ITEM 1. BUSINESS
(a) General history of business.
Registrant (also referred to as the "Company") is the parent corporation of Tiffany and Company ("Tiffany"). Charles Lewis Tiffany founded Tiffany's business in 1837. He incorporated Tiffany in New York in 1868. Registrant acquired Tiffany in 1984 and completed the initial public offering of Registrant's Common Stock in 1987.
(b) Financial information about industry segments.
Registrant's segment information for the fiscal years ended January 31, 2003, 2004 and 2005 is incorporated by reference from Registrant's Annual Report to Stockholders for the Fiscal Year ended January 31, 2005 (Note T. "Segment Information"). The Executive Officers of the Company do not evaluate the performance of the Company's assets on a segment basis for internal management reporting and, therefore, such asset information is not presented.
(c) Narrative description of business.
As used below, the terms "Fiscal 2002", "Fiscal 2003" and "Fiscal 2004" refer to the fiscal years ended on January 31, 2003, 2004 and 2005, respectively. Registrant is a holding company, and conducts all business through its subsidiary corporations.
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Products
Registrant's principal product categories are jewelry, timepieces, sterling silver goods (other than jewelry), china, crystal, stationery, fragrances and personal accessories.
Tiffany offers an extensive selection of TIFFANY & CO. brand jewelry at a wide range of prices. In Fiscal 2002, 2003 and 2004, approximately 80%, 81% and 82%, respectively, of Registrant's net sales, in all channels of distribution, were attributable to TIFFANY & CO. brand jewelry. Designs are developed by employees, suppliers, independent designers and independent "name" designers. See Designer Licenses below.
Retail Sales of TIFFANY & CO. Jewelry by Category*
(A) This category includes most gem jewelry other than engagement jewelry. Most jewelry in this category is constructed of platinum, although gold was used in approximately 18% of pieces in 2004. Most items in this category contain diamonds, other gems or both. The average U.S. price-point for goods sold in 2004 for merchandise in this category was $3,801 in the U.S. and $2,062 in Japan. (B) This category includes diamond rings, band rings and wedding bands marketed to brides and grooms. Most jewelry in this category is constructed of platinum, although gold was used in approximately 7% of pieces in 2004. Most sales in this category are of items containing diamonds. The average U.S. price-point for goods sold in 2004 for merchandise in this category was $3,549 in the U.S. and $1,827 in Japan. (C) This category generally consists of non-gemstone, gold or platinum jewelry, although small gems are used as accents in some pieces. The average U.S. price-point for goods sold in 2004 for merchandise in this category was $927 in the U.S. and $1,004 in Japan. (D) This category generally consists of non-gemstone, sterling silver jewelry, although small gems are used as accents in some pieces. The average U.S. price-point for goods sold in 2004 for merchandise in this category was $188 in the U.S. and $235 in Japan.
* Sales include only sales made in TIFFANY & CO. retail stores or boutiques in the United States and Japan. Jewelry marketed to men is not included in any category discussed above.
In addition to jewelry, the Company sells TIFFANY & CO. brand merchandise in the following categories: timepieces and clocks; sterling silver merchandise, including flatware, hollowware (tea and coffee services, bowls, cups and trays), trophies, key holders, picture frames and desk accessories; stainless steel flatware; crystal, glassware, china and other tableware; custom engraved stationery; writing instruments; and fashion accessories. Fragrance products are sold under the trademarks TIFFANY, PURE TIFFANY and TIFFANY FOR MEN. Tiffany also sells other brands of timepieces and tableware in its U.S. stores.
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Products sold by Registrant in the "Other" channel of distribution include jewelry, timepieces and clocks and decorative items sold under non-Tiffany trademarks and tradenames, although a small amount of TIFFANY & CO. brand merchandise is sold through Little Switzerland in the "Other" channel of distribution.
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 Tiffany-operated stores in the United States (see U.S. Retail below);
Direct Marketing consists of U.S. business-to-business, direct mail catalog and Internet sales transacted by Tiffany (see Direct Marketing below);
International Retail consists of both retail and wholesale sales of TIFFANY & CO. merchandise to customers located outside the United States, as well as a limited amount of business-to-business sales and Internet sales (see International Retail below); and
Other consists of retail and wholesale sales transacted under non-TIFFANY trademarks and trade names (i.e., LITTLE SWITZERLAND, TEMPLE ST CLAIR and IRIDESSE). Other also includes sales of rough and polished diamonds that were found unsuitable for Tiffany's needs.
U.S. Retail
New York Flagship
Tiffany's New York flagship store on Fifth Avenue accounts for a significant portion of the Company's sales and is the focal point for marketing and public relations efforts. Approximately 10%, 9% and 10% of total Company net sales for Fiscal 2002, 2003 and 2004, respectively, were attributable to the New York store's retail sales. In Fiscal 2000, Tiffany commenced a multiyear renovation and reconfiguration project to increase the store's selling space and provide additional floor space for customer service and special exhibitions. Tiffany opened the additional selling floor in Fiscal 2001, and renovations of three other floors were completed by the end of Fiscal 2004. Tiffany anticipates completion of its renovation plans within the next two years.
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U.S. Branch Stores
At January 31, 2005, in addition to its New York flagship store, Tiffany had 54 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
+Replaced two previously existing Honolulu locations. ++Conversion from DFS trade location to U.S. Retail.
Most of Tiffany's U.S. branch stores display a representative selection of merchandise, but none of them maintains the extensive selection carried by the New York store. Management currently contemplates the opening of new TIFFANY & CO. branch stores in the United States at the rate of approximately three to five per year. Management regularly evaluates potential markets for new TIFFANY & CO. stores with a view to the demographics of the area to be served, consumer demand and the proximity of other luxury brands and existing TIFFANY & CO. locations, recognizing that over-saturation of any market could diminish the distinctive appeal of the
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TIFFANY & CO. brand. However, management believes that there are a significant number of locations remaining in the United States that meet the requirements of a TIFFANY & CO. location, particularly when the current 5,000 square foot format stores are considered. Tiffany has entered into lease agreements to open additional branches in Fiscal 2005 in Carmel, California; Naples, Florida; Pasadena, California and San Antonio, Texas. See Item 2.
ITEM 2. PROPERTIES
Registrant both owns and leases its principal operating facilities and occupies its various store premises under lease arrangements that are generally on a two to ten-year basis.
New York Flagship Store
In November 1999, Tiffany repurchased the land and building housing its flagship store at 727 Fifth Avenue in New York City. Prior to its repurchase, Tiffany had leased the building since 1984. Constructed for Tiffany in 1940, the building was designed to be a retail store for the Company and is believed to be well located for this function. Currently, approximately 40,000 gross square feet of this 124,000 square foot building are devoted to retail sales, with the balance devoted to administrative offices, certain product services, jewelry manufacturing and storage. In Fiscal 2000, Tiffany commenced a multiyear renovation and reconfiguration project to increase the store's selling space and provide additional floor space for customer service and special exhibitions. An additional selling floor was opened in November 2001 and renovations of three other floors were completed by the end of Fiscal 2004. Tiffany anticipates completion of its renovation plans within the next two years.
London Flagship Store
In October 2002, Registrant purchased through a subsidiary the building housing its flagship European store at 25/25A Old Bond Street in London and the adjacent building at 15 Albermarle Street. The London store had been leased since Fiscal 1986 and was expanded to its current 15,200 gross square feet in 1991. In Fiscal 2004, a renovation and reconfiguration plan commenced to increase the store's interior selling space by approximately 60%. The renovation plan will occur in several phases through Fiscal 2006.
Tokyo Flagship Store
In June 2003, through its purchase of a trust beneficiary interest, Registrant's Japanese affiliate acquired the land and building housing its flagship store in Tokyo's Ginza shopping district. The 61,000 square foot, nine-story building houses retail, restaurant and office tenants, including the TIFFANY & CO. store located on the street level, second and third floors. Prior to its purchase, the Tokyo flagship store had been leased and subleased by Tiffany-Japan to Mitsukoshi. The store was expanded to its current 12,000 gross square feet in Fiscal 1999.
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Retail Service Center
In Fiscal 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 "Retail Service Center" ("RSC") on that property was completed and Tiffany commenced operations. The RSC is a combined warehouse, distribution, light manufacturing, computing and office center. To meet increased demand, the computer and office center areas were expanded during Fiscal 2001. In January 2001, Tiffany exercised its right under the lease to purchase the RSC for a scheduled purchase price. This capital lease buyout was completed on January 31, 2002. Registrant believes that the RSC has been properly designed to handle worldwide distribution functions and that it is suitable for that purpose. The RSC comprises approximately 370,000 square feet, of which approximately 186,000 square feet are devoted to office and computer operations use, with the balance devoted to warehousing, shipping, receiving, light manufacturing, merchandise processing and other distribution functions. The RSC specializes in receipt of merchandise from around the world and replenishment of retail stores.
Customer Fulfillment Center
In anticipation of growth in sales volume, in Fiscal 2001 Tiffany entered into a ground lease of undeveloped property in Hanover Township, New Jersey in order to construct and occupy a Customer Fulfillment Center ("CFC") to manage the warehousing and processing of direct-to-customer orders and to perform other distribution functions. Construction of the CFC was completed and Tiffany commenced operations at this facility in September 2003 under a temporary certificate of occupancy, with a permanent certificate of occupancy anticipated when the landlord completes certain corrective work to the property to the satisfaction of the Township. Tiffany and the landlord also have a dispute over the landlord's entitlement to reimbursement of certain costs associated with the landlord's site work. The CFC comprises approximately 266,000 square feet, of which approximately 34,500 square feet are devoted to office use, and the balance to warehousing, shipping, receiving, merchandise processing and other warehouse functions.
Manufacturing Facility - Cumberland, Rhode Island
Tiffany's manufacturing facility in Cumberland, Rhode Island commenced operations in May of 2001. It is a 100,000 square foot facility that was specially designed and constructed for Tiffany for the manufacture of jewelry. It produces a significant portion of the silver, gold and platinum jewelry and silver accessory items sold under the TIFFANY & CO. trademark.
Manufacturing Facility - Cranston, Rhode Island
On January 31, 2003 Tiffany purchased a warehouse facility and land located in Cranston, Rhode Island. During Fiscal 2003, Tiffany renovated the 75,000 square foot building to process metals for raw material use.
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Manufacturing Facilities - Westchester County, New York
On July 1, 1997, Tiffany entered into a lease for a 34,280 square foot manufacturing facility in Pelham, New York, to expire on June 30, 2008. In Fiscal 2004, Tiffany modified the lease to add an additional 10,200 square feet to the lease, subject to the original expiration date.
On February 16, 2005, Tiffany purchased approximately 22,000 square feet of space to be used as a manufacturing facility for jewelry setting in Mount Vernon, New York.
U.S. TIFFANY & CO. Branch 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 TIFFANY & CO. STORE LEASES
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New U.S. TIFFANY & CO. Store Leases
In addition to the U.S. leases described herein on pages 21 and 22, Tiffany has entered into the following new leases for domestic stores expected to open in Fiscal 2005: a 10-year lease for a 3,036 square foot store at Carmel Plaza in Carmel, California, a 10-year lease for a 5,845 square foot store at The Waterside Shops in Naples, Florida, a 10-year lease for a 5,613 square foot store on Colorado Boulevard in Pasadena, California, and a 10-year lease for a 5,980 square foot store at The Shops at La Cantera in San Antonio, Texas.
International TIFFANY & CO. Branch Retail Store Leases
INTERNATIONAL BRANCH TIFFANY & CO. STORE LEASES
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+ Renewal subject to conditions imposed by Italian law, including right of landlord to occupy premises for its own use.
LITTLE SWITZERLAND Branch Retail Store Leases
LITTLE SWITZERLAND BRANCH STORE LEASES
+ Additional space in the Main Street store is operated under two separate leases, the first additional lease expiring on May 31, 2006 with a renewal option of one five-year term and the second additional lease expiring on October 31, 2008.
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TEMPLE ST CLAIR Branch Retail Store Leases
TEMPLE ST CLAIR BRANCH STORE LEASES
IRIDESSE Branch Retail Store Leases
IRIDESSE BRANCH STORE LEASES
New IRIDESSE Store Leases
In addition to the U.S. leases described herein on page 24, Iridesse expects to open three to four new domestic stores in 2005, including a 10-year lease for a 1,473 gross square foot store in Woodfield, Illinois.
ITEM 3.
ITEM 3. LEGAL AND ENVIRONMENTAL PROCEEDINGS
Registrant and Tiffany are from time to time involved in routine litigation incidental to the conduct of Tiffany's business, including proceedings to protect its trademark rights, litigation with parties claiming infringement of their intellectual property rights by Tiffany, litigation instituted by persons alleged to have been injured upon premises within Registrant's control and litigation with present and former employees and customers. 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 litigation currently pending to which it or Tiffany is a party or to which its properties are subject will be resolved without any material adverse effect on Registrant's financial position, earnings or cash flows.
On or about July 1, 2004, both Tiffany and the landlord of Tiffany's Customer Fulfillment Center ("River Park") requested arbitration of the parties' continuing dispute over their respective obligations surrounding completion of River Park's site work (Tiffany and Company v. River Park Business Center, Inc., American Arbitration Association). In connection with the arbitration, River Park's then pending civil claim in the Superior Court of New Jersey (Morris County), River Park Business Center, Inc. v. Tiffany and Company, was dismissed in September 2004.
In the arbitration, Tiffany asserts River Park's continuing breach of its obligations to complete Landlord's Work by the close of Fiscal 2001, as originally required under the Ground Lease, and to obtain timely site plan approval from the Township of Hanover. Tiffany seeks damages stemming from River Park's continuous delays in completing its obligations, which damages Tiffany contends are in excess of $1,000,000. In its arbitration complaint, River Park
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seeks an unspecified amount in damages alleging entitlement to reimbursement of grading costs and excess installation costs of the landfill gas venting system.
ITEM 4.
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, 2005.
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of Registrant are:
Michael J. Kowalski. Mr. Kowalski assumed the role of Chairman of the Board in January 2003, following the retirement of William R. Chaney. He has served as the Registrant's Chief Executive Officer since February 1999 and on the Registrant's Board of Directors since January 1995. Since joining Tiffany in 1983 as Director of Financial Planning, Mr. Kowalski held a variety of merchandising management positions and served as Executive Vice President from 1992 to 1996 with overall responsibility in the areas of merchandising, marketing, advertising, public relations and product design until his election as President in 1997. Mr. Kowalski is a member of the Board of Directors of Fairmont Hotels & Resorts and the Bank of New York. The Bank of New York is Tiffany's principal banking relationship, serving as Administrative Agent and a lender under Tiffany's credit agreement and as a trustee of Tiffany's Employee Pension Plan.
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James E. Quinn. Mr. Quinn was appointed President effective January 31, 2003. He had served as Vice Chairman since 1998. After joining Tiffany in July 1986 as Vice President of branch sales for the Company's business-to-business sales operations, Mr. Quinn 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. He has responsibility for worldwide sales. Mr. Quinn is a member of the board of directors of BNY Hamilton Funds, Inc. and Mutual of America Capital Management, Inc.
Beth O. Canavan. Ms. Canavan joined Tiffany in May 1987 as Director of New Store Development. She later held the positions of Vice President, Retail Sales Development in 1990, Vice President and General Manager of the New York flagship 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 and retail store expansion. In May 2001, Ms. Canavan also assumed responsibility for direct sales and business sales activities in the U.S. and Canada.
James N. Fernandez. Mr. Fernandez joined Tiffany in October 1983 and has held various positions in financial planning and management prior to his appointment as Senior Vice President-Chief Financial Officer in April 1989. In January 1998, he was promoted to Executive Vice President-Chief Financial Officer. Presently, he has responsibility for accounting, treasury, investor relations, information technology, financial planning, business development and diamond operations, and overall responsibility for distribution, manufacturing, customer service and security. Mr. Fernandez is a member of the Board of Directors of The Dun & Bradstreet Corporation.
Victoria Berger-Gross. Dr. Berger-Gross joined Tiffany in February 2001 as Senior Vice President - Human Resources. Prior to joining Tiffany, she served as Senior Vice President & Director of Human Resources at Lehman Brothers from May 1999, Senior Director - Human Resources at Bertelsmann A.G.'s BMG Entertainment from March 1997, and Vice President - Organizational Effectiveness at Personnel Decisions International from January 1991.
Patrick B. Dorsey. Mr. Dorsey joined Tiffany in July 1985 as General Counsel and Secretary.
Fernanda M. Kellogg. Ms. Kellogg joined Tiffany in October 1984 as Director of Retail Marketing. She assumed her current responsibilities in January 1990.
Jon M. King. Mr. King joined Tiffany in 1990 as a jewelry buyer and has held various positions in the Merchandising Division, assuming responsibility for product development in 2002 as Group Vice President. He assumed his current responsibilities in March 2003.
Caroline D. Naggiar. Ms. Naggiar joined Tiffany in June 1997 as Vice President - Marketing Communications. She assumed her current responsibilities in February 1998.
John S. Petterson. Mr. Petterson joined Tiffany in 1988 as a management associate. He was promoted to Senior Vice President - Corporate Sales in May 1995 and, in February 2000, his responsibilities were expanded to include Direct Mail and the E-Commerce business. In May 2001, Mr. Petterson assumed the new role of Senior Vice President - Operations, with responsibility for worldwide distribution, customer service and security activities. His responsibilities were expanded in February 2003 to include manufacturing operations.
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PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Registrant's Common Stock is traded on the New York Stock Exchange. In consolidated trading, the high and low selling prices per share for shares of such Common Stock for Fiscal 2003 were:
In consolidated trading, the high and low selling prices per share for shares of such Common Stock for Fiscal 2004 were:
On March 24, 2005, the high and low selling prices quoted on such exchange were $32.66 and $32.20, respectively. On March 24, 2005 there were 5,957 record holders of Registrant's Common Stock.
It is Registrant's policy to pay a quarterly dividend on the Registrant's Common Stock, subject to declaration by Registrant's Board of Directors. In Fiscal 2003, a dividend of $0.04 per share of Common Stock was paid on April 10, 2003, and dividends of $0.05 per share of Common Stock were paid on July 10, 2003, October 10, 2003 and January 12, 2004. In Fiscal 2004, a dividend of $0.05 per share of Common Stock was paid on January 12, 2004, and dividends of $0.06 per share of Common Stock were paid on July 12, 2004, October 11, 2004 and January 10, 2005.
In calculating the aggregate market value of the voting stock held by non-affiliates of the Registrant shown on the cover page of this Report on Form 10-K, 1,494,731 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.
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The following table indicates the Company's stock repurchases of equity securities in the fourth quarter of Fiscal 2004:
Issuer Purchases of Equity Securities
* In November 2003, the Board of Directors expanded the Company's stock repurchase program, which was first announced on September 21, 2000 and scheduled to expire in November 2003; the Board extended the program until November 30, 2006 and increased the remaining authorization by $100,000,000, allowing the Company to repurchase up to $116,500,000 of the Company's outstanding Common Stock in addition to those which already had been purchased. Under a prior program, which expired in 2000, the Company had purchased 4,484,400 shares.
In March 2005, the Board of Directors approved a new stock repurchase program and terminated the previously existing program (which was due to expire in November 2006). The amount available for repurchase, under the previous plan, as of January 31, 2005 was approximately $29,767,000. The new stock repurchase program, effective immediately, authorizes the Company to repurchase up to $400,000,000 of its Common Stock through open market or private transactions. Repurchases under this program in excess of $159,000,000 will be subject to lender approval under the Company's multi-bank credit facility. The new program expires on March 30, 2007.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
Incorporated by reference from Registrant's Annual Report to Stockholders for the Fiscal Year ended January 31, 2005, page 18.
ITEM 7.
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, 2005, pages 19-32.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Incorporated by reference from Registrant's Annual Report to Stockholders for the Fiscal Year ended January 31, 2005, page 31.
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ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Incorporated by reference from Registrant's Annual Report to Stockholders for the Fiscal Year ended January 31, 2005, pages 34-61.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS ON ACCOUNTING AND FINANCIAL DISCLOSURE
NONE.
ITEM 9A.
ITEM 9A. CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES
Based on their evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report, Registrant's chief executive officer and chief financial officer concluded that, as of the end of the period covered by this annual report, Registrant's disclosure controls and procedures are effective to ensure that information required to be disclosed by Registrant in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms.
In addition, Registrant's chief executive officer and chief financial officer have determined that there have been no changes in Registrant's internal control over financial reporting during the period covered by this annual report identified in connection with the evaluation described in the above paragraph that have materially affected, or are reasonably likely to materially affect, Registrant's internal control over financial reporting.
Registrant's management, including its chief executive officer and chief financial officer necessarily applied their judgment in assessing the costs and benefits of such controls and procedures that, by their nature, can provide only reasonable assurance regarding management's control objectives. Management does not expect that its disclosure controls and procedures will prevent all errors and fraud. A control system, irrespective of how well it is designed and operated, can only provide reasonable assurance, and cannot guarantee, that it will succeed in its stated objectives.
MANAGEMENTS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management's report on internal control over financial reporting and the report of the independent registered public accounting firm are incorporated by reference to pages 33-35 of Registrant's Annual Report to Stockholders for the Fiscal Year ended January 31, 2005.
ITEM 9B.
ITEM 9B. OTHER INFORMATION
NONE
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PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Incorporated by reference from Registrant's Proxy Statement dated April 14, 2005, pages 5-6 and 28-30.
Code of Ethics and Other Corporate Governance Disclosures
Registrant has adopted a Code of Business and Ethical Conduct for its Directors, Chief Executive Officer, Chief Financial Officer and all other officers of Registrant. A copy of this Code is posted on the corporate governance section of the Registrant's website, www.shareholder.com/tiffany/. Registrant intends to disclose any material amendments to its Code of Business and Ethical Conduct, as well as any waivers by posting such information on the same website. The Registrant will also provide a copy of the Code of Business and Ethical Conduct to stockholders upon request.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated by reference from Registrant's Proxy Statement dated April 14, 2005, pages 16-26.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Incorporated by reference from Registrant's Proxy Statement dated April 14, 2005, pages 5-6.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See Executive Officers of the Registrant herein on pages 25-26. Board of Directors information incorporated by reference from Registrant's Proxy Statement dated April 14, 2005, page 9 and pages 28-30.
ITEM 14.
ITEM 14. PRINCIPAL INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES AND SERVICES
Incorporated by reference from Registrant's Proxy Statement dated April 14, 2005, pages 7-8.
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PART IV
ITEM 15.
ITEM 15. 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 2004 Annual Report to Stockholders of Tiffany & Co. and Subsidiaries:
Report of Independent Registered Public Accounting Firm (following this Form 10-K)
Consolidated Balance Sheets as of January 31, 2005 and 2004
Consolidated Statements of Earnings for the years ended January 31, 2005, 2004 and 2003
Consolidated Statements of Stockholders' Equity and Comprehensive Earnings for the years ended January 31, 2005, 2004 and 2003
Consolidated Statements of Cash Flows for the years ended January 31, 2005, 2004 and 2003
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.
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3. Exhibits:
The following exhibits have been filed with the Securities and Exchange Commission, but are not attached to copies of this Form 10-K other than complete copies filed with said Commission and the New York Stock Exchange:
Exhibit Description
3.1 Restated Certificate of Incorporation of Registrant. Incorporated by reference from Exhibit 3.1 to Registrant's Report on Form 8-K dated May 16, 1996.
3.1a Amendment to Certificate of Incorporation of Registrant. Incorporated by reference from Exhibit 3.1 to Registrant's Report on Form 8-K dated May 20, 1999.
3.1b Amendment to Certificate of Incorporation of Registrant dated May 18, 2000. Incorporated by reference from Exhibit 3.1b to Registrant's Report on Form 10-K for the Fiscal Year ended January 31, 2001.
3.2 Restated By-Laws of Registrant, as last amended September 18, 2003. Incorporated by reference from Exhibit 3.2 to Registrant's Report on Form 10-K for the Fiscal Year ended January 31, 2004.
4.1 Amended and Restated Rights Agreement dated as of April 8, 2004 by and between Registrant and Mellon Investor Services LLC, as Rights Agent. Incorporated by reference from Exhibit 4.1 to Registrant's Report on Form 10-K for the Fiscal Year ended January 31, 2004.
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").
10.122 Agreement dated as of April 3, 1996 among American Family Life Assurance Company of Columbus, Japan Branch, Tiffany & Co. Japan, Inc., Japan Branch, and Registrant, as Guarantor, for yen 5,000,000,000 Loan Due 2011. Incorporated by reference from Exhibit 10.122 filed with Registrant's Report on Form 10-Q for the Fiscal quarter ended April 30, 1996.
10.122a Amendment No. 1 to the Agreement referred to in Exhibit 10.122 above dated November 18, 1998. Incorporated by reference from Exhibit 10.122a filed with Registrant's Report on Form 10-K for the Fiscal Year ended January 31, 1999.
10.122b Guarantee by Tiffany & Co. of the obligations under the Agreement referred to in Exhibit 10.122 above dated April 3, 1996. Incorporated by reference from Exhibit 10.122b filed with Registrant's Report on Form 8-K dated August 2, 2002.
10.122c Amendment No. 2 to Guarantee referred to in Exhibit 10.122b above, dated October 15, 1999. Incorporated by reference from Exhibit 10.122c filed with Registrant's Report on Form 8-K dated August 2, 2002.
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10.122d Amendment No. 3 to Guarantee referred to in Exhibit 10.122b above, dated July 16, 2002. Incorporated by reference from Exhibit 10.122d filed with Registrant's Report on Form 8-K dated August 2, 2002.
10.123 Agreement made effective as of February 1, 1997 by and between Tiffany and Elsa Peretti. Incorporated by reference from Exhibit 10.123 to Registrant's Report on Form 10-K for the Fiscal Year ended January 31, 1997.
10.126 Form of Note Purchase Agreement between Registrant and various institutional note purchasers with Schedules B, 5.14 and 5.15 and Exhibits 1A, 1B, and 4.7 thereto, dated as of December 30, 1998 in respect of Registrant's $60 million principal amount 6.90% Series A Senior Notes due December 30, 2008 and $40 million principal amount 7.05% Series B Senior Notes due December 30, 2010. Incorporated by reference from Exhibit 10.126 filed with Registrant's Report on Form 10-K for the Fiscal Year ended January 31, 1999.
10.126a First Amendment and Waiver Agreement to Form of Note Purchase Agreement referred to in previously filed Exhibit 10.126, dated May 16, 2002. Incorporated by reference from Exhibit 126a filed with Registrant's Report on Form 8-K dated June 10, 2002.
10.129 Agreement made the 1st day of August 2001 by and between Tiffany & Co. Japan Inc. and Mitsukoshi Ltd. of Japan. Incorporated by reference from Exhibit 10.128 filed with Registrant's Report on Form 8-K dated August 1, 2001.
10.130 Credit Agreement dated as of November 5, 2001, by and among Registrant, Tiffany and Company, Tiffany & Co. International, each other Subsidiary of Registrant that is a Borrower and is a signatory thereto and The Bank of New York, as the Swing Line Lender, as the Issuing Bank, as a Lender, and as Administrative Agent, ABN AMRO Bank N.V., The Chase Manhattan Bank, The Dai-ichi Kangyo Bank Ltd., Firstar Bank, NA, and Fleet National Bank, Fleet Precious Metals Inc. (collectively, as a Lender). Incorporated by reference from Exhibit 10.130 filed with Registrant's Report on Form 10-Q for the Fiscal quarter ended October 31, 2001.
10.130a Amendment No. 1 to Credit Agreement referred to in previously filed Exhibit 10.130, dated April 12, 2002. Incorporated by reference from Exhibit 10.130a filed with Registrant's Report on Form 10-Q for the Fiscal quarter ended April 30, 2002.
10.130b Amendment No. 2 to Credit Agreement referred to in previously filed Exhibit 10.130, dated June 30, 2003. Incorporated by reference from Exhibit 10.130b filed with Registrant's Report on Form 10-K for the Fiscal Year ended January 31, 2004.
10.130c Increase Supplement to Credit Agreement referred to in previously filed Exhibit 10.130, dated September 28, 2004.
10.130d Amendment No. 3 to Credit Agreement referred to in previously filed Exhibit 10.130, dated January 27, 2005.
10.131 Guaranty Agreement dated as of November 5, 2001, with respect to the Credit Agreement (see Exhibit 10.129 above) by and among Registrant, Tiffany and Company,
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Tiffany & Co. International, and Tiffany & Co. Japan Inc. and The Bank of New York, as Administrative Agent. Incorporated by reference from Exhibit 10.131 filed with Registrant's Report on Form 10-Q for the Fiscal quarter ended October 31, 2001.
10.132 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 July 18, 2002 in respect of Registrant's $40,000,000 principal amount 6.15% Series C Notes due July 18, 2009 and $60,000,000 principal amount 6.56% Series D Notes due July 18, 2012. Incorporated by reference from Exhibit 10.132 filed with Registrant's Report on Form 8-K dated August 2, 2002.
10.133 Guaranty Agreement dated July 18, 2002 with respect to the Note Purchase Agreements (see Exhibit 10.132 above) by Tiffany and Company, Tiffany & Co. International and Tiffany & Co. Japan Inc. in favor of each of the note purchasers. Incorporated by reference from Exhibit 10.133 filed with Registrant's Report on Form 8-K dated August 2, 2002.
10.134 Translation of Condition of Bonds applied to Tiffany & Co. Japan Inc. First Series Yen Bonds due 2010 in the aggregate principal amount of 15,000,000,000 yen issued September 30, 2003 (for Qualified Investors Only). Incorporated by reference from Exhibit 10.134 filed with Registrant's Report on Form 10-K for the Fiscal Year ended January 31, 2004.
10.135 Translation of Application of Bonds for Tiffany & Co. Japan Inc. First Series Yen Bonds due 2010 in the aggregate principal amount of 15,000,000,000 yen issued September 30, 2003 (for Qualified Investors Only). Incorporated by reference from Exhibit 10.135 filed with Registrant's Report on Form 10-K for the Fiscal Year ended January 31, 2004.
10.135a Translation of Amendment of Application of Bonds referred to in Exhibit 10.135. Incorporated by reference from Exhibit 10.135a filed with Registrant's Report on Form 10-K for the Fiscal Year ended January 31, 2004.
10.136 Payment Guarantee dated September 30, 2003 made by Tiffany & Co. for the benefit of the Qualified Investors of the Bonds referred to in Exhibit 10.134. Incorporated by reference from Exhibit 10.136 filed with Registrant's Report on Form 10-K for the Fiscal Year ended January 31, 2004.
10.145 Ground Lease between Tiffany and Company and River Park Business Center, Inc., dated November 29, 2000.
10.145a First Addendum to the Ground Lease between Tiffany and Company and River Park Business Center, Inc., dated November 29, 2000.
13.1 Annual Report to Stockholders for Fiscal Year ended January 31, 2005 (pages 18-61 of such Annual Report have been filed in electronic format).
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14.1 Code of Business and Ethical Conduct and Business Conduct Policy. Incorporated by reference from Exhibit 14.1 filed with Registrant's Report on Form 10-K for the Fiscal Year ended January 31, 2004.
21.1 Subsidiaries of Registrant.
23.1 Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm.
31.1 Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Executive Compensation Plans and Arrangements
Exhibit Description
4.3 Registrant's Amended and Restated 1998 Employee Incentive Plan and standard terms of stock option award (transferable and non-transferable). Incorporated by reference from Exhibit 4.3 filed with Registrant's Report on Form 10-K for the Fiscal Year ended January 31, 2003.
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.
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.
10.49 Form of Indemnity Agreement, approved by the Board of Directors on March 11, 2005 for use with all directors and executive officers. Incorporated by reference from Exhibit 10.49 filed with Registrant's Report on Form 8-K dated March 16, 2005.
10.60 Registrant's 1988 Director Stock Option Plan and form of stock option agreement, as last amended on November 21, 1996. Incorporated by reference from Exhibit 10.60 to Registrant's Report on Form 10-K for the Fiscal Year ended January 31, 1997.
10.106 Amended and Restated Tiffany and Company Executive Deferral Plan originally made effective October 1, 1989, as amended effective January 1, 2003. Incorporated by
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reference from Exhibit 10.106 filed with Registrant's Report on Form 10-Q for the Fiscal Quarter ended October 31, 2002.
10.108 Registrant's Amended and Restated Retirement Plan for Non-Employee Directors originally made effective January 1, 1989, as amended through January 21, 1999. Incorporated by reference from Exhibit 10.108 filed with Registrant's Report on Form 10-K for the Fiscal Year ended January 31, 1999.
10.109 Summary of informal incentive cash bonus plan for managerial employees. Incorporated by reference from Exhibit 10.109 filed with Registrant's Report on Form 8-K dated March 16, 2005.
10.113 Tiffany and Company Pension Plan, Amended and Restated Effective as of March 30, 2004. Incorporated by reference from Exhibit 10.113 filed with Registrants Report on Form 10-K for the Fiscal Year ended January 31, 2004.
10.114 1994 Tiffany and Company Supplemental Retirement Income Plan, Amended and Restated as of March 7, 2005. Incorporated by reference from Exhibit 10.114 filed with Registrant's Report on Form 8-K dated March 16, 2005.
10.127b Form of Retention Agreement between and among Registrant and Tiffany and each of its executive officers and Appendices I to III to the Agreement. Incorporated by reference from Exhibit 10.127b filed with Registrant's Report on Form 10-K for the Fiscal Year ended January 31, 2003.
10.128 Group Long Term Disability Insurance Policy issued by UnumProvident, Policy No. 533717 001. Incorporated by reference from Exhibit 10.128 filed with Registrant's Report on Form 10-K for the Fiscal Year ended January 31, 2003.
10.137 Summary of arrangements for the payment of premiums on life insurance policies owned by executive officers. Incorporated by reference from Exhibit 10.137 filed with Registrant's Report on Form 10-K for the Fiscal Year ended January 31, 2004.
10.138 Tiffany and Company Un-funded Retirement Income Plan to Recognize Compensation in Excess of Internal Revenue Code Limits. Incorporated by reference from Exhibit 10.138 filed with Registrant's Report on Form 10-K for the Fiscal Year ended January 31, 2004.
10.139 Form of Fiscal 2005 Cash Incentive Award Agreement for certain executive officers under Registrant's 1998 Employee Incentive Plan. Incorporated by reference from Exhibit 10.139 filed with Registrant's Report on Form 8-K dated March 16, 2005.
10.140 Form of Terms of Performance-Based Restricted Stock Unit Grants to Executive Officers under Registrant's 1998 Employee Incentive Plan. Incorporated by reference from Exhibit 10.139 filed with Registrant's Report on Form 8-K dated March 16, 2005.
10.141 Form of Non-Competition and Confidentiality Covenants for use in connection with Performance-Based Restricted Stock Unit Grants to Registrant's Executive Officers and Time-Vested Restricted Unit Awards made to other officers of Registrant's affiliated
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companies pursuant to the Registrant's 1998 Employee Incentive Plan and pursuant to the Tiffany and Company Un-funded Retirement Income Plan to Recognize Compensation in Excess of Internal Revenue Code Limits. Incorporated by reference from Exhibit 10.141 filed with Registrant's Report on Form 8-K dated March 16, 2005.
10.142 Terms of Stock Option Award (Transferable Non-Qualified Option) under Registrant's 1998 Directors Option Plan as revised March 7, 2005. Incorporated by reference from Exhibit 10.142 filed with Registrant's Report on Form 8-K dated March 16, 2005.
10.143 Terms of Stock Option Award (Standard Non-Qualified Option) under Registrant's 1998 Employee Incentive Plan as revised March 7, 2005. Incorporated by reference from Exhibit 10.143 filed with Registrant's Report on Form 8-K dated March 16, 2005.
10.144 Terms of Stock Option Award (Transferable Non-Qualified Option) under Registrant's 1998 Employee Incentive Plan as revised March 7, 2005 (form used for Executive Officers). Incorporated by reference from Exhibit 10.144 filed with Registrant's Report on Form 8-K dated March 16, 2005.
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(b) Reports on Form 8-K.
On November 12, 2004, Registrant filed a Report on Form 8-K reporting its unaudited earnings and results of operations for the three month period ended October 31, 2004.
On December 10, 2004, Registrant filed a Report on Form 8-K reporting the issuance of two press releases. The first reported press release announcing the agreement between Registrant and Aber Diamond Corporation to increase the price at which Registrant purchases diamonds from Aber to market value and to eliminate certain restrictions on the sale of Aber shares held by Registrant. The second reported press release announcing the sale of Registrant's entire holding of Aber Diamond Corporation through a private offering in the United States and on the Toronto Stock Exchange.
On December 18, 2004, Registrant filed a Report on Form 8-K reporting the issuance of a press release announcing its recommendation of the rejection of a below-market "mini-tender" offer from TRC Capital Corporation.
On January 7, 2005, Registrant filed a Report on Form 8-K reporting the issuance of a press release announcing its 12% increase in Holiday Season Sales, comparable U.S. Store sales increase 8%.
On February 28, 2005, Registrant filed a Report on Form 8-K reporting the issuance of a press release announcing its sales and earnings results for the full year.
On March 16, 2005, Registrant filed a Report on Form 8-K reporting various changes to forms of changed awards, terms and agreements subject to such changes made in Fiscal 2005 by Registrant's Compensation Committee of its Board of Directors. Attached to the Report are the following Exhibits:
Exhibit Description
10.49 Form of Indemnity Agreement, approved by the Board of Directors on March 11, 2005 for use with all directors and executive officers.
10.109 Summary of informal incentive cash bonus plan for managerial employees.
10.114 1994 Tiffany and Company Supplemental Retirement Income Plan, Amended and Restated as of March 7, 2005.
10.139 Form of Fiscal 2005 Cash Incentive Award Agreement for certain executive officers under Registrant's 1998 Employee Incentive Plan.
10.140 Form of Terms of Performance-Based Restricted Stock Unit Grants to Executive Officers under Registrant's 1998 Employee Incentive Plan.
10.141 Form of Non-Competition and Confidentiality Covenants for use in connection with Performance-Based Restricted Stock Unit Grants to Registrant's Executive Officers and Time-Vested Restricted Unit Awards made to other officers of Registrant's affiliated companies pursuant to the
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Registrant's 1998 Employee Incentive Plan and pursuant to the Tiffany and Company Un-funded Retirement Income Plan to Recognize Compensation in Excess of Internal Revenue Code Limits.
10.142 Terms of Stock Option Award (Transferable Non-Qualified Option) under Registrant's 1988 Directors Option Plan as revised March 7, 2005.
10.143 Terms of Stock Option Award (Standard Non-Qualified Option) under Registrant's 1988 Employee Incentive Plan as revised March 7, 2005.
10.144 Terms of Stock Option Award (Transferable Non-Qualified Option) under Registrant's 1998 Employee Incentive Plan as revised March 7, 2005 (form used for Executive Officers).
On March 18, 2005, Registrant filed a Report on Form 8-K reporting the issuance of a press release announcing that its Board of Directors approved a new stock repurchase program authorizing the Company to repurchase up to $400 million of its Common Stock through open market or private transactions.
On April 14, 2005, Registrant filed a Report on Form 8-K reporting the filing of its Annual Report to Stockholders and reconciling the net earnings, gross margin and statements in said report with those announced on February 28, 2005, to conform to Staff Accounting Bulletin No. 107, issued March 29, 2005, by the Securities and Exchange Commission.
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SIGNATURES
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 14, 2005 By: /s/ Michael J. Kowalski ------------------------------- Michael J. Kowalski Chief Executive Officer
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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/ Michael J. Kowalski By: /s/ James N. Fernandez ---------------------------------- ---------------------- Michael J. Kowalski James N. Fernandez Chairman and Chief Executive Officer Executive Vice President (principal executive officer) (director) (principal financial officer)
By: /s/ James E. Quinn By: /s/ Warren S. Feld ------------------ ----------------------------- James E. Quinn Warren S. Feld President Vice President (director) (principal accounting officer)
By: /s/ William R. Chaney By: /s/ Rose Marie Bravo --------------------- -------------------- William R. Chaney Rose Marie Bravo Director Director
By: /s/ Samuel L. Hayes III By: /s/ Abby F. Kohnstamm ----------------------- --------------------- Samuel L. Hayes, III Abby F. Kohnstamm Director Director
By: /s/ Charles K. Marquis By: /s/ J. Thomas Presby ---------------------- -------------------- Charles K. Marquis J. Thomas Presby Director Director
By: /s/ William A. Shutzer ---------------------- William A. Shutzer Director
April 14, 2005
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PRICEWATERHOUSECOOPERS LLP
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON FINANCIAL STATEMENT SCHEDULE
To the Board of Directors of Tiffany & Co.:
Our audits of the consolidated financial statements, of management's assessment of the effectiveness of internal control over financial reporting and of the effectiveness of internal control over financial reporting referred to in our report dated March 31, 2005 appearing in the January 31, 2005 Annual Report to Shareholders of Tiffany & Co. (which report, consolidated financial statements and assessment are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the financial statement schedule listed in Item 15(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 March 31, 2005
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TIFFANY & CO. AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
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(a) Uncollectible accounts written off. (b) Adjustment related to sales returns previously provided for. (c) Liquidation of inventory previously written down to market. (d) Physical inventory losses. (e) Reclassification from gross inventory to reserves.
TIFFANY & CO. AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
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(a) Uncollectible accounts written off. (b) Adjustment related to sales returns previously provided for. (c) Liquidation of inventory previously written down to market. (d) Physical inventory losses.
TIFFANY & CO. AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
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(a) Uncollectible accounts written off. (b) Liquidation of inventory previously written down to market. (c) Physical inventory losses. (d) Amounts established or assumed in connection with a business acquisition.