MOVADO GROUP, INC. During fiscal 1999, the Company issued $25 million of Series A Senior Notes under a Note Purchase and Private Shelf Agreement dated November 30, 1998. The $25 million Series A Senior Notes bear interest at 6.90%, mature on October 30, 2010 and are subject to annual repayments of $5.0 million commencing October 31, 2006. On March 21, 2001, the Company entered into a new Note Purchase and Private Shelf Agreement which allows for the issuance for up to three years after the date thereof, of senior promissory notes in the aggregate principal amount of up to $40 million with maturities up to 12 years from their original date of issuance. The Company finances its seasonal working capital requirements through borrowings under its bank lines of credit. The Company borrows from its bank group under both a $100 million unsecured revolving line and $15.0 million of uncommitted working capital lines of credit. The borrowings are governed under a three year renewed Bank Credit Agreement dated June 22, 2000 among the Company and its bank group, which replaced a previous agreement dated July 23, 1997. The previous agreement provided for a $90 million unsecured revolving line and $31.6 million of annually renewable working capital lines of credit. At January 31, 2001, the Company had $8.8 million of outstanding borrowings under its bank lines as compared to $13.5 million at January 31, 2000. Under a series of share repurchase authorizations approved by the Board of Directors, the Company has maintained a discretionary buy-back program throughout fiscal 2001. Share repurchases under the repurchase program amounted to $7.3 million, $17.6 million and $0.6 million in fiscal 2001, 2000 and 1999, respectively. As of January 31, 2001, the Company had authority to repurchase $4.5 million against an aggregate  authorization of $30 million. During fiscal 1999, the Company repurchased $2.3 million of stock under a 400,000 share program that had been authorized by the Board of Directors in March 1998. This program had been put in place to  mitigate the dilutive impact of employee compensation programs. Cash dividends in fiscal 2001 and fiscal 2000 amounted to $1.2 million and $1.0 million in fiscal 1999. Cash and cash equivalents at January 31, 2001 amounted to $23.1 million compared to $26.6 million at January 31, 2000. Net debt to total capitalization at January 31, 2001 was 16% as compared to 20% at January 31, 2000.  In summary, the Company made significant progress in fiscal 2001 in maintaining its liquidity primarily through the success of its operating expense reduction initiatives and increased product profitability.  The Company plans to continue to focus on improving its cash flows in fiscal 2002. In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended, which is effec- tive for the company as of February 1, 2001. SFAS 133 requires that an entity recognizes all derivatives as 36 Recently Issued Accounting Standards