TIFFANY & CO.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3228013
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
727 FIFTH AVENUE, NEW YORK, NY 10022
(Address of principal executive offices) (Zip Code)
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Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
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Common Stock, $.01 par value New York Stock Exchange
Stock Purchase Rights New York Stock Exchange
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]
STATE THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES OF THE REGISTRANT. THE AGGREGATE MARKET VALUE SHALL BE COMPUTED BY REFERENCE TO THE PRICE AT WHICH THE STOCK WAS SOLD, OR THE AVERAGE BID AND ASKED PRICES OF SUCH STOCK, AS OF A SPECIFIED DATE WITHIN 60 DAYS PRIOR TO THE DATE OF FILING. As of March 23, 2001 the aggregate market value of voting stock held by non-affiliates was $3,949,212,609. See Item 5. Market for Registrant's Common Equity and Related Stockholder Matters below.
PART I
ITEM 1. BUSINESS
(a) General history of business.
Registrant (also referred to as the "Company") is the parent corporation of Tiffany and Company ("Tiffany"). Charles Lewis Tiffany founded Tiffany's business in 1837. He incorporated Tiffany in New York in 1868. Registrant acquired Tiffany in 1984 and completed the initial public offering of Registrant's Common Stock in 1987.
(b) Financial information about industry segments.
Registrant's operating segment information for the fiscal years ended
January 31, 2001, 2000 and 1999 is incorporated by reference from Registrant's
Annual Report to Stockholders for the Fiscal Year ended January 31, 2001 (Note
Q. "Operating Segments"). Executive Officers of the Company evaluate the
performance of the Company's assets on a consolidated basis. Therefore, separate
financial information for the Company's assets on a segment basis is not
available.
(c) Narrative description of business.
As used below, the terms "Fiscal 1998", "Fiscal 1999" and "Fiscal 2000" refer to the fiscal years ended on January 31, 1999, 2000 and 2001, respectively. Registrant is a holding company, and conducts all business through its subsidiary corporations.
Products
Registrant's principal product categories are fine jewelry, timepieces, sterling silver goods, china, crystal, stationery, writing instruments, fragrances and personal accessories.
Registrant offers an extensive selection of TIFFANY & CO. brand jewelry at a wide range of prices. In Fiscal 1998, 1999 and 2000, approximately 73%, 75% and 78%, respectively, of Registrant's net sales were attributable to jewelry. See Merchandise Purchasing, Manufacturing and Raw Materials below. Designs are developed by employees, suppliers, independent designers and independent "name" designers. See Designer Licenses below.
In addition to jewelry, the Company sells TIFFANY & CO. brand merchandise in the following categories: timepieces and clocks; sterling silver merchandise, including flatware, hollowware (tea and coffee services, bowls, cups and trays), trophies, key holders, picture frames and desk accessories; stainless steel flatware; crystal, glassware, china and other tableware; custom engraved stationery; writing instruments; and fashion accessories, including men's ties. Fragrance products are sold under the trademarks TIFFANY, TRUESTE and TIFFANY FOR MEN. Tiffany
also sells other brands of timepieces and tableware in its U.S. stores. Registrant also offers a line of commercial glassware under the JUDEL trademark.
Distribution and Marketing
Channels of Distribution
For financial reporting purposes, Registrant categorizes its sales as follows:
U.S. Retail consists of retail sales transacted in company-operated stores in the United States and first quarter Fiscal 2000 wholesale sales to independent retailers in the United States(1). Wholesale sales of fragrance products to independent retailers in the Americas are also included(2) (see U.S. Retail below);
Direct Marketing consists of sales in the United States through a staff of specialized sales personnel who concentrate on business clients and sales through direct mail catalogs and through Registrant's Web site at www.tiffany.com (see Direct Marketing below); and
International Retail consists of both retail and wholesale sales to customers located outside the United States (see International Retail below).
U.S. Retail
Fifth Avenue Store
The Fifth Avenue store in New York accounts for a significant portion of the Company's sales and is the focal point for marketing and public relations efforts. Approximately 14%, 13% and 12% of total Company net sales for Fiscal 1998, 1999 and 2000 respectively, were attributable to the New York store's retail sales. In the fourth quarter of Fiscal 2000, Tiffany began a three-year renovation project to increase the New York building's selling space by approximately 25% and to provide additional space for customer service and special exhibitions.
U.S. Branch Stores
At January 31, 2001 Tiffany had 41 branch stores in the United States. The following table identifies the location and year of opening of each U.S. branch store:
U.S. BRANCH STORE OPENINGS
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STORE LOCATION YEAR STORE LOCATION YEAR
-------------- OPENED -------------- OPENED
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San Francisco, California 1963
Beverly Hills, California 1964 Chevy Chase, Maryland 1996
Houston, Texas 1964 Charlotte, North Carolina 1997
Chicago, Illinois 1966 Chestnut Hill, Massachusetts 1997
Atlanta, Georgia 1969 Cincinnati, Ohio 1997
Dallas, Texas 1982 Honolulu, Hawaii (Hilton) 1997
Boston, Massachusetts 1984 Palo Alto, California 1997
Costa Mesa, California 1988 Denver, Colorado 1998
Philadelphia, Pennsylvania 1990 Honolulu, Hawaii (Surfrider)+ 1998
Vienna, Virginia 1990 Las Vegas, Nevada 1998
Palm Beach, Florida 1991 Manhasset, New York 1998
Honolulu, Hawaii (Ala Moana) 1992 Seattle, Washington 1998
San Diego, California 1992 Scottsdale, Arizona 1998
Troy, Michigan 1992 Century City, California 1999
Bal Harbour, Florida 1993 Dallas (NorthPark), Texas 1999
Maui, Hawaii 1994 Boca Raton, Florida 1999
Oak Brook, Illinois 1994 Tamuning, Guam++ 1999
King of Prussia, Pennsylvania 1995 Old Orchard, (Skokie) IL 2000
Short Hills, New Jersey 1995 Maui, Hawaii (Wailea) 2000
White Plains, New York 1995 Greenwich, Connecticut 2000
Hackensack, New Jersey 1996 Portland, Oregon 2000
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+ Operated by Mitsukoshi (U.S.A.), Inc. until January 1998
++ Operated by Mitsukoshi (U.S.A.), Inc. until March 1999
Each of the U.S. branch stores displays a representative selection of merchandise but none maintains the extensive selection carried by the New York store. Management currently contemplates the opening of new branch stores in the United States at the rate of approximately three to five per year. Tiffany has entered into lease agreements to open additional branches in 2001 in Tampa, Florida and Santa Clara (San Jose), California. See Item 2. Properties below for further information concerning U.S. Retail store leases. U. S. Retail branch stores range in size from approximately 800 to 16,000 gross square feet and total approximately 331,000 gross square feet. Prior to 1993, an average of approximately 45% of the floor space in each branch store was devoted to retail selling. Newer stores generally range from approximately 4,000 to 8,000 gross square feet and are designed to devote approximately 60-70% of total floor space to retail selling.
Direct Marketing
Corporate Division
Corporate Division sales executives call on business clients throughout the United States, selling products drawn from the retail product line and items specially developed or sourced for the business market, including trophies and items designed for the particular customer. Price allowances are given to business customers for volume purchases. Corporate Division customers purchase for business gift giving, employee service and achievement recognition awards, customer incentives and other purposes. Products and services are marketed through a sales force of approximately 169 persons, through advertising in newspapers and business periodicals and through the publication of special catalogs.
Catalogs
Tiffany also distributes catalogs of selected merchandise to its proprietary list of mail and telephone customers and to mailing lists rented from third parties. Four seasonal SELECTIONS(R) catalogs are published, supplemented by COLLECTIONS and other catalogs. The following table sets forth certain data with respect to mail order operations for the periods indicated:
Fiscal Year
1998 1999 2000
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Number of names on catalog mailing list at
year-end (consists of customers who purchased by
mail or telephone prior to the applicable date): 964,000 1,099,000 1,206,000
Total catalog mailings during fiscal year (in
millions): 24.3 26.0 24.7
Total mail or telephone orders received during
fiscal year: 337,760 359,255 335,000
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Internet
The Company distributes a selection of approximately 1,350 products through its Web site at www.tiffany.com. The Company expects to continue its expansion of merchandise selection and services on the site based on customer needs. In Fiscal 2000, the Company entered into a venture with Della.com, Inc., presently known as WeddingChannel.com, to create a TIFFANY & Co. online registry at the weddingchannel.com's website. Prospective buyers are able to purchase merchandise suitable for wedding gifts from TIFFANY & CO. registries or from a selection of TIFFANY & CO. products offered through the weddingchannel.com website. The Company anticipates that further enhancements will be made to these services to allow registries to be edited and managed online.
International Retail
Stores and boutiques included in the International Retail channel of distribution are listed on the following page. In these locations, which are operated by Registrant's subsidiary corporations, Registrant records as sales the retail price charged to retail customers. For locations operated by third-party distributors, Registrant records as sales the wholesale price charged to the third-party distributors. See International Wholesale Distribution below.
International Locations
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LOCATIONS OPERATED BY REGISTRANT'S SUBSIDIARIES
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JAPAN ASIA-PACIFIC EXCLUDING JAPAN
* Operated by Registrant's Subsidiaries with
Mitsukoshi, Ltd.
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Abeno, Kintetsu Department Store++ Australia: Melbourne, Crown Casino
Chiba, Mitsukoshi Department Store * Australia: Melbourne, Daimaru Department Store
Fukuoka, Mitsukoshi * Australia: Sydney, Chifley Plaza
Fukuoka, Mitsukoshi Department Store * Hong Kong: Causeway Bay, Lee Gardens
Ginza, Mitsukoshi Department Store * Hong Kong: Landmark Center
Hamamatsu, Matsubishi Department Store Hong Kong: Mitsukoshi Department Store+++
Hiroshima, Mitsukoshi Department Store * Hong Kong: Pacific Place
Ikebukuro, Mitsukoshi Department Store * Hong Kong: Peninsula Hotel
Kagoshima, Mitsukoshi Department Store * Hong Kong: Sogo Department Store
Kanazawa, Mitsukoshi * Korea: Seoul, Galleria Department Store
Kashiwa, Takashimaya Department Store++ Korea: Seoul, Grand Hyatt Hotel
Kawasaki, Saikaya Department Store Korea: Seoul, Hyundai Department Store
Kobe, Daimaru Department Store Korea: Seoul, Lotte Downtown Department Store
Kobe, Hotel Okura Kobe *+ Korea: Pusan, Paradise Hotel
Kobe, Mitsukoshi Department Store * Malaysia: Suria KLCC
Kochi, Daimaru Department Store Singapore: Ngee Ann City
Kokura, Izutsuya Department Store Singapore: Raffles Hotel
Koriyama, Usui Department Store Taiwan: Kaohsiung, Hanshin Department Store
Kumamoto, Tsuruya Department Store Taiwan: Tainan, Mitsukoshi Department Store
Kurashiki, Mitsukoshi Department Store * Taiwan: Taipei, Regent Hotel
Kyoto, Daimaru Department Store Taiwan: Taipei, Sogo Department Store
Kyoto, Takashimaya Department Store
Matsuyama, Mitsukoshi Department Store* +++ Location closed February 2001.
Nagano, Mitsukoshi *
Nagoya Hoshigaoka, Mitsukoshi Dept. Store * --------------------------------------------------
Nagoya Sakae, Mitsukoshi Department Store*
Nagoya, Hilton Hotel * EUROPE
Nihonbashi, Mitsukoshi Department Store *
Niigata, Mitsukoshi Department Store * --------------------------------------------------
Oita, Tokiwa Department Store
Okayama, Tenmaya Department Store England: London, Old Bond Street
Okinawa, Mitsukoshi Department Store * England: London, Harrod's Department Store
Osaka, Mitsukoshi Department Store * France: Paris
Osaka, Takashimaya Department Store Germany: Frankfurt
Sagamihara, Isetan Department Store Germany: Munich
Sapporo, Mitsukoshi Department Store * Italy: Florence
Sendai, Mitsukoshi Department Store * Italy: Milan
Shinjuku, Mitsukoshi Department Store * Switzerland: Zurich
Shinsaibashi, Daimaru Department Store
Shizuoka, Matsuzakaya Department Store --------------------------------------------------
Takamatsu, Mitsukoshi Department Store * CANADA AND MEXICO
Tokyo Bay, Ikspiari *
Tokyo, Ginza Flagship Store * --------------------------------------------------
Tottori , Daimaru Department Store
Umeda, Daimaru Department Store
Utsunomiya, Tobu Department Store++ Canada: Toronto
Yokohama, Landmark Plaza, Mitsukoshi * Mexico: Mexico City, Palacio Store, Polanco
Yokohama, Mitsukoshi Department Store * Mexico: Mexico City, Palacio Store, Perisur
Mexico: Mexico City, Masaryk
+Location closed January 31, 2001
++Location opened March 2001
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Business with Mitsukoshi
The Company has and expects to maintain an important commercial relationship with Mitsukoshi Ltd. of Japan ("Mitsukoshi").
From 1972 until July 1993, selected TIFFANY & CO. products, principally jewelry and timepieces, were purchased from Tiffany by Mitsukoshi for distribution in Japan in TIFFANY & CO. boutiques located, for the most part, in Mitsukoshi's department stores.
On June 12, 1993, Registrant, through its affiliated companies, entered into a distribution agreement (the "93 Agreement") with Mitsukoshi. Under the 93 Agreement, Registrant's wholly owned subsidiary, Tiffany & Co. Japan Inc. ("Tiffany-Japan"), has merchandising and marketing responsibilities in the operation of TIFFANY & CO. boutiques in Mitsukoshi's stores and other locations in Japan. Under the 93 Agreement, Mitsukoshi acts for Tiffany-Japan in the sale of merchandise owned by Tiffany-Japan and Registrant recognizes as revenues the retail price charged to the ultimate consumer in Japan. Tiffany-Japan holds inventories for sale, establishes retail prices, bears the risk of currency fluctuations, provides one or more brand managers in each boutique, controls merchandising and display within the boutiques, manages inventory and controls and funds all advertising and publicity programs with respect to TIFFANY & CO. merchandise. In some boutiques Tiffany-Japan provides the retail staff, and in others the retail staff is provided by Mitsukoshi. Mitsukoshi provides and maintains the boutique facilities and assumes credit and certain other risks. Tiffany-Japan pays Mitsukoshi fees aggregating up to 27% of net retail sales made in certain boutiques. Lower fees are paid for boutiques in which Tiffany-Japan provides the retail staff. Tiffany-Japan also pays Mitsukoshi an incentive fee of 5% of the amount by which boutique sales increase year-to-year, calculated on a per-boutique basis. In Tokyo, TIFFANY & CO. boutiques may be established only in Mitsukoshi's stores and TIFFANY & CO. brand jewelry may be sold only in such boutiques, or in a "flagship store" (see below). The mutual obligations described in this paragraph will expire on October 15, 2001.
In Fiscal 1998, 1999 and 2000, respectively, total Japan sales represented 27%, 27% and 28% of Registrant's net sales. In Fiscal 1998, 1999 and 2000, sales made in TIFFANY & CO. boutiques located in Mitsukoshi's stores constituted 16% of Registrant's net sales.
Mitsukoshi, Tiffany and Tiffany-Japan entered into an Agreement dated February 23, 1996 (the "FSS Agreement") governing the operation of a 7,700 square foot TIFFANY & CO. store in premises (the "Premises") located in Tokyo's Ginza shopping district (the "Flagship Store"). In June 1999 by Supplemental Agreement, the parties expanded the Premises to approximately 12,000 square feet. The FSS Agreement will expire on September 30, 2001. The Premises are leased by a third party to Tiffany-Japan for a fixed annual rental and subleased by Tiffany-Japan to Mitsukoshi on a percentage-of-sales basis (the "Sublease"). Tiffany-Japan completed, at its cost, all necessary improvements to prepare the Premises and delivered the Premises to Mitsukoshi in May 1996. Under the FSS Agreement, Tiffany-Japan bears all costs of operating the Premises. Tiffany-Japan selects and furnishes its own merchandise for display in the Flagship Store, prices the merchandise for retail sale, bears all risk of loss until the merchandise is sold to a customer and determines all issues of display, packaging, signage and advertising. Mitsukoshi acts for Tiffany-Japan in the sale of the merchandise, collects and holds the sales proceeds, makes credit available to customers, bears all credit losses and provides its point-of-sale transaction processing system (the "POS System").
Tiffany-Japan provides all necessary staff other than ten employees provided by Mitsukoshi. After compensating Tiffany-Japan on a percentage-of-sales basis for Sublease rent and staffing, Mitsukoshi retains 8.3% of net sales for most sales transactions in the Flagship Store. Management of the Flagship Store, other than with respect to the POS System, is the responsibility of Tiffany-Japan.
The Company has been negotiating new agreements comparable to the 93 Agreement and the FSS Agreement with Mitsukoshi and has reached an agreement in principle with respect to their substantive terms. It is anticipated that negotiations will be concluded and formal documents entered into during the first quarter of Fiscal 2001.
On February 2, 1998, Tiffany purchased, as a going concern, the TIFFANY & CO. business operated on the island of Oahu, Hawaii, by an affiliate of Mitsukoshi under agreement with Tiffany. The transaction was structured as a purchase of assets. Tiffany paid a cash price of $8.1 million and agreed to make contingent payments equal to 3.75% of certain sales made by Tiffany on the island of Oahu after the date of the purchase and through January 31, 2003. On March 19, 1999, Tiffany purchased, as a going concern, the TIFFANY & CO. business operated in Guam by an affiliate of Mitsukoshi under agreement with Tiffany. The transaction was structured as a cash-for-stock purchase of the affiliate, under which Tiffany assumed all of the assets and liabilities of the affiliate. Tiffany paid a total cash price of $7.0 million.
From 1989 through January 1999, Mitsukoshi Limited of Japan and its affiliated companies held a significant portion of the Registrant's Common Stock. As of January 31, 1999, Mitsukoshi's holdings represented 12.3% of Registrant's outstanding shares. In February 1999, Mitsukoshi sold all of its holdings of Registrant's Common Stock through a public offering.
International Wholesale Distribution
Wholesale distribution of selected TIFFANY & CO. merchandise is also made through independent distributors in the countries listed on the following page. Registrant records as sales the wholesale price charged to the third-party distributor. Multiple doors are indicated in parentheses.(3)
(3) In July 2000 the Company discontinued wholesale sales of jewelry to third-party retailers in Europe. Trade sales in Europe represented less than 1% of International Retail sales in Fiscal 1999. This change has not had a significant impact on sales or profits and has enabled the Company to better manage the TIFFANY & CO. brand and to focus management efforts on Company-operated stores in Europe. International wholesale fragrance sales, also representing less than 1% of International Retail sales in Fiscal 1999, were discontinued in most international markets effective January 31, 2001. This change is not expected to have a significant impact on sales or profits.
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INTERNATIONAL WHOLESALE DISTRIBUTION
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ASIA-PACIFIC, MIDDLE EAST AND RUSSIA CARIBBEAN
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Australia (2) Lebanon (3) Aruba (3) Jamaica (5)
Bahrain New Zealand Bahamas (2) Puerto Rico (5)
Egypt Oman (2) Bermuda St. Maarten (2)
Guam Philippines (2) Dominican Republic(2) St. Thomas (2)
Hong Kong Qatar (4) Grand Cayman (2) Turks and Caicos
India Russia (5)
Indonesia Saipan
Japan (8) Saudi Arabia (5)
Jordan Singapore
Korea Syria
Kuwait (2) United Arab Emirates (3)
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CANADA CENTRAL/LATIN AMERICA
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Calgary Ottawa Argentina (4) Panama (2)
Montreal Vancouver Brazil (2) Paraguay (4)
Colombia Uruguay
Costa Rica Venezuela
Guatemala
Honduras (2)
Mexico (6)
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Management anticipates continued expansion of international wholesale distribution in Central/Latin American, Caribbean and Asia-Pacific regions as markets are developed.
Expansion of Worldwide Retail Operations
Registrant expects to continue to open stores in locations outside the United States. However, the timing and success of this program will depend upon many factors, including Registrant's ability to obtain suitable retail space on satisfactory economic terms and the extent of consumer demand for TIFFANY & CO. products in overseas markets. Such demand varies from market to market.
The Company's commercial relationship with Mitsukoshi and Mitsukoshi's ability to continue as a leading department store operator have been and will continue to be substantial factors in the Company's continued success in Japan. TIFFANY & CO. boutiques are located in 27 Mitsukoshi department stores and other retail locations operated with Mitsukoshi in Japan. The Company also operates 20 boutiques primarily in department stores other than Mitsukoshi, in locations within Japan but outside of Tokyo, and plans to open more.
In recent years, the Japanese department store industry has, in general, suffered declining sales. There is a risk that such financial difficulties will force consolidations or store closings.
Should one or more Japanese department store operators, such as Mitsukoshi, elect or be required to close one or more stores now housing a TIFFANY & CO. boutique, the Company's sales and earnings would be reduced while alternate premises are being obtained.
Tiffany began its ongoing program of international expansion through proprietary retail stores in 1986 with the establishment of the London store. Company-operated international TIFFANY & CO. stores and boutiques range in size from approximately 400 to 14,000 gross square feet and total approximately 197,000 gross square feet devoted to retail purposes. The following chart details the growth in the Company's stores and boutiques since Fiscal 1987 on a worldwide basis:
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Worldwide Retail Locations Operated by Registrant's Subsidiary Companies
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Americas and Europe Asia-Pacific
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End of Canada,
Fiscal: U.S. Mexico Europe Japan Elsewhere Total
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1987 8 0 2 0 0 10
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1988 9 0 3 0 1 13
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1989 9 0 5 0 2 16
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1990 12 0 5 0 3 20
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1991 13 1 7 0 4 25
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1992 16 1 7 7 4 35
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1993 16 1 6 37** 5 65
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1994 18 1 6 37 7 69
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1995 21 1 6 38 9 75
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1996 23 1 6 39 12 81
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1997 28 2 7 42 17 96
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1998 34 2 7 44 17 104
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1999 38 3 8 44 17 110
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2000 42 4 8 44 21 119
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**Prior to July 1993, many TIFFANY & CO. boutiques in Japan were operated by Mitsukoshi (ranging from 21 in 1987 to 29 in 1993). See Business with Mitsukoshi above.
Advertising and Promotion
Tiffany regularly advertises its business, primarily in newspapers and magazines. Cooperative advertising funds are received from certain merchandise vendors and the Company also provides its international third-party distributors with cooperative advertising funds. In Fiscal 1998, 1999 and 2000, Tiffany spent approximately $52.5 million, $57.3 million and $65.4 million, respectively, on worldwide advertising, net of amounts contributed by vendors to Tiffany, but inclusive of cooperative advertising funds contributed by Tiffany to third party distributors and amounts expended to print and mail catalogs and brochures.
Public Relations (promotional) activity is also a significant aspect of Registrant's business. Management believes that Tiffany's image is enhanced by a program of charity sponsorships, grants and merchandise donations. Donations are also made to The Tiffany & Co. Foundation, a private foundation organized to support other 501(c)(3) charitable organizations with efforts concentrated in the preservation and conservation of the arts. The Company also engages in an aggressive program of retail promotions and media activities to maintain consumer awareness of the Company and its products. Each year, Tiffany publishes its well-known Blue Book which showcases fine jewelry and other merchandise. Tiffany's New York window displays are another important aspect of Tiffany's promotional efforts. In its New York store, Tiffany displays table settings created by leading interior decorators and by prominent hosts and hostesses. John Loring, Tiffany's Design Director, is the author of several books featuring TIFFANY & CO. products. Registrant considers these and other promotional efforts important in maintaining Tiffany's image as an arbiter of taste and style.
Trademarks
The designations TIFFANY(R) and TIFFANY & CO.(R) are the principal trademarks of Tiffany, as well as serving as tradenames. Through its subsidiaries, the Company has obtained and is the proprietor of trademark registrations for TIFFANY and TIFFANY & CO. as well as the TIFFANY BLUE BOX and the color TIFFANY BLUE for a variety of product categories in the United States and in other countries. Over the years, Tiffany has maintained a program to protect its trademarks and has instituted legal action where necessary to prevent others either from registering or using marks which are considered to create a likelihood of confusion with the Company or its products. Tiffany has been generally successful in such actions and management considers that its United States trademark rights in TIFFANY and TIFFANY & CO. are strong. However, use of the designation TIFFANY by third parties (often small companies) on unrelated goods or services, frequently transient in nature, may not come to the attention of Tiffany or may not rise to a level of concern warranting legal action. Despite the general fame of the TIFFANY and TIFFANY & CO. name and mark for the Company's products and services, Tiffany is not the sole person entitled to use the name TIFFANY in every category in every country of the world; third parties have registered the name TIFFANY in the United States in the food services category, and in a number of foreign countries in respect of certain product categories (including, in a few countries, the categories of fragrance, cosmetics, jewelry, eyeglass frames, clothing and tobacco products) under circumstances where Tiffany's rights were not sufficiently clear under local law, and/or where management concluded that Tiffany's foreseeable business interests did not warrant the expense of litigation.
Designer Licenses
Tiffany has been the sole licensee for jewelry designed by Elsa Peretti, Paloma Picasso and the late Jean Schlumberger since 1974, 1980 and 1956, respectively. In 1992, Tiffany acquired trademark and other rights necessary to sell the designs of the late Mr. Schlumberger under the TIFFANY-SCHLUMBERGER trademark. Ms. Peretti and Ms. Picasso retain ownership of copyrights for their designs and of their trademarks and exercise approval rights with respect to important aspects of the promotion, display, manufacture and merchandising of their designs and Tiffany is required by contract to devote a portion of its advertising budget to the promotion of their respective products; each is paid a royalty by Tiffany for jewelry and other items designed by them and sold under their respective names. Written agreements exist between Ms. Peretti and Tiffany and between Ms. Picasso and Tiffany but may be terminated by either party following six months notice to the other party. Tiffany is the sole retail source for merchandise designed by Ms. Peretti worldwide; however, she has reserved by contract the right to appoint other distributors in markets outside the United States, Canada, Japan, Singapore, Australia, Italy, the United Kingdom, Switzerland and Germany.
The designs of Ms. Peretti accounted for 15% of the Company's net sales in Fiscal 1998, 1999 and 2000. Merchandise designed by Ms. Picasso accounted for 3% of the Company's net sales in Fiscal 1998, 1999 and 2000.
Registrant's operating results could be adversely affected were it to cease to be a licensee of either of these designers or should its degree of exclusivity in respect of their designs be diminished.
Merchandise Purchasing, Manufacturing and Raw Materials
Merchandise offered for sale by the Company is supplied from Tiffany's workshops in New York City and Pelham, New York; Parsippany, New Jersey; Warwick, Rhode Island; Salem, West Virginia; and Paris, France and through purchases and consignments from others. The Company has recently completed construction of a jewelry and silver goods manufacturing facility in Cumberland, Rhode Island and expects operations to commence in May 2001. The following table shows Tiffany's sources of merchandise, based on cost, for the periods indicated:
Fiscal Years
1998 1999 2000
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Produced by Tiffany 31% 37% 46%
Purchased from others 69 63 54
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Total 100% 100% 100%
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The preceding figures include the cost of precious gems incorporated in such merchandise. Approximately 49% of the merchandise purchased from others in Fiscal 2000 was manufactured outside the United States.
Gems and precious metals used in making Tiffany's jewelry may be purchased from a variety of sources. For the most part, purchases of such materials are from suppliers with which Tiffany enjoys long-standing relationships.
Products containing one or more diamonds of varying sizes, including diamonds used as accents, side-stones and center-stones, accounted for approximately 37%, 38% and 40% of Tiffany's net sales in Fiscal 1998, 1999 and 2000, respectively. Products containing one or more diamonds of one carat or larger accounted for less than 10% of net sales in each of those years. Tiffany purchases cut diamonds principally from three key vendors. Were trade relations between Tiffany and one or more of these vendors to be disrupted, the Company's sales would be adversely affected in the short term until alternative supply arrangements could be established. Diamonds of one carat or greater of the quality the Company demands are, on a relative basis, more difficult to acquire than smaller diamonds. Established sources for smaller stones would be more easily replaced in the event of a disruption in supply than would established sources for larger-sized stones.
Except as noted above, Tiffany believes that there are numerous alternative sources for gems and precious metals and that the loss of any single supplier would not have a material adverse effect on its operations.
In 1999, the Company announced its plans to form a joint arrangement and distribution contract with Aber Diamond Corporation ("Aber"), a publicly traded company headquartered in Canada. The Company strengthened this commercial relationship by making a substantial equity investment ($71 million) by purchasing 8 million shares in Aber, representing approximately 14.9% of its outstanding shares. It is expected that Tiffany's alliance with Aber, 40% owner of the Diavik Diamonds Project in Northwest Canada, will enable Tiffany to secure a significant portion of its future diamond needs once production commences. Production is expected to commence in Fiscal 2003.
Presently, the supply and price of rough (uncut and unpolished) diamonds in the principal world markets have been and continue to be significantly influenced by a single entity, the Diamond Trading Corporation (the "DTC"), of De Beers Centenary AG, a Swiss corporation. The DTC supplies approximately 70% of the world market for rough, gem-quality diamonds, notwithstanding that its historical ability to control supplies has been somewhat diminished due to changing politics in diamond-producing countries and revised contractual arrangements with independent mine operators. Through its affiliates, the DTC continues to exert a significant influence on the demand for polished diamonds through its advertising and marketing efforts throughout the world.
Tiffany does not purchase rough diamonds; in consequence, Tiffany does not purchase directly from the DTC. Some, but not all, of Tiffany's suppliers do purchase directly from the DTC. It is estimated that 78% of the diamonds that Tiffany purchases have their source with the DTC. The availability and price of diamonds to the DTC and Tiffany's suppliers may be, to some extent, dependent on the political situation in diamond-producing countries, the opening of new mines and the continuance of the prevailing supply and marketing arrangements for rough diamonds. Sustained interruption in the supply of rough diamonds or an over-abundance of supply or a substantial change in the marketing arrangements described above could adversely affect Tiffany and the retail jewelry industry as a whole. Direct purchasers from the DTC may sell cut and polished diamonds marked with the DTC's proprietary trademark. This practice, coupled with a change in the marketing and advertising policies of the DTC's affiliates, could affect consumer demand for diamonds that do not bear the DTC's trademark. Tiffany may or may not carry such
branded diamonds in the future. Additionally, an affiliate of the DTC has announced a joint venture with an affiliate of a major luxury goods retailer for the purpose of retailing diamond jewelry. This joint venture may become a competitor of Tiffany.
Increasing attention has been focused within the last eighteen months on the issue of "conflict" diamonds. Conflict diamonds are extracted from war-torn regions and sold by rebel forces to fund insurrection. Concerned participants in the diamond trade, including Tiffany and non-government organizations, seek to exclude such diamonds, which represent a small fraction of the world's supply, from legitimate trade through an international system of certification and legislative initiatives. It is not expected that such efforts, if successful, will substantially affect the supply of diamonds. However, in the near term, efforts by these non-governmental organizations to increase consumer awareness of the issue and encourage legislative response could affect consumer demand for diamonds.
Finished jewelry is purchased from approximately 150 manufacturers, most of which have long-standing relationships with Tiffany. Tiffany believes that there are alternative sources for most jewelry items; however, due to the craftsmanship involved in certain designs, Tiffany would have difficulty in finding readily available alternatives in the short term.
TIFFANY & CO. brand clocks and components for timepieces are manufactured and assembled by third parties. Approximately 50% of net watch sales during Fiscal 2000 were attributable to a single manufacturer. Tiffany contracts with a single manufacturer to produce its silver flatware patterns from Tiffany's proprietary tools and dies by use of Tiffany's traditional manufacturing techniques. Likewise, engraved stationery is purchased from a single manufacturer. Loss of any of these manufacturers could result in the unavailability of timepieces, silver flatware or engraved stationery, as the case may be, during the period necessary for Tiffany to arrange for new production.
Competition
Registrant encounters significant competition in all of its product lines from other third-party providers, some of which specialize in just one area in which the Company is active. Many of the Company's competitors have established reputations for style and expertise similar to that of the Company and compete on the basis of value. Other jewelers and retailers compete primarily through advertised price promotion. The Company competes on the basis of quality and value and does not engage in price promotional advertising. See Merchandise Purchasing, Manufacturing and Raw Materials above.
The international marketplace for the Company's products is highly competitive. Although the Company believes that the name TIFFANY & CO. is known internationally, and although Tiffany did operate retail stores in London and Paris prior to World War II, the Company did not have a retail presence in Europe in the post-war era until 1986. Accordingly, consumer awareness of Tiffany & Co. and its products is not as strong in Europe as in the U.S. or in Japan, where Tiffany has distributed its products for many years. The Company expects that its overseas stores will continue to experience intense competition from established retailers in international cities where TIFFANY & CO. stores are or may eventually be located.
Registrant also faces increasing competition in the area of direct marketing. A growing number of direct sellers compete for access to the same mailing lists of known purchasers of luxury goods. In marketing service awards and business gifts to corporations and other organizations, the Company faces numerous competitors who sell a wide variety of products at a greater price range than the Company, which has chosen to offer a more limited selection in order to adhere to its established quality standards. Tiffany currently distributes selected merchandise through its Web site at www.tiffany.com and anticipates increasing competition in this area as the technology evolves. Tiffany does not currently offer diamond engagement jewelry through its Web site, while certain of Tiffany's competitors do. Nonetheless, Tiffany will seek to maintain and improve its position in the Internet marketplace by refining and expanding its merchandise selection and services.
Seasonality
As a jeweler and specialty retailer, the Company's business is seasonal in nature, with the fourth quarter typically representing a proportionally greater percentage of annual sales, earnings from operations and cash flow. Management expects such seasonality to continue.
Employees
As of January 31, 2001, the Registrant's subsidiary corporations employed an aggregate of approximately 5,960 full-time and part-time persons. Of those employees, 4,932 are employed in the United States. Of Tiffany's total employees, approximately 2,250 persons are salaried employees, 572 are engaged in manufacturing and 2,887 are retail store personnel. None of the Company's employees is represented by a union. Registrant believes that relations with its employees are good.
ITEM 2. PROPERTIES
Registrant both owns and leases its principal operating facilities and occupies its various store premises under lease arrangements which are generally on a two to ten-year basis.
New York Store
In November 1999, Tiffany purchased the land and building housing its flagship store at 727 Fifth Avenue in New York City. Prior to its repurchase, the building had been leased by Tiffany since 1984. Constructed for Tiffany in 1940, the building was designed to be a retail store for the Company and is believed to be well located for this function. Currently, approximately 32,450 gross square feet of this 124,000 square foot building are devoted to retail selling purposes, with the balance devoted to administrative offices, certain product services, jewelry manufacturing and storage. During the fourth quarter of fiscal 2000, the Company commenced a three-year renovation project to reconfigure the store to increase its selling space by approximately 25% and to provide additional space for customer service and special exhibitions.
Customer Service Center
In 1995, Tiffany entered into a lease of undeveloped property in Parsippany, New Jersey, in order to construct and occupy a new distribution facility. In April 1997, construction of the "Customer Service Center" ("CSC") on that property was completed and Tiffany commenced operations. The CSC is a combined warehouse, distribution, light manufacturing, computing and office center. It comprises approximately 269,000 square feet, of which approximately 96,000 square feet are devoted to office and computer operations use, with the balance devoted to warehousing, shipping, receiving, light manufacturing, merchandise processing and other distribution functions. Registrant believes that the CSC has been properly designed to handle worldwide distribution functions and that it is suitable for that purpose. The computer and office center areas are currently being expanded to meet increased demand.
The present term of the lease expires on January 31, 2002. Tiffany has exercised its right under the lease to purchase the CSC as of such date for a scheduled purchase price.
In anticipation of growth in sales volume and company-operated stores, Tiffany has entered into a ground lease, subject to state and local approvals and receipt of landlord's required insurance documentation, of undeveloped property in Hanover Township, New Jersey in order to construct and occupy an additional facility to manage the warehousing and processing of direct-to- customer orders and to perform other distribution functions. It is anticipated that, if approved, construction of the facility will commence in 2001 with occupancy expected in Fiscal 2003. The proposed facility will be approximately 266,000 square feet, of which approximately 34,500 square feet will be devoted to office use, the balance to warehousing, shipping, receiving, merchandise processing and other warehouse functions.
Manufacturing Facility - Cumberland, Rhode Island
In January 2000 Tiffany entered into an agreement to purchase certain undeveloped property in Cumberland, Providence County, Rhode Island in order to construct and occupy a 100,000 square foot jewelry and silver goods manufact- uring facility. Construction has recently been completed and operations are expected to commence in May 2001.(4)
(4) In September 2000 Tiffany entered into agreements with the Rhode Island Industrial Facilities Corporation to purchase an industrial development bond for the purpose of financing the continued construction and equipping of the manufacturing facility. In connection with the issuance of the Bond, Tiffany transferred title to the land, building and improvements, and leased back the project. Under the Lease Agreement, Tiffany's rental payments will be used to pay the principal and interest on the Bond. Upon payment in full of the Bond, Tiffany has the option to purchase the facility at a price of One Thousand ($1,000.00) Dollars.
Branch and Subsidiary Retail Store Leases
Set forth below is the expiration date for each of Tiffany's existing branch and subsidiary retail store leases (and, where applicable, optional renewal terms):
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U.S. BRANCH STORE LEASES
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CITY STATE/TERR. LOCATION EXPIRATION DATE RENEWAL OPTIONS
----------------------------------------------------------------------------------------------------------
Atlanta GA Phipps Plaza Shopping Center July 31, 2010
----------------------------------------------------------------------------------------------------------
Bal Harbour FL Bal Harbour Shops May 31, 2003
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Beverly Hills CA Two Rodeo Drive October 7, 2005 Two five-year
terms
----------------------------------------------------------------------------------------------------------
Boca Raton FL Town Center January 31, 2010 One five-year
term
----------------------------------------------------------------------------------------------------------
Boston MA Copley Place July 31, 2009 Two five-year
terms
----------------------------------------------------------------------------------------------------------
Century City CA Century City Shopping Center June 30, 2009
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Charlotte NC SouthPark Mall December 31, 2007 One five-year
term
----------------------------------------------------------------------------------------------------------
Chestnut Hill MA The Atrium January 31, 2008 One five-year
term
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Chevy Chase MD 5500 Wisconsin Avenue January 31, 2006
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Chicago IL 730 North Michigan Avenue October 20, 2012 Two five-year
terms
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Cincinnati OH Fountain Place November 30, 2012 Two five-year
terms
----------------------------------------------------------------------------------------------------------
Costa Mesa CA South Coast Plaza January 31, 2004 One five-year
term
----------------------------------------------------------------------------------------------------------
Dallas TX The Galleria May 31, 2009
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Dallas TX NorthPark Center May 31, 2009 One five-year
term
----------------------------------------------------------------------------------------------------------
Denver CO Cherry Creek Shopping Center January 31, 2008 One five-year
term
----------------------------------------------------------------------------------------------------------
Greenwich CT 140 Greenwich Avenue July 31, 2010 Two five-year
terms
----------------------------------------------------------------------------------------------------------
Hackensack NJ Riverside Square Mall September 30, 2006
----------------------------------------------------------------------------------------------------------
Honolulu HI Ala Moana Center January 31, 2011
----------------------------------------------------------------------------------------------------------
Honolulu HI Hilton Hawaiian Village December 31, 2002 One five-year
term
----------------------------------------------------------------------------------------------------------
Honolulu HI Moana Surfrider January 31, 2003
----------------------------------------------------------------------------------------------------------
Houston TX Galleria Post Oak September 30, 2001 One five-year
term
----------------------------------------------------------------------------------------------------------
Las Vegas NV Bellagio January 31, 2008 One ten-year
term
----------------------------------------------------------------------------------------------------------
King of Prussia PA King of Prussia Plaza November 30, 2005 One five-year
term
----------------------------------------------------------------------------------------------------------
Manhasset NY Americana Shopping Center June 9, 2008
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Maui HI Whalers Village July 31, 2004
----------------------------------------------------------------------------------------------------------
Maui HI Wailea November 30, 2010 One five-year
term
----------------------------------------------------------------------------------------------------------
Oak Brook IL Oakbrook Center April 30, 2009 Two five-year
terms
----------------------------------------------------------------------------------------------------------
Old Orchard IL Old Orchard Shopping Center April 30, 2010 One five-year
term
----------------------------------------------------------------------------------------------------------
Palm Beach FL 259 Worth Avenue May 31, 2007 Two five-year
terms
----------------------------------------------------------------------------------------------------------
Palo Alto CA Stanford Shopping Center May 31, 2007
----------------------------------------------------------------------------------------------------------
Philadelphia PA The Bellevue June 30, 2010 One five-year term
----------------------------------------------------------------------------------------------------------
Portland OR Pioneer Place December 31, 2010 One five-year
term
----------------------------------------------------------------------------------------------------------
San Diego CA Fashion Valley Shopping December 31, 2007 One five-year
Center term
----------------------------------------------------------------------------------------------------------
San Francisco CA Union Square October 23, 2006 One ten-year
term
----------------------------------------------------------------------------------------------------------
Scottsdale AZ Fashion Square December 31, 2008 One five-year
term
----------------------------------------------------------------------------------------------------------
Seattle WA Pacific Place October 28, 2008 Two five-year
terms
----------------------------------------------------------------------------------------------------------
Short Hills NJ The Mall at Short Hills January 31, 2005 One five-year
term
----------------------------------------------------------------------------------------------------------
One five-year
Tamuning Guam Tumon Sands Plaza September 30, 2001 term
----------------------------------------------------------------------------------------------------------
Troy MI The Somerset Collection September 30, 2007
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Vienna VA Fairfax Square March 31, 2010 One five-year term
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White Plains NY The Westchester April 30, 2005 One five-year term
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INTERNATIONAL BRANCH STORE LEASES-
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COUNTRY CITY LOCATION EXPIRATION DATE RENEWAL OPTIONS
----------------------------------------------------------------------------------------------------
Australia Sydney Chifley Tower October 18, 2004 One five-year term
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Australia Melbourne Crown Casino May 7, 2002
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Canada Toronto 85 Bloor Street West November 15, 2006 One seven-year term
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England London 25 Old Bond Street March 24, 2016
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France Paris 6 Rue de la Paix April 1, 2011
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Germany Frankfurt 20 Goethestrasse January 31, 2011 One ten-year term
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Germany Munich Residenzstrasse 11 January 31, 2004 One five-year term
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Hong Kong Causeway Bay Lee Gardens June 30, 2003
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Hong Kong The Landmark May 31, 2005
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Hong Kong Kowloon The Peninsula February 28, 2002
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Hong Kong Pacific Place October 31, 2003
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Italy Florence Via Tornabuoni December 31, 2001 One six-year term+
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Italy Milan Via della Spiga October 31, 2005
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Japan Tokyo Ginza October 24, 2002 One three-year term
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Korea Pusan Paradise Hotel September 20, 2003 One two-year option
----------------------------------------------------------------------------------------------------
Korea Seoul Grand Hyatt Hotel December 31, 2001
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Malaysia Kuala Lumpur Suria KL City Centre November 30, 2002 Two three-year terms
----------------------------------------------------------------------------------------------------
Mexico Mexico City Masaryk May 31, 2004 Two three-year terms
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Singapore Raffles Hotel September 15, 2003
----------------------------------------------------------------------------------------------------
Singapore Ngee Ann City September 14, 2002 One one-year term
----------------------------------------------------------------------------------------------------
Switzerland Zurich Bahnhofstrasse 14 September 30, 2005
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Taiwan Taipei Regent Hotel Under Negotiation
----------------------------------------------------------------------------------------------------
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+ Renewal subject to conditions imposed by Italian law, including right of landlord to occupy premises for its own use.
New Store Leases
In addition to the U.S. leases described herein on page 18, Tiffany has entered into the following new leases for domestic stores expected to open in 2001: a 10-year lease for a 6,500 square foot store at International Plaza in Tampa, Florida and an 11-year lease for a 6,065 square foot store at Westfield Shoppingtown Valley Fair in Santa Clara (San Jose), California. Expected U.S. openings in 2002: a 15-year lease for an 11,226 square foot store on Kalakaua Avenue, Waikiki, Honolulu, Hawaii. Tiffany has also entered into the following new leases for international stores expected to open in 2001: a 6-year lease for a 4,360 square foot store on Via Del Babuino in Rome, Italy, a 15-year lease for a 1,390 square foot store in Royal Exchange, London, England, a 5-year lease for 3,951 square foot store in Inguatemi Shopping Center in Sao Paulo, Brazil and a 5-year lease for a 5,920 square foot store on Collins Street in Melbourne, Australia.
ITEM 3. LEGAL AND ENVIRONMENTAL PROCEEDINGS
Registrant and Tiffany are from time to time involved in routine litigation incidental to the conduct of Tiffany's business, including proceedings to protect its trademark rights, litigation with parties claiming infringement of their intellectual property rights by Tiffany, litigation instituted by persons alleged to have been injured upon premises within Registrant's control and litigation with present and former employees. Although litigation with present and former employees is routine and incidental to the conduct of Tiffany's business, as well as for any business employing significant numbers of U.S.-based employees, such litigation can result in large monetary awards when a civil jury is allowed to determine compensatory and/or punitive damages for actions claiming
discrimination on the basis of age, gender, race, religion, disability or other legally protected characteristic or for termination of employment that is wrongful or in violation of implied contracts. However, Registrant believes that no litigation currently pending to which it or Tiffany is a party or to which its properties are subject will have a material adverse effect on its financial position, results of operations or cash flows.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's security holders during the fourth quarter of the fiscal year ended January 31, 2001.
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of Registrant are:
NAME AGE POSITION YEAR JOINED TIFFANY
William R. Chaney 68 Chairman of the Board of Directors 1980
Michael J. Kowalski 49 President and Chief Executive Officer 1983
James E. Quinn 49 Vice Chairman 1986
Beth O. Canavan 46 Executive Vice President 1987
James N. Fernandez 45 Executive Vice President and 1983
Chief Financial Officer
Victoria Berger-Gross 45 Senior Vice President - Human Resources 2001
Patrick B. Dorsey 50 Senior Vice President - General Counsel 1985
and Secretary
Linda A. Hanson 40 Senior Vice President - Merchandising 1990
Fernanda M. Kellogg 54 Senior Vice President - Public Relations 1984
Caroline D. Naggiar 43 Senior Vice President - Marketing 1997
John S. Petterson 42 Senior Vice President - Direct Marketing 1988
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William R. Chaney. Mr. Chaney, Chairman of Tiffany since August 1984, joined Tiffany in January 1980 as a member of its Board. From August 1984 through January 31, 1999, he also served as Chief Executive Officer of Registrant. Prior to 1984 he served as an executive officer of Avon Products Inc. Mr. Chaney also serves on the board of directors of the Bank of New York and the Atlantic Mutual Companies.
Michael J. Kowalski. Mr. Kowalski was appointed President on January 18, 1996 and served as Chief Operating Officer from January 1997 until his appointment as Chief Executive Officer on February 1, 1999, succeeding William R. Chaney. He has served on Registrant's Board of Directors since January 1995. He previously served as Executive Vice President from March 19, 1992, with overall responsibility in the following areas: merchandising, marketing, advertising, public relations and product design. He has held a variety of merchandising management positions since joining Tiffany in 1983 as Director of Financial Planning.
James E. Quinn. Mr. Quinn joined Tiffany in July 1986 as Vice President of branch sales for the Company's corporate sales operations and has since had various responsibilities for sales management and operations. He was promoted to Executive Vice President on March 19, 1992 and assumed responsibility for retail and corporate sales for the Americas in 1994. In January 1995 he became a member of Registrant's Board of Directors. In January 1998 he was appointed Vice Chairman. He has responsibility for worldwide sales. Mr. Quinn is a member of the Board of Directors of BNY Hamilton Funds, Inc. and Mutual of America Capital Management.
Beth O. Canavan. Ms. Canavan joined Tiffany in May 1987 as Director of New Store Development. She later held the positions of Vice President, Retail Sales Development in 1990, Vice President and General Manager of the New York Store in 1992 and Eastern Regional Vice President in 1994. In 1997, she assumed the position of Senior Vice President for U.S. Retail. In January 2000, she was promoted to Executive Vice President responsible for retail sales activities in the U.S. and Canada, retail store expansion and customer service.
James N. Fernandez. Mr. Fernandez joined Tiffany in October 1983 and has held various positions in financial planning and management prior to his appointment as Senior Vice President-Chief Financial Officer in April 1989. In January 1998, he was promoted to Executive Vice President-Chief Financial Officer, at which time his responsibilities were expanded to include distribution in addition to his responsibilities for the accounting, treasury, investor relations, information technology, financial planning and internal audit functions.
Victoria Berger-Gross. Dr. Berger-Gross joined Tiffany in February 2001 as Senior Vice President - Human Resources. Prior to joining Tiffany, she served as Senior Vice President & Director of Human Resources at Lehman Brothers from May 2000, Senior Director - Human Resources at Bertelsmann A.G.'s BMG Entertainment from March 1998 and Vice President - Organizational Effectiveness at Personnel Decisions International from January 1990.
Patrick B. Dorsey. Mr. Dorsey joined Tiffany in July 1985 as General Counsel and Secretary.
Linda A. Hanson. Ms. Hanson joined Tiffany in April 1990 as a management associate. She assumed her current responsibilities in July 1997.
Fernanda M. Kellogg. Ms. Kellogg joined Tiffany in October 1984 as Director of Retail Marketing. She assumed her current responsibilities in January 1990.
Caroline D. Naggiar. Ms. Naggiar joined Tiffany in June 1997 as Vice President-Marketing Communications. She assumed her current responsibilities in February 1998. Prior to joining Tiffany, she served as Vice President-Management Representative of McCann-Erickson Advertising from January 1993, where she was responsible for the Tiffany account.
John S. Petterson. Mr. Petterson joined Tiffany in 1988 as a management associate. He was promoted to Senior Vice President - Corporate Sales in May 1995 and in February 2000 his responsibilities were expanded to include Direct Mail and the E-Commerce business.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Registrant's Common Stock is traded on the New York Stock Exchange. On July 21, 1999 and July 20, 2000, two-for-one stock splits were effected through stock dividends. All share prices and dividend amounts have been restated to reflect the two stock splits. In consolidated trading the high and low selling prices per share for shares of such Common Stock for Fiscal 1999 were:
Fiscal 1999 High Low ----------- ---- --- First Fiscal Quarter $21.86 $13.19 Second Fiscal Quarter $26.50 $19.47 Third Fiscal Quarter $33.50 $20.91 Fourth Fiscal Quarter $45.00 $29.19 |
In consolidated trading, the high and low selling prices per share for shares of such Common Stock for Fiscal 2000 were:
Fiscal 2000 High Low ----------- ---- --- First Fiscal Quarter $42.75 $27.25 Second Fiscal Quarter $38.75 $27.09 Third Fiscal Quarter $45.38 $32.00 Fourth Fiscal Quarter $43.56 $26.75 |
On March 23, 2001, the high and low selling prices quoted on such exchange were $27.80 and $27.00 respectively. On March 23, 2001 there were 3,082 record holders of Registrant's Common Stock.
It is Registrant's policy to pay a quarterly dividend of $0.04 per share of Common Stock, subject to declaration by Registrant's Board of Directors. In Fiscal 1999, a dividend of $0.0225 per share of Common Stock was paid on April 12, 1999. On May 20, 1999, Registrant's Board of Directors declared an increase in the regular quarterly dividend from $0.0225 per share to $0.03 per share of Common Stock. Thereafter, dividends of $0.03 per share of Common Stock were paid on July 21, 1999, October 12, 1999 and January 10, 2000. In Fiscal 2000, a dividend of $0.03 per share of Common Stock was paid on April 10, 2000. The preceding dividends per share have been adjusted for a two-for-one stock split of the Common Stock in July 2000. On May 18, 2000, Registrant's Board of Directors declared an increase in the regular quarterly dividend from $0.03 per share to $0.04 per share of Common Stock. Thereafter, dividends of $0.04 per share of Common Stock were paid on July 20, 2000, October 10, 2000 and January 10, 2001.
In calculating the aggregate market value of the voting stock held by non-affiliates of the Registrant shown on the cover page of this Report on Form 10-K, 1,804,964 shares of Registrant's
Common Stock beneficially owned by the executive officers and directors of the Registrant (exclusive of shares which may be acquired on exercise of employee stock options) were excluded, on the assumption that certain of those persons could be considered "affiliates" under the provisions of Rule 405 promulgated under the Securities Act of 1933.
ITEM 6. SELECTED FINANCIAL DATA
Incorporated by reference from Registrant's Annual Report to Stockholders for the Fiscal Year ended January 31, 2001, pages 18-19.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Incorporated by reference from Registrant's Annual Report to Stockholders for the Fiscal Year ended January 31, 2001, pages 20-26.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Incorporated by reference from Registrant's Annual Report to Stockholders for the Fiscal Year ended January 31, 2001, pages 27-46.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
NONE.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Incorporated by reference from Registrant's Proxy Statement dated April 10, 2001, pages 8-10 and 24-26.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated by reference from Registrant's Proxy Statement dated April 10, 2001, pages 12-22.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated by reference from Registrant's Proxy Statement dated April 10, 2001, pages 4-6.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated by reference from Registrant's Proxy Statement dated April 10, 2001, page 15.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
(a) List of Documents Filed As Part of This Report:
1. Financial Statements:
Data incorporated by reference from
the 2000 Annual Report to Stockholders
of Tiffany & Co. and Subsidiaries:
Report of Independent Accountants
(following this Form 10-K)
Consolidated Statements of Earnings
for the years ended January 31, 2001, 2000, and 1999
Consolidated Balance Sheets
as of January 31, 2001 and 2000
Consolidated Statements of Stockholders' Equity for the years ended January 31, 2001, 2000 and 1999
Consolidated Statements of Cash Flows
for the years ended January 31, 2001, 2000 and 1999
Notes to consolidated financial statements
2. Financial Statement Schedules:
The following financial statement schedule should be read in conjunction with the consolidated financial statements incorporated by reference herein:
II. Valuation and qualifying accounts and reserves.
All other schedules have been omitted since they are neither applicable nor required, or because the information required is included in the consolidated financial statements and notes thereto.
3. Exhibits:
The following exhibits have been filed with the Securities and Exchange Commission but are not attached to copies of this Form 10-K other than complete copies filed with said Commission and the New York Stock Exchange:
Exhibit Description
3.1 Restated Certificate of Incorporation of Registrant. Incorporated by reference from Exhibit 3.1
to Registrant's Report on Form 8-K dated May 16, 1996.
3.1a Amendment to Certificate of Incorporation of Registrant. Incorporated by reference from Exhibit 3.1
to Registrant's Report on Form 8-K dated May 20, 1999.
3.1b Amendment to Certificate of Incorporation of Registrant dated May 18, 2000.
3.2 By-Laws of Registrant (as last amended March 15, 2001).
4.1 Amended and Restated Rights Agreement Dated as of September 22, 1998 by and between Registrant and
ChaseMellon Shareholder Services L.L.C., as Rights Agent. Incorporated by reference from Exhibit
4.1 to Registrant's Report on Form 8-A/A dated September 24, 1998.
10.5 Designer Agreement between Tiffany and Paloma Picasso dated April 4, 1985. Incorporated by reference
from Exhibit 10.5 filed with Registrant's Registration Statement on Form S-1, Registration No.
33-12818 (the "Registration Statement").
10.101 Form of Note Purchase Agreement, including the form of 7.52% Senior Notes due 2003 issued thereunder
at par by Registrant on January 31, 1993 for an aggregate principal amount of $51,500,000. Incorporated
by reference from Exhibit 10.101 filed with Registrant's Report on Form 10-K for the Fiscal Year ended
January 31, 1993 and dated April 12, 1993.
10.111 Agreement made June 12, 1993 by and between Tiffany-Japan (Delaware) Inc., Tiffany and Mitsukoshi
Limited as amended. Incorporated by reference from Exhibit 10.111 filed with Registrant's Report on Form
8-K filed June 12, 1993 and Exhibit 10.111a filed with Registrant's Report on Form 10-Q dated August 28, 1998.
10.111a Rider No. 1 to Agreement referred to in Exhibit 10.111, dated September 21, 1999. Incorporated by reference from Exhibit
10.111a filed with Registrant's Report on Form 10-K for the Fiscal Year ended January 31, 2000.
10.116 Credit Agreement dated as of June 26, 1995 by and among Registrant, Tiffany, Tiffany & Co. International,
The Bank of New York, as Issuing Bank and as Swing Line Lender, The Bank of New York, as Arranging Agent and
The Bank of New York as Administrative Agent, restated through Amendment No. 5 dated as of November 20, 1997.
Incorporated by reference from Exhibit 10.116 filed with Registrant's Report on Form 10-Q for the Fiscal quarter
ended October 31, 1997 and dated December 10, 1997.
10.116a Amendments Nos. 6-8 to Credit Agreement referred to in Exhibit 10.116 above, dated, respectively October 6,
1998, November 30, 1998 and March 8, 1999. Incorporated by reference from Exhibit 10.116a filed with Registrant's
Report on Form 10-K for the Fiscal Year ended January 31, 1999.
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10.116b Amendments Nos. 9-11 to Credit Agreement referred to in previously
filed Exhibit 10.116 dated, respectively, July 15, 1999, October 20,
1999 and February 14, 2000. Incorporated by reference from Exhibit
10.116b filed with Registrant's Report on Form 10-K for the Fiscal
Year ended January 31, 2000.
10.116c Amendments Nos. 12-13 to Credit Agreement referred to in previously
filed Exhibit 10.116 dated, respectively, June 22, 2000 and November 1, 2000.
10.119 Amended and Restated Lease Agreement dated as of December 1, 1995,
effective as of August 1, 1995, by and between First Fidelity Bank,
National Association, not in its individual capacity, but solely as
the trustee under that certain Trust Agreement 1995-1 dated as of
July 1, 1995, as amended, as Owner-Lessor and Tiffany, as Lessee;
Amended and Restated Construction Agency Agreement dated as of
December 1, 1995, effective as of December 11, 1995, by and between
Tiffany, as Agent, and First Fidelity Bank, National Association, a
national banking association, not in its individual capacity but
solely as trustee pursuant to a Trust Agreement 1995-1 dated as of
July 1, 1995, as amended, as Owner; Agreement and Consent to
Assignment dated as of December 1, 1995 among Registrant, Tiffany and
Fleet National Bank of Connecticut, as Collateral Trustee; and
Definition Appendix to the foregoing documents listed in this Exhibit
10.119. Incorporated by reference from Exhibit 10.119 filed with
Registrant's Report on Form 10-K for the Fiscal Year ended January
31, 1996 and dated April 8, 1996.
10.119a Amendment No. 1 to the Agreement and Consent to Assignment dated as
of December 1, 1995 among Registrant, Tiffany and Fleet National Bank
of Connecticut, as Collateral Trustee referenced in Exhibit 10.119
above, dated November 3, 1998. Incorporated by reference from Exhibit
10.119a filed with Registrant's Report on Form 10-K for the Fiscal
Year ended January 31, 1999.
10.120 Watch Supplier Agreement as of October 30, 1995 by and among Tiffany
and Tiffany & Co. Watch Center S.A. and TWF SA. Incorporated by
reference from Exhibit 10.120 filed with Registrant's Report on Form
10-K for the Fiscal Year ended January 31, 1996 and dated April 8, 1996.
10.121 Agreement as of February 23, 1996 among Mitsukoshi Limited,
Tiffany-Japan Inc. and Tiffany. Incorporated by reference from
Exhibit 10.121 filed with Registrant's Report on Form 10-K for the
Fiscal Year ended January 31, 1996 and dated April 8, 1996.
10.122 Agreement dated as of April 3, 1996 among American Family Life
Assurance Company of Columbus, Japan Branch, Tiffany & Co. Japan,
Inc., Japan Branch, and Registrant, as Guarantor, for yen
5,000,000,000 Loan Due 2011. Incorporated by reference from Exhibit
10.122 filed with Registrant's Report on Form 10-Q for the Fiscal
quarter ended April 30, 1996 and dated June 13, 1996.
10.122a Amendment No. 1 to the Agreement referred to in Exhibit 10.122 above,
dated November 18, 1998. Incorporated by reference from Exhibit
10.122a filed with Registrant's Report on Form 10-K for the Fiscal
Year ended January 31, 1999.
10.123 Agreement made effective as of February 1, 1997 by and between
Tiffany and Elsa Peretti. Incorporated by reference from Exhibit
10.123 to Registrant's Report on Form 10-K for the Fiscal Year ended
January 31, 1997 and dated April 8, 1997.
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10.126 Form of Note Purchase Agreement between Registrant and various
institutional note purchasers with Schedules B, 5.14 and 5.15 and
Exhibits 1A, 1B, and 4.7 thereto, dated as of December 30, 1998 in
respect of Registrant's $60 million principal amount 6.90% Series A
Senior Notes due December 30, 2008 and $40 million principal amount
7.05% Series B Senior Notes due December 30, 2010. Incorporated by
reference from Exhibit 10.126 filed with Registrant's Report on Form
10-K for the Fiscal Year ended January 31, 1999.
10.128 Translation of Loan Agreement between Tiffany & Co. Japan Inc. and
the Fuji Bank, Ltd., Hong Kong Branch dated 22 October 1999, Guaranty
issued in connection therewith by the Registrant and Agreement on
Bank Transactions referenced in the aforesaid Loan Agreement;
Schedule to Master Agreement dated as of October 18, 1999 between The
Chase Manhattan Bank and Tiffany & Co. Japan Inc. (made with
reference to International Swap Dealers Association, Inc. Master
Agreement form copyrighted 1992), Guaranty dated October 18, 1999
issued in connection with such Master Agreement by Tiffany and
Company, Tiffany & Co. International and Registrant in favor of The
Chase Manhattan Bank and Confirmation issued October 29, 1999 by The
Chase Manhattan Bank. Incorporated by reference from Exhibit 10.128
filed with Registrant's Report on Form 10-Q for the Fiscal quarter
ended October 31, 1999.
13.1 Annual Report to Stockholders for Fiscal Year Ended January 31, 2001
(pages 18-46 of such Annual Report have been filed in electronic
format).
21.1 Subsidiaries of Registrant.
23.1 Consent of PricewaterhouseCoopers LLP, independent accountants.
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Executive Compensation Plans and Arrangements
Exhibit Description
4.3 Registrant's 1998 Employee Incentive Plan and standard terms of stock
option award (transferable and non-transferable). Incorporated by
reference from Exhibit 4.3 to Registrant's Registration Statement on
Form S-8, file number 333-67723, filed November 23, 1998.
4.3a Standard terms of stock option award (transferable and
non-transferable) under Registrant's 1998 Employee Incentive Plan, as
revised January 21, 1999. Incorporated by reference from Exhibit 4.3a
filed with Registrant's Report on Form 10-K for the Fiscal Year ended
January 31, 1999.
4.4 Registrant's 1998 Directors Option Plan. Incorporated by reference
from Exhibit 4.3 to Registrant's Registration Statement on Form S-8,
file number 333-67725, filed November 23, 1998.
|
4.4a Standard terms of stock option award (transferable non-qualified
option) under Registrant's 1998 Directors Option Plan, as revised
January 21, 1999. Incorporated by reference from Exhibit 4.4a filed
with Registrant's Report on Form 10-K for the Fiscal Year ended
January 31, 1999.
10.3 Registrant's 1986 Stock Option Plan and terms of stock option
agreement, as last amended on July 16, 1998. Incorporated by
reference from Exhibit 10.3 filed with Registrant's Report on Form
10-K for the Fiscal Year ended January 31, 1999.
10.25 Amended and Restated Deferred Compensation Agreement originally made
effective December 31, 1989 by and between William R. Chaney and
Tiffany and Company, and subsequently amended February 8, 1999.
Incorporated by reference from Exhibit 10.25 filed with Registrant's
Report on Form 10-K for the Fiscal Year ended January 31, 1999.
10.49 Form of Indemnity Agreement, approved by the Board of Directors on
March 19, 1987. Incorporated by reference from Exhibit 10.49 to the
Registration Statement.
10.60 Registrant's 1988 Director Stock Option Plan and form of Stock Option
agreement, as last amended on November 21, 1996. Incorporated by
reference from Exhibit 10.60 to Registrant's Report on Form 10-K for
the Fiscal Year ended January 31, 1997 and dated April 8, 1997.
10.105 Group Long Term Disability Insurance Policy issued by The Mutual
Benefit Life Insurance Company. Policy Number: G53,152. Incorporated
by reference from Exhibit 10.105 filed with Registrant's Report on
Form 10-K for the Fiscal Year ended January 31, 1993 and dated April
12, 1993.
10.106 Amended and Restated Tiffany and Company Executive Deferral Plan
originally made effective October 1, 1989, as amended effective
October 1, 1998. Incorporated by reference from Exhibit 10.106 filed
with Registrant's Report on Form 10-K for the Fiscal Year ended
January 31, 1999.
10.108 Registrant's Amended and Restated Retirement Plan for Non-Employee
Directors originally made effective January 1, 1989, as amended
through January 21, 1999. Incorporated by reference from Exhibit
10.108 filed with Registrant's Report on Form 10-K for the Fiscal
Year ended January 31, 1999.
10.109 Summary of informal incentive cash bonus plan for managerial
employees. Incorporated by reference from Exhibit 10.109 filed with
Registrant's Report on Form 10-K for the Fiscal Year ended January
31, 1993 and dated April 12, 1993.
10.113 Tiffany and Company Pension Plan, as last amended effective December
21, 1998. Incorporated by reference from Exhibit 10.113 filed with
Registrant's Report on Form 10-K for the Fiscal Year ended January
31, 1999.
10.114 1994 Tiffany and Company Supplemental Retirement Income Plan.
Incorporated by reference from Exhibit 10.114 filed with Registrant's
Report on Form 10-K for the Fiscal Year ended January 31, 1994 and
dated April 7, 1994.
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10.115 1994 Form of Split Dollar Life Insurance Agreement entered into by
Tiffany and Company and certain Executive Officers including form of
Assignment of Life Insurance Policy as Collateral and Rider No. 1 to
1994 Form of Split Dollar Life Insurance Agreement entered into by
Tiffany and Company and certain Executive Officers. Incorporated by
reference from Exhibit 10.115 filed with Registrant's Report on Form
10-K for the Fiscal Year ended January 31, 1995 and dated April 7,
1995.
10.115a Riders Nos. 2 and 3, dated October 18, 1998 and March 20, 1999,
respectively to Split Dollar Life Insurance Agreements between and
among William R. Chaney and Tiffany and Company, and respectively,
the 1994 Chaney Family Trust u/a 2/23/94 and the Babette C. Chaney et
al. Trust u/a 2/23/94. Incorporated by reference from Exhibit 10.115a
filed with Registrant's Report on Form 10-K for the Fiscal Year ended
January 31, 1999.
10.127 Retention Agreements dated March 30, 1999 between and among
Registrant and Tiffany and, respectively, each of the following
executive officers: Michael J. Kowalski, James E. Quinn, James N.
Fernandez and Patrick B. Dorsey and Appendices I to III to each of
those Agreements. Incorporated by reference from Exhibit 10.127 filed
with Registrant's Report on Form 10-K for the Fiscal Year ended
January 31, 1999.
10.127a Retention Agreements dated March 13, 2001 between and among Registrant and Tiffany and,
respectively, each of the following executive officers: Beth O. Canavan, Linda A. Hanson,
Fernanda M. Kellogg, Caroline D. Naggiar, John S. Petterson and Victoria Berger-Gross and
Appendices I to III to each of those Agreements.
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REGISTRANT WILL FURNISH COPIES OF ANY OF THE FOREGOING EXHIBITS TO ANY REGISTERED HOLDER OF THE REGISTRANT'S COMMON STOCK UPON PAYMENT OF A FEE OF $.15 PER PAGE FURNISHED, WHICH FEE REPRESENTS REGISTRANT'S EXPENSES IN FURNISHING SUCH EXHIBIT.
(b) Reports on Form 8-K.
On December 20, 2000, Registrant filed a Report on Form 8-K reporting the extension of hours of its flagship New York store beginning January 1, 2001.
On January 4, 2001, Registrant filed a Report on Form 8-K reporting the issuance of a press release announcing preliminary unaudited sales figures for the two-month period ended December 31, 2000.
On March 1, 2001, Registrant filed a Report on Form 8-K reporting the issuance of a press release announcing its sales and earnings for the three- month period and Fiscal Year ended January 31, 2001.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
TIFFANY & CO.
(Registrant)
Date: April 10, 2001 By: /s/ Michael J. Kowalski
----------------------------------------
Michael J. Kowalski
President and Chief Executive Officer
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated.
By: /s/ William R. Chaney By: /s/ Michael J. Kowalski
---------------------------------------- -----------------------------------------
William R. Chaney Michael J. Kowalski
Chairman of the Board President and Chief Executive Officer
(director) (principal executive officer) (director)
By: /s/ James N. Fernandez By: /s/ Warren S.Feld
--------------------------------------- -----------------------------------------
James N. Fernandez Warren S. Feld
Executive Vice President Vice President
(principal financial officer) (principal accounting officer)
By: /s/ Rose Marie Bravo By: /s/ James E. Quinn
----------------------------------------- -----------------------------------------
Rose Marie Bravo James E. Quinn
Director Vice Chairman
(director)
By: /s/ Samuel L. Hayes, III By: /s/ William A. Shutzer
----------------------------------------- ------------------------------------------
Samuel L. Hayes, III William A. Shutzer
Director Director
By: /s/ Charles K. Marquis By: /s/ Geraldine Stutz
------------------------------------------- -------------------------------------------
Charles K. Marquis Geraldine Stutz
Director Director
|
April 10, 2001
PRICEWATERHOUSECOOPERS LLP
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES
To the Board of Directors & Shareholders of Tiffany & Co.
Our audits of the consolidated financial statements referred to in our report dated February 28, 2001 appearing in the fiscal 2000 Annual Report to Shareholders of Tiffany & Co. (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the financial statement schedule listed in Item 14(a)(2) of this Form 10-K. In our opinion, the financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.
/s/ PricewaterhouseCoopers LLP New York, New York February 28, 2001 |
TIFFANY & CO. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
-------------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
-------------------------------------------------------------------------------------------------------------------------------
Additions
--------------------------------------
Balance at Charged to
beginning costs and Charged to Balance at end
Description of period expenses other accounts Deductions of period
-------------------------------------------------------------------------------------------------------------------------------
Year Ended
January 31, 2001:
Reserves deducted from
assets:
Accounts receivable allowances:
Doubtful accounts $5,137,719 $1,210,547 - - $2,457,796 (a) $3,890,470
Sales returns 4,578,657 -- - - 495,841 4,082,816
Allowance for inventory
liquidation and
obsolescence 14,160,281 17,665,831 - - 13,431,297 (b) 18,394,815
Allowance for inventory
shrinkage 2,625,788 3,052,347 - - 2,664,186 (c) 3,013,949
LIFO reserve 13,492,173 2,450,113 - - - - 15,942,286
|
(a) Uncollectible accounts written off.
(b) Liquidation of inventory previously written down to market.
(c) Physical inventory losses.
TIFFANY & CO. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
-------------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
-------------------------------------------------------------------------------------------------------------------------------
Additions
--------------------------------------
Balance at Charged to
beginning costs and Charged to Balance at
Description of period expenses other accounts Deductions end of period
-------------------------------------------------------------------------------------------------------------------------------
Year Ended
January 31, 2000:
Reserves deducted from
assets:
Accounts receivable allowances:
Doubtful accounts $4,680,955 $2,173,026 - - $1,716,262 (a) $5,137,719
Sales returns 3,425,457 1,153,200 - - - - 4,578,657
Allowance for inventory
liquidation and
obsolescence 15,654,894 4,274,113 - - 5,768,726 (b) 14,160,281
Allowance for inventory
shrinkage 1,788,742 3,921,920 - - 3,084,874 (c) 2,625,788
LIFO reserve 15,870,000 -- - - 2,377,827 13,492,173
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(a) Uncollectible accounts written off.
(b) Liquidation of inventory previously written down to market.
(c) Physical inventory losses.
TIFFANY & CO. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
-------------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
-------------------------------------------------------------------------------------------------------------------------------
Additions
--------------------------------------
Balance at Charged to
beginning costs and Charged to Balance at end
Description period expenses other accounts Deductions of period
-----------------------------------------------------------------------------------------------------------------------------------
Year Ended
January 31, 1999:
Reserves deducted from
assets:
Accounts receivable allowances:
Doubtful accounts $4,068,327 $2,073,975 $ - - $1,461,347 (a) $4,680,955
Sales returns 2,920,148 505,309 - - 0 3,425,457
Allowance for inventory
liquidation and
obsolescence 16,112,265 5,727,108 - - 6,184,479 (b) 15,654,894
Allowance for inventory
shrinkage 1,726,535 4,156,366 - - 4,094,159 (c) 1,788,742
LIFO reserve 15,870,000 - - - - - - 15,870,000
|
(a) Uncollectible accounts written off.
(b) Liquidation of inventory previously written down to market.
(c) Physical inventory losses.
EXHIBIT INDEX
SEE PAGES 25 THROUGH 29 FOR A COMPLETE LIST OF EXHIBITS FILED, INCLUDING
EXHIBITS INCORPORATED BY REFERENCE FROM PREVIOUSLY FILED DOCUMENTS.
EXHIBIT
------- DESCRIPTION
3.1b Amendment to Certificate of Incorporation of Registrant
dated May 18, 2000.
3.3 By-Laws of Registrant (as last amended March 15, 2001).
10.116c Amendments Nos. 12-13 to Credit Agreement referred to in
previously filed Exhibit 10.116 dated, respectively,
June 22, 2000 and November 1, 2000.
10.127a Retention Agreements dated March 15, 2001 between and among
Registrant and Tiffany and, respectively, each of the
following executive officers: Beth O. Canavan, Linda A.
Hanson, Fernanda M. Kellogg, Caroline D. Naggiar, John S.
Petterson and Victoria Berger-Gross and Appendices I to III
to each of those Agreements.
13.1 Annual Report to Stockholders for Fiscal Year Ended
January 31, 2001 (pages 18-46 of such Annual Report have
been filed in electronic format).
21.1 Subsidiaries of Registrant.
23.1 Consent of PricewaterhouseCoopers LLP, independent
accountants.
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Exhibit 3.1b Tiffany & Co.
Report on Form 10-K
FY 2000
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
TIFFANY & CO.
Pursuant to Section 242 of the General Corporation Law of the State of Delaware
Tiffany & Co., a corporation of the State of Delaware (the "Corporation"), hereby sets forth an Amendment to its Certificate of Incorporation pursuant to 8 Del. C. Section 242, hereby certifying as follows:
FIRST: The Certificate of Incorporation of the Corporation is amended by striking out the first paragraph of Article FOURTH thereof and by substituting in lieu thereof a new first paragraph of Article FOURTH reading as follows:
FOURTH: The Corporation shall be authorized to issue two classes of shares of stock to be designated, respectively, "Preferred Stock" and "Common Stock"; the total number of shares which the Corporation shall have authority to issue is Two Hundred and Forty-two Million (242,000,000); the total number of shares of Preferred Stock shall be Two Million (2,000,000) and each such share shall have a par value of $.01; and the total number of shares of Common Stock shall be Two Hundred and Forty Million (240,000,000) and each such share of Common Stock shall have a par value of $.01.
SECOND: Said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed by its President and attested by its Assistant Secretary this 18th day of May, 2000.
TIFFANY & CO.
Attest: By: /s/ Michael J. Kowalski
--------------------------------
Michael J. Kowalski
President
/s/ Tarz F. Palomba
---------------------------
Tarz F. Palomba
Assistant Secretary
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Tiffany & Co.
Report on Form 10-K
Exhibit No. 3.3
RESTATED BY-LAWS
AS LAST AMENDED MARCH 15, 2001
-OF-
TIFFANY & CO., A DELAWARE CORPORATION
(HEREIN CALLED THE "CORPORATION")
-OO0OO-
ARTICLE I
Stockholders
SECTION 1.01. Annual Meeting. The Board of Directors by resolution shall designate the time, place and date of the annual meeting of the stockholders for the election of directors and the transaction of such other business as may come before it.
SECTION 1.02. Notice of Meetings of Stockholders. Whenever stockholders are required or permitted to take any action at a meeting, written notice of the meeting shall be given (unless that notice shall be waived) which shall state the place, date and hour of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called. The written notice of any meeting shall be given, personally or by mail, not less than ten nor more than sixty days before the date of the meeting to each stockholder entitled to vote at such meeting. If mailed, such notice is given when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the records of the Corporation.
When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.
SECTION 1.03. Quorum. At all meetings of the stockholders, the holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or by proxy, shall constitute a quorum for the transaction of any business.
When a quorum is once present to organize a meeting, it is not broken by the subsequent withdrawal of any stockholders.
The stockholders present may adjourn the meeting despite the absence of a quorum and at any such adjourned meeting at which the requisite amount of voting stock shall be represented, the Corporation may transact any business which might have been transacted at the original meeting had a quorum been there present.
SECTION 1.04. Method of Voting. The vote upon any question before the meeting need not be by ballot. All elections and all other questions shall be decided by a plurality of the votes cast, at a meeting at which a quorum is present, except as expressly provided otherwise by the General Corporation Law of the State of Delaware or the Certificate of Incorporation.
SECTION 1.05. Voting Rights of Stockholders and Proxies. Each stockholder of record entitled to vote in accordance with the laws of the State of Delaware, the Certificate of Incorporation or these By-laws, shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of stock entitled to vote standing in his name on the books of the Corporation, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period.
SECTION 1.06. Ownership of its Own Stock. Shares of its own capital stock belonging to the Corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the Corporation, shall neither be entitled to vote nor be counted for quorum purposes. Nothing in this section shall be construed as limiting the right of any corporation to vote stock, including but not limited to its own stock, held by it in a fiduciary capacity.
SECTION 1.07. Conduct of Meetings. Each meeting of the stockholders shall be presided over by the Chairman of the Board of Directors or such other person as the Board of Directors may designate as chairman of such meeting. The Secretary of the Corporation, or in his absence, an Assistant Secretary, shall act as secretary of every meeting, but if neither the Secretary nor an Assistant Secretary is present, the chairman of the meeting shall appoint a secretary of the meeting. In the conduct of a meeting of the stockholders, all of the powers and authority vested in a presiding officer by law or practice shall be vested in the chairman of the meeting.
SECTION 1.08. Notice of Business and Nominations.
A. Nominations of persons for election to the Board of Directors and the proposal of business to be transacted by the stockholders at an annual meeting of stockholders may be made (1) by or at the direction of the Board of Directors (or any duly authorized committee thereof) pursuant to a notice of meeting or by otherwise properly bringing the matter before an annual meeting of stockholders or (2) by any stockholder of record of the Corporation who was a stockholder of record at the time of the giving of the notice provided for in the following paragraph, who is entitled to vote at the meeting and who has complied with the notice procedures set forth in this Section 1.08.
B. For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (2) of the foregoing paragraph A., the stockholder must comply with the following provisions (1) through (4) of this paragraph B.
(1) The stockholder must have given timely notice thereof in writing to the Secretary of the Corporation, as hereinafter provided. To be timely, a stockholder's notice shall be delivered to the Secretary at the principal executive offices of the Corporation not less than 90 days prior to and not more than 120 days prior to the first anniversary of the preceding year's annual meeting of stockholders; provided, however, that if the date of the annual meeting is advanced more than 30 days prior to or delayed by more than 60 days after such anniversary date, notice by the stockholder to be timely must be so delivered not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made.
(2) Such business must be a proper matter for stockholder action under the General Corporation Law of the State of Delaware.
(3) If the stockholder, or the beneficial owner on whose behalf any such proposal or nomination is made, solicits or participates in the solicitation of proxies in support of such proposal or nominees, the stockholder must have timely indicated its, or such beneficial owner's, intention to do so as provided in provision (4)(c)(iii) below.
(4) Such stockholder's notice shall set forth the following information: (a) as to each person whom the stockholder proposes to nominate for election or reelection as a director, all information relating to such person as would be required to be disclosed in solicitations of proxies for the election of such nominees as directors pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and such person's written consent to serving as a director if elected; (b) as to any other business that the stockholder proposes to bring before the meeting, a brief description of such business, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and (c) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made, (i) the name and address of such stockholder, as they appear on the Corporation's books, and of such beneficial owner, (ii) the class and number of shares of the Corporation that are owned beneficially and of record by such stockholder and such beneficial owner, and (iii) whether either such stockholder or beneficial owner intends to solicit or participate in the solicitation of proxies in favor of such proposal or nominee or nominees.
C. Notwithstanding anything in paragraph B.(1) of this Section 1.08 to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased above the number in effect at the preceding year's annual meeting of stockholders and there is no public announcement naming all of the nominees for director or specifying the size of the increased Board of Directors made by the Corporation at least 100 days prior to the first anniversary of the preceding year's annual meeting, a stockholder's notice required by this By-law shall also be considered timely, but only with respect to nominees for any new positions created by such
increase, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the Corporation.
D. Only such business shall be conducted at a special meeting of
stockholders as shall have been brought before the meeting pursuant to a notice
of meeting issued by or at the direction of a majority vote of the Board of
Directors. Nominations of persons for election to the Board of Directors may be
made at a special meeting of stockholders at which directors are to be elected
pursuant to such a notice of meeting (1) by or at the direction of the Board or
(2) by any stockholder of record of the Corporation who is a stockholder of
record at the time of giving of notice provided for in this paragraph D., who
shall be entitled to vote at the meeting and who complies with the notice
procedures set forth in the following sentence. The stockholder's notice must
include the information required in paragraphs B.(3) and B. (4) of this Section
1.08 and must be delivered to the Secretary at the principal executive offices
of the Corporation not later than the close of business on the later of the 90th
day prior to such special meeting or the 10th day following the day on which
public announcement is first made of the date of the special meeting and of the
nominees proposed by the Board of Directors to be elected at such meeting and
not earlier than the 120th day prior to such special meeting.
E. Only persons nominated in accordance with the procedures set forth
in this Section 1.08 shall be eligible to serve as directors and only such
business shall be conducted at a meeting of stockholders as shall have been
brought before the meeting in accordance with the procedures set forth in this
Section 1.08. The chairman of the meeting shall have the power and the duty to
determine whether a nomination or any business proposed to be brought before the
meeting has been made in accordance with the procedures set forth in these
By-laws and, if any proposed nomination or business is not in compliance with
these By-laws, to declare that such defective proposed business or nomination
shall not be presented for stockholder action at the meeting and shall be
disregarded.
F. For purposes of this Section 1.08, "public announcement" shall mean disclosure in a press release reported by the Dow Jones New Service, Associated Press or a comparable national news service or in a documents publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
G. Notwithstanding the foregoing provisions of this Section 1.08, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to matters set forth in this Section 1.08. Nothing in this Section 1.08 shall be deemed to excuse any stockholder from the obligation to comply with the requirements of Rule 14a-8 under the Exchange Act with respect to proposals offered for inclusion in the Corporation's proxy statement.
H. Paragraphs A. through G. of this Section 1.08 shall not apply with respect to the 1998 Annual Meeting of Stockholders which shall be governed by the following special provisions:
At the 1998 annual meeting of the stockholders, only such business shall be conducted as shall have been brought before the meeting (i) by or at the direction of the Board of Directors or (ii) by any stockholder of the Corporation who complies with the notice procedures set forth in this paragraph H. For business to be properly brought before such meeting by a stockholder, the stockholder must have given notice thereof in writing to the Secretary of the Corporation at the principal executive offices of the Corporation, which written notice must be received by the Secretary of the Corporation not less than 60 days in advance of such meeting or, if later, the fifteenth day following the first public disclosure of the date of such meeting (by mailing of notice of the meeting or otherwise). A stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the meeting (1) a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting, (2) the name and address, as they appear on the Corporation's books, of the stockholder proposing such business, (3) the class, series and number of shares of the Corporation that are beneficially owned by the stockholder, and (4) any material interest of the stockholder in such business. In addition, the stockholder making such proposal shall promptly provide any other information reasonably requested by the Corporation. Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at such meeting of the stockholders except in accordance with the procedures set forth in this paragraph H. The Chairman of such meeting shall direct that any business not properly brought before the meeting shall not be considered.
ARTICLE II
Directors
SECTION 2.01. Management of Business. The business of the Corporation shall be managed by its Board of Directors.
The Board of Directors, in addition to the powers and authority expressly conferred upon it herein, by statute, by the Certificate of Incorporation of the Corporation or otherwise, is hereby empowered to exercise all such powers as may be exercised by the Corporation, except as expressly provided otherwise by the statutes of the State of Delaware, by the Certificate of Incorporation of the Corporation or by these By-laws.
Without prejudice to the generality of the foregoing, the Board of Directors, by resolution or resolutions, may create and issue, whether or not in connection with the issue and sale of any shares of stock or other securities of the Corporation, rights or options entitling the holders thereof to purchase from the Corporation any shares of its capital stock of any class or classes or any other securities of the Corporation, such rights or options to be evidenced by or in such instrument or instruments as shall be approved by the Board of Directors. The terms upon which, including the time or times, which may be limited or unlimited in duration, at or within which, and
the price or prices at which, any such rights or options may be issued and any such shares or other securities may be purchased from the Corporation upon the exercise of any such right or option shall be such as shall be fixed and stated in the resolution or resolutions adopted by the Board of Directors providing for the creation and issue of such rights or options, and, in every case, set forth or incorporated by reference in the instrument or instruments evidencing such rights or options. In the absence of actual fraud in the transaction, the judgment of the directors as to the consideration for the issuance of such rights or options and the sufficiency thereof shall be conclusive. In case the shares of stock of the Corporation to be issued upon the exercise of such rights or options shall be shares having a par value, the price or prices so to be received therefor shall not be less than the par value thereof. In case the shares of stock to be issued shall be shares of stock without par value, the consideration therefor shall be determined in the manner provided in Section 153 of the General Corporation Law of the State of Delaware.
SECTION 2.02. Qualifications and Number of Directors. Directors need not be stockholders. The number of directors which shall constitute the whole Board shall be seven (7), but such number as determined by the Board of Directors may be increased or decreased and subsequently again from time to time increased or decreased by an amendment to these By-laws, provided that no decrease to such number by action of the Board of Directors shall in itself effect the removal of any sitting director. In order to qualify for election or appointment, directors shall be younger than 72 years when elected or appointed, provided that the Board of Directors may, by specific resolution, waive the provisions of this sentence with respect to an individual director whose continued service is deemed uniquely important to the Corporation.
SECTION 2.03. Election and Term. The directors shall be elected at the annual meeting of the stockholders, and each director shall be elected to hold office until his successor shall be elected and qualified, or until his earlier resignation or removal.
SECTION 2.04. Resignations. Any director of the Corporation may resign at any time by giving written notice to the Corporation. Such resignation shall take effect at the time specified therein, if any, or if no time is specified therein, then upon receipt of such notice by the Corporation; and, unless otherwise provided therein, the acceptance of such resignation shall not be necessary to make it effective.
SECTION 2.05. Vacancies and Newly Created Directorships. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until their successors shall be elected and qualified, or until their earlier resignation or removal. When one or more directors shall resign from the Board, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as herein provided in the filling of other vacancies.
SECTION 2.06. Quorum of Directors. At all meetings of the Board of Directors, a majority of the entire Board, but not less than two directors, shall constitute a quorum for the transaction of
business, except that when a board of one director is authorized, then one director shall constitute a quorum. The act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors except as provided in Section 2.05 hereof.
A majority of the directors present, whether or not a quorum is present, may adjourn any meeting of the directors to another time and place. Notice of any adjournment need not be given if such time and place are announced at the meeting.
SECTION 2.07. Annual Meeting. The newly elected Board of Directors shall meet immediately following the adjournment of the annual meeting of stockholders in each year at the same place, within or without the State of Delaware, and no notice of such meeting shall be necessary.
SECTION 2.08. Regular Meetings. Regular meetings of the Board of Directors may be held at such time and place, within or without the State of Delaware, as shall from time to time be fixed by the Board and no notice thereof shall be necessary.
SECTION 2.09. Special Meetings. Special meetings of the Board of Directors may be called at any time by the Chairman of the Board of Directors, the Chief Executive Officer, the President, the Vice Chairman of the Board of Directors, any Vice-President, the Treasurer or the Secretary or by resolution of the Board of Directors. Special meetings shall be held at such place, within or without the State of Delaware, as shall be fixed by the person or persons calling the meeting and stated in the notice or waiver of notice of the meeting.
Special meetings of the Board of Directors shall be held upon notice to the directors or waiver thereof. Unless waived, notice of each special meeting of the directors, stating the time and place of the meeting, shall be given to each director by delivered letter, by transmitted facsimile, by electronic mail, by telegram or by personal communication either over the telephone or otherwise, in each such case not later than 48 hours prior to the meeting, or by mailed letter deposited in the United States mail with postage thereon prepaid not later than the seventh day prior to the meeting.
SECTION 2.10. Action Without a Meeting. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in a writing or writings and the writing or writings are filed with the minutes of proceedings of the Board or committee.
SECTION 2.11. Compensation. Directors shall receive such fixed sums and expenses of attendance for attendance at each meeting of the Board or of any committee and/or such salary as may be determined from time to time by the Board of Directors; provided that nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefor.
SECTION 2.12. Committees. Whereas by resolution adopted by a majority of the whole Board of Directors, the Corporation has elected to be governed by paragraph (2) of Section 141(c) of the General Corporation Law of the State of Delaware, the Board of Directors may, by resolution or
resolutions, designate one or more committees (and may discontinue any of same at any time) each to consist of one or more of the directors of the Corporation. The members of each committee shall be appointed by the Board and shall hold office during the pleasure of the Board. Subject to any limitations on the delegation of power and authority to such committee in the Corporation's Restated Certificate of Incorporation or under applicable law, a committee may be delegated and may exercise such powers of the Board of Directors in the management of the business and affairs of the Corporation (and may authorize the seal of the Corporation to be affixed to all papers which may require it) as may be delegated to such committee by such a resolution of the Board of Directors. Subject to a resolution of the Board of Directors to the contrary, in the absence or disqualification of a member of a committee, the member or members of the committee present at any meeting of the committee and not disqualified from voting, whether or not such present member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at such meeting of the committee in the place of such absent or disqualified member. Regular meetings of any such committee may be held at such time and place, within or without the State of Delaware, as shall from time to time be fixed by such committee and no notice thereof shall be necessary. Special meetings of any such committee may be called at any time by any officer of the Corporation or any member of any such committee. Special meetings shall be held at such place, within or without the State of Delaware, as shall be fixed by the person calling the meeting and stated in the notice or waiver of the meeting. A majority of the members of any such committee shall constitute a quorum for the transaction of business and the act of a majority present at which there is a quorum shall be the act of such committee. Notice of each special meeting of a committee shall be given (or waived) in the same manner as notice of a directors' meeting. Each committee shall keep written minutes of its meetings and report such minutes to the Board of Directors at the next regular meeting of the Board of Directors.
ARTICLE III
Officers
SECTION 3.01. Number. The officers of the Corporation shall be chosen by the Board of Directors. The officers shall be a Chairman of the Board of Directors, a Chief Executive Officer, a Chief Operating Officer, a President, a Vice Chairman of the Board of Directors, a Secretary and a Treasurer, and such number of Vice-Presidents (including Vice-Presidents designated by the Board of Directors as Senior Vice President and Executive Vice Presidents), Assistant Secretaries and Assistant Treasurers, and such other officers, if any, as the Board may from time to time determine. The Board may choose such other agents as it shall deem necessary. Any number of offices may be held by the same person.
SECTION 3.02. Terms of Office. Each officer shall hold his office until his successor is chosen and qualified or until his earlier resignation or removal. Any officer may resign at any time by written notice to the Corporation.
SECTION 3.03. Removal. Any officer may be removed from office at any time by the Board of Directors with or without cause.
SECTION 3.04. Authority. The powers and duties of the officers of the Corporation shall be determined by resolution of the Board, or by one of the committees of the Board. The Secretary, or some other officer designated by resolution of the Board or by one of the committees of the Board, shall record all of the proceedings of the meetings of the stockholders and directors in a book to be kept for that purpose.
SECTION 3.05. Voting Securities Owned by the Corporation. Powers of attorney, proxies, waivers of notice of meeting, consents and other instruments relating to securities owned by the Corporation may be executed in the name of and on behalf of the Corporation by the Chairman of the Board of Directors, the Chief Executive Officer, the President , the Vice Chairman of the Board of Directors, or any Vice-President and any such officer may, in the name of and on behalf of the Corporation, take all such action as any such officer may deem advisable to vote in person or by proxy at any meeting of security holders of any corporation in which the Corporation may own securities and at any such meeting shall possess and may exercise any and all rights and powers incident to the ownership of such securities and which, as the owner thereof, the Corporation might have exercised and possessed if present. The Board of Directors may, by resolution, from time to time confer like powers upon any other person or persons.
ARTICLE IV
Capital Stock
SECTION 4.01. Stock Certificates. Every holder of stock in the Corporation shall be entitled to have a certificate signed by, or in the name of the Corporation by, the Chairman of the Board of Directors, the President, the Vice Chairman of the Board of Directors or a Vice-President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, of the Corporation, certifying the number of shares owned by him in the Corporation. Where such certificate is signed (1) by a transfer agent other than the Corporation or its employee, or (2) by a registrar other than the Corporation or its employee, the signatures of the officers of the Corporation may be facsimiles. In case any officer who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer at the date of issue.
SECTION 4.02. Transfers. Stock of the Corporation shall be transferable in the manner prescribed by the laws of the State of Delaware.
SECTION 4.03. Registered Holders. Prior to due presentment for registration of transfer of any security of the Corporation in registered form, the Corporation shall treat the registered owner as the person exclusively entitled to vote, to receive notifications and to otherwise exercise all the rights and powers of an owner, and shall not be bound to recognize any equitable or other claim to, or interest in, any security, whether or not the Corporation shall have notice thereof, except as otherwise provided by the laws of the State of Delaware.
SECTION 4.04. New Certificates. The Corporation shall issue a new certificate of stock in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, if the owner: (1) so requests before the Corporation as notice that the shares of stock represented by that certificate have been acquired by a bona fide purchaser; (2) files with the Corporation a bond sufficient (in the judgment of the directors) to indemnify the Corporation against any claim that may be made against it on account of the alleged loss or theft of that certificate or the issuance of a new certificate; and (3) satisfies any other requirements imposed by the directors that are reasonable under the circumstances. A new certificate may be issued without requiring any bond when, in the judgment of the directors, it is proper so to do.
ARTICLE V
Miscellaneous
SECTION 5.01. Offices. The registered office of the Corporation in the State of Delaware shall be at Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801. The Corporation may also have offices at other places within and/or without the State of Delaware.
SECTION 5.02. Seal. The corporate seal shall have inscribed thereon the name of the Corporation, the year of its incorporation and the words "Corporate Seal Delaware."
SECTION 5.03. Checks. All checks or demands for money shall be signed by such person or persons as the Board of Directors may from time to time determine.
SECTION 5.04. Fiscal Year. The fiscal year shall begin the first day of February in each year and shall end on the thirty-first day of January of the following year.
SECTION 5.05. Waivers of Notice: Dispensing with Notice. Whenever any notice whatever is required to be given under the provisions of the General Corporation Law of the State of Delaware, of the Certificate of Incorporation of the Corporation, or of these By-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice.
Attendance of a person at a meeting of stockholders shall constitute a waiver of notice of such meeting, except when the stockholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.
Whenever any notice whatever is required to be given under the provisions of the General Corporation Law of the State of Delaware, of the Certificate of Incorporation of the Corporation, or of these By-laws, to any person with whom communication is made unlawful by any law of the United States of America, or by any rule, regulation, proclamation or executive order
issued under any such law, then the giving of such notice to such person shall not be required and there shall be no duty to apply to any governmental authority or agency for a license or permit to give such notice to such person; and any action or meeting which shall be taken or held without notice to any such person or without giving or without applying for a license or permit to give any such notice to any such person with whom communication is made unlawful as aforesaid, shall have the same force and effect as if such notice had been given as provided under the provisions of the General Corporation Law of the State of Delaware, or under the provisions of the Certificate of Incorporation of the Corporation or of these By-laws. In the event that the action taken by the Corporation is such as to require the filing of a certificate under any of the other sections of this title, the certificate shall state, if such is the fact and if notice is required, that notice was given to all persons entitled to receive notice except such persons with whom communication is unlawful.
SECTION 5.06. Loans to and Guarantees of Obligations of Employees and Officers. The Corporation may lend money to or guaranty any obligation of, or otherwise assist any officer or other employee of the Corporation or of a subsidiary, including any officer or employee who is a director of the corporation or a subsidiary, whenever, in the judgment of the Board of Directors, such loan, guaranty or assistance may reasonably be expected to benefit the Corporation. The loan, guaranty or other assistance may be with or without interest, and may be unsecured, or secured in such manner as the Board of Directors shall approve, including without limitation, a pledge of shares of stock of the Corporation. Nothing in this Section contained shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the Corporation at common law or under any other statute.
SECTION 5.07. Amendment of By-laws. These By-laws may be altered, amended or repealed at any meeting of the Board of Directors.
SECTION 5.08. Section Headings and Statutory References. The headings of the Articles and Sections of these By-laws, and the references in brackets to relevant sections of the General Corporation Law of the State of Delaware, have been inserted for convenience of reference only and shall not be deemed to be a part of these By-laws.
ARTICLE VI
SECTION 6.01. Indemnification of Directors and Officers. The Corporation shall, to the fullest extent permitted by law, indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (including without limitation an action by or in the right of the Corporation) by reason of the fact that he is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful, provided, however, that in the event of any action, suit or proceeding initiated by and in
the name of (or by and in the name of a nominee or agent for) a person who would otherwise by entitled to indemnification under this Section 6.01, such person shall be entitled to indemnification hereunder only in the event such action, suit or proceeding was initiated on the authorization of the Board of Directors. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, that he had reasonable cause to believe that his conduct was unlawful.
The right of indemnity provided herein shall not be exclusive and the Corporation may provide indemnification to any person, by agreement or otherwise, on such terms and conditions as the Board of Directors may approve. Any agreement for indemnification of any director, officer, employee or other person may provide indemnification rights which are broader or otherwise different from those set forth herein.
No repeal or modification of this Article or of relevant provisions of the General Corporation Law of the State of Delaware or any other applicable laws shall affect or diminish in any way the rights of any person to indemnification under the provisions hereof with respect to any action, suit, proceeding or investigation arising out of, or relating to, any actions, transactions or facts occurring prior to the final adoption of such repeal or modification.
SECTION 6.02. Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article.
Tiffany & Co.
Report on Form 10-K
Exhibit 10.116c
TIFFANY & CO.
AMENDMENT NO. 12
AMENDMENT NO. 12 (this "Amendment"), dated as of June 22, 2000, to the Credit Agreement, dated as of June 26, 1995, by and among Tiffany & Co., Tiffany and Company, Tiffany & Co. International, the Subsidiary Borrowers party thereto, the Lenders party thereto and The Bank of New York, as Issuing Bank, as Swing Line Lender, as Arranging Agent and as Administrative Agent, as amended by Amendment No. 1, dated as of November 9, 1995, Amendment No. 2, dated as of August 15, 1996, Amendment No. 3, dated as of January 22, 1997, Amendment No. 4, dated as of August 4, 1997, Amendment No. 5, dated as of November 20, 1997, Amendment No. 6, dated as of October 1, 1998, Amendment No. 7, dated as of November 30, 1998, Amendment No. 8, dated as of March 8, 1999, Amendment No. 9, dated as of July 15, 1999, Amendment No. 10, dated as of October 20, 1999, and Amendment No. 11, dated as of February 14, 2000 (as amended, the "Credit Agreement").
Except as otherwise provided herein, capitalized terms used herein which are not defined herein shall have the meanings set forth in the Credit Agreement.
In consideration of the covenants, conditions and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and pursuant to Section 11.1 of the Credit Agreement, the Parent, the Borrowers and Administrative Agent hereby agree as follows:
1. Section 2.1(e)(iii) of the Credit Agreement is hereby amended to delete the amount "$6,000,000" appearing at the end thereof and to replace it with the amount "$10,000,000".
2. Exhibit A-2 to the Credit Agreement is hereby amended and restated in its entirety in the form attached hereto.
3. This Amendment shall become effective immediately upon receipt by the Administrative Agent of this Amendment executed by a duly authorized officer or officers of the Parent, the Borrowers, the Administrative Agent and the Required Lenders.
4. Except as amended hereby, the Credit Agreement and the other Loan Documents shall remain in full force and effect.
5. In order to induce the Administrative Agent to execute this Amendment and the Required Lenders to consent hereto, the Parent and the Borrowers each hereby (a) certifies that, on the date hereof and immediately before and after giving effect to this Amendment, all representations and warranties contained in the Credit Agreement are and will be true and correct in all respects, (b) certifies that, immediately before and after giving effect to this Amendment, no Default or Event of Default exists or will exist under the Loan Documents, and (c) agrees to pay the reasonable fees and disbursements of counsel to the Administrative Agent incurred in connection with the preparation, negotiation and closing of this Amendment.
6. Each of the Parent and the Borrowers hereby (a) reaffirms and admits the validity, enforceability and continuation of all the Loan Documents to which it is a party and its obligations thereunder, and (b) agrees and admits that as of the date hereof it has no valid defenses to or offsets against any of its obligations under the Loan Documents to which it is a party.
7. This Amendment may be executed in any number of counterparts, each of which shall be an original and all of which shall constitute one agreement. It shall not be necessary in making proof of this Amendment to produce or account for more than one counterpart signed by the party to be charged.
8. This Amendment is being delivered in and is intended to be performed in the State of New York and shall be construed and enforceable in accordance with, and be governed by, the internal laws of the State of New York without regard to principles of conflict of laws.
[Signature pages follow]
TIFFANY CREDIT AGREEMENT
AMENDMENT NO. 12
The parties have caused this Amendment to be duly executed as of the date first written above.
TIFFANY & CO., a Delaware corporation
By: ______________________________ Name: ______________________________ Title: ______________________________ |
TIFFANY AND COMPANY, a New York
corporation
By: ______________________________ Name: ______________________________ Title: ______________________________ |
TIFFANY & CO. INTERNATIONAL, a Delaware
corporation
By: ______________________________ Name: ______________________________ Title: ______________________________ |
SOCIETE FRANCAISE POUR LE DEVELOPPMENT
DE LA PORCELAINE D'ART (S.A.R.L.), a French corporation By: ______________________________ Name: ______________________________ Title: ______________________________ |
TIFFANY-FARAONE S.P.A., an Italian corporation
By: ______________________________ Name: ______________________________ Title: ______________________________ |
TIFFANY & CO. JAPAN INC., a Delaware corporation
By: ______________________________ Name: ______________________________ Title: ______________________________ |
TIFFANY & CO. PTE, LTD., a Singapore corporation
By: ______________________________ Name: ______________________________ Title: ______________________________ |
TIFFANY & CO, a United Kingdom corporation
By: ______________________________ Name: ______________________________ Title: ______________________________ |
TIFFANY & CO. WATCH CENTER S.A., a Swiss
corporation
By: ______________________________ Name: ______________________________ Title: ______________________________ |
TIFFCO KOREA LTD., a Korean corporation
By: ______________________________ Name: ______________________________ Title: ______________________________ TIFFANY & CO. MEXICO, S.A. de C.V., a Mexican corporation By: ______________________________ Name: ______________________________ Title: ______________________________ |
THE BANK OF NEW YORK, as Administrative Agent
By: ______________________________ Name: ______________________________ Title: ______________________________ |
TIFFANY CREDIT AGREEMENT
AMENDMENT NO. 12
AGREED AND CONSENTED TO:
THE BANK OF NEW YORK, individually
By: ______________________________ Name: ______________________________ Title: ______________________________ |
TIFFANY CREDIT AGREEMENT
AMENDMENT NO. 12
AGREED AND CONSENTED TO:
THE CHASE MANHATTAN BANK
By: ______________________________ Name: ______________________________ Title: ______________________________ |
TIFFANY CREDIT AGREEMENT
AMENDMENT NO. 12
AGREED AND CONSENTED TO:
THE DAI-ICHI KANGYO BANK
LIMITED (NEW YORK BRANCH)
By: ______________________________ Name: ______________________________ Title: ______________________________ |
TIFFANY CREDIT AGREEMENT
AMENDMENT NO. 12
AGREED AND CONSENTED TO:
THE FUJI BANK, LTD.
By: ______________________________ Name: ______________________________ Title: ______________________________ |
TIFFANY CREDIT AGREEMENT
AMENDMENT NO. 12
AGREED AND CONSENTED TO:
FLEET NATIONAL BANK
By: ______________________________ Name: ______________________________ Title: ______________________________ By: ______________________________ Name: ______________________________ Title: ______________________________ |
FLEET PRECIOUS METALS INC.
By: ______________________________ Name: ______________________________ Title: ______________________________ |
TIFFANY EXHIBIT A2
LIST OF INDIVIDUAL CURRENCY COMMITMENTS
Australian Dollars
------------------
Lender Individual Currency Commitment
------ ------------------------------
Dai-Ichi Kangyo $3,500,000.00
Fuji Bank $3,000,000.00
Canadian Dollars
----------------
Lender Individual Currency Commitment
------ ------------------------------
- -
Hong Kong Dollars
-----------------
Lender Individual Currency Commitment
------ ------------------------------
BNY $3,000,000.00
Italian Lira
------------
Lender Individual Currency Commitment
------ ------------------------------
The Chase Manhattan Bank $6,000,000.00
Korean Won
----------
Lender Individual Currency Commitment
------ ------------------------------
BNY $10,000,000.00
Malaysian Ringgit
-----------------
Lender Individual Currency Commitment
------ ------------------------------
- -
Mexican Pesos
-------------
Lender Individual Currency Commitment
------ ------------------------------
- -
New Taiwan Dollars
------------------
Lender Individual Currency Commitment
------ ------------------------------
BNY $5,000,000.00
Philippine Pesos
----------------
Lender Individual Currency Commitment
------ ------------------------------
- -
Singapore Dollars
-----------------
Lender Individual Currency Commitment
------ ------------------------------
BNY $3,000,000.00
|
Swiss Francs
------------
Lender Individual Currency Commitment
------ ------------------------------
The Chase Manhattan Bank $5,000,000.00
Thai Baht
---------
Lender Individual Currency Commitment
------ ------------------------------
- -
|
Tiffany & Co.
Report on Form 10-K
Exhibit 10.116c
TIFFANY & CO.
AMENDMENT NO. 13
AMENDMENT NO. 13 (this "Amendment"), dated as of November 1, 2000, to the Credit Agreement, dated as of June 26, 1995, by and among Tiffany & Co., Tiffany and Company, Tiffany & Co. International, the Subsidiary Borrowers party thereto, the Lenders party thereto and The Bank of New York, as Issuing Bank, as Swing Line Lender, as Arranging Agent and as Administrative Agent, as amended by Amendment No. 1, dated as of November 9, 1995, Amendment No. 2, dated as of August 15, 1996, Amendment No. 3, dated as of January 22, 1997, Amendment No. 4, dated as of August 4, 1997, Amendment No. 5, dated as of November 20, 1997, Amendment No. 6, dated as of October 1, 1998, Amendment No. 7, dated as of November 30, 1998, Amendment No. 8, dated as of March 8, 1999, Amendment No. 9, dated as of July 15, 1999, Amendment No. 10, dated as of October 20, 1999, Amendment No. 11, dated as of February 14, 2000, and Amendment No. 12, dated as of June 22, 2000 (as amended, the "Credit Agreement").
Except as otherwise provided herein, capitalized terms used herein which are not defined herein shall have the meanings set forth in the Credit Agreement.
In consideration of the covenants, conditions and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and pursuant to Section 11.1 of the Credit Agreement, the Parent, the Borrowers and Administrative Agent hereby agree as follows:
1. Section 1.1 of the Credit Agreement is hereby amended to amend and restate clause (x) of the definition of "Individual Currency Commitment" to read as follows: "(x) increased or reduced from time to time pursuant to Section 2.9 or".
2. Section 2.1(e)(iii) of the Credit Agreement is hereby amended and restated to read as follows:
(iii) with respect to any Applicable Currency, the aggregate principal amount of the Individual Currency Loans of such Lender designated in such Applicable Currency shall not exceed such Lender's Individual Currency Commitment for such Applicable Currency, and.
3. Section 2.9(c) of the Credit Agreement is hereby amended to add the following at the end thereof:
The Parent may at any time or from time to time request a Lender to provide a new, or to increase an existing, Individual Currency Commitment, and the Lender may, in its sole and absolute discretion, agree so to provide or increase such Individual Currency Commitment, provided that the Parent and such Lender shall promptly notify the Administrative Agent in a writing, executed by the Parent and such Lender, of such new or increased Individual Currency Commitment. Such new or increased Individual Currency Commitment shall become effective upon receipt by the Administrative Agent of such notice executed by the Parent and the applicable Lender. Promptly following its receipt of such notice, the Administrative Agent shall prepare and distribute to the Parent and the Lenders a new replacement Exhibit A-2 evidencing such new or increased Individual Currency Commitment.
4. Exhibit A-2 to the Credit Agreement is hereby amended and restated in its entirety in the form attached hereto.
5. This Amendment shall become effective immediately upon receipt by the Administrative Agent of this Amendment executed by a duly authorized officer or officers of the Parent, the Borrowers, the Administrative Agent, The Chase Manhattan Bank (as the Lender increasing an Individual Currency Commitment as set forth on Exhibit A-2 attached hereto) and the Required Lenders.
6. Except as amended hereby, the Credit Agreement and the other Loan Documents shall remain in full force and effect.
7. In order to induce the Administrative Agent to execute this Amendment and the Required Lenders to consent hereto, the Parent and the Borrowers each hereby (a) certifies that, on the date hereof and immediately before and after giving effect to this Amendment, all representations and warranties contained in the Credit Agreement are and will be true and correct in all respects, (b) certifies that, immediately before and after giving effect to this Amendment, no Default or Event of Default exists or will exist under the Loan Documents, and (c) agrees to pay the reasonable fees and disbursements of counsel to the Administrative Agent incurred in connection with the preparation, negotiation and closing of this Amendment.
8. Each of the Parent and the Borrowers hereby (a) reaffirms and admits the validity, enforceability and continuation of all the Loan Documents to which it is a party and its obligations thereunder, and (b) agrees and admits that as of the date hereof it has no valid defenses to or offsets against any of its obligations under the Loan Documents to which it is a party.
9. This Amendment may be executed in any number of counterparts, each of which shall be an original and all of which shall constitute one agreement. It shall not be necessary in making proof of this Amendment to produce or account for more than one counterpart signed by the party to be charged.
10. This Amendment is being delivered in and is intended to be performed in the State of New York and shall be construed and enforceable in accordance with, and be governed by, the internal laws of the State of New York without regard to principles of conflict of laws.
[Signature pages follow]
TIFFANY CREDIT AGREEMENT
AMENDMENT NO. 13
The parties have caused this Amendment to be duly executed as of the date first written above.
TIFFANY & CO., a Delaware corporation
By: ______________________________ Name: ______________________________ Title: ______________________________ |
TIFFANY AND COMPANY, a New York
corporation
By: ______________________________ Name: ______________________________ Title: ______________________________ |
TIFFANY & CO. INTERNATIONAL, a Delaware
corporation
By: ______________________________ Name: ______________________________ Title: ______________________________ |
SOCIETE FRANCAISE POUR LE DEVELOPPMENT
DE LA PORCELAINE D'ART (S.A.R.L.),
a French corporation
By: ______________________________ Name: ______________________________ Title: ______________________________ |
TIFFANY CREDIT AGREEMENT
AMENDMENT NO. 13
TIFFANY-FARAONE S.P.A., an Italian
corporation
By: ______________________________ Name: ______________________________ Title: ______________________________ |
TIFFANY & CO. JAPAN INC., a Delaware corporation
By: ______________________________ Name: ______________________________ Title: ______________________________ |
TIFFANY & CO. PTE, LTD., a Singapore corporation
By: ______________________________ Name: ______________________________ Title: ______________________________ |
TIFFANY & CO, a United Kingdom corporation
By: ______________________________ Name: ______________________________ Title: ______________________________ |
TIFFANY & CO. WATCH CENTER S.A., a Swiss
corporation
By: ______________________________ Name: ______________________________ Title: ______________________________ |
TIFFANY CREDIT AGREEMENT
AMENDMENT NO. 13
TIFFCO KOREA LTD., a Korean corporation
By: ______________________________ Name: ______________________________ Title: ______________________________ |
TIFFANY & CO. MEXICO, S.A. de C.V., a Mexican corporation
By: ______________________________ Name: ______________________________ Title: ______________________________ |
THE BANK OF NEW YORK, as Administrative Agent
By: ______________________________ Name: ______________________________ Title: ______________________________ |
TIFFANY CREDIT AGREEMENT
AMENDMENT NO. 13
AGREED AND CONSENTED TO:
THE BANK OF NEW YORK, individually
By: ______________________________ Name: ______________________________ Title: ______________________________ |
TIFFANY CREDIT AGREEMENT
AMENDMENT NO. 13
AGREED AND CONSENTED TO:
THE CHASE MANHATTAN BANK
By: ______________________________ Name: ______________________________ Title: ______________________________ |
TIFFANY CREDIT AGREEMENT
AMENDMENT NO. 13
AGREED AND CONSENTED TO:
THE DAI-ICHI KANGYO BANK
LIMITED (NEW YORK BRANCH)
By: ______________________________ Name: ______________________________ Title: ______________________________ |
TIFFANY CREDIT AGREEMENT
AMENDMENT NO. 13
AGREED AND CONSENTED TO:
THE FUJI BANK, LTD.
By: ______________________________ Name: ______________________________ Title: ______________________________ |
TIFFANY CREDIT AGREEMENT
AMENDMENT NO. 13
AGREED AND CONSENTED TO:
FLEET NATIONAL BANK
By: ______________________________ Name: ______________________________ Title: ______________________________ By: ______________________________ Name: ______________________________ Title: ______________________________ |
FLEET PRECIOUS METALS INC.
By: ______________________________ Name: ______________________________ Title: ______________________________ |
TIFFANY EXHIBIT A2
LIST OF INDIVIDUAL CURRENCY COMMITMENTS
Australian Dollars
------------------
Lender Individual Currency Commitment
------ ------------------------------
Dai-Ichi Kangyo $3,500,000.00
Fuji Bank $3,000,000.00
Canadian Dollars
----------------
Lender Individual Currency Commitment
------ ------------------------------
- -
Hong Kong Dollars
-----------------
Lender Individual Currency Commitment
------ ------------------------------
BNY $3,000,000.00
Italian Lira
------------
Lender Individual Currency Commitment
------ ------------------------------
The Chase Manhattan Bank $15,000,000.00
Korean Won
----------
Lender Individual Currency Commitment
------ ------------------------------
BNY $10,000,000.00
Malaysian Ringgit
-----------------
Lender Individual Currency Commitment
------ ------------------------------
- -
Mexican Pesos
-------------
Lender Individual Currency Commitment
------ ------------------------------
- -
New Taiwan Dollars
------------------
Lender Individual Currency Commitment
------ ------------------------------
BNY $5,000,000.00
Philippine Pesos
----------------
Lender Individual Currency Commitment
------ ------------------------------
- -
Singapore Dollars
-----------------
Lender Individual Currency Commitment
------ ------------------------------
BNY $3,000,000.00
|
Swiss Francs
------------
Lender Individual Currency Commitment
------ ------------------------------
The Chase Manhattan Bank $5,000,000.00
Thai Baht
---------
Lender Individual Currency Commitment
------ ------------------------------
- -
|
Exhibit 10.127a Tiffany & Co.
Report on Form 10-K
FY 2000
[COMPANY LETTERHEAD]
March 15, 2001
John S. Petterson
727 Fifth Avenue
New York, NY 10022
Re: RETENTION AGREEMENT
Dear John:
Tiffany and Company and Tiffany & Co. (respectively, "EMPLOYER" and "PARENT,") wish to take steps to retain key management, it being recognized that future discussions concerning a Change of Control or a decision to cooperate in or effect a Change of Control could result in the departure or distraction of key management at a time when Parent and Employer Board would require the clear and focused attention of experienced management, unafflicted with concerns for personal financial and job security. Accordingly, in order to induce you to remain in the employ of the Employer, Parent and Employer have determined to enter into this letter agreement (this "AGREEMENT") which addresses the terms and conditions of your employment in the event of a Change of Control.
This Agreement will provide you with certain payments and benefits should you incur an Involuntary Termination after a Change of Control Date.
An "Involuntary Termination" means (i) your termination of employment by Employer during the Term without Cause or (ii) your resignation of employment with the
Employer during the Term for Good Reason. The terms "Change of Control Date," "Term," "Cause," "Good Reason" and other initially capitalized words and phrases used in this letter agreement shall have the meanings ascribed to them in Appendix I attached. With respect to your specific situation, you would also have "Good Reason" to resign from employment with Employer if any of the following occurs after a Change of Control Date:
(A) at any time you are not the Chief Direct Marketing Officer of the Successor Entity or the Controlling Entity; and
(B) any similar adverse change on or after the Change in Control Date in your title, position or reporting responsibilities.
1. Term of Employment Under This Agreement. The Term of your employment under this Agreement shall not commence unless and until a Change in Control Date occurs and shall continue thereafter until the SECOND anniversary of the Change in Control Date.
2. Cash Payments in the Event of Involuntary Termination During the Term. In the event of your Involuntary Termination during the Term you will be paid the following amounts in cash by the Employer:
(a) your Earned Compensation previously unpaid;
(b) a severance payment equal to the sum of (i) TWO times your Reference Salary and (ii) TWO times your Reference Bonus; and
(c) a Supplementary Pension Payment designed to provide you with the present cash value of the added benefits you would have received under the Defined Benefit Plans had you continued in your employment for a Measuring Period of TWO years; and
(d) a Gross-Up Payment to defray your Excise Tax liability if, following a Change in Control Date, it is determined that any Payment(s) made to you is (are) subject to the Excise Tax.
Payments under subsections (a) and (b) will be made within five (5) days of your Date of Termination and payment under subsection (c) will be made within forty-five (45) days of your date of termination. All calculations necessary to compute the Supplementary Pension Benefit Payment shall be done by the Accounting Firm at Employer's expense. Appendix II sets forth the applicable procedures relating to the Gross-Up Payment.
3. Benefit Continuation in the Event of Involuntary Termination During the Term. In the event of your Involuntary Termination during the Term Employer shall maintain all Benefit Plans in full force and effect, for the continued benefit of you and your eligible dependents for a maximum Benefits Continuation Period of TWO years. Employer's obligation under this Section 3 is subject to the following: (i) that your and your eligible dependent's continued participation is possible under the general terms and provisions of such Benefit Plans (and under the terms of any applicable funding media) and (ii) that you continue to pay an amount equal to your regular contribution under such plans for such participation. You and your eligible dependents continued participation in such plans shall also be subject to the additional conditions stated in Appendix III.
4. Notice of Termination. Any termination of your employment by Employer or by you during the Term shall be communicated by a Notice of Termination to the other parties hereto.
5. No Mitigation or Offset; Employer's Opportunity to Correct. You shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this Agreement be reduced by any compensation earned by you as the result of employment by another employer or by pension benefits paid by Employer or Employer's plans after the Date of Termination or otherwise, except as provided in the definition of "Benefit Continuation Period." No event shall constitute Good Reason for your resignation unless your claim to that effect is communicated by you to Employer in writing and is not corrected by Employer or Parent in a manner which is reasonably satisfactory to you (including full retroactive correction with respect to any monetary matter) within ten (10) days of the Employer's receipt of such written notice from you.
6. Legal Fees and Expenses Necessary to Enforce Agreement. The Employer shall pay or reimburse you on an after-tax basis for all costs and expenses (including, without limitation, court costs and reasonable legal fees and expenses which reflect common practice with respect to the matters involved) incurred by you as a result of any claim, action or proceeding (i) contesting, disputing or enforcing any right, benefits or obligations under this Agreement or which you reasonably claim to have or to be owed to you by Employer or Parent or (ii) arising out of or challenging the validity, advisability or enforceability of this Agreement or any provision hereof; provided, however, that the amount of the payments and reimbursements under this Section 5 shall not exceed $50,000.
7. Employment During the Term. During the Term you shall be employed by Employer on the terms and conditions on which you were employed immediately prior to the Change in Control Date without any Substantial Change.
8. Successors; Binding Agreement; Respective Responsibilities of Parent and Employer.
(a) Assumption by Successor. Parent and Employer will each require their respective successors (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of either, to expressly assume and to agree to perform this Agreement for your benefit in the same manner and to the same extent that the Parent or the Employer, as the case may be, would be required to perform it if no such succession had taken place; provided, however, that no such assumption shall relieve either the Parent or the Employer of its obligations hereunder, and no failure to expressly assume and agree to perform this Agreement shall relieve any successor of its obligations under this Agreement by operation of law.
(b) Enforceability; Beneficiaries. This Agreement shall be binding upon, inure to the benefit of and be enforceable by you (and your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees) and the Parent and Employer and any Person(s) which succeeds to substantially all of the business or assets of the Parent or Employer, whether by means of merger, consolidation, acquisition of all or substantially all of the assets of the Parent or Employer or otherwise, including, without limitation, as a result of a Change in Control or by operation of law.
(c) Joint and Several Liability. Parent shall be jointly and severally liable with Employer for all Employer's obligations hereunder and Employer shall be jointly and severally liable with Parent for all Parent's obligations hereunder.
9. Notices. For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when hand-delivered or when mailed by United States registered mail, return receipt requested, postage prepaid, addressed, if to Parent or Employer, to the Boards of Directors, Tiffany & Co. and Tiffany and Company, 600 Madison Avenue, New York, NY 10022, Attn. Legal Department, or, if to you, to you at the address set forth on the first page of this Agreement, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.
10. Miscellaneous.
(a) Amendments, Waivers, Etc. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing, No waiver by either party hereto any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provision or conditions at the same or at any later or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the subject matter here have been made by either party which are not expressly set forth in this Agreement
and this Agreement shall supersede all prior agreements, negotiations, correspondence, undertakings and communications of the parties, oral or written, with respect to the subject matter hereof.
(b) Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
(c) Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.
(d) No Contract of Employment. Nothing in this Agreement shall be construed as giving you any right to be retained in the employ of Employer or Parent nor shall it affect the terms and conditions of your employment with Employer prior to the commencement of the Term hereof. Failing the occurrence of a Change in Control Date your employment shall continue to be "at will," meaning that either you or Employer may terminate your employment with or without cause, for any reason or no reason, with or without notice.
(e) Withholding. Amounts paid to you hereunder shall be subject to all applicable federal, state and local withholding taxes.
(f) Source of Payments. All payments provided under this Agreement, other than payments made pursuant to a Benefit Plan which provides otherwise, shall be paid in cash from the general funds of Employer or Parent, and no special or separate fund shall be established, and no other segregation of assets made, to assure payment. You will have no right, title or interest whatsoever in or to any investments which Employer or Parent may make to aid it in meeting its obligations hereunder. To the extent that any person acquires a right to receive payments from Employer or Parent hereunder, such right shall be no greater than the right of an unsecured creditor of Parent or Employer, as the case may be.
(g) Headings. The headings contained in this Agreement are intended solely for convenience of reference and shall not affect the rights of the parties to this Agreement.
(h) Governing Law. The validity, interpretation, construction, and performance of this Agreement shall be governed by the laws of the State of New York applicable to contracts entered into and to be performed in this State.
If this letter set forth our agreement on the subject matter hereof, kindly sign and return to Employer the enclosed copy of this letter which will then constitute the agreement among us on this subject.
Sincerely,
TIFFANY & CO. ("Parent")
By: /s/ Michael J. Kowalski
---------------------------------
Name: Michael J. Kowalski
Title: President and Chief Executive Officer
|
TIFFANY AND COMPANY ("Employer")
By: /s/ Michael J. Kowalski
---------------------------------
Name: Michael J. Kowalski
Title: President and Chief Executive Officer
|
Agreed to as of this 26 day of March 2001
/s/ John S. Petterson
------------------------------------
John S. Petterson
|
Attachment: Appendices I through III
Exhibit 10.127a Tiffany & Co.
Report on Form 10-K
FY 2000
[COMPANY LETTERHEAD]
March 15, 2001
Fernanda M. Kellogg
727 Fifth Avenue
New York, NY 10022
Re: RETENTION AGREEMENT
Dear Fernanda:
Tiffany and Company and Tiffany & Co. (respectively, "EMPLOYER" and "PARENT,") wish to take steps to retain key management, it being recognized that future discussions concerning a Change of Control or a decision to cooperate in or effect a Change of Control could result in the departure or distraction of key management at a time when Parent and Employer Board would require the clear and focused attention of experienced management, unafflicted with concerns for personal financial and job security. Accordingly, in order to induce you to remain in the employ of the Employer, Parent and Employer have determined to enter into this letter agreement (this "AGREEMENT") which addresses the terms and conditions of your employment in the event of a Change of Control.
This Agreement will provide you with certain payments and benefits should you incur an Involuntary Termination after a Change of Control Date.
An "Involuntary Termination" means (i) your termination of employment by Employer during the Term without Cause or (ii) your resignation of employment with the
Employer during the Term for Good Reason. The terms "Change of Control Date," "Term," "Cause," "Good Reason" and other initially capitalized words and phrases used in this letter agreement shall have the meanings ascribed to them in Appendix I attached. With respect to your specific situation, you would also have "Good Reason" to resign from employment with Employer if any of the following occurs after a Change of Control Date:
(A) at any time you are not the Chief Public Relations Officer of the Successor Entity or the Controlling Entity; and
(B) any similar adverse change on or after the Change in Control Date in your title, position or reporting responsibilities.
1. Term of Employment Under This Agreement. The Term of your employment under this Agreement shall not commence unless and until a Change in Control Date occurs and shall continue thereafter until the SECOND anniversary of the Change in Control Date.
2. Cash Payments in the Event of Involuntary Termination During the Term. In the event of your Involuntary Termination during the Term you will be paid the following amounts in cash by the Employer:
(a) your Earned Compensation previously unpaid;
(b) a severance payment equal to the sum of (i) TWO times your Reference Salary and (ii) TWO times your Reference Bonus; and
(c) a Supplementary Pension Payment designed to provide you with the present cash value of the added benefits you would have received under the Defined Benefit Plans had you continued in your employment for a Measuring Period of TWO years; and
(d) a Gross-Up Payment to defray your Excise Tax liability if, following a Change in Control Date, it is determined that any Payment(s) made to you is (are) subject to the Excise Tax.
Payments under subsections (a) and (b) will be made within five (5) days of your Date of Termination and payment under subsection (c) will be made within forty-five (45) days of your date of termination. All calculations necessary to compute the Supplementary Pension Benefit Payment shall be done by the Accounting Firm at Employer's expense. Appendix II sets forth the applicable procedures relating to the Gross-Up Payment.
3. Benefit Continuation in the Event of Involuntary Termination During the Term. In the event of your Involuntary Termination during the Term Employer shall maintain all Benefit Plans in full force and effect, for the continued benefit of you and your eligible dependents for a maximum Benefits Continuation Period of TWO years. Employer's obligation under this Section 3 is subject to the following: (i) that your and your eligible dependent's continued participation is possible under the general terms and provisions of such Benefit Plans (and under the terms of any applicable funding media) and (ii) that you continue to pay an amount equal to your regular contribution under such plans for such participation. You and your eligible dependents continued participation in such plans shall also be subject to the additional conditions stated in Appendix III.
4. Notice of Termination. Any termination of your employment by Employer or by you during the Term shall be communicated by a Notice of Termination to the other parties hereto.
5. No Mitigation or Offset; Employer's Opportunity to Correct. You shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this Agreement be reduced by any compensation earned by you as the result of employment by another employer or by pension benefits paid by Employer or Employer's plans after the Date of Termination or otherwise, except as provided in the definition of "Benefit Continuation Period." No event shall constitute Good Reason for your resignation unless your claim to that effect is communicated by you to Employer in writing and is not corrected by Employer or Parent in a manner which is reasonably satisfactory to you (including full retroactive correction with respect to any monetary matter) within ten (10) days of the Employer's receipt of such written notice from you.
6. Legal Fees and Expenses Necessary to Enforce Agreement. The Employer shall pay or reimburse you on an after-tax basis for all costs and expenses (including, without limitation, court costs and reasonable legal fees and expenses which reflect common practice with respect to the matters involved) incurred by you as a result of any claim, action or proceeding (i) contesting, disputing or enforcing any right, benefits or obligations under this Agreement or which you reasonably claim to have or to be owed to you by Employer or Parent or (ii) arising out of or challenging the validity, advisability or enforceability of this Agreement or any provision hereof; provided, however, that the amount of the payments and reimbursements under this Section 5 shall not exceed $50,000.
7. Employment During the Term. During the Term you shall be employed by Employer on the terms and conditions on which you were employed immediately prior to the Change in Control Date without any Substantial Change.
8. Successors; Binding Agreement; Respective Responsibilities of Parent and Employer.
(a) Assumption by Successor. Parent and Employer will each require their respective successors (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of either, to expressly assume and to agree to perform this Agreement for your benefit in the same manner and to the same extent that the Parent or the Employer, as the case may be, would be required to perform it if no such succession had taken place; provided, however, that no such assumption shall relieve either the Parent or the Employer of its obligations hereunder, and no failure to expressly assume and agree to perform this Agreement shall relieve any successor of its obligations under this Agreement by operation of law.
(b) Enforceability; Beneficiaries. This Agreement shall be binding upon, inure to the benefit of and be enforceable by you (and your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees) and the Parent and Employer and any Person(s) which succeeds to substantially all of the business or assets of the Parent or Employer, whether by means of merger, consolidation, acquisition of all or substantially all of the assets of the Parent or Employer or otherwise, including, without limitation, as a result of a Change in Control or by operation of law.
(c) Joint and Several Liability. Parent shall be jointly and severally liable with Employer for all Employer's obligations hereunder and Employer shall be jointly and severally liable with Parent for all Parent's obligations hereunder.
9. Notices. For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when hand-delivered or when mailed by United States registered mail, return receipt requested, postage prepaid, addressed, if to Parent or Employer, to the Boards of Directors, Tiffany & Co. and Tiffany and Company, 600 Madison Avenue, New York, NY 10022, Attn. Legal Department, or, if to you, to you at the address set forth on the first page of this Agreement, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.
10. Miscellaneous.
(a) Amendments, Waivers, Etc. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing, No waiver by either party hereto any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provision or conditions at the same or at any later or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the subject matter here have been made by either party which are not expressly set forth in this Agreement
and this Agreement shall supersede all prior agreements, negotiations, correspondence, undertakings and communications of the parties, oral or written, with respect to the subject matter hereof.
(b) Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
(c) Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.
(d) No Contract of Employment. Nothing in this Agreement shall be construed as giving you any right to be retained in the employ of Employer or Parent nor shall it affect the terms and conditions of your employment with Employer prior to the commencement of the Term hereof. Failing the occurrence of a Change in Control Date your employment shall continue to be "at will," meaning that either you or Employer may terminate your employment with or without cause, for any reason or no reason, with or without notice.
(e) Withholding. Amounts paid to you hereunder shall be subject to all applicable federal, state and local withholding taxes.
(f) Source of Payments. All payments provided under this Agreement, other than payments made pursuant to a Benefit Plan which provides otherwise, shall be paid in cash from the general funds of Employer or Parent, and no special or separate fund shall be established, and no other segregation of assets made, to assure payment. You will have no right, title or interest whatsoever in or to any investments which Employer or Parent may make to aid it in meeting its obligations hereunder. To the extent that any person acquires a right to receive payments from Employer or Parent hereunder, such right shall be no greater than the right of an unsecured creditor of Parent or Employer, as the case may be.
(g) Headings. The headings contained in this Agreement are intended solely for convenience of reference and shall not affect the rights of the parties to this Agreement.
(h) Governing Law. The validity, interpretation, construction, and performance of this Agreement shall be governed by the laws of the State of New York applicable to contracts entered into and to be performed in this State.
If this letter set forth our agreement on the subject matter hereof, kindly sign and return to Employer the enclosed copy of this letter which will then constitute the agreement among us on this subject.
Sincerely,
TIFFANY & CO. ("Parent")
By: /s/ Michael J. Kowalski
----------------------------------
Name: Michael J. Kowalski
Title: President and Chief Executive Officer
|
TIFFANY AND COMPANY ("Employer")
By: /s/ Michael J. Kowalski
----------------------------------
Name: Michael J. Kowalski
Title: President and Chief Executive Officer
|
Agreed to as of this 29 day of March 2001
/s/ Fernanda M. Kellogg
------------------------------------
Fernanda M. Kellogg
|
Attachment: Appendices I through III
Exhibit 10.127a Tiffany & Co.
Report on Form 10-K
FY 2000
[COMPANY LETTERHEAD]
March 15, 2001
Victoria Berger-Gross
727 Fifth Avenue
New York, NY 10022
Re: RETENTION AGREEMENT
Dear Victoria:
Tiffany and Company and Tiffany & Co. (respectively, "EMPLOYER" and "PARENT,") wish to take steps to retain key management, it being recognized that future discussions concerning a Change of Control or a decision to cooperate in or effect a Change of Control could result in the departure or distraction of key management at a time when Parent and Employer Board would require the clear and focused attention of experienced management, unafflicted with concerns for personal financial and job security. Accordingly, in order to induce you to remain in the employ of the Employer, Parent and Employer have determined to enter into this letter agreement (this "AGREEMENT") which addresses the terms and conditions of your employment in the event of a Change of Control.
This Agreement will provide you with certain payments and benefits should you incur an Involuntary Termination after a Change of Control Date.
An "Involuntary Termination" means (i) your termination of employment by Employer during the Term without Cause or (ii) your resignation of employment with the
Employer during the Term for Good Reason. The terms "Change of Control Date," "Term," "Cause," "Good Reason" and other initially capitalized words and phrases used in this letter agreement shall have the meanings ascribed to them in Appendix I attached. With respect to your specific situation, you would also have "Good Reason" to resign from employment with Employer if any of the following occurs after a Change of Control Date:
(A) at any time you are not the Chief Human Resources Officer of the Successor Entity or the Controlling Entity; and
(B) any similar adverse change on or after the Change in Control Date in your title, position or reporting responsibilities.
1. Term of Employment Under This Agreement. The Term of your employment under this Agreement shall not commence unless and until a Change in Control Date occurs and shall continue thereafter until the SECOND anniversary of the Change in Control Date.
2. Cash Payments in the Event of Involuntary Termination During the Term. In the event of your Involuntary Termination during the Term you will be paid the following amounts in cash by the Employer:
(a) your Earned Compensation previously unpaid;
(b) a severance payment equal to the sum of (i) TWO times your Reference Salary and (ii) TWO times your Reference Bonus; and
(c) a Supplementary Pension Payment designed to provide you with the present cash value of the added benefits you would have received under the Defined Benefit Plans had you continued in your employment for a Measuring Period of TWO years; and
(d) a Gross-Up Payment to defray your Excise Tax liability if, following a Change in Control Date, it is determined that any Payment(s) made to you is (are) subject to the Excise Tax.
Payments under subsections (a) and (b) will be made within five (5) days of your Date of Termination and payment under subsection (c) will be made within forty-five (45) days of your date of termination. All calculations necessary to compute the Supplementary Pension Benefit Payment shall be done by the Accounting Firm at Employer's expense. Appendix II sets forth the applicable procedures relating to the Gross-Up Payment.
3. Benefit Continuation in the Event of Involuntary Termination During the Term. In the event of your Involuntary Termination during the Term Employer shall maintain all Benefit Plans in full force and effect, for the continued benefit of you and your eligible dependents for a maximum Benefits Continuation Period of TWO years. Employer's obligation under this Section 3 is subject to the following: (i) that your and your eligible dependent's continued participation is possible under the general terms and provisions of such Benefit Plans (and under the terms of any applicable funding media) and (ii) that you continue to pay an amount equal to your regular contribution under such plans for such participation. You and your eligible dependents continued participation in such plans shall also be subject to the additional conditions stated in Appendix III.
4. Notice of Termination. Any termination of your employment by Employer or by you during the Term shall be communicated by a Notice of Termination to the other parties hereto.
5. No Mitigation or Offset; Employer's Opportunity to Correct. You shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this Agreement be reduced by any compensation earned by you as the result of employment by another employer or by pension benefits paid by Employer or Employer's plans after the Date of Termination or otherwise, except as provided in the definition of "Benefit Continuation Period." No event shall constitute Good Reason for your resignation unless your claim to that effect is communicated by you to Employer in writing and is not corrected by Employer or Parent in a manner which is reasonably satisfactory to you (including full retroactive correction with respect to any monetary matter) within ten (10) days of the Employer's receipt of such written notice from you.
6. Legal Fees and Expenses Necessary to Enforce Agreement. The Employer shall pay or reimburse you on an after-tax basis for all costs and expenses (including, without limitation, court costs and reasonable legal fees and expenses which reflect common practice with respect to the matters involved) incurred by you as a result of any claim, action or proceeding (i) contesting, disputing or enforcing any right, benefits or obligations under this Agreement or which you reasonably claim to have or to be owed to you by Employer or Parent or (ii) arising out of or challenging the validity, advisability or enforceability of this Agreement or any provision hereof; provided, however, that the amount of the payments and reimbursements under this Section 5 shall not exceed $50,000.
7. Employment During the Term. During the Term you shall be employed by Employer on the terms and conditions on which you were employed immediately prior to the Change in Control Date without any Substantial Change.
8. Successors; Binding Agreement; Respective Responsibilities of Parent and Employer.
(a) Assumption by Successor. Parent and Employer will each require their respective successors (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of either, to expressly assume and to agree to perform this Agreement for your benefit in the same manner and to the same extent that the Parent or the Employer, as the case may be, would be required to perform it if no such succession had taken place; provided, however, that no such assumption shall relieve either the Parent or the Employer of its obligations hereunder, and no failure to expressly assume and agree to perform this Agreement shall relieve any successor of its obligations under this Agreement by operation of law.
(b) Enforceability; Beneficiaries. This Agreement shall be binding upon, inure to the benefit of and be enforceable by you (and your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees) and the Parent and Employer and any Person(s) which succeeds to substantially all of the business or assets of the Parent or Employer, whether by means of merger, consolidation, acquisition of all or substantially all of the assets of the Parent or Employer or otherwise, including, without limitation, as a result of a Change in Control or by operation of law.
(c) Joint and Several Liability. Parent shall be jointly and severally liable with Employer for all Employer's obligations hereunder and Employer shall be jointly and severally liable with Parent for all Parent's obligations hereunder.
9. Notices. For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when hand-delivered or when mailed by United States registered mail, return receipt requested, postage prepaid, addressed, if to Parent or Employer, to the Boards of Directors, Tiffany & Co. and Tiffany and Company, 600 Madison Avenue, New York, NY 10022, Attn. Legal Department, or, if to you, to you at the address set forth on the first page of this Agreement, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.
10. Miscellaneous.
(a) Amendments, Waivers, Etc. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing, No waiver by either party hereto any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provision or conditions at the same or at any later or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the subject matter here have been made by either party which are not expressly set forth in this Agreement
and this Agreement shall supersede all prior agreements, negotiations, correspondence, undertakings and communications of the parties, oral or written, with respect to the subject matter hereof.
(b) Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
(c) Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.
(d) No Contract of Employment. Nothing in this Agreement shall be construed as giving you any right to be retained in the employ of Employer or Parent nor shall it affect the terms and conditions of your employment with Employer prior to the commencement of the Term hereof. Failing the occurrence of a Change in Control Date your employment shall continue to be "at will," meaning that either you or Employer may terminate your employment with or without cause, for any reason or no reason, with or without notice.
(e) Withholding. Amounts paid to you hereunder shall be subject to all applicable federal, state and local withholding taxes.
(f) Source of Payments. All payments provided under this Agreement, other than payments made pursuant to a Benefit Plan which provides otherwise, shall be paid in cash from the general funds of Employer or Parent, and no special or separate fund shall be established, and no other segregation of assets made, to assure payment. You will have no right, title or interest whatsoever in or to any investments which Employer or Parent may make to aid it in meeting its obligations hereunder. To the extent that any person acquires a right to receive payments from Employer or Parent hereunder, such right shall be no greater than the right of an unsecured creditor of Parent or Employer, as the case may be.
(g) Headings. The headings contained in this Agreement are intended solely for convenience of reference and shall not affect the rights of the parties to this Agreement.
(h) Governing Law. The validity, interpretation, construction, and performance of this Agreement shall be governed by the laws of the State of New York applicable to contracts entered into and to be performed in this State.
If this letter set forth our agreement on the subject matter hereof, kindly sign and return to Employer the enclosed copy of this letter which will then constitute the agreement among us on this subject.
Sincerely,
TIFFANY & CO. ("Parent")
By: /s/ Michael J. Kowalski
---------------------------------
Name: Michael J. Kowalski
Title: President and Chief Executive Officer
|
TIFFANY AND COMPANY ("Employer")
By: /s/ Michael J. Kowalski
---------------------------------
Name: Michael J. Kowalski
Title: President and Chief Executive Officer
|
Agreed to as of this 22 day of March 2001
/s/ Victoria Berger-Gross
------------------------------------
Victoria Berger-Gross
|
Attachment: Appendices I through III
Exhibit 10.127a Tiffany & Co.
Report on Form 10-K
FY 2000
[COMPANY LETTERHEAD]
March 15, 2001
Linda A. Hanson
727 Fifth Avenue
New York, NY 10022
Re: RETENTION AGREEMENT
Dear Linda:
Tiffany and Company and Tiffany & Co. (respectively, "EMPLOYER" and "PARENT,") wish to take steps to retain key management, it being recognized that future discussions concerning a Change of Control or a decision to cooperate in or effect a Change of Control could result in the departure or distraction of key management at a time when Parent and Employer Board would require the clear and focused attention of experienced management, unafflicted with concerns for personal financial and job security. Accordingly, in order to induce you to remain in the employ of the Employer, Parent and Employer have determined to enter into this letter agreement (this "AGREEMENT") which addresses the terms and conditions of your employment in the event of a Change of Control.
This Agreement will provide you with certain payments and benefits should you incur an Involuntary Termination after a Change of Control Date.
An "Involuntary Termination" means (i) your termination of employment by Employer during the Term without Cause or (ii) your resignation of employment with the Employer during the Term for Good Reason. The terms "Change of Control Date," "Term," "Cause," "Good Reason" and other initially capitalized words and phrases used in this letter agreement shall have the meanings ascribed to them in Appendix I attached. With respect to your specific situation, you would also have "Good Reason" to resign from employment with Employer if any of the following occurs after a Change of Control Date:
(A) at any time you are not the Chief Merchandising Officer of the Successor Entity or the Controlling Entity; and
(B) any similar adverse change on or after the Change in Control Date in your title, position or reporting responsibilities.
1. Term of Employment Under This Agreement. The Term of your employment under this Agreement shall not commence unless and until a Change in Control Date occurs and shall continue thereafter until the SECOND anniversary of the Change in Control Date.
2. Cash Payments in the Event of Involuntary Termination During the Term. In the event of your Involuntary Termination during the Term you will be paid the following amounts in cash by the Employer:
(a) your Earned Compensation previously unpaid;
(b) a severance payment equal to the sum of (i) TWO times your Reference Salary and (ii) TWO times your Reference Bonus; and
(c) a Supplementary Pension Payment designed to provide you with the present cash value of the added benefits you would have received under the Defined Benefit Plans had you continued in your employment for a Measuring Period of TWO years; and
(d) a Gross-Up Payment to defray your Excise Tax liability if, following a Change in Control Date, it is determined that any Payment(s) made to you is (are) subject to the Excise Tax.
Payments under subsections (a) and (b) will be made within five (5) days of your Date of Termination and payment under subsection (c) will be made within forty-five (45) days of your date of termination. All calculations necessary to compute the Supplementary Pension Benefit Payment shall be done by the Accounting Firm at Employer's expense. Appendix II sets forth the applicable procedures relating to the Gross-Up Payment.
3. Benefit Continuation in the Event of Involuntary Termination During the Term. In the event of your Involuntary Termination during the Term Employer shall maintain all Benefit Plans in full force and effect, for the continued benefit of you and your eligible dependents for a maximum Benefits Continuation Period of TWO years. Employer's obligation under this Section 3 is subject to the following: (i) that your and your eligible dependent's continued participation is possible under the general terms and provisions of such Benefit Plans (and under the terms of any applicable funding media) and (ii) that you continue to pay an amount equal to your regular contribution under such plans for such participation. You and your eligible dependents continued participation in such plans shall also be subject to the additional conditions stated in Appendix III.
4. Notice of Termination. Any termination of your employment by Employer or by you during the Term shall be communicated by a Notice of Termination to the other parties hereto.
5. No Mitigation or Offset; Employer's Opportunity to Correct. You shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this Agreement be reduced by any compensation earned by you as the result of employment by another employer or by pension benefits paid by Employer or Employer's plans after the Date of Termination or otherwise, except as provided in the definition of "Benefit Continuation Period." No event shall constitute Good Reason for your resignation unless your claim to that effect is communicated by you to Employer in writing and is not corrected by Employer or Parent in a manner which is reasonably satisfactory to you (including full retroactive correction with respect to any monetary matter) within ten (10) days of the Employer's receipt of such written notice from you.
6. Legal Fees and Expenses Necessary to Enforce Agreement. The Employer shall pay or reimburse you on an after-tax basis for all costs and expenses (including, without limitation, court costs and reasonable legal fees and expenses which reflect common practice with respect to the matters involved) incurred by you as a result of any claim, action or proceeding (i) contesting, disputing or enforcing any right, benefits or obligations under this Agreement or which you reasonably claim to have or to be owed to you by Employer or Parent or (ii) arising out of or challenging the validity, advisability or enforceability of this Agreement or any provision hereof; provided, however, that the amount of the payments and reimbursements under this Section 5 shall not exceed $50,000.
7. Employment During the Term. During the Term you shall be employed by Employer on the terms and conditions on which you were employed immediately prior to the Change in Control Date without any Substantial Change.
8. Successors; Binding Agreement; Respective Responsibilities of Parent and Employer.
(a) Assumption by Successor. Parent and Employer will each require their respective successors (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of either, to expressly assume and to agree to perform this Agreement for your benefit in the same manner and to the same extent that the Parent or the Employer, as the case may be, would be required to perform it if no such succession had taken place; provided, however, that no such assumption shall relieve either the Parent or the Employer of its obligations hereunder, and no failure to expressly assume and agree to perform this Agreement shall relieve any successor of its obligations under this Agreement by operation of law.
(b) Enforceability; Beneficiaries. This Agreement shall be binding upon, inure to the benefit of and be enforceable by you (and your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees) and the Parent and Employer and any Person(s) which succeeds to substantially all of the business or assets of the Parent or Employer, whether by means of merger, consolidation, acquisition of all or substantially all of the assets of the Parent or Employer or otherwise, including, without limitation, as a result of a Change in Control or by operation of law.
(c) Joint and Several Liability. Parent shall be jointly and severally liable with Employer for all Employer's obligations hereunder and Employer shall be jointly and severally liable with Parent for all Parent's obligations hereunder.
9. Notices. For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when hand-delivered or when mailed by United States registered mail, return receipt requested, postage prepaid, addressed, if to Parent or Employer, to the Boards of Directors, Tiffany & Co. and Tiffany and Company, 600 Madison Avenue, New York, NY 10022, Attn. Legal Department, or, if to you, to you at the address set forth on the first page of this Agreement, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.
10. Miscellaneous.
(a) Amendments, Waivers, Etc. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing, No waiver by either party hereto any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provision or conditions at the same or at any later or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter here have been made by either party which are not expressly set forth in this Agreement
and this Agreement shall supersede all prior agreements, negotiations, correspondence, undertakings and communications of the parties, oral or written, with respect to the subject matter hereof.
(b) Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
(c) Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.
(d) No Contract of Employment. Nothing in this Agreement shall be construed as giving you any right to be retained in the employ of Employer or Parent nor shall it affect the terms and conditions of your employment with Employer prior to the commencement of the Term hereof. Failing the occurrence of a Change in Control Date your employment shall continue to be "at will," meaning that either you or Employer may terminate your employment with or without cause, for any reason or no reason, with or without notice.
(e) Withholding. Amounts paid to you hereunder shall be subject to all applicable federal, state and local withholding taxes.
(f) Source of Payments. All payments provided under this Agreement, other than payments made pursuant to a Benefit Plan which provides otherwise, shall be paid in cash from the general funds of Employer or Parent, and no special or separate fund shall be established, and no other segregation of assets made, to assure payment. You will have no right, title or interest whatsoever in or to any investments which Employer or Parent may make to aid it in meeting its obligations hereunder. To the extent that any person acquires a right to receive payments from Employer or Parent hereunder, such right shall be no greater than the right of an unsecured creditor of Parent or Employer, as the case may be.
(g) Headings. The headings contained in this Agreement are intended solely for convenience of reference and shall not affect the rights of the parties to this Agreement.
(h) Governing Law. The validity, interpretation, construction, and performance of this Agreement shall be governed by the laws of the State of New York applicable to contracts entered into and to be performed in this State.
If this letter set forth our agreement on the subject matter hereof, kindly sign and return to Employer the enclosed copy of this letter which will then constitute the agreement among us on this subject.
Sincerely,
TIFFANY & CO. ("Parent")
By: /s/ Michael J. Kowalski
---------------------------------
Name: Michael J. Kowalski
Title: President and Chief Executive Officer
|
TIFFANY AND COMPANY ("Employer")
By: /s/ Michael J. Kowalski
---------------------------------
Name: Michael J. Kowalski
Title: President and Chief Executive Officer
|
Agreed to as of this 22 day of March 2001
/s/ Linda A. Hanson
------------------------------------
Linda A. Hanson
|
Attachment: Appendices I through III
Exhibit 10.127a Tiffany & Co.
Report on Form 10-K
FY 2000
[COMPANY LETTERHEAD]
March 15, 2001
Caroline D. Naggiar
727 Fifth Avenue
New York, NY 10022
Re: RETENTION AGREEMENT
Dear Caroline:
Tiffany and Company and Tiffany & Co. (respectively, "EMPLOYER" and "PARENT,") wish to take steps to retain key management, it being recognized that future discussions concerning a Change of Control or a decision to cooperate in or effect a Change of Control could result in the departure or distraction of key management at a time when Parent and Employer Board would require the clear and focused attention of experienced management, unafflicted with concerns for personal financial and job security. Accordingly, in order to induce you to remain in the employ of the Employer, Parent and Employer have determined to enter into this letter agreement (this "AGREEMENT") which addresses the terms and conditions of your employment in the event of a Change of Control.
This Agreement will provide you with certain payments and benefits should you incur an Involuntary Termination after a Change of Control Date.
An "Involuntary Termination" means (i) your termination of employment by Employer during the Term without Cause or (ii) your resignation of employment with the Employer during the Term for Good Reason. The terms "Change of Control Date," "Term," "Cause," "Good Reason" and other initially capitalized words and phrases used in this letter agreement shall have the meanings ascribed to them in Appendix I attached. With respect to your specific situation, you would also have "Good Reason" to resign from employment with Employer if any of the following occurs after a Change of Control Date:
(A) at any time you are not the Chief Marketing Officer of the Successor Entity or the Controlling Entity; and
(B) any similar adverse change on or after the Change in Control Date in your title, position or reporting responsibilities.
1. Term of Employment Under This Agreement. The Term of your employment under this Agreement shall not commence unless and until a Change in Control Date occurs and shall continue thereafter until the SECOND anniversary of the Change in Control Date.
2. Cash Payments in the Event of Involuntary Termination During the Term. In the event of your Involuntary Termination during the Term you will be paid the following amounts in cash by the Employer:
(a) your Earned Compensation previously unpaid;
(b) a severance payment equal to the sum of (i) TWO times your Reference Salary and (ii) TWO times your Reference Bonus; and
(c) a Supplementary Pension Payment designed to provide you with the present cash value of the added benefits you would have received under the Defined Benefit Plans had you continued in your employment for a Measuring Period of TWO years; and
(d) a Gross-Up Payment to defray your Excise Tax liability if, following a Change in Control Date, it is determined that any Payment(s) made to you is (are) subject to the Excise Tax.
Payments under subsections (a) and (b) will be made within five (5) days of your Date of Termination and payment under subsection (c) will be made within forty-five (45) days of your date of termination. All calculations necessary to compute the Supplementary Pension Benefit Payment shall be done by the Accounting Firm at Employer's expense. Appendix II sets forth the applicable procedures relating to the Gross-Up Payment.
3. Benefit Continuation in the Event of Involuntary Termination During the Term. In the event of your Involuntary Termination during the Term Employer shall maintain all Benefit Plans in full force and effect, for the continued benefit of you and your eligible dependents for a maximum Benefits Continuation Period of TWO years. Employer's obligation under this Section 3 is subject to the following: (i) that your and your eligible dependent's continued participation is possible under the general terms and provisions of such Benefit Plans (and under the terms of any applicable funding media) and (ii) that you continue to pay an amount equal to your regular contribution under such plans for such participation. You and your eligible dependents continued participation in such plans shall also be subject to the additional conditions stated in Appendix III.
4. Notice of Termination. Any termination of your employment by Employer or by you during the Term shall be communicated by a Notice of Termination to the other parties hereto.
5. No Mitigation or Offset; Employer's Opportunity to Correct. You shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this Agreement be reduced by any compensation earned by you as the result of employment by another employer or by pension benefits paid by Employer or Employer's plans after the Date of Termination or otherwise, except as provided in the definition of "Benefit Continuation Period." No event shall constitute Good Reason for your resignation unless your claim to that effect is communicated by you to Employer in writing and is not corrected by Employer or Parent in a manner which is reasonably satisfactory to you (including full retroactive correction with respect to any monetary matter) within ten (10) days of the Employer's receipt of such written notice from you.
6. Legal Fees and Expenses Necessary to Enforce Agreement. The Employer shall pay or reimburse you on an after-tax basis for all costs and expenses (including, without limitation, court costs and reasonable legal fees and expenses which reflect common practice with respect to the matters involved) incurred by you as a result of any claim, action or proceeding (i) contesting, disputing or enforcing any right, benefits or obligations under this Agreement or which you reasonably claim to have or to be owed to you by Employer or Parent or (ii) arising out of or challenging the validity, advisability or enforceability of this Agreement or any provision hereof; provided, however, that the amount of the payments and reimbursements under this Section 5 shall not exceed $50,000.
7. Employment During the Term. During the Term you shall be employed by Employer on the terms and conditions on which you were employed immediately prior to the Change in Control Date without any Substantial Change.
8. Successors; Binding Agreement; Respective Responsibilities of Parent and Employer.
(a) Assumption by Successor. Parent and Employer will each require their respective successors (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of either, to expressly assume and to agree to perform this Agreement for your benefit in the same manner and to the same extent that the Parent or the Employer, as the case may be, would be required to perform it if no such succession had taken place; provided, however, that no such assumption shall relieve either the Parent or the Employer of its obligations hereunder, and no failure to expressly assume and agree to perform this Agreement shall relieve any successor of its obligations under this Agreement by operation of law.
(b) Enforceability; Beneficiaries. This Agreement shall be binding upon, inure to the benefit of and be enforceable by you (and your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees) and the Parent and Employer and any Person(s) which succeeds to substantially all of the business or assets of the Parent or Employer, whether by means of merger, consolidation, acquisition of all or substantially all of the assets of the Parent or Employer or otherwise, including, without limitation, as a result of a Change in Control or by operation of law.
(c) Joint and Several Liability. Parent shall be jointly and severally liable with Employer for all Employer's obligations hereunder and Employer shall be jointly and severally liable with Parent for all Parent's obligations hereunder.
9. Notices. For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when hand-delivered or when mailed by United States registered mail, return receipt requested, postage prepaid, addressed, if to Parent or Employer, to the Boards of Directors, Tiffany & Co. and Tiffany and Company, 600 Madison Avenue, New York, NY 10022, Attn. Legal Department, or, if to you, to you at the address set forth on the first page of this Agreement, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.
10. Miscellaneous.
(a) Amendments, Waivers, Etc. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing, No waiver by either party hereto any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provision or conditions at the same or at any later or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the subject matter here have been made by either party which are not expressly set forth in this Agreement
and this Agreement shall supersede all prior agreements, negotiations, correspondence, undertakings and communications of the parties, oral or written, with respect to the subject matter hereof.
(b) Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
(c) Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.
(d) No Contract of Employment. Nothing in this Agreement shall be construed as giving you any right to be retained in the employ of Employer or Parent nor shall it affect the terms and conditions of your employment with Employer prior to the commencement of the Term hereof. Failing the occurrence of a Change in Control Date your employment shall continue to be "at will," meaning that either you or Employer may terminate your employment with or without cause, for any reason or no reason, with or without notice.
(e) Withholding. Amounts paid to you hereunder shall be subject to all applicable federal, state and local withholding taxes.
(f) Source of Payments. All payments provided under this Agreement, other than payments made pursuant to a Benefit Plan which provides otherwise, shall be paid in cash from the general funds of Employer or Parent, and no special or separate fund shall be established, and no other segregation of assets made, to assure payment. You will have no right, title or interest whatsoever in or to any investments which Employer or Parent may make to aid it in meeting its obligations hereunder. To the extent that any person acquires a right to receive payments from Employer or Parent hereunder, such right shall be no greater than the right of an unsecured creditor of Parent or Employer, as the case may be.
(g) Headings. The headings contained in this Agreement are intended solely for convenience of reference and shall not affect the rights of the parties to this Agreement.
(h) Governing Law. The validity, interpretation, construction, and performance of this Agreement shall be governed by the laws of the State of New York applicable to contracts entered into and to be performed in this State.
If this letter set forth our agreement on the subject matter hereof, kindly sign and return to Employer the enclosed copy of this letter which will then constitute the agreement among us on this subject.
Sincerely,
TIFFANY & CO. ("Parent")
By: /s/ Michael J. Kowalski
----------------------------------
Name: Michael J. Kowalski
Title: President and Chief Executive Officer
|
TIFFANY AND COMPANY ("Employer")
By: /s/ Michael J. Kowalski
----------------------------------
Name: Michael J. Kowalski
Title: President and Chief Executive Officer
|
Agreed to as of this _____ day of _______ 2001
/s/ Caroline D. Naggiar
------------------------------------
Caroline D. Naggiar
|
Attachment: Appendices I through III
Exhibit 10.127a Tiffany & Co.
Report on Form 10-K
FY 2000
[COMPANY LETTERHEAD]
March 15, 2001
Beth O. Canavan
727 Fifth Avenue
New York, NY 10022
Re: RETENTION AGREEMENT
Dear Beth:
Tiffany and Company and Tiffany & Co. (respectively, "EMPLOYER" and "PARENT,") wish to take steps to retain key management, it being recognized that future discussions concerning a Change of Control or a decision to cooperate in or effect a Change of Control could result in the departure or distraction of key management at a time when Parent and Employer Board would require the clear and focused attention of experienced management, unafflicted with concerns for personal financial and job security. Accordingly, in order to induce you to remain in the employ of the Employer, Parent and Employer have determined to enter into this letter agreement (this "AGREEMENT") which addresses the terms and conditions of your employment in the event of a Change of Control.
This Agreement will provide you with certain payments and benefits should you incur an Involuntary Termination after a Change of Control Date.
An "Involuntary Termination" means (i) your termination of employment by Employer during the Term without Cause or (ii) your resignation of employment with the Employer during the Term for Good Reason. The terms "Change of Control Date,"
"Term," "Cause," "Good Reason" and other initially capitalized words and phrases used in this letter agreement shall have the meanings ascribed to them in Appendix I attached. With respect to your specific situation, you would also have "Good Reason" to resign from employment with Employer if any of the following occurs after a Change of Control Date:
(A) at any time you are not the Chief U.S. Retail Officer of the Successor Entity or the Controlling Entity; and
(B) any similar adverse change on or after the Change in Control Date in your title, position or reporting responsibilities.
1. Term of Employment Under This Agreement. The Term of your employment under this Agreement shall not commence unless and until a Change in Control Date occurs and shall continue thereafter until the SECOND anniversary of the Change in Control Date.
2. Cash Payments in the Event of Involuntary Termination During the Term. In the event of your Involuntary Termination during the Term you will be paid the following amounts in cash by the Employer:
(a) your Earned Compensation previously unpaid;
(b) a severance payment equal to the sum of (i) TWO times your Reference Salary and (ii) TWO times your Reference Bonus; and
(c) a Supplementary Pension Payment designed to provide you with the present cash value of the added benefits you would have received under the Defined Benefit Plans had you continued in your employment for a Measuring Period of TWO years; and
(d) a Gross-Up Payment to defray your Excise Tax liability if, following a Change in Control Date, it is determined that any Payment(s) made to you is (are) subject to the Excise Tax.
Payments under subsections (a) and (b) will be made within five (5) days of your Date of Termination and payment under subsection (c) will be made within forty-five (45) days of your date of termination. All calculations necessary to compute the Supplementary Pension Benefit Payment shall be done by the Accounting Firm at Employer's expense. Appendix II sets forth the applicable procedures relating to the Gross-Up Payment.
3. Benefit Continuation in the Event of Involuntary Termination During the Term. In the event of your Involuntary Termination during the Term Employer shall maintain all Benefit Plans in full force and effect, for the continued benefit of you and your eligible dependents for a maximum Benefits Continuation Period of TWO years. Employer's obligation under this Section 3 is subject to the following: (i) that your and your eligible dependent's continued participation is possible under the general terms and provisions of such Benefit Plans (and under the terms of any applicable funding media) and (ii) that you continue to pay an amount equal to your regular contribution under such plans for such participation. You and your eligible dependents continued participation in such plans shall also be subject to the additional conditions stated in Appendix III.
4. Notice of Termination. Any termination of your employment by Employer or by you during the Term shall be communicated by a Notice of Termination to the other parties hereto.
5. No Mitigation or Offset; Employer's Opportunity to Correct. You shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this Agreement be reduced by any compensation earned by you as the result of employment by another employer or by pension benefits paid by Employer or Employer's plans after the Date of Termination or otherwise, except as provided in the definition of "Benefit Continuation Period." No event shall constitute Good Reason for your resignation unless your claim to that effect is communicated by you to Employer in writing and is not corrected by Employer or Parent in a manner which is reasonably satisfactory to you (including full retroactive correction with respect to any monetary matter) within ten (10) days of the Employer's receipt of such written notice from you.
6. Legal Fees and Expenses Necessary to Enforce Agreement. The Employer shall pay or reimburse you on an after-tax basis for all costs and expenses (including, without limitation, court costs and reasonable legal fees and expenses which reflect common practice with respect to the matters involved) incurred by you as a result of any claim, action or proceeding (i) contesting, disputing or enforcing any right, benefits or obligations under this Agreement or which you reasonably claim to have or to be owed to you by Employer or Parent or (ii) arising out of or challenging the validity, advisability or enforceability of this Agreement or any provision hereof; provided, however, that the amount of the payments and reimbursements under this Section 5 shall not exceed $50,000.
7. Employment During the Term. During the Term you shall be employed by Employer on the terms and conditions on which you were employed immediately prior to the Change in Control Date without any Substantial Change.
8. Successors; Binding Agreement; Respective Responsibilities of Parent and Employer.
(a) Assumption by Successor. Parent and Employer will each require their respective successors (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of either, to expressly assume and to agree to perform this Agreement for your benefit in the same manner and to the same extent that the Parent or the Employer, as the case may be, would be required to perform it if no such succession had taken place; provided, however, that no such assumption shall relieve either the Parent or the Employer of its obligations hereunder, and no failure to expressly assume and agree to perform this Agreement shall relieve any successor of its obligations under this Agreement by operation of law.
(b) Enforceability; Beneficiaries. This Agreement shall be binding upon, inure to the benefit of and be enforceable by you (and your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees) and the Parent and Employer and any Person(s) which succeeds to substantially all of the business or assets of the Parent or Employer, whether by means of merger, consolidation, acquisition of all or substantially all of the assets of the Parent or Employer or otherwise, including, without limitation, as a result of a Change in Control or by operation of law.
(c) Joint and Several Liability. Parent shall be jointly and severally liable with Employer for all Employer's obligations hereunder and Employer shall be jointly and severally liable with Parent for all Parent's obligations hereunder.
9. Notices. For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when hand-delivered or when mailed by United States registered mail, return receipt requested, postage prepaid, addressed, if to Parent or Employer, to the Boards of Directors, Tiffany & Co. and Tiffany and Company, 600 Madison Avenue, New York, NY 10022, Attn. Legal Department, or, if to you, to you at the address set forth on the first page of this Agreement, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.
10. Miscellaneous.
(a) Amendments, Waivers, Etc. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing, No waiver by either party hereto any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provision or conditions at the same or at any later or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the subject matter here have been made by either party which are not expressly set forth in this Agreement
and this Agreement shall supersede all prior agreements, negotiations, correspondence, undertakings and communications of the parties, oral or written, with respect to the subject matter hereof.
(b) Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
(c) Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.
(d) No Contract of Employment. Nothing in this Agreement shall be construed as giving you any right to be retained in the employ of Employer or Parent nor shall it affect the terms and conditions of your employment with Employer prior to the commencement of the Term hereof. Failing the occurrence of a Change in Control Date your employment shall continue to be "at will," meaning that either you or Employer may terminate your employment with or without cause, for any reason or no reason, with or without notice.
(e) Withholding. Amounts paid to you hereunder shall be subject to all applicable federal, state and local withholding taxes.
(f) Source of Payments. All payments provided under this Agreement, other than payments made pursuant to a Benefit Plan which provides otherwise, shall be paid in cash from the general funds of Employer or Parent, and no special or separate fund shall be established, and no other segregation of assets made, to assure payment. You will have no right, title or interest whatsoever in or to any investments which Employer or Parent may make to aid it in meeting its obligations hereunder. To the extent that any person acquires a right to receive payments from Employer or Parent hereunder, such right shall be no greater than the right of an unsecured creditor of Parent or Employer, as the case may be.
(g) Headings. The headings contained in this Agreement are intended solely for convenience of reference and shall not affect the rights of the parties to this Agreement.
(h) Governing Law. The validity, interpretation, construction, and performance of this Agreement shall be governed by the laws of the State of New York applicable to contracts entered into and to be performed in this State.
If this letter set forth our agreement on the subject matter hereof, kindly sign and return to Employer the enclosed copy of this letter which will then constitute the agreement among us on this subject.
Sincerely,
TIFFANY & CO. ("Parent")
By: /s/ Michael J. Kowalski
---------------------------------
Name: Michael J. Kowalski
Title: President and Chief Executive Officer
|
TIFFANY AND COMPANY ("Employer")
By: /s/ Michael J. Kowalski
---------------------------------
Name: Michael J. Kowalski
Title: President and Chief Executive Officer
|
Agreed to as of this 30 day of March 2001
/s/ Beth O. Canavan
------------------------------------
Beth O. Canavan
|
Attachment: Appendices I through III
APPENDIX I - DEFINITIONS
FOR PURPOSES OF THE AGREEMENT, THE FOLLOWING INITIALLY CAPITALIZED WORDS SHALL HAVE THE MEANINGS SET FORTH BELOW:
"ACCOUNTING FIRM" shall mean PricewaterhouseCoopers LLP or, if such firm is unable or unwilling to perform such calculations or provide such opinions as are required under this Agreement, such other nationally recognized public accounting firm as shall be designated by agreement of you and the Employer, or failing such Agreement, as designated by PricewaterhouseCoopers LLP, provided, however, that if PricewaterhouseCoopers LLP, or any firm designated by PricewaterhouseCoopers LLP, is serving as accountant or auditor for the Person or group effecting the Change of Control (other than for Parent or Employer), you may appoint another nationally recognized public accounting firm as Accounting Firm hereunder.
"AFFILIATE" shall mean any Person that controls, is controlled by or is under common control with, any other Person, directly or indirectly.
"BENEFIT CONTINUATION PERIOD" means the period beginning on your Date of
Termination and ending following the period of years stated in Section 3,
provided that such period shall earlier terminate on the commencement date of
equivalent benefits from your new employer or your attainment of age sixty-five
(65), whichever first occurs.
"BENEFIT PLANS" mean all insured and self-insured employee welfare benefit plans in which you were entitled to participate immediately prior to your Date of Termination.
"CAUSE" shall mean a termination of your employment during the Term which is the result of:
(i) your conviction or plea of nolo contendere to a felony involving financial impropriety or a felony which would tend to subject Employer or any of its Affiliates to public criticism or materially interfere with your continued service to Employer;
(ii) your willful disclosure of material trade secrets or other material confidential information related to the business of Employer or any of its Affiliates, which disclosure actually results in substantive harm to such business or puts such business at an actual competitive disadvantage;
(iii) your willful failure or refusal to perform substantially all such proper and achievable directives issued by your superior (other than any such failure resulting from your incapacity due to physical or mental illness, any such actual or anticipated failure resulting from a resignation by you for Good Reason, or any such refusal made by you in good faith because you believe such directives to be illegal, unethical or immoral) after a written demand for substantial performance is delivered to you on behalf of Employer, which demand specifically identifies the manner in which you have not substantially performed your duties, and which performance is not substantially corrected by you within ten (10) days of receipt of such demand;
(iv) your gross negligence in the performance of your duties and responsibilities materially injurious to the Employer;
(v) your willful breach of any material obligation that you have to Parent or Employer under any written agreement that you have with either Parent or Employer;
(vi) your fraud or dishonesty with regard to Employer or any of its Affiliates;
(vii) your death; or
(viii) your Disability.
For purposes of the previous sentence, no act or failure to act on your part
shall be deemed "willful" unless done, or omitted to be done, by you in bad
faith toward, or without reasonable belief that your action or omission was in
the best interests of, Parent, Employer or an Affiliate of Parent or Employer.
Notwithstanding the foregoing, you shall not be deemed to have been terminated
for Cause with respect to items (i) through (vi) or item (viii) unless and until
there shall have been delivered to you a copy of a resolution duly adopted by
the affirmative vote of not less than three-fourths (3/4th) of the entire
membership of the Employer Board at a meeting called and held for such purpose
(after reasonable notice to you and an opportunity for you, together with your
counsel, to be heard before such Board), finding that, in the good faith opinion
of such Board, Cause exists as set forth in items (i), (ii), (iii), (iv), (v),
(vi) or (viii) above.
"CHANGE IN CONTROL" shall mean a change in control of Parent of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Exchange Act, whether or not Parent is then subject to such reporting requirement; provided, however, that, anything in this Agreement to the contrary notwithstanding, a Change in Control shall be deemed to have occurred if:
(i) any Person, or any syndicate or group deemed to be a person under Section 14(d)(2) of the Exchange Act, excluding Parent or any of its Affiliates, a trustee or any fiduciary holding securities under an employee benefit plan of Parent or any of its Affiliates, an underwriter temporarily holding securities pursuant to an offering of such securities or a corporation owned, directly or indirectly by stockholders of Parent in substantially the same proportion as their ownership of Parent, is or becomes the "beneficial owner" (as defined in Rule 13d-3 of the General Rules and Regulations under the Exchange Act), directly or indirectly, of securities of Parent representing Thirty-five percent (35%) or more of the combined voting power of Parent's then outstanding securities entitled to vote in the election of directors of Parent;
(ii) ten (10) days following the "Shares Acquisition Date" if any Person has in fact become and then remains an "Acquiring Person" under the Rights Plan;
(iii) if the Parent Board should resolve to redeem the "Rights" under the Rights Plan in response to a proposal by any Person to acquire, directly or indirectly, securities of Parent representing Fifteen percent (15%) or more of the combined voting power of Parent's then outstanding securities entitled to vote in the election of directors of Parent;
(iv) if the Incumbent Directors cease to constitute a
majority of the Parent Board; provided, however, that no
person shall be deemed an Incumbent Director if he or
she was appointed or elected to the Parent Board after
having been designated to serve on the Parent Board by a
Person who has entered into an agreement with Parent to
effect a transaction described in clauses (i), (iii),
(v), (vi), (vii), (viii) or (ix) of this definition;
(v) there occurs a reorganization, merger, consolidation or other corporate transaction involving Parent, in each case with respect to which the stockholders of Parent immediately prior to such transaction do not, immediately after such transaction, own more than Fifty percent (50%) of the combined voting power of the Parent or other corporation resulting from such transaction, as the case may be;
(vi) all or substantially all of the assets of Parent are sold, liquidated or distributed, except to an Affiliate of Parent;
(vii) all or substantially all of the assets of Employer are sold, liquidated or distributed, except to an Affiliate of Parent;
(viii) any Person, or any syndicate or group deemed to be a person under Section 14(d)(2) of the Exchange Act, excluding Parent or any of its Affiliates, a trustee or any fiduciary holding securities under an employee benefit plan of Parent or any of its Affiliates, an underwriter temporally holding securities pursuant to an offering of such securities or a corporation owned, directly or indirectly by stockholders of Parent in substantially the same proportion as their ownership of Parent, is or becomes the "beneficial owner" (as defined in Rule 13d-3 of the General Rules and Regulations under the Exchange Act), directly or indirectly, of securities of Employer representing Fifty percent (50%) or more of the combined voting power of Employer's then outstanding securities entitled to vote in the election of directors of Employer; or
(ix) there is a "change of control" or a "change in the
effective control" of Parent within the meaning of
Section 280G of the Code and the Regulations.
"CHANGE IN CONTROL DATE" shall mean the earliest of:
(i) the date on which a Change of Control occurs;
(ii) the date on which Parent executes an agreement or its stockholders adopt a resolution, the consummation of which would result in the occurrence of a Change of Control;
(iii) the date the Parent Board approves a transaction or series of transactions, the consummation of which would result in a Change in Control; and
(iv) the date Parent or Employer fails to satisfy the obligation to have this Agreement expressly assumed by their respective successors in accordance with Section 8(a) of the Agreement;
provided that if your employment with Employer terminates prior to any of the dates specified in items (i) through (iv) of this definition and it is reasonably demonstrated that your termination of employment (a) was at the request of a third party who has taken steps reasonably calculated to effect a Change in Control or (b) otherwise arose in connection with or in anticipation of a Change in Control, then "Change in Control Date" shall mean the date immediately prior to your Date of Termination.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, and any successor provisions thereto.
"COMMON STOCK" shall mean the common stock of Parent.
"CONTROLLING ENTITY" shall mean the Controlling Person of the Successor Entity if such a Controlling Person exists; otherwise "Controlling Entity" shall mean the Successor Entity.
The "CONTROLLING PERSON" of any Person shall mean the Person which ultimately controls such first Person and all other Affiliates of such first Person, directly or indirectly, through ownership of voting stock or otherwise.
Your "DATE OF TERMINATION" shall mean:
(i) if your employment is terminated for Disability, thirty
(30) days after a Notice of Termination is given
(provided that you shall not have returned to the
full-time performance of your duties during such thirty
(30) day period);
(ii) if your employment is terminated by Employer in an Involuntary Termination, five (5) days after the date the Notice of Termination is received by you;
(iii) if your employment is terminated by Employer for Cause (other than Disability), the later of the date specified in the Notice of Termination or ten (10) days following the date such Notice is received by you;
(iv) if you resign and specify Good Reason, ten (10) days after the date your Notice of Termination is received by Employer; and
(v) if you resign and decline to specify Good Reason, the date set forth in your Notice of Termination, which shall be no earlier than ten (10) days after the date such notice is received by Employer.
"DEFINED BENEFIT PLANS" shall mean, collectively, the Tiffany and Company Pension Plan and the 1994 Tiffany and Company Supplemental Retirement Income Plan.
"DISABILITY" shall mean your incapacity due to physical or mental illness which causes you to be absent from the full-time performance of your duties with Employer for six (6) consecutive months provided, however, that you shall not be determined to be subject to a Disability for purposes of this Agreement unless you fail to return to full-time performance of your duties with Employer within thirty (30) days after written Notice of Termination due to Disability is given to you.
"EARNED COMPENSATION" shall mean:
(i) any earned but unpaid base salary through your Date of Termination at the rate in effect at the time of the Notice of Termination;
(ii) all unused vacation time which you may have accrued as of your Date of Termination; and
(iii) a pro rata portion of your target bonus or incentive award for the fiscal year in which your Involuntary Termination occurs, calculated on the assumption that all performance targets (including your individual performance targets and sales and earnings targets applicable to the Employer and/or to the Successor Entity) have been or will be achieved.
"EMPLOYER" shall mean Tiffany and Company, a New York corporation, and any successor to its business and/or assets by operation of law or otherwise.
"EMPLOYER BOARD" shall mean the Board of Directors of Employer.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended, and any successor provisions thereto.
"EXCISE TAX" shall mean the excise tax imposed by Section 4999 of the Code and interest or penalties with respect to such excise tax.
"GOOD REASON" means, in addition to those reasons stated in the body of the Agreement, your resignation from employment with Employer during the Term as a result of any of the following:
(i) A meaningful and detrimental alteration in your position, your titles, or the nature or status of your responsibilities (including your reporting responsibilities) from those in effect immediately before the Change in Control Date.
(ii) A reduction by Employer in your annual base salary as in effect immediately prior to the Change in Control Date or as the same may be increased from time to time thereafter; a failure by the Employer to increase your salary at a rate commensurate with that of other key executives of Employer; or a reduction in your target bonus or incentive award (expressed as a percentage of base salary) below the target in effect for you prior to the Change in Control Date;
(iii) The failure by Employer to pay you a bonus or incentive award commensurate with the bonus paid other key executives of Employer (expressed as a percentage of your target bonus) unless such failure is justified by clear and objective deficiencies of the business units for which you are responsible;
(iv) the relocation of the office of Employer where you were employed immediately prior to the Change in Control Date to a location which is more than 50 miles away or should Employer require you to be based more than 50 miles away from such office (except for required travel on the Employer's business to an extent substantially consistent with your customary business travel obligations in the ordinary course of business prior to the Change in Control Date);
(v) the failure by Employer or Parent to continue in effect any compensation plan in which you participated prior to the Change in Control Date or made available to you after the Change in Control Date, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan in connection with the Change in Control, or the failure by Employer or Parent to continue your participation therein on at least as favorable a basis, both in terms of the amount of benefits provided and the level of your participation relative to other participants, as existed on the Change in Control Date;
(vi) the failure by Employer or Parent to continue to provide you with benefits at least as favorable in the aggregate to those enjoyed by you under the Defined Benefit Plans, the Benefit Plan or Employer's or Parent's savings, life insurance, disability and fringe benefit plans and programs in which you were participating or had a right to participate immediately prior to the Change in Control Date; or the failure by the Company to provide you with the number of paid vacation days to which you were entitled on the basis of years of service with Employer in accordance with Employer's normal vacation policy in effect immediately prior to the Change in Control Date;
(vii) the failure of Employer and Parent to obtain an express agreement reasonably satisfactory to you from their successors, if any, to assume and agree to perform this Agreement, as contemplated in Section 8(a) of the Agreement;
(viii) any termination of your employment with Employer which is not effected pursuant to the terms of this Agreement; or
(ix) a material breach by Employer or Parent of the provisions of this Agreement.
"GROSS-UP PAYMENT" means a payment to you by the Employer such that after payment by you of all Taxes (including any Excise Tax and any state or federal income taxes) imposed upon the Gross-Up
Payment, you retain an amount of the Gross-Up Payment equal to the sum of (x) the Excise Tax imposed upon the Payments which have triggered your right to a Gross-Up Payment and (y) the product of any deductions disallowed you because of the inclusion of the Gross-Up Payment in your adjusted gross income and the highest applicable marginal rate of federal income taxation for the calendar year in which the Gross-Up Payment is to be made.
"INCUMBENT DIRECTORS" shall mean those individuals who were members of the Board of Directors of Tiffany & Co., a Delaware corporation, as of the date of this Agreement and those individuals whose later appointment to such Board, or whose later nomination for election to such Board by the stockholders of Tiffany & Co., was approved by a vote of at least a majority of those members of such Board who either were members of such Board as of the date of this Agreement, or whose election or nomination for election was previously so approved.`-+*
"MEASUREMENT PERIOD" means the period of years after your Date of Termination specified in Section 3.
"NOTICE OF TERMINATION" shall mean a written notice indicating the specific termination provision in this Agreement relied upon and setting forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated.
"PARENT" shall mean Tiffany & Co., a Delaware corporation, and any successor to its business and/or assets by operation of law or otherwise.
"PARENT BOARD" shall mean the Board of Directors of Parent.
"PAYMENT" means (i) any amount due or paid to you under this Agreement,
(ii) any amount that is due or paid to you under any plan, program or
arrangement of Parent or Employer (including, without limitation the Parent's
stock option plans) and (iii) any amount or benefit that is due or payable to
you under this Agreement or under any plan, program or arrangement of Parent or
Employer not otherwise covered under clause (i) or (ii) hereof which must
reasonably be taken into account under Section 280G of the Code and the
Regulation in determining the amount of "parachute payments" received by you,
including, without limitation, any amounts which must be taken into account
under the Code and Regulations as a result of (A) the acceleration of the
vesting of any option, restricted stock or other equity award granted under the
Parent's employee stock option plans or otherwise, (B) the acceleration of the
time at which any payment or benefit is receivable by you or (C) any contingent
severance or other amounts that are payable to you.
"PERSON" shall mean any individual, firm, corporation, partnership, limited partnership, limited liability partnership, business trust, limited liability company, unincorporated association or other entity, and shall include any successor (by merger or otherwise) of such entity.
"REFERENCE BONUS" shall mean the greater of (i) the target annual bonus
applicable to you for the year in which your Involuntary Termination occurs and
(ii) the highest annual bonus paid to you in any of the three years ended prior
to the Change in Control Date. For this purpose, the term "bonus" shall also
refer to a cash Incentive Award under the 1998 Employee Incentive Plan.
"REFERENCE SALARY" shall mean the greater of (i) the annual rate of your base salary from Employer in effect immediately prior to the date of your Involuntary Termination and (ii) the highest annual rate of your base salary from Employer in effect at any point during the three-year period ended on the Change in Control Date.
"REGULATIONS" shall mean regulations under Section 280G of the Code, including proposed and temporary regulations, and any successor provisions thereto.
"RIGHTS PLAN" shall mean the Amended and Restated Rights Agreement Dated as of September 22, 1998 by and between Parent and ChaseMellon Shareholder Services L.L.C., as Rights Agent, as such Agreement may be further amended from time to time.
"SUBSTANTIAL CHANGE" means any substantial change in the terms or conditions of your employment following a Change of Control Date that is less favorable to you than those in effect previous to the Change of Control Date.
"SUCCESSOR ENTITY" shall mean the Person who is in most immediate control, whether through voting stock ownership of one or more subsidiaries or otherwise, of the worldwide consolidated business of Parent's Affiliates, substantially as such business existed immediately prior to the Change in Control Date whether or not such Person is ultimately controlled by another Person.
"SUPPLEMENTARY PENSION PAYMENT" means the lump sum actuarial equivalent (employing actuarial assumptions no less favorable to you than those in effect under the Defined Benefit Plans prior to the Change in Control Date) of the excess of the (i) aggregate benefits under the Defined Benefit Plans which you would receive if your employment with Employer continued for the Measurement Period over (ii) your vested accrued benefits payable under the Defined Benefit Plans as of your Date of Termination. The following assumptions shall be used to calculate such actuarial equivalent, that: (x) your accrued benefits under the Defined Benefit Plans were fully vested, (y) in each of the years during the Measurement Period your salary and bonus were equivalent to your Reference Salary and Reference Bonus and (z) that you will begin to receive benefits under Defined Benefit Plans at age 65, as calculated by the Accounting Firm with the assistance of the actuaries for the Tiffany and Company Pension Plan.
"TAXES" shall mean the federal, state and local income taxes to which you are subject at the time of determination, calculated on the basis of the highest marginal rates then in effect, plus any additional payroll or withholding taxes to which you are then subject.
"TERM" shall mean the term of your employment under this Agreement as defined in Section 1.
APPENDIX II - PROCEDURES RELATING TO GROSS UP PAYMENT
(A) Assumptions to be Used in Calculating the Gross-Up Payment. In determining the amount of the Gross-Up Payment, you shall be deemed to:
(1) pay federal income taxes at the highest marginal rates of federal income taxation for the calendar year in which the Gross-Up Payment is to be made;
(2) pay applicable state and local income taxes at the highest marginal rate of taxation for the calendar year in which the Gross-Up Payment is to be made, net of the maximum reduction in federal income taxes which could be obtained from deduction of state and local taxes; and
(3) have otherwise allowable deductions for federal income tax purposes at least equal to those which could be disallowed because of the inclusion of the Gross-Up Payment in your gross income.
(B) Calculation and Payment of Gross-Up Payment. Subject to the provisions set out below, all determinations required under this Appendix, including whether a Gross-Up Payment is required, the amount of the Payments constituting excess parachute payments, and the amount of the Gross-Up Payment, shall be made by the Accounting Firm. Any determination by the Accounting Firm shall be binding upon you and the Employer. The Accounting Firm shall be instructed by the Employer to provide detailed supporting calculations both to you and the Employer within fifteen days of the Change of Control Date, your Date of Termination or any other date reasonably requested by you or the Employer on which a determination under this Appendix is necessary or advisable. The Employer shall pay to you the initial amount of the Gross-Up Payment within five days of the receipt by you and the Employer of the Accounting Firm's determination. If the Accounting Firm determines that no Excise Tax is payable by you, the Employer shall cause the Accounting Firm to provide you with an opinion that the Accounting Firm has substantial authority under the Code and Regulations that you are not required to report an Excise Tax on your federal income tax return. If the initial Gross-Up Payment is insufficient to cover the amount of the Excise Tax that is ultimately determined to be owing by you with respect to any Payment (hereinafter an "UNDERPAYMENT"), the Employer, after exhausting its remedies under (C) below, shall promptly pay to you an additional Gross-Up Payment in respect of the Underpayment.
(C) Procedures Regarding Claims In Respect of Underpayments. If a claim is made upon you by the Internal Revenue Service, that would, if successful, require the Employer to make a Gross-Up Payment to you, you must notify the Employer as soon as practicable after you know of the claim. Such notice must state the nature of the claim and the date that payment is demanded. As a condition to your right to a Gross-Up Payment in respect of such claim, you shall not pay such claim until the expiration of a thirty (30) day period following the date on which you notify the Employer of such claim, or such shorter period ending on the date the Taxes in respect to such claim are due (the "NOTICE PERIOD"). If the Employer notifies you in writing prior to the expiration of the Notice Period that it desires to contest the claim, you shall:
(1) give the Employer any information reasonably requested by the Employer relating to the claim;
(2) take such action in connection with the claim as the Employer may reasonably request, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Employer and reasonably acceptable to you;
(3) cooperate with the Employer in good faith in contesting the claim; and
(4) permit the Employer to participate in any proceedings relating to the claim.
You shall permit the Employer to control all proceedings related to the claim and, at its option, permit the Employer to pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim.
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If requested to do so by the Employer, you agree either to pay the tax claimed and sue for a refund or contest the claim in any permissible manner and to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts as the Employer shall determine; provided, however, that, if the Employer directs you pay such claim and pursue a refund, the Employer shall advance the amount of such payment to you on an after-tax and interest-free basis (an "ADVANCE").
The Employer's control of the contest related to the claim shall be limited to the issues related to the Gross-Up Payment and you shall be entitled to settle or contest, as the case may be, any other issues raised by the Internal Revenue Service or other taxing authority. If the Employer does not notify you in writing prior to the end of the Notice Period of its desire to contest the claim, the Employer shall pay to you an additional Gross-Up Payment in respect of the excess parachute payments that are the subject of the claim, and you agree to pay the amount of the Excise Tax that is the subject of the claim to the applicable taxing authority in accordance with applicable law.
(D) Repayment of Advance. If, after receipt by you of an Advance, you become entitled to a refund with respect to the claim to which such Advance relates, you shall pay the Employer the amount of the refund (together with any interest paid or credited thereon after Taxes applicable thereto). If, after receipt by you of any Advance, a third-party determination is made that you are not entitled to any refund with respect to the claim and the Employer does not promptly notify you of its intent to contest the denial of refund, then the amount thereof shall offset the amount of the additional Gross-Up Payment then owing to you with respect to such claim.
(E) Indemnity and Costs Relating to Gross-Up Payments. The Employer shall indemnify you and hold you harmless, on an after-tax basis, from any costs, expenses, penalties, fines, interest or other liabilities ("Losses") incurred by you with respect to the exercise by the Employer of any of its rights under this Appendix II, including, without limitation, any Losses related to the Employer's decision to contest a claim or any imputed income to you resulting from any Advance or action taken on your behalf by the Employer hereunder. The Employer shall pay all legal fees and expenses incurred by you under this Appendix II, and shall promptly reimburse you for the reasonable expenses incurred by you in connection with any actions taken by the Employer or required to be taken by you hereunder. The Employer shall also pay all of the fees and expenses of the Accounting firm, including, without limitation, the fees and expenses related to the determination referred to in (B) above.
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APPENDIX III - BENEFIT CONTINUATION
(A) In the event that your participation in any Benefit Plan is barred, Employer shall, at its sole cost and expense, arrange to have issued for the benefit of you and your eligible dependents individual policies of insurance providing benefits substantially similar (on an after-tax basis) to those which you otherwise would have been entitled to receive under such Benefit Plan pursuant to Section 3 for the Benefit Continuation Period.
(B) In lieu of the benefits provided in (A) above, if, in the reasonable opinion of Employer, such insurance is not available at a reasonable cost to the Employer, the Employer shall directly provide you and your eligible dependents with equivalent benefits (on an after-tax basis).
(C) In either of the circumstances described in (A) or (B), you shall not be required to pay any premiums or other charges in an amount greater than that which you would have paid in order participate in such Benefit Plan had your Involuntary Termination not occurred.
(D) If at the end of the Benefit Continuation Period you have not reached age sixty-five and you have not previously received or are not then receiving equivalent benefits from a new employer, Employer shall arrange to enable you to convert your and your eligible dependents' coverage under the Benefit Plans to individual policies or programs upon the same terms as employees of the Employer may apply for such conversions. Employer shall bear the cost of making such conversions available to you; you shall bear the cost of coverage under such converted policies or programs.
(E) For the purposes of Section 3 and this Appendix, a dependent will be deemed "eligible" if, at the time in question, you would, if an employee of Employer, be entitled to cover such dependent under the plan in question.
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SELECTED FINANCIAL DATA
The following table sets forth selected financial data, certain of which have been derived from the Company's audited financial statements for 1996-2000. All references to years relate to the fiscal year that ends on January 31 of the following calendar year. Net sales and gross profit have been reclassified for all periods presented to reflect the adoption of the Emerging Issues Task Force Issue 00-10, "Accounting for Shipping and Handling Fees and Costs." Diluted earnings per share and the weighted average number of common shares have been retroactively adjusted to comply with the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 128, "Earnings Per Share." All share and per share data have been retroactively adjusted to reflect the two-for-one splits in 2000, 1999 and 1996 of the Company's Common Stock effected in the form of share distributions ("stock dividends"):
(in thousands, except per share amounts,
percentages, stores and boutiques and employees) 2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- --------
EARNINGS DATA
Net sales $1,668,056 $1,471,690 $1,177,929 $1,024,843 $929,235
Gross profit 948,414 821,680 625,599 536,016 482,028
Earnings from operations 327,396 256,883 161,122 133,422 109,413
Net earnings 190,584 145,679 90,062 72,822 58,439
Net earnings per diluted share 1.26 0.97 0.63 0.50 0.41
Weighted average number of
diluted common shares 151,816 149,666 143,936 144,416 142,760
---------- ---------- ---------- ---------- --------
BALANCE SHEET AND
CASH FLOW DATA
Total assets $1,568,340 $1,343,562 $1,057,023 $ 827,067 $739,418
Cash and cash equivalents 195,613 216,936 188,593 107,252 117,161
Inventories 651,717 504,800 481,439 386,431 335,389
Working capital 667,647 610,685 522,927 381,084 342,511
Net cash provided by operations 109,177 230,351 80,178 29,652 24,784
Capital expenditures 108,382 171,237 62,821 50,565 39,884
Short-term borrowings 28,778 20,646 97,370 90,054 76,338
Long-term debt 242,157 249,581 194,420 90,930 92,675
Stockholders' equity 925,483 757,076 516,453 443,724 378,264
Stockholders' equity per share 6.34 5.22 3.72 3.18 2.74
Cash dividends per share 0.150 0.113 0.085 0.065 0.046
---------- ---------- ---------- ---------- --------
RATIO ANALYSIS
As a percentage of net sales:
Earnings from operations 19.6% 17.5% 13.7% 13.0% 11.8%
Net earnings 11.4% 9.9% 7.6% 7.1% 6.3%
Current ratio 3.0:1 3.2:1 2.8:1 2.5:1 2.5:1
Return on average assets 13.1% 12.1% 9.6% 9.3% 8.4%
Net-debt as a percentage of total capital 7.5% 6.6% 16.7% 14.2% 12.1%
Return on average stockholders' equity 22.7% 22.9% 18.8% 17.7% 18.2%
Company-operated stores and boutiques 119 110 104 96 81
Number of employees 5,960 5,368 4,845 4,360 3,892
|
18 TIFFANY & CO. AND SUBSIDIARIES
[BAR CHART] NET SALES (IN MILLIONS) |
1996 $ 929 1997 $1,025 1998 $1,178 1999 $1,472 2000 $1,668 |
[BAR CHART]
RETURN ON AVERAGE
STOCKHOLDERS' EQUITY
1996 18.2% 1997 17.7% 1998 18.8% 1999 22.9% 2000 22.7% |
[BAR CHART]
NET EARNINGS
(IN MILLIONS)
1996 $58 1997 $73 1998 $90 1999 $146 2000 $191 |
[BAR CHART]
RETURN ON
AVERAGE ASSETS
1996 8.4% 1997 9.3% 1998 9.6% 1999 12.1% 2000 13.1% |
[BAR CHART]
NET EARNINGS
AS A PERCENTAGE OF
NET SALES
1996 6.3% 1997 7.1% 1998 7.6% 1999 9.9% 2000 11.4% |
[BAR CHART]
NET-DEBT
AS A PERCENTAGE OF
TOTAL CAPITAL
1996 12.1% 1997 14.2% 1998 16.7% 1999 6.6% 2000 7.5% |
TIFFANY & CO. AND SUBSIDIARIES 19
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
OVERVIEW
The Company operates three channels of distribution. U.S. Retail includes retail sales in Company-operated stores in the U.S.; International Retail primarily includes retail sales in Company-operated stores and boutiques, as well as a limited amount of corporate (business-to-business) sales and wholesale sales to independent retailers and distributors in the Asia-Pacific region, Europe, Canada, the Middle East and Latin America. Direct Marketing includes corporate, catalog and Internet sales in the U.S.
All references to years relate to fiscal years ended on January 31 of the following calendar year. All share and per share data have been retroactively adjusted to reflect the two-for-one stock splits in 2000 and 1999.
Net sales rose 13% in 2000 and 25% in 1999. Worldwide comparable store sales, on a constant-exchange-rate basis which excludes the effect of translating local-currency-denominated sales into U.S. dollars, rose 13% in 2000 and 18% in 1999. Net earnings increased 31% in 2000 and 62% in 1999 due to sales growth and improved operating margins.
In order to focus its distribution on Company-operated stores and to eliminate marginally profitable operations, the Company has eliminated certain wholesale selling operations. Effective January 2001, wholesale sales of fragrance products were discontinued in the U.S. and most international markets; effective July 2000, wholesale sales of jewelry and non-jewelry items were discontinued in Europe; and effective January 2000, wholesale sales of jewelry and other non-jewelry items were discontinued in the U.S. In connection with these decisions, the Company established product return reserves, which had the effect of reducing gross profit by $9,364,000, and recorded a charge of $3,146,000 to Selling, general and administrative expenses, primarily relating to the write-off of unrecoverable store fixtures maintained by such customers. As of January 31, 2001, $3,132,000 of estimated product return reserves remain for these operations.
Management does not expect these decisions, singularly or in the aggregate, to significantly affect the Company's financial position, earnings or cash flows, although the eliminations of wholesale sales and the related accounts receivable modestly affect year-over-year comparisons.
Net sales include shipping and handling fees while cost of sales include shipping and handling costs as recommended by the Emerging Issues Task Force ("EITF") Issue 00-10, "Accounting for Shipping and Handling Fees and Costs" ("Issue 00-10"). The following table highlights certain operating data as a percentage of net sales:
2000 1999 1998
----------------------------------------------------------------------------------
Net sales 100.0% 100.0% 100.0%
Cost of sales 43.1 44.2 46.9
-------------------------------------
Gross profit 56.9 55.8 53.1
Selling, general and
administrative expenses 37.3 38.3 39.4
-------------------------------------
Earnings from operations 19.6 17.5 13.7
Other expenses, net 0.6 0.6 0.5
-------------------------------------
Earnings before income taxes 19.0 16.9 13.2
Provision for income taxes 7.6 7.0 5.6
-------------------------------------
Net earnings 11.4% 9.9% 7.6%
=====================================
|
NET SALES
Net sales by channel of distribution were as follows:
(in thousands) 2000 1999 1998
-----------------------------------------------------------------------------------------
U.S. Retail $ 833,221 $ 744,425 $ 593,589
International Retail 679,274 589,607 462,474
Direct Marketing 155,561 137,658 121,866
--------------------------------------------------
$1,668,056 $1,471,690 $1,177,929
==================================================
|
(percentage of net sales) 2000 1999 1998
------------------------------------------------------------------------------------------
U.S. Retail 50% 51% 50%
International Retail 41 40 40
Direct Marketing 9 9 10
-------------------------------------------
100% 100% 100%
===========================================
|
U.S. Retail sales increased 12% in 2000 and 25% in 1999. Comparable store sales rose 12% in 2000 and 20% in 1999 due to sales growth throughout the U.S. Comparable store sales declined slightly in the fourth quarter of 2000
20 TIFFANY & CO. AND SUBSIDIARIES
in comparison to strong "pre-millennium" sales in the fourth quarter of 1999, due to widespread deceleration in consumer spending tied to unsettled political, economic and stock market conditions. Sales in the New York flagship store rose 6% in 2000, following a 14% increase in 1999, and represented 12%, 13% and 14% of net sales in 2000, 1999 and 1998. Comparable U.S. branch store sales rose 15% in 2000, following a 22% increase in 1999. Comparable store sales growth in both years was due to an increased number of sales transactions, although in 1999 the average transaction size rose as well. Domestic customers, who account for the largest portion of sales demand, generated most of the comparable store sales growth. Sales to foreign tourists remained unchanged as a percentage of U.S. Retail sales in 2000 after increasing in 1999. The Company added four new U.S. stores in both 2000 and 1999.
International Retail sales increased 15% in 2000 and 27% in 1999. On a constant-exchange-rate basis, International Retail sales increased 14% in 2000 and 17% in 1999. Japan represented 28%, 27% and 27% of net sales in 2000, 1999 and 1998. Total retail sales in Japan, in local currency, rose 13% in both 2000 and 1999, due to comparable store sales growth of 11% in 2000 and 13% in 1999. In 2000, three new department-store boutiques were opened and three older ones were closed while, in 1999, two boutiques were opened and two older ones were closed. In addition, several existing boutiques were renovated and/or expanded over the two-year period. The Company's reported sales and earnings reflect either a translation-related benefit from a strengthening Japanese yen or a detriment from a strengthening U.S. dollar. The average yen rate was stronger than the prior year in both 2000 and 1999; consequently, when translated into U.S. dollars, total Japan sales rose 15% in 2000 and 29% in 1999. The Asia-Pacific region outside Japan represented 7%, 7% and 6% of net sales in 2000, 1999 and 1998. On a constant-exchange-rate basis, comparable store sales in Company-operated locations increased 26% in 2000 following a 36% increase in 1999. The Company opened stores in 2000 in Malaysia, Hong Kong and Korea. Europe represented 4% of net sales in 2000, 1999 and 1998. On a constant-exchange-rate basis, comparable store sales rose 23% in 2000 and 26% in 1999, due to particularly strong growth in London. The Company relocated its Milan store in 2000 and opened a store in Paris in 1999.
The Company's ongoing strategy is to selectively open new Company-operated stores in key U.S. and international markets. The long-term U.S. growth plan is to open an average of three to five new U.S. stores per year in new and/or existing markets. Finalized plans include opening a store in Tampa, Florida and in San Jose, California in 2001 and opening an additional store in Honolulu, Hawaii in 2002. The Company is also renovating and reconfiguring the New York flagship store over a three-year period to increase selling space by 25%. The Company's long-term international expansion plans include opening one to two new locations each year and renovating and/or expanding additional existing locations in Japan, as well as opening several additional locations in other international markets. Finalized plans for 2001 include opening three boutiques and renovating several existing ones in Japan, opening a store in Melbourne, Australia, a store in Sao Paulo, Brazil, a store in Rome and a third store in London.
Direct Marketing sales increased 13% in both 2000 and 1999. Corporate division sales (representing the largest portion of this channel) rose 7% in 2000 and 9% in 1999, primarily due to an increased number of orders. Combined catalog and Internet sales rose 21% in 2000 and 18% in 1999. Catalog mailings and the response rate (number of orders received as a percentage of catalogs mailed) were 25 million and 1.3% in 2000, 26 million and 1.4% in 1999 and 24 million and 1.4% in 1998. The Company currently plans to mail 26 million catalogs in 2001. Internet sales commenced in November 1999 and the Company enhanced that operation in 2000 by increasing the number of products available for purchase and by introducing an on-line wedding gift registry.
GROSS PROFIT
Gross profit as a percentage of net sales increased in both 2000 and 1999. Management attributes the increases to favorable shifts in sales mix, the leverage effect of increased
TIFFANY & CO. AND SUBSIDIARIES 21
sales on fixed costs, selective price increases and product manufacturing/ sourcing efficiencies. The Company's hedging program (see Financial Condition - Market Risk) uses yen put options to stabilize product costs in Japan over the short-term despite exchange rate fluctuations. Also, the Company adjusts its retail prices in Japan periodically to address changes in the yen/dollar relationship and local competitive pricing. Management's ongoing strategy includes implementing selective price adjustments, achieving further product manufacturing/sourcing efficiencies and leveraging its fixed costs in order to maintain the Company's gross margin at, or above, prior year levels.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ("SG&A")
SG&A increased 10% in 2000 and 22% in 1999 primarily due to incremental occupancy, staffing and marketing expenses related to the Company's worldwide expansion program, as well as sales-related variable expenses. In addition, changes in the yen/dollar relationship had the effect of increasing SG&A growth in both 2000 and 1999 when translating yen-denominated expenses into U.S. dollars. The ratio of SG&A to net sales improved in both 2000 and 1999 and management's ongoing objective is to further reduce this ratio by leveraging sales growth against the Company's fixed-expense base.
EARNINGS FROM OPERATIONS
As a result of the above factors, earnings from operations rose 27% in 2000 and 59% in 1999 and the ratio of earnings from operations to net sales improved in both years. On a reportable operating segment basis, the ratio of earnings from operations to net sales improved in each segment in both 2000 and 1999 and were as follows: U.S. Retail was 28%, 24% and 21% in 2000, 1999 and 1998; International Retail was 27%, 25% and 24% in 2000, 1999 and 1998; and Direct Marketing was 14%, 13% and 13% in 2000, 1999 and 1998. The improvements in each segment were due to sales growth, higher gross margin and leveraging fixed expenses.
INTEREST EXPENSE AND FINANCING COSTS
Interest expense rose in both 2000 and 1999 due to increased borrowings related to working capital, as well as incremental interest costs from long-term financings in both 1999 and 1998 and Common Stock repurchases. Based on current plans, management expects interest expense and financing costs to increase in 2001.
OTHER INCOME, NET
Other income, net, which includes interest income and realized and unrealized gains (losses) on investment activities, increased in both 2000 and 1999 due to higher interest income earned on cash and cash equivalents.
PROVISION FOR INCOME TAXES
The Company's effective tax rate was 40.0% in 2000, compared with 41.3% in 1999 and 42.1% in 1998. The declining rates were due to shifts in the geographical business mix toward lower-tax jurisdictions.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, 1999 and 2000, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS No. 133"), SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of SFAS No. 133" and SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities - An Amendment of SFAS No. 133." These statements outline the accounting treatment for all derivative activities, which requires that an entity recognize all derivative instruments as either assets or liabilities on its balance sheet at their fair value. Gains and losses resulting from changes in the fair value of derivatives are recorded each period in current or comprehensive earnings, depending on whether a derivative is designated as part of an effective hedge transaction and, if it is, the type of hedge transaction. Gains and losses on derivative instruments reported in comprehensive earnings will be reclassified to earnings in the period in which earnings are affected by the hedged item. On February 1, 2001, the Company adopted SFAS No. 133 and its application had no significant impact on its financial position, earnings or cash flows.
22 TIFFANY & CO. AND SUBSIDIARIES
In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB 101") which provides guidelines in applying generally accepted accounting principles to certain revenue recognition issues. The Company adopted SAB 101 in the fourth quarter of the year ended January 31, 2001, as of the beginning of 2000, and its application had no significant impact on its financial position, earnings or cash flows.
In July 2000, the EITF reached a consensus on Issue 00-10, and determined that all fees billed related to shipping and handling should be classified as revenue. Subsequently, the EITF determined that the classification of shipping and handling costs is an accounting policy decision that should be disclosed. If handling costs are significant and not included in cost of sales, the amount of such costs and the line item on the income statement that includes such amount should also be disclosed. The Company adopted Issue 00-10 in the fourth quarter of the year ended January 31, 2001 and its application had no impact on its financial position, earnings or cash flows.
EURO CONVERSION
On January 1, 1999, 11 of the 15 member countries of the European Economic and Monetary Union converted to a common currency, known as the euro, and established fixed conversion rates between their existing currencies ("legacy currencies") and the euro. The euro is traded on currency exchanges and may be used in business transactions. The conversion to the euro eliminates currency-exchange-rate risk between the member countries. On January 1, 2002, new euro-denominated bills and coins will be issued by participating countries and legacy currencies will be withdrawn from circulation. The Company continues to address the issues raised by the euro currency conversion. These issues include the need to adapt and modify information technology systems, business processes and equipment to accommodate euro-denominated transactions. The Company's policy is to maintain uniform pricing among the member countries and, as a result, management does not anticipate that the conversion to the euro will significantly impact the financial position, earnings or cash flows of the Company's European businesses.
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity needs have been, and are expected to remain, primarily a function of its seasonal working capital requirements and capital expenditure needs, which have increased due to the Company's expansion. Management believes that the Company's financial condition at January 31, 2001 provides sufficient resources to support current business activities and planned expansion in distribution and internal manufacturing.
The Company achieved net cash inflows from operating activities of $109,177,000 in 2000, $230,351,000 in 1999 and $80,178,000 in 1998. In 2000, the inflow was below prior year due to increased inventory purchases of finished goods and raw materials, partially offset by increased net earnings. In 1999, the inflow was greater than prior year due to increased net earnings and a decreased use of working capital (current assets less current liabilities).
Working capital and the corresponding current ratio (current assets divided by current liabilities) were $667,647,000 and 3.0:1 at January 31, 2001 compared with $610,685,000 and 3.2:1 at January 31, 2000.
Accounts receivable at January 31, 2001 were 10% lower than at January 31, 2000. Lower than expected sales growth in the fourth quarter of 2000 and the effect of discontinued wholesale trade sales resulted in a decrease in receivables.
Inventories (which represent the largest portion of assets) at January 31, 2001 were 29% higher than at January 31, 2000. An increase in finished goods was due to new stores, new product introductions and broadened product offerings, especially in the engagement jewelry category, as well as the effect of lower-than-expected sales growth in the fourth quarter of 2000. Raw materials increased to support the Company's internal jewelry manufacturing initiative. In addition, management has seen a tightening in the market supply of high-quality diamonds and, therefore, the Company increased its purchases of such diamonds in the second half of 2000 to ensure adequate inventory position in the future. The Company's ongoing objectives
TIFFANY & CO. AND SUBSIDIARIES 23
are: to refine worldwide replenishment systems; to focus on the specialized disciplines of product development, category management and sales demand forecasting; to improve presentation and management of display inventories in each store; and to improve warehouse management and supply-chain logistics.
Capital expenditures were $108,382,000 in 2000, $171,237,000 in 1999 and $62,821,000 in 1998. In all three years, capital expenditures included costs related to new-store openings, renovations, expansions and/or relocations of stores, expansion and/or renovation of administrative, distribution and manufacturing facilities and investments in new systems. In addition, expenditures in 2000 included the costs related to construction of a jewelry manufacturing facility in Rhode Island that is expected to commence production in spring 2001. The largest portion of expenditures in 1999 was for the Company's cash purchase of the land and building housing its New York flagship store. The increment between the cost of leasing and the cost of ownership does not have a significant impact upon earnings. In January 2001, the Company began a project to renovate and reconfigure this flagship store over a three-year period in order to increase the total sales area by approximately 25%, as well as to provide additional space for customer service, customer hospitality and special exhibitions. The Company estimates that the overall cost of the project will be approximately $71,000,000. In January 2001, the Company notified the lessor of its New Jersey customer service/distribution center and office facility that it exercised its irrevocable purchase right included in the lease for approximately $40,706,000. This purchase is expected to be completed in January 2002. Based on current plans, management expects that capital expenditures in 2001 will be approximately $195,000,000, due to costs related to the opening, renovation and expansion of store, distribution and office facilities, investments in new systems and the purchase of the Company's New Jersey customer service/distribution center and office facility.
In July 1999, the Company made a strategic investment in Aber Diamond Corporation ("Aber"), previously known as Aber Resources, Ltd., by purchasing 8 million shares of its common stock at a cost of $70,636,000, which represented approximately 14.9% of Aber's outstanding shares. Aber holds a 40% interest in the Diavik Diamonds Project in Canada's Northwest Territories, an operation being developed to mine gem-quality reserves. Production is expected to commence in 2003. In addition, prior to the start of production, the Company will form a joint venture and enter into a diamond-purchase agreement with Aber. It is expected that this commercial relationship will enable the Company to secure a considerable portion of its future diamond needs.
Cash dividends were $21,820,000 in 2000, $16,083,000 in 1999 and $11,897,000 in 1998. In both May 2000 and 1999, the Board of Directors declared an increase of 33% in the quarterly dividend rate on common shares, which became effective in July 2000 and 1999. The dividend payout ratio (dividends as a percentage of net earnings) was 11% in both 2000 and 1999 and 13% in 1998. The Company expects to continue to retain the majority of its earnings to support its business and future expansion.
In September 2000, the Board of Directors extended the Company's original stock repurchase program until November 2003. The program was initially authorized in November 1997 for the repurchase of up to $100,000,000 of the Company's Common Stock in the open market over a three-year period and would have expired in November 2000. As extended, the program authorizes future repurchases of up to $100,000,000 of the Company's Common Stock in the open market. The timing and actual number of shares repurchased will depend on a variety of factors such as price and other market conditions. The Company repurchased and retired 465,000 shares in 2000 at an aggregate cost of $13,319,000, or an average cost of $28.64 per share; none in 1999; and repurchased and retired 3,194,400 shares in 1998 at an aggregate cost of $30,035,000, or an average cost of $9.40 per share. On a cumulative basis, the Company has repurchased 4,559,400 shares at a cost of $52,026,000, or an average cost of $11.41 per share. As of January 31, 2001, $97,887,000 remains available for future share repurchases.
In July 1999, the Company issued 2,900,000 shares of its Common Stock at a price of $24.6876 per share, resulting in net proceeds of $71,426,000. The net proceeds from the issuance were added to the Company's working capital and have been used to support strategic initiatives and ongoing business expansion.
24 TIFFANY & CO. AND SUBSIDIARIES
The Company's net-debt (short-term borrowings plus long-term debt less cash and cash equivalents) and the corresponding ratio of net-debt as a percentage of total capital (net-debt plus stockholders' equity) were $75,322,000 and 8% at January 31, 2001, compared with $53,291,000 and 7% at January 31, 2000.
In October 1999, the Company entered into a yen 5,500,000,000 five-year term loan agreement, bearing interest at the six-month Japanese LIBOR plus 50 basis points, adjusted every six months (the "floating rate"). The proceeds from this loan were used to reduce short-term indebtedness in Japan. At the same time, the Company entered into a yen 5,500,000,000 five-year interest rate swap agreement whereby the Company pays a fixed rate of 1.815% and receives the floating rate.
In December 1998, the Company, in private transactions with various institutional lenders, issued, at par, $60,000,000 principal amount 6.90% Series A Senior Notes Due 2008 and $40,000,000 principal amount 7.05% Series B Senior Notes Due 2010. The proceeds of these new issuances were used by the Company as working capital and to refinance a portion of outstanding short-term indebtedness under the Company's revolving credit facility.
The Company maintains a $160,000,000 multicurrency revolving credit facility (the "Credit Facility") with five banks. The Credit Facility entitles the Company to borrow $31,250,000 on a pro-rata basis from each of three banks, $30,000,000 from one bank and $36,250,000 from an agent bank. All borrowings are at interest rates based on a prime rate or a reserve-adjusted LIBOR and are affected by local borrowing conditions. The Credit Facility expires on June 30, 2002. Management anticipates that internally-generated cash flows and funds available under the revolving credit facility will be sufficient to support the Company's planned 2001 worldwide business expansion and seasonal working capital increases that are typically required during the third and fourth quarters of the year.
MARKET RISK
The Company is exposed to market risk from fluctuations in foreign currency exchange rates and interest rates, which could impact its consolidated financial position, results of operations and cash flows. The Company manages its exposure to market risk through its regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. The Company uses derivative financial instruments as risk management tools and not for trading or speculative purposes, and does not maintain such instruments that may expose the Company to significant market risk.
The Company uses foreign currency-purchased put options and, to a lesser extent, forward foreign-exchange contracts to minimize the impact of a significant strengthening of the U.S. dollar on foreign currency-denominated transactions. Gains or losses on these instruments substantially offset losses or gains on the assets, liabilities and transactions being hedged. The Company's primary net foreign currency exposure is the Japanese yen. Management does not foresee nor expect any significant changes in foreign currency exposure in the near future.
The fair value of foreign currency-purchased put options is sensitive to changes in foreign currency exchange rates. The unrealized gain on the Company's purchased put options amounted to $5,503,000 at January 31, 2001. Unrealized gains and losses from foreign currency exchange contracts are defined as the difference between the contract rate at the inception date and the current market exchange rate. If the market yen-exchange rates are stronger than the contracted exchange rates, the Company will allow the option to expire, limiting its loss to the cost of the option contract. At January 31, 2001 and 2000, a 10% appreciation in yen-exchange rates from the prevailing market rates would result in an unrealized loss equal to the cost of option contracts. At January 31, 2001 and 2000, a 10% depreciation in yen-exchange rates from the prevailing market rates would result in additional unrealized gains of $8,746,000 and $1,013,000.
TIFFANY & CO. AND SUBSIDIARIES 25
The Company also manages its portfolio of fixed-rate debt to reduce its exposure to interest rate changes. The fair value of the Company's fixed-rate long-term debt is sensitive to interest rate changes. Interest rate changes would result in gains (losses) in the market value of this debt due to differences between market interest rates and rates at the inception of the debt obligation. Based on a hypothetical immediate 100 basis point increase in interest rates at January 31, 2001 and 2000, the market value of the Company's fixed-rate long-term debt would decrease by $10,996,000 and $11,835,000. Based on a hypothetical immediate 100 basis point decrease in interest rates at January 31, 2001 and 2000, the market value of the Company's fixed-rate long-term debt would increase by $11,938,000 and $12,941,000.
The Company uses an interest rate swap to manage its yen-denominated floating rate long-term debt in order to reduce the impact of interest rate changes on earnings and cash flows and to lower overall borrowing costs. The Company monitors its interest rate risk on the basis of changes in fair value. Assuming a 10% downward shift in interest rates at January 31, 2001 and 2000, the potential loss for changes in fair value of the interest rate swap and the underlying debt would have been $10,000 and $721,000.
SEASONALITY
As a jeweler and specialty retailer, the Company's business is seasonal in nature, with the fourth quarter typically representing a proportionally greater percentage of annual sales, earnings from operations and cash flow. Management expects such seasonality to continue.
RISK FACTORS
This document contains certain "forward-looking statements" concerning the Company's objectives and expectations with respect to store openings, catalog mailings, retail prices, gross profit, expenses, inventory performance, capital expenditures and cash flow. In addition, management makes other forward-looking statements from time to time concerning objectives and expectations. As a jeweler and specialty retailer, the Company's success in achieving its objectives and expectations is partially dependent upon economic conditions, competitive developments and consumer attitudes. However, certain assumptions are specific to the Company and/or the markets in which it operates. The following assumptions, among others, are "risk factors" which could affect the likelihood that the Company will achieve the objectives and expectations communicated by management: (i) that sales in Japan will not decline substantially; (ii) that there will not be a substantial adverse change in the exchange relationship between the Japanese yen and the U.S. dollar; (iii) that the Company's commercial relationship with Mitsukoshi, Ltd. ("Mitsukoshi") and Mitsukoshi's ability to continue as a leading department store operator in Japan will continue; (iv) that Mitsukoshi and other department store operators in Japan, in the face of declining or stagnant department store sales, will not close or consolidate stores in which TIFFANY & CO. boutiques are located; (v) that low or negative growth in the economy or in the financial markets, particularly in the U.S. and Japan, will not occur and reduce discretionary spending on goods that are, or are perceived to be, "luxuries"; (vi) that existing product supply arrangements, including license arrangements with third-party designers Elsa Peretti and Paloma Picasso, will continue; (vii) that the wholesale market for high-quality cut diamonds will provide continuity of supply and pricing; (viii) that the investment in Aber achieves its financial and strategic objectives; (ix) that new stores and other sales locations can be leased or otherwise obtained on suitable terms in desired markets and that construction can be completed on a timely basis; (x) that new systems, particularly for inventory management, can be successfully integrated into the Company's operations; (xi) that no downturn in consumer spending will occur during the fourth quarter of any year; and (xii) that warehousing and distribution productivity and capacity can be further improved to support the Company's worldwide distribution requirements.
26 TIFFANY & CO. AND SUBSIDIARIES
REPORT OF MANAGEMENT
The Company's consolidated financial statements were prepared by management, who are responsible for their integrity and objectivity. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and, as such, include amounts based on management's best estimates and judgments.
Management is further responsible for maintaining a system of internal accounting control designed to provide reasonable assurance that the Company's assets are adequately safeguarded and that the accounting records reflect transactions executed in accordance with management's authorization. The system of internal control is continually reviewed and is augmented by written policies and procedures, the careful selection and training of qualified personnel and a program of internal audit.
The consolidated financial statements have been audited by PricewaterhouseCoopers LLP, Independent Accountants. Their report is shown on this page.
The Audit Committee of the Board of Directors, which is composed solely of independent directors, meets regularly to discuss specific accounting, financial reporting and internal control matters. Both the independent accountants and the internal auditors have full and free access to the Audit Committee. Each year the Audit Committee selects the firm that is to perform audit services for the Company.
/s/ WILLIAM R. CHANEY ------------------------------ William R. Chaney Chairman of the Board /s/ MICHAEL J. KOWALSKI ------------------------------ Michael J. Kowalski President and Chief Executive Officer /s/ JAMES N. FERNANDEZ ------------------------------ James N. Fernandez Executive Vice President and Chief Financial Officer |
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and
Board of Directors of Tiffany & Co.
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of earnings, stockholders' equity and cash flows present fairly, in all material respects, the financial position of Tiffany & Co. and Subsidiaries at January 31, 2001 and 2000 and the results of their operations and their cash flows for each of the three years in the period ended January 31, 2001, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP --------------------------------- PricewaterhouseCoopers LLP New York, New York February 28, 2001 |
TIFFANY & CO. AND SUBSIDIARIES 27
CONSOLIDATED STATEMENTS OF EARNINGS
Years Ended January 31,
--------------------------------------------
(in thousands, except per share amounts) 2001 2000 1999
-----------------------------------------------------------------------------------------------
Net sales $1,668,056 $1,471,690 $1,177,929
Cost of sales 719,642 650,010 552,330
--------------------------------------------
Gross profit 948,414 821,680 625,599
Selling, general and administrative expenses 621,018 564,797 464,477
--------------------------------------------
Earnings from operations 327,396 256,883 161,122
Interest expense and financing costs 16,207 15,038 9,326
Other income, net 6,452 6,213 3,852
--------------------------------------------
Earnings before income taxes 317,641 248,058 155,648
Provision for income taxes 127,057 102,379 65,586
--------------------------------------------
Net earnings $ 190,584 $ 145,679 $ 90,062
============================================
Net earnings per share:
Basic $ 1.31 $ 1.02 $ 0.64
============================================
Diluted $ 1.26 $ 0.97 $ 0.63
============================================
Weighted average number of common shares:
Basic 145,493 142,968 139,860
Diluted 151,816 149,666 143,936
|
See Notes to Consolidated Financial Statements.
28 TIFFANY & CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
January 31,
------------------------------
(in thousands, except per share amount) 2001 2000
-------------------------------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 195,613 $ 216,936
Accounts receivable, less allowances of $7,973 and $9,716 106,988 119,356
Inventories, net 651,717 504,800
Deferred income taxes 28,069 30,212
Prepaid expenses and other current assets 22,458 20,357
------------------------------
Total current assets 1,004,845 891,661
Property, plant and equipment, net 423,244 322,400
Deferred income taxes 7,282 6,235
Other assets, net 132,969 123,266
------------------------------
$ 1,568,340 $ 1,343,562
==============================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 28,778 $ 20,646
Obligation under capital lease 40,747 --
Accounts payable and accrued liabilities 189,531 176,101
Income taxes payable 42,085 53,954
Merchandise and other customer credits 36,057 30,275
------------------------------
Total current liabilities 337,198 280,976
Long-term debt 242,157 249,581
Postretirement/employment benefit obligations 26,134 23,165
Other long-term liabilities 37,368 32,764
Commitments and contingencies
Stockholders' equity:
Common Stock, $0.01 par value; authorized 240,000 shares,
issued and outstanding 145,897 and 144,952 1,459 1,450
Additional paid-in capital 318,794 293,173
Retained earnings 630,076 473,819
Accumulated other comprehensive loss:
Foreign currency translation adjustments (24,846) (11,366)
------------------------------
Total stockholders' equity 925,483 757,076
------------------------------
$ 1,568,340 $ 1,343,562
==============================
|
See Notes to Consolidated Financial Statements.
TIFFANY & CO. AND SUBSIDIARIES 29
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended January 31,
-------------------------------------------
(in thousands) 2001 2000 1999
------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 190,584 $ 145,679 $ 90,062
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 46,735 41,543 29,652
Loss on equity investments 1,168 193 --
Provision for uncollectible accounts 1,277 1,442 1,996
Reduction in reserve for product return -- -- (2,580)
Provision for inventories 17,666 3,507 6,015
Tax benefit from exercise of stock options 12,401 19,632 7,082
Deferred income taxes 782 (8,980) (618)
Loss on disposal of fixed assets 773 17 435
Provision for postretirement/employment benefits 2,970 1,626 1,418
Changes in assets and liabilities:
Accounts receivable 10,235 (12,742) (6,179)
Inventories (182,041) (13,398) (81,891)
Prepaid expenses and other current assets (3,913) (1,065) 1,865
Other assets, net (5,738) (10,137) (4,869)
Accounts payable 11,044 (3,860) 10,611
Accrued liabilities 6,170 37,612 10,576
Income taxes payable (10,897) 20,595 8,105
Merchandise and other customer credits 5,875 7,349 4,210
Other long-term liabilities 4,086 1,338 4,288
-------------------------------------------
Net cash provided by operating activities 109,177 230,351 80,178
-------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Equity investments (7,903) (70,636) --
Capital expenditures (108,382) (171,237) (62,821)
Acquisitions, net of liabilities assumed -- (7,031) (8,150)
Proceeds from lease incentives 3,761 5,316 3,952
-------------------------------------------
Net cash used in investing activities (112,524) (243,588) (67,019)
-------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of Common Stock -- 71,426 --
Proceeds from (repayment of) short-term borrowings, net 9,840 (77,676) 15
Proceeds from issuance of long-term debt -- 48,818 100,000
Repurchase of Common Stock (13,319) -- (30,035)
Proceeds from exercise of stock options 10,741 16,380 11,073
Cash dividends on Common Stock (21,820) (16,083) (11,897)
-------------------------------------------
Net cash (used) provided by financing activities (14,558) 42,865 69,156
-------------------------------------------
Effect of exchange rate changes on
cash and cash equivalents (3,418) (1,285) (974)
-------------------------------------------
Net (decrease) increase in cash and cash equivalents (21,323) 28,343 81,341
Cash and cash equivalents at beginning of year 216,936 188,593 107,252
-------------------------------------------
Cash and cash equivalents at end of year $ 195,613 $ 216,936 $ 188,593
===========================================
|
See Notes to Consolidated Financial Statements.
30 TIFFANY & CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Accumulated
Total Other Common Stock Additional
Stockholders' Retained Comprehensive ---------------------- Paid-in
(in thousands) Equity Earnings Loss Shares Amount Capital
-----------------------------------------------------------------------------------------------------------------------------------
Balances, January 31, 1998 $ 443,724 $ 293,689 $(18,399) 139,720 $ 1,398 $ 167,036
Exercise of stock options 11,073 -- -- 2,280 22 11,051
Tax benefit from exercise of stock options 7,082 -- -- -- -- 7,082
Issuance of Common Stock
under the Employee Profit Sharing
and Retirement Savings Plan 1,400 -- -- 126 2 1,398
Purchase and retirement of Common Stock (30,035) (27,631) -- (3,194) (32) (2,372)
Cash dividends on Common Stock (11,897) (11,897) -- -- -- --
Foreign currency translation adjustments 5,044 -- 5,044 -- -- --
Net earnings 90,062 90,062 -- -- -- --
----------------------------------------------------------------------------------
Balances, January 31, 1999 516,453 344,223 (13,355) 138,932 1,390 184,195
Exercise of stock options 16,380 -- -- 3,006 30 16,350
Tax benefit from exercise of stock options 19,632 -- -- -- -- 19,632
Issuance of Common Stock
under the Employee Profit Sharing
and Retirement Savings Plan 1,600 -- -- 114 1 1,599
Issuance of Common Stock,
net of issuance costs of $168 71,426 -- -- 2,900 29 71,397
Cash dividends on Common Stock (16,083) (16,083) -- -- -- --
Foreign currency translation adjustments 1,989 -- 1,989 -- -- --
Net earnings 145,679 145,679 -- -- -- --
----------------------------------------------------------------------------------
BALANCES, JANUARY 31, 2000 757,076 473,819 (11,366) 144,952 1,450 293,173
Exercise of stock options 10,741 -- -- 1,307 13 10,728
Tax benefit from exercise of stock options 12,401 -- -- -- -- 12,401
Issuance of Common Stock
under the Employee Profit Sharing
and Retirement Savings Plan 3,300 -- -- 103 1 3,299
Purchase and retirement of Common Stock (13,319) (12,507) -- (465) (5) (807)
Cash dividends on Common Stock (21,820) (21,820) -- -- -- --
Foreign currency translation adjustments (13,480) -- (13,480) -- -- --
Net earnings 190,584 190,584 -- -- -- --
----------------------------------------------------------------------------------
BALANCES, JANUARY 31, 2001 $ 925,483 $ 630,076 $(24,846) 145,897 $ 1,459 $ 318,794
==================================================================================
|
Comprehensive earnings is as follows: 2001 2000 1999
-------------------------------------
Net earnings $ 190,584 $ 145,679 $ 90,062
Foreign currency translation adjustments (13,480) 1,989 5,044
-------------------------------------
$ 177,104 $ 147,668 $ 95,106
=====================================
|
See Notes to Consolidated Financial Statements.
TIFFANY & CO. AND SUBSIDIARIES 31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FISCAL YEAR
The Company's fiscal year ends on January 31 of the following calendar year. References to years relate to fiscal years rather than calendar years.
BASIS OF REPORTING
The consolidated financial statements include the accounts of Tiffany & Co. and all majority-owned domestic and foreign subsidiaries (the "Company"). The equity method of accounting is used for investments in which the Company has significant influence, but not a controlling interest. Intercompany accounts, transactions and profits have been eliminated in consolidation. These statements have been prepared in accordance with accounting principles generally accepted in the United States of America that require management to make certain estimates and assumptions that affect amounts reported and disclosed in the financial statements and related notes. The most significant estimates include valuation of inventories, provisions for income taxes and uncollectible accounts and the recoverability of non-consolidated investments and long-lived assets. Actual results could differ from these estimates. Periodically, the Company reviews all significant estimates and assumptions affecting the financial statements and, when necessary, records the effect of any adjustments.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents are stated at cost plus accrued interest, which approximates fair value. Cash equivalents include highly liquid investments with an original maturity of three months or less and consist of time deposits with a number of U.S. and non-U.S. commercial banks with high credit ratings. The Company's policy restricts the amounts invested in any one bank.
RECEIVABLES AND FINANCE CHARGES
The Company's domestic and international presence and large, diversified customer base serve to limit overall credit risk. The Company maintains reserves for potential credit losses and, historically, such losses, in the aggregate, have not exceeded expectations.
Finance charges on retail revolving charge accounts are not material and are accounted for as a reduction of Selling, general and administrative expenses.
INVENTORIES
Inventories are valued at the lower of cost or market. Domestic and foreign branch inventories are valued using the LIFO (last-in, first-out) method. Inventories held by foreign subsidiaries are valued using the FIFO (first-in, first-out) method.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of their estimated useful lives or the related lease terms. Maintenance and repair costs are charged to earnings while expenditures for major renewals and improvements are capitalized. Upon the disposition of property, plant and equipment, the accumulated depreciation is deducted from the original cost and any gain or loss is reflected in current earnings.
GOODWILL
Goodwill represents the excess of cost over fair value of net assets acquired and is amortized over 20 years using the straight-line method. At January 31, 2001 and 2000, unamortized goodwill amounts of $10,884,000 and $10,628,000 were included in Other assets, net.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company periodically reviews its long-lived assets for impairment by comparing the carrying values of the assets with their estimated future undiscounted cash flows. If it is determined that an impairment loss has occurred, the loss would be recognized during that period. The impairment loss is calculated as the difference between asset carrying values and the present value of estimated net cash flows or comparable market values, giving consideration to recent operating performance and pricing trends. In 2000, 1999 and 1998, there were no significant impairment losses related to long-lived assets.
32 TIFFANY & CO. AND SUBSIDIARIES
FINANCIAL INSTRUMENTS
The Company manages a foreign currency hedging program intended to reduce the Company's risk in foreign currency-denominated (primarily yen) transactions. To minimize the potentially negative impact of a significant strengthening of the U.S. dollar against the yen, the Company (generally on a regular basis) purchases foreign currency put options and enters into forward foreign-exchange contracts that are designated as hedges of commitments to purchase merchandise and settle liabilities in foreign currencies. Unrealized gains and losses on these foreign-exchange contracts are initially deferred and later recognized in earnings or as adjustments to inventories and liabilities when the related transactions are settled. The Company does not use derivative financial instruments for trading or speculative purposes.
PREOPENING COSTS
Costs associated with the opening of new retail stores are expensed in the period incurred.
ADVERTISING COSTS
Media and production costs for print advertising are expensed as incurred, while catalog costs are expensed upon mailing. Media and production costs associated with television advertising are expensed when the advertising first takes place. Advertising costs, which include media, production and catalogs, totaled $65,400,000, $57,300,000 and $52,500,000 in 2000, 1999 and 1998.
INCOME TAXES
Income taxes are accounted for by the asset and liability method, which recognizes deferred tax assets and liabilities by applying statutory tax rates in effect in the years in which the differences are expected to reverse to differences between the book and tax bases of existing assets and liabilities. The Company, its domestic subsidiaries and its foreign branches file a consolidated Federal income tax return.
FOREIGN CURRENCY
The functional currency of the Company's foreign subsidiaries is the applicable local currency. Assets and liabilities are translated into U.S. dollars using the current exchange rates in effect at the balance sheet date, while revenues and expenses are translated at the average exchange rates during the period. The resulting translation adjustments are recorded as a component of other comprehensive earnings within stockholders' equity. Gains and losses resulting from foreign currency transactions have not been significant and are included in Other income, net.
REVENUE RECOGNITION
Sales are recognized at the "point of sale," which occurs when merchandise is sold in an "over-the-counter" transaction or upon receipt by a customer. Sales are reported net of returns. The Company maintains a reserve for potential product returns and it records, as a reduction to sales, its provision for estimated product returns, which is determined based on historical experience. In 2000, 1999 and 1998, the largest portion of the Company's sales was denominated in U.S. dollars.
SHIPPING AND HANDLING FEES AND COSTS
Fees billed to customers related to shipping and handling are accounted for as revenue and included in net sales. Shipping and handling costs are included as a component of cost of sales.
STOCK-BASED COMPENSATION
Employee stock options are accounted for under the intrinsic value method, which measures compensation cost as the excess, if any, of the quoted market price of the stock at grant date over the amount an employee must pay to acquire the stock. The Company makes pro forma disclosures of net earnings and earnings per share as if the fair-value-based method of accounting had been applied as required by Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123").
EARNINGS PER SHARE
Basic earnings per share is computed as net earnings divided by the weighted average number of common shares outstanding for the period. Diluted earnings per share includes the dilutive effect of the assumed exercise of stock options.
TIFFANY & CO. AND SUBSIDIARIES 33
STOCK SPLITS
On May 18, 2000 and May 20, 1999, the Board of Directors declared a two-for-one split of the Company's Common Stock, effected in the form of a share distribution (stock dividend) paid on July 20, 2000 and July 21,1999 to stockholders of record on June 20, 2000 and June 23, 1999. Shares, per share and stock option data have been retroactively adjusted to reflect the splits.
RECLASSIFICATIONS
Certain reclassifications were made to prior years' consolidated financial statement amounts and related note disclosures to conform with the current year's presentation.
NEW ACCOUNTING STANDARDS
In June 1998, 1999 and 2000, the Financial Accounting Standards Board ("FASB") issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS No. 133"), SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of SFAS No. 133" and SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities - An amendment of SFAS No. 133." These statements outline the accounting treatment for all derivative activities, which requires that an entity recognize all derivative instruments as either assets or liabilities on its balance sheet at their fair value. Gains and losses resulting from changes in the fair value of derivatives are recorded each period in current or comprehensive earnings, depending on whether a derivative is designated as part of an effective hedge transaction and, if it is, the type of hedge transaction. Gains and losses on derivative instruments reported in comprehensive earnings will be reclassified to earnings in the period in which earnings are affected by the hedged item. On February 1, 2001, the Company adopted SFAS No. 133 and its application had no significant impact on its financial position, earnings or cash flows.
In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB 101"), which provides guidelines in applying generally accepted accounting principles to certain revenue recognition issues. The Company adopted SAB 101 in the fourth quarter of the year ended January 31, 2001, as of the beginning of 2000, and its application had no significant impact on its financial position, earnings or cash flows.
In July 2000, the Emerging Issues Task Force ("EITF") reached a consensus on Issue 00-10, "Accounting for Shipping and Handling Fees and Costs," and determined that all fees billed related to shipping and handling should be classified as revenue. Subsequently, the EITF determined that the classification of shipping and handling costs is an accounting policy decision that should be disclosed. During the years ended January 31, 2001, 2000 and 1999, the Company reclassified from Selling, general and administrative expenses $10,217,000, $9,833,000 and $8,685,000 of shipping and handling fees to revenue and $46,062,000, $41,998,000 and $37,383,000 of handling costs to cost of sales.
B. ACQUISITIONS AND DISPOSITIONS
In January 2001, wholesale sales of fragrance products were discontinued in the U.S. and most international markets; in July 2000, wholesale sales of jewelry and non-jewelry items were discontinued in Europe; in January 2000, wholesale sales of jewelry and other non-jewelry items were discontinued in the U.S. In connection with these decisions, the Company established product return reserves, which had the effect of reducing gross profit by $9,364,000, and recorded a charge of $3,146,000 to Selling, general and administrative expenses, primarily relating to the write-off of unrecoverable store fixtures maintained by such customers. As of January 31, 2001, $3,132,000 of estimated product return reserves remain for these operations.
In March 1999, the Company acquired the business of a TIFFANY & CO. retail boutique previously operated by Mitsukoshi, Ltd. ("Mitsukoshi"), a related party and leading Japanese department store group, for $7,031,000. In February 1998, the Company acquired substantially all of the assets and assumed certain liabilities of another TIFFANY & CO. retail boutique previously operated by Mitsukoshi for $8,150,000 plus contingent payments based on operating performance over a five-year period. These acquisitions were accounted for under the purchase
34 TIFFANY & CO. AND SUBSIDIARIES
method and, accordingly, the assets and liabilities have been recorded at their estimated fair values at the date of acquisition. The excess of the purchase price over the estimated fair values of the net assets acquired has been recorded as goodwill.
C. INVESTMENTS
In February 2000, the Company announced the acquisition of an approximate 5.4% equity interest in Della.com, Inc. ("Della"), a provider of on-line wedding gift registry services. Immediately thereafter, the Company entered into a Gift Registry Service Agreement, whereby the Company agreed to offer products through Della's site and whereby Della agreed to develop an on-line wedding gift registry for the Company. In April 2000, Della merged with and into Wedcom Inc. with the consequence that the Company's equity interest in Della was converted to an approximate 2.7% interest in Wedcom Inc., assuming the conversion of all outstanding preferred shares to common. The Company is accounting for this investment in accordance with the cost method as provided in Accounting Principles Board Opinion No. 18, as amended.
In July 1999, the Company made a strategic investment in Aber Diamond Corporation ("Aber"), previously known as Aber Resources Ltd., a publicly-traded company headquartered in Canada, by purchasing 8 million shares of its common stock at a cost of $70,636,000, which represented approximately 14.9% of Aber's outstanding shares. Aber holds a 40% interest in the Diavik Diamonds Project in Canada's Northwest Territories, an operation being developed to mine gem-quality diamond reserves. Production is expected to commence during the year ending January 31, 2004. On January 31, 2001 and 2000, the Company's investment had aggregate values of $69,500,000 and $46,000,000. This investment is included in Other assets, net and has been allocated between the Company's interest in the net book value of Aber, $20,203,000 and $21,446,000 at January 31, 2001 and 2000, and the mineral rights obtained, $49,190,000 at January 31, 2001 and 2000. The amount allocated to the Company's interest in the net book value of Aber is being accounted for under the equity method based upon the Company's significant influence including representation on Aber's Board of Directors. The Company's share of Aber's results from operations has been included in Other income, net and amounted to losses of $1,243,000 and $193,000 in 2000 and 1999. Depletion of the mineral rights will be recorded as a charge to cost of sales based on the projected units of production method and will commence once production has started. In addition, prior to the start of production, the Company will form a joint venture with Aber and enter into a diamond purchase agreement whereby the Company shall have the obligation to purchase, subject to the Company's quality standards, a minimum of $50,000,000 of diamonds per year for 10 years. It is expected that this commercial relationship will enable the Company to secure a considerable portion of its future diamond needs.
D. SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental cash flow information:
Years Ended January 31,
--------------------------------------
(in thousands) 2001 2000 1999
----------------------------------------------------------------------------
Cash paid during the year for:
Interest $ 15,487 $14,052 $ 7,806
======================================
Income taxes $121,019 $67,451 $47,625
======================================
|
Details of businesses acquired in purchase transactions:
Years Ended January 31,
--------------------------------------
(in thousands) 2001 2000 1999
----------------------------------------------------------------------------
Fair value of assets acquired $ -- $ 7,048 $ 12,302
Less: liabilities assumed -- (17) (4,152)
--------------------------------------
Net cash paid for acquisitions $ -- $ 7,031 $ 8,150
======================================
|
Supplemental Noncash Investing and Financing Activities:
Years Ended January 31,
--------------------------------------
(in thousands) 2001 2000 1999
----------------------------------------------------------------------------
Issuance of Common Stock
under the Employee
Profit Sharing and
Retirement Savings Plan $ 3,300 $ 1,600 $ 1,400
======================================
Capital Lease $40,747 $ -- $ --
======================================
|
TIFFANY & CO. AND SUBSIDIARIES 35
E. INVENTORIES
January 31,
---------------------------
(in thousands) 2001 2000
--------------------------------------------------
Finished goods $ 510,888 $ 438,499
Raw materials 87,207 43,278
Work-in-process 56,636 25,648
---------------------------
654,731 507,425
Reserves (3,014) (2,625)
---------------------------
$ 651,717 $ 504,800
===========================
|
LIFO-based inventories at January 31, 2001 and 2000 were $531,936,000 and $377,588,000 with the current cost exceeding the LIFO inventory value by $15,942,000 and $13,492,000. The LIFO valuation method had the effect of decreasing earnings per diluted share by $0.01 for the year ended January 31, 2001, had the effect of increasing earnings per diluted share by $0.01 for the year ended January 31, 2000, and had no effect on earnings per diluted share for the year ended January 31, 1999.
F. PROPERTY, PLANT AND EQUIPMENT
In January 2001, the Company notified the lessor of its New Jersey customer service/distribution center and office facility that it exercised its irrevocable purchase right included in the lease. This purchase is expected to be completed in January 2002. In January 2000, the Company purchased land for a manufacturing facility in Rhode Island. In November 1999, the Company purchased the land and building housing its flagship store at Fifth Avenue and 57th Street, New York City.
January 31,
---------------------------
(in thousands) 2001 2000
-----------------------------------------------------------
Land $ 38,998 $ 38,998
Buildings 63,457 62,025
Leasehold improvements 216,086 184,447
Capital leases 42,034 --
Construction-in-progress 33,747 7,418
Office equipment 186,757 158,556
Machinery and equipment 34,744 23,077
---------------------------
615,823 474,521
Accumulated depreciation
and amortization (192,579) (152,121)
---------------------------
$ 423,244 $ 322,400
===========================
|
The provision for depreciation and amortization for the years ended January 31, 2001, 2000 and 1999 was $47,448,000, $41,161,000 and $29,347,000.
G. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
January 31,
------------------------
(in thousands) 2001 2000
--------------------------------------------------------
Accounts payable - trade $ 73,365 $ 61,788
Accrued compensation
and commissions 41,947 33,018
Accrued sales and
withholding taxes 13,212 14,360
Other 61,007 66,935
------------------------
$189,531 $176,101
========================
|
H. EARNINGS PER SHARE
The following table summarizes the reconciliation of the numerators and denominators for the basic and diluted earnings per share ("EPS") computations:
Years Ended January 31,
----------------------------------------
(in thousands) 2001 2000 1999
---------------------------------------------------------------------------
Net earnings for basic
and diluted EPS $190,584 $145,679 $ 90,062
========================================
Weighted average
shares for basic EPS 145,493 142,968 139,860
Incremental shares based
upon the assumed exercise
of stock options 6,323 6,698 4,076
----------------------------------------
Weighted average shares
for diluted EPS 151,816 149,666 143,936
========================================
|
In 2000, 1999 and 1998, there were 1,683,000, 36,000 and nil stock options excluded from the computations of earnings per diluted share due to their antidilutive effect.
I. DEBT
January 31,
------------------------
(in thousands) 2001 2000
-------------------------------------------------------------
Short-term borrowings $ 28,778 $ 20,646
Long-term debt:
Variable rate yen loan 47,487 51,376
6.90% Series A Senior Notes 60,000 60,000
7.05% Series B Senior Notes 40,000 40,000
4.50% yen loan 43,170 46,705
7.52% Senior Notes 51,500 51,500
------------------------
$270,935 $270,227
========================
|
36 TIFFANY & CO. AND SUBSIDIARIES
In October 1999, the Company entered into a yen 5,500,000,000, five-year loan agreement due 2004, bearing interest at a variable rate. The interest rate at January 31, 2001 was 1.02% and is based upon the six-month Japanese LIBOR plus 50 basis points and is reset every six months (the "floating rate"). The proceeds from this loan were used to reduce short-term indebtedness in Japan. Concurrently, the Company entered into a five-year, yen 5,500,000,000 interest rate swap agreement whereby the Company pays a fixed rate of interest of 1.815% and receives the floating rate on the yen 5,500,000,000 loan. The interest rate swap agreement had the effect of increasing interest expense by $538,000 and $156,000 for the years ended January 31, 2001 and 2000. The fair values of the interest rate swap were $1,204,000 and $495,000 at January 31, 2001 and 2000 and were based upon the amounts the Company would expect to pay to terminate the agreement.
In December 1998, the Company, in private transactions with various institutional lenders, issued, at par, $60,000,000 principal amount 6.90% Series A Senior Notes Due 2008 and $40,000,000 principal amount 7.05% Series B Senior Notes Due 2010. The proceeds of these issuances were used by the Company for working capital and to refinance a portion of outstanding short-term indebtedness under the Company's revolving credit facility. The Note Purchase Agreements require lump sum repayments upon maturity, maintenance of specific financial covenants and ratios and limit certain payments, investments and indebtedness, in addition to other requirements customary in such circumstances.
The Company maintains a $160,000,000 multicurrency revolving credit facility (the "Credit Facility") with five banks. The Credit Facility entitles the Company to borrow $31,250,000 on a pro-rata basis from each of three banks, $30,000,000 from one bank and $36,250,000 from an agent bank. All borrowings are at interest rates based on a prime rate or a reserve-adjusted LIBOR and are affected by local borrowing conditions. The Credit Facility expires on June 30, 2002. At January 31, 2001 and 2000, the amounts outstanding under the Credit Facility were $28,108,000 and $19,795,000 with interest rates ranging from 0.26% to 7.80% and 0.30% to 8.30%. The weighted average interest rates for the Credit Facility were 4.55% and 1.43% for the years ended January 31, 2001 and 2000. The Credit Facility requires the payment of an annual fee based on the total amount of available credit and contains covenants that require maintenance of certain debt/equity and interest coverage ratios, in addition to other requirements customary to loan facilities of this nature.
The Company has a yen 5,000,000,000, 15-year term loan agreement due 2011 bearing interest at a rate of 4.50%.
The Company has issued, at par, $51,500,000 of 7.52% Senior Notes Due 2003. The Note Purchase Agreements require lump sum repayments upon maturity, maintenance of specific financial covenants and ratios and limit certain payments, investments and indebtedness, in addition to other requirements customary in such circumstances.
The fair value of the 7.52% Senior Notes at January 31, 2001 and 2000 was approximately $52,751,000 and $50,678,000. The fair value of the 6.90% Series A Senior Notes at January 31, 2001 and 2000 was approximately $59,349,000 and $54,250,000. The fair value of the 7.05% Series B Senior Notes at January 31, 2001 and 2000 was approximately $39,272,000 and $35,533,000. The fair values of the Senior Notes and the Series A and Series B Senior Notes were determined using the quoted market prices of debt instruments with similar terms and maturities. The fair value of the 4.50% yen long-term debt was $50,002,000 and $55,263,000 at January 31, 2001 and 2000. The fair value of the 4.50% yen debt is based upon discounted cash flow analysis for securities with similar characteristics. The fair value of the yen variable rate long-term debt approximates its carrying value of $47,487,000 and $51,376,000 at January 31, 2001 and 2000 due to its variable interest rate terms.
TIFFANY & CO. AND SUBSIDIARIES 37
J. FINANCIAL INSTRUMENTS
In the normal course of business, the Company uses various financial instruments, including derivative financial instruments, for purposes other than trading. These instruments include interest rate swap agreements, foreign currency-purchased put options and forward foreign-exchange contracts. The Company does not use derivative financial instruments for trading or speculative purposes.
The Company's foreign subsidiaries and branches satisfy all of their inventory requirements by purchasing merchandise from the Company's New York subsidiary. All inventory purchases are payable in U.S. dollars. Accordingly, the foreign subsidiaries and branches have foreign-exchange risk that may be hedged. To mitigate this risk, the Company manages a foreign currency hedging program intended to reduce the Company's risk in foreign currency-denominated (primarily yen) transactions.
To minimize the potentially negative impact of a significant strengthening of the U.S. dollar against the yen, the Company purchases yen put options (the "options") on behalf of its Japanese subsidiary which are designated as hedges of commitments to purchase merchandise in U.S. dollars. At January 31, 2001, the Company had outstanding options maturing at various dates through January 24, 2002, giving it the right, but not the obligation, to sell yen 10,134,000,000 at predetermined contract-exchange rates. If the market yen-exchange rates at maturity are below the contracted rates, the Company will allow the options to expire. Unrealized gains relating to the Company's options are initially deferred and later recognized in earnings based upon the disposition of the related inventory. Recognized gains on the Company's options were $291,000, $2,446,000 and $7,731,000 in 2000, 1999 and 1998 with unamortized gains totaling $1,386,000, $59,000 and $2,386,000 for those years. The unrealized gain on the Company's purchased put options amounted to $5,503,000 at January 31, 2001. The fair value of the options was $5,411,000 and $1,308,000 at January 31, 2001 and 2000. The fair value of the options was determined using quoted market prices for these instruments.
At January 31, 2001 and 2000, the Company also had $18,003,000 and $6,676,000 of outstanding forward exchange yen contracts, which subsequently matured on February 26, 2001 and February 28, 2000, to support the settlement of merchandise liabilities for the Company's business in Japan. Due to the short-term nature of the Company's forward foreign-exchange contracts and the lack of significant fluctuations between currencies, the book value of the underlying assets and liabilities approximates fair value. The Company's pretax expense related to its hedging program was $2,648,000, $2,864,000 and $3,455,000 in 2000, 1999 and 1998.
K. COMMITMENTS AND CONTINGENCIES
The Company leases certain office, distribution, retail and manufacturing facilities. The lease agreements, which expire at various dates through 2017, are subject, in many cases, to renewal options and provide for the payment of taxes, insurance and maintenance. Certain leases contain escalation clauses resulting from the pass-through of increases in operating costs, property taxes and the effect on costs from changes in consumer price indices.
In January 2001, the Company notified the lessor of its New Jersey customer service/distribution center and office facility that it exercised its irrevocable purchase right included in the lease for approximately $40,706,000. This purchase is expected to be completed in January 2002.
Rent-free periods and other incentives granted under certain leases and scheduled rent increases are charged to rent expense on a straight-line basis over the related terms of such leases. Rent expense for the Company's operating leases, including escalations, consisted of the following:
Years Ended January 31,
-------------------------------------
(in thousands) 2001 2000 1999
-------------------------------------------------------------
Minimum rent $41,014 $43,596 $40,633
Contingent rent
based on sales 17,469 13,195 7,818
-------------------------------------
$58,483 $56,791 $48,451
=====================================
|
38 TIFFANY & CO. AND SUBSIDIARIES
Aggregate future minimum annual rental payments under noncancelable leases are as follows:
Capital Operating
Leases Leases
-----------------------
Years Ending January 31, (in thousands)
-------------------------------------------------------
2002 $44,083 $ 42,497
2003 - 40,949
2004 - 37,413
2005 - 35,757
2006 - 34,886
Thereafter - 191,468
-----------------------
Total minimum rentals 44,083 $382,970
========
Imputed interest at 8.19% (3,336)
---------
Present value of
minimum lease payments $40,747
=======
|
The Company is, from time to time, involved in routine litigation incidental to the conduct of its business including proceedings to protect its trademark rights, litigation instituted by persons injured upon premises within the Company's control, litigation with present and former employees and litigation claiming infringement of the copyrights and patents of others. Management believes that such pending litigation will not have a significant impact on the Company's financial position, earnings or cash flows.
L. RELATED PARTY TRANSACTIONS
In February 1999, Mitsukoshi sold 17,080,000 shares of the Company's Common Stock in a public offering at $14.00 per share. Prior to this public offering, Mitsukoshi owned approximately 12.3% of the Company's outstanding Common Stock and was a related party.
Prior to 1993, Mitsukoshi was the Company's principal product distributor in Japan. In 1993, the Company realigned its Japanese operations and assumed full merchandising and marketing responsibilities for its boutiques located in Mitsukoshi's stores. The Company continues to operate boutiques within Mitsukoshi's stores in Japan and a flagship store in Tokyo pursuant to agreements which expire in September 2001. In connection with these agreements, the Company pays a percentage of sales generated in these locations to Mitsukoshi. These fees totaled $76,400,000, $70,200,000 and $57,400,000 in 2000, 1999 and 1998.
Mitsukoshi no longer operates TIFFANY & CO. boutiques in the Asia-Pacific region. Wholesale sales to Mitsukoshi were nil in 2000, $142,000 in 1999 and $5,200,000 in 1998. There were no trade receivables due from Mitsukoshi at January 31, 2001 and 2000.
M. STOCKHOLDERS' EQUITY
AUTHORIZED STOCK
In May 2000, the stockholders approved an amendment to the Company's Restated Certificate of Incorporation to increase the number of common shares authorized from 120,000,000 shares to 240,000,000 shares, following an approved increase in May 1999 from 60,000,000 shares to 120,000,000 shares.
In July 1999, the Company issued 2,900,000 shares of its Common Stock at a price of $24.6876 per share, resulting in net proceeds of $71,426,000. The net proceeds from the sale were added to the Company's working capital and used to support ongoing business expansion.
STOCK REPURCHASE PROGRAM
In September 2000, the Board of Directors extended the Company's original stock repurchase program until November 2003. The program was initially authorized in November 1997 for the repurchase of up to $100,000,000 of the Company's Common Stock in the open market over a three-year period and would have expired in November 2000. As extended, the program authorizes future repurchases of up to $100,000,000 of the Company's Common Stock in the open market. The timing and actual number of shares repurchased will depend on a variety of factors such as price and other market conditions. The Company repurchased and retired 465,000 shares in 2000 at an aggregate cost of $13,319,000, or an average cost of $28.64 per share; none in 1999; and repurchased and retired 3,194,400 shares in 1998 at an aggregate cost of $30,035,000, or an average cost of $9.40 per share.
PREFERRED STOCK
The Board of Directors is authorized to issue, without further action by the stockholders, shares of Preferred Stock and to fix and alter the rights related to such stock. In March 1987, the stockholders authorized 2,000,000 shares of
TIFFANY & CO. AND SUBSIDIARIES 39
Preferred Stock, par value $0.01 per share. In November 1988, the Board of Directors designated certain shares of such Preferred Stock as Series A Junior Participating Cumulative Preferred Stock, par value $0.01 per share, to be issued in connection with the exercise of certain stock purchase rights under the Stockholder Rights Plan. At January 31, 2001 and 2000, there were no shares of Preferred Stock issued or outstanding.
STOCKHOLDER RIGHTS PLAN
In September 1998, the Board of Directors amended and restated the Company's existing Stockholder Rights Plan (the "Rights Plan") to extend its expiration date from November 17, 1998 to September 17, 2008. Under the Rights Plan, as amended, each outstanding share of the Company's Common Stock has a stock purchase right, initially subject to redemption at $0.01 per right, which right first becomes exercisable should certain takeover-related events occur. Following certain such events, but before any person has acquired beneficial ownership of 15% of the Company's common shares, each right may be used to purchase 0.0025 of a share of Series A Junior Participating Cumulative Preferred Stock at an exercise price of $165.00 (subject to adjustment); after such an acquisition, each right becomes nonredeemable and may be used to purchase, for the exercise price, common shares having a market value equal to two times the exercise price. If, after such acquisition, a merger of the Company occurs (or 50% of the Company's assets are sold), each right may be exercised to purchase, for the exercise price, common shares of the acquiring corporation having a market value equal to two times the exercise price. Rights held by such a 15% owner may not be exercised.
CASH DIVIDENDS
The Board of Directors declared an increase of 33% in the quarterly dividend rate on common shares in both May 2000 and 1999, increasing the quarterly rate to $0.04 and $0.03 per share. On February 21, 2001, the Board of Directors declared a quarterly dividend of $0.04 per common share. This dividend will be paid on April 10, 2001 to stockholders of record on March 20, 2001.
N. STOCK COMPENSATION PLANS
In May 1998, the stockholders approved both the Company's 1998 Employee Incentive Plan and the Directors Option Plan. No award may be made under either plan after March 19, 2008. Under the Employee Incentive Plan, the maximum number of shares of Common Stock subject to award is 8,000,000 (subject to adjustment); awards may be made to employees of the Company or its related companies in the form of stock options, stock appreciation rights, shares of stock and cash; awards made in the form of non-qualified stock options, tax-qualified incentive stock options or stock appreciation rights may have a maximum term of 10 years from the date of grant (vesting in increments of 25% per year over a four-year period on the yearly anniversary date of the grant) and may not be granted for an exercise price below fair market value. With the adoption of the Employee Incentive Plan, no further stock options may be granted under the Company's 1986 Stock Option Plan; however, 4,823,851 shares remain subject to issuance based on prior grants made under such plan. Under the Directors Option Plan, the maximum number of shares of Common Stock subject to award is 1,000,000 (subject to adjustment); awards may be made to non-employee directors of the Company in the form of stock options or shares of stock but may not exceed 20,000 (subject to adjustment) shares per non-employee director in any fiscal year; awards made in the form of stock options may have a maximum term of 10 years from the date of grant (vesting in increments of 50% per year over a two-year period on the yearly anniversary date of the grant) and may not be granted for an exercise price below fair market value unless the director has agreed to forego all or a portion of his or her annual cash retainer or other fees for service as a director in exchange for below-market exercise price options. No further options may be granted under the 1988 Directors Option Plan, which has expired; all options awarded under the 1988 Plan were granted at 50% below the market value at the date of grant. The Company recognizes compensation expense relating to options granted at below market value based on the difference between the option price and the fair market value at the date of grant.
40 TIFFANY & CO. AND SUBSIDIARIES
A summary of activity for the Company's stock option plans is presented below:
Weighted
Number Average
of Exercise
Shares Price
--------------------------------------------------------------------
Outstanding, January 31, 1998 12,099,740 $ 6.38
Granted 3,152,900 14.59
Exercised (2,280,652) 4.86
Forfeited (410,400) 8.18
-----------------------------
Outstanding, January 31, 1999 12,561,588 8.66
Granted 1,899,400 39.54
Exercised (3,006,564) 5.45
Forfeited (168,800) 12.06
-----------------------------
Outstanding, January 31, 2000 11,285,624 14.66
Granted 1,581,300 33.06
Exercised (1,307,545) 8.21
Forfeited (228,850) 20.71
-----------------------------
OUTSTANDING, January 31, 2001 11,330,529 $ 17.85
=============================
|
Options exercisable at January 31, 2001, 2000 and 1999 were 6,438,929, 5,675,874 and 6,435,352.
The Company accounts for stock-based compensation using the intrinsic value method. Accordingly, compensation expense has not been recognized for stock options granted at or above fair value. Had compensation expense been determined and recorded based upon fair value at grant date, net earnings and earnings per share would have been reduced to pro forma amounts as follows:
Years Ended January 31,
-------------------------------------------
(in thousands, except per share amounts) 2001 2000 1999
-------------------------------------------------------------------------------------
Net earnings:
As reported $ 190,584 $ 145,679 $ 90,062
Pro forma 181,473 139,976 87,858
Earnings per basic share:
As reported 1.31 1.02 0.64
Pro forma 1.25 0.98 0.63
Earnings per diluted share:
As reported 1.26 0.97 0.63
Pro forma 1.20 0.94 0.61
|
The weighted-average fair values of options granted for the years ended January 31, 2001, 2000 and 1999 were $12.14, $15.10 and $4.80. The fair value of each option grant is estimated at the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:
Years Ended January 31,
-----------------------------------
2001 2000 1999
----------------------------------------------------------------------
Dividend yield 0.7% 0.7% 0.8%
Expected volatility 35.0% 33.0% 30.5%
Risk-free interest rate 4.9% 6.7% 4.8%
Expected life (years) 5 5 5
|
The following tables summarize information concerning options outstanding and exercisable at January 31, 2001:
Options Outstanding
--------------------------------------------
Weighted
Average Weighted
Remaining Average
Range of Number Contractual Exercise
Exercise Prices Outstanding Life (years) Price
-------------------------------------------------------------------
$ 0.97-$ 6.88 2,647,729 5.14 $ 4.99
$ 8.50-$ 9.48 2,318,950 7.59 9.46
$ 10.14-$12.20 410,450 7.52 11.31
$ 14.98-$14.98 2,565,700 7.97 14.98
$ 17.59-$39.97 1,807,100 9.71 31.84
$ 42.08-$42.08 1,580,600 8.97 42.08
--------------------------------------------
11,330,529 7.63 $ 17.85
============================================
|
Options Exercisable
------------------------------------
Weighted
Average
Range of Number Exercise
Exercise Prices Exercisable Price
-----------------------------------------------------------
$ 0.97-$ 6.88 2,647,729 $ 4.99
$ 8.50-$ 9.48 1,836,600 9.45
$ 10.14-$12.20 213,950 11.20
$ 14.98-$14.98 1,280,200 14.98
$ 17.59-$39.97 52,800 23.79
$ 42.08-$42.08 407,650 42.08
------------------------------------
6,438,929 $ 10.96
====================================
|
TIFFANY & CO. AND SUBSIDIARIES 41
O. EMPLOYEE BENEFIT PLANS
PENSIONS AND OTHER POSTRETIREMENT BENEFITS
The Company maintains a noncontributory defined benefit pension plan (the "Plan") covering substantially all domestic salaried and full-time hourly employees. The Company accounts for pension expense using the projected unit credit actuarial method for financial reporting purposes. Plan benefits are based on the highest five consecutive years of compensation or as a percentage of actual compensation, as applicable in the circumstances, and the number of years of service. The actuarial present value of the vested benefit obligation is calculated based on the expected date of separation or retirement of the Company's eligible employees.
The Company provides certain health care and life insurance benefits for retired employees and accrues the cost of providing these benefits throughout the employees' active service periods until they attain full eligibility for those benefits. Substantially all of the Company's U.S. employees may become eligible for these benefits if they reach normal or early retirement age while working for the Company. The Company's employee and retiree health care benefits are administered by an insurance company and premiums on life insurance are based on prior years' claims experience. Based on current estimates and a fixed health-care-cost trend rate of 6.50%, an increase to this rate by one percentage point would increase the Company's accumulated postretirement benefit obligation by $1,127,000 and the aggregate service and interest cost components of net periodic postretirement benefits by $176,000 for the year ended January 31, 2001. Decreasing the health-care-cost trend rate by one percentage point would decrease the Company's accumulated postretirement benefit obligation by $1,038,000 and the aggregate service and interest cost components of net periodic postretirement benefits by $161,000 for the year ended January 31, 2001.
42 TIFFANY & CO. AND SUBSIDIARIES
The following tables provide a reconciliation of benefit obligations, plan assets and funded status of the plans:
Other Postretirement
Pension Benefits Benefits
--------------------------------------------------------------
(in thousands, except percentages) 2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------------------
CHANGE IN BENEFIT OBLIGATION:
Benefit obligation at beginning of year $ 76,339 $ 70,692 $ 22,306 $ 18,923
Service cost 4,632 4,503 2,129 1,626
Interest cost 5,487 4,444 1,642 1,030
Participants' contributions -- -- 33 15
Amendments -- -- -- 486
Actuarial loss (gain) 6,203 (566) 618 1,132
Benefits paid (2,842) (2,734) (934) (906)
--------------------------------------------------------------
Benefit obligation at end of year $ 89,819 $ 76,339 $ 25,794 $ 22,306
==============================================================
CHANGE IN PLAN ASSETS:
Fair value of plan assets at beginning of year $ 85,882 $ 67,385 $ -- $ --
Actual return on plan assets (3,759) 21,231 -- --
Employer contribution -- -- 901 891
Participants' contributions -- -- 33 15
Benefits paid (2,842) (2,734) (934) (906)
--------------------------------------------------------------
Fair value of plan assets at end of year $ 79,281 $ 85,882 $ -- $ --
==============================================================
Funded status $(10,538) $ 9,543 $(25,794) $(22,306)
Unrecognized net actuarial gain (7,440) (22,568) (727) (1,344)
Unrecognized prior service cost 10 147 275 269
Unrecognized transition obligation 31 134 -- --
--------------------------------------------------------------
Accrued benefit cost $(17,937) $(12,744) $(26,246) $(23,381)
==============================================================
Weighted-average assumptions at end of year:
Discount rate 7.00% 7.50% 7.00% 7.50%
Expected return on plan assets 9.00% 9.00% -- --
Rate of increase in compensation 4.25% 4.50% -- --
|
Net periodic pension and other postretirement benefit expense included the following components:
Years Ended January 31,
-----------------------------------------------------------------
Other Postretirement
Pension Benefits Benefits
(in thousands) 2001 2000 1999 2001 2000 1999
----------------------------------------------------------------------------------------------------------------------
Service cost-benefits earned during period $ 4,632 $ 4,503 $ 3,501 $ 2,129 $ 1,626 $ 1,253
Interest cost on accumulated benefit obligation 5,487 4,444 4,089 1,642 1,030 1,055
Return on plan assets (5,166) (4,373) (3,999) -- -- --
Net amortization and deferrals 241 971 649 (5) (230) (225)
-------------------------------------------------------------------
Net expense $ 5,194 $ 5,545 $ 4,240 $ 3,766 $ 2,426 $ 2,083
===================================================================
|
TIFFANY & CO. AND SUBSIDIARIES 43
PROFIT SHARING AND RETIREMENT SAVINGS PLAN
The Company also maintains an Employee Profit Sharing and Retirement Savings Plan (the "EPSRS Plan") that covers substantially all U.S.-based employees. Under the profit sharing portion of the EPSRS Plan, the Company makes contributions to the employees' accounts based upon the achievement of certain targeted earnings objectives established by the Board of Directors. The Company recorded charges in 2000, 1999 and 1998 of $2,800,000, $3,300,000 and $1,600,000. Under the retirement savings feature, employees who meet certain eligibility requirements may participate in the EPSRS Plan by contributing up to 15% of their annual compensation and the Company provides a 50% matching contribution up to 6% of each participant's total compensation. The Company recorded charges of $3,635,000, $2,983,000 and $2,477,000 in 2000, 1999 and 1998. Contributions to both portions of the EPSRS Plan are made in the following year in the form of newly issued Company Common Stock.
P. INCOME TAXES
Earnings before income taxes consisted of the following:
Years Ended January 31,
--------------------------------
(in thousands) 2001 2000 1999
-------------------------------------------------------
United States $245,665 $177,011 $118,541
Foreign 71,976 71,047 37,107
--------------------------------
$317,641 $248,058 $155,648
================================
|
Components of the provision for income taxes were as follows:
Years Ended January 31,
--------------------------------------------
(in thousands) 2001 2000 1999
-------------------------------------------------------------
Current:
Federal $ 80,530 $ 58,908 $ 38,346
State 21,309 20,406 13,250
Foreign 25,988 30,900 14,384
--------------------------------------------
127,827 110,214 65,980
--------------------------------------------
Deferred:
Federal 476 (4,932) (511)
State (1,222) (2,261) (307)
Foreign (24) (642) 424
--------------------------------------------
(770) (7,835) (394)
--------------------------------------------
$ 127,057 $ 102,379 $ 65,586
============================================
|
Deferred tax assets (liabilities) consisted of the following:
January 31,
-------------------------
(in thousands) 2001 2000
-------------------------------------------------------------------
Postretirement/employment benefits $ 12,080 $ 10,899
Product return reserves 1,259 983
Inventory reserves 13,657 10,093
Accrued expenses 10,008 14,049
Financial hedging instruments 1,173 619
Depreciation 1,187 (1,163)
Pension contribution 7,231 4,989
Undistributed earnings
of foreign subsidiaries (15,144) (10,070)
Other 3,900 6,048
-------------------------
$ 35,351 $ 36,447
=========================
|
The income tax effects of items comprising the deferred income tax benefit were as follows:
Years Ended January 31,
----------------------------------------
(in thousands) 2001 2000 1999
-----------------------------------------------------------------------------
Postretirement/employment
benefit obligations $(1,360) $ (739) $ (645)
Product return reserves (293) (331) 950
Undistributed earnings of
foreign subsidiaries 5,074 3,754 1,378
Accelerated depreciation (1,129) (485) 244
Inventory reserves (1,874) 1,335 (571)
Financial hedging instruments (553) 999 830
Accrued expenses 3,684 (7,246) 1,263
Excess pension contribution (2,324) (2,523) (1,929)
Other (1,995) (2,599) (1,914)
----------------------------------------
$ (770) $(7,835) $ (394)
========================================
|
Reconciliations of the provision for income taxes at the statutory Federal income tax rate to the Company's effective tax rate were as follows:
Years Ended January 31,
-----------------------
2001 2000 1999
---------------------------------------------------------
Statutory Federal income
tax rate 35.0% 35.0% 35.0%
State income taxes, net of
Federal benefit 4.1 4.8 5.4
Foreign losses with
no tax benefit 0.6 0.7 0.6
Other 0.3 0.8 1.1
-----------------------
40.0% 41.3% 42.1%
=======================
|
44 TIFFANY & CO. AND SUBSIDIARIES
Q. OPERATING SEGMENTS
The Company operates its business in three reportable segments: U.S. Retail, International Retail and Direct Marketing. The Company's reportable segments represent channels of distribution that offer similar merchandise and service and have similar marketing and distribution strategies. In deciding how to allocate resources and assess performance, the Company's Executive Officers regularly evaluate the performance of its operating segments on the basis of net sales and earnings from operations, after the elimination of intersegment sales and transfers. The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies.
The Company's products are primarily sold in more than 100 TIFFANY & CO. stores and boutiques in key markets around the world. In Japan, the Company's largest international operation, net sales accounted for 28%, 27% and 27% of the Company's net sales for the years ended January 31, 2001, 2000 and 1999. Net sales by geographic area are presented by attributing revenues from external customers on the basis of the country in which the merchandise is sold.
Certain information relating to the Company's reportable operating segments is set forth below:
Years Ended January 31,
----------------------------------------------
(in thousands) 2001 2000 1999
------------------------------------------------------------------------------------
Net sales:
U.S. Retail $ 833,221 $ 744,425 $ 593,589
International Retail 679,274 589,607 462,474
Direct Marketing 155,561 137,658 121,866
----------------------------------------------
$1,668,056 $1,471,690 $1,177,929
==============================================
Earnings from
operations*:
U.S. Retail $ 234,814 $ 176,827 $ 126,796
International Retail 184,801 149,918 110,635
Direct Marketing 22,041 17,707 15,458
----------------------------------------------
$ 441,656 $ 344,452 $ 252,889
==============================================
|
* Represents earnings from operations before unallocated corporate expenses and interest and other expenses, net.
Executive Officers of the Company evaluate the performance of the Company's assets on a consolidated basis. Therefore, separate financial information for the Company's assets on a segment basis is not available. For the years ended January 31, 2001, 2000 and 1999, total assets were $1,568,340,000, $1,343,562,000 and $1,057,023,000.
The following table sets forth reconciliations of the reportable segments' earnings from operations to the Company's consolidated earnings before income taxes:
Years Ended January 31,
---------------------------------------------
(in thousands) 2001 2000 1999
----------------------------------------------------------------------------
Earnings from
operations for
reportable segments $ 441,656 $ 344,452 $ 252,889
Unallocated
corporate expenses (114,260) (87,569) (91,767)
Interest and other
expenses, net (9,755) (8,825) (5,474)
---------------------------------------------
Earnings before
income taxes $ 317,641 $ 248,058 $ 155,648
=============================================
|
Sales to unaffiliated customers and long-lived assets were as follows:
GEOGRAPHIC AREAS
Years Ended January 31,
----------------------------------------------
(in thousands) 2001 2000 1999
------------------------------------------------------------------------------------
Net sales:
United States $1,022,203 $ 914,948 $ 744,039
Japan 463,130 403,148 312,204
Other countries 182,723 153,594 121,686
----------------------------------------------
$1,668,056 $1,471,690 $1,177,929
==============================================
Long-lived assets:
United States $ 494,715 $ 386,475 $ 188,482
Japan 6,490 8,430 4,887
Other countries 26,058 24,202 17,727
----------------------------------------------
$ 527,263 $ 419,107 $ 211,096
==============================================
|
CLASSES OF SIMILAR PRODUCTS
Years Ended January 31,
----------------------------------------------
(in thousands) 2001 2000 1999
------------------------------------------------------------------------------------
Net sales:
Jewelry $1,300,697 $1,110,964 $ 861,443
Tableware,
timepieces
and other 367,359 360,726 316,486
----------------------------------------------
$1,668,056 $1,471,690 $1,177,929
==============================================
|
TIFFANY & CO. AND SUBSIDIARIES 45
R. QUARTERLY FINANCIAL DATA (UNAUDITED)
2000 Quarter Ended
----------------------------------------------------------
(in thousands, except per share amounts) April 30 July 31 October 31 January 31
-----------------------------------------------------------------------------------------------------------------
Net sales $345,143 $374,448 $372,074 $576,391
Gross profit 188,709 212,454 206,365 340,886
Earnings from operations 53,395 67,077 63,052 143,872
Net earnings 30,425 39,165 36,320 84,674
Net earnings per share:
Basic $ 0.21 $ 0.27 $ 0.25 $ 0.58
==========================================================
Diluted $ 0.20 $ 0.26 $ 0.24 $ 0.56
==========================================================
|
1999 Quarter Ended
----------------------------------------------------------
(in thousands, except per share amounts) April 30 July 31 October 31 January 31
-----------------------------------------------------------------------------------------------------------------
Net sales $274,202 $309,399 $324,894 $563,195
Gross profit 142,004 168,116 173,318 338,242
Earnings from operations 29,439 41,953 39,482 146,009
Net earnings 16,157 22,981 21,962 84,579
Net earnings per share:
Basic $ 0.12 $ 0.16 $ 0.15 $ 0.58
==========================================================
Diluted $ 0.11 $ 0.16 $ 0.15 $ 0.56
==========================================================
|
The sum of the quarterly net earnings per share amounts may not equal the full-year amount since the computations of the weighted average number of common-equivalent shares outstanding for each quarter and the full year are made independently.
S. SUBSEQUENT EVENT
In February 2001, Aber announced the completion of the sale of its interest in the Snap Lake Project to De Beers Canada Mining, Inc. for $114,000,000. As a result of this sale, in the first quarter ending April 30, 2001, the company will record a pretax gain of approximately $5,200,000, net of mineral rights allocated to the Snap Lake Project, based upon the Company's equity interest in Aber.
46 TIFFANY & CO. AND SUBSIDIARIES
Tiffany & Co. Exhibit 21.1 Subsidiaries Tiffany & Co.
Report on Form 10-K
--------------------------
TIFFANY & CO.
Delaware
August 16, 1984
--------------------------
--------------------- -----------------
TIFFANY AND COMPANY TIFFANY & CO.
INTERNATIONAL
New York Delaware
May 30, 1868 October 11, 1984
--------------------- ------------------
Domestic Subsidiaries International Subsidiaries Domestic Subsidiaries International Subsidiaries
----------------------------- ----------------------------- ----------------------------- -----------------------------
TIFFANY & CO. SOCIETE FRANCAISE TIFFANY & CO. TIFFANY-BRASIL LTDA.
ICT, INC. POUR LE JAPAN INC.
DEVELOPPEMENT DE LA
PORCELAINE D'ART
Delaware France Delaware Brazil
----------------------------- ----------------------------- ----------------------------- -----------------------------
----------------------------- ----------------------------- -----------------------------
JUDEL PRODUCTS CORP. TIFFANY & CO. TIFFANY & CO.
(Formerly Glassware (Unlimited Liability) OF NEW YORK LIMITED
Acquisition Inc.)
West Virginia United Kingdom Hong Kong
----------------------------- ----------------------------- -----------------------------
----------------------------- ----------------------------- -----------------------------
TIFFANY (NJ) INC. TIFFANY & CO. K.K. SINDAT LIMITED
(Tiffany and Company 51%
Mitsukoshi, Ltd. 49%)
New Jersey Japan Hong Kong
----------------------------- ----------------------------- -----------------------------
-----------------------------
TIFFANY & CO. ITALIA
S.p.A.
(Formerly Tiffany-Faraone
S.p.A.)
Italy
-----------------------------
-----------------------------
TIFFCO KOREA LTD.
Republic of Korea
-----------------------------
-----------------------------
TIFFANY & CO. MEXICO,
S.A. de C.V.
Mexico
-----------------------------
-----------------------------
TIFFANY & CO.
OVERSEAS FINANCE B.V.
Netherlands
-----------------------------
-----------------------------
TIFFANY & CO.
PTE LTD.
Singapore
-----------------------------
-----------------------------
UPTOWN ALLIANCE
(M) Sdn. Bhd.
Malaysia
-----------------------------
-----------------------------
TIFFANY & CO. A.G.
Switzerland-Canton Zurich
-----------------------------
-----------------------------
TIFFANY & CO.
WATCH CENTER A.G.
Switzerland-Canton Zurich
-----------------------------
|
Exhibit 23.1 Tiffany & Co.
Report on Form 10-K
FY 2000
[PRICEWATERHOUSECOOPERS LOGO]
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration Statement on Form S-3 (File No. 333-82653) and Form S-8 (File Nos. 333-43978, 333-85195, 333-85197, 333-85199, 333-85201 and 033-54847) of Tiffany & Co. of our report dated February 28, 2001 relating to the financial statements, which appears in the Annual Report to Shareholders, which is incorporated in this Annual Report on Form 10-K. We also consent to the incorporation by reference of our report dated February 28, 2001 relating to the financial statement schedule, which appears in this Form 10-K.
New York, New York /s/ PRICEWATERHOUSECOOPERS LLP April 10, 2001 ------------------------------ |