Fossil Group, Inc.

Our cash and cash equivalents balance at the end of the Second Quarter was $109.9 million, including $104.6 million held by foreign subsidiaries, in comparison to cash and cash equivalents of $104.9 million at the end of the Prior Year Quarter and $123.6 million at the end of fiscal year 2024. Generally, starting in the third quarter, our cash needs begin to increase, typically reaching a peak in the September-November time frame as we increase inventory levels in advance of the holiday season. Our quarterly cash requirements are also impacted by debt repayments, restructuring charges and capital expenditures.

At the end of the Second Quarter, we had net working capital of $223.8 million compared to net working capital of $262.7 million at the end of the Prior Year Quarter. At the end of the Second Quarter, we had $13.4 million of short-term borrowings and $165.6 million in long-term debt including unamortized issuance costs compared to $2.6 million of short-term borrowings and $156.5 million in long-term debt including unamortized issuance costs at the end of the Prior Year Quarter.

Operating Activities. Cash from operating activities is net income (loss) adjusted for certain non-cash items and changes in assets and liabilities. Cash used in operating activities was $50.9 million in the Year To Date Period as compared to cash provided by operating activities of $39.0 million from the Prior Year YTD Period, primarily due to the receipt of $57.3 million of U.S. tax refunds in the Prior Year YTD Period.

Investing Activities. Investing cash flows increased $24.0 million in the Year To Date Period compared to the Prior Year YTD Period, primarily related to the sale of our European distribution center in the Second Quarter.

Financing Activities. Financing cash flows primarily consist of borrowings and repayments of debt. The $58.2 million increase in financing cash flows year-over-year was primarily due to net borrowings during the Year To Date Period compared to net payments in the Prior Year YTD Period under the Revolving Facility.

Material Cash Requirements. We have various payment obligations as part of our ordinary course of business. Our material cash requirements include: (1) operating lease obligations (see Note—14 Leases within the Condensed Consolidated Financial Statements); (2) debt repayments (see Note 15—Debt Activity within the Condensed Consolidated Financial Statements); (3) non-cancellable purchase obligations; (4) minimum royalty payments; and (5) employee wages, benefits, and incentives. The expected timing of payments of our obligations is estimated based on current information. Timing of payments and actual amounts paid may be different, depending on the timing of receipt of goods or services, or changes to agreed-upon amounts for some obligations. In addition, some of our purchasing requirements are not current obligations and are therefore not included above. For example, some of these requirements are not handled through binding contracts or are fulfilled by vendors on a purchase order basis within short time horizons. Moreover, we may be subject to additional material cash requirements that are contingent upon the occurrence of certain events, e.g., legal contingencies, uncertain tax positions (see Note 5—Income Taxes within the Condensed Consolidated Financial Statements) and other matters.

For fiscal year 2025, we expect total capital expenditures to be approximately $5 million. Our capital expenditure budget is an estimate and is subject to change.

Sources of Liquidity. We believe cash flows from operations, combined with existing cash on hand and amounts available under our credit facilities will be sufficient to fund our cash needs for at least the next twelve months. Although we believe we have adequate sources of liquidity, we are assessing our liquidity position and potential sources of supplemental liquidity in light of our operating performance, the timing of the expected benefits of our Turnaround Plan and other relevant considerations, including macroeconomic events, recessionary risks and tariffs. In the event our liquidity is insufficient, we may be required to limit our spending or sell assets. In addition, we may seek additional deleveraging or refinancing transactions, including entering into transactions to exchange debt for other debt securities (including additional secured debt), issuance of equity (including preferred stock and/or convertible securities), repurchase or redemption of outstanding indebtedness, or may otherwise seek transactions to reduce interest expense, extend debt maturities and improve our capital structure. Any of these transactions could impact our financial results, including additional expenses, charges and cancellation of indebtedness income. We cannot assure you whether any of such transactions will be consummated, whether we will achieve the benefits of any such transaction, or whether our cost of capital will increase, any of which could have a material adverse impact on our future liquidity.

The following table shows our sources of liquidity (in millions):

(1) On August 13, 2025, we entered into a New Revolving Credit Facility (as defined below)

As of August 13, 2025, we had $31.1 million of available borrowing capacity under our New Revolving Credit Facility.

Notes: In November 2021, we sold $150.0 million aggregate principal amount of our 7.00% senior notes due 2026 (the "Notes"), generating net proceeds of approximately $141.7 million. The Notes are our general unsecured obligations. The Notes bear interest at the rate of 7.00% per annum. Interest on the Notes is payable quarterly in arrears on February 28, May 31, August 31 and November 30 of each year. The Notes mature on November 30, 2026. We may redeem the Notes for cash in whole or in part at any time at our option at the following prices: (i) prior to November 30, 2025, at a price equal to $25.25 per $25.00 principal amount of Notes and (ii) on or after November 30, 2025, at a price equal to $25.00 per $25.00 principal amount of Notes, plus (in each case noted above) accrued and unpaid interest, if any, to, but excluding, the date of redemption.

Revolving Facility: On September 26, 2019, we and Fossil Partners L.P., as the U.S. borrowers, and Fossil Group Europe GmbH, Fossil Asia Pacific Limited, Fossil (Europe) GmbH, Fossil (UK) Limited and Fossil Canada Inc., as the non-U.S. borrowers, certain other of our subsidiaries from time to time party thereto designated as borrowers, and certain of our subsidiaries from time to time party thereto as guarantors, entered into a secured asset-based revolving credit agreement (as amended from time to time, the “Revolving Facility”) with JPMorgan Chase Bank, N.A. as administrative agent (the "ABL Agent"), J.P. Morgan AG, as French collateral agent, JPMorgan Chase Bank, N.A., Citizens Bank, N.A. and Wells Fargo Bank, National Association as joint bookrunners and joint lead arrangers, and Citizens Bank, N.A. and Wells Fargo Bank, National Association, as co-syndication agents and each of the lenders from time to time party thereto (the "ABL Lenders").

ABL Credit Agreement: On August 13, 2025, the Company and certain of its subsidiaries identified therein as guarantors entered into the ABL Credit Agreement with the Lenders, the Administrative Agent and the Company as a borrower to refinance the Revolving Credit Facility. Pursuant to the ABL Credit Agreement, the Lenders have provided new financing commitments to the Company under a new senior secured asset-based revolving credit facility (the “New Revolving Credit Facility”) in an aggregate principal amount of $150 million.

Borrowings under the New Revolving Credit Facility will bear interest at a rate of 5.00% for term SOFR borrowings and 4.00% for base rate borrowings, payable monthly in arrears. The Lenders will receive an upfront commitment fee equal to 2.00% of the aggregate commitments under the New Revolving Credit Facility. The Company’s obligations under the New Revolving Credit Facility are guaranteed by certain of the Company’s subsidiaries, and those obligations and the guarantees are secured by substantially all of the assets of the Company and certain of its subsidiaries. The ABL Credit Agreement includes customary representations and warranties, covenants applicable to the Company and events of default. If an event of default under the ABL Credit Agreement occurs, the Lenders may, among other things, declare the outstanding obligations under the ABL Credit Agreement to be immediately due and payable.

The New Revolving Credit Facility has a maturity date of August 13, 2030, subject to a springing maturity date if on the date that is the 91st day prior to its scheduled maturity any material indebtedness as defined in the ABL Credit Agreement is outstanding.

As of August 13, 2025, we had $15.0 million borrowed under the New Revolving Credit Facility and $31.1 million of available borrowing capacity.

Year To Date 2025 Activity: We had net borrowings of $2.1 million under the Revolving Facility during the Year To Date Period at an average interest rate of 6.7%. As of July 5, 2025, we had $150.0 million outstanding under the Notes and $18.0 million outstanding under the Revolving Facility. We also had unamortized debt issuance costs of $2.4 million recorded in long-term debt and $1.8 million recorded in intangible and other assets-net on the condensed consolidated balance sheets. In addition, we had $5.4 million of outstanding standby letters of credit as of July 5, 2025. Amounts available under the Revolving Facility are reduced by any amounts outstanding under standby letters of credit. As of July 5, 2025, we had available borrowing capacity of $0.7 million under the Revolving Facility. At July 5, 2025, we were in compliance with all debt covenants related to our credit facilities. In May 2025, the ABL Agent imposed an additional $5.0 million restructuring reserve that reduced the amount we were able to borrow under the Revolving Facility.

During the Year To Date Period and in fiscal year 2024, Fossil India Private Ltd. entered into receivables buyout facilities that are used for working capital purposes (the "Fossil India facilities"). Indian Rupee borrowings, in U.S. dollars, under the Fossil India facilities were approximately $12.8 million as of July 5, 2025.

Transaction Support Agreement: On August 13, 2025, the Company Fossil (UK) Global Services Ltd. (“Fossil UK”), and certain direct and indirect subsidiaries of the Company identified therein (collectively, the “Company Parties") entered into a Transaction Support Agreement ("The Transaction Support Agreement") with certain holders (the "Consenting Noteholders") representing ownership of approximately 59% of the aggregate principal of the Company’s 7.00% senior notes due 2026 (the “Notes”).

The Transaction Support Agreement contains certain covenants on the part of each of the parties thereto, including covenants that the Consenting Noteholders participate in, consent to, vote in favor of, and otherwise support, as applicable:

•A new money financing of up to $32.5 million aggregate principal amount of 9.500% First-Out Senior Secured Notes due 2029 (the “First-Out Notes”) to be offered to (i) the Consenting Noteholders on a private placement basis and (ii) to holders of Notes (“Noteholders”) (other than the Consenting Noteholders) pursuant to an SEC-registered offering (together, the “New Money Financing”), in each casepro rata (based on the face amount of their respective Notes in comparison to the total aggregate principal amount of all Notes. Noteholders that participate in the New Money Financing for their fullpro rata portion of the New Money Financing will also receive Common Stock of the Company equal to 5.0% of their respective funded portion of the New Money Financing, with the value of the Common Stock to be determined based on the average of the Daily VWAPs for the 30 consecutive Trading Days (each as defined in the Transaction Support Agreement) immediately prior to the date of the Transaction Support Agreement.

•An out-of-court private exchange of Notes pursuant to which the Consenting Noteholders will exchange Notes for First-Out Notes at 100% of the face amount of Notes plus accrued and unpaid interest and their portion of the New Warrants (as defined below) as described below (the “Private Exchange”).

•SEC-registered offerings in which the Company will offer to all Noteholders (other than the Consenting Noteholders) the opportunity (i) to participate for theirpro rata portion of the New Money Financing (based on the face amount of their respective Notes in comparison to the total aggregate principal amount of all Notes) and to receive their New Stock Investment, and (ii) to tender Notes in exchange for (A) if such Noteholder funds the full amount of itspro rata portion of the New Money Financing, First-Out Notes, and (B) if such Noteholder does not fund the full amount of itspro rata portion of the New Money Financing, 7.500% Second-Out Notes due 2029 (the “Second-Out Notes”), in each case, at 100% of the face amount of its Notes plus accrued and unpaid interest in the case of such exchange, together with, in each case, their portion of the New Warrants as described below (the “Public Exchange,” together with the Private Exchange, the “Exchange Transaction”).

•The issuance of warrants (the “New Warrants”) to purchase 3,000,000 shares of Common Stock or prefunded warrants, pro rata (based on amount of Notes exchanged into First-Out Notes or Second-Out Notes, irrespective of participation in the New Money Financing) to all Noteholders that exchange their Notes in the Exchange Transaction. The New Warrants will have an exercise price of $0.50 per share and a term of 30 days.

•The purchase by certain Consenting Noteholders (the “Backstop Providers”) of an amount of First-Out Notes equal to the amount of unpurchased First-Out Notes in the New Money Financing by Noteholders other than the Consenting Noteholders (the “Backstop Commitment”). As consideration for the Backstop Commitment, the Company will pay the Backstop Providers a backstop premium in the form of additional First-Out Notes.

•To consent to and support a consent solicitation in connection with the Public Exchange (the “Consent Solicitation”) pursuant to which the Company will solicit consents from Noteholders to enter into a supplemental indenture to the Indenture to (i) in the event the Out-of-Court Threshold (as defined in the Transaction Support Agreement) is met, remove certain covenants and events of default under the Notes, as well as to subordinate the Notes in right of payment to the First-Out Notes, the Second-Out Notes and the ABL Credit Agreement to the fullest extent permitted by Section

316(b) of the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”), and the Indenture, as amended; or (ii) in the event the Out-of-Court Threshold is not met and is not waived, amend the Indenture to enable implementation of the restructuring of the Company’s Notes through a proceeding pursuant to the Companies Act 2006 of England and Wales. Noteholders that so consent (including the Consenting Noteholders who have agreed to consent through the Transaction Support Agreement) will receive an aggregate amount of $1.0 million, pro rata (based on amount of Notes consented to by each such Noteholder), payable in First-Out Notes or Second Out Notes, depending on the form of new notes such Noteholder is receiving in exchange for their Notes.

The Transaction Support Agreement contemplates that, if Noteholders of less than 90% (subject to modification or waiver in accordance with the Transaction Support Agreement) of the outstanding principal amount of the Company’s Notes become party to the Transaction Support Agreement or validly tender their Notes in the Exchange Transaction, the restructuring of the Company’s Notes will be implemented through a proceeding initiated in the English Court by Fossil UK pursuant to the Companies Act 2006 of England and Wales.

The Transaction Support Agreement also contains certain customary representations, warranties and other agreements by the parties thereto, and contemplates that the Company Parties and Consenting Noteholders enter into a Mutual Release Agreement, providing for customary mutual releases of claims among the parties thereto.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the periods reported. On an on-going basis, we evaluate our estimates and judgments, including those related to product returns, inventories, long-lived asset impairment, impairment of trade names, income taxes and warranty costs. We base our estimates and judgments on historical experience and on various other factors that we believe to be reasonable under the circumstances. Our estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

There have been no changes to the critical accounting policies and estimates disclosed in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the fiscal year ended December 28, 2024.