Guess Inc. on Wednesday said it signed a 10-year licensing agreement with Callanen International Inc., the Timex Corp. unit that has been producing and distributing Guess watches for more than 20 years.

The announcement comes nine days after the L.A.-based apparel manufacturer and retailer ended negotiations for an agreement under which Fossil Inc. would have produced and distributed its watches.

Norwalk, Conn.-based Callanen will form a separate company to manage the distribution and marketing of Guess watches. The initial term is for 10 years, starting Jan. 1, 2007, with a five-year option to renew thereafter. The company has been manufacturing and selling Guess watches under an exclusive worldwide license agreement since 1983, Callanen said in a statement.

Minimum royalties under the Callanen license agreement are based on sales of $1.45 billion for the initial 10-year term. Guess watches generate about $150 million in worldwide sales each year.

On Sept. 19, Guess and Fossil Inc. ended nearly three weeks of negotiations for a licensing agreement. The Richardson, Tex.-based watchmaker said it was unable to settle on certain material terms of the agreement.

A few days after the announcement, Callanen filed suit to stop Fossil from making Guess watches. Callanen said it has the exclusive right to distribute Guess watches until Dec. 31, 2006. The company alleged the proposed deal violated federal antitrust and state unfair competition laws.

Also on Wednesday, Guess said it amended its handbag and eyewear licensing agreements to add about $92.7 million to the amount of fixed royalty payments it receives. It said $42.7 million has already been received. The company said the balance will be paid over time, including a payment of $35 million due in 2012.

The company anticipates that the licensing agreements will boost earnings per share by 7 cents in 2006, 17 cents in 2007 and 2008, 18 cents in 2009, and 16 cents in 2010.

Shares of Guess closed down 0.6 percent to $20.52 on Wednesday.