of borrowings in the U.S. and Switzerland, excluding contractual interest payments.

(2)Consists of interest payments related to debt and capital lease obligations.

(3)Consists primarily of minimum royalty commitments under exclusive licenses to manufacture watches and jewelry under trademarks not owned by us. However these minimum royalty commitments do not include amounts owed pursuant to various license and design service agreements under which we are obligated to pay the licensors a percentage of our net sales of these licensed products.

(4)Consists primarily of outstanding letters of credit, which represent inventory purchase commitments that typically mature in one to eight months and open non-cancelable purchase orders.

(5)Management has only included its current ASC 740 liability in the table above. Long-term amounts of $14.8 million have been excluded because the payment timing cannot be reasonably estimated.

(6)Pension obligations of $14.0 million have been excluded because the payment timing cannot be reasonably estimated.

Off Balance Sheet Arrangements

There are no off balance sheet arrangements other than those disclosed in commitments and contingencies.

Selected Quarterly Consolidated Financial Data

The table below sets forth selected quarterly consolidated financial information. The information is derived from our unaudited consolidated financial statements and includes, in the opinion of management, all normal and recurring adjustments that management considers necessary for a fair statement of results for such periods. The operating results for any quarter are not necessarily indicative of results for any future period. Certain line items presented in the tables below, when aggregated, may not agree with the corresponding line items on our consolidated statements of income and comprehensive income for fiscal years 2014 and 2013 due to rounding (in thousands, except percentage and per share data).

Fiscal Year 2014	1st Qtr			2nd Qtr			3rd Qtr			4th Qtr
Net sales	$	776,544		$	773,820		$	894,482		$	1,064,845
Gross profit	443,220			444,602			509,038			604,312
Net income	69,161			54,899			106,404			156,146
Net income attributable to noncontrolling interest	2,818			2,382			2,683			2,021
Net income attributable to Fossil Group, Inc	$	66,343		$	52,517		$	103,721		$	154,125
Earnings per share:
Basic	$	1.23		$	0.98		$	1.97		$	3.01
Diluted	$	1.22		$	0.98		$	1.96		$	3.00
Gross profit as a percentage of net sales	57.1		%	57.5		%	56.9		%	56.8		%

Fiscal Year 2013	1st Qtr			2nd Qtr			3rd Qtr			4th Qtr
Net sales	$	680,899		$	706,249		$	810,396		$	1,062,427
Gross profit	378,471			408,901			464,969			609,345
Net income	73,980			70,409			92,374			151,284
Net income attributable to noncontrolling interest	1,794			2,696			2,640			2,766
Net income attributable to Fossil Group, Inc	$	72,186		$	67,713		$	89,734		$	148,518
Earnings per share:
Basic	$	1.22		$	1.16		$	1.59		$	2.69
Diluted	$	1.21		$	1.15		$	1.58		$	2.68
Gross profit as a percentage of net sales	55.6		%	57.9		%	57.4		%	57.4		%

While the majority of our products are not seasonal in nature, a significant portion of our net sales and operating income is generally derived in the second half of the fiscal year. Our third and fourth quarters, which include the “back to school” and Christmas seasons, have historically generated a significant portion of our annual operating income. The amount of net sales and operating income generated during the first quarter is affected by the levels of inventory held by retailers at the end of the Christmas season, as well as general economic conditions and other factors beyond our control. In general, lower levels of inventory held by retailers at the end of the Christmas season may have a positive impact on our net sales and operating income in the first quarter of the following fiscal year as a result of higher levels of restocking orders placed by retailers.

As we expand our retail store base and e-commerce businesses, sales from the direct to consumer distribution channel may increase as a percentage of the total sales mix. Based upon the historical seasonality of direct to consumer sales, we believe this expansion could result in higher levels of profitability in the fourth quarter and lower levels of profitability in the first and second quarters when, due to seasonality, it is more difficult to leverage four wall operating costs and back office expenses against a lower level of sales productivity. In addition, new product launches would generally augment the sales and operating expense levels in the quarter the product launch takes place. The results of operations for a particular quarter may also vary due to a number of factors, including retail, economic and monetary conditions, timing of orders or holidays and the mix of products sold by us.

EX-99.3

Exhibit 99.3

Item 8.  Consolidated Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Fossil Group, Inc.

Richardson, Texas

We have audited the accompanying consolidated balance sheets of Fossil Group, Inc. and subsidiaries (the “Company”) as of January 3, 2015 and December 28, 2013, and the related consolidated statements of income and comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended January 3, 2015. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinions.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Fossil Group, Inc. and subsidiaries as of January 3, 2015 and December 28, 2013, and the results of their operations and their cash flows for each of the three years in the period ended January 3, 2015, in conformity with accounting principles generally accepted in the United States of America.

/s/ Deloitte & Touche LLP

Dallas, Texas

February 20, 2015

(May 7, 2015 as to Notes 1, 2, 9, 13 and 18)

FOSSIL GROUP, INC.

CONSOLIDATED BALANCE SHEETS

IN THOUSANDS

	January 3, 2015			December 28, 2013
Assets
Current assets:
Cash and cash equivalents	$	276,261		$	320,479
Accounts receivable-net	430,498			454,762
Inventories	597,281			570,719
Deferred income tax assets-net	34,084			46,986
Prepaid expenses and other current assets	151,730			86,516
Total current assets	1,489,854			1,479,462
Property, plant and equipment-net	345,606			355,666
Goodwill	197,728			206,954
Intangible and other assets-net	174,364			188,332
Total long-term assets	717,698			750,952
Total assets	$	2,207,552		$	2,230,414
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	159,267		$	165,433
Short-term and current portion of long-term debt	16,646			13,443
Accrued expenses:
Compensation	50,776			80,573
Royalties	54,013			65,117
Co-op advertising	28,591			25,599
Transaction taxes	35,301			35,134
Other	75,609			79,860
Income taxes payable	26,626			26,747
Total current liabilities	446,829			491,906
Long-term income taxes payable	16,610			15,720
Deferred income tax liabilities	87,860			98,168
Long-term debt	613,659			494,711
Other long-term liabilities	58,793			54,542
Total long-term liabilities	776,922			663,141
Commitments and contingencies (Note 13)
Stockholders’ equity:
Common stock, 50,771 and 54,708 shares issued and outstanding at January 3, 2015 and December 28, 2013, respectively	508			547
Additional paid-in capital	171,669			154,376
Retained earnings	822,093			877,063
Accumulated other comprehensive (loss) income	(16,410		)	36,691
Total Fossil Group, Inc. stockholders’ equity	977,860			1,068,677
Noncontrolling interest	5,941			6,690
Total stockholders’ equity	983,801			1,075,367
Total liabilities and stockholders’ equity	$	2,207,552		$	2,230,414

See notes to the consolidated financial statements.

FOSSIL GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

IN THOUSANDS, EXCEPT PER SHARE DATA

Fiscal Year	2014			2013			2012
Net sales	$	3,509,691		$	3,259,971		$	2,857,508
Cost of sales	1,508,519			1,398,285			1,250,965
Gross profit	2,001,172			1,861,686			1,606,543
Selling, general and administrative expenses	1,434,636			1,300,090			1,117,703
Operating income	566,536			561,596			488,840
Interest expense	15,898			9,548			5,160
Other income-net	7,440			9,419			8,542
Income before income taxes	558,078			561,467			492,222
Provision for income taxes	171,467			173,419			137,963
Net income	386,611			388,048			354,259
Less: Net income attributable to noncontrolling interest	9,904			9,896			10,858
Net income attributable to Fossil Group, Inc.	$	376,707		$	378,152		$	343,401
Other comprehensive income (loss), net of taxes:
Currency translation adjustment	$	(65,393	)	$	7,971		$	11,228
Securities available for sale-net change	0			475			(29		)
Cash flow hedges-net change	16,675			(1,251		)	(4,619		)
Pension plan activity	(4,383		)	736			0
Total other comprehensive income (loss)	(53,101		)	7,931			6,580
Total comprehensive income	333,510			395,979			360,839
Less: Comprehensive income attributable to noncontrolling interest	9,904			9,896			10,858
Comprehensive income attributable to Fossil Group, Inc.	$	323,606		$	386,083		$	349,981
Earnings per share:
Basic	$	7.12		$	6.59		$	5.63
Diluted	$	7.10		$	6.56		$	5.59
Weighted average common shares outstanding:
Basic	52,882			57,401			60,959
Diluted	53,080			57,676			61,400

See notes to the consolidated financial statements.

FOSSIL GROUP, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

AMOUNTS IN THOUSANDS

	Common stock					Additional									Accumulated other comprehensive			Stockholders’ equity attributable						Total
	Shares		Par value			paid-in capital			Treasury stock			Retained earnings			income (loss)			to Fossil Group, Inc.			Noncontrolling interest			stockholders’ equity
Balance, December 31, 2011	68,370		$	684		$	149,243		$	(450,700	)	$	1,384,522		$	22,180		$	1,105,929		$	10,917		$	1,116,846
Common stock issued upon exercise of stock options and stock appreciation rights	336		3			6,087			0			0			0			6,090			0			6,090
Tax benefit derived from stock-based compensation	0		0			11,693			0			0			0			11,693			0			11,693
Acquisition of common stock	0		0			0			(271,293		)	0			0			(271,293		)	0			(271,293		)
Retirement of common stock	(9,341	)	(93		)	(60,476		)	722,410			(661,841		)	0			0			0			0
Restricted stock issued in connection with stock-based compensation plan	116		1			(1		)	0			0			0			0			0			0
Common stock forfeitures put to treasury	0		0			417			(417		)	0			0			0			0			0
Stock-based compensation	0		0			18,568			0			0			0			18,568			0			18,568
Net income	0		0			0			0			343,401			0			343,401			10,858			354,259
Other comprehensive income (loss)	0		0			0			0			0			6,580			6,580			0			6,580
Purchase of noncontrolling interest shares	0		0			(7,332		)	0			0			0			(7,332		)	(6,729		)	(14,061		)
Distribution of noncontrolling interest earnings and other	0		0			0			0			0			0			0			(8,198		)	(8,198		)
Acquisitions	150		1			19,898			0			0			0			19,899			81			19,980
Balance, December 29, 2012	59,631		$	596		$	138,097		$	0		$	1,066,082		$	28,760		$	1,233,535		$	6,929		$	1,240,464
Common stock issued upon exercise of stock options and stock appreciation rights	293		3			7,593			0			0			0			7,596			0			7,596
Tax benefit derived from stock-based compensation	0		0			8,379			0			0			0			8,379			0			8,379
Acquisition of common stock	0		0			1,064			(583,318		)	0			0			(582,254		)	0			(582,254		)
Retirement of common stock	(5,340	)	(53		)	(16,094		)	583,318			(567,171		)	0			0			0			0
Restricted stock issued in connection with stock-based compensation plan	124		1			(1		)	0			0			0			0			0			0
Stock-based compensation	0		0			15,338			0			0			0			15,338			0			15,338
Net income	0		0			0			0			378,152			0			378,152			9,896			388,048
Other comprehensive income (loss)	0		0			0			0			0			7,931			7,931			0			7,931
Distribution of noncontrolling interest earnings and other	0		0			0			0			0			0			0			(10,135		)	(10,135		)
Balance, December 28, 2013	54,708		$	547		$	154,376		$	0		$	877,063		$	36,691		$	1,068,677		$	6,690		$	1,075,367
Common stock issued upon exercise of stock options and stock appreciation rights	88		1			3,234			0			0			0			3,235			0			3,235
Tax benefit derived from stock-based compensation	0		0			1,430			0			0			0			1,430			0			1,430
Acquisition of common stock	0		0			800			(438,711		)	0			0			(437,911		)	0			(437,911		)
Retirement of common stock	(4,144	)	(41		)	(6,993		)	438,711			(431,677		)	0			0			0			0
Restricted stock issued in connection with stock-based compensation plan	119		1			(1		)	0			0			0			0			0			0
Stock-based compensation	0		0			18,823			0			0			0			18,823			0			18,823
Net income	0		0			0			0			376,707			0			376,707			9,904			386,611
Other comprehensive income (loss)	0		0			0			0			0			(53,101		)	(53,101		)	0			(53,101		)
Distribution of noncontrolling interest earnings and other	0		0			0			0			0			0			0			(10,317		)	(10,317		)
Purchase of noncontrolling interest shares	0		0			0			0			0			0			0			(336		)	(336		)
Balance, January 3, 2015	50,771		$	508		$	171,669		$	0		$	822,093		$	(16,410	)	$	977,860		$	5,941		$	983,801

See notes to consolidated financial statements.

FOSSIL GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

AMOUNTS IN THOUSANDS

Fiscal Year	2014			2013			2012
Operating Activities:
Net income	$	386,611		$	388,048		$	354,259
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	95,931			81,936			65,536
Stock-based compensation	18,823			15,338			18,568
Increase (decrease) in allowance for returns-net of inventory in transit	3,701			(307		)	3,395
Loss on disposal of assets	465			731			2,290
Impairment losses	9,266			5,750			1,231
Equity in income of joint venture	0			0			(1,382		)
Distribution from joint venture	0			0			1,870
Gain on equity method investment	0			(6,510		)	0
Increase (decrease) in allowance for doubtful accounts	550			(5,422		)	(1,221		)
Excess tax benefits from stock-based compensation	(1,430		)	(8,379		)	(11,693		)
Deferred income taxes and other	2,708			12,400			10,591
Contingent consideration remeasurement	1,112			0			(9,949		)
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable	(8,495		)	(77,452		)	(42,849		)
Inventories	(60,746		)	(52,923		)	10,677
Prepaid expenses and other current assets	(52,726		)	(21,141		)	38,236
Accounts payable	2,477			15,347			(7,017		)
Accrued expenses	(13,315		)	52,904			2,847
Income taxes payable	2,951			11,362			16,211
Net cash provided by operating activities	387,883			411,682			451,600
Investing Activities:
Additions to property, plant and equipment	(94,763		)	(95,234		)	(112,385		)
Increase in intangible and other assets	(9,419		)	(14,818		)	(10,419		)
Proceeds from the sale of property, plant, equipment and other	571			2,029			68
Net change in restricted cash	41			376			6,734
Business acquisitions-net of cash acquired	0			(15,521		)	(229,151		)
Net investment hedge settlement	410			0			0
Net cash used in investing activities	(103,160		)	(123,168		)	(345,153		)
Financing Activities:
Acquisition of common stock	(437,911		)	(582,254		)	(271,293		)
Distribution of noncontrolling interest earnings and other	(10,317		)	(10,135		)	(8,198		)
Purchase of noncontrolling interest shares	(336		)	0			(14,061		)
Excess tax benefits from stock-based compensation	1,430			8,379			11,693
Debt borrowings	961,000			1,222,116			554,568
Debt payments	(838,684		)	(791,495		)	(498,391		)
Proceeds from exercise of stock options	3,235			7,596			6,090
Other financing activities	(3,598		)	(2,456		)	0
Net cash used in financing activities	(325,181		)	(148,249		)	(219,592		)
Effect of exchange rate changes on cash and cash equivalents	(3,760		)	2,978			2,883
Net (decrease) increase in cash and cash equivalents	(44,218		)	143,243			(110,262		)
Cash and cash equivalents:
Beginning of year	320,479			177,236			287,498
End of year	$	276,261		$	320,479		$	177,236

See notes to the consolidated financial statements.

FOSSIL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Significant Accounting Policies

Effective during the first quarter of fiscal 2015, 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.

Consolidated Financial Statements include the accounts of Fossil Group, Inc., a Delaware corporation, and its subsidiaries (the “Company”). The Company reports on a fiscal year reflecting the retail-based calendar (containing 4-4-5 week calendar quarters). References to fiscal years 2014, 2013 and 2012 are for the fiscal years ended January 3, 2015, December 28, 2013 and December 29, 2012, respectively. The Company’s fiscal year periodically results in a 53-week year instead of a normal 52-week year. The current fiscal year ended January 3, 2015 is a 53-week year, with the additional week included in the first quarter of the fiscal year. Accordingly, the information presented herein includes fifty-three weeks of operations for fiscal year 2014 as compared to fifty-two weeks in fiscal years 2013 and 2012. All intercompany balances and transactions are eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the current period presentation. The Company is a leader in the design, development, marketing and distribution of contemporary, high quality fashion accessories on a global basis. The Company’s products are sold primarily through department stores, specialty retailers and Company-owned retail stores worldwide.

Use of Estimates is required in the preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. Management makes estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates its estimates and judgments, including those related to product returns, inventories, long-lived assets, goodwill and trade names, income taxes, warranty costs, hedge accounting and stock-based compensation. Management bases its estimates and judgments on historical experience and on various other factors that it believes are reasonable under the circumstances. Management estimates form the basis for making judgments about the carrying value of the assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates under different assumptions or conditions.

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

A significant portion of sales of the Company’s products are supplied by manufacturers located outside of the U.S., primarily in Asia. While the Company is not dependent on any single manufacturer outside the U.S., the Company could be adversely affected by political or economic disruptions affecting the business or operations of third-party manufacturers located outside of the U.S. In fiscal year 2014, two of the Company’s majority-owned assembly factories accounted for approximately 57% of the Company’s total watch assembly and jewelry production.

The Company has entered into multi-year, worldwide exclusive license agreements for the manufacture, distribution and sale of products bearing the brand names of certain globally recognized fashion companies. Sales of the Company’s licensed products amounted to 53.5% of the consolidated net sales for fiscal year 2014, of which MICHAEL KORS® product sales accounted for 26.3%.

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

Accounts Receivable are stated net of allowances of approximately $68.2 million and $63.1 million for estimated customer returns at the end of fiscal years 2014 and 2013, respectively, and net of doubtful accounts of approximately $11.8 million at the end of both fiscal years 2014 and 2013. The Company’s policy is to maintain allowances for bankruptcies until the bankruptcies are actually settled. The total amount charged to cost and expenses during fiscal year 2014 relating to the Company’s doubtful accounts receivable was $3.3 million.

Inventories are stated at the lower of market or average cost, including any applicable duty and freight charges. Inventory held at consignment locations is included in the Company’s finished goods inventory, and at the end of fiscal years 2014 and 2013, was $40.7 million and $29.9 million, respectively.

Investments in which the Company has significant influence over the investee are accounted for utilizing the equity method. If the Company does not have significant influence over the investee, the cost method is utilized.

Property, Plant and Equipment is stated at cost less accumulated depreciation and amortization. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets of thirty years for buildings, generally five years for machinery and equipment and furniture and fixtures and three to seven years for computer equipment and software. Leasehold improvements are amortized over the shorter of the lease term or the asset’s estimated useful life.

Property, plant and equipment and other long-lived assets are evaluated for impairment whenever events or conditions indicate that the carrying value of an asset may not be recoverable based on expected undiscounted cash flows related to the asset. Property, plant and equipment and key money impairment losses related to underperforming Company-owned retail stores of approximately $9.3 million, $5.8 million and $1.2 million were recorded in fiscal years 2014, 2013 and 2012, respectively, and are included in selling, general and administrative expenses in the Company’s consolidated statements of income and comprehensive income.

Goodwill and Other Intangible Assets include the cost in excess of net tangible assets acquired (goodwill), trademarks, trade names, customer lists and patents. Trademarks, customer lists and patents are amortized using the straight-line method over their estimated useful lives, which are generally three to 20 years. Goodwill and other indefinite-lived intangible assets, such as trade names acquired in business combinations, are evaluated for impairment annually as of the end of the fiscal year. Additionally, if events or conditions were to indicate the carrying value of a reporting unit or an indefinite-lived intangible asset may not be recoverable, the Company would evaluate the asset for impairment at that time. Impairment testing compares the carrying amount of the reporting unit or other intangible assets with its fair value. When the carrying amount of the reporting unit or other intangible assets exceeds its fair value, an impairment charge is recorded.

The Company has three reporting units for which it evaluates goodwill for impairment. These reporting units are (i) Americas, (ii) Europe and (iii) Asia. The fair value of each reporting unit is estimated using market comparable information and an income approach. If the estimated fair value of a reporting unit exceeds its carrying value, no impairment charge is recorded. As of January 3, 2015, the fair value of each of these reporting units substantially exceeded its carrying value.

Judgments and assumptions are inherent in the Company’s estimate of future cash flows used to determine the estimate of the reporting unit’s fair value. The most significant assumptions associated with the fair value calculations include estimated future cash flows. The Company’s estimated future cash flows are dependent on estimated future growth rates, discount rates and operating margins. If actual results differ, the estimated future cash flows may not be realized, and future impairments of goodwill may be incurred.

The Company estimates the fair value of its trade names using discounted cash flow methodologies. Due to the inherent uncertainties involved in making the estimates and assumptions used in the fair value analysis, actual results may differ, which could alter the fair value of the trade names and possibly result in impairment charges in future periods. The Company has completed the required annual impairment testing for trade names for fiscal years 2014, 2013 and 2012. No impairment charges were recorded in fiscal years 2014, 2013 or 2012.

Accrued Expenses Other includes liabilities relating to warranties, duty, deferred compensation, gift cards, foreign exchange forward contracts (“forward contracts”), deferred rent, and other liabilities which are current in nature.

Other Long-Term Liabilities includes obligations relating to asset retirements, deferred rent, forward contracts and defined benefits relating to certain international employees that are not current in nature.

Cumulative Translation Adjustment is included as a component of accumulated other comprehensive income and reflects the adjustments resulting from translating the financial statements of foreign subsidiaries into U.S. dollars. The functional currency of the Company’s foreign subsidiaries is the currency of the primary economic environment in which the entity operates, which is generally the local currency of the country. Accordingly, assets and liabilities of the foreign subsidiaries are translated to U.S. dollars at fiscal year-end exchange rates. Income and expense items are translated at daily or average monthly exchange rates. Those changes in exchange rates that affect cash flows and the related receivables or payables are recognized as transaction gains and losses in determining net income. The Company incurred net foreign currency transaction gains, including gains and losses associated with the settlement of forward contracts, of approximately $20,000, $1.0 million and $5.6 million fiscal years 2014, 2013 and 2012, respectively. These net gains have been included in other income—net in the Company’s consolidated statements of income and comprehensive income.

Hedging Instruments consist of forward contracts and an interest rate swap. Forward contracts are entered into by the Company principally to hedge the future payment of intercompany inventory transactions by its non-U.S. subsidiaries. These cash flow hedges are stated at estimated fair value and changes in fair value are reported as a component of other comprehensive income (loss), net of taxes on the Company’s consolidated statements of income and comprehensive income. If the Company was to settle its euro, British pound, Canadian dollar, Japanese yen, Australian dollar and Mexican peso based forward contracts at fiscal year-end 2014, the result would have been a net gain of approximately $18.1 million, net of taxes. This unrealized gain is recognized in other comprehensive income (loss), net of taxes on the Company’s consolidated statements of income and comprehensive income. Additionally, to the extent that any of these contracts are not considered to be perfectly effective in offsetting the change in the value of the cash flows being hedged, any changes in fair value relating to the ineffective portion of these contracts would be recognized in other income-net on the Company’s consolidated statements of income and comprehensive income. Also, the Company has entered into an interest rate swap agreement to effectively convert a portion of its variable rate debt obligations from a floating rate to a fixed rate. Changes in the fair value of the interest rate swap are recorded as a component of accumulated other comprehensive income within stockholders’ equity, and are recognized in interest expense in the period in which the payment is settled. 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 8—Derivatives and Risk Management for more information regarding the Company’s use of derivatives.

Litigation Liabilities are estimated amounts for claims that are probable and can be reasonably estimated and are recorded as liabilities in the Company’s consolidated balance sheets. The likelihood of a material change in these estimated liabilities would be dependent on new claims that may arise, changes in the circumstances used to estimate amounts for prior period claims and favorable or unfavorable final settlements of prior period claims. As additional information becomes available, the Company assesses the potential liability related to new claims and existing claims and revises estimates as appropriate. As new claims arise or circumstances change relative to prior claim assessments, revisions in estimates of the potential liability could materially impact the Company’s consolidated results of operations and financial position.

Stock-Based Compensation is recognized as expense related to the fair value of employee stock based awards. The Company utilizes the Black-Scholes model to determine the fair value of stock options and stock appreciation rights on the date of grant. The model requires the Company to make assumptions concerning (i) the length of time employees will retain their vested stock options and stock appreciation rights before exercising them (“expected term”), (ii) the volatility of the Company’s common stock price over the expected term and (iii) the number of stock options and stock appreciation rights that will be forfeited. Changes in these assumptions can materially affect the estimate of fair value of stock-based compensation and, consequently, the related expense amounts recognized on the Company’s consolidated statements of income and comprehensive income.

Revenues are recognized at the point title and the risks and rewards of ownership have passed to the customer, based on the terms of sale. Revenue from sales of the Company’s products including those that are subject to inventory consignment agreements is recognized when title and risk of loss transfers, delivery has occurred, the price to the buyer is determinable and collectability is reasonably assured. The Company accepts limited returns and may request that a customer return a product if the customer has an excess of any style that the Company has identified as being a poor performer for that customer or geographic location. The Company continually monitors returns and maintains a provision for estimated returns based upon historical experience and any specific issues identified. Product returns are accounted for as reductions to revenue, cost of sales, accounts receivable and an increase in inventory to the extent the returned product is resalable. While returns have historically been within management’s expectations and the provisions established, future return rates may differ from those experienced in the past. In the event that the Company’s products are performing poorly in the retail market and/or it experiences product damages or defects at a rate significantly higher than the historical rate, the resulting returns could have an adverse impact on the operating results for the period or periods in which such returns occur. Taxes imposed by governmental authorities on the Company’s revenue-producing activities with customers, such as sales taxes and value added taxes, are excluded from net sales.

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

Selling, General and Administrative Expenses (“SG&A”) include selling and distribution expenses primarily consisting of sales and distribution labor costs, sales distribution center and warehouse facility costs, depreciation expense

related to sales distribution and warehouse facilities, the four-wall operating costs of the Company’s retail stores, point-of- sale expenses, advertising expenses and art, design and product development labor costs. SG&A also includes general and administrative expenses primarily consisting of administrative support labor and “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.

Advertising Costs for in-store and media advertising as well as co-op advertising, catalog costs, product displays, show/exhibit costs, advertising royalties related to the sales of licensed brands, internet costs associated with affiliation fees, printing, sample costs and promotional allowances are expensed as incurred. Advertising costs were approximately $232.7 million, $205.6 million and $185.1 million for fiscal years 2014, 2013 and 2012, respectively.

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

Noncontrolling Interest is recognized as equity in the Company’s consolidated balance sheets, is reflected in net income attributable to noncontrolling interest in the consolidated statements of income and comprehensive income and is captured within the summary of changes in equity attributable to controlling and noncontrolling interests. Noncontrolling interests represent ownership interests in the Company’s subsidiaries held by third parties.

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

Earnings Per Share (“EPS”) is based on the weighted average number of common shares outstanding during each period. Diluted EPS adjusts basic EPS for the effects of dilutive common stock equivalents outstanding during each period using the treasury stock method.

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

Fiscal Year	2014		2013		2012
Numerator:
Net income attributable to Fossil Group, Inc.	$	376,707	$	378,152	$	343,401
Denominator:
Basic EPS computation:
Basic weighted average common shares outstanding	52,882		57,401		60,959
Basic EPS	$	7.12	$	6.59	$	5.63
Diluted EPS computation:
Basic weighted average common shares outstanding	52,882		57,401		60,959
Stock options, stock appreciation rights and restricted stock units	198		275		441
Diluted weighted average common shares outstanding	53,080		57,676		61,400
Diluted EPS	$	7.10	$	6.56	$	5.59

Approximately 318,448, 274,944 and 316,638 weighted shares issuable under stock-based awards were not included in the diluted EPS calculation in fiscal years 2014, 2013 and 2012, respectively, because they were antidilutive.

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

Recently Issued Accounting Standards

In January 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 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 adoption will have a material impact on the Company’s consolidated results of operations or financial position.

In April 2014, FASB issued ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”). Under ASU 2014-08, only disposals of a component of an entity, or a group of components of an entity, that represent a strategic shift that has (or will have) a major effect on the entity’s results and operations would qualify as discontinued operations. ASU 2014-08 also provides guidance on the financial statement presentations and disclosures of discontinued operations. ASU 2014-08 is effective prospectively for all disposals, or components classified as held for sale, for fiscal years, and interim periods within those years, beginning on or after December 15, 2014. Early adoption is permitted but only for disposals that have not been previously reported. The Company is evaluating the effect of adopting ASU 2014-08, but does not expect 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 provisions, which had no material impact on the Company’s financial position, results of operations or cash flows, were adopted effective fiscal year 2014:

·ASU 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists;

·ASU 2013-05, Foreign Currency Matters (Topic 830): Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity; and

·ASU 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities.

2. Acquisitions, Divestiture and Goodwill

Skagen Designs, Ltd. Acquisition.  On April 2, 2012, the Company acquired Skagen Designs, Ltd. and certain of its international affiliates (“Skagen Designs”). The purchase price was $231.7 million in cash and 150,000 shares of the Company’s common stock valued at $19.9 million. In addition, subject to the purchase agreement, the sellers could receive up to 100,000 additional shares of the Company’s common stock if the Company’s net sales of SKAGEN® branded products exceed certain thresholds over a defined period of time (the “Earnout”).

The Company recorded the Earnout as a $9.9 million contingent consideration liability in accrued expenses—other in the Company’s consolidated balance sheets as of the acquisition date. As of December 29, 2012, the contingent consideration liability was remeasured at zero, which resulted in a decrease in operating expenses of $9.9 million during fiscal year 2012. The contingent consideration liability remained valued at zero as the Earnout criteria was not met. The results of Skagen Designs’ operations have been included in the Company’s consolidated financial statements since April 2, 2012.

Prior to closing the Skagen Designs acquisition, the Company incurred approximately $600,000 of acquisition-related expenses for legal, accounting and valuation services during fiscal year 2011 and the first quarter of fiscal year 2012. The Company incurred additional acquisition and integration related costs of approximately $8.2 million in fiscal year 2012, subsequent to the closing date. Acquisition and integration costs were reflected in SG&A on the Company’s consolidated statements of income and comprehensive income. Assets acquired and liabilities assumed in the transaction were recorded at their acquisition date fair values, while transaction costs associated with the acquisition were expensed as incurred.

Because the total purchase price for Skagen Designs exceeded the fair values of the tangible and intangible assets acquired, $140.4 million of goodwill was recorded equal to the difference. The element of goodwill that is not separable into identifiable intangible assets represents expected synergies.

The goodwill and trade name assets recognized from the acquisition have indefinite useful lives, were tested for impairment beginning fiscal year-end 2012 and will continue to be tested for impairment annually or on an interim basis if indicators are present. The amortization periods for the acquired customer lists, patents and noncompete agreements range from three years to nine years. Approximately $133.8 million of the goodwill recognized in the acquisition is deductible for tax purposes.

During the fourth quarter of fiscal year 2014, the Company participated in arbitration proceedings regarding the original purchase price for Skagen Designs, which concluded that the original purchase amount for Skagen Designs was overstated and awarded the Company approximately $6.0 million. The Company recognized the amount in other income-net in the Company’s consolidated statements of income and comprehensive income for the fiscal year 2014.

Fossil Spain Acquisition.  On August 10, 2012, the Company’s joint venture company, Fossil, S.L. (“Fossil Spain”), entered into a Framework Agreement (the “Framework Agreement”) with several related and unrelated parties, including General De Relojeria, S.A. (“General De Relojeria”), the Company’s joint venture partner. Pursuant to the Framework Agreement, Fossil Spain was granted the right to acquire the outstanding 50% of its shares owned by General De Relojeria upon the expiration of the joint venture agreement on December 31, 2015. Upon the acquisition of these shares, Fossil Spain will become a wholly-owned subsidiary of the Company.

Effective January 1, 2013, pursuant to the Framework Agreement, the Company assumed control over the board of directors and the day-to-day management of Fossil Spain. As a result of this change, the Company now controls Fossil Spain and began consolidating it, instead of treating it as an equity method investment.

The Company remeasured its preexisting investment in Fossil Spain to fair value as of January 1, 2013, resulting in a gain of $6.5 million, which was recorded in other income-net on the Company’s consolidated statements of income and comprehensive income. The results of Fossil Spain’s operations have been included in the Company’s consolidated financial statements since January 1, 2013. The Company recorded approximately $10.6 million of goodwill related to the acquisition.

The purchase price for the shares has a fixed and variable component. The fixed portion is based on 50% of the net book value of Fossil Spain as of December 31, 2012. The fixed portion was measured at 5.2 million euros (approximately $6.8 million at the purchase date). The Company recorded a contingent consideration liability of 5.9 million euros (approximately $7.8 million at the purchase date) related to the variable portion of the purchase price as of January 1, 2013. The variable portion is determined based on Fossil Spain’s aggregated results of operations with a minimum annual variable price of 2.0 million euros (approximately $2.6 million at the purchase date) and a maximum annual variable price of 3.5 million euros (approximately $4.6 million at the purchase date) for each of the calendar years 2013, 2014 and 2015. See Note 9—Fair Value Measurements for additional information about the contingent consideration liability for Fossil Spain.

Of the total consideration for Fossil Spain, 3.2 million euros (approximately $3.9 million) relating to the contingent consideration for 2014 was recorded in accrued expenses—other, and 6.6 million euros (approximately $7.9 million) of the total consideration was recorded in other long-term liabilities in the consolidated balance sheets at January 3, 2015.

Bentrani Watches, LLC Acquisition.  On December 31, 2012, the Company purchased substantially all of the assets of Bentrani Watches, LLC (“Bentrani”). Bentrani was a distributor of watch products in 16 Latin American countries and was based in Miami, Florida. Bentrani was the Company’s largest third-party distributor and had partnered with the Company for ten years. The purchase price was $26.6 million, comprised of $19.3 million in cash and $7.3 million in forgiveness of a payable to the Company. The Company recorded approximately $8.9 million of goodwill related to the acquisition. The results of Bentrani’s operations have been included in the Company’s consolidated financial statements since the acquisition date. On June 28, 2013, the Company also obtained control of Bentrani Chile SpA (“Bentrani Chile”), and the results of Bentrani Chile’s operations have been included in the Company’s consolidated financial statements since that date. The terms of the Bentrani Chile acquisition were not significant.

Swiss Technology Components AG Divestiture.  On April 24, 2013, Swiss Technology Holding GmbH (“STH”), a wholly-owned subsidiary of the Company, sold 80% of STH’s share in Swiss Technology Components AG (“STC”). STC was deconsolidated as a result of the Company’s termination of control and has subsequently been accounted for under the cost method.

Goodwill.  The changes in the carrying amount of goodwill were as follows (in thousands):

	Americas			Europe			Asia			Total
Balance at December 29, 2012	$	110,778		$	62,034		$	11,981		$	184,793
Acquisitions	8,890			10,641			0			19,531
Foreign currency changes	(13		)	2,692			(49		)	2,630
Balance at December 28, 2013	$	119,655		$	75,367		$	11,932		$	206,954
Foreign currency changes	(217		)	(8,934		)	(75		)	(9,226		)
Balance at January 3, 2015	$	119,438		$	66,433		$	11,857		$	197,728

3. Inventories

Inventories consisted of the following (in thousands):

At Fiscal Year End	2014		2013
Components and parts	$	48,797	$	56,275
Work-in-process	13,719		14,017
Finished goods	534,765		500,427
Inventories	$	597,281	$	570,719

4. Warranty Liabilities

The Company’s warranty liabilities are primarily related to watch products and are included in accrued expenses—other in the consolidated balance sheets. The Company’s FOSSIL® watch products sold in the U.S. are covered by a limited warranty against defects in materials or workmanship for a period of 11 years from the date of purchase. RELIC® watch products sold in the U.S. are covered by a comparable 12 year warranty, while certain other watches sold by the Company are covered by a comparable two year limited warranty. SKAGEN branded watches are covered by a lifetime warranty against defects due to faulty material or workmanship subject to normal conditions of use. The Company’s warranty liability is

recorded using historical warranty repair expense. As changes in warranty costs are experienced, the warranty accrual is adjusted as necessary. Warranty liability activity consisted of the following (in thousands):

Fiscal Year	2014			2013			2012
Beginning balance	$	15,658		$	13,383		$	10,996
Settlements in cash or kind	(12,313		)	(10,672		)	(6,945		)
Warranties issued and adjustments to preexisting warranties(1)	10,155			12,607			8,737
Liabilities assumed in acquisition	0			340			595
Ending balance	$	13,500		$	15,658		$	13,383

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

5. Prepaid Expenses and Other Current Assets

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

At Fiscal Year End	2014		2013
Prepaid royalties	$	42,698	$	12,322
Prepaid taxes	34,094		29,645
Other receivables	14,840		7,378
Forward contracts	25,867		3,289
Prepaid rent	13,543		10,599
Restricted cash	125		39
Other prepaid expenses	20,359		23,048
Other	204		196
Prepaid expenses and other current assets	$	151,730	$	86,516

6. Property, Plant and Equipment

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

At Fiscal Year End	2014		2013
Land	$	14,508	$	15,184
Buildings	71,580		78,013
Machinery and equipment	36,992		39,154
Furniture and fixtures	108,137		98,494
Computer equipment and software	205,831		186,123
Leasehold improvements	246,882		237,671
Construction in progress	21,867		15,814
	705,797		670,453
Less accumulated depreciation and amortization	360,191		314,787
Property, plant and equipment-net	$	345,606	$	355,666

7. Intangible and Other Assets

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

		2014				2013
At Fiscal Year End	Useful Lives	Gross Amount		Accumulated Amortization		Gross Amount		Accumulated Amortization
Intangibles-subject to amortization:
Trademarks	10 yrs.	$	4,174	$	2,950	$	4,175	$	2,695
Customer lists	5 - 10 yrs.	41,703		17,457		43,367		14,065
Patents	3 - 20 yrs.	2,273		1,902		2,273		1,360
Noncompete agreement	6 yrs.	1,855		851		1,913		558
Other	7 - 20 yrs.	353		341		263		207
Total intangibles-subject to amortization		50,358		23,501		51,991		18,885
Intangibles-not subject to amortization:
Trade names		83,610				83,659
Other assets:
Key money deposits		31,892		18,661		35,535		17,038
Other deposits		21,854				22,574
Deferred compensation plan assets		2,477				2,360
Deferred tax asset-net		8,583				10,044
Restricted cash		575				752
Shop-in-shop		16,333		9,660		16,334		7,767
Interest rate swap		1,724				4,307
Forward contracts		1,802				219
Other		6,978				4,247
Total other assets		92,218		28,321		96,372		24,805
Total intangible and other assets		$	226,186	$	51,822	$	232,022	$	43,690
Total intangible and other assets-net				$	174,364			$	188,332

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 $5.1 million, $5.2 million and $3.5 million for fiscal years 2014, 2013 and 2012, respectively. Estimated aggregate future amortization expense by fiscal year for intangible assets is as follows (in thousands):

Fiscal Year	Amortization Expense
2015	$	4,633
2016	$	4,494
2017	$	4,236
2018	$	3,877
2019	$	3,780

8. Derivatives and Risk Management

Cash Flow Hedges.  The primary risks managed by using derivative instruments are the fluctuations in global currencies that will ultimately be used by non-U.S. dollar functional currency subsidiaries to settle future payments of intercompany inventory transactions denominated in U.S. dollars. Specifically, the Company projects future intercompany purchases by its non-U.S. dollar functional currency subsidiaries generally over a period of up to 18 months. The Company enters into 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 eligibility, which requires that they represent foreign-currency-denominated forecasted intra-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 its consolidated statements of income and comprehensive income, and there were no components excluded from the assessment of hedge effectiveness for fiscal years 2014, 2013 and 2012.

All derivative instruments are recognized as either assets or liabilities at fair value in the 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 within the equity section of the Company’s 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 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 for fiscal years 2014, 2013 and 2012. 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 January 3, 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
Type	Amount
Euro	160.4
British pound	26.0
Canadian dollar	34.4
Japanese yen	2,865.0
Australian dollar	15.0
Mexican peso	164.3

Contract Currency
Type	Amount
U.S. dollar	211.6
U.S. dollar	42.2
U.S. dollar	30.9
U.S. dollar	26.8
U.S. dollar	13.1
U.S. dollar	12.0

The Company is also exposed to interest rate risk related to its $250 million U.S.-based term loan (“Term Loan”). To manage the interest rate risk related to this 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. 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.

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 in cumulative translation adjustment as a component of other comprehensive income (loss) in the Company’s 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 consolidated statements of income and comprehensive income. Gains and losses reported in accumulated other comprehensive income 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 January 3, 2015 and December 28, 2013. Changes in the fair value of derivatives not designated as hedging instruments are recognized in earnings when they occur.

The effective portion of gains and losses on cash flow hedges that was recognized in other comprehensive income (loss), net of taxes during fiscal years 2014 and 2013 was (in thousands):

	For the Fiscal Year Ended January 3, 2015			For the Fiscal Year Ended December 28, 2013
Cash flow hedges:
Forward contracts	$	22,927		$	(1,391	)
Interest rate swap	(2,159		)	(1,031		)
Total gain (loss) recognized in other comprehensive income (loss), net of taxes	$	20,768		$	(2,422	)

The following table illustrates the effective portion of gains and losses on derivative instruments recorded in other comprehensive income (loss), net of taxes during the term of the hedging relationship and reclassified into earnings, and gains and losses on derivatives not designated as hedging instruments recorded directly to earnings during fiscal years 2014 and 2013 (in thousands):

	Consolidated Statements of Income and Comprehensive Income Location		For the Fiscal Year Ended January 3, 2015			For the Fiscal Year Ended December 28, 2013
Forward contracts designated as cash flow hedging instruments	Other income-net	Total gain (loss) reclassified from other comprehensive income (loss)	$	5,856		$	(246	)
Forward contracts not designated as hedging instruments	Other income-net	Total gain (loss) recognized in income	$	(148	)	$	567
Interest rate swap designated as a cash flow hedging instrument	Interest expense	Total gain loss reclassified from other comprehensive income (loss)	$	(1,763	)	$	(925	)

The following table discloses the fair value amounts for the Company’s derivative instruments as separate asset and liability values, presents the fair value of derivative instruments on a gross basis, and identifies the line items in the consolidated balance sheets in which the fair value amounts for these categories of derivative instruments are included (in thousands):

	Asset Derivatives						Liability Derivatives
	January 3, 2015			December 28, 2013			January 3, 2015			December 28, 2013
	Consolidated Balance Sheets Location	Fair Value		Consolidated Balance Sheets Location	Fair Value		Consolidated Balance Sheets Location	Fair Value		Consolidated Balance Sheets Location	Fair Value
Forward contracts designated as cash flow hedging instruments	Prepaid expenses and and other current assets	$	25,867	Prepaid expenses and other current assets	$	3,289	Accrued expenses-other	$	0	Accrued expenses-other	$	7,651
Interest rate swap designated as a cash flow hedging instrument	Prepaid expenses and and other current assets	$	0	Prepaid expenses and other current assets	0		Accrued expenses-other	2,157		Accrued expenses-other	2,783
Forward contracts designated as cash flow hedging instruments	Intangible and other assets-net	$	1,802	Intangible and other assets-net	219		Other long-term liabilities	0		Other long-term liabilities	563
Interest rate swap designated as a cash flow hedging instrument	Intangible and other assets-net	$	1,724	Intangible and other assets-net	4,307		Other long-term liabilities	357		Other long-term liabilities	1,693
Total		$	29,393		$	7,815		$	2,514		$	12,690

At the end of fiscal year 2014, the Company had forward contracts with maturities extending through June 2016. The estimated net amount of the existing gains and losses at January 3, 2015 that is expected to be reclassified into earnings within the next twelve months is a gain of $16.9 million. See Note 1—Significant Accounting Policies for additional disclosures on foreign currency hedging instruments.

9. Fair Value Measurements

The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date.

ASC 820, Fair Value Measurement and Disclosures (“ASC 820”), establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into three broad levels as follows:

·Level 1—Quoted prices in active markets for identical assets or liabilities.

·Level 2—Inputs, other than quoted prices in active markets, that are observable either directly or indirectly.

·Level 3—Unobservable inputs based on the Company’s assumptions.

ASC 820 requires the use of observable market data if such data is available without undue cost and effort.

The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of 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 following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of December 28, 2013 (in thousands):

	Fair Value at December 28, 2013
	Level 1		Level 2		Level 3		Total
Assets:
Forward contracts	$	0	$	3,508	$	0	$	3,508
Deferred compensation plan assets:
Investment in publicly traded mutual funds	2,360		0		0		2,360
Interest rate swap	0		4,307		0		4,307
Total	$	2,360	$	7,815	$	0	$	10,175
Liabilities:
Contingent consideration	$	0	$	0	$	8,084	$	8,084
Forward contracts	0		8,214		0		8,214
Interest rate swap	0		4,476		0		4,476
Total	$	0	$	12,690	$	8,084	$	20,774

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 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 Company estimates the fair value of its debt using Level 2 inputs, such as interest rates, related terms and maturities. The fair value of the Company’s debt approximated its carrying amount as of January 3, 2015 and December 28, 2013. As of January 3, 2015 and December 28, 2013, 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 Fossil Spain was determined using Level 3 inputs. See Note 2—Acquisitions, Divestiture and Goodwill for additional disclosures about the acquisition. The contingent consideration recorded as of January 3, 2015 is based on Fossil Spain’s forecasted earnings during the two year period from January 1, 2014 to December 31, 2015. During the fiscal year 2014, the Company paid 2.8 million euros (approximately $3.4 million) for the 2013 contingent consideration. The contingent consideration for calendar year 2014 will be paid during 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. Due to an increase in Fossil Spain’s estimated future revenue for calendar years 2014 and 2015, the Company recorded an unfavorable $1.1 million remeasurement adjustment to the contingent consideration liability in SG&A during the fiscal year 2014. Future revenue growth based on management’s projections for the 2015 calendar year is approximately 10%. Operating expenses are projected to be approximately 28% 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 years 2014 and 2015 is valued at the maximum annual variable price of 3.5 million euros (approximately $4.2 million) for each year. A decrease in future cash flows may result in a lower estimated fair value of the contingent consideration liability. Future changes in the estimated fair value of the contingent consideration liability, if any, will be reflected in earnings.

The fair values of the interest rate swap asset and liability are determined using valuation models based on market observable inputs, including forward curves, mid-market price, foreign exchange spot or forward rates and volatility levels. See Note 8—Derivatives and Risk Management for additional disclosures about the interest rate swap.

The following tables present the fair value hierarchy for those assets and liabilities measured at fair value on a nonrecurring basis as of January 3, 2015 and December 28, 2013 (in thousands):

	For the Fiscal Year Ended		Fair Value Measurements Using						Total Impairment
	January 3, 2015		Level 1		Level 2		Level 3		Charge
Assets:
Specific Company-owned stores	$	284	$	0	$	0	$	284	$	(9,266	)
	For the Fiscal Year Ended		Fair Value Measurements Using:						Total Impairment
	December 28, 2013		Level 1		Level 2		Level 3		Charge
Assets:
Specific Company-owned stores	$	668	$	0	$	0	$	668	$	(5,750	)

In accordance with the provisions of ASC 360, Property, Plant and Equipment, property, plant and equipment—net with a carrying amount of $9.1 million related to Company-owned retail store leasehold improvements and fixturing was written down to a fair value of $0.3 million, and related key money in the amount of $0.5 million was deemed not recoverable, resulting in total impairment charges of $9.3 million for fiscal year 2014.

In fiscal year 2013, property, plant and equipment—net with a carrying amount of $6.4 million related to Company-owned retail store leasehold improvements, fixturing, computer software and computer hardware was written down to a fair value of $0.7 million, resulting in an impairment charge of $5.8 million for fiscal year 2013.

The fair values of assets related to the Company-owned retail stores were determined using Level 3 inputs. Impairment expenses related to Company-owned retail stores are recorded in SG&A within the Americas, Europe and Asia segments based on the geographic location of the assets.

10. Debt

The Company’s debt consisted of the following, excluding capital lease obligations, (in millions):

	January 3, 2015		December 28, 2013
U.S. revolving line of credit	$	389.0	$	250.0
U.S. term loan	231.3		246.9
Other international	3.3		3.8
Total debt	623.6		500.7
Less current portion	15.7		12.6
Long-term debt	$	607.9	$	488.1

U.S.-Based.  On May 17, 2013, the Company and certain of its subsidiaries entered into a five year Credit Agreement (the “Credit Agreement”) which provided for revolving credit loans in the amount of $750 million (the “Revolver”), a swingline subfacility up to $20 million, an up to $10 million subfacility for letters of credit, and a term loan in the amount of $250 million (the “Term Loan”). On May 23, 2014, the Company, entered into a First Amendment (the “Amendment”) to the Credit Agreement. The Amendment increased the credit limit on the Revolver by $300 million to $1,050 million. The Credit Agreement expires and is due and payable on May 17, 2018. The Credit Agreement is guaranteed by all direct and indirect material domestic subsidiaries of the Company and is secured by 65% of the outstanding voting capital stock and 100% of the non-voting capital stock of the following foreign subsidiaries of the Company: Fossil Europe B.V., Swiss Technology Holding GmbH and Fossil (East) Limited. In connection with entering into the Credit Agreement, the Company paid upfront fees of approximately $4.8 million, which are being amortized over the life of the Credit Agreement.

Amounts outstanding under the Revolver and Term Loan bear interest at the Company’s option of (i) the base rate (defined as the higher of (a) the prime rate publicly announced by Wells Fargo (3.25% at fiscal year-end 2014), (b) the federal funds rate plus 0.50% and (c) the London Interbank Offer Rate (“LIBOR”) (0.16% at fiscal year-end 2014) for an interest period of one month plus 1.00%) plus the base rate applicable margin (which varies based upon the Company’s consolidated leverage ratio (the “Ratio”) from 0.25% if the Ratio is less than 1.00 to 1.00, to 1.00% if the 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 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). 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 base rate applicable margin. Interest based upon the base rate is payable quarterly in arrears. Interest based upon the LIBOR rate is payable either monthly or quarterly in arrears, depending on the interest period selected by the Company. The Revolver also includes a commitment fee ranging from 0.20% to 0.35% for any amounts not drawn under the Revolver.

During fiscal 2014, the Company made principal payments of $15.6 million under the Term Loan. The Company had net borrowings of $139.0 million under the Revolver during fiscal 2014. Borrowings were primarily used to fund common stock repurchases and normal operating expenses. Amounts available under the Revolver are reduced by any amounts outstanding under standby letters of credit. As of January 3, 2015, the Company had available borrowings of approximately $660.1 million under the Revolver. The Company incurred approximately $6.3 million and $6.1 million of interest expense related to the Term Loan and Revolver, respectively, including the interest rate swap impact during fiscal year 2014.

Financial covenants in the Credit Agreement require the Company to maintain (i) a consolidated leverage ratio no greater than 2.50 to 1.00, (ii) a consolidated interest coverage ratio no less than 3.50 to 1.00 and (iii) maximum capital expenditures not in excess of (x) $200.0 million during each of fiscal years 2014 and 2015 and (y) $250.0 million during each fiscal year thereafter, subject to certain adjustments. The Credit Agreement contains representations, warranties, covenants, events of default and indemnities that are customary for agreements of this type. The Company was in compliance with all covenants in the Credit Agreement as of January 3, 2015.

The Company’s debt as of January 3, 2015, excluding capital lease obligations, matures as follows (in millions):

Less than 1 Year	$	15.7
Year 2	22.0
Year 3	18.9
Year 4	564.1
Year 5	0.1
Thereafter	2.8
Total	$	623.6

Letters of Credit.  On May 11, 2012, the Company, Fossil Partners, L.P., Fossil Europe GmbH and Fossil Asia Pacific Ltd. renewed their Letter of Credit Facility (the “LC Facility”) to allow for $80 million of commercial letters of credit. At the end of fiscal years 2014 and 2013, the Company had outstanding letters of credit under the LC Facility of approximately $50.3 million and $49.7 million, respectively. Letters of credit issued under the LC Facility are primarily used for the purchase of inventory.

Capital Lease Obligations.  At the end of fiscal years 2014 and 2013, the Company had current capital lease obligations of $0.9 million and $0.8 million, respectively, and long-term capital lease obligations of $5.8 million and $6.6 million, respectively.

11. Other Income—Net

Other income—net consisted of the following (in thousands):

Fiscal Year	2014		2013		2012
Interest income	$	799	$	809	$	889
Remeasurement of investment in Fossil Spain to fair value	0		6,510		0
Gain on Skagen Designs arbitration settlement	5,968		0		0
Equity in the earnings of joint venture, net of tax	0		0		972
Currency gains	20		951		5,565
Other gains	653		1,149		1,116
Other income—net	$	7,440	$	9,419	$	8,542

12. Taxes

Income Taxes.  Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the consolidated deferred tax assets and liabilities were (in thousands):

Fiscal Year	2014			2013
Current deferred income tax assets (liabilities):
Bad debt allowance	$	4,387		$	4,467
Returns allowance	8,724			8,641
Inventory	11,882			12,169
Warranty reserve	2,590			3,040
Compensation	6,459			9,189
Accrued liabilities	6,658			0
Deferred rent	1,128			1,810
Loss carryforwards	1,910			3,392
Other	(5,007		)	12,070
Total current deferred tax assets	38,731			54,778
Valuation allowance	(5,168		)	(7,946		)
Net current deferred income tax assets	$	33,563		$	46,832
Total short-term deferred income tax assets	$	34,084		$	46,986
Total short-term deferred income tax liabilities	(521		)	(154		)
Net short-term deferred income tax assets	$	33,563		$	46,832

Long-term deferred income tax (liabilities) assets:
Unrealized exchange losses	$	8,325		$	(1,939	)
State income tax and interest on tax contingencies	2,880			160
Fixed assets	(51,719		)	(50,194		)
Trade names and customer lists	(6,782		)	(6,803		)
Compensation	3,481			4,803
Deferred rent	9,425			7,456
Loss carryforwards	1,409			2,429
Undistributed earnings of certain foreign subsidiaries	(52,122		)	(52,546		)
Tax deductible foreign reserves	3,248			0
Other	4,231			11,111
Total deferred income tax liabilities	(77,624		)	(85,523		)
Valuation allowance	(1,653		)	(2,601		)
Net long-term deferred income tax liabilities	$	(79,277	)	$	(88,124	)
Total long-term deferred income tax assets	$	8,583		$	10,044
Total long-term deferred income tax liabilities	(87,860		)	(98,168		)
Net long-term deferred income tax liabilities	$	(79,277	)	$	(88,124	)

Operating Loss Carryforwards.  The deferred income tax asset for loss carryforwards includes $3.3 million of net operating losses of foreign subsidiaries. Valuation allowances have been recorded to reflect the estimated amount of deferred tax assets that may not be realized on these losses. The amounts and the fiscal year of expiration of the loss carryforwards are (in thousands):

Expires 2015 through 2019	$	6,100
Expires 2020 through 2024	2,855
Expires 2025 through 2028	2,696
Indefinite	3,263
Total loss carryforwards	$	14,914

The following table identifies income before income taxes for the Company’s U.S. and non-U.S. based operations for the fiscal years indicated (in thousands):

Fiscal Year	2014		2013		2012
U.S	$	169,079	$	194,956	$	193,985
Non-U.S	388,999		366,511		298,237
Total	$	558,078	$	561,467	$	492,222

The Company’s provision for income taxes consisted of the following for the fiscal years indicated (in thousands):

Fiscal Year	2014			2013			2012
Current provision:
U.S. federal	$	84,669		$	97,860		$	64,552
Non-U.S	74,190			69,901			60,239
State and local	10,582			8,297			6,314
Total current	169,441			176,058			131,105
Deferred provision (benefit)
U.S. federal	5,124			(2,346		)	9,485
Non-U.S	(3,622		)	(166		)	(2,426		)
State and local	524			(127		)	(201		)
Total deferred	2,026			(2,639		)	6,858
Provision for income taxes	$	171,467		$	173,419		$	137,963

The expected cash payments for current U.S. income tax expense for fiscal years 2014, 2013 and 2012 were reduced by approximately $4.7 million, $12.0 million and $15.1 million, respectively, as a result of tax deductions related to the exercise of non-qualified stock options and stock appreciation rights and the vesting of restricted stock and restricted stock units. The expected cash payments for current foreign tax expense for fiscal years 2014, 2013 and 2012 were reduced by $0.4 million, $0.8 million and $0.5 million, respectively, as a result of tax deductions related to the exercise of stock options

and the vesting of restricted stock granted to foreign employees. The income tax benefits resulting from these stock-based compensation plans have been recorded to additional paid-in capital in the Company’s consolidated balance sheets. Total deferred income tax expense (benefit) of $2.0 million, ($2.6) million and $6.9 million for fiscal years 2014, 2013 and 2012, respectively, are included in deferred income taxes on the Company’s consolidated statements of cash flows.

The Company was granted a 60% tax holiday for its watch assembly activities in Switzerland for tax years 2008 through 2012. In 2013 and 2014, the Company paid the full Swiss tax rate on its watch assembly activities. This tax holiday reduced current foreign income taxes by approximately $1.2 million in fiscal year 2012.

A reconciliation of the U.S. federal statutory income tax rate of 35% to the Company’s effective tax rate is as follows:

Fiscal Year	2014		2013		2012
Tax at statutory rate	35.0	%	35.0	%	35.0	%
State, net of federal tax benefit	0.9		0.9		1.0
Foreign rate differential	(12.3	)	(12.5	)	(10.0	)
U.S. tax on foreign income	6.3		5.9		3.1
Income tax contingencies	0.7		0.0		(1.7	)
Valuation allowances	(0.3	)	0.9		0.0
Other	0.4		0.7		0.6
Provision for income taxes	30.7	%	30.9	%	28.0	%

Deferred U.S. federal income taxes and foreign withholding taxes are not recorded on undistributed earnings of certain foreign subsidiaries where management plans to continue reinvesting these earnings outside the U.S. The amount of undistributed earnings that would be subject to tax if distributed was approximately $800.6 million at January 3, 2015. Determining tax amounts that would be payable if these earnings were distributed to the U.S. parent company is not practicable.

The total amount of unrecognized tax benefits, excluding interest and penalties that would favorably impact the effective tax rate in future periods if recognized, was $12.8 million, $9.6 million and $10.7 million for fiscal years 2014, 2013 and 2012, respectively. The IRS began its examination of the Company’s 2010-2012 federal income tax returns in the first quarter of fiscal 2014. The Company is also subject to tax examinations in various state and foreign jurisdictions for the Company’s 2007-2013 tax years, none of which the Company believes are individually significant. Audit outcomes and timing of audit settlements are subject to significant uncertainty.

The Company has classified uncertain tax positions as long-term income taxes payable unless such amounts are expected to be paid within twelve months from January 3, 2015. As of January 3, 2015, the Company had recorded $5.3 million of unrecognized tax benefits, excluding interest and penalties, for positions that could 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 in the Company’s consolidated balance sheets was $1.8 million and $1.2 million at January 3, 2015 and December 28, 2013, respectively. The total amount of accrued income tax-related penalties in the Company’s consolidated balance sheets was $0.4 million and $0.4 million at January 3, 2015 and December 28, 2013, respectively. The Company accrued income tax-related interest expense (benefit) of $0.7 million, ($1.0) million and ($1.0) million in fiscal years 2014, 2013 and 2012, respectively.

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits for the fiscal years indicated (in thousands):

Fiscal Year	2014			2013			2012
Balance at beginning of year	$	14,314		$	15,549		$	17,974
Gross increases tax positions in prior years	4,234			3,310			1,245
Gross decreases tax positions in prior years	(1,018		)	(4,384		)	(2,580		)
Gross increases—current year tax positions	3,508			3,575			2,486
Settlements	(194		)	(3,456		)	(3,582		)
Lapse in statute of limitations	(617		)	(297		)	0
Change due to currency revaluation	(141		)	17			6
Balance at end of year	$	20,086		$	14,314		$	15,549

13. Commitments and Contingencies

License Agreements.  The Company has various license agreements to market watches and jewelry bearing certain trademarks or patents owned by various third parties. In accordance with these agreements, the Company incurred royalty expense of approximately $258.6 million, $214.1 million and $181.8 million in fiscal years 2014, 2013 and 2012, respectively. These amounts are included in the Company’s cost of sales or, if advertising related, in SG&A. At fiscal year-end 2014, certain of the Company’s significant license agreements had expiration dates between fiscal years 2015 and 2024. These license agreements require the Company to pay royalties ranging from 4% to 16% of defined net sales. The Company has minimum royalty commitments through fiscal year 2019 under these license agreements as summarized below, by fiscal year (in thousands):

	Minimum Royalty Commitments
2015	$	226,363
2016	95,866
2017	101,649
2018	76,973
2019	8,401
	$	509,252

These minimum royalty commitments do not include amounts owed under these license agreements obligating the Company to pay the licensors a percentage of net sales of these licensed products.

Leases.  The Company leases its retail and outlet store facilities as well as certain of its office and warehouse facilities and equipment under non-cancelable operating leases and capital leases. Most of the retail and outlet store leases provide for contingent rental payments based on operating results and require the payment of taxes, insurance and other costs applicable to the property. Generally, these leases include renewal options for various periods at stipulated rates. Rent expense under these agreements was approximately $190.6 million, $143.8 million and $131.5 million for fiscal years 2014, 2013 and 2012, respectively. Contingent rent expense was approximately $14.1 million, $12.1 million and $11.1 million for fiscal years 2014, 2013 and 2012, respectively. Capital leases are included as a component of short-term and current portion of long-term debt and in long-term debt in the Company’s consolidated balance sheets. Future minimum rental commitments under non-cancelable leases, by fiscal year, are as follows (in thousands):

	Operating Leases		Capital Leases
2015	$	158,692	$	1,039
2016	140,757		1,021
2017	115,521		1,003
2018	100,526		991
2019	88,308		976
Thereafter	316,109		2,188
	$	919,913	$	7,218
Less amounts representing interest at 1.4% to 10.8%			373
Capital lease obligations			$	6,845

Purchase Obligations.  As of January 3, 2015, the Company had purchase obligations totaling $310.4 million.

Asset Retirement Obligations.  ASC 410, Asset Retirement and Environmental Obligations requires (i) that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made and (ii) that the associated asset retirement costs be capitalized as part of the carrying amount of the long-lived asset. The Company’s asset retirement obligations relate to costs associated with the retirement of leasehold improvements under office leases and retail store leases within the Americas, Europe and Asia segments.

The following table summarizes the changes in the Company’s asset retirement obligations (in thousands):

Fiscal Year:	2014			2013
Beginning asset retirement obligation	$	8,306		$	6,560
Liabilities incurred during the period	1,587			1,839
Revisions in estimated retirement obligations	2			(9		)
Liabilities settled during the period	(860		)	(278		)
Accretion expense	364			288
Currency translation	(474		)	(94		)
Ending asset retirement obligations	$	8,925		$	8,306

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.

14. Stockholders’ Equity

Common and Preferred Stock.  The Company has 100,000,000 shares of common stock, par value $0.01 per share, authorized, with 50,771,079, and 54,707,810 shares issued at fiscal year-end 2014 and 2013, respectively. The Company has 1,000,000 shares of preferred stock, par value $0.01 per share, authorized, with none issued or outstanding at fiscal year-end 2014 and 2013. Rights, preferences and other terms of preferred stock will be determined by the Board of Directors at the time of issuance.

Common Stock Repurchase Programs.  Purchases of the Company’s common stock 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 period from the announcement of the Company’s $750 million and $1 billion buyback authorizations in August 2010 and December 2012, respectively, until the end of the fiscal year 2014, the Company has repurchased approximately $1.7 billion of its common stock, representing approximately 18.6 million shares. The Company has not repurchased any shares under the $30 million and $1 billion repurchase plans authorized in 2010 and 2014, respectively.

During fiscal year 2014, the Company effectively retired 4.1 million shares of common stock repurchased under its repurchase programs. The effective retirement of repurchased common stock decreased common stock by $41,000, additional paid-in capital by $3.2 million, retained earnings by $431.7 million and treasury stock by $435.0 million. At December 28, 2013 and January 3, 2015, all treasury stock had been effectively retired. As of January 3, 2015, the Company had $1.1 billion of repurchase authorizations remaining under the combined repurchase plans.

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

				For the 2014 Fiscal Year			For the 2013 Fiscal Year
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	0.0	$	0.0	0.0	$	0.0
2012	$	1,000.0	December 2016	4.1	$	435.0	4.9	$	536.3
2010	$	30.0	None	0.0	$	0.0	0.0	$	0.0
2010	$	750.0	December 2013(1)	0.0	$	0.0	0.4	$	38.6

(1)In the first quarter of fiscal year 2013, the Company completed this repurchase plan.

Noncontrolling Interest.  In October 2012, the Company acquired the outstanding minority interest shares in Fossil Mexico, S.A. de C.V. (“Fossil Mexico”) and Servicios Fossil Mexico, S.A. de C.V. (“Fossil Servicios”), representing the entire noncontrolling interest in these subsidiaries, for approximately $14.1 million in cash. The transaction was accounted for as an equity transaction, and the Company’s ownership interest in both Fossil Mexico and Fossil Servicios increased to 100%. The

following table summarizes the effects of changes in the Company’s ownership interest in its subsidiaries on stockholders’ equity (in thousands):

Fiscal Year	2014		2013		2012
Net income attributable to Fossil Group, Inc.	$	376,707	$	378,152	$	343,401
Transfers to noncontrolling interest:
Decrease in Fossil Group, Inc.’s additional paid-in capital for purchases of 49 common shares of Fossil Mexico and 49 common shares of Fossil Servicios	0		0		(7,332		)
Change from net income attributable to Fossil Group, Inc. and transfers to noncontrolling interest	$	376,707	$	378,152	$	336,069

15. Employee Benefit Plans

Deferred Compensation and Savings Plans.  The Company has a defined contribution savings plan (the “401(k) Plan”) for substantially all U.S.-based full-time employees of the Company. The Company’s common stock is one of several investment alternatives available under the 401(k) Plan. Effective January 1, 2012, the Company added a Roth 401(k) option to the 401(k) Plan. The Company has a discretionary match for the 401(k) Plan. After ninety 90 days of service (minimum of 250 hours worked), the Company matches 50% of employee contributions up to 6% of their compensation. Matching contributions made by the Company to the 401(k) Plan totaled approximately $3.0 million, $2.7 million and $2.7 million for fiscal years 2014, 2013 and 2012, respectively. The Company also has the right to make additional matching contributions not to exceed 15% of employee compensation. The Company did not make any additional matching contributions during fiscal years 2014, 2013 and 2012.

In December 1998, the Company adopted the Fossil Group, Inc. and Affiliates Deferred Compensation Plan (the “Deferred Plan”). Eligible participants may elect to defer up to 50% of their salary or up to 100% of any bonuses paid pursuant to the terms and conditions of the Deferred Plan. In addition, the Company may make employer contributions to participants under the Deferred Plan from time to time. The Company made no contributions to the Deferred Plan during fiscal years 2014, 2013 and 2012. In prior periods, the Company made payments pursuant to the Deferred Plan into a Rabbi Trust. The funds held in the Rabbi Trust are directed to certain investments available through life insurance products. As of January 3, 2015, the Company had an asset of $2.5 million related to the Company’s invested balances recorded in intangible and other assets—net and a liability of $3.3 million related to the participants’ invested balances recorded in accrued expenses—other, each on the Company’s consolidated balance sheets.

Stock-Based Compensation Plans.  The Company’s grants under its current stock-based compensation plans generally include: (i) stock options and restricted stock units for its international employees, (ii) restricted stock units for its nonemployee directors and (iii) stock appreciation rights, restricted stock and restricted stock units for its U.S.-based employees. As of January 3, 2015, the Company had approximately $22.7 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Company’s stock based compensation plans. This cost is expected to be recognized over a weighted-average period of approximately 1.5 years.

Long-Term Incentive Plans.  An aggregate of 4,685,030 shares of the Company’s common stock were reserved for issuance pursuant to the Company’s 2008 Long-Term Incentive Plan (“2008 LTIP”), adopted in March 2008. Under the 2008 LTIP, designated employees of the Company, including officers, certain contractors, and outside directors of the Company, are eligible to receive (i) stock options, (ii) stock appreciation rights, (iii) restricted or non-restricted stock awards, (iv) restricted stock units, (v) cash awards, or (vi) any combination of the foregoing. The 2008 LTIP is administered by the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”). Each award issued under the 2008 LTIP terminates at the time designated by the Compensation Committee, not to exceed ten years. The current outstanding stock options, stock appreciation rights, restricted stock and restricted stock units issued under the 2008 LTIP predominantly have original vesting periods of three years. All stock appreciation rights and restricted stock units are settled in shares of the Company’s common stock. The exercise prices of stock options granted under the 2008 LTIP were not less than the fair market value of the Company’s common stock at the date of grant. Effective January 1, 2012, the Company’s Board of Directors approved changes to the equity compensation package for nonemployee directors. Each nonemployee director receives restricted stock units valued at $120,000 on the date of the Company’s annual stockholders’ meeting. These grants vest on the earlier of one year from the date of grant or the Company’s next annual stockholders’ meeting date.

Prior to the Company establishing the 2008 LTIP, stock-based compensation awards were made to employees and nonemployee directors pursuant to the Company’s initial Long-Term Incentive Plan (“LTIP”) and Nonemployee Director Stock Option Plan (“Nonemployee Plan”), respectively. Each award issued under the LTIP terminates at the time designated by the Compensation Committee, not to exceed ten years. The currently outstanding stock options, stock appreciation rights, restricted stock and restricted stock units issued under the LTIP and Nonemployee Plan have original vesting periods that predominately range from three to five years. All stock appreciation rights and restricted stock units are settled in shares of the Company’s common stock. The exercise prices of stock options granted under the Nonemployee Plan were not less than the fair

market value of the Company’s common stock at the date of grant. Pursuant to the Nonemployee Plan, 50% of the stock options granted became exercisable on the first anniversary of the date of grant and in two additional installments of 25% each on the second and third anniversaries. On March 26, 2008, the Company’s Board of Directors elected to terminate these prior plans. The termination of the LTIP and the Nonemployee Plan did not impair outstanding awards representing 60,085 shares and 15,750 shares, respectively, of the Company’s common stock at January 3, 2015 which continued in accordance with their original terms.

Stock Options and Stock Appreciation Rights.  The fair value of stock options and stock appreciation rights granted under the Company’s stock-based compensation plans was estimated on the date of grant using the Black-Scholes option pricing model. The table below outlines the weighted average assumptions for these award grants:

Fiscal Year	2014			2013			2012
Risk-free interest rate	0.9		%	0.8		%	1.1		%
Expected term (in years)	3.4			4.7			5.1
Expected volatility	47.1		%	55.1		%	51.1		%
Expected dividend yield	0.0		%	0.0		%	0.0		%
Estimated fair value per stock option/stock appreciation right granted	$	38.88		$	48.19		$	56.08

The expected term of the stock options represent the estimated period of time until exercise and is based on historical experience of similar awards. Expected stock price volatility is based on the historical volatility of the Company’s common stock. The risk-free interest rate is based on the implied yield available on U.S. Treasury securities with an equivalent remaining term.

The Company generally receives a tax deduction when stock options are exercised or when restricted stock vests. Generally for stock options, the tax deduction is related to the excess of the stock price at the time the stock options are exercised over the exercise price of the stock options. For restricted stock, the tax deduction is equal to the fair market value of the Company’s common stock on the date the restricted stock vests multiplied by the number of shares of restricted stock. Excess tax benefits from stock-based compensation on the Company’s consolidated statements of cash flows for fiscal years 2014, 2013 and 2012 amounted to approximately $1.4 million, $8.4 million and $11.7 million, respectively.

The following table summarizes stock option and stock appreciation rights activity:

Stock Options and Stock Appreciation Rights	Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
	in thousands					in thousands
Outstanding at December 31, 2011	1,220		$	41.20	5.8	$	49,125
Granted	279		124.61
Exercised	(386	)	30.28			32,201
Forfeited or expired	(74	)	98.53
Outstanding at December 29, 2012	1,039		63.56		6.4	36,708
Granted	41		104.62
Exercised	(332	)	35.64			24,820
Forfeited or expired	(70	)	97.62
Outstanding at December 28, 2013	678		76.15		6.2	31,794
Granted	94		111.90
Exercised	(91	)	39.20			6,391
Forfeited or expired	(18	)	120.77
Outstanding at January 3, 2015	663		85.08		5.6	20,751
Exercisable at January 3, 2015	479		$	73.45	5.1	$	20,296

The aggregate intrinsic value in the table above is before income taxes and is based on the exercise price for outstanding and exercisable options/rights at January 3, 2015 and based on the fair market value of the Company’s common stock on the exercise date for options/rights that were exercised during the fiscal year.

Stock 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 January 3, 2015:

Stock Options Outstanding					Stock Options Exercisable
Range of Exercise Prices	Number of Shares	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)	Number of Shares	Weighted- Average Exercise Price
	in thousands				in thousands
$13.65 - $21.51	56	$	15.09	3.6	56	$	15.09
$25.77 - $42.76	103	34.94		3.7	103	34.94
$43.92 - $67.10	5	43.92		3.0	5	43.92
$69.53 - $106.40	97	80.86		6.3	95	80.80
$106.89 - $131.46	167	128.10		7.1	114	128.10
Total	428	$	79.24	5.6	373	$	72.29

Stock Appreciation Rights Outstanding					Stock Appreciation Rights Exercisable
Range of Exercise Prices	Number of Shares	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)	Number of Shares	Weighted- Average Exercise Price
	in thousands				in thousands
$13.65 - $21.51	18	$	13.65	2.1	18	$	13.65
$25.77 - $42.76	17	35.69		2.5	17	35.68
$43.92 - $67.10	3	67.10		5.5	2	67.10
$69.53 - $106.40	70	93.62		5.6	39	87.56
$106.89 - $131.46	127	117.46		6.5	30	127.16
Total	235	$	95.68	5.6	106	$	77.52

Restricted Stock and Restricted Stock Units.  The following table summarizes restricted stock and restricted stock unit activity:

Restricted Stock and Restricted Stock Units	Number of Shares		Weighted-Average Grant Date Fair Value
	in thousands
Nonvested at December 31, 2011	352		$	45.70
Granted	102		110.72
Vested	(161	)	45.14
Forfeited	(16	)	67.62
Nonvested at December 29, 2012	277		68.69
Granted	140		106.76
Vested	(171	)	57.83
Forfeited	(27	)	86.51
Nonvested at December 28, 2013	219		99.27
Granted	164		110.95
Vested	(115	)	90.66
Forfeited	(13	)	108.76
Nonvested at January 3, 2015	255		$	110.17

The total fair value of shares/units vested during fiscal years 2014, 2013 and 2012 was $12.6 million, $18.1 million and $19.1 million, respectively.

The Company maintains a defined benefit plan for its employees located in Switzerland. The plan is funded through payments to an insurance company. The payments are determined by periodic actuarial calculations. During fiscal years 2014, 2013 and 2012, the Company recorded pension gains of $0.2 million and pension expenses of $6.2 million and $2.8 million, respectively, related to this plan. The liability for the Company’s defined benefit plan was $12.4 million and $8.6 million at the end of fiscal years 2014 and 2013, respectively. This liability is recorded in other long-term liabilities on the Company’s consolidated balance sheets.

Under French law, the Company is required to maintain a defined benefit plan for its employees located in France, which is referred to as a “retirement indemnity”. The amount of the retirement indemnity is based on the employee’s last salary and duration of employment with the Company. The employee’s right to receive the retirement indemnity is subject to the employee remaining with the Company until retirement. In each of fiscal years 2014, 2013 and 2012, the Company recorded pension expenses of $0.3 million per year for its retirement indemnity obligations. The liability for the Company’s retirement indemnity was $1.6 million and $1.5 million at the end of fiscal years 2014 and 2013, respectively. This liability is recorded in other long-term liabilities on the Company’s consolidated balance sheets.

16. Supplemental Cash Flow Information

The following table summarizes supplemental cash flow information (in thousands):

Fiscal Year	2014		2013		2012
Cash paid during the year for:
Interest	$	15,924	$	9,450	$	5,155
Income taxes	$	167,702	$	167,624	$	105,433
Supplemental disclosures of non-cash investing and financing activities:
Additions to property, plant and equipment included in accounts payable	$	5,030	$	8,317	$	11,713
Additions to property, plant and equipment acquired under capital leases	$	1,180	$	1,068	$	4,884
Issuance of common stock for acquisition	$	0	$	0	$	19,899

17. Supplemental Disclosure for Accumulated Other Comprehensive Income

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

	January 3, 2015
				Cash Flow Hedges
	Currency Translation Adjustments			Forward Contracts			Interest Rate Swap			Pension Plan			Total
Beginning balance	$	38,152		$	(2,091	)	$	(106	)	$	736		$	36,691
Other comprehensive income (loss) before reclassifications	(65,240		)	37,182			(3,397		)	(4,804		)	(36,259		)
Tax (expense) benefit	(153		)	(14,255		)	1,238			421			(12,749		)
Amounts reclassed from accumulated other comprehensive income	0			8,893			(2,774		)	0			6,119
Tax (expense) benefit	0			(3,037		)	1,011			0			(2,026		)
Total other comprehensive income (loss)	(65,393		)	17,071			(396		)	(4,383		)	(53,101		)
Ending balance	$	(27,241	)	$	14,980		$	(502	)	$	(3,647	)	$	(16,410	)

	December 28, 2013
						Cash Flow Hedges
	Currency Translation Adjustments		Securities Available for Sale			Forward Contracts			Interest Rate Swap			Pension Plan		Total
Beginning balance	$	30,181	$	(475	)	$	(946	)	$	0		$	0	$	28,760
Other comprehensive income (loss) before reclassifications	7,971		(83		)	(2,148		)	(1,592		)	583		4,731
Tax (expense) benefit	0		0			757			561			153		1,471
Amounts reclassed from accumulated other comprehensive income	0		(558		)	(145		)	(1,423		)	0		(2,126		)
Tax (expense) benefit	0		0			(101		)	498			0		397
Total other comprehensive income (loss)	7,971		475			(1,145		)	(106		)	736		7,931
Ending balance	$	38,152	$	0		$	(2,091	)	$	(106	)	$	736	$	36,691

	December 29, 2012
						Cash Flow Hedges
	Currency Translation Adjustments		Securities Available for Sale			Forward Contracts			Total
Beginning balance	$	18,953	$	(446	)	$	3,673		$	22,180
Other comprehensive income (loss) before reclassifications	11,228		(29		)	1,232			12,431
Tax (expense) benefit	0		0			(806		)	(806		)
Amounts reclassed from accumulated other comprehensive income	0		0			7,761			7,761
Tax (expense) benefit	0		0			(2,716		)	(2,716		)
Total other comprehensive income (loss)	11,228		(29		)	(4,619		)	6,580
Ending balance	$	30,181	$	(475	)	$	(946	)	$	28,760

18. Major Customer, Segment and Geographic Information

Major Customer

Wholesale customers of the Company consist principally of major department stores and specialty retail stores located throughout the world. No individual customer accounts for 10% or more of the Company’s net sales.

Segment Information

The Company reports segment information based on the “management approach”. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments.

The Company manages its business primarily on a geographic basis. The Company’s reportable operating segments are comprised of (i) Americas, (ii) Europe and (iii) Asia. Each reportable operating segment includes sales to wholesale and distributor customers, and sales through Company-owned retail stores and e-commerce activities based on the location of the selling entity. The Americas segment primarily includes sales to customers based in Canada, Latin America and the United States. The Europe segment primarily includes sales to customers based in European countries, the Middle East and Africa. The Asia segment primarily includes sales to customers based in Australia, China, 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 fiscal year 2015 presentation. Due to changes in the Company’s reportable segments as discussed in Note 1 to the consolidated financial statements, segment results for fiscal years 2014, 2013 and 2012 have been recast to present results on a comparable basis. Summary information by operating segment was as follows (in thousands):

	Fiscal Year 2014
	Net Sales		Operating Income			Depreciation and Amortization		Long-term Assets		Total Assets
Americas	$	1,747,506	$	463,246		$	24,846	$	263,324	$	809,548
Europe	1,195,948		287,961			20,028		220,742		561,486
Asia	566,237		116,288			12,676		57,508		233,881
Corporate			(300,959		)	25,780		176,124		602,637
Consolidated	$	3,509,691	$	566,536		$	83,330	$	717,698	$	2,207,552

	Fiscal Year 2013
	Net Sales		Operating Income			Depreciation and Amortization		Long-term Assets		Total Assets
Americas	$	1,703,350	$	472,812		$	22,024	$	260,730	$	781,374
Europe	1,052,497		238,585			18,904		248,182		600,289
Asia	504,124		115,841			9,332		60,197		210,916
Corporate			(265,642		)	24,007		181,843		637,835
Consolidated	$	3,259,971	$	561,596		$	74,267	$	750,952	$	2,230,414

	Fiscal Year 2012
	Net Sales		Operating Income			Depreciation and Amortization		Long-term Assets		Total Assets
Americas	$	1,529,279	$	404,387		$	18,036	$	244,705	$	687,380
Europe	880,012		180,958			15,558		228,129		506,325
Asia	448,217		114,011			6,813		49,949		183,935
Corporate			(210,516		)	20,099		175,094		464,349
Consolidated	$	2,857,508	$	488,840		$	60,506	$	697,877	$	1,841,989

The following table indicates revenue for each class of similar products for fiscal years 2014, 2013 and 2012 (in thousands):

	Fiscal Year 2014				Fiscal Year 2013				Fiscal Year 2012
	Net Sales		Percentage of Total		Net Sales		Percentage of Total		Net Sales		Percentage of Total
Watches	$	2,736,511	78.0	%	$	2,513,081	77.1	%	$	2,141,481	74.9	%
Leathers	419,391		11.9		436,285		13.4		440,113		15.4
Jewelry	276,485		7.9		228,748		7.0		181,636		6.4
Other	77,304		2.2		81,857		2.5		94,278		3.3
Total	$	3,509,691	100.0	%	$	3,259,971	100.0	%	$	2,857,508	100.0	%

Geographic Information

Net sales and long-lived assets related to the Company’s operations in the U.S., Europe, Asia and all other international markets were as follows (in thousands):

	Fiscal Year 2014
				Long-tern
	Net Sales (1)			Assets
United States	$	1,588,566		$	397,034
Europe	1,195,948		(2)	235,219
Asia	566,237			67,693
All other international	158,940			17,752
Consolidated	$	3,509,691		$	717,698

	Fiscal Year 2013
				Long-tern
	Net Sales (1)			Assets
United States	$	1,525,107		$	412,966
Europe	1,052,497		(2)	262,324
Asia	504,124			65,432
All other international	178,243			10,230
Consolidated	$	3,259,971		$	750,952

	Fiscal Year 2012
				Long-tern
	Net Sales (1)			Assets
United States	$	1,354,337		$	392,740
Europe	880,012		(2)	239,917
Asia	448,217			54,491
All other international	174,942			10,729
Consolidated	$	2,857,508		$	697,877

(1)Net sales are based on the location of the selling entity.

(2)Net sales from Germany accounted for more than 10% of the Company’s consolidated net sales and were approximately $612.5 million, $578.8 million and $472.4 million in fiscal years 2014, 2013 and 2012, respectively.

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Commitments and Contingencies (Tables)

12 Months Ended

Jan. 03, 2015

Commitments and Contingencies

Schedule of future minimum royalty commitments under license agreements

The Company has minimum royalty commitments through fiscal year 2019 under these license agreements as summarized below, by fiscal year (in thousands):

	Minimum Royalty Commitments
2015	$	226,363
2016		95,866
2017		101,649
2018		76,973
2019		8,401
	$	509,252

Schedule of future minimum rental commitments under non-cancelable leases

Future minimum rental commitments under non-cancelable leases, by fiscal year, are as follows (in thousands):

	Operating Leases		Capital Leases
2015	$	158,692	$	1,039
2016		140,757		1,021
2017		115,521		1,003
2018		100,526		991
2019		88,308		976
Thereafter		316,109		2,188
	$	919,913	$	7,218
Less amounts representing interest at 1.4% to 10.8%				373
Capital lease obligations			$	6,845

Summary of changes in the Company's asset retirement obligations

The following table summarizes the changes in the Company's asset retirement obligations (in thousands):

Fiscal Year:	2014			2013
Beginning asset retirement obligation	$	8,306		$	6,560
Liabilities incurred during the period		1,587			1,839
Revisions in estimated retirement obligations		2			(9	)
Liabilities settled during the period		(860	)		(278	)
Accretion expense		364			288
Currency translation		(474	)		(94	)
Ending asset retirement obligations	$	8,925		$	8,306

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Inventories (Details) (USD $) In Thousands, unless otherwise specified	Jan. 03, 2015	Dec. 28, 2013
Inventories
Components and parts	$ 48,797	$ 56,275
Work-in-process	13,719	14,017
Finished goods	534,765	500,427
Inventories	$ 597,281	$ 570,719

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Significant Accounting Policies (Details 4) (USD $)	12 Months Ended
	Jan. 03, 2015 item	Dec. 28, 2013	Dec. 29, 2012
Significant Accounting Policies
Number of reporting units that evaluate goodwill for impairment	3
Indefinite lived intangible assets
Impairment charges	$ 0
Cumulative Translation Adjustment
Foreign currency transaction gain (loss), included in other income (expense)	20,000	951,000	5,565,000
Forward Currency Hedging Instruments
Unrealized gain recognized in other comprehensive income (loss), net of taxes	18,100,000
Advertising Costs
Advertising costs	232,700,000	205,600,000	185,100,000
Trade name
Indefinite lived intangible assets
Impairment charges	$ 0	$ 0	$ 0

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Taxes (Details 2) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jan. 03, 2015	Dec. 28, 2013	Dec. 29, 2012
Operating loss carryforwards
Total loss carryforwards	$ 14,914
Income before income taxes for the entity's U.S. and non-U.S. based operations
U.S.	169,079	194,956	193,985
Non-U.S.	388,999	366,511	298,237
Income before income taxes	558,078	561,467	492,222
Current provision:
U.S. federal	84,669	97,860	64,552
Non-U.S.	74,190	69,901	60,239
State and local	10,582	8,297	6,314
Total current	169,441	176,058	131,105
Deferred provision (benefit)
U.S. federal	5,124	(2,346)	9,485
Non-U.S.	(3,622)	(166)	(2,426)
State and local	524	(127)	(201)
Total deferred	2,026	(2,639)	6,858
Provision for income taxes	171,467	173,419	137,963
Expires 2015 through 2019
Operating loss carryforwards
Total loss carryforwards	6,100
Expires 2020 through 2024
Operating loss carryforwards
Total loss carryforwards	2,855
Expires 2025 through 2028
Operating loss carryforwards
Total loss carryforwards	2,696
Indefinite
Operating loss carryforwards
Total loss carryforwards	3,263
Foreign income tax
Operating loss carryforwards
Total loss carryforwards	$ 3,300

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Warranty Liabilities (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jan. 03, 2015		Dec. 28, 2013		Dec. 29, 2012
Warranty liability activity
Beginning balance	$ 15,658		$ 13,383		$ 10,996
Settlements in cash or kind	(12,313)		(10,672)		(6,945)
Warranties issued and adjustments to preexisting warranties	10,155	[1]	12,607	[1]	8,737	[1]
Liability assumed in acquisition	0		340		595
Ending balance	$ 13,500		$ 15,658		$ 13,383
FOSSIL watch products
Warranty Liability
Warranty period	11 years
RELIC watch products
Warranty Liability
Warranty period	12 years
Other watch products
Warranty Liability
Warranty period	2 years

[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 2) (Stock options and stock appreciation rights, USD $)	12 Months Ended
	Jan. 03, 2015	Dec. 28, 2013	Dec. 29, 2012
Stock options and stock appreciation rights
Weighted average assumptions for award grants
Risk-free interest rate (as a percent)	0.90%	0.80%	1.10%
Expected term	3 years 4 months 24 days	4 years 8 months 12 days	5 years 1 month 6 days
Expected volatility (as a percent)	47.10%	55.10%	51.10%
Expected dividend yield (as a percent)	0.00%	0.00%	0.00%
Estimated fair value per stock option/stock appreciation right granted (in dollars per share)	$ 38.88	$ 48.19	$ 56.08

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Significant Accounting Policies (Details 2) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Jan. 03, 2015	Dec. 28, 2013	Dec. 29, 2012
Buildings
Property, plant and equipment
Useful life	30 years
Machinery and equipment
Property, plant and equipment
Useful life	5 years
Furniture and fixtures
Property, plant and equipment
Useful life	5 years
Computer equipment and software | Minimum
Property, plant and equipment
Useful life	3 years
Computer equipment and software | Maximum
Property, plant and equipment
Useful life	7 years
Software | Minimum
Property, plant and equipment
Useful life	3 years
Software | Maximum
Property, plant and equipment
Useful life	7 years
Retail stores
Property, plant and equipment
Impairment losses	$ 9.3	$ 5.8	$ 1.2

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Intangible and Other Assets (Tables)

12 Months Ended

Jan. 03, 2015

Intangible and Other Assets

Schedule of intangible and other assets-net

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

			2014				2013
At Fiscal Year End	Useful Lives		Gross Amount		Accumulated Amortization		Gross Amount		Accumulated Amortization
Intangibles-subject to amortization:
Trademarks		10 yrs.	$	4,174	$	2,950	$	4,175	$	2,695
Customer lists		5 - 10 yrs.		41,703		17,457		43,367		14,065
Patents		3 - 20 yrs.		2,273		1,902		2,273		1,360
Noncompete agreement		6 yrs.		1,855		851		1,913		558
Other		7 - 20 yrs.		353		341		263		207
Total intangibles-subject to amortization				50,358		23,501		51,991		18,885
Intangibles-not subject to amortization:
Trade names				83,610				83,659
Other assets:
Key money deposits				31,892		18,661		35,535		17,038
Other deposits				21,854				22,574
Deferred compensation plan assets				2,477				2,360
Deferred tax asset-net				8,583				10,044
Restricted cash				575				752
Shop-in-shop				16,333		9,660		16,334		7,767
Interest rate swap				1,724				4,307
Forward contracts				1,802				219
Other				6,978				4,247
Total other assets				92,218		28,321		96,372		24,805
Total intangible and other assets			$	226,186	$	51,822	$	232,022	$	43,690
Total intangible and other assets-net					$	174,364			$	188,332

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	$	4,633
2016	$	4,494
2017	$	4,236
2018	$	3,877
2019	$	3,780

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Employee Benefit Plans (Details 3) (USD $) Share data in Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Jan. 03, 2015 item	Dec. 28, 2013	Dec. 29, 2012	Dec. 31, 2011
Shares
Beginning Balance, Shares	678	1,039	1,220
Granted (in shares)	94	41	279
Exercised (in shares)	(91)	(332)	(386)
Forfeited or expired (in shares)	(18)	(70)	(74)
Ending Balance, Shares	663	678	1,039	1,220
Exercisable at end of period (in shares)	479
Weighted-Average Exercise Price Per Share
Beginning Balance, Weighted-average Exercise Price (in dollars per share)	$ 76.15	$ 63.56	$ 41.20
Granted (in dollars per share)	$ 111.90	$ 104.62	$ 124.61
Exercised (in dollars per share)	$ 39.20	$ 35.64	$ 30.28
Forfeited or expired (in dollars per share)	$ 120.77	$ 97.62	$ 98.53
Ending Balance, Weighted-average Exercise Price (in dollars per share)	$ 85.08	$ 76.15	$ 63.56	$ 41.20
Stock Options and Stock Appreciation Rights Exercisable, Weighted- Average Exercise Price (in dollars per share)	$ 73.45
Weighted-Average Remaining Contractual Term
Beginning of period	5 years 7 months 6 days	6 years 2 months 12 days	6 years 4 months 24 days	5 years 9 months 18 days
End of period	5 years 7 months 6 days	6 years 2 months 12 days	6 years 4 months 24 days	5 years 9 months 18 days
Exercisable at end of period	5 years 1 month 6 days
Aggregate Intrinsic Value
Beginning of period	$ 31,794,000	$ 36,708,000	$ 49,125,000
Exercised	6,391,000	24,820,000	32,201,000
End of period	20,751,000	31,794,000	36,708,000	49,125,000
Exercisable at end of period	20,296,000
Minimum years of service to be eligible for employer 401(k) matching	90 days
Minimum hours worked to be eligible for employer 401(k) matching	250
Percentage of employee contributions in which Company will provide a matching contribution of up to 6 percent of employee compensation	50.00%
Percentage of eligible compensation, first level, matched by employer after amendment	6.00%
Employer's matching contributions under the plan	3,000,000	2,700,000	2,700,000
Maximum additional contribution by employer (as a percent)	15.00%
Maximum percentage of salary that may be deferred by participating employees	50.00%
Maximum percentage of annual bonus that may be deferred by participating employees	100.00%
Asset related to invested balances recorded in intangibles and other assets-net	2,500,000
Liability related to participants' invested balances recorded in accrued expenses other	$ 3,300,000

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Taxes (Details 5) (USD $)	12 Months Ended
	Jan. 03, 2015	Dec. 28, 2013	Dec. 29, 2012
Taxes
Tax at statutory rate (as a percent)	35.00%	35.00%	35.00%
State, net of federal tax benefit (as a percent)	0.90%	0.90%	1.00%
Foreign rate differential (as a percent)	(12.30%)	(12.50%)	(10.00%)
U.S. tax on foreign income (as a percent)	6.30%	5.90%	3.10%
Income tax contingencies (as a percent)	0.70%	0.00%	(1.70%)
Valuation allowances	(0.30%)	0.90%	0.00%
Other (as a percent)	0.40%	0.70%	0.60%
Provision for income taxes (as a percent)	30.70%	30.90%	28.00%
Undistributed earnings of certain foreign subsidiaries	$ 800,600,000
Unrecognized tax benefits that would favorably impact the effective tax rate in future periods if recognized	12,800,000	9,600,000	10,700,000
Unrecognized tax benefits excluding interest and penalties	5,300,000
Accrued income tax-related interest	1,800,000	1,200,000
Penalties accrued	400,000	400,000
Accrued interest (benefit) expense	700,000	(1,000,000)	(1,000,000)
Reconciliation of the total amounts of unrecognized tax benefits
Balance at beginning of year	14,314,000	15,549,000	17,974,000
Gross increases tax positions in prior years	4,234,000	3,310,000	1,245,000
Gross decreases tax positions in prior years	(1,018,000)	(4,384,000)	(2,580,000)
Gross increases - current year tax positions	3,508,000	3,575,000	2,486,000
Settlements	(194,000)	(3,456,000)	(3,582,000)
Lapse in statute of limitations	(617,000)	(297,000)	0
Change due to currency revaluation	(141,000)	17,000	6,000
Balance at end of year	$ 20,086,000	$ 14,314,000	$ 15,549,000

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Property, Plant and Equipment (Details) (USD $) In Thousands, unless otherwise specified	Jan. 03, 2015	Dec. 28, 2013
Property, plant and equipment
Property, plant and equipment - gross	$ 705,797	$ 670,453
Less accumulated depreciation and amortization	360,191	314,787
Property, plant and equipment-net	345,606	355,666
Land
Property, plant and equipment
Property, plant and equipment - gross	14,508	15,184
Buildings
Property, plant and equipment
Property, plant and equipment - gross	71,580	78,013
Machinery and equipment
Property, plant and equipment
Property, plant and equipment - gross	36,992	39,154
Furniture and fixtures
Property, plant and equipment
Property, plant and equipment - gross	108,137	98,494
Computer equipment and software
Property, plant and equipment
Property, plant and equipment - gross	205,831	186,123
Leasehold improvements
Property, plant and equipment
Property, plant and equipment - gross	246,882	237,671
Construction in progress
Property, plant and equipment
Property, plant and equipment - gross	$ 21,867	$ 15,814

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Stockholders' Equity (Details 2) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended			1 Months Ended
	Jan. 03, 2015	Dec. 28, 2013	Dec. 29, 2012	Oct. 31, 2012
Noncontrolling Interest
Equity interest acquired for cash	$ 336	$ 0	$ 14,061
Net income attributable to Fossil Group, Inc.	376,707	378,152	343,401
Transfers to noncontrolling interest:
Decrease in Fossil Group, Inc.'s additional paid-in capital for purchases of noncontrolling interest shares	(336)		(14,061)
Change from net income attributable to Fossil Group, Inc.'s and transfers to noncontrolling interest	376,707	378,152	336,069
Fossil Mexico and Fossil Servicios
Noncontrolling Interest
Equity interest acquired for cash				14,100
Fossil Mexico
Noncontrolling Interest
Percentage of ownership interest				100.00%
Fossil Servicios
Noncontrolling Interest
Percentage of ownership interest				100.00%
Stockholders' equity attributable to Fossil Group, Inc.
Transfers to noncontrolling interest:
Decrease in Fossil Group, Inc.'s additional paid-in capital for purchases of noncontrolling interest shares	$ 0	$ 0	$ (7,332)
Stockholders' equity attributable to Fossil Group, Inc. | Fossil Mexico
Transfers to noncontrolling interest:
Number of subsidiary common shares purchased	49
Stockholders' equity attributable to Fossil Group, Inc. | Fossil Servicios
Transfers to noncontrolling interest:
Number of subsidiary common shares purchased	49

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Major Customer, Segment and Geographic Information (Details 2) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jan. 03, 2015	Dec. 28, 2013	Dec. 29, 2012
Net sales for each class of similar products
Net sales	$ 3,509,691	$ 3,259,971	$ 2,857,508
Percentage of Total	100.00%	100.00%	100.00%
Watches
Net sales for each class of similar products
Net sales	2,736,511	2,513,081	2,141,481
Percentage of Total	78.00%	77.10%	74.90%
Leathers
Net sales for each class of similar products
Net sales	419,391	436,285	440,113
Percentage of Total	11.90%	13.40%	15.40%
Jewelry
Net sales for each class of similar products
Net sales	276,485	228,748	181,636
Percentage of Total	7.90%	7.00%	6.40%
Other
Net sales for each class of similar products
Net sales	$ 77,304	$ 81,857	$ 94,278
Percentage of Total	2.20%	2.50%	3.30%

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Employee Benefit Plans (Details 5) (Restricted Stock and Restricted Stock Units, USD $) In Millions, except Share data in Thousands, unless otherwise specified	12 Months Ended
	Jan. 03, 2015	Dec. 28, 2013	Dec. 29, 2012
Restricted Stock and Restricted Stock Units
Nonvested, Number of Shares
Nonvested, beginning balance (in shares)	219	277	352
Granted (in shares)	164	140	102
Vested (in shares)	(115)	(171)	(161)
Forfeited (in shares)	(13)	(27)	(16)
Nonvested, ending balance (in shares)	255	219	277
Nonvested, Weighted-Average Grant Date Fair Value
Nonvested, beginning balance (in dollars per share)	$ 99.27	$ 68.69	$ 45.70
Granted (in dollars per share)	$ 110.95	$ 106.76	$ 110.72
Vested (in dollars per share)	$ 90.66	$ 57.83	$ 45.14
Forfeited (in dollars per share)	$ 108.76	$ 86.51	$ 67.62
Nonvested, ending balance (in dollars per share)	$ 110.17	$ 99.27	$ 68.69
Fair value of restricted stock and restricted stock units, vested	$ 12.6	$ 18.1	$ 19.1

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Major Customer, Segment and Geographic Information (Details 3) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jan. 03, 2015	Dec. 28, 2013	Dec. 29, 2012
Summary information by operating segment
Net sales	$ 3,509,691	$ 3,259,971	$ 2,857,508
Long-term Assets	717,698	750,952	697,877
United States
Summary information by operating segment
Net sales	1,588,566	1,525,107	1,354,337
Long-term Assets	397,034	412,966	392,740
Europe
Summary information by operating segment
Net sales	1,195,948	1,052,497	880,012
Long-term Assets	235,219	262,324	239,917
Asia
Summary information by operating segment
Net sales	566,237	504,124	448,217
Long-term Assets	67,693	65,432	54,491
All other international
Summary information by operating segment
Net sales	158,940	178,243	174,942
Long-term Assets	17,752	10,230	10,729
Germany
Summary information by operating segment
Net sales	$ 612,500	$ 578,800	$ 472,400

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Employee Benefit Plans (Details) (USD $)	12 Months Ended	0 Months Ended
	Jan. 03, 2015	Mar. 25, 2008	Mar. 26, 2008
Long-Term Incentive Plans
Unrecognized compensation cost related to nonvested share-based compensation arrangements	$ 22,700,000
Weighted-average period over which unrecognized compensation cost is expected to be recognized	1 year 6 months
Nonemployee director | Restricted stock units
Long-Term Incentive Plans
Vesting period	1 year
Value of awards granted	$ 120,000
2008 LTIP
Long-Term Incentive Plans
Number of common shares reserved for issuance	4,685,030
Term of award under the plan	10 years
Vesting period		3 years
Initial LTIP
Long-Term Incentive Plans
Term of award under the plan		10 years
Number of outstanding awards			60,085
Nonemployee Plan
Long-Term Incentive Plans
Percentage of options granted that became exercisable on first anniversary of the date of grant		50.00%
Options granted that became exercisable on second and third anniversary of the date of grant		25.00%
Number of installments in which options are exercisable		2
Number of outstanding awards			15,750
Nonemployee Plan | Minimum
Long-Term Incentive Plans
Vesting period		3 years
Nonemployee Plan | Maximum
Long-Term Incentive Plans
Vesting period		5 years

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Taxes (Details 3) (USD $)	12 Months Ended
	Jan. 03, 2015	Dec. 28, 2013	Dec. 29, 2012
Income tax contingency
Deferred income tax (benefit) expense	$ 2,026,000	$ (2,639,000)	$ 6,858,000
U.S. income tax
Income tax contingency
Tax benefit from exercise of non-qualified stock options and stock appreciation rights and vesting of restricted stock and restricted stock units	4,700,000	12,000,000	15,100,000
Foreign income tax
Income tax contingency
Tax benefit from exercise of non-qualified stock options and stock appreciation rights and vesting of restricted stock and restricted stock units	$ 400,000	$ 800,000	$ 500,000

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SCHEDULE II VALUATIONS AND QUALIFYING ACCOUNTS

12 Months Ended

Jan. 03, 2015

SCHEDULE II VALUATIONS AND QUALIFYING ACCOUNTS

SCHEDULE II VALUATIONS AND QUALIFYING ACCOUNTS

SCHEDULE II
FOSSIL GROUP, INC. AND SUBSIDIARIES
VALUATIONS AND QUALIFYING ACCOUNTS
Fiscal Years 2012, 2013 and 2014
(in thousands)

			Additions			Deductions
Classification	Balance at Beginning of Period		Charged (Credited) to Operations			Actual Returns or Writeoffs		Balance at End of Period
Fiscal Year 2012:
Account receivable allowances:
Sales returns	$	61,580	$	119,106		$	115,430	$	65,256
Bad debts	$	18,241	$	848		$	1,983	$	17,106
Deferred tax asset valuation allowance	$	3,193	$	3,114		$	544	$	5,763
Fiscal Year 2013:
Account receivable allowances:
Sales returns	$	65,256	$	116,777		$	118,963	$	63,070
Bad debts	$	17,106	$	(1,078	)	$	4,258	$	11,770
Deferred tax asset valuation allowance	$	5,763	$	4,988		$	204	$	10,547
Fiscal Year 2014:
Account receivable allowances:
Sales returns	$	63,070	$	144,694		$	139,557	$	68,207
Bad debts	$	11,770	$	3,257		$	3,187	$	11,840
Deferred tax asset valuation allowance	$	10,547	$	(820	)	$	2,906	$	6,821

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Acquisitions, Divestiture and Goodwill (Details) (Skagen Designs, USD $)	0 Months Ended	3 Months Ended	9 Months Ended	12 Months Ended
	Apr. 02, 2012	Mar. 31, 2012	Dec. 29, 2012	Dec. 28, 2013	Dec. 31, 2011
Business Acquisition
Business Acquisition, cash	$ 231,700,000
Common stock number of shares issued or issuable	150,000
Common Stock Valued	19,900,000
Contingent consideration liability at acquisition date	9,900,000
Contingent consideration liability at end of period			0	0
Fair value of contingent consideration liability during the period resulting increase (decrease) operating expenses				9,900,000
Acquisition related cost		$ 600,000	$ 8,200,000		$ 600,000
Contingent equity consideration | Issuable | Maximum
Business Acquisition
Common stock number of shares issued or issuable	100,000

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Supplemental Cash Flow Information (Tables)

12 Months Ended

Jan. 03, 2015

Supplemental Cash Flow Information

Summary of supplemental cash flow information

The following table summarizes supplemental cash flow information (in thousands):

Fiscal Year	2014		2013		2012
Cash paid during the year for:
Interest	$	15,924	$	9,450	$	5,155
Income taxes	$	167,702	$	167,624	$	105,433
Supplemental disclosures of non-cash investing and financing activities:
Additions to property, plant and equipment included in accounts payable	$	5,030	$	8,317	$	11,713
Additions to property, plant and equipment acquired under capital leases	$	1,180	$	1,068	$	4,884
Issuance of common stock for acquisition	$	0	$	0	$	19,899

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Stockholders' Equity (Details) (USD $)	53 Months Ended	12 Months Ended
	Jan. 03, 2015	Jan. 03, 2015	Dec. 28, 2013	Dec. 29, 2012	Dec. 31, 2011
Common and Preferred Stock
Authorizations remaining	$ 1,100,000	$ 1,100,000
Common stock, shares authorized	100,000,000	100,000,000
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common Stock, Shares, Issued	50,771,000	50,771,000	54,708,000
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common Stock Repurchase Programs
Number of shares repurchased	18,600,000
Common stock repurchased, value	1,700,000,000
Common stock
Common and Preferred Stock
Common Stock, Shares, Issued	50,771,000	50,771,000	54,708,000	59,631,000	68,370,000
Common Stock Repurchase Programs
Treasury stock effectively retired (in shares)		4,144,000	5,340,000	9,341,000
Treasury stock effectively retired		41,000	53,000	93,000
Additional paid-in capital
Common Stock Repurchase Programs
Treasury stock effectively retired		6,993,000	16,094,000	60,476,000
Retained earnings
Common Stock Repurchase Programs
Treasury stock effectively retired		431,677,000	567,171,000	661,841,000
Treasury stock
Common Stock Repurchase Programs
Treasury stock effectively retired		(438,711,000)	(583,318,000)	(722,410,000)
Stock repurchase plans | Common stock
Common Stock Repurchase Programs
Treasury stock effectively retired (in shares)		4,100,000
Treasury stock effectively retired		41,000
Stock repurchase plans | Additional paid-in capital
Common Stock Repurchase Programs
Treasury stock effectively retired		3,200,000
Stock repurchase plans | Retained earnings
Common Stock Repurchase Programs
Treasury stock effectively retired		431,700,000
Stock repurchase plans | Treasury stock
Common Stock Repurchase Programs
Treasury stock effectively retired		435,000,000
Common Stock Repurchase Program period authorized fiscal year 2014 with termination date December 2018
Common Stock Repurchase Programs
Common stock authorized amount, value	1,000,000,000	1,000,000,000
Number of shares repurchased		0	0
Common stock repurchased, value		0	0
Repurchase program with termination date of December 2016
Common Stock Repurchase Programs
Common stock authorized amount, value	1,000,000,000	1,000,000,000
Number of shares repurchased		4,100,000	4,900,000
Common stock repurchased, value		435,000,000	536,300,000
Share repurchase plan with no termination date
Common Stock Repurchase Programs
Common stock authorized amount, value	30,000,000	30,000,000
Number of shares repurchased		0	0
Common stock repurchased, value		0	0
Share repurchase plan with December 2013 termination date
Common Stock Repurchase Programs
Common stock authorized amount, value	750,000,000	750,000,000
Number of shares repurchased		0	400,000
Common stock repurchased, value		$ 0	$ 38,600,000

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Other Income-Net (Tables)

12 Months Ended

Jan. 03, 2015

Other Income-Net

Schedule of other income-net

Other income—net consisted of the following (in thousands):

Fiscal Year	2014		2013		2012
Interest income	$	799	$	809	$	889
Remeasurement of investment in Fossil Spain to fair value		0		6,510		0
Gain on Skagen Designs arbitration settlement		5,968		0		0
Equity in the earnings of joint venture, net of tax		0		0		972
Currency gains		20		951		5,565
Other gains		653		1,149		1,116
Other income—net	$	7,440	$	9,419	$	8,542

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Acquisitions, Divestiture and Goodwill (Details 3)	12 Months Ended			0 Months Ended							0 Months Ended								0 Months Ended
	Jan. 03, 2015 USD ($)	Dec. 28, 2013 USD ($)	Dec. 29, 2012 USD ($)	Dec. 31, 2012 Bentrani USD ($) country	Jan. 01, 2013 Fossil Spain USD ($)	Jan. 01, 2013 Fossil Spain USD ($)	Jan. 03, 2015 Fossil Spain Accrued expenses - other USD ($)	Jan. 03, 2015 Fossil Spain Accrued expenses - other EUR (€)	Jan. 03, 2015 Fossil Spain Other long-term liabilities USD ($)	Jan. 03, 2015 Fossil Spain Other long-term liabilities EUR (€)	Jan. 01, 2013 Fossil Spain General De Relojeria	Aug. 10, 2012 Fossil Spain General De Relojeria	Jan. 01, 2013 Fossil Spain General De Relojeria USD ($)	Jan. 01, 2013 Fossil Spain General De Relojeria EUR (€)	Jan. 03, 2015 Fossil Spain General De Relojeria Minimum USD ($)	Jan. 03, 2015 Fossil Spain General De Relojeria Minimum EUR (€)	Jan. 03, 2015 Fossil Spain General De Relojeria Maximum USD ($)	Jan. 03, 2015 Fossil Spain General De Relojeria Maximum EUR (€)	Apr. 24, 2013 STC Swiss Technology Holding GmbH
Business Acquisition
Voting interest that may be acquired upon expiration of joint venture agreement (as a percent)												50.00%
Remeasurement of investment in Fossil Spain to fair value	$ 0	$ 6,510,000	$ 0		$ 6,500,000
Goodwill	197,728,000	206,954,000	184,793,000	8,900,000		10,600,000
Percentage of net book value used in the calculation of the fixed purchase price component											50.00%
Fixed portion of purchase price for the shares													6,800,000	5,200,000
Variable price													7,800,000	5,900,000	2,600,000	2,000,000	4,600,000	3,500,000
Contingent consideration							3,900,000	3,200,000	7,900,000	6,600,000
Number of Latin American countries in which Bentrani is a distributor				16
Period of partnership with Company				10 years
Acquisition amount				26,600,000
Purchase price paid in cash				19,300,000
Payable forgiven				$ 7,300,000
Sale of stock in subsidiary (as a percent)																			80.00%

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Debt (Details 2) (USD $)	12 Months Ended			0 Months Ended	7 Months Ended	0 Months Ended
	Jan. 03, 2015	Dec. 28, 2013	Dec. 29, 2012	May 17, 2013	Jan. 03, 2015 item	Sep. 30, 2013	May 23, 2014	May 11, 2012
Maturity of long term debt excluding capital lease obligations
Less than 1 Year	$ 15,700,000				$ 15,700,000
Year 2	22,000,000				22,000,000
Year 3	18,900,000				18,900,000
Year 4	564,100,000				564,100,000
Year 5	100,000				100,000
Thereafter	2,800,000				2,800,000
Total debt	623,600,000	500,700,000			623,600,000
Interest paid	15,924,000	9,450,000	5,155,000
Credit Agreement
Debt Instrument
Debt term				5 years
Upfront fees				4,800,000
Maximum capital expenditures after 2015, debt covenant	250,000,000
Credit Agreement | Maximum
Debt Instrument
Consolidated leverage ratio required					2.50
Consolidated interest coverage ratio required					3.50
Maximum capital expenditures during 2014, debt covenant					200,000,000
Maximum capital expenditures during 2015, debt covenant					200,000,000
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%
Swingline loan
Debt Instrument
Maximum borrowing capacity				20,000,000
U.S. revolving line of credit
Debt Instrument
Interest expense incurred	6,100,000
Maximum borrowing capacity	1,050,000,000			750,000,000	1,050,000,000
Increased credit limit							300,000,000
Remaining borrowing capacity	660,100,000				660,100,000
Percentage of total outstanding voting capital stock				65.00%
Maturity of long term debt excluding capital lease obligations
Total debt	389,000,000	250,000,000			389,000,000
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)	100.00%				100.00%
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)	200.00%				200.00%
U.S. revolving line of credit | Prime rate | Base rate loans
Debt Instrument
Base rate at end of period (as a percent)	3.25%				3.25%
Description of base rate					prime rate
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
Base rate at end of period (as a percent)	0.16%				0.16%
Description of base rate					LIBOR
Basis spread on base rate (as a percent)					1.25%
U.S. revolving line of credit | LIBOR | LIBOR rate loans
Debt Instrument
LIBOR Rate, amount used to calculate quotient (as a percent)	100.00%				100.00%
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)					1.00%
Consolidated leverage ratio used to calculate variable rate of debt (as a percent)	100.00%				100.00%
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)	200.00%				200.00%
U.S. term loan
Debt Instrument
Interest expense incurred	6,300,000
Total borrowings					15,600,000
Repayment of borrowings						139,000,000
Maximum borrowing capacity	250,000,000				250,000,000
Maturity of long term debt excluding capital lease obligations
Total debt	231,300,000	246,900,000			231,300,000
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)	100.00%				100.00%
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)	200.00%				200.00%
U.S. term loan | Prime rate | Base rate loans
Debt Instrument
Base rate at end of period (as a percent)	3.25%				3.25%
Description of base rate					Prime rate
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)					0.25%
U.S. term loan | LIBOR | Base rate loans
Debt Instrument
Base rate at end of period (as a percent)	0.16%				0.16%
Description of base rate					LIBOR
Basis spread on base rate (as a percent)					1.25%
U.S. term loan | LIBOR | LIBOR rate loans
Debt Instrument
LIBOR Rate, amount used to calculate quotient (as a percent)	100.00%				100.00%
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)	100.00%				100.00%
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)	200.00%				200.00%
Other international
Maturity of long term debt excluding capital lease obligations
Total debt	3,300,000	3,800,000			3,300,000
LC Facility
Debt Instrument
Maximum borrowing capacity				10,000,000				80,000,000
Maturity of long term debt excluding capital lease obligations
Letters of credit outstanding	50,300,000	49,700,000			50,300,000
Capital Lease Obligations
Maturity of long term debt excluding capital lease obligations
Current capital lease obligations	900,000	800,000			900,000
Long-term capital lease obligations	$ 5,800,000	$ 6,600,000			$ 5,800,000

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Derivatives and Risk Management (Details 2) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jan. 03, 2015	Dec. 28, 2013
Derivatives
Total (loss) gain recognized in other comprehensive income (loss), net of taxes	$ 20,768	$ (2,422)
Cash Flow Hedges | Foreign exchange forward contracts
Derivatives
Total (loss) gain recognized in other comprehensive income (loss), net of taxes	22,927	(1,391)
Cash Flow Hedges | Interest rate swap
Derivatives
Total (loss) gain recognized in other comprehensive income (loss), net of taxes	$ (2,159)	$ (1,031)

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Significant Accounting Policies (Details 3)	12 Months Ended
	Jan. 03, 2015
Minimum
Finite lived intangible assets
Amortization period	3 years
Maximum
Finite lived intangible assets
Amortization period	20 years

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Inventories

12 Months Ended

Jan. 03, 2015

Inventories

Inventories

3. Inventories

        Inventories consisted of the following (in thousands):

At Fiscal Year End	2014		2013
Components and parts	$	48,797	$	56,275
Work-in-process		13,719		14,017
Finished goods		534,765		500,427
Inventories	$	597,281	$	570,719

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Derivatives and Risk Management (Details 3) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jan. 03, 2015	Dec. 28, 2013
Foreign exchange forward contracts | Designated as cash flow hedges
Effective portion of gains and losses on derivative instruments
Total (loss) gain reclassified from other comprehensive income	$ 5,856	$ (246)
Foreign exchange forward contracts | Not designated as hedging instruments
Effective portion of gains and losses on derivative instruments
Total loss recognized in income	(148)	567
Interest rate swap | Designated as cash flow hedges
Effective portion of gains and losses on derivative instruments
Total (loss) gain reclassified from other comprehensive income	$ (1,763)	$ (925)

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Supplemental Disclosure for Accumulated Other Comprehensive Income (Tables)

12 Months Ended

Jan. 03, 2015

Supplemental Disclosure for Accumulated Other Comprehensive Income

Schedule of changes in accumulated other comprehensive income

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

	January 3, 2015
				Cash Flow Hedges
	Currency Translation Adjustments			Forward Contracts			Interest Rate Swap			Pension Plan			Total
Beginning balance	$	38,152		$	(2,091	)	$	(106	)	$	736		$	36,691
Other comprehensive income (loss) before reclassifications		(65,240	)		37,182			(3,397	)		(4,804	)		(36,259	)
Tax (expense) benefit		(153	)		(14,255	)		1,238			421			(12,749	)
Amounts reclassed from accumulated other comprehensive income		0			8,893			(2,774	)		0			6,119
Tax (expense) benefit		0			(3,037	)		1,011			0			(2,026	)
Total other comprehensive income (loss)		(65,393	)		17,071			(396	)		(4,383	)		(53,101	)
Ending balance	$	(27,241	)	$	14,980		$	(502	)	$	(3,647	)	$	(16,410	)

	December 28, 2013
						Cash Flow Hedges
	Currency Translation Adjustments		Securities Available for Sale			Forward Contracts			Interest Rate Swap			Pension Plan		Total
Beginning balance	$	30,181	$	(475	)	$	(946	)	$	0		$	0	$	28,760
Other comprehensive income (loss) before reclassifications		7,971		(83	)		(2,148	)		(1,592	)		583		4,731
Tax (expense) benefit		0		0			757			561			153		1,471
Amounts reclassed from accumulated other comprehensive income		0		(558	)		(145	)		(1,423	)		0		(2,126	)
Tax (expense) benefit		0		0			(101	)		498			0		397
Total other comprehensive income (loss)		7,971		475			(1,145	)		(106	)		736		7,931
Ending balance	$	38,152	$	0		$	(2,091	)	$	(106	)	$	736	$	36,691

	December 29, 2012
						Cash Flow Hedges
	Currency Translation Adjustments		Securities Available for Sale			Forward Contracts			Total
Beginning balance	$	18,953	$	(446	)	$	3,673		$	22,180
Other comprehensive income (loss) before reclassifications		11,228		(29	)		1,232			12,431
Tax (expense) benefit		0		0			(806	)		(806	)
Amounts reclassed from accumulated other comprehensive income		0		0			7,761			7,761
Tax (expense) benefit		0		0			(2,716	)		(2,716	)
Total other comprehensive income (loss)		11,228		(29	)		(4,619	)		6,580
Ending balance	$	30,181	$	(475	)	$	(946	)	$	28,760

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Inventories (Tables)

12 Months Ended

Jan. 03, 2015

Inventories

Schedule of inventories

        Inventories consisted of the following (in thousands):

At Fiscal Year End	2014		2013
Components and parts	$	48,797	$	56,275
Work-in-process		13,719		14,017
Finished goods		534,765		500,427
Inventories	$	597,281	$	570,719

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Acquisitions, Divestiture and Goodwill (Tables)

12 Months Ended

Jan. 03, 2015

Acquisitions, Divestiture and Goodwill

Schedule of changes in the carrying amount of goodwill

The changes in the carrying amount of goodwill were as follows (in thousands):

	Americas			Europe			Asia			Total
Balance at December 29, 2012	$	110,778		$	62,034		$	11,981		$	184,793
Acquisitions	8,890			10,641			0			19,531
Foreign currency changes	(13		)	2,692			(49		)	2,630
Balance at December 28, 2013	$	119,655		$	75,367		$	11,932		$	206,954
Foreign currency changes	(217		)	(8,934		)	(75		)	(9,226		)
Balance at January 3, 2015	$	119,438		$	66,433		$	11,857		$	197,728

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Prepaid Expenses and Other Current Assets (Details) (USD $) In Thousands, unless otherwise specified	Jan. 03, 2015	Dec. 28, 2013
Prepaid Expenses and Other Current Assets
Prepaid royalties	$ 42,698	$ 12,322
Prepaid taxes	34,094	29,645
Other receivables	14,840	7,378
Forward contracts	25,867	3,289
Prepaid rent	13,543	10,599
Restricted cash	125	39
Other prepaid expenses	20,359	23,048
Other	204	196
Prepaid expenses and other current assets	$ 151,730	$ 86,516

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Major Customer, Segment and Geographic Information (Tables)

12 Months Ended

Jan. 03, 2015

Major Customer, Segment and Geographic Information

Summary information by operating segment

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

	Fiscal Year 2014
	Net Sales		Operating Income			Depreciation and Amortization		Long-term Assets		Total Assets
Americas	$	1,747,506	$	463,246		$	24,846	$	263,324	$	809,548
Europe	1,195,948		287,961			20,028		220,742		561,486
Asia	566,237		116,288			12,676		57,508		233,881
Corporate			(300,959		)	25,780		176,124		602,637
Consolidated	$	3,509,691	$	566,536		$	83,330	$	717,698	$	2,207,552

	Fiscal Year 2013
	Net Sales		Operating Income			Depreciation and Amortization		Long-term Assets		Total Assets
Americas	$	1,703,350	$	472,812		$	22,024	$	260,730	$	781,374
Europe	1,052,497		238,585			18,904		248,182		600,289
Asia	504,124		115,841			9,332		60,197		210,916
Corporate			(265,642		)	24,007		181,843		637,835
Consolidated	$	3,259,971	$	561,596		$	74,267	$	750,952	$	2,230,414

	Fiscal Year 2012
	Net Sales		Operating Income			Depreciation and Amortization		Long-term Assets		Total Assets
Americas	$	1,529,279	$	404,387		$	18,036	$	244,705	$	687,380
Europe	880,012		180,958			15,558		228,129		506,325
Asia	448,217		114,011			6,813		49,949		183,935
Corporate			(210,516		)	20,099		175,094		464,349
Consolidated	$	2,857,508	$	488,840		$	60,506	$	697,877	$	1,841,989

Schedule of revenue for each class of similar products

The following table indicates revenue for each class of similar products for fiscal years 2014, 2013 and 2012 (in thousands):

	Fiscal Year 2014					Fiscal Year 2013					Fiscal Year 2012
	Net Sales		Percentage of Total			Net Sales		Percentage of Total			Net Sales		Percentage of Total
Watches	$	2,736,511		78.0	%	$	2,513,081		77.1	%	$	2,141,481		74.9	%
Leathers		419,391		11.9			436,285		13.4			440,113		15.4
Jewelry		276,485		7.9			228,748		7.0			181,636		6.4
Other		77,304		2.2			81,857		2.5			94,278		3.3
Total	$	3,509,691		100.0	%	$	3,259,971		100.0	%	$	2,857,508		100.0	%

Schedule of net sales and long-lived assets

Net sales and long-lived assets related to the Company’s operations in the U.S., Europe, Asia and all other international markets were as follows (in thousands):

	Fiscal Year 2014
				Long-tern
	Net Sales (1)			Assets
United States	$	1,588,566		$	397,034
Europe	1,195,948		(2)	235,219
Asia	566,237			67,693
All other international	158,940			17,752
Consolidated	$	3,509,691		$	717,698

	Fiscal Year 2013
				Long-tern
	Net Sales (1)			Assets
United States	$	1,525,107		$	412,966
Europe	1,052,497		(2)	262,324
Asia	504,124			65,432
All other international	178,243			10,230
Consolidated	$	3,259,971		$	750,952

	Fiscal Year 2012
				Long-tern
	Net Sales (1)			Assets
United States	$	1,354,337		$	392,740
Europe	880,012		(2)	239,917
Asia	448,217			54,491
All other international	174,942			10,729
Consolidated	$	2,857,508		$	697,877

(1) Net sales are based on the location of the selling entity.

(2) Net sales from Germany accounted for more than 10% of the Company’s consolidated net sales and were approximately $612.5 million, $578.8 million and $472.4 million in fiscal years 2014, 2013 and 2012, respectively.

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Warranty Liabilities (Tables)

12 Months Ended

Jan. 03, 2015

Warranty Liabilities

Schedule of warranty liability activity

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

Fiscal Year	2014			2013			2012
Beginning balance	$	15,658		$	13,383		$	10,996
Settlements in cash or kind		(12,313	)		(10,672	)		(6,945	)
Warranties issued and adjustments to preexisting warranties(1)		10,155			12,607			8,737
Liabilities assumed in acquisition		0			340			595
Ending balance	$	13,500		$	15,658		$	13,383

(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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Prepaid Expenses and Other Current Assets (Tables)

12 Months Ended

Jan. 03, 2015

Prepaid Expenses and Other Current Assets

Schedule of prepaid expenses and other current assets

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

At Fiscal Year End	2014		2013
Prepaid royalties	$	42,698	$	12,322
Prepaid taxes		34,094		29,645
Other receivables		14,840		7,378
Forward contracts		25,867		3,289
Prepaid rent		13,543		10,599
Restricted cash		125		39
Other prepaid expenses		20,359		23,048
Other		204		196
Prepaid expenses and other current assets	$	151,730	$	86,516

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Acquisitions, Divestiture and Goodwill

12 Months Ended

Jan. 03, 2015

Acquisitions, Divestiture and Goodwill

Acquisitions, Divestiture and Goodwill

2. Acquisitions, Divestiture and Goodwill

Skagen Designs, Ltd. Acquisition.  On April 2, 2012, the Company acquired Skagen Designs, Ltd. and certain of its international affiliates (“Skagen Designs”). The purchase price was $231.7 million in cash and 150,000 shares of the Company’s common stock valued at $19.9 million. In addition, subject to the purchase agreement, the sellers could receive up to 100,000 additional shares of the Company’s common stock if the Company’s net sales of SKAGEN® branded products exceed certain thresholds over a defined period of time (the “Earnout”).

The Company recorded the Earnout as a $9.9 million contingent consideration liability in accrued expenses—other in the Company’s consolidated balance sheets as of the acquisition date. As of December 29, 2012, the contingent consideration liability was remeasured at zero, which resulted in a decrease in operating expenses of $9.9 million during fiscal year 2012. The contingent consideration liability remained valued at zero as the Earnout criteria was not met. The results of Skagen Designs’ operations have been included in the Company’s consolidated financial statements since April 2, 2012.

Prior to closing the Skagen Designs acquisition, the Company incurred approximately $600,000 of acquisition-related expenses for legal, accounting and valuation services during fiscal year 2011 and the first quarter of fiscal year 2012. The Company incurred additional acquisition and integration related costs of approximately $8.2 million in fiscal year 2012, subsequent to the closing date. Acquisition and integration costs were reflected in SG&A on the Company’s consolidated statements of income and comprehensive income. Assets acquired and liabilities assumed in the transaction were recorded at their acquisition date fair values, while transaction costs associated with the acquisition were expensed as incurred.

Because the total purchase price for Skagen Designs exceeded the fair values of the tangible and intangible assets acquired, $140.4 million of goodwill was recorded equal to the difference. The element of goodwill that is not separable into identifiable intangible assets represents expected synergies.

The goodwill and trade name assets recognized from the acquisition have indefinite useful lives, were tested for impairment beginning fiscal year-end 2012 and will continue to be tested for impairment annually or on an interim basis if indicators are present. The amortization periods for the acquired customer lists, patents and noncompete agreements range from three years to nine years. Approximately $133.8 million of the goodwill recognized in the acquisition is deductible for tax purposes.

During the fourth quarter of fiscal year 2014, the Company participated in arbitration proceedings regarding the original purchase price for Skagen Designs, which concluded that the original purchase amount for Skagen Designs was overstated and awarded the Company approximately $6.0 million. The Company recognized the amount in other income-net in the Company’s consolidated statements of income and comprehensive income for the fiscal year 2014.

Fossil Spain Acquisition.  On August 10, 2012, the Company’s joint venture company, Fossil, S.L. (“Fossil Spain”), entered into a Framework Agreement (the “Framework Agreement”) with several related and unrelated parties, including General De Relojeria, S.A. (“General De Relojeria”), the Company’s joint venture partner. Pursuant to the Framework Agreement, Fossil Spain was granted the right to acquire the outstanding 50% of its shares owned by General De Relojeria upon the expiration of the joint venture agreement on December 31, 2015. Upon the acquisition of these shares, Fossil Spain will become a wholly-owned subsidiary of the Company.

Effective January 1, 2013, pursuant to the Framework Agreement, the Company assumed control over the board of directors and the day-to-day management of Fossil Spain. As a result of this change, the Company now controls Fossil Spain and began consolidating it, instead of treating it as an equity method investment.

The Company remeasured its preexisting investment in Fossil Spain to fair value as of January 1, 2013, resulting in a gain of $6.5 million, which was recorded in other income-net on the Company’s consolidated statements of income and comprehensive income. The results of Fossil Spain’s operations have been included in the Company’s consolidated financial statements since January 1, 2013. The Company recorded approximately $10.6 million of goodwill related to the acquisition.

The purchase price for the shares has a fixed and variable component. The fixed portion is based on 50% of the net book value of Fossil Spain as of December 31, 2012. The fixed portion was measured at 5.2 million euros (approximately $6.8 million at the purchase date). The Company recorded a contingent consideration liability of 5.9 million euros (approximately $7.8 million at the purchase date) related to the variable portion of the purchase price as of January 1, 2013. The variable portion is determined based on Fossil Spain’s aggregated results of operations with a minimum annual variable price of 2.0 million euros (approximately $2.6 million at the purchase date) and a maximum annual variable price of 3.5 million euros (approximately $4.6 million at the purchase date) for each of the calendar years 2013, 2014 and 2015. See Note 9—Fair Value Measurements for additional information about the contingent consideration liability for Fossil Spain.

Of the total consideration for Fossil Spain, 3.2 million euros (approximately $3.9 million) relating to the contingent consideration for 2014 was recorded in accrued expenses—other, and 6.6 million euros (approximately $7.9 million) of the total consideration was recorded in other long-term liabilities in the consolidated balance sheets at January 3, 2015.

Bentrani Watches, LLC Acquisition.  On December 31, 2012, the Company purchased substantially all of the assets of Bentrani Watches, LLC (“Bentrani”). Bentrani was a distributor of watch products in 16 Latin American countries and was based in Miami, Florida. Bentrani was the Company’s largest third-party distributor and had partnered with the Company for ten years. The purchase price was $26.6 million, comprised of $19.3 million in cash and $7.3 million in forgiveness of a payable to the Company. The Company recorded approximately $8.9 million of goodwill related to the acquisition. The results of Bentrani’s operations have been included in the Company’s consolidated financial statements since the acquisition date. On June 28, 2013, the Company also obtained control of Bentrani Chile SpA (“Bentrani Chile”), and the results of Bentrani Chile’s operations have been included in the Company’s consolidated financial statements since that date. The terms of the Bentrani Chile acquisition were not significant.

Swiss Technology Components AG Divestiture.  On April 24, 2013, Swiss Technology Holding GmbH (“STH”), a wholly-owned subsidiary of the Company, sold 80% of STH’s share in Swiss Technology Components AG (“STC”). STC was deconsolidated as a result of the Company’s termination of control and has subsequently been accounted for under the cost method.

Goodwill.  The changes in the carrying amount of goodwill were as follows (in thousands):

	Americas			Europe			Asia			Total
Balance at December 29, 2012	$	110,778		$	62,034		$	11,981		$	184,793
Acquisitions	8,890			10,641			0			19,531
Foreign currency changes	(13		)	2,692			(49		)	2,630
Balance at December 28, 2013	$	119,655		$	75,367		$	11,932		$	206,954
Foreign currency changes	(217		)	(8,934		)	(75		)	(9,226		)
Balance at January 3, 2015	$	119,438		$	66,433		$	11,857		$	197,728

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Property, Plant and Equipment (Tables)

12 Months Ended

Jan. 03, 2015

Property, Plant and Equipment

Schedule of the components of property, plant and equipment-net

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

At Fiscal Year End	2014		2013
Land	$	14,508	$	15,184
Buildings		71,580		78,013
Machinery and equipment		36,992		39,154
Furniture and fixtures		108,137		98,494
Computer equipment and software		205,831		186,123
Leasehold improvements		246,882		237,671
Construction in progress		21,867		15,814
		705,797		670,453
Less accumulated depreciation and amortization		360,191		314,787
Property, plant and equipment-net	$	345,606	$	355,666

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Supplemental Cash Flow Information (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jan. 03, 2015	Dec. 28, 2013	Dec. 29, 2012
Cash paid during the year for:
Interest	$ 15,924	$ 9,450	$ 5,155
Income taxes	167,702	167,624	105,433
Supplemental disclosures of non-cash investing and financing activities:
Additions to property, plant and equipment included in accounts payable	5,030	8,317	11,713
Additions to property, plant and equipment acquired under capital leases	1,180	1,068	4,884
Issuance of common stock for acquisition	$ 0	$ 0	$ 19,899

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Stockholders' Equity (Tables)

12 Months Ended

Jan. 03, 2015

Stockholders' Equity

Schedule of common stock repurchase activity

The following table shows the Company's common stock repurchase activity for the periods indicated (in millions):

				For the 2014 Fiscal Year				For the 2013 Fiscal Year
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		0.0	$	0.0		0.0	$	0.0
2012	$	1,000.0	December 2016		4.1	$	435.0		4.9	$	536.3
2010	$	30.0	None		0.0	$	0.0		0.0	$	0.0
2010	$	750.0	December 2013(1)		0.0	$	0.0		0.4	$	38.6

Summary of the effects of changes in the Company's ownership interest in its subsidiaries on stockholders' equity

The following table summarizes the effects of changes in the Company's ownership interest in its subsidiaries on stockholders' equity (in thousands):

Fiscal Year	2014		2013		2012
Net income attributable to Fossil Group, Inc.	$	376,707	$	378,152	$	343,401
Transfers to noncontrolling interest:
Decrease in Fossil Group, Inc.'s additional paid-in capital for purchases of 49 common shares of Fossil Mexico and 49 common shares of Fossil Servicios		0		0		(7,332	)
Change from net income attributable to Fossil Group, Inc. and transfers to noncontrolling interest	$	376,707	$	378,152	$	336,069

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Acquisitions, Divestiture and Goodwill (Details 4) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jan. 03, 2015	Dec. 28, 2013
Changes in carrying amount of goodwill
Beginning Balance	$ 206,954	$ 184,793
Foreign currency changes	(9,226)	2,630
Acquisitions		19,531
Ending Balance	197,728	206,954
Americas
Changes in carrying amount of goodwill
Beginning Balance	119,655	110,778
Foreign currency changes	(217)	(13)
Acquisitions		8,890
Ending Balance	119,438	119,655
Europe
Changes in carrying amount of goodwill
Beginning Balance	75,367	62,034
Foreign currency changes	(8,934)	2,692
Acquisitions		10,641
Ending Balance	66,433	75,367
Asia
Changes in carrying amount of goodwill
Beginning Balance	11,932	11,981
Foreign currency changes	(75)	(49)
Acquisitions		0
Ending Balance	$ 11,857	$ 11,932

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Taxes (Details 4) (Foreign income tax, USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 29, 2012	Jan. 03, 2015
Income tax holiday
Current foreign income taxes reduced by tax holiday	$ 1.2
2008 through 2012
Income tax holiday
Tax holiday granted (as a percent)		60.00%

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Jan. 03, 2015	Dec. 28, 2013
Current assets:
Cash and cash equivalents	$ 276,261	$ 320,479
Accounts receivable-net	430,498	454,762
Inventories	597,281	570,719
Deferred income tax assets-net	34,084	46,986
Prepaid expenses and other current assets	151,730	86,516
Total current assets	1,489,854	1,479,462
Property, plant and equipment-net	345,606	355,666
Goodwill	197,728	206,954
Intangible and other assets-net	174,364	188,332
Total long-term assets	717,698	750,952
Total assets	2,207,552	2,230,414
Current liabilities:
Accounts payable	159,267	165,433
Short-term and current portion of long-term debt	16,646	13,443
Accrued expenses:
Compensation	50,776	80,573
Royalties	54,013	65,117
Co-op advertising	28,591	25,599
Transaction taxes	35,301	35,134
Other	75,609	79,860
Income taxes payable	26,626	26,747
Total current liabilities	446,829	491,906
Long-term income taxes payable	16,610	15,720
Deferred income tax liabilities	87,860	98,168
Long-term debt	613,659	494,711
Other long-term liabilities	58,793	54,542
Total long-term liabilities	776,922	663,141
Commitments and contingencies (Note 13)
Stockholders' equity:
Common stock, 50,771 and 54,708 shares issued at January 3, 2015 and December 28, 2013, respectively	508	547
Additional paid-in capital	171,669	154,376
Retained earnings	822,093	877,063
Accumulated other comprehensive (loss) income	(16,410)	36,691
Total Fossil Group, Inc. stockholders' equity	977,860	1,068,677
Noncontrolling interest	5,941	6,690
Total stockholders' equity	983,801	1,075,367
Total liabilities and stockholders' equity	$ 2,207,552	$ 2,230,414

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Significant Accounting Policies (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Jan. 03, 2015	Dec. 28, 2013 Plant
Accounts Receivable
Allowance for estimated customer returns	$ 68.2	63.1
Allowance For Doubtful Accounts Receivable and Sales Returns Current	11.8	11.8
Cost and expense related to the Company's doubtful accounts	3.3
Inventories
Consignment inventory	$ 40.7	29.9
Sales of Licensed Products
Concentration of Risk
Concentration risk percentage	53.50%
Watch assembly and Jewelry production | Production | Production Concentration
Concentration of Risk
Number of majority-owned assembly factories		2
Concentration risk percentage		57.00%
MICHAEL KORS | Sales of Licensed Products | Licensed products
Concentration of Risk
Concentration risk percentage	26.30%

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jan. 03, 2015	Dec. 28, 2013	Dec. 29, 2012
Operating Activities:
Net income	$ 386,611	$ 388,048	$ 354,259
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	95,931	81,936	65,536
Stock-based compensation	18,823	15,338	18,568
Increase (decrease) in allowance for returns-net of inventory in transit	3,701	(307)	3,395
Loss on disposal of assets	465	731	2,290
Impairment losses	9,266	5,750	1,231
Equity in income of joint venture	0	0	(1,382)
Distribution from joint venture	0	0	1,870
Gain on equity method investment	0	(6,510)	0
Increase (decrease) in allowance for doubtful accounts	550	(5,422)	(1,221)
Excess tax benefits from stock-based compensation	(1,430)	(8,379)	(11,693)
Deferred income taxes and other	2,708	12,400	10,591
Contingent consideration revaluation	1,112	0	(9,949)
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable	(8,495)	(77,452)	(42,849)
Inventories	(60,746)	(52,923)	10,677
Prepaid expenses and other current assets	(52,726)	(21,141)	38,236
Accounts payable	2,477	15,347	(7,017)
Accrued expenses	(13,315)	52,904	2,847
Income taxes payable	2,951	11,362	16,211
Net cash provided by operating activities	387,883	411,682	451,600
Investing Activities:
Additions to property, plant and equipment	(94,763)	(95,234)	(112,385)
Increase in intangible and other assets	(9,419)	(14,818)	(10,419)
Proceeds from sale of property, plant and equipment, and other	(571)	(2,029)	(68)
Net change in restricted cash	41	376	6,734
Business acquisitions-net of cash acquired	0	(15,521)	(229,151)
Net investment hedge settlement	410	0	0
Net cash used in investing activities	(103,160)	(123,168)	(345,153)
Financing Activities:
Acquisition of common stock	(437,911)	(582,254)	(271,293)
Distribution of noncontrolling interest earnings and other	(10,317)	(10,135)	(8,198)
Purchase of noncontrolling interest shares	(336)	0	(14,061)
Excess tax benefits from stock-based compensation	1,430	8,379	11,693
Debt borrowings	961,000	1,222,116	554,568
Debt payments	(838,684)	(791,495)	(498,391)
Proceeds from exercise of stock options	3,235	7,596	6,090
Other financing activities	(3,598)	(2,456)	0
Net cash used in financing activities	(325,181)	(148,249)	(219,592)
Effect of exchange rate changes on cash and cash equivalents	(3,760)	2,978	2,883
Net (decrease) increase in cash and cash equivalents	(44,218)	143,243	(110,262)
Cash and cash equivalents:
Beginning of year	320,479	177,236	287,498
End of year	$ 276,261	$ 320,479	$ 177,236

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Intangible and Other Assets (Details 2) (USD $)	12 Months Ended
	Jan. 03, 2015	Dec. 28, 2013	Dec. 29, 2012
Intangible and Other Assets
Amortization expense for intangible assets	$ 5,100,000	$ 5,200,000	$ 3,500,000
Estimated aggregate future amortization expense by fiscal year
2015	4,633,000
2016	4,494,000
2017	4,236,000
2018	3,877,000
2019	$ 3,780,000

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Fair Value Measurements (Tables)

12 Months Ended

Jan. 03, 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 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 following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of December 28, 2013 (in thousands):

	Fair Value at December 28, 2013
	Level 1		Level 2		Level 3		Total
Assets:
Forward contracts	$	0	$	3,508	$	0	$	3,508
Deferred compensation plan assets:
Investment in publicly traded mutual funds		2,360		0		0		2,360
Interest rate swap		0		4,307		0		4,307
Total	$	2,360	$	7,815	$	0	$	10,175
Liabilities:
Contingent consideration	$	0	$	0	$	8,084	$	8,084
Forward contracts		0		8,214		0		8,214
Interest rate swap		0		4,476		0		4,476
Total	$	0	$	12,690	$	8,084	$	20,774

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

The following tables present the fair value hierarchy for those assets and liabilities measured at fair value on a nonrecurring basis as of January 3, 2015 and December 28, 2013 (in thousands):

			Fair Value Measurements Using
	For the Fiscal Year Ended January 3, 2015								Total Impairment Charge
			Level 1		Level 2		Level 3
Assets:
Specific Company-owned stores	$	284	$	0	$	0	$	284	$	(9,266	)

			Fair Value Measurements Using:
	For the Fiscal Year Ended December 28, 2013								Total Impairment Charge
			Level 1		Level 2		Level 3
Assets:
Specific Company-owned stores	$	668	$	0	$	0	$	668	$	(5,750	)

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Fair Value Measurements (Details 2) (USD $)	12 Months Ended
	Jan. 03, 2015	Dec. 28, 2013	Dec. 29, 2012
Fair value hierarchy for assets and liabilities measured at fair value on a nonrecurring basis
Impairment charges	$ (9,266,000)	$ (5,750,000)	$ (1,231,000)
Property, plant and equipment-net	345,606,000	355,666,000
Specific Company-owned stores
Fair value hierarchy for assets and liabilities measured at fair value on a nonrecurring basis
Key money amount not recoverable	500,000
Impairment charges	(9,300,000)	(5,800,000)
Property, plant and equipment-net	9,100,000	6,400,000
Property, plant and equipment - net, fair value	300,000	700,000
Fair Value Measurement, Nonrecurring Basis | Level 1 | Specific Company-owned stores
Fair value hierarchy for assets and liabilities measured at fair value on a nonrecurring basis
Specific Company-owned stores	0	0
Fair Value Measurement, Nonrecurring Basis | Level 2 | Specific Company-owned stores
Fair value hierarchy for assets and liabilities measured at fair value on a nonrecurring basis
Specific Company-owned stores	0	0
Fair Value Measurement, Nonrecurring Basis | Level 3 | Specific Company-owned stores
Fair value hierarchy for assets and liabilities measured at fair value on a nonrecurring basis
Specific Company-owned stores	284,000	668,000
Fair Value Measurement, Nonrecurring Basis | Total | Specific Company-owned stores
Fair value hierarchy for assets and liabilities measured at fair value on a nonrecurring basis
Specific Company-owned stores	$ 284,000	$ 668,000

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Supplemental Cash Flow Information

12 Months Ended

Jan. 03, 2015

Supplemental Cash Flow Information

Supplemental Cash Flow Information

16. Supplemental Cash Flow Information

        The following table summarizes supplemental cash flow information (in thousands):

Fiscal Year	2014		2013		2012
Cash paid during the year for:
Interest	$	15,924	$	9,450	$	5,155
Income taxes	$	167,702	$	167,624	$	105,433
Supplemental disclosures of non-cash investing and financing activities:
Additions to property, plant and equipment included in accounts payable	$	5,030	$	8,317	$	11,713
Additions to property, plant and equipment acquired under capital leases	$	1,180	$	1,068	$	4,884
Issuance of common stock for acquisition	$	0	$	0	$	19,899

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Debt (Tables)

12 Months Ended

Jan. 03, 2015

Debt

Schedule of components of debt excluding capital lease obligations

The Company's debt consisted of the following, excluding capital lease obligations, (in millions):

	January 3, 2015		December 28, 2013
U.S. revolving line of credit	$	389.0	$	250.0
U.S. term loan		231.3		246.9
Other international		3.3		3.8
Total debt		623.6		500.7
Less current portion		15.7		12.6
Long-term debt	$	607.9	$	488.1

Schedule of maturity of debt excluding capital lease obligations

The Company's debt as of January 3, 2015, excluding capital lease obligations, matures as follows (in millions):

Less than 1 Year	$	15.7
Year 2		22.0
Year 3		18.9
Year 4		564.1
Year 5		0.1
Thereafter		2.8
Total	$	623.6

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Major Customer, Segment and Geographic Information

12 Months Ended

Jan. 03, 2015

Major Customer, Segment and Geographic Information

Major Customer, Segment and Geographic Information

18. Major Customer, Segment and Geographic Information

Major Customer

Wholesale customers of the Company consist principally of major department stores and specialty retail stores located throughout the world. No individual customer accounts for 10% or more of the Company’s net sales.

Segment Information

The Company reports segment information based on the “management approach”. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments.

The Company manages its business primarily on a geographic basis. The Company’s reportable operating segments are comprised of (i) Americas, (ii) Europe and (iii) Asia. Each reportable operating segment includes sales to wholesale and distributor customers, and sales through Company-owned retail stores and e-commerce activities based on the location of the selling entity. The Americas segment primarily includes sales to customers based in Canada, Latin America and the United States. The Europe segment primarily includes sales to customers based in European countries, the Middle East and Africa. The Asia segment primarily includes sales to customers based in Australia, China, 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 fiscal year 2015 presentation. Due to changes in the Company’s reportable segments as discussed in Note 1 to the consolidated financial statements, segment results for fiscal years 2014, 2013 and 2012 have been recast to present results on a comparable basis. Summary information by operating segment was as follows (in thousands):

	Fiscal Year 2014
	Net Sales		Operating Income			Depreciation and Amortization		Long-term Assets		Total Assets
Americas	$	1,747,506	$	463,246		$	24,846	$	263,324	$	809,548
Europe	1,195,948		287,961			20,028		220,742		561,486
Asia	566,237		116,288			12,676		57,508		233,881
Corporate			(300,959		)	25,780		176,124		602,637
Consolidated	$	3,509,691	$	566,536		$	83,330	$	717,698	$	2,207,552

	Fiscal Year 2013
	Net Sales		Operating Income			Depreciation and Amortization		Long-term Assets		Total Assets
Americas	$	1,703,350	$	472,812		$	22,024	$	260,730	$	781,374
Europe	1,052,497		238,585			18,904		248,182		600,289
Asia	504,124		115,841			9,332		60,197		210,916
Corporate			(265,642		)	24,007		181,843		637,835
Consolidated	$	3,259,971	$	561,596		$	74,267	$	750,952	$	2,230,414

	Fiscal Year 2012
	Net Sales		Operating Income			Depreciation and Amortization		Long-term Assets		Total Assets
Americas	$	1,529,279	$	404,387		$	18,036	$	244,705	$	687,380
Europe	880,012		180,958			15,558		228,129		506,325
Asia	448,217		114,011			6,813		49,949		183,935
Corporate			(210,516		)	20,099		175,094		464,349
Consolidated	$	2,857,508	$	488,840		$	60,506	$	697,877	$	1,841,989

The following table indicates revenue for each class of similar products for fiscal years 2014, 2013 and 2012 (in thousands):

	Fiscal Year 2014				Fiscal Year 2013				Fiscal Year 2012
	Net Sales		Percentage of Total		Net Sales		Percentage of Total		Net Sales		Percentage of Total
Watches	$	2,736,511	78.0	%	$	2,513,081	77.1	%	$	2,141,481	74.9	%
Leathers	419,391		11.9		436,285		13.4		440,113		15.4
Jewelry	276,485		7.9		228,748		7.0		181,636		6.4
Other	77,304		2.2		81,857		2.5		94,278		3.3
Total	$	3,509,691	100.0	%	$	3,259,971	100.0	%	$	2,857,508	100.0	%

Geographic Information

Net sales and long-lived assets related to the Company’s operations in the U.S., Europe, Asia and all other international markets were as follows (in thousands):

	Fiscal Year 2014
				Long-tern
	Net Sales (1)			Assets
United States	$	1,588,566		$	397,034
Europe	1,195,948		(2)	235,219
Asia	566,237			67,693
All other international	158,940			17,752
Consolidated	$	3,509,691		$	717,698

	Fiscal Year 2013
				Long-tern
	Net Sales (1)			Assets
United States	$	1,525,107		$	412,966
Europe	1,052,497		(2)	262,324
Asia	504,124			65,432
All other international	178,243			10,230
Consolidated	$	3,259,971		$	750,952

	Fiscal Year 2012
				Long-tern
	Net Sales (1)			Assets
United States	$	1,354,337		$	392,740
Europe	880,012		(2)	239,917
Asia	448,217			54,491
All other international	174,942			10,729
Consolidated	$	2,857,508		$	697,877

(1) Net sales are based on the location of the selling entity.

(2) Net sales from Germany accounted for more than 10% of the Company’s consolidated net sales and were approximately $612.5 million, $578.8 million and $472.4 million in fiscal years 2014, 2013 and 2012, respectively.

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Other Income-Net (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jan. 03, 2015	Dec. 28, 2013	Dec. 29, 2012
Other Income-Net
Interest income	$ 799	$ 809	$ 889
Remeasurement of investment in Fossil Spain to fair value	0	6,510	0
Equity in the earnings of joint venture, net of tax	0	0	972
Gain on Skagen Designs arbitration settlement	5,968	0	0
Currency gains (losses)	20	951	5,565
Other gains	653	1,149	1,116
Other income (expense) - net	$ 7,440	$ 9,419	$ 8,542

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Significant Accounting Policies

12 Months Ended

Jan. 03, 2015

Significant Accounting Policies

Significant Accounting Policies

1. Significant Accounting Policies

Effective during the first quarter of fiscal 2015, 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.

Consolidated Financial Statements include the accounts of Fossil Group, Inc., a Delaware corporation, and its subsidiaries (the “Company”). The Company reports on a fiscal year reflecting the retail-based calendar (containing 4-4-5 week calendar quarters). References to fiscal years 2014, 2013 and 2012 are for the fiscal years ended January 3, 2015, December 28, 2013 and December 29, 2012, respectively. The Company’s fiscal year periodically results in a 53-week year instead of a normal 52-week year. The current fiscal year ended January 3, 2015 is a 53-week year, with the additional week included in the first quarter of the fiscal year. Accordingly, the information presented herein includes fifty-three weeks of operations for fiscal year 2014 as compared to fifty-two weeks in fiscal years 2013 and 2012. All intercompany balances and transactions are eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the current period presentation. The Company is a leader in the design, development, marketing and distribution of contemporary, high quality fashion accessories on a global basis. The Company’s products are sold primarily through department stores, specialty retailers and Company-owned retail stores worldwide.

Use of Estimates is required in the preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. Management makes estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates its estimates and judgments, including those related to product returns, inventories, long-lived assets, goodwill and trade names, income taxes, warranty costs, hedge accounting and stock-based compensation. Management bases its estimates and judgments on historical experience and on various other factors that it believes are reasonable under the circumstances. Management estimates form the basis for making judgments about the carrying value of the assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates under different assumptions or conditions.

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

A significant portion of sales of the Company’s products are supplied by manufacturers located outside of the U.S., primarily in Asia. While the Company is not dependent on any single manufacturer outside the U.S., the Company could be adversely affected by political or economic disruptions affecting the business or operations of third-party manufacturers located outside of the U.S. In fiscal year 2014, two of the Company’s majority-owned assembly factories accounted for approximately 57% of the Company’s total watch assembly and jewelry production.

The Company has entered into multi-year, worldwide exclusive license agreements for the manufacture, distribution and sale of products bearing the brand names of certain globally recognized fashion companies. Sales of the Company’s licensed products amounted to 53.5% of the consolidated net sales for fiscal year 2014, of which MICHAEL KORS® product sales accounted for 26.3%.

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

Accounts Receivable are stated net of allowances of approximately $68.2 million and $63.1 million for estimated customer returns at the end of fiscal years 2014 and 2013, respectively, and net of doubtful accounts of approximately $11.8 million at the end of both fiscal years 2014 and 2013. The Company’s policy is to maintain allowances for bankruptcies until the bankruptcies are actually settled. The total amount charged to cost and expenses during fiscal year 2014 relating to the Company’s doubtful accounts receivable was $3.3 million.

Inventories are stated at the lower of market or average cost, including any applicable duty and freight charges. Inventory held at consignment locations is included in the Company’s finished goods inventory, and at the end of fiscal years 2014 and 2013, was $40.7 million and $29.9 million, respectively.

Investments in which the Company has significant influence over the investee are accounted for utilizing the equity method. If the Company does not have significant influence over the investee, the cost method is utilized.

Property, Plant and Equipment is stated at cost less accumulated depreciation and amortization. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets of thirty years for buildings, generally five years for machinery and equipment and furniture and fixtures and three to seven years for computer equipment and software. Leasehold improvements are amortized over the shorter of the lease term or the asset’s estimated useful life.

Property, plant and equipment and other long-lived assets are evaluated for impairment whenever events or conditions indicate that the carrying value of an asset may not be recoverable based on expected undiscounted cash flows related to the asset. Property, plant and equipment and key money impairment losses related to underperforming Company-owned retail stores of approximately $9.3 million, $5.8 million and $1.2 million were recorded in fiscal years 2014, 2013 and 2012, respectively, and are included in selling, general and administrative expenses in the Company’s consolidated statements of income and comprehensive income.

Goodwill and Other Intangible Assets include the cost in excess of net tangible assets acquired (goodwill), trademarks, trade names, customer lists and patents. Trademarks, customer lists and patents are amortized using the straight-line method over their estimated useful lives, which are generally three to 20 years. Goodwill and other indefinite-lived intangible assets, such as trade names acquired in business combinations, are evaluated for impairment annually as of the end of the fiscal year. Additionally, if events or conditions were to indicate the carrying value of a reporting unit or an indefinite-lived intangible asset may not be recoverable, the Company would evaluate the asset for impairment at that time. Impairment testing compares the carrying amount of the reporting unit or other intangible assets with its fair value. When the carrying amount of the reporting unit or other intangible assets exceeds its fair value, an impairment charge is recorded.

The Company has three reporting units for which it evaluates goodwill for impairment. These reporting units are (i) Americas, (ii) Europe and (iii) Asia. The fair value of each reporting unit is estimated using market comparable information and an income approach. If the estimated fair value of a reporting unit exceeds its carrying value, no impairment charge is recorded. As of January 3, 2015, the fair value of each of these reporting units substantially exceeded its carrying value.

Judgments and assumptions are inherent in the Company’s estimate of future cash flows used to determine the estimate of the reporting unit’s fair value. The most significant assumptions associated with the fair value calculations include estimated future cash flows. The Company’s estimated future cash flows are dependent on estimated future growth rates, discount rates and operating margins. If actual results differ, the estimated future cash flows may not be realized, and future impairments of goodwill may be incurred.

The Company estimates the fair value of its trade names using discounted cash flow methodologies. Due to the inherent uncertainties involved in making the estimates and assumptions used in the fair value analysis, actual results may differ, which could alter the fair value of the trade names and possibly result in impairment charges in future periods. The Company has completed the required annual impairment testing for trade names for fiscal years 2014, 2013 and 2012. No impairment charges were recorded in fiscal years 2014, 2013 or 2012.

Accrued Expenses Other includes liabilities relating to warranties, duty, deferred compensation, gift cards, foreign exchange forward contracts (“forward contracts”), deferred rent, and other liabilities which are current in nature.

Other Long-Term Liabilities includes obligations relating to asset retirements, deferred rent, forward contracts and defined benefits relating to certain international employees that are not current in nature.

Cumulative Translation Adjustment is included as a component of accumulated other comprehensive income and reflects the adjustments resulting from translating the financial statements of foreign subsidiaries into U.S. dollars. The functional currency of the Company’s foreign subsidiaries is the currency of the primary economic environment in which the entity operates, which is generally the local currency of the country. Accordingly, assets and liabilities of the foreign subsidiaries are translated to U.S. dollars at fiscal year-end exchange rates. Income and expense items are translated at daily or average monthly exchange rates. Those changes in exchange rates that affect cash flows and the related receivables or payables are recognized as transaction gains and losses in determining net income. The Company incurred net foreign currency transaction gains, including gains and losses associated with the settlement of forward contracts, of approximately $20,000, $1.0 million and $5.6 million fiscal years 2014, 2013 and 2012, respectively. These net gains have been included in other income—net in the Company’s consolidated statements of income and comprehensive income.

Hedging Instruments consist of forward contracts and an interest rate swap. Forward contracts are entered into by the Company principally to hedge the future payment of intercompany inventory transactions by its non-U.S. subsidiaries. These cash flow hedges are stated at estimated fair value and changes in fair value are reported as a component of other comprehensive income (loss), net of taxes on the Company’s consolidated statements of income and comprehensive income. If the Company was to settle its euro, British pound, Canadian dollar, Japanese yen, Australian dollar and Mexican peso based forward contracts at fiscal year-end 2014, the result would have been a net gain of approximately $18.1 million, net of taxes. This unrealized gain is recognized in other comprehensive income (loss), net of taxes on the Company’s consolidated statements of income and comprehensive income. Additionally, to the extent that any of these contracts are not considered to be perfectly effective in offsetting the change in the value of the cash flows being hedged, any changes in fair value relating to the ineffective portion of these contracts would be recognized in other income-net on the Company’s consolidated statements of income and comprehensive income. Also, the Company has entered into an interest rate swap agreement to effectively convert a portion of its variable rate debt obligations from a floating rate to a fixed rate. Changes in the fair value of the interest rate swap are recorded as a component of accumulated other comprehensive income within stockholders’ equity, and are recognized in interest expense in the period in which the payment is settled. 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 8—Derivatives and Risk Management for more information regarding the Company’s use of derivatives.

Litigation Liabilities are estimated amounts for claims that are probable and can be reasonably estimated and are recorded as liabilities in the Company’s consolidated balance sheets. The likelihood of a material change in these estimated liabilities would be dependent on new claims that may arise, changes in the circumstances used to estimate amounts for prior period claims and favorable or unfavorable final settlements of prior period claims. As additional information becomes available, the Company assesses the potential liability related to new claims and existing claims and revises estimates as appropriate. As new claims arise or circumstances change relative to prior claim assessments, revisions in estimates of the potential liability could materially impact the Company’s consolidated results of operations and financial position.

Stock-Based Compensation is recognized as expense related to the fair value of employee stock based awards. The Company utilizes the Black-Scholes model to determine the fair value of stock options and stock appreciation rights on the date of grant. The model requires the Company to make assumptions concerning (i) the length of time employees will retain their vested stock options and stock appreciation rights before exercising them (“expected term”), (ii) the volatility of the Company’s common stock price over the expected term and (iii) the number of stock options and stock appreciation rights that will be forfeited. Changes in these assumptions can materially affect the estimate of fair value of stock-based compensation and, consequently, the related expense amounts recognized on the Company’s consolidated statements of income and comprehensive income.

Revenues are recognized at the point title and the risks and rewards of ownership have passed to the customer, based on the terms of sale. Revenue from sales of the Company’s products including those that are subject to inventory consignment agreements is recognized when title and risk of loss transfers, delivery has occurred, the price to the buyer is determinable and collectability is reasonably assured. The Company accepts limited returns and may request that a customer return a product if the customer has an excess of any style that the Company has identified as being a poor performer for that customer or geographic location. The Company continually monitors returns and maintains a provision for estimated returns based upon historical experience and any specific issues identified. Product returns are accounted for as reductions to revenue, cost of sales, accounts receivable and an increase in inventory to the extent the returned product is resalable. While returns have historically been within management’s expectations and the provisions established, future return rates may differ from those experienced in the past. In the event that the Company’s products are performing poorly in the retail market and/or it experiences product damages or defects at a rate significantly higher than the historical rate, the resulting returns could have an adverse impact on the operating results for the period or periods in which such returns occur. Taxes imposed by governmental authorities on the Company’s revenue-producing activities with customers, such as sales taxes and value added taxes, are excluded from net sales.

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

Selling, General and Administrative Expenses (“SG&A”) include selling and distribution expenses primarily consisting of sales and distribution labor costs, sales distribution center and warehouse facility costs, depreciation expense related to sales distribution and warehouse facilities, the four-wall operating costs of the Company’s retail stores, point-of- sale expenses, advertising expenses and art, design and product development labor costs. SG&A also includes general and administrative expenses primarily consisting of administrative support labor and “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.

Advertising Costs for in-store and media advertising as well as co-op advertising, catalog costs, product displays, show/exhibit costs, advertising royalties related to the sales of licensed brands, internet costs associated with affiliation fees, printing, sample costs and promotional allowances are expensed as incurred. Advertising costs were approximately $232.7 million, $205.6 million and $185.1 million for fiscal years 2014, 2013 and 2012, respectively.

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

Noncontrolling Interest is recognized as equity in the Company’s consolidated balance sheets, is reflected in net income attributable to noncontrolling interest in the consolidated statements of income and comprehensive income and is captured within the summary of changes in equity attributable to controlling and noncontrolling interests. Noncontrolling interests represent ownership interests in the Company’s subsidiaries held by third parties.

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

Earnings Per Share (“EPS”) is based on the weighted average number of common shares outstanding during each period. Diluted EPS adjusts basic EPS for the effects of dilutive common stock equivalents outstanding during each period using the treasury stock method.

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

Fiscal Year	2014		2013		2012
Numerator:
Net income attributable to Fossil Group, Inc.	$	376,707	$	378,152	$	343,401
Denominator:
Basic EPS computation:
Basic weighted average common shares outstanding	52,882		57,401		60,959
Basic EPS	$	7.12	$	6.59	$	5.63
Diluted EPS computation:
Basic weighted average common shares outstanding	52,882		57,401		60,959
Stock options, stock appreciation rights and restricted stock units	198		275		441
Diluted weighted average common shares outstanding	53,080		57,676		61,400
Diluted EPS	$	7.10	$	6.56	$	5.59

Approximately 318,448, 274,944 and 316,638 weighted shares issuable under stock-based awards were not included in the diluted EPS calculation in fiscal years 2014, 2013 and 2012, respectively, because they were antidilutive.

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

Recently Issued Accounting Standards

In January 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 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 adoption will have a material impact on the Company’s consolidated results of operations or financial position.

In April 2014, FASB issued ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”). Under ASU 2014-08, only disposals of a component of an entity, or a group of components of an entity, that represent a strategic shift that has (or will have) a major effect on the entity’s results and operations would qualify as discontinued operations. ASU 2014-08 also provides guidance on the financial statement presentations and disclosures of discontinued operations. ASU 2014-08 is effective prospectively for all disposals, or components classified as held for sale, for fiscal years, and interim periods within those years, beginning on or after December 15, 2014. Early adoption is permitted but only for disposals that have not been previously reported. The Company is evaluating the effect of adopting ASU 2014-08, but does not expect 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 provisions, which had no material impact on the Company’s financial position, results of operations or cash flows, were adopted effective fiscal year 2014:

· ASU 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists;

· ASU 2013-05, Foreign Currency Matters (Topic 830): Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity; and

· ASU 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities.

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) In Thousands, unless otherwise specified	Jan. 03, 2015	Dec. 28, 2013
CONDENSED CONSOLIDATED BALANCE SHEETS
Common stock, shares issued	50,771	54,708
Common stock, shares outstanding	50,771	54,708

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Other Income-Net

12 Months Ended

Jan. 03, 2015

Other Income-Net

Other Income-Net

11. Other Income—Net

        Other income—net consisted of the following (in thousands):

Fiscal Year	2014		2013		2012
Interest income	$	799	$	809	$	889
Remeasurement of investment in Fossil Spain to fair value		0		6,510		0
Gain on Skagen Designs arbitration settlement		5,968		0		0
Equity in the earnings of joint venture, net of tax		0		0		972
Currency gains		20		951		5,565
Other gains		653		1,149		1,116
Other income—net	$	7,440	$	9,419	$	8,542

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Document and Entity Information (USD $)	12 Months Ended
	Jan. 03, 2015	Feb. 16, 2015	Jul. 05, 2014
Document and Entity Information
Entity Registrant Name	Fossil Group, Inc.
Entity Central Index Key	0000883569
Document Type	8-K
Document Period End Date	Jan. 03, 2015
Amendment Flag	false
Current Fiscal Year End Date	--01-03
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 5,007,626,160
Entity Common Stock, Shares Outstanding		50,379,206
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	FY

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Taxes

12 Months Ended

Jan. 03, 2015

Taxes

Taxes

12. Taxes

        Income Taxes.    Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the consolidated deferred tax assets and liabilities were (in thousands):

Fiscal Year	2014			2013
Current deferred income tax assets (liabilities):
Bad debt allowance	$	4,387		$	4,467
Returns allowance		8,724			8,641
Inventory		11,882			12,169
Warranty reserve		2,590			3,040
Compensation		6,459			9,189
Accrued liabilities		6,658			0
Deferred rent		1,128			1,810
Loss carryforwards		1,910			3,392
Other		(5,007	)		12,070
Total current deferred tax assets		38,731			54,778
Valuation allowance		(5,168	)		(7,946	)
Net current deferred income tax assets	$	33,563		$	46,832
Total short-term deferred income tax assets	$	34,084		$	46,986
Total short-term deferred income tax liabilities		(521	)		(154	)
Net short-term deferred income tax assets	$	33,563		$	46,832
Long-term deferred income tax (liabilities) assets:
Unrealized exchange losses	$	8,325		$	(1,939	)
State income tax and interest on tax contingencies		2,880			160
Fixed assets		(51,719	)		(50,194	)
Trade names and customer lists		(6,782	)		(6,803	)
Compensation		3,481			4,803
Deferred rent		9,425			7,456
Loss carryforwards		1,409			2,429
Undistributed earnings of certain foreign subsidiaries		(52,122	)		(52,546	)
Tax deductible foreign reserves		3,248			0
Other		4,231			11,111
Total deferred income tax liabilities		(77,624	)		(85,523	)
Valuation allowance		(1,653	)		(2,601	)
Net long-term deferred income tax liabilities	$	(79,277	)	$	(88,124	)
Total long-term deferred income tax assets	$	8,583		$	10,044
Total long-term deferred income tax liabilities		(87,860	)		(98,168	)
Net long-term deferred income tax liabilities	$	(79,277	)	$	(88,124	)

        Operating Loss Carryforwards.    The deferred income tax asset for loss carryforwards includes $3.3 million of net operating losses of foreign subsidiaries. Valuation allowances have been recorded to reflect the estimated amount of deferred tax assets that may not be realized on these losses. The amounts and the fiscal year of expiration of the loss carryforwards are (in thousands):

Expires 2015 through 2019	$	6,100
Expires 2020 through 2024		2,855
Expires 2025 through 2028		2,696
Indefinite		3,263
Total loss carryforwards	$	14,914

        The following table identifies income before income taxes for the Company's U.S. and non-U.S. based operations for the fiscal years indicated (in thousands):

Fiscal Year	2014		2013		2012
U.S	$	169,079	$	194,956	$	193,985
Non-U.S		388,999		366,511		298,237
Total	$	558,078	$	561,467	$	492,222

        The Company's provision for income taxes consisted of the following for the fiscal years indicated (in thousands):

Fiscal Year	2014			2013			2012
Current provision:
U.S. federal	$	84,669		$	97,860		$	64,552
Non-U.S		74,190			69,901			60,239
State and local		10,582			8,297			6,314
Total current		169,441			176,058			131,105
Deferred provision (benefit)
U.S. federal		5,124			(2,346	)		9,485
Non-U.S		(3,622	)		(166	)		(2,426	)
State and local		524			(127	)		(201	)
Total deferred		2,026			(2,639	)		6,858
Provision for income taxes	$	171,467		$	173,419		$	137,963

        The expected cash payments for current U.S. income tax expense for fiscal years 2014, 2013 and 2012 were reduced by approximately $4.7 million, $12.0 million and $15.1 million, respectively, as a result of tax deductions related to the exercise of non-qualified stock options and stock appreciation rights and the vesting of restricted stock and restricted stock units. The expected cash payments for current foreign tax expense for fiscal years 2014, 2013 and 2012 were reduced by $0.4 million, $0.8 million and $0.5 million, respectively, as a result of tax deductions related to the exercise of stock options and the vesting of restricted stock granted to foreign employees. The income tax benefits resulting from these stock-based compensation plans have been recorded to additional paid-in capital in the Company's consolidated balance sheets. Total deferred income tax expense (benefit) of $2.0 million, ($2.6) million and $6.9 million for fiscal years 2014, 2013 and 2012, respectively, are included in deferred income taxes on the Company's consolidated statements of cash flows.

        The Company was granted a 60% tax holiday for its watch assembly activities in Switzerland for tax years 2008 through 2012. In 2013 and 2014, the Company paid the full Swiss tax rate on its watch assembly activities. This tax holiday reduced current foreign income taxes by approximately $1.2 million in fiscal year 2012.

        A reconciliation of the U.S. federal statutory income tax rate of 35% to the Company's effective tax rate is as follows:

Fiscal Year	2014			2013			2012
Tax at statutory rate		35.0	%		35.0	%		35.0	%
State, net of federal tax benefit		0.9			0.9			1.0
Foreign rate differential		(12.3	)		(12.5	)		(10.0	)
U.S. tax on foreign income		6.3			5.9			3.1
Income tax contingencies		0.7			0.0			(1.7	)
Valuation allowances		(0.3	)		0.9			0.0
Other		0.4			0.7			0.6
Provision for income taxes		30.7	%		30.9	%		28.0	%

        Deferred U.S. federal income taxes and foreign withholding taxes are not recorded on undistributed earnings of certain foreign subsidiaries where management plans to continue reinvesting these earnings outside the U.S. The amount of undistributed earnings that would be subject to tax if distributed was approximately $800.6 million at January 3, 2015. Determining tax amounts that would be payable if these earnings were distributed to the U.S. parent company is not practicable.

        The total amount of unrecognized tax benefits, excluding interest and penalties that would favorably impact the effective tax rate in future periods if recognized, was $12.8 million, $9.6 million and $10.7 million for fiscal years 2014, 2013 and 2012, respectively. The IRS began its examination of the Company's 2010-2012 federal income tax returns in the first quarter of fiscal 2014. The Company is also subject to tax examinations in various state and foreign jurisdictions for the Company's 2007-2013 tax years, none of which the Company believes are individually significant. Audit outcomes and timing of audit settlements are subject to significant uncertainty.

        The Company has classified uncertain tax positions as long-term income taxes payable unless such amounts are expected to be paid within twelve months from January 3, 2015. As of January 3, 2015, the Company had recorded $5.3 million of unrecognized tax benefits, excluding interest and penalties, for positions that could 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 in the Company's consolidated balance sheets was $1.8 million and $1.2 million at January 3, 2015 and December 28, 2013, respectively. The total amount of accrued income tax-related penalties in the Company's consolidated balance sheets was $0.4 million and $0.4 million at January 3, 2015 and December 28, 2013, respectively. The Company accrued income tax-related interest expense (benefit) of $0.7 million, ($1.0) million and ($1.0) million in fiscal years 2014, 2013 and 2012, respectively.

        The following is a tabular reconciliation of the total amounts of unrecognized tax benefits for the fiscal years indicated (in thousands):

Fiscal Year	2014			2013			2012
Balance at beginning of year	$	14,314		$	15,549		$	17,974
Gross increases tax positions in prior years		4,234			3,310			1,245
Gross decreases tax positions in prior years		(1,018	)		(4,384	)		(2,580	)
Gross increases—current year tax positions		3,508			3,575			2,486
Settlements		(194	)		(3,456	)		(3,582	)
Lapse in statute of limitations		(617	)		(297	)		0
Change due to currency revaluation		(141	)		17			6
Balance at end of year	$	20,086		$	14,314		$	15,549

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Employee Benefit Plans (Details 4) (USD $)	12 Months Ended
	Jan. 03, 2015
Stock options
Stock-based compensation plans disclosures
Stock Options Outstanding, Number Of Shares	428,000
Stock Options Outstanding, Weighted- Average Exercise Price (in dollars per share)	$ 79.24
Stock Options Outstanding, Weighted- Average Remaining Contractual Term	5 years 7 months 6 days
Stock Options Exercisable, Number Of Shares	373,000
Stock Options Exercisable, Weighted- Average Exercise Price (in dollars per share)	$ 72.29
Stock appreciation rights
Stock-based compensation plans disclosures
Stock Appreciation Rights Outstanding, Number Of Shares	235,000
Stock Appreciation Rights Outstanding, Weighted- Average Exercise Price (in dollars per share)	$ 95.68
Stock Appreciation Rights Outstanding, Weighted- Average Remaining Contractual Term	5 years 7 months 6 days
Stock Appreciation Rights Exercisable, Number Of Shares	106,000
Stock Appreciation Rights Exercisable, Weighted- Average Exercise Price (in dollars per share)	$ 77.52
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	56,000
Stock Options Outstanding, Weighted- Average Exercise Price (in dollars per share)	$ 15.09
Stock Options Outstanding, Weighted- Average Remaining Contractual Term	3 years 7 months 6 days
Stock Options Exercisable, Number Of Shares	56,000
Stock Options Exercisable, Weighted- Average Exercise Price (in dollars per share)	$ 15.09
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	18,000
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 1 month 6 days
Stock Appreciation Rights Exercisable, Number Of Shares	18,000
Stock Appreciation Rights Exercisable, Weighted- Average Exercise Price (in dollars per share)	$ 13.65
Range Of Exercise Prices $25.77 - $42.76 | Stock options
Stock-based compensation plans disclosures
Stock Options Outstanding, lower range (in dollars per share)	$ 25.77
Stock Options Outstanding, upper range (in dollars per share)	$ 42.76
Stock Options Outstanding, Number Of Shares	103,000
Stock Options Outstanding, Weighted- Average Exercise Price (in dollars per share)	$ 34.94
Stock Options Outstanding, Weighted- Average Remaining Contractual Term	3 years 8 months 12 days
Stock Options Exercisable, Number Of Shares	103,000
Stock Options Exercisable, Weighted- Average Exercise Price (in dollars per share)	$ 34.94
Range Of Exercise Prices $25.77 - $42.76 | Stock appreciation rights
Stock-based compensation plans disclosures
Stock Appreciation Rights Outstanding, lower range (in dollars per share)	$ 25.77
Stock Appreciation Rights Outstanding, upper range (in dollars per share)	$ 42.76
Stock Appreciation Rights Outstanding, Number Of Shares	17,000
Stock Appreciation Rights Outstanding, Weighted- Average Exercise Price (in dollars per share)	$ 35.69
Stock Appreciation Rights Outstanding, Weighted- Average Remaining Contractual Term	2 years 6 months
Stock Appreciation Rights Exercisable, Number Of Shares	17,000
Stock Appreciation Rights Exercisable, Weighted- Average Exercise Price (in dollars per share)	$ 35.68
Range Of Exercise Prices $43.92 - $67.10 | Stock options
Stock-based compensation plans disclosures
Stock Options Outstanding, lower range (in dollars per share)	$ 43.92
Stock Options Outstanding, upper range (in dollars per share)	$ 67.10
Stock Options Outstanding, Number Of Shares	5,000
Stock Options Outstanding, Weighted- Average Exercise Price (in dollars per share)	$ 43.92
Stock Options Outstanding, Weighted- Average Remaining Contractual Term	3 years
Stock Options Exercisable, Number Of Shares	5,000
Stock Options Exercisable, Weighted- Average Exercise Price (in dollars per share)	$ 43.92
Range Of Exercise Prices $43.92 - $67.10 | Stock appreciation rights
Stock-based compensation plans disclosures
Stock Appreciation Rights Outstanding, lower range (in dollars per share)	$ 43.92
Stock Appreciation Rights Outstanding, upper range (in dollars per share)	$ 67.10
Stock Appreciation Rights Outstanding, Number Of Shares	3,000
Stock Appreciation Rights Outstanding, Weighted- Average Exercise Price (in dollars per share)	$ 67.10
Stock Appreciation Rights Outstanding, Weighted- Average Remaining Contractual Term	5 years 6 months
Stock Appreciation Rights Exercisable, Number Of Shares	2,000
Stock Appreciation Rights Exercisable, Weighted- Average Exercise Price (in dollars per share)	$ 67.10
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	97,000
Stock Options Outstanding, Weighted- Average Exercise Price (in dollars per share)	$ 80.86
Stock Options Outstanding, Weighted- Average Remaining Contractual Term	6 years 3 months 18 days
Stock Options Exercisable, Number Of Shares	95,000
Stock Options Exercisable, Weighted- Average Exercise Price (in dollars per share)	$ 80.80
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	70,000
Stock Appreciation Rights Outstanding, Weighted- Average Exercise Price (in dollars per share)	$ 93.62
Stock Appreciation Rights Outstanding, Weighted- Average Remaining Contractual Term	5 years 7 months 6 days
Stock Appreciation Rights Exercisable, Number Of Shares	39,000
Stock Appreciation Rights Exercisable, Weighted- Average Exercise Price (in dollars per share)	$ 87.56
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	167,000
Stock Options Outstanding, Weighted- Average Exercise Price (in dollars per share)	$ 128.10
Stock Options Outstanding, Weighted- Average Remaining Contractual Term	7 years 1 month 6 days
Stock Options Exercisable, Number Of Shares	114,000
Stock Options Exercisable, Weighted- Average Exercise Price (in dollars per share)	$ 128.10
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	127,000
Stock Appreciation Rights Outstanding, Weighted- Average Exercise Price (in dollars per share)	$ 117.46
Stock Appreciation Rights Outstanding, Weighted- Average Remaining Contractual Term	6 years 6 months
Stock Appreciation Rights Exercisable, Number Of Shares	30,000
Stock Appreciation Rights Exercisable, Weighted- Average Exercise Price (in dollars per share)	$ 127.16

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CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Jan. 03, 2015	Dec. 28, 2013	Dec. 29, 2012
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
Net sales	$ 3,509,691	$ 3,259,971	$ 2,857,508
Cost of sales	1,508,519	1,398,285	1,250,965
Gross profit	2,001,172	1,861,686	1,606,543
Selling, general and administrative expenses	1,434,636	1,300,090	1,117,703
Operating income	566,536	561,596	488,840
Interest expense	15,898	9,548	5,160
Other income-net	7,440	9,419	8,542
Income before income taxes	558,078	561,467	492,222
Provision for income taxes	171,467	173,419	137,963
Net income	386,611	388,048	354,259
Less: Net income attributable to noncontrolling interest	9,904	9,896	10,858
Net income attributable to Fossil Group, Inc.	376,707	378,152	343,401
Other comprehensive income (loss), net of taxes:
Currency translation adjustment	(65,393)	7,971	11,228
Securities available for sale-net change	0	475	(29)
Cash flow hedges net change	16,675	(1,251)	(4,619)
Pension plan activity	(4,383)	736	0
Total other comprehensive income (loss)	(53,101)	7,931	6,580
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest	333,510	395,979	360,839
Less: Comprehensive income attributable to noncontrolling interest	9,904	9,896	10,858
Comprehensive income attributable to Fossil Group, Inc.	$ 323,606	$ 386,083	$ 349,981
Earnings per share:
Basic (in dollars per share)	$ 7.12	$ 6.59	$ 5.63
Diluted (in dollars per share)	$ 7.10	$ 6.56	$ 5.59
Weighted average common shares outstanding:
Basic (in shares)	52,882	57,401	60,959
Diluted (in shares)	53,080	57,676	61,400

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Property, Plant and Equipment

12 Months Ended

Jan. 03, 2015

Property, Plant and Equipment

Property, Plant and Equipment

6. Property, Plant and Equipment

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

At Fiscal Year End	2014		2013
Land	$	14,508	$	15,184
Buildings		71,580		78,013
Machinery and equipment		36,992		39,154
Furniture and fixtures		108,137		98,494
Computer equipment and software		205,831		186,123
Leasehold improvements		246,882		237,671
Construction in progress		21,867		15,814
		705,797		670,453
Less accumulated depreciation and amortization		360,191		314,787
Property, plant and equipment-net	$	345,606	$	355,666

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Prepaid Expenses and Other Current Assets

12 Months Ended

Jan. 03, 2015

Prepaid Expenses and Other Current Assets

Prepaid Expenses and Other Current Assets

5. Prepaid Expenses and Other Current Assets

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

At Fiscal Year End	2014		2013
Prepaid royalties	$	42,698	$	12,322
Prepaid taxes		34,094		29,645
Other receivables		14,840		7,378
Forward contracts		25,867		3,289
Prepaid rent		13,543		10,599
Restricted cash		125		39
Other prepaid expenses		20,359		23,048
Other		204		196
Prepaid expenses and other current assets	$	151,730	$	86,516

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Supplemental Disclosure for Accumulated Other Comprehensive Income

12 Months Ended

Jan. 03, 2015

Supplemental Disclosure for Accumulated Other Comprehensive Income

Supplemental Disclosure for Accumulated Other Comprehensive Income

17. Supplemental Disclosure for Accumulated Other Comprehensive Income

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

	January 3, 2015
				Cash Flow Hedges
	Currency Translation Adjustments			Forward Contracts			Interest Rate Swap			Pension Plan			Total
Beginning balance	$	38,152		$	(2,091	)	$	(106	)	$	736		$	36,691
Other comprehensive income (loss) before reclassifications		(65,240	)		37,182			(3,397	)		(4,804	)		(36,259	)
Tax (expense) benefit		(153	)		(14,255	)		1,238			421			(12,749	)
Amounts reclassed from accumulated other comprehensive income		0			8,893			(2,774	)		0			6,119
Tax (expense) benefit		0			(3,037	)		1,011			0			(2,026	)
Total other comprehensive income (loss)		(65,393	)		17,071			(396	)		(4,383	)		(53,101	)
Ending balance	$	(27,241	)	$	14,980		$	(502	)	$	(3,647	)	$	(16,410	)

	December 28, 2013
						Cash Flow Hedges
	Currency Translation Adjustments		Securities Available for Sale			Forward Contracts			Interest Rate Swap			Pension Plan		Total
Beginning balance	$	30,181	$	(475	)	$	(946	)	$	0		$	0	$	28,760
Other comprehensive income (loss) before reclassifications		7,971		(83	)		(2,148	)		(1,592	)		583		4,731
Tax (expense) benefit		0		0			757			561			153		1,471
Amounts reclassed from accumulated other comprehensive income		0		(558	)		(145	)		(1,423	)		0		(2,126	)
Tax (expense) benefit		0		0			(101	)		498			0		397
Total other comprehensive income (loss)		7,971		475			(1,145	)		(106	)		736		7,931
Ending balance	$	38,152	$	0		$	(2,091	)	$	(106	)	$	736	$	36,691

	December 29, 2012
						Cash Flow Hedges
	Currency Translation Adjustments		Securities Available for Sale			Forward Contracts			Total
Beginning balance	$	18,953	$	(446	)	$	3,673		$	22,180
Other comprehensive income (loss) before reclassifications		11,228		(29	)		1,232			12,431
Tax (expense) benefit		0		0			(806	)		(806	)
Amounts reclassed from accumulated other comprehensive income		0		0			7,761			7,761
Tax (expense) benefit		0		0			(2,716	)		(2,716	)
Total other comprehensive income (loss)		11,228		(29	)		(4,619	)		6,580
Ending balance	$	30,181	$	(475	)	$	(946	)	$	28,760

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Commitments and Contingencies

12 Months Ended

Jan. 03, 2015

Commitments and Contingencies

Commitments and Contingencies

13. Commitments and Contingencies

License Agreements.  The Company has various license agreements to market watches and jewelry bearing certain trademarks or patents owned by various third parties. In accordance with these agreements, the Company incurred royalty expense of approximately $258.6 million, $214.1 million and $181.8 million in fiscal years 2014, 2013 and 2012, respectively. These amounts are included in the Company’s cost of sales or, if advertising related, in SG&A. At fiscal year-end 2014, certain of the Company’s significant license agreements had expiration dates between fiscal years 2015 and 2024. These license agreements require the Company to pay royalties ranging from 4% to 16% of defined net sales. The Company has minimum royalty commitments through fiscal year 2019 under these license agreements as summarized below, by fiscal year (in thousands):

	Minimum Royalty Commitments
2015	$	226,363
2016	95,866
2017	101,649
2018	76,973
2019	8,401
	$	509,252

These minimum royalty commitments do not include amounts owed under these license agreements obligating the Company to pay the licensors a percentage of net sales of these licensed products.

Leases.  The Company leases its retail and outlet store facilities as well as certain of its office and warehouse facilities and equipment under non-cancelable operating leases and capital leases. Most of the retail and outlet store leases provide for contingent rental payments based on operating results and require the payment of taxes, insurance and other costs applicable to the property. Generally, these leases include renewal options for various periods at stipulated rates. Rent expense under these agreements was approximately $190.6 million, $143.8 million and $131.5 million for fiscal years 2014, 2013 and 2012, respectively. Contingent rent expense was approximately $14.1 million, $12.1 million and $11.1 million for fiscal years 2014, 2013 and 2012, respectively. Capital leases are included as a component of short-term and current portion of long-term debt and in long-term debt in the Company’s consolidated balance sheets. Future minimum rental commitments under non-cancelable leases, by fiscal year, are as follows (in thousands):

	Operating Leases		Capital Leases
2015	$	158,692	$	1,039
2016	140,757		1,021
2017	115,521		1,003
2018	100,526		991
2019	88,308		976
Thereafter	316,109		2,188
	$	919,913	$	7,218
Less amounts representing interest at 1.4% to 10.8%			373
Capital lease obligations			$	6,845

Purchase Obligations.  As of January 3, 2015, the Company had purchase obligations totaling $310.4 million.

Asset Retirement Obligations.  ASC 410, Asset Retirement and Environmental Obligations requires (i) that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made and (ii) that the associated asset retirement costs be capitalized as part of the carrying amount of the long-lived asset. The Company’s asset retirement obligations relate to costs associated with the retirement of leasehold improvements under office leases and retail store leases within the Americas, Europe and Asia segments.

The following table summarizes the changes in the Company’s asset retirement obligations (in thousands):

Fiscal Year:	2014			2013
Beginning asset retirement obligation	$	8,306		$	6,560
Liabilities incurred during the period	1,587			1,839
Revisions in estimated retirement obligations	2			(9		)
Liabilities settled during the period	(860		)	(278		)
Accretion expense	364			288
Currency translation	(474		)	(94		)
Ending asset retirement obligations	$	8,925		$	8,306

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.

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Supplemental Disclosure for Accumulated Other Comprehensive Income (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jan. 03, 2015	Dec. 28, 2013	Dec. 29, 2012
Accumulated Other Comprehensive Income (Loss), Net of Tax
Beginning balance	$ 36,691	$ 28,760	$ 22,180
Other comprehensive income (loss) before reclassifications	(36,259)	4,731	12,431
Tax (expense) benefit	(12,749)	1,471	(806)
Amounts reclassed from accumulated other comprehensive income	6,119	(2,126)	7,761
Tax expense (benefit)	(2,026)	397	(2,716)
Total other comprehensive income (loss)	(53,101)	7,931	6,580
Ending balance	(16,410)	36,691	28,760
Currency Translation Adjustments
Accumulated Other Comprehensive Income (Loss), Net of Tax
Beginning balance	38,152	30,181	18,953
Other comprehensive income (loss) before reclassifications	(65,240)	7,971	11,228
Tax (expense) benefit	(153)	0	0
Amounts reclassed from accumulated other comprehensive income	0	0	0
Tax expense (benefit)	0	0	0
Total other comprehensive income (loss)	(65,393)	7,971	11,228
Ending balance	(27,241)	38,152	30,181
Unrealized gain (loss) on securities available for sale
Accumulated Other Comprehensive Income (Loss), Net of Tax
Beginning balance		(475)	(446)
Other comprehensive income (loss) before reclassifications		(83)	(29)
Tax (expense) benefit		0	0
Amounts reclassed from accumulated other comprehensive income		(558)	0
Tax expense (benefit)		0	0
Total other comprehensive income (loss)		475	(29)
Ending balance		0	(475)
Unrealized gain (loss) on forward contracts | Foreign exchange forward contracts
Accumulated Other Comprehensive Income (Loss), Net of Tax
Beginning balance	(2,091)	(946)	3,673
Other comprehensive income (loss) before reclassifications	37,182	(2,148)	1,232
Tax (expense) benefit	(14,255)	757	(806)
Amounts reclassed from accumulated other comprehensive income	8,893	(145)	7,761
Tax expense (benefit)	(3,037)	(101)	(2,716)
Total other comprehensive income (loss)	17,071	(1,145)	(4,619)
Ending balance	14,980	(2,091)	(946)
Unrealized gain (loss) on forward contracts | Interest rate swap
Accumulated Other Comprehensive Income (Loss), Net of Tax
Beginning balance	(106)	0
Other comprehensive income (loss) before reclassifications	(3,397)	(1,592)
Tax (expense) benefit	1,238	561
Amounts reclassed from accumulated other comprehensive income	(2,774)	(1,423)
Tax expense (benefit)	1,011	498
Total other comprehensive income (loss)	(396)	(106)
Ending balance	(502)	(106)
Pension Plan
Accumulated Other Comprehensive Income (Loss), Net of Tax
Beginning balance	736	0
Other comprehensive income (loss) before reclassifications	(4,804)	583
Tax (expense) benefit	421	153
Amounts reclassed from accumulated other comprehensive income	0	0
Tax expense (benefit)	0	0
Total other comprehensive income (loss)	(4,383)	736
Ending balance	$ (3,647)	$ 736

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Fair Value Measurements

12 Months Ended

Jan. 03, 2015

Fair Value Measurements

Fair Value Measurements

9. Fair Value Measurements

The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date.

ASC 820, Fair Value Measurement and Disclosures (“ASC 820”), establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into three broad levels as follows:

· Level 1—Quoted prices in active markets for identical assets or liabilities.

· Level 2—Inputs, other than quoted prices in active markets, that are observable either directly or indirectly.

· Level 3—Unobservable inputs based on the Company’s assumptions.

ASC 820 requires the use of observable market data if such data is available without undue cost and effort.

The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of 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 following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of December 28, 2013 (in thousands):

	Fair Value at December 28, 2013
	Level 1		Level 2		Level 3		Total
Assets:
Forward contracts	$	0	$	3,508	$	0	$	3,508
Deferred compensation plan assets:
Investment in publicly traded mutual funds	2,360		0		0		2,360
Interest rate swap	0		4,307		0		4,307
Total	$	2,360	$	7,815	$	0	$	10,175
Liabilities:
Contingent consideration	$	0	$	0	$	8,084	$	8,084
Forward contracts	0		8,214		0		8,214
Interest rate swap	0		4,476		0		4,476
Total	$	0	$	12,690	$	8,084	$	20,774

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 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 Company estimates the fair value of its debt using Level 2 inputs, such as interest rates, related terms and maturities. The fair value of the Company’s debt approximated its carrying amount as of January 3, 2015 and December 28, 2013. As of January 3, 2015 and December 28, 2013, 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 Fossil Spain was determined using Level 3 inputs. See Note 2—Acquisitions, Divestiture and Goodwill for additional disclosures about the acquisition. The contingent consideration recorded as of January 3, 2015 is based on Fossil Spain’s forecasted earnings during the two year period from January 1, 2014 to December 31, 2015. During the fiscal year 2014, the Company paid 2.8 million euros (approximately $3.4 million) for the 2013 contingent consideration. The contingent consideration for calendar year 2014 will be paid during 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. Due to an increase in Fossil Spain’s estimated future revenue for calendar years 2014 and 2015, the Company recorded an unfavorable $1.1 million remeasurement adjustment to the contingent consideration liability in SG&A during the fiscal year 2014. Future revenue growth based on management’s projections for the 2015 calendar year is approximately 10%. Operating expenses are projected to be approximately 28% 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 years 2014 and 2015 is valued at the maximum annual variable price of 3.5 million euros (approximately $4.2 million) for each year. A decrease in future cash flows may result in a lower estimated fair value of the contingent consideration liability. Future changes in the estimated fair value of the contingent consideration liability, if any, will be reflected in earnings.

The fair values of the interest rate swap asset and liability are determined using valuation models based on market observable inputs, including forward curves, mid-market price, foreign exchange spot or forward rates and volatility levels. See Note 8—Derivatives and Risk Management for additional disclosures about the interest rate swap.

The following tables present the fair value hierarchy for those assets and liabilities measured at fair value on a nonrecurring basis as of January 3, 2015 and December 28, 2013 (in thousands):

	For the Fiscal Year Ended		Fair Value Measurements Using						Total Impairment
	January 3, 2015		Level 1		Level 2		Level 3		Charge
Assets:
Specific Company-owned stores	$	284	$	0	$	0	$	284	$	(9,266	)
	For the Fiscal Year Ended		Fair Value Measurements Using:						Total Impairment
	December 28, 2013		Level 1		Level 2		Level 3		Charge
Assets:
Specific Company-owned stores	$	668	$	0	$	0	$	668	$	(5,750	)

In accordance with the provisions of ASC 360, Property, Plant and Equipment, property, plant and equipment—net with a carrying amount of $9.1 million related to Company-owned retail store leasehold improvements and fixturing was written down to a fair value of $0.3 million, and related key money in the amount of $0.5 million was deemed not recoverable, resulting in total impairment charges of $9.3 million for fiscal year 2014.

In fiscal year 2013, property, plant and equipment—net with a carrying amount of $6.4 million related to Company-owned retail store leasehold improvements, fixturing, computer software and computer hardware was written down to a fair value of $0.7 million, resulting in an impairment charge of $5.8 million for fiscal year 2013.

The fair values of assets related to the Company-owned retail stores were determined using Level 3 inputs. Impairment expenses related to Company-owned retail stores are recorded in SG&A within the Americas, Europe and Asia segments based on the geographic location of the assets.

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Derivatives and Risk Management (Details)	12 Months Ended																		12 Months Ended
	Jan. 03, 2015 USD ($)	Dec. 28, 2013 USD ($)	Dec. 29, 2012 USD ($)	Jan. 03, 2015 Cash Flow Hedges	Dec. 28, 2013 Unrealized gain (loss) on forward contracts Amount Reclassified from AOCI Cash Flow Hedges USD ($)	Apr. 05, 2014 Foreign exchange forward contracts Designated as cash flow hedges Euro Net Investment Hedges EUR (€)	Jan. 03, 2015 Foreign exchange forward contracts Designated as cash flow hedges Euro Cash Flow Hedges USD ($)	Jan. 03, 2015 Foreign exchange forward contracts Designated as cash flow hedges Euro Cash Flow Hedges EUR (€)	Jan. 03, 2015 Foreign exchange forward contracts Designated as cash flow hedges British Pound Cash Flow Hedges USD ($)	Jan. 03, 2015 Foreign exchange forward contracts Designated as cash flow hedges British Pound Cash Flow Hedges GBP (£)	Jan. 03, 2015 Foreign exchange forward contracts Designated as cash flow hedges Canadian Dollar Cash Flow Hedges USD ($)	Jan. 03, 2015 Foreign exchange forward contracts Designated as cash flow hedges Canadian Dollar Cash Flow Hedges CAD	Jan. 03, 2015 Foreign exchange forward contracts Designated as cash flow hedges Japanese Yen Cash Flow Hedges USD ($)	Jan. 03, 2015 Foreign exchange forward contracts Designated as cash flow hedges Japanese Yen Cash Flow Hedges JPY (¥)	Jan. 03, 2015 Foreign exchange forward contracts Designated as cash flow hedges Australian Dollar Cash Flow Hedges USD ($)	Jan. 03, 2015 Foreign exchange forward contracts Designated as cash flow hedges Australian Dollar Cash Flow Hedges AUD	Jan. 03, 2015 Foreign exchange forward contracts Designated as cash flow hedges Mexican Peso Cash Flow Hedges USD ($)	Jan. 03, 2015 Foreign exchange forward contracts Designated as cash flow hedges Mexican Peso Cash Flow Hedges MXN	Jan. 03, 2015 Interest rate swap U.S. term loan Designated as cash flow hedges Cash Flow Hedges USD ($)
Derivatives
Gains or losses reclassified into earnings	$ 376,707,000	$ 378,152,000	$ 343,401,000		$ 0
Notional amount							211,600,000	160,400,000	42,200,000	26,000,000	30,900,000	34,400,000	26,800,000	2,865,000,000	13,100,000	15,000,000	12,000,000	164,300,000
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
Hedged amount						25,000,000													250,000,000
Maximum period of future intercompany purchases				18 months
Forecasted purchases to manage fluctuations (as a percent)				65.00%
Hedges resulted ineffectiveness	$ 0	$ 0	$ 0

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Intangible and Other Assets

12 Months Ended

Jan. 03, 2015

Intangible and Other Assets

Intangible and Other Assets

7. Intangible and Other Assets

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

			2014				2013
At Fiscal Year End	Useful Lives		Gross Amount		Accumulated Amortization		Gross Amount		Accumulated Amortization
Intangibles-subject to amortization:
Trademarks		10 yrs.	$	4,174	$	2,950	$	4,175	$	2,695
Customer lists		5 - 10 yrs.		41,703		17,457		43,367		14,065
Patents		3 - 20 yrs.		2,273		1,902		2,273		1,360
Noncompete agreement		6 yrs.		1,855		851		1,913		558
Other		7 - 20 yrs.		353		341		263		207
Total intangibles-subject to amortization				50,358		23,501		51,991		18,885
Intangibles-not subject to amortization:
Trade names				83,610				83,659
Other assets:
Key money deposits				31,892		18,661		35,535		17,038
Other deposits				21,854				22,574
Deferred compensation plan assets				2,477				2,360
Deferred tax asset-net				8,583				10,044
Restricted cash				575				752
Shop-in-shop				16,333		9,660		16,334		7,767
Interest rate swap				1,724				4,307
Forward contracts				1,802				219
Other				6,978				4,247
Total other assets				92,218		28,321		96,372		24,805
Total intangible and other assets			$	226,186	$	51,822	$	232,022	$	43,690
Total intangible and other assets-net					$	174,364			$	188,332

        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 $5.1 million, $5.2 million and $3.5 million for fiscal years 2014, 2013 and 2012, respectively. Estimated aggregate future amortization expense by fiscal year for intangible assets is as follows (in thousands):

Fiscal Year	Amortization Expense
2015	$	4,633
2016	$	4,494
2017	$	4,236
2018	$	3,877
2019	$	3,780

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Derivatives and Risk Management

12 Months Ended

Jan. 03, 2015

Derivatives and Risk Management

Derivatives and Risk Management

8. Derivatives and Risk Management

        Cash Flow Hedges.    The primary risks managed by using derivative instruments are the fluctuations in global currencies that will ultimately be used by non-U.S. dollar functional currency subsidiaries to settle future payments of intercompany inventory transactions denominated in U.S. dollars. Specifically, the Company projects future intercompany purchases by its non-U.S. dollar functional currency subsidiaries generally over a period of up to 18 months. The Company enters into 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 eligibility, which requires that they represent foreign-currency-denominated forecasted intra-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 its consolidated statements of income and comprehensive income, and there were no components excluded from the assessment of hedge effectiveness for fiscal years 2014, 2013 and 2012.

        All derivative instruments are recognized as either assets or liabilities at fair value in the 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 within the equity section of the Company's 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 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 for fiscal years 2014, 2013 and 2012. 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 January 3, 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		160.4	U.S. dollar		211.6
British pound		26.0	U.S. dollar		42.2
Canadian dollar		34.4	U.S. dollar		30.9
Japanese yen		2,865.0	U.S. dollar		26.8
Australian dollar		15.0	U.S. dollar		13.1
Mexican peso		164.3	U.S. dollar		12.0

        The Company is also exposed to interest rate risk related to its $250 million U.S.-based term loan ("Term Loan"). To manage the interest rate risk related to this 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. 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.

        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 in cumulative translation adjustment as a component of other comprehensive income (loss) in the Company's 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 consolidated statements of income and comprehensive income. Gains and losses reported in accumulated other comprehensive income 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 January 3, 2015 and December 28, 2013. Changes in the fair value of derivatives not designated as hedging instruments are recognized in earnings when they occur.

        The effective portion of gains and losses on cash flow hedges that was recognized in other comprehensive income (loss), net of taxes during fiscal years 2014 and 2013 was (in thousands):

	For the Fiscal Year Ended January 3, 2015			For the Fiscal Year Ended December 28, 2013
Cash flow hedges:
Forward contracts	$	22,927		$	(1,391	)
Interest rate swap		(2,159	)		(1,031	)
Total gain (loss) recognized in other comprehensive income (loss), net of taxes	$	20,768		$	(2,422	)

        The following table illustrates the effective portion of gains and losses on derivative instruments recorded in other comprehensive income (loss), net of taxes during the term of the hedging relationship and reclassified into earnings, and gains and losses on derivatives not designated as hedging instruments recorded directly to earnings during fiscal years 2014 and 2013 (in thousands):

	Consolidated Statements of Income and Comprehensive Income Location		For the Fiscal Year Ended January 3, 2015			For the Fiscal Year Ended December 28, 2013
Forward contracts designated as cash flow hedging instruments	Other income-net	Total gain (loss) reclassified from other comprehensive income (loss)	$	5,856		$	(246	)
Forward contracts not designated as hedging instruments	Other income-net	Total gain (loss) recognized in income	$	(148	)	$	567
Interest rate swap designated as a cash flow hedging instrument	Interest expense	Total gain loss reclassified from other comprehensive income (loss)	$	(1,763	)	$	(925	)

        The following table discloses the fair value amounts for the Company's derivative instruments as separate asset and liability values, presents the fair value of derivative instruments on a gross basis, and identifies the line items in the consolidated balance sheets in which the fair value amounts for these categories of derivative instruments are included (in thousands):

	Asset Derivatives						Liability Derivatives
	January 3, 2015			December 28, 2013			January 3, 2015			December 28, 2013
	Consolidated Balance Sheets Location	Fair Value		Consolidated Balance Sheets Location	Fair Value		Consolidated Balance Sheets Location	Fair Value		Consolidated Balance Sheets Location	Fair Value
Forward contracts designated as cash flow hedging instruments	Prepaid expenses and and other current assets	$	25,867	Prepaid expenses and other current assets	$	3,289	Accrued expenses-other	$	0	Accrued expenses-other	$	7,651
Interest rate swap designated as a cash flow hedging instrument	Prepaid expenses and and other current assets	$	0	Prepaid expenses and other current assets		0	Accrued expenses-other		2,157	Accrued expenses-other		2,783
Forward contracts designated as cash flow hedging instruments	Intangible and other assets-net	$	1,802	Intangible and other assets-net		219	Other long-term liabilities		0	Other long-term liabilities		563
Interest rate swap designated as a cash flow hedging instrument	Intangible and other assets-net	$	1,724	Intangible and other assets-net		4,307	Other long-term liabilities		357	Other long-term liabilities		1,693
Total		$	29,393		$	7,815		$	2,514		$	12,690

        At the end of fiscal year 2014, the Company had forward contracts with maturities extending through June 2016. The estimated net amount of the existing gains and losses at January 3, 2015 that is expected to be reclassified into earnings within the next twelve months is a gain of $16.9 million. See Note 1—Significant Accounting Policies for additional disclosures on foreign currency hedging instruments.

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Debt

12 Months Ended

Jan. 03, 2015

Debt

Debt

10. Debt

        The Company's debt consisted of the following, excluding capital lease obligations, (in millions):

	January 3, 2015		December 28, 2013
U.S. revolving line of credit	$	389.0	$	250.0
U.S. term loan		231.3		246.9
Other international		3.3		3.8
Total debt		623.6		500.7
Less current portion		15.7		12.6
Long-term debt	$	607.9	$	488.1

        U.S.-Based.    On May 17, 2013, the Company and certain of its subsidiaries entered into a five year Credit Agreement (the "Credit Agreement") which provided for revolving credit loans in the amount of $750 million (the "Revolver"), a swingline subfacility up to $20 million, an up to $10 million subfacility for letters of credit, and a term loan in the amount of $250 million (the "Term Loan"). On May 23, 2014, the Company, entered into a First Amendment (the "Amendment") to the Credit Agreement. The Amendment increased the credit limit on the Revolver by $300 million to $1,050 million. The Credit Agreement expires and is due and payable on May 17, 2018. The Credit Agreement is guaranteed by all direct and indirect material domestic subsidiaries of the Company and is secured by 65% of the outstanding voting capital stock and 100% of the non-voting capital stock of the following foreign subsidiaries of the Company: Fossil Europe B.V., Swiss Technology Holding GmbH and Fossil (East) Limited. In connection with entering into the Credit Agreement, the Company paid upfront fees of approximately $4.8 million, which are being amortized over the life of the Credit Agreement.

        Amounts outstanding under the Revolver and Term Loan bear interest at the Company's option of (i) the base rate (defined as the higher of (a) the prime rate publicly announced by Wells Fargo (3.25% at fiscal year-end 2014), (b) the federal funds rate plus 0.50% and (c) the London Interbank Offer Rate ("LIBOR") (0.16% at fiscal year-end 2014) for an interest period of one month plus 1.00%) plus the base rate applicable margin (which varies based upon the Company's consolidated leverage ratio (the "Ratio") from 0.25% if the Ratio is less than 1.00 to 1.00, to 1.00% if the 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 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). 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 base rate applicable margin. Interest based upon the base rate is payable quarterly in arrears. Interest based upon the LIBOR rate is payable either monthly or quarterly in arrears, depending on the interest period selected by the Company. The Revolver also includes a commitment fee ranging from 0.20% to 0.35% for any amounts not drawn under the Revolver.

        During fiscal 2014, the Company made principal payments of $15.6 million under the Term Loan. The Company had net borrowings of $139.0 million under the Revolver during fiscal 2014. Borrowings were primarily used to fund common stock repurchases and normal operating expenses. Amounts available under the Revolver are reduced by any amounts outstanding under standby letters of credit. As of January 3, 2015, the Company had available borrowings of approximately $660.1 million under the Revolver. The Company incurred approximately $6.3 million and $6.1 million of interest expense related to the Term Loan and Revolver, respectively, including the interest rate swap impact during fiscal year 2014.

        Financial covenants in the Credit Agreement require the Company to maintain (i) a consolidated leverage ratio no greater than 2.50 to 1.00, (ii) a consolidated interest coverage ratio no less than 3.50 to 1.00 and (iii) maximum capital expenditures not in excess of (x) $200.0 million during each of fiscal years 2014 and 2015 and (y) $250.0 million during each fiscal year thereafter, subject to certain adjustments. The Credit Agreement contains representations, warranties, covenants, events of default and indemnities that are customary for agreements of this type. The Company was in compliance with all covenants in the Credit Agreement as of January 3, 2015.

        The Company's debt as of January 3, 2015, excluding capital lease obligations, matures as follows (in millions):

Less than 1 Year	$	15.7
Year 2		22.0
Year 3		18.9
Year 4		564.1
Year 5		0.1
Thereafter		2.8
Total	$	623.6

        Letters of Credit.    On May 11, 2012, the Company, Fossil Partners, L.P., Fossil Europe GmbH and Fossil Asia Pacific Ltd. renewed their Letter of Credit Facility (the "LC Facility") to allow for $80 million of commercial letters of credit. At the end of fiscal years 2014 and 2013, the Company had outstanding letters of credit under the LC Facility of approximately $50.3 million and $49.7 million, respectively. Letters of credit issued under the LC Facility are primarily used for the purchase of inventory.

        Capital Lease Obligations.    At the end of fiscal years 2014 and 2013, the Company had current capital lease obligations of $0.9 million and $0.8 million, respectively, and long-term capital lease obligations of $5.8 million and $6.6 million, respectively.

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Fair Value Measurements (Details)	3 Months Ended	12 Months Ended
	Oct. 04, 2014 Fossil Spain USD ($)	Jan. 03, 2015 Fossil Spain USD ($)	Jan. 03, 2015 Fossil Spain EUR (€)	Jan. 03, 2015 Level 3 Contingent consideration, Fossil Spain	Jan. 03, 2015 Fair Value Measurement, Recurring Basis Level 1 USD ($)	Dec. 28, 2013 Fair Value Measurement, Recurring Basis Level 1 USD ($)	Jan. 03, 2015 Fair Value Measurement, Recurring Basis Level 2 USD ($)	Dec. 28, 2013 Fair Value Measurement, Recurring Basis Level 2 USD ($)	Jan. 03, 2015 Fair Value Measurement, Recurring Basis Level 3 USD ($)	Dec. 28, 2013 Fair Value Measurement, Recurring Basis Level 3 USD ($)	Jan. 03, 2015 Fair Value Measurement, Recurring Basis Total USD ($)	Dec. 28, 2013 Fair Value Measurement, Recurring Basis Total USD ($)
Assets:
Forward contracts					$ 0	$ 0	$ 27,669,000	$ 3,508,000	$ 0	$ 0	$ 27,669,000	$ 3,508,000
Investment in publicly traded mutual funds					2,477,000	2,360,000		0	0	0	2,477,000	2,360,000
Interest rate swaps					0	0	1,724,000	4,307,000	0	0	1,724,000	4,307,000
Total					2,477,000	2,360,000	29,393,000	7,815,000	0	0	31,870,000	10,175,000
Liabilities:
Contingent consideration					0	0	0	0	7,114,000	8,084,000	7,114,000	8,084,000
Forward contracts						0		8,214,000		0		8,214,000
Interest rate swaps					0	0	2,514,000	4,476,000	0	0	2,514,000	4,476,000
Total					0	0	2,514,000	12,690,000	7,114,000	8,084,000	9,628,000	20,774,000
Payment of contingent consideration		3,400,000	2,800,000
Fair value of contingent consideration liability during the period resulting increase (decrease) operating expenses	(1,100,000)
Maximum annual variable price for contingent consideration		$ 4,200,000	€ 3,500,000
Future revenue growth for 2015 (as a percent)		10.00%	10.00%
Projected operating expenses as a percentage of revenues				28.00%
Discount rate (as a percent)				19.00%

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Major Customer, Segment and Geographic Information (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jan. 03, 2015	Dec. 28, 2013	Dec. 29, 2012
Summary information by operating segment
Net Sales	$ 3,509,691	$ 3,259,971	$ 2,857,508
Operating Income	566,536	561,596	488,840
Depreciation and Amortization	83,330	74,267	60,506
Long-term Assets	717,698	750,952	697,877
Total Assets	2,207,552	2,230,414	1,841,989
Corporate
Summary information by operating segment
Operating Income	(300,959)	(265,642)	(210,516)
Depreciation and Amortization	25,780	24,007	20,099
Long-term Assets	176,124	181,843	175,094
Total Assets	602,637	637,835	464,349
Americas
Summary information by operating segment
Net Sales	1,747,506	1,703,350	1,529,279
Operating Income	463,246	472,812	404,387
Depreciation and Amortization	24,846	22,024	18,036
Long-term Assets	263,324	260,730	244,705
Total Assets	809,548	781,374	687,380
Europe
Summary information by operating segment
Net Sales	1,195,948	1,052,497	880,012
Operating Income	287,961	238,585	180,958
Depreciation and Amortization	20,028	18,904	15,558
Long-term Assets	220,742	248,182	228,129
Total Assets	561,486	600,289	506,325
Asia
Summary information by operating segment
Net Sales	566,237	504,124	448,217
Operating Income	116,288	115,841	114,011
Depreciation and Amortization	12,676	9,332	6,813
Long-term Assets	57,508	60,197	49,949
Total Assets	$ 233,881	$ 210,916	$ 183,935

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Debt (Details) (USD $) In Millions, unless otherwise specified	Jan. 03, 2015	Dec. 28, 2013
Long-term debt excluding capital lease obligations
Total debt	$ 623.6	$ 500.7
Less current portion	15.7	12.6
Long-term debt	607.9	488.1
U.S. revolving line of credit
Long-term debt excluding capital lease obligations
Total debt	389.0	250.0
U.S. term loan
Long-term debt excluding capital lease obligations
Total debt	231.3	246.9
Other international
Long-term debt excluding capital lease obligations
Total debt	$ 3.3	$ 3.8

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Derivatives and Risk Management (Details 4) (USD $)	Jan. 03, 2015	Dec. 28, 2013
Fair value of derivative instruments
Asset Derivatives, Fair Value	$ 29,393,000	$ 7,815,000
Liability Derivatives, Fair Value	2,514,000	12,690,000
Existing losses expected to be reclassified into earnings within the next twelve months	16,900,000
Foreign exchange forward contracts | Designated as cash flow hedges | Prepaid expenses and other current assets
Fair value of derivative instruments
Asset Derivatives, Fair Value	25,867,000	3,289,000
Foreign exchange forward contracts | Designated as cash flow hedges | Intangible and other assets-net
Fair value of derivative instruments
Asset Derivatives, Fair Value	1,802,000	219,000
Foreign exchange forward contracts | Designated as cash flow hedges | Accrued expenses - other
Fair value of derivative instruments
Liability Derivatives, Fair Value	0	7,651,000
Foreign exchange forward contracts | Designated as cash flow hedges | Other long-term liabilities
Fair value of derivative instruments
Liability Derivatives, Fair Value	0	563,000
Interest rate contracts | Designated as 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 | Intangible and other assets-net
Fair value of derivative instruments
Asset Derivatives, Fair Value	1,724,000	4,307,000
Interest rate contracts | Designated as cash flow hedges | Accrued expenses - other
Fair value of derivative instruments
Liability Derivatives, Fair Value	2,157,000	2,783,000
Interest rate contracts | Designated as cash flow hedges | Other long-term liabilities
Fair value of derivative instruments
Liability Derivatives, Fair Value	$ 357,000	$ 1,693,000

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Derivatives and Risk Management (Tables)

12 Months Ended

Jan. 03, 2015

Derivatives and Risk Management

Schedule of outstanding forward contracts

        As of January 3, 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		160.4	U.S. dollar		211.6
British pound		26.0	U.S. dollar		42.2
Canadian dollar		34.4	U.S. dollar		30.9
Japanese yen		2,865.0	U.S. dollar		26.8
Australian dollar		15.0	U.S. dollar		13.1
Mexican peso		164.3	U.S. dollar		12.0

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 cash flow hedges that was recognized in other comprehensive income (loss), net of taxes during fiscal years 2014 and 2013 was (in thousands):

	For the Fiscal Year Ended January 3, 2015			For the Fiscal Year Ended December 28, 2013
Cash flow hedges:
Forward contracts	$	22,927		$	(1,391	)
Interest rate swap		(2,159	)		(1,031	)
Total gain (loss) recognized in other comprehensive income (loss), net of taxes	$	20,768		$	(2,422	)

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 fiscal years 2014 and 2013 (in thousands):

	Consolidated Statements of Income and Comprehensive Income Location		For the Fiscal Year Ended January 3, 2015			For the Fiscal Year Ended December 28, 2013
Forward contracts designated as cash flow hedging instruments	Other income-net	Total gain (loss) reclassified from other comprehensive income (loss)	$	5,856		$	(246	)
Forward contracts not designated as hedging instruments	Other income-net	Total gain (loss) recognized in income	$	(148	)	$	567
Interest rate swap designated as a cash flow hedging instrument	Interest expense	Total gain loss reclassified from other comprehensive income (loss)	$	(1,763	)	$	(925	)

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

	Asset Derivatives						Liability Derivatives
	January 3, 2015			December 28, 2013			January 3, 2015			December 28, 2013
	Consolidated Balance Sheets Location	Fair Value		Consolidated Balance Sheets Location	Fair Value		Consolidated Balance Sheets Location	Fair Value		Consolidated Balance Sheets Location	Fair Value
Forward contracts designated as cash flow hedging instruments	Prepaid expenses and and other current assets	$	25,867	Prepaid expenses and other current assets	$	3,289	Accrued expenses-other	$	0	Accrued expenses-other	$	7,651
Interest rate swap designated as a cash flow hedging instrument	Prepaid expenses and and other current assets	$	0	Prepaid expenses and other current assets		0	Accrued expenses-other		2,157	Accrued expenses-other		2,783
Forward contracts designated as cash flow hedging instruments	Intangible and other assets-net	$	1,802	Intangible and other assets-net		219	Other long-term liabilities		0	Other long-term liabilities		563
Interest rate swap designated as a cash flow hedging instrument	Intangible and other assets-net	$	1,724	Intangible and other assets-net		4,307	Other long-term liabilities		357	Other long-term liabilities		1,693
Total		$	29,393		$	7,815		$	2,514		$	12,690

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Acquisitions, Divestiture and Goodwill (Details 2) (USD $)	12 Months Ended	3 Months Ended
	Jan. 03, 2015	Jan. 03, 2015	Dec. 28, 2013	Dec. 29, 2012	Apr. 02, 2012
Allocation of purchase price:
Goodwill	197,728,000	$ 197,728,000	$ 206,954,000	$ 184,793,000
Minimum
Allocation of purchase price:
Amortization period	3 years
Maximum
Allocation of purchase price:
Amortization period	20 years
Customer lists | Minimum
Allocation of purchase price:
Amortization period	5 years
Customer lists | Maximum
Allocation of purchase price:
Amortization period	10 years
Patents | Minimum
Allocation of purchase price:
Amortization period	3 years
Patents | Maximum
Allocation of purchase price:
Amortization period	20 years
Noncompete agreement
Allocation of purchase price:
Amortization period	6 years
Skagen Designs
Allocation of purchase price:
Goodwill					140,400,000
Goodwill expected to be deductible for tax purposes	133,800,000	133,800,000
Purchase price adjustment		$ 6,000,000
Skagen Designs | Customer lists | Minimum
Allocation of purchase price:
Amortization period	3 years
Skagen Designs | Customer lists | Maximum
Allocation of purchase price:
Amortization period	9 years
Skagen Designs | Patents | Minimum
Allocation of purchase price:
Amortization period	3 years
Skagen Designs | Patents | Maximum
Allocation of purchase price:
Amortization period	9 years
Skagen Designs | Noncompete agreement | Minimum
Allocation of purchase price:
Amortization period	3 years
Skagen Designs | Noncompete agreement | Maximum
Allocation of purchase price:
Amortization period	9 years

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Employee Benefit Plans

12 Months Ended

Jan. 03, 2015

Employee Benefit Plans

Employee Benefit Plans

15. Employee Benefit Plans

        Deferred Compensation and Savings Plans.    The Company has a defined contribution savings plan (the "401(k) Plan") for substantially all U.S.-based full-time employees of the Company. The Company's common stock is one of several investment alternatives available under the 401(k) Plan. Effective January 1, 2012, the Company added a Roth 401(k) option to the 401(k) Plan. The Company has a discretionary match for the 401(k) Plan. After ninety 90 days of service (minimum of 250 hours worked), the Company matches 50% of employee contributions up to 6% of their compensation. Matching contributions made by the Company to the 401(k) Plan totaled approximately $3.0 million, $2.7 million and $2.7 million for fiscal years 2014, 2013 and 2012, respectively. The Company also has the right to make additional matching contributions not to exceed 15% of employee compensation. The Company did not make any additional matching contributions during fiscal years 2014, 2013 and 2012.

        In December 1998, the Company adopted the Fossil Group, Inc. and Affiliates Deferred Compensation Plan (the "Deferred Plan"). Eligible participants may elect to defer up to 50% of their salary or up to 100% of any bonuses paid pursuant to the terms and conditions of the Deferred Plan. In addition, the Company may make employer contributions to participants under the Deferred Plan from time to time. The Company made no contributions to the Deferred Plan during fiscal years 2014, 2013 and 2012. In prior periods, the Company made payments pursuant to the Deferred Plan into a Rabbi Trust. The funds held in the Rabbi Trust are directed to certain investments available through life insurance products. As of January 3, 2015, the Company had an asset of $2.5 million related to the Company's invested balances recorded in intangible and other assets—net and a liability of $3.3 million related to the participants' invested balances recorded in accrued expenses—other, each on the Company's consolidated balance sheets.

        Stock-Based Compensation Plans.    The Company's grants under its current stock-based compensation plans generally include: (i) stock options and restricted stock units for its international employees, (ii) restricted stock units for its nonemployee directors and (iii) stock appreciation rights, restricted stock and restricted stock units for its U.S.-based employees. As of January 3, 2015, the Company had approximately $22.7 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Company's stock based compensation plans. This cost is expected to be recognized over a weighted-average period of approximately 1.5 years.

        Long-Term Incentive Plans.    An aggregate of 4,685,030 shares of the Company's common stock were reserved for issuance pursuant to the Company's 2008 Long-Term Incentive Plan ("2008 LTIP"), adopted in March 2008. Under the 2008 LTIP, designated employees of the Company, including officers, certain contractors, and outside directors of the Company, are eligible to receive (i) stock options, (ii) stock appreciation rights, (iii) restricted or non-restricted stock awards, (iv) restricted stock units, (v) cash awards, or (vi) any combination of the foregoing. The 2008 LTIP is administered by the Compensation Committee of the Company's Board of Directors (the "Compensation Committee"). Each award issued under the 2008 LTIP terminates at the time designated by the Compensation Committee, not to exceed ten years. The current outstanding stock options, stock appreciation rights, restricted stock and restricted stock units issued under the 2008 LTIP predominantly have original vesting periods of three years. All stock appreciation rights and restricted stock units are settled in shares of the Company's common stock. The exercise prices of stock options granted under the 2008 LTIP were not less than the fair market value of the Company's common stock at the date of grant. Effective January 1, 2012, the Company's Board of Directors approved changes to the equity compensation package for nonemployee directors. Each nonemployee director receives restricted stock units valued at $120,000 on the date of the Company's annual stockholders' meeting. These grants vest on the earlier of one year from the date of grant or the Company's next annual stockholders' meeting date.

        Prior to the Company establishing the 2008 LTIP, stock-based compensation awards were made to employees and nonemployee directors pursuant to the Company's initial Long-Term Incentive Plan ("LTIP") and Nonemployee Director Stock Option Plan ("Nonemployee Plan"), respectively. Each award issued under the LTIP terminates at the time designated by the Compensation Committee, not to exceed ten years. The currently outstanding stock options, stock appreciation rights, restricted stock and restricted stock units issued under the LTIP and Nonemployee Plan have original vesting periods that predominately range from three to five years. All stock appreciation rights and restricted stock units are settled in shares of the Company's common stock. The exercise prices of stock options granted under the Nonemployee Plan were not less than the fair market value of the Company's common stock at the date of grant. Pursuant to the Nonemployee Plan, 50% of the stock options granted became exercisable on the first anniversary of the date of grant and in two additional installments of 25% each on the second and third anniversaries. On March 26, 2008, the Company's Board of Directors elected to terminate these prior plans. The termination of the LTIP and the Nonemployee Plan did not impair outstanding awards representing 60,085 shares and 15,750 shares, respectively, of the Company's common stock at January 3, 2015 which continued in accordance with their original terms.

        Stock Options and Stock Appreciation Rights.    The fair value of stock options and stock appreciation rights granted under the Company's stock-based compensation plans was estimated on the date of grant using the Black-Scholes option pricing model. The table below outlines the weighted average assumptions for these award grants:

Fiscal Year	2014			2013			2012
Risk-free interest rate		0.9	%		0.8	%		1.1	%
Expected term (in years)		3.4			4.7			5.1
Expected volatility		47.1	%		55.1	%		51.1	%
Expected dividend yield		0.0	%		0.0	%		0.0	%
Estimated fair value per stock option/stock appreciation right granted	$	38.88		$	48.19		$	56.08

        The expected term of the stock options represent the estimated period of time until exercise and is based on historical experience of similar awards. Expected stock price volatility is based on the historical volatility of the Company's common stock. The risk-free interest rate is based on the implied yield available on U.S. Treasury securities with an equivalent remaining term.

        The Company generally receives a tax deduction when stock options are exercised or when restricted stock vests. Generally for stock options, the tax deduction is related to the excess of the stock price at the time the stock options are exercised over the exercise price of the stock options. For restricted stock, the tax deduction is equal to the fair market value of the Company's common stock on the date the restricted stock vests multiplied by the number of shares of restricted stock. Excess tax benefits from stock-based compensation on the Company's consolidated statements of cash flows for fiscal years 2014, 2013 and 2012 amounted to approximately $1.4 million, $8.4 million and $11.7 million, respectively.

        The following table summarizes stock option and stock appreciation rights activity:

Stock Options and Stock Appreciation Rights	Shares			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
	in thousands							in thousands
Outstanding at December 31, 2011		1,220		$	41.20		5.8	$	49,125
Granted		279			124.61
Exercised		(386	)		30.28				32,201
Forfeited or expired		(74	)		98.53
Outstanding at December 29, 2012		1,039			63.56		6.4		36,708
Granted		41			104.62
Exercised		(332	)		35.64				24,820
Forfeited or expired		(70	)		97.62
Outstanding at December 28, 2013		678			76.15		6.2		31,794
Granted		94			111.90
Exercised		(91	)		39.20				6,391
Forfeited or expired		(18	)		120.77
Outstanding at January 3, 2015		663			85.08		5.6		20,751
Exercisable at January 3, 2015		479		$	73.45		5.1	$	20,296

        The aggregate intrinsic value in the table above is before income taxes and is based on the exercise price for outstanding and exercisable options/rights at January 3, 2015 and based on the fair market value of the Company's common stock on the exercise date for options/rights that were exercised during the fiscal year.

        Stock 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 January 3, 2015:

Stock Options Outstanding							Stock Options Exercisable
Range of Exercise Prices	Number of Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)		Number of Shares		Weighted- Average Exercise Price
	in thousands						in thousands
$13.65 - $21.51		56	$	15.09		3.6		56	$	15.09
$25.77 - $42.76		103		34.94		3.7		103		34.94
$43.92 - $67.10		5		43.92		3.0		5		43.92
$69.53 - $106.40		97		80.86		6.3		95		80.80
$106.89 - $131.46		167		128.10		7.1		114		128.10
Total		428	$	79.24		5.6		373	$	72.29

Stock Appreciation Rights Outstanding							Stock Appreciation Rights Exercisable
Range of Exercise Prices	Number of Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)		Number of Shares		Weighted- Average Exercise Price
	in thousands						in thousands
$13.65 - $21.51		18	$	13.65		2.1		18	$	13.65
$25.77 - $42.76		17		35.69		2.5		17		35.68
$43.92 - $67.10		3		67.10		5.5		2		67.10
$69.53 - $106.40		70		93.62		5.6		39		87.56
$106.89 - $131.46		127		117.46		6.5		30		127.16
Total		235	$	95.68		5.6		106	$	77.52

        Restricted Stock and Restricted Stock Units.    The following table summarizes restricted stock and restricted stock unit activity:

Restricted Stock and Restricted Stock Units	Number of Shares			Weighted-Average Grant Date Fair Value
	in thousands
Nonvested at December 31, 2011		352		$	45.70
Granted		102			110.72
Vested		(161	)		45.14
Forfeited		(16	)		67.62
Nonvested at December 29, 2012		277			68.69
Granted		140			106.76
Vested		(171	)		57.83
Forfeited		(27	)		86.51
Nonvested at December 28, 2013		219			99.27
Granted		164			110.95
Vested		(115	)		90.66
Forfeited		(13	)		108.76
Nonvested at January 3, 2015		255		$	110.17

        The total fair value of shares/units vested during fiscal years 2014, 2013 and 2012 was $12.6 million, $18.1 million and $19.1 million, respectively.

        The Company maintains a defined benefit plan for its employees located in Switzerland. The plan is funded through payments to an insurance company. The payments are determined by periodic actuarial calculations. During fiscal years 2014, 2013 and 2012, the Company recorded pension gains of $0.2 million and pension expenses of $6.2 million and $2.8 million, respectively, related to this plan. The liability for the Company's defined benefit plan was $12.4 million and $8.6 million at the end of fiscal years 2014 and 2013, respectively. This liability is recorded in other long-term liabilities on the Company's consolidated balance sheets.

        Under French law, the Company is required to maintain a defined benefit plan for its employees located in France, which is referred to as a "retirement indemnity". The amount of the retirement indemnity is based on the employee's last salary and duration of employment with the Company. The employee's right to receive the retirement indemnity is subject to the employee remaining with the Company until retirement. In each of fiscal years 2014, 2013 and 2012, the Company recorded pension expenses of $0.3 million per year for its retirement indemnity obligations. The liability for the Company's retirement indemnity was $1.6 million and $1.5 million at the end of fiscal years 2014 and 2013, respectively. This liability is recorded in other long-term liabilities on the Company's consolidated balance sheets.

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Significant Accounting Policies (Policies)

12 Months Ended

Jan. 03, 2015

Significant Accounting Policies

Consolidated Financial Statements

Consolidated Financial Statements include the accounts of Fossil Group, Inc., a Delaware corporation, and its subsidiaries (the "Company"). The Company reports on a fiscal year reflecting the retail-based calendar (containing 4-4-5 week calendar quarters). References to fiscal years 2014, 2013 and 2012 are for the fiscal years ended January 3, 2015, December 28, 2013 and December 29, 2012, respectively. The Company's fiscal year periodically results in a 53-week year instead of a normal 52-week year. The current fiscal year ended January 3, 2015 is a 53-week year, with the additional week included in the first quarter of the fiscal year. Accordingly, the information presented herein includes fifty-three weeks of operations for fiscal year 2014 as compared to fifty-two weeks in fiscal years 2013 and 2012. All intercompany balances and transactions are eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the current period presentation. The Company is a leader in the design, development, marketing and distribution of contemporary, high quality fashion accessories on a global basis. The Company's products are sold primarily through department stores, specialty retailers and Company-owned retail stores worldwide.

Use of Estimates

Use of Estimates is required in the preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. Management makes estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates its estimates and judgments, including those related to product returns, inventories, long-lived assets, goodwill and trade names, income taxes, warranty costs, hedge accounting and stock-based compensation. Management bases its estimates and judgments on historical experience and on various other factors that it believes are reasonable under the circumstances. Management estimates form the basis for making judgments about the carrying value of the assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates under different assumptions or conditions.

Concentration of Risk

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

        A significant portion of sales of the Company's products are supplied by manufacturers located outside of the U.S., primarily in Asia. While the Company is not dependent on any single manufacturer outside the U.S., the Company could be adversely affected by political or economic disruptions affecting the business or operations of third-party manufacturers located outside of the U.S. In fiscal year 2014, two of the Company's majority-owned assembly factories accounted for approximately 57% of the Company's total watch assembly and jewelry production.

        The Company has entered into multi-year, worldwide exclusive license agreements for the manufacture, distribution and sale of products bearing the brand names of certain globally recognized fashion companies. Sales of the Company's licensed products amounted to 53.5% of the consolidated net sales for fiscal year 2014, of which MICHAEL KORS® product sales accounted for 26.3%.

Cash Equivalents

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

Accounts Receivable

Accounts Receivable are stated net of allowances of approximately $68.2 million and $63.1 million for estimated customer returns at the end of fiscal years 2014 and 2013, respectively, and net of doubtful accounts of approximately $11.8 million at the end of both fiscal years 2014 and 2013. The Company's policy is to maintain allowances for bankruptcies until the bankruptcies are actually settled. The total amount charged to cost and expenses during fiscal year 2014 relating to the Company's doubtful accounts receivable was $3.3 million.

Inventories

Inventories are stated at the lower of market or average cost, including any applicable duty and freight charges. Inventory held at consignment locations is included in the Company's finished goods inventory, and at the end of fiscal years 2014 and 2013, was $40.7 million and $29.9 million, respectively.

Investments

Investments in which the Company has significant influence over the investee are accounted for utilizing the equity method. If the Company does not have significant influence over the investee, the cost method is utilized.

Property, Plant and Equipment

Property, Plant and Equipment is stated at cost less accumulated depreciation and amortization. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets of thirty years for buildings, generally five years for machinery and equipment and furniture and fixtures and three to seven years for computer equipment and software. Leasehold improvements are amortized over the shorter of the lease term or the asset's estimated useful life.

        Property, plant and equipment and other long-lived assets are evaluated for impairment whenever events or conditions indicate that the carrying value of an asset may not be recoverable based on expected undiscounted cash flows related to the asset. Property, plant and equipment and key money impairment losses related to underperforming Company-owned retail stores of approximately $9.3 million, $5.8 million and $1.2 million were recorded in fiscal years 2014, 2013 and 2012, respectively, and are included in selling, general and administrative expenses in the Company's consolidated statements of income and comprehensive income.

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets include the cost in excess of net tangible assets acquired (goodwill), trademarks, trade names, customer lists and patents. Trademarks, customer lists and patents are amortized using the straight-line method over their estimated useful lives, which are generally three to 20 years. Goodwill and other indefinite-lived intangible assets, such as trade names acquired in business combinations, are evaluated for impairment annually as of the end of the fiscal year. Additionally, if events or conditions were to indicate the carrying value of a reporting unit or an indefinite-lived intangible asset may not be recoverable, the Company would evaluate the asset for impairment at that time. Impairment testing compares the carrying amount of the reporting unit or other intangible assets with its fair value. When the carrying amount of the reporting unit or other intangible assets exceeds its fair value, an impairment charge is recorded.

The Company has three reporting units for which it evaluates goodwill for impairment. These reporting units are (i) Americas, (ii) Europe and (iii) Asia. The fair value of each reporting unit is estimated using market comparable information and an income approach. If the estimated fair value of a reporting unit exceeds its carrying value, no impairment charge is recorded. As of January 3, 2015, the fair value of each of these reporting units substantially exceeded its carrying value.

Judgments and assumptions are inherent in the Company’s estimate of future cash flows used to determine the estimate of the reporting unit’s fair value. The most significant assumptions associated with the fair value calculations include estimated future cash flows. The Company’s estimated future cash flows are dependent on estimated future growth rates, discount rates and operating margins. If actual results differ, the estimated future cash flows may not be realized, and future impairments of goodwill may be incurred.

The Company estimates the fair value of its trade names using discounted cash flow methodologies. Due to the inherent uncertainties involved in making the estimates and assumptions used in the fair value analysis, actual results may differ, which could alter the fair value of the trade names and possibly result in impairment charges in future periods. The Company has completed the required annual impairment testing for trade names for fiscal years 2014, 2013 and 2012. No impairment charges were recorded in fiscal years 2014, 2013 or 2012.

Accrued Expenses Other

Accrued Expenses Other includes liabilities relating to warranties, duty, deferred compensation, gift cards, foreign exchange forward contracts ("forward contracts"), deferred rent, and other liabilities which are current in nature.

Other Long-Term Liabilities

Other Long-Term Liabilities includes obligations relating to asset retirements, deferred rent, forward contracts and defined benefits relating to certain international employees that are not current in nature.

Cumulative Translation Adjustment

Cumulative Translation Adjustment is included as a component of accumulated other comprehensive income and reflects the adjustments resulting from translating the financial statements of foreign subsidiaries into U.S. dollars. The functional currency of the Company's foreign subsidiaries is the currency of the primary economic environment in which the entity operates, which is generally the local currency of the country. Accordingly, assets and liabilities of the foreign subsidiaries are translated to U.S. dollars at fiscal year-end exchange rates. Income and expense items are translated at daily or average monthly exchange rates. Those changes in exchange rates that affect cash flows and the related receivables or payables are recognized as transaction gains and losses in determining net income. The Company incurred net foreign currency transaction gains, including gains and losses associated with the settlement of forward contracts, of approximately $20,000, $1.0 million and $5.6 million fiscal years 2014, 2013 and 2012, respectively. These net gains have been included in other income—net in the Company's consolidated statements of income and comprehensive income.

Hedging Instruments

Hedging Instruments consist of forward contracts and an interest rate swap. Forward contracts are entered into by the Company principally to hedge the future payment of intercompany inventory transactions by its non-U.S. subsidiaries. These cash flow hedges are stated at estimated fair value and changes in fair value are reported as a component of other comprehensive income (loss), net of taxes on the Company's consolidated statements of income and comprehensive income. If the Company was to settle its euro, British pound, Canadian dollar, Japanese yen, Australian dollar and Mexican peso based forward contracts at fiscal year-end 2014, the result would have been a net gain of approximately $18.1 million, net of taxes. This unrealized gain is recognized in other comprehensive income (loss), net of taxes on the Company's consolidated statements of income and comprehensive income. Additionally, to the extent that any of these contracts are not considered to be perfectly effective in offsetting the change in the value of the cash flows being hedged, any changes in fair value relating to the ineffective portion of these contracts would be recognized in other income-net on the Company's consolidated statements of income and comprehensive income. Also, the Company has entered into an interest rate swap agreement to effectively convert a portion of its variable rate debt obligations from a floating rate to a fixed rate. Changes in the fair value of the interest rate swap are recorded as a component of accumulated other comprehensive income within stockholders' equity, and are recognized in interest expense in the period in which the payment is settled. 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 8—Derivatives and Risk Management for more information regarding the Company's use of derivatives.

Litigation Liability

Litigation Liabilities are estimated amounts for claims that are probable and can be reasonably estimated and are recorded as liabilities in the Company's consolidated balance sheets. The likelihood of a material change in these estimated liabilities would be dependent on new claims that may arise, changes in the circumstances used to estimate amounts for prior period claims and favorable or unfavorable final settlements of prior period claims. As additional information becomes available, the Company assesses the potential liability related to new claims and existing claims and revises estimates as appropriate. As new claims arise or circumstances change relative to prior claim assessments, revisions in estimates of the potential liability could materially impact the Company's consolidated results of operations and financial position.

Stock-Based Compensation

Stock-Based Compensation is recognized as expense related to the fair value of employee stock based awards. The Company utilizes the Black-Scholes model to determine the fair value of stock options and stock appreciation rights on the date of grant. The model requires the Company to make assumptions concerning (i) the length of time employees will retain their vested stock options and stock appreciation rights before exercising them ("expected term"), (ii) the volatility of the Company's common stock price over the expected term and (iii) the number of stock options and stock appreciation rights that will be forfeited. Changes in these assumptions can materially affect the estimate of fair value of stock-based compensation and, consequently, the related expense amounts recognized on the Company's consolidated statements of income and comprehensive income

Revenues

Revenues are recognized at the point title and the risks and rewards of ownership have passed to the customer, based on the terms of sale. Revenue from sales of the Company's products including those that are subject to inventory consignment agreements is recognized when title and risk of loss transfers, delivery has occurred, the price to the buyer is determinable and collectability is reasonably assured. The Company accepts limited returns and may request that a customer return a product if the customer has an excess of any style that the Company has identified as being a poor performer for that customer or geographic location. The Company continually monitors returns and maintains a provision for estimated returns based upon historical experience and any specific issues identified. Product returns are accounted for as reductions to revenue, cost of sales, accounts receivable and an increase in inventory to the extent the returned product is resalable. While returns have historically been within management's expectations and the provisions established, future return rates may differ from those experienced in the past. In the event that the Company's products are performing poorly in the retail market and/or it experiences product damages or defects at a rate significantly higher than the historical rate, the resulting returns could have an adverse impact on the operating results for the period or periods in which such returns occur. Taxes imposed by governmental authorities on the Company's revenue-producing activities with customers, such as sales taxes and value added taxes, are excluded from net sales.

Cost of Sales

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

Selling, General and Administrative Expenses

Selling, General and Administrative Expenses ("SG&A") include selling and distribution expenses primarily consisting of sales and distribution labor costs, sales distribution center and warehouse facility costs, depreciation expense related to sales distribution and warehouse facilities, the four-wall operating costs of the Company's retail stores, point-of- sale expenses, advertising expenses and art, design and product development labor costs. SG&A also includes general and administrative expenses primarily consisting of administrative support labor and "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.

Advertising Costs

Advertising Costs for in-store and media advertising as well as co-op advertising, catalog costs, product displays, show/exhibit costs, advertising royalties related to the sales of licensed brands, internet costs associated with affiliation fees, printing, sample costs and promotional allowances are expensed as incurred. Advertising costs were approximately $232.7 million, $205.6 million and $185.1 million for fiscal years 2014, 2013 and 2012, respectively.

Warranty Costs

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

Noncontrolling Interest

Noncontrolling Interest is recognized as equity in the Company's consolidated balance sheets, is reflected in net income attributable to noncontrolling interest in the consolidated statements of income and comprehensive income and is captured within the summary of changes in equity attributable to controlling and noncontrolling interests. Noncontrolling interests represent ownership interests in the Company's subsidiaries held by third parties.

Other Comprehensive Income (Loss)

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

Earnings Per Share ("EPS")

Earnings Per Share ("EPS") is based on the weighted average number of common shares outstanding during each period. Diluted EPS adjusts basic EPS for the effects of dilutive common stock equivalents outstanding during each period using the treasury stock method.

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

Fiscal Year	2014		2013		2012
Numerator:
Net income attributable to Fossil Group, Inc	$	376,707	$	378,152	$	343,401
Denominator:
Basic EPS computation:
Basic weighted average common shares outstanding		52,882		57,401		60,959
Basic EPS	$	7.12	$	6.59	$	5.63
Diluted EPS computation:
Basic weighted average common shares outstanding		52,882		57,401		60,959
Stock options, stock appreciation rights and restricted stock units		198		275		441
Diluted weighted average common shares outstanding		53,080		57,676		61,400
Diluted EPS	$	7.10	$	6.56	$	5.59

        Approximately 318,448, 274,944 and 316,638 weighted shares issuable under stock-based awards were not included in the diluted EPS calculation in fiscal years 2014, 2013 and 2012, respectively, because they were antidilutive.

Income Taxes

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

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Significant Accounting Policies (Details 5) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Jan. 03, 2015	Dec. 28, 2013	Dec. 29, 2012
Numerator:
Net income attributable to Fossil Group, Inc.	$ 376,707	$ 378,152	$ 343,401
Denominator:
Basic weighted average common shares outstanding	52,882,000	57,401,000	60,959,000
Basic EPS (in dollars per share)	$ 7.12	$ 6.59	$ 5.63
Diluted EPS computation:
Basic weighted average common shares outstanding	52,882,000	57,401,000	60,959,000
Stock options, stock appreciation rights and restricted stock units (in shares)	198,000	275,000	441,000
Diluted weighted average common shares outstanding	53,080,000	57,676,000	61,400,000
Diluted EPS (in dollars per share)	$ 7.10	$ 6.56	$ 5.59
Other EPS Disclosures
Shares issuable under stock-based awards not included in the diluted EPS calculation	318,448	274,944	316,638

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Employee Benefit Plans (Tables)

12 Months Ended

Jan. 03, 2015

Employee Benefit Plans

Schedule of weighted average assumptions for the stock options and stock appreciation rights grants

Fiscal Year	2014			2013			2012
Risk-free interest rate		0.9	%		0.8	%		1.1	%
Expected term (in years)		3.4			4.7			5.1
Expected volatility		47.1	%		55.1	%		51.1	%
Expected dividend yield		0.0	%		0.0	%		0.0	%
Estimated fair value per stock option/stock appreciation right granted	$	38.88		$	48.19		$	56.08

Summary of stock options and stock appreciation rights activity

Stock Options and Stock Appreciation Rights	Shares			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
	in thousands							in thousands
Outstanding at December 31, 2011		1,220		$	41.20		5.8	$	49,125
Granted		279			124.61
Exercised		(386	)		30.28				32,201
Forfeited or expired		(74	)		98.53
Outstanding at December 29, 2012		1,039			63.56		6.4		36,708
Granted		41			104.62
Exercised		(332	)		35.64				24,820
Forfeited or expired		(70	)		97.62
Outstanding at December 28, 2013		678			76.15		6.2		31,794
Granted		94			111.90
Exercised		(91	)		39.20				6,391
Forfeited or expired		(18	)		120.77
Outstanding at January 3, 2015		663			85.08		5.6		20,751
Exercisable at January 3, 2015		479		$	73.45		5.1	$	20,296

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 January 3, 2015:

Stock Options Outstanding							Stock Options Exercisable
Range of Exercise Prices	Number of Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)		Number of Shares		Weighted- Average Exercise Price
	in thousands						in thousands
$13.65 - $21.51		56	$	15.09		3.6		56	$	15.09
$25.77 - $42.76		103		34.94		3.7		103		34.94
$43.92 - $67.10		5		43.92		3.0		5		43.92
$69.53 - $106.40		97		80.86		6.3		95		80.80
$106.89 - $131.46		167		128.10		7.1		114		128.10
Total		428	$	79.24		5.6		373	$	72.29

Stock Appreciation Rights Outstanding							Stock Appreciation Rights Exercisable
Range of Exercise Prices	Number of Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)		Number of Shares		Weighted- Average Exercise Price
	in thousands						in thousands
$13.65 - $21.51		18	$	13.65		2.1		18	$	13.65
$25.77 - $42.76		17		35.69		2.5		17		35.68
$43.92 - $67.10		3		67.10		5.5		2		67.10
$69.53 - $106.40		70		93.62		5.6		39		87.56
$106.89 - $131.46		127		117.46		6.5		30		127.16
Total		235	$	95.68		5.6		106	$	77.52

Summary of restricted stock and restricted stock unit activity

Restricted Stock and Restricted Stock Units	Number of Shares			Weighted-Average Grant Date Fair Value
	in thousands
Nonvested at December 31, 2011		352		$	45.70
Granted		102			110.72
Vested		(161	)		45.14
Forfeited		(16	)		67.62
Nonvested at December 29, 2012		277			68.69
Granted		140			106.76
Vested		(171	)		57.83
Forfeited		(27	)		86.51
Nonvested at December 28, 2013		219			99.27
Granted		164			110.95
Vested		(115	)		90.66
Forfeited		(13	)		108.76
Nonvested at January 3, 2015		255		$	110.17

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CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (USD $) Share data in Thousands, unless otherwise specified	Stockholders' equity attributable to Fossil Group, Inc.	Common stock	Additional paid-in capital	Treasury stock	Retained earnings	Accumulated other comprehensive income (loss)	Currency Translation Adjustments	Unrealized gain (loss) on securities available for sale	Noncontrolling interest	Total
Balance at Dec. 31, 2011	$ 1,105,929,000	$ 684,000	$ 149,243,000	$ (450,700,000)	$ 1,384,522,000	$ 22,180,000			$ 10,917,000	$ 1,116,846,000
Balance (in shares) at Dec. 31, 2011		68,370
Increase (Decrease) in Shareholders' Equity
Common stock issued upon exercise of stock options and stock appreciation rights	6,090,000	3,000	6,087,000							6,090,000
Common stock issued upon exercise of stock options and stock appreciation rights (in shares)		336
Tax benefit derived from stock-based compensation	11,693,000		11,693,000							11,693,000
Acquisition of common stock	(271,293,000)			(271,293,000)						(271,293,000)
Retirement of common stock		(93,000)	(60,476,000)	722,410,000	(661,841,000)
Retirement of common stock (in shares)		(9,341)
Restricted stock issued in connection with stock-based compensation plan		1,000	(1,000)
Restricted stock issued in connection with stock-based compensation plan (in shares)		116
Common stock forfeitures put to treasury			417,000	(417,000)
Stock-based compensation	18,568,000		18,568,000							18,568,000
Net income	343,401,000				343,401,000				10,858,000	354,259,000
Other comprehensive income (loss)	6,580,000					6,580,000	11,228,000	(29,000)		6,580,000
Purchase of noncontrolling interest shares	(7,332,000)		(7,332,000)						(6,729,000)	(14,061,000)
Distribution of noncontrolling interest earnings and other									(8,198,000)	(8,198,000)
Acquisitions	19,899,000	1,000	19,898,000						81,000	19,980,000
Acquisitions (in shares)		150
Balance at Dec. 29, 2012	1,233,535,000	596,000	138,097,000	0	1,066,082,000	28,760,000			6,929,000	1,240,464,000
Balance (in shares) at Dec. 29, 2012		59,631
Increase (Decrease) in Shareholders' Equity
Common stock issued upon exercise of stock options and stock appreciation rights	7,596,000	3,000	7,593,000							7,596,000
Common stock issued upon exercise of stock options and stock appreciation rights (in shares)		293
Tax benefit derived from stock-based compensation	8,379,000		8,379,000							8,379,000
Acquisition of common stock	(582,254,000)		1,064,000	(583,318,000)						(582,254,000)
Retirement of common stock		(53,000)	(16,094,000)	583,318,000	(567,171,000)
Retirement of common stock (in shares)		(5,340)
Restricted stock issued in connection with stock-based compensation plan		1,000	(1,000)
Restricted stock issued in connection with stock-based compensation plan (in shares)		124
Stock-based compensation	15,338,000		15,338,000							15,338,000
Net income	378,152,000				378,152,000				9,896,000	388,048,000
Other comprehensive income (loss)	7,931,000					7,931,000	7,971,000	475,000		7,931,000
Purchase of noncontrolling interest shares	0
Distribution of noncontrolling interest earnings and other									(10,135,000)	(10,135,000)
Balance at Dec. 28, 2013	1,068,677,000	547,000	154,376,000	0	877,063,000	36,691,000			6,690,000	1,075,367,000
Balance (in shares) at Dec. 28, 2013		54,708								54,708
Increase (Decrease) in Shareholders' Equity
Common stock issued upon exercise of stock options and stock appreciation rights	3,235,000	1,000	3,234,000							3,235,000
Common stock issued upon exercise of stock options and stock appreciation rights (in shares)		88
Tax benefit derived from stock-based compensation	1,430,000		1,430,000							1,430,000
Acquisition of common stock	(437,911,000)		800,000	(438,711,000)						(437,911,000)
Retirement of common stock		(41,000)	(6,993,000)	438,711,000	(431,677,000)
Retirement of common stock (in shares)		(4,144)
Restricted stock issued in connection with stock-based compensation plan		1,000	(1,000)
Restricted stock issued in connection with stock-based compensation plan (in shares)		119
Stock-based compensation	18,823,000		18,823,000							18,823,000
Net income	376,707,000				376,707,000				9,904,000	386,611,000
Other comprehensive income (loss)	(53,101,000)					(53,101,000)	(65,393,000)			(53,101,000)
Purchase of noncontrolling interest shares	0								(336,000)	(336,000)
Distribution of noncontrolling interest earnings and other									(10,317,000)	(10,317,000)
Balance at Jan. 03, 2015	$ 977,860,000	$ 508,000	$ 171,669,000	$ 0	$ 822,093,000	$ (16,410,000)			$ 5,941,000	$ 983,801,000

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SCHEDULE II VALUATIONS AND QUALIFYING ACCOUNTS (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jan. 03, 2015	Dec. 28, 2013	Dec. 29, 2012
Sales returns
Valuation and qualifying accounts
Balance at Beginning of Period	$ 63,070	$ 65,256	$ 61,580
Charged (Credited) to Operations	144,694	116,777	119,106
Actual Returns or Writeoffs	139,557	118,963	115,430
Balance at End of Period	68,207	63,070	65,256
Bad debts
Valuation and qualifying accounts
Balance at Beginning of Period	11,770	17,106	18,241
Charged (Credited) to Operations	3,257	(1,078)	848
Actual Returns or Writeoffs	3,187	4,258	1,983
Balance at End of Period	11,840	11,770	17,106
Deferred tax asset valuation allowance
Valuation and qualifying accounts
Balance at Beginning of Period	10,547	5,763	3,193
Charged (Credited) to Operations	(820)	4,988	3,114
Actual Returns or Writeoffs	2,906	204	544
Balance at End of Period	$ 6,821	$ 10,547	$ 5,763

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Warranty Liabilities

12 Months Ended

Jan. 03, 2015

Warranty Liabilities

Warranty Liabilities

4. Warranty Liabilities

        The Company's warranty liabilities are primarily related to watch products and are included in accrued expenses—other in the consolidated balance sheets. The Company's FOSSIL® watch products sold in the U.S. are covered by a limited warranty against defects in materials or workmanship for a period of 11 years from the date of purchase. RELIC® watch products sold in the U.S. are covered by a comparable 12 year warranty, while certain other watches sold by the Company are covered by a comparable two year limited warranty. SKAGEN branded watches are covered by a lifetime warranty against defects due to faulty material or workmanship subject to normal conditions of use. The Company's warranty liability is recorded using historical warranty repair expense. As changes in warranty costs are experienced, the warranty accrual is adjusted as necessary. Warranty liability activity consisted of the following (in thousands):

Fiscal Year	2014			2013			2012
Beginning balance	$	15,658		$	13,383		$	10,996
Settlements in cash or kind		(12,313	)		(10,672	)		(6,945	)
Warranties issued and adjustments to preexisting warranties(1)		10,155			12,607			8,737
Liabilities assumed in acquisition		0			340			595
Ending balance	$	13,500		$	15,658		$	13,383

(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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Intangible and Other Assets (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jan. 03, 2015	Dec. 28, 2013
Intangible and other assets
Total intangibles - subject to amortization	$ 50,358	$ 51,991
Total intangibles-not subject to amortization, Carrying Amount	83,610	83,659
Total other assets, Gross Amount	92,218	96,372
Total intangible and other assets, Carrying Amount	226,186	232,022
Total intangibles-subject to amortization, Accumulated Amortization	23,501	18,885
Total other assets, Accumulated Amortization	28,321	24,805
Total intangible and other assets, Accumulated Amortization	51,822	43,690
Total intangible and other assets-net	174,364	188,332
Minimum
Intangible and other assets
Useful Lives	3 years
Maximum
Intangible and other assets
Useful Lives	20 years
Key money deposits
Intangible and other assets
Total other assets, Gross Amount	31,892	35,535
Total other assets, Accumulated Amortization	18,661	17,038
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	21,854	22,574
Deferred compensation plan assets
Intangible and other assets
Total other assets, Gross Amount	2,477	2,360
Deferred tax asset-net
Intangible and other assets
Total other assets, Gross Amount	8,583	10,044
Restricted cash
Intangible and other assets
Total other assets, Gross Amount	575	752
Shop-in-shop
Intangible and other assets
Total other assets, Gross Amount	16,333	16,334
Total other assets, Accumulated Amortization	9,660	7,767
Interest rate swap
Intangible and other assets
Total other assets, Gross Amount	1,724	4,307
Forward contracts
Intangible and other assets
Total other assets, Gross Amount	1,802	219
Other assets
Intangible and other assets
Total other assets, Gross Amount	6,978	4,247
Trademarks
Intangible and other assets
Total intangibles - subject to amortization	4,174	4,175
Total intangibles-subject to amortization, Accumulated Amortization	2,950	2,695
Useful Lives	10 years
Customer lists
Intangible and other assets
Total intangibles - subject to amortization	41,703	43,367
Total intangibles-subject to amortization, Accumulated Amortization	17,457	14,065
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	1,902	1,360
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	1,855	1,913
Total intangibles-subject to amortization, Accumulated Amortization	851	558
Useful Lives	6 years
Other
Intangible and other assets
Total intangibles - subject to amortization	353	263
Total intangibles-subject to amortization, Accumulated Amortization	$ 341	$ 207
Useful Lives	20 years
Other | Minimum
Intangible and other assets
Useful Lives	7 years

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Employee Benefit Plans (Details 6) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Jan. 03, 2015	Dec. 28, 2013	Dec. 29, 2012
Defined contribution employee benefit plan for employees located in Switzerland
Employee Benefit Plans
Pension expense	$ (0.2)	$ 6.2	$ 2.8
Employee benefit plan obligations included in other long-term liabilities	12.4	8.6
Defined benefit plan for employees located in France
Employee Benefit Plans
Pension expense	0.3	0.3
Employee benefit plan obligations included in other long-term liabilities	$ 1.6	$ 1.5

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Taxes (Details) (USD $) In Thousands, unless otherwise specified	Jan. 03, 2015	Dec. 28, 2013
Current deferred income tax assets (liabilities):
Bad debt allowance	$ 4,387	$ 4,467
Returns allowance	8,724	8,641
Inventory	11,882	12,169
Warranty reserve	2,590	3,040
Compensation	6,459	9,189
Accrued liabilities	6,658	0
Deferred rent	1,128	1,810
Loss carryforwards	1,910	3,392
Other	(5,007)	12,070
Total current deferred tax assets	38,731	54,778
Valuation allowance	(5,168)	(7,946)
Net current deferred income tax assets	33,563	46,832
Total short-term deferred income tax assets	34,084	46,986
Total short-term deferred income tax liabilities	(521)	(154)
Net short-term deferred income tax assets	33,563	46,832
Long-term deferred income tax (liabilities) assets:
Unrealized exchange losses	8,325	(1,939)
State income tax and interest on tax contingencies	2,880	160
Fixed assets	(51,719)	(50,194)
Trade names and customer lists	(6,782)	(6,803)
Compensation	3,481	4,803
Deferred rent	9,425	7,456
Loss carryforwards	1,409	2,429
Undistributed earnings of certain foreign subsidiaries	(52,122)	(52,546)
Tax deductible foreign reserves	3,248	0
Other	4,231	11,111
Net long-term deferred income tax liabilities	(77,624)	(85,523)
Valuation allowance	(1,653)	(2,601)
Net long-term deferred income tax liabilities	(79,277)	(88,124)
Total long-term deferred income tax assets	(8,583)	(10,044)
Total long-term deferred income tax liabilities	(87,860)	(98,168)
Total long-term deferred income tax liabilities	$ (79,277)	$ (88,124)

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Significant Accounting Policies (Tables)

12 Months Ended

Jan. 03, 2015

Significant Accounting 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):

Fiscal Year	2014		2013		2012
Numerator:
Net income attributable to Fossil Group, Inc	$	376,707	$	378,152	$	343,401
Denominator:
Basic EPS computation:
Basic weighted average common shares outstanding		52,882		57,401		60,959
Basic EPS	$	7.12	$	6.59	$	5.63
Diluted EPS computation:
Basic weighted average common shares outstanding		52,882		57,401		60,959
Stock options, stock appreciation rights and restricted stock units		198		275		441
Diluted weighted average common shares outstanding		53,080		57,676		61,400
Diluted EPS	$	7.10	$	6.56	$	5.59

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Commitments and Contingencies (Details) (USD $)	12 Months Ended
	Jan. 03, 2015	Dec. 28, 2013	Dec. 29, 2012
Royalty expense	$ 258,600,000	$ 214,100,000	$ 181,800,000
Minimum percentage of royalties	4.00%
Maximum percentage of royalties	16.00%
Future minimum royalty commitments under license agreements
2015	226,363,000
2016	95,866,000
2017	101,649,000
2018	76,973,000
2019	8,401,000
Total	509,252,000
Rent expense	190,600,000	143,800,000	131,500,000
Contingent rent expense	14,100,000	12,100,000	11,100,000
Future minimum rental commitments under non-cancelable operating leases
2015	158,692,000
2016	140,757,000
2017	115,521,000
2018	100,526,000
2019	88,308,000
Thereafter	316,109,000
Total	919,913,000
Future minimum rental commitments under non-cancelable capital leases
2015	1,039,000
2016	1,021,000
2017	1,003,000
2018	991,000
2019	976,000
Thereafter	2,188,000
Total	7,218,000
Less amounts representing interest	(373,000)
Capital lease obligations	6,845,000
Purchase obligations	310,400,000
Beginning asset retirement obligation	8,306,000	6,560,000
Liabilities incurred during the period	1,587,000	1,839,000
Revisions in estimated retirement obligations	2,000	(9,000)
Liabilities settled during the period	(860,000)	(278,000)
Accretion expense	364,000	288,000
Currency translation	(474,000)	(94,000)
Ending asset retirement obligations	$ 8,925,000	$ 8,306,000	$ 6,560,000
Minimum
Future minimum rental commitments under non-cancelable capital leases
Capital Leases Future Minimum Payments Percent Of Interest Included In Payments	1.4
Maximum
Future minimum rental commitments under non-cancelable capital leases
Capital Leases Future Minimum Payments Percent Of Interest Included In Payments	10.8

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Taxes (Tables)

12 Months Ended

Jan. 03, 2015

Taxes

Schedule of significant components of the consolidated deferred tax assets and liabilities

Significant components of the consolidated deferred tax assets and liabilities were (in thousands):

Fiscal Year	2014			2013
Current deferred income tax assets (liabilities):
Bad debt allowance	$	4,387		$	4,467
Returns allowance		8,724			8,641
Inventory		11,882			12,169
Warranty reserve		2,590			3,040
Compensation		6,459			9,189
Accrued liabilities		6,658			0
Deferred rent		1,128			1,810
Loss carryforwards		1,910			3,392
Other		(5,007	)		12,070
Total current deferred tax assets		38,731			54,778
Valuation allowance		(5,168	)		(7,946	)
Net current deferred income tax assets	$	33,563		$	46,832
Total short-term deferred income tax assets	$	34,084		$	46,986
Total short-term deferred income tax liabilities		(521	)		(154	)
Net short-term deferred income tax assets	$	33,563		$	46,832
Long-term deferred income tax (liabilities) assets:
Unrealized exchange losses	$	8,325		$	(1,939	)
State income tax and interest on tax contingencies		2,880			160
Fixed assets		(51,719	)		(50,194	)
Trade names and customer lists		(6,782	)		(6,803	)
Compensation		3,481			4,803
Deferred rent		9,425			7,456
Loss carryforwards		1,409			2,429
Undistributed earnings of certain foreign subsidiaries		(52,122	)		(52,546	)
Tax deductible foreign reserves		3,248			0
Other		4,231			11,111
Total deferred income tax liabilities		(77,624	)		(85,523	)
Valuation allowance		(1,653	)		(2,601	)
Net long-term deferred income tax liabilities	$	(79,277	)	$	(88,124	)
Total long-term deferred income tax assets	$	8,583		$	10,044
Total long-term deferred income tax liabilities		(87,860	)		(98,168	)
Net long-term deferred income tax liabilities	$	(79,277	)	$	(88,124	)

Schedule of the amounts and the fiscal year of expiration of the entity's loss carry-forwards

The amounts and the fiscal year of expiration of the loss carryforwards are (in thousands):

Expires 2015 through 2019	$	6,100
Expires 2020 through 2024		2,855
Expires 2025 through 2028		2,696
Indefinite		3,263
Total loss carryforwards	$	14,914

Schedule of income before income taxes for the Company's U.S. and non-U.S. based operations

The following table identifies income before income taxes for the Company's U.S. and non-U.S. based operations for the fiscal years indicated (in thousands):

Fiscal Year	2014		2013		2012
U.S	$	169,079	$	194,956	$	193,985
Non-U.S		388,999		366,511		298,237
Total	$	558,078	$	561,467	$	492,222

Components of provision for income taxes

Fiscal Year	2014			2013			2012
Current provision:
U.S. federal	$	84,669		$	97,860		$	64,552
Non-U.S		74,190			69,901			60,239
State and local		10,582			8,297			6,314
Total current		169,441			176,058			131,105
Deferred provision (benefit)
U.S. federal		5,124			(2,346	)		9,485
Non-U.S		(3,622	)		(166	)		(2,426	)
State and local		524			(127	)		(201	)
Total deferred		2,026			(2,639	)		6,858
Provision for income taxes	$	171,467		$	173,419		$	137,963

Schedule of reconciliation of the U.S. federal statutory income tax rate to the effective tax rate

A reconciliation of the U.S. federal statutory income tax rate of 35% to the Company's effective tax rate is as follows:

Fiscal Year	2014			2013			2012
Tax at statutory rate		35.0	%		35.0	%		35.0	%
State, net of federal tax benefit		0.9			0.9			1.0
Foreign rate differential		(12.3	)		(12.5	)		(10.0	)
U.S. tax on foreign income		6.3			5.9			3.1
Income tax contingencies		0.7			0.0			(1.7	)
Valuation allowances		(0.3	)		0.9			0.0
Other		0.4			0.7			0.6
Provision for income taxes		30.7	%		30.9	%		28.0	%

Schedule of reconciliation of the total amounts of unrecognized tax benefits

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits for the fiscal years indicated (in thousands):

Fiscal Year	2014			2013			2012
Balance at beginning of year	$	14,314		$	15,549		$	17,974
Gross increases tax positions in prior years		4,234			3,310			1,245
Gross decreases tax positions in prior years		(1,018	)		(4,384	)		(2,580	)
Gross increases—current year tax positions		3,508			3,575			2,486
Settlements		(194	)		(3,456	)		(3,582	)
Lapse in statute of limitations		(617	)		(297	)		0
Change due to currency revaluation		(141	)		17			6
Balance at end of year	$	20,086		$	14,314		$	15,549

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Stockholders' Equity

12 Months Ended

Jan. 03, 2015

Stockholders' Equity

Stockholders' Equity

14. Stockholders' Equity

        Common and Preferred Stock.    The Company has 100,000,000 shares of common stock, par value $0.01 per share, authorized, with 50,771,079, and 54,707,810 shares issued at fiscal year-end 2014 and 2013, respectively. The Company has 1,000,000 shares of preferred stock, par value $0.01 per share, authorized, with none issued or outstanding at fiscal year-end 2014 and 2013. Rights, preferences and other terms of preferred stock will be determined by the Board of Directors at the time of issuance.

        Common Stock Repurchase Programs.    Purchases of the Company's common stock 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 period from the announcement of the Company's $750 million and $1 billion buyback authorizations in August 2010 and December 2012, respectively, until the end of the fiscal year 2014, the Company has repurchased approximately $1.7 billion of its common stock, representing approximately 18.6 million shares. The Company has not repurchased any shares under the $30 million and $1 billion repurchase plans authorized in 2010 and 2014, respectively.

        During fiscal year 2014, the Company effectively retired 4.1 million shares of common stock repurchased under its repurchase programs. The effective retirement of repurchased common stock decreased common stock by $41,000, additional paid-in capital by $3.2 million, retained earnings by $431.7 million and treasury stock by $435.0 million. At December 28, 2013 and January 3, 2015, all treasury stock had been effectively retired. As of January 3, 2015, the Company had $1.1 billion of repurchase authorizations remaining under the combined repurchase plans.

        The following table shows the Company's common stock repurchase activity for the periods indicated (in millions):

				For the 2014 Fiscal Year				For the 2013 Fiscal Year
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		0.0	$	0.0		0.0	$	0.0
2012	$	1,000.0	December 2016		4.1	$	435.0		4.9	$	536.3
2010	$	30.0	None		0.0	$	0.0		0.0	$	0.0
2010	$	750.0	December 2013(1)		0.0	$	0.0		0.4	$	38.6

(1) In the first quarter of fiscal year 2013, the Company completed this repurchase plan.

        Noncontrolling Interest.    In October 2012, the Company acquired the outstanding minority interest shares in Fossil Mexico, S.A. de C.V. ("Fossil Mexico") and Servicios Fossil Mexico, S.A. de C.V. ("Fossil Servicios"), representing the entire noncontrolling interest in these subsidiaries, for approximately $14.1 million in cash. The transaction was accounted for as an equity transaction, and the Company's ownership interest in both Fossil Mexico and Fossil Servicios increased to 100%. The following table summarizes the effects of changes in the Company's ownership interest in its subsidiaries on stockholders' equity (in thousands):

Fiscal Year	2014		2013		2012
Net income attributable to Fossil Group, Inc.	$	376,707	$	378,152	$	343,401
Transfers to noncontrolling interest:
Decrease in Fossil Group, Inc.'s additional paid-in capital for purchases of 49 common shares of Fossil Mexico and 49 common shares of Fossil Servicios		0		0		(7,332	)
Change from net income attributable to Fossil Group, Inc. and transfers to noncontrolling interest	$	376,707	$	378,152	$	336,069