year’s net income of $13.7 million or 4.7% of net sales. Fully diluted earnings per share grew 65.1% to $1.75 versus $1.06 for the prior fiscal year. The prior year results reflect an after- tax gain on the sale of the Piaget business of $3.7 million or $0.28 per share and nonrecurring after-tax charges of $5.9 million or $0.46 per share. Excluding these items, net income increased 30.4% and fully diluted EPS increased 41.1%. 

In fiscal 2001, the Company reported positive cash flow from operating activities of $25.3 million following record cash flows of $28.3 million achieved in fiscal year 2000. Our continued focus on working capital management has contributed to the positive cash flow generation. 

## Strengthening Existing Brands 

Fiscal 2001 was another year of strong sales for our existing businesses – Movado, Concord, ESQ, Coach and our outlet stores. Our domestic sales increased 8.5% to $252 million, driven primarily by strong sales growth in Movado and ESQ. Domestically, we continue to place a priority on improving our execution at the point of sale and investing in our brands through advertising and targeted marketing programs. 

International sales grew 6.2% to $60 million, fueled by strong sales growth in Concord and Coach. On a constant dollar basis, international sales grew 15.5%. We believe that developing brand recognition and consumer demand is the key to capturing long-term opportunities for our brands overseas. Our global marketing and brand-building initiatives remain focused on specific countries in the Far East, Middle East, and Western Europe where we believe significant opportunities exist to grow brand sales and gain market share. 

Brand sales were driven by the continued success of our 

core product collections and the positive reception accorded our new product introductions. In Movado, we continued to benefit from the strength of our marketing programs as well as new product introductions such as the New Sports Edition (SE) introduced last year, our most successful product launch ever. This year we are launching Elliptica, a watch design which premiered at the Basel World Watch, Clock and Jewellery Show trade fair to rave reviews. 

Our Concord luxury brand’s successful “be late” lifestyle advertising campaign continued to draw favorable responses. Additionally, we continued to emphasize our leading La Scala collection of watches with several new model introductions. Concord continues to develop its prestige and exclusivity within the luxury category. 

Our ESQ brand continued to deliver strong sales growth with its focused product offering and strong retail sell through. ESQ’s “Unwind” advertising campaign is strate- gically positioned to appeal to confident, nonconforming young professionals with a watch brand that offers them the freedom to meet life’s many challenges and adventures. 

Our Coach brand of watches is well positioned at retail including Coach stores and department stores in the United States (the base of Coach leathergoods distribution), as well as in Coach stores and other watch retailers in Japan, and in duty free stores worldwide. For the current year, we will focus on solidifying our position in the marketplace and fine-tuning the Coach collection with the introduction of lower price points to reach a wider consumer base, and a new line of watches to complement Coach’s very successful signature “C” design. The Coach brand is extremely strong, and we firmly believe it represents a great opportunity of future growth for the Company. 

