Allowances for estimated returns and sales discounts are provided when sales are recorded. 

## Pre-opening Costs 

Costs associated with the opening at new retail and outlet stores is expensed in the period incurred. 

## Advertising 

The Company expenses the production costs of an advertising campaign at the commencement date of the advertising campaign. Advertising expenses for fiscal 2001, 2000 and 1999, amounted to $62.3 million, $61.8 million and $53.8 million, respectively. 

## Income taxes 

The Company and its domestic subsidiaries file a consolidated federal income tax return. Foreign income taxes have been provided based on the applicable tax rates in each of the foreign countries in which the Company operates. Certain Swiss income taxes are payable over several years; the portion of these taxes not payable within one year is classified as noncurrent. Noncurrent foreign income taxes included in the consolidated balance sheets at January 31, 2001 and 2000 were $1,812,000 and $1,905,000, respectively. 

## Earnings per share 

The Company presents net income per share on a ‘basic’ and ‘diluted’ basis. Basic earnings per share is computed using weighted average shares outstanding during the period. Diluted earnings per share is comput- ed using the weighted average number of shares outstanding adjusted for dilutive common stock equivalents. 

The weighted average number of shares outstanding for basic earnings per share were 11,651,000, 12,527,000 and 12,842,000 for fiscal 2001, 2000 and 1999, respectively. For diluted earnings per share, these amounts were increased by 215,000, 363,000 and 414,000 in fiscal 2001, 2000 and 1999, respectively, due to potentially dilutive common stock equivalents issuable under the Company’s stock option plans. There were no anti-dilutive common stock equivalents in the years presented. 

## Stock-based compensation 

Stock-based compensation is recognized using the intrinsic value method. For disclosure purposes, pro forma net income and earnings per share are provided as if the fair value method had been applied. 

## Use of estimates in the preparation of financial statements 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 

