42 MOVADO GROUP, INC. Notes to Consolidated Financial Statements Note 1. Significant Accounting Policies Organization and Business Movado Group, Inc. (the “Company”) is a designer, manufacturer and distributor of quality watches with prominent brands in almost every price category comprising the watch industry. In fiscal 2001, the Company marketed four distinctive brands of watches: Movado, Concord, ESQ, and Coach, which compete in most  segments of the watch market.  The Company designs and manufactures Concord and Movado watches primarily through its subsidiaries and third party contract assemblers in Switzerland, as well as in the United States, for sale throughout the world. ESQ watches are manufactured to the Company's specifications using Swiss movements by indepen- dent contractors located in the Far East. Coach watches are assembled in Switzerland by independent suppli- ers. The Company distributes its watch brands through its United States operations as well as through sales subsidiaries in Canada, Hong Kong, Singapore and Switzerland, and through a number of independent dis- tributors located in various countries throughout the world. In addition to its sales to trade customers and independent distributors, through a wholly owned  domestic subsidiary, the Company sells Movado watches, Movado jewelry, tabletop accessories and other product line extensions within the Movado brand directly to consumers in its Movado Boutiques. Another of the Company’s domestic subsidiaries also operates a number of Movado outlet stores throughout the United States, through which it sells discontinued and sample merchandise. The consolidated financial statements include the accounts of the Company and its subsidiaries. Intercompany transactions and balances have been eliminated.  The financial statements of the Company's international subsidiaries have been translated into United States dollars by translating balance sheet accounts at year-end exchange rates and statement of operations accounts at average exchange rates for the year. Foreign currency transaction gains and losses are charged or credited to income as incurred. Foreign currency translation gains and losses are reflected in the equity section of the Company's consolidated balance sheet in accumulated other comprehensive income.  The Company's trade customers include department stores, jewelry store chains and independent jewelers. Movado and Concord watches are also marketed outside the U.S. through a network of independent  distributors. Accounts receivable are stated net of allowances for doubtful accounts of $4,442,000 and $3,604,000 at January 31, 2001 and 2000, respectively. The Zale Corporation accounted for 10%, 13%, and Trade receivables Translation of foreign currency financial statements and foreign currency transactions Principles of consolidation