MOVADO GROUP, INC. Selling expenses increased in both the Company’s wholesale and retail businesses. Selling expenses in the wholesale business primarily reflect higher levels of sales commissions due to sales increases across the Company’s brands. Headcount increases in the Coach and ESQ brands to support growth also resulted  in increased compensation and travel expenses. Selling expenses for fiscal 2000 also reflect the first year of amortization of the Company’s major trade show exhibition facility constructed for use at the annual  Basel International Watch and Jewellery Show. Increases in selling expenses associated with the Company’s retail operations relate primarily to the  addition of four new outlets and one new Movado Boutique in fiscal 2000 as well as the annualization of cost of stores opened during fiscal 1999. Increases in distribution expenses include a nonrecurring charge associated with the planned relocation  of the Company’s U.S. distribution operations. The remaining increase is due to the variable nature of  distribution expenses which grew proportionately with increases in unit volume shipments. Increases in general and administrative expenses were primarily in the area of human resources and  information systems. The Company experienced increases in employee benefit costs associated with a growing workforce as well as recruiting fees, specifically associated with the hiring of two senior executives in the fourth quarter. Information systems related expenses increased as the Company began amortizing its  significant investment in its new U.S. core system effective with the March 1999 implementation date and incurred Year 2000 remediation expenses relative to systems in Switzerland and its other international  subsidiaries. The Company also added information systems support personnel in fiscal 2000. Interest Expense . Net interest expense in fiscal 2001 increased $1.0 million from $5.4 million in fiscal 2000 to $6.4 million in fiscal 2001. The increase in interest expense is primarily a result of a decrease in investment income from the investment of the $28.4 million proceeds from the Company’s sale of the Piaget business in February 1999. Gross interest expense decreased by $148,000 or 2.4% due to a decrease in the average  revolving credit and working capital borrowings from $40.3 million in fiscal 2000 to $31.7 million in fiscal 2001, a 21% reduction of debt, offset by an increase in average interest rates. In addition, a $5.0 million  payment on the Senior Note borrowings was made in January 2000, interest for this borrowing was reduced by approximately $0.3 million. Net interest expense for fiscal 2000 and 1999 was $5.4 million and consisted primarily of interest on the Company’s 6.56% Senior Notes, 6.90% Series A Senior Notes, revolving lines of credit and borrowings against working capital lines. Income Taxes . The Company’s income tax provision amounted to $6.9 million, $1.4 million, and $6.3 million for fiscal 2001, 2000 and 1999, respectively, or 25% of pretax income for fiscal 2001, 9.4% for fiscal 2000 and 23% for fiscal 1999. Also, a portion of the Company’s consolidated operations are located in non-U.S. jurisdictions, and, therefore, the Company’s effective rate differs from U.S. statutory rates. The majority of the 34