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<SEC-DOCUMENT>0000950123-02-003561.txt : 20020416
<SEC-HEADER>0000950123-02-003561.hdr.sgml : 20020416
ACCESSION NUMBER: 0000950123-02-003561
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 5
CONFORMED PERIOD OF REPORT: 20020131
FILED AS OF DATE: 20020410
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: TIFFANY & CO
CENTRAL INDEX KEY: 0000098246
STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-JEWELRY STORES [5944]
IRS NUMBER: 133228013
STATE OF INCORPORATION: DE
FISCAL YEAR END: 0131
FILING VALUES:
FORM TYPE: 10-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-09494
FILM NUMBER: 02606577
BUSINESS ADDRESS:
STREET 1: 727 FIFTH AVE
CITY: NEW YORK
STATE: NY
ZIP: 10022
BUSINESS PHONE: 2122305317
MAIL ADDRESS:
STREET 1: 727 FIFTH AVENUE
CITY: NEW YORK
STATE: NY
ZIP: 10022
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>y58691e10-k.txt
<DESCRIPTION>TIFFANY & CO.
<TEXT>
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------
FORM 10-K
---------
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JANUARY 31, 2002 COMMISSION FILE NUMBER: 1-9494
TIFFANY & CO.
(Exact name of registrant as specified in its charter)
<Table>
<S> <C>
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)
</Table>
Registrant's telephone number, including area code: (212) 755-8000
---------
Securities registered pursuant to Section 12(b) of the Act:
<Table>
<Caption>
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ------------------------
<S> <C>
Common Stock, $.01 par value New York Stock Exchange
Stock Purchase Rights New York Stock Exchange
</Table>
---------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
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. [ ]
---------
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 22, 2002 the aggregate market value of voting stock held by
non-affiliates was $5,186,490,809. See Item 5. Market for Registrant's Common
Equity and Related Stockholder Matters below.
---------
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S
CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE: 145,505,077 shares
of Common Stock outstanding as of March 22, 2002.
---------
The following documents are incorporated by reference into this Annual
Report on Form 10-K: Registrant's Annual Report to Stockholders for the Fiscal
Year Ended January 31, 2002 (Parts I, II and IV) and Registrant's Proxy
Statement Dated April 10, 2002 (Part III).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
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 segment information for the fiscal years ended January
31, 2002, 2001 and 2000 is incorporated by reference from Registrant's Annual
Report to Stockholders for the Fiscal Year ended January 31, 2002 (Note R.
"Segment Information"). 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 1999", "Fiscal 2000" and "Fiscal 2001"
refer to the fiscal years ended on January 31, 2000, 2001 and 2002,
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 1999, 2000 and 2001, approximately 75%, 78%
and 79%, 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. Fragrance
products are sold under the trademarks TIFFANY and TIFFANY FOR MEN. Tiffany
also sells other
- -Page 2-
<PAGE>
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.(1) (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 of 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, as well
as a limited amount of business sales and internet sales (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 13%, 12% and 11% of total Company net sales for Fiscal
1999, 2000 and 2001, respectively, were attributable to the New York store's
retail sales. During Fiscal 2001, Tiffany completed its first phase of a four-
year renovation project, which include a 25% increase of its selling space and
the reconfiguration of two floors of office space for customer service and
special exhibitions. Over the next three years, renovations of other existing
selling space will be completed.
- -------------------------------------
(1) In fiscal years 1999 and 2000 the Company discontinued its wholesale sales
of jewelry, tabletop product and fragrances to third party retailers in the
United States. 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 the U.S.
- -Page 3-
<PAGE>
U.S. Branch Stores
At January 31, 2002 Tiffany had 43 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
<TABLE>
<CAPTION> YEAR
STORE LOCATION YEAR OPENED STORE LOCATION OPENED
-------------- ----------- -------------- -----
<S> <C> <C> <C>
San Francisco, California 1963 Charlotte, North Carolina 1997
Beverly Hills, California 1964 Chestnut Hill, Massachusetts 1997
Houston, Texas 1964 Cincinnati, Ohio 1997
Chicago, Illinois 1966 Honolulu, Hawaii (Hilton) + 1997
Atlanta, Georgia 1969 Palo Alto, California 1997
Dallas, Texas 1982 Denver, Colorado 1998
Boston, Massachusetts 1984 Honolulu, Hawaii (Surfrider)+ 1998
Costa Mesa, California 1988 Las Vegas, Nevada 1998
Philadelphia, Pennsylvania 1990 Manhasset, New York 1998
Vienna, Virginia 1990 Seattle, Washington 1998
Palm Beach, Florida 1991 Scottsdale, Arizona 1998
Honolulu, Hawaii (Ala Moana) 1992 Century City, California 1999
San Diego, California 1992 Dallas (NorthPark), Texas 1999
Troy, Michigan 1992 Boca Raton, Florida 1999
Bal Harbour, Florida 1993 Tamuning, Guam++ 1999
Maui, Hawaii 1994 Old Orchard, (Skokie) IL 2000
Oak Brook, Illinois 1994 Maui, Hawaii (Wailea) 2000
King of Prussia, Pennsylvania 1995 Greenwich, Connecticut 2000
Short Hills, New Jersey 1995 Portland, Oregon 2000
White Plains, New York 1995 Tampa, Florida 2001
Hackensack, New Jersey 1996 Santa Clara (San Jose), California 2001
Chevy Chase, Maryland 1996
</TABLE>
+ Closing Fiscal 2002, to be replaced by new Honolulu location
++ Operated by Mitsukoshi (U.S.A.), Inc. until March 1999
Most of the U.S. branch stores display a representative selection of
merchandise, but none maintains the extensive selection carried by the New York
store. Beginning in 2002, branch stores of approximately 5,000 square feet in
size will feature a new store design and display primarily fine jewelry, with a
select assortment of china and crystal giftware. One or more branch stores will
be opened in resort areas and will be approximately 3,000 square feet in size.
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 2002 in East Hampton, New
York, Orlando, Florida, Bellevue, Washington, St. Louis, Missouri and Honolulu,
Hawaii. 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
- -Page 4-
<PAGE>
square feet and total approximately 345,000 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
7,000 gross square feet and are designed to devote approximately 60-70% of total
floor space to retail selling.
Direct Marketing
Business Sales Division
Business Sales 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. Business Sales Division
customers purchase for business gift giving, employee service and achievement
recognition awards, customer incentives and other purposes. Products and
services are marketed through an organization of approximately 160 persons
through advertising in newspapers and business periodicals and through the
publication of special catalogs. Business gift purchases may also be made
through the Company's Web site at www.tiffany.com.
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.
Internet
The Company distributes a selection of approximately 2,400 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. 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.
- -Page 5-
<PAGE>
The following table sets forth certain data with respect to mail,
telephone and internet order operations for the periods indicated:
<TABLE>
<CAPTION>
Fiscal Year
1999 2000 2001
---- ---- ----
<S> <C> <C> <C>
Number of names on catalog mailing and internet lists at 1,103,700 1,254,000 1,497,407
year-end (consists of customers who purchased by mail,
telephone or internet prior to the applicable date)*
Total catalog mailings during fiscal year (in millions): 26.0 24.7 25.9
Total mail, telephone or internet orders received during 364,150 406,680 491,916
fiscal year*:
</TABLE>
*Prior years have been restated to include orders received from e-commerce
customers, which commenced in November 1999.
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.
- -Page 6-
<PAGE>
International Locations
<TABLE>
<CAPTION>
LOCATIONS OPERATED BY REGISTRANT'S SUBSIDIARIES
-----------------------------------------------
JAPAN ASIA-PACIFIC EXCLUDING JAPAN
* Operated by Registrant's Subsidiaries with
Mitsukoshi, Ltd.
- --------------------------------------------------------- ----------------------------------
<S> <C>
Abeno, Kintetsu Department Store Australia: Melbourne, Collins Street
Chiba, Mitsukoshi Department Store * Australia: Melbourne, Crown Casino
Fukuoka, Mitsukoshi * Australia: Sydney, Chifley Plaza
Fukuoka, Mitsukoshi Department Store * China, Beijing, The Palace Hotel
Ginza, Mitsukoshi Department Store * Hong Kong: Causeway Bay, Lee Gardens
Hiroshima, Mitsukoshi Department Store * Hong Kong: Landmark Center
Ikebukuro, Mitsukoshi Department Store * Hong Kong: Pacific Place
Kagoshima, Mitsukoshi Department Store * Hong Kong: Peninsula Hotel
Kanazawa, Mitsukoshi * Hong Kong: Sogo Department Store
Kashiwa, Takashimaya Department Store Korea: Seoul, Galleria Department Store
Kawasaki , Saikaya Department Store Korea: Seoul, Hyundai Department Store
Kobe, Daimaru Department Store Korea: Seoul, Lotte Downtown Department Store
Kobe, Mitsukoshi Department Store * Korea: Pusan, Paradise Hotel
Kochi, Daimaru Department Store Malaysia: Suria KLCC
Kokura, Izutsuya Department Store Singapore: Ngee Ann City
Koriyama, Usui Department Store Singapore: Raffles Hotel
Kumamoto, Tsuruya Department Store Taiwan: Kaohsiung, Hanshin Department Store
Kurashiki, Mitsukoshi Department Store * Taiwan: Tainan, Mitsukoshi Department Store
Kyoto, Daimaru Department Store Taiwan: Taipei, Regent Hotel
Kyoto, Takashimaya Department Store Taiwan: Taipei, Sogo Department Store
Matsuyama, Mitsukoshi Department Store*
Nagano, Mitsukoshi * --------------------------------------------
Nagoya Hoshigaoka, Mitsukoshi Dept. Store * EUROPE
Nagoya Sakae, Mitsukoshi Department Store* --------------------------------------------
Nagoya, Hilton Hotel *
Nagoya, Takashimaya Department Store+ England: London, Old Bond Street
Nihonbashi, Mitsukoshi Department Store * England: London, The Royal Exchange
Niigata, Mitsukoshi Department Store * England: London, Harrod's Department Store
Oita, Tokiwa Department Store France: Paris
Okayama, Tenmaya Department Store Germany: Frankfurt
Okinawa, Mitsukoshi Department Store * Germany: Munich
Osaka, Mitsukoshi Department Store * Italy: Florence
Osaka, Takashimaya Department Store Italy: Milan
Sagamihara, Isetan Department Store Italy: Rome
Sapporo, Mitsukoshi Department Store * Switzerland: Zurich
Sendai, Mitsukoshi Department Store *
Shinjuku, Isetan Department Store+ ---------------------------------------------
Shinjuku, Mitsukoshi Department Store *
Shinsaibashi, Daimaru Department Store
Shizuoka, Matsuzakaya Department Store CANADA AND CENTRAL/SOUTH AMERICA
Tachikawa, Isetan Department Store
Takamatsu, Mitsukoshi Department Store * ---------------------------------------------
Tokyo Bay, Ikspiari *
Tokyo, Ginza Flagship Store * Canada: Toronto
Tottori , Daimaru Department Store Mexico: Mexico City, Palacio Store, Polanco
Umeda, Daimaru Department Store Mexico: Mexico City, Palacio Store, Perisur
Utsunomiya, Tobu Department Store Mexico: Mexico City, Masaryk
Yokohama, Landmark Plaza, Mitsukoshi * Brazil: Sao Paulo
Yokohama, Mitsukoshi Department Store *
+Location opened March 2002
- --------------------------------------------------------- ----------------------------------------------
</TABLE>
- -Page 7-
<PAGE>
Business with Mitsukoshi
On August 1, 2001, Registrant's wholly-owned subsidiary, Tiffany & Co.
Japan Inc. ("Tiffany-Japan") entered into agreements with Mitsukoshi Ltd. of
Japan ("Mitsukoshi"). These agreements continue long-standing commercial
relationships that Registrant and its affiliated companies have had with
Mitsukoshi.
(Historical Background)
On June 12, 1993, Registrant, through its affiliated companies, entered
into a distribution agreement (the "93 Agreement") with Mitsukoshi. The 93
Agreement significantly changed the way Registrant and Mitsukoshi had done
business in Japan, which, from 1972 until that time, had consisted of sales to
Mitsukoshi for resale. As a consequence of the 93 Agreement, Tiffany-Japan
commenced retail sales operations in Japan.
In the fiscal years ended January 31, 2000, 2001 and 2002,
respectively, total Japan sales represented 27%, 28% and 28% of Registrant's net
sales. Sales made in TIFFANY & CO. boutiques located in Mitsukoshi's stores
constituted 16%, 16% and 15% of Registrant's net sales in those years.
(The 93 Agreement and the 2001 Agreement)
On August 1, 2001, Tiffany-Japan and Mitsukoshi entered into an
agreement (the "2001 Agreement"). The 2001 Agreement replaced the 93 Agreement,
which remained in effect until November 1, 2001. The 2001 Agreement will expire
on January 31, 2007.
Under the 93 and 2001 Agreements Tiffany-Japan had and has
merchandising and marketing responsibilities in the operation of TIFFANY & CO.
boutiques in Mitsukoshi's stores and other locations throughout Japan.
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 displays
within the boutiques, manages inventory and controls and funds all advertising
and publicity programs with respect to TIFFANY & CO. merchandise. Mitsukoshi
provides and maintains boutique facilities and assumes retail credit and certain
other risks. Risk of inventory loss varies depending on whether the boutique is
a "Standard Boutique" or a "Concession Boutique." Mitsukoshi bears
responsibility for loss or damage to the merchandise in Standard Boutiques and
Tiffany-Japan bears the risk in Concession Boutiques.
Mitsukoshi provides retail staff in Standard Boutiques and
Tiffany-Japan provides retail staff in Concession Boutiques. At present, there
are 19 Standard Boutiques and eight Concession Boutiques. Under the 2001
Agreement two existing boutiques will be closed and 10 will be converted from
Standard to Concession Boutiques over the term of the Agreement.
Under the 93 Agreement, Mitsukoshi retained a portion (the "basic
portion") of the net retail sales made in TIFFANY & CO Boutiques. The basic
portion varied depending on the type
- -Page 8-
<PAGE>
of Boutique and the retail price of the merchandise involved. Generally,
however, Mitsukoshi's basic portion was 27% in Standard Boutiques and 20% in
Concession Boutiques. These basic portions will remain in effect under the 2001
Agreement through January 31, 2003.
From February 1, 2003 through the expiration of the 2001 Agreement,
Mitsukoshi's basic portion will be reduced by four percent in each category and
increased by a factor that varies between zero and three percent depending upon
the historic sales performance of the individual boutique in question. Thus, the
highest basic portion available to Mitsukoshi in any Boutique during this time
period will be 26% and Registrant expects that Mitsukoshi's average portion,
across all Boutiques, will not be less than 24%.
Under the 93 Agreement, Tiffany-Japan also paid Mitsukoshi an incentive
fee of five percent of the amount by which boutique sales increased
year-to-year, calculated on a per-boutique basis. Under the 2001 Agreement, the
five-percent incentive fee will be calculated only upon the increase above
"Target Sales." Target Sales means a year-to-year increase that is greater than
the lesser of (i) 10% or (ii) a sales goal set by Tiffany-Japan.
Under the 93 Agreement, Mitsukoshi had the following exclusive rights
in Tokyo: TIFFANY & CO. boutiques could be established only in Mitsukoshi's
stores and TIFFANY & CO. brand jewelry could be sold only in such boutiques, or
in the "Flagship Store" (see below). Outside Tokyo, Registrant was not
restricted in its right to establish TIFFANY & CO. boutiques or sell TIFFANY &
CO. merchandise.
Under the 2001 Agreement, Registrant is free to establish TIFFANY & CO.
boutiques and sell TIFFANY & CO. merchandise throughout Japan, including in
Tokyo.
(The FSS Agreement and the 2001 FSS Agreement)
Mitsukoshi, Tiffany-Japan and Tiffany 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"). Tiffany-Japan completed, at its
cost, all necessary improvements to prepare the Premises and delivered the
Premises to Mitsukoshi in May 1996. In June 1999, by Supplemental Agreement to
the FSS Agreement, the parties expanded the Premises to approximately 12,000
square feet. The Premises are leased by a third party landlord to Tiffany-Japan
for a fixed annual rental.
On August 1, 2001, Mitsukoshi and Tiffany-Japan entered into the "2001
FSS Agreement" which replaced the FSS Agreement.
Under both the FSS Agreement and the 2001 FSS Agreement, the Premises
are subleased by Tiffany-Japan to Mitsukoshi on a percentage-of-sales basis (the
"Sublease"). Tiffany-Japan bears all costs of operating the Premises.
Tiffany-Japan selects and furnishes 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 employees provided by Mitsukoshi in connection with
the POS
- -Page 9-
<PAGE>
System. Management of the Flagship Store, other than with respect to the POS
System, is the responsibility of Tiffany-Japan.
After compensating Tiffany-Japan on a percentage-of-sales basis for
Sublease rent and staffing, Mitsukoshi is allocated a percentage of net sales.
Under the FSS Agreement, Mitsukoshi's percentage allocation was 8.3%. Under the
2001 FSS Agreement, Mitsukoshi's percentage allocation is 3%
The 2001 FSS Agreement is scheduled to expire on September 30, 2002,
but will be extended until September 30, 2005, and then again to January 31,
2007, subject to renewal of the lease for the Premises by Tiffany-Japan and the
landlord for the Premises.
(Other Transactions)
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 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.(2)
- -----------------------------
(2) In fiscal years 2000 and 2001 the Company discontinued wholesale sales of
jewelry and fragrance in Europe. 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.
- -Page 10-
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL WHOLESALE DISTRIBUTION
------------------------------------
ASIA-PACIFIC, MIDDLE EAST AND RUSSIA CARIBBEAN
------------------------------------ ---------
<S> <C> <C> <C>
Australia (2) Morocco Aruba (3) Jamaica (5)
Bahrain New Zealand Bahamas (3) Puerto Rico (3)
Egypt Oman (2) Barbados St. Maarten (2)
Guam Philippines (2) Bermuda St. Thomas (2)
Hong Kong Qatar (4) Dominican Republic (2) Turks and Caicos (2)
India Russia (7) Grand Cayman (2)
Indonesia Saipan
Japan (7) Saudi Arabia (5)
Korea Singapore
Kuwait (2) Syria
Lebanon (3) United Arab Emirates (4)
CANADA CENTRAL/LATIN AND SOUTH AMERICA
------ -------------------------------
Calgary Ottawa Argentina (4) Panama
Montreal Vancouver Brazil Paraguay (4)
Colombia Venezuela (2)
Costa Rica
Guatemala
Honduras (2)
Mexico (6)
</TABLE>
Management anticipates continued expansion of international wholesale
distribution in Central/Latin/South 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.
Presently, TIFFANY & CO. boutiques are located in 27 Mitsukoshi department
stores and other retail locations operated with Mitsukoshi in Japan. The
Company also operates 22 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.
- -Page 11-
<PAGE>
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
224,000 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:
<TABLE>
<CAPTION>
Worldwide Retail Locations Operated by Registrant's Subsidiary Companies
------------------------------------------------------------------------
Americas and Europe Asia-Pacific
------------------- ------------
End of Canada,
Fiscal: U.S. Central/Latin/South Europe Japan Elsewhere Total
Americas
- ---------------- --------------- ----------------- ---------------- --------------------- ---------------------- --------
<S> <C> <C> <C> <C> <C> <C>
1987 8 0 2 0 0 10
1988 9 0 3 0 1 13
1989 9 0 5 0 2 16
1990 12 0 5 0 3 20
1991 13 1 7 0 4 25
1992 16 1 7 7 4 35
1993 16 1 6 37** 5 65
1994 18 1 6 37 7 69
1995 21 1 6 38 9 75
1996 23 1 6 39 12 81
1997 28 2 7 42 17 96
1998 34 2 7 44 17 104
1999 38 3 8 44 17 110
2000 42 4 8 44 21 119
2001 44 5 10 47 20 126
</TABLE>
**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.
- -Page 12-
<PAGE>
Advertising and Promotion
Tiffany regularly advertises its business, primarily in newspapers and
magazines. In Fiscal 1999, 2000 and 2001, Tiffany spent approximately $57.3
million, $65.4 million, and $68.1 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 of the arts and environmental conservation. The Company also
engages in a 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 window displays are another important aspect of Tiffany's promotional
efforts. John Loring, Tiffany's Design Director, is the author of numerous 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(R)
and the color TIFFANY BLUE(R) 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.
- -Page 13-
<PAGE>
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. 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 1999, 2000 and 2001. Merchandise designed by Ms. Picasso accounted for
3% of the Company's net sales in Fiscal 1999, 2000 and 2001.
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
jewelry and silver goods manufacturing facility in Cumberland, Rhode Island and
Tiffany's workshops in New York City and Pelham, New York; Parsippany, New
Jersey; Salem, West Virginia; and Paris, France and through purchases and
consignments from others. The following table shows Tiffany's sources of
merchandise, based on cost, for the periods indicated:
<TABLE>
<CAPTION>
Fiscal Years
1999 2000 2001
---- ---- ----
<S> <C> <C> <C>
Produced by Tiffany 37% 46% 44%
Purchased from others 63 54 56
--- --- ---
Total 100% 100% 100%
=== === ===
</TABLE>
The preceding figures include the cost of precious gems incorporated in
such merchandise. Approximately 39% of the merchandise purchased from others in
Fiscal 2001 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.
- -Page 14-
<PAGE>
Products containing one or more diamonds of varying sizes, including
diamonds used as accents, side-stones and center-stones, accounted for
approximately 38%, 40% and 38% of Tiffany's net sales in Fiscal 1999, 2000 and
2001, 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 four 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 2001 the Company entered into a joint arrangement and distribution
contract with Aber Diamond Corporation ("Aber"), a publicly-traded company
headquartered in Canada. In 1999, the Company made a 14.7% equity investment
($71 million) in Aber by purchasing 8 million unregistered shares of its common
stock. It is expected that Tiffany's alliance with Aber, a 40% participant 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 the first half of 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 65% 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 50% 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, in the future, sell cut and
polished diamonds marked with the DTC's proprietary trademark. Such a 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 is likely to become a competitor of Tiffany.
- -Page 15-
<PAGE>
Increasing attention has been focused within the last few years on the
issue of "conflict" diamonds. Conflict diamonds are extracted from war-torn
regions and sold by rebel forces to fund insurrection. Allegations have been
made in the press that diamonds are used as a source to further terrorist
activities. 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
expected that such efforts, if successful, will not 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 100 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 2001 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
- -Page 16-
<PAGE>
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
continuing 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, 2002, the Registrant's subsidiary corporations
employed an aggregate of approximately 5,938 full-time and part-time persons. Of
those employees, 4,798 are employed in the United States. Of Tiffany's total
employees, approximately 2,378 persons are salaried employees, 617 are engaged
in manufacturing and 2,985 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 repurchased 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 40,000
gross square feet of this 124,000 square foot building are devoted to retail
sales, with the balance devoted to administrative offices, certain product
services, jewelry manufacturing and storage. During Fiscal 2001, Tiffany
completed its first phase of a four-year renovation project, which include a 25%
increase of its selling space and the reconfiguration of two floors of office
space for customer service and special exhibitions. Over the next three years,
renovations of other existing selling space will be completed.
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
- -Page 17-
<PAGE>
"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. To meet increased demand, the
computer and office center areas were expanded during Fiscal 2001. In January
2001, Tiffany exercised its right under the lease to purchase the CSC for a
scheduled purchase price. This capital lease buyout was completed on January 31,
2002. Registrant believes that the CSC has been properly designed to handle
worldwide distribution functions and that it is suitable for that purpose. The
CSC currently comprises approximately 370,000 square feet, of which
approximately 186,000 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.
In anticipation of growth in sales volume and company-operated stores,
in Fiscal 2001 Tiffany entered into a ground lease 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. Construction of the facility has
commenced and occupancy is 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. When the new facility
becomes operational, the CSC will be devoted to store replenishment and
wholesale support activities.
Manufacturing Facility - Cumberland, Rhode Island
In January 2000 Tiffany entered into a purchase agreement for the
purchase of undeveloped property in Cumberland, Providence County, Rhode Island
in order to construct and occupy a 100,000 square foot jewelry and silver goods
manufacturing facility.(3) In May 2001, construction of the facility was
completed and Tiffany commenced operations.
- --------
(3) 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.
- -Page 18-
<PAGE>
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):
<TABLE>
<CAPTION>
U.S. BRANCH STORE LEASES
------------------------
CITY STATE/TERR. LOCATION EXPIRATION DATE RENEWAL OPTIONS
- ---- ----------- -------- --------------- ---------------
<S> <C> <C> <C> <C>
Atlanta GA Phipps Plaza Shopping Center July 31, 2010
Bal Harbour FL Bal Harbour Shops May 31, 2003
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
Charlotte NC SouthPark Mall December 31, 2007 One five-year term
Chestnut Hill MA The Atrium January 31, 2008 One five-year term
Chevy Chase MD 5500 Wisconsin Avenue January 31, 2006
Chicago IL 730 North Michigan Avenue October 20, 2012 Two five-year terms
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
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, 2006
King of Prussia PA King of Prussia Plaza November 30, 2005 One five-year term
Las Vegas NV Bellagio March 1, 2008 One ten-year term
Manhasset NY Americana Shopping Center June 9, 2008
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 Center December 31, 2007 One five-year term
San Francisco CA Union Square November 1, 2010 One ten-year term
Santa Clara (San Jose) CA Westfield Shoppingtown Valley Fair January 31, 2012
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
Tampa FL International Plaza January 31, 2012 One five-year term
Tamuning Guam Tumon Sands Plaza September 30, 2003
Troy MI The Somerset Collection September 30, 2007
Vienna VA Fairfax Square March 31, 2010 One five-year term
White Plains NY The Westchester March 31, 2005 One five-year term
</TABLE>
- -Page 19-
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL BRANCH STORE LEASES
---------------------------------
COUNTRY CITY LOCATION EXPIRATION DATE RENEWAL OPTIONS
- ------- ---- -------- --------------- ---------------
<S> <C> <C> <C> <C>
Australia Sydney Chifley Tower October 18, 2004 One five-year term
Australia Melbourne Crown Casino May 7, 2002
Australia Melbourne 267 Collins Street October 31, 2005 Three five-year terms
Brazil Sao Paulo Shopping Center Iguatemi January 1, 2006 Two five-year terms
Canada Toronto 85 Bloor Street West August 31, 2006 One seven-year term
England London 25 Old Bond Street March 24, 2016
England London The Royal Exchange August 31, 2016 Three five-year terms
France Paris 6 Rue de la Paix April 1, 2011
Germany Frankfurt 20 Goethestrasse January 31, 2011 One ten-year term
Germany Munich Residenzstrasse 11 January 31, 2004 One five-year term
Hong Kong Causeway Bay Lee Gardens June 30, 2003
Hong Kong The Landmark May 31, 2005
Hong Kong Kowloon The Peninsula February 29, 2004
Hong Kong Pacific Place October 31, 2003
Italy Florence Via Tornabuoni December 31, 2007
Italy Milan Via della Spiga October 31, 2005
Italy Rome Via Del Babuino December 31, 2007 One six-year term+
Japan Tokyo Ginza October 24, 2005 One three-year term
Korea Pusan Paradise Hotel September 20, 2003 One two-year option
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
Singapore Raffles Hotel September 15, 2003
Singapore Ngee Ann City September 14, 2005 One one-year term
Switzerland Zurich Bahnhofstrasse 14 September 30, 2005
Taiwan Taipei Regent Hotel April 30, 2006
</TABLE>
+ 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 19, Tiffany has
entered into the following new leases for domestic stores expected to open in
2002: a 15-year lease for a 5,500 square foot store at Bellevue Square in
Bellevue, Washington, a 10-year lease for a 4,800 square foot store at Plaza
Frontenac in St. Louis, Missouri, a 10-year lease for a 5,700 square foot store
in The Mall at Millenia in Orlando, Florida, a 10-year lease for a 3,300 square
foot store at 53 Main Street in East Hampton, New York and a 15-year lease for a
10,100 square foot store on Kalakaua Avenue, Waikiki, Honolulu, Hawaii.
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
- -Page 20-
<PAGE>
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, 2002.
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of Registrant are:
<TABLE>
<CAPTION>
NAME AGE POSITION YEAR JOINED TIFFANY
- ---- --- -------- -------------------
<S> <C> <C> <C>
William R. Chaney 69 Chairman of the Board of Directors 1980
Michael J. Kowalski 50 President and Chief Executive Officer 1983
James E. Quinn 50 Vice Chairman 1986
Beth O. Canavan 47 Executive Vice President 1987
James N. Fernandez 46 Executive Vice President and 1983
Chief Financial Officer
Victoria Berger-Gross 46 Senior Vice President -- Human Resources 2001
Patrick B. Dorsey 51 Senior Vice President -- General Counsel 1985
and Secretary
Linda A. Hanson 41 Senior Vice President -- Merchandising 1990
Fernanda M. Kellogg 55 Senior Vice President -- Public Relations 1984
Caroline D. Naggiar 44 Senior Vice President -- Marketing 1997
John S. Petterson 43 Senior Vice President -- Operations 1988
</TABLE>
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, the Atlantic Mutual
Companies and Provident Holdings, Inc. Bank of New York is Tiffany's principal
banking relationship
- - Page 21 -
<PAGE>
serving as Administrative Agent and a lender under the Registrant's revolving
credit facility and as trustee of the Tiffany and Company Pension Plan.
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. At the request of the Registrant, Mr. Quinn also serves on the board
of directors of Little Switzerland, Inc., a specialty retailer of brand name
watches, jewelry and giftware in which the Registrant holds a 45% equity
interest.
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. In May 2001,
Ms. Canavan also assumed responsibility for direct sales and business sales
activities in the U.S. and Canada.
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. At the
request of the Registrant, Mr. Fernandez serves on the board of directors of
Aber Diamond Corporation, a publicly-traded company in which the Registrant
holds a 14.7% equity interest. Aber is a 40% participant of the Diavik Diamonds
Project in Northwest Canada.
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. At the request of the Registrant, Mr. Dorsey serves on the board of
directors of Little Switzerland, Inc.,
- - Page 22 -
<PAGE>
a specialty retailer of brand name watches, jewelry and giftware in which the
Registrant holds a 45% equity interest.
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. In May 2001, Mr. Petterson assumed the new
role of Senior Vice President - Operations, with responsibility for worldwide
distribution, customer service and security activities.
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. In
consolidated trading, the high and low selling prices per share for shares of
such Common Stock for Fiscal 2000 were:
<TABLE>
<CAPTION>
Fiscal 2000 High Low
- ----------- ------ ------
<S> <C> <C>
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
</TABLE>
In consolidated trading, the high and low selling prices per share for
shares of such Common Stock for Fiscal 2001 were:
<TABLE>
<CAPTION>
Fiscal 2001 High Low
- ----------- ------ ------
<S> <C> <C>
First Fiscal Quarter $37.16 $25.12
Second Fiscal Quarter $38.25 $31.55
Third Fiscal Quarter $36.60 $19.90
Fourth Fiscal Quarter $36.59 $22.86
</TABLE>
- - Page 23 -
<PAGE>
On March 22, 2002, the high and low selling prices quoted on such
exchange were $36.40 and $35.75, respectively. On March 22, 2002 there were
3,416 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 2000, a dividend of $0.03 per share of Common Stock was
paid on April 10, 2000. The preceding dividend per share has been adjusted for a
two-for-one 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 Fiscal 2001, dividends of $0.04 per share of
Common Stock were paid on April 10, 2001, July 10, 2001, October 10, 2001 and
January 10, 2002.
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, 1,735,408 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, 2002, page 16.
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, 2002, pages 17-26.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Incorporated by reference from Registrant's Annual Report to Stockholders for
the Fiscal Year ended January 31, 2002, pages 27-48.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
NONE.
- - Page 24 -
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Incorporated by reference from Registrant's Proxy Statement dated April 10,
2002, pages 7-11 and 26-29.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated by reference from Registrant's Proxy Statement dated April 10,
2002, pages 12-24.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
Incorporated by reference from Registrant's Proxy Statement dated April 10,
2002, pages 4-7.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated by reference from Registrant's Proxy Statement dated April 10,
2002, pages 17 and 26-29.
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 2001 Annual Report to Stockholders
of Tiffany & Co. and Subsidiaries:
Report of Independent Accountants
(following this Form 10-K)
Consolidated Balance Sheets
as of January 31, 2002 and 2001
Consolidated Statements of Earnings
for the years ended January 31, 2002, 2001, and 2000
Consolidated Statements of Stockholders' Equity and Comprehensive Earnings for
the years ended January 31, 2002, 2001 and 2000
Consolidated Statements of Cash Flows
- - Page 25 -
<PAGE>
for the years ended January 31, 2002, 2001 and 2000
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.
- - Page 26 -
<PAGE>
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. Incorporated by reference from Exhibit 3.1b to
Registrant's Report on Form 10-K for the Fiscal Year ended January
31, 2001.
3.2 By-Laws of Registrant (as last amended July 19, 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.
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.
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.
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.
- - Page 27 -
<PAGE>
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.
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.
10.129 Agreement made the 1st day of August 2001 by and between Tiffany &
Co. Japan Inc. and Mitsukoshi Limited. Incorporated by reference
from Exhibit 10.128 filed with Registrant's Report on Form 8-K
dated August 1, 2001.
10.130 Credit Agreement dated as of November 5, 2001, by and among
Registrant, Tiffany and Company, Tiffany & Co. International, each
other Subsidiary of Registrant that is a Borrower and is a
signatory thereto and The Bank of New York, as the Swing Line
Lender, as the Issuing Bank, as a Lender, and as Administrative
Agent, ABN AMRO Bank N.V., The Chase Manhattan Bank, The Dai-ichi
Kangyo Bank Ltd., Firstar Bank, NA, and Fleet National Bank, Fleet
Precious Metals Inc. (collectively, as a Lender). Incorporated by
reference from Exhibit 10.130 filed with Registrant's Report on
Form 10-Q for the Fiscal quarter ended October 31, 2001.
10.131 Guaranty Agreement dated as of November 5, 2001, with respect to
the Credit Agreement (see Exhibit 10.129 above) by and among
Registrant, Tiffany and Company, Tiffany & Co. International, and
Tiffany & Co. Japan Inc. and The Bank of New York, as
Administrative Agent. Incorporated by reference from Exhibit
10.131 filed with Registrant's Report on Form 10-Q for the Fiscal
quarter ended October 31, 2001.
13.1 Annual Report to Stockholders for Fiscal Year Ended January 31,
2002 (pages 16-48 of such Annual Report have been filed in
electronic format).
21.1 Subsidiaries of Registrant.
- - Page 28 -
<PAGE>
23.1 Consent of PricewaterhouseCoopers LLP, independent accountants.
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.
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.
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
- - Page 29 -
<PAGE>
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.
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.
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.
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.
Incorporated by reference from Exhibit 10.127a to Registrant's
Report on Form 10-K for the Fiscal Year ended January 31, 2001.
- - Page 30 -
<PAGE>
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.
- - Page 31 -
<PAGE>
(b) Reports on Form 8-K.
On November 14, 2001, Registrant filed a Report on Form 8-K
reporting sales and earnings for the three-month period ended October 31, 2001.
On January 8, 2002, 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, 2001.
On February 28, 2002, 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, 2002.
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, 2002 By: /s/ Michael J. Kowalski
-------------------------------------
Michael J. Kowalski
President and Chief Executive Officer
- - Page 32 -
<PAGE>
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/ Abby F. Kohnstamm
------------------------------ ---------------------------------------
Charles K. Marquis Abby F. Kohnstamm
Director Director
April 10, 2002
- - Page 33 -
<PAGE>
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 27, 2002 appearing in the fiscal 2001 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 27, 2002
- - Page 34 -
<PAGE>
TIFFANY & CO. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<TABLE>
<CAPTION>
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
----------- --------- --------- -------------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Year Ended
January 31, 2002:
Reserves deducted from
assets:
Accounts receivable allowances:
Doubtful accounts $ 3,890,470 $ 1,694,924 -- $ 2,789,994(a) $ 2,795,400
Sales returns 4,082,816 -- -- -- 4,082,816
Allowance for inventory
liquidation and
obsolescence 18,394,815 10,084,907 -- 9,646,558(b) 18,833,164
Allowance for inventory
shrinkage 3,013,949 3,797,454 -- 3,292,558(c) 3,518,845
LIFO reserve 15,942,286 3,028,295 -- -- 18,970,581
</TABLE>
- -------------------
(a) Uncollectible accounts written off.
(b) Liquidation of inventory previously written down to market.
(c) Physical inventory losses.
<PAGE>
TIFFANY & CO. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<TABLE>
<CAPTION>
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
----------- --------- -------- -------------- ---------- ---------
<S> <C> <C> <C> <C> <C>
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
</TABLE>
- -------------------
(a) Uncollectible accounts written off.
(b) Liquidation of inventory previously written down to market.
(c) Physical inventory losses.
<PAGE>
TIFFANY & CO. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<TABLE>
<CAPTION>
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
----------- --------- -------- -------------- ---------- ---------
<S> <C> <C> <C> <C> <C>
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
</TABLE>
- -------------------
(a) Uncollectible accounts written off.
(b) Liquidation of inventory previously written down to market.
(c) Physical inventory losses.
<PAGE>
EXHIBIT INDEX
SEE PAGES 27 THROUGH 30 FOR A COMPLETE LIST OF EXHIBITS FILED, INCLUDING
EXHIBITS INCORPORATED BY REFERENCE FROM PREVIOUSLY FILED DOCUMENTS.
EXHIBIT DESCRIPTION
- ------- -----------
3.2 By-Laws of Registrant (as last amended July 19, 2001).
13.1 Annual Report to Stockholders for Fiscal Year Ended January 31,
2002 (pages 16-48 of such Annual Report have been filed in
electronic format).
21.1 Subsidiaries of Registrant.
23.1 Consent of PricewaterhouseCoopers LLP, independent accountants.
- - Page -
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.2
<SEQUENCE>3
<FILENAME>y58691ex3-2.txt
<DESCRIPTION>BY-LAWS AS AMENDED
<TEXT>
<PAGE>
Exhibit 3.2
Tiffany & Co.
Report on Form 10-K
RESTATED BY-LAWS
AS LAST AMENDED JULY 19, 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.
<PAGE>
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
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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
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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:
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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,
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<PAGE>
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 eight (8), 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
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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
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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
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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
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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
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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
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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.
Page 12
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13.1
<SEQUENCE>4
<FILENAME>y58691ex13-1.txt
<DESCRIPTION>ANNUAL REPORT TO STOCKHOLDERS: FOR Y/E 01/31/2002
<TEXT>
<PAGE>
EXHIBIT 13.1
[ 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 1997-2001. 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 in 2000 of the Emerging Issues
Task Force Issue 00-10, "Accounting for Shipping and Handling Fees and Costs."
All share and per share data have been retroactively adjusted to reflect the
two-for-one splits in 2000 and 1999 of the Company's Common Stock effected in
the form of share distributions (stock dividends).
<TABLE>
<CAPTION>
(in thousands, except per share amounts,
percentages, stores and boutiques and employees) 2001 2000 1999 1998 1997
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
EARNINGS DATA
Net sales $1,606,535 $1,668,056 $1,471,690 $1,177,929 $1,024,843
Gross profit 943,477 948,414 821,680 625,599 536,016
Earnings from operations 309,897 327,396 256,883 161,122 133,422
Net earnings 173,587 190,584 145,679 90,062 72,822
Net earnings per diluted share 1.15 1.26 0.97 0.63 0.50
Weighted average number of
diluted common shares 150,517 151,816 149,666 143,936 144,416
BALANCE SHEET AND
CASH FLOW DATA
Total assets $1,629,868 $1,568,340 $1,343,562 $1,057,023 $ 827,067
Cash and cash equivalents 173,675 195,613 216,936 188,593 107,252
Inventories, net 611,653 651,717 504,800 481,439 386,431
Working capital 612,978 667,647 610,685 522,927 381,084
Net cash provided by operations 241,506 110,696 230,351 80,178 29,652
Capital expenditures 170,806 108,382 171,237 62,821 50,565
Short-term borrowings and current
portion of long-term debt 91,902 28,778 20,646 97,370 90,054
Long-term debt 179,065 242,157 249,581 194,420 90,930
Stockholders' equity 1,036,945 925,483 757,076 516,453 443,724
Stockholders' equity per share 7.15 6.34 5.22 3.72 3.18
Cash dividends per share 0.160 0.150 0.113 0.085 0.065
RATIO ANALYSIS AND OTHER DATA
As a percentage of net sales:
Earnings from operations 19.3% 19.6% 17.5% 13.7% 13.0%
Net earnings 10.8% 11.4% 9.9% 7.6% 7.1%
Current ratio 2.8:1 3.0:1 3.2:1 2.8:1 2.5:1
Return on average assets 10.9% 13.1% 12.1% 9.6% 9.3%
Return on average stockholders' equity 17.7% 22.7% 22.9% 18.8% 17.7%
Net-debt as a percentage of total capital 8.6% 7.5% 6.6% 16.7% 14.2%
Company-operated stores and boutiques 126 119 110 104 96
Number of employees 5,938 5,960 5,368 4,845 4,360
</TABLE>
TIFFANY & CO. AND SUBSIDIARIES
[ 16 ]
<PAGE>
[ MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS ]
RESULTS OF OPERATIONS
CRITICAL ACCOUNTING POLICIES
Management's discussion and analysis of results of operations and financial
condition are based upon the Company's consolidated financial statements. These
statements have been prepared in accordance with accounting principles generally
accepted in the United States of America. These principles 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 and assumptions include valuation of inventories, provisions for
income taxes and uncollectible accounts, the recoverability of non-consolidated
investments and long-lived assets and pension and other postretirement benefits.
Actual results could differ from these estimates. Periodically, the Company
reviews all significant estimates and assumptions affecting the financial
statements and records the effect of any necessary adjustments.
The following critical accounting policies rely upon assumptions and estimates
and were used in the preparation of the Company's consolidated financial
statements:
Sales returns: 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. The Company's customers have the right to return merchandise. 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.
Credit losses: The Company maintains a reserve for potential credit losses based
on estimates of the credit- worthiness of the Company's customers. If the
financial condition of the Company's customers was to deteriorate, resulting in
an impairment of their ability to make payments, additional allowances may be
required.
Inventory: The Company writes down its inventory for discontinued, slow-moving
and unmarketable inventory. This write-down is equal to the difference between
the cost of inventory and its estimated market value based upon assumptions
about future demand and market conditions. If actual market conditions are less
favorable than those projected by management, additional inventory write-downs
may be required. In addition, the Company's domestic and foreign branch
inventories are valued using the LIFO (last-in, first-out) method. Fluctuation
in inventory levels, along with the cost of raw materials, could impact the
carrying value of the Company's inventory.
Long-lived assets: The Company periodically reviews long-lived assets for
impairment by comparing the carrying value of the assets with their estimated
future undiscounted cash flows. If it is determined that an impairment loss has
occurred, the loss is recognized during that period.
Non-consolidated investments: Future adverse changes in market conditions or
poor operating results of underlying investments could result in losses or an
inability to recover the carrying value of the investments that may not be
reflected in an investment's current carrying value, thereby possibly requiring
an impairment charge in the future.
Income taxes: Income taxes are accounted for by using 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 believes that all net deferred tax assets shown on its
balance sheet are more likely than not to be realized in the future. While the
Company has considered future taxable income and ongoing prudent and feasible
tax planning strategies in assessing the need for a valuation allowance, in the
event the Company were to determine that it would not be able to realize all or
part of its net deferred tax asset in the future, an adjustment to the deferred
tax asset would be charged to earnings in the period such determination was
made.
Employee benefit plans: The Company maintains a noncontributory defined benefit
pension plan covering substantially all domestic salaried and full-time hourly
TIFFANY & CO. AND SUBSIDIARIES
[ 17 ]
<PAGE>
employees and provides certain postretirement health care and life insurance
benefits for retired employees. The Company makes certain assumptions that
affect the underlying estimates related to pension and other postretirement
costs. Significant declines in interest rates, declining securities market
values and changes to projected increases in health care costs would require the
Company to revise key assumptions and could result in a charge to earnings.
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 in markets
outside the U.S., as well as a limited amount of business-to-business sales,
Internet sales and wholesale sales to independent retailers and distributors in
certain of those markets; Direct Marketing includes business-to-business,
catalog and Internet sales in the U.S.
All references to years relate to the fiscal year that ends 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 declined 4% in 2001 following a 13% increase in 2000. The Company's
reported sales reflect either a translation-related benefit from strengthening
foreign currencies or a detriment from a strengthening U.S. dollar. On a
constant-exchange-rate basis, net sales increased fractionally in 2001 and rose
13% in 2000, largely due to a worldwide comparable store sales decline of 4% in
2001 and an increase of 13% in 2000. Net earnings declined 9% in 2001 following
a 31% increase in 2000.
In order to focus on Company-operated stores and to eliminate marginally
profitable operations, the Company eliminated certain wholesale selling
operations. In January 2001, wholesale sales of fragrance products were
discontinued in the U.S. and in most international markets; in July 2000,
wholesale sales of jewelry and non-jewelry items were discontinued in Europe;
and in January 2000, wholesale sales of jewelry and non-jewelry items were
discontinued in the U.S. In connection with these decisions, the Company
established product return reserves, which had the cumulative 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. There were no product
return reserves remaining for these operations at January 31, 2002. Management
believes that these decisions, singularly and in the aggregate, did not
significantly affect the Company's financial position, earnings or cash flows,
although the elimination of wholesale sales and the related accounts receivable
modestly affected year-over-year comparisons.
Net sales includes shipping and handling fees billed to customers while cost of
sales includes the related costs as recommended by the Emerging Issues Task
Force Issue 00-10, "Accounting for Shipping and Handling Fees and Costs."
The following table highlights certain operating data as a percentage of net
sales:
<TABLE>
<CAPTION>
2001 2000 1999
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales 100.0% 100.0% 100.0%
Cost of sales 41.3 43.1 44.2
--------------------------------
Gross profit 58.7 56.9 55.8
Selling, general and
administrative expenses 39.4 37.3 38.3
--------------------------------
Earnings from operations 19.3 19.6 17.5
Other expenses, net 1.3 0.6 0.6
--------------------------------
Earnings before income taxes 18.0 19.0 16.9
Provision for income taxes 7.2 7.6 7.0
--------------------------------
Net earnings 10.8% 11.4% 9.9%
================================
</TABLE>
TIFFANY & CO. AND SUBSIDIARIES
[ 18 ]
<PAGE>
NET SALES
Net sales by channel of distribution were as follows:
<TABLE>
<CAPTION>
(in thousands) 2001 2000 1999
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Retail $ 786,792 $ 833,221 $ 744,425
International Retail 659,028 679,274 589,607
Direct Marketing 160,715 155,561 137,658
---------------------------------------------
$1,606,535 $1,668,056 $1,471,690
=============================================
</TABLE>
<TABLE>
<CAPTION>
(percentage of net sales) 2001 2000 1999
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Retail 49% 50% 51%
International Retail 41 41 40
Direct Marketing 10 9 9
---------------------------------------------
100% 100% 100%
=============================================
</TABLE>
U.S. Retail sales declined 6% in 2001 and rose 12% in 2000, largely reflecting a
comparable store sales decline of 8% in 2001, following a 12% increase in 2000.
Management attributes the comparable store sales decline in 2001 to challenging
economic and retail conditions that resulted in smaller average transaction
sizes, as well as lower levels of customer traffic and transactions in many of
Tiffany's stores following the events of September 11th. The comparable store
sales increase in 2000 was geographically broad-based and was due to an
increased number of transactions. Sales in the New York flagship store declined
15% in 2001 and rose 6% in 2000, and represented 11%, 12% and 13% of net sales
in 2001, 2000 and 1999. Comparable U.S. branch store sales declined 6% in 2001
and increased 15% in 2000. Comparable sales to domestic customers, accounting
for the majority of U.S. sales, decreased in 2001 and rose in 2000. Comparable
sales to foreign tourists, as a percentage of U.S. Retail sales, decreased in
2001 and were unchanged in 2000. The Company opened two U.S. stores in 2001 and
four stores in 2000 and, as part of a multi-year renovation project, added an
additional selling floor in its New York flagship store in November 2001.
International Retail sales decreased 3% in 2001 and increased 15% in 2000. When
compared with the prior year, the average yen rate was weaker in 2001 and
stronger in 2000. Therefore, on a constant-exchange-rate basis, International
Retail sales rose 7% in 2001 and 14% in 2000. Japan represented 28%, 28% and 27%
of net sales in 2001, 2000 and 1999. Total retail sales in Japan in local
currency rose 10% in 2001 and 13% in 2000, partly due to comparable store sales
growth of 3% in 2001 and 11% in 2000. Management believes that increasingly
difficult economic conditions in Japan affected sales growth in 2001. Unit sales
rose in 2001 and 2000 but were partly offset in 2001 by a smaller average
transaction size. In 2001, four new boutiques were opened and one older one was
closed, while in 2000 three new boutiques were opened and three older ones were
closed. The Asia-Pacific region outside Japan represented 6%, 7% and 7% of net
sales in 2001, 2000 and 1999. Comparable sales on a constant-exchange-rate
basis in Company-operated stores and boutiques in that region declined
fractionally in 2001 and rose 26% in 2000. In that region, the Company opened
two stores and closed three boutiques in 2001, while in 2000 the Company opened
four retail stores. Europe represented 4% of net sales in 2001, 2000 and 1999
and comparable sales on a constant-exchange-rate basis in Company- operated
stores increased 1% in 2001 and rose 23% in 2000. The Company opened two stores
in Europe in 2001.
Worldwide gross square footage for Company-operated stores increased 9% in 2001
and 7% in 2000. The Company's strategy is to continue to open Company-operated
stores in U.S. and international markets with an overall objective of at least
5% annual growth in gross retail store square footage. The long-term plan in the
U.S. is to open an average of three to five stores per year in new and/or
existing markets. Plans for 2002 include opening stores in St. Louis, Missouri,
Orlando, Florida, Bellevue, Washington, East Hampton, New York and Honolulu,
Hawaii (which will replace two existing hotel boutiques). The Company's
long-term international expansion plans include opening two to three locations
per year in Japan and renovating and/or expanding certain existing locations, as
well as opening locations in other international markets. Plans for 2002 include
opening two boutiques in Japan, and additional retail stores in Korea and
Taiwan.
TIFFANY & CO. AND SUBSIDIARIES
[ 19 ]
<PAGE>
In 2001, the Company signed new distribution agreements with Mitsukoshi Ltd. of
Japan ("Mitsukoshi"), whereby TIFFANY & CO. boutiques will continue to operate
within Mitsukoshi's stores in Japan until at least January 31, 2007. Existing
agreements were scheduled to expire in 2001. The new agreements largely continue
the principles on which Mitsukoshi and the Company have been cooperating since
1993, when the relationship was last renegotiated. The main agreement, which
will expire on January 31, 2007, covers the continued operation of 24 TIFFANY &
CO. boutiques. A separate set of agreements covers the operation of a
freestanding TIFFANY & CO. store on Tokyo's Ginza. Under the new agreements, the
Company is not restricted from further expansion of its Tokyo operations. In
addition, the Company will pay to Mitsukoshi a reduced percentage fee based on
certain sales beginning in 2002, followed by a greater reduction in fees
beginning in 2003.
Direct Marketing sales increased 3% in 2001 following a 13% increase in 2000.
Sales in the Business Sales division (formerly called the Corporate division)
declined 13% in 2001 due to a lower average order size and rose 7% in 2000
primarily due to an increased number of orders. Combined Internet and catalog
sales increased 23% in 2001 and 21% in 2000, primarily due to strong growth in
Internet sales. The Company launched Internet sales in 1999 and, since then, has
increased the number of products online from approximately 225 to 2,400 and
plans a modest increase in products in 2002. The Company mailed 26 million, 25
million and 26 million catalogs in 2001, 2000 and 1999 and currently plans to
mail 24-25 million catalogs in 2002.
GROSS PROFIT
Gross profit as a percentage of net sales ("gross margin") increased in 2001 and
2000. Management attributes the increases in both years to shifts in sales mix
toward lower-priced items that carry a higher gross margin, as well as to
improved efficiencies in product manufacturing and sourcing and selective price
increases. In 2000, the Company also achieved the leverage effect of increased
sales on the fixed component of cost of sales. The Company's hedging program
(see Note K to the Consolidated Financial Statements) uses yen put options to
stabilize product costs in Japan over the short-term despite exchange rate
fluctuations, but the Company adjusts its retail prices in Japan from time to
time to address longer-term changes in the yen/dollar relationship and local
competitive pricing. Management's ongoing strategy and objectives include
achieving further product manufacturing/sourcing efficiencies, leveraging its
fixed costs and implementing selective price adjustments, 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 2% in 2001 and 10% in 2000. In both years, SG&A growth was
affected by incremental depreciation, staffing, occupancy and marketing expenses
related to the Company's overall worldwide expansion program. Management acted
to restrain growth in discretionary spending in 2001. However, the rate of SG&A
growth was also moderated by lower sales-related variable expenses and by the
translation effect of a weaker yen; the latter two factors had the opposite
effect on the rate of SG&A growth in 2000. As a percentage of net sales, SG&A
rose in 2001 following a decline in 2000. Management's longer-term objective is
to reduce this percentage by leveraging sales growth against the Company's
fixed-expense base.
EARNINGS FROM OPERATIONS
As a result of the above factors, earnings from operations declined 5% in 2001
following a 27% increase in 2000. As a percentage of net sales, earnings from
operations declined in 2001 and increased in 2000. On a reportable segment
basis, the ratio of earnings from operations (before the effect of unallocated
corporate expenses and interest and other expenses, net) to net sales in 2001,
2000 and 1999 was as follows: U.S. Retail was 25%, 28% and 24%; International
Retail was 30%, 28% and 25%; and Direct Marketing was 16%, 14% and 13%. Sales
levels, gross margins and the ability to leverage fixed expenses affected
changes in profitability in each segment.
TIFFANY & CO. AND SUBSIDIARIES
[ 20 ]
<PAGE>
INTEREST EXPENSE AND FINANCING COSTS
In 2001, interest expense rose primarily due to interest costs resulting from
the Company's decision to purchase its 370,000 square foot Parsippany, New
Jersey customer service/distribution center and office facility ("CSC") which
resulted in the conversion of the operating lease into a capital lease. In 2000,
interest expense rose due to higher short-term borrowings related to increased
working capital and capital expenditure requirements. Management expects
interest expense and financing costs to increase modestly in 2002 primarily as a
result of the Company's planned expansion.
OTHER EXPENSE (INCOME), NET
Other expense (income), net includes interest income and realized and unrealized
gains (losses) on investment activities. In 2001, other expense (income), net
declined due to lower interest income earned on cash and cash equivalents, a
pretax impairment charge of $7,800,000, representing the Company's total
investment in a third-party provider of online wedding gift registry services,
and the recognition of the Company's share of losses in equity investments. This
was partially offset by a pretax gain of $5,257,000, based on the Company's
approximate 14.7% equity interest in Aber Diamond Corporation ("Aber"), a
publicly-traded company headquartered in Canada, which sold its interest in the
Snap Lake Project to De Beers Canada Mining, Inc. in February 2001. In 2000,
other expense (income), net rose 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 both 2001 and 2000 and was 41.3%
in 1999. The declining rate in 2000 was due to shifts in the geographical
business mix toward lower-tax jurisdictions.
NEW ACCOUNTING STANDARDS
In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 141, "Accounting for Business
Combinations" and SFAS No. 142, "Accounting for Goodwill and Other Intangible
Assets." SFAS No. 141 requires that all business combinations initiated after
June 30, 2001 be accounted for using the purchase method of accounting. SFAS No.
142 requires that goodwill and certain other intangible assets no longer be
amortized to earnings. In addition, the Company will be required to review
goodwill and certain other intangible assets annually for potential impairment.
On February 1, 2002, the Company adopted these standards and their application
is not expected to have a significant impact on the Company's financial
position, earnings or cash flows.
In September 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations," which addresses the accounting and financial reporting
for legal obligations associated with the retirement of tangible long-lived
assets and the associated retirement costs. The provisions of SFAS No. 143 will
be effective for the Company's financial statements for the fiscal year
beginning February 1, 2003. The Company does not expect the adoption of this
standard to have a significant impact on its financial position, earnings or
cash flows.
In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets," which addresses the accounting for impairment or
disposal of long-lived assets and discontinued operations. On February 1, 2002,
the Company adopted this standard and its application had no significant impact
on its financial position, earnings or cash flows.
EURO CONVERSION
On January 1, 2002, new euro-denominated bills and coins were issued by 11 of
the 15 member countries of the European Economic and Monetary Union, and
existing currencies have since been withdrawn from circulation. The Company's
policy is to maintain uniform pricing among the member countries and, as a
result, the conversion to the euro had no impact on the financial position,
earnings or cash flows of the Company's European businesses.
TIFFANY & CO. AND SUBSIDIARIES
[ 21 ]
<PAGE>
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, 2002 provides sufficient
resources to support current business activities and planned expansion.
The Company achieved net cash inflows from operating activities of $241,506,000
in 2001, $110,696,000 in 2000 and $230,351,000 in 1999. The inflow in 2001 was
greater than 2000 largely due to decreased raw material inventory purchases. The
inflow in 2000 was below 1999 due to increased inventory purchases of finished
goods and raw materials.
Working capital (current assets less current liabilities) and the corresponding
current ratio (current assets divided by current liabilities) were $612,978,000
and 2.8:1 at January 31, 2002 compared with $667,647,000 and 3.0:1 at January
31, 2001.
Accounts receivable at January 31, 2002 were 8% below January 31, 2001 primarily
due to lower sales.
Inventories at January 31, 2002 were 6% below January 31, 2001 and, on a
constant-exchange-rate basis, were 1% below January 31, 2001. A 3% increase in
finished goods was primarily due to lower-than-expected sales levels partially
offset by the translation impact, in the amount of $31,900,000, resulting from
the strengthening of the U.S. dollar. On a constant-exchange-rate basis,
finished goods inventories were 10% above January 31, 2001. Finished goods
inventories were increased to support store openings, product introductions and
wider assortment and greater availability especially in the engagement jewelry
category. In order to adjust inventory levels to reflect sales demand in 2001,
management reduced the quantities of certain finished goods to be purchased from
outside suppliers and selectively adjusted levels of internal production. The
effect was a deceleration in the rate of year-over-year inventory growth at the
end of each quarter in 2001. More than offsetting higher finished goods was a
40% decline in raw material and work-in-process inventories from January 31,
2001 levels. In the latter part of 2000, the Company had made strategic
purchases of diamonds to address the tightening in the market supply of
high-quality diamonds, and increased production to ensure adequate inventory
position in certain categories. The Company's ongoing inventory objectives 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 inventories in each
store; and to improve warehouse management and supply-chain logistics.
Management expects that inventory levels in 2002 will increase to support
anticipated sales growth and new stores, as well as product introductions that
include a new collection of watches.
Capital expenditures and the payment of the capital lease purchase obligation
were $210,291,000 in 2001, $108,382,000 in 2000 and $171,237,000 in 1999. In all
three years, a portion of capital expenditures was related to the opening,
renovation and/or expansion of retail stores and office facilities, expansion of
internal jewelry manufacturing and investments in new systems. The increase in
2001 included costs related to the capital lease buyout and expansion of the
CSC. The Company also commenced construction of a 266,000 square foot customer
fulfillment/distribution center ("CFC") in Hanover Township, New Jersey that
will fulfill shipments to retail, catalog, Internet and business sales
customers. Upon completion of the CFC, the Company's existing CSC will be used
primarily to replenish store inventories. The CFC is scheduled to open in late
2003 and the Company estimates that the overall cost of that project will be
approximately $98,500,000 of which $24,330,000 has been incurred. In 2000, the
Company began a four-year project to renovate and reconfigure its New York
flagship store in order to increase the total sales area by 25% and to provide
additional space for customer service, customer hospitality
TIFFANY & CO. AND SUBSIDIARIES
[ 22 ]
<PAGE>
and special exhibitions. The new second floor opened in November 2001 and
provides an expanded presentation of engagement and other jewelry. In addition,
in conjunction with the New York store project, the Company relocated its
after-sales service functions to a new location and relocated several of its
administrative functions. The Company spent $33,339,000 in 2001 and $38,768,000
to date for the New York store and related projects. Based on current plans, the
Company estimates that the overall cost of these projects will be approximately
$85,000,000. Capital expenditures in 1999 included the Company's cash purchase
of the land and building housing its New York flagship store. Based on current
plans, management expects that capital expenditures will be approximately
$175,000,000-$200,000,000 in 2002, due to costs related to the opening,
renovation and expansion of store and distribution facilities, as well as
ongoing investments in new systems.
In May 2001, the Company made an equity investment in Little Switzerland, Inc.,
a publicly-traded company headquartered in the U.S. Virgin Islands, by
purchasing 7,410,000 newly issued unregistered shares of its common stock, which
represented approximately 45% of Little Switzerland's outstanding shares, at a
cost of $9,546,000, and has provided a loan of $2,500,000.
In February 2000, the Company acquired an approximate 5.4% equity interest in
Della.com, Inc. ("Della"), a provider of online wedding gift registry services.
Immediately thereafter, the Company entered into a Gift Registry Service
Agreement, and, as a result, the Company offers its products through Della's
site and Della developed an online wedding gift registry for the Company, which
was launched in August 2000. In April 2000, Della merged with and into
WeddingChannel.com with the consequence that the Company's equity interest in
Della was converted to an approximate 2.7% interest in WeddingChannel.com,
assuming the conversion of all outstanding preferred shares to common. In 2001,
the Company recorded a pretax impairment charge of $7,800,000, representing the
Company's total investment.
In July 1999, the Company made a strategic investment in Aber by purchasing 8
million unregistered shares of its common stock, which represents approximately
14.7% of Aber's outstanding shares, at a cost of $70,636,000. Aber holds a 40%
interest in the Diavik Diamonds Project in Canada's Northwest Territories, an
operation being developed to mine gem-quality diamonds. Production is expected
to commence in the first half of 2003. In addition, the Company has formed a
joint venture and has entered 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 $23,315,000 in 2001, $21,820,000 in 2000 and $16,083,000 in
1999. In both May 2000 and May 1999, the Board of Directors declared a 33%
increase in the quarterly dividend rate on common shares, effective in July 2000
and July 1999. The dividend payout ratio (dividends as a percentage of net
earnings) was 13% in 2001 and 11% in both 2000 and 1999. 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. That authorization was
superceded in September 2000 by a further authorization of repurchases of up to
$100,000,000 of the Company's Common Stock in the open market. At January 31,
2002, $58,622,000 remained available for future share repurchases. The timing
and actual number of shares repurchased depend on a variety of factors such as
price and other market conditions. The Company repurchased and retired 1,628,000
shares of Common Stock in 2001 at an aggregate cost of $39,265,000, or an
average cost of $24.12 per share; repurchased and retired 465,000 shares of
Common Stock in 2000 at an aggregate cost of $13,319,000, or an average cost of
$28.64 per share. No repurchases were made in 1999.
TIFFANY & CO. AND SUBSIDIARIES
[ 23 ]
<PAGE>
In July 1999, the Company issued 2,900,000 shares of its Common Stock at a price
of $24.69 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 used to
support strategic initiatives and ongoing business expansion.
In October 1999, the Company entered into a yen 5,500,000,000, five-year term
loan agreement due 2004, bearing interest at the six-month Japanese LIBOR, plus
50 basis points, adjusted every six months ("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.
The Company's sources of working capital are internally-generated cash flows
and borrowings available under a multicurrency revolving credit facility
("Credit Facility"). In November 2001, the Credit Facility was amended to
increase the amount from $160,000,000 to $200,000,000 and the number of banks
from five to six. The Credit Facility entitles the Company to borrow $38,750,000
on a pro-rata basis from each of three banks, $25,000,000 from one bank,
$15,000,000 from another bank and $43,750,000 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 in November
2006.
The Company has issued, at par, $51,500,000 of 7.52% Senior Notes Due January
31, 2003. In order to provide funds for the redemption of these Senior Notes, as
well as for general corporate purposes, the Company is evaluating a new debt
issuance in an amount of up to $100,000,000.
Management anticipates that internally-generated cash flows, funds available
under the Credit Facility and the completion of a new debt issuance will be
sufficient to support the Company's planned worldwide business expansion and
seasonal working capital increases that are typically required during the third
and fourth quarters of the year.
Net-debt (short-term borrowings plus the current portion of long-term debt 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 $97,292,000 and 9% at January 31, 2002, compared with $75,322,000 and 8% at
January 31, 2001.
CONTRACTUAL CASH OBLIGATIONS AND COMMERCIAL COMMITMENTS
The following summarizes the Company's contractual cash obligations at January
31, 2002:
<TABLE>
<CAPTION>
Due
Due 2003- Due
(in thousands) Total 2002 2005 Thereafter
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Long-term debt $ 230,565 $ 51,500 $ 41,415 $ 137,650
Operating leases 432,447 51,771 128,211 252,465
Inventory purchase
obligations 597,370 97,370 150,000 350,000
Construction-
in-progress 33,562 26,162 7,400 --
Other contractual
obligations 2,700 1,000 1,700 --
-------------------------------------------------------
Total contractual
cash obligations $1,296,644 $ 227,803 $ 328,726 $ 740,115
=======================================================
</TABLE>
The following summarizes the Company's commercial commitments at January 31,
2002:
<TABLE>
<CAPTION>
Amount of commitment
expiration per period
----------------------------------
Total Less
Amounts Than 1-3 Over
(in thousands) Committed 1 year years 4 years
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Lines of credit (1) $205,474 $ 5,474 $ -- $200,000
Letters of credit and
financial guarantees 12,314 10,732 1,582 --
-----------------------------------------------
Total commercial
commitments $217,788 $ 16,206 $ 1,582 $200,000
===============================================
</TABLE>
(1) At January 31, 2002, $40,402,000 was drawn against these facilities.
TIFFANY & CO. AND SUBSIDIARIES
[ 24 ]
<PAGE>
MARKET RISK
The Company is exposed to market risk from fluctuations in foreign currency
exchange rates and interest rates, which could affect 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, primarily yen, and, to
a lesser extent, foreign-exchange forward contracts to minimize the impact from
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. 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 $8,109,000 at January 31, 2002 and $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, 2002 and 2001, a 10% appreciation in yen-exchange rates from the
prevailing market rates would have resulted in an unrealized loss equal to the
cost of the option contracts (which was $3,276,000 and $2,282,000). At January
31, 2002 and 2001, a 10% depreciation in yen-exchange rates from the prevailing
market rates would have resulted in additional unrealized gains of $12,389,000
and $8,746,000.
The Company also manages its fixed-rate debt liability 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, 2002 and 2001, the market value of the Company's fixed-rate
long-term debt would have decreased by $9,562,000 and $10,996,000. Based on a
hypothetical immediate 100 basis point decrease in interest rates at January 31,
2002 and 2001, the market value of the Company's fixed-rate long-term debt would
have increased by $10,321,000 and $11,938,000.
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.
If there had been a 10% decrease in interest rates at January 31, 2002 and 2001,
the loss for changes in market value of the interest-rate swap and the
underlying debt would have been $20,000 and $10,000.
Management neither foresees nor expects significant changes in its exposure to
interest rate fluctuations, nor in its market risk-management practices.
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.
TIFFANY & CO. AND SUBSIDIARIES
[ 25 ]
<PAGE>
RISK FACTORS
This document contains certain "forward-looking statements" concerning the
Company's objectives and expectations with respect to store openings, 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 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"; (ii) that
consumer spending does not decline substantially during the fourth quarter of
any year; (iii) that the events of September 11, 2001 and subsequent military
operations, as well as unsettled global political and economic conditions, do
not result in long-term disruptions to, or a slowing of, tourist travel; (iv)
that sales in Japan will not decline substantially; (v) that there will not be a
substantial adverse change in the exchange relationship between the Japanese yen
and the U.S. dollar; (vi) 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; (vii)
that Mitsukoshi's ability to continue as a leading department store operator in
Japan will continue; (viii) that existing product supply arrangements, including
license arrangements with third-party designers Elsa Peretti and Paloma Picasso,
will continue; (ix) that the wholesale market for high-quality cut diamonds will
provide continuity of supply and pricing; (x) that the investment in Aber
achieves its financial and strategic objectives; (xi) that new systems,
particularly for inventory management, can be successfully integrated into the
Company's operations; (xii) that warehousing and distribution productivity and
capacity can be further improved to support the Company's worldwide distribution
requirements; and (xiii) 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.
TIFFANY & CO. AND SUBSIDIARIES
[ 26 ]
<PAGE>
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 with financial management and the
independent accountants 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 comprehensive
earnings and cash flows present fairly, in all material respects, the financial
position of Tiffany & Co. and Subsidiaries at January 31, 2002 and 2001 and the
results of their operations and their cash flows for each of the three years in
the period ended January 31, 2002, 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 27, 2002
TIFFANY & CO. AND SUBSIDIARIES
[ 27 ]
<PAGE>
[ CONSOLIDATED BALANCE SHEETS ]
<TABLE>
<CAPTION>
January 31,
----------------------------
(in thousands, except per share amount) 2002 2001
============================================================================================
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 173,675 $ 195,613
Accounts receivable, less allowances of $6,878 and $7,973 98,527 106,988
Inventories, net 611,653 651,717
Deferred income taxes 41,170 28,069
Prepaid expenses and other current assets 29,389 22,458
----------------------------
Total current assets 954,414 1,004,845
Property, plant and equipment, net 525,585 423,244
Deferred income taxes 4,560 7,282
Other assets, net 145,309 132,969
----------------------------
$ 1,629,868 $ 1,568,340
============================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 40,402 $ 28,778
Current portion of long-term debt 51,500 --
Obligation under capital lease -- 40,747
Accounts payable and accrued liabilities 161,782 189,531
Income taxes payable 48,997 42,085
Merchandise and other customer credits 38,755 36,057
----------------------------
Total current liabilities 341,436 337,198
Long-term debt 179,065 242,157
Postretirement/employment benefit obligations 29,999 26,134
Other long-term liabilities 42,423 37,368
Commitments and contingencies
Stockholders' equity:
Common Stock, $0.01 par value; authorized 240,000 shares,
issued and outstanding 145,001 and 145,897 1,450 1,459
Additional paid-in capital 330,743 318,794
Retained earnings 743,543 630,076
Accumulated other comprehensive (loss) gain:
Foreign currency translation adjustments (45,306) (24,846)
Cash flow hedging instruments 6,515 --
----------------------------
Total stockholders' equity 1,036,945 925,483
----------------------------
$ 1,629,868 $ 1,568,340
============================
</TABLE>
See Notes to Consolidated Financial Statements.
TIFFANY & CO. AND SUBSIDIARIES
[ 28 ]
<PAGE>
[ CONSOLIDATED STATEMENTS OF EARNINGS ]
<TABLE>
<CAPTION>
Years Ended January 31,
--------------------------------------------
(in thousands, except per share amounts) 2002 2001 2000
=============================================================================================
<S> <C> <C> <C>
Net sales $ 1,606,535 $ 1,668,056 $ 1,471,690
Cost of sales 663,058 719,642 650,010
--------------------------------------------
Gross profit 943,477 948,414 821,680
Selling, general and administrative expenses 633,580 621,018 564,797
--------------------------------------------
Earnings from operations 309,897 327,396 256,883
Interest expense and financing costs 19,834 16,207 15,038
Other expense (income), net 751 (6,452) (6,213)
--------------------------------------------
Earnings before income taxes 289,312 317,641 248,058
Provision for income taxes 115,725 127,057 102,379
--------------------------------------------
Net earnings $ 173,587 $ 190,584 $ 145,679
============================================
Net earnings per share:
Basic $ 1.19 $ 1.31 $ 1.02
============================================
Diluted $ 1.15 $ 1.26 $ 0.97
============================================
Weighted average number of common shares:
Basic 145,535 145,493 142,968
Diluted 150,517 151,816 149,666
</TABLE>
See Notes to Consolidated Financial Statements.
TIFFANY & CO. AND SUBSIDIARIES
[ 29 ]
<PAGE>
[ CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE EARNINGS ]
<TABLE>
<CAPTION>
Accumulated
Total Other Common Stock Additional
Stockholders' Retained Comprehensive ---------------------- Paid-in
(in thousands) Equity Earnings (Loss) Gain Shares Amount Capital
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
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
Exercise of stock options 6,306 -- -- 643 7 6,299
Tax benefit from exercise of stock options 5,294 -- -- -- -- 5,294
Issuance of Common Stock
under the Employee Profit Sharing
and Retirement Savings Plan 2,800 -- -- 89 1 2,799
Purchase and retirement of Common Stock (39,265) (36,805) -- (1,628) (17) (2,443)
Cash dividends on Common Stock (23,315) (23,315) -- -- -- --
Cash flow hedging instruments 6,515 -- 6,515 -- -- --
Foreign currency translation adjustments (20,460) -- (20,460) -- -- --
Net earnings 173,587 173,587 -- -- -- --
-----------------------------------------------------------------------------------------
BALANCES, JANUARY 31, 2002 $ 1,036,945 $ 743,543 $ (38,791) 145,001 $ 1,450 $ 330,743
=========================================================================================
</TABLE>
<TABLE>
<CAPTION>
Comprehensive earnings is as follows: 2002 2001 2000
-----------------------------------------
<S> <C> <C> <C>
Net earnings $ 173,587 $ 190,584 $ 145,679
Cash flow hedging instruments
(net of taxes of $3,508) 6,515 -- --
Foreign currency translation adjustments (20,460) (13,480) 1,989
-----------------------------------------
$ 159,642 $ 177,104 $ 147,668
=========================================
</TABLE>
See Notes to Consolidated Financial Statements.
TIFFANY & CO. AND SUBSIDIARIES
[ 30 ]
<PAGE>
[ CONSOLIDATED STATEMENTS OF CASH FLOWS ]
<TABLE>
<CAPTION>
Years Ended January 31,
---------------------------------------
(in thousands) 2002 2001 2000
=======================================================================================================
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 173,587 $ 190,584 $ 145,679
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 64,627 46,735 41,543
(Gain) loss on equity investments (2,633) 1,168 193
Provision for uncollectible accounts 1,702 1,277 1,442
Provision for inventories 10,085 17,666 3,507
Impairment of investment in third-party online provider 7,800 -- --
Tax benefit from exercise of stock options 5,294 12,401 19,632
Deferred income taxes (14,668) 782 (8,980)
Loss on disposal of fixed assets 532 773 17
Provision for postretirement/employment benefits 3,865 2,970 1,626
Changes in assets and liabilities:
Accounts receivable 4,107 10,235 (12,742)
Inventories 2,819 (182,041) (13,398)
Prepaid expenses and other current assets 1,635 (3,913) (1,065)
Other assets, net (6,890) (4,219) (10,137)
Accounts payable (17,163) 11,044 (3,860)
Accrued liabilities (7,010) 6,170 37,612
Income taxes payable 8,564 (10,897) 20,595
Merchandise and other customer credits 2,755 5,875 7,349
Other long-term liabilities 2,498 4,086 1,338
---------------------------------------
Net cash provided by operating activities 241,506 110,696 230,351
---------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Equity investments (9,546) (7,903) (70,636)
Capital expenditures (170,806) (108,382) (171,237)
Acquisitions, net of liabilities assumed -- -- (7,031)
Proceeds from lease incentives 4,554 3,761 5,316
Investments in notes receivable (2,500) (1,519) --
---------------------------------------
Net cash used in investing activities (178,298) (114,043) (243,588)
---------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of Common Stock -- -- 71,426
Proceeds from (repayment of) short-term borrowings, net 13,852 9,840 (77,676)
Proceeds from issuance of long-term debt -- -- 48,818
Payment on capital lease obligation (39,485) -- --
Repurchase of Common Stock (39,265) (13,319) --
Proceeds from exercise of stock options 6,306 10,741 16,380
Cash dividends on Common Stock (23,315) (21,820) (16,083)
---------------------------------------
Net cash (used in) provided by financing activities (81,907) (14,558) 42,865
---------------------------------------
Effect of exchange rate changes on
cash and cash equivalents (3,239) (3,418) (1,285)
---------------------------------------
Net (decrease) increase in cash and cash equivalents (21,938) (21,323) 28,343
Cash and cash equivalents at beginning of year 195,613 216,936 188,593
---------------------------------------
Cash and cash equivalents at end of year $ 173,675 $ 195,613 $ 216,936
=======================================
</TABLE>
See Notes to Consolidated Financial Statements.
TIFFANY & CO. AND SUBSIDIARIES
[ 31 ]
<PAGE>
[ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ]
A. NATURE OF BUSINESS
Tiffany & Co. retails and distributes fine jewelry, timepieces, sterling
silverware, china, crystal, stationery, fragrances and personal accessories. It
is also engaged in product design and manufacturing activities. Sales are made
through three segments of business. 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 in markets outside the
U.S., as well as a limited amount of business-to-business sales, Internet sales
and wholesale sales to independent retailers and distributors in certain of
those markets; Direct Marketing includes business-to-business, catalog and
Internet sales in the U.S.
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FISCAL YEAR
The Company's fiscal year ends on January 31 of the following calendar year. All
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 ("Company"). Intercompany
accounts, transactions and profits have been eliminated in consolidation. The
equity method of accounting is used for investments in which the Company has
significant influence, but not a controlling interest. These statements have
been prepared in accordance with accounting principles generally accepted in the
United States of America; these principles 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 relative to current conditions and records the effect of any
necessary 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 its 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 significant 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 following estimated
useful lives: 39 years for buildings, 3-10 years for office equipment and 5-15
years for machinery and equipment. 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, until February 1, 2002, was being amortized over 20 years using the
straight-line
TIFFANY & CO. AND SUBSIDIARIES
[ 32 ]
<PAGE>
method (see Note B, New Accounting Standards). At January 31, 2002 and 2001,
unamortized goodwill of $10,393,000 and $10,884,000 was included in other
assets, net.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company periodically reviews long-lived assets for impairment by comparing
the carrying value of the assets with their estimated future undiscounted cash
flows. If it is determined that an impairment loss has occurred, the loss is
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 2001, 2000 and 1999, there were no
significant impairment losses related to long-lived assets.
HEDGING INSTRUMENTS
Effective February 1, 2001, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments
and Hedging Activities," and its related amendment, SFAS No. 138, "Accounting
for Certain Derivative Instruments and Certain Hedging Activities." These
standards require that all derivative instruments be recorded on the
consolidated balance sheet at their fair value as either assets or liabilities.
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 will be reclassified to earnings in
the period in which earnings are affected by the hedged item. As of February 1,
2001, the adoption of these new standards resulted in a cumulative effect of an
accounting change of $1,653,000, recorded in cost of sales, which reduced net
earnings by $975,000, net of income taxes, and increased accumulated
comprehensive earnings by $3,773,000, net of income taxes of $2,622,000.
The Company uses a limited number of derivative financial instruments to manage
its foreign currency and interest rate exposures. For a derivative to qualify as
a hedge at inception and throughout the hedged period, the Company formally
documents the nature and relationships between the hedging instruments and
hedged items, as well as its risk-management objectives, strategies for
undertaking the various hedge transactions and method of assessing hedge
effectiveness. Additionally, for hedges of forecasted transactions, the
significant characteristics and expected terms of a forecasted transaction must
be specifically identified, and it must be probable that each forecasted
transaction will occur. If it were deemed probable that the forecasted
transaction would not occur, the gain or loss would be recognized in current
earnings. Financial instruments qualifying for hedge accounting must maintain a
specified level of effectiveness between the hedge instrument and the item being
hedged, both at inception and throughout the hedged period. 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
$68,100,000, $65,400,000 and $57,300,000 in 2001, 2000 and 1999.
INCOME TAXES
Income taxes are accounted for by using 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 of U.S.
corporations 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
TIFFANY & CO. AND SUBSIDIARIES
[ 33 ]
<PAGE>
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 expense
(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. Shipping and handling fees billed to customers are
included in net sales and the related costs are included in cost of sales.
Revenues for gift card and certificate sales and store credits are recognized
upon redemption. 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 2001, 2000 and
1999, the largest portion of the Company's sales was denominated in U.S.
dollars.
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB 101"),
which provides guidance in applying generally accepted accounting principles
with respect to revenue recognition. The Company adopted SAB 101 in the fourth
quarter of 2000 and its application, retroactive to the beginning of 2000, 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 2000 and 1999, the Company reclassified from selling, general
and administrative expenses $10,217,000 and $9,833,000 of shipping and handling
fees to net sales and $46,062,000 and $41,998,000 of handling costs to 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 SFAS No. 123, "Accounting for Stock-Based Compensation."
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.
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 July 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No.
141, "Accounting for Business Combinations" and SFAS No. 142, "Accounting for
Goodwill and Other Intangible Assets." SFAS No. 141 requires that all business
combinations initiated after June 30, 2001 be accounted for using the purchase
method of accounting. SFAS No. 142 requires that goodwill and certain other
intangible assets no longer be amortized to earnings. In addition, the Company
will be required to review goodwill and certain other intangible assets annually
for potential impairment. On February 1, 2002, the Company adopted these
standards and their application is not expected to have a significant impact on
the Company's financial position, earnings or cash flows.
TIFFANY & CO. AND SUBSIDIARIES
[ 34 ]
<PAGE>
In September 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations," which addresses the accounting and financial reporting
for legal obligations associated with the retirement of tangible long-lived
assets and the associated retirement costs. The provisions of SFAS No. 143 will
be effective for the Company's financial statements for the fiscal year
beginning February 1, 2003. The Company does not expect the adoption of this
standard to have a significant impact on its financial position, earnings or
cash flows.
In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets," which addresses the accounting for impairment or
disposal of long-lived assets and discontinued operations. On February 1, 2002,
the Company adopted this standard and its application had no significant impact
on its financial position, earnings or cash flows.
C. ACQUISITIONS AND DISPOSITIONS
In January 2001, wholesale sales of fragrance products were discontinued in the
U.S. and in most international markets; in July 2000, wholesale sales of jewelry
and non-jewelry items were discontinued in Europe; and in January 2000,
wholesale sales of jewelry and non-jewelry items were discontinued in the U.S.
In connection with these decisions, the Company established product return
reserves, which had the cumulative 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, 2002, all costs
relating to these discontinued operations had been incurred and there was no
product return reserve remaining.
In March 1999, the Company acquired the business of a TIFFANY & CO. retail
boutique previously operated by Mitsukoshi, Ltd. ("Mitsukoshi"), a leading
Japanese department store group, for $7,031,000. The acquisition was accounted
for under the purchase 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.
D. INVESTMENTS
In May 2001, the Company made an equity investment in Little Switzerland, Inc.
("Little Switzerland"), a publicly-traded company headquartered in the U.S.
Virgin Islands. The Company purchased 7,410,000 newly issued unregistered shares
of Little Switzerland's common stock, representing approximately 45% of Little
Switzerland's outstanding shares, at a cost of $9,546,000. The Company has
provided a $2,500,000 loan bearing an interest rate of 3% per annum above LIBOR.
Interest is receivable semi-annually on July 31 and January 31 of each calendar
year with principal and unpaid interest due on or before April 30, 2006. The
Company's investment in Little Switzerland is being accounted for under the
equity method based upon its ownership interest and significant influence,
including representation on Little Switzerland's Board of Directors. The
Company's share of Little Switzerland's results from operations has been
included in other expense (income), net and amounted to a loss of $2,483,000 in
2001. On January 31, 2002, the Company's investment had an aggregate fair market
value of $14,301,000, based upon the market price of Little Switzerland's common
stock on that date.
In February 2000, the Company acquired an approximate 5.4% equity interest in
Della.com, Inc. ("Della"), a provider of online wedding gift registry services.
Immediately thereafter, the Company entered into a Gift Registry Service
Agreement and, as a result, the Company offers its products through Della's site
and Della developed an online wedding gift registry for the Company. In April
2000, Della merged with and into WeddingChannel.com with the consequence that
the Company's equity interest in Della was converted to an approximate 2.7%
interest in WeddingChannel.com, 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 2001, the Company recorded in other expense
(income), net a pretax impairment charge of $7,800,000 representing the
Company's total investment.
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 unregistered shares of
its common stock, which represents
TIFFANY & CO. AND SUBSIDIARIES
[ 35 ]
<PAGE>
approximately 14.7% of Aber's outstanding shares, at a cost of $70,636,000. Aber
holds a 40% interest in the Diavik Diamonds Project in Canada's Northwest
Territories, an operation being developed to mine gem-quality diamonds.
Production is expected to commence in the first half of 2003. On January 31,
2002 and 2001, the Company's investment had aggregate fair market values of
$121,440,000 and $69,500,000, based upon the market price of Aber's common stock
on those dates. This investment is included in other assets, net and was
allocated at the time of investment between the Company's interest in the net
book value of Aber and the mineral rights obtained. At January 31, 2002 and
2001, the Company's investment in Aber was $33,088,000 and $20,203,000 and the
mineral rights was $41,243,000 and $49,190,000. 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. 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, the Company
recorded in other expense (income), net a pretax gain of $5,257,000, net of
mineral rights costs related to the Snap Lake Project. The Company's share of
Aber's results from operations (excluding the gain on the sale of its interest
in the Snap Lake Project) has been included in other expense (income), net and
amounted to losses of $125,000, $1,243,000 and $193,000 in 2001, 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, the Company has formed a joint venture with
Aber and has entered into a diamond purchase agreement whereby the Company has
the obligation to purchase from the joint venture, 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.
E. SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the year for:
<TABLE>
<CAPTION>
Years Ended January 31,
------------------------------------------
(in thousands) 2002 2001 2000
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest $ 19,525 $ 15,487 $ 14,052
==========================================
Income taxes $112,158 $121,019 $ 67,451
==========================================
</TABLE>
Details of businesses acquired in purchase transactions:
<TABLE>
<CAPTION>
Years Ended January 31,
--------------------------------
(in thousands) 2002 2001 2000
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Fair value of assets acquired $ -- $ -- $ 7,048
Less: liabilities assumed -- -- (17)
--------------------------------
Net cash paid for acquisitions $ -- $ -- $ 7,031
================================
</TABLE>
Supplemental noncash investing and financing activities:
<TABLE>
<CAPTION>
Years Ended January 31,
--------------------------------
(in thousands) 2002 2001 2000
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Issuance of Common Stock under the
Employee Profit Sharing and
Retirement Savings Plan $ 2,800 $ 3,300 $ 1,600
================================
Capital Lease $ -- $ 40,747 $ --
================================
</TABLE>
F. INVENTORIES
<TABLE>
<CAPTION>
January 31,
--------------------------------
(in thousands) 2002 2001
- --------------------------------------------------------------------------------
<S> <C> <C>
Finished goods $ 528,671 $ 510,888
Raw materials 67,779 87,207
Work-in-process 18,722 56,636
--------------------------------
615,172 654,731
Reserves (3,519) (3,014)
--------------------------------
$ 611,653 $ 651,717
================================
</TABLE>
LIFO-based inventories at January 31, 2002 and 2001 were $481,716,000 and
$531,936,000 with the current cost exceeding the LIFO inventory value by
$18,971,000 and $15,942,000. The LIFO valuation method had the effect of
decreasing earnings per diluted share by $0.01 for the years ended January 31,
2002 and 2001, and had the effect of increasing earnings per diluted share by
$0.01 for the year ended January 31, 2000.
TIFFANY & CO. AND SUBSIDIARIES
[ 36 ]
<PAGE>
G. 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 purchase
right included in the lease. The capital lease buyout was completed on January
31, 2002.
<TABLE>
<CAPTION>
January 31,
------------------------------
(in thousands) 2002 2001
- --------------------------------------------------------------------------------
<S> <C> <C>
Land $ 55,498 $ 38,998
Buildings 119,316 63,457
Leasehold improvements 255,233 216,086
Capital lease -- 42,034
Construction-in-progress 55,727 33,747
Office equipment 229,565 186,757
Machinery and equipment 49,398 34,744
------------------------------
764,737 615,823
Accumulated depreciation
and amortization (239,152) (192,579)
------------------------------
$ 525,585 $ 423,244
==============================
</TABLE>
The provision for depreciation and amortization for the years ended January 31,
2002, 2001 and 2000 was $65,997,000, $47,448,000 and $41,161,000. The growth in
depreciation and amortization for the year ended January 31, 2002 was primarily
due to capital asset additions, as well as accelerated depreciation as a result
of the shortening of useful lives related to renovations and/or expansions of
retail stores and office facilities. The amount of accelerated depreciation
recognized was $6,516,000 for the year ended January 31, 2002.
H. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
<TABLE>
<CAPTION>
January 31,
---------------------------
(in thousands) 2002 2001
- --------------------------------------------------------------------------------
<S> <C> <C>
Accounts payable - trade $ 56,291 $ 73,365
Accrued compensation and commissions 39,144 41,947
Accrued sales and withholding taxes 12,871 13,212
Other 53,476 61,007
---------------------------
$161,782 $189,531
===========================
</TABLE>
I. EARNINGS PER SHARE
The following table summarizes the reconciliation of the numerators and
denominators for the basic and diluted earnings per share ("EPS") computations:
<TABLE>
<CAPTION>
Years Ended January 31,
--------------------------------------
(in thousands) 2002 2001 2000
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net earnings for basic and diluted EPS $173,587 $190,584 $145,679
======================================
Weighted average shares for basic EPS 145,535 145,493 142,968
Incremental shares based upon the
assumed exercise of stock options 4,982 6,323 6,698
--------------------------------------
Weighted average shares
for diluted EPS 150,517 151,816 149,666
======================================
</TABLE>
For the years ended January 31, 2002, 2001 and 2000, there were 3,220,000,
1,683,000 and 36,000 stock options excluded from the computations of earnings
per diluted share due to their antidilutive effect.
J. DEBT
<TABLE>
<CAPTION>
January 31,
-------------------------
(in thousands) 2002 2001
- --------------------------------------------------------------------------------
<S> <C> <C>
Short-term borrowings:
Credit facility $ 36,913 $ 28,108
Other lines of credit 3,489 670
-------------------------
40,402 28,778
-------------------------
Current portion of long-term debt:
7.52% Senior Notes 51,500 --
Long-term debt:
Variable-rate yen loan 41,415 47,487
6.90% Series A Senior Notes 60,000 60,000
7.05% Series B Senior Notes 40,000 40,000
4.50% yen loan 37,650 43,170
7.52% Senior Notes -- 51,500
-------------------------
179,065 242,157
-------------------------
$270,967 $270,935
=========================
</TABLE>
In November 2001, the Company's $160,000,000 multicurrency revolving credit
facility ("Credit Facility") was amended to increase the amount to $200,000,000
and the number of participating banks from five to six. The Credit Facility
entitles the Company to borrow $38,750,000 on a pro-rata basis from each of
three banks,
TIFFANY & CO. AND SUBSIDIARIES
[ 37 ]
<PAGE>
$25,000,000 from one bank, $15,000,000 from another bank and $43,750,000 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 November 5, 2006. 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. At January 31, 2002 and 2001, the amounts outstanding under the
Credit Facility were $36,913,000 and $28,108,000 with interest rates ranging
from 0.22% to 9.70% and 0.26% to 7.80%. The weighted average interest rates for
the Credit Facility were 3.57% and 4.55% for the years ended January 31, 2002
and 2001.
The Company also has other lines of credit totalling $5,474,000. At January 31,
2002 and 2001, amounts outstanding under these lines of credit were $3,489,000
and $670,000.
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, 2002 was 0.59% and is based upon the six-month Japanese LIBOR plus
50 basis points and is reset every six months ("floating rate"). The proceeds
from this loan were used to reduce short-term indebtedness in Japan.
Concurrently, the Company entered into a yen 5,500,000,000, five-year
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
$508,000, $538,000 and $156,000 for the years ended January 31, 2002, 2001 and
2000.
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 repayment 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 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 January
31, 2003 and, accordingly, is classified as a current liability at January 31,
2002. The Note Purchase Agreements require lump sum repayment 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 had letters of credit and financial guarantees of $12,314,000 at
January 31, 2002.
The fair value of the 7.52% Senior Notes at January 31, 2002 and 2001 was
$53,147,000 and $52,751,000. The fair value of the 6.90% Series A Senior Notes
at January 31, 2002 and 2001 was $60,420,000 and $59,349,000. The fair value of
the 7.05% Series B Senior Notes at January 31, 2002 and 2001 was $40,075,000 and
$39,272,000. 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 $45,541,000 and $50,002,000 at January 31, 2002 and 2001. 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 $41,415,000 and $47,487,000 at
January 31, 2002 and 2001 due to its variable interest rate terms.
K. HEDGING INSTRUMENTS
In the normal course of business, the Company uses financial hedging
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 speculative purposes.
TIFFANY & CO. AND SUBSIDIARIES
[ 38 ]
<PAGE>
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
("options") and enters into forward foreign-exchange contracts that are
designated as hedges of forecasted purchases of merchandise and to settle
liabilities in foreign currencies. The Company accounts for its option contracts
as cash flow hedges. Effective November 1, 2001, the Company assesses hedge
effectiveness based on the total changes in the option's cash flows. The
effective portion of unrealized gains and losses associated with the value of
the option contracts is deferred as a component of accumulated other
comprehensive (loss) gain and is recognized as a component of cost of sales on
the Company's consolidated statement of earnings when the related inventory is
sold. Prior to November 1, 2001, the Company excluded time value from the
assessment of effectiveness, which amounted to pretax hedging losses of
$375,000, recorded in cost of sales. There was no ineffectiveness related to the
Company's option contracts in 2001. The fair value of the options was $8,562,000
and $5,411,000 at January 31, 2002 and 2001. The fair value of the options was
determined using quoted market prices for these instruments.
At January 31, 2002 and 2001, the Company also had $16,306,000 and $18,003,000
of outstanding forward foreign-exchange yen contracts, which subsequently
matured on February 26, 2002 and February 26, 2001, 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, the book
value of the underlying assets and liabilities approximates fair value.
The Company utilizes an interest-rate swap agreement to effectively convert its
floating-rate obligation to a fixed-rate obligation. The Company accounts for
its interest-rate swap as a cash flow hedge. There was no ineffectiveness
related to the Company's interest-rate swap in 2001. The fair value of the
interest-rate swap agreement was $1,298,000 and $1,204,000 at January 31, 2002
and 2001 and was based upon the amounts the Company would expect to pay to
terminate the agreement.
Hedging activity affected accumulated other comprehensive (loss) gain, net of
income taxes, as follows:
<TABLE>
<CAPTION>
Year Ended January 31,
----------------------
(in thousands) 2002
- --------------------------------------------------------------------------------
<S> <C>
Balance at beginning of period $ --
Impact of adoption 3,773
Derivative gains transferred to earnings (4,672)
Change in fair value 7,414
-------
$ 6,515
=======
</TABLE>
The Company expects $7,299,000 of derivative gains included in accumulated other
comprehensive income to be reclassified into earnings within the next 12 months.
This amount may vary due to fluctuations in the yen exchange rate. The maximum
term over which the Company is hedging its exposure to the variability of future
cash flows (for all forecasted transactions, excluding interest payments on
variable-rate debt) is 12 months.
L. COMMITMENTS AND CONTINGENCIES
The Company leases certain office, distribution, retail and manufacturing
facilities. Retail store leases may require the payment of minimum rentals and
contingent rent based upon a percentage of sales exceeding a stipulated amount.
The lease agreements, which expire at various dates through 2032, 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 purchase
right included in the lease. The capital lease buyout was completed on January
31, 2002.
TIFFANY & CO. AND SUBSIDIARIES
[ 39 ]
<PAGE>
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:
<TABLE>
<CAPTION>
Years Ended January 31,
-----------------------------------
(in thousands) 2002 2001 2000
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Minimum rent for retail
stores and boutiques $32,044 $29,277 $27,114
Contingent rent based on sales 15,668 17,469 13,195
Office, distribution and
manufacturing facilities rent 10,809 11,737 16,482
-----------------------------------
$58,521 $58,483 $56,791
===================================
</TABLE>
Aggregate minimum annual rental payments under noncancelable operating leases
are as follows:
<TABLE>
<CAPTION>
Minimum Annual
Rental Payments
Years Ending January 31, (in thousands)
- --------------------------------------------------------------------------------
<S> <C>
2003 $ 51,771
2004 47,804
2005 42,294
2006 38,113
2007 34,190
Thereafter 218,275
</TABLE>
At January 31, 2002, the Company's contractual cash obligations and commercial
commitments were: inventory purchases of $97,370,000 excluding the obligation
under the joint venture agreement with Aber (see Note D), construction-in-
progress of $33,562,000 and other contractual obligations of $2,700,000.
In August 2001, the Company signed new agreements with Mitsukoshi whereby
TIFFANY & CO. boutiques will continue to operate within Mitsukoshi's stores in
Japan until at least January 31, 2007. Existing agreements were scheduled to
expire in 2001. The new agreements largely continue the principles on which
Mitsukoshi and the Company have been cooperating since 1993, when the
relationship was last renegotiated. The main agreement, which will expire on
January 31, 2007, covers the continued operation of 24 TIFFANY & CO. boutiques.
A separate set of agreements covers the operation of a freestanding TIFFANY &
CO. store on Tokyo's Ginza. Under the new agreements, the Company is not
restricted from further expansion of its Tokyo operations. In addition, the
Company will pay to Mitsukoshi a reduced percentage fee based on certain sales
beginning in 2002, followed by a greater reduction in fees beginning in 2003.
The Company also operates boutiques in other Japanese department stores. The
Company pays the department stores a percentage fee based on sales generated in
these locations. Fees paid to Mitsukoshi and other Japanese department stores
totaled $93,971,000, $102,204,000 and $91,824,000 in 2001, 2000 and 1999.
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.
M. RELATED PARTIES
A member of the Company's Board of Directors, who joined in July 2001, is an
officer of a technology and information services company which has had a long-
standing business relationship with the Company. Fees paid to that company for
services performed amounted to $4,700,000, $3,100,000 and $2,100,000 in 2001,
2000 and 1999.
A member of the Company's Board of Directors is an officer of a financial
services company which is serving as a placement agent for a new debt instrument
in an amount of up to $100,000,000.
An officer of the Company is a member of the Board of Directors of a financial
services company that serves as the Company's lead bank for its Credit Facility
and serves as the plan administrator for the Company's pension plan.
TIFFANY & CO. AND SUBSIDIARIES
[ 40 ]
<PAGE>
N. 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 to 240,000,000 shares.
In July 1999, the Company issued 2,900,000 shares of its Common Stock at a price
of $24.69 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 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. That authorization was
superceded in September 2000 by a further authorization of 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 depend on a variety of factors such as price
and other market conditions. The Company repurchased and retired 1,628,000
shares of Common Stock in 2001 at an aggregate cost of $39,265,000, or an
average cost of $24.12 per share; repurchased and retired 465,000 shares of
Common Stock in 2000 at an aggregate cost of $13,319,000, or an average cost of
$28.64 per share. No repurchases were made in 1999.
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
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, 2002 and 2001, 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 ("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 an 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 May 1999, increasing the quarterly
rate to $0.04 and $0.03 per share. On February 20, 2002, the Board of Directors
declared a quarterly dividend of $0.04 per common share. This dividend will be
paid on April 10, 2002 to stockholders of record on March 20, 2002.
O. 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 10,365,000 (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
TIFFANY & CO. AND SUBSIDIARIES
[ 41 ]
<PAGE>
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, 4,324,094 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 recognized 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.
A summary of activity for the Company's stock option plans is presented below:
<TABLE>
<CAPTION>
Weighted
Average
Number of Exercise
Shares Price
- --------------------------------------------------------------------------------
<S> <C> <C>
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
Granted 2,067,250 33.80
Exercised (642,870) 9.58
Forfeited (246,949) 28.65
----------------------
OUTSTANDING, JANUARY 31, 2002 12,507,960 $20.70
======================
</TABLE>
Options exercisable at January 31, 2002, 2001 and 2000 were 7,805,486, 6,438,929
and 5,675,874.
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:
<TABLE>
<CAPTION>
Years Ended January 31,
--------------------------------------
(in thousands, except per share amounts) 2002 2001 2000
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net earnings:
As reported $ 173,587 $ 190,584 $ 145,679
Pro forma 162,874 181,473 139,976
Earnings per basic share:
As reported 1.19 1.31 1.02
Pro forma 1.12 1.25 0.98
Earnings per diluted share:
As reported 1.15 1.26 0.97
Pro forma 1.08 1.20 0.94
</TABLE>
TIFFANY & CO. AND SUBSIDIARIES
[ 42 ]
<PAGE>
The weighted-average fair values of options granted for the years ended January
31, 2002, 2001 and 2000 were $12.33, $12.14 and $15.10. 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:
<TABLE>
<CAPTION>
Years Ended January 31,
-------------------------
2002 2001 2000
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Dividend yield 0.7% 0.7% 0.7%
Expected volatility 36.5% 35.0% 33.0%
Risk-free interest rate 4.3% 4.9% 6.7%
Expected life (years) 5 5 5
</TABLE>
The following tables summarize information concerning options outstanding and
exercisable at January 31, 2002:
<TABLE>
<CAPTION>
Options Outstanding
-------------------------------------------------
Weighted
Average Weighted
Remaining Average
Range of Number Contractual Exercise
Exercise Prices Outstanding Life (years) Price
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 0.97-$ 6.88 2,424,612 4.28 $ 4.97
$ 8.50-$ 9.48 2,084,460 6.60 9.46
$10.14-$12.20 332,550 6.54 11.33
$14.98-$14.98 2,399,900 6.97 14.98
$17.59-$34.02 3,504,138 9.43 32.68
$34.92-$42.08 1,762,300 8.06 41.38
-------------------------------------------------
12,507,960 7.22 $20.70
=================================================
</TABLE>
<TABLE>
<CAPTION>
Options Exercisable
-------------------------------------------------
Weighted
Average
Range of Number Exercise
Exercise Prices Exercisable Price
- --------------------------------------------------------------------------------
<S> <C> <C>
$ 0.97-$ 6.88 2,424,612 $ 4.97
$ 8.50-$ 9.48 2,074,960 9.46
$10.14-$12.20 274,050 11.26
$14.98-$14.98 1,781,950 14.98
$17.59-$34.02 419,475 30.71
$34.92-$42.08 830,439 41.78
-------------------------------------------------
7,805,486 $13.97
=================================================
</TABLE>
P. EMPLOYEE BENEFIT PLANS
PENSIONS AND OTHER POSTRETIREMENT BENEFITS
The Company maintains a noncontributory defined benefit pension plan ("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 funds the Plan's trust in accordance
with regulatory limits to provide for current service and for unfunded projected
benefit obligation over a reasonable period. Assets of the Plan consist
primarily of equity mutual funds, common stocks and U.S. Government, corporate
and mortgage obligations. The Plan's assets also include investments in the
Company's Common Stock representing 11% and 10% of Plan assets at January 31,
2002 and 2001.
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.
TIFFANY & CO. AND SUBSIDIARIES
[ 43 ]
<PAGE>
The following tables provide a reconciliation of benefit obligations, plan
assets and funded status of the plans:
<TABLE>
<CAPTION>
Other Postretirement
Pension Benefits Benefits
---------------------------------------------------------
(in thousands, except percentages) 2002 2001 2002 2001
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CHANGE IN BENEFIT OBLIGATION:
Benefit obligation at beginning of year $ 89,819 $ 76,339 $ 25,794 $ 22,306
Service cost 6,040 4,632 2,769 2,129
Interest cost 6,297 5,487 2,064 1,642
Participants' contributions -- -- 33 33
Amendment 1,132 -- -- --
Actuarial loss 6,037 6,203 9,093 618
Benefits paid (2,952) (2,842) (966) (934)
---------------------------------------------------------
Benefit obligation at end of year $ 106,373 $ 89,819 $ 38,787 $ 25,794
=========================================================
CHANGE IN PLAN ASSETS:
Fair value of plan assets at beginning of year $ 79,281 $ 85,882 $ -- $ --
Actual return on plan assets (3,462) (3,759) -- --
Employer contribution -- -- 933 901
Participants' contributions -- -- 33 33
Benefits paid (2,952) (2,842) (966) (934)
---------------------------------------------------------
Fair value of plan assets at end of year $ 72,867 $ 79,281 $ -- $ --
=========================================================
Funded status $ (33,506) $ (10,538) $ (38,787) $ (25,794)
Unrecognized net actuarial loss (gain) 7,867 (7,440) 8,337 (727)
Unrecognized prior service cost -- 10 -- 275
Unrecognized transition obligation 1,132 31 281 --
---------------------------------------------------------
Accrued benefit cost $ (24,507) $ (17,937) $ (30,169) $ (26,246)
=========================================================
Weighted-average assumptions at end of year:
Discount rate 6.75% 7.00% 6.75% 7.00%
Expected return on plan assets 9.00% 9.00% -- --
Rate of increase in compensation 4.00% 4.25% -- --
</TABLE>
Net periodic pension and other postretirement benefit expense included the
following components:
<TABLE>
<CAPTION>
Years Ended January 31,
------------------------------------------------------------------------
Other Postretirement
Pension Benefits Benefits
------------------------------------------------------------------------
(in thousands) 2002 2001 2000 2002 2001 2000
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Service cost-benefits earned during period $ 6,040 $ 4,632 $ 4,503 $ 2,769 $ 2,129 $ 1,626
Interest cost on accumulated benefit obligation 6,297 5,487 4,444 2,064 1,642 1,030
Return on plan assets (5,808) (5,166) (4,373) -- -- --
Net amortization and deferrals 41 241 971 (23) (5) (230)
------------------------------------------------------------------------
Net expense $ 6,570 $ 5,194 $ 5,545 $ 4,810 $ 3,766 $ 2,426
========================================================================
</TABLE>
For postretirement benefit measurement purposes, 11.50% (for pre-age 65
retirees) and 12.50% (for post-age 65 retirees) annual rates of increase in the
per capita cost of covered health care were assumed for 2001. The rate was
assumed to decrease gradually to 5.00% for both groups by 2017 and remain at
that level thereafter.
TIFFANY & CO. AND SUBSIDIARIES
[ 44 ]
<PAGE>
Assumed health-care-cost trend rates have a significant effect on the amounts
reported for the Company's postretirement health care benefits plan. A one
percentage point change in the assumed health-care-cost trend rate would
increase the Company's accumulated postretirement benefit obligation by
$6,487,000 and the aggregate service and interest cost components of net
periodic postretirement benefits by $1,005,000 for the year ended January 31,
2002. Decreasing the health-care-cost trend rate by one percentage point would
decrease the Company's accumulated postretirement benefit obligation by
$5,225,000 and the aggregate service and interest cost components of net
periodic postretirement benefits by $789,000 for the year ended January 31,
2002.
OTHER RETIREMENT PLANS
The Company has deferred compensation arrangements for certain executives which
generally provide for payments upon retirement, death or termination of
employment. The amounts accrued under these plans were $18,163,000 and
$16,017,000 at January 31, 2002 and 2001, and are reflected in other long-term
liabilities. The Company funds a portion of these obligations through the
establishment of trust accounts on behalf of the executives participating in the
plans. The trust accounts are reflected in other assets, net.
PROFIT SHARING AND RETIREMENT SAVINGS PLAN
The Company also maintains an Employee Profit Sharing and Retirement Savings
Plan ("EPSRS Plan") that covers substantially all U.S.-based employees. Under
the profit sharing portion of the EPSRS Plan, the Company makes contributions,
in the form of newly issued Company Common Stock, to the employees' accounts
based upon the achievement of certain targeted earnings objectives established
by, or as otherwise determined by, the Board of Directors. The Company recorded
charges in 2001, 2000 and 1999 of $1,000,000, $2,800,000 and $3,300,000. Under
the retirement savings portion of the EPSRS Plan, employees who meet certain
eligibility requirements may participate by contributing up to 15% of their
annual compensation and the Company provides a 50% matching cash contribution up
to 6% of each participant's total compensation. The Company recorded charges of
$4,054,000, $3,635,000 and $2,983,000 in 2001, 2000 and 1999. Contributions to
both portions of the EPSRS Plan are made in the following year.
Under the profit sharing portion of the EPSRS Plan, the Company's stock
contribution is required to be maintained in such stock until the employee
either leaves or retires from the Company. Under the retirement savings portion
of the EPSRS Plan, the employees have the ability to elect to invest their
contribution and the matching contribution in company stock. At January 31,
2002, investments in company stock in the profit sharing portion and in the
retirement savings portion represented 28% and 23% of total EPSRS Plan assets.
Q. INCOME TAXES
Earnings before income taxes consisted of the following:
<TABLE>
<CAPTION>
Years Ended January 31,
------------------------------------------
(in thousands) 2002 2001 2000
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
United States $204,955 $245,665 $177,011
Foreign 84,357 71,976 71,047
------------------------------------------
$289,312 $317,641 $248,058
==========================================
</TABLE>
Components of the provision for income taxes were as follows:
<TABLE>
<CAPTION>
Years Ended January 31,
----------------------------------------------
(in thousands) 2002 2001 2000
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ 72,943 $ 80,530 $ 58,908
State 21,091 21,309 20,406
Foreign 28,328 25,988 30,900
----------------------------------------------
122,362 127,827 110,214
----------------------------------------------
Deferred:
Federal (5,166) 476 (4,932)
State (2,429) (1,222) (2,261)
Foreign 958 (24) (642)
----------------------------------------------
(6,637) (770) (7,835)
----------------------------------------------
$ 115,725 $ 127,057 $ 102,379
==============================================
</TABLE>
TIFFANY & CO. AND SUBSIDIARIES
[ 45 ]
<PAGE>
Deferred tax assets (liabilities) consisted of the following:
<TABLE>
<CAPTION>
January 31,
---------------------------
(in thousands) 2002 2001
- --------------------------------------------------------------------------------
<S> <C> <C>
Postretirement/employment benefits $ 13,835 $ 12,080
Inventory reserves 24,939 13,657
Accrued expenses 11,066 11,267
Financial hedging instruments (602) 1,173
Depreciation 4,288 1,187
Pension contribution 6,478 7,231
Undistributed earnings
of foreign subsidiaries (19,719) (15,144)
Other 5,445 3,900
---------------------------
$ 45,730 $ 35,351
===========================
</TABLE>
The income tax effects of items comprising the deferred income tax benefit were
as follows:
<TABLE>
<CAPTION>
Years Ended January 31,
--------------------------------------
(in thousands) 2002 2001 2000
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Postretirement/employment
benefit obligations $(1,730) $(1,360) $ (739)
Undistributed earnings
of foreign subsidiaries 4,575 5,074 3,754
Accelerated depreciation (2,461) (1,129) (485)
Inventory reserves (930) (1,874) 1,335
Financial hedging instruments 1,775 (553) 999
Inventory capitalization (6,518) (671) (89)
Asset impairment (2,732) -- --
Accrued expenses 392 3,391 (7,577)
Excess pension contribution 753 (2,324) (2,523)
Other 239 (1,324) (2,510)
--------------------------------------
$(6,637) $ (770) $(7,835)
======================================
</TABLE>
Reconciliations of the provision for income taxes at the statutory Federal
income tax rate to the Company's effective tax rate were as follows:
<TABLE>
<CAPTION>
Years Ended January 31,
-----------------------------
2002 2001 2000
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Statutory Federal income tax rate 35.0% 35.0% 35.0%
State income taxes, net of
Federal benefit 4.3 4.1 4.8
Foreign losses with no tax benefit 0.3 0.6 0.7
Other 0.4 0.3 0.8
-----------------------------
40.0% 40.0% 41.3%
=============================
</TABLE>
R. SEGMENT INFORMATION
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 reportable segments on the basis of
net sales and earnings from operations, after the elimination of intersegment
sales and transfers. The accounting policies of the reportable 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%, 28% and 27% of the
Company's net sales in 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 segments is set forth
below:
<TABLE>
<CAPTION>
Years Ended January 31,
------------------------------------------
(in thousands) 2002 2001 2000
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales:
U.S. Retail $ 786,792 $ 833,221 $ 744,425
International Retail 659,028 679,274 589,607
Direct Marketing 160,715 155,561 137,658
------------------------------------------
$1,606,535 $1,668,056 $1,471,690
==========================================
Earnings from operations*:
U.S. Retail $ 199,293 $ 230,795 $ 176,827
International Retail 196,753 188,216 149,918
Direct Marketing 26,055 22,277 17,707
------------------------------------------
$ 422,101 $ 441,288 $ 344,452
==========================================
</TABLE>
* Represents earnings from operations before unallocated corporate expenses and
interest and other expenses, net.
TIFFANY & CO. AND SUBSIDIARIES
[ 46 ]
<PAGE>
The Company's Executive Officers 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, 2002, 2001 and 2000, total assets were $1,629,868,000,
$1,568,340,000 and $1,343,562,000.
The following table sets forth reconciliations of the reportable segments'
earnings from operations to the Company's consolidated earnings before income
taxes:
<TABLE>
<CAPTION>
Years Ended January 31,
------------------------------------------
(in thousands) 2002 2001 2000
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Earnings from operations
for reportable segments $ 422,101 $ 441,288 $ 344,452
Unallocated
corporate expenses (112,204) (113,892) (87,569)
Interest and other
expenses, net (20,585) (9,755) (8,825)
------------------------------------------
Earnings before
income taxes $ 289,312 $ 317,641 $ 248,058
==========================================
</TABLE>
Sales to unaffiliated customers and long-lived assets were as follows:
Geographic Areas
<TABLE>
<CAPTION>
Years Ended January 31,
----------------------------------------------
(in thousands) 2002 2001 2000
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales:
United States $ 972,178 $1,022,203 $ 914,948
Japan 448,239 463,130 403,148
Other countries 186,118 182,723 153,594
----------------------------------------------
$1,606,535 $1,668,056 $1,471,690
==============================================
Long-lived assets:
United States $ 504,187 $ 407,412 $ 305,641
Japan 4,541 6,490 8,430
Other countries 32,684 24,246 21,757
----------------------------------------------
$ 541,412 $ 438,148 $ 335,828
==============================================
</TABLE>
Classes of Similar Products
<TABLE>
<CAPTION>
Years Ended January 31,
--------------------------------------------
(in thousands) 2002 2001 2000
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales:
Jewelry $1,276,344 $1,300,697 $1,110,964
Tableware, timepieces
and other 330,191 367,359 360,726
--------------------------------------------
$1,606,535 $1,668,056 $1,471,690
============================================
</TABLE>
TIFFANY & CO. AND SUBSIDIARIES
[ 47 ]
<PAGE>
S. QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
2001 Quarter Ended
-----------------------------------------------
(in thousands, except per share amounts) April 30 July 31 October 31 January 31
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $336,401 $371,301 $333,074 $565,759
Gross profit 190,140 215,871 192,839 344,627
Earnings from operations 49,221 65,670 46,041 148,965
Net earnings 30,762 36,052 24,028 82,745
Net earnings per share:
Basic $ 0.21 $ 0.25 $ 0.17 $ 0.57
===============================================
Diluted $ 0.20 $ 0.24 $ 0.16 $ 0.55
===============================================
</TABLE>
<TABLE>
<CAPTION>
2000 Quarter Ended
-----------------------------------------------
(in thousands, except per share amounts) April 30 July 31 October 31 January 31
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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
===============================================
</TABLE>
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.
TIFFANY & CO. AND SUBSIDIARIES
[ 48 ]
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21.1
<SEQUENCE>5
<FILENAME>y58691ex21-1.txt
<DESCRIPTION>SUBSIDIARIES OF REGISTRANT
<TEXT>
<PAGE>
Tiffany & Co. Exhibit 21.1
Subsidiaries Tiffany & Co.
Report on Form 10-K
<TABLE>
<S> <C> <C> <C>
--------------------------
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
-----------------------------
-----------------------------
TIFFANY KOREA LTD.
(Formerly 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.
WATCH CENTER A.G.
Switzerland-Canton Zurich
-----------------------------
</TABLE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>6
<FILENAME>y58691ex23-1.txt
<DESCRIPTION>CONSENT OF PRICEWATERHOUSECOOPERS LLP
<TEXT>
<PAGE>
Exhibit 23.1
Tiffany & Co.
Report on Form 10-K
FY 2001
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. and
Subsidiaries of our report dated February 27, 2002 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 27, 2002 relating to
the financial statement schedule, which appears in this Form 10-K.
/s/ pricewaterhousecoopers LLP
New York, New York
April 9, 2002
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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