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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JANUARY 31, 1995 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 (I.R.S. Employer
of incorporation or organization) Identification No.)
727 FIFTH AVENUE 10022
NEW YORK, NY (Zip Code)
(Address of principal executive offices)
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(212) 755-8000
(Registrant's telephone number, including area code)
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
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<S> <C>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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COMMON STOCK, $.01 PAR VALUE NEW YORK STOCK EXCHANGE
STOCK PURCHASE RIGHTS NEW YORK STOCK EXCHANGE
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Indicate by check mark 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
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /
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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 24, 1995 the aggregate market value of voting stock held by
non-affiliates was $391,767,665.94. See Item 5. Market for Registrant's Common
Equity and Related Stockholder Matters below.
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INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S
CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE: 15,728,184 shares of
Common Stock outstanding as of March 24, 1995.
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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, 1995 (Parts I, II and IV) and Registrant's Proxy
Statement Dated April 7, 1995 (Part III).
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PART I
ITEM 1. BUSINESS
(a) General development of business.
Registrant (also referred to as the "Company") is the parent
corporation of Tiffany and Company ("Tiffany"). The Tiffany business was founded
in 1837 and was incorporated in New York in 1868. On May 5, 1987 Registrant
completed the initial public offering of its Common Stock.
(b) Financial information about industry segments.
Industry segment information is not provided because the Registrant
operates in a single industry segment: retail and wholesale distribution of fine
jewelry, gift and fashion accessory items. Incorporated by reference from
Registrant's Annual Report to Stockholders for the fiscal year ended January 31,
1995 (Footnote P. "Foreign Operations") is the Registrant's geographic segment
information for the fiscal years ended January 31, 1995, 1994 and 1993.
(c) Narrative description of business.
As used below, the terms "Fiscal 1992", "Fiscal 1993" and "Fiscal 1994"
refer to the fiscal years ended on January 31, 1993, 1994 and 1995,
respectively.
Products
Registrant's principal product categories are fine jewelry, timepieces,
sterling silverware, china, crystal, stationery, writing instruments, fragrance,
leather goods, scarves and ties.
Registrant offers an extensive selection of fine jewelry at a wide
range of prices. In Fiscal 1992, 1993 and 1994, approximately 60%, 65% and 67%,
respectively, of Registrant's net sales were attributable to jewelry. See
Merchandise Purchasing, Manufacturing and Raw Materials below. Subject to
approval by Tiffany's design department, designs are developed by employees,
suppliers, independent designers and independent "name" designers. See Designer
Licenses below.
TIFFANY & CO. brand watches and clocks as well as other brands of
watches are sold. The range of TIFFANY & CO. brand sterling silver merchandise
includes flatware, hollowware (tea and coffee services, bowls, cups and trays),
trophies, key holders, picture frames and desk accessories. Crystal, glassware,
china and other tableware, is sold under the trademarks of well-known
manufacturers, as well as under the TIFFANY & CO.
TIFFANY & CO. REPORT ON FORM 10-K FY 1994 - PAGE 2 -
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trademark. Custom engraved stationery, writing instruments, handbags, wallets,
scarves, men's ties and fashion accessories are sold under the TIFFANY & CO.
trademark. Fragrance products are sold under the trademarks TIFFANY and TIFFANY
FOR MEN.
Distribution and Marketing
Channels of Distribution
Registrant sells through three channels of distribution, and reports
its sales as follows:
U.S. Retail consists of retail sales from stores in the United
States and wholesale sales to selected independent retailers in
North America. U.S. Retail sales include wholesale sales of
fragrance products in the United States, Canada and in the
Caribbean region. See U.S. Retail below;
Direct Marketing consists of sales in the United States through a
staff of specialized sales personnel who concentrate on business
clients, and sales through direct mail catalogs. See Direct
Marketing below; and
International Retail consists of both retail and wholesale sales
to customers located outside the United States. See International
Retail below.
U.S. Retail
The Fifth Avenue store in New York accounts for the largest portion of
the Company's sales and is the focal point for marketing and public relations
efforts. Approximately 24%, 21% and 19% of total Company net sales for Fiscal
1992, 1993 and 1994, respectively, were attributable to the New York store's
retail sales. Management believes that the New York retail store will continue
to account for a substantial portion of the Company's sales. Approximately
32,450 gross square feet in the New York building are devoted to retail selling.
Prior to September 1963, when the first branch store was opened in San
Francisco, the New York store was Tiffany's sole retail location in the United
States. Since that time, branch stores have been opened in the following cities:
Houston (1964), Beverly Hills (1964), Chicago (1966), Atlanta (1969), Dallas
(1982), Boston (1984), Costa Mesa (1988), Vienna, Virginia (Washington D.C.
area) (1990), Philadelphia (1990), Palm Beach (1991), San Diego (1992), Honolulu
(1992), Troy, Michigan (1992), Bal Harbour (1993), Maui, Hawaii (1994) and Oak
Brook, Illinois (1994). The Beverly Hills branch store was relocated
- - PAGE 3 - TIFFANY & CO. REPORT ON FORM 10-K FY 1994
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to larger quarters in 1990, as were the San Francisco and Houston branches in
1991. Each of the 17 U.S. branch stores displays a representative selection of
merchandise but none maintains the extensive selection carried by the New York
store. Management currently contemplates the opening of new branch stores in
major United States cities at the rate of approximately two or three per year.
Separate lease agreements to open branches in White Plains, New York, Short
Hills, New Jersey, and Chevy Chase, Maryland have been entered into and, subject
to completion of construction, Registrant expects to open for business in those
locations in May 1995, September 1995 and April 1996, respectively. See Item 2.
Properties below for further information concerning U.S. Retail store leases.
United States branch stores range in size from approximately 1,600 to 16,000
gross square feet and total approximately 180,000 gross square feet devoted to
retail purposes. Historically, an average of approximately 45% of the floor
space in each branch store has been devoted to retail selling. Newer stores are
designed to devote approximately 60% of total floor space to retail selling.
Tiffany sells jewelry, watches, tableware and other products at
wholesale to approximately 200 United States independent retail locations
(exclusive of locations which sell TIFFANY fragrance products but not other
TIFFANY & CO. products). Selected merchandise is provided to these accounts at
wholesale prices that allow traditional retail jewelry mark-ups.
TIFFANY and TIFFANY FOR MEN brand fragrance products are sold in
Registrant's own stores, through its Direct Marketing channel of distribution
and through wholesale distribution in the U.S. and many overseas markets. These
products are now available in approximately 3,380 retail locations in the United
States and abroad. Chanel, Inc. sells fragrance concentrates to Tiffany. A
subsidiary of Chanel, Inc. provides production, packaging, warehousing,
accounting and U.S. distribution services. Tiffany retains control of marketing
and promotion and owns all fragrance product inventories and receivables.
TIFFANY & CO. REPORT ON FORM 10-K FY 1994 - PAGE 4 -
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Direct Marketing
Corporate Division sales executives call on business clients throughout
the United States, selling products drawn from the retail product line and items
specially developed for the business market, including trophies and items made
to customer specifications. Price allowances are given to business customers for
volume purchases. Corporate Division customers purchase for business gift
giving, employee service and achievement recognition awards, customer incentives
and other purposes. Products and services are marketed through a sales force of
approximately 130 persons, through advertising in newspapers and business
periodicals and through the publication of special catalogs.
Tiffany also distributes catalogs of selected merchandise to its
proprietary list of mail and telephone customers and to mailing lists rented
from third parties. Four seasonal SELECTIONS(R) catalogs are published,
supplemented by COLLECTIONS and other catalogs. The following table sets forth
certain data with respect to mail order operations for the periods indicated:
<TABLE>
<CAPTION>
Fiscal Years Ended January 31,
1993 1994 1995
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<S> <C> <C> <C>
Number of names on catalog mailing list
at year-end (consists of customers who
purchased by mail or telephone prior to
the applicable date): 491,538 535,307 595,165
Total catalog mailings during fiscal
year (in millions): 12.9 14.1 15.0
Total mail or telephone orders received
during fiscal year: 197,984 210,379 239,485
</TABLE>
International Retail
Stores and boutiques included in the International Retail channel of
distribution are listed below. For locations 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.
- - PAGE 5 - TIFFANY & CO. REPORT ON FORM 10-K FY 1994
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International Locations
LOCATIONS OPERATED BY REGISTRANT'S SUBSIDIARIES
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FREE-STANDING STORES JAPAN: MITSUKOSHI DEPARTMENT STORES
London, England Tokyo (Nihombashi) Takamatsu
Munich, Germany Tokyo (Shinjuku) Matsuyama
Zurich, Switzerland Tokyo (Shinjuku) + Hirakata
Frankfurt, Germany Tokyo (Ginza) Kobe ++
Milan, Italy (Faraone) Tokyo (Ikebukuro) Nagoya (Hoshigaoka)
Florence, Italy (Faraone) Yokohama Nagoya (Sakae)
Hong Kong (Peninsula Hotel) Sendai Niigata
Hong Kong (Landmark Center) Sapporo Chiba
Taipei, Taiwan Osaka ++ Kagoshima
Singapore (Raffles Hotel) Kurashiki Okinawa
Singapore (Ngee Ann City) Hiroshima
Toronto, Canada ++ (Temporarily closed as a
Sydney, Australia + (Accessories Boutique) result of earthquake).
JAPAN: NON-MITSUKOSHI DEPARTMENT STORES JAPAN: OTHER MITSUKOSHI LOCATIONS
Kawasaki, (Saikaya Department Store) (NON-DEPARTMENT STORE LOCATIONS)
Kokura, (Izutsuya Department Store) Hilton Hotel, Nagoya, Japan
Kyoto, (Daimaru Department Store) Hotel Okura, Kobe, Japan ++
Hamamatsu, (Matsubishi Department Store) Tokyo Bay Hotel, Tokyo, Japan
Oita, (Tokiwa Department Store) Royal Hotel, Osaka, Japan
Osaka (Shinsaibashi), (Daimaru Department Store) Nagano, Japan (Specialty Store)
Osaka (Umeda), (Daimaru Department Store) Fukuoka, Japan (Specialty Store)
Kumamoto, (Tsuruya Department Store) Kanazawa, Japan (Specialty Store)
The Landmark, Yokohama, Japan
TAIWAN: DEPARTMENT STORES
Taipei, Sogo Department Store
LOCATIONS OPERATED BY LOTTE TRADING CO., LTD. IN KOREA LOCATIONS OPERATED BY MITSUKOSHI LIMITED AND AFFILIATES
Lotte World Department Store, Seoul (Duty-free) DEPARTMENT STORE LOCATIONS
Lotte Department Store, Seoul (Duty-free) (Duty-paid) Hong Kong
Hotel Lotte, Seoul (Lobby boutique) (Duty-free) Taipei, Taiwan
Hotel Paradise, Pusan (Duty-free) Tokyo (Nihombashi), Japan (Faraone)
Tokyo (Shinjuku), Japan (Faraone)
Sapporo, Japan (Faraone)
Matsuyama, Japan (Faraone)
LOCATIONS OPERATED BY OTHER THIRD PARTIES NON-DEPARTMENT STORE LOCATIONS
Rustan's Department Store, Manila, Philippines Moana Surfrider Hotel, Honolulu, Hawaii
DFS Saipan Tumon Sands Plaza, Guam
Mohammed bin Masaood & Sons, Abu Dhabi, U.A.E.
</TABLE>
The above listing does not include international "trade
accounts", i.e. non-U.S. retailers to which TIFFANY & CO. or FARAONE
brand merchandise is sold on a wholesale basis, but which do not
operate a dedicated TIFFANY & CO. or FARAONE boutique within their
respective stores.
TIFFANY & CO. REPORT ON FORM 10-K FY 1994 - PAGE 6 -
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From 1972 through July 1993, selected TIFFANY & CO. products,
principally jewelry and watches, were purchased from Tiffany by Mitsukoshi
Limited and its affiliated companies ("Mitsukoshi") for distribution in Japan in
TIFFANY & CO. boutiques. Under the agreement with Tiffany by which Mitsukoshi
purchased and distributed TIFFANY & CO. products in Japan (the "Distribution
Agreement"), all sales transactions between Tiffany and Mitsukoshi were
denominated in U.S. dollars. Registrant recorded wholesale sales to Mitsukoshi
as revenue and Mitsukoshi received the merchandise into inventory and recorded
revenue on the final sale in Japanese yen to the ultimate consumer. Mitsukoshi
established retail prices for TIFFANY & CO. merchandise in Japan and bore
responsibility for management of inventory and the risk of currency fluctuations
between the Japanese yen and the U.S. dollar.
On June 12, 1993, Registrant, through its affiliated companies, entered
into an agreement (the "New Agreement") to realign its business relationship
with Mitsukoshi. Under the New Agreement, Registrant's wholly owned subsidiary,
Tiffany & Co. Japan Inc. ("Tiffany-Japan") assumed merchandising and marketing
responsibilities in the operation of TIFFANY & CO. boutiques previously operated
by Mitsukoshi in its stores and other locations in Japan. The changeover in
responsibilities from the Distribution Agreement to the New Agreement occurred
during the month of July 1993. Tiffany-Japan now provides merchandising and
marketing management and owns substantially all merchandise held for sale in the
boutiques. Mitsukoshi provides and maintains boutique facilities, staffs the
boutiques with retail employees and assumes credit and certain other risks.
Tiffany-Japan pays Mitsukoshi fees aggregating 27% of net retail sales made in
such boutiques. Tiffany-Japan also pays Mitsukoshi an incentive fee of 5% of the
amount by which boutique sales increase year-to-year, calculated on a
per-boutique basis. In Tokyo, TIFFANY & CO. boutiques may be established only in
Mitsukoshi's stores and TIFFANY & CO. brand jewelry may be sold only in such
boutiques. Tiffany-Japan has, however, reserved certain rights so that it may
open a flagship store in Tokyo. The mutual obligations described in this
paragraph will expire on October 15, 2001.
In Fiscal 1992, 1993 and 1994, Mitsukoshi's wholesale purchases from
Tiffany constituted, respectively, 15%, 7% and 3% of Registrant's net sales. The
significant decrease in Fiscal 1993 and 1994 reflects the changeover from the
Distribution Agreement to the New Agreement. Under the New Agreement, Mitsukoshi
no longer purchases TIFFANY & CO. merchandise for sale in Japan. Instead,
Mitsukoshi acts for Tiffany-Japan in the sale of merchandise owned by
Tiffany-Japan and Registrant recognizes as revenues the retail price charged to
the ultimate consumer in Japan. Tiffany-Japan holds inventories for sale,
establishes retail prices, bears the risk of currency fluctuations, provides one
or more brand managers in each boutique, controls merchandising and display
within the boutiques, manages inventory and controls and funds all advertising
and publicity programs with respect to TIFFANY & CO. merchandise.
- - PAGE 7 - TIFFANY & CO. REPORT ON FORM 10-K FY 1994
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Because the inventory repurchased and to be repurchased by Tiffany from
Mitsukoshi was previously sold by Tiffany to Mitsukoshi, Registrant reversed
the sales and related gross profit associated with the repurchase. Accordingly,
in 1993 Registrant established a $57.5 million reserve, representing the
provision for product returns; this reduced net income in Registrant's second
fiscal quarter ended July 31, 1993 by approximately $32.7 million, or $2.07 per
share. The establishment of this reserve resulted in a net loss in such second
quarter and in Fiscal 1993. Registrant's carrying value of the inventory
purchased from Mitsukoshi is lower than the purchase price paid Mitsukoshi
because of the reversal of such gross profit. The majority of inventories of
saleable TIFFANY & CO. merchandise owned by Mitsukoshi have been repurchased by
Tiffany-Japan. In addition, approximately yen 3.5 billion ($35.5 million) of
TIFFANY & CO. inventory must be repurchased by Tiffany through the period
ending February 28, 1998. The price for inventories to be repurchased by
Tiffany is payable in Japanese yen. Mitsukoshi has agreed to accept a deferred
payment in respect of yen 2.8 billion ($27.6 million) of the purchase price to
be paid by Tiffany for inventory already repurchased. This amount must be paid
in full on February 28, 1998. Interest at the rate of 6% per annum is payable
quarterly to Mitsukoshi by Tiffany on the deferred amount. All other amounts
payable by Tiffany for inventory repurchased pursuant to the New Agreement must
be paid 40 days following receipt of inventory.
Under separate agreements, Mitsukoshi operates four FARAONE boutiques
in Mitsukoshi stores in Japan, TIFFANY & CO. boutiques in its department stores
in Hong Kong and Taipei and TIFFANY & CO. boutiques in Honolulu and on the
island of Guam. Tiffany sells merchandise to Mitsukoshi for resale in these
boutiques on a wholesale basis.
In 1989, Mitsukoshi purchased from General Electric Capital Corporation
("GECC"), 1,500,000 shares of Registrant's Common Stock. As of March 24, 1995,
Mitsukoshi owned 2,135,000 shares, or 13.63% of the Registrant's Common Stock.
Prior to Mitsukoshi's purchase of Registrant's Common Stock from GECC,
Registrant and Mitsukoshi entered into an agreement by which Mitsukoshi agreed,
subject to certain contingencies, not to purchase in excess of 19.99% of
Registrant's issued and outstanding Common shares. This agreement expired on
September 21, 1994.
In 1992, Registrant assumed the operation of four TIFFANY & CO.
boutiques previously operated by Mitsukoshi in third party department stores in
Japan. Registrant now operates eight boutiques in Japan in non-Mitsukoshi
department stores.
Mr. Yoshiaki Sakakura, President and Chief Executive Officer of
Mitsukoshi, was appointed a director of the Registrant on November 15, 1989, and
will continue to serve as a director if elected by Registrant's stockholders at
their annual meeting scheduled to be held on May 18, 1995.
TIFFANY & CO. REPORT ON FORM 10-K FY 1994 - PAGE 8 -
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Wholesale distribution of TIFFANY & CO. jewelry and/or watches is also
made through independent distributors in Japan, Europe, the Middle East, Korea,
the Philippines and Saipan.
Tiffany began its ongoing program of international expansion through
proprietary retail stores in 1986 with the establishment of the London store.
The Munich and Zurich stores were opened in 1987 and 1988, respectively. In
1990, the Zurich store was expanded. Stores in Hong Kong at the Peninsula hotel
and at the Landmark center were opened in August 1988 and March 1989,
respectively. In 1990, a store was opened in Taipei, and in 1991 stores in
Singapore (at the Raffles Hotel), Frankfurt and Toronto were opened, and the
London store was expanded. In Fiscal 1993, a second store was opened in
Singapore's Ngee Ann City, and the Peninsula hotel store in Hong Kong was
expanded. In Fiscal 1994, Tiffany opened its store in Sydney, Australia.
Company-operated international TIFFANY & CO. stores and boutiques range
in size from approximately 700 to 13,000 gross square feet and total
approximately 134,000 gross square feet devoted to retail purposes.
In October 1989, Registrant completed the purchase of a controlling
interest in the parent corporation of Faraone, S.p.A. ("Faraone"), a
manufacturing jeweler which operates retail jewelry stores under the FARAONE
tradename in Milan and Florence and offers its products at wholesale to other
retailers in Europe and through Mitsukoshi-operated FARAONE boutiques in Japan.
Faraone also offers TIFFANY & CO. products in its stores and through its
wholesale distribution, and FARAONE products are offered in TIFFANY & CO. stores
in Europe.
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, the extent of consumer demand for TIFFANY & CO.
products in overseas markets and the fact that Tiffany's reputation in Europe is
not yet as firmly established with consumers as it is in the United States and
Japan. TIFFANY & CO. boutiques have now been installed in all current Mitsukoshi
department stores in Japan. Future expansion in Japan will, to some extent, be
dependent upon Mitsukoshi establishing new department stores. However, under its
agreement with Mitsukoshi, Tiffany has retained certain rights so that it may
undertake further development in Japan on its own initiative, and Tiffany also
operates and plans to operate additional boutiques in stores other than
Mitsukoshi in locations outside of Tokyo.
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The following chart details the growth in the Company's stores and
boutiques since fiscal 1987 on a worldwide basis:
Worldwide Retail Locations
<TABLE>
<CAPTION>
Registrant's Subsidiary Companies Independent
North America and Europe Asia-Pacific and Middle East
End of
Fiscal: U.S. Canada Europe Japan Elsewhere Mitsukoshi Others Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1987 8 0 2 0 0 21 0 31
1988 9 0 3 0 1 21 0 34
1989 9 0 5 0 2 24 0 40
1990 12 0 5 0 3 27 0 47
1991 13 1 7 0 4 38 2 65
1992 16 1 7 7 4 36 4 75
1993 16 1 6 37 5 8 6 79
1994 18 1 6 37(1) 7 8 7 84
</TABLE>
(1) Includes three locations temporarily closed as a result of earthquake.
Advertising and Promotion
Tiffany regularly advertises its business, primarily in newspapers and
magazines. Cooperative advertising funds are received from certain merchandise
vendors and the Company also provides its domestic and international third-party
distributors with cooperative advertising funds. In Fiscal 1992, 1993 and 1994,
Tiffany spent approximately $19.4 million, $18.1 million and $21.8 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.
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. The Company
also engages in an aggressive program of retail promotions and media activities
to maintain consumer awareness of the Company and its products. Each year,
Tiffany publishes its well-known Blue Book which showcases fine jewelry and
other merchandise. Tiffany's New York window displays are another important
aspect of Tiffany's promotional efforts. From 1955 through 1994, these windows
were designed by Gene Moore, who retired in January, 1995. In its
TIFFANY & CO. REPORT ON FORM 10-K FY 1994 - PAGE 10 -
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New York store, Tiffany displays table settings created by leading interior
decorators and by prominent hosts and hostesses. John Loring, Tiffany's Design
Director, is the author of several books featuring TIFFANY & CO. products.
Registrant considers these and other promotional efforts important in
maintaining Tiffany's image as an arbiter of taste and style.
Trademarks
The designations TIFFANY(R) and TIFFANY & CO.(R) are the principal
trademarks of Tiffany, as well as serving as tradenames. Tiffany has obtained
and is the proprietor of trademark registrations for TIFFANY and TIFFANY & CO.
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 does not claim to be the sole person
entitled to use the name TIFFANY in every category in every country of the
world; third parties have registered the name TIFFANY in the United States in
the food services category, and in a number of foreign countries in respect of
certain product categories (including, in a few countries, the categories of
fragrance, cosmetics, jewelry, eyeglass frames, clothing and tobacco products)
under circumstances where Tiffany's rights were not sufficiently clear under
local law, and/or where management concluded that Tiffany's foreseeable business
interests did not warrant the expense of litigation.
Designer Licenses
Tiffany has been the sole licensee for jewelry designed by Elsa
Peretti, Paloma Picasso and the late Jean Schlumberger since 1974, 1980 and
1956, respectively. In 1992, Tiffany acquired trademark and other rights
necessary to sell the designs of the late Mr. Schlumberger under the
TIFFANY-SCHLUMBERGER trademark. Ms. Peretti and Ms. Picasso retain ownership of
copyrights for their designs and of their trademarks and exercise approval
rights with respect to important aspects of the promotion, display, manufacture
and merchandising of their designs and Tiffany is required by contract to devote
a portion of its advertising budget to the promotion of their respective
products; each is paid a royalty by Tiffany for jewelry and other items designed
by them and sold under their respective names. Written agreements exist between
Ms. Peretti and Tiffany and between Ms. Picasso and Tiffany but may be
terminated by either party following six months notice to the other party.
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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.
The designs of Ms. Peretti accounted for 14%, 14% and 12% of Tiffany's
net sales in Fiscal 1992, 1993 and 1994, respectively. Merchandise designed by
Ms. Picasso accounted for 5% of Tiffany's net sales in Fiscal 1992, 1993 and
1994, respectively. Registrant's operating results could be adversely affected
were it to cease to be a licensee of one or more 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 Tiffany is supplied from the Company's
workshops in New York City and Pleasantville, New York; Parsippany, New Jersey;
Attleboro, Massachusetts; Salem, West Virginia; Lussy-sur-Morges, Switzerland;
Paris, France; and Milan, Italy 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 Ended January 31,
1993 1994 1995
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<S> <C> <C> <C>
Produced by Tiffany 29 % 27 % 26 %
Purchased from others 71 73 74
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Total 100 % 100 % 100 %
</TABLE>
Approximately 43% of the merchandise purchased from others in Fiscal 1994 was
manufactured outside the United States.
Gems and precious metals used in making Tiffany 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. 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.
Diamond jewelry accounted for approximately 16%, 23% and 22% of
Tiffany's net sales for Fiscal 1992, 1993 and 1994, respectively. Tiffany does
not purchase uncut diamonds and does not anticipate any material adverse change
in the availability of cut and polished diamonds in general. The supply and
price of diamonds in the principal world markets are significantly influenced by
a single entity, the Central Selling Organization (the "CSO"), a marketing arm
of De Beers Centenary AG, a Swiss corporation. The CSO has traditionally
controlled the marketing of approximately 75-80% of the world's supply of uncut
diamonds and sells uncut diamonds to worldwide diamond cutters from its London
office approximately 10 times a year in quantities and at prices determined in
its sole
TIFFANY & CO. REPORT ON FORM 10-K FY 1994 - PAGE 12 -
<PAGE> 13
discretion. Tiffany does not purchase diamonds directly from the CSO. The
availability and price of diamonds to the CSO and Tiffany's suppliers may be, to
some extent, dependent on the political situation in diamond-producing
countries, such as South Africa (which currently accounts for approximately 11%
of the world diamond output), Australia, Brazil, Botswana, the former Soviet
Union and Zaire, and on the continuance of the prevailing supply and marketing
arrangements for uncut diamonds. Sustained interruption in the supply of uncut
diamonds from the producing countries could adversely affect Tiffany and the
retail jewelry industry as a whole.
Finished jewelry is purchased from more than 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 watches are manufactured
by third party suppliers. Some watches are also assembled by third parties.
Tiffany contracts with a single manufacturer to produce its silver
flatware patterns from Tiffany's proprietary dies by use of Tiffany's
traditional manufacturing techniques. Likewise, engraved stationery is purchased
from a single manufacturer. Loss of either manufacturer could result in the
unavailability of silver flatware or engraved stationery, as the case may be,
during the period necessary for Tiffany to arrange for new production.
As Registrant's sales have grown, management has increasingly begun to
focus its attention on merchandise supply issues and has acquired additional
merchandise manufacturing capabilities. In Fiscal 1989, the Company completed
the acquisition of the assets and business and assumed certain liabilities of
Howard H. Sweet & Son, Inc., a manufacturer of gold and silver jewelry and
chains located in Attleboro, Massachusetts ("Sweet"). Tiffany operates the Sweet
business as a separate subsidiary under the name and trademark HOWARD H. SWEET &
SON. In Fiscal 1990, Tiffany acquired the assets and business of McTeigue & Co.,
a manufacturer of gold jewelry located in Pleasantville, New York. In Fiscal
1991 Tiffany completed the acquisition of the business of the late Camille Le
Tallec. Located in Paris, this workshop decorates hand-painted tableware. Also
in Fiscal 1991, the Company established a watch assembly, engineering and
testing operation in Lussy-sur-Morges, Switzerland. In Fiscal 1992, Tiffany
acquired the assets and business of Judel Glassware Co., Inc., which produces
crystal glassware in Salem, West Virginia. Registrant may seek additional
manufacturing capacity in certain key product categories, although there are no
current plans to do so.
- - PAGE 13 - TIFFANY & CO. REPORT ON FORM 10-K FY 1994
<PAGE> 14
Competition
Registrant is faced with substantial competition in all areas in which
it is active, in most cases from companies that provide competition for only a
portion of its diverse lines of merchandise. Competitors and the intensity of
competition vary across product lines, geographic locations and channels of
distribution. In the United States, TIFFANY & CO. retail stores must compete
with jewelers and other retailers whose international reputations for style,
integrity and expertise are well established. Tiffany must also compete with
jewelers and other retailers who compete primarily on the basis of price.
However, while price promotion is common in the jewelry industry, Tiffany does
not compete through price promotion but rather on the basis of value -- the
quality of its products and designs -- and the service provided by its store
personnel.
The international marketplace for TIFFANY & CO. products is
characterized by highly competitive conditions. Although Registrant believes
that the name TIFFANY & CO. is known and respected internationally, and although
Tiffany did operate retail stores in London and Paris prior to World War II,
Tiffany did not have a retail presence in Europe in the post-war era until 1986.
Accordingly, consumer awareness of Tiffany and its products is not as strong in
Europe as in the United States or in Japan, where Tiffany has distributed its
products for many years. Registrant expects that its overseas stores have and
will continue to experience intense competition from established retailers in
international cities where TIFFANY & CO. stores are and may eventually be
located.
In direct marketing, the TIFFANY & CO. reputation and diverse product
line are believed to be favorable competitive factors; nonetheless, highly
competitive conditions prevail. A growing number of direct sellers compete for
access to the same mailing lists of known purchasers of luxury goods, and
mailing and production costs are increasing. In marketing to businesses, Tiffany
faces numerous competitors who sell a wide variety of products.
Employees
As of January 31, 1995, the Registrant's subsidiary corporations
employed an aggregate of approximately 3,306 full-time and part-time persons. Of
those employees, 2,629 were employed in the United States. Of Tiffany's total
employees, approximately 1,229 persons are salaried employees, 404 are engaged
in manufacturing and 1,275 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
All of Tiffany's principal operating facilities are leased although
Registrant does own a small glass manufacturing facility in Salem, West
Virginia.
TIFFANY & CO. REPORT ON FORM 10-K FY 1994 - PAGE 14 -
<PAGE> 15
New York Store
Tiffany leases the land and building at 727 Fifth Avenue in New York
City for use as its main retail store and executive offices. The building was
constructed in 1940. Approximately 32,450 gross square feet of this 124,000
square foot building are devoted to retail selling purposes, with the balance
devoted to executive and administrative offices, jewelry production and storage.
The building at 727 Fifth Avenue was designed to be a retail store for Tiffany
and Tiffany believes it is well configured and located for this function.
The initial lease term for the New York store building expired on
October 31, 1994 and has been renewed for an additional five year term expiring
on October 31, 1999. It may, subject to the terms of the lease, be renewed for
four more successive terms of five years each. Basic rent for the building is
$7.1 million per annum. That rate will remain effective until the expiration of
the current five-year renewal term. If and when Tiffany exercises additional
renewal terms, the basic rent will be increased by the greater of (i) a
proportional increase in accordance with a consumer price index or (ii) the fair
rental value of the property as determined by an appraisal proceeding. Tiffany
must also pay all costs of operating the building, including real property
taxes, in addition to the basic rent.
Customer Service Center
Tiffany's distribution facility in Parsippany, New Jersey is 17 years
old and consists of approximately 135,000 square feet of space devoted to
warehousing, receipt and distribution of merchandise, order processing,
silversmithing and offices. The initial term of the net lease covering this
facility expires on May 31, 1997 and may be renewed thereafter for one renewal
term of six months. The current basic rental is approximately $7.06 per square
foot per annum, but will increase to approximately $7.65 per square foot per
annum effective June 1, 1995. In April, 1993 Tiffany entered into a lease for
51,000 square feet of warehouse space in Pine Brook, New Jersey, a town adjacent
to Parsippany. Management believes that its New Jersey distribution facilities
will continue to be adequate but not optimal for the most efficient distribution
of Tiffany's products. Accordingly, management has developed plans and is
working with real estate developers towards the construction and lease of a
combined warehouse, distribution, light manufacturing and office facility on a
site in Parsippany, New Jersey. The combined facility will consist of
approximately 269,000 square feet of space, of which approximately 96,000 square
feet will be devoted to office purposes, and will consolidate all of Tiffany's
New Jersey operations other than retail sales.
- - PAGE 15 - TIFFANY & CO. REPORT ON FORM 10-K FY 1994
<PAGE> 16
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): Phipps Plaza Shopping Center, Atlanta, GA, July 31, 2000 (two
five-year terms); Two Rodeo Drive, Beverly Hills, CA, October 7, 2005 (two
five-year terms); Copley Place, Boston, MA, July 31, 2009 (two five-year terms);
715 North Michigan Avenue, Chicago, IL, September 30, 1997 (one 10-year term);
South Coast Plaza, Costa Mesa, CA, January 31, 2004 (one five-year term); The
Galleria, Dallas, TX, October 31, 1997 (one five-year term); Union Square, San
Francisco, CA, October 29, 2006 (one 10-year term); Galleria Post Oak Shopping
Center, Houston, TX, September 30, 2001 (one five-year term); 259 Worth Avenue,
Palm Beach, FL, May 31, 2007 (two five-year terms); The Bellevue, Philadelphia,
PA, November 16, 2005 (one five-year term); The Paladion, San Diego, CA, May 31,
2007; Fairfax Square, Vienna, VA, March 31, 2000 (two five-year terms); The
Somerset Collection, Troy, MI, September 30, 2007; Ala Moana Center, Honolulu,
HI, January 31, 2000; Bal Harbour Shops, Bal Harbour, FL, May 31, 2003; Whalers
Village, Maui, HI, July 31, 1999; Oakbrook Center, Oak Brook, IL, April 30, 2009
(two five-year terms); Chifley Tower, Sydney, Australia, January 31, 1999 (two
five-year terms); 20 Goethestrasse, Frankfurt, Germany, January 31, 2001 (one
10-year term); 25 Old Bond Street, London, England, March 24, 2016;
Residenzstrasse 11, Munich, Germany, June 30, 1998 (one four-year term); The
Landmark, Hong Kong, October 31, 1997; The Peninsula, Kowloon, Hong Kong,
February 28, 1997; Raffles Hotel, Singapore, September 15, 1997 (one three-year
term); Regent Hotel, Taipei, Taiwan, October 6, 1995 (two five-year terms); 85
Bloor Street, Toronto, Canada, October 15, 2006 (one seven-year term);
Bahnhofstrasse 14, Zurich, Switzerland, September 30, 2000; and Ngee Ann City,
Singapore, September 15, 1999 (one one-year term).
In addition to the leases shown above, Tiffany has entered into a
10-year lease for a 6,079 square foot retail location at The Westchester, White
Plains, New York, an 8,400 square foot retail location at The Mall at Short
Hills, Short Hills, New Jersey, and a 5,400 square foot retail location at Chevy
Chase Plaza, Chevy Chase, Maryland. Construction of the White Plains, New York
store began in January, 1995 and the store is anticipated to open in May, 1995.
Construction of The Mall at Short Hills location is expected to begin in Spring
1995 and to be completed by September 1995. Construction of the Chevy Chase,
Maryland store is expected to commence no later than December 1995 and to be
completed within four months.
Registrant also operates two FARAONE stores in Italy, one in Milan and
one in Florence. The Milan store is located on Via de Montenapoleone. The
present lease expires on March 31, 1999, but may, subject to certain conditions
imposed by Italian law, be renewed for an additional term of six years. The
Florence store is located on Via Tornabuoni. The present lease expires on June
30, 1997 and is renewable for an additional term of six years, subject to the
same conditions imposed by law upon the Milan lease.
TIFFANY & CO. REPORT ON FORM 10-K FY 1994 - PAGE 16 -
<PAGE> 17
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 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 and any business employing significant numbers of U.S.- based
employees, such litigation can result in large monetary awards when a civil jury
is allowed to determine compensatory and/or punitive damages for actions
claiming discrimination on the basis of age, gender, race, religion, disability
or other legally protected characteristic or for termination of employment that
is wrongful or in violation of implied contracts. However, Registrant believes
that no litigation currently pending to which it or Tiffany is a party or to
which its properties are subject will have a material adverse effect on its
results of operations or financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year ended January 31, 1995.
- - PAGE 17 - TIFFANY & CO. REPORT ON FORM 10-K FY 1994
<PAGE> 18
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 62 Chairman of the Board of Directors, 1980
President and Chief Executive Officer
Michael J. Kowalski 43 Executive Vice President 1983
James E. Quinn 43 Executive Vice President 1986
Jeanne B. Daniel 39 Senior Vice President - Merchandising 1986
Patrick B. Dorsey 44 Senior Vice President - General Counsel 1985
and Secretary
James N. Fernandez 39 Senior Vice President - Finance 1983
and Chief Financial Officer
Marsha S. Gewirtzman 44 Senior Vice President - Corporate 1987
Fernanda K. Gilligan 48 Senior Vice President - Public Relations 1984
John R. Loring 55 Senior Vice President - Design Director 1979
Diana Lyne 41 Senior Vice President - Marketing 1984
Thomas J. O'Neill 42 Senior Vice President - Asia-Pacific 1985
Dale S. Strohl 58 Senior Vice President - Operations 1984
Larry M. Segall 40 Vice President, Treasurer and Controller 1985
</TABLE>
William R. Chaney. Mr. Chaney, Chairman, President and Chief Executive
Officer of Tiffany since August 1984, joined Tiffany in January 1980 as a
member of its Board. 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.
Michael J. Kowalski. Mr. Kowalski has held a variety of merchandising
management positions since joining Tiffany in 1983 as Director of Financial
Planning. On March 19, 1992 he was appointed Executive Vice President with
overall responsibility in the following areas: merchandising, marketing,
advertising, public relations and product design.
TIFFANY & CO. REPORT ON FORM 10-K FY 1994 - PAGE 18 -
<PAGE> 19
James E. Quinn. Mr. Quinn joined the Company in July 1986 as Vice President of
branch sales for the Company's corporate sales operations. He was promoted to
his current position as Executive Vice President responsible for all United
States retail and corporate sales on March 19, 1992 and assumed responsibility
for all North American retail and corporate sales in 1994.
Jeanne B. Daniel. Ms. Daniel has served in a variety of merchandising management
positions since joining the Company in 1986 as a merchandising management
associate. She was appointed Senior Vice President with responsibility for
merchandising in October 1992.
Patrick B. Dorsey. Mr. Dorsey joined the Company in July 1985 as General Counsel
and Secretary.
James N. Fernandez. Mr. Fernandez joined Tiffany in October 1983 and has held
various positions in financial planning and management since that time. He was
appointed to his current position in April 1989.
Marsha S. Gewirtzman. Ms. Gewirtzman joined the Company in September 1987 in a
sales management capacity within the corporate sales division. On March 19, 1992
she was appointed Senior Vice President with responsibility for corporate sales.
Fernanda K. Gilligan. Mrs. Gilligan joined Tiffany in October 1984 as Director
of Retail Marketing. She assumed her current responsibilities in January 1990.
John R. Loring. Mr. Loring has served as Design Director since joining Tiffany
in 1979.
Diana Lyne. Ms. Lyne joined Tiffany in July 1984 as Director of Advertising. She
assumed her current responsibilities in January 1990.
Thomas J. O'Neill. Dr. O'Neill joined Tiffany in February 1985 as a management
associate. He assumed responsibility for sales in the Asia-Pacific region in
March 1992 and assumed responsibility for sales in the Middle East in 1994.
Dale S. Strohl. Mr. Strohl assumed his current responsibilities in September
1984.
Larry M. Segall. Mr. Segall joined Tiffany in 1985 as Controller. He was
appointed Treasurer-Controller on January 21, 1993.
- - PAGE 19 - TIFFANY & CO. REPORT ON FORM 10-K FY 1994
<PAGE> 20
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 1993 were:
<TABLE>
<CAPTION>
Fiscal 1993 High Low
<S> <C> <C>
First Fiscal Quarter $32.63 $24.13
Second Fiscal Quarter $33.50 $26.38
Third Fiscal Quarter $33.25 $26.25
Fourth Fiscal Quarter $38.00 $29.13
</TABLE>
In consolidated trading, the high and low selling prices per share for
shares of such Common Stock for Fiscal 1994 were:
<TABLE>
<CAPTION>
Fiscal 1994 High Low
<S> <C> <C>
First Fiscal Quarter $34.50 $28.50
Second Fiscal Quarter $37.50 $28.50
Third Fiscal Quarter $39.75 $33.63
Fourth Fiscal Quarter $43.63 $29.00
</TABLE>
On March 24, 1995, the high and low selling prices quoted on such
exchange were $29.88 and $29.50 respectively. On March 24, 1995 there were 2,287
record holders of Registrant's Common Stock.
It is Registrant's policy to pay a quarterly dividend of $0.07 per share
of Common Stock, subject to declaration of such dividend by Registrant's Board
of Directors. In Fiscal 1993, dividends of $0.07 per share were paid on April 9,
1993, July 9, 1993, October 8, 1993 and January 10, 1994. In Fiscal 1994,
dividends of $0.07 per share were paid on April 11, 1994, July 11, 1994, October
11, 1994 and January 10, 1995.
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, 2,135,000 shares of Registrant's Common Stock beneficially owned by
Mitsukoshi Limited and 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.
TIFFANY & CO. REPORT ON FORM 10-K FY 1994 - PAGE 20 -
<PAGE> 21
ITEM 6. SELECTED FINANCIAL DATA
Incorporated by reference from Registrant's Annual Report to Stockholders for
the fiscal year ended January 31, 1995, page 8.
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, 1995, pages 9-11.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Incorporated by reference from Registrant's Annual Report to Stockholders for
the fiscal year ended January 31, 1995, pages 12-25.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
NONE
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Incorporated by reference from Registrant's Proxy Statement dated April 7, 1995,
pages 2-7.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated by reference from Registrant's Proxy Statement dated April 7, 1995,
pages 8-18.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated by reference from Registrant's Proxy Statement dated April 7, 1995,
pages 6-8.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated by reference from Registrant's Proxy Statement dated April 7, 1995,
page 15. See also Part I, Item 1. Distribution and Marketing, International
Retail, above, for a discussion of Registrant's business relationship with
Mitsukoshi, Ltd., a holder of in excess of 10% of Registrant's issued and
outstanding Common Stock.
- - PAGE 21 - TIFFANY & CO. REPORT ON FORM 10-K FY 1994
<PAGE> 22
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 1994 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, 1995 and 1994
Consolidated statements of operations
for the years ended January 31, 1995, 1994 and 1993
Consolidated statements of stockholders' equity
for the years ended January 31, 1995, 1994 and 1993
Consolidated statements of cash flows
for the years ended January 31, 1995, 1994 and 1993
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:
VIII. Valuation and qualifying accounts and reserves.
All other schedules have been omitted since they are either not applicable or
not required, or because the information required is included in the
consolidated financial statements and notes thereto.
TIFFANY & CO. REPORT ON FORM 10-K FY 1994 - PAGE 22 -
<PAGE> 23
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:
<TABLE>
<CAPTION>
Exhibit Description
<S> <C>
3.1 Restated Certificate of Incorporation of Registrant. Incorporated
by reference from Exhibit 3.1 to Registrant's Report on Form 8-K
dated June 23, 1989.
3.2 By-Laws of Registrant (as last amended January 19, 1995).
4.1 Form of Rights Agreement Dated as of November 17, 1988 by and
between Registrant and Manufacturers Hanover Trust Company, as
Rights Agent. Incorporated by reference from Exhibit 4.1 to
Registrant's Report on Form 8-K dated November 18, 1988.
4.2 Amendment to Rights Agreement dated as of September 21, 1989 by and
between Registrant and Manufacturers Hanover Trust Company, as
Rights Agent. Incorporated by reference from Exhibit 4.2 to
Registrant's Report on Form 8-K dated September 28, 1989.
4.3 Indenture dated as of March 15, 1991 between Registrant and
Manufacturers Hanover Trust Company, as Trustee, in respect of
Registrant's 6-3/8% Convertible Subordinated Debentures Due 2001.
Incorporated by reference from Exhibit 4.3 to Registrant's Report
on Form 10-K for the fiscal year ended January 31, 1992 and dated
April 10, 1992.
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").
10.15 Lease between Tiffany and Creef Gem Corporation dated May 24, 1985
for 801 Jefferson Road, Parsippany, N.J., amended as of June 1,
1995.
10.16 Lease dated October 15, 1984 between Avon Export Corporation and
Tiffany for 727 Fifth Avenue, New York, N.Y. Incorporated by
reference from Exhibit 10.16 to the Registration Statement.
</TABLE>
- - PAGE 23 - TIFFANY & CO. REPORT ON FORM 10-K FY 1994
<PAGE> 24
<TABLE>
<CAPTION>
Exhibit Description
<S> <C>
10.53 Distribution and Manufacturing Services Agreement between Chanel,
Inc. and Tiffany and Company dated as of January 1, 1993.
Incorporated by reference from Exhibit 10.53 filed with
Registrant's Report on Form 10-K for the fiscal year ended January
31, 1993 and dated April 12, 1993.
10.54 Letter Agreement dated March 4, 1987 between Tiffany and Elsa
Peretti. Incorporated by reference from Exhibit 10.54 to the
Registration Statement.
10.56 Purchase Agreement dated as of July 18, 1988, by and between
Tiffany and Chanel, Inc. Incorporated by reference from Exhibit
28.2 to the Form S-8.
10.64 Distribution Agreement dated November 28, 1988 by and between
Tiffany and Mitsukoshi (U.S.A.), Inc. in respect of Hawaii.
Incorporated by reference from Exhibit 10.64 to Registrant's Report
on Form 10-K for the fiscal year ended January 31, 1989 and dated
April 21, 1989.
10.68 Form of credit agreement entered into with certain banks.
Incorporated by reference from Exhibit 10.68 to Registrant's Report
on Form 10-Q for the fiscal quarter ended July 31, 1989 and dated
September 13, 1989.
10.69 Form of credit agreement entered into with certain banks.
Incorporated by reference from Exhibit 10.69 to Registrant's Report
on Form 10-Q for the fiscal quarter ended October 31, 1989 and
dated December 14, 1989.
10.82 Form of Amendment to Credit Agreement made as of April 1, 1990 with
certain banks. The following banks have entered into an Amendment
to Credit Agreement No. 2: BBL Bank Brussels Lambert, New York
Branch; CIBC, Inc.; Credit Suisse; The Fuji Bank, Limited, Fuji
Bank (Schweiz) AG, and The Fuji Bank and Trust Company; Irving
Trust Company; United Jersey Bank. Incorporated by reference from
Exhibit 10.82 to Registrant's Report on Form 10-Q for the fiscal
quarter ending April 30, 1990 and dated June 13, 1990.
10.89 Subscription Agreement in respect of Registrant's 6-3/8%
Convertible Subordinated Debentures due 2001, dated March 8, 1991
among Lehman Brothers International Limited, Credit Suisse First
Boston Limited, Goldman Sachs International Limited, Merrill Lynch
International Limited, The Nikko Securities Co., (Europe) Ltd.,
Paribas Limited, Robertson, Stephens & Company, UBS Phillips & Drew
Securities Limited. Incorporated by reference from Exhibit 10.89 to
Registrant's Report on Form 10-K for the fiscal year ended January
31, 1991.
</TABLE>
TIFFANY & CO. REPORT ON FORM 10-K FY 1994 - PAGE 24 -
<PAGE> 25
<TABLE>
<CAPTION>
Exhibit Description
<S> <C>
10.99 Form of Amendment to Credit Agreement made as of January 31, 1992
with certain banks. The following banks have entered into an
Amendment to Credit Agreement No. 3: BBL Bank Brussels Lambert, New
York Branch; Credit Suisse; The Fuji Bank, Limited, Fuji Bank
(Schweiz) AG and The Fuji Bank and Trust Company; Bank of New York;
United Jersey Bank. Incorporated by reference from Exhibit 10.99 to
Registrant's Report on Form 10-K for the fiscal year ended January
31, 1992 and dated April 10, 1992.
10.101 Form of Note Purchase Agreement, including the form of 7.52% Senior
Notes due 2003 issued thereunder at par by Registrant on January
31, 1993 for an aggregate principal amount of $51,500,000.
Incorporated by reference from Exhibit 10.101 filed with
Registrant's Report on Form 10-K for the fiscal year ended January
31, 1993 and dated April 12, 1993.
10.102 Master Agreement (interest rate transfers "Swap Transactions")
dated January 26, 1993 between Lehman Brothers Special Financing
Inc. and Registrant, and confirmation of Swap Transaction dated
February 1, 1993 for notional amount $50 million. Incorporated by
reference from Exhibit 10.102 filed with Registrant's Report on
Form 10-K for the fiscal year ended January 31, 1993 and dated
April 12, 1993.
10.110 Inventory Purchase Agreement by and between Tiffany, Tiffany-Japan
(Delaware) Inc., and Mitsukoshi dated June 25, 1992. Incorporated
by reference from Exhibit 10.110 filed with Registrant's Report on
Form 10-K for the fiscal year ended January 31, 1993 and dated
April 12, 1993.
10.111 Agreement made June 12, 1993 by and between Tiffany-Japan
(Delaware) Inc., Tiffany and Mitsukoshi Limited. Incorporated by
reference from Exhibit 10.111 filed with Registrant's Report on
Form 8-K dated June 12, 1993.
10.112 Amendment No.1 To Distribution Agreement (Oahu, Hawaii) made with
respect to Distribution Agreement made the 28th day of November
1988 by and between Tiffany and Mitsukoshi (U.S.A.), Inc. (see
Exhibit 10.64 above) entered into as of December 13, 1993 and
Amendment No. 1 to License Agreement (Oahu, Hawaii) made with
respect to the License made the 28th day of November 1988 by and
between Tiffany and Mitsukoshi (U.S.A.), Inc. (see Exhibit 10.64
above) entered into as of December 13, 1993. Incorporated by
reference from Exhibit 10.112 filed with Registrant's Report on
Form 10-K for the fiscal year ended January 31, 1994 and dated
April 7, 1994.
11.1 Statement re Computation of Per Share Earnings.
</TABLE>
- - PAGE 25 - TIFFANY & CO. REPORT ON FORM 10-K FY 1994
<PAGE> 26
<TABLE>
<CAPTION>
Exhibit Description
<S> <C>
13.1 Annual Report to Stockholders for Fiscal Year Ended January 31,
1995 (pages 8 through 25 of such Annual Report have been filed in
electronic format).
21.1 Subsidiaries of Registrant.
23.1 Consent of Coopers & Lybrand L.L.P., independent accountants.
</TABLE>
Executive Compensation Plans and Arrangements
<TABLE>
<CAPTION>
Exhibit Description
<S> <C>
10.2 Registrant's 1985 Stock Option Plan and forms of incentive stock
option agreement and stock option agreement, as last amended on
January 18, 1990. Incorporated by reference from Exhibit 10.3 to
Registrant's Report on Form 10-K for the fiscal year ended January
31, 1990 and dated April 13, 1990.
10.3 Registrant's 1986 Stock Option Plan and form of stock option
agreement, as last amended on March 19, 1992. Incorporated by
reference from Exhibit 10.3 to Registrant's Report on Form 10-Q for
the fiscal quarter ended April 30, 1992 and dated June 11, 1992.
10.25 Deferred Compensation Agreement between William R. Chaney and
Tiffany and Company dated December 31, 1989. Incorporated by
reference from Exhibit 10.25 to Registrant's Report on Form 10-K
for the fiscal year ended January 31, 1990 and dated April 13,
1990.
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. Incorporated by reference from Exhibit 10.60 to
Registrant's Report on Form 10-K for the fiscal year ended January
31, 1988 and dated April 18, 1988.
10.105 Group Long Term Disability Insurance Policy issued by The Mutual
Benefit Life Insurance Company. Policy Number: G53,152.
Incorporated by reference from Exhibit 10.105 filed with
Registrant's Report on Form 10-K for the fiscal year ended January
31, 1993 and dated April 12, 1993.
10.106 Tiffany and Company Executive Deferral Plan. Incorporated by
reference from
</TABLE>
TIFFANY & CO. REPORT ON FORM 10-K FY 1994 - PAGE 26 -
<PAGE> 27
<TABLE>
<CAPTION>
Exhibit Description
<S> <C>
Exhibit 10.106 filed with Registrant's Report on Form 10-K for the
fiscal year ended January 31, 1993 and dated April 12, 1993.
10.108 Tiffany & Co. Retirement Plan for Non-Employee Directors.
Incorporated by reference from Exhibit 10.108 filed with
Registrant's Report on Form 10-K for the fiscal year ended January
31, 1993 and dated April 12, 1993.
10.109 Summary of informal incentive cash bonus plan for managerial
employees. Incorporated by reference from Exhibit 10.109 filed with
Registrant's Report on Form 10-K for the fiscal year ended January
31, 1993 and dated April 12, 1993.
10.113 Tiffany and Company Pension Plan, as last amended February 16,
1994. Incorporated by Incorporated by reference from Exhibit 10.113
filed with Registrant's Report on Form 10-K for the fiscal year
ended January 31, 1994 and dated April 7, 1994.
10.114 1994 Tiffany and Company Supplemental Retirement Income Plan.
Incorporated by reference from Exhibit 10.114 filed with
Registrant's Report on Form 10-K for the fiscal year ended January
31, 1994 and dated April 7, 1994.
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.
</TABLE>
REGISTRANT WILL FURNISH COPIES OF ANY OF THE FOREGOING EXHIBITS TO ANY
REGISTERED HOLDER OF THE REGISTRANT'S COMMON STOCK UPON PAYMENT OF A FEE OF $.15
PER PAGE FURNISHED, WHICH FEE REPRESENTS REGISTRANT'S EXPENSES IN FURNISHING
SUCH EXHIBIT.
(b) Reports on Form 8-K.
On January 5, 1995 Registrant filed a Report on Form 8-K reporting
that Registrant had announced its preliminary, unaudited sales figures for the
period November 1 to December 31, 1994. The text of Registrant's announcement
was included in the Report.
- - PAGE 27 - TIFFANY & CO. REPORT ON FORM 10-K FY 1994
<PAGE> 28
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 7, 1995 By: /s/ William R. Chaney
------------------------------------
William R. Chaney
Chairman of the Board and President
TIFFANY & CO. REPORT ON FORM 10-K FY 1994 - PAGE 28 -
<PAGE> 29
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 dates indicated.
By: /s/ William R. Chaney
------------------------
William R. Chaney
Chairman of the Board and President
(principal executive officer) (director)
<TABLE>
<S> <C> <C> <C>
By: /s/ James N. Fernandez By: /s/ Charles K. Marquis
-------------------------------- ------------------------------
James N. Fernandez Charles K. Marquis
Senior Vice President-Finance Director
(principal financial officer)
By: /s/ Larry M. Segall By: /s/ James E. Quinn
-------------------------------- ------------------------------
Larry M. Segall James E. Quinn
Vice President Executive Vice President
(principal accounting officer) (director)
By: /s/ Jane A. Dudley By: /s/ Yoshiaki Sakakura
-------------------------------- ------------------------------
Jane A. Dudley Yoshiaki Sakakura
Director Director
By: /s/ Samuel L. Hayes, III By: /s/ William A. Shutzer
-------------------------------- ------------------------------
Samuel L. Hayes, III William A. Shutzer
Director Director
By: /s/ Michael J. Kowalski By: /s/ Geraldine Stutz
-------------------------------- ------------------------------
Michael J. Kowalski Geraldine Stutz
Executive Vice President Director
(director)
</TABLE>
- - PAGE 29 - TIFFANY & CO. REPORT ON FORM 10-K FY 1994
<PAGE> 30
[Coopers & Lybrand letterhead]
REPORT OF INDEPENDENT ACCOUNTANTS
The Stockholders and
Board of Directors of
Tiffany & Co.:
Our report on the consolidated financial statements of Tiffany & Co. and
Subsidiaries has been incorporated by reference in this Form 10-K from page 26
of the 1994 Annual Report to Stockholders of Tiffany & Co. and Subsidiaries. In
connection with our audits of such consolidated financial statements, we have
also audited the related financial statement schedule listed in Item 14(a)2 of
this Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic consolidated financial statements taken as
a whole, present fairly, in all material respects, the information required to
be included therein.
Coopers & Lybrand L.L.P.
New York, New York
March 6, 1995
<PAGE> 31
TIFFANY & CO. AND SUBSIDIARIES
SCHEDULE VIII - 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, 1995:
Reserves deducted from
assets:
Accounts receivable
allowances principally
doubtful accounts $4,170,217 $3,640,485 $ -- $2,089,547(a) $5,721,155
Allowance for inventory
liquidation and
obsolescence 7,061,876 1,787,945 -- 247,339(b) 8,602,482
Allowance for inventory
shrinkage 2,035,358 2,195,829 -- 1,763,054(c) 2,468,133
LIFO Reserve 8,470,000 1,300,000 -- -- 9,770,000
</TABLE>
___________________
(a) Uncollectible accounts written off.
(b) Liquidation of inventory previously written down to market.
(c) Physical inventory losses.
<PAGE> 32
TIFFANY & CO. AND SUBSIDIARIES
SCHEDULE VIII - 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, 1994:
Reserves deducted from
assets:
Accounts receivable
allowances principally
doubtful accounts $7,292,659 $3,119,873 $(3,000,000)(a) $3,242,315(b) $4,170,217
Allowance for inventory
liquidation and
obsolescence 3,527,704 3,833,000 - 298,828(c) 7,061,876
Allowance for inventory
shrinkage 2,150,000 2,573,852 - 2,688,494(d) 2,035,358
LIFO Reserve 6,871,000 1,599,000 - - 8,470,000
</TABLE>
___________________
(a) Reclassified to the product return reserve in connection with the
Company's realignment of its business in Japan.
(b) Uncollectible accounts written off.
(c) Liquidation of inventory previously written down to market.
(d) Physical inventory losses.
<PAGE> 33
TIFFANY & CO. AND SUBSIDIARIES
SCHEDULE VIII - 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, 1993:
Reserves deducted from
assets:
Accounts receivable
allowances principally
doubtful accounts $4,459,864 $4,789,017 $ - $1,956,222(a) $7,292,659
Allowance for inventory
liquidation and
obsolescence 1,933,390 2,019,721 - 425,407(b) 3,527,704
Allowance for inventory
shrinkage 1,594,000 4,194,954 - 3,638,954(c) 2,150,000
LIFO Reserve 6,521,000 350,000 - - 6,871,000
</TABLE>
___________________
(a) Uncollectible accounts written off.
(b) Liquidation of inventory previously written down to market.
(c) Physical inventory losses.
<PAGE> 34
- --------------------------------------------------------------------------------
EXHIBIT INDEX
SEE PAGES 23 THROUGH 27 FOR A COMPLETE LIST OF EXHIBITS FILED, INCLUDING
EXHIBITS INCORPORATED BY REFERENCE FROM PREVIOUSLY FILED DOCUMENTS.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
<S> <C>
3.2 By-Laws of Registrant (as last amended January 19, 1995) . . . . .
10.15 Amendment to Lease between Tiffany and Creef Gem Corporation
dated May 24, 1985 for 801 Jefferson Road, Parsippany, N.J.,
as of June 1, 1995
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11.1 Statement re Computation of Per Share Earnings . . . . . . . . . .
13.1 Annual Report to Stockholders for Fiscal Year Ended January
31, 1995 (pages 8 through 25 of such Annual Report have been
filed in electronic format).
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21.1 Subsidiaries of Registrant. . . . . . . . . . . . . . . . . . . .
23.1 Consent of Coopers & Lybrand L.L.P., independent accountants . . .
- --------------------------------------------------------------------------------
</TABLE>
NOTE: ALL OTHER EXHIBITS HAVE BEEN INCORPORATED BY REFERENCE FROM EXHIBITS TO
DOCUMENTS PREVIOUSLY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. REFER TO
THE LIST OF EXHIBITS ON PAGES 23 THROUGH 27 FOR REGISTRATION, FILE AND EXHIBIT
NUMBERS.
TIFFANY & CO. REPORT ON FORM 10-K FY 1994 - PAGE 34 -
<PAGE> 1
EXHIBIT 3.2
RESTATED BY-LAWS
AS LAST AMENDED JANUARY 19, 1995
-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 (which shall be, in the case of the first
annual meeting, not more than 13 months after the organization of the
Corporation and, in the case of all other annual meetings not more than 13
months after the date of the last annual meeting) 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 or unless the
meeting is to be dispensed with in accordance with the provisions of Article
SIXTH of the Certificate of Incorporation of the Corporation) 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.
<PAGE> 2
SECTION 1.03. Quorum. At all meetings of the stockholders, the holders of a
majority of the stock issued and outstanding and entitled to vote thereat,
present in person or by proxy, shall constitute a quorum for the transaction of
any business.
When a quorum is once present to organize a meeting, it is not broken by the
subsequent withdrawal of any stockholders.
The stockholders present may adjourn the meeting despite the absence of a
quorum and at any such adjourned meeting at which the requisite amount of
voting stock shall be represented, the Corporation may transact any business
which might have been transacted at the original meeting had a quorum been
there present.
SECTION 1.04. Method of Voting. The vote upon any question before the meeting
need not be by ballot. All elections and all other questions shall be decided
by a plurality of the votes cast, at a meeting at which a quorum is present,
except as expressly provided otherwise by the General Corporation Law of the
State of Delaware or the Certificate of Incorporation.
SECTION 1.05. Voting Rights of Stockholders and Proxies. Each stockholder of
record entitled to vote in accordance with the laws of the State of Delaware,
the Certificate of Incorporation or these By-Laws, shall at every meeting of
the stockholders be entitled to one vote in person or by proxy for each share
of stock entitled to vote standing in his name on the books of the Corporation,
but no proxy shall be voted on after three years from its date, unless the
proxy provides for a longer period.
SECTION 1.06. Ownership of its Own Stock. Shares of its own capital stock
belonging to the Corporation or to another corporation, if a majority of the
shares entitled to vote in the election of directors of such other corporation
is held, directly or indirectly, by the Corporation, shall neither be entitled
to vote nor be counted for quorum purposes. Nothing in this section shall be
construed as limiting the right of any corporation to vote stock, including but
not limited to its own stock, held by it in a fiduciary capacity.
SECTION 1.07. Voting by Fiduciaries and Pledgors. Persons holding stock in a
fiduciary capacity shall be entitled to vote the shares so held. Persons whose
stock is pledged shall be entitled to vote, unless in the transfer by the
pledgor on the books of the Corporation he has expressly empowered the pledgee
to vote thereon, in which case only the pledgee, or his proxy, may represent
such stock and vote thereon.
If shares or other securities having voting power stand of record in the names
of two or more persons, whether fiduciaries, members of a partnership, joint
tenants, tenants in common, tenants by the entirety or otherwise, or if two or
more persons have the same
Page 2
<PAGE> 3
fiduciary relationship respecting the same shares, unless the Secretary of the
Corporation is given written notice to the contrary and is furnished with a copy
of the instrument or order appointing them or creating the relationship wherein
it is so provided, their acts with respect to voting shall have the following
effect:
(1) If only one votes, his act binds all;
(2) If more than one votes, the act of the majority so voting binds all;
(3) If more than one votes, but the vote is evenly split on any
particular matter, each faction may vote the securities in question
proportionally, or any person voting the shares, or a beneficiary, if
any, may apply to the Court of Chancery or such other court as may
have jurisdiction to appoint an additional person to act with the
persons so voting the shares, which shall then be voted as determined
by a majority of such persons and the person appointed by the Court.
If the instrument so filed shows that any such tenancy is held in
unequal interests, a majority or even-split for the purpose of this
subsection shall be a majority or even-split in interest.
SECTION 1.08. Fixing Date for Determination of Stockholders of Record. In
order to determine the stockholders entitled to notice of or to vote at any
meeting of stockholders or any adjournment thereof, or to express consent to
corporate action in writing without a meeting, or entitled to receive payment
of any dividend or other distribution or allotment of any rights, or entitled
to exercise any rights in respect of any change, conversion or exchange of
stock, or for the purpose of any other lawful action, the Board of Directors
may fix, in advance, a record date, which shall not be more than sixty nor less
than ten days before the date of such meeting, nor more than sixty days prior
to any other action. If no record date is fixed by the Board of Directors, the
record date shall be determined in accordance with the provisions of the
General Corporation Law of the State of Delaware.
SECTION 1.09. List of Stockholders. The officer who has charge of the stock
ledger of the Corporation shall prepare and make, at least ten days before
every meeting of the stockholders, a complete list of the stockholders entitled
to vote at the meeting, arranged in alphabetical order, and showing the address
of each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a place within the
city where the meeting is to be held (which place shall be specified in the
notice of the
Page 3
<PAGE> 4
meeting) or, if not so specified, at the place where said meeting is to be held,
and the list shall be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who may
be present. Upon the willful neglect or refusal of the directors to produce
such a list at any meeting for the election of directors, they shall be
ineligible for election to any office at such meeting.
SECTION 1.10. Stockholder's Right of Inspection. Stockholders of record, in
person or by attorney or other agent, shall have the right, upon written demand
under oath stating the purpose thereof, during the usual hours for business to
inspect for any proper purpose the Corporation's stock ledger, a list of its
stockholders, and its other books and records, and to make copies or extracts
therefrom. A proper purpose shall mean a purpose reasonably related to such
person's interest as a stockholder. In every instance where an attorney or
other agent shall be the person who seeks the right to inspection, the demand
under oath shall be accompanied by a power of attorney or such other writing
which authorizes the attorney or other agent to so act on behalf of the
stockholder. The demand under oath shall be directed to the Corporation at its
registered office in this State or at its principal place of business.
The stock ledger shall be the only evidence as to who are the stockholders
entitled to examine the stock ledger, the list required by Section 1.01 or the
books of the Corporation, or to vote in person or by proxy at any meeting of
the stockholders.
SECTION 1.11. Conduct of Meetings. Meetings of the stockholders shall be
presided over by one of the following officers in the order of seniority and if
present and acting: the Chairman of the Board of Directors, if any, the Vice
Chairman of the Board of Directors, if any, the President, a Vice President,
or, if none of the foregoing is in office and present and acting, by a chairman
to be chosen by the stockholders. 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 1.12. Advance Notice of Stockholder Proposals. At any 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 Section 1.12. For business to be properly brought
before any meeting of the stockholders by a stockholder, the stockholder must
have given notice thereof in writing to the Secretary of the
Page 4
<PAGE> 5
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 any meeting of the stockholders except in
accordance with the procedures set forth in this Section 1.12. The Chairman of
any such meeting shall direct that any business not properly brought before the
meeting shall not be considered.
ARTICLE II
Directors
SECTION 2.01. Management of Business. The business of the Corporation shall
be managed by its Board of Directors.
The Board of Directors, in addition to the powers and authority expressly
conferred upon it herein, by statute, by the Certificate of Incorporation of
the Corporation or otherwise, is hereby empowered to exercise all such powers
as may be exercised by the Corporation, except as expressly provided otherwise
by the statutes of the State of Delaware, by the Certificate of Incorporation
of the Corporation or by these By-Laws.
Without prejudice to the generality of the foregoing, the Board of Directors,
by resolution or resolutions, may create and issue, whether or not in
connection with the issue and sale of any shares of stock or other securities
of the Corporation, rights or options entitling the holders thereof to purchase
from the Corporation any shares of its capital stock of any class or classes or
any other securities of the Corporation, such rights or options to be evidenced
by or in such instrument or instruments as shall be approved by the Board of
Directors. The terms upon which, including the time or times, which may be
limited or unlimited in duration, at or within which, and the price or prices
at which, any
Page 5
<PAGE> 6
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 nine (9), 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. In
order to qualify for election or appointment directors shall be younger than 72
years when elected or appointed and a director may be removed by action of the
Board of Directors if such director shall have failed to submit his or her
resignation on or before the first meeting of the Board of Directors occurring
following the 72nd birthday of such director, provided that the Board of
Directors may in its discretion, by specific resolution taken without the
participation of the director in question, 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.
Page 6
<PAGE> 7
Vacancies and newly created directorships resulting from any increase in the
authorized number of directors may be filled by a majority of the directors
then in office, though less than a quorum, or by a sole remaining director, and
the directors so chosen shall hold office until their successors shall be
elected and qualified, or until their earlier resignation or removal. When one
or more directors shall resign from the Board, effective at a future date, a
majority of the directors then in office, including those who have so resigned,
shall have power to fill such vacancy or vacancies, the vote thereon to take
effect when such resignation or resignations shall become effective, and each
director so chosen shall hold office as herein provided in the filling of other
vacancies.
SECTION 2.06. Quorum of Directors. At all meetings of the Board of Directors,
a majority of the entire Board, but not less than two directors, shall
constitute a quorum for the transaction of business, except that when a board
of one director is authorized, then one director shall constitute a quorum.
The act of a majority of the directors present at any meeting at which there is
a quorum shall be the act of the Board of Directors except as provided in
Sections 2.05 and 2.12 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 may be called at any time by
the President, 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.
Page 7
<PAGE> 8
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 telegram or by personal communication either over the telephone or otherwise,
in each such case not later than the second day 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. Notices of special
meetings of the Board of Directors and waivers thereof need not state the
purpose or purposes of 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. Executive Committee. The Board of Directors may, by resolution
or resolutions, passed by a majority of the whole Board, designate an Executive
Committee (and may discontinue the same at any time) to consist of one or more
of the directors of the Corporation. The members shall be appointed by the
Board and shall hold office during the pleasure of the Board. The Board may
designate one or more directors as alternate members of the Committee, who may
replace an absent or disqualified member at any meeting of the Committee. The
Executive Committee shall have and may exercise all the powers of the Board of
Directors (when the Board is not in session) 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), except that the Executive
Committee shall have no power (a) to elect directors; (b) to alter, amend or
repeal these By-Laws or any resolution or resolutions of the directors
designating an Executive Committee; (c) to declare any dividend or make any
other distribution to the stockholders of the Corporation; or (d) to appoint
any member of the Executive Committee. Regular meetings of the Executive
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 the Executive Committee and no
notice thereof shall be necessary. Special meetings may be called at any time
by any officer of the Corporation or any member of the Executive Committee.
Special meetings shall be held at such place, within or without the State of
Delaware, as shall be fixed by the person
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<PAGE> 9
calling the meeting and stated in the notice or waiver of the meeting. A
majority of the members of the Executive 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 the Executive Committee. Notice of each special
meeting of the Executive Committee shall be given (or waived) in the same manner
as notice of a directors' meeting.
SECTION 2.13. Other Committees. The Board may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee
to consist of one or more of the directors of the Corporation. Any such
committee, to the extent provided in the resolution of the Board and subject to
any restrictions or limitations on the delegation of power and authority
imposed by applicable Delaware law, shall have and may exercise all the powers
and authority of the Board 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. Any such committee shall keep written minutes of
its meetings and report such minutes to the Board at the next regular meeting
of the Board.
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 President, a Secretary and a
Treasurer, and such number of Vice-Presidents, Assistant Secretaries and
Assistant Treasurers, and such other officers, if any, as the Board may from
time to time determine. The Board may choose such other agents as it shall
deem necessary. Any number of offices may be held by the same person.
SECTION 3.02. Terms of Office. Each officer shall hold his office until his
successor is chosen and qualified or until his earlier resignation or removal.
Any officer may resign at any time by written notice to the Corporation.
SECTION 3.03. Removal. Any officer may be removed from office at any time by
the Board of Directors with or without cause.
SECTION 3.04. Authority. The Secretary shall record all of the proceedings of
the meetings of the stockholders and directors in a book to be kept for that
purpose, and shall have the authority, perform the duties and exercise the
powers in the management of the Corporation usually incident to the office held
by him, and/or such other authority, duties and powers as may be assigned to
him from time to time by the Board of Directors or the President. The other
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<PAGE> 10
officers, and agents, if any, shall have the authority, perform the duties and
exercise the powers in management of the Corporation usually incident to the
offices held by them, respectively, and/or such other authority, duties and
powers as may be assigned to them from time to time by the Board of Directors or
(except in the case of the President) by the President.
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 President 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 or Vice Chairman of the Board of Directors, or the
President 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
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<PAGE> 11
notifications and to otherwise exercise all the rights and powers of an owner,
and shall not be bound to recognize any equitable or other claim to, or interest
in, any security, whether or not the Corporation shall have notice thereof,
except as otherwise provided by the laws of the State of Delaware.
SECTION 4.04. New Certificates. The Corporation shall issue a new certificate
of stock in the place of any certificate theretofore issued by it, alleged to
have been lost, stolen or destroyed, if the owner: (1) so requests before the
Corporation as notice that the shares of stock represented by that certificate
have been acquired by a bona fide purchaser; (2) files with the Corporation a
bond sufficient (in the judgment of the directors) to indemnify the Corporation
against any claim that may be made against it on account of the alleged loss or
theft of that certificate or the issuance of a new certificate; and (3)
satisfies any other requirements imposed by the directors that are reasonable
under the circumstances. A new certificate may be issued without requiring any
bond when, in the judgment of the directors, it is proper so to do.
ARTICLE V
Miscellaneous
SECTION 5.01. Offices. The registered office of the Corporation in the State
of Delaware shall be at Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801. The Corporation may also have offices at other
places within and/or without the State of Delaware.
SECTION 5.02. Seal. The corporate seal shall have inscribed thereon the name
of the Corporation, the year of its incorporation and the words "Corporate Seal
Delaware."
SECTION 5.03. Checks. All checks or demands for money shall be signed by such
person or persons as the Board of Directors may from time to time determine.
SECTION 5.04. Fiscal Year. The fiscal year shall begin the first day of
February in each year and shall end on the thirty-first day of January of the
following year.
SECTION 5.05. Waivers of Notice: Dispensing with Notice. Whenever any notice
whatever is required to be given under the provisions of the General
Corporation Law of the State of Delaware, of the Certificate of Incorporation
of the Corporation, or of these By-Laws, a waiver thereof in writing, signed by
the person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto. Neither the
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<PAGE> 12
business to be transacted at, nor the purose of, any regular or special meeting
of the stockholders need be specified in any written waiver of notice.
Attendance of a person at a meeting of stockholders shall
constitute a waiver of notice of such meeting, except when the stockholder
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened.
Whenever any notice whatever is required to be given under the
provisions of the General Corporation Law of the State of Delaware, of the
Certificate of Incorporation of the Corporation, or of these By-Laws, to any
person with whom communication is made unlawful by any law of the United States
of America, or by any rule, regulation, proclamation or executive order issued
under any such law, then the giving of such notice to such person shall not be
required and there shall be no duty to apply to any governmental authority or
agency for a license or permit to give such notice to such person; and any
action or meeting which shall be taken or held without notice to any such
person or without giving or without applying for a license or permit to give
any such notice to any such person with whom communication is made unlawful as
aforesaid, shall have the same force and effect as if such notice had been
given as provided under the provisions of the General Corporation Law of the
State of Delaware, or under the provisions of the Certificate of Incorporation
of the Corporation or of these By-Laws. In the event that the action taken by
the Corporation is such as to require the filing of a certificate under any of
the other sections of this title, the certificate shall state, if such is the
fact and if notice is required, that notice was given to all persons entitled
to receive notice except such persons with whom communication is unlawful.
SECTION 5.06. Loans to and Guarantees of Obligations of Employees and
Officers. The Corporation may lend money to or guaranty any obligation of, or
otherwise assist any officer or other employee of the Corporation or of a
subsidiary, including any officer or employee who is a director of the
corporation or a subsidiary, whenever, in the judgment of the Board of
Directors, such loan, guaranty or assistance may reasonably be expected to
benefit the Corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or secured in such manner as the Board
of Directors shall approve, including without limitation, a pledge of shares of
stock of the Corporation. Nothing in this Section contained shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the Corporation
at common law or under any other statute.
SECTION 5.07. Amendment of By-Laws. These By-Laws may be altered, amended or
repealed at any meeting of the Board of Directors.
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<PAGE> 13
SECTION 5.08. Section Headings and Statutory References. The headings of the
Articles and Sections of these By-Laws, and the references in brackets to
relevant sections of the General Corporation Law of the State of Delaware, have
been inserted for convenience of reference only and shall not be deemed to be a
part of these By-Laws.
ARTICLE VI
SECTION 6.01. Indemnification of Directors and Officers. The Corporation
shall, to the fullest extent permitted by law, indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (including without limitation an action by or in the right of
the Corporation) by reason of the fact that he is or was a director or officer
of the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
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
Delaware General Corporation Law 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 occuring
prior to the final adoption of such repeal or modification.
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<PAGE> 14
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.
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<PAGE> 1
EXHIBIT 10.15
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE (this "First Amendment") made as of the 1st day
of June, 1995, by and between CREEF GEM CORPORATION, a New Jersey corporation,
having an office at c/o Citibank, N.A. - Realty Investment Advisors, 909 Third
Avenue, 30th Floor, New York, New York 10043 ("Lessor"), and TIFFANY & CO.,
having an office at 727 Fifth Avenue, New York, New York 10022 ("Lessee")
W I T N E S S E T H:
WHEREAS, by Lease dated as of May 24, 1985 (the "Lease"), between Lessor
and Lessee, Landlord leased to Tenant that certain office/warehouse building
known as Tiffany Warehouse located at 801 Jefferson Road, Parsippany, N.J., (the
"Premises") as more particularly described in the Lease;
WHEREAS, the term of the Lease currently expires on May 31, 1995; and
WHEREAS, Landlord and Tenant desire to modify and amend the Lease as
hereinafter provided.
NOW, THEREFORE, for and in consideration of the mutual covenants herein
contained and other good and valuable consideration, the adequacy and receipt of
which are hereby acknowledged, Landlord and Tenant hereby agree as follows:
1. Section 1.1 of the Lease is hereby amended to delete May 31, 1995 from
the first sentence therein and substitute May 31, 1997 therefor.
2. Section 1.2 of the Lease is hereby deleted in its entirety and the
following is substituted therefor:
"1.2. Renewal Terms. Lessee shall have the right, exercisable as
hereinafter provided, to renew the term of this Lease for one period of
six months, provided that no Event of Default shall have occurred and be
continuing at the time of exercise or at the time of commencement of such
renewal period and this Lease shall not have been terminated as of either
the time of exercise or the time of commencement of such renewal period.
Except as otherwise provided herein, such renewal term shall be upon the
same terms and conditions as those provided in this Lease for the Primary
Term, except that Lessee shall not have the right
<PAGE> 2
to renew the term of this Lease beyond the end of such renewal period.
Lessee may only exercise its right to renew the term by notifying Lessor in
writing of its election to exercise its right to renew the term at least
nine months prior to the expiration of the Primary Term. If Lessee fails
to notify Lessor within the time and in the manner provided in this
section, Lessee's right of renewal shall expire. If such option for
renewal shall not be exercised, Lessee, at Lessor's request, shall execute
and deliver to Lessor an instrument, in recordable form, stating that such
renewal option has not been exercised."
3. Section 2.1.1. is hereby amended by adding the following paragraph (e)
at the end thereof:
"(e) for the period commencing June 1, 1995 to and including May 31,
1997, at the annual rate of $1,029,600 per annum."
4. Section 2.1.2. is hereby deleted in its entirety and the following is
substituted therefor:
"2.1.2. Renewal Term. If Lessee shall exercise its option to renew
this Lease as provided in section 1 hereof, Lessee will pay Basic Rent
during such renewal term, in advance, on the first day of each calendar
month computed at the rate of $1,158,300 per annum."
5. The following Section 44 is hereby added to the Lease:
"44. Termination Option. Notwithstanding any provision contained
herein to the contrary, Lessee shall have the option, exercisable by
written notice (the "Termination Notice") delivered to Lessor at any time
prior to April 30, 1996, time being of the essence, to terminate this Lease
effective at any date (the "Termination Date") subsequent to January 31,
1997 and prior to May 31, 1997; provided, however, that Lessee pays to
Lessor an amount (the "Termination Payment") equal to 50% of the Basic Rent
that would be due to Lessor for the period commencing on the Termination
Date and ending on May 31, 1997. If Lessee effectively terminates this
Lease by timely delivering the Termination Notice and paying the
Termination Payment, this Lease shall terminate on the Termination Date
as if such date was the original termination date of the Primary Term."
6. Section 12 clause (b) is hereby amended to read as follows:
"(b) on 48 hours prior notice to Lessee, exhibiting the Leased
Premises for the purpose of lease, sale or mortgage, or for the purpose of
displaying therein advertisements for letting or, for sale."
<PAGE> 3
7. Each party hereto covenants, warrants and represents to the other
party that it has had no dealings, conversations or negotiations with any
broker concerning the execution and delivery of this First Amendment. Each
party hereto agrees to defend, indemnify and hold harmless the other party
against and from any claims for any brokerage commissions and all costs,
expenses and liabilities in connection therewith, including, without limitation,
reasonable attorneys' fees and disbursements, arising out of its respective
representations and warranties contained in this Paragraph 7 being untrue.
8. Notwithstanding anything in the contrary contained herein, if, as of
May 31, 1995, there is an Event of Default under the Lease, then, at Landlord's
option, the Lease shall expire as provided therein and this First Amendment
shall be of no force or effect.
9. Except as expressly set forth in this First Amendment, the terms and
conditions of the Lease including, without limitation, Section 4 thereof, shall
continue in full force and effect without any change or modification.
10. The terms, covenants, conditions and provisions contained in this
First Amendment shall be binding upon and inure to the benefit of Landlord and
Tenant, their respective heirs, representatives, successors and permitted
assigns.
11. This First Amendment shall be governed by and construed in accordance
with the laws of the State of New Jersey.
12. This First Amendment may not be modified, amended or terminated nor
any of its provisions waived except by an agreement in writing signed by the
party against whom enforcement of any modification, amendment or waiver is
sought.
13. This First Amendment shall not be binding upon either party unless and
until it is fully executed and delivered to both parties.
IN WITNESS WHEREOF, Landlord and Tenant have executed this First Amendment
as of the date and year first above written.
LANDLORD: TENANT:
CREEF GEM CORPORATION TIFFANY AND COMPANY
By: /s/ Jeffrey Weissman By: /s/ James N. Fernandez
----------------------------- ----------------------------
Name: Jeffrey Weissman Name: James N. Fernandez
----------------------- ----------------------
Title: V.P. Title: S.V.P. - CFO
---------------------- ---------------------
<PAGE> 1
EXHIBIT 10.115
TIFFANY AND COMPANY
Split-Dollar Life Insurance Agreement
================================================================================
THIS AGREEMENT, is made as of the _____ day of _______________, 19___,
by and between Tiffany and Company ("Tiffany") and
______________________________ ("Employee").
RECITALS:
A. Tiffany is a corporation duly organized and validly existing
under the laws of The State of New York with its executive
offices and principal place of business at 727 Fifth Avenue,
New York, NY 10022.
B. Employee is a valued and trusted employee of Tiffany.
C. In consideration of the faithful performance of services by
Employee for Tiffany, Tiffany wishes to benefit Employee by
entering into a split-dollar life insurance agreement in
accordance with the terms and conditions of this Agreement.
D. The split-dollar arrangement provided for in this Agreement,
which the parties intend to satisfy the requirements of
Revenue Ruling 64-328, 1964-2 C.B. 11, relates to a life
insurance policy number _______________ (the "Policy") to be
issued by Connecticut General Life Insurance Company or one of
its subsidiaries (the "Insurer") on the life of Employee to be
owned by Employee subject to a collateral assignment in favor
of Tiffany.
NOW, THEREFORE, the parties mutually agree as follows:
1. Acquisition of Policy. The parties shall
cooperate in applying for and obtaining the Policy.
The Policy shall be issued to Employee as the sole and
exclusive owner of the Policy, subject to a collateral
assignment in favor of Tiffany as hereinafter
provided.
2. Payment of Premiums. Tiffany shall pay the
minimum premiums due on the Policy to the Insurer on
the date the premium is due or within the grace period
allowed by the Policy for the payment of the premium,
or such greater premium payment as shall be necessary
to keep the Policy in force without a reduction in the
death benefit provided under the Policy. Tiffany
shall furnish an annual written statement to Employee
setting forth the amount of imputed income, if any,
reportable by the employee as a result of Tiffany's
payments hereunder, the death benefit payable under
the Policy, Aggregate Premiums Paid, as hereinafter
defined, and the Cash Surrender Value, as hereinafter
defined.
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1
<PAGE> 2
TIFFANY AND COMPANY
Split-Dollar Life Insurance Agreement
================================================================================
3. Liability of Employee.
A. Liability. In consideration of Tiffany's
premium payments under this split-dollar arrangement,
Employee undertakes the obligation to repay such
premium payments to Tiffany in accordance with the
provisions of this Agreement. Employee's obligation
to repay such premium payments (the "Liability") shall
equal the amount determined in accordance with the
following provisions of this Article 3 and Tiffany
shall be entitled to recover the Liability in
accordance with the terms and conditions of this
Agreement, provided, however, that (i) while Employee
remains living the Liability shall never exceed the
amount available on surrender or partial surrender of
the Policy and (ii) following Employee's death the
Liability shall never exceed the proceeds available
from the Policy.
B. Termination of Agreement. Upon
termination of this Agreement for any reason other
than the death of Employee, the Liability, at such
time, shall be an amount equal to the lesser of (i)
Aggregate Premiums Paid, as hereinafter defined, or
(ii) the Cash Surrender Value, as hereinafter defined.
C. Death of Employee. Upon the death of
Employee, the Liability shall be an amount equal to
Aggregate Premiums Paid as hereinafter defined.
D. Definitions. For purposes of this
Agreement:
(i) The Cash Surrender Value of the
Policy at any time equals at such time
the guaranteed cash value under the
Policy; plus any additional cash value
credited to the Policy; less any amounts
withdrawn from the Policy by Tiffany by
means of the surrender or partial
surrender of the Policy; less any policy
loans to Tiffany and accrued interest
thereon at such time.
(ii) The Aggregate Premiums Paid at any
time equal at such time the cumulative
premiums paid by Tiffany under the
Policy; less any amounts withdrawn from
the Policy by Tiffany by means of the
surrender or partial surrender of the
Policy; less any policy loans to Tiffany
and accrued interest thereon at such
time; less any amounts received by
Tiffany from Employee for the economic
benefit of the Policy.
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2
<PAGE> 3
TIFFANY AND COMPANY
Split-Dollar Life Insurance Agreement
================================================================================
4. Collateral Assignment.
A. Tiffany's Rights. As security for repayment of the Liability,
Employee shall execute, in substantially the form attached as Exhibit A, a
collateral assignment of the Policy to Tiffany (the "Collateral
Assignment") and Tiffany shall have the rights set forth in the Collateral
Assignment. As between the parties hereto, Tiffany's rights under the
Collateral Assignment shall be subject to the limitations hereinafter
expressed:
(i) Tiffany's sole right to obtain, directly or indirectly, one
or more loans or advances against the fund value of the Policy,
shall be limited to the extent of, but not in excess of, the
lesser of Aggregate Premiums Paid or the Cash Surrender Value,
and Tiffany shall have the right to pledge or assign the lesser
of Aggregate Premiums Paid or the Cash Surrender Value, as
security for such loans or advances;
(ii) On the exercise of Tiffany's sole right to make a full or
partial surrender of the Policy Tiffany may realize up to the
lesser of Aggregate Premiums Paid or the Cash Surrender Value of
the Policy; and
(iii) Tiffany's right to realize the proceeds of the Policy in
the event of the death of Employee shall be limited to the extent
of the Liability.
Tiffany shall also have the right, as between the parties hereto, to
increase the death benefit payable under the policy, as permitted by the
Insurer, if it is deemed necessary, in the exercise of Tiffany's judgement,
to reflect increases in Employee's compensation.
B. Employee's Rights. Except for the rights granted to Tiffany in the
Collateral Assignment or reserved to Tiffany above, Employee shall have all
the rights of the owner under the Policy and Employee shall be entitled to
exercise all such rights, options, and privileges without the consent of
Tiffany. Employee's rights include:
(i) The right to absolutely and irrevocably give a donee all of
his/her right, title and interest in and to the Policy, subject
to the Collateral Assignment. Employee may exercise this right by
executing a written transfer of ownership in the form used by the
Insurer for
- --------------------------------------------------------------------------------
3
<PAGE> 4
TIFFANY AND COMPANY
Split-Dollar Life Insurance Agreement
================================================================================
irrevocable gifts of insurance policies, and delivering this form
to Tiffany. Upon receipt of such form, executed by Employee and
duly accepted by the donee thereof, Tiffany shall consent thereto
in writing, and shall thereafter treat the Employee's donee as
the sole owner of all of Employee's right, title and interest in
and to the Policy, subject to this Agreement and the Collateral
Assignment. Thereafter, Employee shall have no right, title or
interest in and to the Policy, all such rights being vested in
and exercisable only by such assignee. Employee agrees with
Tiffany that his/her right to assign his/her interest in the
Policy shall be exercised only in accordance with this Section B
(i) of Article 4; and
(ii) The right to designate and to change the beneficiary or
beneficiaries of the portion of the proceeds of the Policy
payable, upon the death of Employee, to Employee's beneficiary,
pursuant to Section B of Article 5 below; and
(iii) The right to elect any optional form of settlement
available with respect to the portion of the proceeds of the
Policy payable, upon the death of Employee, to Employee's
beneficiary, pursuant to Section B of Article 5 below.
C. Conflict. As between the parties hereto, in the event of any
conflict between the terms of the Collateral Assignment and this Agreement,
the terms of this Agreement shall prevail.
5. Death of Employee.
A. Tiffany's Death Benefit Portion. On the death of Employee, Tiffany
shall be entitled to recover out of the proceeds of the Policy an amount
equal to the Liability of Employee to Tiffany as determined under
Subsection C of Article 3 above.
B. Employee's Death Benefit Portion. On the death of Employee, the
beneficiary designated under the Policy shall be entitled to receive the
balance of the proceeds of the Policy after deducting the Liability.
Employee and Tiffany agree to conform the beneficiary designation of the
Policy to the provisions hereof.
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4
<PAGE> 5
TIFFANY AND COMPANY
Split-Dollar Life Insurance Agreement
================================================================================
C. Collection of Death Proceeds. Promptly following Employee's death,
the parties shall take all necessary steps to collect the proceeds of the
Policy by submitting the proper claim forms to the Insurer. Tiffany shall
notify the Insurer, by affidavit, of the amount of Liability of Employee to
Tiffany and the amount of proceeds payable to the beneficiary designated by
Employee under the Policy. Such amounts shall be paid by the Insurer to
Tiffany and the beneficiary and such payments shall be a full discharge of
the Insurer binding on all parties claiming any interest under the Policy.
6. Termination of Agreement.
A. Termination Event. Subject to fulfillment of the obligations
arising upon termination hereinafter or hereinabove set forth, this
Agreement shall terminate on the first to occur of the following events
(each referred to as a "Termination Event"):
(i) The death of Employee.
(ii) Termination of Employee's employment with Tiffany for any
reason other than death, including retirement but excluding
disability retirement, with or without cause.
(iii) At age 65 for an Employee who is disabled under Article 9
of this Agreement.
(iv) Written notice by Tiffany to Employee.
(v) The bankruptcy, receivership or dissolution of Tiffany.
B. Disposition of Policy. Within (60) days following a Termination
Event, other than death, Employee shall pay to Tiffany the Liability. Upon
receipt of such amount from Employee, Tiffany shall take all steps
necessary to release the Collateral Assignment so that Employee shall own
the policy free of all encumbrances thereon in favor of Tiffany arising
under this Agreement. If Employee does not repay Tiffany the Liability
within sixty (60) days of a Termination Event, Tiffany, in Tiffany's sole
discretion, shall take the following action: Tiffany shall withdraw from
the Policy, by any means available to Tiffany under the terms of the
Policy as Tiffany in its sole discretion deems advisable, an amount equal
to the Liability and thereafter release the Collateral
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5
<PAGE> 6
TIFFANY AND COMPANY
Split-Dollar Life Insurance Agreement
================================================================================
Assignment and otherwise take all steps necessary to transfer its
interest in the Policy to Employee, without further consideration.
7. Provisions Regarding the Insurer.
A. Bound By Policy. The Insurer shall be bound only by the provisions
of the Policy and any endorsement thereto.
B. Discharge. Any payment made or actions taken by the Insurer in
accordance with the provisions of the Policy and any endorsement thereto
shall fully discharge the Insurer from all claims, suits, and demands of
all persons whatsoever.
C. Insurer Not a Party. The Insurer shall not be deemed a party to, or
have notice of, this Agreement or the provisions hereof and shall have no
obligations to see to the performance of the obligations of the parties
hereunder.
8. Special Provisions.
In compliance with the requirements of Employee Retirement Income Security
Act of 1974, as amended, the parties hereby confirm:
A. Named Fiduciary. Tiffany is the named fiduciary of the split-dollar
life insurance plan of which this Agreement is the written instrument.
B. Funding. The funding policy of the split-dollar life insurance plan
is that Tiffany will pay that portion of the premiums under the Policy
required under Article 2 above.
C. ERISA Claim Procedure. The following claims procedure shall be
used:
(i) The claimant shall file a claim for benefits by notifying
Tiffany in writing. If the claim is wholly or partially denied,
Tiffany shall provide a written notice within ninety (90) days
specifying the reasons for the denial, the provisions of this
Agreement on which the denial is based, and additional material
or information, if any, necessary for the claimant to receive
benefits.
- -------------------------------------------------------------------------------
6
<PAGE> 7
TIFFANY AND COMPANY
Split-Dollar Life Insurance Agreement
================================================================================
Such written notice shall also indicate the steps to be taken by
the claimant if review of the denial is desired.
(ii) If the claim is denied and review is desired, the claimant
shall notify Tiffany in writing within sixty (60) days after
receipt of the written notice of a denial of a claim. In
requesting a review, the claimant may review plan documents and
submit written issues and comments the claimant feels are
appropriate. Tiffany shall then review the claim and provide
a written decision within sixty (60) days of receipt of request
for a review. This decision shall state the specific reasons
for the decision and shall include references to specific
provisions of this Agreement, if any, upon which the decision
is based.
9. Disability
If Employee becomes disabled in accordance with any Tiffany-sponsored
disability benefits or disability retirement program, the Agreement shall
continue until otherwise terminated in accordance with Article 6, Section
A.
10. Tiffany's Group Life Insurance Plan.
So long as this Agreement remains effective Tiffany shall not be required
under its Group Life Insurance Plan, or any successor plan (the "Group
Plan"), to provide any death benefit to Employee's beneficiary or estate
and, in the event that Employee retires from Tiffany while this Agreement
remains effective, to provide any death benefit under the Group Plan,
notwithstanding the benefits that would otherwise be available to employees
or retirees under the Group Plan, and Employee hereby waives, on behalf of
Employee and his or her beneficiaries and estate, any benefits under the
Group Plan except as provided herein. The limitations and waiver contained
in this Section 10 are not applicable to coverage provided under Tiffany's
Accidental Death and Dismemberment Insurance Plan.
11. Amendment.
This Agreement may be altered, amended, or modified, including the addition
of any extra policy provisions, but only by a written instrument signed by
the parties hereto.
- --------------------------------------------------------------------------------
7
<PAGE> 8
TIFFANY AND COMPANY
Split-Dollar Life Insurance Agreement
================================================================================
12. Assignment.
A party may assign such party's interest and obligations under this Agreement at
any time subject to the terms and conditions of this Agreement.
13. Governing Law.
This Agreement shall be governed by the laws of the State of New York.
14. Entire Agreement.
This Agreement sets forth the entire agreement of the parties with respect to
the subject matter hereof. Any and all prior agreements or understandings with
respect to such matters are hereby superseded.
- --------------------------------------------------------------------------------
8
<PAGE> 9
TIFFANY AND COMPANY
Split-Dollar Life Insurance Agreement
================================================================================
IN WITNESS WHEREOF, the parties have signed and sealed this Agreement
as of the day and year first written above.
WITNESS:
- ------------------------------------ -------------------------------------
(Witness) (Employee)
ATTEST: Tiffany and Company
("Tiffany")
By
- ------------------------------------ -------------------------------------
(Witness)
- --------------------------------------------------------------------------------
9
<PAGE> 10
TIFFANY AND COMPANY
Split-Dollar Life Insurance Agreement
================================================================================
RIDER NO. 1 TO SPLIT-DOLLAR LIFE INSURANCE AGREEMENT
EMPLOYEE: JOHN Q. EXECUTIVE
THIS RIDER supplements and amends that certain Split-Dollar Life
Insurance Agreement made as of the ____ day of February, 1994 by and between
Tiffany and Company ("Tiffany") and the Employee named above (the "Agreement").
This Rider shall become part of the Agreement and any term or phrase defined in
the Agreement shall have the same meaning in this Rider. To the extent that
any term or provision of this Rider conflicts with any term or provision of the
Agreement, this Rider shall supersede and control the Agreement.
A. DEFINED TERMS. The following initially capitalized terms and phrases shall
have the meanings ascribed to them below:
A "CHANGE OF CONTROL" is deemed to have occurred if (i) any person or
group of persons acting in concert acquires thirty- five percent (35%)
in voting power or amount of the equity securities of Tiffany & Co., a
Delaware corporation (the "Company") (including the acquisition of any
right, option, warrant or other right to obtain such voting power or
amount, whether or not presently exercisable) unless such acquisition
is authorized or approved by the Board of Directors of the Company;
(ii) individuals who constituted the Board of Directors of the Company
on May 19, 1994 (the "Incumbent Board") cease for any reason to
constitute at least a majority of such Board of Directors, provided
that any individual becoming a director subsequent to May 19, 1994
whose election or nomination for election by the Company's
stockholders was approved by a vote of at least three quarters of the
directors comprising the Incumbent Board (either by a specific vote or
by approval of the proxy statement of the Company in which such
individual is named as a nominee for director) will be, for the
purposes of this clause (ii), considered as though such individual
were a member of the Incumbent Board; or (iii) any other circumstance
with respect to a change of control of the Company occurs which the
Board of Directors of the Company deems to be a Change of Control of
the Company. As used in this definition of Change of Control, the
word "person" means an individual or an entity.
"DISABILITY RETIREMENT" means the termination of Employee's employment
with Tiffany as a consequence of the fact that Employee has become
disabled in accordance with the provisions of any Tiffany-sponsored
disability benefits or disability retirement program.
"ENDING COMPENSATION" means Employee's mean average annual
compensation from salary and bonuses (inclusive of amounts deferred
pursuant to the Tiffany & Co. Executive Deferral Plan and the Tiffany
& Co. Retirement Income and Savings Plan but exclusive of any other
compensation, whether paid or deferred, such as, but not limited to,
income attributable to the exercise of employee stock options and
taxable income attributable to this Agreement or the Policy) for the
last three consecutive calendar years of employment completed with
Tiffany prior to Retirement; if Employee has completed less than three
consecutive calendar years of employment with Tiffany at Retirement,
Ending Compensation shall be Employee's annual compensation paid
during his or her last full calendar year of employment completed; if
Employee has completed less than one full year of
1
<PAGE> 11
TIFFANY AND COMPANY
Split-Dollar Life Insurance Agreement
================================================================================
employment prior to Retirement, Ending Compensation shall be
Employee's projected annual salary and target bonus during the year of
Retirement.
"INTEREST RATE" means, at any date as of which a Required
Post-Retirement Premium Payment or the Target Surplus must be
calculated, the higher of .32737% per month, compounded monthly (4%
compounded yearly) or the rate most recently announced by the Insurer
for application to the net cash value under the Policy.
"MATURITY DATE" means March 1, _____ .
"POLICY FACTORS" means the cost of insurance and expenses in effect
under the Policy at any date as of which a Required Post-Retirement
Premium Payment or the Target Surplus must be calculated.
"POST-RETIREMENT PERIOD" means the period following Retirement and up
to the Maturity Date.
"REDUCED EMPLOYEE DEATH BENEFIT" means a reduced death benefit payable
to Employee from the Policy pursuant to this Agreement equal to Two
Hundred Percent (200%) of Ending Compensation.
"REQUIRED POST-RETIREMENT PREMIUM PAYMENTS" means level annual premium
payments under the Policy made on each March 1 during the Post
Retirement Period, the schedule of such annual premium payments having
been calculated (subject to recalculation as provided for below) to
produce the Target Surplus as of the Maturity Date on the basis of all
applicable provisions of the Policy and the Interest Rate and Policy
Factors from time to time.
"RETIREMENT" means termination of Employee's employment with Tiffany
under the first to occur of either of the following circumstances (1)
or (2):
(1) termination of Employee's employment for any reason
(voluntarily or involuntarily, with or without cause) other
than death or Disability Retirement, which termination occurs
(a) after the Employee has reached 65 years of age or (b)
after the occurrence of a Change in Control; or
(2) the voluntary decision of the Employee to terminate
his/her employment, which termination (a) occurs after
Employee has reached 60 years of age (but before age 65) and
(b) is approved by the Board of Directors of Tiffany & Co, a
Delaware corporation, or the Compensation Committee of such
Board of Directors.
"SURPLUS" means, at any point in time, the amount, if any, by which
the Cash Surrender Value of the Policy exceeds the Liability. For the
purposes of this definition, the Liability shall be calculated
exclusive of that portion of the Liability forfeited pursuant to
Article E below.
"TARGET SURPLUS" means that amount of Surplus necessary so that (1)
the owner of the Policy may continue the Policy in force on the
Employee's life without further payment of premiums with a death
benefit equal to the Reduced Employee Death Benefit and (2) so that
such Policy will endow
2
<PAGE> 12
TIFFANY AND COMPANY
Split-Dollar Life Insurance Agreement
================================================================================
(net cash value becomes equal to the Reduced Employee Death Benefit)
when the Employee reaches age 95, assuming that the Interest Rate and
Policy Factors in effect at the time that the Target Surplus is
calculated continues in effect until the Employee reaches age 95 and
that no further premium payments are made after the date of such
calculation.
B. NO TERMINATION BY NOTICE FOLLOWING CHANGE OF CONTROL. On the occurrence of
a Change of Control, Article 6.A.(iv) of the Agreement will no longer
constitute a Termination Event with the effect that Tiffany will be no longer
be entitled to unilaterally terminate the Agreement by written notice to
Employee.
C. TARGET SURPLUS NOT OBTAINED BY RETIREMENT. Subject to Article E. below,
if, on Retirement, the Surplus is not equal to or in excess of the Target
Surplus, then this Agreement shall, notwithstanding the subsequent occurrence
of any Termination Event (other than the death of Employee), remain in force
until the earlier of the Maturity Date or the death of Employee and Tiffany
shall have the right, as between the parties to this Agreement, to make such
adjustments to the Policy as necessary, from time to time, so that the death
benefit payable under the Policy will equal the Reduced Employee Death Benefit
plus the projected amount of the Liability at the Maturity Date on the basis of
the then current schedule of Required Post-Retirement Premium Payments.
D. REQUIRED POST-RETIREMENT PREMIUM PAYMENTS. If this Agreement continues in
effect following Retirement as provided for in Article C of this Rider, Tiffany
shall, on or before March 1 of every year during the Post Retirement Period
make Required Post- Retirement Premium Payments to the Insurer. Tiffany shall
make its initial calculation of the schedule of Required Post-Retirement
Premium Payments on the basis of the Interest Rate and Policy Factors at the
time of Retirement and provide such schedule to Employee within thirty (30)
days of Retirement. In the event that the Insurer changes the Interest Rate
and/or the Policy Factors on one or more occasions during the Post Retirement
Period, Tiffany shall, on each such occasion, revise the schedule of Required
Post-Retirement Premium Payments within thirty (30) days after receipt of
notice of the change in Interest Rate and provide Employee with its revised
calculations. Tiffany shall make all Required Post-Retirement Premium Payments
on the basis of the most recently revised schedule of payments.
E. FAILURE TO MAKE REQUIRED POST-RETIREMENT PREMIUM PAYMENTS. If Tiffany
fails to make any Required Post-Retirement Premium Payment within thirty days
of a written demand from Employee that such payment be made, then the Employee
shall have the option of terminating this Agreement and Tiffany shall, on
exercise of such option, forfeit its right to repayment of all or such portion
of the Liability sufficient so that the Surplus is made equal to the Target
Surplus as of the date of such option exercise. Failure to exercise such
option shall not foreclose Employee from any other remedy at law or equity for
Tiffany's failure to make such payment, including specific enforcement, and the
exercise of such option shall not be deemed a waiver of Employee's right to
recover damages for Tiffany's breach if forfeiture of Tiffany's right to
repayment of the Liability does not make the Surplus equal to the Target
Surplus.
F. DISPUTES CONCERNING CALCULATION OF REQUIRED POST-RETIREMENT PREMIUM
PAYMENTS; ATTORNEYS' FEES. In the event of any controversy or claim arising
out of or relating to the calculation of Required Post-Retirement Premium
Payments, the Target Surplus or both, the parties to this Agreement agree that
such controversy or claim shall be settled by arbitration in accordance with
the then current Commercial
3
<PAGE> 13
TIFFANY AND COMPANY
Split-Dollar Life Insurance Agreement
================================================================================
Arbitration Rules of the American Arbitration Association (the "Association")
to the extent that such Rules do not conflict with any provisions of this
Article F. The arbitration shall be held at a regional office of the
Association serving the City of New York. The arbitration shall be held before
a single arbitrator chosen from a panel of persons knowledgeable in the field
of life insurance. The arbitrators shall interpret the Agreement in accordance
with the laws of the State of New York. Any award, order or judgment pursuant
to such arbitration shall be deemed final and may be entered and enforced in
any state or federal court of competent jurisdiction. Each party agrees to
submit to the jurisdiction of any such court for purposes of the enforcement of
any such award, order or judgment. In any arbitration proceeding hereunder, or
in any judicial proceeding to enforce this Agreement or obtain damages for its
breach, the arbitrator and/or the court shall award reasonable attorneys' fees
and other costs to the prevailing party.
IN WITNESS WHEREOF, the parties have signed and sealed this Rider as
of the ___ day of ________, 1994.
WITNESS:
- ------------------------------------ -------------------------------------
(Employee)
ATTEST: Tiffany and Company
("Tiffany")
By
- ------------------------------------ -------------------------------------
4
<PAGE> 1
EXHIBIT 11.1
Item 6. TIFFANY & CO. AND SUBSIDIARIES
EXHIBIT 11 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(in thousands, except per share data)
<TABLE>
<CAPTION>
Years Ended
------------------------------------------------
January 31, January 31, January 31,
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
PRIMARY EARNINGS PER SHARE:
Net income/(loss) on which primary
earnings per share are based $29,341 $(10,242) $15,712
======= ======== =======
Weighted average number of shares on
which primary earnings are based 15,898 15,781 15,786
======= ======== =======
Primary net income/(loss) per
common share $ 1.85 $ (0.65) $ 1.00
======= ======== =======
FULLY DILUTED EARNINGS PER SHARE:
Net income/(loss) on which primary
earnings per share are based $29,341 $(10,242) $15,712
Add:
Interest and fees on convertible
subordinated debt, net of
applicable income taxes 1,712 1,844 1,945
------- -------- --------
Net income/(loss) on which fully
diluted earnings per share are based 31,053 $ (8,398) $17,657
======= ======== =======
Weighted average number of common
shares used in calculating
fully diluted earnings per share 15,898 15,781 15,786
Shares assumed upon conversion
of convertible debt, using the
"if converted" method 893 893 893
------- ------- -------
Weighted average number of shares
used in calculating fully diluted
earnings per share 16,791 16,674 16,679
======= ======== ========
Fully diluted net income/(loss) per
common share $ 1.85 $ (0.65) $ 1.00
======= ======== ========
</TABLE>
NOTE: As a result of the 6 3/8% Convertible Subordinated Debenture's dilutive
effect in future periods, fully diluted earnings per share reflects the
weighted average number of common shares outstanding under the "if
converted" method which assumes conversion as of the bond issuance date
of the Debentures. Since the "if converted" method had no effect on
fully diluted earnings per share (antidilutive) for the years ended
January 31, 1995, 1994 and 1993 primary earnings per share was used for
financial statement presentation purposes.
<PAGE> 1
EXHIBIT 13.1
SELECTED FINANCIAL DATA
The following table sets forth selected financial data with respect to the
Company for Fiscal 1987-Fiscal 1994. All share and per share data have been
retroactively adjusted to reflect the three-for-two split of the Company's
Common Stock effected in the form of a share distribution ("stock dividend") in
Fiscal 1989.
<TABLE>
<CAPTION>
(in thousands, except per FISCAL Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal
share amounts and employees) 1994 1993 1992 1991 1990 1989 1988 1987
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EARNINGS DATA:
Net sales $682,831 $566,501 $486,396 $491,906 $455,712 $383,964 $290,344 $230,488
Gross profit 358,202 232,882 237,033 243,009 223,600 191,683 144,511 112,140
Income/(loss) from operations 64,655 (10,029) 26,741 61,028 67,806 60,977 44,193 33,691
Income/(loss) before accounting
change and extraordinary item 29,341 (10,242) 15,712 31,805 36,661 33,305 24,901 16,820
Income/(loss) per share before
accounting change and
extraordinary item:
Primary 1.85 (0.65) 1.00 2.01 2.34 2.13 1.62 1.17
Fully diluted 1.85 (0.65) 1.00 2.01 2.34 2.13 1.62 1.17
Weighted average number of
common shares (primary) 15,898 15,781 15,786 15,835 15,694 15,606 15,332 14,300
BALANCE SHEET DATA:
Total assets $551,372 $504,409 $419,355 $394,882 $307,268 $237,061 $162,648 $126,669
Inventories 270,075 262,282 224,151 213,435 173,964 142,545 103,771 70,778
Working capital 234,687 212,266 199,334 159,466 131,219 112,735 81,329 66,772
Capital expenditures 18,977 18,103 22,754 41,385 24,835 14,040 9,680 1,895
Short-term borrowings 60,696 59,289 22,458 43,566 31,046 14,339 7,253 --
Long-term debt 101,500 101,500 101,500 50,000 18,226 18,226 -- --
Stockholders' equity 221,697 189,081 204,806 200,039 176,183 135,568 99,193 71,621
Book value per share 14.12 12.07 13.11 12.61 11.24 8.71 6.46 5.56
Cash dividends per share 0.28 0.28 0.28 0.28 0.26 0.18 0.10 --
Numberof employees 3,306 3,133 2,865 2,735 2,379 2,085 1,741 1,324
</TABLE>
8 Tiffany & Co. and Subsidiaries
<PAGE> 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company operates three channels of distribution: U.S. Retail includes
retail sales in Company-operated stores in the U.S. and wholesale sales to
independent retailers in North America; Direct Marketing includes corporate
(business-to business) and catalog sales; and International Retail includes
retail sales through Company-operated stores and boutiques, corporate sales,
and wholesale sales to independent retailers and distributors in Asia-Pacific,
Europe, Canada and the Middle East.
Net sales by channel of distribution:
<TABLE>
<CAPTION>
FISCAL Fiscal Fiscal
(in thousands) 1994 1993 1992
- ---------------------------------------------------------------
<S> <C> <C> <C>
U.S. Retail $308,290 $268,706 $241,127
Direct Marketing 92,684 87,429 89,541
International Retail 281,857 210,366 155,728
------------------------------
$682,831 $566,501 $486,396
==============================
(percentage of net sales)
- -------------------------
U.S. Retail 45% 47% 50%
Direct Marketing 14 16 18
International Retail 41 37 32
-----------------------------
100% 100% 100%
=============================
</TABLE>
NET SALES increased 21% in Fiscal 1994 and 16% in Fiscal 1993.
U.S. Retail sales increased 15% and 11% in Fiscal 1994 and 1993, and comparable
store sales rose 12% and 8%. Sales in the New York store rose 11% to
$130,602,000 in Fiscal 1994 after increasing 2% to $117,700,000 in Fiscal 1993,
and represented 19%, 21% and 24% of total Company sales in Fiscal 1994, 1993
and 1992. Comparable branch store sales increased 14% and 13% in Fiscal 1994
and 1993. The Company opened two new U.S. TIFFANY & CO. stores in Fiscal 1994
and opened one store and closed one boutique in Fiscal 1993. Sales growth in
Fiscal 1994 was primarily due to a higher volume of retail transactions, while
in Fiscal 1993 it was due to an increase in the average transaction amount. In
both years, higher sales were primarily generated by sales made to
local-resident customers. Sales to international tourists represented 14% of
retail store sales in the U.S. in Fiscal 1994, compared with 15% in both Fiscal
1993 and 1992. Wholesale trade and fragrance sales to independent retailers in
North America increased in both Fiscal 1994 and 1993 and represented 8% of U.S.
Retail sales in Fiscal 1994, 1993 and 1992.
Direct Marketing sales increased 6% in Fiscal 1994, following a 2% decline in
Fiscal 1993. Corporate sales, representing approximately two-thirds of the
sales in this channel, rose 2% in Fiscal 1994 after declining 4% in Fiscal
1993. Although the number of corporate orders increased in both years, there
was a decline in average order size, which management attributes to continued
conservative spending by U.S. corporations. Catalog sales increased 16% and 1%
in Fiscal 1994 and 1993. The Company mailed 15.0 million catalogs in Fiscal
1994, compared with 14.1 million in Fiscal 1993 and 12.9 million in Fiscal
1992. Catalog sales in Fiscal 1994 primarily benefitted from a higher catalog
response rate, which resulted in an increased number of orders, while Fiscal
1993 sales were affected by a lower catalog response rate and a lower average
order size.
International Retail sales increased 34% in Fiscal 1994 and 35% in Fiscal 1993.
Sales in the first half of Fiscal 1994 were not directly comparable with the
first half of Fiscal 1993 due to the realignment of the Company's Japan
business in July 1993 (discussed below). Total Japan sales increased 44% in
Fiscal 1994 and 57% in Fiscal 1993. When measured in yen, comparable store
sales increased 3% in Fiscal 1994 following a 14% decline in Fiscal 1993 (for
comparison purposes, Fiscal 1993 and 1992 sales include retail sales made in
boutiques that were operated by Mitsukoshi Ltd. prior to and in the first half
of Fiscal 1993). Total Japan sales represented approximately 28%, 23% and 17%
of total Company sales in Fiscal 1994, 1993 and 1992. Sales in Japan in Fiscal
1994 and 1993 were negatively affected by economic conditions in Japan and
favorably affected by the Company's merchandising, marketing and publicity
initiatives, including significant price reductions (discussed below). In
addition, three TIFFANY & CO. boutiques, which represent 5% of retail sales in
Japan, closed in January 1995 following an earthquake. Any future effect on
consumer spending in Japan from the earthquake cannot be predicted, nor is it
known if or when the closed boutiques may reopen, but the Company expects to
open additional boutiques in Fiscal 1995.
The Company also achieved sales growth in its other Asia-Pacific markets. In
Europe, total sales increased 15% in Fiscal 1994 and decreased 6% in Fiscal
1993. Comparable European retail store sales, when measured in local
currencies, were unchanged in Fiscal 1994 following a 2% increase in Fiscal
Tiffany & Co. and Subsidiaries 9
<PAGE> 3
1993. Three new TIFFANY & CO. international retail locations were opened in
Fiscal 1994, following the opening of five locations in Fiscal 1993.
In July 1993, the Company effected a realignment of its business in Japan by
assuming merchandising and marketing responsibilities for each of the 29
TIFFANY & CO. boutiques previously operated by Mitsukoshi Ltd., an operator of
department stores. Under the new arrangement, Mitsukoshi no longer purchases
TIFFANY & CO. merchandise on a wholesale basis for resale in Japan. Instead,
Mitsukoshi acts for the Company in the sale of merchandise owned by the
Company, and the Company recognizes as revenues the retail price charged to the
ultimate consumer in Japan (as opposed to the wholesale price previously
charged to Mitsukoshi). Mitsukoshi is paid at the rate of approximately 27% of
retail sales in compensation for providing boutique facilities and sales and
clerical staff, as well as for the collection of receivables and security of
store inventories. The new arrangement entails greater seasonality in sales for
the Company than did the prior wholesale arrangement with Mitsukoshi. The
Company incurs greater expenses in Japan under the new arrangement, but also
records higher revenues at the retail level. In general, management believes
that the Company's increased revenues and corresponding gross profit more than
offset the increased expenses.
As a result of the business realignment in Japan, the Company's reported sales
and earnings results benefit from a strengthening Japanese yen and are
adversely affected by a strengthening U.S. dollar. To reduce the potential
negative impact of a significant strengthening of the dollar against the yen on
the Company's financial results, in early Fiscal 1994 the Company initiated a
foreign currency hedging program for merchandise purchase transactions
initiated from Japan. The Company's pretax expense related to its hedging
program was $991,000 in Fiscal 1994.
Since the realignment, the Company has made a number of changes in its Japan
business that have affected sales, gross margins, inventory levels and
operating expenses. In June 1994, the Company reduced Japan retail prices by
approximately 25% on products that generate approximately 55% of Japan retail
sales. In October 1993, prices of solitaire diamond rings, which represent more
than one-third of sales in Japan, were reduced approximately 20%. These
reductions, done in part to offset the effect of a strengthening yen, were
taken to make pricing for TIFFANY & CO. brand merchandise more competitive with
both Japanese and imported brands in Japan by reducing the premium over New
York prices to approximately 50%. In the past, retail prices of imported luxury
goods in Japan typically reflected a substantial premium to "home market"
prices, although a recent trend among retailers in Japan has been to reduce
that premium.
Other improvements made since the Japan realignment, some of which will not be
fully implemented before the end of Fiscal 1995, include the establishment of
processes and systems to improve merchandise availability and to expedite the
flow of merchandise to the boutiques; an increase in advertising expenditures
directed to Japan; and improved visual merchandising within the boutiques.
GROSS MARGIN (gross profit as a percentage of net sales) was 52.5% in Fiscal
1994, compared with 51.3% (excluding the effect of the nonrecurring charge
related to the Japan business realignment) in Fiscal 1993 and 48.7% in Fiscal
1992. The increases were primarily due to the effect of recording higher retail
sales as part of the Japan realignment. Based on current plans, the Company's
objective is to maintain full-year gross margin at approximately current
levels.
OPERATING EXPENSES (selling, general and administrative expenses and the
provision for uncollectible accounts) increased 21% and 16% in Fiscal 1994 and
1993. The increases were largely due to the effect of the Japan realignment
(staffing-related expenses and sales-related variable expenses--primarily fees
paid to department stores), the weakened U.S. dollar and its effect on
translating foreign operating expenses into U.S. dollars, and incremental
occupancy, staffing and marketing expenses related to the Company's worldwide
expansion program. As a percentage of net sales, operating expenses were 43.0%
in Fiscal 1994, compared with 42.9% and 43.2% in Fiscal 1993 and 1992.
INTEREST EXPENSE increased in Fiscal 1994 and 1993, primarily due to higher
average short-term borrowings to support the Company's worldwide expansion
program and the effect of the Japan realignment. A significant portion of the
Company's short-term borrowings at January 31, 1995 and 1994 was denominated in
Japanese yen and was used to support the local working capital requirements of
the Company's Japan operations. Based on current plans, management expects
slightly higher interest expense in Fiscal 1995.
THE PROVISION/(BENEFIT) FOR INCOME TAXES resulted in an effective tax rate of
43.1% in Fiscal 1994, (43.1)% in Fiscal 1993 and 21.1% in Fiscal 1992. The
disproportionate effective tax rate in Fiscal 1992 primarily resulted from an
adjustment to tax reserves that had been established for the Company's
1985-1988 fiscal years (see Note O to Consolidated Financial Statements).
10
<PAGE> 4
ACCOUNTING STANDARDS: In November 1992, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No. 112, "Accounting
for Postemployment Benefits." The adoption of this new standard in Fiscal 1994,
as required, did not have a material effect on the Company's consolidated
results of operations or financial condition.
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES: Management believes that the Company's
financial condition at January 31, 1995 provides sufficient liquidity and
resources to support current business activity and planned expansion.
Working capital and the corresponding current ratio were $234,687,000 and 2.4:1
at January 31, 1995 and $212,266,000 and 2.4:1 at January 31, 1994. Accounts
receivable decreased 8% in Fiscal 1994, following a 31% increase in Fiscal
1993. Accounts receivable performance in Fiscal 1994 represented improved
collection productivity relative to sales growth, while the increase in Fiscal
1993 primarily reflected higher sales levels and receivables in Japan due to
the business realignment.
Inventories (which represent the largest component of both working capital and
current assets) increased 3% in Fiscal 1994 and 17% in Fiscal 1993. In both
years, the increases were due to merchandise purchases to support sales growth,
new store openings and expanded product offerings. In addition, the increase in
Fiscal 1994 reflected the weakened U.S. dollar and its effect on translating
foreign inventories into U.S. dollars, while the increase in Fiscal 1993
reflected inventory repurchased from Mitsukoshi as part of the Japan business
realignment. Inventory turnover was 0.9 times at January 31, 1995 and 1994. The
Company is taking several steps to improve inventory performance: replenishment
systems are being refined; merchandising management is being reorganized to
increase the focus on the specialized disciplines of product development,
assortment planning and inventory management; a visual merchandising group has
been created to improve the presentation and management of display inventories
in each store; and assortment editing by product category is being pursued.
Capital expenditures were $18,977,000, $18,103,000 and $22,754,000 in Fiscal
1994, 1993 and 1992. In all three years, these expenditures were required for
the opening of new stores and the expansion of certain existing stores, for the
renovation and expansion of administrative office facilities and for enhanced
computer operations and distribution capabilities. Based on current expansion
plans, the Company expects capital expenditures in Fiscal 1995 will be
approximately $30,000,000.
Cash dividends of $0.28 per share of Common Stock were paid in Fiscal 1994,
1993 and 1992. The Company expects to retain the majority of its earnings to
support its business and future expansion.
The Company incurred a net cash inflow from operating activities of $65,574,000
in Fiscal 1994, compared with an outflow of $19,502,000 in Fiscal 1993. Net
debt (short-term borrowings and long-term debt, less cash and short-term
investments) was $117,878,000 and $155,795,000 at January 31, 1995 and 1994.
The ratio of net debt to total capital (net debt and stockholders' equity) was
35% and 45% at January 31, 1995 and 1994. In addition, the Company had a
long-term trade payable of yen 2,750,000,000 ($27,591,000) at January 31, 1995
and yen 2,750,000,000 ($25,394,000) at January 31, 1994, which relates to
certain merchandise repurchased in Fiscal 1993 under the Japan business
realignment and is payable to Mitsukoshi on February 28, 1998. Inventory and
debt levels have been increased in recent years to support the Company's
long-term, worldwide expansion strategies and the Company's Fiscal 1993
realignment of its Japan business; however, it is management's goal to improve
inventory turnover, generate excess cash flow and reduce the ratio of net debt
to total capital.
The Company's sources of working capital are internally generated funds and
funds available under a $100,000,000 revolving credit facility and a yen
2,500,000,000 ($25,100,000) line of credit. The Company's operations and
expansion programs were supported with internally generated funds in Fiscal
1994, but were financed with revolving credit facility funds in Fiscal 1993.
The Company is in the process of arranging for a new five-year $130,000,000
agented multicurrency revolving credit facility to replace the current
$100,000,000 credit facility as well as the yen 2,500,000,000
non-collateralized line of credit, both of which expire in July 1995. The
Company has received signed commitment letters from the participating lenders,
subject to their satisfactory review of documentation. Management anticipates
that internally generated funds and funds available under the new facility will
be sufficient to support planned worldwide business expansion, as well as
seasonal working capital increases typically required during the third and
fourth quarters of each year.
SEASONALITY: The Company's business is seasonal in nature, with the fourth
quarter typically representing a proportionally greater percentage of annual
sales, income from operations, net income and cash flow. Management expects
such seasonality to continue in the future.
11
<PAGE> 5
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended January 31,
--------------------------------
(in thousands, except per share amounts) 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $682,831 $566,501 $486,396
Product return for Japan realignment -- (115,000) -
--------------------------------
682,831 451,501 486,396
Cost of goods sold 324,629 276,119 249,363
Cost related to product return for Japan realignment -- (57,500) --
--------------------------------
Gross profit 358,202 232,882 237,033
Selling, general and administrative expenses 291,722 240,283 209,140
Provision for uncollectible accounts 1,825 2,628 1,152
-------------------------------
Income/(loss) from operations 64,655 (10,029) 26,741
Interest expense and financing costs 12,942 9,562 7,231
Other (deductions)/income (147) 1,591 415
-------------------------------
Income/(loss) before income taxes 51,566 (18,000) 19,925
Provision/(benefit) for income taxes 22,225 (7,758) 4,213
NET INCOME/(LOSS) $ 29,341 $(10,242) $ 15,712
================================
Net income/(loss) per share:
Primary $ 1.85 $ (0.65) $ 1.00
================================
Fully diluted $ 1.85 $ (0.65) $ 1.00
================================
Weighted average number of common shares:
Primary 15,898 15,781 15,786
Fully diluted 16,791 16,674 16,679
</TABLE>
See notes to consolidated financial statements.
12 Tiffany & Co. and Subsidiaries
<PAGE> 6
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
January 31,
-------------------------
(in thousands) 1995 1994
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and short-term investments $ 44,318 $ 4,994
Accounts receivable, less allowances of $5,721 and $4,170 61,622 67,330
Income tax receivable 7,925 12,517
Inventories 270,075 262,282
Prepaid expenses 17,868 17,718
-------------------------
Total current assets 401,808 364,841
Property and equipment, net 103,478 97,365
Deferred income taxes 14,094 15,404
Other assets, net 31,992 26,799
-------------------------
$551,372 $504,409
=========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: $ 60,696 $ 59,289
Short-term borrowings 84,289 79,980
Accounts payable and accrued liabilities 13,607 6,359
Income taxes payable 8,529 6,947
Merchandise and other customer credits -------------------------
Total current liabilities 167,121 152,575
Long-term trade payable 27,591 25,394
Reserve for product return 13,103 13,663
Long-term debt 101,500 101,500
Deferred income taxes 3,298 6,758
Postretirement/employment benefit obligation 16,581 14,320
Other long-term liabilities 481 1,118
Commitments and contingencies
Stockholders' equity:
Common Stock, $.01 par value; authorized
30,000 shares, issued 15,703 and 15,660 157 157
Additional paid-in capital 71,821 70,498
Retained earnings 151,032 126,082
Foreign currency translation adjustments (1,313) (7,656)
-------------------------
Total stockholders' equity 221,697 189,081
-------------------------
$551,372 $504,409
=========================
</TABLE>
See notes to consolidated financial statements.
Tiffany & Co. and Subsidiaries 13
<PAGE> 7
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended January 31.
--------------------------------
(in thousands) 1995 1994* 1993*
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss) $ 29,341 $(10,242) $ 15,712
Adjustments to reconcile net income/(loss) to net cash
provided by/(used in) operating activities:
Depreciation and amortization 16,501 13,587 11,425
Provision for uncollectible accounts 1,825 2,628 1,152
Provision for product return -- 57,500 --
Reduction in reserve for product return (560) (43,837) --
Provision for inventories 1,788 3,833 2,020
Provision for operational realignment -- -- 7,000
Deferred income taxes (2,039) (7,181) (4,596)
Income tax receivable 4,592 ( 12,517) --
Provision for postretirement/employment benefits 2,261 1,550 1,600
(Increase)/decrease in assets and increase/
(decrease) in liabilities, net of acquisitions:
Accounts receivable 5,839 (18,264) ( 1,976)
Inventories 2,630 (16,015) (17,586)
Prepaid expenses 393 (7,193) 1,474
Other assets, net (7,863) (1,850) (7,278)
Accounts payable (3,055) 11,384 (17,188)
Accrued liabilities 5,817 3,825 6,610
Income taxes payable 6,700 3,044 (4,906)
Merchandise and other customer credits 1,582 1,629 631
Other long-term liabilities (178) (1,383) 352
-------------------------------
Net cash provided by/(used in) operating activities 65,574 (19,502) (5,554)
-------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (18,977) (18,103) (22,754)
Acquisitions, net of cash acquired -- -- (945)
Other (133) 2,450 4,310
-------------------------------
Net cash used in investing activities (19,110) (15,653) (19,389)
-------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
(Decrease)/increase in short-term borrowings (4,072) 36,912 (21,200)
Proceeds from debt offering -- -- 51,500
Proceeds from exercise of stock options 967 569 1,095
Tax benefit from exercise of stock options 356 377 619
Cash dividends on Common Stock (4,391) (4,381) (4,371)
-------------------------------
Net cash (used in)/provided by financing activities (7,140) 33,477 27,643
-------------------------------
Net increase/(decrease) in cash and short-term investments 39,324 (1,678) 2,700
Cash and short-term investments at beginning of year 4,994 6,672 3,972
-------------------------------
Cash and short-term investments at end of year $ 44,318 $ 4,994 $ 6,672
===============================
</TABLE>
* Reclassified for comparative purposes.
See notes to consolidated financial statements.
14 Tiffany & Co. and Subsidiaries
<PAGE> 8
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Foreign
Total Common Stock Additional Currency Treasury Stock
Stockholders' ----------------- Paid-in Retained Translation -------------------
(in thousands) Equity Shares Amount Capital Earnings Adjustments Shares Amount
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balances, January 31,1992 $200,039 15,865 $159 $67,927 $129,364 $ 2,680 (299) $(91)
Exercise of stock options 1,095 54 -- 1,095 -- -- -- --
Tax benefit from exercise of
stock options 619 -- -- 619 -- -- -- --
Cash dividends on Common Stock (4,371) -- -- -- (4,371) -- -- --
Foreign currency translation
adjustments (8,288) -- -- -- -- (8,288) -- --
Retirement of Treasury Stock -- (299) (3) (88) -- 299 91
Net income 15,712 -- -- -- 15,712 -- -- --
----------------------------------------------------------------------------------------------
Balances, January 31,1993 204,806 15,620 156 69,553 140,705 (5,608) -- --
Exercise of stock options 569 40 1 568 -- -- -- --
Tax benefit from exercise of
stock options 377 -- -- 377 -- -- -- --
Cash dividends on Common Stock (4,381) -- -- -- (4,381) -- -- --
Foreign currency translation
adjustments (2,048) -- -- -- -- (2,048) -- --
Net loss (10,242) -- -- -- (10,242) -- -- --
-----------------------------------------------------------------------------------------------
Balances, January 31, 1994 189,081 15,660 157 70,498 126,082 (7,656) -- --
Exercise of stock options 967 43 -- 967 -- -- -- --
Tax benefit from exercise of
stock options 356 -- -- 356 -- -- -- --
Cash dividends on Common Stock (4,391) -- -- -- (4,391) -- -- --
Foreign currency translation
adjustments 6,343 -- -- -- -- 6,343 -- --
Net income 29,341 -- -- -- 29,341 -- -- --
----------------------------------------------------------------------------------------------
BALANCES, JANUARY 31, 1995 $221,697 15,703 $157 $71,821 $151,032 $(1,313) -- --
==============================================================================================
</TABLE>
See notes to consolidated financial statements.
Tiffany & Co. and Subsidiaries 15
<PAGE> 9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Tiffany & Co. and
all majority-owned domestic and foreign subsidiaries (the "Company") after
elimination of all material intercompany balances and transactions.
CASH AND SHORT-TERM INVESTMENTS AND SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Short-term investments with a maturity of 90 days or less when
purchased are considered cash equivalents. The carrying amount of these
instruments approximates fair value due to their short-term maturity.
Supplemental cash flow information for the years ended January 31, 1995, 1994
and 1993 is as follows:
<TABLE>
<CAPTION>
(in thousands) 1995 1994 1993
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash paid during
the year for:
Interest $12,445 $8,714 $ 6,571
-------------------------------------------------
Income taxes $13,326 $5,535 $13,932
-------------------------------------------------
Details of businesses acquired in
purchase transactions were as follows:
Fair value of
assets acquired $ -- $ -- $ 1,284
Less: Liabilities assumed -- -- 339
-------------------------------------------------
Net cash paid for
acquisitions $ -- $ -- $ 945
=================================================
</TABLE>
RECEIVABLES AND FINANCE CHARGES
Accounts receivable finance charge income on retail revolving charge accounts
was not material and has been included as a reduction in selling, general and
administrative expenses.
The Company's domestic and international presence and large diversified
customer base serve to limit overall credit risk. The Company maintains
reserves for potential credit losses, and such losses, in the aggregate, have
not exceeded expectations.
INVENTORIES
Inventories are valued at the lower of cost or market with cost being
determined by the LIFO (last-in, first-out) method for domestic and foreign
branch inventories and the FIFO (first-in, first-out) method for inventories
held by foreign subsidiaries.
PROPERTY AND EQUIPMENT
Property and equipment is depreciated on a straight-line basis over the
estimated useful lives of the assets. Leasehold improvements are amortized over
the shorter of the useful lives of the improvements or the terms of the related
leases.
Expenditures for repairs and maintenance are charged to operations as incurred,
and expenditures for major renewals and betterments are capitalized.
PREOPENING COSTS
Costs associated with the opening of new retail stores are charged to
operations in the period incurred.
ADVERTISING
Advertising costs are expensed as incurred and aggregated $21,800,000,
$18,100,000 and $19,400,000 for the years ended January 31, 1995, 1994 and
1993.
INCOME TAXES
The Company, its domestic subsidiaries and its foreign branches file a
consolidated Federal income tax return. Certain items of revenue and expense
are reported for Federal income tax purposes in different periods than for
financial reporting purposes, thereby resulting in deferred income tax items.
FOREIGN CURRENCY TRANSLATION
In accordance with Statement of Financial Accounting Standards No. 52, assets
and liabilities of foreign operations are translated into U.S. dollars using
current exchange rates in effect at the balance sheet date, while revenue and
expense accounts are translated at average rates of exchange prevailing during
the period. Adjustments resulting from such translation are included as a
separate component of stockholders' equity.
The Company recognized $924,000 and $1,534,000 of net foreign currency
transaction gains (included in Other (deductions)/income) related to its
foreign operations for the years ended January 31, 1995 and 1994. Gains or
losses resulting from foreign currency transactions were not material for the
year ended January 31, 1993.
REVENUE RECOGNITION
The Company recognizes revenue at the "point of sale," which occurs when
merchandise is taken in an "over-the-counter" transaction or upon shipment to a
customer. For
16 Tiffany & Co. and Subsidiaries
<PAGE> 10
the years ended January 31, 1995, 1994 and 1993, the largest portion of the
Company's sales were denominated in U.S. dollars.
GOODWILL
Goodwill represents the excess of cost over fair value of net assets acquired
and is being amortized over 20 years using the straight-line method. At January
31, 1995 and 1994, the remaining unamortized amounts of $6,511,000 and
$6,974,000 are included in Other assets, net.
B. OPERATIONAL REALIGNMENT
During the year ended January 31, 1994, the Company realigned its business with
Mitsukoshi Ltd. in Japan (see Note J).
During the year ended January 31, 1993, the Company charged $7,000,000 to
operations, which included a selective realignment of store operations and the
implementation of improved organizational efficiencies leading to a reduction
in worldwide staff levels.
C. INVENTORIES
<TABLE>
<CAPTION>
(in thousands) 1995 1994
- -----------------------------------------------------
<S> <C> <C>
Finished goods $227,412 $219,010
Raw materials 38,262 40,210
Work-in-process 6,869 5,097
----------------------
272,543 264,317
Reserves (2,468) (2,035)
----------------------
$270,075 $262,282
======================
</TABLE>
At January 31, 1995 and 1994, $189,943,000 and $177,379,000 of inventories were
valued using the LIFO method. The excess of current cost over the LIFO
inventory value was $9,770,000 and $8,470,000 at January 31, 1995 and 1994. The
LIFO valuation method had the effect of decreasing net income by $0.05 per
share for the year ended January 31, 1995, increasing net loss by $0.06 per
share for the year ended January 31, 1994, and decreasing net income by $0.01
per share for the year ended January 31, 1993.
D. PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
(in thousands) 1995 1994
- -----------------------------------------------------
<S> <C> <C>
Leasehold improvements $ 91,529 $ 81,214
Office equipment 31,815 26,613
Machinery and equipment 29,001 26,184
----------------------
152,345 134,011
Accumulated depreciation
and amortization (48,867) (36,646)
---------------------
$103,478 $ 97,365
======================
</TABLE>
For the years ended January 31, 1995, 1994 and 1993, the provision for
depreciation and amortization amounted to $14,057,000, $11,947,000 and
$9,928,000.
E. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
<TABLE>
<CAPTION>
(in thousands) 1995 1994
- -----------------------------------------------------
<S> <C> <C>
Accounts payable-trade $36,997 $40,476
Accrued rent payable 7,931 6,777
Accrued compensation and
commissions 8,943 5,906
Other 30,418 26,821
---------------------
$84,289 $79,980
=====================
</TABLE>
F. DEBT
On January 29, 1993, the Company entered into an agreement with a group of
lenders to issue, at par, $51,500,000 of 7.52% Senior Notes Due 2003. The Note
Purchase Agreements (the "Note Agreements") require lump sum repayment upon
maturity, require maintenance of specific financial covenants and ratios, and
limit certain payments, investments and indebtedness, in addition to other
requirements customary in such circumstances. The Note Agreements also provide
that, in the event a default has occurred under any debt of the Company in
excess of $1,000,000, the unpaid principal amount of these Senior Notes may
become immediately due and payable. The proceeds from this loan were used
entirely to repay short-term indebtedness under the Company's revolving credit
facility (the "Credit Facility").
On March 19, 1991, the Company completed a Euro-offering of $50,000,000, at
par, of 6 3/8% Convertible Subordinated Debentures Due 2001 (the "Debentures")
issued pursuant to an Indenture (the "Indenture"), which are convertible into
shares of the Company's Common Stock at a conversion price of $56.00, subject
to certain adjustments, and are subordinated in right of payment to all
existing and future senior indebtedness of the Company. The Debentures are
redeemable at the option of either the Company or the holder under certain
circumstances and require lump sum repayment upon maturity. The Indenture
contains a cross-default provision relating to an event of default under any of
the Company's debt agreements whereby outstanding debt in excess of $3,000,000
has been accelerated and such acceleration has not been rescinded within 10
days after notification. In addition, the Indenture requires the Debentures to
be collateralized equally and ratably with any collateralized subordinated debt
of the Company.
17
<PAGE> 11
The Company also maintains a $100,000,000 Credit Facility expiring in July
1995, which it uses to support short-term borrowings. The Credit Facility
entitles the Company to borrow up to $20,000,000 on a non-collateralized basis
from each of five banks at interest rates based upon Eurodollar rates, a prime
rate, certificate of deposit rates or money market rates. During the years
ended January 31, 1995 and 1994, interest rates ranged from 2.57% to 9.78% and
1.35% to 10.95%. The weighted average interest rate for the years ended January
31, 1995 and 1994 was 3.40% and 3.70%. Each Credit Facility agreement provides
for the payment of an annual commitment fee based on unused amounts and
contains covenants that require maintenance of specific net worth, working
capital and capital expenditure levels, in addition to other requirements
customary in such circumstances. In addition, each Credit Facility agreement
contains a cross-default provision relating to an event of default under any
debt of the Company which exceeds $100,000.
In connection with the Company's realignment of its Japan business, the Company
modified certain covenants of the Note Agreements and Credit Facility and
received a waiver of compliance with respect to certain of the Credit
Facility's financial covenant requirements through January 31, 1995.
During the year ended January 31, 1994, the Company established a yen
2,500,000,000 non-collateralized line of credit expiring in July 1995. This
line of credit bears interest at a Euroyen rate plus 55 basis points. At
January 31, 1995 and 1994, the Company had yen 2,500,000,000 outstanding
($25,100,000) and yen 2,000,000,000 outstanding ($18,500,000) at an average
rate of 2.86% and 2.91% under this line.
The Company is in the process of arranging for a new five-year $130,000,000
agented multicurrency revolving credit facility to replace the current
$100,000,000 Credit Facility as well as the yen 2,500,000,000
non-collateralized line of credit, both of which expire in July 1995. The
Company has received signed commitment letters from the participating lenders,
subject to their satisfactory review of documentation.
G. FINANCIAL HEDGING INSTRUMENTS
During the year ended January 31, 1995, the Company initiated a limited-cost
foreign currency hedging program intended to reduce the Company's risk on
foreign-currency denominated transactions. In connection with this program, the
Company will, from time to time, enter into foreign-currency-purchased put
options and forward exchange contracts that are designated as hedges of
commitments to purchase merchandise and settle liabilities in foreign
currencies. The market value gains and losses on these foreign exchange
contracts are initially deferred and then recognized in income or as
adjustments of carrying amounts when the related transactions are settled. At
January 31, 1995, the Company had outstanding purchased put options maturing at
various dates through January 25, 1996, giving it the right, but not the
obligation, to sell yen 5,068,000,000 ($50,850,000) at the predetermined
contract exchange rates. If the market yen exchange rates at maturity are below
the contract rates, the Company will allow the options to expire. The Company's
pretax expense related to its hedging program was $991,000 for the year ended
January 31, 1995. There were no material outstanding forward exchange contracts
at January 31, 1995.
On January 31, 1993, the Company entered into a three-year $50,000,000 interest
rate swap agreement to modify the interest characteristics of its outstanding
Senior Notes from a fixed to a floating rate basis. In addition to the interest
on the 7.52% Senior Notes, the Company will pay the six-month LIBOR rate,
adjusted every six months, and will receive a fixed rate of 5.30%. The
six-month LIBOR rates at January 31, 1995 and 1994 were 6.69% and 3.56% and at
July 30, 1994 and 1993 were 5.25% and 3.38%. At January 31, 1995 and 1994,
there were no amounts outstanding as the terms of the underlying agreement
mandate semi-annual settlements of outstanding net positions each July 31 and
January 31. The interest rate swap agreement had the effect of increasing
interest expense by $375,000 and decreasing interest expense by $891,000 for
the years ended January 31, 1995 and 1994.
H. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table sets forth the carrying amounts and estimated fair values
of the Company's financial instruments at January 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
----------------------- ---------------------
CARRYING FAIR Carrying Fair
(in thousands) AMOUNT VALUE Amount Value
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Senior Notes $51,500 $48,100 $51,500 $54,278
Convertible
Subordinated
Debentures 50,000 45,750 50,000 50,000
Interest Rate Swap -- 1,300 -- 198
</TABLE>
18
<PAGE> 12
The carrying amounts of the Company's Senior Notes and Debentures in the above
table are included in Long-term debt in the consolidated balance sheets at
January 31, 1995 and 1994. No carrying amount has been recognized in the
financial statements for the interest rate swap agreement.
The fair values of these financial instruments at January 31, 1995 and 1994
were estimated as follows: the Senior Notes were based upon the quoted market
prices of comparable instruments; the Debentures were based upon their quoted
market price; and the interest rate swap agreement was valued at the amount
the Company would expect to pay to terminate the agreement.
I. COMMITMENTS AND CONTINGENCIES
The Company leases certain office, distribution, retail and manufacturing
facilities. The leases, which expire at various dates through 2009, also
provide for the payment of taxes, insurance and maintenance, and certain leases
contain escalation clauses resulting from the pass-through of increases in
operating costs, property taxes and consumer price indices.
Rent-free periods 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 under leases, including escalations, for the years
ended January 31, 1995, 1994 and 1993, amounted to $29,046,000, $26,552,000 and
$24,015,000.
Future minimum annual rental payments under noncancelable operating leases are
as follows:
<TABLE>
<CAPTION>
Minimum Annual
Fiscal Year Ending Rental Payments
January 31, (in thousands)
- -------------------------------------------
<S> <C>
1996 $26,660
1997 26,652
1998 25,160
1999 23,356
2000 20,720
2001 and thereafter 77,532
</TABLE>
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 and litigation with present and former employees. Management
believes that such pending litigation will not have a material adverse effect
on the Company's consolidated results of operations or financial condition.
J. RELATED PARTY TRANSACTIONS
Mitsukoshi Ltd. ("Mitsukoshi"), a leading Japanese department store group, owns
approximately 14% of the Company's outstanding Common Stock. Until July 1993,
Mitsukoshi served as the Company's principal distributor in Japan. Pursuant to
a written agreement, the Company now operates TIFFANY & CO. boutiques in
Mitsukoshi's stores in exchange for a percentage of net sales and Mitsukoski
continues to operate certain TIFFANY & CO. boutiques outside of Japan.
Wholesale sales to Mitsukoshi amounted to $19,000,000, $42,000,000, and
$74,000,000 for the years ended January 31, 1995, 1994 and 1993. There were no
trade receivables due from Mitsukoshi at January 31, 1995 and 1994.
During the year ended January 31, 1994, the Company realigned its primary
Japanese distribution arrangement and assumed full merchandising and marketing
responsibilities for 29 TIFFANY & CO. boutiques previously operated by
Mitsukoshi in Japan. As part of the transaction, the Company agreed to
repurchase over the next four years $115,000,000 of TIFFANY & CO. merchandise
previously sold to Mitsukoshi. Accordingly, in the second quarter of 1993 the
Company established a reserve for product return of $57,500,000, which had the
effect of reducing net income by $32,700,000 (net of income tax benefit of
$24,800,000), or $2.07 per share. Under this agreement, $35,500,000 of
merchandise remains to be repurchased throughout the period ending February 28,
1998. The Company owes yen 2,750,000,000 ($27,591,000) to Mitsukoshi through a
long-term trade payable agreement, due February 28, 1998, which was accounted
for as a non-cash transaction.
During the year ended January 31, 1993, the Company assumed the operation of
seven boutiques previously operated by Mitsukoshi in non-Mitsukoshi department
stores in Japan.
K. STOCKHOLDERS' EQUITY
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
19
<PAGE> 13
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
(described below). At January 31, 1995 and 1994, there were no shares of
Preferred Stock issued or outstanding.
STOCKHOLDER RIGHTS PLAN
Under the Company's Stockholder Rights Plan, each outstanding share of Common
Stock has a stock purchase right, which will become exercisable should certain
takeover-related events occur. The rights expire on November 17, 1998 and are
subject to redemption at $0.01 per right. Following such events, but before any
person has acquired beneficial ownership of 20% of the common shares, each
right may be used to purchase one one-hundredth of a share of Series A Junior
Participating Cumulative Preferred Stock at an exercise price of $140 (subject
to adjustment); after such an acquisition, each right may be used to purchase
for the exercise price common shares having a market value equal to two times
such 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 20% owner may not be exercised.
CASH DIVIDENDS
Cash dividends declared and paid during the years ended January 31, 1995 and
1994 amounted to $4,391,000 and $4,381,000. On February 15, 1995, the Company's
Board of Directors declared a regular quarterly dividend of $0.07 per common
share, for stockholders of record on March 21, 1995, to be paid on April 11,
1995.
STOCK OPTIONS
Under the 1985 Stock Option Plan, options to acquire up to 360,000 shares of
Common Stock may be granted to key employees of the Company at no less than
100% of fair market value on the date of grant. Certain options granted under
the 1985 Plan are intended to qualify as "incentive stock options" pursuant to
Section 422A of the Internal Revenue Code. Of the options granted, options for
180,000 shares became exercisable in full two years following the date of
grant. The balance became exercisable in part one year following the date of
grant. Options under the 1985 Plan have maximum terms of 10 or 11 years.
Under the 1986 Stock Option Plan, non-qualified stock options to acquire
2,709,000 shares of Common Stock may be granted to key employees of the Company
at no less than 100% of the fair market value on the date of the grant. Options
granted under the 1986 Plan have a maximum term of 11 years and are exercisable
in four equal installments with the first installment becoming exercisable on
the first anniversary of the grant date.
Under the 1988 Director Option Plan, options to acquire 150,000 shares of
Common Stock may be granted to nonemployee directors of the Company at a price
equal to 50% of the fair market value on the date of grant. Each director may
elect to receive options in lieu of all or 50% of an annual retainer fee.
Options granted under this plan have a maximum term of 15 years and are
exercisable in full one year following the date of grant.
Changes in options under these Plans during the years ended January 31, 1993,
1994 and 1995 were as follows:
<TABLE>
<CAPTION>
Number of Option Price
Shares Per Share
- ------------------------------------------------------------------------------
<S> <C> <C>
Outstanding -
January 31, 1992 1,074,807 $ 1.81-$52.88
Granted 433,890 $16.91-$50.94
Exercised (54,338) $ 1.81-$44.63
Canceled (57,164) $14.75-$52.88
---------
Outstanding -
January 31, 1993 1,397,195 $ 1.81-$52.88
Granted 321,270 $15.88-$31.88
Exercised (39,826) $ 1.81-$26.71
Canceled (108,888) $25.21-$52.88
---------
Outstanding -
January 31, 1994 1,569,751 $ 1.81-$52.88
Granted 353,260 $19.56-$42.56
Exercised (42,501) $ 1.81-$36.38
Canceled (115,385) $23.17-$52.88
---------
OUTSTANDING-
JANUARY 31, 1995 1,765,125 $ 1.81-$52.88
=========
EXERCISABLE -
JANUARY 31, 1995 980,554
=========
</TABLE>
20
<PAGE> 14
L. POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE BENEFITS
The Company provides certain health care and life insurance benefits for
retired employees. Substantially all of the Company'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 benefits paid during the year. The Company accounts for
postretirement health care and life insurance benefits under the provision of
Statement of Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," which requires companies to
accrue the cost of providing these benefits throughout the employees' active
service periods until they attain full eligibility for those benefits.
The following table sets forth the Company's cumulative postretirement benefit
obligation and the amount recognized in the Company's consolidated balance
sheets at January 31, 1995 and 1994:
<TABLE>
<CAPTION>
(in thousands, except percentages) 1995 1994
- -------------------------------------------------------------------
<S> <C> <C>
Retirees $ 8,074 $ 9,294
Fully eligible plan participants 2,345 855
Other active plan participants 5,070 9,852
-----------------------
Total accumulated postretirement
benefit obligation 15,489 20,001
Unrecognized gain/(loss) 1,232 (4,891)
-----------------------
Postretirement benefit obligation $16,721 $15,110
=======================
Discount rate 8.50% 7.50%
Rate of increase in compensation 5.50% 5.00%
Health care cost trend* 9.50% 11.00%
</TABLE>
*Gradually declining to 5.50% to be achieved in the year 2011.
Postretirement benefit cost included the following components:
<TABLE>
<CAPTION>
(in thousands) 1995 1994 1993
- ------------------------------------------------------------------
<S> <C> <C> <C>
Service cost $1,132 $1,042 $ 988
Interest cost on projected
benefit obligation 1,137 1,298 1,178
--------------------------
Total postretirement
benefit cost $2,269 $2,340 $2,166
==========================
</TABLE>
Based on current estimates, increasing the health care cost trend rate by one
percentage point would increase the Company's accumulated postretirement
benefit obligation by $2,106,000 and the aggregate service and interest cost
components of net periodic postretirement benefit for the year ended January
31, 1995 by $400,000.
M. POSTEMPLOYMENT BENEFITS
Effective February 1, 1994, the Company adopted Statement of Financial
Accounting Standards No. 112, "Accounting for Postemployment Benefits," which
requires the accrual of the cost of postemployment benefits as they are earned
rather than expensing the costs when incurred. These benefits include salary
continuation, severance benefits, disability benefits and continuation of
health care benefits and life insurance coverage for former employees after
employment but before retirement. The adoption of this standard did not have a
material impact on the Company's reported results of operation or financial
condition.
N. EMPLOYEE BENEFIT PLANS
The Company has a non-contributory defined benefit pension plan (the "Plan")
covering substantially all domestic salaried and full-time hourly employees.
The Company accounts for pension expense under the provision of Statement of
Financial Accounting Standards No. 87, "Employers' Accounting for Pensions,"
which requires the use of 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.
21
<PAGE> 15
Net pension expense included the following components:
<TABLE>
<CAPTION>
(in thousands, except percentages) 1995 1994 1993
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost-benefits
earned during period $2,343 $2,076 $1,850
Interest cost on projected
benefit obligation 2,625 2,493 2,299
Return on assets 877 (3,073) (1,015)
Net amortization
and deferrals (2,703) 1,411 (326)
-----------------------------
Net periodic
pension expense $3,142 $2,907 $2,808
=============================
Discount rate 7.50% 8.25% 8.50%
Rate of increase
in compensation 5.00% 5.50% 6.00%
Long-term rate of
return on assets 9.00% 9.00% 9.00%
</TABLE>
The following table sets forth the funded status of the Plan and amounts
recognized in the Company's consolidated balance sheets at January 31, 1995 and
1994:
<TABLE>
<CAPTION>
(in thousands) 1995 1994
- --------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of
benefit obligation:
Vested $25,840 $26,852
Nonvested 3,251 3,889
--------------------
Accumulated benefit obligation $29,091 $30,741
====================
Projected benefit obligation $34,571 $36,440
Plan assets at fair value,
primarily stocks and fixed
income securities 30,749 30,131
--------------------
Projected benefit obligation
in excess of Plan assets 3,822 6,309
Unrecognized net loss (2,968) (5,182)
Unrecognized net obligation (651) (755)
Recognition of minimum liability -- 237
--------------------
Pension liability recognized in the
consolidated balance sheets $ 203 $ 609
====================
</TABLE>
The assumptions used in the calculation of the projected benefit obligation are
as follows:
<TABLE>
<CAPTION>
1995 1994
- --------------------------------------------------------------------
<S> <C> <C>
Discount rate 8.50% 7.50%
Rate of increase in compensation 5.50% 5.00%
</TABLE>
The Company has an Employee Profit Sharing and Retirement Savings Plan that
covers substantially all U.S.-based employees of the Company. The Company's
contribution for the year ended January 31, 1995 amounted to $600,000 in the
form of newly issued Company Common Stock. There were no contributions for the
years ended January 31, 1994 and 1993.
O. INCOME TAXES
Effective February 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes," which requires the
Company to provide for taxes based upon the tax rate at which the items of
income and expense are expected to be settled in the Company's tax return. The
adoption of this standard did not have a material impact on the Company's
consolidated results of operations or financial condition. Prior years'
financial statements have not been restated.
Income/(loss) before income taxes consisted of the following:
<TABLE>
<CAPTION>
(in thousands) 1995 1994 1993
- -----------------------------------------------------------
<S> <C> <C> <C>
United States $41,894 $(31,808) $22,373
Foreign 9,672 13,808 (2,448)
------------------------------
$51,566 $(18,000) $19,925
==============================
</TABLE>
Components of the provision/(benefit) for income taxes are as follows:
<TABLE>
<CAPTION>
(in thousands) 1995 1994 1993
- ------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $12,171 $(9,472) $ 4,827
State and foreign 12,858 7,782 4,954
--------------------------------
25,029 (1,690) 9,781
--------------------------------
Deferred:
Federal (2,236) (2,324) (5,078)
State and foreign (568) (3,744) (490)
--------------------------------
(2,804) (6,068) (5,568)
--------------------------------
$22,225 $(7,758) $ 4,213
================================
</TABLE>
The Company has an income tax receivable amounting to $7,925,000, primarily due
to the recognition of a tax benefit from its year ended January 31, 1994, for
domestic net operating losses and foreign tax credits that were carried back to
prior tax years.
22
<PAGE> 16
Deferred tax assets/(liabilities) as of January 31, 1995 and 1994 consisted of
the following:
<TABLE>
<CAPTION>
(in thousands) 1995 1994
- --------------------------------------------------------------------
<S> <C> <C>
Postretirement/employment benefits $ 7,905 $6,434
Product return reserve 5,962 6,267
State net operating loss
carryforward -- 2,703
5,624 5,210
Inventory reserves
Accrued expenses 2,310 2,383
Depreciation (3,601) (5,189)
Pension contribution (1,439) (2,160)
Undistributed earnings
of foreign subsidiaries (3,701) (3,868)
Other (2,264) (3,134)
-------------------
$10,796 $8,646
===================
</TABLE>
The income tax effects of items comprising the deferred income tax benefit are
as follows:
<TABLE>
<CAPTION>
(in thousands) 1995 1994 1993
- ------------------------------------------------------------------
<S> <C> <C> <C>
Postretirement/employment
benefit obligation $(1,029) $ (711) $ (544)
Tax audit settlement -- -- (4,196)
Lease buyout provision -- 510 (510)
Product return reserve 255 (6,267) --
Undistributed earnings
of foreign subsidiaries (167) 1,028 1,211
State net operating loss
carryforward 2,703 (2,703) --
Book/tax depreciation (1,068) 137 193
Excess pension contribution (704) 185 113
Inventory reserves (1,033) (1,946) (33)
Other (1,761) 3,699 (1,802)
---------------------------
$(2,804) $(6,068) $(5,568)
===========================
</TABLE>
A reconciliation of the provision/(benefit) for income taxes at the statutory
Federal income tax rate to the Company's effective tax rate as reported is as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
- ---------------------------------------------------------------------
<S> <C> <C> <C>
Statutory Federal income
tax rate 35.0% (35.0)% 34.0%
Tax audit settlement -- -- (21.1)
State income taxes, net of
Federal benefit 5.4 (14.2) 6.1
Foreign tax rates in excess
of foreign tax credits -- 4.8 --
Other 2.7 1.3 2.1
-------------------------
Effective income tax rate 43.1% (43.1)% 21.1%
=========================
</TABLE>
For the year ended January 31, 1995, the Company recognized a state income tax
benefit of $2,703,000 attributable to net operating loss carryforwards. The
Company has fully utilized all available foreign tax credits.
During the year ended January 31, 1993, the Company was advised by the Internal
Revenue Service that its audit of the Company's Federal tax returns for the
1985-1988 fiscal years was completed. The statute of limitations with respect
to such fiscal periods had expired. All material proposed adjustments related
to the acquisition of Tiffany and Company from Avon Products, Inc. in October
1984 and with respect to certain indebtedness incurred prior to the completion
of the Company's May 1987 initial public offering were withdrawn. As a result,
the provision for income taxes was reduced by $4,196,000, in order to adjust
tax reserves that had been established for the Company's 1985-1988 fiscal
years.
During the year ended January 31, 1995, an audit of the Company's Federal
income tax returns for the 1989-1992 fiscal years was completed and no material
adjustments were proposed.
23
<PAGE> 17
P. FOREIGN OPERATIONS
Certain information relating to the Company's foreign operations is set forth
below:
<TABLE>
<CAPTION>
Domestic International
-------------------- --------------------------
(in thousands) U.S. Export Japan Other Unallocated Total
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED JANUARY 31, 1995
Sales $508,928 $15,964 $189,445 $ 76,373 $ -- $790,710
Eliminations (96,037) -- -- (11,842) -- (107,879)
------------------------------------------------------------------------------------
Net sales $412,891 $15,964 $189,445 $ 64,531 $ -- $682,831
====================================================================================
Operating profit* $ 94,760 $ 7,503 $ 16,158 $ 3,808 $ -- $122,229
Recognition of deferred gross profit** (41,445) -- 41,445 -- -- --
Eliminations (10,158) -- -- (1,706) -- (11,864)
Corporate expenses -- -- -- -- (45,710) (45,710)
Interest and other expenses, net -- -- -- -- (13,089) (13,089)
-----------------------------------------------------------------------------------
Income before income taxes $ 43,157 $ 7,503 $ 57,603 $ 2,102 $ (58,799) $ 51,566
====================================================================================
Identifiable assets $489,880 $ 3,900 $108,463 $109,581 $ -- $711,824
Eliminations (127,131) -- (33,229) (92) -- (160,452)
-----------------------------------------------------------------------------------
Identifiable assets $362,749 $ 3,900 $ 75,234 $109,489 $ -- $551,372
====================================================================================
YEAR ENDED JANUARY 31, 1994
Sales $418,125 $41,106 $104,963 $ 56,577 $ -- $620,771
Eliminations (49,534) -- -- (4,736) -- (54,270)
-----------------------------------------------------------------------------------
Net sales $368,591 $41,106 $104,963 $ 51,841 $ -- $566,501
====================================================================================
Operating profit* $ 60,476 $21,786 $ 13,125 $ 532 $ -- $ 95,919
Recognition of deferred gross profit** (21,684) -- 21,684 -- -- --
Eliminations (4,405) -- -- (1,773) -- (6,178)
Corporate expenses -- -- -- -- (42,270) (42,270)
Japan realignment -- -- -- -- (57,500) (57,500)
Interest and other expenses, net -- -- -- -- (7,971) (7,971)
-----------------------------------------------------------------------------------
Income/(loss) before income tax $ 34,387 $21,786 $ 34,809 $ (1,241) $(107,741) $(18,000)
====================================================================================
Identifiable assets $457,597 $ 5,867 $115,432 $102,577 $ -- $681,473
Eliminations (134,311) -- (43,320) 567 -- (177,064)
-----------------------------------------------------------------------------------
Identifiable assets $323,286 $ 5,867 $ 72,112 $103,144 $ -- $504,409
====================================================================================
YEAR ENDED JANUARY 31, 1993
Sales $362,200 $87,730 $ 13,822 $ 46,770 $ -- $510,522
Eliminations (23,633) -- -- (493) -- (24,126)
-----------------------------------------------------------------------------------
Net Sales $338,567 $87,730 $ 13,822 $ 46,277 $ -- $486,396
====================================================================================
Operating profit* $ 25,008 $46,497 $ 2,371 $ 378 $ -- $ 74,254
Recognition of deferred gross profit** (843) -- 843 -- -- --
Eliminations 2,054 -- -- (368) -- 1,686
Corporate expenses -- -- -- -- (42,199) (42,199)
Operational realignment -- -- -- -- (7,000) (7,000)
Interest and other expenses, net -- -- -- -- (6,816) (6,816)
-----------------------------------------------------------------------------------
Income before income taxes $ 26,219 $46,497 $ 3,214 $ 10 $ (56,015) $ 19,925
====================================================================================
Identifiable assets $417,970 $ 2,251 $ 18,640 $114,399 $ -- $553,260
Eliminations (131,039) -- (2,082) (784) -- (133,905)
-----------------------------------------------------------------------------------
Identifiable assets $286,931 $ 2,251 $ 16,558 $113,615 $ -- $419,355
====================================================================================
</TABLE>
* Represents income from operations before corporate expenses, realignments and
interest and other expenses, net.
**Represents the gross profit on international transfers initially deferred in
the U.S. and recognized upon sale to retail customers in Japan.
<PAGE> 18
Q. QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
Fiscal 1994 Quarter Ended
--------------------------------------------------------
(in thousands, except per share amounts) April 30 July 31 October 31 January 31
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $131,207 $152,257 $160,091 $239,276
Gross profit 67,200 78,921 84,417 127,664
Income from operations 6,114 9,018 11,827 37,696
Net income 1,876 3,450 4,720 19,295
Net income per share:
Primary $ 0.12 $ 0.22 $ 0.30 $ 1.21
========================================================
Fully Diluted $ 0.12 $ 0.22 $ 0.30 $ 1.17
========================================================
</TABLE>
<TABLE>
<CAPTION>
Fiscal 1993 Quarter Ended
--------------------------------------------------------
(in thousands, except per share amounts) April 30 July 31 October 31 January 31
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $109,481 $114,233 $134,750 $208,037
Gross profit/(loss) 50,781 (2,053)* 71,832 112,322
Income/(loss) from operations 3,705 (55,675) 7,916 34,025
Net income/(loss) 1,037 (32,550) 3,255 18,016
Net income/(loss) per share:
Primary $ 0.07 $ (2.06) $ 0.21 $ 1.14
========================================================
Fully Diluted $ 0.07 $ (2.06) $ 0.21 $ 1.11
========================================================
</TABLE>
* Includes a $57,500 provision related to the realignment of the Company's
business in Japan.
The sum of the quarterly net income/(loss) per share amounts may not equal the
full year amount since the computations of the weighted average number of
common and common equivalent shares outstanding for each quarter and the full
year are made independently.
<PAGE> 1
Exhibit 21.1
<TABLE>
<S> <C>
TIFFANY & CO.
(Delaware)
Registrant
(13-3228013)
TIFFANY & CO. TIFFANY AND COMPANY
INTERNATIONAL
(Delaware) (New York)
(06-1121421) (13-1387680)
TIFFANY & CO. TIFFANY & CO. TIFFANY & CO. TIFFANY & CO.
JAPAN INC. OF NEW YORK LIMITED (NEW YORK) PTY. LTD. ICT, INC.
(Delaware) (Hong Kong) (Australia) (Delaware)
TIFFANY-FARAONE TIFFANY & CO. TIFFCO JEWELRY SOCIETE FRANCAISE POUR LE
S.P.A. OVERSEAS FINANCE B.V. AND CHAIN CRAFTS, INC. DEVELOPPEMENT DE LA
(Italy) (Netherlands) (Delaware) PORCELAINE D'ART S.A.R.L.
(France)
TIFFANY & CO. TIFFANY & CO. TIFFANY & CO. TIFFANY & CO.
PTE. LTD A.G. K.K.
(Singapore) (Switzerland) (Japan) (United Kingdom)
TIFFANY & CO. GLASSWARE
WATCH FACTORY S.A. ACQUISITION INC.
(Switzerland) (West Virginia)
</TABLE>
<PAGE> 1
[COOPERS & LYBRAND LETTERHEAD]
CONSENT OF INDEPENDENT ACCOUNTANTS
---------------------
We consent to the incorporation by reference in the registration statement of
Tiffany & Co. and Subsidiaries on Form S-8 of our report dated March 6, 1995 on
our audits of the consolidated financial statements and financial statement
schedule of Tiffany & Co. and Subsidiaries as of January 31, 1995 and 1994, and
for each of the three years in the period ended January 31, 1995, which report
is included in the Company's Annual Report on Form 10-K.
/s/ Coopers & Lybrand L.L.P.
New York, New York
April 7, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1995
<PERIOD-START> FEB-01-1994
<PERIOD-END> JAN-31-1995
<CASH> 44,318,000
<SECURITIES> 0
<RECEIVABLES> 67,343,000
<ALLOWANCES> 2,197,000
<INVENTORY> 270,075,000
<CURRENT-ASSETS> 401,808,000
<PP&E> 152,345,000
<DEPRECIATION> 48,867,000
<TOTAL-ASSETS> 551,372,000
<CURRENT-LIABILITIES> 167,121,000
<BONDS> 101,500,000
<COMMON> 157,000
0
0
<OTHER-SE> 221,540,000
<TOTAL-LIABILITY-AND-EQUITY> 551,372,000
<SALES> 682,831,000
<TOTAL-REVENUES> 682,831,000
<CGS> 324,629,000
<TOTAL-COSTS> 324,629,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,825,000
<INTEREST-EXPENSE> 12,942,000
<INCOME-PRETAX> 51,566,000
<INCOME-TAX> 22,225,000
<INCOME-CONTINUING> 29,341,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 29,341,000
<EPS-PRIMARY> 1.85
<EPS-DILUTED> 1.85
</TABLE>
