Good day, and welcome to the Fossil, Inc. Q3 2015 Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the conference over to Eric Cerny. Please go ahead.

Thank you. Good afternoon, everyone. Thank you for joining us and welcome to Fossil Group's third quarter 2015 earnings conference call. I'd like to remind you that information made available during this conference call contains forward-looking information, and actual results could differ materially from those that will be projected during this call. Fossil Group'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 reports filed with the SEC. In addition, the company assumes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Please note that you may listen to a live webcast or replay of this call by visiting fossilgroup.com under the Investors section. Now, I would like to turn the call over to the company's Chairman and CEO, Kosta Kartsotis. Kosta N. Kartsotis - Chairman & Chief Executive Officer: Thank you, and good afternoon, everyone. As you saw, we made two announcements today. I will begin with a few prepared remarks on our third quarter performance, followed by our announcement to acquire Misfit. Before turning the call over to Dennis Secor, our Chief Financial Officer, who is joining us remotely today. Following his prepared remarks, Greg McKelvey, our Chief Strategy and Marketing Officer, will join us for Q&A. For the third quarter, we delivered sales and earnings within our expectations. Given last year's strong third quarter, we knew the comparisons would be tough and that proved to be the case. From a top line perspective, and in constant currency, overall sales declined 8%. While we are certainly not satisfied with that result, we executed well and delivered solid results…

Thanks, Kosta, and good afternoon everyone. I'd like to start with discussing our third quarter results and our outlook for the remainder of the year before going into additional detail regarding the Misfit acquisition. Third quarter net sales decreased 8%, and on a reported basis declined 14% to $771 million. While sales overall were soft partially due to the strong quarter we experienced in 2014, they came in at the low end of our expectations. For the quarter, we delivered earnings per share of $1.19 compared to $1.96 last year. Compared to the third quarter of 2014, this quarter's EPS was negatively impacted by roughly $0.40 due to currencies and another $0.05 due to our restructuring charges. Our investments to support our strategic initiatives and enhanced marketing totaled about $0.19 per share and the current quarter benefited $0.13 due to a lower tax rate. Fossil sales increased 2% in constant dollars. Leathers and watches grew, while jewelry was flat. Sales for the brand increased in all three regions with the highest growth in Asia. The brand drove positive comps in Europe and a double-digit increase in our global e-comm business driven by higher traffic and improved conversion rates. Skagen sales grew 10% in constant dollars with growth in all three regions. Solid growth in watches drove the business with increases in leathers and jewelry as well. In constant dollars, our multi-brand watch portfolio declined 11% compared to last year, partially due to last year's tough 12% comparison, but also it is clear that technology is putting pressure on the traditional watch category. Compounding this effect is the fact that we have brands in our portfolio that are lapping historically explosive growth. In the Americas, reported sales decreased 11% to $391 million, a 10% constant dollar decrease. The decrease was driven…

Thank you. And we'll take our first question from Erinn Murphy with Piper Jaffray. Erinn E. Murphy - Piper Jaffray & Co (Broker): Great. Thanks. Good afternoon. I was hoping you guys could talk a little bit more about the wholesale dynamic in North America. You talk about your retail partners managing inventory very tightly right now. I guess how much are they shrinking the open-to-buy dollars on the overall watch category? That would be my first question. And I've got a couple of follow-ups. Kosta N. Kartsotis - Chairman & Chief Executive Officer: We haven't seen a significant pullback on the inventory flow and it looks to us when we analyze it, it looks like it's relative to the sales, which obviously the trend is down. But the inventories look to be in good shape for us for the back half of the year and we'll move forward from there, but we don't see any significant pullback. Erinn E. Murphy - Piper Jaffray & Co (Broker): Okay. So, I guess if I look at your sales guidance for the fourth quarter then, is that all just sell-through rates decelerating to that range or is there an assumption that there is effectively no reorders from, or something else more draconian than that in the fourth quarter guide? Just I'm just trying to understand that dynamic.

Yeah. No, this, it's we experienced in the third quarter, sequentially we saw a slowdown in each one of our businesses. So, we believe that given where we are, that we could see some tightness everywhere. Europe is actually the largest change in the way we've been thinking about the fourth quarter from where we were before. So, we've lowered our expectations to accommodate the fact that we think that the fourth quarter could not be as strong as we had anticipated going in. I mean we always operate with a relative limited visibility. So a lot remains to be seen, and most of the business is done in the second half of the quarter, and we don't operate with backlog. But we've left a fairly wide range to accommodate lower sell-in and sell-through. Erinn E. Murphy - Piper Jaffray & Co (Broker): Okay. And then, I guess just last question on Michael Kors, you did highlight that a number of times in your prepared remarks just on the kind of comping the pretty tough comp from last year. When do you think we officially cycle that or how much more kind of pruning or kind of right-sizing of that brand needs to happen? Because it does seem to your point earlier that Europe is now starting to go through that reset on the brand? So I'm just curious on how you think about that over the next 12 to 18 to 24 months. Kosta N. Kartsotis - Chairman & Chief Executive Officer: Yeah, well as we said, we're going through some pretty tough comparisons, mostly in the U.S. and Europe. But in the meantime, we're ramping up a lot on automatics. We're adding additional assortments and locations for jewelry. We're building more shop-in-shops. Asia is still in its infancy for Kors, so there's a lot of opportunity there. And the big opportunity over the next couple years is going to be adding wearables to this. We think it could turbocharge that business quite a bit. So in addition to that, I would say that the Michael Kors business is still extremely productive, our most productive brand, very powerful globally. So, we expect that business will probably settle a bit for a while, we'll get wearables in there next year, and then we'll set it up for more long-term growth. It's a very strong global brand. It's unique in the world and it's a great brand, and one we're very pleased to go to battle with over the long term. Erinn E. Murphy - Piper Jaffray & Co (Broker): Okay. Thank you, guys. I'll let someone else jump in.

Thank you.

And we'll take our next question from Omar Saad with Evercore ISI.

Thank you. Good afternoon. So, wanted to follow-up, my first question on the wearables piece, a lot of stuff going on there. It's obviously a really tiny percentage of your business now, but you mentioned there's some data that you're seeing that gives you a lot of confidence in this, obviously enough confidence to make a sizable acquisition. Help us understand: A, where you're getting this confidence to make this kind of bet on the wearables piece and then maybe a little bit more details around Misfit specifically, the app platform versus the hardware side, what the key ingredients are there that you can leverage in your existing businesses? Gregory A. McKelvey - Executive Vice President, Chief Strategy Officer & Chief Digital Officer: This is Greg McKelvey. Yeah, in terms of the confidence in the size of the category, it's – I think the first is, we're seeing the market develop, where it's increasingly clear to us that wearable technology is and will be a large growing category. There's projections out there that are putting it about $45 billion in the next four years or five years with roughly two-thirds of that being wrist wearing, that would put the size of that market at roughly the same size of the under $1,000 global watch market. And we believe that, all three categories that make up that market, which would be activity trackers, smartwatches with display, and then the third being smarter watches, so integrating technology similar to what you'd find in activity tracker into the same type of watches we sell today, all three of those are viable products that are – that we see actually are Fossil Q launch being very successful with. So we're going – part of that we see the market is developing and we have…

And if I could just add one more thought is that, we absolutely remain at the core of the traditional watch market, but what this allows us to do is really to be all things to all people on the wrist, so whether it's design, fashion, style or brands, or now tech and the additional functionality, and that community, that brings we think that we have the products to merge that together, and we can do it in a way that nobody else can.

If I could bring the wearables conversation to line it up with the Michael Kors conversation, do you think that female, 20-year-old to 40-year-old Michael Kors fashion watch consumer that had been buying watches, has now switched and is buying Fitbits and Apple Watches, or do you think she is on the sideline, because she is waiting to see what's going to happen to the space or was there a lack of newness and innovation and new products for her within the Michael Kors line, and that the majority had enough products and styles? Help me understand what do you think is going on between wearables and Michael Kors, specifically because it is so big and was such a big growth driver? Kosta N. Kartsotis - Chairman & Chief Executive Officer: Excellent question. What we've seen from Kors is a huge audience of Kors fans out there that over the last 10 years have fallen in love with the brand, and have bought Kors products that the overall look of that is what we would call boyfriend. So, it's a men's watch on a woman. Most of those customers and a lot of them have multiples of those watches. And I'd say one thing we haven't done which we're working on right now is we haven't innovated off of that idea fast enough and you're going to see a whole new assortment of Kors watches next year, even before the wearable technology comes in. We're going to totally change the look. It's more modern, simpler, et cetera. There's a totally new look for it. It gives the consumers, the Kors fans, reason to buy another watch. But clearly, when we put the wearable technology in there and we put – Michael Kors themselves gets behind it, and the entire power of that organization is talking about technology and how can it fit with the Kors lifestyle, et cetera, we think it's another catalyst for another phase of growth and I think that's – the idea of technology injecting with fashion is so relevant today especially with the Millennial customer, we think it's going to fit and dovetail perfectly with our long-term Michael Kors strategy.

So, to summarize, you think it's a combination of lack of the wearable technology, but also maybe a little bit of lack in newness and innovation? Kosta N. Kartsotis - Chairman & Chief Executive Officer: Absolutely.

Thanks, guys, for all the information.

And we'll take our next question from Rick Patel with Stephens.

Thank you, good afternoon. Just a couple of questions. First, on the Fossil Q Founder. Does that have the one week battery life as well or is that just a Fossil Q Grant that you were referring to? And then secondly, any color on the pricing of Fossil Founder and perhaps the economics of it. Since you're partnering with Google and Intel, I'm curious about how each unit sold is going to impact sales and profitability. Dennis, I think you mentioned the negative impact of lower margins. But any way to frame that quantitatively? Gregory A. McKelvey - Executive Vice President, Chief Strategy Officer & Chief Digital Officer: This is Greg. The Q Grant has a week or more battery life. Q Founder will have a day to two days, depending on use. Price points on Q Founder are $275 to $295, and then Q Grant is $175 to $195. And then in terms of economics, we don't release margins on these products. I'd say that compare to where the growth that we're expecting for Gen 2 and Gen 3 over the next 12 months and 18 months, we're going to see a heck of a lot more unit volume and margin expansion as we go into next year. I'd still call Generation 1, our first foray into the market, limited inventory risk that we took in Q4 as we're just sort of starting to see how the products perform. But we're giving App Store, both on Apple and Google app stores, very good scores. It's performing really well, at both wholesale and our own direct-to-consumer channel. So, we're going to start to step into more volume as the holiday season goes on and early next year. Kosta N. Kartsotis - Chairman & Chief Executive Officer: The other thing I would add.

Just on the margin as well, Greg is right. We're not giving specific details of them. The volumes in the fourth quarter are relatively low, the way we think about this going forward into the future is that we do expect as it becomes a larger part of the mix that that should drive some downward pressure just because the category historically has not been as strong margins as we yield. On the other hand, as we scale, there should be some opportunity for the scale economics to kick in and help to offset some of that. But over time, the way we think about it now is we'd expect some general margin headwinds. Having said that, Kosta alluded to this, that as we add innovation to products, there is an opportunity for us to claim greater price and drive AUR. All that remains to be seen. But if you're thinking about next year, this should probably give us a little bit of margin headwind. Kosta N. Kartsotis - Chairman & Chief Executive Officer: Yeah, one thing that just in the tech industry, and especially with our – the expertise we're going to gain from Misfit is everything is going to get better, battery life is going to get better, chips are going to get better and less expensive. The objects are going to get smaller and we'll be able to put next year or shortly thereafter, women's smartwatches out there, our Android smartwatches at some point probably next year will be untethered, which means you don't need your smartphone with you, but all of this is going to get better, especially with us having the expertise to be an innovator and be on the front edge of all this technology and working with partners, et cetera, we're going to be able to bring more compelling products that will look better, feel better, margins will be better, and we'll be able to add lot of function to fashion without a lot of intrusiveness. So we're going to be in a pretty good position.

And as you roll out wearables, are you going to have to augment your display cases and department stores and jewelry stores versus what you have for analog watches? And if so, how should we think about the impact it's going to have either on depreciation or expenses or CapEx? Kosta N. Kartsotis - Chairman & Chief Executive Officer: Well, we've already done that. If you see the Q, presentations of both our stores and also in department stores, you'll see that we've added some in-case and top of counter and some other display. But as a matter of course, we refresh those anyway on an ongoing basis. So I wouldn't say it's any additional cost. Generally, it's more just changing from one thing to another. So it is going to be part of it, but it shouldn't be a big expense. Gregory A. McKelvey - Executive Vice President, Chief Strategy Officer & Chief Digital Officer: The other thing I'd add is this is also a big part of the value of the Misfit platform. So their technology is built on replaceable coin cell or watch-type batteries, so their whole software runs on those. What that allows us to do is very quickly scale both smarter watches and activity trackers that use those coin cell batteries across our global sales organization, across all channels without having to worry about putting power and expensive fixtures in place. So it gives us speed and much lower cost in operating expense and in CapEx.

Thank you. Good luck this holiday.

Thank you.

And we'll take our next question from Simeon Siegel with Nomura Securities.

Thanks. Good afternoon, guys. Sorry, if I missed this, but is the goal for Misfit to take the place of Intel and Google for all the connected devices and, I guess, if that's correct, what happens to the devices you have in the interim? And then, Dennis, can you just talk about the conflicting factors mentioned in the press release of pricing initiatives versus the higher markdowns that we have on this quarter's gross margin? Thanks. Gregory A. McKelvey - Executive Vice President, Chief Strategy Officer & Chief Digital Officer: Yeah. This is Greg. I'll take the first one. In terms of our technology partnerships, Intel and Google, who are both of our announced partnerships, they have been fantastic partners and will continue to be partners with us. The Misfit acquisition is really about owning the cloud on the app platform, given how integral it is now to product and brand and customer experience. So, we'll own that part of the customer experience through the app and cloud, but we will continue to partner with the leading technology companies across the world to continue to build the right ecosystem of partners to compete in this space. So, we'll – the best hardware providers, the best contract manufacturer, the right ecosystem, cloud partners, whether that's music or fitness or what have you. So, it still takes an entire ecosystem. This is just about us owning the cloud and app platform that's now part of product and brand.

Yeah. In terms of the margin, the pricing – generally speaking, the pricing adjustments that we've made, we've seen the margin yields that we were anticipating for the year, sales have not materialized as we had expected, so inventory levels as you saw are certainly higher, and so we will be likely then moving more inventory through different channels that would put some pressure on the margins, that we've included in the guidance, but to manage our inventory at the appropriate levels.

Okay. So, the higher markdowns are on different products then were you able to take the price on?

Yeah, it's different – it's different product. And I also mentioned that we're a little heavy in Swiss. And we'll likely invest a little there to make sure those levels of inventory appropriate.

Great. All right, thanks a lot guys and best of luck for holiday.

Thank you.

And we'll take our next question from Lindsay Drucker Mann with Goldman Sachs. Lindsay Beth Drucker Mann - Goldman Sachs & Co.: Thanks. Good evening everyone.

Good evening. Lindsay Beth Drucker Mann - Goldman Sachs & Co.: I just, I wanted to get some context around your outlook for smarter accessories and watches versus traditional ones. And given some of the headwinds you cited for millennial consumers and their acceptance of traditional watches and embracing digital ones, how we should think about the risk to your traditional watch sales for next year. Thanks.

Well I think our view is that, we're at a point now where this is a natural evolution. We see these markets coming together where those who traditionally have not participated in the traditional watch market, they're now more accessible to us because we have the ability to add tech to the product. So we are, as I said a few minutes ago, I really think the way we view this is that we've now got the best of both worlds in that we can be all things to all people on the wrist. So that if to the extent that you're a customer for whom design, fashion, style, branding matter and you're not interested in tech, we still are advantaged there. This expands our, another arrow in our quiver to attack an additional market and go after additional consumers. Lindsay Beth Drucker Mann - Goldman Sachs & Co.: I guess my question would be... Gregory A. McKelvey - Executive Vice President, Chief Strategy Officer & Chief Digital Officer: I'd add one other... Lindsay Beth Drucker Mann - Goldman Sachs & Co.: Sure. Gregory A. McKelvey - Executive Vice President, Chief Strategy Officer & Chief Digital Officer: Sorry, I'd add one other data point for you that, remember, 65% or 70% of our revenues today are female fashion-conscious customers. And the smartwatch market in particular today is still male-dominated. Females are playing in the activity tracker space. So, it's really not replacing for female fashion-conscious customers anyway. Smartwatches are not having a large overlap today. So we see however an opportunity for all three of the categories that we're going to be bringing to market to support and drive growth with that customer, that core customer. Lindsay Beth Drucker Mann - Goldman Sachs & Co.: Got it. But as we think about the speed at which you can scale these new platforms and have to build them and some of the lead times, should we be thinking about your North American business as one that can, given some of the headwinds you talked about in the traditional category, should we be thinking of that as a business that can grow next year or are you anticipating further revenue pressure?

So we haven't yet guided for 2016. So the way I would think about it is the acquisition itself provides us for opportunities for tailwinds for growth for next year, Misfit, by itself, our ability to accelerate that growth through our own distribution sales force and our ability to leverage our platform, or the Misfit platform, across some of our brands. That will be later in the second half of the year and it won't include all of the brands on the platform next year, but there will be tailwinds there. Fossil and Skagen we see as tailwinds in 2016. Every region those brands are growing in. We're seeing benefits from the marketing investments that we are making and our omni investments are also yielding dividends. Our e-commerce business has been up. So there's a lot of tailwinds going into next year. What remains to be seen is what are the – and we really need the fourth quarter to get better informed about this, what are the category trends, how is the consumer feeling, economic trends, brand trends. So we need more and we'll learn more through the fourth quarter, but we see a portfolio going into next year that includes a number of tailwinds including this acquisition will provide many of those. Lindsay Beth Drucker Mann - Goldman Sachs & Co.: Great. Thanks so much.

You bet.

. We do ask that you please limit yourself to one question and one follow up today. We'll take our next question from Oliver Chen with Cowen and Company.

Hi, thank you. Kosta, what do you think are the near-term differences that you can make to stimulate demand? I know the sell-ins are mostly done for the holiday season, but as we look to spring, are you going to have a radically changed assortment across all your brands including Kors, or is Kors kind of the main focus for transformation? And then did the watch market, did it also decline double-digits? I'm just curious about how the market moved versus your constant currency results. Kosta N. Kartsotis - Chairman & Chief Executive Officer: Yeah, actually we're moving very quickly across our entire spectrum of products with innovation and new materials, new ideas, changing as much as possible, changing point of sale. You could even, if you see our Fossil store for example and you saw we've had pretty good results in there, we've totally changed the way we have our presentations done, the products look great. And we're showing some pretty good increases relative to the market. So this is a typical pro forma for us. When times get tough, we innovate like crazy and put more designs in there, take some chances, et cetera. And typically during tough times, we come out of it in a pretty strong growth. Our operating model is really built for resilience and flexibility. Our inventory turns are faster than the rest of the market. Our design innovation is better and quicker. Our resources are broader and have a larger scale. Just giving you one example is that, we globally, most of our business is done through our own wholly owned subsidiaries where our competitors largely use distributors. So when times get tough, distributors pull back on their inventory investment, et cetera, we just keep going. So, this is a time for us to get stronger, take more share while we're moving very quickly to disrupt the market with new innovation, the technology and new ideas, et cetera. So we think we're in a pretty good position over the next couple of years. We think it will play out pretty well for us.

Yeah, and then on the U.S. market, the data that we collect, independent data covers not all but a substantial part of the market, about 40% of the U.S. market at our price points. And as we mentioned on the call, when we exclude the impact of Kors, we see us, our watch business outperforming the U.S. market in third quarter at our price points.

Okay. Best regards for the holiday season and next year.

Thank you very much.

And we'll take our next question from Ed Yruma with KeyBanc Capital Markets.

Hi, thanks for taking my questions. I guess first, I know historically you haven't provided markdown support for your wholesale partners, but I guess what do you or can you do in a time like this where sales trends are deteriorating pretty meaningfully? And then second, I know you've talked about wearables having a lower margin profile. I guess maybe a little bit more color and I know obviously this is changing with your acquisition. Thank you. Kosta N. Kartsotis - Chairman & Chief Executive Officer: Yeah, well the one advantage also in our operating model is that watches and accessories, they're not typically, there's not a weather-related component to it. There's not a lot of seasonality. It's not like swimwear and shorts and outerwear, et cetera. So the margins that retailers get are relatively high and it's not typically been a big part of our ongoing business model. We don't expect that to change dramatically. As far as the wearables, as we've been talking about, we have a lower gross margin now, but we think over long term as quantities come into play and we scale this across our platform that we can actually have a situation where we're able to increase that over time. Just looking at Moore's Law, and chips get less expensive and more robust, and we think that will play out for us, especially with our quantities and how we're going to go to market and especially also with us having the expertise to develop this ourselves rather than rely on third parties largely to do most of it.

Yeah, the other aspect of longer term, as you think about the margins, even to the extent that gross margins are modestly expanding or even if they're still creating a headwind, we think that there's an opportunity to leverage the entire infrastructure and the platform across all of our brands and distribution that provides us a lot of power to drive operating margin expansion over time. We won't see that immediately, because we're not getting all the benefits of leveraging the platform over the portfolio all the way in 2016, but, over time, we think that could be significant.

Got it. And one follow up if I may. You mentioned that FX obviously and some of the hedges you have won't be working in your favor next year, is that simply just looking at that other income line and assuming that that goes closer to zero? Thank you.

That's right. It's exactly right. You won't have the benefit of those contracts, because most of those have run now.

Thanks so much.

You bet.

And we'll move to our next question from Ike Boruchow with Wells Fargo.

Hi, everyone. Thanks for taking my question. Just a quick one on your Q4's sales guidance. I mean, when you look back historically, you've guided within a range of two points, this year it's nine points. I'm just – if you can give us some more detail about the visibility that you have, I mean, historically, you've had some predictability there, and just kind of the ongoing discussions with your wholesale partners, maybe region-by-region, just trying to understand the sell-in and sell-out kind of dynamic that you're dealing with day-to-day right now.

Well, as I said before, we don't have is a lot of visibility. We don't operate with backlogs. What we do – do is as we analyze our business in a lot of different ways, we look at it regionally, by category, by brand. I did say earlier, the biggest change in the way we're thinking about the fourth quarter comes from Europe, where going into this last quarter, we had seen one quarter of less favorable performance following about seven or eight of very strong double-digit or so growth coming out of Europe, so the trajectory changed there fairly quickly, so we've adjusted our expectations. I mean we're coming off a down 7.5% third quarter up against a 10%. We've provided a wide range to reflect a relatively choppy environment right now. That's difficult to predict and we want to be able to accommodate in our range the deteriorating trends. The second quarter, we saw a step-down from Q2 going into Q3 and most of the business in the fourth quarter happens in the back part of the quarter. It's going to be largely dependent on reorders and how our wholesale partners are looking to manage their inventories at their year-end.

Got it. And, Dennis, when you said the acquisition was – I think you said it was dilutive to 2016. Was that dilutive to your margins or dilutive to your EPS? Just want to make sure.

Both.

Got it. Thank you so much.

You bet.

And we'll take our next question from Anna Andreeva with Oppenheimer. Anna Andreeva - Oppenheimer & Co., Inc. (Broker): Great. Thanks so much. Good afternoon, guys. Kosta N. Kartsotis - Chairman & Chief Executive Officer: Good afternoon.

Good afternoon. Anna Andreeva - Oppenheimer & Co., Inc. (Broker): I guess, to Dennis, an earlier comment about needing to invest in the business. Can you may be talk about the puts and takes on the gross margin versus SG&A lines as we think about 2016, could next year, I guess, be a down earnings year for Fossil given some of the investments? And also a question on the store footprint. You guys have been adding new doors at a pretty healthy clip. Should we expect that to change as the focus shifts towards wearables and any opportunity – additional opportunity to close doors? Thanks.

So, again, in terms of growth, thinking about next year, so, a fairly near-term kind of lens on this, I would expect just because of the nature of wearables, we would expect to see some modest headwinds in the gross margins in terms of the way we're planning the expense line. We have been holding infrastructure tight, and we think that is the way we're going to manage 2016. We've actually been operating with very limited store growth, and we would expect to continue to do that into next year. One thing that we have to work through that we don't have yet is just what are the purchase accounting implications of the Misfit acquisition and how that will likely affect the expense line. But, what we believe is that – I mean, this is the hottest category right now, and now it's the time for us to invest. We're seeing traction from the investments that we're making in Fossil, in Skagen, and omni, and we intend to continue to do that and really drive the top line. Again, we talked about it in the last call or the last question rather, currency, they're going to impact our earnings, because, in 2015, you really saw it in the operating margins, but the earnings were lifted up because we have the non-operating contracts supporting it below the line. Now, in 2016, we're going to be anywhere from a year-and-a-half to two-and-a-half years, outside of when the dollar really started strengthening. So, the contracts only buy you time, and now that's been neutralized. So, even in the base business, all other things being equal, the currencies because of the lack of those non-operating gains are going to create earnings headwinds.

And, we'll move to our next question from Heather Balsky with Bank of America.

Hi, good evening. Thanks for taking my call. I was wondering if you could just talk about how you're thinking about your SG&A investments next year outside of marketing around the wearables. If – especially, if you do see the greater than expected sales weakness in the fourth quarter, would your plan be to invest more in marketing to drive awareness, to drive traffic?

That is where – I mean, as I just said in the last – the framework for us for next year is whole infrastructure stores tight, but invest where we're seeing returns, and we're seeing returns in Fossil and Skagen. In the third quarter, those brands were both up and there's not a lot of brands that are able to drive growth in a pretty challenging environment. So we're seeing returns, we expect to invest. Omni-channel is another investment where we're seeing good, solid returns in our e-comm business and those are the areas we're going to invest. Again, wearables is hot right now, this is the time for us to be investing in it, and that's the way we're approaching 2016.

Great. Thank you. Gregory A. McKelvey - Executive Vice President, Chief Strategy Officer & Chief Digital Officer: Yeah, I had...

Oh, sorry... Gregory A. McKelvey - Executive Vice President, Chief Strategy Officer & Chief Digital Officer: I had couple of more points on top of the marketing investment. We are investing based on last year's, the results, in very targeted ways, largely digital, and almost all traffic driving. So very good returns, more short-term focused, and we – it gives us the ability also to quickly respond to the effectiveness that we're seeing. So – and then on omni-channel investments, we have some pretty leading indicator so far on the investments paying out, not just in the traffic and conversion improvements that we're seeing online, but L2 recently came out with some reports that put us as a top mover in the space compared to the rest of the fashion peer set, and the initiatives that we're deploying now are just going to continue to drive momentum there. And then on the social side, we're seeing a lot of momentum as well with pretty significant follower growth and sentiment. So those all give us a lot of confidence that the investments are paying out and we'll continue to compound as we go into next year.

Okay. And then separate question, in terms of your direct performance, I was wondering if you could just quickly tell us how outlet performed compared to your full priced channel?

You know what? Let me – I'm remote today. I don't have those data in front of me. May be somebody can grab and I can get that in just a second.

Sure. Thank you. That's it.

Operator, if you want to move to the next question and we can come back to that.

And we'll take our next question from Laurent Vasilescu with Macquarie. Laurent Vasilescu - Macquarie Capital (USA), Inc.: Good afternoon. Can you provide a bit more color on the composition of the inventory by product category? Should we see watches are up high-single to low-double-digits year-over-year? And if that's the case, what's the kind of exit strategy you're looking for? And then where do you think inventories will stack up for next quarter?

Yeah, the inventory – our inventory was up 7%, which is obviously outpacing the sales growth in the business higher than we planned. The growth is primarily in our strongest selling brands, but as you have falling demand, just giving lead-times, it takes a while to turn through it. So we see most of that as a timing issue that we ultimately can work through. I did mention earlier that we are a bit heavier given the performance in markets like Asia on our Swiss inventories and we're working through those as well. Laurent Vasilescu - Macquarie Capital (USA), Inc.: And can you talk about the intellectual property you acquired with Misfit. And also what's your current R&D rate as a percent of sales and how should we think about the step-up function for that for next year. Gregory A. McKelvey - Executive Vice President, Chief Strategy Officer & Chief Digital Officer: In regards to Misfit and the IP, as we talked about earlier, this is a unique platform in both cloud and app, and then, the ability to have an engineering team that really is driving our product platform. So, it's multi-brand, it connects to the Internet of Things and communities that our customers care about, and basically their low-power management platform that's built on watch technology and/or watch rechargeable – non-rechargeable batteries coin cell fits very well with our roadmap and the technology we're trying to bring into our watches. Laurent Vasilescu - Macquarie Capital (USA), Inc.: Thank you very much. Best of luck.

Thank you. Just on the question, the earlier question, our comp was driven more by the outlets which were slightly up, the full-priced stores slightly down.

And, that does conclude our question-and-answer session. I'll turn the call back to the speakers for any additional or closing remarks.

Thank you very much for participating in the call today. And, we look forward to talking to you after our fourth quarter call in February. Thank you very much.

That does conclude our conference. Thank you for your participation.