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, 1999
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 "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, 1999 and 1998, Supplemental Schedule
as of December 31, 1999, and
Independent Auditors' Report
<PAGE>
<TABLE>
<CAPTION>
FOSSIL, INC. SAVINGS AND RETIREMENT PLAN
Page
----
<S> <C>
Independent Auditors' Report 2
Financial Statements:
Statements of Net Assets Available for
Benefits as of December 31, 1999 and 1998 3
Statements of Changes in Net Assets Available for
Benefits for the Years Ended December 31, 1999 and 1998 4
Notes to Financial Statements 5 - 8
Supplemental Schedule:
Schedule of Assets Held for Investment
Purposes at End of Year December 31, 1999 9
Independent Auditors' Consent 10
</TABLE>
<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,
1999 and 1998, 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 auditing standards generally accepted
in the United States of America. 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 as of December 31,
1999 and 1998, and changes in net assets available for benefits for the years
then ended in conformity with accounting principles generally accepted in the
United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedule of
assets held for investment purposes at December 31, 1999 is presented for the
purpose of additional analysis and is not a required part of the basic financial
statements. The supplemental schedule is 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 schedule is the responsibility of
the Plan's management. Such schedule has been subjected to the auditing
procedures applied in our audits and, in our opinion, is fairly stated in all
material respects when considered in relation to the basic financial statements
taken as a whole.
/s/ Deloitte & Touche LLP
-------------------------
Dallas, Texas
June 16, 2000
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<PAGE>
<TABLE>
<CAPTION>
FOSSIL, INC. SAVINGS AND RETIREMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, December 31,
1999 1998
---------------- ---------------
<S> <C> <C>
ASSETS
Investments, at Fair Value:
Fidelity Mutual Funds:
Retirement Government Money Market Fund $148,906 $129,794
Intermediate Bond Fund 229,556 197,499
Growth and Income Fund 2,158,888 1,758,935
Blue Chip Growth Fund 2,522,752 1,828,337
Fossil, Inc. Common Stock 867,766 661,509
---------------- ---------------
Total Investments 5,927,868 4,576,074
---------------- ---------------
Cash 98,047 68,045
Receivable Due from Fossil Partners, L.P. 676 15,723
---------------- ---------------
NET ASSETS AVAILABLE FOR BENEFITS $6,026,591 $4,659,842
================ ===============
</TABLE>
See notes to financial statements.
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<PAGE>
<TABLE>
<CAPTION>
FOSSIL, INC. SAVINGS AND RETIREMENT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
1999 1998
------------ ------------
<S> <C> <C>
Net Assets Available for Benefits,
Beginning of Year $4,659,842 $2,934,493
Additions:
Investment Income:
Net Appreciation in Fair Value of
Investments 806,086 984,701
Interest and Dividends 44,249 39,915
------------ ------------
Total Investment Income 850,335 1,024,616
------------ ------------
Rollovers and Contributions:
Rollover Transfers 73,278 43,317
Contributions:
Employer 209,049 191,115
Employee 666,289 612,937
------------ ------------
Total Contributions 875,338 804,052
------------ ------------
Total Additions 1,798,951 1,871,985
------------ ------------
Deductions:
Benefits Paid 432,202 146,247
Transfers Within Funds/Forfeitures Released - 389
------------ ------------
Total Deductions 432,202 146,636
------------ ------------
Net Increase in Net Assets Available for
Benefits 1,366,749 1,725,349
------------ ------------
Net Assets Available for Benefits,
End of Year $6,026,591 $4,659,842
============ ============
</TABLE>
See notes to financial statements.
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<PAGE>
FOSSIL, INC. SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
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
accounting principles generally accepted in the United States of America,
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 in fair value of
investments during the year. Purchases and sales of securities are recorded on a
trade date basis. Interest and dividend income are recorded on an accrual basis.
Expenses: Expenses incurred by the Plan are paid by Fossil.
Payment of Benefits: Benefits are recorded when paid.
Reclassifications: Certain prior year amounts have been reclassified for
consistency purposes.
By-Fund Information: The Plan has adopted Statement of Position 99-3, Accounting
and Reporting of Certain Defined Contribution Plan Investments and Other
Disclosure Matters, which changes the required disclosures for plans with
participant-directed investment programs. As a result, the by-fund disclosures
of participant-directed investment programs are not presented.
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 eligible United States Fossil
subsidiaries. The purpose of the Plan is to encourage employees to accumulate
savings for their retirement. The Plan is administered by Fossil Partners, L.
P., a Fossil, Inc. affiliate.
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, $10,000. The Plan document provides for limitations on salary deferral
contributions in the event of a hardship
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<PAGE>
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 contributions were made for 1999 or 1998. 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 1000 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
calculated each year for the remaining participants based upon the participant's
compensation for the Plan year, and then reallocated to the participant's
individual fund balances based upon the quarter-ending balance in their
respective account at the time of reallocation.
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 Investments (several of Fidelity's
mutual funds) after being transferred from Fidelity Institutional Retirement
Services Company (also, several of Fidelity's mutual funds) in November of 1998,
and by 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 Southwest Securities.
Fidelity Retirement Government Money Market Fund: This fund is a money market
fund that seeks as high a level of current income that is consistent with the
preservation of capital and liquidity by investing in obligations of the U.S.
government and its agencies.
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<PAGE>
Fidelity Intermediate Bond Fund: This fund is a fund that 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.
Fidelity Growth and Income Fund: This fund is a fund that 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 fund is a fund that 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 fund is a liquidity fund that invests in the common
stock of Fossil, Inc.
The following table details the net change in fair value by type of investment
(including investments bought, sold, and held during the year):
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, December 31,
1999 1998
----------------- ----------------
<S> <C> <C>
Fidelity Mutual Funds $637,722 $754,531
Fossil, Inc. Common Stock 168,364 230,170
----------------- ----------------
Net Appreciation in Fair Value of Investments $806,086 $984,701
================= ================
</TABLE>
NOTE 4 - INCOME TAX STATUS
The Internal Revenue Service has issued a determination letter dated July 23,
1994, 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 - 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,
1999 1998
----------------- -----------------
<S> <C> <C>
Net Assets Available for Benefits per the Financial Statements $6,026,591 $4,659,842
Less - Amounts Allocated to Withdrawing Participants 15,890 36,055
----------------- -----------------
Net Assets Available for Benefits per the Form 5500 $6,010,701 $4,623,787
================= =================
</TABLE>
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<PAGE>
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500:
<TABLE>
<CAPTION>
Year Ended
December 31,
1999
-----------------
<S> <C>
Benefits Paid to Participants per the Financial Statements $432,202
Add - Amounts Allocated to Withdrawing Participants at December 31, 1999 15,890
Less - Amounts Allocated to Withdrawing Participants at December 31, 1998 (36,055)
-----------------
Benefits Paid to Participants per the Form 5500 $412,037
=================
</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.
NOTE 6 - SUBSEQUENT EVENT
Effective January 1, 2000, Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch") became the Plan Administrator and all existing Fidelity funds
were liquidated and moved into like-kind Merrill Lynch funds and Fossil common
stock. The Plan's investments are currently held in Fossil common stock or the
following Merrill Lynch funds: AIM Small Cap Growth Fund Class A, Alliance
Premier Growth Class A, Black Rock Managed Income Portfolio Class A, Fidelity
Advisor Equity Growth Fund Class T, Fidelity Advisor Overseas Fund Class T,
Merrill Lynch Basic Value Fund Class D, Merrill Lynch Preservation Trust (D),
Merrill Lynch S & P 500 Index Fund Class A and Oppenheimer Quest Balance Value
Class A. In addition, participants may elect to utilize a Goal Manager Model
(the "Model") to assist them in allocating their investments among the various
Merrill Lynch funds. The Model selections are made from one or more of the above
funds that are designated as either conservative, moderate, or aggressive. Only
one of the Models may be selected but the percentage allocation may be less than
100%.
-8-
<PAGE>
<TABLE>
<CAPTION>
FOSSIL, INC. SAVINGS AND RETIREMENT PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR
DECEMBER 31, 1999
(e) Current
(a) (b) Identity of Issue (c) Description of Investment (d) Cost Value
--- --------------------- ----------------------------------------------- ------------------- -----------------
<S> <C> <C> <C> <C>
* Fidelity Mutual Retirement Government Money Market Fund $148,906 $148,906
* Fidelity Mutual Intermediate Bond Fund 239,223 229,556
* Fidelity Mutual Growth and Income Fund 2,042,858 2,158,888
* Fidelity Mutual Blue Chip Growth Fund 2,018,731 2,522,752
* Fossil, Inc. Common Stock, $0.01 Par 275,810 867,766
------------------- -----------------
Total Investments $4,725,528 $5,927,868
=================== =================
<FN>
* Party-in-Interest.
</FN>
</TABLE>
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<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
33-65980 on Form S-8, Registration Statement No. 33-77526 on Form S-8 and the
Post-Effective Amendment No. 1 thereto and Registration Statement No. 333-70477
on Form S-8 of our report dated June 16, 2000, included in this Annual Report on
Form 11-K of the Fossil, Inc. Savings and Retirement Plan for the year ended
December 31, 1999.
/s/ Deloitte & Touche, LLP
------------------------------
Dallas, Texas
June 28, 2000
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<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 28, 2000.
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 28, 2000
------------------------------------
Randy S. Kercho
/s/ Dave Morgan June 28, 2000
------------------------------------
Dave Morgan
/s/ Michael W. Barnes June 28, 2000
------------------------------------
Michael W. Barnes
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<PAGE>
Exhibit Index
Exhibit
Number Document Description
------- --------------------
23(b) Consent of Deloitte & Touche (as contained on page 10)
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