Foreign Currency Exchange Rate Risk The Company’s primary market risk exposure relates to foreign currency exchange risk (see Note 7 – Derivative Financial Instruments to the Consolidated Financial Statements). A significant portion of the Company’s purchases are denominated in Swiss Francs and, to a lesser extent, the Japanese Yen. The Company also sells to third-party customers in a variety of foreign currencies, most notably the Euro, Swiss Franc and the British Pound. The Company reduces its exposure to the Swiss Franc, Euro, British Pound, Chinese Yuan and Japanese Yen exchange rate risk through a hedging program. Under the hedging program, the Company manages most of its foreign currency exposures on a consolidated basis, which allows it to net certain exposures and take advantage of natural offsets. In the event these exposures do not offset, from time to time the Company uses various derivative financial instruments to further reduce the net exposures to currency fluctuations, predominately forward and option contracts. Certain of these contracts meet the requirements of qualified hedges. In these circumstances, the Company designates and documents these derivative instruments as a cash flow hedge of a specific underlying exposure, as well as the risk management objectives and strategies for undertaking the hedge transactions. Changes in the fair value of hedges designated and documented as a cash flow hedge and which are highly effective, are recorded in other comprehensive income until the underlying transaction affects earnings, and then are later reclassified into earnings in the same account as the hedged transaction. The earnings impact is mostly offset by the effects of currency movements on the underlying hedged transactions. To the extent that the Company does not engage in a hedging program, any change in the Swiss Franc, Euro, British Pound, Chinese Yuan and Japanese Yen exchange rates to local currency would have an equal effect on the Company’s earnings. From time to time the Company uses forward exchange contracts, which do not meet the requirements of qualified hedges, to offset its exposure to certain foreign currency receivables and liabilities. These forward contracts are not designated as qualified hedges and, therefore, changes in the fair value of these derivatives are recognized in earnings in the period they arise, thereby offsetting the current earnings effect resulting from the revaluation of the related foreign currency receivables and liabilities. As of July 31, 2026, the Company’s entire net forward contracts hedging portfolio consisted of 12.0 million Swiss Francs equivalent, 30.1 million U.S. dollars equivalent, 25.3 million Euros equivalent (including 3.0 million designated as cash flow hedges) and 4.6 million British Pounds equivalent with various expiry dates ranging through December 3, 2026, compared to a portfolio of 30.0 million Swiss Francs equivalent, 28.9 million U.S. dollars equivalent, 36.0 million Euros equivalent (including 14.0 million Euros designated as cash flow hedges) and 2.7 million British Pounds equivalent with various expiry dates ranging through January 15, 2026, as of July 31, 2025. If the Company were to settle its Swiss Franc forward contracts at July 31, 2026, the result would be a $0.1 million loss. If the Company were to settle its Euro forward contracts at July 31, 2026, the result would be a $0.1 million gain. As of July 31, 2026, the Company’s British Pound, Chinese Yuan and US Dollar forward contracts had no gain or loss. Commodity Risk The Company considers its exposure to fluctuations in commodity prices to be primarily related to gold used in the manufacturing of the Company’s watches. Under its hedging program, the Company can purchase various commodity derivative instruments, primarily futures contracts. When held, these derivatives are documented as qualified cash flow hedges, and the resulting gains and losses on these derivative instruments are first reflected in other comprehensive income, and later reclassified into earnings, partially offset by the effects of gold market price changes on the underlying actual gold purchases. The Company did not hold any future contracts in its gold hedge portfolio as of July 31, 2026 and 2025; thus, any changes in the gold purchase price will have an equal effect on the Company’s cost of sales. 34 Debt and Interest Rate Risk Floating rate debt at July 31, 2026 and 2025 was zero for both periods. During the six months ended July 31, 2026, the Company had no weighted average borrowings. The Company does not hedge these interest rate risks.