ANOTHER LOOK AT DIAMOND PROFITS

Glenn Rothman’s editorial (JCK, April 1996, page 30) blaming the Rapaport List for declining profits in the diamond trade raises important issues. Is there “little or no profit at every level of polished diamond trading?” If so, why have profits declined? Can we simply blame the Rapaport List or is there more to the story of declining profits. Perhaps economic forces much more powerful than Rapaport are restructuring our industry?

Before we take a look at the real issues impacting diamond profits, it is important to recognize Rothman’s instinctive need to find a simple solution to a complex problem and target a scapegoat. This need is undoubtedly shared by others in the trade who have experienced declining profits. The problem with Rothman’s analysis is not merely that it is conceptually and factually wrong, but also that its emotional appeal encourages the trade to adopt false solutions to real problems.

Firms that are having difficulty surviving in the current market need to confront the new challenges and opportunities of a changing industry head-on. They must adapt if they are to survive. Wishful thinking about the good old days is a recipe for disaster, for the good old days are long gone. The only hope for survival is to focus on the future and find ways to make money in the good new days. Forward-thinking strategic planners who take advantage of new opportunities will do well. Backward-thinking firms that make emotional decisions based on a yearning for the good old days are doomed to become part of the history they so fondly recall.

Rothman’s first mistake is that he takes an emotional rather than rational approach. Regarding declining profits he writes, “The answer does not require scientific or statistical analysis. We do not need financial, economic or marketing consultants to work up case studies or complicated models of supply and demand to answer our question … The simple answer to the difficult lack of profitability question is only three words … The Rapaport List.” In the opinion of this writer, nothing could be farther from the truth. The answer to the complex problem of declining profit margins requires all of the above and must be based upon economic and statistical analysis.

Rothman’s second mistake is that he does not differentiate between market forces that move the market and information resources that report on the market. De Beers uses its market power to change price levels through monopolistic control of rough diamonds. It buys and sells massive quantities of diamonds to directly set prices. Rapaport reports on prices but does not set them. The fact that transactions take place at free floating variable discounts and premiums to our list is proof positive that we do not control the price level at which the trade transacts. Transaction prices reflect real supply and demand considerations that are directly negotiated by buyers and sellers. The Rapaport List does not replace the human element in the trading and pricing of diamonds.

A simplified way to understand this point is to compare market conditions to the weather. De Beers directly influences the weather (it seeds the clouds) and Rapaport reports on the weather. While our weather reports may influence market behavior (people take umbrellas to work), we do not have the market power to make it rain. Getting rid of the weatherman is not going to change the weather.

Does this mean the Rapaport List has no impact on diamond prices? Over the long term, there is no impact because market forces are fully communicated. Over the short term, the Rapaport List democratizes and standardizes a base level of price information across the marketplace. While market players need not use our list or grading report, many do so because it improves their liquidity, increases customer confidence and gives them greater sales levels.

The list does limit illegitimate profits based on misrepresentation of inter-dealer market prices. For example in the late ’70s and ’80s, International Diamond Corp. mounted a telemarketing program that targeted all Americans earning over $100,000 per year. The firm misrepresented wholesale prices, and the Federal Trade Commission used the Rapaport List to help shut down IDC. These days it is unlikely that a firm could get away with such big-lie tactics. The premise is that good information drives out bad information and misinformation.

In response to Rothman’s challenge: “Hopefully, the Rapaport Diamond Report will leave the diamond industry a little breathing room. This can best be accomplished by letting the markets find their own equilibrium.” [We do, in the form of discounts to the list.] “The role of of the Rapaport Diamond Report should include insuring that there is a sufficient reporting on diamond news to meet demand … and encourage free and fair international trading.” [We do, and are open to suggestions – other than stopping the price list.] “Attempts by the Rapaport Diamond Report to set artificial price levels or push the market are dangerous…” [As explained above, we report prices, we don’t set them.]

Let us now take a more detailed look at the profit issue. Since we can not provide a full analysis here due to space limitations, readers are encouraged to review our articles “Where is the Beef,” “Discounts,” “The Big Squeeze” and “Ready or Not.” All are available on the Internet site at www.diamonds.net.

Profit is the difference between cost price and sales price. It follows logically that the secret to making money is to buy low and sell high. How does one do this? Specifically, how does one add value to the product one buys in order to turn it into something more valuable that can be sold at a higher price to someone else?

Profits in the diamond trade are tied directly to the ability of merchants to add value to the diamond product as it moves down the distribution channel. Diamond cutters add value to rough diamonds by transforming them into polished diamonds. Dealers and wholesalers add value to polished diamonds by providing liquidity to cutters, sorting and merchandising diamonds into desirable categories and making diamonds available in local regional markets. Retail jewelers add diamond value by transforming diamonds into jewelry, educating consumers, providing quality assurance warranties and offering selections of diamond products in a manner easily accessible to consumers. Profits do not appear or disappear by magic. They are the direct result of hard-earned efforts to increase added value.

For most products, profit levels are directly related to the degree of added value the seller provides the buyer. This is especially true at the wholesale level when knowledgeable sellers transact with knowledgeable buyers. Buyers appreciate the services that sellers provide and are willing to pay for them because they realize it would cost them more to provide these services themselves. For example, a retailer in Oklahoma will pay a wholesaler more than the cost of the diamond in Tel-Aviv because the retailer realizes it is more cost effective for the wholesaler to buy diamonds in Tel-Aviv than for the retailer to travel. Rational profits, therefore, are based on the ability of the seller to add real value. The more added value, the greater the profits to the seller.

Unfortunately, in some instances sellers try to cheat buyers by charging based on the perception or illusion of added value rather than real added value. One major problem is that diamond grading and pricing require a high level of expertise that is well beyond the skills and experience of most consumers and even some retailers. A retailer might offer excellent added value to a consumer only to find the consumer buys elsewhere because another retailer has lied about quality, cut or price. The consumer just doesn’t know enough about diamonds to verify if they are getting a good deal – even when they are getting a good deal. Sometimes the retailer who gets the sale is simply the one that lies the best.

The problem with the “good old days” when diamonds were more of a “blind item” is that it became very difficult for legitimate retailers to compete against unfair competition. Over the years, the trade has adopted the use of standards such as Gemological Institute of America grading reports and the Rapaport List to create a more level playing field and make diamonds less of a blind item. Perhaps profit margins are limited when competition is based on standards. But what type of profit margins are we limiting? What is the cost to the trade of having a level playing field?

Let us now consider just two of the major economic forces impacting profit margins in the diamond trade today. On the demand side, we are witnessing a massive restructuring of our industry that has brought about fierce competition at the retail and wholesale levels. Large mass marketers such as Wal-Mart are taking over retail sales of inexpensive jewelry. Discounters such as warehouse clubs are retailing medium- to better-quality merchandise at 12% to 14% margins. Upstairs “diamond offices” are retailing certs at 15% to 25% margins. There are even retailers on the Internet selling certs at 10% below list with warranties and 30-day return privileges. Profit margins are changing because the market is changing.

Not all firms are experiencing lower profit margins. Profits are up 38% at Lazare Kaplan, 34% at Tiffany, 14% at Zale. While total diamond sales are increasing, big firms are increasing market share and pushing out smaller retailers that do not have a well-defined market niche. Some smaller retailers are also growing in spite of the trend toward higher-volume firms. Retailers who specialize in better quality and cuts or who find niches in custom designed jewelry are doing very well.

Profit margins for many intermediate firms have come down as too many sellers chase too few customers. The same holds true for intermediate dealers. As the market share of smaller independent retailers shrinks, so does the market share of their suppliers. Large diamond wholesalers who provide a broad menu of added value services such as credit, memo, mounted goods and co-op advertising have taken over market share from the smaller diamond wholesaler. The handwriting is on the wall: get big, get specialized or get out.

Another squeeze on profit margins is coming from the supply side of the diamond equation. The simple fact is the De Beers CSO monopoly has decided to increase rough prices and the cost price of polished diamonds faster than the ability of the trade to increase sales prices. Additional analysis of De Beers is provided in my articles on the Internet.

Rothman’s defense of De Beers ignores such long-established facts as the downward slope of diamond demand (gold, colored stones, vacations and consumer electronics all compete with diamonds and their prices have not increased significantly against diamonds’). De Beers squeezes the market to increase profits (as do all monopolies). Perhaps Rothman’s most bizarre statement is that diamond prices are not demand-dependent but Rapaport List-dependent. Rothman writes, “The CSO prices rough diamonds to its sightholders based on the Rapaport List…” Really? Pray tell, did last December’s 5% CSO price increase follow a 5% increase in Rapaport prices? Obviously not. The CSO leads the market instead of following it, and that is what we complain about in our articles.

In conclusion I will quote an old Jewish saying well known in the diamond trade: “A Koza geit Tzurich.” Translated, this means that Koza (small furry animal) always goes backward. And why does a Koza go backward? As comedian George Burns explained, the Koza is not interested in where he is going. He is only interested in where he has been.

Martin Rapaport Rapaport Diamond Corp. New York, N.Y.

THE PURPOSE OF JVC APPRAISAL GUIDELINES

The Jewelers Vigilance Committee’s new insurance documentation guidelines represent a sincere effort to bring good information to an industry that is in sore need of it. [For full text of the guidelines, see JCK, December 1995, pages 146-151.] They are neither perfect nor set in stone. They are neither a law nor a panacea. They were never intended to shield jewelers from liability resulting from their own representations or misrepresentations.

The JVC Guidelines are intended as an alternative standard for retailers who have not undertaken the increasingly arduous training required of a professional appraiser, but wish to provide insurance documentation to their customers. They are a way to say to the customer, “I am not cavalierly using your important insurance documentation as a mere sales tool without regard for your insurance needs or welfare, and I am not misrepresenting quantity or quality.” I think they succeed in this. A merchant has certain training and knowledge by virtue of his or her own activity in the market. Without formal appraisal methodology, knowledgeable merchants can document the retail replacement cost of their own merchandise in their own store. This concept works just fine for insurance purposes.

Although controversy has been minimal, a few people have reacted negatively. Since the guidelines are voluntary, retailers who disagree with the required disclosures and accurate representations of cost and quality they recommend will simply not use them. Accordingly, we have heard little dissonance from that direction. While most accredited appraisers feel the guidelines are at least a step in the right direction, we have heard from a vocal few who consider any quality and cost documentation to be the natural province of the appraiser – ground that should no longer be tread by retailers. Most alarmingly, some vague threats of legal liabilities arising from use of the guidelines have been implied. As one of the most active members of the task force, I am writing this letter to JCK to provide a sense of the truth about the guidelines.

Some have complained the guidelines mean nothing unless they are made mandatory for JVC members. That simply doesn’t follow. They are voluntary guidelines and are not intended to be mandatory for anyone. If any particular group wishes to require its membership to adhere to the guidelines, it is welcome to do so – but no one presently requires it.

Probably the most common complaint is that the guidelines somehow “authorize” the “untrained” to do “appraisals.” This complaint seems to be based on the idea that a true appraisal always requires direct market research. This stems from an old jewelry appraisers’ misconception that direct market research is the only legitimate way to evaluate jewelry. This notion has been rejected for years by USPAP (the Uniform Standards of Professional Appraisal Practice) and by most appraisal societies and associations. Actually, all accredited appraisers are required to consider three approaches to value in every appraisal assignment – cost, market and income. Most jewelry appraisers use a combination of cost and market research for generic items, and consider the income approach inappropriate for jewelry. The guidelines limit the “un(appraisal)trained” retailer to the cost approach based on their own sales records. This is clearly explained in every report written according to the guidelines and is quite satisfactory for most insurance purposes. The insurance documentation that results is admittedly not an appraisal … just a statement of one store’s actual selling price for an item. Sure, the public will still consider the documents to be “appraisals,” but the guidelines require each report to clearly disclose that the cost estimate represents only one store’s actual selling prices. That should prevent any significant misunderstandings.

Most appraisal societies and associations agree that an appraisal involves an estimate of “value.” “Value” is the item’s worth in a broader market than just one store’s prices could represent. One easy way to think about the difference between “price” and “value” is in the way you hear the words used by the consumer. When customers ask, “What is the price of this ring?” they obviously mean, “How much will you sell this particular ring for?” On the other hand, customers who ask, “What is the value of this ring?” really mean, “What do rings like this usually sell for in the marketplace, not just this store?” An estimate of “value” is an appraisal; a document that just reports a single store’s “price” is not. This is a hard concept to fully grasp. Attempts to educate clients, insurance companies and even the courts about this particularly subtle distinction may lead more to confusion than illumination. Most outsiders will probably consider a “replacement cost (or price) estimate” to be an appraisal, no matter what you call it. The solution is an explanation of what the replacement cost estimate in the document actually represents. A short statement recommended by the guidelines does this nicely:

“Unless otherwise stated, the subject property was sold by [NAME] Jewelers and the replacement cost stated is the actual price paid. In any case, the replacement cost estimate is the most common actual sales price of the same, identical, or fully comparable property if sold by [NAME] Jewelers at this time.”

The liability question: There may well be some legal liability in offering “appraisals” that are not appraisals, but the JVC Guidelines do not encourage the issuance of insurance “appraisals” that are not technically “appraisals.” No such liability is likely to surface. The guidelines were reviewed by attorneys familiar with the jewelry industry and the legal ramifications of an “appraisal.” The guidelines clearly state an “appraisal” requires training beyond their scope – including an “appraisal” made for insurance purposes. They recommend that documents claiming to be “appraisals” or “valuations” conform to the Uniform Standards of Professional Appraisal Practice, a minimum standard accepted by nearly every appraisal society and association. No matter what the document may be called, it is clear that “price” is being reported rather than “value” if the document is prepared according to the JVC Guidelines. To do an “appraisal” by the task force definition, you need training beyond the scope of the JVC guidelines.

This question of “price” versus “value” and “replacement cost estimate” versus “appraisal” may seem like belaboring a point, but the concept is also essential to understanding why it would not be logical or appropriate to limit the JVC guidelines to items actually sold by the retailer.

An introductory “preamble” written by Joel Windman of the JVC warns that “Cost estimates given by jewelers on jewelry they did not sell is a mine field.” The real pitfall lies in attempting to document an item unlike those that you usually sell. Some appraisers (including a minority on the task force) believe that the guidelines should deal only with items actually sold by the preparer. While I share some of their concerns, I disagree with their conclusion that retailers must be strictly limited to documenting their own sales.

It is difficult to imagine any intended use for an appraisal other than insurance that would be satisfied by reporting a “price” rather than a “value.” In fact, insurance companies often seek verification of “value” through an independent source if they have any reason to question the original documentation. Such verification requires an “appraisal” as opposed to a “replacement cost (or price) estimate.” It is the nature of most insurance contracts and the replacement policies of the insurers that makes “price” appropriate for insurance under most circumstances. The task force had only three alternatives in addressing whether retailers could legitimately document an item they did not sell under the guidelines:

1) State that the guidelines apply only to items sold by the retailer and ignore the other items completely.

This is a non-solution that fails to address some of the most prevalent “appraisal” abuses and would severely limit the usefulness of the guidelines.

2) State categorically that retailers should never document items not sold by them and should either refuse documentation of all such items or gain the necessary training to make a true “appraisal” of those items.

This is illogical and unfair to the knowledgeable retailer who is fully capable of identifying and replacing the item from his or her own stock. If I were a such a retailer, I would immediately suspect self-serving motives for such a proclamation. Moreover, such a statement would damage the practicality of the guidelines for many retailers – particularly those with a high level of gemological and other product knowledge.

3) State the circumstances under which such replacement cost estimates could be legitimately provided, including the necessary statements and disclosures and emphasizing that documenting the sales of another retailer is, indeed, more risky than limiting oneself to one’s own sales.

Obviously, retailers would have to meet the same competency requirements in doing someone else’s merchandise as in doing their own, and they have the same obligation not to mislead or misrepresent. This is the choice the task force eventually made, and I still feel it is the correct one.

Opponents of “allowing” retailers to document other than their own sales imply that this somehow encourages “low balling.” The guidelines assume honesty. If a retailer claims to have prepared his “replacement cost estimate” in conformance with the guidelines, the consumer and the insurer should be able to rely on the honesty of the report. The first two bullets under “Proper Practice” rule out denigrating the sales of competitors. The guidelines should be a way for the retailer to say, “This is an honest and ethical store.” If retailers are knowledgeable enough to legitimately document their own merchandise, then they can logically also document any item for which they have sales records and a regular, current line of supply. In other words, the key issue is not whether you sold the item, it is whether you can recognize it for what it is and whether you could replace it through your own usual sources of supply.

Express warranties: Another part of the guidelines that has drawn criticism is a statement regarding express warranty. The guidelines cite the case of Daugherty vs. Ashe (Record #910054, Supreme Court of Virginia, 1992) and clearly recommend that all insurance documentation should be qualified as an “opinion” in order to avoid the problems exemplified by that case. I have to be amused at one particularly ridiculous suggestion that, “in citing the court case, the guidelines should have deleted the name of the jeweler.” I suppose we should have cited it as “Some Anonymous Customer vs. Some Anonymous Jeweler” to avoid embarrassing the poor fellow. Court cases are public record, and the citation was made correctly.

There is no increased danger of warranty litigation incurred by point-of-sale documentation prepared according to the guidelines. Misrepresentation or failure to disclose the

limitations of grading and testing procedures are the root causes of any danger of express warranty litigation that might exist.

It is important to realize that just being the seller doesn’t necessarily qualify one to document items for insurance. The guidelines clearly state that you must have the experience and knowledge to accurately identify and evaluate the quality of any item you document. There are certainly retailers who have neither the experience nor the knowledge to accurately identify and evaluate their own merchandise. Those retailers must rely on manufacturer representations or the services of other professionals. While the guidelines allow for such reliance, it is not recommended and must be clearly disclosed. Knowledge of gemology, manufacturing techniques and all the other factors that affect the item’s replacement cost estimate is highly recommended for anyone preparing any type of insurance documentation. The responsibility for representations of type, quality and quantity rests squarely on the shoulders of the person providing the documentation whether they relied on others or not.

Self-promotion? One of the most ludicrous claims is that task force members unfairly promoted their businesses through listings on the appraisal information source page. Listing on that page was (and is) open to any company, organization, individual or publisher that legitimately offers appraisal courses, seminars or publications. The list is expected to expand in the future and is intended solely as a service for those who want to get more training in the emerging appraisal profession.

Existing appraisal standards and practices were used as the basis for the guidelines. This is self-evident and clearly stated. Credit was given to the sources. No copyrights were infringed. You cannot copyright professional standards, only the specific wording explaining them. Besides, the dissemination of high ethical and professional standards is generally recognized as a good thing.

The 40-some-odd members of the ATF couldn’t be expected to achieve perfection at first attempt. Detractors of the guidelines have also pointed out a few legitimate areas where improvements could be made. We should caution jewelers not to write documentation “to whom it may concern,” although USPAP, ASA and ISA have no such prohibition, and there are appraisal scenarios where the client can be kept confidential. In normal insurance documentation, however, there is never any such need – and addressing insurance documentation “to whom it may concern” makes the jeweler liable to anyone who uses the report to get insurance. This omission has been noted by several people, and should be dealt with at the next task force meeting. The task force also should probably replace “Every effort” with “Every reasonable effort” in the sentence, “Every effort has been made to grade the gemstones described in this document as accurately as possible within normal and reasonable gemological ranges.” Sometimes redundancy pays.

Too complicated? The final complaint seems to be that the guidelines are too complicated and hard to

understand. I don’t believe we should underestimate the intelligence of the retail jeweler. The guidelines are not addressing a “simple and straightforward” issue – no matter how much we might wish they were. At one point, the rough draft for the guidelines exceeded 30 pages. At its last meeting, the JVC Appraisal Task Force made a tremendous effort to pare the guidelines down to the bare essentials. Nothing extraneous was retained or added. We were charged with providing retailers a viable alternative to offering “appraisals” that didn’t fit the definition of an “appraisal.” We were also charged with stating what is “proper” and what is “improper” in order to give the honest retailer a guideline for ethical reporting and a way to avoid identification with those that insist on using “appraisals” to mislead or cheat their own customers.

Those who might plan to misuse the guidelines have at least one very legitimate concern. Anyone who claims to adhere to the guidelines – and then doesn’t – will be much easier to impeach in court. In fact, an intelligent and informed consumer or underwriter should be able to make a comparison between the guidelines and any report in question and reject a poor example before the need for litigation arises.

The JVC Appraisal Task Force is now charged with the dissemination and ongoing reassessment of the guidelines. The new GIA appraisal course is based in large part on the guidelines, although it doesn’t follow them exactly. ASA now offers a one-day seminar based on the guidelines, and programs have been sponsored by several chapters of Jewelers of America. The guidelines are being presented to insurance societies and associations. Retailers or appraisers with questions about the guidelines should contact JVC or one of the members of the task force listed in the guidelines. Yes, the guidelines are probably imperfect. But the imperfections – however each of us may define them – are far outweighed by the positive aspects of the effort.

Larry Phillips, GG, ASA, ISA Phillips Associates

COUNTERFEIT JEWELRY

The problem of counterfeit jewelry, particularly for licensed products, continues to increase. This is particularly true of Disney-licensed products that Colibri, Van Dell, Judith Jack, Seiko and Lorus produce. We have been working in close association with Disney to increase the awareness of this problem and to alert retailers to their liability when carrying such counterfeit merchandise.

I have enclosed a copy of an article that Jewelers Mutual Insurance Co. published in a recent newsletter. We would appreciate it if you would consider rerunning this article to support our attempt to educate retailers.

William M. Gempp Director of Advertising Colibri Corp. Providence, R.I.

“DISNEY WARNS JEWELERS ABOUT TRADEMARK INFRINGEMENT”

Don’t mess with Mickey! That’s the bottom line from the Legal Department at Walt Disney Company.

The Disney animated characters (including Mickey Mouse, Minnie Mouse, Donald Duck, Daisy Duck, Goofy and Pluto) and all characters from Disney’s animated movies are fully protected by United States law. It is against the law to reproduce, distribute, display, advertise or sell any item depicting these characters without express authorization by the Walt Disney Company.

Disney has successfully sued jewelers who have sold Disney “knock-off character jewelry.” According to Robert Ogden, an attorney with The Walt Disney Company, most violations fall into two categories.

In the first category are wax molds for Disney characters. These counterfeit character molds may be mixed in with a large batch of wax molds that a jeweler buys. In other cases, a jeweler buys a legitimate piece, sinks it and copies it. These molds are not licensed by Disney and it is a violation of the law to use them to produce jewelry.

The second category includes inexpensive 10k acid-etched characters. Typically, these items are sold in bulk.

The only companies now authorized to manufacture and/or distribute fine jewelry (sterling silver and karat gold) bearing the Disney animated characters are:

• Colibri Corp. (Van Dell), 100 Niantic Ave., Providence, RI 02907; (800) 556-7354

• Judith Jack Inc., 392 Fifth Ave., Second Fl., New York, NY 10018-8105; (212) 695-4004

Eileen Holcomb, director of sales and marketing for Judith Jack, said they recently found counterfeit Disney jewelry at a major New York jewelry show. The vendor at the show had purchased the jewelry from an importer. She encouraged jewelers to look for the Disney copyright symbol as a first indication of authenticity. Judith Jack is a manufacturer and wholesaler for the Mickey & Co. brand, which includes sterling and marcasite jewelry.

Colibri Corp. manufactures Disney jewelry for women under the brand Van Dell and for men under the Colibri brand. President Fred Levinger encouraged jewelers to look for the Van Dell and Colibri trademarks as evidence of authenticity. He said 10k copies and counterfeit charms are the biggest areas of concern.

While a lawsuit has financial impact, Mr. Levinger warned jewelers that the bigger cost is the jeweler’s loss of integrity in an already competitive marketplace. “If your name is in the newspaper for selling counterfeit Disney merchandise, that’s an indictment against the quality of the rest of your merchandise as well,” Mr. Levinger pointed out. “It’s your reputation and integrity that are lost.”

What are warning signs that items may be counterfeit? According to Disney Attorney Bob Ogden, the warning signs that you may be purchasing counterfeit Disney jewelry are the same warning signs that govern any transaction:

• The vendor provides only a very general or nonspecific invoice. Each item should be properly identified. For example, when purchasing legitimate Disney charms, the invoices should list “Mickey Mouse charm,” not “character charm.”

• The vendor lists no address.

• The vendor requires payment in cash.

If you have any questions about the legitimacy of a product depicting a Disney animated character, or if you have any information about unauthorized use of any of the Disney characters, Mr. Ogden encourages you to call the legal department at The Walt Disney Company. You may contact them anonymously, if needed.

Robert Ogden, Legal Department, The Walt Disney Company, 500 Park Ave., New York, NY 10022; (212) 735-5435. Aviva Gordon, Disney Consumer Products, 500 S. Buena Vista St., Burbank, CA 91521; (818) 567-5429.

STILL REPAIRING IWC

I read with interest the item about International Watch Co. (IWC) in JCK April 1996, page 204.

Please be advised that Superior Watch Service Inc. has been a factory authorized service center for IWC and Porsche Design watches for more than 15 years. By contractual joint agreement with IWC (see letter below), Superior continues to service IWC and Porsche Design watches as a factory authorized service center. Our company flyer to customers describes in detail the services we continue to provide built on years of experience.

We request that you provide your readership with this information in your next issue so they can choose their source for IWC and Porsche Design service as they see fit.

Jack Freedman, Pres. Superior Watch Service, Inc.

We are pleased to announce to you and your company that our IWC office in Winchester, Va., will be performing the following additional services effective Nov. 15. We will be capable of handling all of your after-sales service needs for both IWC and Porsche Design watches.

The new center will be identified as IWC After-Sales Service, a division of Swiss Prestige Inc., and will be located on our premises at 188 Brooke Road, Winchester, Va. . . . The new center will offer factory original parts and watch straps for both warranty and out-of-warranty service. This includes refinishing, waterproofing, timing and all other service needs.

We are pleased to announce at the present time we have three experienced watchmakers on staff and are scheduled to have two additional expert technicians joining us in the very near future. All of the watchmakers are factory trained and in fact some have worked for IWC in Schaffhausen.

As you are aware, Jack Freedman of Superior Watch Service has serviced IWC and Porsche Design by IWC watches for many years, and we have been very happy with the quality of his work. Superior, an authorized service center, will continue to service IWC/PD watches.

Our new service center simply gives you, our valued customer, a further option to obtain quality service on a timely basis. We look forward to continuing to meet or exceed your needs.