Allison Malkin - Investor Relations, ICR Kosta Kartsotis - CEO Mike Barnes - President and COO Mike Kovar - CFO

Brad Stephens - Morgan Keegan Barbara Wyckoff - Buckingham Research Group John Curti - Principal Global Investors Ronald Bookbinder - Global Hunter

Ladies and gentlemen, thank you for standing by and welcome to the Fossil 2008 First Quarter Earnings Call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation the conference will be open for questions. (Operator Instructions) I would now like to turn the conference over to Allison Malkin with the ICR. Please go ahead, ma'am.

Thank you, before we begin, you should be aware that during this conference call, certain discussions will contain forward looking information. Actual results could differ materially from those that will be projected during these discussions. Fossil’s policy on forward-looking statements and additional information concerning a number of factors that could cause actual results to differ materially from such statements is readily available in our Form 10-K and 10-Q report filed with the SEC. In addition, Fossil undertakes no obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise. If any non-GAAP financial measure is used on this call, a presentation of the most directly comparable GAAP financial measure and a reconciliation of the non-GAAP financial measure to GAAP will be provided as supplemental financial information to this release, under the earnings release section of the investor relations heading on Fossil’s website. Please note that this call is being webcast live on Fossil’s website. It will be available for replay on the website under the Investor Relations heading after the conclusion of the call. And now I’d like to turn the call over to Fossil’s CEO, Kosta Kartsotis.

Thanks Allison. Good morning everyone, and thanks for joining us. Also here today are Mike Barnes, President and COO, and our CFO, Mike Kovar. We will give you an overview of our first quarter results and then give some additional insight into our operations and our outlook for the reminder of the year. At the conclusion of our prepared remarks, we will welcome your questions. During the first quarter, we continued to experience solid growth. The strength of our global distribution network and diverse product offerings, along with the benefit of the favorable changes in the exchange rates, more than offset the impact of a challenging retail environment in United States. As a result we reported record sales and earnings, surpassing our original guidance. Specifically, our first quarter results included net sales growth of 17%; gross profit margin at 54.5% represented a 330 basis points increase from last year; operating margins of 14% of net sales, and diluted earnings per share of $0.43. Our overseas business, which generates more than half of our sales, continued to build on its market share gains. We experienced solid growth for the Fossil watch business in both Europe and Asia, with wholesales shipments growing at 17% ex-currency. And we continue to make progress in expanding our accessories businesses outside United States. Global net sales from licensed brand watches also increased by 16% ex-currency during the quarter, and represented approximately 33% of our consolidated sales. We continue to see double-digit sales growth in many of our larger more penetrated business as well as in newer businesses such as Kors and Marc Jacobs. Both are performing very well and adding doors globally. As to our direct consumer businesses, we are pleased with the progress we made during the first quarter. We have increased our global retail infrastructure and believe we are well-positioned to achieve our targeted 80 to 85 door growth this year. The new stores look great and serve as a great platform for us to showcase the Fossil brand worldwide and to build significant brand awareness. Our history tells us that this increase in awareness will also fuel our wholesale sales. Our Fossil accessory stores experienced positive comps in Europe and Asia. Our U.S. accessory store comps were impacted by a challenging environment in the United States, but we have seen a promising improvement in April and in early May. In our outlet store concept, which is predominantly in United States, increases in gross profit margins more than offset a slight decline in comp sales. On the balance sheet we ended the quarter with cash balances of $205 million. The company's cashflow allowed us to repurchase nearly $2 million shares of Fossil common stock over the last 12 months and still increase yearend cash balances by 38%. We are also pleased to raise our guidance for the year, which Mike Kovar will detail later in the call. While we anticipate there will still be some headwind in the United States, we are in the position to benefit from our diversified global business model. And now I would like to turn the call over to Mike Barnes to review our sales highlights in more detail.

Alright. Thank you, Kosta. Good morning everybody. I'll start with a review of our domestic businesses. Domestic wholesale watch shipments increased by about 6.7%. This growth was driven by our mass market, licensed watch and Michele brand, and partially offset by a sales decline in Fossil and Relic watches. Mass market watches saw shipments rise 69% in the first quarter, benefiting from Wal-Mart's promotional program commencing in first quarter this year, compared to the second quarter last year. Although the second quarter will be a much tougher comparison for our mass market because of the shift, we should see benefits in the replenishment business due to the earlier start this year. We expect our annual growth to be solid and we are pleased with the customer acceptance of the mass offerings. Our licensed watch sales rose by 13.5%, primarily due to the strength of our larger licensed brands as well as continued success with the rollout of Michael Kors. As we've mentioned on the previous calls, we're continuing to experience great responsership from our department store customers for these brands, and consumers are responding nicely to the newness in the assortments. Our proprietary luxury brand, Michele, experienced an increased in wholesale shipments for the quarter and it remains the bestselling luxury watch in the luxury care of distribution. Adding to our Michele brand portfolio, we launched Michele sunglasses in April, with a signature line priced from $200 to $395 and a diamond collection priced from $395 to $1,195. Early sell-through rates are encouraging. Additionally, we remain on track to re-launch the Michele jewelry line in Q4 with the core assortment priced from $300 to $800. Relic watches experienced a double-digit decline in the first quarter wholesale shipments, primarily due to the timing shifts between quarters. Based on current sell-through rates of retail though, we expect Relic shipments to increase in the second quarter and for the full year. It's important to note that Relic remained in a solid position within both Penney's and Kohl's. Fossil watches reported a decline in domestic wholesale shipments. We're confident however, that this performance does not accurately reflect the performance of Fossil at retail, but rather the preference of retailers to maintain tight inventories in a seasonally slower quarter and given the overall consumers spending environment. Retail selling itself was solid, and because their inventory to sales ratios with many of our customers is now lower, this creates a situation which can typically result in increased shipments in future quarters. This is especially the case as we enter the more significant fall in holiday seasons. Also, we believe it's important to point out that while our domestic wholesale shipments declined in the first quarter, our accelerated accessory store rollout has resulted in market share gains for Fossil watches, when you combine all channels of distribution and the United States. Our domestic accessory business experienced an 8% decline in the wholesale shipments during the quarter, due to declines in our men's leather category and softer than expected eyewear sales. These declines were partially offset by a 3% increase in wholesale shipments of Fossil handbags. The newness we delivered in certain handbag categories during last year's fourth quarter continues to perform well at retail. Our plans are to upgrade our women's small leather offerings with similar treatments that convey a more modern vintage design. And we're exited about the opportunity this presents for both handbags and small leathers for the balance of the year. The launch of our premium priced Fossil 54 handbag line in Q4 last year also continues to deliver solid sell-through rates at retail. Currently, the selection is limited to approximatly only 50 department store doors and our own full price retail stores. But based on current demand, we anticipate expanding the offering to approximately 150 additional department stores this fall. Relic handbags and small leather goods have a solid performance as well for the quarter. Wholesale shipments rose about 10%, with handbags sell-through rates retailing even better than that. Our forward retail bag line continues to build momentum at both Penney's and Kohl's. We're gaining market share and we're looking for this success to continue throughout the remainder of the year. Now, I'll move over to talk about our international wholesale business. Our total international business had a great performance for the quarter with net sales increasing by 30%, or 18% excluding currency. In Europe, sales rose by 29.3% or 14.4% ex-currency. Our performance was led by our Fossil and licensed watch brands as well as our jewelry business. I'll talk a little bit more specifically about our global jewelry results a little later. The Fossil watch business posted an 11.6% increase during the quarter. We're experiencing a positive response to the repositioned brand direction and styling. Also, the growth in our retail store base is furthering brand awareness throughout our wholesale channels. Wholesale shipments of licensed watch brands increased by 11% ex-currency. We expect this positive trend to continue for both our licensed and Fossil brands for the remainder of the year, as we continue to solidify our position in existing doors and add new doors throughout this region. In our other international segment, wholesale shipments rose by 30.5% or 24.6% ex-currency. We experienced strong double digit growth across our Fossil and licensed watch brands with most of our significant operating subsidiaries providing double digit sales growth in this segment of the business. Our shop and shop concepts in the Asia Pacific region continued to provide an excellent opportunity for us to build awareness for our brands and gain market shares in the department store environment. Shipments to our third-party distribution partners increased by 37% during the quarter. We believe this growth demonstrates the opportunity we have in gaining market share in many of the developing countries around the world by introducing our powerful portfolio of globally recognized watch and jewelry brands. In Mexico, we continue to gain market share and we're also encouraged by the early results in China, India and Korea. On the global jewelry front, wholesale shipments of branded jewelry rose by 45.4%, or 30.1% ex currency during the quarter. This was driven primarily by the growth in the Fossil brand across all international segments and the wider-scale introduction of Fossil brand jewelry in the U.S. market. You may recall that we launched the U.S. market in about 550 doors last year. We now expect this to grow to approximately 1,100 doors by year-end. Sell-through rates at retail are solid and we believe this category represents one of our largest opportunities for near and long-term growth. We also believe significant opportunity to broaden our jewelry business by just expanding the brand presence within this category. Now, looking at our direct consumer business; On a global basis, sales from our direct consumer segment rose by 17.4%, or 14.7% excluding currency. Primarily this was the result of a 24.4% increase from retail store door growth, which was partially offset by comparable store sales decline of 0.5% or 2.2% ex currency. Although this quarters results are not indicative of what we believe is the long-term potential for our direct business to be, the performance was commendable considering the overall U.S. environment and the 12% comp we delivered during last year's first quarter. Within our Fossil accessory store concept where our strategic retail rollout is based, we experienced comp increases of 3.4% in 68 comp stores that were opened during the quarter. However, excluding currency benefits, comp sales were flat to last year. Having said that, we did see better comp results from our 27 international accessory stores. Globally, we ended the quarter with 250 stores. This includes 118 full-priced accessory stores, 60 of which were outside the U.S. and 81 outlet locations, including 6 outside the U.S, 33 apparel stores and 18 multi-brand stores. This compares to 199 stores at the end of the prior-year quarter, including 75 full priced accessories stores that had 32 outside the U.S. and 77 outlet stores with 4 outside the U.S., 32 apparel stores and 15 multi-brand stores. During the first quarter, we opened seven new doors, including six full-priced stores, and one outlet store. We closed one accessory store during the first quarter. For the full-year 2008, we still expect to open 80 to 85 total stores. And as previously stated, we'll concentrate on the full-priced accessory concept with slightly more stores being opened internationally than domestically. At this time, I'll turn the call over to Mike Kovar to discuss our financial results.

Thanks, Mike, and good morning to everyone. First, I'd like to summarize our first quarter results from this morning's press release. Net sales increased 16.8% to $356.2 million compared to $304.8 million. Gross profit grew 24.4% to $194.3 million or 54.5% of net sales compared to $156.1 million, or 51.2% of net sales. Operating income increased 50.9% to $49.1 million or 13.8% of net sales, compared to $32.6 million or 10.7% of net sales. Reported net income rose 20.7% to $30.2 million compared to net income of $25 million last year. To note, the prior year quarter's effective tax rate of 26%, which was well below our structural rate due to an approximate $3.9 million tax reserve being released during last year's first quarter. And if you normalized last year's effective rate to our structural rate, net income would have increased approximately 40%. Diluted weighted average common shares increased 0.7% to 69.8 million compared to 69.2 million shares last year, and reported diluted earnings per share increased 19.4% to $0.43 compared to $0.36 per diluted share last year. And again, normalizing the prior-year effective tax rate to the structural rate would have resulted in first quarter diluted EPS growing 39%. The sales mix breakdown for the first quarter in comparison to the last year continues to shift towards a higher percentage of internationally based sales with an offsetting reduction in domestic sales percentages. Specifically, the 2008 first quarter sales mix was as follows; 13.9% from domestic wholesale watch sales, 15.6% from other domestic wholesale businesses, 15.5% from worldwide direct to consumer businesses, 36.6% from European wholesale activities, and 18.4% from wholesale activities and other international locations. The 16.8% sales growth for the quarter consisted of the following increases and decreases by category and geographic region. Domestic watch sales increased approximately 6.7% to $49.6 million compared to $46.5 million. Other domestic sales, which include our leather and sunglasses and jewelry businesses, decreased 8.1% to $55.3 million compared to $60.2 million in the prior-year quarter. Sales generated from European-based wholesale operations increased 29.3% to $130.1 million compared to $100.6 million in the prior year quarter. Other international sales, which consists of export sales to distributors and sales from our Canada, Mexico, and Asia Pacific wholesale operations, increased 30.6% and $65.7 million compared to $50.3 million in the prior year quarter. And finally sales from our worldwide direct to consumer businesses grew 17.6% to $55.5 million, compared to $47.2 million in the prior year quarter, primarily as a result of 24.4% growth in the average number of doors open during the first quarter, partially offset by comp store sales decreases of 0.05%. Gross profit margin grew 330 basis points to 54.5% of net sales compared to 51.2% in the prior year quarter. The gross profit increase includes an approximate 200 basis points benefit relating to the impact of a weaker U.S. dollar. Additionally, gross profit margin was favorably impacted by an increase in our sales mix towards higher margin international sales and an increase in our Relic store margins as a result of lower levels of discontinued product inventory in comparison to the prior year quarter and improved margins related to our internal initiative to reduce product costs and decrease the proportion of lower margin offerings across many of our business’s. These favorable increases in gross profit margin were partially offset by increased freight costs and an increased mix of lower margin mass market and third-party distributor shipments. Operating expenses at the percentage of net sales increased 20 basis points for the first quarter to 40.7%, compared to 40.5% for the prior year quarter. Total operating expenses increased by $21.6 million in comparison to the prior year quarter to $145.1 million, and this includes approximately $6.8 million related to the translation of foreign-based expenses as a result of the weakening U.S. dollar. Operating expenses in the prior year quarter also included approximately $6 million related to the expenses associated with our equity grant review. Excluding the impact of expenses related to currency this year and the equity review last year, the increase in operating expenses was principally driven by our direct to consumer segment, primarily due to retail door growth and expenses related to building the infrastructure to support our accelerated store growth plans. Moreover direct to consumer operating expenses, as a percentage of direct to consumer sales, increased from 53.8% to 68.7% during the first quarter, resulting in approximately $8 million of additional expenses in our first quarter SG&A. We believe this trend will continue during the second quarter to a slightly lesser extent, but expect the overall operating expense leverage to be significantly less impactful during the more seasonal second half of the year. Operating expense increases in our wholesale operations were result of increased payroll expense primarily attributable to our incentive cash and equity compensation plans and higher levels of expenses, as a result of increased sales. In 2008, although we expect to leverage the infrastructure associated with our wholesale business activity as sales increased, we believe the leverage gains will be generally offset by our anticipated retail store expansion initiatives. Operating profit increased 50.9% for the first quarter to 13.8% of net sales, compared to operating profit of 10.7% of net sales for the prior year quarter, as a result of increased gross profit margins partially offset by a slight increase in operating expenses as a percentage of net sales. Operating income was favorably impacted by approximately $10.8 million as a result of the translation of foreign-based sales and expenses into U.S. dollars. First quarter other income expense increased unfavorably by approximately $2.9 million when compared to the prior year quarter. And this unfavorable increase is related to $2.1 million of foreign currency transaction losses during the first quarter compared to approximately $700,000 of gains in the prior year quarter. These increases were partially offset by increased interest income resulting from higher levels of invested cash balances. The currency transaction losses are primarily related to forward contracts previously entered into throughout fiscal 2007 at forward rates below the relative current quarter exchange rate and are a part of our normal hedging activity program. Income tax expense for the first quarter and prior year quarter was $17.2 million and $8.8 million respectively, resulting in an effective income tax rate of 36.3% and 26% respectively. And as I alluded to earlier, the lower effective rate for the prior year quarter was primarily due to the release of $3.9 million in certain income tax contingency reserves. We're estimating our fiscal year 2008 effective tax rate will approximate 37% to 38%. Now looking at the balance sheet; Our cash, cash equivalents, and securities available for sale at the end of the first quarter totaled $205 million, in comparison to $149 million at the end of the prior year quarter, and $268 million at the end of fiscal year 2007. We've purchased approximately $68 million of our common stock since the end of the prior year first quarter and our debt balances remain minimal. Accounts receivable increased to $204.8 million at the end of the first quarter, compared to $151.9 million at the end of the prior year quarter. Days sales outstanding for the first quarter was 52 days, an increase from 45 days in the prior-year quarter, primarily due to higher levels of international wholesale sales that generally results in longer collection cycles than we experienced with sales in the U.S., and increase in sales mix related to third-party distributors that generally have longer payment terms in comparison to wholesale sales and a slight increase in our domestic wholesale collection cycle. Inventory at quarter-end was $265.5 million, representing an increase of 12.7% from the prior-year inventory balance of $235.6 million and included inventory related to an additional 51 net retail stores being opened since the end of the prior-year quarter. Capital expenditures for the first quarter totaled approximately $9 million, and we're expecting 2008 capital expenditures of approximately $75 million to $80 million. A significant portion of these are related to new retail store openings including the implementation of a new SAP point-of-sale system. Depreciation and amortization expense for the first quarter was $8.9 million and we're estimating full year 2008 depreciation and amortization of $40 million to $44 million with the increases over the 2007 level primarily related to our direct to consumer businesses. As it relates to the guidance for the remainder of the year and as we continue to grow our retail store base, sales from our direct to consumer segment increased as a percentage of our total sales mix, benefiting our profitability in the fourth quarter, but generally at the expense of the first and second quarter. When due to seasonality, it's more difficult to leverage retail expenses against retail store sales. In addition, our guidance includes a more conservative approach as to the expected currency gains for the second half of the year. As a result, we are currently estimating second quarter fiscal 2008 net sales to increase in the range of 12% to 14% and diluted earnings per share of $0.25, inclusive of $0.04 in incremental costs in support of our direct to consumer expansion. This compares to 2007 second quarter actual diluted EPS of $0.21. For the full quarter fiscal year 2008, we currently estimate net sales growth in the mid-teens range with fully diluted earnings per share in a range of $2.16 to $2.22, as compared to a normalized $1.78 and diluted EPS for fiscal 2007. The 2007 EPS figure of $1.78 is exclusive of option grant review cost and adjusted to a normalized tax rate of 37.5%. And now, I'll turn the call back over to Kosta for concluding remarks.

Thanks Mike. In conclusion, we remain confident that our strategy is positioned to achieve our near and long-term goals. We believe the following drivers will result in a solid 2008 performance. The Fossil brand is performing well and gaining an importance in existing and new geographies. This is a huge long-term opportunity. Our repositioning of the brand and retooling of the product line is going well, and we expect ongoing improvement through the rest of this year and beyond in both watches and leather goods. Our direct to consumer expansion strategy is fueling the opportunity as we continue to deliver our new store economics. This will increase our brand awareness and spur further wholesale growth. It is important to note that at the year-end, more than half of our accessory stores will be located outside the United States. We also believe a significant opportunity exists to maximize our e-commerce platform in both domestic and overseas markets. All in all, we feel we are in a very great position for future sales and earnings growth. With that, we'd like to turn the call over for Q&A.

(Operator instructions) Our first question is from Brad Stephens with Morgan Keegan. Please go ahead. Brad Stephens - Morgan Keegan: Hi, good morning, guys.

Hi, Brad. Brad Stephens - Morgan Keegan: A few questions for you. First of all, on the $0.04, that is a directly to SG&A for rent expense or… Just a little clarity on that please?

That would include the impact of the additional infrastructure cost we have been carrying since last year in addition to pre-opening cost for the new stores that we expect to open in the second quarter. Brad Stephens - Morgan Keegan: Okay. Your domestic business, can you give us an idea of what percentage of that is on replenishment, and for the percentage that is, has there been any change to maybe the modules they are reordering on? And then also any push-out in ordering patterns going forward that you have seen?

No, I would just generally, if you look at all the categories, replenishment is probably 30% on balance. And I think our shipments in the United States are really more an issue of stores making efforts to turn faster and not necessarily a function of any QRS or anything like that. Brad Stephens - Morgan Keegan: Okay. And then on your fashion orders, are people delaying orders at this point?

No, I would just say as I said earlier, I think they are just trying to turn faster. There is a quite a lot of, obviously the headwind in the United States has doors concerned. First quarter, small time of the year, there is very litte benefit for carrying a lot of inventory quite honestly, and they have been conservative based on the headwind. And at the same time, I think their objectives are for them to try to turn faster. And so I think the combination of all those things is really to have, as a percentage of sales of last year, their order flow was less than their sales increases. Brad Stephens - Morgan Keegan: Okay. And last, Mike, your view on additional repurchase authorization at this point?

Well, we've talked about earlier we completed our current buyback in early April. We anticipate looking at opening up a new buyback sometime after we have a Board meeting later next week, but we do anticipate to continue to buyback to some extent. Our reasoning for that has always been to offset the dilution impact of equity grants to our employees. Brad Stephens - Morgan, Keegan: Okay. Thank you, guys. Good luck.

Thank you. (Operator Instructions). Our next question is from Barbara Wyckoff with Buckingham Research Group. Please go ahead. Barbara Wyckoff - Buckingham Research Group: Hi, everyone. Good job.

Hi, Barbara. Barbara Wyckoff - Buckingham Research Group: Hi. Kosta, what's your view and I guess Mike too, what's your view in the handbag business going into fall, what do you see that is new that could drive incremental sales? Then a question on the jewelry business. How big is the jewelry business now domestic plus international? How big could it be, say five years down the road? And then, could you talk thirdly about the sell through on the auto and the Swiss watches? How important are they to the mix, where could it go and what are you doing to secure steady supply of automatic movements?

Well on the handbag business, first as we've been talking about, we have been repositioning the Fossil brand, making it more aspirational, which bodes very well for the handbag business because that's probably the most aspirational business. And the retooling of the product line is going very well. We've got a great response both in the United States and also internationally. And we're expecting big things to happen through the balance of this year and onward. It's also very interesting to note that in our own stores globally, we're actually getting in our stores a better response internationally to handbags than we are in the U.S. And we think that is going to help penetrate those new markets. As you know, most of our handbag business right now is in the United States. Barbara Wyckoff - Buckingham Research Group: Right.

On the jewelry side, we had launched a jewelry line in the United States in department stores doing very well taking, a pretty good position and space in the stores, and we think it's positioned for good long-term growth. And we see that as an ongoing situation. And as you know, globally our jewelry business is probably the fastest growing business we have. It does have very sustainable upside, because globally we're continuing to see branded jewelry be a big issue not only in United States but outside. And as you mentioned also on the automatic watch side and on the Swiss watch side, there has been an increasing awareness and sell-through on Swiss watches. You can see our Burberry business growing very, very quickly, which is a Swiss watch brand. We do have automatic watches in Fossil and also in Armani that are doing very well. And we have in the last couple of years or so developed some relationships with the Swiss manufacturers of movements as well as some Chinese manufactures. And we think we're in a very good position to have some pretty good supply, but it isn't increasing in growing part of our business.

Barbara, on the jewelry side for the first quarter, our total jewelry business represented about 9% of the total sales, which is up slightly to, I think, 8% for the full year 2007. Barbara Wyckoff - Buckingham Research Group: Okay. And by the end of the year, you expect it to be kind of where? Could it get up to 12?

I think we expect it to continue to grow, like some of the opportunities we have not only in Fossil in the U.S. with the recent launch, but obviously the line is doing well outside the U.S. and particularly in its home base of Europe. Barbara Wyckoff - Buckingham Research Group: Okay. Thank you.

Thank you. Our next question is from John Curti with Principal Global Investors. Please go ahead. John Curti - Principal Global Investors: Good morning. I was wondering if you could maybe give us a little more detail in terms of the incremental costs for the remainder of the year for the direct to consumer rollout. You mentioned $0.04 in the second quarter, what about for the back half of the year and how much was it in the first quarter?

In the first quarter it was around $0.08 a share, about $8 million as I said on the conference call if you just normalize the SG&A as a percentage of sales against last year. For the balance of the year Q3 and Q4, we're expecting some slight leverage against that infrastructure build. Obviously, our fourth quarter to our direct consumer business is very significant as it relates to the percentage of total sales. So I would say that in Q3, we're going to see a slight impact to the leverage story but that being more than made up for in Q4. John Curti - Principal Global Investors: Okay. Thank you.

Thank you. Our next question is from Ronald Bookbinder with Global Hunter. Please go ahead. Ronald Bookbinder - Global Hunter: Good morning.

Good morning.

Hi, Ron. Ronald Bookbinder - Global Hunter: Could you talk about the efforts of the margin team and how much of an impact they had on that 330 basis points of expansion?

Yeah. We can talk about that a little bit, actually we started this initiative last year and as we've told everyone in the past, it takes a while to turn things around because of existing inventories, and inventories that were already on order into pipeline. So we started seeing the results of the margin team began pretty much in Q3 last year with a little bit more in Q4, Q1 we think it's obviously been a lot more. Having said that, there is still lot of pressure from China on pricing and everything, so that's partially been offset, but we're still seeing a positive impact. If you strip it all down, we still saw about 50 basis points. We saw that 50 basis points that we can attribute directly to initiatives of the margin team and not to currency or any other initiatives. Ronald Bookbinder - Global Hunter: And really…

That continued to some degree throughout this year. Ronald Bookbinder - Global Hunter: Or at least through the third quarter?

Correct. We won't start anniversarying that initiative until the fourth quarter. As Mike alluded to, it really started at the end of Q3 with no real impact to Q3 margins last year, but we did see that benefit start flowing through in Q4 last year. Ronald Bookbinder - Global Hunter: And on the repositioning of the Fossil brand, how is that going? How has that been received? And how long does it take for to really start having an impact on revenue?

Well, as we mentioned, it's going very well. I think if you look at the strategy, starting with our stores, web, and catalog as the communication point. If you want the stores, you look at some of the categories we've taken out, they were lower priced, maybe more teenage related. What its done is put us in a position where increasingly we can get higher prices for products, which is obviously going to help us as we move forward. And we think that long-term globally, the position we are in, targeting especially 25 to 35-year-old is going to fit better in the malls and in the stores outside United States to create more aspirational viewpoint, but it will also continue to get the teenage customers as well. So, we think we're going to be able to benefit from that, so long term we think it's a great objective of ours. And we are very excited about the prospect of us putting not only stores, but websites and potentially catalogs around the world to communicate this. And we think it's going to be a great thing for us long term. Ronald Bookbinder - Global Hunter: Okay. Good luck. Thanks.

Thank you. Our next question is a follow-up question from Barbara Wyckoff with Buckingham Research Group. Please go ahead. Barbara Wyckoff - Buckingham Research Group: Hi, sorry. On the mass market watches, how big is this business now and where could it go? You said very tight overhead controls on this business, is that still the case? Thank you.

Yes, the business currently represents probably around just over 2% of sales. So, it's nothing significant. It's primarily still driven by Wal-Mart. We're seeing some expansion in the Target and other customers within that channel. But again, it's something that we think can grow nicely over time, but it's not going to be anything more significant to total sales than probably where it is today. Barbara Wyckoff - Buckingham Research Group: Okay, thanks.

Ladies and gentlemen, this concludes our question-and-answer session. I will turn it back over to Mike Kovar for any closing remarks.

Thanks. Should you want to replay this conference call, it has been recorded and will be available from 10 a.m. Central Time today until 12 Midnight Central Time tomorrow. And you can call 303-590-3000 and enter reservation number 11110811 followed by the pound sign. Again, that reservation number is 11110811. The conference call has also been recorded by StreetEvents and may be accessed through StreetEvents' website at www.StreetEvents.com or directly through our website at fossil.com. Click on Investor Relations on our home page and then on webcast. Finally, should do you have any questions that did not get addressed today, please give Mike Barnes or myself a call. Thanks again for joining us today. Our next scheduled conference call will be in May for the release of our 2008 second quarter operating results.

Ladies and gentlemen, this does conclude our conference for today. You may now disconnect.