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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, 2000 COMMISSION FILE NUMBER: 1-9494
TIFFANY & CO.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3228013
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
727 FIFTH AVENUE, NEW YORK, NY 10022
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 755-8000
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Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
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Common Stock, $.01 par value New York Stock Exchange
Stock Purchase Rights New York Stock Exchange
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
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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, 2000 the aggregate market value of voting stock held by
non-affiliates was $4,879,349,268.80. 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: 72,535,551 shares of
Common Stock outstanding as of March 24, 2000.
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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, 2000 (Parts I, II and IV) and Registrant's Proxy
Statement Dated April 7, 2000 (Part III).
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PART I
ITEM 1. BUSINESS
(a) General history of business.
Registrant (also referred to as the "Company") is the parent
corporation of Tiffany and Company ("Tiffany"). Charles Lewis Tiffany founded
Tiffany's business in 1837. He incorporated Tiffany in New York in 1868.
Registrant acquired Tiffany in 1984 and completed the initial public offering of
Registrant's Common Stock in 1987.
(b) Financial information about industry segments.
Registrant's operating segment information for the fiscal years ended
January 31, 2000, 1999 and 1998 is incorporated by reference from Registrant's
Annual Report to Stockholders for the Fiscal Year ended January 31, 2000 (Note
Q. "Operating Segments"). Executive Officers of the Company evaluate the
performance of the Company's assets on a consolidated basis. Therefore, separate
financial information for the Company's assets on a segment basis is not
available.
(c) Narrative description of business.
As used below, the terms "Fiscal 1997", "Fiscal 1998" and "Fiscal 1999"
refer to the fiscal years ended on January 31, 1998, 1999 and 2000,
respectively. Registrant is a holding company, and conducts all business through
its subsidiary corporations.
Products
Registrant's principal product categories are fine jewelry, timepieces,
sterling silver goods, china, crystal, stationery, writing instruments,
fragrances and personal accessories.
Registrant offers an extensive selection of TIFFANY & CO. brand jewelry
at a wide range of prices. In Fiscal 1997, 1998 and 1999, approximately 73%, 74%
and 77%, respectively, of Registrant's net sales were attributable to jewelry.
See Merchandise Purchasing, Manufacturing and Raw Materials below. Designs are
developed by employees, suppliers, independent designers and independent "name"
designers. See Designer Licenses below.
In the Fall of 1999 the Company introduced LUCIDA(TM), a square cut
diamond and engagement ring setting.
- - PAGE 2 - TIFFANY & CO. REPORT ON FORM 10-K FY 1999
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In addition to jewelry, the Company sells TIFFANY & CO. brand
merchandise in the following categories: timepieces and clocks; sterling silver
merchandise, including flatware, hollowware (tea and coffee services, bowls,
cups and trays), trophies, key holders, picture frames and desk accessories;
crystal, glassware, china and other tableware; custom engraved stationery;
writing instruments; and fashion accessories, including men's ties. Fragrance
products are sold under the trademarks TIFFANY, TRUESTE and TIFFANY FOR MEN.
Tiffany also sells other brands of timepieces and tableware in its U.S. stores,
and FARAONE brand jewelry in selected European stores. Registrant also offers a
line of commercial glassware under the JUDEL trademark.
Distribution and Marketing
Channels of Distribution
For financial reporting purposes, Registrant categorizes its sales as
follows:
U.S. Retail consists of retail sales transacted in company owned stores
in the United States and wholesale sales to independent retailers in
the United States. Wholesale sales of fragrance products to independent
retailers in the Americas are also included (see U.S. Retail below);
Direct Marketing consists of sales in the United States through a staff
of specialized sales personnel who concentrate on business clients and
sales through direct mail catalogs and through Registrant's Web site at
www.tiffany.com (see Direct Marketing below); and
International Retail consists of both retail and wholesale sales to
customers located outside the United States (see International Retail
below).
U.S. Retail
Fifth Avenue Store
The Fifth Avenue store in New York accounts for a significant portion
of the Company's sales and is the focal point for marketing and public relations
efforts. Approximately 16%, 14% and 13% of total Company net sales for Fiscal
1997, 1998 and 1999 respectively, were attributable to the New York store's
retail sales. Approximately 32,450 gross square feet in the New York building
are devoted to retail selling.
- - PAGE 3 - TIFFANY & CO. REPORT ON FORM 10-K FY 1999
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U.S. Branch Stores
At January 31, 2000 Tiffany had 37 branch stores in the United States.
The following table identifies the location and year of opening of each U.S.
branch store:
U.S. BRANCH STORE OPENINGS
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STORE LOCATION YEAR OPENED STORE LOCATION YEAR OPENED
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San Francisco, California 1963 Hackensack, New Jersey 1996
Beverly Hills, California 1964 Chevy Chase, Maryland 1996
Houston, Texas 1964 Charlotte, North Carolina 1997
Chicago, Illinois 1966 Chestnut Hill, Massachusetts 1997
Atlanta, Georgia 1969 Cincinnati, Ohio 1997
Dallas, Texas 1982 Honolulu, Hawaii (Hilton) 1997
Boston, Massachusetts 1984 Palo Alto, California 1997
Costa Mesa, California 1988 Denver, Colorado 1998
Philadelphia, Pennsylvania 1990 Honolulu, Hawaii (Surfrider) 1998
Vienna, Virginia 1990 Las Vegas, Nevada 1998
Palm Beach, Florida 1991 Manhasset, New York 1998
Honolulu, Hawaii (Ala Moana) 1992 Seattle, Washington 1998
San Diego, California 1992 Scottsdale, Arizona 1998
Troy, Michigan 1992 Century City, California 1999
Bal Harbour, Florida 1993 Dallas (NorthPark), Texas 1999
Maui, Hawaii 1994 Boca Raton, Florida 1999
Oak Brook, Illinois 1994 Tamuning, Guam+ 1999
King of Prussia, Pennsylvania 1995
Short Hills, New Jersey 1995
White Plains, New York 1995
+ Operated by Mitsukoshi (U.S.A.), Inc. until March 1999.
Each of the U.S. branch stores displays a representative selection of
merchandise but none maintains the extensive selection carried by the New York
store. Management currently contemplates the opening of new branch stores in the
United States at the rate of approximately three to five per year. Tiffany has
entered into lease agreements to open additional branches in 2000 in Wailea,
Hawaii and Skokie, Illinois. See Item 2. Properties below for further
information concerning U.S. Retail store leases. United States branch stores
range in size from approximately 800 to 16,000 gross square feet and total
approximately 302,000 gross square feet devoted to retail purposes. Prior to
1993, an average of approximately 45% of the floor space in each branch store
was devoted to retail selling. Newer stores generally range from approximately
4,000 to 8,000 gross square feet and are designed to devote approximately 60-70%
of total floor space to retail selling.
- - PAGE 4 - TIFFANY & CO. REPORT ON FORM 10-K FY 1999
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U.S. Wholesale Distribution
In September 1999, the Company announced that it would discontinue
wholesale sales of jewelry and tabletop products to third-party retailers in the
U.S. This change will become effective during the first quarter of fiscal year
2000. Trade sales represented less than 3% of U.S. Retail Sales in Fiscal 1999.
This change is not expected to have a significant impact on sales or profits and
will enable the Company to better manage the TIFFANY & CO. brand and to focus on
Company-operated store development.
Direct Marketing
Corporate Division
Corporate Division sales executives call on business clients throughout
the United States, selling products drawn from the retail product line and items
specially developed or sourced for the business market, including trophies and
items designed for the particular customer. Price allowances are given to
business customers for volume purchases. Corporate Division customers purchase
for business gift giving, employee service and achievement recognition awards,
customer incentives and other purposes. Products and services are marketed
through a sales force of approximately 164 persons, through advertising in
newspapers and business periodicals and through the publication of special
catalogs.
Catalogs
Tiffany also distributes catalogs of selected merchandise to its
proprietary list of mail and telephone customers and to mailing lists rented
from third parties. Four seasonal SELECTIONS(R) catalogs are published,
supplemented by COLLECTIONS and other catalogs. The following table sets forth
certain data with respect to mail order operations for the periods indicated:
Fiscal Year
1997 1998 1999
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Number of names on catalog mailing list at year-end
(consists of customers who purchased by mail or telephone
prior to the applicable date): 817,100 964,000 1,099,000
Total catalog mailings during fiscal year (in millions): 21.4 24.3 26.0
Total mail or telephone orders received during fiscal year: 285,992 337,760 359,255
- - PAGE 5 - TIFFANY & CO. REPORT ON FORM 10-K FY 1999
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Internet
In November 1999, the Company commenced the distribution of a limited
selection of merchandise through its Web site at www.tiffany.com. Approximately
235 items are available. The Company expects to refine and eventually expand its
merchandise selection and services on the site based on customer needs. Most
recently, the Company entered into a venture with Della.com for the development
of online wedding gift registry services. The Company expects these services to
be available by late 2000. A selection of TIFFANY & CO. merchandise suitable for
wedding gifts will be available through the Della.com site.
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. In
March 2000, the Company announced that it would discontinue wholesale sales of
jewelry to third-party retailers in Europe. This change will become effective
during fiscal year 2000. Trade sales in Europe represented less than 1% of
International Retail sales in Fiscal 1999. This change is not expected to have a
significant impact on sales or profits and will enable the Company to better
manage the TIFFANY & CO. brand and to focus management efforts on
Company-operated stores in Europe.
- - PAGE 6 - TIFFANY & CO. REPORT ON FORM 10-K FY 1999
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International Locations
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LOCATIONS OPERATED BY REGISTRANT'S SUBSIDIARIES
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JAPAN ASIA-PACIFIC EXCLUDING JAPAN
* Operated by Registrant's Subsidiaries with
Mitsukoshi, Ltd.
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Chiba, Mitsukoshi Department Store * Australia: Melbourne, Crown Casino
Fukuoka, Mitsukoshi * Australia: Melbourne, Daimaru Department Store
Fukuoka, Mitsukoshi Department Store * Australia: Sydney, Chifley Plaza
Ginza, Mitsukoshi Department Store * Hong Kong: Landmark Center
Hamamatsu, Matsubishi Department Store Hong Kong: Mitsukoshi Department Store
Hiroshima, Mitsukoshi Department Store * Hong Kong: Pacific Place
Ikebukuro, Mitsukoshi Department Store * Hong Kong: Peninsula Hotel
Kagoshima, Mitsukoshi Department Store * Hong Kong: Sogo Department Store
Kanazawa, Mitsukoshi * Korea: Seoul, Grand Hyatt Hotel
Kawasaki , Saikaya Department Store Korea: Seoul, Hyundai Department Store
Kobe, Hotel Okura Kobe * Korea: Seoul, Lotte Downtown Department Store
Kobe, Mitsukoshi Department Store * Malaysia: Suria KLCC City Centre+++
Kochi, Daimaru Department Store Singapore: Ngee Ann City
Kokura, Izutsuya Department Store Singapore: Raffles Hotel
Koriyama, Usui Department Store Taiwan: Kaohsiung, Hanshin Department Store
Kumamoto, Tsuruya Department Store Taiwan: Tainan, Mitsukoshi Department Store
Kurashiki, Mitsukoshi Department Store * Taiwan: Taipei, Regent Hotel
Kyoto, Daimaru Department Store Taiwan: Taipei, Sogo Department Store
Kyoto, Takashimaya Department Store
Matsuyama, Mitsukoshi Department Store* +++ Location opened February 2000.
Nagano, Mitsukoshi *
Nagoya Hoshigaoka, Mitsukoshi Dept. Store * ---------------------------------------------------------
Nagoya Sakae, Mitsukoshi Department Store
Nagoya, Hilton Hotel * EUROPE
Nihonbashi, Mitsukoshi Department Store *
Niigata, Mitsukoshi Department Store * ---------------------------------------------------------
Oita, Tokiwa Department Store
Okayama, Ten Maya Department Store+ England: London, Old Bond Street
Okinawa, Mitsukoshi Department Store * England: London, Harrod's Department Store
Osaka, Mitsukoshi Department Store * France: Paris
Osaka, Righa Royal Hotel*++ Germany: Frankfurt
Osaka, Takashimaya Department Store Germany: Munich
Sagamihara, Isetan Department Store Italy: Florence, FARAONE Store
Sapporo, Mitsukoshi Department Store * Italy: Milan
Sendai, Mitsukoshi Department Store * Switzerland: Zurich
Shinjuku, Mitsukoshi Department Store *
Shinsaibashi, Daimaru Department Store ---------------------------------------------------------
Shizuoka, Matsuza Kaya Department Store
Takamatsu, Mitsukoshi Department Store * CANADA AND MEXICO
Tokyo Bay, Hotel Tokyu *
Tokyo, Ginza Flagship Store * ---------------------------------------------------------
Tottori , Daimaru Department Store
Umeda, Daimaru Department Store Canada: Toronto
Yokohama, Landmark Plaza, Mitsukoshi * Mexico: Mexico City, El Palacio de Hierro
Yokohama, Mitsukoshi Department Store * Mexico: Mexico City, Masaryk
+Location opened February 2000
++Location closed February 2000
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- - PAGE 7 - TIFFANY & CO. REPORT ON FORM 10-K FY 1999
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LOCATIONS OPERATED BY THIRD PARTIES
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CANADA ASIA-PACIFIC
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Calgary, Holt-Renfrew Department Store Australia: Gold Coast, DFS Store
Montreal, Holt-Renfrew Department Store Australia: Sydney, DFS Store
Ottawa, Holt-Renfrew Department Store Guam: DFS Store
Quebec, Holt-Renfrew Department Store Hong Kong: DFS Store
Vancouver, Holt-Renfrew Department Store India: Bombay, Group Beautiful
Indonesia: Bali, DFS Store
Japan: Tokyo (FARAONE) +
Korea: Cheju, Korean Airlines (KAL) Duty Free Shop
Korea: Pusan, Lotte Pusan Duty Free Shop ++
Korea: Seoul, Hotel Lotte Duty Free Shop ++
Korea: Seoul, Lotte World Duty Free Shop ++
New Zealand: Auckland, DFS Store
Philippines: Manila, Rustan's Department Store (Edsa Plaza)
Philippines: Manila, Rustan's Makati Department Store (Makati)
Saipan: DFS Store
Singapore: DFS Store
Taiwan: Taipei (until 4/00) +
+ Operated by Mitsukoshi, Ltd. Location closing April 2000.
++ Operated by Lotte Duty Free.
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The preceding tables do not include international "trade accounts,"
i.e. non-U.S. retailers to which the Company sells TIFFANY & CO. or FARAONE
brand merchandise on a wholesale basis, but which do not operate a dedicated
TIFFANY & CO. boutique within their respective stores. See International
Wholesale Distribution below.
Business with Mitsukoshi
The Company has and expects to maintain an important commercial
relationship with Mitsukoshi Ltd. of Japan ("Mitsukoshi").
From 1972 until July 1993, selected TIFFANY & CO. products, principally
jewelry and timepieces, were purchased from Tiffany by Mitsukoshi for
distribution in Japan in TIFFANY & CO. boutiques located, for the most part, in
Mitsukoshi's department stores.
On June 12, 1993, Registrant, through its affiliated companies, entered
into an agreement (the "93 Agreement") to realign its business relationship with
Mitsukoshi. Under the 93 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 93 Agreement occurred
during July 1993.
- - PAGE 8 - TIFFANY & CO. REPORT ON FORM 10-K FY 1999
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Under the 93 Agreement, Mitsukoshi acts for Tiffany-Japan in the sale of
merchandise owned by Tiffany-Japan and Registrant recognizes as revenues the
retail price charged to the ultimate consumer in Japan. Tiffany-Japan holds
inventories for sale, establishes retail prices, bears the risk of currency
fluctuations, provides one or more brand managers in each boutique, controls
merchandising and display within the boutiques, manages inventory and controls
and funds all advertising and publicity programs with respect to TIFFANY & CO.
merchandise. 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, or in a "flagship store" (see below). The mutual obligations
described in this paragraph will expire on October 15, 2001.
In Fiscal 1997, 1998 and 1999, respectively, total Japan sales
represented 27%, 27% and 28% of Registrant's net sales. In Fiscal 1997, 1998 and
1999, respectively, sales made in TIFFANY & CO. boutiques located in
Mitsukoshi's stores constituted 17%, 16% and 16% of Registrant's net sales.
Under the 93 Agreement, Tiffany-Japan reserved the right to make
TIFFANY & CO. brand jewelry available for sale in Tokyo in a single "flagship
store", i.e., a TIFFANY & CO. store not located within a larger department
store; however, Tiffany-Japan was required to offer to Mitsukoshi the
opportunity to participate in the capitalization and ownership of a corporation
which would operate the flagship store. In lieu of forming such a corporation,
Mitsukoshi, Tiffany and Tiffany-Japan entered into an Agreement dated February
23, 1996 (the "FSS Agreement") governing the operation of a 7,700 square foot
TIFFANY & CO. store in premises (the "Premises") located in Tokyo's Ginza
shopping district (the "Flagship Store"). In June 1999 by Supplemental
Agreement, the parties expanded the Premises to approximately 12,000 square
feet. The FSS Agreement will expire on September 30, 2001. The Premises are
leased by a third party to Tiffany-Japan for a fixed annual rental and subleased
by Tiffany-Japan to Mitsukoshi on a percentage-of-sales basis (the "Sublease").
Tiffany-Japan completed, at its cost, all necessary improvements to prepare the
Premises and delivered the Premises to Mitsukoshi in May 1996. Under the FSS
Agreement, Tiffany-Japan bears all costs of operating the Premises.
Tiffany-Japan selects and furnishes its own merchandise for display in the
Flagship Store, prices the merchandise for retail sale, bears all risk of loss
until the merchandise is sold to a customer and determines all issues of
display, packaging, signage and advertising. Mitsukoshi acts for Tiffany-Japan
in the sale of the merchandise, collects and holds the sales proceeds, makes
credit available to customers, bears all credit losses and provides its
point-of-sale transaction processing system (the "POS System"). Tiffany-Japan
provides all necessary staff other than ten employees provided by Mitsukoshi.
After compensating Tiffany-Japan on a percentage-of-sales basis for Sublease
rent and staffing, Mitsukoshi retains 8.3% of net sales for most sales
transactions in the Flagship Store. Management of the Flagship Store, other than
with respect to the POS System, is the responsibility of Tiffany-Japan.
On February 2, 1998, Tiffany purchased, as a going concern, the TIFFANY
& CO. business operated on the island of Oahu, Hawaii, by an affiliate of
Mitsukoshi under agreement with Tiffany. The transaction was structured as a
purchase of assets. Tiffany paid a cash price of $8.1 million and
- - PAGE 9 - TIFFANY & CO. REPORT ON FORM 10-K FY 1999
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agreed to make contingent payments equal to 3.75% of certain sales made by
Tiffany on the island of Oahu after the date of the purchase and through January
31, 2003. On March 19, 1999, Tiffany purchased, as a going concern, the TIFFANY
& CO. business operated in Guam by an affiliate of Mitsukoshi under agreement
with Tiffany. The transaction was structured as a cash-for-stock purchase of the
affiliate, under which Tiffany assumed all of the assets and liabilities of the
affiliate. Tiffany paid a total cash price of $7.0 million.
From 1989 through January 1999, Mitsukoshi Limited of Japan and its
affiliated companies held a significant portion of the Registrant's Common
Stock. As of January 31, 1999, Mitsukoshi's holdings represented 12.3% of
Registrant's outstanding shares. In February 1999, Mitsukoshi sold all of its
holdings of Registrant's Common Stock through a public offering.
International Wholesale Distribution
Wholesale distribution of selected TIFFANY & CO. merchandise is also
made through independent distributors in the countries listed below. Multiple
doors are indicated in parentheses.
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INTERNATIONAL WHOLESALE DISTRIBUTION
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EUROPE+ ASIA-PACIFIC, MIDDLE EAST AND RUSSIA
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Austria (2) * Luxembourg Bahrain (2) Lebanon (3)
Belgium Malta Egypt Oman
Czech Republic Monaco India * Qatar (2)
England (4) Spain (25) Israel (2) Russia (5)
Germany (30) * Switzerland (15) * Japan (7) * Saudi Arabia (4) *
Greece/Cyprus (14) Turkey (2) Jordan Syria
Italy (46) * Netherlands (3) Kuwait (2) * United Arab Emirates (3)*
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CARIBBEAN CENTRAL/LATIN AMERICA
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Aruba (3) Jamaica (4) Argentina (4) Panama (2)
Bahamas (2) Puerto Rico (5) Brazil (2) Paraguay (4)
Bermuda (2) St. Maarten (2) Costa Rica Uruguay
Dominican Republic (2) St. Thomas (3) Honduras (2) Venezuela
Grand Cayman (2) Mexico (6)
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* FARAONE merchandise also available in some locations.
+ Wholesale distribution in Europe will be discontinued in Fiscal 2000. See
International Retail above.
Management anticipates continued expansion of international wholesale
distribution in Central/Latin American, Caribbean and Asia-Pacific regions as
markets are developed.
- - PAGE 10 - TIFFANY & CO. REPORT ON FORM 10-K FY 1999
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Expansion of Worldwide Retail Operations
Registrant expects to continue to open stores in locations outside the
United States. However, the timing and success of this program will depend upon
many factors, including Registrant's ability to obtain suitable retail space on
satisfactory economic terms and the extent of consumer demand for TIFFANY & CO.
products in overseas markets. Such demand varies from market to market.
The Company's commercial relationship with Mitsukoshi and Mitsukoshi's
ability to continue as a leading department store operator have been and will
continue to be substantial factors in the Company's continued success in Japan.
TIFFANY & CO. boutiques are located in 25 Mitsukoshi department stores and other
retail locations operated with Mitsukoshi in Japan. The Company also operates 17
boutiques primarily in department stores other than Mitsukoshi, in locations
within Japan but outside of Tokyo, and plans to open more.
In recent years, the Japanese department store industry has, in
general, suffered declining sales. There is a risk that such financial
difficulties will force consolidations or store closings. Should one or more
Japanese department store operators, such as Mitsukoshi, elect or be required to
close one or more stores now housing a TIFFANY & CO. boutique, the Company's
sales and earnings would be reduced while alternate premises are being obtained.
Tiffany began its ongoing program of international expansion through
proprietary retail stores in 1986 with the establishment of the London store.
Company-operated international TIFFANY & CO. stores and boutiques range in size
from approximately 400 to 14,000 gross square feet and total approximately
182,000 gross square feet devoted to retail purposes. The following chart
details the growth in the Company's stores and boutiques since Fiscal 1987 on a
worldwide basis:
- - PAGE 11 - TIFFANY & CO. REPORT ON FORM 10-K FY 1999
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Worldwide Retail Locations
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Registrant's Subsidiary Companies Independent
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Americas and Europe Asia-Pacific, Middle East, Americas
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End of Canada,
Fiscal: U.S. Mexico Europe Japan Elsewhere Mitsukoshi Others Total
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1987 8 0 2 0 0 21 0 31
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1988 9 0 3 0 1 21 0 34
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1989 9 0 5 0 2 24 0 40
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1990 12 0 5 0 3 27 0 47
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1991 13 1 7 0 4 38 2 65
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1992 16 1 7 7 4 36 4 75
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1993 16 1 6 37 5 8 7 80
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1994 18 1 6 37 7 8 8 85
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1995 21 1 6 38 9 7 16 98
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1996 23 1 6 39 12 4 19 104
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1997 28 2 7 42 17 4 23 123
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1998 34 2 7 44 17 3 19 126
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1999 38 3 8 44 17 2 20 132
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Advertising and Promotion
Tiffany regularly advertises its business, primarily in newspapers and
magazines. Prior to 1996, television advertising was used on a limited basis in
Japan. Since then, television advertising has expanded into various other
markets during the holiday season. 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 1997, 1998 and 1999, Tiffany spent approximately $51.8 million, $52.5
million and $57.3 million, respectively, on worldwide advertising, net of
amounts contributed by vendors to Tiffany, but inclusive of cooperative
advertising funds contributed by Tiffany to third party distributors and amounts
expended to print and mail catalogs and brochures.
- - PAGE 12 - TIFFANY & CO. REPORT ON FORM 10-K FY 1999
13
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. In its New York store, Tiffany displays
table settings created by leading interior decorators and by prominent hosts and
hostesses. John Loring, Tiffany's Design Director, is the author of several
books featuring TIFFANY & CO. products. Registrant considers these and other
promotional efforts important in maintaining Tiffany's image as an arbiter of
taste and style.
Trademarks
The designations TIFFANY(R) and TIFFANY & CO.(R) are the principal
trademarks of Tiffany, as well as serving as tradenames. Tiffany has obtained
and is the proprietor of trademark registrations for TIFFANY and TIFFANY & CO.
as well as the TIFFANY BLUE BOX and has applied for trademark registration of
the color TIFFANY BLUE for a variety of product categories in the United States
and in other countries. Over the years, Tiffany has maintained a program to
protect its trademarks and has instituted legal action where necessary to
prevent others either from registering or using marks which are considered to
create a likelihood of confusion with the Company or its products. Tiffany has
been generally successful in such actions and management considers that its
United States trademark rights in TIFFANY and TIFFANY & CO. are strong. However,
use of the designation TIFFANY by third parties (often small companies) on
unrelated goods or services, frequently transient in nature, may not come to the
attention of Tiffany or may not rise to a level of concern warranting legal
action. Despite the general fame of the TIFFANY and TIFFANY & CO. name and mark
for the Company's products and services, Tiffany is not the sole person entitled
to use the name TIFFANY in every category in every country of the world; third
parties have registered the name TIFFANY in the United States in the food
services category, and in a number of foreign countries in respect of certain
product categories (including, in a few countries, the categories of fragrance,
cosmetics, jewelry, eyeglass frames, clothing and tobacco products) under
circumstances where Tiffany's rights were not sufficiently clear under local
law, and/or where management concluded that Tiffany's foreseeable business
interests did not warrant the expense of litigation.
Designer Licenses
Tiffany has been the sole licensee for jewelry designed by Elsa
Peretti, Paloma Picasso and the late Jean Schlumberger since 1974, 1980 and
1956, respectively. In 1992, Tiffany acquired trademark and other rights
necessary to sell the designs of the late Mr. Schlumberger under the
TIFFANY-SCHLUMBERGER trademark. Ms. Peretti and Ms. Picasso retain ownership of
copyrights for their designs and of their trademarks and exercise approval
rights with respect to important aspects of the promotion, display, manufacture
and merchandising of their designs and Tiffany is required by contract to devote
a portion of its advertising budget to the promotion of their respective
products; each is paid a royalty by Tiffany for jewelry and other items designed
by them and sold under their respective names. Written agreements exist between
Ms. Peretti and Tiffany and between Ms. Picasso and Tiffany but may be
terminated by either party following six months notice to the other party.
Tiffany is the sole retail source for merchandise designed by Ms. Peretti
worldwide; however, she has reserved by contract the right to appoint other
distributors in markets
- - PAGE 13 - TIFFANY & CO. REPORT ON FORM 10-K FY 1999
14
outside the United States, Canada, Japan, Singapore, Australia, Italy, the
United Kingdom, Switzerland and Germany.
The designs of Ms. Peretti accounted for 14%, 15% and 15% of the
Company's net sales in Fiscal 1997, 1998 and 1999, respectively. Merchandise
designed by Ms. Picasso accounted for 4%, 3% and 3% of the Company's net sales
in Fiscal 1997, 1998 and 1999, respectively.
Registrant's operating results could be adversely affected were it to
cease to be a licensee of either of these designers or should its degree of
exclusivity in respect of their designs be diminished.
Merchandise Purchasing, Manufacturing and Raw Materials
Merchandise offered for sale by the Company is supplied from Tiffany's
workshops in New York City and Pelham, New York; Parsippany, New Jersey;
Warwick, Rhode Island; Salem, West Virginia; and Paris, France and through
purchases and consignments from others. The following table shows Tiffany's
sources of merchandise, based on cost, for the periods indicated:
Fiscal Years
1997 1998 1999
---- ---- ----
Produced by Tiffany 31% 31% 37%
Purchased from others 69 69 63
---- ---- ----
Total 100% 100% 100%
==== ==== ====
The preceding figures include the cost of precious gems incorporated in
such merchandise. Approximately 43% of the merchandise purchased from others in
Fiscal 1999 was manufactured outside the United States.
Gems and precious metals used in making Tiffany's jewelry may be
purchased from a variety of sources. For the most part, purchases of such
materials are from suppliers with which Tiffany enjoys long-standing
relationships.
Products containing one or more diamonds of varying sizes, including
diamonds used as accents, side-stones and center-stones, accounted for
approximately 37%, 37% and 38% of Tiffany's net sales in Fiscal 1997, 1998 and
1999, respectively. Products containing one or more diamonds of one carat or
larger accounted for less than 10% of net sales in each of those years. Tiffany
purchases cut diamonds principally from three key vendors. Were trade relations
between Tiffany and one or more of these vendors to be disrupted, the Company's
sales would be adversely affected in the short term until alternative supply
arrangements could be established. Diamonds of one carat or greater of the
quality the Company demands are, on a relative basis, more difficult to acquire
than smaller diamonds. Established sources for smaller stones would be more
easily replaced in the event of a disruption in supply than would established
sources for larger-sized stones.
- - PAGE 14 - TIFFANY & CO. REPORT ON FORM 10-K FY 1999
15
Except as noted above, Tiffany believes that there are numerous
alternative sources for gems and precious metals and that the loss of any single
supplier would not have a material adverse effect on its operations.
In 1999, the Company announced its intention to form a joint
arrangement and distribution contract with Aber Resources Ltd. ("Aber"), a
publicly traded company headquartered in Canada. The Company strengthened this
commercial relationship by making a substantial equity investment ($71 million)
of 8 million shares in Aber, representing approximately 14.9% of its outstanding
shares. It is expected that Tiffany's alliance with Aber, 40% owner of the
Diavik Diamonds Project in Northwest Canada, will enable Tiffany to secure a
significant portion of its future diamond needs once production commences.
Production is expected to commence in 2003.
Presently, the supply and price of rough (uncut and unpolished)
diamonds in the principal world markets have been and continue to be
significantly influenced by a single entity, the Central Selling Organization
(the "CSO"), of De Beers Centenary AG, a Swiss corporation. The CSO supplies
approximately 70% of the world market for rough, gem-quality diamonds,
notwithstanding that its historical ability to control supplies has been
somewhat diminished due to changing politics in diamond-producing countries and
revised contractual arrangements with independent mine operators. Through its
affiliates, the CSO continues to exert a significant influence on the demand for
polished diamonds through its advertising and marketing efforts throughout the
world.
Tiffany does not purchase rough diamonds; in consequence, Tiffany does
not purchase directly from the CSO. Some, but not all, of Tiffany's suppliers do
purchase 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 (including war-torn African countries),
the opening of new mines and the continuance of the prevailing supply and
marketing arrangements for rough diamonds. Sustained interruption in the supply
of rough diamonds, an over-abundance of supply or a substantial change in the
marketing arrangements described above or legislative initiatives intended to
stem the flow of diamonds from war-torn regions could adversely affect Tiffany
and the retail jewelry industry as a whole. The CSO has begun to offer to brand
cut and polished diamonds with a proprietary trademark. This service will be
offered to its direct purchasers. Such a change, coupled with a change in the
marketing and advertising policies of the CSO's affiliates, could affect
consumer demand for diamonds that do not bear the CSO's trademark. Tiffany may
or may not carry such branded diamonds in the future.
Finished jewelry is purchased from approximately 150 manufacturers,
most of which have long-standing relationships with Tiffany. Tiffany believes
that there are alternative sources for most jewelry items; however, due to the
craftsmanship involved in certain designs, Tiffany would have difficulty in
finding readily available alternatives in the short term.
TIFFANY & CO. brand clocks and components for timepieces are
manufactured and assembled by third parties. Approximately 47% of net watch
sales during Fiscal 1999 were attributable to a single manufacturer. Tiffany
contracts with a single manufacturer to produce its silver flatware patterns
from Tiffany's proprietary tools and dies by use of Tiffany's traditional
manufacturing techniques. Likewise, engraved stationery is purchased from a
single manufacturer. Loss of any of these manufacturers could result in the
unavailability of timepieces, silver flatware or
- - PAGE 15 - TIFFANY & CO. REPORT ON FORM 10-K FY 1999
16
engraved stationery, as the case may be, during the period necessary for Tiffany
to arrange for new production.
Competition
Registrant encounters significant competition in all of its product
lines from other third-party providers, some of which specialize in just one
area in which the Company is active. Many of the Company's competitors have
established reputations for style and expertise similar to that of the Company
and compete on the basis of value. Other jewelers and retailers compete
primarily through advertised price promotion. The Company competes on the basis
of quality and value and does not engage in price promotional advertising.
The international marketplace for the Company's products is highly
competitive. Although the Company believes that the name TIFFANY & CO. is known
internationally, and although Tiffany did operate retail stores in London and
Paris prior to World War II, the Company did not have a retail presence in
Europe in the post-war era until 1986. Accordingly, consumer awareness of
Tiffany & Co. and its products is not as strong in Europe as in the U.S. or in
Japan, where Tiffany has distributed its products for many years. The Company
expects that its overseas stores will continue to experience intense competition
from established retailers in international cities where TIFFANY & CO. stores
are or may eventually be located.
Registrant also faces increasing competition in the area of direct
marketing. A growing number of direct sellers compete for access to the same
mailing lists of known purchasers of luxury goods. In marketing service awards
and business gifts to corporations and other organizations, the Company faces
numerous competitors who sell a wide variety of products at a greater price
range than the Company, which has chosen to offer a more limited selection in
order to adhere to its established quality standards. Tiffany has only recently
commenced the distribution of selected merchandise through its Web site at
www.tiffany.com and anticipates increasing competition in this area as the
technology evolves. Tiffany does not currently offer diamond engagement jewelry
through its Web site, while certain of Tiffany's competitors do. Nonetheless,
Tiffany will seek to maintain and improve its position in the Internet
marketplace by refining and expanding its merchandise selection and services.
Seasonality
As a jeweler and specialty retailer, the Company's business is seasonal
in nature, with the fourth quarter typically representing a proportionally
greater percentage of annual sales, earnings from operations and cash flow.
Management expects such seasonality to continue.
Employees
As of January 31, 2000, the Registrant's subsidiary corporations
employed an aggregate of approximately 5,368 full-time and part-time persons. Of
those employees, 4,462 are employed in the United States. Of Tiffany's total
employees, approximately 2,022 persons are salaried employees, 491 are engaged
in manufacturing and 2,493 are retail store personnel. None of the Company's
employees is represented by a union. Registrant believes that relations with its
employees are good.
- - PAGE 16 - TIFFANY & CO. REPORT ON FORM 10-K FY 1999
17
ITEM 2. PROPERTIES
Registrant both owns and leases its principal operating facilities and
occupies its various store premises under lease arrangements which are generally
on a two to ten-year basis.
New York Store
In November 1999, Tiffany purchased the land and building housing its
flagship store at 727 Fifth Avenue in New York City. Constructed for Tiffany in
1940, the building was designed to be a retail store for the Company and is
believed to be well configured and located for this function. 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, certain product services, jewelry manufacturing and
storage. Tiffany intends to add an additional elevator to accommodate customers.
Prior to Tiffany's recent purchase of its flagship store, Tiffany leased the New
York store building since 1984.
Customer Service Center
In 1995, Tiffany entered into a lease of undeveloped property in
Parsippany, New Jersey, in order to construct and occupy a new distribution
facility. In April 1997, construction of the "Customer Service Center" ("CSC")
on that property was completed and Tiffany commenced operations. The CSC is a
combined warehouse, distribution, light manufacturing, computing and office
center. It comprises approximately 269,000 square feet, of which approximately
96,000 square feet are devoted to office and computer operations use, with the
balance devoted to warehousing, shipping, receiving, light manufacturing,
merchandise processing and other distribution functions.
The present term of the lease expires on January 31, 2001. Subject to
the conditions stated in the lease, Tiffany may thereafter extend the term of
the lease for eight separate one year periods. The rental rate will be
approximately $13.33 per square foot throughout the remaining term of the lease
and Tiffany must also pay all expenses of operating and maintaining the CSC,
including property taxes. Subject to certain conditions stated in the lease
governing the end of the lease term and Tiffany's obligation to pay specified
costs and expenses, Tiffany has the right to purchase the CSC in each of fiscal
years 2000 through 2008 for a scheduled purchase price that ranges from $35.2 to
$27.8 million. Alternatively, if the CSC is sold to a third party for less than
such scheduled purchase price, Tiffany would become liable for an end-of-term
rental adjustment up to the amount of such deficiency (subject to a conditional
maximum deficiency), and would, if the CSC is neither purchased by Tiffany nor
sold to a third party, become liable for an end-of-term rental adjustment that
would range from $30.9 to $24.6 million in fiscal years 2000 through 2008
depending on Tiffany's compliance with certain lease conditions. Registrant has
guaranteed Tiffany's obligations under the CSC lease and provided certain
financial covenants to the landlord's lenders in support of such guaranty
consistent with financial covenants provided to Registrant's bank lenders.
Registrant believes that the CSC has been properly designed to handle
worldwide distribution functions and that it is suitable for that purpose.
However, it will have to be expanded over the next few years to meet increased
demand. Plans for that expansion are in progress. Moreover, with the anticipated
growth in sales volume and company operated stores, the Company
- - PAGE 17 - TIFFANY & CO. REPORT ON FORM 10-K FY 1999
18
is presently considering the purchase or lease of an additional facility to
manage the warehousing and processing of direct-to-customer orders and to
perform other distribution functions.
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):
- -------------------------------------------------------------------------------------------------------------------------
U.S. BRANCH STORE LEASES
- -------------------------------------------------------------------------------------------------------------------------
CITY STATE/TERR. LOCATION EXPIRATION DATE RENEWAL OPTIONS
- -------------------------------------------------------------------------------------------------------------------------
Atlanta GA Phipps Plaza Shopping Center July 31, 2000 Two five-year terms
- -------------------------------------------------------------------------------------------------------------------------
Bal Harbour FL Bal Harbour Shops May 31, 2003
- -------------------------------------------------------------------------------------------------------------------------
Hackensack NJ Riverside Square Mall September 30, 2006
- -------------------------------------------------------------------------------------------------------------------------
Beverly Hills CA Two Rodeo Drive October 7, 2005 Two five-year terms
- -------------------------------------------------------------------------------------------------------------------------
Boca Raton FL Town Center November 1, 2009 One five-year term
- -------------------------------------------------------------------------------------------------------------------------
Boston MA Copley Place July 31, 2009 Two five-year terms
- -------------------------------------------------------------------------------------------------------------------------
Century City CA Century City Shopping Center June 30, 2009
- -------------------------------------------------------------------------------------------------------------------------
Charlotte NC SouthPark Mall December 31, 2007 One five-year term
- -------------------------------------------------------------------------------------------------------------------------
Chestnut Hill MA The Atrium January 31, 2008 One five-year term
- -------------------------------------------------------------------------------------------------------------------------
Chevy Chase MD 5500 Wisconsin Avenue January 31, 2006
- -------------------------------------------------------------------------------------------------------------------------
Chicago IL 730 North Michigan Avenue October 1, 2012 Two five-year terms
- -------------------------------------------------------------------------------------------------------------------------
Cincinnati OH Fountain Place November 30, 2012 Two five-year terms
- -------------------------------------------------------------------------------------------------------------------------
Costa Mesa CA South Coast Plaza January 31, 2004 One five-year term
- -------------------------------------------------------------------------------------------------------------------------
Dallas TX The Galleria October 31, 2007
- -------------------------------------------------------------------------------------------------------------------------
Dallas TX NorthPark Center May 15, 2009 One five-year term
- -------------------------------------------------------------------------------------------------------------------------
Denver CO Cherry Creek Shopping Center August 30, 2008 One five-year term
- -------------------------------------------------------------------------------------------------------------------------
Honolulu HI Ala Moana Center January 31, 2000 Under negotiation
- -------------------------------------------------------------------------------------------------------------------------
Honolulu HI Hilton Hawaiian Village December 31, 2002 One five-year term
- -------------------------------------------------------------------------------------------------------------------------
Honolulu HI Moana Surfrider January 31, 2001
- -------------------------------------------------------------------------------------------------------------------------
Houston TX Galleria Post Oak September 30, 2001 One five-year term
- -------------------------------------------------------------------------------------------------------------------------
Las Vegas NV Bellagio August 31, 2008 One ten-year term
- -------------------------------------------------------------------------------------------------------------------------
King of Prussia PA King of Prussia Plaza November 30, 2005 One five-year term
- -------------------------------------------------------------------------------------------------------------------------
Manhasset NY Americana Shopping Center August 14, 2008
- -------------------------------------------------------------------------------------------------------------------------
Maui HI Whalers Village July 31, 2004
- -------------------------------------------------------------------------------------------------------------------------
Oak Brook IL Oakbrook Center April 30, 2009 Two five-year terms
- -------------------------------------------------------------------------------------------------------------------------
Palm Beach FL 259 Worth Avenue May 31, 2007 Two five-year terms
- -------------------------------------------------------------------------------------------------------------------------
Palo Alto CA Stanford Shopping Center May 31, 2007
- -------------------------------------------------------------------------------------------------------------------------
Philadelphia PA The Bellevue November 16, 2005 One five-year term
- -------------------------------------------------------------------------------------------------------------------------
San Diego CA Fashion Valley Shopping Center December 31, 2007 One five-year term
- -------------------------------------------------------------------------------------------------------------------------
San Francisco CA Union Square October 29, 2006 One ten-year term
- -------------------------------------------------------------------------------------------------------------------------
Scottsdale AZ Fashion Square December 31, 2008 One five-year term
- -------------------------------------------------------------------------------------------------------------------------
Seattle WA Pacific Place October 1, 2008 Two five-year terms
- -------------------------------------------------------------------------------------------------------------------------
Short Hills NJ The Mall at Short Hills August 31, 2005 One five-year term
- -------------------------------------------------------------------------------------------------------------------------
Troy MI The Somerset Collection September 30, 2007
- -------------------------------------------------------------------------------------------------------------------------
Tamuning Guam Tumon Sands Plaza September 30, 2001 One five-year term
- -------------------------------------------------------------------------------------------------------------------------
Vienna VA Fairfax Square March 31, 2010 One five-year term
- -------------------------------------------------------------------------------------------------------------------------
White Plains NY The Westchester April 30, 2005 One five-year term
- -------------------------------------------------------------------------------------------------------------------------
- - PAGE 18 - TIFFANY & CO. REPORT ON FORM 10-K FY 1999
19
- ------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL BRANCH STORE LEASES
- ------------------------------------------------------------------------------------------------------------------------
COUNTRY CITY LOCATION EXPIRATION DATE RENEWAL OPTIONS
- ------------------------------------------------------------------------------------------------------------------------
Australia Sydney Chifley Tower October 18, 2004 One five-year term
- ------------------------------------------------------------------------------------------------------------------------
Australia Melbourne Crown Casino May 7, 2000 Two three-year terms
- ------------------------------------------------------------------------------------------------------------------------
Canada Toronto 85 Bloor Street November 15, 2006 One seven-year term
- ------------------------------------------------------------------------------------------------------------------------
England London 25 Old Bond Street March 27, 2016
- ------------------------------------------------------------------------------------------------------------------------
France Paris 6 Rue de la Paix March 31, 2011
- ------------------------------------------------------------------------------------------------------------------------
Germany Frankfurt 20 Goethestrasse January 31, 2001 One ten-year term
- ------------------------------------------------------------------------------------------------------------------------
Germany Munich Residenzstrasse 11 January 31, 2004 One five-year term
- ------------------------------------------------------------------------------------------------------------------------
Hong Kong The Landmark April 30, 2005
- ------------------------------------------------------------------------------------------------------------------------
Hong Kong Kowloon The Peninsula February 28, 2002
- ------------------------------------------------------------------------------------------------------------------------
Hong Kong Pacific Place October 31, 2000
- ------------------------------------------------------------------------------------------------------------------------
Italy Florence Via Tornabuoni December 31, 2001 One six-year term+
- ------------------------------------------------------------------------------------------------------------------------
Italy Milan Via della Spiga October 31, 2005
- ------------------------------------------------------------------------------------------------------------------------
Japan Tokyo Ginza October 24, 2002 One three-year term
- ------------------------------------------------------------------------------------------------------------------------
Korea Seoul Grand Hyatt Hotel December 31, 2000 One two-year term
- ------------------------------------------------------------------------------------------------------------------------
Malaysia Kuala Lumpur Suria KL City Centre November 30, 2002 Two three-year terms
- ------------------------------------------------------------------------------------------------------------------------
Mexico Mexico City El Palacio de Hierro January 31, 2000 Under negotiation
- ------------------------------------------------------------------------------------------------------------------------
Mexico Mexico City Masaryk May 31, 2004 Two three-year terms
- ------------------------------------------------------------------------------------------------------------------------
Singapore Raffles Hotel September 15, 2000
- ------------------------------------------------------------------------------------------------------------------------
Singapore Ngee Ann City September 14, 2002 One one-year term
- ------------------------------------------------------------------------------------------------------------------------
Switzerland Zurich Bahnhofstrasse 14 September 30, 2000
- ------------------------------------------------------------------------------------------------------------------------
Taiwan Taipei Regent Hotel September 15, 2000 One five-year term
- ------------------------------------------------------------------------------------------------------------------------
+ Renewal subject to conditions imposed by Italian law, including right of
landlord to occupy premises for its own use.
New Store Leases
In addition to the U.S. leases described herein on page 18, Tiffany has
entered into the following new leases for domestic stores expected to open in
2000: a 10-year lease for a 6,800 square foot store at Old Orchard Center,
Skokie, Illinois and a 10-year lease for a 2,965 square foot store at The Shops
at Wailea in Maui, Hawaii.
- - PAGE 19 - TIFFANY & CO. REPORT ON FORM 10-K FY 1999
20
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 as well as for any business employing significant numbers of U.S.-based
employees, such litigation can result in large monetary awards when a civil jury
is allowed to determine compensatory and/or punitive damages for actions
claiming discrimination on the basis of age, gender, race, religion, disability
or other legally protected characteristic or for termination of employment that
is wrongful or in violation of implied contracts. However, Registrant believes
that no litigation currently pending to which it or Tiffany is a party or to
which its properties are subject will have a material adverse effect on its
financial position, results of operations or cash flows.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's security holders
during the fourth quarter of the fiscal year ended January 31, 2000.
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of Registrant are:
NAME AGE POSITION YEAR JOINED TIFFANY
William R. Chaney 67 Chairman of the Board of Directors 1980
Michael J. Kowalski 48 President and Chief Executive Officer 1983
James E. Quinn 48 Vice Chairman 1986
Beth O. Canavan 45 Executive Vice President 1987
James N. Fernandez 44 Executive Vice President and 1983
Chief Financial Officer
Patrick B. Dorsey 49 Senior Vice President - General Counsel and 1985
Secretary
Linda A. Hanson 39 Senior Vice President - Merchandising 1990
Fernanda M. Kellogg 53 Senior Vice President - Public Relations 1984
Caroline D. Naggiar 42 Senior Vice President - Marketing 1997
John S. Petterson 41 Senior Vice President - Direct Marketing 1988
- - PAGE 20 - TIFFANY & CO. REPORT ON FORM 10-K FY 1999
21
William R. Chaney. Mr. Chaney, Chairman of Tiffany since August 1984, joined
Tiffany in January 1980 as a member of its Board. From August 1984 through
January 31, 1999, he also served as Chief Executive Officer of Registrant. Prior
to 1984 he served as an executive officer of Avon Products Inc. Mr. Chaney also
serves on the board of directors of the Bank of New York and the Atlantic Mutual
Companies.
Michael J. Kowalski. Mr. Kowalski was appointed President on January 18, 1996
and Chief Operating Officer from January 1997 until his appointment as Chief
Executive Officer on February 1, 1999, succeeding William R. Chaney. He has
served on Registrant's Board of Directors since January 1995. He previously
served as Executive Vice President from March 19, 1992, with overall
responsibility in the following areas: merchandising, marketing, advertising,
public relations and product design. He has held a variety of merchandising
management positions since joining Tiffany in 1983 as Director of Financial
Planning.
James E. Quinn. Mr. Quinn joined the Company in July 1986 as Vice President of
branch sales for the Company's corporate sales operations and has since had
various responsibilities for sales management and operations. He was promoted to
Executive Vice President on March 19, 1992 and assumed responsibility for retail
and corporate sales for the Americas in 1994. In January 1995 he became a member
of Registrant's Board of Directors. In January 1998, he was appointed Vice
Chairman. He has responsibility for worldwide sales. Mr. Quinn is a member of
the Board of Directors of the BNY Hamilton Funds, Inc. and Mutual of America
Capital Management.
Beth O. Canavan. Ms. Canavan joined the Company in May 1987 as Director of New
Store Development. She later held the positions of Vice President, Retail Sales
Development in 1990, Vice President and General Manager of the New York Store in
1992 and Eastern Regional Vice President in 1994. In 1997, she assumed the
position of Senior Vice President for U.S. Retail. In January 2000, she was
promoted to Executive Vice President responsible for retail sales activities in
the U.S. and Canada, retail store expansion and customer service.
James N. Fernandez. Mr. Fernandez joined Tiffany in October 1983 and has held
various positions in financial planning and management prior to his appointment
as Senior Vice President-Chief Financial Officer in April 1989. In January 1998,
he was promoted to Executive Vice President-Chief Financial Officer, at which
time his responsibilities were expanded to include distribution in addition to
his responsibilities for the accounting, treasury, investor relations,
information technology, financial planning and internal audit functions.
Patrick B. Dorsey. Mr. Dorsey joined the Company in July 1985 as General Counsel
and Secretary.
Linda A. Hanson Ms. Hanson joined Tiffany in April 1990 as a management
associate. She assumed her current responsibilities in July 1997.
Fernanda M. Kellogg. Ms. Kellogg joined Tiffany in October 1984 as Director of
Retail Marketing. She assumed her current responsibilities in January 1990.
- - PAGE 21 - TIFFANY & CO. REPORT ON FORM 10-K FY 1999
22
Caroline D. Naggiar. Ms. Naggiar joined Tiffany in June 1997 as Vice
President-Marketing Communications. She assumed her current responsibilities in
February 1998. Prior to joining Tiffany, she served as Vice President-Management
Representative of McCann-Erickson Advertising from January 1993, where she was
responsible for the Tiffany account.
John S. Petterson. Mr. Petterson joined Tiffany in 1988 as a management
associate. He was promoted to Senior Vice President - Corporate Sales in May
1995 and in February 2000 his responsibilities were expanded to include Direct
Mail and the E-Commerce business.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Registrant's Common Stock is traded on the New York Stock Exchange. On
July 21, 1999, a two-for-one stock split was effected through a stock dividend.
All share prices and dividend amounts have been restated to reflect the stock
split. In consolidated trading the high and low selling prices per share for
shares of such Common Stock for Fiscal 1998 were:
Fiscal 1998 High Low
- ----------- ---- ---
First Fiscal Quarter $26.00 $19.88
Second Fiscal Quarter $24.44 $20.09
Third Fiscal Quarter $22.75 $13.50
Fourth Fiscal Quarter $32.50 $16.75
In consolidated trading, the high and low selling prices per share for
shares of such Common Stock for Fiscal 1999 were:
Fiscal 1999 High Low
- ----------- ---- ---
First Fiscal Quarter $43.72 $26.38
Second Fiscal Quarter $53.00 $38.94
Third Fiscal Quarter $67.00 $41.81
Fourth Fiscal Quarter $90.00 $58.38
On March 24, 2000, the high and low selling prices quoted on such
exchange were $78.00 and $74.19 respectively. On March 24, 2000 there were 2,828
record holders of Registrant's Common Stock.
It is Registrant's policy to pay a quarterly dividend of $0.06 per
share of Common Stock, subject to declaration of such dividend by Registrant's
Board of Directors. In Fiscal 1998, a dividend of $0.035 per share was paid on
April 10, 1998. On May 21, 1998, Registrant's Board of Directors declared an
increase in the regular quarterly dividend from $0.035 to $0.045 per share of
Common Stock. Thereafter, dividends of $0.045 per share were paid on July 10,
1998, October 12, 1998 and January 11, 1999. In Fiscal 1999, a dividend of
$0.045 per share of Common Stock was paid on April 12, 1999. The preceding
dividends per share have been adjusted for a two-for-one stock split of the
Common Stock in July 1999. On May 20, 1999, Registrant's Board of Directors
declared an increase in the regular quarterly dividend from $0.045 to $0.06 per
share of Common
- - PAGE 22 - TIFFANY & CO. REPORT ON FORM 10-K FY 1999
23
Stock. Thereafter, dividends of $0.06 per share of Common Stock were paid on
July 21, 1999, October 12, 1999, and January 10, 2000.
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, 875,328 shares of Registrant's Common Stock beneficially owned by the
executive officers and directors of the Registrant (exclusive of shares which
may be acquired on exercise of employee stock options) were excluded, on the
assumption that certain of those persons could be considered "affiliates" under
the provisions of Rule 405 promulgated under the Securities Act of 1933.
ITEM 6. SELECTED FINANCIAL DATA
Incorporated by reference from Registrant's Annual Report to Stockholders for
the Fiscal Year ended January 31, 2000, pages 14-15.
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, 2000, pages 16-22.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Incorporated by reference from Registrant's Annual Report to Stockholders for
the Fiscal Year ended January 31, 2000, pages 23-42.
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, 2000,
pages 7-8 and 23-25.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated by reference from Registrant's Proxy Statement dated April 7, 2000,
pages 11-21.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated by reference from Registrant's Proxy Statement dated April 7, 2000,
pages 6-7.
- - PAGE 23 - TIFFANY & CO. REPORT ON FORM 10-K FY 1999
24
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated by reference from Registrant's Proxy Statement dated April 7, 2000,
page 14.
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 1999 Annual Report to Stockholders
of Tiffany & Co. and Subsidiaries:
Report of Independent Accountants
(following this Form 10-K)
Consolidated Statements of Earnings
for the years ended January 31, 2000, 1999, and 1998
Consolidated Balance Sheets
as of January 31, 2000 and 1999
Consolidated Statements of Stockholders' Equity
for the years ended January 31, 2000, 1999 and 1998
Consolidated Statements of Cash Flows
for the years ended January 31, 2000, 1999 and 1998
Notes to consolidated financial statements
2. Financial Statement Schedules:
The following financial statement schedule should be read in
conjunction with the consolidated financial statements incorporated by reference
herein:
II. Valuation and qualifying accounts and reserves.
All other schedules have been omitted since they are neither applicable nor
required, or because the information required is included in the consolidated
financial statements and notes thereto.
- - PAGE 24 - TIFFANY & CO. REPORT ON FORM 10-K FY 1999
25
3. Exhibits:
The following exhibits have been filed with the Securities and Exchange
Commission but are not attached to copies of this Form 10-K other than complete
copies filed with said Commission and the New York Stock Exchange:
Exhibit Description
3.1 Restated Certificate of Incorporation of Registrant. Incorporated by
reference from Exhibit 3.1 to Registrant's Report on Form 8-K dated May
16, 1996.
3.1a Amendment to Certificate of Incorporation of Registrant. Incorporated
by reference from Exhibit 3.1 to Registrant's Report on Form 8-K dated
May 20, 1999.
3.2 By-Laws of Registrant (as last amended January 21, 1999). Incorporated
by reference from Exhibit 3.2 filed with Registrant's Report on Form
10-K for the Fiscal Year ended January 31, 1999.
4.1 Amended and Restated Rights Agreement Dated as of September 22, 1998 by
and between Registrant and ChaseMellon Shareholder Services L.L.C., as
Rights Agent. Incorporated by reference from Exhibit 4.1 to
Registrant's Report on Form 8-A/A dated September 24, 1998.
10.5 Designer Agreement between Tiffany and Paloma Picasso dated April 4,
1985. Incorporated by reference from Exhibit 10.5 filed with
Registrant's Registration Statement on Form S-1, Registration No.
33-12818 (the "Registration Statement").
10.101 Form of Note Purchase Agreement, including the form of 7.52% Senior
Notes due 2003 issued thereunder at par by Registrant on January 31,
1993 for an aggregate principal amount of $51,500,000. Incorporated by
reference from Exhibit 10.101 filed with Registrant's Report on Form
10-K for the Fiscal Year ended January 31, 1993 and dated April 12,
1993.
10.111 Agreement made June 12, 1993 by and between Tiffany-Japan (Delaware)
Inc., Tiffany and Mitsukoshi Limited as amended. Incorporated by
reference from Exhibit 10.111 filed with Registrant's Report on Form
8-K filed June 12, 1993 and Exhibit 10.111a filed with Registrant's
Report on Form 10-Q dated August 28, 1998.
10.111a Rider No. 1 to Agreement referred to in Exhibit 10.111, dated September
21, 1999.
10.116 Credit Agreement dated as of June 26, 1995 by and among Registrant,
Tiffany, Tiffany & Co. International, The Bank of New York, as Issuing
Bank and as Swing Line Lender, The Bank of New York, as Arranging Agent
and The Bank of New York as Administrative Agent, restated through
Amendment No. 5 dated as of November 20, 1997. Incorporated by
reference from Exhibit 10.116 filed with Registrant's Report on Form
10-Q for the Fiscal quarter ended October 31, 1997 and dated December
10, 1997.
- - PAGE 25 - TIFFANY & CO. REPORT ON FORM 10-K FY 1999
26
Exhibit Description
10.116a Amendments Nos. 6-8 to Credit Agreement referred to in Exhibit 10.116
above, dated, respectively October 6, 1998, November 30, 1998 and March
8, 1999. Incorporated by reference from Exhibit 10.116a filed with
Registrant's Report on Form 10-K for the Fiscal Year ended January 31,
1999.
10.116b Amendments Nos. 9-11 to Credit Agreement referred to in previously
filed Exhibit 10.116 dated, respectively, July 15, 1999, October 20,
1999 and February 14, 2000.
10.119 Amended and Restated Lease Agreement dated as of December 1, 1995,
effective as of August 1, 1995, by and between First Fidelity Bank,
National Association, not in its individual capacity, but solely as the
trustee under that certain Trust Agreement 1995-1 dated as of July 1,
1995, as amended, as Owner-Lessor and Tiffany, as Lessee; Amended and
Restated Construction Agency Agreement dated as of December 1, 1995,
effective as of December 11, 1995, by and between Tiffany, as Agent,
and First Fidelity Bank, National Association, a national banking
association, not in its individual capacity but solely as trustee
pursuant to a Trust Agreement 1995-1 dated as of July 1, 1995, as
amended, as Owner; Agreement and Consent to Assignment dated as of
December 1, 1995 among Registrant, Tiffany and Fleet National Bank of
Connecticut, as Collateral Trustee; and Definition Appendix to the
foregoing documents listed in this Exhibit 10.119. Incorporated by
reference from Exhibit 10.119 filed with Registrant's Report on Form
10-K for the Fiscal Year ended January 31, 1996 and dated April 8,
1996.
10.119a Amendment No. 1 to the Agreement and Consent to Assignment dated as of
December 1, 1995 among Registrant, Tiffany and Fleet National Bank of
Connecticut, as Collateral Trustee referenced in Exhibit 10.119 above,
dated November 3, 1998. Incorporated by reference from Exhibit 10.119a
filed with Registrant's Report on Form 10-K for the Fiscal Year ended
January 31, 1999.
10.120 Watch Supplier Agreement as of October 30, 1995 by and among Tiffany
and Tiffany & Co. Watch Center S.A. and TWF SA. Incorporated by
reference from Exhibit 10.120 filed with Registrant's Report on Form
10-K for the Fiscal Year ended January 31, 1996 and dated April 8,
1996.
10.121 Agreement as of February 23, 1996 among Mitsukoshi Limited,
Tiffany-Japan Inc. and Tiffany. Incorporated by reference from Exhibit
10.121 filed with Registrant's Report on Form 10-K for the Fiscal Year
ended January 31, 1996 and dated April 8, 1996.
10.122 Agreement dated as of April 3, 1996 among American Family Life
Assurance Company of Columbus, Japan Branch, Tiffany & Co. Japan, Inc.,
Japan Branch, and Registrant, as Guarantor, for yen 5,000,000,000 Loan
Due 2011. Incorporated by reference from Exhibit 10.122 filed with
Registrant's Report on Form 10-Q for the Fiscal quarter ended April 30,
1996 and dated June 13, 1996.
10.122a Amendment No. 1 to the Agreement referred to in Exhibit 10.122 above,
dated November 18, 1998. Incorporated by reference from Exhibit 10.122a
filed with Registrant's Report on Form 10-K for the Fiscal Year ended
January 31, 1999.
- - PAGE 26 - TIFFANY & CO. REPORT ON FORM 10-K FY 1999
27
Exhibit Description
10.123 Agreement made effective as of February 1, 1997 by and between Tiffany
and Elsa Peretti. Incorporated by reference from Exhibit 10.123 to
Registrant's Report on Form 10-K for the Fiscal Year ended January 31,
1997 and dated April 8, 1997.
10.126 Form of Note Purchase Agreement between Registrant and various
institutional note purchasers with Schedules B, 5.14 and 5.15 and
Exhibits 1A, 1B, and 4.7 thereto, dated as of December 30, 1998 in
respect of Registrant's $60 million principal amount 6.90% Series A
Senior Notes due December 30, 2008 and $40 million principal amount
7.05% Series B Senior Notes due December 30, 2010. Incorporated by
reference from Exhibit 10.126 filed with Registrant's Report on Form
10-K for the Fiscal Year ended January 31, 1999.
10.128 Translation of Loan Agreement between Tiffany & Co. Japan Inc. and the
Fuji Bank, Ltd., Hong Kong Branch dated 22 October 1999, Guaranty
issued in connection therewith by the Registrant and Agreement on Bank
Transactions referenced in the aforesaid Loan Agreement; Master dated
of between The Chase Bank Tiffany & Inc (made with reference to
International Swap Dealers Association, Inc. Master 1992 Guaranty dated
October 18, 1999 issued in connection with such Master Agreement by
Tiffany and Company, Tiffany & Co. International and Registrant in
favor of The Chase Manhattan Bank) and Confirmation issued October 29,
1999 by The Chase Manhattan Bank. Incorporated by reference from
Exhibit 10.128 filed with Registrant's Report on Form 10-Q for the
Fiscal quarter ended October 31,1999.
13.1 Annual Report to Stockholders for Fiscal Year Ended January 31, 2000
(pages 14-42 of such Annual Report have been filed in electronic
format).
21.1 Subsidiaries of Registrant.
23.1 Consent of PricewaterhouseCoopers LLP, independent accountants.
27 Financial Data Schedule (Exhibit 27 is submitted as an exhibit only in
the electronic format of this Annual Report on Form 10-K submitted to
the Securities and Exchange Commission).
Executive Compensation Plans and Arrangements
Exhibit Description
4.3 Registrant's 1998 Employee Incentive Plan and standard terms of stock
option award (transferable and non-transferable). Incorporated by
reference from Exhibit 4.3 to Registrant's Registration Statement on
Form S-8, file number 333-67723, filed November 23, 1998.
4.3a Standard terms of stock option award (transferable and
non-transferable) under Registrant's 1998 Employee Incentive Plan, as
revised January 21, 1999. Incorporated
- - PAGE 27 - TIFFANY & CO. REPORT ON FORM 10-K FY 1999
28
Exhibit Description
by reference from Exhibit 4.3a filed with Registrant's Report on Form
10-K for the Fiscal Year ended January 31, 1999.
4.4 Registrant's 1998 Directors Option Plan. Incorporated by reference from
Exhibit 4.3 to Registrant's Registration Statement on Form S-8, file
number 333-67725, filed November 23, 1998.
4.4a Standard terms of stock option award (transferable non-qualified
option) under Registrant's 1998 Directors Option Plan, as revised
January 21, 1999. Incorporated by reference from Exhibit 4.4a filed
with Registrant's Report on Form 10-K for the Fiscal Year ended January
31, 1999.
10.3 Registrant's 1986 Stock Option Plan and terms of stock option
agreement, as last amended on July 16, 1998. Incorporated by reference
from Exhibit 10.3 filed with Registrant's Report on Form 10-K for the
Fiscal Year ended January 31, 1999.
10.25 Amended and Restated Deferred Compensation Agreement originally made
effective December 31, 1989 by and between William R. Chaney and
Tiffany and Company, and subsequently amended February 8, 1999.
Incorporated by reference from Exhibit 10.25 filed with Registrant's
Report on Form 10-K for the Fiscal Year ended January 31, 1999.
10.49 Form of Indemnity Agreement, approved by the Board of Directors on
March 19, 1987. Incorporated by reference from Exhibit 10.49 to the
Registration Statement.
10.60 Registrant's 1988 Director Stock Option Plan and form of Stock Option
agreement, as last amended on November 21, 1996. Incorporated by
reference from Exhibit 10.60 to Registrant's Report on Form 10-K for
the Fiscal Year ended January 31, 1997 and dated April 8, 1997.
10.105 Group Long Term Disability Insurance Policy issued by The Mutual
Benefit Life Insurance Company. Policy Number: G53,152. Incorporated by
reference from Exhibit 10.105 filed with Registrant's Report on Form
10-K for the Fiscal Year ended January 31, 1993 and dated April 12,
1993.
10.106 Amended and Restated Tiffany and Company Executive Deferral Plan
originally made effective October 1, 1989, as amended effective October
1, 1998. Incorporated by reference from Exhibit 10.106 filed with
Registrant's Report on Form 10-K for the Fiscal Year ended January 31,
1999.
10.108 Registrant's Amended and Restated Retirement Plan for Non-Employee
Directors originally made effective January 1, 1989, as amended through
January 21, 1999. Incorporated by reference from Exhibit 10.108 filed
with Registrant's Report on Form 10-K for the Fiscal Year ended January
31, 1999.
- - PAGE 28 - TIFFANY & CO. REPORT ON FORM 10-K FY 1999
29
Exhibit Description
10.109 Summary of informal incentive cash bonus plan for managerial employees.
Incorporated by reference from Exhibit 10.109 filed with Registrant's
Report on Form 10-K for the Fiscal Year ended January 31, 1993 and
dated April 12, 1993.
10.113 Tiffany and Company Pension Plan, as last amended effective December
21, 1998. Incorporated by reference from Exhibit 10.113 filed with
Registrant's Report on Form 10-K for the Fiscal Year ended January 31,
1999.
10.114 1994 Tiffany and Company Supplemental Retirement Income Plan.
Incorporated by reference from Exhibit 10.114 filed with Registrant's
Report on Form 10-K for the Fiscal Year ended January 31, 1994 and
dated April 7, 1994.
10.115 1994 Form of Split Dollar Life Insurance Agreement entered into by
Tiffany and Company and certain Executive Officers including form of
Assignment of Life Insurance Policy as Collateral and Rider No. 1 to
1994 Form of Split Dollar Life Insurance Agreement entered into by
Tiffany and Company and certain Executive Officers. Incorporated by
reference from Exhibit 10.115 filed with Registrant's Report on Form
10-K for the Fiscal Year ended January 31, 1995 and dated April 7,
1995.
10.115a Riders Nos. 2 and 3, dated October 18, 1998 and March 20, 1999,
respectively to Split Dollar Life Insurance Agreements between and
among William R. Chaney and Tiffany and Company, and respectively, the
1994 Chaney Family Trust u/a 2/23/94 and the Babette C. Chaney et al.
Trust u/a 2/23/94. Incorporated by reference from Exhibit 10.115a filed
with Registrant's Report on Form 10-K for the Fiscal Year ended January
31, 1999.
10.127 Retention Agreements dated March 30, 1999 between and among Registrant
and Tiffany and, respectively, each of the following executive
officers: Michael J. Kowalski, James E. Quinn, James N. Fernandez and
Patrick B. Dorsey and Appendices I to III to each of those Agreements.
Incorporated by reference from Exhibit 10.127 filed with Registrant's
Report on Form 10-K for the Fiscal Year ended January 31, 1999.
REGISTRANT WILL FURNISH COPIES OF ANY OF THE FOREGOING EXHIBITS TO ANY
REGISTERED HOLDER OF THE REGISTRANT'S COMMON STOCK UPON PAYMENT OF A FEE OF $.15
PER PAGE FURNISHED, WHICH FEE REPRESENTS REGISTRANT'S EXPENSES IN FURNISHING
SUCH EXHIBIT.
- - PAGE 29 - TIFFANY & CO. REPORT ON FORM 10-K FY 1999
30
(b) Reports on Form 8-K.
On November 23, 1999, Registrant filed a Report on Form 8-K reporting
the issuance of a press release announcing the purchase of the land and building
housing its flagship store at 727 Fifth Avenue, New York.
On January 6, 2000, Registrant filed a Report on Form 8-K reporting the
issuance of a press release announcing preliminary unaudited sales figures for
the two-month period ending December 31, 1999.
On March 2, 2000, Registrant filed a Report on Form 8-K reporting the
issuance of a press release announcing its sales and earnings for the
three-month period and Fiscal Year ended January 31, 2000.
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, 2000 By: /s/ Michael J. Kowalski
-----------------------
Michael J. Kowalski
President and Chief Executive Officer
- - PAGE 30 - TIFFANY & CO. REPORT ON FORM 10-K FY 1999
31
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the date indicated.
By: /s/ William R. Chaney By: /s/ Michael J. Kowalski
---------------------------------- -------------------------------
William R. Chaney Michael J. Kowalski
Chairman of the Board President and Chief Executive Officer
(director) (principal executive officer) (director)
By: /s/ James N. Fernandez By: /s/ Warren S. Feld
---------------------------------- -------------------------------
James N. Fernandez Warren S. Feld
Executive Vice President Vice President
(principal financial officer) (principal accounting officer)
By: /s/ Rose Marie Bravo By: /s/ James E. Quinn
---------------------------------- -------------------------------
Rose Marie Bravo James E. Quinn
Director Vice Chairman
(director)
By: /s/ Samuel L. Hayes, III By: /s/ William A. Shutzer
---------------------------------- -------------------------------
Samuel L. Hayes, III William A. Shutzer
Director Director
By: /s/ Charles K. Marquis By: /s/ Geraldine Stutz
---------------------------------- -------------------------------
Charles K. Marquis Geraldine Stutz
Director Director
April 7, 2000
- - PAGE 31 - TIFFANY & CO. REPORT ON FORM 10-K FY 1999
32
PRICEWATERHOUSECOOPERS LLP
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES
To the Board of Directors & Shareholders
of Tiffany & Co.
Our audits of the consolidated financial statements referred to in our report
dated February 29, 2000 appearing in the fiscal 1999 Annual Report to
Shareholders of Tiffany & Co. (which report and consolidated financial
statements are incorporated by reference in this Annual Report on Form 10-K)
also included an audit of the financial statement schedule listed in Item
14(a)(2) of this Form 10-K. In our opinion, the financial statement schedule
presents fairly, in all material respects, the information set forth therein
when read in conjunction with the related consolidated financial statements.
/s/ PricewaterhouseCoopers LLP
New York, New York
February 29, 2000
- - PAGE 32 - TIFFANY & CO. REPORT ON FORM 10-K FY 1999
33
EXHIBIT INDEX
SEE PAGES 25 THROUGH 29 FOR A COMPLETE LIST OF EXHIBITS FILED, INCLUDING
EXHIBITS INCORPORATED BY REFERENCE FROM PREVIOUSLY FILED DOCUMENTS.
EXHIBIT DESCRIPTION
10.111a Rider No. 1 to Agreement referred to in Exhibit 10.111, dated September
21, 1999.
10.116b Amendments Nos. 9-11 to Credit Agreement referred to in previously
filed Exhibit 10.116 dated, respectively July 15, 1999, October 20,
1999 and February 14, 2000.
13.1 Annual Report to Stockholders for Fiscal Year Ended January 31, 2000
(pages 14-42 of such Annual Report have been filed in electronic
format).
21.1 Subsidiaries of Registrant.
23.1 Consent of PricewaterhouseCoopers LLP, independent accountants.
27 Financial Data Schedule (Exhibit 27 is submitted as an exhibit only in
the electronic format of this Annual Report on Form 10-K submitted to
the Securities and Exchange Commission).
- - PAGE 33 - TIFFANY & CO. REPORT ON FORM 10-K FY 1999
34
TIFFANY & CO. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
- ----------------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
- ----------------------------------------------------------------------------------------------------------------------------------
Additions
-----------------------------------
Balance at Charged to
beginning costs and Charged to Balance at end
Description of period expenses other accounts Deductions of period
- ----------------------------------------------------------------------------------------------------------------------------------
Year Ended
January 31, 2000:
Reserves deducted from
assets:
Accounts receivable allowances:
Doubtful accounts $4,680,955 $2,173,026 - - $1,716,262 (a) $5,137,719
Sales returns 3,425,457 1,153,200 - - - - 4,578,657
Allowance for inventory
liquidation and
obsolescence 15,654,894 4,274,113 - - 5,768,726 (b) 14,160,281
Allowance for inventory
shrinkage 1,788,742 3,921,920 - - 3,084,874 (c) 2,625,788
LIFO reserve 15,870,000 - - - - 2,377,827 13,492,173
- -------------------
(a) Uncollectible accounts written off.
(b) Liquidation of inventory previously written down to market.
(c) Physical inventory losses.
35
TIFFANY & CO. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
- -----------------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
- -----------------------------------------------------------------------------------------------------------------------------------
Additions
--------------------------------
Balance at Charged to
beginning costs and Charged to Balance at end
Description of period expenses other accounts Deductions of period
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended
January 31, 1999:
Reserves deducted from
assets:
Accounts receivable allowances:
Doubtful accounts $4,068,327 $2,073,975 $ - - $1,461,347 (a) $4,680,955
Sales returns 2,920,148 505,309 - - 0 3,425,457
Allowance for inventory
liquidation and
obsolescence 16,112,265 5,727,108 - - 6,184,479 (b) 15,654,894
Allowance for inventory
shrinkage 1,726,535 4,156,366 - - 4,094,159 (c) 1,788,742
LIFO reserve 15,870,000 - - - - - - 15,870,000
- -------------------
(a) Uncollectible accounts written off.
(b) Liquidation of inventory previously written down to market.
(c) Physical inventory losses.
36
TIFFANY & CO. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
- -----------------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
- -----------------------------------------------------------------------------------------------------------------------------------
Additions
--------------------------------------
Balance at Charged to
beginning costs and Charged to Balance at end
Description of period expenses other accounts Deductions of period
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended
January 31, 1998:
Reserves deducted from
assets:
Accounts receivable allowances:
Doubtful accounts $3,579,541 $2,469,286 $ - - $1,980,500 (a) $4,068,327
Sales returns 3,284,844 (364,696) - - - - 2,920,148
Allowance for inventory
liquidation and
obsolescence 13,790,944 5,885,724 - - 3,564,403 (b) 16,112,265
Allowance for inventory
shrinkage 1,743,169 2,217,964 - - 2,234,598 (c) 1,726,535
LIFO reserve 14,870,000 1,000,000 - - - - 15,870,000
- -------------------
(a) Uncollectible accounts written off.
(b) Liquidation of inventory previously written down to market.
(c) Physical inventory losses.