UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

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

FOR THE FISCAL YEAR ENDED JANUARY 1, 2000

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

For the transition period from to

Commission File Number 0-19848

FOSSIL, INC.
(Exact name of registrant as specified in its charter)

DELAWARE 75-2018505
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

2280 N. GREENVILLE AVENUE
RICHARDSON, TEXAS 75082
(Address of principal executive (Zip Code)
offices)

Registrant's telephone number, including area code: (972) 234-2525

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act:

COMMON STOCK, $.01 PAR VALUE
(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. _____

The aggregate market value of Common Stock held by nonaffiliates of
the registrant, based on the sale trade price of the Common Stock as reported
by the Nasdaq National Market on March 29, 2000, was $410,652,945. For
purposes of this computation, all officers, directors and 10% beneficial
owners of the registrant are deemed to be affiliates. Such determination
should not be deemed an admission that such officers, directors or 10%
beneficial owners are, in fact, affiliates of the registrant. As of March 29,
2000, 32,100,646 shares of Common Stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

The Company's definitive proxy statement in connection with the Annual
Meeting of Stockholders to be held May 24, 2000, to be filed with the Commission
pursuant to Regulation 14A, and the Company's Annual Report to Stockholders are
incorporated by reference into Part III of this report.

PART I

ITEM 1. BUSINESS

GENERAL

Fossil, Inc. (the "Company") is a leader in the design, development,
marketing and distribution of contemporary, high quality fashion watches and
accessories. The Company developed the FOSSIL-Registered Trademark- brand
name to convey a distinctive fashion, quality and value message and a brand
image reminiscent of "America in the 1950s" that suggests a time of fun,
fashion and humor. Since its inception in 1984, the Company has grown from
its original flagship FOSSIL watch product into a diversified company
offering an extensive line of fashion watches, small leather goods, belts,
handbags and sunglasses under the FOSSIL and RELIC-Registered Trademark-
brands. In addition to developing its own brands, the Company leverages its
development and production expertise by designing and manufacturing private
label products for some of the most prestigious companies in the world,
including national retailers, entertainment companies and theme restaurants.
The Company's successful expansion of its product lines has contributed to
its increasing net sales and operating profits.

The Company has capitalized on the increasing awareness of the FOSSIL
brand by entering into various license agreements for other categories of
fashion accessories. The Company has entered into various license agreements to
design, manufacture, distribute and market watches under the brands of other
companies, including EMPORIO ARMANI-Registered Trademark- , DKNY-Registered
Trademark- and DIESEL-Registered Trademark-.

The Company's products are sold to department stores and specialty
retail stores in over 85 countries worldwide through Company-owned foreign sales
subsidiaries and through a network of approximately 52 independent distributors.
The Company's foreign operations include a presence in Europe, South and Central
America, the Caribbean, Canada, the Far East, Australia and the Middle East. In
addition, the Company's products are offered at retail locations in major
airports in the United States, on cruise ships and in independently-owned,
authorized FOSSIL retail stores and kiosks in certain international markets.

The Company is a Delaware corporation formed in 1991 and is the
successor to a Texas corporation formed in 1984. In 1993, the Company completed
an initial public offering of 2,760,000 shares of common stock, par value $.01
(the "Common Stock"). The Company conducts substantially all of its operations
in the United States through Fossil Partners, L.P., a Texas limited partnership
formed in 1994 of which the Company is the sole general partner. The Company
also conducts operations in the United States and certain international markets
through various directly and indirectly owned subsidiaries. The Company's
operations in Hong Kong relating to the procurement of watches from various
manufacturing sources are conducted by Fossil (East) Limited ("Fossil East"), a
wholly owned subsidiary of the Company acquired in 1992. The Company's principal
executive offices are located at 2280 N. Greenville Avenue, Richardson, Texas
75082, and its telephone number at such address is (972) 234-2525.

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FORWARD-LOOKING INFORMATION

The statements contained in this Annual Report on Form 10-K ("Annual
Report") that are not historical facts, including, but not limited to,
statements found in this "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 actual results of the future events described in such forward-looking
statements in the Annual Report could differ materially from those stated in
such forward-looking statements. Among the factors that could cause actual
results to differ materially are: general economic conditions, competition,
government regulation and possible future litigation, as well as the risks and
uncertainties discussed in this Annual Report, including, without limitation,
the portions referenced above, and the risks and uncertainties set forth on the
Company's Current Report on Form 8-K dated March 30, 1999.

INDUSTRY OVERVIEW

WATCH PRODUCTS

The Company believes that the current market for watches in the United
States can be divided into four segments. One segment of the market consists of
fine watches characterized by internationally known brand names such as Concord,
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
often 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 $1,500 to in excess of $20,000. A second
segment of the market consists of fine premium branded and designer watches
manufactured in Switzerland and the Far East such as Gucci, Rado, Raymond Weil,
Seiko and Swiss Army. These watches are sold at retail prices generally ranging
from $150 to $1,500. The Company's EMPORIO ARMANI line generally competes in
this market segment. A third segment of the market consists of watches sold by
mass marketers, which include certain watches sold under the Timex brand name as
well as certain watches sold by Armitron under various brand names and labels.
Retail prices in this segment range from $5 to $40.

The fourth segment of the market consists of moderately priced watches
characterized by contemporary fashion and well known brand names. Moderately
priced watches are typically manufactured in Japan or Hong Kong and are sold by
department stores and specialty stores at retail prices ranging from $40 to
$150. This market segment is targeted by the Company and its principal
competitors, including the companies that market watches under the Guess?, Anne
Klein II, Kenneth Cole and Swatch brand names, whose products attempt to reflect
emerging fashion trends in accessories and apparel. The Company's DKNY line
generally competes in this segment as well. Some of the watches in this sector
are manufactured under license agreements with companies that market watches
under various brand names, including Guess?, Anne Klein II and Kenneth Cole. The
Company believes that one reason for the growth of this sector has been that
fashion-conscious consumers have increasingly come to regard branded fashion
watches not only as time pieces but also as fashion accessories. This trend has
resulted in consumers owning multiple watches that may differ significantly in
terms of style, features and cost.

FASHION ACCESSORIES

The Company believes that the fashion accessories market in the United
States includes products such as small leather goods, handbags, belts, eyewear,
neckwear, underwear, lounge wear, costume jewelry, gloves, hats, hosiery and
socks. The Company believes that one reason for the growth in this line of
business

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is that consumers are becoming more aware of accessories as fashion statements,
and as a result, are purchasing brand name, quality items that complement other
fashion items. These fashion accessory products are generally marketed through
mass merchandisers, department stores and specialty shops, depending upon price
and quality. Higher price point items include products offered by Coach, Dooney
& Burke, Ralph Lauren and Donna Karan.

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 FOSSIL and RELIC. The Company
currently offers small leather goods, handbags, belts, eyewear for both men and
women through department stores and specialty retailers in the moderate to
upper-moderate price range. Companies such as Calvin Klein, Tommy Hilfiger,
Guess?, Nine West, Kenneth Cole and Liz Claiborne currently operate in this
market.

BUSINESS STRATEGY

The Company's long-term goal is to capitalize on the strength of its
growing consumer brand recognition and capture an increasing share of a growing
number of markets by providing consumers with fashionable, high quality,
value-driven products. In pursuit of this goal, the Company has adopted
operating and growth strategies that provide the framework for the Company's
future growth, while maintaining the consistency and integrity of its brands.

OPERATING STRATEGY

- - FASHION ORIENTATION AND DESIGN INNOVATION. The Company is able to
market its products to consumers with differing tastes and lifestyles
by offering a wide range of brands and product categories at a variety
of price points. The Company attempts to stay abreast of emerging
fashion and lifestyle trends affecting accessories and apparel and it
responds to these trends by making adjustments in its product lines
several times each year. The Company differentiates its products from
those of its competitors principally through innovations in fashion
details, including variations in the treatment of dials, crystals,
cases, straps and bracelets for the Company's watches and innovative
treatments and details in its other accessories.

- - COORDINATED PRODUCT PROMOTION. The Company coordinates in-house product
design, packaging, advertising and in-store presentations to more
effectively and cohesively communicate to its target markets the themes
and images associated with its brands. For example, many of the
Company's FOSSIL brand products and certain of its accessory products
are packaged in metal tins decorated with designs consistent with the
Company's marketing strategy and product image. In addition, the
Company generally markets its fashion accessory lines through the same
distribution channels as its watch lines, using similar in-store
presentations, graphics and packaging.

- - PRODUCT VALUE. The Company's products provide value to the consumer by
offering fashionable, high quality components and features at suggested
retail prices generally below those of competitive products of
comparable quality. The Company is able to offer its watches at a
reasonable price point by manufacturing them principally in the Far
East at lower cost than comparable quality watches manufactured in
Switzerland. In addition, the Company is able to offer its accessories
at reasonable prices because of its close relationships with
manufacturers in the Far East. Unlike certain of its principal
competitors, the Company does not pay royalties on most of its
products, which the

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Company believes allows it to enjoy certain cost advantages that
enhance its ability to achieve attractive profit margins.

- - CAPTIVE SUPPLIERS. The Company owns a majority interest in a number of
watch assemblers with locations in Hong Kong and China. In addition,
the Company maintains close relationships with accessory manufacturers
in the Far East. The Company believes these relationships create a
significant competitive advantage, as they allow the Company to produce
quality products, reduce the delivery time to market and improve
overall operating margins.

- - ACTIVELY MANAGE RETAIL SALES. The Company manages the retail sales
process by monitoring customer sales and inventory levels by product
category and style, primarily through EDI, and by assisting retailers
in the conception, development and implementation of their marketing
programs. As a result, the Company believes it enjoys close
relationships with its principal retailers, often allowing it to
influence the mix, quantity and timing of customer purchasing
decisions.

- - CENTRALIZED DISTRIBUTION. The Company distributes substantially all of
its products sold in the United States and certain of its products sold
in international markets from its warehouse and distribution center in
Richardson, Texas. The Company also distributes its products to
international markets from warehouse and distribution centers located
in Germany, Italy, Hong Kong, the United Kingdom, Spain and Japan. The
Company believes its centralized distribution capabilities enable it
to reduce inventory risk, increase flexibility in meeting the delivery
requirements of its customers and maintain significant cost advantages
as compared to its competitors.

GROWTH STRATEGY

- - INTRODUCE NEW PRODUCTS AND BRANDS. The Company continually introduces
new products within its existing brands and through license agreements
and brand extensions to attract a wide range of consumers with
differing tastes and lifestyles. For example, the Company currently
offers a full line of watch and accessory products under its FOSSIL and
RELIC brands, as well as watches under the EMPORIO ARMANI and DKNY
brand names pursuant to license agreements. The Company will also
introduce a line of watches under the DIESEL brand in 2000. The Company
also leverages its brand recognition and its design and marketing
expertise to expand the scope of its product offerings through the
selective licensing of new product categories that complement its
existing products. For example, the Company entered into a license
agreement with Safilo Group to offer FOSSIL optical frames in the
United States and Canada and optical frames and sunglasses in Italy.

- - EXPAND INTERNATIONAL BUSINESS. The Company increased its efforts to
align its FOSSIL brand watches sold internationally with its successful
domestic assortments. The Company believes these efforts will increase
its global brand recognition and allow it to leverage this recognition
to successfully market the Company's accessory lines in international
markets. The Company has recently introduced RELIC brand watches and
accessories in selected international markets and believes these
efforts will similarly increase the global recognition of this brand.

- - EXPAND RETAIL LOCATIONS. The Company is currently expanding its
Company-owned FOSSIL retail and outlet locations to further strengthen
its brand image. The Company currently operates 50 retail and outlet
stores and plans to open an additional 12 retail stores and two outlet
stores in 2000. In 2000, the Company will beginning offering FOSSIL
brand apparel products at selected Company-owned FOSSIL retail stores
in the United States. The Company intends to continue to

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offer its watch and accessory products through additional
independently-owned, authorized FOSSIL retail stores in airports, on
cruise ships and in international markets.

- - LEVERAGE INFRASTRUCTURE. The Company believes it has the design,
marketing, manufacturing and distribution infrastructure in place to
allow it to manage and grow its businesses. The Company continues to
develop additional products and brands and seeks additional businesses
and products to complement its existing business and allow it to
leverage its existing infrastructure.

PRODUCTS

The Company designs, develops, markets and distributes fashion watches
and accessories, including sunglasses, small leather goods, belts and handbags,
principally under the FOSSIL and RELIC brand names and watches bearing the brand
names of certain internationally known fashion designers pursuant to license
agreements.

WATCH PRODUCTS

The Company introduced FOSSIL watches, its flagship product, in 1986
and RELIC watches in 1990. Since 1986, the Company has also contracted with
retailers and other customers for the manufacture of watches primarily for sale
under private labels. Sales of the Company's watches for fiscal years 1999, 1998
and 1997 accounted for approximately 76.5%, 75.5% and 72.4%, respectively, of
the Company's gross sales.

The following table sets forth certain information with respect to the
Company's FOSSIL and RELIC watches:

SUGGESTED PRICE DISTRIBUTION
WATCH BRAND PRODUCT CATEGORIES POINT RANGE AVERAGE PRICE CHANNELS
----------- ------------------ ----------- ------------- --------

FOSSIL FOSSIL BLUE, F2, FOSSIL $45 - 100 $72 Major dept. stores (Dayton
Steel, BIG TIC, FOSSIL Hudson Corp., Dillard's,
Sterling, BLUE TEQ, Federated/Macy's, May Dept.
DEFENDER, ARKITEKT, Limited Stores, Nordstrom, Inc. and
Edition and Vintage Saks)

RELIC RELIC Wet, RELIC $45 - 75 $58 Major retailers (Stage Dept.
Adjust-A-Link, RELIC Stores, JCPenney, Kohl's
Stainless Steel, Metal, Department Stores, Inc.,
Sport, Novelty, Pendant and Montgomery Ward & Co. and
Pocket Sears)

The Company has entered into multi-year, worldwide license agreements
for the manufacture, distribution and sale of watches bearing the brand names of
certain internationally known fashion designers. The following table sets forth
certain information with respect to the Company's licensed watch products:

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SUGGESTED PRICE AVERAGE DISTRIBUTION
BRAND(S) PRODUCTS POINT RANGE PRICE TERRITORY CHANNEL(S)
------- -------- ----------- ----- --------- ----------

EMPORIO ARMANI Wrist watches and $125 - 500 $214 Worldwide Major department
bands, pocket stores, specialty
watches retailers, jewelry
stores and Armani
Boutiques

DKNY, DKNY Active, Men's, women's $85 - 250 $106 Worldwide Better department
DKNY Jeans & DONNA and children's stores, specialty
KARAN NEW YORK watches stores, and Donna
Karan Retail Stores

PRIVATE LABEL, PREMIUM AND LICENSED PRODUCTS. The Company designs,
markets and arranges for the manufacture of watches on behalf of certain
retailers, entertainment companies, theme restaurants and other corporate
customers such as Eddie Bauer, Warner Bros. and Disney, as private label
products or as premium and incentive items for use in various corporate
events. Under this arrangement, the Company performs design and product
development functions as well as acts as a sourcing agent for its customers
by contracting for the manufacture of watches, managing the manufacturing
process, inspecting the finished watches, purchasing the watches and arranging
for their shipment to the United States. Participation in the private label
and premium businesses provide the Company with certain advantages, including
increased manufacturing volume, which may reduce the costs of manufacturing
the Company's other watch products, and the strengthening of business
relationships with its manufacturing sources. These lines provide income to
the Company with reduced inventory risks and certain other carrying costs.
The Company has also entered into a number of license agreements for the sale of
collectible watches. Under these agreements, the Company designs, manufactures
and markets the goods bearing the trademarks, trade names and logos of various
entities through major department stores within the Company's channels of
distribution, including Pink Panther, Toy Story and Ford.

FASHION ACCESSORIES

In order to leverage the Company's design and marketing expertise and
its close relationships with its principal retail customers, the Company has
developed a line of fashion accessories, including handbags, sunglasses for men
and women, men's and women's belts and small leather goods. The Company's
handbags are made of a variety of fine leathers and other materials that
emphasize classic styles and incorporate a variety of creative designs. The
sunglass line features optical quality lenses in both plastic and metal frames,
with classic and fashion styling similar to other FOSSIL products. The Company's
small leather goods are made of fine leathers and include items such as
mini-bags, coin purses, key chains and wallets. The Company currently sells its
fashion accessories through a number of its existing major department store and
specialty retail store customers. The Company generally markets its fashion
accessory lines through the same distribution channels as its watch business,
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 the Company's watches.
Sales of the Company's accessory lines for fiscal years 1999, 1998 and 1997
accounted for approximately 22.5%, 23.5% and 26.4%, respectively of the
Company's gross sales.

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The following table sets forth certain information with respect to the
Company's fashion accessories:

SUGGESTED PRICE
BRAND ACCESSORY CATEGORY POINT RANGE AVERAGE PRICE DISTRIBUTION CHANNEL
- ----- ------------------ ----------- ------------- --------------------

FOSSIL Sunglasses $28 - 75 $40 Major dept. stores
(Dayton Hudson Corp.,
Handbags $35 - 150 $78 Dillard's,
Federated/Macy's,
Men's and Women's Small $15 - 70 $29 May Dept. Stores,
Leather Goods Nordstrom, Inc. and
Saks)
Men's and Women's Belts $20 - 40 $28

RELIC Sunglasses $20 - 25 $21 Major retailers
(Sears, Fred Meyer,
Handbags $20 - 42 $28 JCPenney, Kohl's
Department Stores,
Men's and Women's Small $14 - 42 $17 Inc., Montgomery Ward
Leather Goods & Co.)

Men's and Women's Belts $14 - 20 $18

OTHER PRODUCTS

LICENSED PRODUCTS. In order to complement the Company's existing line
of products and to increase consumer awareness of the FOSSIL brand, the Company
has entered into license agreements for other categories of fashion accessories.
These license agreements provide for royalty income to the Company based on a
percentage of net sales and are subject to certain guaranteed minimum royalties.
In 1999 the Company entered into a multi-year license agreement with the Safilo
Group for the manufacture, marketing and sale of optical frames under the FOSSIL
brand in the United States and Canada and optical frames and sunglasses in
Italy. The Company also entered into a multi-year license agreement for the
manufacture, marketing and sale of certain handbags, backpacks and sports bags
in Germany, Austria and Switzerland under the FOSSIL brand.

FUTURE PRODUCTS. The Company continually evaluates opportunities to
expand its product offerings in the future to include other accessory or apparel
lines that would complement its existing product.

DESIGN AND DEVELOPMENT

The Company's products are created and developed by its in-house design
staff in cooperation with various outside sources, including its manufacturing
sources and component suppliers. Product design ideas are drawn from various
sources and are reviewed and modified by the design staff to ensure consistency
with the Company's existing product offerings and the themes and images that it
associates with its products. Senior management is actively involved in the
design process.

In order to respond effectively to changing consumer preferences, the
Company attempts to stay abreast of emerging lifestyle and fashion trends
affecting accessories and apparel. In addition, the Company attempts to take
advantage of the constant flow of information from the Company's customers
regarding the

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retail performance of its products. The design staff reviews weekly sales
reports provided by a substantial number of the Company's customers 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, the 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 and the anticipated retail prices of and profit
margins for the products.

The Company differentiates its products from those of its competitors
principally by incorporating into its product designs innovations in fashion
details, including variations in the treatment of dials, crystals, cases and
straps for the Company's watches and details and treatments of its other
accessories. In certain instances, the Company believes that such innovations
have allowed it to achieve significant improvements in consumer acceptance of
its product offerings with only nominal increases in manufacturing costs. The
Company believes that the substantial experience of its design staff will assist
it in maintaining its current leadership position in watch design and in
expanding the scope of its product offerings.

MARKETING AND PROMOTION

The Company's current FOSSIL brand advertising themes aim at evoking
nostalgia for the simpler values and more optimistic outlook of the 1950s
through the use of images of cars, trains, airliners and consumer products that
reflect the classic American tastes of the period. These images are carefully
coordinated in order to convey the flair for fun, fashion and humor that the
Company associates with its products. The Company's nostalgic "America in the
1950s" tin packaging concept for many of its watch products and certain of its
accessories is an example of these marketing themes. The tins have become a
signature piece to the FOSSIL image and have become popular with collectors.

The Company participates in cooperative advertising programs with its
major retail customers, whereby it shares 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, the Company attempts to differentiate the space used to sell
its products from other areas of its customers' stores. In addition, the Company
frequently offers promotional gifts, such as T-shirts and caps, to consumers who
purchase its products. The Company also provides its customers with a large
number of preprinted, customized advertising inserts and from time to time
stages promotional events designed to focus public attention on its products.

The Company's in-house advertising department designs, develops and
implements all aspects of the packaging, advertising, marketing and sales
promotion of the Company's products. The advertising staff uses computer-aided
design techniques to generate the images presented on product packaging and
other advertising materials. The Company believes that the use of computers
encourages greater creativity and reduces the time and cost required to
incorporate new themes and ideas into effective product packaging and other
advertising materials. Senior management is involved in monitoring the Company's
advertising and promotional activities to ensure that themes and ideas are
communicated in a cohesive manner to the Company's target audience.

The Company advertises, markets and promotes its products to potential
consumers through a variety of media, including catalog inserts, billboards and
print media. The Company has advertised from time to time with billboards and
other outdoor advertisements including bus panels in major metropolitan areas.
The Company periodically advertises the FOSSIL brand in certain national fashion
and consumer

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magazines such as SEVENTEEN, TEEN PEOPLE, DETAILS, JANE, POV and MEN'S HEALTH,
and the RELIC brand in MADEMOISELLE, TEEN, ENTERTAINMENT WEEKLY, PEOPLE and
ROLLING STONE. The Company also periodically advertises in trade publications
such as WOMEN'S WEAR DAILY and DAILY NEWS RECORD.

SALES AND CUSTOMERS

The Company sells its products in approximately 17,000 retail locations
in the United States through a diversified distribution network that includes
approximately 5,000 department store doors, such as Federated/Macy's, May
Department Stores and Dillard's for its FOSSIL brand and JCPenney and Sears for
its RELIC brand, as well as approximately 12,000 specialty retail locations. The
Company also sells its product at Company-owned FOSSIL retail stores located at
retail sites in the United States and sells certain of its products at
Company-owned FOSSIL outlet stores located at major outlet malls throughout the
United States. The Company also sells its products at retail locations in major
airports in the United States, on cruise ships and in independently-owned,
authorized FOSSIL retail stores and kiosks in certain international markets. The
Company generally does not have long-term contracts with any of its retail
customers. All transactions between the Company and its retail customers are
conducted on the basis of purchase orders, which generally require payment of
amounts due to the Company on a net 30-day basis.

DEPARTMENT STORES. For fiscal years 1999, 1998 and 1997, domestic
department stores accounted for approximately 58.8%, 60.8% and 49.0% of the
Company's net sales, respectively. In addition, in the same periods, the
Company's 10 largest customers represented approximately 41%, 47% and 45% of net
sales, respectively. No customer accounted for more than 10% of the Company's
net sales in fiscal years 1999, 1998 and 1997. Certain of the Company's
customers are under common ownership. Sales to the department store group under
common ownership by Federated Department Stores accounted for approximately
9.0%, 10.0% and 10.8% of the Company's net sales in fiscal years 1999, 1998 and
1997, respectively. No other customer, when considered as a group under common
ownership, accounted for more than 10% of the Company's net sales in fiscal
years 1999, 1998 and 1997.

INTERNATIONAL SALES. The Company's products are sold to department
stores and specialty retail stores in over 85 countries worldwide through
Company-owned foreign sales subsidiaries and through a network of approximately
52 independent distributors. The Company's foreign operations include a presence
in Europe, South and Central America, the Caribbean, Canada, the Far East,
Australia and the Middle East. Foreign distributors generally purchase products
at uniform prices established by the Company for all international sales and
resell them to department stores and specialty retail stores. The Company
generally receives payment from its foreign distributors in United States
currency. During the fiscal years 1999, 1998 and 1997, international and export
sales accounted for approximately 31%, 29% and 31% of net sales, respectively.

COMPANY-OWNED FOSSIL STORES. In 1995, the Company commenced operations
of FOSSIL outlet stores at selected major outlet malls throughout the United
States. The Company operated 33 outlet stores at the end of fiscal year 1999.
These stores, which operate under the FOSSIL name, enable the Company to
liquidate excess inventory and increase brand awareness. The Company's products
in such stores are generally sold at discounts from 25% to 50% off the suggested
retail price. The Company intends to open three additional outlet stores in
2000.

In 1996, the Company commenced operations of full priced FOSSIL retail
stores at some of the most prestigious retail malls in the United States in
order to broaden the recognition of the FOSSIL brand name. The Company currently
operates 17 retail stores in leading malls and retail location throughout the
United States. These stores, which operate under the FOSSIL name, carry a full
assortment of FOSSIL

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merchandise which is generally sold at the suggested retail price. In 2000, the
Company will beginning offering FOSSIL brand apparel products at approximately
12 FOSSIL retail stores in the United States. The Company intends to open one
additional retail store in 2000 offering accessories only. During the fiscal
years 1999, 1998 and 1997, Company Store sales accounted for approximately 9%,
9% and 8% of net sales, respectively.

INTERNET SALES. In November 1996, the Company established a website at
www.FOSSIL.com. In September 1999, the Company's website was redesigned with a
stronger emphasis on retail sales and order fulfillment. The Company offers
selected FOSSIL brand watches, sunglassses, leather goods and other related
products. These products are also available to consumers through a "storefront"
on America Online that is connected to the Company's website. In addition to
offering selected FOSSIL products, the Company also provides Company news and
information on the website. During 2000, the Company plans to launch a
business-to-business site that will allow the Company's specialty retail
accounts access to real-time inventory, account information and automated order
processing.

SALES PERSONNEL. The Company utilizes an in-house sales staff and, to a
lesser extent, independent sales representatives to promote the sale of the
Company's products to retail accounts. As of the end of fiscal year 1999, the
Company had 80 in-house sales and customer service employees and 17 independent
sales representatives. The Company's in-house sales personnel receive a salary
and, in some cases, a commission based on a percentage of gross sales
attributable to specified accounts. Independent sales representatives generally
do not sell competing product lines and are under contracts with the Company
that are generally terminable by either party upon 30 days' prior notice. These
independent contractors are compensated on a commission basis.

CUSTOMER SERVICE. During the past several years, the retail industry
has undergone significant consolidation. As a result of these developments,
department stores and other major retailers have generally become more dependent
on the resources and market expertise of their suppliers. The Company believes
that this dependence has created opportunities for suppliers that provide
superior service to their retail customers and are able to manage the retail
sales process effectively. In order to take advantage of the opportunities
presented by this increasing dependence, the Company has developed an approach
to managing the retail sales process that involves monitoring its customers'
sales and inventories by product category and style, primarily through EDI, and
assisting in the conception, development and implementation of their marketing
programs. For example, the Company reviews weekly selling reports prepared by
certain of its principal customers and has established an active EDI program
with certain of its customers. The Company also places significant emphasis on
the establishment of cooperative advertising programs with its major retail
customers. The Company believes that its management of the retail sales process
has resulted in close relationships with its principal customers, often allowing
it to influence the mix, quantity and timing of their purchasing decisions.

The Company believes that its sales approach achieves high retail
turnover in its products, which can result in attractive profit margins for its
retail customers. The Company believes that the resulting profit margins for its
retail customers encourage them to devote greater selling space to its products
within their stores and enable the Company to work closely with buyers in
determining the mix of products any store should carry. In addition, the Company
believes that the buyers' familiarity with the Company's sales approach should
facilitate the introduction of new products through its existing distribution
network.

The Company permits the return of damaged or defective products. In
addition, although it has no obligation to do so, the Company accepts limited
amounts of product returns from its customers in certain other instances.
Accordingly, the Company provides allowances for the estimated amount of product

-10-

returns. The allowances for product returns as of the end of fiscal years 1999,
1998 and 1997 were $17.7 million, $14.0 million and $10.6 million respectively.
Since 1990, the Company has not experienced any returns in excess of the
aggregate allowances therefor.

BACKLOG

It is the practice of a substantial number of the Company's 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 the Company believes
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
represent orders that the Company believes, based on industry practice and prior
experience, will be confirmed in the ordinary course of business. The Company's
backlog at a particular time is affected by a number of factors, including
seasonality and the scheduling of the manufacture and shipment of products.
Accordingly, a comparison of backlog from period to period is not necessarily
meaningful and may not be indicative of eventual actual shipments. For fiscal
year 1999, the Company had unfilled customer orders of approximately $41.4
million compared to $22.2 million and $16.2 million for fiscal years 1998 and
1997, respectively.

MANUFACTURING

The Company's products are manufactured to its specifications by
independent contractors and by companies in which the Company holds a majority
interest. Substantially all of the Company's watches are manufactured by
approximately 38 factories located primarily in Hong Kong and China, and to a
lesser extent in Japan. The Company believes that its policy of outsourcing
products allows it to achieve increased production flexibility while avoiding
significant capital expenditures, build-ups of work-in-process inventory and the
costs of managing a substantial production work force.

The principal components used in the manufacture of the Company's
watches are cases, crystals, dials, movements and straps. These components are
obtained by the Company's manufacturing sources from a large number of suppliers
located principally in Hong Kong, Japan, China, Taiwan, Italy and Korea. The
Company estimates that the majority of the movements used in the manufacture of
the Company's watches are supplied by two principal vendors. No other single
component supplier accounted for more than 10% of component supplies in 1999.
Although the Company does not normally engage in direct transactions with
component suppliers, in some cases it actively reviews the performance of such
suppliers and makes recommendations to its manufacturing sources regarding the
sourcing of components. The Company does not believe that its business is
materially dependent on any single component supplier.

The Company believes that it has established and maintains close
relationships with a number of watch manufacturers located in Hong Kong and
Japan. In 1999, three separate watch manufacturers in which the Company holds a
majority interest, each accounted for 10% or more of the Company's watch
supplies. The loss of any one of these manufacturers could temporarily disrupt
shipments of certain of the Company's watches. However, as a result of the
number of suppliers from which the Company purchases its watches, the Company
believes that it could arrange for the shipment of goods from alternative
sources within approximately 30 days on terms that are not materially different
from those currently available to the Company. Accordingly, the Company does not
believe that the loss of any single supplier would have a material adverse
effect on the Company's business. In general, however, the future success of the
Company will depend upon its ability to maintain close relationships with its
current suppliers and to develop long-term relationships with other suppliers
that satisfy the Company's requirements for price and production flexibility.

-11-

The Company's products are 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 three months in the case of
watches, from three to six months in the case of sunglasses and from three to
four months in the case of leather goods. The Company believes that the close
relationships that it has established and maintains with its principal
manufacturing sources constitute a significant competitive advantage and allow
it to quickly and efficiently introduce innovative product designs and alter
production in response to the retail performance of its products.

QUALITY CONTROL

The Company's quality control program attempts to ensure that its
products meet the standards established by its design staff. Samples of products
are inspected by the Company prior to the placement of orders with manufacturing
sources to ensure compliance with its specifications. The operations of the
Company's manufacturing sources located in Hong Kong are monitored on a periodic
basis by Fossil (East). Substantially all of the Company's watches and certain
of its other accessories are inspected by personnel of Fossil East or by the
manufacturer prior to shipment to the Company. In addition, the Company performs
quality control checks on its products upon receipt at the Company's facility.

DISTRIBUTION

Upon completion of manufacturing, the Company's products are shipped to
its warehousing and distribution centers in Richardson, Texas, Italy, Japan,
Hong Kong, the United Kingdom and Germany from which they are shipped to
customers in selected markets. Since July 1997, the Company has owned and
operated a warehouse and distribution facility in Richardson, Texas, adjacent to
the Company's headquarters, to maximize the Company's inventory management and
distribution capabilities.

The Company's warehouse and distribution facility in Richardson, Texas
is operated in a special purpose subzone established by the United States
Department of Commerce Foreign Trade Zone Board. As a result of the
establishment of the subzone, the Company enjoys certain economic and
operational advantages: (i) the Company may not have to pay duty on imported
merchandise until it leaves the subzone and enters the United States market,
(ii) the Company does not pay any United States duty on merchandise if the
imported merchandise is subsequently re-exported, and (iii) the Company does not
pay local property tax on inventory located within the subzone.

MANAGEMENT INFORMATION SYSTEMS

INVENTORY CONTROL. The Company maintains inventory control systems at
its facilities that enable it to track each item of merchandise from receipt
from its manufacturing sources, through shipment to its customers. To facilitate
this tracking, a significant number of products sold by the Company are
pre-ticketed and bar coded prior to shipment to its retail customers. The
Company's inventory control systems report shipping, sales and individual SKU
level inventory information. The Company manages the retail sales process by
monitoring customer sales and inventory levels by product category and style,
primarily through EDI. The Company believes that its distribution capabilities
enable it to reduce inventory risk and increase flexibility in responding to the
delivery requirements of its customers. The Company's management believes that
its EDI efforts will continue to grow in the future as customers focus further
on increasing operating efficiencies. In addition, the Company maintains systems
that are designed to track inventory movement

-12-

through the FOSSIL retail and outlet stores. Detailed sales transaction records
are accumulated on each store's point-of-sale system and polled nightly by the
Company.

WARRANTY AND REPAIR

The Company's FOSSIL watch products are covered by a limited warranty
against defects in materials or workmanship for a period of 11 years from the
date of purchase. The Company's RELIC watch products are covered by a comparable
12 year warranty. The Company's licensed watch products generally are covered by
one (1) year limited warranty. The Company's sunglass line is covered by a one
year limited warranty against defects in materials or workmanship. Defective
products returned by consumers are processed at the Company's warehousing and
distribution centers. In most cases, defective products under warranty are
repaired by the Company's personnel. Products under warranty that cannot be
repaired in a cost-effective manner are replaced by the Company at no cost to
the customer. The Company also performs watch repair services on behalf of
certain of its private label customers.

GOVERNMENTAL REGULATIONS

IMPORTS AND IMPORT RESTRICTIONS. Most of the Company's products are
manufactured overseas. As a result, the United States and the countries in which
the Company's products are manufactured or sold may from time to time modify
existing or impose new quotas, duties, tariffs or other restrictions in a manner
that adversely affects the Company. For example, the Company's products imported
to the United States are subject to United States customs duties and, in the
ordinary course of its business, the Company may from time to time be subject to
claims by the United States Customs Service for duties and other charges.
Factors which may influence the modification or imposition of these restrictions
include the determination by the United States Trade Representative that a
country has denied adequate intellectual property rights or fair and equitable
market access to United States firms that rely on intellectual property, trade
disputes between the United States 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 government of the United
States. The Company cannot predict the effect, if any, these events would have
on its operations, especially in light of the concentration of its manufacturing
operations in Hong Kong and China.

GENERAL. The Company's sunglass products are subject to regulation by
the United States Food and Drug Administration as medical devices. The Company
does not believe that compliance with such regulations is material to its
operations. In addition, the Company is subject to various state and federal
regulations generally applicable to similar businesses.

INTELLECTUAL PROPERTY

TRADEMARKS: The Company has registered the FOSSIL and RELIC trademarks
for use on the Company's watches, leather goods and other fashion accessories.
The Company has also registered or applied for the registration of certain other
marks used by the Company in conjunction with the sale and marketing of its
products and services. In addition, the Company has registered certain of its
trademarks, including FOSSIL and RELIC, in certain foreign countries, including
a number of countries located in Europe, the Far East, the Middle East, South
America and Central America. The Company also has certain trade dress rights in,
and has applied for registration of, the distinctive rectangular tins in which
the Company packages the majority of its FOSSIL watch products.

-13-

PATENTS: The Company has been granted, and has pending, various United
States and international design and utility patents related to its BIG TIC watch
line. The Company also has been granted, and has pending, various United States
patents related to certain of its other products.

The Company regards its trademarks, trade dress and patents as valuable
assets and believes that they have significant value in the marketing of its
products. The Company intends to protect its intellectual property rights
vigorously against infringement.

COMPETITION

There is intense competition in each of the businesses in which the
Company competes. The Company's watch business competes with a number of
established manufacturers, importers and distributors such as Guess? Anne Klein
II, Kenneth Cole and Swatch. In addition, the Company's leather goods and
sunglass businesses compete with a large number of established companies that
have significantly greater experience than the Company in designing, developing,
marketing and distributing such products. In all of its businesses, the Company
competes with numerous manufacturers, importers and distributors who have
significantly greater financial, distribution, advertising and marketing
resources than the Company. The Company's competitors include distributors that
import watches and accessories from abroad, domestic companies that have
established foreign manufacturing relationships and companies that produce
accessories domestically.

The Company competes primarily on the basis of style, price, value,
quality, brand name, advertising, marketing and distribution. In addition, the
Company believes that its 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
its ability to compete.

The Company considers that 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 the Company's experience that better
department stores and other major retailers have been increasingly unwilling to
source 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 the end of fiscal year 1999, the Company (excluding the Company's
foreign subsidiaries) had 1,217 full-time employees, including 110 in executive
or managerial positions and the balance in design, advertising, sales, quality
control, distribution, clerical and other office positions. As of the end of
fiscal year 1999, the Company's foreign operating subsidiaries had 280 full-time
employees, including 36 in managerial positions.

The Company has not entered into any collective bargaining agreements
with its employees. The Company believes that its relations with its employees
are generally good.

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ITEM 2. PROPERTIES

COMPANY FACILITIES: As of the end of fiscal year 1999, the Company
owned or leased the following facilities in connection with its domestic and
international operations:

LOCATION USE SQUARE FOOTAGE OWNED / LEASED
- -------- --- -------------- --------------

Richardson, Texas Corporate headquarters 177,000 Owned
Richardson, Texas Warehouse, distribution and general 138,000 Owned
office
Hong Kong Office, warehouse and assembly factory 37,600 Lease expiring in 2001
Erlstatt, Germany Office, warehouse and distribution 12,000 Lease expiring in 2002
Milton Keynes, England Office, warehouse and distribution 8,250 Lease expiring in 2002
Tokyo, Japan Office, warehouse and distribution 2,800 Lease expiring in 2002
Vicenza, Italy Office 3,100 Lease expiring in 2004
New York, New York General office and showroom 13,596 Lease expiring in 2006
Atlanta, Georgia General office and showroom 1,380 Lease expiring in 2000
Chicago, Illinois General office and showroom 2,980 Lease expiring in 2001
Los Angeles, California General office and showroom 1,675 Lease expiring in 2000

The Company's Richardson, Texas facilities are located on approximately
20 acres of land. The Company owns both facilities and the land on which each is
located.

RETAIL STORE FACILITIES: As of the end of fiscal year 1999, the Company
had entered into 20 lease agreements for retail space at prime locations in the
United States for the sale of its full assortment of products. The leases,
including renewal options, expire at various times from 2004 to 2010 and provide
for minimum annual rentals above specified net sales amounts and for the payment
of additional rent based on a percentage of sales ranging from 4% to 9%. The
Company is also required to pay its pro rata share of the common area
maintenance costs at each retail mall, including, real estate taxes, insurance,
maintenance expenses and utilities.

OUTLET STORE FACILITIES: The Company also leases retail space at
selected outlet centers throughout the United States for the sale of its
products. As of the end of fiscal year 1999, the Company had entered into 37
such leases. The leases, including renewal options, expire at various times from
2000 to 2013, and provide for minimum annual rentals and for the payment of
additional rent based on a percentage of sales above specified net sales amounts
ranging from 3% to 7%. The Company is also required to pay its pro rata share of
the common area maintenance costs at each outlet center, including, real estate
taxes, insurance, maintenance expenses and utilities.

The Company believes that its existing facilities are well maintained,
in good operating condition and adequate for its current needs.

ITEM 3. LEGAL PROCEEDINGS

There are no legal proceedings to which the Company is a party or to
which its properties are subject, other than routine litigation incident to the
Company's business which is not material to the Company's consolidated financial
condition or results of operations.

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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted to a vote of the stockholders of the Company
during the fourth quarter of the fiscal year 1999.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

The Company's Common Stock is listed on the Nasdaq National Market
under the symbol "FOSL." Quotation of the Company's Common Stock began on the
Nasdaq National Market on April 8, 1993.

The following table sets forth the range of quarterly high and low
sales prices per share of the Company's Common Stock on the Nasdaq National
Market for the fiscal years ended January 1, 2000 and January 2, 1999. Such
prices have been adjusted to reflect a three-for-two stock split (the "3 for 2
Stock Split") of the Company's Common Stock effected as a fifty percent (50%)
stock dividend declared on July 21, 1999, paid on August 17, 1999 to all
stockholders of record on August 3, 1999.

HIGH LOW
---- ---

Fiscal year beginning January 2, 1999:

First Quarter $23.667 $17.833
Second Quarter 33.583 17.250
Third Quarter 36.583 26.333
Fourth Quarter 30.625 18.750

Fiscal year beginning January 3, 1998:

First Quarter $14.444 $ 9.667
Second Quarter 18.250 11.917
Third Quarter 18.000 8.667
Fourth Quarter 20.417 8.667

As of March 29, 2000, the Company estimates that there were
approximately 4,250 beneficial owners of the Company's Common Stock, represented
by approximately 133 holders of record.

DIVIDEND POLICY. The Company expects that it will retain all available
earnings generated by its operations for the development and growth of its
business and does not anticipate paying any cash dividends in the foreseeable
future. Any future determination as to dividend policy will be made in the
discretion of the Board of Directors of the Company and will depend on a number
of factors, including the future earnings, capital requirements, financial
condition and future prospects of the Company and such other factors as the
Board of Directors may deem relevant.

The Company declared a three-for-two stock on July 21, 1999, effected
as a fifty percent (50%) stock dividend paid on August 17, 1999 to all
stockholders of record on August 3, 1999.

-16-

ITEM 6. SELECTED FINANCIAL DATA

The information appearing under "Financial Highlights" beginning on
page 5 of the Fossil, Inc. 1999 Annual Report is incorporated herein by
reference.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The information appearing under "Management's Discussion and Analysis"
beginning on page 11 of the Fossil, Inc. 1999 Annual Report is incorporated
herein by reference.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information appearing under "Management's Discussion and Analysis"
and "Financial Information" beginning on pages 11 and 26, respectively, of the
Fossil, Inc. 1999 Annual Report is incorporated herein by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

The information appearing under "Financial Information" beginning on
page 26 of the Fossil, Inc. 1999 Annual Report is incorporated herein by
reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES

The Company has had no disagreements with its accountants to report
under this item.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required in response to this Item is incorporated
herein by reference to the Company's proxy statement to be filed with the
Securities and Exchange Commission pursuant to Regulation 14A, not later than
120 days after the end of the fiscal year covered by this report.

ITEM 11. EXECUTIVE COMPENSATION

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES AND REPORTS ON FORM 8-K

(a) Documents filed as part of Report.

1. FINANCIAL STATEMENTS:

The Financial Statements appearing under "Financial Information"
beginning on page 26 of the Fossil, Inc. 1999 Annual Report are incorporated
herein by reference.

2. FINANCIAL STATEMENT SCHEDULE:

The following Financial Statement Schedule and related Auditor's Report
are contained herein on pages S-1 and S-2 of this Report.

Schedule II - Valuation and Qualifying Accounts

3. EXHIBITS:

3.1 Amended and Restated Certificate of Incorporation of Fossil, Inc.
(incorporated by reference to Exhibit 3.1 of the Company's Registration
Statement on Form S-1, registration no.33-45357, filed with the
Securities and Exchange Commission).

3.2 Amended and Restated Bylaws of Fossil, Inc.(incorporated by reference
to Exhibit 3.2 of the Company's Registration Statement on Form S-1,
registration no. 33-45357, filed with the Securities and Exchange
Commission).

3.3 Certificate of Amendment of the Amended and Restated Certificate of
Incorporation of Fossil, Inc. (incorporated by reference to Exhibit 3.1
of the Company's Report on Form 10-Q for the quarterly period ended
June 30, 1995).

3.4 Second Amended and Restated Certificate of Incorporation of Fossil,
Inc. (incorporated by reference to Exhibit 3.1 of the Company's Report
on Form 10-Q for the quarterly period ended July 4, 1998).

10.1(2) Fossil, Inc. 1993 Nonemployee Director Stock Option Plan (incorporated
herein by reference to Exhibit 10.1 of the Company's Registration
Statement of Form S-1, registration no. 33-45357, filed with the
Securities and Exchange Commission).

10.2(2) Fossil, Inc. 1993 Long-Term Incentive Plan (incorporated herein by
reference to Exhibit 10.2 of the Company's Registration Statement of
Form S-1, registration no. 33-45357, filed with the Securities and
Exchange Commission).

10.3(2) Fossil, Inc. 1993 Savings and Retirement Plan (incorporated herein by
reference to Exhibit 10.3 of the Company's Registration Statement of
Form S-1, registration no. 33-45357, filed with the Securities and
Exchange Commission).

10.4(2) Description of Bonus Program (incorporated herein by reference to
Exhibit 10.4 of the Company's Registration Statement of Form S-1,
registration no. 33-45357, filed with the Securities and Exchange
Commission).

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10.5 Non-Competition Agreement dated December 31, 1992 between Fossil, Inc.
and Mr. Jal S. Shroff (incorporated herein by reference to Exhibit
10.12 of the Company's Registration Statement of Form S-1, registration
no. 33-45357, filed with the Securities and Exchange Commission).

10.6 Amended and Restated Buying Agent Agreement dated March 21, 1992
between Fossil, Inc. and Fossil East Ltd. (incorporated by reference to
Exhibit 10.13 of the Company's Annual Report on Form 10-K for the year
ended December 31, 1993).

10.7 Commercial/Real Estate Note dated as of August 31, 1994, in the
principal amount of $5,000,000 executed by Fossil Partners, L.P. and
payable to the order of First Interstate Bank of Texas, N.A.
(incorporated by reference to Exhibit 10.6 of the Company's Report on
Form 10-Q for the quarterly period ended September 30, 1994).

10.8 Subordination Agreement of Fossil Trust for the benefit of First
Interstate Bank of Texas, N.A. dated as of August 31, 1994
(incorporated by reference to Exhibit 10.7 of the Company's Report on
Form 10-Q for the quarterly period ended September 30, 1994).

10.9 Indemnity Agreement dated as of August 31, 1994 from Fossil Partners,
L.P. and Fossil, Inc. to First Interstate Bank of Texas, N.A.
(incorporated by reference to Exhibit 10.8 of the Company's Report on
Form 10-Q for the quarterly period ended September 30, 1994).

10.10 Master Licensing Agreement dated as of August 30, 1994, by and between
Fossil, Inc. and Fossil Partners, L.P. (incorporated by reference to
Exhibit 10.12 of the Company's Report on Form 10-Q for the quarterly
period ended September 30, 1994).

10.11 Agreement of Limited Partnership of Fossil Partners, L.P. (incorporated
by reference to Exhibit 10.13 of the Company's Report on Form 10-Q for
the quarterly period ended September 30, 1994).

10.12 Overhead Allocation Agreement by and between Fossil Partners, L.P. and
Fossil New York, Inc. dated October 1, 1994 (incorporated by reference
to Exhibit 10.33 of the Company's Annual Report on Form 10-K for the
year ended December 31, 1994).

10.13 Services and Operations Agreement by and between Fossil Partners, L.P.
and Fossil New York, Inc. dated October 1, 1994 (incorporated by
reference to Exhibit 10.34 of the Company's Annual Report on Form 10-K
for the year ended December 31, 1994).

10.14 Overhead Allocation Agreement by and between Fossil Partners, L.P. and
Fossil Stores I, Inc. dated December 1, 1994 (incorporated by reference
to Exhibit 10.35 of the Company's Annual Report on Form 10-K for the
year ended December 31, 1994).

10.15 Second Amended and Restated Loan Agreement entered into on May 2, 1995
by and between First Interstate Bank of Texas, N.A., Fossil Partners,
L.P., Fossil, Inc., Fossil Intermediate, Inc., Fossil Trust, Fossil New
York, Inc. and Fossil Stores I, Inc. (without exhibits) (incorporated
by reference to Exhibit 10.1 of the Company's Report on Form 10-Q for
the quarterly period ended June 30, 1995).

10.16 Stock Pledge Agreement entered into on May 2, 1995 by and between
Fossil, Inc. and First Interstate Bank of Texas, N.A. (incorporated by
reference to Exhibit 10.3 of the Company's Report on Form 10-Q for the
quarterly period ended June 30, 1995).

10.17 Joint Development Agreement entered into on December 25, 1995 by and
between Fossil, Inc., Seiko Instruments, Inc, and Time Tech, Inc.
(incorporated by reference to Exhibit 10.43 of the Company's Annual
Report on Form 10-K for the year ended December 31, 1996).

-19-

10.18 Joint Venture Agreement entered into on December 22, 1994 by and
between Fossil, Inc., Fossil Europe B.V., Enrico Margaritelli, Zuglia,
S.r.l. and Bluewhale Holding, S.a. (without exhibits) (incorporated by
reference to Exhibit 10.44 of the Company's Annual Report on Form 10-K
for the year ended December 31, 1996).

10.19 Amendment No. 1 to Joint Venture Agreement entered into on January 18,
1995 by and between Fossil, Inc., Fossil Europe B.V., Enrico
Margaritelli, Zuglia, S.r.l. and Bluewhale Holding, S.a. (incorporated
by reference to Exhibit 10.45 of the Company's Annual Report on Form
10-K for the year ended December 31, 1996).

10.20(2) Letter Agreement dated October 4, 1995 between Fossil, Inc. and Mark D.
Quick (incorporated by reference to Exhibit 10.32 of the Company's
Annual Report on Form 10-K for the year-ended December 31, 1996).

10.21 Stock Purchase Agreement dated February 1, 1997, by and between
Bluewhale Holding S.a., and Fossil Europe B.V. (incorporated by
reference to Exhibit 10.1 of the Company's Report on Form 10-Q for the
transition period from January 1, 1997 to April 5, 1997).

10.22(2) First Amendment to the Fossil, Inc. 1993 Long-Term Incentive Plan
(incorporated by reference to Exhibit 4.1 of the Company's Report on
Form 10-Q for the quarterly period ended July 4, 1998).

10.23(2) Second Amendment to the Fossil, Inc. 1993 Long-Term Incentive Plan
(incorporated by reference to Exhibit 4.1 of the Company's Report on
Form 10-Q for the quarterly period ended July 4, 1998).

10.24(2) Amendment to the Fossil, Inc. 1993 Non-Employee Director Stock Option
Plan (incoporated by reference to Exhibit 10.24 of the Company's Report
on Form 10-K for the year-ended January 2, 1999).

10.25(2) Fossil, Inc. and Affiliates Deferred Compensation Plan (incoporated by
reference to Exhibit 10.25 of the Company's Report on Form 10-K for the
year-ended January 2, 1999).

10.26 Third Amended and Restated Loan Agreement dated June 29, 1998, by and
among Wells Fargo Bank (Texas), National Association, a national
banking association formerly known as First Interstate Bank of Texas,
N.A., Fossil Partners, L.P., Fossil, Inc., Fossil Intermediate, Inc.,
Fossil Trust, Fossil New York, Inc., Fossil Stores I, Inc., and Fossil
Stores II, Inc. (without exhibits) (incorporated by reference to
Exhibit 10.1 of the Company's Report on Form 10-Q for the quarterly
period ended July 4, 1998).

10.27 Fourth Amended and Restated Loan Agreement by and among Wells Fargo
Bank (Texas), National Association, Fossil Partners, L.P., Fossil,
Inc., Fossil Intermediate, Inc., Fossil Trust, Fossil Stores I, Inc.
and Fossil Stores II, Inc. dated as of June 28, 1999 (without exhibits)
(incorporated by reference to Exhibit 10.1 of the Company's Report on
Form 10-Q for the quarterly period ended July 3, 1999)

10.28 Joint Venture Agreement between Fossil, Inc. and Seiko Instruments
America, Inc. dated June 1, 1999 (without exhibits) (incorporated by
reference to Exhibit 10.1 of the Company's Report on Form 10-Q for the
quarterly period ended October 2, 1999)

10.29 Service Agreement between SII Marketing International, Inc. and Fossil
Partners, L.P. dated August 9, 1999 (incorporated by reference to
Exhibit 10.2 of the Company's Report on Form 10-Q for the quarterly
period ended October 2, 1999).

10.30 Asset Purchase Agreement by and between Junghans UK Limited and Fossil
(UK) Ltd. dated August 1999 (without schedules) (incorporated by
reference to Exhibit 10.3 of the Company's Report on Form 10-Q for the
quarterly period ended October 2, 1999)

13(1) Fossil, Inc. 1999 Annual Report to Stockholders.

21.1(1) Subsidiaries of Fossil, Inc.

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23.1(1) Consent of Independent Auditors.

27 (1) Financial Data Schedule.

(1) Filed herewith.

(2) Management contract or compensatory plan or arrangement.

(b) Reports on Form 8-K

The Company did not file any report on Form 8-K during the last quarter
of the period covered by this Report.

-21-

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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 in the City of
Richardson, State of Texas, on March 30, 2000.

FOSSIL, INC.

/s/ Tom Kartsotis
---------------------------------------
TOM KARTSOTIS, CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

SIGNATURE CAPACITY DATE

/s/ Tom Kartsotis
- -------------------------------------------- Chairman of the Board, Chief Executive March 30, 2000
TOM KARTSOTIS Officer and Director
(Principal Executive Officer)

/s/ Kosta N. Kartsotis
- -------------------------------------------- President and Chief Operating Officer March 30, 2000
KOSTA N. KARTSOTIS and Director

/s/ Randy S. Kercho
- -------------------------------------------- Executive Vice President, Chief Financial March 30, 2000
RANDY S. KERCHO Officer and Treasurer
(Principal Financial and Accounting Officer)

/s/ Michael W. Barnes
- -------------------------------------------- Executive Vice President and Director March 30, 2000
MICHAEL W. BARNES

/s/ Jal S. Shroff
- -------------------------------------------- Director March 30, 2000
JAL S. SHROFF

/s/ Kenneth W. Anderson
- -------------------------------------------- Director March 30, 2000
KENNETH W. ANDERSON

/s/ Alan J. Gold
- -------------------------------------------- Director March 30, 2000
ALAN J. GOLD

/s/ Michael Steinberg
- -------------------------------------------- Director March 30, 2000
MICHAEL STEINBERG

/s/ Donald J. Stone
- -------------------------------------------- Director March 30, 2000
DONALD J. STONE

-22-

INDEPENDENT AUDITORS' REPORT

To the Directors of Fossil, Inc.:

We have audited the consolidated financial statements of Fossil, Inc. and
subsidiaries as of January 1, 2000 and January 2, 1999 and for each of the three
years in the period ended January 1, 2000, and have issued our report thereon
dated February 18, 2000, which report expressed an unqualified opinion; such
consolidated financial statements and report are included in your 1999 Annual
Report to Stockholders and are incorporated herein by reference. Our audit also
included the consolidated financial statement schedule of Fossil, Inc. and
subsidiaries listed in Item 14. This consolidated financial statement schedule
is the responsibility of the Company's management. Our responsibility is to
express an opinion based on our audits. In our opinion, such consolidated
financial statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.

DELOITTE & TOUCHE LLP
Dallas, Texas
February 18, 2000

S-1

SCHEDULE II

FOSSIL, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS

Fiscal Years 1997, 1998, and 1999
(in thousands)

ADDITIONS
---------
CHARGED DEDUCTIONS
BALANCE AT (CREDITED) TO --------------
BEGINNING OF COSTS AND ACTUAL RETURNS BALANCE AT END OF
CLASSIFICATION PERIOD EXPENSES OR WRITEOFFS PERIOD
- -------------- ------ -------- ------------- ------

Fiscal Year 1997:

Accounts receivable allowances:

Sales returns 8,854 17,399 (15,677) 10,576

Bad debts 4,292 2,025 (1,617) 4,700

Cash discounts 214 205 (230) 189

Inventory in transit for estimated
customer returns (4,464) (9,716) 8,485 (5,695)

Fiscal Year 1998:

Accounts receivable allowances:

Sales returns 10,576 22,967 (19,577) 13,966

Bad debts 4,700 4,005 (1,841) 6,864

Cash discounts 189 249 (210) 228

Inventory in transit for estimated
customer returns (5,695) (12,595) 10,805 (7,485)

Fiscal Year 1999:

Accounts receivable allowances:

Sales returns 13,966 23,667 (19,933) 17,700

Bad debts 6,864 2,573 (1,480) 7,957

Cash discounts 228 219 (274) 173

Inventory in transit for estimated
customer returns (7,485) (10,732) 8,754 (9,463)

S-2

EXHIBIT INDEX

EXHIBIT
NUMBER DESCRIPTION

3.1 Amended and Restated Certificate of Incorporation of Fossil, Inc.
(incorporated by reference to Exhibit 3.1 of the Company's Registration
Statement on Form S-1, registration no. 33-45357, filed with the
Securities and Exchange Commission).

3.5 Certificate of Amendment of the Amended and Restated Certificate of
Incorporation of Fossil, Inc. (incorporated by reference to Exhibit 3.1
of the Company's Report on Form 10-Q for the quarterly period ended
June 30, 1995).

3.6 Second Amended and Restated Certificate of Incorporation of Fossil,
Inc. (incorporated by reference to Exhibit 3.1 of the Company's Report
on Form 10-Q for the quarterly period ended July 4, 1998).

10.11 Agreement of Limited Partnership of Fossil Partners, L.P. (incorporated
by reference to Exhibit 10.13 of the Company's Report on Form 10-Q for
the quarterly period ended September 30, 1994).

10.22 Stock Purchase Agreement dated February 1, 1997, by and between
Bluewhale Holding S.a., and Fossil Europe B.V. (incorporated by
reference to Exhibit 10.1 of the Company's Report on Form 10-Q for the
transition period from January 1, 1997 to April 5, 1997).

10.22(2) First Amendment to the Fossil, Inc. 1993 Long-Term Incentive Plan
(incorporated by reference to Exhibit 4.1 of the Company's Report on
Form 10-Q for the quarterly period ended July 4, 1998).

10.25(2) Fossil, Inc. and Affiliates Deferred Compensation Plan (incoporated by
reference to Exhibit 10.25 of the Company's Report on Form 10-K for the
year-ended January 2, 1999).

10.27 Third Amended and Restated Loan Agreement dated June 29, 1998, by and
among Wells Fargo Bank (Texas), National Association, a national
banking association formerly known as First Interstate Bank of Texas,
N.A., Fossil Partners, L.P., Fossil, Inc., Fossil Intermediate, Inc.,
Fossil Trust, Fossil New York, Inc., Fossil Stores I, Inc., and Fossil
Stores II, Inc. (without exhibits) (incorporated by reference to
Exhibit 10.1 of the Company's Report on Form 10-Q for the quarterly
period ended July 4, 1998).

13(1) Fossil, Inc. 1999 Annual Report to Stockholders.

21.1(1) Subsidiaries of Fossil, Inc.

23.1(1) Consent of Independent Auditors.

27 (1) Financial Data Schedule.

(1) Filed herewith.

(2) Management contract or compensatory plan or arrangement.