UNITED STATES
SECURITIES AND EXCHANGE COMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
Commission file number: 0-19848
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
Fossil, Inc. Savings and Retirement Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Fossil, Inc.
2280 N. Greenville
Richardson, Texas 75082
REQUIRED INFORMATION
The following financial statements shall be furnished for the plan:
1. An audited statement of financial condition as of the end of the
latest two fiscal years of the plan (or such lesser period as the plan has been
in existence).
2. An audited statement of income and changes in plan equity for each
of the latest three fiscal years of the plan (or such lesser period as the plan
has been in existence).
3. The statements required by Items 1 and 2 shall be prepared in
accordance with the applicable provisions of Article 6A of Regulation S-X
(17 CFR 210.6A-01-6A-05).
4. In lieu of the requirements of Item 1-3 above, plans subject to
ERISA may file plan financial statements and schedules prepared in accordance
with the financial reporting requirements of ERISA. To the extent required by
ERISA, the plan financial statements shall be examined by an independent
accountant, except the the "limited scope exemption" contained in Section
103(a)(3)(C) of ERISA shall not be available.
Note: A written consent of the accountant is required with respect to
the plan annual financial statements which have been incorporated by reference
in a registration statement on Form S-8 under the Securities Act of 1933. The
consent should be filed as an exhibit to this annual report. Such consent shall
be currently dated and manually signed.
<PAGE>
FOSSIL, INC. SAVINGS AND RETIREMENT PLAN
Financial Statements as of and for the Years Ended
December 31, 1997 and 1996, Supplemental Schedules as of
December 31, 1997, and for the Year Then Ended, and
Independent Auditors' Report
<PAGE>
FOSSIL, INC. SAVINGS AND RETIREMENT PLAN
Pages
Independent Auditor's Report 2
Financial Statements:
Statements of Net Assets Available for
Benefits as of December 31, 1997 and 1996 3
Statement of Changes in Net Assets Available for
Benefits as of December 31, 1997 4
Statement of Changes in Net Assets Available for
Benefits as of December 31, 1996 5
Notes to Financial Statements 6-9
Supplemental Schedules:
Item 27a - Schedule of Assets Held for Investment
Purposes as of December 31, 1997 10
Item 27d - Schedule of Reportable Transactions for the
Year Ended December 31, 1997 11
Independent Auditors' Consent 12
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Advisory Committee Fossil, Inc.
We have audited the accompanying statements of net assets available for benefits
of the Fossil, Inc. Savings and Retirement Plan (the "Plan") as of December
31,1997 and 1996, and the related statements of changes in net assets available
for benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted accounting
standards. 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 opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan at December 31, 1997
and 1996, and the changes in net assets available for benefits for the years
then ended, in conformity with generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental information by
fund is presented for the purpose of additional analysis of the basic financial
statements rather than to present information regarding the net assets available
for benefits and changes in net assets available for benefits of the individual
funds, and the accompanying supplemental schedules of (1) assets held for
investment purposes at December 31, 1997, (2) reportable transactions for the
year ended December 31, 1997 and are presented for the purpose of additional
analysis and are not a required part of the basic financial statements. The
supplemental schedules are required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The supplemental information and schedules are the
responsibility of the Plan's management. Such supplemental information and
schedules have been subjected to the auditing procedures applied in our audit of
the basic financial statements and, in our opinion, are fairly stated in all
material respects when considered in relation to the basic financial statements
taken as a whole.
/s/ Deloitte & Touche LLP
- -------------------------
June 24, 1998
-2-
<PAGE>
FOSSIL, INC. SAVINGS AND RETIREMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
December 31, December 31,
1997 1996
--------------- ----------------
ASSETS
Investments, at Fair Value:
Fidelity Mutual Funds:
<S> <C> <C>
Retirement Government Money Market Fund $ 172,539 $ 153,397
Intermediate Bond Fund 149,229 84,445
Growth and Income Fund 1,087,036 640,941
Blue Chip Growth Fund 1,124,335 726,910
Fossil, Inc. Common Stock 351,225 168,804
--------------- ----------------
Total Investments 2,884,364 1,774,497
--------------- ----------------
Cash 43,802 14,125
Contributions Receivable 6,327 30,797
--------------- ----------------
NET ASSETS AVAILABLE FOR BENEFITS $2,934,493 $1,819,419
=============== ================
</TABLE>
See notes to financial statements.
-3-
<PAGE>
FOSSIL, INC. SAVINGS AND RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
SUPPLEMENTAL INFORMATION BY FUND
------------------------------------------------------------------
Retirement
Government Intermediate Growth and Blue Chip Fossil, Inc.
Money Market Bond Income Growth Common
Fund Fund Fund Fund Stock Total
--------------- ------------ ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Assets Available for Benefits
December 31, 1996 $157,072 $87,003 $653,736 $738,342 $183,266 $1,819,419
--------------- ------------ ------------ ----------- ---------- -----------
Investment Income:
Net Appreciation in Fair Value of
Investments - 1,292 173,280 158,315 158,348 491,235
Interest and Dividends 8,967 7,014 45,025 53,336 90 114,432
--------------- ------------ ----------- ----------- ---------- -----------
Total Investment Income 8,967 8,306 218,305 211,651 158,438 605,667
--------------- ------------ ----------- ----------- ---------- -----------
Additions:
Rollover Transfers 1,478 12,437 19,482 14,738 8,848 56,983
Contributions:
Employer 13,771 13,291 56,294 63,624 17,017 163,997
Employee 36,172 36,641 158,828 186,357 46,221 464,219
--------------- ------------ ------------ ------------ ----------- ------------
Total Contributions 49,943 49,932 215,122 249,981 63,238 628,216
--------------- ------------ ------------ ------------ ----------- ------------
Total Additions 51,421 62,369 234,604 264,719 72,086 685,199
--------------- ------------ ------------ ------------ ----------- ------------
Deductions:
Benefits Paid 5,802 6,108 49,244 84,274 30,365 175,793
Transfers Within Funds/Forfeitures
Released 44,113 3,308 (39,611) (25,508) 17,697 (1)
--------------- ------------ ------------ ------------ ----------- ------------
Total Deductions 49,915 9,416 9,633 58,766 48,062 175,792
--------------- ------------ ------------ ------------ ----------- ------------
Net Assets Available for Benefits,
December 31, 1997 $167,545 $148,262 $1,097,012 $1,155,946 $365,728 $2,934,493
=============== ============ ============ ============ =========== ============
</TABLE>
See notes to financial statements.
-4-
<PAGE>
FOSSIL, INC. SAVINGS AND RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
SUPPLEMENTAL INFORMATION BY FUND
--------------------------------------------------------------------
Retirement
Government Intermediate Growth and Blue Chip Fossil, Inc.
Money Market Bond Income Growth Common
Fund Fund Fund Fund Stock Total
--------------- ------------ ------------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Assets Available for Benefits,
December 31, 1995 $164,358 $68,671 $506,666 $686,429 $114,730 $1,540,854
--------------- ------------ ------------ ----------- ----------- ------------
Investment Income:
Net Appreciation / (Depreciation) in
Fair Value of Investments - (2,021) 76,360 45,674 65,882 185,895
Interest and Dividends 7,740 4,954 31,767 52,741 - 97,202
--------------- ------------ ------------- ----------- ----------- ------------
Total Investment Income 7,740 2,933 108,127 98,415 65,882 283,097
--------------- ------------ ------------- ----------- ----------- ------------
Additions:
Rollover Transfers 5,725 4,409 13,409 13,995 2,548 40,086
Contributions:
Employer 15,410 8,724 42,145 47,182 15,574 129,035
Employee 39,208 25,512 114,129 136,885 42,906 358,640
--------------- ------------ ------------- ----------- ----------- ------------
Total Contributions 54,618 34,236 156,274 184,067 58,480 487,675
--------------- ------------ ------------- ----------- ----------- ------------
Total Additions 60,343 38,645 169,683 198,062 61,028 527,761
--------------- ------------ ------------- ----------- ----------- ------------
Deductions:
Benefits Paid 113,796 15,803 149,153 206,835 48,372 533,959
Transfers Within Funds/Forfeitures
Released (38,427) 7,443 (18,413) 37,729 10,002 (1,666)
-------------- ------------ ------------- ----------- ----------- ------------
Total Deductions 75,369 23,246 130,740 244,564 58,374 532,293
-------------- ------------ ------------- ----------- ----------- ------------
Net Assets Available for Benefits,
December 31, 1996 $157,072 $87,003 $653,736 $738,342 $183,266 $1,819,419
=============== ============ ============= =========== =========== ============
</TABLE>
See notes to financial statements.
-5-
<PAGE>
FOSSIL, INC. SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting: The accounting records of the Fossil, Inc. Savings and
Retirement Plan (the "Plan"), sponsored by Fossil, Inc. ("Fossil" or the
"Employer"), are maintained on the accrual basis of accounting.
Use of Estimates: The preparation of financial statements, in conformity with
generally accepted accounting principles, requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Investments: Investments are presented in the financial statements at fair value
determined by quoted market prices at the close of business on December 31. The
change in the difference between fair value and the cost of the investments,
including realized gains and losses, is reflected in the statement of changes in
net assets available for benefits as net appreciation (depreciation) in fair
value of investments during the year. Purchases and sales of securities are
recorded on a trade date basis. Interest and dividend income is recorded on an
accrual basis.
Expenses: Expenses incurred by the Plan are paid by Fossil.
Payment of Benefits: Benefits are recorded when paid. Included in net assets
available for plan benefits as of December 31, 1997 and 1996, are $287,622 and
$255,103, respectively, for amounts due to participants that had not been
processed as of year end.
Reclassifications: Certain prior year amounts have been reclassified for
consistency purposes.
NOTE 2 - DESCRIPTION OF PLAN
The following brief description of the Plan provides only general information.
Participants should refer to the Plan document for a more complete description
of the Plan's provisions.
Plan Organization, Amendments, and General Provisions: The Plan is a defined
contribution plan covering eligible employees of Fossil. The purpose of the Plan
is to encourage employees to accumulate savings for their retirement. The Plan
is administered by Fossil Partners, L. P., an affiliate of Fossil, Inc.
The Plan is subject to the provisions of the Employee Retirement Income Security
Act of 1974 ("ERISA").
Contributions and Vesting: The Plan is qualified under Section 401(k) of the
Internal Revenue Code (the "Code"). Employees are eligible to make
contributions, after having been employed by Fossil for at least 12 months, from
amounts subject to federal income tax and such amounts are characterized as
salary deferral contributions by Fossil . The maximum salary deferral
contribution per year is the lesser of 15% of gross pay or, according to the
Code, $9,500 for 1997 and 1996. The Plan document provides for limitations on
salary deferral contributions in the event of a hardship withdrawal. Fossil
generally makes a matching contribution at the rate of 50% of the first 3% of
the participant's salary deferral contribution and 25% on the next 3% thereof.
Fossil may also make additional profit sharing contributions at the discretion
of the Plan's Advisory Committee. No such additional discretionary
-6-
<PAGE>
contributions were made for 1997 or 1996. Vesting in salary deferral
contributions is 100%. Vesting in matching contributions is 20% per year of
service. An employee is credited with a year of service when 1,000 actual hours
of service have been attained during a plan year (the 12 consecutive month
period ending December 31).
Currently, participants can elect to have their contributions invested in any of
several investment options which are described in Note 3. The participants can
change elections and can also reallocate those funds already invested between
available investment options effective at the beginning of each calendar
quarter. The Plan also allows rollover transfers from other qualified plans. The
Plan limits the participant's purchase of Fossil Common Stock to a maximum of
25% of salary deferral contributions. In the case of a transfer reallocation
within the Plan or a rollover transfer into the Plan, there is a maximum of 25%
of the participant's total balance that may be allocated to Fossil Common Stock.
In addition, hardship withdrawals are permitted for certain expenses including
medical expense, tuition expenses, funeral expenses, purchase of a primary
residence, needs to prevent eviction from principal residence, and needs arising
from a participant's disability.
Forfeitures of non-vested employer contribution account balances are generally
reallocated each year to the remaining participants based upon the participant's
matching contribution for that quarter. The Plan additionally allows for
forfeitures to be used to lower future employer contributions. For 1997 and
1996, all forfeitures were reallocated to the participants.
Distribution of Benefits: Distributions of vested benefits may be made to a
participant upon retirement, disability, death, or termination of employment.
Prior to the age of 65, a participant, while employed, may make a withdrawal
from his salary contributions account in the event that the participant has an
immediate and substantial financial need, as defined in Section 401(k) of the
Code, subject to certain conditions contained in the Plan document.
Distributions of vested benefits under the Plan are paid to the participant or a
beneficiary in the form of a lump sum or partial distribution.
Any withdrawals from the Plan will generally be subject to federal income tax.
Taxes may be postponed by "rolling over" the proceeds to an individual
retirement plan or to another qualified plan. An additional 10% excise tax may
be imposed on the taxable portion of distributions and withdrawals before
attaining age 65. The additional tax is not imposed for distributions made
pursuant to death, disability, termination of employment after age 59 1/2, a
qualified domestic relations order, and other reasons enumerated in the Code.
Amendment or Termination: Fossil has reserved the right to amend, modify, or
terminate the Plan at any time, subject to the Plan document and applicable laws
and regulations. Fossil has no intentions of terminating the Plan, and Fossil is
not aware of any occurrences that could reasonably result in the termination of
the Plan.
NOTE 3 - PLAN INVESTMENTS
The Plan's investments are held by Fidelity Institutional Retirement Services
Company (several of Fidelity's mutual funds) and Southwest Securities (Fossil
Common Stock). The initial purchase of Fossil Common Stock by the Plan was
through a stock issuance by Fossil and is in the Plan's name and on record at
Fossil's transfer agent.
Fidelity Retirement Government Money Market Fund: This is a money market
fund which seeks as high a level of current income as is consistent with the
preservation of capital and liquidity by investing in obligations of the U.S.
government and its agencies.
Fidelity Intermediate Bond Fund: This is a fund which seeks a high level of
income by investing in high quality, fixed income obligations with a dollar
weighted average portfolio maturing in three to five years.
-7-
<PAGE>
Fidelity Growth and Income Fund: This is a fund which seeks long-term capital
growth, current income, and growth of income consistent with reasonable
investment risk by investing in securities of companies that offer growth of
earnings potential while paying current dividends. The fund invests in any
combination of common stock, convertible securities, preferred stock, and
corporate bonds. Securities may be of foreign or domestic issuers.
Fidelity Blue Chip Growth Fund: This is a fund which seeks growth of capital
over the long term by investing primarily in a diversified portfolio of common
stocks of well known and established companies with at least 65% of these
securities issued by "blue chip" companies.
Fossil Common Stock: This is a fund which invests in the common stock of Fossil.
<TABLE>
<CAPTION>
December 31, 1997
Number
of Plan Number of
Participants Units Held in
Unit With Participant Market
Fund Valuation Balances Accounts Value
- ---------------------------------------------------------------------------------------------------------------------------
Fidelity Mutual Funds:
<S> <C> <C> <C> <C>
Retirement Government Money Market $1.00 100 172,539 $172,539
Intermediate Bond 10.17 106 14,673 149,229
Growth and Income 38.10 202 28,531 1,087,036
Blue Chip Growth 39.46 202 28,493 1,124,335
- ---------------------------------------------------------------------------------------------------------------------------
Fossil, Inc. Common Stock 25.00 133 14,049 351,225
- ---------------------------------------------------------------------------------------------------------------------------
December 31, 1996
Number
of Plan Number of
Participants Units Held in
Unit With Participant Market
Fund Valuation Balances Accounts Value
- ---------------------------------------------------------------------------------------------------------------------------
Fidelity Mutual Funds:
Retirement Government Money Market $1.00 97 153,397 $153,397
Intermediate Bond 10.08 89 8,377 84,445
Growth and Income 30.73 175 20,857 640,941
Blue Chip Growth 32.69 180 22,236 726,910
- ---------------------------------------------------------------------------------------------------------------------------
Fossil, Inc. Common Stock 13.50 118 12,504 168,804
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
-8-
<PAGE>
NOTE 4 - INCOME TAX STATUS
The Internal Revenue Service has issued a determination letter that the Plan
qualifies under section 401(a) of the Code of 1986, as amended, and is exempt
from federal income tax under section 501(a) thereof.
The Plan has been amended since receiving the last determination letter.
However, the Plan's administrator and the Plan's tax counsel believe that the
Plan is designed and is currently being operated in compliance with the
applicable requirements of the Code.
Elective contributions made by participants, matching employer contributions,
profit sharing employer contributions, interest, dividends, and net profit from
the sale of securities need not be reported by participants for federal income
tax purposes until their account is wholly or partially withdrawn or
distributed.
NOTE 5 - NET APPRECIATION IN FAIR VALUE OF INVESTMENTS
The following table details the net change in fair value by type of investment:
<TABLE>
<CAPTION>
December 31, December 31,
1997 1996
------------------ -----------------
<S> <C> <C>
Fidelity Mutual Funds $332,887 $120,013
Fossil, Inc. Common Stock 158,348 65,882
------------------ ------------------
Net Appreciation in Fair Value of Investments $491,235 $185,895
================== =================
</TABLE>
NOTE 6 - RECONCILIATION TO FORM 5500
The following is a reconciliation of net assets available for benefits per the
financial statements to the Form 5500:
<TABLE>
<CAPTION>
December 31, December 31,
1997 1996
------------------ ----------------
<S> <C> <C>
Net Assets Available for Benefits per the Financial Statements $2,934,493 $1,819,419
Amounts Allocated to Withdrawing Participants (428) (8,936)
------------------ ----------------
Net Assets Available for Benefits per the Form 5500 $2,934,065 $1,810,483
================== ================
</TABLE>
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500:
<TABLE>
<CAPTION>
Year Ended
December 31,
1997
----------------
<S> <C>
Benefits Paid to Participants per the Financial Statements $175,793
Amounts Allocated to Withdrawing Participants at December 31, 1997 428
Amounts Allocated to Withdrawing Participants at December 31, 1996 (8,936)
----------------
Benefits Paid to Participants per the Form 5500 $167,285
================
</TABLE>
Amounts allocated to withdrawing participants are recorded on the Form 5500 for
benefit claims that have been processed and approved for payment prior to
December 31 but not yet paid as of that date.
-9-
<PAGE>
FOSSIL, INC. SAVINGS AND RETIREMENT PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
(e) Current
(a) (b) Identity of Issue (c) Description of Investment (d) Cost Value
--- --------------------- ---------------------------------------- ------------------- -------------------
<S> <C> <C>
Fidelity Mutual Retirement Government Money Market Fund $ 172,539 $ 172,539
Fidelity Mutual Intermediate Bond Fund 148,423 149,229
Fidelity Mutual Growth and Income Fund 768,019 1,087,036
Fidelity Mutual Blue Chip Growth Fund 849,150 1,124,335
Fossil, Inc. Common Stock, $0.01 Par 228,578 351,225
------------------- -------------------
Total Investments $2,166,709 $2,884,364
=================== ===================
</TABLE>
-10-
<PAGE>
FOSSIL, INC. SAVINGS AND RETIREMENT PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
(h) Current
(f) Expense Value of
Incurred Assets On (i) Net
(a) Identity of (b) Description (c) Purchase (d) Selling (e) Lease with (g) Cost Transaction Gain
Party of Investment Price Price Rental Transaction of Asset Date or (Loss)
- --------------- --------------- ---------------------------------------------------------------------------------------------
Series
<S> <C> <C> <C> <C>
Fidelity Mutual Growth and Income
Fund $276,620 - - - $276,620 $276,620 $0
Fidelity Mutual Blue Chip Growth 269,822 - - - 269,822 269,822 0
Fund
</TABLE>
-11-
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement
No. 33-65980 of Fossil, Inc. on Form S-8 of our report dated June 24, 1998,
included in this Annual Report on Form 11-K of the Fossil, Inc.Savings and
Retirement Plan for the year ended December 31, 1997.
/s/ Deloitte & Touche, LLP
- ------------------------------
Dallas, Texas
June 30, 1998
-12-
<PAGE>
SIGNATURES
The Plan. Pursuant to the requirements of Securities Exchange Act of
1934, the Advisory Committee which administers the Plan has duly caused this
annual report to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Richardson, State of Texas, on June 30, 1998.
FOSSIL, INC. SAVINGS AND RETIREMENT PLAN
/s/ Randy S. Kercho
---------------------------------------------
Randy S. Kercho
Member of the Advisory Committee
Pursuant to the requirements of the Securities Exchange Act of 1934,
this annual report has been signed below by the following persons in their
capacities as members of the Advisory Committee of the Fossil, Inc.
Savings and Retirement Plan and on the dates indicated.
Signature Date
/s/ Randy S. Kercho June 30, 1998
- ------------------------------------
Randy S. Kercho
/s/ Dave Morgan June 30, 1998
- ------------------------------------
Dave Morgan
/s/ Michael W. Barnes June 30, 1998
- ------------------------------------
Michael W. Barnes
-13-
<PAGE>
Exhibit Index
Exhibit
Number Document Description
- ------- --------------------
23(b) Consent of Deloitte & Touche (as contained on page 12 hereof)
-14-
