Watch maker Fossil Inc announces Q2 results

09 Aug '05

9 min read

The Company's balance sheet remains strong. At quarter-end, cash balances were $132.8 million with no long term debt. Inventory at quarter-end was $218.4 million, 34.6 percent above the prior year quarter inventory of $162.2 million. This increase primarily relates to increased retail store inventories, including new stores and higher per store inventory levels, increased inventory levels associated with the Company's luxury brands and increased inventory levels across the Company's European businesses.

At quarter end, accounts receivable increased approximately 12.0 percent to $117.9 million compared to $105.3 million at the end of the prior year quarter. Days sales outstanding increased to 47 days for the Second Quarter compared to 46 days in the prior year period. Working capital rose to $354.3 million, an increase of $43.8 million over working capital of $310.5 million at July 3, 2004.

The Company estimates third quarter fully diluted earnings per share of approximately $0.28 compared to $0.31 fully diluted earnings per share in the prior year quarter and fourth quarter fully diluted earnings per share of approximately $0.57 compared to $0.47 fully diluted earnings per share in the prior year quarter.

This revised guidance of $0.85 for the second half of the year represents a decrease of $0.17 diluted earnings per share from its previous guidance of $1.02 as reported in the Company's first quarter conference call in May of this year. Of this decrease approximately $0.06 per share is related to reducing the U.S. dollar exchange rate from 1.28 to the euro and 1.89 to the pound, included in the Company's previous guidance, to 1.23 to the euro and 1.77 to the pound in the second half of the year, which reflect the current approximate spot rates.

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