Contents - AL-Tax

82 5 Intercompany Sale of Diamondswere not problematic, there are virtually no publicly held U.S. distributors of luxurygoods, broadly defined. For example, only four firms are listed under U.S.Standard Industrial Classification Code 5094 (consisting of firms in the businessof distributing jewelry, watches, precious stones and precious metals). None ofthese entities function purely as wholesale distributors and are therefore not suitablecomparables.Given the paucity of information that we obtained through our narrowly definedsearch for luxury goods distributors, we expanded our search parameters to includeindependent distributors of high-end personal care products of any kind. We identifiedsuch firms through the following searches: Keywords = “Distribution, Distributor or Distributes” and “Jewelry”; Industry/MarketSegment = Unspecified (4 hits). Keywords = “Distribution, Distributor or Distributes” and “Designer”; Industry/Market Segment = Unspecified (9 hits). Keywords = “Distribution, Distributor or Distributes” and “Luxury”; Industry/MarketSegment = Unspecified (28 hits). Keywords = “Distribution, Distributor or Distributes” and “Prestige”;Industry/Market Segment = Unspecified (12 hits). Keyword = “Distribution, Distributor or Distributes” and “Perfume”;Industry/Market Segment = Unspecified (44 hits). Keywords = “Distribution, Distributor or Distributes” and “High-End”;Industry/Market Segment = Unspecified (2 hits).After reviewing descriptions of business for all companies identified by meansof the above searches, we eliminated those that (a) were integrated backwards intomanufacturing; (b) were engaged primarily in direct selling (i.e., through individualsto end-users); (c) operated retail establishments (stores or salons) in lieu of, or inaddition to, distribution operations; (d) were engaged principally in the developmentof personal care products; (e) were engaged primarily in the performance of services;(f) were in the development stage; or, (g) distributed significantly dissimilarproducts (e.g., pre-recorded music and video game hardware and pharmaceuticalcompounds).Following this process of elimination, the following companies constituted ourdistributor sample:1. Signature Eyewear, Inc.: Designs, markets and distributes prescription eyewearframes and sunglasses, primarily under exclusive licenses with well-knownretailers (Laura Ashley, Eddie Bauer, Hart-Schaffner & Marx and others). Sellsto independent optical retailers in the United States through own salesforce andindependent representatives and through exclusive distributors in foreign markets.Procures frames from independent contract manufacturers. Performs designfunction internally.2. Orange 21, Inc.: Designs, develops and markets premium products, primarilysunglasses and goggles, under the self-developed Spy Optic brand and otherbrands. Targets active sports markets (surfing, skateboarding, snowboarding,