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A N D P ROX Y S TAT E M E N T
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727 FIFTH AV E N U E
N E W Y O R K , N E W Y O R K 10022
212 755 8000
March 25, 2008
M I C H A E L J . KO WA L S K I
C H A I R M A N O F T H E B OA R D
C H I E F E X E C U T I V E O F F I C E R
Dear Stockholder:
,
We invite you to attend the upcoming Annual Meeting of Stockholders of Tiffany & Co. on Thursday, May 15, 2008
at 10:00 a.m. in the Roof/Penthouse of The St. Regis Hotel, 2 East 55th Street at Fifth Avenue, New York, NY.
Your participation in the affairs of Tiffany & Co. is important. Therefore, whether or not you are able to attend,
please vote your shares as soon as possible by completing and returning the enclosed proxy card, by calling the
telephone number listed on the card or by accessing the Internet site to vote electronically.
2007 was a year of major achievement for Tiffany & Co. In addition to strong operating performance from
continuing operations, we launched two bold initiatives to address significant strategic opportunities. First, we
forged a landmark strategic alliance to develop TIFFANY & CO. as a globally recognized and distributed luxury
watch brand. Second, we developed and are preparing to deploy a new, smaller store format that will allow us to
broaden our store expansion plans and profitably reach more consumers in the United States. Details of these
important developments follow a review of 2007 operating performance.
Net sales in fiscal 2007 increased 15% to $2.9 billion.
(cid:120) U.S. Retail sales rose 11% and Direct Marketing sales rose 5%. Sales growth began to slow in the second half
(cid:120)
(cid:120)
of the
year
as consumer confidence waned in the face of developing economic news.
International Retail sales increased 19%. We achieved this through strong growth in the Asia-Pacific
region outside of Japan and in Europe, continuing our transition from a U.S.-focused retailer with a
business in Japan to a geographically diversified network capable of achieving robust and consistent
consolidated growth despite softness in individual national markets.
In total, worldwide comparable store sales rose 7% on a “constant-exchange-rate basis” which excludes the
effect of translating foreign-currency-denominated sales into U.S. dollars.
2007 was also another active and successful year for store expansion. We increased our store count by six in the U.S.
and by 11 locations outside the U.S. We will continue on that pace in the U.S. and accelerate expansion in Europe
and Asia-Pacific in 2008. Other highlights of our distribution expansion program were:
(cid:120) Our new store at 37 Wall Street is a landmark in two senses: it is an architecturally stunning store in a
historic location and it is our first branch store in New York City. We are more than pleased with its initial
performance.
(cid:120) Our growth was particularly vibrant in the greater China region where we are organizationally poised to
continue this expansion program into 2008 and beyond.
(cid:120) At year-end, we operated 184 TIFFANY & CO. stores and boutiques, a 10% increase from the prior year.
(cid:120) We completely redesigned tiffany.com using cutting-edge technology to create a more beautiful site with
more sophisticated search features and the ability to present multiple marketing messages simultaneously.
As mentioned above, we have developed a new, highly efficient store format for the U.S. These new stores will offer
an edited, more profitable product selection and will give us the potential to open in some important, but smaller,
U.S. cities and better serve some of the larger markets where we already have full-line stores. We believe that the
store design will provide a retail selling and service environment that further enhances Tiffany’s appeal to the self-
purchase customer. The first of these stores is scheduled to open later in 2008.
Adding new products to our assortment excites customers and contributes to our sales growth. We continued
apace in 2007 with introductions spanning our entire product spectrum.
Assortment management requires an appropriate mix between “aspirational” and “accessible” products. Our 2007
results suggest, quite persuasively, that we have achieved an appropriate balance that enables us to both grow sales
and continue to enhance the image of the brand. Sales growth was evident in our high-end jewelry (price points
above $50,000), in the engagement category and in silver jewelry. We were also pleased with the continued success
of the CELEBRATION ring campaign and its appeal to the self-purchase customer.
Strong sales growth enabled us to achieve leverage on fixed operating expenses and enhance profitability from
continuing operations. We were, however, required to increase retail prices in order to maintain product margins
in the face of steadily rising precious metal and diamond costs.
Cost containment and asset efficiency was and remains a priority. In 2007, we took advantage of our superb
infrastructure to improve cost-effectiveness, product distribution and our ability to obtain and process diamonds
and to manufacture an increasing percentage of our own jewelry. We now process diamonds in
Belgium,
Canada,
South Africa, Botswana, Namibia and Vietnam and continue to develop our jewelry manufacturing operations to
,
achieve
greater efficiency and capacity. Our merchandise planning, production, acquisition and distribution
activities
provided consistently high levels of in-store merchandise availability throughout the world and we
improved
inventory turnover.
In summary, net income rose 20% to $304 million and net earnings of $2.20 per diluted share were 22% higher than
$1.80 in the prior year. Return on average stockholders’ equity rose to 18% and return on average assets rose to 11%.
Here are some other highlights of 2007:
(cid:120) We completed the long-intended sale and leaseback of Tiffany’s flagship stores in London and Tokyo,
generating substantial profits from both transactions while securing Tiffany’s presence in those prime
locations for many years to come.
(cid:120) We applied a small portion of those profits to make a $10 million contribution to The Tiffany & Co.
Foundation, a charitable organization. This contribution will foster the Foundation’s mission that focuses
on environmental conservation and support for the decorative arts.
(cid:120) We sold the Little Switzerland business after determining that its long-term profit potential would not
meet our objectives. We recorded a loss on the transaction and its results are reflected as “discontinued
operations.”
As mentioned above, we completed a strategic alliance with The Swatch Group Ltd. (“SGL”). SGL is the world’s
leading designer, developer, distributor and manufacturer of high-end, luxury watches. The combination of SGL’s
manufacturing and distribution expertise, Tiffany’s own retail store network, and our joint product design and
marketing expertise will allow us to fast-track the emergence of TIFFANY & CO. as a globally recognized and
distributed luxury watch brand. The Company will share in the profits of this new venture, and our expansion plans
will also benefit from the worldwide attention that a significantly increased advertising budget will bring to the
brand.
Our stockholders deserve to share in our success. Our Board approved two dividend increases, voting to increase
the quarterly rate by 20% in May and by an additional 25% in August to the current annual rate of 60 cents per
share. 2007 represented the fifth consecutive year of dividend increases.
We also returned excess capital to stockholders through share repurchases. We spent $575 million to repurchase
12.4 million shares at an average cost of $46.44 per share. During the year, our Board increased the authorization for
repurchases by an additional $500 million. At year-end, there was $621 million available for future repurchases
under the program.
As we look to the future, our Company has substantial opportunities for continued store expansion and growth
through new product introductions. We will stay focused on achieving sustainable growth by building upon our
competitive strengths and the integrity and values that define the TIFFANY & CO. brand.
I offer my thanks to stockholders for your interest and support, and to our employees who are responsible for
delivering extraordinary products and a superior shopping experience to our customers. I look forward to updating
you on our continued progress.
Sincerely,
FINANCIAL HIGHLIGHTS
(in thousands, except per share amounts, percentages and retail locations)
2007
2006
Increase
Net sales
$ 2,938,771 $ 2,560,734
15%
Worldwide comparable store sales increase (on a constant-
exchange-rate basis) *
7%
7%
Net earnings from continuing operations
$
331,319 $
268,693
23%
As a percentage of net sales
11.3%
10.5%
Net earnings
As a percentage of net sales
Net earnings from continuing operations per diluted share
Net earnings per diluted share
Weighted-average number of diluted common shares
Return on average assets
Return on average stockholders’ equity
Total debt-to-equity ratio
Cash flows from operating activities
Cash dividends paid per share
Company-operated TIFFANY & CO. stores and boutiques
$
303,772 $ 253,927
20%
$
$
$
$
26%
22%
10.3%
2.40 $
2.20 $
9.9%
1.91
1.80
138,140
140,841
10.5%
17.6%
27.7%
9.0%
14.0%
28.7%
391,395 $
239,036
0.52 $
184
0.38
167
64%
37%
10%
All references to years relate to the fiscal year that ends on January 31 of the following calendar year.
See Item 6. Selected Financial Data for significant non-recurring factors that affected 2007 net earnings.
* See Non-GAAP Measures section in Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations for a reconciliation of GAAP to non-GAAP measures.
Net Sales
( i n Mi lli ons)
Net Earn in gs
per Dil ut ed Share
Cas h Di vi dends Pai d per Share
$2,128
$2,313
$1,929
$2,939
$2,561
$ 2.05
$ 1.75
$ 1.80
$ 2.20
$ 1.45
$0.23
$0.19
$0.52
$0.38
$0.30
2003
2004
2005
2006
2007
2003
2004
2005
2006
2007
2003
2004
2005
2006
2007
Tiffany & Co. Year-End Report 2007
Table of Contents
Annual Report on Form 10-K for the fiscal year ended January 31, 2008
Part I
Business...................................................................................................................................................................
Risk Factors ...........................................................................................................................................................
Unresolved Staff Comments ........................................................................................................................
Properties ...............................................................................................................................................................
Legal Proceedings...............................................................................................................................................
Submission of Matters to a Vote of Security Holders.....................................................................
Part II
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities....................................................................................................................
Selected Financial Data...................................................................................................................................
Management’s Discussion and Analysis of Financial Condition and Results
of Operations .......................................................................................................................................................
Quantitative and Qualitative Disclosures About Market Risk ..................................................
Financial Statements and Supplementary Data ................................................................................
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure ..............................................................................................................................................................
Controls and Procedures................................................................................................................................
Other Information ............................................................................................................................................
Part III
Directors and Executive Officers and Corporate Governance ..................................................
Executive Compensation...............................................................................................................................
Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters .......................................................................................................................
Certain Relationships and Related Transactions, and Director Independence ...............
Principal Accountant Fees and Services ................................................................................................
Part IV
Exhibits and Financial Statement Schedules ......................................................................................
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Item 15.
Proxy Statement for the 2008 Annual Meeting of Stockholders
Attendance and Voting Matters ..................................................................................................................................................
Introduction.........................................................................................................................................................
Matters to Be Voted On at the 2008 Annual Meeting....................................................................
How to Vote Your Shares................................................................................................................................
How to Revoke Your Proxy ............................................................................................................................
The Number of Votes That You Have ......................................................................................................
What a Quorum Is.............................................................................................................................................
What a “Broker Non-Vote” Is........................................................................................................................
What Vote Is Required To Approve Each Proposal...........................................................................
Proxy Voting on Proposals in the Absence of Instructions..........................................................
How Proxies Are Solicited .............................................................................................................................
Ownership of the Company ..........................................................................................................................................................
Stockholders Who Own At Least Five Percent of the Company ...............................................
Ownership by Directors, Director Nominees and Executive Officers ..................................
Compliance of Directors, Executive Officers and Greater-Than-Ten-Percent
Stockholders with Section 16(a) Beneficial Ownership Reporting Requirements.........
Relationship with Independent Registered Public Accounting Firm.....................................................................
Fees and Services of PricewaterhouseCoopers LLP .........................................................................
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Board of Directors and Corporate Governance ..................................................................................................................
The Board, In General ......................................................................................................................................
The Role of the Board in Corporate Governance ..............................................................................
Executive Sessions of Non-management Directors/Presiding Non-management
Director...................................................................................................................................................................
Communication with Non-management Directors........................................................................
Director Attendance at Annual Meeting ...............................................................................................
Independent Directors Constitute a Majority of the Board........................................................
Meetings and Attendance during Fiscal 2007....................................................................................
Committees of the Board...............................................................................................................................
Self-Evaluation.....................................................................................................................................................
Resignation on Job Change or New Directorship .............................................................................
Business Conduct Policy and Code of Ethics ......................................................................................
Limitation on Adoption of Poison Pill Plans........................................................................................
Transactions with Related Persons............................................................................................................................................
Report of the Audit Committee ..................................................................................................................................................
Executive Officers of the Company ..........................................................................................................................................
Compensation of the CEO and Other Executive Officers ............................................................................................
Compensation Discussion and Analysis................................................................................................
Report of the Compensation Committee ..............................................................................................................................
Summary Compensation Table ...................................................................................................................................................
Grants of Plan-Based Awards ........................................................................................................................................................
Equity Compensation Plan Information ................................................................................................................................
Discussion of Summary Compensation Table and Grants of Plan-Based Awards............................................
Non-Equity Incentive Plan Awards...........................................................................................................
Equity Incentive Plan Awards - Performance-Based Restricted Stock Units......................
Options....................................................................................................................................................................
Life Insurance Benefits...................................................................................................................................
Outstanding Equity Awards at Fiscal Year-End...................................................................................................................
Option Exercises and Stock Vested...........................................................................................................................................
Pension Benefits Table .....................................................................................................................................................................
Assumptions Used in Calculating the Present Value of the Accumulated Benefits.......
Features of the Retirement Plans ..............................................................................................................
Nonqualified Deferred Compensation Table.......................................................................................................................
Features of the Executive Deferral Plan .................................................................................................
Potential Payments on Termination or Change in Control..........................................................................................
Explanation of Potential Payments on Termination or Change in Control ........................
Director Compensation Table......................................................................................................................................................
Discussion of Director Compensation Table ......................................................................................
Performance of Company Stock..................................................................................................................................................
Discussion of Proposals Presented by the Board ...............................................................................................................
Item 1. – Election of Directors.....................................................................................................................
Item 2. – Appointment of the Independent Registered Public Accounting Firm............
Item 3. – Approval of the 2008 Directors Equity Compensation Plan...................................
Other Matters ......................................................................................................................................................................................
Stockholder Proposals for Inclusion in the Proxy Statement for the 2009
Annual Meeting...................................................................................................................................................
Other Proposals ..................................................................................................................................................
Householding.......................................................................................................................................................
Reminder to Vote ...............................................................................................................................................
Appendix I Corporate Governance Principles.....................................................................................................................
Appendix II 2008 Directors Equity Compensation Plan...............................................................................................
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Board of Directors and Executive Officers of Tiffany & Co..........................................................................................
Stockholder Information................................................................................................................................................................
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Corporate Information
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(cid:58) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended January 31, 2008
OR
(cid:134) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from
to
Commission file no. 1-9494
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
13-3228013
(I.R.S. Employer Identification No.)
727 Fifth Avenue, New York, New York
(Address of principal executive offices)
10022
(Zip code)
Registrant’s telephone number, including area code: (212)755-8000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Name of each exchange on which registered
Common Stock, $.01 par value per share
New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes (cid:58) No (cid:134)
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes (cid:134) No (cid:58)
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 (cid:58) No (cid:134)
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
Annual Report on Form10-K or any amendment to this Annual Report on Form10-K. (cid:134)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definition of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
(Check One).
Large Accelerated filer (cid:58)
Non-Accelerated filer (cid:134)
Accelerated filer (cid:134)
Smaller reporting company (cid:134)
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes (cid:134) No (cid:58)
As of July 31, 2007 the aggregate market value of the registrant’s voting and non-voting stock held by non-affiliates of the registrant was
approximately $6,535,940,127 using the closing sales price on this day of $48.25. See Item 5. Market for Registrant’s Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity Securities.
As of March 20, 2008, the registrant had outstanding 126,087,745 shares of its common stock, $.01 par value per share.
DOCUMENTS INCORPORATED BY REFERENCE.
The following documents are incorporated by reference into this Annual Report on Form 10-K: Registrant's Proxy Statement Dated April 10,
2008 (Part III).
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K, including information incorporated herein by reference, contains
certain “forward-looking statements” concerning the Registrant’s objectives and expectations with
respect to store openings, sales, retail prices, gross margin, expenses, effective tax rate, net earnings and
net earnings per share, inventories, capital expenditures and cash flow. In addition, management makes
other forward-looking statements from time to time concerning objectives and expectations. Statements
beginning with such words as “believes”, “intends”, “plans”, and “expects” include forward-looking
statements that are based on management’s expectations given facts as currently known by management
on the date this Annual Report on Form 10-K was first filed with the Securities and Exchange
Commission. All forward-looking statements involve risks, uncertainties and assumptions that, if they
never materialize or prove incorrect, could cause actual results to differ materially from those expressed
or implied by such forward-looking statements.
The statements in this Annual Report on Form 10-K are made as of the date this Annual Report on Form
10-K was first filed with the Securities and Exchange Commission and the Registrant undertakes no
obligation to update any of the forward-looking information included in this document, whether as a
result of new information, future events, changes in expectations or otherwise.
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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. Through its subsidiary companies, the Company sells fine jewelry and other
items that it makes or has made by others to its specifications.
b) Financial information about industry segments.
Registrant's segment information for the fiscal years ended January 31, 2008, 2007 and 2006 is stated in
Item 8. Financial Statements and Supplementary Data (see Note P. “Segment Information”).
c) Narrative description of business.
As used below, the terms “Fiscal 2007,” “Fiscal 2006” and “Fiscal 2005” refer to the fiscal years ended on
January 31, 2008, 2007 and 2006, respectively. Registrant is a holding company, and conducts all business
through its subsidiary corporations.
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DISTRIBUTION AND MARKETING
Maintenance of the TIFFANY & CO. Brand
The TIFFANY & CO. brand (the “Brand”) is the single most important asset of Tiffany and, indirectly, of
Registrant. The strength of the Brand goes beyond trademark rights (see TRADEMARKS below) and is
inherent in consumer aspirations for the Brand. Management monitors the strength of the Brand
through focus groups and survey research.
Management believes that the Brand stands for a pronounced and emphatic association with high-
quality gemstone jewelry, particularly diamond jewelry; excellent customer service; an elegant store and
online environment; upscale store locations; “classic” product positioning; distinctive and high-quality
packaging materials (most significantly, the TIFFANY & CO. blue box); and sophisticated style and
romance.
Maintaining the strength of the Brand informs Tiffany’s business plan in nearly all aspects. Stores must
be staffed with knowledgeable professionals to provide excellent service. Elegant store and online
environments increase capital and maintenance costs. Display practices require larger store footprints
and lease budgets, but enable Tiffany to showcase fine jewelry in a retail setting consistent with the
Brand positioning. Stores in the best “high street” and luxury mall locations are more expensive and
difficult to secure, but reinforce the Brand’s luxury connotations through association with other luxury
brands. By the same token, over-proliferation of stores, or stores that are located in second-tier markets,
can diminish the strength of the Brand. The classic positioning of Tiffany’s product line supports the
Brand, but limits the display space that can be afforded to fashion jewelry. Tiffany’s packaging practices
support consumer expectations with respect to the Brand and are more expensive. Advertising that
reinforces the Brand offsets the amount of pure product promotional advertising that may be done
within a given budget. To maintain its position within the high-end of the jewelry market requires
T I F F A N Y & C O .
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Tiffany to invest significantly in gemstone and diamond inventory and accept reduced overall gross
margins; it also causes some consumers to view Tiffany as beyond their price range.
All of the foregoing demand that management make difficult tradeoffs between business initiatives that
might generate incremental sales and profits and Brand maintenance objectives. This is a dynamic
process. To the extent that management deems that product or distribution initiatives will unduly and
negatively affect the strength of the Brand, such initiatives have been and will be curtailed or modified
appropriately. At the same time, Brand maintenance suppositions are regularly questioned by
management to determine if the tradeoff between sales and profit is truly worth the positive effect on
the Brand. At times, management has determined, and will in the future determine, that the strength of
the Brand warranted, or that it will permit, more aggressive and profitable distribution and marketing
initiatives.
For financial reporting purposes, Registrant categorizes its sales as follows:
Channels of Distribution
U.S. Retail consists of retail sales transacted in TIFFANY & CO. stores in the United States and sales of
TIFFANY & CO. products through business-to-business direct selling operations in the United States (see
U.S. Retail below);
International Retail consists of sales in TIFFANY & CO. stores and department store boutiques outside
the United States, as well as business-to-business, Internet and wholesale sales of TIFFANY & CO.
products outside the United States (see International Retail below);
Direct Marketing consists of Internet and catalog sales of TIFFANY & CO. products in the United States
(see Direct Marketing below); and
Other consists of worldwide sales of businesses operated under trademarks or tradenames other than
TIFFANY & CO. (i.e., IRIDESSE). Other also includes wholesale sales of diamonds obtained through bulk
purchases that are subsequently deemed not suitable for Tiffany’s needs (see Other below). All prior year
amounts in this Annual Report on Form 10-K have been restated to reflect Little Switzerland, Inc. as a
discontinued operation.
Products
Registrant's principal product category is jewelry. It also sells 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
2007, 2006 and 2005 approximately 86%, 86% and 85%, respectively, of Registrant's net sales were
attributable to TIFFANY & CO. brand jewelry. Designs are developed by employees, suppliers,
independent designers and independent “name” designers (see Designer Licenses below).
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Sales by Reportable Segment of TIFFANY & CO. Jewelry by Category*
% to total
U.S. Retail Sales
% to total
International
Retail Sales
% to total
Direct
Marketing Sales
% to total
Reportable
Segment Sales
32%
16%
10%
29%
30%
24%
11%
26%
8%
–
8%
58%
29%
18%
10%
30%
% to total
U.S. Retail Sales
% to total
International
Retail Sales
% to total
Direct
Marketing Sales
% to total
Reportable
Segment Sales
31%
14%
11%
29%
29%
24%
11%
27%
8%
–
9%
56%
29%
17%
11%
30%
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% to total
U.S. Retail Sales
30%
15%
11%
29%
% to total
International
Retail Sales
% to total
Direct
Marketing Sales
% to total
Reportable
Segment Sales
28%
24%
12%
26%
8%
–
8%
55%
28%
17%
11%
29%
2007
Category
A
B
C
D
2006
Category
A
B
C
D
2005
Category
A
B
C
D
A) This category includes most gemstone jewelry and gemstone band rings, other than
engagement jewelry. Most jewelry in this category is constructed of platinum, although gold
was used as the primary metal in approximately 10%, 11% and 12% of pieces in 2007, 2006
and 2005, respectively. Most items in this category contain diamonds, other gemstones or
both. The average price of merchandise sold in 2007, 2006 and 2005, respectively, in this
category was approximately $3,400, $3,000 and $2,800 for total reportable segments.
B) This category includes diamond rings and wedding bands marketed to brides and grooms.
Most jewelry in this category is constructed of platinum, although gold was used as the
primary metal in approximately 3%, 3% and 4% of pieces in 2007, 2006 and 2005,
respectively. Most sales in this category are of items containing diamonds. The average price
of merchandise sold in 2007, 2006 and 2005, respectively, in this category was approximately
$3,000, $2,500 and $2,500 for total reportable segments.
C) This category generally consists of non-gemstone, gold or platinum jewelry, although small
gemstones are used as accents in some pieces. The average price of merchandise sold in 2007,
2006 and 2005, respectively, in this category was approximately $700, $600 and $600 for
total reportable segments.
D) This category generally consists of non-gemstone, sterling silver jewelry, although small
gemstones are used as accents in some pieces. The average price of merchandise sold in 2007,
T I F F A N Y & C O .
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2006 and 2005, in this category was approximately $200 for total reportable segments in
each year.
* Certain reclassifications have been made to the prior years’ percentages to conform to current-year
presentations.
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;
eyewear 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. Other than jewelry, none of these categories individually represent 10% or more of consolidated
net sales.
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U.S. Retail
New York Flagship Store. Tiffany’s New York Flagship store on Fifth Avenue accounts for a significant
portion of the Company's net sales and is the focal point for marketing and public relations efforts.
Approximately 10% of total Company net sales for Fiscal 2007, 2006 and 2005 were attributable to the
New York Flagship store's retail sales.
U.S. Branch Stores. On January 31, 2008, in addition to its New York Flagship store, Tiffany had 69 branch
stores in the United States. 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 Flagship store.
Store Locations
San Francisco, California
Houston, Texas
Beverly Hills, California
Chicago, Illinois
Atlanta, Georgia
Dallas, Texas
Boston, Massachusetts
Costa Mesa, California
Philadelphia, Pennsylvania
Vienna, Virginia
Palm Beach, Florida
Honolulu (Ala Moana), Hawaii
San Diego, California
Troy, Michigan
Bal Harbour, Florida
Oak Brook, Illinois
King of Prussia, Pennsylvania
Short Hills, New Jersey
White Plains, New York
Hackensack, New Jersey
Chevy Chase, Maryland
Charlotte, North Carolina
Chestnut Hill, Massachusetts
Cincinnati, Ohio
Palo Alto, California
Denver, Colorado
Las Vegas (Bellagio), Nevada
Manhasset, New York
Seattle, Washington
Scottsdale, Arizona
Century City, California
Dallas (NorthPark), Texas
Boca Raton, Florida
Tamuning, Guam
Fiscal Year
Opened
1963
1963
1964
1966
1969
1982
1984
1988
1990
1990
1991
1992
1992
1992
1993
1994
1995
1995
1995
1996
1996
1997
1997
1997
1997
1998
1998
1998
1998
1998
1999
1999
1999
1999
Store Locations
Old Orchard (Skokie), Illinois
Maui (Wailea), Hawaii
Greenwich, Connecticut
Portland, Oregon
Tampa, Florida
Santa Clara (San Jose), California
Honolulu (Waikiki), Hawaii
Bellevue, Washington
East Hampton, New York
St. Louis, Missouri
Orlando, Florida
Coral Gables, Florida
Tumon Bay (DFS), Guam
Palm Desert, California
Walnut Creek, California
Edina, Minnesota
Kansas City, Missouri
Palm Beach Gardens, Florida
Westport, Connecticut
Carmel, California
Naples, Florida
Pasadena, California
San Antonio, Texas
Atlantic City, New Jersey
Indianapolis, Indiana
Nashville, Tennessee
Tucson, Arizona
The Big Island (Waikoloa), Hawaii
Austin, Texas
Las Vegas (Forum Shops), Nevada
Natick, Massachusetts
New York (37 Wall Street), New York
Red Bank, New Jersey
Providence, Rhode Island
Santa Barbara, California
T I F F A N Y & C O .
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Fiscal Year
Opened
2000
2000
2000
2000
2001
2001
2002
2002
2002
2002
2002
2003
2003
2003
2003
2004
2004
2004
2004
2005
2005
2005
2005
2006
2006
2006
2006
2006
2007
2007
2007
2007
2007
2007
2007
Not included in the above list is a holiday sales boutique that the Company operated in late 2007 at the
Mohegan Sun Resort, Connecticut.
Expansion of U.S. Retail Operations. Management currently contemplates opening six new TIFFANY &
CO. branch stores in the United States in 2008, and eight to twelve branch stores per year beginning in
2009 (which will include a new smaller store format). 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. Management
recognizes that over-saturation of any market could diminish the distinctive appeal of the TIFFANY &
CO. brand, but believes that there are a significant number of locations remaining in the United States
that meet the requirements of a TIFFANY & CO. location, particularly for small stores (see Item 2.
Properties for further information concerning U.S. Retail store leases).
Business-to-Business Sales Division. Tiffany’s Business Sales Division sales executives call on business
clients throughout the United States, selling products drawn from the retail product line and items
specially developed or sourced for the business market, including trophies and items designed for the
particular customer. Price allowances are given to business account holders for certain purchases.
Business Sales Division customers have typically purchased for business gift giving, employee service and
achievement recognition awards, customer incentives and other purposes. Products and services are
marketed through a sales organization, through advertising in newspapers and business periodicals and
through the publication of special catalogs.
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The following tables set forth locations operated by Registrant’s subsidiaries:
International Retail
Europe
Austria: Vienna
France: Paris, Galeries Lafayette
France: Paris, Printemps Department Store
France: Paris, Rue de la Paix
Germany: Frankfurt
Germany: Hamburg
Germany: Munich
Italy: Bologna
Italy: Florence
Canada and Central/South America
Canada: Toronto
Canada: Vancouver
Brazil: Sao Paulo, Jardins
Brazil: Sao Paulo, Iguatemi Shopping Center
Mexico: Mexico City, Masaryk
Italy: Milan
Italy: Rome
Switzerland: Zurich
United Kingdom: London, Harrods
United Kingdom: London, Old Bond Street
United Kingdom: London, Royal Exchange
United Kingdom: London, Selfridges
United Kingdom: London, Sloane Street
Mexico: Mexico City, Palacio Store, Perisur
Mexico: Mexico City, Palacio Store, Polanco
Mexico: Monterrey, Palacio Store
Mexico: Puebla, Palacio Store
Mexico: Santa Fe
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Japan
Abeno, Kintetsu Department Store
Chiba, Mitsukoshi Department Store
Fukuoka, Mitsukoshi Department Store
Ginza, Mitsukoshi Department Store
Hiroshima, Fukuya Department Store
Ikebukuro, Mitsukoshi Department Store
Ikebukuro, Tobu Department Store
Kagoshima, Mitsukoshi Department Store
Kanazawa, Mitsukoshi
Kashiwa, Takashimaya Department Store
Kawasaki, Saikaya Department Store
Kobe, Daimaru Department Store
Kochi, Daimaru Department Store
Kokura, Izutsuya Department Store
Koriyama, Usui Department Store
Kumamoto, Tsuruya Department Store
Kyoto, Daimaru Department Store
Kyoto, Takashimaya Department Store
Matsuyama, Mitsukoshi Department Store
Mito, Keisei Department Store
Nagoya, Mitsukoshi
Nagoya, Takashimaya Department Store
Nagoya, Matsuzakaya Department Store
Nihonbashi, Mitsukoshi Department Store
Niigata, Mitsukoshi Department Store
Oita, Tokiwa Department Store
Okayama, Tenmaya Department Store
Omiya, Sogo Department Store
Osaka, Takashimaya Department Store
Osaka, Umeda ‡
Sagamihara, Isetan Department Store
Sapporo, Mitsukoshi Department Store
Sapporo, Daimaru Department Store
Sendai, Mitsukoshi Department Store
Shibuya, Seibu Department Store
Shinjuku, Isetan Department Store
Shinjuku, Mitsukoshi Department Store
Shinjuku, Takashimaya Department Store
Shinsaibashi, Sogo Department Store
Shizuoka, Matsuzakaya Department Store
Tachikawa, Isetan Department Store
Takamatsu, Mitsukoshi Department Store
Takasaki, Takashimaya Department Store
Tamagawa, Takashimaya Department Store
Tokyo, Ginza Flagship Store ‡
Tokyo, Marunouchi ‡
Tokyo, Roppongi Hills ‡
Umeda, Daimaru Department Store
Utsunomiya, Tobu Department Store
Wakayama, Kintetsu Department Store
Yokohama, Landmark Plaza, Mitsukoshi
Yokohama, Takashimaya Department Store
Yonago, Takashimaya Department Store
‡ Freestanding stores operated by Registrant’s Subsidiaries.
Asia-Pacific Excluding Japan
Australia: Brisbane
Australia: Melbourne
Australia: Sydney
China: Beijing, The Peninsula Palace Hotel
China: Beijing, Oriental Plaza
China: Shanghai, Jiu Guang City Plaza
China: Shanghai, Plaza 66
China: Tianjin
Hong Kong: Elements
Hong Kong: Hong Kong International Airport
Hong Kong: International Finance Center
Hong Kong: The Landmark Center
Hong Kong: Pacific Place
Hong Kong: The Peninsula Hotel
Hong Kong: Sogo Department Store
Korea: Busan, Lotte Department Store
Korea: Seoul, Galleria Luxury Hall East Dept. Store
Korea: Seoul, Hyundai Department Store
Korea: Seoul, Hyundai Coex Department Store
Korea: Seoul, Lotte Downtown Department Store
Korea: Seoul, Lotte World
Korea: Seoul, Shinsegae Main
Macau: The Venetian Resort
Macau: Wynn Resort
Malaysia: Kuala Lumpur, KLCC
Malaysia: Kuala Lumpur, Pavillion
Singapore: Changi Airport
Singapore: Ngee Ann City
Singapore: Raffles Hotel
Taiwan: Kaohsiung, Hanshin Department Store
Taiwan: Taichung, Sogo Department Store
Taiwan: Taipei, The Regent Hotel
Taiwan: Taipei, Sogo Department Store
Taiwan: Taipei, Taipei Financial Center
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Business with Department Stores in Japan. In Fiscal 2007, 2006 and 2005, respectively, total net sales in
Japan of TIFFANY & CO. merchandise represented 17%, 19% and 21% of Registrant’s net sales.
In Fiscal 2007, approximately 2% of Registrant’s net sales were recorded in Registrant’s Tokyo Flagship
store, which is operated by Registrant’s wholly-owned subsidiary Tiffany & Co. Japan Inc. (“Tiffany-
Japan”). Sales recorded in retail locations operated in connection with Mitsukoshi Ltd. of Japan
(“Mitsukoshi”) accounted for 5%, 9% and 11%, in Fiscal 2007, 2006 and 2005, respectively. With a
concentration of 15 of the total 49 TIFFANY & CO. department store boutiques in Japan, Mitsukoshi is
the single largest department store with TIFFANY & CO. boutiques in Japan.
Tiffany-Japan has merchandising and marketing responsibilities in the operation of TIFFANY & CO.
boutiques in department store locations throughout Japan. Department stores act for Tiffany-Japan in
the sale of merchandise. Tiffany-Japan owns the merchandise and recognizes as revenues the retail price
charged to the ultimate consumer in Japan. Tiffany-Japan establishes retail prices, bears the risk of
currency fluctuation, 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. The department stores in Japan provide and
maintain boutique facilities and assume retail credit and certain other risks.
The department stores provide retail staff in “Standard Boutiques” and Tiffany-Japan provides retail staff
in “Concession Boutiques.” At the end of Fiscal 2007, there were 6 Standard Boutiques and 43 Concession
Boutiques operated with department stores in Japan. Risk of inventory loss varies depending on whether
the boutique is a Standard Boutique or a Concession Boutique. The department stores bear responsibility
for loss or damage to the merchandise in Standard Boutiques and Tiffany-Japan bears the risk in
Concession Boutiques.
The department stores retain a portion (the “basic portion”) of the net retail sales made in TIFFANY &
CO. boutiques. The basic portion varies depending on the type of boutique and the retail price of the
merchandise involved with the fees generally varying from store to store. The highest basic portion
available to any department store is 23% and the lowest is 14%.
In recent years, the Company has been closing underperforming boutiques in Japan and relocating to
other department store locations in order to improve sales growth and profitability. Management will
continue to identify suitable prime retail locations and does not anticipate reducing overall store-count
in Japan during that transition.
The Company's commercial relationships with department stores in Japan, and their abilities to continue
to operate as leading department store operators have been and will continue to be substantial factors in
the Company's continued success in Japan. At the end of Fiscal 2007, TIFFANY & CO. boutiques were
located in 15 locations operated with Mitsukoshi and 34 other retail locations with other Japanese
department stores, including among others Takashimaya, Isetan and Daimaru. Tiffany-Japan also
operates four freestanding stores outside the scope of its Japanese department store operations.
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 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
were being obtained.
In 2007, Mitsukoshi and Isetan department stores announced plans to merge to form the company
Isetan Mitsukoshi Holdings Ltd. in April 2008, making it the largest department store group in Japan.
T I F F A N Y & C O .
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Mitsukoshi and Isetan department stores will retain their current names after the merger. The
establishment of Isetan Mitsukoshi Holdings Ltd. realigned Japan’s department store sector,
transforming it into a venue dominated by four main department store groups including the J. Front
Retailing Co., which integrated Daimaru and Matsuzakaya department stores, Takashimaya and the
Millennium Retailing Co., which was formed in 2003, integrating the Sogo and Seibu department stores.
The Company operates TIFFANY & CO. boutiques in each of the aforementioned department stores.
International Internet Sales. The Company offers a selection of TIFFANY & CO. merchandise for
purchase in England, Wales, Northern Ireland and Scotland through its U.K. website at
www.tiffany.com/uk . The Company also offers a selection of TIFFANY & CO. merchandise for purchase in
Japan and Canada through websites at www.tiffany.co.jp and www.tiffany.ca. In 2008, the Company
expects to offer a selection of TIFFANY & CO. merchandise for purchase in Australia through its website
at www.tiffany.com/au. The scope and selection of merchandise offered for purchase on these
international websites is comparable to the selection offered on the U.S. website (see U.S. Internet Sales
below).
International Wholesale Distribution. Selected TIFFANY & CO. merchandise is sold to independent
distributors for resale in markets in the Central/South American, Caribbean, Canadian, Asia-Pacific,
Russian and Middle Eastern regions. Such sales represented approximately 3% of net sales in Fiscal 2007.
Management anticipates continued expansion of international wholesale distribution in these regions as
markets are developed.
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Expansion of International Retail Operations. Tiffany began its ongoing program of international
expansion through proprietary retail stores in 1986 with the establishment of the London Flagship store.
Registrant expects to continue to open TIFFANY & CO. stores in locations outside the United States and
to selectively expand its channels of distribution in important markets around the world without
compromising the long-term value of the TIFFANY & CO. trademark. Management currently
contemplates opening approximately 20 TIFFANY & CO. international stores and boutiques in 2008, and
at least 12 to 15 annually in subsequent years.
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The following chart details the growth in TIFFANY & CO. stores and boutiques since Fiscal 1987 on a
worldwide basis:
Worldwide TIFFANY & CO. Retail Locations Operated by Registrant’s Subsidiary Companies
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End of
Fiscal:
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Canada,
Central/
South
Americas
0
0
0
0
1
1
1
1
1
1
2
2
3
4
5
5
7
7
7
9
10
U.S.
8
9
9
12
13
16
16
18
21
23
28
34
38
42
44
47
51
55
59
64
70
Europe
2
3
5
5
7
7
6
6
6
6
7
7
8
8
10
11
11
12
13
14
17
Japan
0
0
0
0
0
7
37*
37
38
39
42
44
44
44
47
48
50
53
50
52
53
Other
Asia-Pacific
0
1
2
3
4
4
5
7
9
12
17
17
17
21
20
20
22
24
25
28
34
Total
10
13
16
20
25
35
65
69
75
81
96
104
110
119
126
131
141
151
154
167
184
*Prior to July 1993, many TIFFANY & CO. boutiques in Japan were operated by Mitsukoshi (ranging from
21 in 1987 to 29 in 1993)
Direct Marketing
U.S. Internet Sales. Tiffany distributes a selection of more than 3,500 products through its website at
www.tiffany.com for purchase in the United States. Sales for transactions made on websites outside the
U.S. are reported in the International Retail channel of distribution. Business account holders may make
gift purchases through the Company’s website at http://business.tiffany.com. Price allowances are given to
eligible business account holders for certain purchases on the Tiffany for Business website.
Catalogs. Tiffany also distributes catalogs of selected merchandise to its proprietary list of customers
and to mailing lists rented from third parties. SELECTIONS® catalogs are published, supplemented by
COLLECTIONS and other catalogs.
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The following table sets forth certain data with respect to mail, telephone and Internet order operations
for the periods indicated:
Number of names on U.S. catalog mailing and U.S. Internet
lists at fiscal year-end (consists of U.S. customers who
purchased by mail, telephone or Internet prior to the
applicable date):
3,593,167
3,187,500
2,821,638
2007
2006
2005
Total U.S. catalog mailings during fiscal year (in millions):
19.5
21.7
24.4
Total U.S. mail, telephone or Internet orders received
during fiscal year:
770,918
744,414
704,221
Other
This channel of distribution includes the consolidated results of existing businesses that sell
merchandise under trademarks or tradenames other than TIFFANY & CO. In Fiscal 2004, the Company
also initiated, through this channel of distribution, wholesale sales of diamonds that were found to be
unsuitable for Tiffany’s needs.
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Registrant believes that the sale of merchandise under trademarks or tradenames other than TIFFANY &
CO. offers an opportunity to achieve incremental growth in sales and earnings without diminishing the
distinctive appeal of the TIFFANY & CO. brand. Businesses to be developed or acquired for this channel
have been and will be chosen with a view to more fully exploit Registrant’s established infrastructure for
distribution and manufacturing of luxury products, store development and brand management.
Wholesale Diamond Sales. In Fiscal 2003, the Company began to purchase rough diamonds. In Fiscal
2004, the Company commenced the sale of diamonds that were found unsuitable for Tiffany’s needs.
Tiffany purchases parcels of rough diamonds, but not all the diamonds in a parcel are suitable for
Tiffany’s production. In addition, after production not all polished diamonds are suitable for Tiffany
jewelry. These diamonds that do not meet Tiffany’s quality standards are sold to third parties through
the Other channel of distribution. The Company’s objective from such sales is to recoup its original costs,
thereby earning minimal, if any, gross margin on those transactions.
Iridesse, Inc. In Fiscal 2004, the Company organized a new retail subsidiary, under the name Iridesse,
Inc., to engage exclusively in the design and retail sale of pearl jewelry in the United States. At the end of
Fiscal 2007, there were 16 IRIDESSE retail stores (see Item 2. Properties, IRIDESSE Stores, for further
information concerning IRIDESSE retail store leases).
Little Switzerland, Inc. In 2007, the Company sold its interest in Little Switzerland, Inc. to an unaffiliated
third party. Its results have been reclassified to discontinued operations.
ADVERTISING AND PROMOTION
Registrant regularly advertises, primarily in newspapers and magazines, and periodically conducts
product promotional events. In Fiscal 2007, 2006 and 2005, Registrant spent approximately $174 million,
$162 million and $137 million, respectively, on worldwide advertising, which includes costs for media,
production, catalogs, promotional events and other related items.
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Public Relations (promotional) activity is a significant aspect of Registrant's business. Management
believes that Tiffany's image is enhanced by a program of charity sponsorships, grants and merchandise
donations. Donations are also made to The Tiffany & Co. Foundation, a private foundation organized to
support 501(c)(3) charitable organizations with efforts concentrated in environmental conservation and
support for the decorative arts. Tiffany also engages in a program of retail promotions and media
activities to maintain consumer awareness of the Company and its products. Each year, Tiffany publishes
its well-known Blue Book which showcases jewelry and other merchandise. John Loring, Tiffany's Design
Director, is the author of numerous books featuring TIFFANY & CO. products. Registrant considers these
and other promotional efforts important in maintaining Tiffany's image.
TRADEMARKS
The designations TIFFANY® and TIFFANY & CO.® are the principal trademarks of Tiffany, as well as
serving as tradenames. Through its subsidiaries, the Company has obtained and is the proprietor of
trademark registrations for TIFFANY and TIFFANY & CO., as well as the TIFFANY BLUE BOX® and the
color TIFFANY BLUE® for a variety of product categories in the United States and in other countries.
Tiffany maintains a program to protect its trademarks and institutes 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.
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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.
Tiffany actively pursues those who counterfeit or sell counterfeit TIFFANY & CO. goods through civil
action and cooperation with criminal law enforcement agencies. However, counterfeit TIFFANY & CO.
goods remain available in many markets and the cost of enforcement is expected to continue to rise. In
recent years, there has been an increase in the availability of counterfeit goods, predominantly silver
jewelry, in various markets by street vendors and small retailers and on the Internet.
The continued availability of counterfeit goods within these various markets has the potential, in the
long term, to devalue the TIFFANY brand.
In July 2004, Tiffany initiated a civil proceeding against eBay, Inc. in the Federal District Court for the
Southern District of New York, alleging direct and contributory trademark infringement, unfair
competition, false advertising and trademark dilution. Tiffany seeks damages and injunctive relief
stemming from eBay’s alleged assistance and contribution to the offering for sale, advertising and
promotion, in the United States, of counterfeit TIFFANY jewelry and any other jewelry or merchandise
which bears the TIFFANY trademark and is dilutive or confusingly similar to the TIFFANY trademarks. In
November 2007, the case was tried as a bench trial and the parties are awaiting the Court’s verdict.
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, 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.
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DESIGNER LICENSES
Tiffany has been the sole licensee for jewelry designed by Elsa Peretti, Paloma Picasso and the late Jean
Schlumberger since Fiscal 1974, 1980 and 1956, respectively.
In Fiscal 2005, Tiffany became the sole licensee for jewelry designed by the architect, Frank Gehry. The
Gehry collection was made available for retail sale in the first quarter of Fiscal 2006. Merchandise
designed by Mr. Gehry accounted for 2% of the Company’s net sales in Fiscal 2007 and 2006.
Ms. Peretti and Ms. Picasso retain ownership of copyrights for their designs and of their trademarks and
exercise approval rights with respect to important aspects of the promotion, display, manufacture and
merchandising of their designs. Tiffany is required by contract to devote a portion of its advertising
budget to the promotion of their respective products; each is paid a royalty by Tiffany for jewelry and
other items designed by them and sold under their respective names. Written agreements exist between
Ms. Peretti and Tiffany and between Ms. Picasso and Tiffany, but may be terminated by either party
following six months notice to the other party. No arrangements are currently in place to continue the
sale of designs following the death or disability of either Elsa Peretti or Paloma Picasso. Tiffany is the sole
retail source for merchandise designed by Ms. Peretti worldwide; however, she has reserved by contract
the right to appoint other distributors in markets outside the United States, Canada, Japan, Singapore,
Australia, Italy, the United Kingdom, Switzerland and Germany. In Fiscal 1992, Tiffany acquired trademark
and other rights necessary to sell the designs of the late Mr. Schlumberger under the TIFFANY-
SCHLUMBERGER trademark.
The designs of Ms. Peretti accounted for 11%, 12% and 13% of the Company's net sales in Fiscal 2007,
2006 and 2005, respectively. Merchandise designed by Ms. Picasso accounted for 3% of the Company's
net sales in Fiscal 2007, and 4% of the Company’s net sales in Fiscal 2006 and 2005. Registrant's
operating results could be adversely affected were it to cease to be a licensee of either of these designers
or should its degree of exclusivity in respect of their designs be diminished.
MERCHANDISE PURCHASING, MANUFACTURING AND RAW MATERIALS
Merchandise offered for sale by the Company is supplied from Tiffany’s jewelry and silver goods
manufacturing facilities in Cumberland and Cranston, Rhode Island; Pelham and Mount Vernon, New
York; the hollowware manufacturing facility in Tiffany’s Retail Service Center and through purchases and
consignments from others. It is Registrant’s long-term objective to continue its expansion of Tiffany’s
internal manufacturing operations. However, it is not expected that Tiffany will ever manufacture all of
its needs. Factors to be considered in its decision to outsource manufacturing include product quality,
gross margin improvement, access to or mastery of various jewelry-making skills and technology, support
for alternative capacity and the cost of capital investments.
The following table shows Tiffany's sources of jewelry merchandise, based on cost, for the periods
indicated:
Finished Goods produced by Tiffany*
Finished Goods purchased from others
2007
59%
41%
100%
2006
58%
42%
100%
2005
65%
35%
100%
*Includes raw materials provided by Tiffany to subcontractors.
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Almost all non-jewelry items are purchased from third-party vendors.
Purchases of Polished Gemstones and Precious Metals. Gemstones and precious metals used in making
Tiffany’s jewelry may be purchased from a variety of sources. Most purchases 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 48%, 46% and 46% of Tiffany's net sales in Fiscal
2007, 2006 and 2005, respectively. Products containing one or more diamonds of one carat or larger
accounted for 11%, 10% and 10% of net sales in each of those years, respectively.
Tiffany purchases polished diamonds principally from seven 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 that meet the quality demands of Tiffany are increasingly more scarce and difficult to
acquire than smaller diamonds. Prices for all Tiffany quality diamonds are increasing, however the prices
for greater-than-one-carat diamonds are increasing at a faster rate than diamonds smaller than one carat.
Established sources for smaller diamonds would be more easily replaced in the event of a disruption in
supply than could sources for larger diamonds.
Some, but not all, of Tiffany’s suppliers are DTC sight-holders (see below), and it is estimated that a
significant portion of the diamonds that Tiffany has purchased have had their source with the DTC.
Acquiring diamonds for the engagement business is increasingly difficult because of supply limitations;
at times, Tiffany is not able to maintain a comprehensive selection of diamonds in each retail location
due to the broad assortment of sizes, colors, clarity grades and cuts demanded by customers.
Except as noted above, Tiffany believes that there are numerous alternative sources for gemstones and
precious metals and that the loss of any single supplier would not have a material adverse effect on its
operations.
Purchases of Rough Diamonds. Until Fiscal 2003, the Company did not purchase rough (uncut and
unpolished) diamonds. Since that time, the Company has established diamond processing operations
that purchase, sort, cut and/or polish rough diamonds for use by Tiffany. The Company now has such
operations in Canada’s Northwest Territories, Belgium, South Africa, Botswana, Namibia, China and
Vietnam. Operations in South Africa, Botswana and Namibia are conducted through joint ventures with
third parties. The Company will continue to invest in additional opportunities that will potentially lead
to additional “conflict-free” (see below) sources of rough diamonds.
In Fiscal 2007, approximately 40% of the polished diamonds acquired by Tiffany for use in jewelry were
produced from rough diamonds purchased by the Company. The balance of Tiffany’s needs for polished
diamonds were purchased from third parties (see above). The Company expects to continue to purchase
rough diamonds in increasing amounts. In conducting these activities, it is the Company’s intention to
supply Tiffany’s needs for cut/polished diamonds to as great an extent as possible.
In order to acquire rough diamonds, the Company must purchase mixed boxes of rough diamonds or
purchase “run-of-mine” production. Thus, it is necessary to purchase rough diamonds that cannot be
cut to meet Tiffany’s quality standards and that must be sold to third parties; such sales have been
conducted through Registrant’s Other channel of distribution. To make such sales, the Company must
charge a market price and is unable to earn any significant profit above its original cost. Sales of rough
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diamonds in the Other channel of distribution have had and will continue to have the effect of reducing
the Company’s overall gross margins.
The DTC. The supply and price of rough diamonds in the principal world markets have been and
continue to be significantly influenced by a single entity, the Diamond Trading Company (the “DTC”), an
affiliate of De Beers S.A., the Luxembourg-based holding company of the De Beers Group. However, the
role of the DTC is rapidly changing and that change has greatly affected, and will continue to affect,
traditional channels of supply in the markets for rough and cut diamonds. The DTC continues to supply a
significant portion of the world market for rough, gem-quality diamonds, notwithstanding that its
historical ability to control worldwide production supplies has been significantly diminished due to
changing policies in diamond-producing countries and revised contractual arrangements with other
diamond mine operators. Responding to pressure from the European Commission, in Fiscal 2005 the
DTC entered into commitments for a three-year phase-out of purchases of rough diamonds from the
world’s second largest producer, ALROSA Company Limited, which accounts for over 98% of Russian
diamond production. Russia is the second largest diamond producing country in the world, in value, after
Botswana. The DTC maintains separate arrangements to purchase and distribute diamonds produced in
Botswana. The DTC’s three-year phase-out commitments with ALROSA are anticipated to make
additional rough diamonds available for competitive bid.
The DTC continues to exert a significant influence on the demand for polished diamonds through
advertising and marketing efforts throughout the world and through the requirements it imposes on
those who purchase rough diamonds from the DTC (“sight-holders”). The Company is a DTC sight-holder
through its joint ventures (see above).
Worldwide Availability of Diamonds. The availability and price of diamonds to the DTC, Tiffany and
Tiffany's suppliers may be, to some extent, dependent on the political situation in diamond-producing
countries, the opening of new mines and the continuance of the prevailing supply and marketing
arrangements for rough diamonds. As a consequence of changes in the sight-holder system and increased
competition in the retail diamond trade, substantial competition exists for rough diamonds, which
resulted in significant increases in diamond prices commencing in Fiscal 2004 and continued, albeit
lesser, increases in diamond prices through 2007. Sustained interruption in the supply of rough
diamonds, an overabundance of supply or a substantial change in the marketing arrangements described
above could adversely affect Tiffany and the retail jewelry industry as a whole. Changes in the marketing
and advertising policies of the DTC and its direct purchasers could affect consumer demand for
diamonds. Additionally, an affiliate of the DTC has formed a joint venture with an affiliate of a major
luxury goods retailer for the purpose of retailing diamond jewelry under the DEBEERS trademark. This
joint venture has become a competitor of Tiffany. Further, the DTC has encouraged its sight-holders to
engage in diamond brand development, which may also increase demand for diamonds and affect the
supply of diamonds in certain categories.
Conflict Diamonds. Increasing attention has been focused in recent years on the issue of “conflict”
diamonds. Conflict diamonds are extracted from war-torn geographic regions and sold by rebel forces to
fund insurrection. Allegations have been made that diamond trading is used as a source of funds to
further terrorist activities. Concerned participants in the diamond trade, including Tiffany and non-
government organizations, seek to exclude such diamonds, which represent a small fraction of the
world’s supply, from legitimate trade through an international system of certification and legislation. It is
expected that such efforts will not substantially affect the supply of diamonds.
Manufactured Diamonds. Manufactured diamonds have become available in small quantities. Although
significant questions remain as to the ability of producers to produce manufactured diamonds
economically within a full range of sizes and natural diamond colors, and as to consumer acceptance of
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manufactured diamonds, it is possible that manufactured diamonds may become a factor in the market.
Should manufactured diamonds come into the market in significant quantities at prices significantly
below those for natural diamonds of comparable quality, the price for natural diamonds may fall unless
consumers are willing to pay a premium for natural diamonds. Such a price decline could affect the price
that Tiffany is able to obtain for its products. Also, a significant decline in the price of natural diamonds
may affect the economics of diamond mining, causing some mining operations to become uneconomic;
this, in turn, could lead to shortages in natural diamonds.
Finished Jewelry. Finished jewelry is purchased from approximately 90 manufacturers, most of which
have long-standing relationships with Tiffany. However, Tiffany does not enter into long-term supply
arrangements with its finished goods vendors. Tiffany does enter into written blanket purchase-order
agreements with nearly all of its finished goods vendors. These agreements may be terminated at any
time by Tiffany without penalty; such termination would not discharge Tiffany’s obligations under
unfilled purchase orders placed prior to termination. The blanket purchase-order agreements establish
non-price terms by which Tiffany may purchase and by which vendors may sell finished goods to Tiffany.
These terms include payment terms, shipping procedures, product quality requirements, merchandise
specifications and vendor social responsibility requirements. Tiffany believes that there are alternative
sources for most jewelry items; however, due to the craftsmanship involved in certain designs, Tiffany
would have difficulty finding readily available alternatives in the short term.
Watches. Watch sales by the Company in Fiscal 2007 constituted approximately 2% of net sales. In 2007,
the Company entered into a 20-year license and distribution agreement with The Swatch Group Ltd. for
the manufacture and distribution of TIFFANY & CO. brand watches. Under the agreement, the Swatch
Group will incorporate a new watch-making company in Switzerland. The new company will be
authorized to use certain trademarks owned by the Company and operate under the TIFFANY & CO.
name. The two companies will collaborate on design, engineering, manufacturing, marketing,
distribution and service. The distribution of TIFFANY & CO. watches will be made through the Swatch
Group Ltd. distribution network via Swatch Group affiliates, Swatch Group retail facilities and third party
distributors as well as through TIFFANY & CO. stores.
COMPETITION
TIFFANY & CO. stores encounter significant competition in all product lines. Some competitors
specialize in just one area in which Tiffany is active. Many competitors have established worldwide,
national or local reputations for style, quality, expertise and customer service similar to Tiffany and
compete on the basis of that reputation. Other jewelers and retailers compete primarily through
advertised price promotion. Tiffany competes on the basis of its reputation for high-quality products,
brand recognition, customer service and distinctive value-priced merchandise and does not engage in
price promotional advertising.
Competition for engagement jewelry sales is particularly fierce and becoming more so. Tiffany’s price for
diamonds reflects the rarity of the stones it offers and the rigid parameters it exercises with respect to
the cut, clarity and other quality factors which increase the beauty of Tiffany diamonds, but also increase
Tiffany’s cost. Tiffany competes in this market by stressing quality.
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. Tiffany
currently distributes selected merchandise through its websites and anticipates continuing competition
in this area as the technology evolves. Tiffany does not offer diamond engagement jewelry through its
website, while certain of Tiffany's competitors do. Nonetheless, Tiffany will seek to maintain and improve
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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 at least one-third of annual net sales and approximately one-half of annual net
earnings. Management expects such seasonality to continue.
EMPLOYEES
As of January 31, 2008, the Registrant's subsidiary corporations employed an aggregate of approximately
8,800 full-time and part-time persons. Of those employees, approximately 6,000 are employed in the
United States. Approximately 40 of the total number of Registrant’s subsidiary’s employees in South
Africa are represented by unions and approximately 440 of the total number of Registrant’s subsidiary’s
employees in Vietnam are represented by unions. None of Registrant’s unionized employees are
employed in the United States. Registrant believes that relations with its employees and these unions are
good.
AVAILABLE INFORMATION
The Company files annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on
Form 8-K, proxy and information statements and amendments to reports filed or furnished pursuant to
Sections 13(a), 14 and 15(d) of the Securities Exchange Act of 1934, as amended. The public may read and
copy these materials at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549.
The public may obtain information on the operation of the public reference room by calling the SEC at 1-
800-SEC-0330. The SEC also maintains a website at www.sec.gov that contains reports, proxy and
information statements and other information regarding Tiffany & Co. and other companies that file
materials with the SEC electronically. You may also obtain copies of the Company’s annual reports on
Form 10-K, Forms 10-Q and Forms 8-K, free of charge on the Company’s website at
http://investor.tiffany.com/financials.cfm.
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Item 1A. Risk Factors.
As is the case for any retailer, Registrant’s success in achieving its objectives and expectations is
dependent upon general economic conditions, competitive conditions and consumer attitudes.
However, certain factors are specific to the Registrant and/or the markets in which it operates.
The following “risk factors” are specific to Registrant; these risk factors affect the likelihood that
Registrant will achieve the financial objectives and expectations communicated by management:
(i) Risk: that a decline in consumer confidence will adversely affect Registrant’s sales.
As a retailer of goods which are discretionary purchases, Registrant’s sales results are particularly
sensitive to changes in consumer confidence. Consumer confidence is affected by general business
conditions; changes in the market value of securities and real estate; inflation; interest rates and the
availability of consumer credit; tax rates; and expectations of future economic conditions and
employment prospects.
Consumer spending for discretionary goods generally declines during times of falling consumer
confidence, which will negatively affect Registrant’s earnings because of its cost base and inventory
investment.
(ii) Risk: that sales will decline or remain flat in Registrant’s fourth fiscal quarter, which includes the
holiday selling season.
Registrant’s business is seasonal in nature, with the fourth quarter typically representing at least
one-third of annual net sales and approximately one-half of annual net earnings. Poor sales results
during Registrant’s fourth quarter will have a material adverse effect on Registrant’s sales and profits.
(iii) Risk: that regional instability and conflict will disrupt tourist travel.
Unsettled regional and global conflicts or crises which result in military, terrorist or other
conditions creating disruptions or disincentives to, or changes in the pattern, practice or frequency of
tourist travel to the various regions where the Registrant operates retail stores could adversely affect the
Registrant’s sales and profits.
(iv) Risk: that the Japanese yen will weaken against the U.S. dollar and require Registrant to raise prices or
shrink profit margins in Japan.
Registrant’s sales in Japan represented approximately 17% of Registrant’s net sales in Fiscal 2007.
A substantial weakening of the Japanese yen against the U.S. dollar would require Registrant to raise its
retail prices in Japan or reduce its profit margins. Japanese consumers may not accept significant price
increases on Registrant’s goods; thus there is a risk that a substantial weakening of the yen will result in
reduced sales or profit margins.
(v) Risk: that Registrant will be unable to continue to offer merchandise designed by Elsa Peretti or
Paloma Picasso.
Registrant’s long-standing right to sell the jewelry designs of Elsa Peretti and Paloma Picasso and
use their trademarks is responsible for a substantial portion of Registrant’s revenues. Merchandise
designed by Elsa Peretti and by Paloma Picasso accounted for 11% and 3% of Fiscal 2007 net sales,
respectively. Tiffany has exclusive license arrangements with Elsa Peretti and Paloma Picasso; these
arrangements are subject to royalty payments as well as other requirements. Each license may be
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terminated by Tiffany or the designer on six-months notice, even in the case where no default has
occurred. Also, no agreements have been made for the continued sale of the designs or use of the
trademarks ELSA PERETTI or PALOMA PICASSO following the death of either designer. Loss of either
license would materially adversely affect Registrant’s business through lost sales and profits.
(vi) Risk: that increased commodity prices or reduced supply availability will adversely affect Registrant’s
ability to produce and sell products at historic profit margins.
Most of Registrant’s jewelry and non-jewelry offerings are made with diamonds, gemstones
and/or precious metals. A significant change in the prices of these commodities could adversely affect
Registrant’s business, which is vulnerable to the risks inherent in the trade for such commodities. A
substantial decrease in the supply or an increase in the price of raw materials and/or high-quality rough
and polished diamonds within the quality grades, colors and sizes that customers demand could lead to
decreased customer demand and lost sales and/or reduced gross profit margins.
(vii) Risk: that the value of the TIFFANY & CO. trademark will decline due to the sale by infringers of
counterfeit merchandise.
The TIFFANY & CO. trademark is an asset which is essential to the competitiveness and success
of Registrant’s business and Registrant takes appropriate action to protect it. However, Registrant’s
enforcement actions have not stopped the imitation and counterfeit of Registrant’s merchandise or the
infringement of the trademark. The continued sale of counterfeit merchandise could have an adverse
effect on the TIFFANY & CO. brand by undermining Tiffany’s reputation for quality goods and making
such goods appear less desirable to consumers of luxury goods. Damage to the brand would result in lost
sales and profits.
(viii) Risk: that Registrant will be unable to lease sufficient space for its retail stores in prime locations.
Registrant, positioned as a luxury goods retailer, has established its retail presence in choice store
locations. If Registrant cannot secure and retain locations on suitable terms in prime and desired luxury
shopping locations, its expansion plans, sales and profits will be jeopardized.
(ix) Risk: that Registrant’s business is dependent upon the distinctive appeal of the TIFFANY & CO.
brand.
The TIFFANY & CO. brand’s association with quality, luxury and exclusivity is integral to the
success of Registrant’s business. Registrant’s expansion plans for retail and direct selling operations and
merchandise development, production and management support the brand’s appeal. Consequently, poor
maintenance, promotion and positioning of the TIFFANY & CO. brand through market over-saturation
may adversely affect the business by diminishing the distinctive appeal of the TIFFANY & CO. brand and
tarnishing its image. This will result in lower sales and profits.
Item 1B. Unresolved Staff Comments.
NONE
Item 2. Properties.
Registrant owns or leases its principal operating facilities and occupies its various store premises under
lease arrangements that are generally on a two to ten-year basis.
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NEW YORK FLAGSHIP STORE
In November 1999, Tiffany purchased the land and building housing its Flagship store at 727 Fifth Avenue
in New York City which it had leased since 1984. The building was originally constructed for Tiffany in
1940 but was later sold by Tiffany and leased back. It was designed to be a retail store for Tiffany 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 multi-year 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 all renovations were completed by the end of Fiscal 2006.
LONDON FLAGSHIP STORE
In October 2007, the Company sold the building housing the TIFFANY & CO. Flagship store in London
and simultaneously entered into a 15-year lease with two 10-year renewable options. The Company
completed a renovation and reconfiguration of the store in Fiscal 2006, which increased its gross square
footage from 15,200 to 22,400.
TOKYO FLAGSHIP STORE
In August 2007, the Company sold the land and multi-tenant building housing the TIFFANY & CO.
Flagship store in Tokyo’s Ginza shopping district and leased back only the 12,000 gross square feet of the
property that was occupied immediately prior to the transaction. The lease expires in 2032; however, the
Company has options to terminate the lease in 2022 and 2027 without penalty.
TIFFANY & CO. - U.S. AND INTERNATIONAL RETAIL STORES
The following table provides a reconciliation of Company-operated TIFFANY & CO. stores and boutiques:
2007
United States
Japan
Beginning of year
Opened, net of relocations
Closed
End of year
64
7
(1)
70
52
4
(3)
53
2006
United States
Japan
Beginning of year
Opened, net of relocations
Closed
End of year
59
5
–
64
50
4
(2)
52
Other
Countries
51
10
–
61
Other
Countries
45
7
(1)
51
Total
167
21
(4)
184
Total
154
16
(3)
167
U.S. TIFFANY & CO. Stores
In Fiscal 2007, Tiffany leased and operated 69 retail branch locations in the U.S. totaling approximately
493,000 gross square feet devoted to retail selling and operations (not including the New York Flagship
store). Tiffany retail branch stores range from approximately 1,300 to 18,000 gross square feet with an
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average retail store size of approximately 7,100 gross square feet. Most new branch stores opened since
Fiscal 2001 are approximately 5,000 to 6,000 gross square feet, and display primarily jewelry and
timepieces, with a select assortment of china and crystal giftware. Management currently contemplates
the opening of new TIFFANY & CO. branch stores in the United States in this format at the rate of
approximately five to seven stores per year. Beginning in 2008, the Company will also open a smaller
format 2,000 gross square foot store that offers jewelry (except engagement and high-end statement
jewelry) and anticipates opening three to five of these stores annually. Stores of this format will carry a
reduced selection of merchandise in order to concentrate on higher-margin products and will occupy a
smaller footprint than Tiffany’s full-line stores. Management believes that this new format will be highly
efficient and will give the Company the opportunity to open stores in affluent, albeit smaller, U.S. cities
and to better serve larger markets where the Company already operates full assortment stores.
Anticipation of this format underpins management’s expanded store opening program for the U.S.
New U.S. TIFFANY & CO. Retail Branch Store Leases. In addition to the U.S. leases described above,
Registrant has entered into the following new leases for domestic stores expected to open in Fiscal 2008:
a 10-year lease for an approximately 5,900 gross square foot store in Topanga Plaza in Los Angeles,
California, a 10-year lease for an approximately 6,000 gross square foot store in West Hartford,
Connecticut, a 10-year lease for an approximately 5,600 gross square foot store in Pittsburgh,
Pennsylvania, a 10-year lease for an approximately 6,100 gross square foot store in Columbus, Ohio, and a
10-year lease for an approximately 2,600 gross square foot store in Glendale, California. This Glendale
store will be the first to employ a new format.
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International TIFFANY & CO. Stores
At the end of Fiscal 2007, Registrant operated 114 retail locations internationally, including the London
and Tokyo Flagship stores, totaling approximately 327,000 gross square feet devoted to retail selling and
operations. Outside of Japan, Registrant operates 61 international retail stores ranging from
approximately 700 to 22,000 gross square feet with an average retail store size of approximately 3,000
gross square feet. At the end of Fiscal 2007, Registrant operated 53 retail locations in Japan ranging from
approximately 1,100 to 12,000 gross square feet with an average retail store size of approximately 2,700
gross square feet.
New International TIFFANY & CO. Retail Branch Store Leases. In addition to the International locations
listed above, Registrant has entered into the following new leases for International branch stores
expected to open in Fiscal 2008: a 7-year lease for an approximately 1,600 gross square foot store in
London Heathrow Airport, United Kingdom; a 9-year lease for an approximately 3,100 gross square foot
store in Brussels, Belgium; a 10-year lease for an approximately 3,900 gross square foot store in
Dusseldorf, Germany; a 10-year lease for an approximately 6,000 gross square foot store in Madrid, Spain;
a 10-year lease for an approximately 4,700 gross square foot store in Perth, Australia; a 3-year lease for an
approximately 2,200 gross square foot store in Shenyang, China and a 3-year lease for an approximately
2,200 gross square foot store in Chengdu, China .
For Fiscal 2008, Registrant’s Japanese affiliate has entered into contractual obligations with Daimaru
Department store in Fukuoka, Japan; Matsuzakaya Department store in Tokyo, Japan; Entetsu
Department store in Hamamatsu, Japan; and Hankyu Department Store in Osaka, Japan for the operation
of Concession Boutiques within said department stores of areas comprising approximately 1,800, 4,900,
1,800, and 600 gross square feet, respectively.
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IRIDESSE Stores
In Fiscal 2007, Iridesse leased and operated 16 retail locations in the U.S. totaling approximately 23,000
gross square feet devoted to retail selling and operations. Iridesse retail stores range from approximately
1,200 to 1,700 gross square feet with an average retail store size of approximately 1,400 gross square feet.
Iridesse rents its retail store locations under standard shopping mall leases, which may contain
minimum rent escalations, for an average term of 10 years. Iridesse leases are all directly or indirectly
guaranteed by Registrant.
New IRIDESSE Store Leases. Iridesse has not entered into any new lease agreements for stores in 2008.
RETAIL SERVICE CENTER
In April 1997, construction of the Retail Service Center (“RSC”) in the Township of Parsippany-Troy Hills
in New Jersey was completed and Tiffany commenced operations. 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. Registrant believes that the RSC has been
properly designed to handle worldwide distribution functions and that it is suitable for that purpose.
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In September 2005, Tiffany sold the RSC and entered into a long term lease which expires in 2025 and has
options for two 10-year renewal periods.
CUSTOMER FULFILLMENT CENTER
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. The CFC is approximately 266,000 square feet; an area of approximately 34,500 square feet is
devoted to office use and the balance is devoted to warehousing, shipping, receiving, merchandise
processing and other warehouse functions.
MANUFACTURING FACILITIES
Since 2001, Tiffany has owned and operated a manufacturing facility in Cumberland, Rhode Island. It is
an approximately 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.
On January 31, 2003, Tiffany purchased a warehouse facility and land located in Cranston, Rhode Island.
During Fiscal 2003, Tiffany renovated the approximately 75,000 square foot building to process metals
for use in jewelry manufacturing.
On July 1, 1997, Tiffany entered into a lease for an approximately 34,000 square foot manufacturing
facility in Pelham, New York, to expire on June 30, 2008. In 2007, Tiffany renewed the lease until June 30,
2013 and modified the rentable square footage to total approximately 44,500 square feet.
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.
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Item 3. Legal 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.
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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 seeks an unspecified amount in damages alleging
entitlement to reimbursement of grading costs and excess installation costs of the landfill gas venting
system.
See Item 1. Business under TRADEMARKS for disclosure on Tiffany and Company v. eBay, Inc.
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, 2008.
Executive Officers of Registrant. See Item 13. Certain Relationships and Related Transactions, and
Director Independence for information on the section titled “EXECUTIVE OFFICERS OF THE
COMPANY” as incorporated by reference from Registrant’s Proxy Statement dated April 10, 2008.
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PART II
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 2007 were:
First Fiscal Quarter
Second Fiscal Quarter
Third Fiscal Quarter
Fourth Fiscal Quarter
High
$ 50.00
$ 56.79
$ 57.34
$ 53.66
Low
$ 39.13
$ 46.56
$ 39.53
$ 32.84
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On March 20, 2008, the high and low selling prices quoted on such exchange were $38.95 and $36.25,
respectively. On March 20, 2008, there were 11,814 holders of record of Registrant's Common Stock.
In consolidated trading, the high and low selling prices per share for shares of such Common Stock for
Fiscal 2006 were:
First Fiscal Quarter
Second Fiscal Quarter
Third Fiscal Quarter
Fourth Fiscal Quarter
High
$ 39.50
$ 35.31
$ 36.95
$ 40.80
Low
$ 34.77
$ 30.11
$ 29.63
$ 34.71
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 2006, a dividend of $0.08 per share of Common
Stock was paid on April 10, 2006, and dividends of $0.10 per share of Common Stock were paid on July 10,
2006, October 10, 2006 and January 10, 2007. In Fiscal 2007, a dividend of $0.10 per share of Common
Stock was paid on April 10, 2007, a dividend of $0.12 per share of Common Stock was paid on July 10,
2007 and dividends of $0.15 were paid on October 10, 2007 and January 10, 2008.
In calculating the aggregate market value of the voting stock held by non-affiliates of the Registrant
shown on the cover page of this Annual Report on Form 10-K, 1,262,521 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 contains the Company’s stock repurchases of equity securities in the fourth quarter
of Fiscal 2007:
Issuer Purchases of Equity Securities
(a) Total Number of
Shares (or Units)
Purchased
(b) Average Price
Paid per Share (or
Unit)
(c) Total Number of
Shares (or Units)
Purchased as Part of
Publicly Announced
Plans or Programs
(d) Maximum Number
(or Approximate Dollar
Value) of Shares, (or
Units) that May Yet Be
Purchased Under the
Plans or Programs*
4,313,691
$46.82
4,313,691
$337,224,000
2,565,200
$46.58
2,565,200
$217,736,000
2,420,600
$40.04
2,420,600
$620,806,000
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Period
November 1, 2007 to
November 30, 2007
December 1, 2007 to
December 31, 2007
January 1, 2008 to
January 31, 2008
TOTAL
9,299,491
$44.99
9,299,491
$620,806,000
* In January 2008, the Company extended the expiration date of the program to January 2011 and
increased by $500,000,000 the amount authorized for repurchase of its Common Stock.
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Item 6. Selected Financial Data.
The following table sets forth selected financial data, certain of which have been derived from the
Company’s consolidated financial statements for fiscal 2003-2007:
(in thousands, except per share amounts,
percentages, ratios, retail locations and employees)
EARNINGS DATA
Net sales
Gross profit
Selling, general & administrative expenses
Net earnings from continuing operations
Net earnings
Net earnings from continuing operations
per diluted share
Net earnings per diluted share
Weighted-average number of diluted
2007
2006
2005
2004
2003
$ 2,938,771 $ 2,560,734 $ 2,312,792 $ 2,127,559 $ 1,928,949
1,128,322
769,091
220,022
215,517
1,441,550
1,010,754
268,693
253,927
1,307,778
920,153
260,283
254,655
1,197,521
902,042
305,856
304,299
1,630,272
1,204,990
331,319
303,772
2.40
2.20
1.91
1.80
1.79
1.75
2.07
2.05
1.48
1.45
common shares
138,140
140,841
145,578
148,093
148,472
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BALANCE SHEET AND CASH FLOW DATA
Total assets
Cash and cash equivalents
Short-term investments
Inventories, net
Short-term borrowings and long-term
debt (including current portion)
Stockholders’ equity
Working capital
Cash flows from operating activities
Capital expenditures
Stockholders’ equity per share outstanding
Cash dividends paid per share
RATIO ANALYSIS AND OTHER DATA
As a percentage of net sales:
Gross profit
Selling, general & administrative expenses
Net earnings from continuing operations
Net earnings
Capital expenditures
Return on average assets
Return on average stockholders’ equity
Total debt-to-equity ratio
Dividends as a percentage of net earnings
Company-operated TIFFANY & CO.
stores and boutiques
Number of employees
$ 2,922,156 $ 2,845,510 $ 2,777,272 $ 2,666,118 $ 2,391,088
246,180
27,450
826,314
186,065
139,200
1,002,221
246,654
–
1,242,465
175,008
15,500
1,146,674
391,594
–
999,706
453,137
1,637,367
1,258,706
391,395
185,608
12.92
0.52
518,462
1,804,895
1,253,973
239,036
174,551
13.28
0.38
471,676
1,830,913
1,334,233
268,458
148,159
12.85
0.30
430,963
1,701,160
1,208,068
144,664
137,059
11.77
0.23
477,773
1,468,200
952,923
287,425
268,567
10.01
0.19
55.5%
41.0%
11.3%
10.3%
6.3%
10.5%
17.6%
27.7%
23.0%
184
8,800
56.3%
39.5%
10.5%
9.9%
6.8%
9.0%
14.0%
28.7%
20.7%
167
8,700
56.5%
39.8%
11.3%
11.0%
6.4%
9.4%
14.4%
25.8%
16.8%
154
8,100
56.3%
42.4%
14.4%
14.3%
6.4%
12.0%
19.2%
25.3%
11.0%
151
7,300
58.5%
39.9%
11.4%
11.2%
13.9%
10.0%
16.1%
32.5%
12.9%
141
6,900
All references to years relate to the fiscal year that ends on January 31 of the following calendar year. All prior year
amounts have been restated to present the sale of Little Switzerland, Inc. as a discontinued operation (see Note C to
consolidated financial statements).
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NOTES TO SELECTED FINANCIAL DATA
Financial information for 2007 includes the following amounts, totaling $41,934,000 of net pre-tax expense
($12,667,000 net after-tax expense, or $0.09 per diluted share):
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
$105,051,000 pre-tax gain related to the sale of the land and multi-tenant building housing the TIFFANY &
CO. Flagship store in Tokyo’s Ginza shopping district;
$10,000,000 pre-tax contribution to The Tiffany & Co. Foundation funded with the proceeds from the
immediately preceding transaction;
$54,260,000 pre-tax expense due to the sale of Little Switzerland, Inc., included within discontinued
operations;
$47,981,000 pre-tax impairment charge on the note receivable from Tahera Diamond Corporation;
$19,212,000 pre-tax expense related to the discontinuance of certain watches as a result of the Company’s
agreement with The Swatch Group, Ltd.; and
$15,532,000 pre-tax charge due to impairment losses associated with the Company’s IRIDESSE business.
Financial information for 2005 includes a $22,588,000 income tax benefit, or $0.16 per diluted share, related to the
American Jobs Creation Act of 2004.
Financial information for 2004 includes the following amounts totaling $168,597,000 of net pre-tax income
($110,179,000 net after-tax income, or $0.74 per diluted share):
(cid:120)
(cid:120)
$193,597,000 pre-tax gain due to the Company’s sale of its equity investment in Aber Diamond
Corporation; and
$25,000,000 pre-tax contribution to The Tiffany & Co. Foundation funded with the proceeds from the
immediately preceding transaction.
In addition, financial information for 2007, 2006, 2005 and 2004 includes pre-tax expense of $37,069,000,
$32,793,000, $25,622,000, and $22,100,000, respectively, or $0.17, $0.14, $0.11 and $0.09, respectively, per diluted
share, due to the effect of expensing stock-based compensation.
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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read in conjunction with the Company’s consolidated
financial statements and related notes. All references to years relate to the fiscal year that ends on
January 31 of the following calendar year.
The Company’s key growth strategies are:
KEY GROWTH STRATEGIES
(cid:120) To selectively expand its channels of distribution in important markets around the world
without compromising the value of the TIFFANY & CO. trademark;
(cid:120) To maintain an active product development program;
(cid:120) To increase its control over product supply through direct diamond sourcing and internal
jewelry manufacturing;
(cid:120) To achieve improved profit margins;
(cid:120) To enhance customer awareness through marketing and public relations programs; and
(cid:120) To provide superior customer service.
2007 SUMMARY
(cid:120) Net sales increased 15% to $2.9 billion due to growth in all channels of distribution.
(cid:120) Worldwide comparable store sales increased 7% on a constant-exchange-rate basis (see Non-
GAAP Measures). Comparable TIFFANY & CO. store sales in the U.S. increased 7%. Comparable
international store sales on a constant-exchange-rate basis increased 7% due to growth in most
countries.
(cid:120) Net earnings rose 20% and net earnings per diluted share rose 22%. Included in net earnings
were the following items:
(cid:120) The Company entered into a strategic alliance with The Swatch Group, Ltd. which will
design, manufacture, distribute and market TIFFANY & CO. brand watches worldwide.
As a result of this agreement, management decided to discontinue certain watch
models and, accordingly, recorded a pre-tax charge of $19,212,000 within cost of sales.
(cid:120) The Company sold and leased back the land and building housing the TIFFANY & CO.
Flagship store in Tokyo. The Company received proceeds of $327,537,000 and recorded a
pre-tax gain of $105,051,000 as other operating income.
(cid:120) The Company contributed $10,000,000 (recorded within selling, general and
administrative (“SG&A”) expenses) to The Tiffany & Co. Foundation, funded with the
proceeds from the sale of the Tokyo Flagship store.
(cid:120) The Company recorded a pre-tax impairment charge of $15,532,000 associated with its
IRIDESSE business within SG&A expenses.
(cid:120) The Company recorded a pre-tax impairment charge of $47,981,000 on the note
receivable from Tahera Diamond Corporation (“Tahera”) within SG&A expenses.
(cid:120) The Company sold 100% of the stock of Little Switzerland, Inc. (“Little Switzerland”) for
net proceeds of $32,870,000 and recorded within discontinued operations a pre-tax
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impairment charge of $54,260,000 due to the sale.
(cid:120) The Company sold and leased back the land and building housing the TIFFANY & CO. Flagship
store in London and received proceeds of $148,628,000.
(cid:120) The Company repurchased 12.4 million shares of its Common Stock.
(cid:120) The number of Company-operated TIFFANY & CO. stores and boutiques increased 10%. The
Company added 17 retail locations, net of closings: opening seven in the U.S. and 14
internationally, while closing four locations, one in the U.S. and three in Japan.
(cid:120) The Board of Directors increased the quarterly dividend rate twice – for a total increase of 50%.
NON-GAAP MEASURES
The Company’s reported sales reflect either a translation-related benefit from strengthening foreign
currencies or a detriment from a strengthening U.S. dollar.
The Company reports information in accordance with U.S. Generally Accepted Accounting Principles
(“GAAP”). Internally, management monitors its international sales performance on a non-GAAP basis that
eliminates the positive or negative effects that result from translating international sales into U.S. dollars
(“constant-exchange-rate basis”). Management believes this constant-exchange-rate measure provides a
more representative assessment of the sales performance and provides better comparability between
reporting periods.
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The Company’s management does not, nor does it suggest that investors should, consider such non-GAAP
financial measures in isolation from, or as a substitute for, financial information prepared in accordance
with GAAP. The Company presents such non-GAAP financial measures in reporting its financial results to
provide investors with an additional tool to evaluate the Company’s operating results. The following table
reconciles sales percentage increases (decreases) from the GAAP to the non-GAAP basis versus the
previous year:
GAAP
Reported
Translation
Effect
2007
Constant-
Exchange-
Rate Basis
GAAP
Reported
Translation
Effect
2006
Constant-
Exchange-
Rate Basis
Net Sales:
Worldwide
U.S. Retail
International Retail
Japan Retail
Other Asia-Pacific
Europe
Comparable Store Sales:
Worldwide
U.S. Retail
International Retail
Japan Retail
Other Asia-Pacific
Europe
15%
11%
19%
1%
39%
31%
8 %
7 %
10 %
(4)%
31 %
22 %
11 %
9 %
12 %
(1)%
25 %
28 %
6 %
5 %
7 %
(4)%
24 %
25 %
–
–
(1)%
(5)%
2 %
5 %
(1)%
–
(1)%
(4)%
2 %
5 %
11 %
9 %
13 %
4 %
23 %
23 %
7 %
5 %
8 %
–
22 %
20 %
2%
–
4%
1%
5%
9%
1%
–
3%
1%
5%
9%
13%
11%
15%
–
34%
22%
7 %
7 %
7 %
(5)%
26 %
13 %
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Certain operating data as a percentage of net sales were as follows:
RESULTS OF OPERATIONS
Net sales
Cost of sales
Gross profit
Other operating income
Selling, general and administrative expenses
Earnings from continuing operations
Interest expense, financing costs and other income, net
Earnings from continuing operations before income taxes
Provision for income taxes
Net earnings from continuing operations
Loss from discontinued operations, net of tax
Net earnings
Net Sales
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2007
100.0%
44.5
55.5
3.5
41.0
18.0
0.2
17.8
6.5
11.3
(1.0)
10.3%
2006
100.0%
43.7
56.3
–
39.5
16.8
0.4
16.4
5.9
10.5
(0.6)
9.9%
2005
100.0%
43.5
56.5
–
39.8
16.7
0.6
16.1
4.8
11.3
(0.3)
11.0%
(in thousands)
2007
2006
2005
U.S. Retail
International Retail
Direct Marketing
Other
$ 1,474,637
1,200,442
182,127
81,565
$ 1,326,441
1,010,627
174,078
49,588
$ 1,220,683
900,689
157,483
33,937
$ 2,938,771 $ 2,560,734
$ 2,312,792
2007 vs. 2006
Increase
2006 vs. 2005
Increase
11%
19%
5%
64%
15%
9%
12%
11%
46%
11%
Comparable Store Sales. Reference will be made to “comparable store sales” below. A store’s sales are
included in comparable store sales when the store has been open for more than 12 months. In markets
other than Japan, sales for relocated stores are included in comparable store sales if the relocation occurs
within the same geographical market. In Japan, sales for a new store or boutique are not included if the
store was relocated from one department store to another or from a department store to a free-standing
location. In all markets, the results of a store in which the square footage has been expanded or reduced
remain in the comparable store base.
U.S. Retail. U.S. Retail includes sales in TIFFANY & CO. stores in the U.S., as well as sales of TIFFANY & CO.
products through business-to-business direct selling operations in the U.S. The following table presents
the U.S. Retail channel and its components as a percentage of worldwide net sales:
New York Flagship store
Branch stores
Business-to-business
2007
10%
38%
2%
50%
2006
10%
40%
2%
52%
2005
10%
41%
2%
53%
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U.S. Retail sales increased in 2007 and 2006 as a result of comparable store sales growth of 7% (or
$94,451,000) in 2007 and 5% (or $61,885,000) in 2006 and non-comparable store sales growth of
$51,478,000 and $41,601,000 in those periods. In 2007 and 2006, the New York Flagship store’s sales
increased 21% and 9% and comparable branch store sales increased 4% in both periods. Total sales
growth in both 2007 and 2006 was driven equally by an increase in the average sales amount per
transaction and an increase in the number of transactions. Management attributes the increased amount
per transaction to sales of higher-priced merchandise. In addition, the New York Flagship store and
certain branch stores benefited from higher sales to foreign tourists. In 2007 and 2006, the Company
experienced growth across a range of jewelry categories, with especially strong results in jewelry with
diamonds. The Company opened seven new U.S. stores and closed one in 2007 and opened five new U.S.
stores in 2006.
International Retail. International Retail includes sales in TIFFANY & CO. stores and department store
boutiques outside the U.S., as well as business-to-business, Internet and wholesale sales of TIFFANY & CO.
products outside the U.S. The following table presents the sales contribution in U.S. dollars of each
geographic region within the International Retail channel as a percentage of worldwide net sales:
Japan
Other Asia-Pacific
Europe
Other International
2007
2006
2005
17%
11%
8%
5%
41%
19%
9%
7%
4%
39%
21%
8%
6%
4%
39%
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International Retail sales increased in 2007 and 2006 primarily due to comparable store sales growth of
10% (or $88,044,000) in 2007 and 7% (or $57,353,000) in 2006 and non-comparable store sales growth
of $78,573,000 and $28,968,000 in those periods. International Retail sales, on a constant-exchange-rate
basis, increased 15% in 2007 and 13% in 2006, and comparable store sales rose 7% in 2007 and 8% in
2006. When compared with the prior year, the weighted-average U.S. dollar exchange rate was weaker in
2007 and stronger in 2006.
Japan retail sales, on a constant-exchange-rate basis, were unchanged in 2007 due to an increase in the
average sales amount per unit offset by a decline in the number of units sold, and increased 4% in 2006
due to an increase in unit sales of engagement and other fine jewelry. Comparable store sales declined 5%
in 2007 and were unchanged in 2006. Management attributes this performance to a lack of consumer
confidence and a stagnant economy. Management will respond by further developing relationships with
key customers, introducing new products to the market and enhancing retail locations through
renovation, expansion and relocation. Management will consider, if the occasion arises, closing or
consolidating certain locations when better locations can be obtained.
In 2007, the Company opened four locations in Japan and closed three. In 2006, the Company opened
four locations and two were closed. Management closed these locations to enhance the quality of its
selling locations in Japan. The Company also launched an e-commerce website in 2005.
In the Asia-Pacific region outside of Japan, comparable store sales on a constant-exchange-rate basis
increased 26% in 2007 due to growth in all markets and 22% in 2006 due to growth in most markets. The
Company opened six stores in 2007 and three stores (net) in 2006.
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In Europe, comparable store sales on a constant-exchange-rate basis increased 13% in 2007 and 20% in
2006 due to growth in all markets. The United Kingdom represents more than half of European sales. The
Company opened three stores in 2007 and one store in 2006.
Store Data. Gross square footage of Company-operated TIFFANY & CO. stores increased 9% to 860,000
in 2007, following a 6% increase to 792,000 in 2006. Sales per gross square foot generated by those stores
were $2,890 in 2007, $2,746 in 2006 and $2,666 in 2005. Management’s objective is to increase sales per
square foot by increasing consumer traffic and the conversion rate (the percentage of shoppers who
actually purchase). Management intends to increase traffic through more targeted advertising and to
improve the conversion rate through continued sales training and customer-focused initiatives.
The Company’s worldwide expansion strategy is to continue to open Company-operated TIFFANY & CO.
stores and boutiques annually. In 2008, the Company expects to add 6 new U.S. stores and approximately
20 international stores. 2008 store openings announced to date for the U.S. are: Los Angeles, California;
West Hartford, Connecticut; Columbus, Ohio; and Pittsburgh, Pennsylvania.
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In 2008, the Company will also open a new store in the Los Angeles market. This store will be the first to
employ a new store format. Stores of this format will carry a reduced selection of merchandise in order to
concentrate on higher-margin products and will occupy a smaller footprint than Tiffany’s full-line stores.
Management believes that this new format will be highly efficient and will give the Company the
opportunity to open stores in affluent, albeit smaller U.S. cities and to better serve larger markets where
the Company already operates full-line stores. Anticipation of the success of this format underpins
management’s expanded store opening program for the U.S.
For non-U.S. markets, 2008 store openings announced to date are: Perth, Australia; Brussels, Belgium;
Düsseldorf, Germany; London–Heathrow Airport, United Kingdom; Madrid, Spain; Shenyang, China;
Chengdu, China; Fukuoka, Japan; Osaka, Japan; and Tokyo, Japan. Additional international locations are
being planned.
Direct Marketing. Direct Marketing includes Internet and catalog sales of TIFFANY & CO. products in the
U.S. Direct Marketing sales rose in both 2007 and 2006. In 2007, approximately three quarters of the
increase resulted from an increase in the number of orders shipped. In 2006, the increase was evenly
divided between a higher number of orders shipped and an increased average order size. Website traffic
and orders have continued to increase as consumers have shifted their purchases from catalogs to the
Internet. Catalogs remain an effective marketing tool for both retail and Internet sales, but the Company
has reduced catalog circulation and in 2006 began e-mail marketing communications to customers.
Other. Other includes worldwide sales of businesses operated under trademarks or tradenames other
than TIFFANY & CO. A significant portion of sales in this channel are of wholesale diamonds. Wholesale
diamond sales are made to divest gemstones that do not meet the Company’s quality requirements;
typically the Company purchases such gemstones in mixed lots which are then culled. Wholesale sales of
diamonds increased to $70,407,000 in 2007 from $39,848,000 in 2006 and $26,218,000 in 2005.
IRIDESSE store sales (representing 14% of Other sales and less than 1% of net sales in 2007) increased in
both years due to store openings, however, performance has been below management’s expectations. The
Company recorded an impairment charge in 2007 associated with Iridesse (see SG&A expenses below).
Gross Margin
Gross margin (gross profit as a percentage of net sales) declined in 2007 by 0.8 percentage point and
declined in 2006 by 0.2 percentage point. The primary components of the net decline in 2007 were: (i) a
0.7 percentage point decline due to a $19,212,000 charge related to the discontinuance of certain watch
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models; (ii) a 0.6 percentage point decline due to increased low-margin wholesale sales of diamonds;
which was partially offset by (iii) a 0.2 percentage point improvement due to the leverage effect of fixed
product-related costs, which includes costs associated with merchandising and distribution. The primary
components affecting the net decline in 2006 were: (i) a 0.4 percentage point decline due to increased
low-margin wholesale sales of diamonds; and (ii) a 0.4 percentage point improvement due to the leverage
effect of fixed product-related costs.
In 2007 and 2006, the Company increased its retail prices in response to higher costs of precious metals
and diamonds. The Company adjusts its retail prices from time to time to address specific market
conditions, product cost increases and longer-term changes in foreign currencies/dollar relationships. In
addition, the Company’s hedging program (see Note I to consolidated financial statements) uses yen put
options to stabilize the effect of exchange rate fluctuations of product costs in Japan over the short-term.
Beginning with the first quarter of 2007, the Company also has a zero-cost collar hedging program that
covers a portion of its platinum and silver needs for internal manufacturing.
Management’s objective is to improve gross margin through greater product manufacturing/sourcing
efficiencies (including increased direct rough-diamond sourcing and internal manufacturing), increased
use of distribution center capacity, and selective price adjustments to address higher product costs.
Other Operating Income
In 2007, the Company entered into a sale-leaseback arrangement for the land and multi-tenant building
housing the TIFFANY & CO. Flagship store in Tokyo’s Ginza shopping district. The Company was able to
secure a long-term lease and proceed with a renovation of the store and the building’s exterior. The
Company is leasing back that portion of the property that it occupied immediately prior to the
transaction. The transaction resulted in a pre-tax gain of $105,051,000 and a deferred gain of
$75,244,000, which will be amortized in selling, general and administrative expenses over a 15-year
period. The pre-tax gain represents the profit on the sale of the property in excess of the present value of
the minimum lease payments. The lease is accounted for as an operating lease. The lease expires in 2032;
however, the Company has options to terminate the lease in 2022 and 2027 without penalty.
Selling, General and Administrative (“SG&A”) Expenses
SG&A expenses increased $194,236,000, or 19%, in 2007 which included the following expenses:
(cid:120)
(cid:120)
(cid:120)
$47,981,000 impairment charge on the note receivable from Tahera (see Liquidity and Capital
Resources below);
$15,532,000 impairment charge for losses in the IRIDESSE business (included in the non-
reportable segment Other). In accordance with its policy on impairment of long-lived assets, the
Company recorded an impairment charge as a result of lower than expected store performance
and a related reduction in future cash flow projections; and
$10,000,000 contribution to The Tiffany & Co. Foundation, a private charitable foundation
established by the Company. The contribution was made from proceeds received from the sale-
leaseback of the land and multi-tenant building housing the TIFFANY & CO. Flagship store in
Tokyo’s Ginza shopping district.
Excluding the above charges, SG&A expenses increased $120,723,000, or 12%, primarily due to increased
labor and benefit costs of $42,136,000 and increased depreciation and store occupancy expenses of
$37,805,000 (both of which were largely due to new and existing stores), as well as an increase of
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$12,287,000 in marketing expenses. SG&A expenses as a percentage of net sales increased 1.5 percentage
points to 41.0%. Excluding the above charges, SG&A expenses as a percentage of net sales improved 1.0
percentage point to 38.5% which resulted from the leverage effect of strong sales growth against fixed
costs.
SG&A expenses increased $90,601,000, or 10%, in 2006 largely due to increased labor and benefit costs
of $31,245,000 and increased depreciation and occupancy expenses of $24,580,000, both of which were
largely due to new and existing stores. In addition, marketing expenses increased $25,177,000 which
included costs to promote the launch of the Frank Gehry jewelry collection. SG&A expenses as a
percentage of net sales improved by 0.3 percentage point in 2006.
Management’s long-term objective is to improve the ratio of SG&A expenses to net sales by controlling
expenses wherever feasible and enhancing productivity so that sales growth can generate a higher rate of
earnings growth.
Earnings from Continuing Operations
(in thousands)
2007
% of
Sales*
2006
% of
Sales*
2005
% of
Sales*
International Retail
Direct Marketing
Other
Earnings (losses) from continuing operations:
$ 288,030
U.S. Retail
301,957
62,533
(33,038)
619,482
(127,007)
105,051
(67,193)
Unallocated corporate expenses
Other operating income
Other operating expenses
Earnings from continuing
20 %
25 %
34 %
(41)%
(4)%
$ 243,258
253,835
58,046
(14,379)
540,760
(109,964)
-
-
18 %
25 %
33 %
(29)%
(4)%
$ 248,129
211,164
53,681
(14,525)
498,449
(110,824)
-
-
20 %
23 %
34 %
(43)%
(5)%
operations
$ 530,333
$ 430,796
$ 387,625
*Percentages represent earnings (losses) from continuing operations as a percentage of each segment’s
net sales.
Reclassifications were made to the prior years’ earnings (losses) from continuing operations by segment
to conform to the current year presentation and to reflect the revised manner in which management
evaluates the performance of segments. Effective with the first quarter of 2007, the Company revised
certain allocations of operating expenses between unallocated corporate expenses and earnings (losses)
from continuing operations for segments.
Earnings from continuing operations rose 23% in 2007. On a segment basis, the ratio of earnings (losses)
from continuing operations (before the effect of unallocated corporate expenses, other operating
income and interest expense, financing costs and other income, net) to each segment’s net sales in 2007
compared with 2006 was as follows:
(cid:120) U.S. Retail – the ratio increased 2 percentage points primarily due to an increase in gross
margin (due to the leverage effect of sales growth on fixed product-related costs) and the
leverage effect of sales growth on operating expenses;
(cid:120)
International Retail – the ratio was consistent with prior year. Strong sales growth and
profitability in most international markets was offset by increased operating expenses (due to
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increased marketing activity and new stores) and a decline in gross margin (due to changes in
sales mix) in Japan;
(cid:120) Direct Marketing – the ratio increased 1 percentage point primarily due to the leverage effect of
sales growth on operating expenses; and
(cid:120) Other – the loss ratio increased 12 percentage points which was more than entirely driven by
the impairment charge associated with the IRIDESSE business.
Earnings from continuing operations rose 11% in 2006. On a segment basis, the ratio of earnings (losses)
from continuing operations (before the effect of unallocated corporate expenses, other operating
income and interest expense, financing costs and other income, net) to each segment’s net sales in 2006
compared with 2005 was as follows:
(cid:120) U.S. Retail – the ratio decreased 2 percentage points primarily due to a decline in gross margin
(due to higher product costs) and increased SG&A expenses (due to new and existing stores as
well as increased marketing expenses);
(cid:120)
International Retail – the ratio increased 2 percentage points primarily due to an improved
gross margin (due to the leverage effect of sales growth on product-related costs) and the
leverage effect of sales growth on operating expenses;
(cid:120) Direct Marketing – the ratio decreased 1 percentage point primarily due to a decline in gross
margin (due to higher product costs); and
(cid:120) Other – the loss ratio improved 14 percentage points primarily due to increased sales.
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Unallocated corporate expenses include costs related to administrative support functions which the
Company does not allocate to its segments. Such unallocated costs include those for information
technology, finance, legal and human resources. Unallocated corporate expenses increased 15% in 2007
partly due to the $10,000,000 contribution to The Tiffany & Co. Foundation. Unallocated corporate
expenses decreased 1% in 2006.
Other operating income represents the $105,051,000 pre-tax gain on the sale-leaseback of the land and
multi-tenant building housing the TIFFANY & CO. Flagship store in Tokyo’s Ginza shopping district.
Other operating expenses include the $47,981,000 impairment charge on the note receivable from
Tahera and the $19,212,000 charge related to the discontinuance of certain watch models.
Interest Expense and Financing Costs
Interest expense decreased $1,345,000 in 2007 primarily due to reduced borrowings under the revolving
credit facility and repayments of long-term debt obligations. Interest expense increased $3,174,000 in
2006 primarily due to increased borrowings to support inventory growth and share repurchases.
Other Income, Net
Other income, net includes interest income, gains/losses on investment activities and foreign currency
transactions, and minority interest income/expense. Other income, net increased $1,012,000 in 2007.
Other income, net increased $7,257,000 in 2006 due to (i) $6,774,000 of gains associated with the sale of
equity investments and marketable securities; (ii) increased interest income; partially offset by (iii) a
change of $3,794,000 in foreign currency transaction gains/losses.
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Provision for Income Taxes
The effective income tax rate was 36.6% in 2007, compared with 36.1% in 2006 and 30.2% in 2005. The
lower effective tax rate in 2005 primarily reflected tax benefits associated with the repatriation
provisions of the American Jobs Creation Act of 2004 (“AJCA”).
The AJCA, which was signed into law on October 22, 2004, created a temporary incentive for U.S.
companies to repatriate accumulated foreign earnings by providing an 85% dividends received deduction
for certain dividends from controlled foreign corporations. The incentive effectively reduced the amount
of U.S. Federal income tax due on repatriation. Taking advantage of the AJCA, the Company recorded an
income tax benefit of $22,588,000 in 2005 associated with the repatriation of foreign earnings. The tax
benefit to the Company occurred because the Company had previously accrued income taxes on un-
repatriated foreign earnings at statutory tax rates. In total, the Company repatriated $178,245,000 of
accumulated foreign earnings.
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Loss from Discontinued Operations, net of tax
Management concluded that Little Switzerland’s operations did not demonstrate the potential to
generate a return on investment consistent with management’s objectives and, therefore, during the
second quarter of 2007 the Company’s Board of Directors authorized the sale of Little Switzerland. On
July 31, 2007, the Company entered into an agreement with NXP Corporation (“NXP”) by which NXP
would purchase 100% of the stock of Little Switzerland. The results of Little Switzerland are presented as
a discontinued operation in the consolidated financial statements for all periods presented. Prior to the
reclassification, Little Switzerland’s results had been included within the non-reportable segment Other
(see Note C to consolidated financial statements).
The loss from discontinued operations in 2007 included a pre-tax impairment charge of $54,260,000
due to the sale of Little Switzerland. The loss from discontinued operations in 2006 included a pre-tax
charge of $6,893,000 related to the impairment of goodwill for the Little Switzerland business as a result
of store performance and cash flow projections.
2008 Outlook
Management’s financial performance objectives for 2008 are based on the following assumptions and
should be read in conjunction with Item 1A “Risk Factors” on page K-20. In addition, these objectives
reflect the Company’s decision to change its inventory valuation method from LIFO to average cost
beginning in the first quarter of 2008 (see Note R to consolidated financial statements).
(cid:120) Net sales growth of approximately 10% reflecting a near-term cautious outlook for the U.S. and
continued strong growth in most international markets.
(cid:120) Management’s outlook reflects the view that the U.S. economy will remain weak
through the first half of 2008 and that U.S. consumer confidence will continue to
reflect conditions observed during the last quarter of 2007.
(cid:120) The net sales growth objective is composed of (i) a high-single-digit percentage
increase in U.S. Retail sales, reflecting a low-single-digit percentage increase in
comparable store sales and the planned opening of six stores; (ii) a mid-teens
percentage increase in International Retail sales, which reflects a mid-single-digit
percentage increase in comparable store sales (on a constant-exchange-rate basis) and
the opening of approximately 20 stores and boutiques (net of closings); (iii) a mid-
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single-digit percentage increase in Direct Marketing sales; and (iv) a low-single-digit
percentage increase in Other sales.
(cid:120) Operating margin approximately equal to the prior year.
(cid:120) Other expenses, net of approximately $20 million.
(cid:120) An effective tax rate of 36% – 37%.
(cid:120) Net earnings per diluted share of $2.75 – $2.85.
(cid:120) Net inventories increasing by a high-single-digit percentage.
(cid:120) Capital expenditures of approximately $200 million.
LIQUIDITY AND CAPITAL RESOURCES
The Company’s liquidity needs have been, and are expected to remain, primarily a function of its seasonal
and expansion-related working capital requirements and capital expenditure needs. The ratio of total
debt (short-term borrowings, current portion of long-term debt and long-term debt) to stockholders’
equity was 28% and 29% at January 31, 2008 and 2007.
The following table summarizes cash flows from operating, investing and financing activities:
(in thousands)
Net cash provided by (used in):
Operating activities
Investing activities
Financing activities
Effect of exchange rates on cash and
cash equivalents
Net cash used in discontinued operations
Net increase (decrease) in cash and cash
equivalents
2007
2006
2005
$ 391,395
335,170
(664,408)
$ 239,036
(197,137)
(248,871)
$ 268,458
40,820
(85,151)
15,610
(7,616)
3,162
(13,296)
(3,555)
(14,644)
$
70,151
$
(217,106)
$ 205,928
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Operating Activities
The Company had net cash inflows from operating activities of $391,395,000 in 2007, $239,036,000 in
2006 and $268,458,000 in 2005. The increase in 2007 from 2006 primarily resulted from increased net
earnings from continuing operations and smaller growth in inventories. Taxes payable also increased in
2007 due to the increase in net earnings. The decrease in 2006 from 2005 resulted from higher
inventory purchases, partly offset by increased net earnings after adjustment for non-cash items and
lower payments for taxes made in 2006 (in 2005, payments for taxes were higher due to the gain on the
sale of an equity investment in 2004).
Working Capital. Working capital (current assets less current liabilities) and the corresponding current
ratio (current assets divided by current liabilities) were $1,258,706,000 and 3.2 at January 31, 2008,
compared with $1,253,973,000 and 3.8 at January 31, 2007.
Accounts receivable, less allowances, at January 31, 2008 were 17% higher than January 31, 2007 primarily
due to sales growth. Changes in foreign currency exchange rates increased accounts receivable, less
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allowances, by 5% compared to January 31, 2007. On a 12-month rolling basis, accounts receivable
turnover was 18 times in both 2007 and 2006.
Inventories, net at January 31, 2008 were 8% above January 31, 2007. Combined raw material and work-in-
process inventories increased 15% due to expanded diamond sourcing operations, as well as higher
precious metal costs. Finished goods inventories increased 5% reflecting store openings, broadened
product assortments and higher costs. Changes in foreign currency exchange rates increased inventories,
net by 4% compared to January 31, 2007.
Investing Activities
The Company had a net cash inflow from investing activities of $335,170,000 in 2007, a net cash outflow
of $197,137,000 in 2006 and a net cash inflow of $40,820,000 in 2005. Investing activities in 2007
included proceeds from the sale of assets. Investing activities in 2005 included higher net proceeds from
the sale of marketable securities and short-term investments and proceeds from the sale of assets.
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Proceeds from Sale of Assets. In the third quarter of 2007, the Company entered into a sale-leaseback
arrangement for the land and multi-tenant building housing the TIFFANY & CO. Flagship store in Tokyo’s
Ginza shopping district. The Company received proceeds of $327,537,000 (¥38,050,000,000) (see Other
Operating Income above for more information).
In the third quarter of 2007, the Company received net proceeds of $32,870,000 associated with the sale
of Little Switzerland.
In the third quarter of 2007, the Company entered into a sale-leaseback arrangement for the building
housing the TIFFANY & CO. Flagship store in London. Following the renovation of the store, the Company
was able to secure a long-term lease and, therefore, determined that ownership of the property was no
longer strategically necessary. The Company sold the building for proceeds of $148,628,000
(£73,000,000) and simultaneously entered into a 15-year lease with two 10-year renewal options. The
transaction resulted in a deferred gain of $63,961,000, which will be amortized in SG&A expenses over a
15-year period. The Company continues to occupy the entire building and the lease is accounted for as an
operating lease.
In the third quarter of 2005, the Company entered into a sale-leaseback arrangement for its Retail Service
Center, a distribution and administrative office facility. The Company received proceeds of $75,000,000
resulting in a gain of $5,300,000, which has been deferred and is being amortized over the lease term. The
lease has been accounted for as an operating lease. The lease expires in 2025 and has two ten-year
renewal options.
Capital Expenditures. Capital expenditures were $185,608,000 in 2007, $174,551,000 in 2006 and
$148,159,000 in 2005, representing 6%, 7% and 6% of net sales in those respective years. In all three years,
expenditures were primarily related to the opening, renovation and expansion of stores and distribution
facilities and ongoing investments in new systems. Management expects that capital expenditures in
future years will continue at a rate of approximately 6% - 7% of net sales.
In 2002, the Company acquired the property housing its Flagship store on Old Bond Street in London
and an adjacent building, in order to renovate and reconfigure the interior retail selling space.
Construction commenced in 2004 and was completed in 2006 at a cost of approximately $36,000,000.
In 2000, the Company began a multi-year project to renovate and reconfigure its New York Flagship store
in order to increase the total sales area by approximately 25% and to provide additional space for
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customer service, customer hospitality and special exhibitions. The increase in the sales area was
completed in 2001 when the renovated second floor opened to provide an expanded presentation of
engagement and other jewelry. Additional floors were renovated in 2002 to 2005 and the Company
completed the project in 2006 with the renovation of the main floor, for a total cost of approximately
$110,000,000.
Acquisitions. In October 2005, the Company acquired a corporation that specializes in polishing small
carat weight diamonds. The price paid by the Company for the entire equity interest in this corporation
was $2,000,000, of which $1,200,000 was paid in 2005, $400,000 in 2006 and $400,000 in 2007. This
acquisition was strategically important to the Company’s diamond sourcing program, but not significant
to the Company’s financial position, earnings or cash flows.
The Company made a $10,000,000 investment ($4,500,000 in 2004 and $5,500,000 in 2005) in a joint
venture that owns and operates a diamond polishing facility. The Company’s interest in, and control over,
this venture are such that its results are consolidated with those of the Company and its subsidiaries. The
Company expects, through its investment, to gain access to additional supplies of diamonds that meet its
quality standards.
Marketable Securities. The Company invests excess cash in short-term investments and marketable
securities. The Company had (net purchases of ) or net proceeds from investments in marketable
securities and short-term investments of $13,182,000, ($13,063,000) and $147,994,000 during 2007,
2006 and 2005.
Financing Activities
The Company had net cash outflows from financing activities of $664,408,000 in 2007, $248,871,000 in
2006 and $85,151,000 in 2005, largely reflecting increased share repurchases.
Dividends. Cash dividends have been increased for five consecutive years, and twice in 2007. The
quarterly dividend rate has increased from $0.06 per share at the beginning of 2005 to a rate of $0.15 per
share at the end of 2007. Cash dividends paid were $69,921,000 in 2007, $52,611,000 in 2006 and
$42,903,000 in 2005. The dividend payout ratio (dividends as a percentage of net earnings) was 23% in
2007, 21% in 2006 and 17% in 2005.
Stock Repurchases. In January 2008, the Company’s Board of Directors amended the existing share
repurchase program to extend the expiration date of the program to January 2011 and to authorize the
repurchase of up to an additional $500,000,000 of the Company’s Common Stock. The timing of
repurchases and the actual number of shares to be repurchased depend on a variety of discretionary
factors such as price and other market conditions.
The Company’s stock repurchase activity was as follows:
(in thousands, except per share amounts)
Cost of repurchases
Shares repurchased and retired
Average cost per share
2007
$ 574,608
12,374
46.44
$
2006
$ 281,176
8,149
34.50
$
2005
$ 132,816
3,835
34.63
$
At January 31, 2008, there remained $620,806,000 of authorization for future repurchases.
At least annually, the Company’s Board of Directors reviews its policies with respect to dividends and
share repurchases with a view to actual and projected earnings, cash flow and capital requirements.
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Recent Borrowings. The Company’s current sources of working capital are internally-generated cash
flows and borrowings available under a revolving credit facility.
In July 2005, the Company entered into a $300,000,000 revolving credit facility (“Credit Facility”) and,
in October 2006, exercised its option to increase the Credit Facility by $150,000,000 to $450,000,000.
The Company has the option to increase such commitments to $500,000,000. The Credit Facility is
available for working capital and other corporate purposes and contains covenants that require
maintenance of certain debt/equity and interest-coverage ratios, in addition to other requirements
customary to loan facilities of this nature. Borrowings may be made from eight participating banks and
are at interest rates based upon local currency borrowing rates plus a margin that fluctuates with the
Company’s fixed charge coverage ratio. There was $40,695,000 and $106,681,000 outstanding under the
Credit Facility at January 31, 2008 and 2007. The weighted-average interest rate at January 31, 2008 and
2007 was 4.58% and 2.44%. The Credit Facility expires in July 2010.
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In January 2006, the Company borrowed HKD 300,000,000 ($38,672,000 at issuance) (“Hong Kong
Term Loan”), SGD 13,100,000 ($8,043,000 at issuance) (“Singapore Term Loan”) and CHF 19,500,000
($15,145,000 at issuance) (“Switzerland Term Loan”) due in January 2011. These funds were used to
partially finance the repatriation of dividends related to the AJCA (see Provision for Income Taxes above).
Principal payments of 10% of the original principal amount are due each year, with the balance due upon
maturity. Amounts may be prepaid without incurring penalties. The covenants of the term loans are
similar to the Credit Facility. Interest rates are based upon local currency borrowing rates plus a margin
that fluctuates with the Company’s fixed charge coverage ratio. In 2006, the Singapore Term Loan was
paid in full with existing funds. The interest rates for the Hong Kong Term Loan and the Switzerland
Term Loan were 3.96% and 3.09%, respectively, at January 31, 2008 and 4.28% and 2.40%, respectively, at
January 31, 2007.
At January 31, 2008, the Company was in compliance with all covenants.
Contractual Cash Obligations and Commercial Commitments
The following is a summary of the Company’s contractual cash obligations at January 31, 2008:
(in thousands)
Total
2008 2009-2010 2011-2012 Thereafter
Unrecorded contractual obligations:
Operating leases
Inventory purchase obligations
Interest on debt and interest-rate
swap agreements a
Construction-in-progress
Non-inventory purchase obligations
Other contractual obligations b
Recorded contractual obligations:
Short-term borrowings
Long-term debt
$1,024,539 $ 114,078 $ 210,238 $ 176,614 $ 523,609
50,000
100,000
403,571
153,571
100,000
43,106
16,047
9,946
12,473
16,519
16,047
9,946
9,258
21,651
-
-
2,185
4,936
-
-
1,015
44,032
409,105
44,032
65,640
-
232,479
-
110,986
-
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$1,962,819 $ 429,091 $
566,553 $ 393,551 $
573,624
a) Excludes interest payments on amounts outstanding under available lines of credit, as the
outstanding amounts fluctuate based on the Company’s working capital needs. Variable-rate interest
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payments were estimated based on rates at January 31, 2008. Actual payments will differ based on
changes in interest rates.
b) Other contractual obligations consist primarily of royalty and maintenance commitments.
The summary above does not include cash contributions for the Company’s pension plan and cash
payments for other postretirement obligations. The Company plans to contribute approximately
$15,000,000 to the pension plan in 2008. However, this expectation is subject to change if actual asset
performance is different than the assumed long-term rate of return on pension plan assets. The Company
estimates cash payments for postretirement health-care and life insurance benefit obligations to be
$955,000 in 2008.
The Company adopted the provisions of Financial Accounting Standards Board Interpretation No. 48,
“Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109” (“FIN No.
48”) on February 1, 2007. During 2007, the unrecognized tax benefits were reduced by $1,812,000 to
$30,306,000. Accrued interest and penalties during 2007 was reduced by $4,649,000 to $3,395,000. The
final outcome of tax uncertainties is dependent upon various matters including tax examinations,
interpretation of the applicable tax law or expiration of statutes of limitations. The Company believes
that its tax positions comply with applicable tax law and that it has adequately provided for these
matters. However, the audits may result in proposed assessments where the ultimate resolution may
result in the Company owing additional taxes. Ongoing audits are in various stages of completion and,
while the Company does not anticipate any material changes in unrecognized income tax benefits over
the next 12 months, future developments in the audit process may result in a change in this assessment.
The following is a summary of the Company’s outstanding borrowings and available capacity under the
Credit Facility and other lines of credit at January 31, 2008:
(in thousands)
Credit Facility*
Other lines of credit
Total
capacity
450,000
9,206
459,206
$
$
Borrowings
outstanding
$
$
40,695
3,337
44,032
Available
capacity
409,305
5,869
415,174
$
$
*This facility matures in July 2010 and the capacity may be increased to $500,000,000.
In addition, the Company had letters of credit and financial guarantees of $20,139,000 at January 31,
2008, of which $19,305,000 expires within one year.
The Company is party to a CDN$35,000,000 ($35,423,000 at January 31, 2008) credit facility and a
CDN$8,000,000 ($8,097,000 at January 31, 2008) working capital loan commitment (collectively the
“Commitment”) to Tahera, a Canadian diamond mining and exploration company. At January 31, 2008
the Commitment was fully funded and no further amounts remain available to Tahera. In consideration
of the Commitment, the Company was granted the right to purchase or market all diamonds mined at the
Jericho mine. This mine has been developed and constructed by Tahera in Nunavut, Canada (the
“Project”). Indebtedness under the Commitment is secured by certain assets of the Project. Although the
Project has been operational, Tahera has continued to experience financial losses as a result of
production problems, appreciation of the Canadian Dollar versus the U.S. Dollar, the rise of oil prices and
other costs relative to diamond prices. Due to the financial difficulties, Tahera sought additional
financing in the fourth quarter of 2007 in order to meet its cash flow requirements, but was not
successful. In January 2008, Tahera filed for protection from creditors pursuant to the provisions of the
Companies’ Creditors Arrangement Act in Canada. Tahera is continuing to pursue financing and strategic
alternatives, but it has not shown indications of possible success to-date and the Project’s operations
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have had to cease and be placed in care and maintenance mode. As a result of these events, the
Company’s management has determined that collectibility of the outstanding Commitment is not
probable. Therefore, the Company has recorded an impairment charge of $47,981,000, within SG&A
expenses, for the full amount outstanding including accrued interest under the Commitment.
Based on the Company’s financial position at January 31, 2008, management anticipates that cash on
hand, internally-generated cash flows and the funds available under the Credit Facility will be sufficient
to support the Company’s planned worldwide business expansion, share repurchases, debt service and
seasonal working capital increases for the foreseeable future.
Seasonality
As a jeweler and specialty retailer, the Company’s business is seasonal in nature, with the fourth quarter
typically representing at least one-third of annual net sales and approximately one-half of annual net
earnings. Management expects such seasonality to continue.
CRITICAL ACCOUNTING ESTIMATES
The Company’s consolidated financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America. These principles require management to
make certain estimates and assumptions that affect amounts reported and disclosed in the financial
statements and related notes. Actual results could differ from those estimates. Periodically, the Company
reviews all significant estimates and assumptions affecting the financial statements and records the
effect of any necessary adjustments.
The development and selection of critical accounting estimates and the related disclosures below have
been reviewed with the Audit Committee of the Company’s Board of Directors. The following critical
accounting policies that rely on assumptions and estimates were used in the preparation of the
Company’s consolidated financial statements:
Inventory. The Company writes down its inventory for discontinued and slow-moving products. This
write-down is equal to the difference between the cost of inventory and its estimated market value, and is
based on assumptions about future demand and market conditions. If actual market conditions are less
favorable than those projected by management, additional inventory write-downs might be required. The
Company has not made any material changes in the accounting methodology used to establish its reserve
for discontinued and slow-moving products during the past three years. At January 31, 2008, a 10%
change in the reserve for discontinued and slow-moving products would have resulted in a change of
$4,201,000 in inventory and cost of sales. The Company’s U.S. and foreign branch inventories, excluding
Japan, are valued using the last-in, first-out (LIFO) method, and inventories held by foreign subsidiaries
and Japan are valued using the average cost method. Fluctuation in inventory levels, along with the costs
of raw materials, could affect the carrying value of the Company’s inventory. Beginning in the first
quarter of 2008, the Company will change its inventory valuation method for the U.S. and foreign
branches from LIFO to average cost (see Note R to consolidated financial statements).
Long-lived assets. The Company’s long-lived assets are primarily property, plant and equipment. The
Company reviews its long-lived assets for impairment when management determines that the carrying
value of such assets may not be recoverable due to events or changes in circumstances. Recoverability of
long-lived assets is evaluated by comparing the carrying value of the asset with estimated future
undiscounted cash flows. If the comparisons indicate that the value of the asset is not recoverable, an
impairment loss is calculated as the difference between the carrying value and the fair value of the asset
and the loss is recognized during that period. The Company recorded impairment charges of $15,532,000
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in 2007 and did not record any impairment charges in 2006 or 2005 (see Note B to consolidated
financial statements).
Goodwill. The Company performs its annual impairment evaluation of goodwill during the fourth
quarter of its fiscal year or when circumstances otherwise indicate an evaluation should be performed.
The evaluation, based upon discounted cash flows, requires management to estimate future cash flows,
growth rates and economic and market conditions. The Company recorded impairment charges of
$6,893,000 in 2006 within loss from discontinued operations (see Note C to consolidated financial
statements). The 2007 and 2005 evaluations resulted in no impairment charges.
Income taxes. Foreign and domestic tax authorities periodically audit the Company’s income tax returns.
These audits often examine and test the factual and legal basis for positions the Company has taken in its
tax filings with respect to its tax liabilities, including the timing and amount of deductions and the
allocation of income among various tax jurisdictions (“tax filing positions”). Management believes that
its tax filing positions are reasonable and legally supportable. However, in specific cases, various tax
authorities may take a contrary position. In evaluating the exposures associated with the Company’s
various tax filing positions, management records reserves using a more-likely-than-not recognition
threshold for income tax positions taken or expected to be taken in accordance with FIN No. 48. Earnings
could be affected to the extent the Company prevails in matters for which reserves have been established
or is required to pay amounts in excess of established reserves. The Company also records valuation
allowances when management determines it is more likely than not that deferred tax assets will not be
realized in the future.
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Employee benefit plans. The Company maintains several pension and retirement plans, as well as
provides certain postretirement health-care and life insurance benefits for current and retired
employees. The Company makes certain assumptions that affect the underlying estimates related to
pension and other postretirement costs. Significant changes in interest rates, the market value of
securities and projected health-care costs would require the Company to revise key assumptions and
could result in a higher or lower charge to earnings.
The Company used a discount rate of 6.00% to determine its 2007 pension and postretirement expense
for all U.S. plans. Holding all other assumptions constant, a 0.5% increase in the discount rate would have
decreased 2007 pension and postretirement expenses by $3,893,000 and $197,000. A decrease of 0.5% in
the discount rate would have increased the 2007 pension and postretirement expenses by $4,270,000
and $230,000. The discount rate is subject to change each year, consistent with changes in the yield on
applicable high-quality, long-term corporate bonds. Management selects a discount rate at which pension
and postretirement benefits could be effectively settled based on (i) analysis of expected benefit
payments attributable to current employment service and (ii) appropriate yields related to such cash
flows.
The Company used an expected long-term rate of return of 7.50% to determine its 2007 pension expense.
Holding all other assumptions constant, a 0.5% change in the long-term rate of return would have
changed the 2007 pension expense by $913,000. The expected long-term rate of return on pension plan
assets is selected by taking into account the average rate of return expected on the funds invested or to
be invested to provide for the benefits included in the projected benefit obligation. More specifically,
consideration is given to the expected rates of return (including reinvestment asset return rates) based
upon the plan’s current asset mix, investment strategy and the historical performance of plan assets.
For postretirement benefit measurement purposes, the following annual rates of increase in the per
capita cost of covered health care were assumed for 2008: 9.00% (for pre-age 65 retirees) and 10.00% (for
post-age 65 retirees). The rate was assumed to decrease gradually to 5.00% by 2016 (for pre-age 65
T I F F A N Y & C O .
K - 4 5
retirees) and by 2018 (for post-age 65 retirees) and remain at that level thereafter. A one-percentage-
point increase in the assumed health-care cost trend rate would have increased the aggregate service and
interest cost components of the 2007 postretirement expense by $28,000. Decreasing the assumed
health-care cost trend rate by one-percentage-point would have decreased the aggregate service and
interest cost components of the 2007 postretirement expense by $25,000.
See Note B to consolidated financial statements.
NEW ACCOUNTING STANDARDS
OFF-BALANCE SHEET ARRANGEMENTS
The Company does not have any off-balance sheet arrangements.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
The Company is exposed to market risk from fluctuations in foreign currency exchange rates, interest
rates and precious metal prices, which could affect its consolidated financial position, earnings and cash
flows. The Company manages its exposure to market risk through its regular operating and financing
activities and, when deemed appropriate, through the use of derivative financial instruments. The
Company uses derivative financial instruments as risk management tools and not for trading or
speculative purposes, and does not maintain such instruments that may expose the Company to
significant market risk.
Foreign Currency Risk
In Japan, the Company uses yen put options to minimize the potential effect of a weakening yen on U.S.
dollar-denominated transactions over a maximum term of 12 months. The Company also uses foreign-
exchange forward contracts to protect against changes in local currencies. Gains or losses on these
instruments substantially offset losses or gains on the assets, liabilities and transactions being hedged.
The fair value of yen put options is sensitive to changes in yen exchange rates. If the market yen exchange
rate at the time of an option’s expiration is stronger than the contracted exchange rate, the Company
allows the option to expire, limiting its loss to the cost of the option contract. The cost of outstanding
option contracts at January 31, 2008 and 2007 was $3,369,000 and $2,978,000. At January 31, 2008 and
2007, the fair value of outstanding yen put options was $863,000 and $6,056,000. The fair value of the
options was determined using quoted market prices for these instruments. At January 31, 2008 and 2007,
a 10% appreciation in yen exchange rates (i.e. a strengthing yen) from the prevailing market rates would
have resulted in a fair value of $230,000 and $563,000. At January 31, 2008 and 2007, a 10% depreciation
in yen exchange rates (i.e. a weakening yen) from the prevailing market rates would have resulted in a fair
value of $7,786,000 and $16,784,000.
At January 31, 2008 and 2007, the Company had $7,311,000 and $5,885,000 of outstanding forward
foreign-exchange contracts, which subsequently matured in February and March 2008 and February and
March 2007, respectively. Due to the short-term nature of the Company’s forward foreign-exchange
contracts, the book value of the underlying assets and liabilities approximates fair value.
Interest Rate Risk
The Company uses interest-rate swap contracts related to certain debt arrangements to manage its net
exposure to interest rate changes. The interest-rate swap contracts effectively convert fixed-rate
obligations to floating-rate instruments. The fair value of the interest-rate swap agreements is based on
the amounts the Company would expect to pay/receive to/from third parties to terminate the
agreements. Additionally, since the fair value of the Company’s fixed-rate long-term debt is sensitive to
interest rate changes, the interest-rate swap contracts serve as a hedge to changes in the fair value of
these debt instruments. A 100 basis-point increase in interest rates at January 31, 2008 and 2007 would
have decreased the market value of the Company’s fixed-rate long-term debt, including the effect of the
interest-rate swap, by $6,731,000 and $8,652,000. A 100 basis-point decrease in interest rates at January
31, 2008 and 2007 would have increased the market value of the Company’s fixed-rate long-term debt,
including the effect of the interest-rate swap, by $6,440,000 and $9,006,000.
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Precious Metal Price Risk
Beginning in the first quarter of 2007, the Company began using a combination of call and put option
contracts in a net-zero cost collar arrangement (“collars”), as hedges of a portion of forecasted purchases
of platinum and silver for internal manufacturing. If the price of the precious metal at the time of the
expiration of the collar is within the call and put price, the collar would expire at no cost to the Company.
The maximum term over which the Company is hedging its exposure to the variability of future cash
flows for all forecasted transactions is 12 months. The fair value of the outstanding collars at January 31,
2008 was $6,435,000. The fair value was determined using quoted market prices for these instruments.
At January 31, 2008, a 10% appreciation in precious metal prices from the prevailing market rates would
have resulted in a fair value of $11,000,000. At January 31, 2008, a 10% depreciation in precious metal
prices from the prevailing market rates would have resulted in a fair value of $2,954,000.
Management neither foresees nor expects significant changes in the Company’s exposure to fluctuations
in foreign currencies, interest rates or precious metal prices, nor in its risk-management practices.
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Item 8. Financial Statements and Supplementary Data.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of Tiffany & Co.:
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements
of earnings, of stockholders' equity and comprehensive earnings, and of cash flows present fairly, in all
material respects, the financial position of Tiffany & Co. and its subsidiaries (the "Company") at January
31, 2008 and 2007, and the results of their operations and their cash flows for each of the three years in
the period ended January 31, 2008 in conformity with accounting principles generally accepted in the
United States of America. In addition, in our opinion, the financial statement schedule listed in the
index appearing under Item 15(a) (2) presents fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated financial statements. Also in our
opinion, the Company maintained, in all material respects, effective internal control over financial
reporting as of January 31, 2008, based on criteria established in Internal Control - Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The
Company's management is responsible for these financial statements and financial statement schedule,
for maintaining effective internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting, included in Management's Report on Internal
Controls over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on
these financial statements, on the financial statement schedule, and on the Company's internal control
over financial reporting based on our integrated audits. We conducted our audits in accordance with the
standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement and whether effective internal control over financial
reporting was maintained in all material respects. Our audits of the financial statements included
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. Our audit of internal control over financial reporting
included obtaining an understanding of internal control over financial reporting, assessing the risk that a
material weakness exists, and testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk. Our audits also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our
opinions.
A company’s internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles. A company’s internal
control over financial reporting includes those policies and procedures that (i) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only
in accordance with authorizations of management and directors of the company; and (iii) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
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Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the
risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
/s/ PricewaterhouseCoopers LLP
New York, New York
March 27, 2008
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CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
ASSETS
Current assets:
Cash and cash equivalents
Short-term investments
Accounts receivable, less allowances of $9,712 and $7,900
Inventories, net
Deferred income taxes
Prepaid expenses and other current assets
Assets held for sale
Total current assets
Property, plant and equipment, net
Deferred income taxes
Other assets, net
Assets held for sale - noncurrent
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings
Current portion of long-term debt
Accounts payable and accrued liabilities
Income taxes payable
Merchandise and other customer credits
Liabilities held for sale
Total current liabilities
Long-term debt
Pension/postretirement benefit obligations
Deferred gains on sale-leasebacks
Other long-term liabilities
Liabilities held for sale - noncurrent
Commitments and contingencies
Stockholders’ equity:
Preferred Stock, $0.01 par value; authorized 2,000 shares,
none issued and outstanding
Common Stock, $0.01 par value; authorized 240,000 shares,
issued and outstanding 126,753 and 135,875
Additional paid-in capital
Retained earnings
Accumulated other comprehensive gain (loss), net of tax:
Foreign currency translation adjustments
Deferred hedging gain
Unrealized (loss) gain on marketable securities
Net unrealized gain (loss) on benefit plans
Total stockholders’ equity
See notes to consolidated financial statements.
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$
$
$
2008
January 31,
2007
$
$
$
246,654
-
193,974
1,242,465
71,402
89,072
-
1,843,567
748,210
158,579
171,800
-
2,922,156
44,032
65,640
203,622
203,611
67,956
-
584,861
343,465
79,254
145,599
131,610
-
175,008
15,500
165,594
1,146,674
72,934
57,460
73,474
1,706,644
912,143
37,368
156,097
33,258
2,845,510
106,681
5,398
198,471
62,979
61,511
17,631
452,671
406,383
84,466
4,944
87,774
4,377
-
1,268
632,671
958,915
42,117
889
(621)
2,128
1,637,367
2,922,156
$
-
1,358
536,187
1,269,940
11,846
2,046
178
(16,660)
1,804,895
2,845,510
$
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands, except per share amounts)
2008
Years Ended January 31,
2007
2006
Net sales
Cost of sales
Gross profit
$ 2,938,771
$ 2,560,734
$ 2,312,792
1,308,499
1,119,184
1,005,014
1,630,272
1,441,550
1,307,778
Other operating income
105,051
-
-
Selling, general and administrative expenses
1,204,990
1,010,754
920,153
Earnings from continuing operations
530,333
430,796
387,625
Interest expense and financing costs
Other income, net
24,724
16,593
26,069
22,895
15,581
8,324
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Earnings from continuing operations before income
taxes
522,202
420,308
373,054
Provision for income taxes
190,883
151,615
112,771
Net earnings from continuing operations
331,319
268,693
260,283
Loss from discontinued operations, net of tax
(27,547)
(14,766)
(5,628)
Net earnings
$
303,772
$
253,927
$ 254,655
Earnings per share:
Basic
Net earnings from continuing operations
Net loss from discontinued operations
Net earnings
Diluted
Net earnings from continuing operations
Net loss from discontinued operations
Net earnings
Weighted-average number of common shares:
Basic
Diluted
See notes to consolidated financial statements.
$
$
$
$
2.46
(0.21)
2.25
2.40
(0.20)
2.20
$
$
$
$
1.94
(0.10)
1.84
1.91
(0.11)
1.80
$
$
$
$
1.82
(0.04)
1.78
1.79
(0.04)
1.75
134,748
138,140
138,362
140,841
142,976
145,578
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CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE EARNINGS
(in thousands)
Balances, January 31, 2005
Exercise of stock options and vesting of restricted
stock units (“RSUs”)
Tax benefit from exercise of stock options and
vesting of RSUs
Share-based compensation expense
Issuance of Common Stock under Employee Profit
Sharing and Retirement Savings (“EPSRS”) Plan
Purchase and retirement of Common Stock
Cash dividends on Common Stock
Deferred hedging gain, net of tax
Unrealized gain on marketable securities, net of tax
Foreign currency translation adjustments, net of tax
Net earnings
Balances, January 31, 2006
Exercise of stock options and vesting of RSUs
Tax benefit from exercise of stock options and
vesting of RSUs
Share-based compensation expense
Issuance of Common Stock under EPSRS Plan
Purchase and retirement of Common Stock
Cash dividends on Common Stock
Deferred hedging loss, net of tax
Unrealized loss on marketable securities, net of tax
Foreign currency translation adjustments, net of tax
Net unrealized loss on benefit plans, net of tax
Net earnings
Balances, January 31, 2007
Implementation effect of FIN No. 48
Balances, February 1, 2007
Exercise of stock options and vesting of RSUs
Tax benefit from exercise of stock options and
vesting of RSUs
Share-based compensation expense
Issuance of Common Stock under EPSRS Plan
Purchase and retirement of Common Stock
Cash dividends on Common Stock
Deferred hedging loss, net of tax
Unrealized loss on marketable securities, net of tax
Foreign currency translation adjustments, net of tax
Net unrealized gain on benefit plans, net of tax
Net earnings
Total
Stockholders’
Equity
Accumulated
Other
Comprehensive
Gain (Loss)
Retained
Earnings
Common Stock
Shares
Amount
Additional
Paid-In
Capital
$
1,701,160
$ 1,246,331
$
27,076
144,548 $ 1,445
$ 426,308
24,545
13,791
25,950
4,400
(132,816)
(42,903)
5,365
530
(23,764)
254,655
–
–
–
–
(126,762)
(42,903)
–
–
–
254,655
–
–
–
–
–
–
5,365
530
(23,764)
–
1,653
–
–
143
(3,835)
–
–
–
–
–
17
–
–
1
(38)
–
–
–
–
–
24,528
13,791
25,950
4,399
(6,016)
–
–
–
–
–
1,830,913
21,689
1,331,321
–
9,207
–
142,509
1,394
1,425
13
488,960
21,676
5,927
33,473
4,550
(281,176)
(52,611)
(1,201)
(501)
6,565
(16,660)
253,927
1,804,895
(4,299)
1,800,596
68,830
20,802
38,343
2,450
(574,608)
(69,921)
(1,157)
(799)
30,271
18,788
303,772
–
–
–
(262,697)
(52,611)
–
–
–
–
253,927
1,269,940
(4,299)
1,265,641
–
–
–
–
(540,577)
(69,921)
–
–
–
–
303,772
–
–
–
–
–
(1,201)
(501)
6,565
(16,660)
–
–
–
121
(8,149)
–
–
–
–
_
–
–
–
1
(81)
–
–
–
–
_
–
(2,590)
–
(2,590)
–
135,875
–
135,875
3,200
1,358
–
1,358
32
–
–
–
–
–
(1,157)
(799)
30,271
18,788
–
–
–
52
(12,374)
–
–
–
–
–
–
–
–
1
(123)
–
–
–
–
–
–
5,927
33,473
4,549
(18,398)
–
–
–
–
_
–
536,187
–
536,187
68,798
20,802
38,343
2,449
(33,908)
–
–
–
–
–
–
Balances, January 31, 2008
$
1,637,367 $
958,915
$
44,513
126,753
$ 1,268
$
632,671
Comprehensive earnings are as follows:
Net earnings
Deferred hedging (loss) gain, net of tax (benefit) expense of ($110), ($647) and $3,393
Foreign currency translation adjustments, net of tax expense (benefit) of $4,714, $3,011 and
($13,222)
Unrealized (loss) gain on marketable securities, net of tax (benefit) expense of ($283), ($301) and
$269
Net unrealized gain on benefit plans, net of tax expense of $14,352
See notes to consolidated financial statements.
2008
Years Ended January 31,
2006
2007
$ 303,772
(1,157)
$ 253,927
(1,201)
$ 254,655
5,365
30,271
6,565
(23,764)
(799)
18,788
$ 350,875
(501)
–
$ 258,790
530
–
$ 236,786
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CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings
Loss from discontinued operations, net of tax
Net earnings from continuing operations
Adjustments to reconcile net earnings from continuing operations to net cash provided by
(used in) operating activities:
Gain on sale-leaseback
Gain on sale of investments and marketable securities
Depreciation and amortization
Excess tax benefits from share-based payment arrangements
Provision for inventories
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Deferred income taxes
Loss on disposal of assets
Provision for pension/postretirement benefits
Share-based compensation expense
Impairment charges
Changes in assets and liabilities:
Accounts receivable
Inventories
Prepaid expenses and other current assets
Other assets, net
Accounts payable and accrued liabilities
Income taxes payable
Merchandise and other customer credits
Other long-term liabilities
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities and short-term investments
Proceeds from sales of marketable securities and short-term investments
Proceeds from sale of assets, net
Capital expenditures
Notes receivable funded
Acquisitions, net of cash acquired
Other
Net cash provided by (used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt
Repayment of long-term debt
(Repayments of) proceeds from short-term borrowings, net
Repurchase of Common Stock
Proceeds from exercise of stock options
Excess tax benefits from share-based payment arrangements
Cash dividends on Common Stock
Other
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
CASH FLOWS FROM DISCONTINUED OPERATIONS:
Operating activities
Investing activities
Net cash used in discontinued operations
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Decrease (increase) in cash and cash equivalents of discontinued operations
Cash and cash equivalents at end of year
See notes to consolidated financial statements.
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2008
$ 303,772
27,547
331,319
Years Ended January 31,
2007
2006
$ 253,927
14,766
268,693
$ 254,655
5,628
260,283
(105,051)
(1,564)
122,151
(18,739)
33,700
(83,608)
1,672
26,666
37,069
63,513
(10,237)
(82,993)
(36,377)
(13,883)
8,986
145,774
5,967
(32,970)
391,395
(870,025)
883,207
509,035
(185,608)
(7,172)
(400)
6,133
335,170
-
(32,301)
(75,147)
(574,608)
68,830
18,739
(69,921)
-
(664,408)
15,610
-
(6,774)
114,572
(6,330)
8,273
582
460
24,751
32,793
-
(16,644)
(156,292)
(22,037)
(32,560)
17,678
8,122
4,887
(1,138)
239,036
(163,341)
150,278
-
(174,551)
(9,728)
(400)
605
(197,137)
-
(14,560)
71,548
(281,176)
21,689
6,330
(52,611)
(91)
(248,871)
3,162
-
-
106,389
(8,636)
10,108
(58,441)
4,925
22,334
25,622
-
(16,952)
(38,121)
1,142
(22,852)
20,652
(41,199)
4,201
(997)
268,458
(100,234)
248,228
75,000
(148,159)
(25,363)
(6,845)
(1,807)
40,820
61,914
-
(3,795)
(132,816)
24,545
8,636
(42,903)
(732)
(85,151)
(3,555)
(6,596)
(1,020)
(7,616)
70,151
175,008
1,495
$ 246,654
(5,454)
(7,842)
(13,296)
(217,106)
391,594
520
$ 175,008
(5,767)
(8,877)
(14,644)
205,928
186,065
(399)
$ 391,594
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. NATURE OF BUSINESS
Tiffany & Co. is a holding company that operates through its subsidiary companies (the “Company”). The
Company’s principal subsidiary, Tiffany and Company, is a jeweler and specialty retailer whose principal
merchandise offering is fine jewelry. It also sells timepieces, sterling silverware, china, crystal, stationery,
fragrances and accessories. Through Tiffany and Company and other subsidiaries, the Company is
engaged in product design, manufacturing and retailing activities.
The Company’s channels of distribution are as follows:
(cid:120) U.S. Retail includes sales in TIFFANY & CO. stores in the U.S., as well as sales of TIFFANY & CO.
products through business-to-business direct selling operations in the U.S.;
(cid:120)
International Retail includes sales in TIFFANY & CO. stores and department store boutiques
outside the U.S., as well as business-to-business, Internet and wholesale sales of TIFFANY & CO.
products outside the U.S.;
(cid:120) Direct Marketing includes Internet and catalog sales of TIFFANY & CO. products in the U.S.; and
(cid:120) Other includes worldwide sales of businesses operated under trademarks or tradenames other
than TIFFANY & CO., such as IRIDESSE. Sales in the Other channel primarily consist of wholesale
sales of diamonds.
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B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fiscal Year
The Company’s fiscal year ends on January 31 of the following calendar year. All references to years relate
to fiscal years rather than calendar years.
Basis of Reporting
The consolidated financial statements include the accounts of the Company and its subsidiaries in
which a controlling interest is maintained. Controlling interest is determined by majority ownership
interest and the absence of substantive third-party participating rights or, in the case of variable interest
entities, by majority exposure to expected losses, residual returns or both. Intercompany accounts,
transactions and profits have been eliminated in consolidation. The equity method of accounting is used
for investments in which the Company has significant influence, but not a controlling interest. These
statements have been prepared in accordance with accounting principles generally accepted in the
United States of America; these principles require management to make certain estimates and
assumptions that affect amounts reported and disclosed in the financial statements and related notes.
Actual results could differ from these estimates. Periodically, the Company reviews all significant
estimates and assumptions affecting the financial statements relative to current conditions and records
the effect of any necessary adjustments.
Cash and Cash Equivalents
Cash and cash equivalents are stated at cost plus accrued interest, which approximates fair value. Cash
equivalents include highly liquid investments with an original maturity of three months or less and
consist of time deposits and money market fund investments with a number of U.S. and non-U.S.
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financial institutions with high credit ratings. The Company’s policy restricts the amounts invested in
any one institution.
Short-Term Investments
Short-term investments include investments with original maturities greater than three months that the
Company anticipates holding for less than 12 months. Short-term investments are stated at fair value.
Receivables and Finance Charges
The Company’s U.S. and international presence and its large, diversified customer base serve to limit
overall credit risk. The Company maintains reserves for potential credit losses and, historically, such
losses for trade receivables, in the aggregate, have not exceeded expectations.
Finance charges on retail revolving charge accounts are not significant and are accounted for as a
reduction of selling, general and administrative expenses.
Inventories
Inventories are valued at the lower of cost or market. U.S. and foreign branch inventories, excluding
Japan, are valued using the last-in, first-out (LIFO) method. Inventories held by foreign subsidiaries and
Japan are valued using the average cost method. Beginning in the first quarter of 2008, the Company will
change its inventory valuation method for the U.S. and foreign branches from LIFO to average cost (see
Note R).
Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is
calculated on a straight-line basis over the following estimated useful lives:
Buildings
Machinery and Equipment
Office Equipment
Furniture and Fixtures
39 years
5-15 years
3-10 years
3-10 years
Leasehold improvements are amortized over the shorter of their estimated useful lives or the related
lease terms. Maintenance and repair costs are charged to earnings while expenditures for major renewals
and improvements are capitalized. Upon the disposition of property, plant and equipment, the
accumulated depreciation is deducted from the original cost, and any gain or loss is reflected in current
earnings.
The Company capitalizes interest on borrowings during the active construction period of major capital
projects. Capitalized interest is added to the cost of the underlying assets and is amortized over the
useful lives of the assets. The Company’s capitalized interest costs were not significant in 2007, 2006 or
2005.
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Intangible Assets
Intangible assets are recorded at cost and are amortized on a straight-line basis over their estimated
useful lives which are approximately 15 years. Intangible assets are reviewed for impairment in
accordance with the Company’s policy for impairment of long-lived assets (see below). Intangible assets
amounted to $9,751,000 and $9,209,000, net of accumulated amortization of $4,398,000 and $3,607,000
at January 31, 2008 and 2007, and consist primarily of product rights and trademarks. Amortization of
intangible assets for the years ended January 31, 2008, 2007 and 2006 was $791,000, $717,000 and
$357,000. Amortization expense in each of the next five years is estimated to be $806,000.
Goodwill
Goodwill represents the excess of cost over fair value of net assets acquired. Goodwill is evaluated for
impairment annually in the fourth quarter or when events or changes in circumstances indicate that the
value of goodwill may be impaired. This evaluation, based on discounted cash flows, requires
management to estimate future cash flows, growth rates and economic and market conditions. If the
evaluation indicates that goodwill is not recoverable, an impairment loss is calculated and recognized
during that period (see Note C). At January 31, 2008 and 2007, unamortized goodwill was included in
other assets, net and consisted of the following by segment:
(in thousands)
U.S. Retail
International Retail
Other
Balance at
January 31,
2007
$
$
10,312
831
2,079
13,222
$
$
Translation
–
–
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34
$
$
Balance at
January 31,
2008
10,312
831
2,113
13,256
Impairment of Long-Lived Assets
The Company reviews its long-lived assets other than goodwill for impairment when management
determines that the carrying value of such assets may not be recoverable due to events or changes in
circumstances. Recoverability of long-lived assets is evaluated by comparing the carrying value of the
asset with the estimated future undiscounted cash flows. If the comparisons indicate that the asset is not
recoverable, an impairment loss is calculated as the difference between the carrying value and the fair
value of the asset and the loss is recognized during that period. In 2007, the Company determined that
the long-lived assets for its IRIDESSE business (included in the non-reportable segment Other) were
impaired as a result of lower than expected store performance and a related reduction in future cash flow
projections. The Company recorded total charges in selling, general and administrative expenses of
$15,532,000 related to the impairment.
Hedging Instruments
The Company uses a limited number of derivative financial instruments to mitigate its foreign currency,
interest rate and precious metal price exposures. Derivative instruments are recorded on the
consolidated balance sheet at their fair value, as either assets or liabilities, with an offset to current or
comprehensive earnings, depending on whether a derivative is designated as part of an effective hedge
transaction and, if it is, the type of hedge transaction. For fair-value hedge transactions, changes in fair
value of the derivative and changes in the fair value of the item being hedged are recorded in current
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earnings. For cash-flow hedge transactions, the effective portion of the changes in fair value of derivatives
are reported as other comprehensive earnings and are recognized in current earnings in the period or
periods during which the hedged transaction affects current earnings. Amounts excluded from the
effectiveness calculation and any ineffective portions of the change in fair value of the derivative of a
cash-flow hedge are recognized in current earnings. For a derivative to qualify as a hedge at inception and
throughout the hedged period, the Company formally documents the nature and relationships between
the hedging instruments and hedged items. The Company also documents its risk-management
objectives, strategies for undertaking the various hedge transactions and method of assessing hedge
effectiveness. Additionally, for hedges of forecasted transactions, the significant characteristics and
expected terms of a forecasted transaction must be specifically identified, and it must be probable that
each forecasted transaction will occur. If it were deemed probable that the forecasted transaction would
not occur, the gain or loss would be recognized in current earnings. Financial instruments qualifying for
hedge accounting must maintain a specified level of effectiveness between the hedge instrument and the
item being hedged, both at inception and throughout the hedged period. The Company does not use
derivative financial instruments for trading or speculative purposes.
Marketable Securities
The Company’s marketable securities, recorded within other assets, net on the consolidated balance
sheet, are classified as available-for-sale and are recorded at fair value with unrealized gains and losses
reported as a separate component of stockholders’ equity. Realized gains and losses are recorded in other
income, net. The marketable securities are held for an indefinite period of time, but might be sold in the
future as changes in market conditions or economic factors occur. The fair value of the marketable
securities is determined based on prevailing market prices. The Company recorded $423,000 and
$296,000 of gross unrealized gains and $1,264,000 and $55,000 of gross unrealized losses within
accumulated other comprehensive income as of January 31, 2008 and 2007, respectively.
The following table summarizes activity in other comprehensive income related to marketable securities:
(in thousands)
Change in fair value of marketable securities, net of tax benefit
of $244
Adjustment for net gains realized and included in net earnings, net
of tax expense of $39
Change in unrealized loss on marketable securities
January 31, 2008
$
(741)
(58)
(799)
$
The amount reclassified from other comprehensive income was determined on the basis of specific
identification.
Merchandise and Other Customer Credits
Merchandise and other customer credits represent outstanding credits issued to customers for returned
merchandise. It also includes outstanding gift coins and gift certificates or cards (collectively “gift
cards”) sold to customers. All such outstanding items may be tendered for future merchandise
purchases. A merchandise credit liability is established when a merchandise credit is issued to a
customer for a returned item and the original sale is reversed. A gift card liability is established when the
gift card is sold. The liabilities are relieved and revenue is recognized when merchandise is purchased
and delivered to the customer and the merchandise credit or gift card is used as a form of payment.
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If merchandise credits or gift cards are not redeemed over an extended period of time (approximately 3-5
years), the value of the merchandise credits or gift cards is generally remitted to the applicable
jurisdiction in accordance with unclaimed property laws.
Revenue Recognition
Sales are recognized at the “point of sale,” which occurs when merchandise is taken in an “over-the-
counter” transaction or upon receipt by a customer in a shipped transaction. Sales are reported net of
returns, sales tax and other similar taxes. Shipping and handling fees billed to customers are included in
net sales. The Company maintains a reserve for potential product returns and it records, as a reduction to
sales and cost of sales, its provision for estimated product returns, which is determined based on
historical experience.
Cost of Sales
Cost of sales includes costs related to the purchase of merchandise from third parties, the cost to
internally manufacture merchandise (metal, gemstones, labor and overhead), inbound freight,
purchasing and receiving, inspection, warehousing, internal transfers and other costs associated with
distribution and merchandising. Cost of sales also includes royalty fees paid to outside designers and
customer shipping and handling charges.
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Selling, General and Administrative (“SG&A”) Expenses
SG&A expenses include costs associated with the selling and promotion of products as well as
administrative expenses. The types of expenses associated with these functions are store operating
expenses (such as labor, rent and utilities), advertising and other corporate level administrative expenses.
Advertising Costs
Media and production costs for print advertising are expensed as incurred, while catalog costs are
expensed upon mailing. Advertising costs, which include media, production, catalogs, promotional
events and other related costs totaled $173,975,000, $161,688,000 and $136,511,000 in 2007, 2006 and
2005, representing 5.9%, 6.3% and 5.9% of net sales, respectively.
Costs associated with the opening of new retail stores are expensed in the period incurred.
Preopening Costs
Stock-Based Compensation
New, modified and unvested share-based payment transactions with employees, such as stock options
and restricted stock, are measured at fair value and recognized as compensation expense over the
requisite service period.
Merchandise Design Activities
Merchandise design activities consist of conceptual formulation and design of possible products and
creation of preproduction prototypes and molds. Costs associated with these activities are expensed as
incurred.
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Foreign Currency
The functional currency of most of the Company’s foreign subsidiaries and branches is the applicable
local currency. Assets and liabilities are translated into U.S. dollars using the current exchange rates in
effect at the balance sheet date, while revenues and expenses are translated at the average exchange rates
during the period. The resulting translation adjustments are recorded as a component of other
comprehensive earnings within stockholders’ equity. The Company also recognizes gains and losses
associated with transactions that are denominated in foreign currencies. The Company recorded a net
gain resulting from foreign currency transactions of $2,290,000 in 2007, a net loss of $1,549,000 in 2006
and a net gain of $2,245,000 in 2005 within other income, net.
Income Taxes
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Income taxes are accounted for by using the asset and liability method in accordance with the provisions
of Statement of Financial Accounting Standards (“SFAS”) No. 109, “Accounting for Income Taxes.” Under
this method, deferred tax assets and liabilities are recognized by applying statutory tax rates in effect in
the years in which the differences between the financial reporting and tax filing bases of existing assets
and liabilities are expected to reverse. In evaluating the exposures associated with the Company’s various
tax filing positions, management records reserves using a more-likely-than-not recognition threshold for
income tax positions taken or expected to be taken in accordance with Financial Accounting Standards
Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an interpretation of
FASB Statement No. 109” (“FIN No. 48”). The Company, its domestic subsidiaries and the foreign
branches of its domestic subsidiaries file a consolidated Federal income tax return.
Earnings Per Share
Basic earnings per share is computed as net earnings divided by the weighted-average number of
common shares outstanding for the period. Diluted earnings per share includes the dilutive effect of the
assumed exercise of stock options and restricted stock units.
The following table summarizes the reconciliation of the numerators and denominators for the basic and
diluted earnings per share (“EPS”) computations:
(in thousands)
Net earnings for basic and diluted EPS
Weighted-average shares for basic EPS
Incremental shares based upon the assumed exercise
of stock options and restricted stock units
Weighted-average shares for diluted EPS
Years Ended January 31,
2008
2007
2006
$
303,772
$
253,927
$
254,655
134,748
138,362
142,976
3,392
138,140
2,479
140,841
2,602
145,578
For the years ended January 31, 2008, 2007 and 2006, there were 427,000, 4,543,000 and 4,586,000 stock
options and restricted stock units excluded from the computations of earnings per diluted share due to
their antidilutive effect.
New Accounting Standards
In July 2006, the FASB issued FIN No. 48 which clarifies the accounting for uncertainty in income tax
positions by prescribing a more-likely-than-not recognition threshold for income tax positions taken or
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expected to be taken in a tax return. FIN No. 48 is effective for fiscal years beginning after December 15,
2006 with the cumulative effect of the change in accounting principle recorded as an adjustment to
retained earnings at the beginning of the year. The Company has adopted FIN No. 48 as of February 1,
2007 which resulted in a charge of $4,299,000 to retained earnings as a cumulative effect of an
accounting change (see Note O).
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” which establishes a
framework for measuring fair value of assets and liabilities and expands disclosures about fair value
measurements. The changes to current practice resulting from the application of SFAS No. 157 relate to
the definition of fair value, the methods used to measure fair value, and the expanded disclosures about
fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. In
February 2008, the FASB deferred the implementation of the provisions of SFAS No. 157 relating to
nonfinancial assets and liabilities, except those that are recognized or disclosed at fair value in the
financial statements on a recurring basis (at least annually) to fiscal years beginning after November 15,
2008. Management has evaluated the provisions of SFAS No. 157 and determined that its adoption will
not have a material effect on the Company’s financial position or earnings.
In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial
Statements.” SFAS No. 160 requires a company to clearly identify and present ownership interests in
subsidiaries held by parties other than the company in the consolidated financial statements within the
equity section but separate from the company’s equity. It also requires the amount of consolidated net
earnings attributable to the parent and to the noncontrolling interest be clearly identified and presented
on the face of the consolidated statement of earnings; changes in ownership interest be accounted for
similarly, as equity transactions; and when a subsidiary is deconsolidated, any retained noncontrolling
equity investment in the former subsidiary and the gain or loss on the deconsolidation of the subsidiary
be measured at fair value. SFAS No. 160 is effective for financial statements issued for fiscal years
beginning after December 15, 2008. Management has evaluated the provisions of SFAS No. 160 and
determined that its adoption will not have a material effect on the Company’s financial position or
earnings.
C. ACQUISITIONS AND DISPOSITIONS
Management concluded that Little Switzerland, Inc.’s (“Little Switzerland”) operations did not
demonstrate the potential to generate a return on investment consistent with management’s objectives
and, therefore, during the second quarter of 2007 the Company’s Board of Directors authorized the sale
of Little Switzerland. On July 31, 2007, the Company entered into an agreement with NXP Corporation
(“NXP”) by which NXP would purchase 100% of the stock of Little Switzerland. The transaction closed on
September 18, 2007 for net proceeds of $32,870,000 which excludes payments for existing trade payables
owed to the Company by Little Switzerland. The purchase price remains subject to customary post-
closing adjustments. The Company has agreed to continue to distribute TIFFANY & CO. merchandise
through TIFFANY & CO. boutiques maintained in certain LITTLE SWITZERLAND stores post-closing. In
addition, the Company has agreed to provide warehousing services to Little Switzerland for a transition
period.
The Company determined that the continuing cash flows from Little Switzerland operations were not
significant. Therefore, the results of Little Switzerland are presented as a discontinued operation in the
consolidated financial statements for all periods presented. Prior to the reclassification, Little
Switzerland’s results had been included within the non-reportable segment Other.
Little Switzerland’s loss before income taxes in 2007 includes a $54,260,000 pre-tax charge ($22,602,000
after-tax) due to the sale of Little Switzerland. The tax benefit recorded in connection with the charge
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included the effect of basis differences in the investment in Little Switzerland. In the fourth quarter of
2006, the Company performed its annual impairment testing for goodwill and determined that all
goodwill for the Little Switzerland business was impaired as a result of store performance and cash flow
projections. Therefore, the loss before income taxes in 2006 includes a $6,893,000 pre-tax charge related
to the impairment of goodwill.
Summarized statement of earnings data for Little Switzerland is as follows:
(in thousands)
Net revenues
Loss on disposal
Loss from operations
Income tax (benefit) expense
$
$
Years Ended January 31,
2008
2007
2006
52,817
$
87,587
$
82,361
$
54,260
5,401
(32,114)
$
-
15,873
(1,107)
-
5,080
548
5,628
Loss from discontinued operations, net of tax
$
27,547
$
14,766
$
Summarized balance sheet data for Little Switzerland is as follows:
(in thousands)
Assets held for sale:
Inventories, net
Other current assets
Property, plant and equipment, net
Other assets
Total assets held for sale
Liabilities held for sale:
Current liabilities
Other liabilities
Total liabilities held for sale
January 31, 2007
$
$
$
$
67,948
5,526
20,246
13,012
106,732
17,631
4,377
22,008
In October 2005, the Company acquired a corporation that specializes in polishing small carat weight
diamonds. The price paid by the Company for the entire equity interest in this corporation was
$2,000,000, of which $1,200,000 was paid in 2005, $400,000 in 2006 and $400,000 in 2007. This
acquisition was strategically important to the Company’s diamond sourcing program, but not significant
to the Company’s financial position, earnings or cash flows.
The Company made a $10,000,000 investment ($4,500,000 in 2004 and $5,500,000 in 2005) in a joint
venture that owns and operates a diamond polishing facility. The Company’s interest in, and control over,
this venture are such that its results are consolidated with those of the Company and its subsidiaries. The
Company expects, through its investment, to gain access to additional supplies of diamonds that meet its
quality standards.
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D. SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the year for:
(in thousands)
Interest, net of interest
capitalization
Income taxes
2008
2007
2006
Years Ended January 31,
$ 23,543
$ 142,034
$ 24,493
$ 141,209
$ 18,593
$ 210,360
Details of businesses acquired in purchase transactions:
(in thousands)
Fair value of assets acquired
Liabilities assumed
Cash paid for acquisition
Cash acquired
Additional consideration on prior-
year acquisitions
Net cash paid for acquisition
2008
–
–
–
–
400
400
$
$
$
$
Supplemental noncash investing and financing activities:
Years Ended January 31,
2006
2,306
(958)
1,348
(3)
2007
–
–
–
–
$
400
400
5,500
6,845
$
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Issuance of Common Stock under
the Employee Profit Sharing and
Retirement Savings Plan
2008
Years Ended January 31,
2006
2007
$
2,450
$
4,550
$
4,400
E.
INVENTORIES
(in thousands)
Finished goods
Raw materials
Work-in-process
$
2008
812,928
352,211
77,326
$ 1,242,465
$
January 31,
2007
772,102
316,206
58,366
$ 1,146,674
LIFO-based inventories at January 31, 2008 and 2007 represented 68% and 72% of inventories, net, with
the current cost exceeding the LIFO inventory value by $137,152,000 and $108,501,000. The Company
recorded a $19,212,000 pre-tax charge during the fourth quarter of 2007 within cost of sales related to
the discontinuance of certain watch models as a result of the Company’s recent agreement by which The
Swatch Group Ltd. will design, manufacture, distribute and market TIFFANY & CO. brand watches
worldwide.
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F. PROPERTY, PLANT AND EQUIPMENT
(in thousands)
Land
Buildings
Leasehold improvements
Office equipment
Furniture and fixtures
Machinery and equipment
Construction-in-progress
Accumulated depreciation and
amortization
$
2008
41,713
104,527
623,048
325,864
178,535
104,377
21,379
1,399,443
(651,233)
$ 748,210
January 31,
2007
$ 201,529
157,708
543,289
283,610
149,129
96,720
11,994
1,443,979
(531,836)
$ 912,143
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The provision for depreciation and amortization for the years ended January 31, 2008, 2007 and 2006
was $129,462,000, $118,129,000 and $110,018,000. In each of those years, the Company accelerated the
depreciation of certain leasehold improvements and equipment as a result of the shortening of useful
lives related to renovations and/or expansions of retail stores and office facilities. The amount of
accelerated depreciation recognized was $3,916,000, $3,467,000 and $3,710,000 for the years ended
January 31, 2008, 2007 and 2006.
G. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
(in thousands)
Accounts payable-trade
Accrued compensation and
commissions
Accrued sales, withholding and other
taxes
Other
2008
69,186
$
64,302
19,432
50,702
January 31,
2007
69,039
$
47,511
33,721
48,200
$ 203,622
$ 198,471
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H. DEBT
(in thousands)
Short-term borrowings:
Credit Facility
Other
Long-term debt:
Senior Notes:
6.90% Series A, due 2008
7.05% Series B, due 2010
6.15% Series C, due 2009
6.56% Series D, due 2012
4.50% yen loan, due 2011
First Series Yen Bonds, due 2010
Hong Kong Term Loan, due 2011
Switzerland Term Loan, due 2011
Less current portion of long-term debt
$
2008
40,695
3,337
44,032
$
60,000
40,000
41,272
64,231
46,755
140,265
12,624
3,958
409,105
65,640
$ 343,465
January 31,
2007
$ 106,681
–
106,681
$
60,000
40,000
39,706
59,848
41,110
123,329
34,572
13,216
411,781
5,398
$ 406,383
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Credit Facility
In July 2005, the Company entered into a $300,000,000 revolving credit facility (“Credit Facility”) and,
in October 2006, exercised its option to increase the Credit Facility by $150,000,000 to $450,000,000.
The Company has the option to increase such commitments to $500,000,000. Borrowings may be made
from eight participating banks and are at interest rates based upon local currency borrowing rates plus a
margin that fluctuates with the Company’s fixed charge coverage ratio. The Credit Facility, which expires
in July 2010, requires the payment of an annual fee based on the total commitment and contains
covenants that require maintenance of certain debt/equity and interest-coverage ratios, in addition to
other requirements customary to loan facilities of this nature. The weighted-average interest rate for the
Credit Facility was 4.58% and 2.44% at January 31, 2008 and 2007.
6.90% Series A Senior Notes and 7.05% Series B Senior Notes
In December 1998, the Company, in private transactions with various institutional lenders, issued, at par,
$60,000,000 principal amount 6.90% Series A Senior Notes Due 2008 and $40,000,000 principal
amount 7.05% Series B Senior Notes Due 2010. The proceeds of these issuances were used by the
Company for working capital and to refinance a portion of the outstanding short-term indebtedness. The
Note Purchase Agreements require lump sum repayments upon maturities, maintenance of specific
financial covenants and ratios and limit certain payments, investments and indebtedness, in addition to
other requirements customary to such borrowings.
6.15% Series C Senior Notes and 6.56% Series D Senior Notes
In July 2002, the Company, in a private transaction with various institutional lenders, issued, at par,
$40,000,000 of 6.15% Series C Senior Notes Due 2009 and $60,000,000 of 6.56% Series D Senior Notes
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Due 2012 with lump sum repayments upon maturities. The proceeds of these issuances were used by the
Company for general corporate purposes, working capital and to redeem previously issued Senior Notes
which came due in January 2003. The Note Purchase Agreements require maintenance of specific
financial covenants and ratios and limit certain changes to indebtedness and the general nature of the
business, in addition to other requirements customary to such borrowings. Concurrent with the issuance
of such debt, the Company entered into an interest-rate swap agreement to hedge the change in fair value
of its fixed-rate obligation. Under the swap agreement, the Company pays variable-rate interest and
receives fixed interest-rate payments periodically over the life of the instrument. The Company accounts
for the interest-rate swap agreement as a fair-value hedge of the debt (see Note I), requiring the debt to
be valued at fair value. The interest-rate swap agreement had the effect of decreasing interest expense by
$535,000 for the year ended January 31, 2008, increasing interest expense by $424,000 for the year ended
January 31, 2007, and decreasing interest expense by $751,000 for the year ended January 31, 2006.
4.50% Yen Loan
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The Company has a yen 5,000,000,000 ($46,755,000 at January 31, 2008), 15-year term loan due 2011,
bearing interest at a rate of 4.50%.
First Series Yen Bonds
In September 2003, the Company issued yen 15,000,000,000 ($140,265,000 at January 31, 2008) of
senior unsecured First Series Yen Bonds (“Bonds”) due in 2010 with principal due upon maturity and a
fixed coupon rate of 2.02% payable in semi-annual installments. The Bonds were sold in a private
transaction to qualified institutional investors in Japan. The proceeds from the issuance were primarily
used by the Company to finance the purchase of the land and building housing its Tokyo Flagship store,
which was subsequently sold in 2007.
Term Loans
In January 2006, the Company borrowed HKD 300,000,000 ($38,672,000 at issuance) (“Hong Kong
Term Loan”) and CHF 19,500,000 ($15,145,000 at issuance) (“Switzerland Term Loan”) due in January
2011. These funds were used to partially finance the repatriation of dividends related to the American
Jobs Creation Act of 2004 (see Note O). Principal payments of 10% of the original principal amount are
due each year, with the balance due upon maturity. Amounts may be prepaid without incurring penalties.
The covenants of the term loans are similar to the Credit Facility. Interest rates are based upon local
currency borrowing rates plus a margin that fluctuates with the Company’s fixed charge coverage ratio.
The interest rates for the Hong Kong Term Loan and the Switzerland Term Loan were 3.96% and 3.09%,
respectively, at January 31, 2008 and 4.28% and 2.40%, respectively, at January 31, 2007.
Other Lines of Credit
The Company had other lines of credit totaling $9,206,000, of which $3,337,000 was outstanding at
January 31, 2008.
The Company had letters of credit and financial guarantees of $20,139,000 outstanding at January 31,
2008.
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Debt Covenants
As of January 31, 2008, the Company was in compliance with all covenants. In the event of any default of
payment or performance obligations extending beyond applicable cure periods under the provisions of
any one of the Credit Facility, Senior Notes or Term Loans, the loan agreements may be terminated or
payment of the notes accelerated. Further, each of the Credit Facility, Senior Notes or Term Loans
contain cross default provisions permitting the termination of the loans, or acceleration of the notes, as
the case may be, in the event that any of the Company’s other debt obligations are terminated or
accelerated prior to the expressed maturity.
Aggregate maturities of long-term debt as of January 31, 2008 are as follows:
Long-Term Debt Maturities
Years Ending January 31,
2009
2010
2011
2012
2013
Thereafter
Amount
(in thousands)
$
65,640
46,912
185,567
46,755
64,231
–
$ 409,105
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I. FINANCIAL INSTRUMENTS
Hedging Instruments
In the normal course of business, the Company uses financial hedging instruments, including derivative
financial instruments, for purposes other than trading. These instruments include interest-rate swap
agreements, foreign currency-purchased put options, forward foreign-exchange contracts and a
combination of call and put option contracts in a net-zero cost collar arrangement (“collars”). The
Company does not use derivative financial instruments for speculative purposes.
The Company’s foreign subsidiaries and branches satisfy nearly all of their inventory requirements by
purchasing merchandise, payable in U.S. dollars, from the Company’s principal subsidiary. Accordingly,
the foreign subsidiaries and branches have foreign currency exchange risk that may be hedged. In
addition, the Company has foreign currency exchange risk related to foreign currency-denominated
purchases of inventory and services from third-party vendors. To mitigate these risks, the Company uses
foreign-exchange forward contracts to hedge the settlement of foreign currency liabilities. At January 31,
2008 and 2007, the Company had $7,311,000 and $5,885,000 of outstanding forward foreign-exchange
contracts, which subsequently matured in February and March 2008 and February and March 2007,
respectively.
To minimize the potentially negative effect of a significant strengthening of the U.S. dollar against the
yen, the Company purchases yen put options (“options”) as hedges of forecasted purchases of
merchandise. The Company accounts for its option contracts as cash-flow hedges. The Company assesses
hedge effectiveness based on the total changes in the options’ cash flows. The effective portion of
unrealized gains and losses associated with the value of the option contracts is deferred as a component
of accumulated other comprehensive gain (loss) and is recognized as a component of cost of sales on the
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Company’s consolidated statement of earnings when the related inventory is sold. There was no material
ineffectiveness related to the Company’s option contracts in 2007, 2006 and 2005.
Beginning in the first quarter of 2007, the Company began using collars as hedges of forecasted
purchases of precious metals to minimize the effect of changes in platinum and silver prices. The
Company accounts for its collars as cash-flow hedges. The Company assesses hedge effectiveness based
on the total changes in the collars’ cash flows. The effective portion of unrealized gains and losses
associated with the value of the collars is deferred as a component of other comprehensive gain (loss)
and is recognized as a component of cost of sales on the Company’s consolidated statement of earnings
when the related inventory is sold. There was no material ineffectiveness related to the Company’s collars
in 2007.
As discussed in Note H, the Company uses an interest-rate swap agreement to effectively convert its
fixed-rate Senior Notes Series C and Series D obligations to floating-rate obligations. The Company
accounts for the interest-rate swaps as a fair-value hedge. The terms of each swap agreement match the
terms of the underlying debt, resulting in no ineffectiveness.
Hedging activity affected accumulated other comprehensive gain (loss), net of tax, as follows:
(in thousands)
Balance at beginning of period
Gains transferred to earnings, net of tax
expense of $1,089 and $2,006
Change in fair value, net of tax expense
of $979 and $1,359
2008
2,046
(2,013)
856
889
$
$
Years Ended January 31,
2007
3,247
(3,725)
2,524
2,046
$
$
The Company expects that $951,000 of net derivative gains included in accumulated other
comprehensive income at January 31, 2008 will be reclassified into earnings within the next 12 months.
This amount will vary due to fluctuations in the yen exchange rate and precious metal prices. The
maximum term over which the Company is hedging its exposure to the variability of future cash flows for
all forecasted transactions is 12 months.
Fair Value
The fair value of financial instruments is generally determined by reference to market values resulting
from trading on a national securities exchange or in an over-the-counter market. The fair value of cash
and cash equivalents, accounts receivable and accounts payable and accrued liabilities approximates
carrying value due to the short-term maturities of these assets and liabilities. The fair value of short-term
borrowings and certain long-term debt approximates carrying value due to its variable interest-rate
terms. The fair value of certain long-term debt was determined using the quoted market prices of debt
instruments with similar terms and maturities. The fair value of the interest-rate swap agreements is
based on the amounts the Company would expect to pay/receive to/from third parties to terminate the
agreements.
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The carrying amounts and estimated fair values of financial instruments are as follows:
$
(in thousands)
Mutual funds
Auction rate securities
Short-term borrowings
Current portion of long-term
debt
Long-term debt
Yen put options
Collars
Interest-rate swap agreements
Carrying
Value
28,133
–
44,032
65,640
343,465
863
6,435
5,503
J. COMMITMENTS AND CONTINGENCIES
2008
Estimated
Fair Value
$
$
28,133
–
44,032
67,273
355,976
863
6,435
5,503
January 31,
2007
Estimated
Fair Value
26,615
15,500
106,681
5,398
419,220
6,056
–
(446)
$
Carrying
Value
26,615
15,500
106,681
5,398
406,383
6,056
–
(446)
The Company leases certain office, distribution, retail and manufacturing facilities and equipment. Retail
store leases may require the payment of minimum rentals and contingent rent based on a percentage of
sales exceeding a stipulated amount. The lease agreements, which expire at various dates through 2051,
are subject, in many cases, to renewal options and provide for the payment of taxes, insurance and
maintenance. Certain leases contain escalation clauses resulting from the pass-through of increases in
operating costs, property taxes and the effect on costs from changes in consumer price indices.
Rent-free periods and other incentives granted under certain leases and scheduled rent increases are
charged to rent expense on a straight-line basis over the related terms of such leases. Lease expense
includes predetermined rent escalations (including escalations based on the Consumer Price Index or
other indices) and is recorded on a straight-line basis over the term of the lease. Adjustments to indices
are treated as contingent rent and recorded in the period that such adjustments are determined.
In the third quarter of 2007, the Company entered into a sale-leaseback arrangement for the land and
multi-tenant building housing the TIFFANY & CO. Flagship store in Tokyo’s Ginza shopping district. The
Company is leasing back that portion of the property that it occupied immediately prior to the
transaction. In the third quarter of 2007, the Company received proceeds of $327,537,000
(¥38,050,000,000) and the transaction resulted in a pre-tax gain of $105,051,000, recorded within other
operating income, and a deferred gain of $75,244,000, which will be amortized in SG&A expenses over a
15-year period. The pre-tax gain represents the profit on the sale of the property in excess of the present
value of the minimum lease payments. The lease is accounted for as an operating lease. The lease expires
in 2032; however, the Company has options to terminate the lease in 2022 and 2027 without penalty.
In the third quarter of 2007, the Company entered into a sale-leaseback arrangement for the building
housing the TIFFANY & CO. Flagship store in London. The Company sold the building for proceeds of
$148,628,000 (£73,000,000) and simultaneously entered into a 15-year lease with two 10-year renewal
options. The transaction resulted in a deferred gain of $63,961,000, which will be amortized in SG&A
expenses over a 15-year period. The Company continues to occupy the entire building and the lease is
accounted for as an operating lease.
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In the third quarter of 2005, the Company entered into a sale-leaseback arrangement for its Retail Service
Center, a distribution and administrative office facility. The Company received proceeds of $75,000,000
resulting in a gain of $5,300,000, which has been deferred and is being amortized over the lease term. The
lease has been accounted for as an operating lease. The lease expires in 2025 and has two ten-year
renewal options.
Rent expense for the Company’s operating leases, including escalations, consisted of the following:
(in thousands)
Minimum rent for retail locations
Contingent rent based on sales
Office, distribution and manufacturing facilities
and equipment
$
2008
82,577
40,694
Years Ended January 31,
$
2007
54,153
34,756
$
2006
48,633
30,395
15,633
$ 138,904
29,435
$ 118,344
27,099
106,127
$
Aggregate minimum annual rental payments under non-cancelable operating leases are as follows:
Years Ending January 31,
2009
2010
2011
2012
2013
Thereafter
Minimum Annual
Rental Payments
(in thousands)
$
114,078
109,092
101,146
91,878
84,736
523,609
The Company entered into a diamond purchase agreement with Aber Diamond Corporation (“Aber”)
whereby the Company has the obligation to purchase a minimum of $50,000,000 of diamonds, subject
to availability and the Company’s quality standards, per year for 10 years beginning in 2004.
At January 31, 2008, the Company’s contractual cash obligations and contingent funding commitments
were: inventory purchases of $403,571,000 including the obligation under the agreement with Aber, non-
inventory purchases of $9,946,000, construction-in-progress of $16,047,000 and other contractual
obligations of $12,473,000.
The Company is party to a CDN$35,000,000 ($35,423,000 at January 31, 2008) credit facility and a
CDN$8,000,000 ($8,097,000 at January 31, 2008) working capital loan commitment (collectively the
“Commitment”) to Tahera, a Canadian diamond mining and exploration company. At January 31, 2008,
the Commitment was fully funded and no further amounts remain available to Tahera. In consideration
of the Commitment, the Company was granted the right to purchase or market all diamonds mined at the
Jericho mine. This mine has been developed and constructed by Tahera in Nunavut, Canada (the
“Project”). Indebtedness under the Commitment is secured by certain assets of the Project. Although the
Project has been operational, Tahera has continued to experience financial losses as a result of
production problems, appreciation of the Canadian Dollar versus the U.S. Dollar, the rise of oil prices and
other costs relative to diamond prices. Due to the financial difficulties, Tahera sought additional
financing in the fourth quarter of 2007 in order to meet its cash flow requirements but was not
successful. In January 2008, Tahera filed for protection from creditors pursuant to the provisions of the
Companies’ Creditors Arrangement Act in Canada. Tahera is continuing to pursue financing and strategic
alternatives, but it has not shown indications of possible success to-date and the Project’s operations
T I F F A N Y & C O .
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have had to cease and be placed in care and maintenance mode. As a result of these events, the
Company’s management has determined that collectibility of the outstanding Commitment is not
probable. Therefore, the Company has recorded an impairment charge of $47,981,000, within SG&A
expenses, for the full amount outstanding including accrued interest under the Commitment.
The Company has an agreement with Mitsukoshi Ltd. of Japan (“Mitsukoshi”) which is subject to renewal
on an annual basis. The agreement continued long-standing commercial relationships that the Company
has maintained with Mitsukoshi. Sales at Mitsukoshi department stores represented 5%, 9% and 11% of
net sales for the years ended January 31, 2008, 2007 and 2006. The Company also operates boutiques in
other Japanese department stores. The Company pays the department stores a percentage fee based on
sales generated in these locations. Fees paid to Mitsukoshi and other Japanese department stores totaled
$65,513,000, $69,982,000 and $72,231,000 in 2007, 2006 and 2005 and are included in SG&A expenses.
Sales transacted at these retail locations are recognized at the “point of sale.”
The Company is, from time to time, involved in routine litigation incidental to the conduct of its
business, including proceedings to protect its trademark rights, litigation instituted by persons injured
upon premises under the Company’s control, litigation with present and former employees and litigation
claiming infringement of the copyrights and patents of others. Management believes that such pending
litigation will not have a significant effect on the Company’s financial position, earnings or cash flows.
K. RELATED PARTIES
The Company’s Chairman of the Board and Chief Executive Officer is a member of the Board of Directors
of The Bank of New York Mellon, which serves as the Company’s lead bank for its Credit Facility, provides
other general banking services; serves as the trustee and an investment manager for the Company’s
pension plan; and Mellon Investor Services LLC serves as the Company’s transfer agent and registrar. In
addition, the Company’s President is a member of the Board of Directors of The Bank of New York
Hamilton Funds, Inc. Fees paid to the bank for services rendered, interest on debt and premiums on
derivative contracts amounted to $1,534,000, $2,375,000 and $1,931,000 in 2007, 2006 and 2005.
The Company’s Executive Vice President and Chief Financial Officer is a member of the Board of
Directors of The Dun & Bradstreet Corporation. Fees paid to that company for credit information reports
were less than $100,000 in each of 2007, 2006 and 2005.
A member of the Company’s Board of Directors is a Senior Managing Director of Evercore Partners, a
financial advisory and private equity firm. Fees paid to that company for financial advisory services, all of
which related to the sale of Little Switzerland, were $1,136,000 in 2007.
A member of the Company’s Board of Directors was an officer of IBM Corporation until January 2006.
Fees paid to that company for information technology equipment and services rendered amounted to
$14,794,000 in 2005.
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L. STOCKHOLDERS’ EQUITY
Stock Repurchase Program
In January 2008, the Company’s Board of Directors amended the existing share repurchase program to
extend the expiration date of the program to January 2011 and to authorize the repurchase of up to an
additional $500,000,000 of the Company’s Common Stock. The timing of repurchases and the actual
number of shares to be repurchased depend on a variety of discretionary factors such as price and other
market conditions.
The Company’s share repurchase activity was as follows:
(in thousands, except per share amounts)
Cost of repurchases
Shares repurchased and retired
Average cost per share
2008
$ 574,608
12,374
46.44
$
Years Ended January 31,
2006
$ 132,816
3,835
34.63
2007
$ 281,176
8,149
34.50
$
$
At January 31, 2008, there remained $620,806,000 of authorization for future repurchases under the
program.
Cash Dividends
In August 2007, the Company’s Board of Directors declared a 25% increase in the quarterly dividend rate
on common shares, increasing it from $0.12 per share to $0.15 per share. In May 2007, they declared a
20% increase in the quarterly rate, increasing it from $0.10 per share to $0.12 per share. In May 2006, they
declared a 25% increase in the quarterly rate, increasing it from $0.08 per share to $0.10 per share. On
February 21, 2008, they declared a quarterly dividend of $0.15 per common share. This dividend will be
paid on April 10, 2008 to stockholders of record on March 20, 2008.
M. STOCK COMPENSATION PLANS
The Company has two stock compensation plans under which awards may continue to be made: the
Employee Incentive Plan and the Directors Option Plan, both of which were approved by the
stockholders. No award may be made under the employee plan after April 30, 2015 and under the
Directors Option Plan after May 21, 2008.
Under the Employee Incentive Plan, the maximum number of common shares authorized for issuance
was 11,000,000, as amended (subject to adjustment); awards may be made to employees of the Company
or its related companies in the form of stock options, stock appreciation rights, shares of stock (or rights
to receive shares of stock) and cash. Awards of shares (or rights to receive shares) reduce the above
authorized amount by 1.58 shares for every share delivered pursuant to such an award. Awards made in
the form of non-qualified stock options, tax-qualified incentive stock options or stock appreciation rights
have a maximum term of 10 years from the grant date and may not be granted for an exercise price below
fair-market value.
The Company grants performance stock units (“PSU”) and stock options to the executive officers of the
Company. Other management employees are granted restricted stock units (“RSU”) or a combination of
RSU’s and PSU’s. Stock options vest in increments of 25% per year over four years. PSU’s issued to the
executive officers vest at the end of a three-year period while PSU’s issued to other management
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employees vest in increments of 25% per year over a four-year period. All PSU’s are contingent on the
Company’s performance against pre-set objectives established by the Compensation Committee of the
Company’s Board of Directors. RSU’s vest in increments of 25% per year over a four-year period. The PSU’s
and RSU’s require no payment from the employee. PSU and RSU payouts will be in shares of Company
stock at vesting. Compensation expense is recognized using the fair market value at the date of grant and
recorded ratably over the vesting period. However, PSU compensation expense may be adjusted over the
vesting period if interim performance objectives are not met.
Under the Directors Option Plan, the maximum number of shares of Common Stock authorized for
issuance was 1,000,000 (subject to adjustment); awards may be made to non-employee directors of the
Company in the form of stock options or shares of stock but may not exceed 20,000 (subject to
adjustment) shares per non-employee director in any fiscal year; awards made in the form of stock
options may have a maximum term of 10 years from the grant date and may not be granted for an
exercise price below fair-market value unless the director has agreed to forego all or a portion of his or
her annual cash retainer or other fees for service as a director in exchange for below market exercise
price options. All director options granted to-date vest in increments of 50% per year over a two-year
period.
The Company uses newly-issued shares to satisfy stock option exercises and vesting of PSU’s and RSU’s.
The fair value of each option award is estimated on the grant date using a Black-Scholes option valuation
model and compensation expense is recognized ratably over the vesting period. The valuation model
uses the assumptions noted in the following table. Expected volatilities are based on historical volatility
of the Company’s stock. The Company uses historical data to estimate the expected term of the option
that represents the period of time that options granted are expected to be outstanding. The risk-free
interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve
in effect at the grant date.
Dividend yield
Expected volatility
Risk-free interest rate
Expected term in years
2008
0.7%
33.5%
4.0%
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2007
0.7%
38.5%
4.5%
8
2006
0.5%
39.2%
4.6%
7
A summary of the option activity for the Company’s stock option plans is presented below:
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Granted
Exercised
Forfeited/cancelled
Outstanding at January 31, 2008
Exercisable at January 31, 2008
Weighted-
Average
Remaining
Contractual
Term in Years
Aggregate
Intrinsic
Value
(in thousands)
4.79
4.16
$ 58,456
$ 56,433
Number of
Shares
11,153,201
497,000
(2,810,152)
(67,038)
8,773,011
7,597,108
Weighted-
Average
Exercise Price
$
$
$
30.26
37.89
24.48
38.33
32.49
31.75
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The weighted-average grant-date fair value of options granted for the years ended January 31, 2008, 2007
and 2006 was $14.81, $18.75 and $17.56. The total intrinsic value (market value on date of exercise less
grant price) of options exercised during the years ended January 31, 2008, 2007 and 2006 was
$69,693,000, $21,518,000 and $34,336,000.
A summary of the activity for the Company’s RSU’s is presented below:
Non-vested at January 31, 2007
Granted
Vested
Forfeited
Non-vested at January 31, 2008
Number of Shares
Weighted-Average
Grant-Date Fair Value
1,269,517
547,280
(389,453)
(91,251)
1,336,093
$
$
37.99
37.57
37.36
37.92
38.02
A summary of the activity for the Company’s PSU’s is presented below:
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Non-vested at January 31, 2007
Granted
Non-vested at January 31, 2008
Number of Shares
942,000
491,352
1,433,352
Weighted-Average
Grant-Date Fair Value
$
$
36.25
36.03
36.18
The weighted-average grant-date fair value of RSU’s granted for the years ended January 31, 2007 and
2006 was $39.33 and $39.10. The weighted-average grant-date fair value of PSU’s granted for the years
ended January 31, 2007 and 2006 was $40.15 and $37.84.
As of January 31, 2008, there was $74,888,000 of total unrecognized compensation expense related to
non-vested share-based compensation arrangements granted under the Employee Incentive Plan and
Directors Option Plan. The expense is expected to be recognized over a weighted-average period of 2.9
years. The total fair value of RSU’s vested during the year ended January 31, 2008, 2007 and 2006 was
$15,183,000, $9,826,000 and $4,594,000. No PSU’s were vested or forfeited during the years ended
January 31, 2008, 2007 and 2006.
Total compensation cost for stock-based-compensation awards recognized in income and the related
income tax benefit was $37,069,000 and $13,764,000 for the year ended January 31, 2008, $32,793,000
and $13,061,000 for the year ended January 31, 2007 and $25,622,000 and $10,104,000 for the year ended
January 31, 2006. Total compensation cost capitalized in inventory was not significant.
N. EMPLOYEE BENEFIT PLANS
Pensions and Other Postretirement Benefits
The Company maintains the following pension plans: a noncontributory defined benefit pension plan
(“Qualified Plan”) covering substantially all U.S. employees hired before January 1, 2006 and qualified in
accordance with the Internal Revenue Service Code, a non-qualified unfunded retirement income plan
(“Excess Plan”) covering certain employees affected by Internal Revenue Service Code compensation
limits, a non-qualified unfunded Supplemental Retirement Income Plan (“SRIP”) that covers executive
officers of the Company and a noncontributory defined benefit pension plan covering substantially all
employees of Tiffany and Company Japan Inc. (“Japan Plan”).
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Qualified Plan benefits are based on the highest five years of compensation and the number of years of
service. Effective February 1, 2007, the Qualified Plan was amended to allow participants with at least 10
years of service who retire after attaining age 55 to receive reduced retirement benefits. The Company
funds the Qualified Plan’s trust in accordance with regulatory limits to provide for current service and
for the unfunded benefit obligation over a reasonable period and for current service benefit accruals. The
Company made cash contributions of $15,000,000 to the Qualified Plan in 2007 and plans to contribute
approximately $15,000,000 in 2008. However, this expectation is subject to change based on asset
performance being significantly different than the assumed long-term rate of return on pension assets.
Effective February 1, 2006, the Qualified Plan was amended to exclude all employees hired on or after
January 1, 2006 from the Qualified Plan. Instead, employees hired on or after January 1, 2006 will be
eligible to receive a defined contribution retirement benefit under the Employee Profit Sharing and
Retirement Savings Plan (see below). Employees hired before January 1, 2006 will continue to be eligible
for and accrue benefits under the Qualified Plan.
On January 1, 2004, the Company established the Excess Plan which uses the same retirement benefit
formula set forth in the Qualified Plan, but includes earnings that are excluded under the Qualified Plan
due to Internal Revenue Service Code qualified pension plan limitations. Benefits payable under the
Qualified Plan offset benefits payable under the Excess Plan. Employees vested under the Qualified Plan
are vested under the Excess Plan; however, benefits under the Excess Plan are subject to forfeiture if
employment is terminated for cause and, for those who leave the Company prior to age 65 if they fail to
execute and adhere to non-competition and confidentiality covenants. Effective February 1, 2007, the
Excess Plan was amended to allow participants with at least 10 years of service who retire after attaining
age 55 to receive reduced retirement benefits.
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The SRIP is a supplement to the Qualified Plan, Excess Plan and Social Security by providing additional
payments upon a participant’s retirement. Benefits payable under the Qualified Plan, Excess Plan and
Social Security offset benefits payable under the SRIP. Effective February 1, 2007, benefits payable under
the SRIP do not vest until a participant both (i) attains at least age 55 while employed by the Company
and (ii) the employee has provided at least 10 years of service, except in the event of a change in control.
Furthermore, benefits are subject to forfeiture if benefits under the Excess Plan are forfeited.
Japan Plan benefits are based on monthly compensation and the numbers of years of service. Benefits are
payable in a lump sum upon retirement, termination, resignation or death if the participant has
completed at least three years of service and attains at least age 60 while employed by Tiffany and
Company Japan Inc.
The Company accounts for pension expense using the projected unit credit actuarial method for
financial reporting purposes. The actuarial present value of the benefit obligation is calculated based on
the expected date of separation or retirement of the Company’s eligible employees.
The Company provides certain health-care and life insurance benefits (“Other Postretirement Benefits”)
for current and retired employees and accrues the cost of providing these benefits throughout the
employees’ active service period until they attain full eligibility for those benefits. Substantially all of the
Company’s U.S. full-time employees may become eligible for these benefits if they reach normal or early
retirement age while working for the Company. The cost of providing postretirement health-care benefits
is shared by the retiree and the Company, with retiree contributions evaluated annually and adjusted in
order to maintain the Company/retiree cost-sharing target ratio. The life insurance benefits are
noncontributory. The Company’s employee and retiree health-care benefits are administered by an
insurance company, and premiums on life insurance are based on prior years’ claims experience.
T I F F A N Y & C O .
K - 7 5
The Company uses a December 31 measurement date for its U.S. employee benefit plans and January 31
for the Japan Plan. In accordance with SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension
and Other Postretirement Plans – an amendment of FASB Statements No. 87, 88, 106 and 132(R)”, the
Company is required to change the measurement date of plan assets and benefit obligations from
December 31 to January 31 for the fiscal year ending January 31, 2008. The Company does not expect the
change in measurement date to have a significant impact on the Company’s financial position or
earnings.
Obligations and Funded Status
The following tables provide a reconciliation of benefit obligations, plan assets and funded status of the
plans as of the measurement date:
Pension Benefits
2007
2008
January 31,
Other Postretirement
Benefits
2007
2008
F
O
R
M
1
0
-
K
(in thousands)
Change in benefit obligation:
Benefit obligation at beginning
of year
Service cost
Interest cost
Participants’ contributions
MMA retiree drug subsidy
Amendment
Actuarial gain
Benefits paid
Translation
Benefit obligation at end of year*
$
$ 265,482
17,796
15,932
–
–
–
(21,253)
(5,422)
1,029
273,564
$ 249,015
16,643
13,739
–
–
6,500
(15,312)
(4,844)
(259)
265,482
Change in plan assets:
Fair value of plan assets at beginning
of year
Actual return on plan assets
Employer contribution
Participants’ contributions
MMA retiree drug subsidy
Benefits paid
Fair value of plan assets at end of year
211,020
17,234
15,900
–
–
(5,422)
238,732
173,436
21,612
20,816
–
–
(4,844)
211,020
$
31,819
1,513
1,671
293
62
–
(5,053)
(1,014)
–
29,291
–
–
659
293
62
(1,014)
–
24,983
900
1,417
446
164
6,207
(518)
(1,780)
–
31,819
–
–
1,170
446
164
(1,780)
–
Funded status at end of year
$
(34,832)
$
(54,462) $
(29,291) $
(31,819)
*The benefit obligation for Pension Benefits is the projected benefit obligation and for Other
Postretirement Benefits is the accumulated postretirement benefit obligation.
T I F F A N Y & C O .
K - 7 6
The following tables provide additional information regarding the Company’s pension plans’ projected
benefit obligations and assets (included in pension benefits in the table above) and accumulated benefit
obligation:
January 31, 2008
(in thousands)
Projected benefit obligation
Fair value of plan assets
Funded status
Qualified
$ 221,595
238,732
$ 17,137
Excess
$ 29,622
–
SRIP
$ 13,791
–
$
$ (29,622) $ (13,791) $
Japan
8,556
–
Total
$ 273,564
238,732
(8,556) $ (34,832)
Accumulated benefit obligation
$ 180,380
$ 14,374
$
6,127
$
6,085
$ 206,966
(in thousands)
Projected benefit obligation
Fair value of plan assets
Funded status
Qualified
$ 214,292
211,020
Excess
$ 29,438
–
(3,272) $ (29,438) $ (14,331) $
SRIP
$ 14,331
–
$
$
January 31, 2007
Japan
7,421
–
Total
$ 265,482
211,020
(7,421) $ (54,462)
Accumulated benefit obligation
$ 176,951
$ 10,483
$
4,660
$
4,879
$ 196,973
At January 31, 2008, the Company had a non-current asset of $17,137,000, a current liability of $2,006,000
and a non-current liability of $79,254,000 for pension and other postretirement benefits. At January 31,
2007, the Company had a current liability of $1,815,000 and a non-current liability of $84,466,000 for
pension and other postretirement benefits.
Amounts recognized in accumulated other comprehensive income consist of:
January 31,
K
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1
M
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F
(in thousands)
Net actuarial loss (gain)
Prior service cost (credit)
Deferred income taxes
2008
1,112
8,623
(3,854)
5,881
$
$
$
Pension Benefits
2007
28,703
9,899
(15,416)
23,186
$
Other Postretirement Benefits
2007
3,794
(10,794)
474
(6,526)
2008
(1,269)
(10,004)
3,264
(8,009) $
$
$
$
The estimated pre-tax amount that will be amortized from accumulated other comprehensive income
into net periodic benefit cost within the next 12 months is as follows:
Other Postretirement Benefits
–
(790)
(790)
$
$
(in thousands)
Net actuarial loss
Prior service cost (credit)
Pension Benefits
$
$
349
1,282
1,631
T I F F A N Y & C O .
K - 7 7
Net Periodic Benefit Cost
Net periodic pension and other postretirement benefit expense included the following components:
(in thousands)
Net Periodic Benefit Cost:
Service cost
Interest cost
Expected return on plan
assets
Amortization of prior service
cost
Amortization of net loss
Net expense
2008
Pension Benefits
2006
2007
Other Postretirement Benefits
2006
2007
2008
Years Ended January 31,
$ 17,796
15,932
$ 16,643
13,739
$ 13,802
12,118
$ 1,513
1,671
$
900
1,417
$ 1,697
1,780
(13,704)
(11,699)
(10,052)
–
–
–
1,281
2,957
$24,262
712
4,186
$ 23,581
815
2,956
$ 19,639
(790)
10
$ 2,404
(1,291)
144
$ 1,170
(856)
74
$ 2,695
F
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Other Amounts Recognized in Other Comprehensive Income
Other changes in plan assets and benefit obligations recognized in other comprehensive income are as
follows:
(in thousands)
Net expense
Net actuarial gain
Recognized actuarial loss
Recognized prior service (cost) credit
Total recognized in other comprehensive
income
Total recognized in net periodic benefit
cost and other comprehensive income
Pension Benefits
2008
24,262
(24,629)
(2,957)
(1,281)
$
$
$
(28,867)
$
(4,605)
Year Ended January 31,
Other Postretirement
Benefits
2008
2,404
(5,053)
(10)
790
$
$
$
$
(4,273)
(1,869)
T I F F A N Y & C O .
K - 7 8
Weighted-average assumptions used to determine benefit obligations:
Assumptions
Discount rate:
Qualified Plan/ Excess Plan/ SRIP
Japan Plan
Rate of increase in compensation:
Qualified Plan
Excess Plan
SRIP
Japan Plan
2008
6.50%
2.75%
4.00%
5.50%
8.50%
2.25%
January 31,
Pension Benefits
2007
6.00%
2.75%
3.50%
5.00%
8.00%
2.25%
The discount rate for Other Postretirement Benefits was 6.50% and 6.00% for January 31, 2008 and 2007.
Weighted-average assumptions used to determine net periodic benefit cost:
K
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Discount rate:
Qualified Plan/ Excess Plan/ SRIP
Japan Plan
Expected return on plan assets
Rate of increase in compensation:
Qualified Plan
Excess Plan
SRIP
Japan Plan
2008
2007
January 31,
Pension Benefits
2006
6.00%
2.75%
7.50%
3.50%
5.00%
8.00%
2.25%
5.75%
2.75%
7.50%
3.50%
5.00%
8.00%
2.25%
6.00%
2.50%
7.50%
3.50%
3.50%
8.00%
2.00%
The discount rate for Other Postretirement Benefits was 6.00%, 5.75% and 6.00% for January 31, 2008,
2007 and 2006.
The expected long-term rate of return on Qualified Plan assets is selected by taking into account the
average rate of return expected on the funds invested or to be invested to provide for benefits included
in the projected benefit obligation. More specifically, consideration is given to the expected rates of
return (including reinvestment asset return rates) based upon the plan’s current asset mix, investment
strategy and the historical performance of plan assets.
For postretirement benefit measurement purposes, 9.00% (for pre-age 65 retirees) and 10.00% (for post-
age 65 retirees) annual rates of increase in the per capita cost of covered health care were assumed for
2008. The rate was assumed to decrease gradually to 5.00% by 2016 (for pre-age 65 retirees) and by 2018
(for post-age 65 retirees) and remain at that level thereafter.
Assumed health-care cost trend rates have a significant effect on the amounts reported for the
Company’s postretirement health-care benefits plan. A one-percentage-point increase in the assumed
T I F F A N Y & C O .
K - 7 9
F
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1
0
-
K
health-care cost trend rate would increase the Company’s accumulated postretirement benefit obligation
by $455,000 and the aggregate service and interest cost components of net periodic postretirement
benefits by $28,000 for the year ended January 31, 2008. Decreasing the assumed health-care cost trend
rate by one-percentage-point would decrease the Company’s accumulated postretirement benefit
obligation by $416,000 and the aggregate service and interest cost components of net periodic
postretirement benefits by $25,000 for the year ended January 31, 2008.
The Company’s Qualified Plan asset allocation at the measurement date and target asset allocation by
asset category are as follows:
Plan Assets
Asset Category
Equity securities
Debt securities
Other
Target Asset Allocation
60% – 70%
20% – 30%
5 % – 15%
Percentage of Qualified Plan Assets
at December 31,
2007
66%
24
10
100%
2006
67%
26
7
100%
Qualified Plan assets include investments in the Company’s Common Stock, representing 1% of plan
assets at December 31, 2006. At December 31, 2007, the Qualified Plan did not include any investments in
the Company’s Common Stock.
The Company’s investment objectives, related to Qualified Plan assets, are the preservation of principal
and the achievement of a reasonable rate of return over time. As a result, the Qualified Plan’s assets are
allocated based on an expectation that equity securities will outperform debt securities over the long
term. Assets of the Qualified Plan are broadly diversified. Equity securities include U.S. large, middle and
small capitalization equities and international equities. Debt securities include U.S. government,
corporate and mortgage obligations. The Company attempts to mitigate investment risk by rebalancing
asset allocation periodically.
Benefit Payments
The Company expects the following future benefit payments to be paid:
Years Ending January 31,
Pension Benefits
(in thousands)
Other Postretirement Benefits
(in thousands)
2009
2010
2011
2012
2013
2014-2018
$
5,702
6,403
7,288
8,125
9,029
67,957
$
955
1,012
1,076
1,149
1,226
7,590
Profit Sharing and Retirement Savings Plan
The Company maintains an Employee Profit Sharing and Retirement Savings Plan (“EPSRS Plan”) that
covers substantially all U.S.-based employees. Under the profit-sharing feature of the EPSRS Plan, the
Company makes contributions, in the form of newly-issued Company Common Stock, to the employees’
T I F F A N Y & C O .
K - 8 0
accounts based on the achievement of certain targeted earnings objectives established by, or as otherwise
determined by, the Company’s Board of Directors. The Company recorded expense of $4,750,000,
$2,450,000 and $4,550,000 in 2007, 2006 and 2005. Under the retirement savings feature of the EPSRS
Plan, employees who meet certain eligibility requirements may participate by contributing up to 15% of
their annual compensation, and the Company provides a 50% matching cash contribution up to 6% of
each participant’s total compensation. The Company recorded expense of $6,940,000, $6,409,000 and
$5,674,000 in 2007, 2006 and 2005. Contributions to both features of the EPSRS Plan are made in the
following year.
Under the profit-sharing feature of the EPSRS Plan, the Company’s stock contribution is required to be
maintained in such stock until the employee has two or more years of service, at which time the
employee may diversify his or her Company stock account into other investment options provided under
the plan. Under the retirement savings portion of the EPSRS Plan, the employees have the ability to elect
to invest their contribution and the matching contribution in Company stock. At January 31, 2008,
investments in Company stock represented 28% of total EPSRS Plan assets.
Effective as of February 1, 2006, the EPSRS Plan was amended to provide a defined contribution
retirement benefit (the “DCRB”) to eligible employees hired on or after January 1, 2006 (see Pensions and
Other Postretirement Benefits above). Under the DCRB, the Company will make contributions each year
to each employee’s account at a rate based upon age and years of service. These contributions will be
deposited into individual accounts set up in each employee’s name to be invested in a manner similar to
the retirement savings portion of the EPSRS Plan. The Company recorded expense of $1,032,000 and
$330,000 in 2007 and 2006.
K
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Deferred Compensation Plan
The Company has a non-qualified deferred compensation plan for directors, executives and certain
management employees, whereby eligible participants may defer a portion of their compensation for
payment at specified future dates, upon retirement, death or termination of employment. The deferred
compensation is adjusted to reflect performance, whether positive or negative, of selected investment
options, chosen by each participant, during the deferral period. The amounts accrued under the plans
were $19,795,000 and $16,972,000 at January 31, 2008 and 2007 and are reflected in other long-term
liabilities.
O. INCOME TAXES
Earnings from continuing operations before income taxes consisted of the following:
(in thousands)
United States
Foreign
2008
$ 343,439
178,763
$ 522,202
Years Ended January 31,
2007
$ 253,573
166,735
$ 420,308
2006
$ 247,192
125,862
$ 373,054
T I F F A N Y & C O .
K - 8 1
Components of the provision for income taxes were as follows:
2008
2007
2006
Years Ended January 31,
(in thousands)
Current:
Federal
State
Foreign
Deferred:
Federal
State
Foreign
$ 145,985
26,174
149,975
322,134
(84,690)
(10,776)
(35,785)
(131,251)
$ 190,883
$
84,477
17,893
48,755
151,125
(1,133)
1,572
51
490
$ 151,615
F
O
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M
1
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-
K
Deferred tax assets (liabilities) consisted of the following:
(in thousands)
Deferred tax assets:
Pension/postretirement benefits
Inventory
Accrued expenses
Share-based compensation
Depreciation
Foreign net operating losses
Notes receivable
Sale-leaseback
Other
Valuation allowance
Deferred tax liabilities:
State tax
Foreign tax credit
Other
Net deferred tax asset
$
2008
21,654
31,195
13,125
28,020
16,780
23,171
20,045
86,866
31,969
272,825
(21,035)
251,790
(10,646)
(8,741)
(3,051)
(22,438)
$ 229,352
$
94,167
24,883
40,042
159,092
(42,574)
(4,417)
670
(46,321)
$ 112,771
January 31,
2007
$
35,309
36,643
10,430
25,403
7,198
19,626
–
–
9,348
143,957
(19,626)
124,331
(7,590)
–
(4,759)
(12,349)
$ 111,982
The Company has recorded a valuation allowance against certain deferred tax assets related to Federal,
state and foreign net operating loss carryforwards where recovery is uncertain. The overall valuation
allowance relates to tax loss carryforwards and temporary differences for which no benefit is expected to
be realized. Tax loss carryforwards of approximately $27,000,000 and $77,000,000 exist in certain state
and foreign jurisdictions, respectively. Whereas some of these tax loss carryforwards do not have an
expiration date, others expire at various times from January 2009 through January 2028.
T I F F A N Y & C O .
K - 8 2
Reconciliations of the provision for income taxes at the statutory Federal income tax rate to the
Company’s effective tax rate were as follows:
Statutory Federal income tax rate
State income taxes, net of Federal benefit
Foreign losses with no tax benefit
American Jobs Creation Act of 2004
Extraterritorial income exclusion
Undistributed foreign earnings
Domestic manufacturing deduction
Other
2008
35.0%
2.8
0.8
–
–
(0.9)
(0.8)
(0.3)
36.6%
Years Ended January 31,
2007
35.0%
3.0
1.0
–
(0.7)
(1.6)
(0.3)
(0.3)
36.1%
2006
35.0%
4.0
0.3
(6.1)
(1.9)
(1.0)
(0.5)
0.4
30.2%
The American Jobs Creation Act of 2004 (“AJCA”), which was signed into law on October 22, 2004,
created a temporary incentive for U.S. companies to repatriate accumulated foreign earnings by
providing an 85% dividends received deduction for certain dividends from controlled foreign
corporations. The incentive effectively reduced the amount of U.S. Federal income tax due on
repatriation. Taking advantage of the AJCA, the Company recorded an income tax benefit of $22,588,000
in 2005 associated with the repatriation of foreign earnings. The tax benefit to the Company occurred
because the Company had previously accrued income taxes on un-repatriated foreign earnings at
statutory tax rates. In total, the Company repatriated $178,245,000 of accumulated foreign earnings.
K
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1
M
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F
The Company determined that it has the intent to indefinitely reinvest any undistributed earnings of
foreign subsidiaries which were not repatriated under the AJCA. As of January 31, 2008 and 2007, the
Company has not provided deferred taxes on approximately $85,000,000 and $62,000,000 of
undistributed earnings. U.S. Federal income taxes of approximately $16,600,000 and $11,300,000 would
be incurred, respectively, if these earnings were distributed.
The Company adopted FIN No. 48 on February 1, 2007. As a result, the Company recorded a non-cash
cumulative transition charge of $4,299,000 as a reduction to the opening retained earnings balance. As
of February 1, 2007, the gross amount of unrecognized tax benefits was approximately $40,000,000,
including interest and penalties of approximately $8,000,000. As of that date, the total amount of
unrecognized tax benefits that, if recognized, would have affected the effective tax rate was
approximately $22,500,000. The Company recognizes interest expense and penalties related to
unrecognized tax benefits within income tax expense.
T I F F A N Y & C O .
K - 8 3
The following table reconciles the unrecognized tax benefits from the beginning of the period to the end
of the period:
(in thousands)
Unrecognized tax benefits at February 1, 2007
Gross increases – tax positions in prior period
Gross decreases – tax positions in prior period
Gross increases – current period tax positions
Settlements
Lapse of statute of limitations
Unrecognized tax benefits at January 31, 2008
$
$
32,118
13,413
(16,030)
6,654
(4,805)
(1,044)
30,306
F
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As of January 31, 2008, the gross amount of unrecognized tax benefits was $33,701,000, including interest
and penalties of $3,395,000. As of that date, the total amount of unrecognized tax benefits that, if
recognized, would have affected the effective tax rate was $14,292,000.
The Company files income tax returns in the U.S. federal jurisdiction as well as various state and foreign
locations. As a matter of course, various taxing authorities regularly audit the Company. The Company’s
tax filings are currently being examined by tax authorities in jurisdictions where its subsidiaries have a
material presence, including Japan (tax years 2003-2005) and New York City (tax year 2002). Tax years
from 2005–present are open to examination in the U.S. and tax years 2003–present are open to
examination in various other state and foreign taxing jurisdictions. The Company believes that its tax
positions comply with applicable tax law and that it has adequately provided for these matters. However,
the audits may result in proposed assessments where the ultimate resolution may result in the Company
owing additional taxes. Ongoing audits are in various stages of completion and while the Company does
not anticipate any material changes in unrecognized income tax benefits over the next 12 months, future
developments in the audit process may result in a change in this assessment.
P. SEGMENT INFORMATION
The Company’s reportable segments are: U.S. Retail, International Retail and Direct Marketing (see
Note A). These reportable segments represent channels of distribution that offer similar merchandise
and service and have similar marketing and distribution strategies. The Other channel of distribution
includes all non-reportable segments which consist of worldwide sales of businesses operated under
trademarks or tradenames other than TIFFANY & CO. Sales in the Other channel primarily represents
wholesale sales of diamonds obtained through bulk purchases that are subsequently deemed not suitable
for the Company’s needs.
The Company’s products are primarily sold in TIFFANY & CO. retail locations around the world. Net sales
by geographic area are presented by attributing revenues from external customers on the basis of the
country in which the merchandise is sold.
In deciding how to allocate resources and assess performance, the Company’s Executive Officers
regularly evaluate the performance of its reportable segments on the basis of net sales and earnings from
operations, after the elimination of inter-segment sales and transfers. The accounting policies of the
reportable segments are the same as those described in the summary of significant accounting policies.
Reclassifications were made to prior years’ segment amounts to conform to the current year
presentation and to reflect the revised manner in which management evaluates the performance of
segments. Effective with the first quarter of 2007, the Company revised certain allocations of operating
T I F F A N Y & C O .
K - 8 4
expenses between unallocated corporate expenses and earnings (losses) from continuing operations for
segments.
Certain information relating to the Company’s segments is set forth below:
2008
2007
2006
Years Ended January 31,
(in thousands)
Net sales:
U.S. Retail
International Retail
Direct Marketing
Total reportable segments
Other
$ 1,474,637
1,200,442
182,127
2,857,206
81,565
$ 2,938,771
Earnings (losses) from continuing operations:*
U.S. Retail
$
International Retail
Direct Marketing
Total reportable segments
Other
$
288,030
301,957
62,533
652,520
(33,038)
619,482
$ 1,326,441
1,010,627
174,078
2,511,146
49,588
$ 2,560,734
$
$
243,258
253,835
58,046
555,139
(14,379)
540,760
$ 1,220,683
900,689
157,483
2,278,855
33,937
$ 2,312,792
$
$
248,129
211,164
53,681
512,974
(14,525)
498,449
K
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1
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*Represents earnings (losses) from continuing operations before unallocated corporate expenses, other
operating income and interest expense, financing costs and other income, net.
The Company’s Executive Officers do not evaluate the performance of the Company’s assets on a
segment basis for internal management reporting and, therefore, such information is not presented.
The following table sets forth reconciliations of the segments’ earnings from operations to the
Company’s consolidated earnings from continuing operations before income taxes:
(in thousands)
Earnings from continuing operations for
segments
Unallocated corporate expenses
Other operating income
Other operating expenses
Interest expense, financing costs and
other income, net
Earnings from continuing operations
before income taxes
2008
2007
2006
Years Ended January 31,
$
619,482
(127,007)
105,051
(67,193)
$
540,760
(109,964)
–
–
$
498,449
(110,824)
–
–
(8,131)
(10,488)
(14,571)
$
522,202
$
420,308
$
373,054
Unallocated corporate expenses include certain costs related to administrative support functions which
the Company does not allocate to its segments. Such unallocated costs include those for information
technology, finance, legal and human resources. In addition, unallocated corporate expenses for the year
ended January 31, 2008 included a $10,000,000 contribution to The Tiffany & Co. Foundation, a private
charitable foundation established by the Company.
T I F F A N Y & C O .
K - 8 5
Other operating income represents the $105,051,000 pre-tax gain on the sale-leaseback of the land and
building housing the TIFFANY & CO. Flagship store in Tokyo’s Ginza shopping district. Other operating
expenses includes the $47,981,000 pre-tax impairment charge on the note receivable from Tahera and
the $19,212,000 pre-tax charge related to the discontinuance of certain watch models as a result of the
Company’s agreement by which The Swatch Group Ltd. will design, manufacture, distribute and market
TIFFANY & CO. brand watches worldwide.
Sales to unaffiliated customers and long-lived assets by geographic areas were as follows:
(in thousands)
Net sales:
United States
Japan
Other countries
Long-lived assets:
United States
Japan
Other countries
F
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K
2008
2007
2006
Years Ended January 31,
$ 1,734,139
498,501
706,131
$ 2,938,771
$
$
658,141
15,427
104,329
777,897
$ 1,560,930
491,312
508,492
$ 2,560,734
$
$
626,262
152,791
159,857
938,910
$ 1,427,710
490,834
394,248
$ 2,312,792
$
$
583,920
157,218
133,798
874,936
Classes of Similar Products
(in thousands)
Net sales:
Jewelry
Tableware, timepieces and other
2008
2007
2006
Years Ended January 31,
$ 2,535,553
403,218
$ 2,938,771
$ 2,201,206
359,528
$ 2,560,734
$ 1,969,264
343,528
$ 2,312,792
T I F F A N Y & C O .
K - 8 6
Q. QUARTERLY FINANCIAL DATA (UNAUDITED)
(in thousands, except per share amounts)
Net sales
Gross profit
Earnings from continuing operations
Net earnings from continuing operations
Net earnings
Earnings from continuing operations per
share:
Basic
Diluted
April 30
$ 595,729
327,328
81,287
49,405
49,659
July 31a October 31a,b
$ 627,323
337,137
153,785
100,445
98,890
$ 662,562
366,113
106,994
63,219
36,973
2007 Quarters Ended
January 31c
$ 1,053,157
599,694
188,267
118,250
118,250
$
$
0.36
0.35
$
$
0.46
0.45
$
$
0.74
0.72
$
$
0.91
0.89
K
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$
$
$
$
$
$
0.36
0.36
0.27
0.26
Net earnings per share:
Basic
0.91
Diluted
0.89
a Includes a pre-tax charge of $54,861,000, or $0.17 per diluted share after-tax, in the quarter ended July 31 and pre-
tax income of $601,000, or $0.01 per diluted share after-tax, in the quarter ended October 31, both due to the sale of
Little Switzerland (see Note C).
b Includes a pre-tax gain of $105,051,000, or $0.48 per diluted share after-tax, due to the sale-leaseback of the
TIFFANY & CO. Flagship store in Tokyo’s Ginza shopping district (see Note J).
c Includes (i) a pre-tax charge of $47,981,000, or $0.22 per diluted share after-tax, related to the impairment of the
Tahera note receivable (see Note J); (ii) a pre-tax charge of $19,212,000, or $0.09 per diluted share after-tax, related
to the discontinuance of certain watches as a result of the Company’s recent agreement with The Swatch Group Ltd.
(see Note E); and (iii) a pre-tax charge of $15,532,000, or $0.07 per diluted share after-tax, related to impairment
losses associated with the Company’s IRIDESSE business (see Note B).
0.73
0.71
$
$
(in thousands, except per share amounts)
Net sales
Gross profit
Earnings from continuing operations
Net earnings from continuing operations
Net earnings
Earnings from continuing operations per
share:
Basic
Diluted
Net earnings per share:
Basic
Diluted
2006 Quarters Ended
April 30
$ 515,356
291,127
74,933
43,483
43,142
July 31 October 31
$ 531,834
287,351
47,655
32,625
29,142
$ 554,657
310,443
76,878
44,714
41,144
January 31
$ 958,887
552,629
231,330
147,871
140,499
$
$
0.31
0.30
$
$
0.32
0.32
$
$
0.24
0.23
$
$
$
$
0.30
0.30
$
$
0.30
0.29
$
$
0.21 $
0.21 $
1.09
1.07
1.04
1.02
The sum of the quarterly net earnings per share amounts in the above tables may not equal the full-year
amount since the computations of the weighted-average number of common-equivalent shares
outstanding for each quarter and the full year are made independently.
T I F F A N Y & C O .
K - 8 7
R. SUBSEQUENT EVENT
In March 2008, the Audit Committee of the Company’s Board of Directors approved management’s
proposal to change the method of costing inventories held by U.S. and foreign branches from the last-in,
first-out (“LIFO”) method to the average cost method. Inventories held by Japan and foreign subsidiaries
are already valued using the average cost method. The Company believes that the average cost method is
preferable on the basis that it conforms to the manner in which the Company operationally manages its
inventories and evaluates retail pricing and it makes the Company’s inventory reporting consistent with
many peer retailers. This change will be effective beginning in the first fiscal quarter of 2008 and will be
applied retrospectively. Accounts affected by this change are: cost of sales; provision for income taxes;
inventories, net; deferred income taxes; and retained earnings.
Components of the Company’s consolidated statements of earnings adjusted for the effect of changing
from LIFO to average cost are as follows:
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(in thousands, except per share data)
Cost of sales
Provision for income taxes
Net earnings from continuing operations
Net earnings
Net earnings from continuing operations
per share:
Basic
Diluted
Net earnings per share:
Basic
Diluted
(in thousands, except per share data)
Cost of sales
Provision for income taxes
Net earnings from continuing operations
Net earnings
Net earnings from continuing operations
per share:
Basic
Diluted
Net earnings per share:
Basic
Diluted
As Reported
1,308,499
190,883
331,319
303,772
2.46
2.40
2.25
2.20
As Reported
1,119,184
151,615
268,693
253,927
1.94
1.91
1.84
1.80
$
$
$
$
$
$
$
$
$
$
T I F F A N Y & C O .
K - 8 8
Year Ended January 31, 2008
Adjustment
(26,993)
7,287
19,706
19,706
0.15
0.14
0.15
0.14
As Adjusted
1,281,506
198,170
351,025
323,478
2.61
2.54
2.40
2.34
$
$
$
$
$
Year Ended January 31, 2007
Adjustment
(31,270)
12,300
18,970
18,970
0.14
0.13
0.14
0.13
As Adjusted
1,087,914
163,915
287,663
272,897
2.08
2.04
1.97
1.94
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
(in thousands, except per share data)
Cost of sales
Provision for income taxes
Net earnings from continuing operations
Net earnings
Net earnings from continuing operations
per share:
Basic
Diluted
Net earnings per share:
Basic
Diluted
Year Ended January 31, 2006
As Reported
1,005,014
112,771
260,283
254,655
1.82
1.79
1.78
1.75
$
$
$
$
$
$
$
$
$
$
Adjustment
(11,322)
4,581
6,741
6,741
0.05
0.05
0.05
0.05
As Adjusted
993,692
117,352
267,024
261,396
1.87
1.83
1.83
1.80
$
$
$
$
$
Quarterly financial data for the year ended January 31, 2008 adjusted for the effect of changing from
LIFO to average cost is as follows:
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(in thousands, except per share amounts)
Net sales
Gross profit
Earnings from continuing operations
Net earnings from continuing operations
Net earnings
Earnings from continuing operations per
share:
Basic
Diluted
April 30
$ 595,729
333,958
87,917
53,827
54,081
July 31
$ 662,562
371,906
112,787
66,709
40,463
2007 Quarters Ended*
January 31
$ 1,053,157
609,854
198,427
127,387
127,387
October 31
$ 627,323
341,547
158,195
103,102
101,547
$
$
0.39
0.39
$
$
0.49
0.48
$
$
0.76
0.74
$
$
Net earnings per share:
Basic
Diluted
* See Note Q for amounts reported prior to the change from LIFO to average cost.
0.30
0.29
0.40
0.39
$
$
$
$
$
$
0.75
0.73
$
$
The sum of the quarterly net earnings per share amounts in the above table may not equal the full-year
amount since the computations of the weighted-average number of common-equivalent shares
outstanding for each quarter and the full year are made independently.
T I F F A N Y & C O .
K - 8 9
0.98
0.96
0.98
0.96
Components of the Company’s consolidated balance sheets adjusted for the effect of changing from
LIFO to average cost are as follows:
(in thousands)
Assets:
Inventories, net
Deferred income taxes – current
Total Assets
Liabilities and Stockholders’ Equity:
Retained earnings
Total Liabilities and Stockholders’ Equity
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(in thousands)
Assets:
Inventories, net
Deferred income taxes – current
Total Assets
Liabilities and Stockholders’ Equity:
Retained earnings
Total Liabilities and Stockholders’ Equity
As Reported
Adjustment
As Adjusted
January 31, 2008
$
1,242,465
71,402
2,922,156
$
129,932
(51,184)
78,748
$
1,372,397
20,218
3,000,904
958,915
2,922,156
78,748
78,748
1,037,663
3,000,904
As Reported
Adjustment
As Adjusted
January 31, 2007
$
1,146,674
72,934
2,845,510
$
102,939
(43,897)
59,042
$
1,249,613
29,037
2,904,552
1,269,940
2,845,510
59,042
59,042
1,328,982
2,904,552
The cumulative effect on retained earnings at January 31, 2006 is an increase of $40,072,000.
The adjustment from LIFO to average cost will have no effect on the net cash provided by/used in
operating, investing and financing activities for the years ended January 31, 2008, 2007 and 2006.
T I F F A N Y & C O .
K - 9 0
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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
NONE
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), Registrant’s chief executive officer and chief
financial officer concluded that, as of the end of the period covered by this 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 (i) recorded, processed,
summarized and reported within the time periods specified in the SEC’s rules and forms and (ii)
accumulated and communicated to our management, including our chief executive officer and chief
financial officer, to allow timely decisions regarding required disclosure.
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 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. By their
nature, such controls and procedures cannot provide absolute certainty, but can provide reasonable
assurance regarding management’s control objectives. Our chief executive officer and our chief financial
officer have concluded that Registrant’s disclosure controls and procedures are (i) designed to provide
such reasonable assurance and (ii) are effective at that reasonable assurance level.
Report of Management
Management’s Responsibility for Financial Information. The Company’s consolidated financial
statements were prepared by management, who are responsible for their integrity and objectivity. The
financial statements have been prepared in accordance with accounting principles generally accepted in
the United States of America and, as such, include amounts based on management’s best estimates and
judgments.
Management is further responsible for maintaining a system of internal accounting control designed to
provide reasonable assurance that the Company’s assets are adequately safeguarded, and that the
accounting records reflect transactions executed in accordance with management’s authorization. The
system of internal control is continually reviewed and is augmented by written policies and procedures,
the careful selection and training of qualified personnel and a program of internal audit.
The consolidated financial statements have been audited by PricewaterhouseCoopers LLP, an
independent registered public accounting firm. Their report is shown on page K-49-50.
The Audit Committee of the Board of Directors, which is composed solely of independent directors,
meets regularly with financial management and the independent registered public accounting firm to
discuss specific accounting, financial reporting and internal control matters. Both the independent
registered public accounting firm and the internal auditors have full and free access to the Audit
T I F F A N Y & C O .
K - 9 1
Committee. Each year the Audit Committee selects the firm that is to perform audit services for the
Company.
Management’s Report on Internal Control over Financial Reporting. Management is responsible for
establishing and maintaining adequate internal control over financial reporting, as defined in Exchange
Act Rule 13a – 15(f ). Management conducted an evaluation of the effectiveness of internal control over
financial reporting based on the framework in Internal Control – Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this
evaluation, management concluded that internal control over financial reporting was effective as of
January 31, 2008 based on criteria in Internal Control – Integrated Framework issued by the COSO. The
effectiveness of the Company’s internal control over financial reporting as of January 31, 2008 has been
audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in
their report which is shown on page K-49-50.
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/s/ Michael J. Kowalski
Chairman of the Board and Chief Executive Officer
/s/ James N. Fernandez
Executive Vice President and Chief Financial Officer
Item 9B. Other Information.
NONE
[Remainder of this page is intentionally left blank]
T I F F A N Y & C O .
K - 9 2
PART III
Item 10. Directors and Executive Officers and Corporate Governance.
Incorporated by reference from the sections titled “Ownership by Directors, Director Nominees and
Executive Officers,” “Compliance of Directors, Executive Officers and Greater-Than-Ten-Percent
Stockholders with Section 16(a) Beneficial Ownership Reporting Requirements” and “DISCUSSION OF
PROPOSALS PRESENTED BY THE BOARD. Item 1. Election of Directors” in Registrant's Proxy Statement
dated April 10, 2008.
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, http://investor.tiffany.com/governance.cfm; go to “Code of
Conduct”. The Registrant will also provide a copy of the Code of Business and Ethical Conduct to
stockholders upon request.
See Registrant’s Proxy Statement dated April 10, 2008, for information within the section titled “Business
Conduct Policy and Code of Ethics.”
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Item 11. Executive Compensation.
Incorporated by reference from the section titled “COMPENSATION OF THE CEO AND OTHER
EXECUTIVE OFFICERS” in Registrant's Proxy Statement dated April 10, 2008.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.
Incorporated by reference from the section titled “OWNERSHIP OF THE COMPANY” in Registrant's
Proxy Statement dated April 10, 2008.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
See Executive Officers of the Registrant and Board of Directors information incorporated by reference
from the sections titled “Independent Directors Constitute a Majority of the Board,” “TRANSACTIONS
WITH RELATED PERSONS” and “EXECUTIVE OFFICERS OF THE COMPANY” in Registrant's Proxy
Statement dated April 10, 2008.
Item 14. Principal Accountant Fees and Services.
Incorporated by reference from the section titled “Fees and Services of PricewaterhouseCoopers LLP” in
Registrant’s Proxy Statement dated April 10, 2008.
T I F F A N Y & C O .
K - 9 3
PART IV
Item 15. Exhibits and Financial Statement Schedules.
(a) List of Documents Filed As Part of This Report:
1. Financial Statements
Report of Independent Registered Public Accounting Firm.
Consolidated Balance Sheets as of January 31, 2008 and 2007.
Consolidated Statements of Earnings for the years ended January 31, 2008, 2007 and 2006.
Consolidated Statements of Stockholders' Equity and Comprehensive Earnings for the years ended
January 31, 2008, 2007 and 2006.
Consolidated Statements of Cash Flows for the years ended January 31, 2008, 2007 and 2006.
Notes to Consolidated Financial Statements.
2. Financial Statement Schedules
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The following financial statement schedule should be read in conjunction with the Consolidated
Financial Statements:
Schedule II - Valuation and Qualifying Accounts and Reserves.
All other schedules have been omitted since they are neither applicable nor required, or because the
information required is included in the consolidated financial statements and notes thereto.
3. Exhibits
The following exhibits have been filed with the Securities and Exchange Commission, but are not
attached to copies of this Annual Report on Form 10-K other than complete copies filed with said
Commission and the New York Stock Exchange:
Exhibit
Description
3.1
3.1a
3.2
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, as amended by the
Certificate of Amendment of Certificate of Incorporation dated May 20, 1999.
Incorporated by reference from Exhibit 3.1 to Registrant’s Report on Form 10-Q for the
Fiscal Quarter ended July 31, 1999.
Amendment to Certificate of Incorporation of Registrant dated May 18, 2000. Previously
filed as Exhibit 3.1b to Registrant's Annual Report on Form 10-K for the Fiscal Year ended
January 31, 2001.
Restated By-Laws of Registrant, as last amended July 19, 2007. Incorporated by reference
from Exhibit 3.2 to Registrant’s Report on Form 8-K dated July 20, 2007.
T I F F A N Y & C O .
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Exhibit
Description
10.5
10.122
10.122a
10.122b
10.122c
10.122d
10.122e
10.122f
10.123
10.126
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”).
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.
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 Annual
Report on Form 10-K for the Fiscal Year ended January 31, 1999.
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.
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.
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.
Amendment No. 4 to Guarantee referred to in Exhibit 10.122b above, dated December 9,
2005. Incorporated by reference from Exhibit 10.122e filed with Registrant’s Report on
Form 10-K for the Fiscal Year ended January 31, 2006.
Amendment No. 5 to Guarantee referred to in Exhibit 10.122b above, dated May 31, 2006.
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 Annual Report on Form
10-K for the Fiscal Year ended January 31, 1997.
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 Annual 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 10.126a filed with Registrant’s Report on Form 8-K dated June 10, 2002.
T I F F A N Y & C O .
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Exhibit
Description
10.128
10.128a
10.128b
10.132
10.133
10.134
10.135
10.135a
10.136
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.
Memorandum of Agreement Regarding Extension and Amendment of 2001 Agreement
dated May 16, 2007 by and between Tiffany & Co. Japan, Inc. and Mitsukoshi Limited.
Incorporated by reference from Exhibit 10.128a filed with Registrant’s Report on Form 8-
K dated June 6, 2007.
Memorandum of Agreement Regarding Extension and Amendment of 2001 Agreement
dated January 25, 2008 by and between Tiffany & Co. Japan, Inc. and Mitsukoshi Limited.
Incorporated by reference from Exhibit 10.128b filed with Registrant’s Report on Form 8-
K dated February 1, 2008.
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.
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.
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 Annual Report on Form 10-K for the Fiscal Year
ended January 31, 2004.
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 Annual Report on Form 10-K for the Fiscal Year ended January 31,
2004.
Translation of Amendment of Application of Bonds referred to in Exhibit 10.135.
Incorporated by reference from Exhibit 10.135a filed with Registrant’s Annual Report on
Form 10-K for the Fiscal Year ended January 31, 2004.
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 Annual Report on Form 10-K for the
Fiscal Year ended January 31, 2004.
T I F F A N Y & C O .
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Exhibit
Description
10.145
10.145a
10.146
10.146a
10.147
10.149
14.1
21.1
23.1
31.1
31.2
32.1
Ground Lease between Tiffany and Company and River Park Business Center, Inc., dated
November 29, 2000. Incorporated by reference from Exhibit 10.145 filed with
Registrant’s Annual Report on Form 10-K for the Fiscal Year ended January 31, 2005.
First Addendum to the Ground Lease between Tiffany and Company and River Park
Business Center, Inc., dated November 29, 2000. Incorporated by reference from Exhibit
10.145a filed with Registrant’s Annual Report on Form 10-K for the Fiscal Year ended
January 31, 2005.
Credit Agreement dated as of July 20, 2005 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 Administrative Agent,
and various lenders party thereto. Incorporated by reference from Exhibit 10.146 filed
with Registrant’s Report on Form 8-K dated July 20, 2005.
Increase Supplement dated as of October 27, 2006 to the Credit Agreement dated July
20, 2005 by and among Registrant, Tiffany and Company, Tiffany & Co. International,
each other Subsidiary of Registrant that is Borrower and is a signatory thereto and The
Bank of New York, as Administrative Agent, and various lenders party thereto.
Guaranty Agreement dated as of July 20, 2005, with respect to the Credit Agreement (see
Exhibit 10.146 above) by and among Registrant, Tiffany and Company, Tiffany & Co.
International, and Tiffany & Co. Japan Inc. and The Bank of New York, as Administrative
Agent. Incorporated by reference from Exhibit 10.147 filed with Registrant’s Report on
Form 8-K dated July 20, 2005.
Lease Agreement made as of September 28, 2005 between CLF Sylvan Way LLC and
Tiffany and Company, and form of Registrant’s guaranty of such lease. Incorporated by
reference from Exhibit 10.149 filed with Registrant’s Report on Form 8-K dated
September 23, 2005.
Code of Business and Ethical Conduct and Business Conduct Policy. Incorporated by
reference from Exhibit 14.1 filed with Registrant’s Annual Report on Form 10-K for the
Fiscal Year ended January 31, 2004.
Subsidiaries of Registrant.
Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting
Firm.
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
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.
T I F F A N Y & C O .
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Exhibit
Description
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
4.4
10.3
10.49
10.49a
10.60
10.106
10.108
10.109
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.
Registrant’s Amended and Restated 1998 Employee Incentive Plan effective May 19, 2005.
Previously filed as Exhibit 4.3 with Registrant’s Report on Form 8-K dated May 23, 2005.
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 Annual
Report on Form 10-K for the Fiscal Year ended January 31, 1999.
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.
Form of Indemnity Agreement, approved by the Board of Directors on March 11, 2005 for
use with all directors and executive officers (Corrected Version). Incorporated by
reference from Exhibit 10.49a filed with Registrant’s Report on Form 8-K dated May 23,
2005.
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 Annual Report on Form 10-K for the Fiscal Year ended January 31, 1997.
Amended and Restated Tiffany and Company Executive Deferral Plan originally made
effective October 1, 1989, as amended effective November 23, 2005. Incorporated by
reference from Exhibit 10.106 to Registrant’s Annual Report on Form 10-K for the Fiscal
Year ended January 31, 2006.
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 Annual Report on
Form 10-K for the Fiscal Year ended January 31, 1999.
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.
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10.114
10.127b
10.128
10.137
10.138
10.139a
10.139b
10.139c
10.140
10.140a
1994 Tiffany and Company Supplemental Retirement Income Plan, Amended and Restated
as of February 1, 2007. Incorporated by reference from Exhibit 10.114 filed with Registrant’s
Report on Form 8-K/A dated February 12, 2007.
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 Annual Report on Form 10-K for the Fiscal Year
ended January 31, 2003.
Group Long Term Disability Insurance Policy issued by UnumProvident, Policy No. 533717
001. Incorporated by reference from Exhibit 10.128 filed with Registrant's Annual Report
on Form 10-K for the Fiscal Year ended January 31, 2003.
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
Annual Report on Form 10-K for the Fiscal Year ended January 31, 2004.
2004 Tiffany and Company Un-funded Retirement Income Plan to Recognize
Compensation in Excess of Internal Revenue Code Limits, Amended and Restated as of
February 1, 2007. Incorporated by reference from Exhibit 10.138 filed with Registrant’s
Report on Form 8-K dated February 8, 2007.
Form of Fiscal 2006 Cash Incentive Award Agreement for certain executive officers under
Registrant’s 2005 Employee Incentive Plan. Incorporated by reference from Exhibit
10.139a filed with Registrant’s Report on Form 8-K dated March 24, 2006.
Form of Fiscal 2007 Cash Incentive Award Agreement for certain executive officers under
Registrant’s 2005 Employee Incentive Plan as Amended and Adopted as of May 18, 2006.
Incorporated by reference from Exhibit 10.139b filed with Registrant’s Report on Form 8-K
dated March 26, 2007.
Form of Fiscal 2008 Cash Incentive Award Agreement for certain executive officers under
Registrant’s 2005 Employee Incentive Plan as Amended and Adopted as of May 18, 2006.
Form of Terms of Performance-Based Restricted Stock Unit Grants to Executive Officers
under Registrant’s 2005 Employee Incentive Plan. Incorporated by reference from Exhibit
10.140 filed with Registrant’s Report on Form 8-K dated March 16, 2005.
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 Registrant’s 2005 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 10.140a
filed with Registrant’s Report on Form 8-K dated May 23, 2005.
10.142
Terms of Stock Option Award (Transferable Non-Qualified Option) under Registrant’s
2005 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.
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10.143
10.143a
10.144
10.144a
10.150
10.151
10.151a
10.152
10.153
Terms of Stock Option Award (Standard Non-Qualified Option) under Registrant’s 2005
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.
Terms of Stock Option Award (Standard Non-Qualified Option) under Registrant’s 2005
Employee Incentive Plan as revised May 19, 2005. Incorporated by reference from Exhibit
10.143a filed with Registrant’s Report on Form 8-K dated May 23, 2005.
Terms of Stock Option Award (Transferable Non-Qualified Option) under Registrant’s
2005 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.
Terms of Stock Option Award (Transferable Non-Qualified Option) under Registrant’s
2005 Employee Incentive Plan as revised May 19, 2005 (form used for Executive Officers).
Incorporated by reference from Exhibit 10.144a filed with Registrant’s Report on Form 8-K
dated May 23, 2005.
Form of Terms of Time-Vested Restricted Stock Unit Grants under Registrant’s 1998
Employee Incentive Plan and 2005 Employee Incentive Plan. Incorporated by reference as
previously filed as Exhibit 10.146 with Registrant’s Report on Form 8-K dated May 23, 2005.
Registrant’s 2005 Employee Incentive Plan as adopted May 19, 2005. Incorporated by
reference as previously filed as Exhibit 10.145 with Registrant’s Report on Form 8-K dated
May 23, 2005.
Registrant’s 2005 Employee Incentive Plan Amended and Adopted as of May 18, 2006.
Incorporated by reference from Exhibit 10.151a with Registrant’s Report on Form 8-K dated
March 26, 2007.
Share Ownership Policy for Executive Officers and Directors, Amended and Restated as of
March 15, 2007. Incorporated by reference from Exhibit 10.152 filed with Registrant’s
Report on Form 8-K dated March 22, 2007.
Corporate Governance Principles, Amended and Restated as of March 15, 2007.
Incorporated by reference from Exhibit 10.153 filed with Registrant’s Report on Form 8-K
dated March 22, 2007.
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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.
Date: March 28, 2008
TIFFANY & CO.
(Registrant)
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
Chairman of the Board and Chief Executive
Officer
(principal executive officer) (director)
James N. Fernandez
Executive Vice President and Chief
Financial Officer
(principal financial officer)
By:
/s/ James E. Quinn
By:
/s/ Henry Iglesias
James E. Quinn
President
(director)
Henry Iglesias
Vice President and Controller
(principal accounting officer)
By:
/s/ William R. Chaney
By:
/s/ Rose Marie Bravo
William R. Chaney
Director
Rose Marie Bravo
Director
By:
/s/ Gary E. Costley
By:
/s/ Abby F. Kohnstamm
Gary E. Costley
Director
Abby F. Kohnstamm
Director
By:
/s/ Charles K. Marquis
By:
/s/ J. Thomas Presby
Charles K. Marquis
Director
J. Thomas Presby
Director
By:
/s/ William A. Shutzer
William A. Shutzer
Director
March 28, 2008
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Tiffany & Co. and Subsidiaries
Schedule II - Valuation and Qualifying Accounts and Reserves
(in thousands)
Column A
Column B
Column C
Column D
Column E
Additions
Balance at
beginning
of period
Charged to
costs and
expenses
Charged to
other
accounts Deductions
Balance at
end of
period
Description
Year Ended January 31, 2008:
Reserves deducted from assets:
Accounts receivable allowances:
Doubtful accounts
$ 2,445
$ 3,801
$ –
Sales returns
5,455
1,380
Allowance for inventory
liquidation and obsolescence
Allowance for inventory shrinkage
LIFO reserve
20,778
384
108,501
33,701
2,960
28,651
–
–
–
–
19,626
Deferred tax valuation allowance
a) Uncollectible accounts written off.
b) Adjustment related to sales returns previously provided for and changes in estimate.
c) Liquidation of inventory previously written down to market.
d) Physical inventory losses.
e) Utilization of deferred tax loss carryforward.
1,811
–
$ 2,891a
478b
12,473c
2,660d
–
402 e
$ 3,355
6,357
42,006
684
137,152
21,035
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Tiffany & Co. and Subsidiaries
Schedule II - Valuation and Qualifying Accounts and Reserves
(in thousands)
Column A
Column B
Column C
Column D
Column E
Additions
Balance at
beginning
of period
Charged to
costs and
expenses
Charged to
other
accounts Deductions
Balance at
end of
period
Description
Year Ended January 31, 2007:
Reserves deducted from assets:
Accounts receivable allowances:
Doubtful accounts
$ 2,118
$ 1,922
$ –
Sales returns
5,884
–
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Allowance for inventory
liquidation and obsolescence
Allowance for inventory shrinkage
LIFO reserve
21,050
1,001
75,624
8,273
2,227
32,877
–
–
–
–
$ 1,595a
429b
$ 2,445
5,455
8,545c
2,844d
–
–
20,778
384
108,501
19,626
Deferred tax valuation allowance
a) Uncollectible accounts written off.
b) Adjustment related to returns previously provided for and changes in estimate.
c) Liquidation of inventory previously written down to market.
d) Physical inventory losses and changes in estimate.
10,080
9,546
–
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Tiffany & Co. and Subsidiaries
Schedule II - Valuation and Qualifying Accounts and Reserves
(in thousands)
Column A
Column B
Column C
Column D
Column E
Additions
Balance at
beginning
of period
Charged to
costs and
expenses
Charged to
other
accounts Deductions
Balance at
end of
period
$ 2,075
$ 1,605
$ –
5,416
908
20,053
10,108
$ 1,562 a
440b
$ 2,118
5,884
9,111c
5,998d
–
1,125e
21,050
1,001
75,624
10,080
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–
–
–
–
Description
Year Ended January 31, 2006:
Reserves deducted from assets:
Accounts receivable allowances:
Doubtful accounts
Sales returns
Allowance for inventory
liquidation and obsolescence
Allowance for inventory shrinkage
4,644
2,355
LIFO reserve
64,058
11,566
9,826
Deferred tax valuation allowance
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 and changes in estimate.
e) Utilization of deferred tax loss carryforward.
1,379
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2008 Annual Meeting of Stockholders
PROXY STATEMENT
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ATTENDANCE AND VOTING MATTERS
Introduction
The Annual Meeting of the stockholders of Tiffany & Co. (the “Company”) will be held on Thursday,
May 15, 2008, at 10:00 a.m. in the Roof/Penthouse of The St. Regis Hotel, 2 East 55th Street at Fifth
Avenue, New York, New York.
This proxy statement and accompanying material, including the form of proxy, was first sent to the
Company’s stockholders on or about April 10, 2008. It was sent to you on behalf of the Company by order
of the Company’s Board of Directors (the “Board”).
You are entitled to vote at our 2008 Annual Meeting because you were a stockholder, or held Company
stock through a broker, bank or other nominee, at the close of business on March 20, 2008, the record
date for this year’s Annual Meeting. That is why you were sent this Proxy Statement and accompanying
material.
This proxy statement has been bound with our Annual Report on Form 10-K, which contains financial
and other information about our business during our last fiscal year (February 1, 2007 to January 31,
2008).
You may also find important information about the Company, with its principal executive offices at
727 Fifth Avenue, New York, New York 10022, on our website at http://investor.tiffany.com and you will
find additional information concerning some of the subjects addressed in this document.
Important Notice Regarding Internet Availability of Proxy Materials
for the Stockholder Meeting to be Held on May 15, 2008.
The Proxy Statement and Annual Report to Stockholders
are available at http://bnymellon.mobular.net/bnymellon/tif
Matters to Be Voted On at the 2008 Annual Meeting
There are three matters scheduled to be voted on at this year’s Annual Meeting:
(cid:120) The election of the Board;
(cid:120) Ratification of the selection of the independent registered public accounting firm to audit our
Fiscal 2008 financial statements; and
(cid:120) Approval of the Tiffany & Co. 2008 Directors Equity Compensation Plan.
In addition, such other business as may properly come before the Annual Meeting or any adjournment or
postponement thereof may be voted on.
How to Vote Your Shares
You can vote your shares at the Annual Meeting by proxy or in person.
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You can vote by proxy by having one or more individuals who will be at the Annual Meeting vote your
shares for you. These individuals are called “proxies” and using them to cast your ballot at the Annual
Meeting is called voting “by proxy.”
If you wish to vote by proxy, you must do one of the following:
(cid:120) Complete the enclosed form, called a “proxy card,” and mail it in the envelope provided, or
(cid:120) Call the telephone number listed on the proxy card (1-866-540-5760) and follow the pre-
recorded instructions, or
(cid:120) Use the Internet to vote by pointing your browser to http://www.proxyvoting.com/tif ; have your
proxy card in hand as you will be prompted to enter your control number and to create and
submit an electronic vote.
If you do one of the above, you will have designated three officers of the Company to act as your proxies
at the 2008 Annual Meeting. One of them will then vote your shares at the Annual Meeting in accordance
with the instructions you have given them on the proxy card, the telephone or the Internet with respect
to each of the proposals presented in this Proxy Statement. If you sign and return your proxy card but do
not give voting instructions, your proxy will vote the shares represented thereby for the election of each
of the director nominees listed in Proposal No. 1 below, for approval of Proposal No. 2, which is discussed
below and for approval of Proposal No. 3, which is also discussed below. Proxies will extend to, and be
voted at, any adjournment or postponement of the Annual Meeting.
Alternatively, you can vote your shares in person by attending the Annual Meeting. You will be given a
ballot at the meeting.
While we know of no other matters to be acted upon at this year’s Annual Meeting, it is possible that
other matters may be presented at the meeting. If that happens and you have signed and not revoked a
proxy card, your proxy will vote on such other matters in accordance with his best judgment.
A special note for those who plan to attend the Annual Meeting and vote in person: if your shares are held
in the name of a broker, bank or other nominee, you must bring a statement from your brokerage account
or a letter from the person or entity in whose name the shares are registered indicating that you are the
beneficial owner of those shares as of the record date. In addition, you will not be able to vote at the
meeting unless you obtain a legal proxy from the record holder of your shares.
How to Revoke Your Proxy
If you decide to vote by proxy (including by mail, telephone or Internet), you can revoke – that is, change
or cancel – your vote at any time before your proxy casts his vote at the Annual Meeting. Revoking your
vote by proxy may be accomplished in one of three ways:
(cid:120) You can send an executed, later-dated proxy card to the Secretary of the Company, call in
different instructions, or access the Internet voting site.
(cid:120) You can notify the Secretary of the Company in writing that you wish to revoke your proxy, or
(cid:120) You can attend the Annual Meeting and vote in person.
The Number of Votes That You Have
Each share of the Company’s common stock has one vote. The number of shares, or votes, that you have
at this year’s Annual Meeting is indicated on the enclosed proxy card.
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What a Quorum Is
A “quorum” is the minimum number of shares that must be present at an Annual Meeting for a valid vote.
For our stockholder meetings, a majority of shares outstanding on the record date and entitled to vote at
the Annual Meeting must be present.
The number of shares outstanding at the close of business on March 20, 2008, the record date, was
126,087,745. Therefore, 63,043,873 shares must be present at our 2008 Annual Meeting for a quorum to
be established.
To determine if there is a quorum, we consider a share “present” if:
(cid:120) The stockholder who owns the share is present at the Annual Meeting, whether or not he or she
chooses to cast a ballot on any proposal; or
(cid:120) The stockholder is represented by proxy at the Annual Meeting.
If a stockholder is represented by proxy at the Annual Meeting, his or her shares are deemed present for
purposes of a quorum, even if:
(cid:120) The stockholder withholds his or her vote or marks “abstain” for one or more proposals; or
(cid:120) There is a “broker non-vote” on one or more proposals.
What a “Broker Non-Vote” Is
Shares held in a broker’s name may be voted by the broker, but only in accordance with the rules of the
New York Stock Exchange. Under those rules, your broker must follow your instructions. If you do not
provide instructions to your broker, your broker may vote your shares based on its own judgment or it
may withhold a vote. Whether your broker votes or withholds its vote is determined by the New York
Stock Exchange rules and depends on the proposal being voted upon.
If your broker withholds its vote, that is called a “broker non-vote.” As stated above, broker non-votes are
counted as present for a quorum.
What Vote Is Required To Approve Each Proposal
Each nominee for director shall be elected by a majority of the votes cast “for” or “against” her or him at
the Annual Meeting. That means that the number of shares voted “for” a nominee must exceed the
number of shares voted “against” that nominee. To vote “for” or “against” any of the nominees named in
this Proxy Statement, you can so mark your proxy card or ballot or, if you vote via telephone or Internet,
so indicate by telephone or electronically.
You may abstain on the vote for any nominee but your abstention will not have any effect on the
outcome of the election of directors. A broker non-vote has the same effect as an abstention: neither
will have any effect on the outcome of the election of directors. To abstain on the vote on any or all of the
nominees named in this Proxy Statement, you can so mark your proxy card or ballot or, if you vote via
telephone or Internet, so indicate by telephone or electronically.
The proposal to ratify the selection of PricewaterhouseCoopers LLP as the independent registered public
accounting firm for Fiscal 2008 will be decided by the affirmative vote of the majority of shares present
at the meeting. That means that the proposal will pass if more than half of those shares present at the
meeting vote “for” the proposal. Therefore, if you “abstain” from voting -- in other words, you indicate
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“abstain” on the proxy card, by telephone or by Internet -- it will have the same effect as an “against” vote.
Broker non-votes on this proposal will be treated the same as abstentions: both will have the same effect
as an “against” vote.
The proposal to approve the Tiffany & Co. 2008 Directors Equity Compensation Plan will be decided as
follows. First a majority of shares outstanding on March 20, 2008, must actually vote on the proposal.
For this purpose, abstentions will count as votes cast but broker non-votes will not. Second, a majority of
those shares actually voting on the proposal must vote in favor of it. For this purpose, abstentions will
have the same legal effect as a vote “against” the proposal and broker non-votes will be disregarded. That
means that holders of 63,043,873 shares of common stock must actually vote “for” or “against” the
proposal (or submit their proxies but “abstain” from voting on the proposal) and at least a majority of
those voting must vote “for” the proposal.
Proxy Voting on Proposals in the Absence of Instructions
If you do not give any specific instructions as to how your shares are to be voted when you sign a proxy
card or vote by telephone or by Internet, your proxies will vote your shares in accordance with the
following recommendations of the Board:
(cid:120) FOR the election of all nine nominees for director named in this Proxy Statement;
(cid:120) FOR the ratification of the appointment of PricewaterhouseCoopers LLP as the independent
registered public accounting firm to examine our Fiscal 2008 financial statements; and
(cid:120) FOR the approval of the Tiffany & Co. 2008 Directors Equity Compensation Plan.
Shares held in the Company’s Employee Profit Sharing and Retirement Savings Plan will not be voted by
the Plan’s trustee unless specific instructions for voting are given by plan participants to whose accounts
such shares have been allocated.
How Proxies Are Solicited
We have hired the firm of Georgeson Inc. to assist in the solicitation of proxies on behalf of the Board.
Georgeson Inc. has agreed to perform this service for a fee of not more than $7,000, plus out-of-pocket
expenses.
Employees of Tiffany and Company, a subsidiary of the Company, may also solicit proxies on behalf of the
Board. These employees will not receive any additional compensation for their work soliciting proxies
and any costs incurred by them in doing so will be paid for by Tiffany and Company.
This particular solicitation is being made by mail, but proxies may also be solicited in person, by
facsimile, by telephone or by electronic mail (e-mail).
In addition, we will pay for any costs incurred by brokerage houses and others for forwarding proxy
materials to beneficial owners.
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OWNERSHIP OF THE COMPANY
Stockholders Who Own At Least Five Percent of the Company
The following table shows all persons who were known to us to be “beneficial owners” of at least five
percent of Company stock as of March 20, 2008. Footnote a) below provides a brief explanation of what is
meant by the term “beneficial ownership.” This table is based upon reports filed with the Securities and
Exchange Commission, commonly referred to as the SEC. Copies of these reports are publicly available
from the SEC.
Name and Address
of Beneficial Owner
Trian Fund Management, L.P.
280 Park Avenue, 41st Floor
New York, NY 10017
OppenheimerFunds, Inc.
Two World Financial Center
225 Liberty Street
New York, NY 10281
Janus Capital Management LLC
151 Detroit Street
Denver, CO 80206
Amount and Nature
of Beneficial Ownership (a)
10,718,600 (b) (c)
Percent
of Class
8.50%
9,325,175 (d)
7.40%
8,267,264 (e)
6.56%
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b)
c)
“Beneficial ownership” is a term broadly defined by the SEC and includes more than the typical
form of stock ownership, that is, stock held in the person’s name. The term also includes what is
referred to as “indirect ownership” such as where, for example, the person has or shares the power
to vote the stock, sell it or acquire it within 60 days. Accordingly, some of the shares reported as
beneficially owned in this table may actually be held by other persons or organizations. Those other
persons and organizations are described in the reports filed with the SEC.
The “Filing Persons” discussed below reported such beneficial ownership to the SEC on their
Schedule 13D as of January 15, 2008 and that they shared voting power and shared dispositive
power with respect to such shares. According to said Schedule 13D, the Filing Persons are Trian
Partners GP, L.P., Trian Partners General Partner, LLC, Trian Partners, L.P., Trian Partners Master
Fund, L.P., a Cayman Islands limited partnership, Trian Partners Parallel Fund I., L.P., Trian Partners
Parallel Fund I General Partner LLC, Trian Partners Parallel Fund II L.P., Trian Partners Parallel Fund
II GP, L.P., Trian Partners Parallel Fund II General Partner, LLC, Trian Fund Management, L.P., Trian
Fund Management GP, LLC, Nelson Peltz, Peter W. May and Edward P. Garden.
Peter W. May, referred to in Note (b) above, is a nominee of the Board for election as a director. See
Item 1 – Election of Directors below.
d) OppenheimerFunds, Inc., reported such beneficial ownership to the SEC on its Schedule 13G as of
e)
February 5, 2008 and that it has shared voting power and shared dispositive power over all such
shares.
Janus Capital Management LLC (“Janus Capital”) reported such beneficial ownership to the SEC on
its Schedule 13G as of December 31, 2007 and that it had sole voting power over 3,467,380 shares,
shared voting power over 4,799,884 shares, sole dispositive power over 3,467,380 shares and shared
dispositive power over 4,799,884 shares. The form was also signed by Enhanced Investment
Technologies LLC (“Intech”). Janus disclosed indirect ownership stakes in Intech and in Perkins,
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Wolf, McDonnell and Company, LLC (“Perkins Wolf ”). Janus disclosed that, by virtue of the
ownership structure disclosed, holdings in the Company’s stock by Janus, Intech and Perkins Wolf
had been aggregated for purposes of its Schedule 13G and that all three of the firms whose holdings
were so aggregated are registered investment advisors furnishing investment advice to various
investment companies and other clients referred to in the Form as the “Managed Portfolios.” The
Form notes that by virtue of its role as investment adviser or sub-adviser to the Managed Portfolios,
Janus Capital may be deemed to be beneficial owner of 3,467,380 shares of the Company’s stock.
The filing also notes that by virtue of its role as investment adviser or sub-adviser to the Managed
Portfolios, Intech may be deemed to be beneficial owner of 4,799,884 shares of the Company’s
stock. Both Intech and Janus Capital state that they have no right to receive dividends from stock
held in the Managed Portfolios and disclaim ownership associated with such rights.
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Ownership by Directors, Director Nominees and Executive Officers
The following table shows the number of shares of the Company’s common stock beneficially owned as
of March 20, 2008 by those persons who are director nominees or who were, as of the end of the last
fiscal year (January 31, 2008), directors, the principal executive officer (the “CEO”), the principal
financial officer (the “CFO”) and the three next most highly compensated executive officers of the
Company:
Amount and Nature of
Beneficial Ownership
Percent Of Classa
Name
Directors
Rose Marie Bravo
William R. Chaney
Gary E. Costley
Lawrence K. Fish
Abby F. Kohnstamm
Michael J. Kowalski (CEO)
Charles K. Marquis
J. Thomas Presby
James E. Quinn (executive officer)
William A. Shutzer
Peter W. May
Executive Officers
Beth O. Canavan
James N. Fernandez (CFO)
Jon M. King
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96,216
780,500
6,000
0
57,000
1,677,000
255,812
31,900
678,262
319,062
10,718,600
290,354
546,636
116,931
b
c
d
e
f
g
h
i
j
k
l
m
n
o
*
*
*
*
*
1.3
*
*
*
*
8.5
*
*
*
13.2
All executive officers and
directors as a group (20 persons):
16,584,564
a)
b)
c)
d)
e)
f)
g)
h)
i)
An asterisk (*) is used to indicate less than 1% of the class outstanding.
Includes 92,216 shares issuable upon the exercise of “Vested Stock Options,” which are stock
options that either are exercisable as of March 20, 2008 or will become exercisable within 60 days
of that date.
Includes 192,500 shares issuable upon the exercise of Vested Stock Options, and 75,000 shares held
by Mr. Chaney’s wife. Also includes 13,000 shares held by The Chaney Family Foundation of which
Mr. Chaney is President. Mr. Chaney disclaims beneficial ownership of Company stock held by The
Chaney Family Foundation.
Includes 5,000 shares issuable upon the exercise of Vested Stock Options.
Includes 55,000 shares issuable upon the exercise of Vested Stock Options.
Includes 1,463,000 shares issuable upon the exercise of Vested Stock Options.
Includes 133,924 shares issuable upon the exercise of Vested Stock Options.
Includes 30,000 shares issuable upon the exercise of Vested Stock Options.
Includes 632,125 shares issuable upon the exercise of Vested Stock Options; 137 shares credited to
Mr. Quinn's account under the Company’s Employee Profit Sharing and Retirement Savings Plan;
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31,000 shares held by Mr. Quinn’s wife; 4,000 shares owned by Mr. Quinn’s minor child under the
UGMA, and 4,000 shares held by Mr. Quinn’s son .
Includes 85,000 shares issuable upon the exercise of Vested Stock Options and 5,100 shares held by
or for Mr. Shutzer's minor child and 114,000 shares held by KJC Ltd. of which Mr. Shutzer is the sole
general partner. Mr. Shutzer disclaims beneficial ownership of Company stock held by KJC Ltd.
See Stockholders Who Own At Least Five Percent of the Company above and reference Trian Fund
Management, L.P. and Peter W. May in Note b) thereto.
Includes 281,500 shares issuable upon the exercise of Vested Stock Options and 554 shares credited
to Mrs. Canavan’s account under the Company’s Employee Profit Sharing and Retirement Savings
Plan.
Includes 509,500 shares issuable upon the exercise of Vested Stock Options and 136 shares
credited to Mr. Fernandez’s account under the Company’s Employee Profit Sharing and Retirement
Savings Plan.
Includes 116,500 shares issuable upon the exercise of Vested Stock Options and 431 shares credited
to Mr. King’s account under the Company’s Employee Profit Sharing and Retirement Savings Plan.
Includes 4,577,395 shares issuable upon the exercise of Vested Stock Options and 2,674 shares held
in the Company’s Employee Profit Sharing and Retirement Savings Plan.
j)
k)
l)
m)
n)
o)
See “COMPENSATION OF THE CEO AND OTHER EXECUTIVE OFFICERS, Compensation Discussion and
Analysis, Equity Ownership by Executive Officers and Directors” on page PS-27 below for a discussion of
the Company’s share ownership policy.
Compliance of Directors, Executive Officers and Greater-Than-Ten-Percent Stockholders with
Section 16(a) Beneficial Ownership Reporting Requirements
Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s directors, executive officers
and greater-than-ten-percent stockholders to file reports of ownership and changes in ownership with
the SEC and the New York Stock Exchange. These persons are also required to provide us with copies of
those reports.
Based on our review of those reports and of certain other documents we have received, we believe that,
during and with respect to our last fiscal year (February 1, 2007 to January 31, 2008), all filing
requirements under Section 16(a) applicable to our directors, executive officers and greater-than-ten-
percent stockholders were satisfied other than as follows: Mr. Marquis exercised stock options on
November 14, 2007 and retained all 12,304 shares subject to such exercise. The transaction was reported
on a Statement of Changes in Beneficial Ownership of Securities filed with the Securities and Exchange
Commission on January 22, 2008
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RELATIONSHIP WITH INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
PricewaterhouseCoopers LLP (“PwC”) serves as the Company’s independent registered public accounting
firm and, through its predecessor firms, has served in that capacity since 1984.
The Audit Committee has selected PwC as the independent registered public accounting firm to audit
the Company’s financial statements and effectiveness of internal controls for the fiscal year ending
January 31, 2009. This Audit Committee is directly responsible for appointing the independent auditors.
In making this selection, the Audit Committee considered the independence of PwC, and whether the
audit and non-audit services PwC provides to the Company are compatible with maintaining that
independence.
The Audit Committee has adopted a policy requiring advance approval of PwC’s fees and services by the
Audit Committee; this policy also prohibits PwC from performing certain non-audit services for the
Company including: (i) bookkeeping, (ii) systems design and implementation, (iii) appraisal or valuation,
(iv) actuarial, (v) internal audit, (vi) management or human resources, (vii) investment advice or
investment banking and (viii) legal and expert services unrelated to the audit. All fees paid to PwC by the
Company as shown in the table that follows were approved by the Audit Committee pursuant to this
policy.
Fees and Services of PricewaterhouseCoopers LLP
The following table presents fees for professional audit services rendered by PwC for the audit of the
Company’s consolidated financial statements and the effectiveness of internal controls over financial
reporting for the years ended January 31, 2008 and 2007, and for its reviews of the Company’s unaudited
condensed consolidated interim financial statements. This table also reflects fees billed for other
services rendered by PwC.
January 31, 2008
January 31, 2007
Audit Fees
Audit-related Feesa
Audit and Audit-related Fees
Tax Feesb
All Other Feesc
Total Fees
$
$
2,320,500
79,250
2,399,750
1,477,100
16,300
3,893,150
$
$
2,172,750
73,750
2,246,500
713,900
15,100
2,975,500
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a) Audit-related fees consist principally of fees for audits of financial statements of certain employee
benefit plans and other advisory services for the years ended January 31, 2008 and January 31, 2007.
b) Tax fees consist of fees for tax consultation and tax compliance services. These fees included tax
filing and compliance fees of $1,090,200 for the year ended January 31, 2008 and $265,600 for the
year ended January 31, 2007.
c) All other fees consist of costs for software used by the Finance Division and other advisory services
for the years ended January 31, 2008 and January 31, 2007.
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
The Board, In General
The Company is a Delaware corporation. Our principal subsidiary is Tiffany and Company, a New York
corporation. In this Proxy Statement, Tiffany and Company will be referred to as simply “Tiffany.”
The Board is currently comprised of nine members. The Board can also fill vacancies and newly created
directorships, as well as amend the By-laws to provide for a greater or lesser number of directors.
Directors are required by our By-laws to be less than age 72 when elected or appointed unless the Board
waives that provision with respect to an individual director whose continued service is deemed uniquely
important to the Company. In the past, the Board has waived the age limit for William R. Chaney because
of his service as the Company’s chief executive officer from 1984 to 1999 and the valuable perspective
that such service brought to Board deliberations. Mr. Chaney is not standing for re-election as a director
at the 2008 Annual Meeting.
Under the Company’s Corporate Governance Principles, directors may not serve on a total of more than
six public company boards. Service on the Board is included in that total.
The Role of the Board in Corporate Governance
The Board plays several important roles in the governance of the Company, as set out in the Company’s
Corporate Governance Principles. The Corporate Governance Principles may be viewed on the
Company’s website http://investor.tiffany.com/governance.cfm and as Appendix I to this Proxy Statement.
The responsibilities of the Board include:
(cid:120) Management succession;
(cid:120) Review and approval of the annual operating plan prepared by management;
(cid:120) Monitoring of performance in comparison to the operating plan;
(cid:120) Review and approval of the Company’s strategic plan prepared by management;
(cid:120) Consideration of topics of relevance to the Company’s ability to carry out its strategic plan;
(cid:120) Review and approval of a delegation of authority by which management carries out the
day-to-day operations of the Company and its subsidiaries;
(cid:120) Review of the Company’s investor relations program;
(cid:120) Review of the Company’s schedule of insurance coverage; and
(cid:120) Review and approval of significant actions by the Company.
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Executive Sessions of Non-management Directors/Presiding Non-management Director
Non-management directors meet regularly in executive session without management participation. This
encourages open discussion. At those meetings, Charles K. Marquis, Chairman of the
Nominating/Corporate Governance Committee, presides. In addition, at least once per year the
independent directors meet separately in executive session.
Communication with Non-management Directors
Stockholders may send written communications to the entire Board or to any of the non-management
directors by addressing their concerns to Mr. Marquis, Chairman of the Nominating/Corporate
Governance Committee (presiding director), at the following address: Corporate Secretary (Legal
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Department), Tiffany & Co., 600 Madison Avenue, Eighth floor, New York, New York 10022. All
communications will be compiled by the Corporate Secretary and submitted to the Board or an
individual director, as appropriate, on a periodic basis.
Director Attendance at Annual Meeting
The Board schedules a regular meeting on the date of the Annual Meeting of Stockholders to facilitate
attendance at the Annual Meeting by the directors. All nine directors attended the Annual Meeting held
in May 2007.
Independent Directors Constitute a Majority of the Board
The Board has affirmatively determined that each of the following directors (each of whom is also a
nominee for re-election) is “independent” under the listing standards of the New York Stock Exchange in
that none of them has a material relationship with the Company (directly or as a partner, shareholder or
officer of any organization that has a relationship with the Company): Rose Marie Bravo, Gary E. Costley,
Abby F. Kohnstamm, Charles K. Marquis, and J. Thomas Presby.
The Board has also affirmatively determined that each of the following nominees (neither of whom has
previously served as a director of the Company) is “independent” under the same listing standards:
Lawrence K. Fish and Peter W. May. If elected (see Item 1 – Election of Directors below) each will be an
independent director.
The Board also considered the other tests of independence set forth in the New York Stock Exchange
Corporate Governance Rules and has determined that each of the above directors and nominees is
independent as defined in such Rules.
In addition, the Board has affirmatively determined that J. Thomas Presby, Gary E. Costley, Abby F.
Kohnstamm, and Charles K. Marquis meet the additional, heightened independence criteria applicable to
audit committee members under New York Stock Exchange rules.
In determining that Ms. Kohnstamm is independent, the Board considered that IBM Corporation, of
which she was an officer until January 2006, and to which she now provides consulting services, sells
data-processing and communication hardware, software and services to Tiffany and Tiffany sells business
gifts to IBM. However, these sales constitute far less than one percent of the consolidated sales of each
seller (IBM and Tiffany, respectively). The Board considered all relevant facts and circumstances
including the amount of such sales in the context of the size of the businesses of the Company and IBM
Corporation, the fact that Ms. Kohnstamm was not responsible at IBM Corporation for such sales in the
course of her duties, and that such sales were long-standing business practices prior to the time Ms.
Kohnstamm was recruited to the Board.
In determining that Mr. May is independent, the Board considered the Commentary set forth in the New
York Stock Exchange’s Listed Company Manual, section 303A.02, which states “… as the concern is
independence from management, the Exchange does not view ownership of even a significant amount of
stock, by itself, as a bar to an independence finding.” See “OWNERSHIP OF THE COMPANY, Stockholders
Who Own At Least Five Percent of the Company” above.
In determining that Mr. Fish is independent, the Board considered banking relationships that exist
between ABN/AMRO and the Company. Both ABN/AMRO and Citizens Financial Group are subsidiaries
of the Royal Bank of Scotland Group. Mr. Fish is an employee of Citizens Financial Group and a director
of Royal Bank of Scotland Group. A portion of the operations of ABN/AMRO was recently acquired by
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Royal Bank of Scotland Group. The Company does banking business with ABN/AMRO but understands
that the operations with which the Company does business have not been acquired by the Royal Bank of
Scotland Group.
To our knowledge, none of the other independent directors or first-time nominees for director has any
direct or indirect relationship with the Company, other than as a director, and none of the independent
directors or first-time nominees serves as an executive officer of any charitable organization to which the
Company or any of its affiliates have made any significant contributions within the preceding three years
other than as follows: Mr. May serves as Chairman of The Mount Sinai Medical Center Board of Trustees;
in fiscal 2007, 2006 and 2005 respectively the Company donated approximately $11,000, $58,000 and
$50,000 in cash and/or goods to this institution. Mr. May was not involved in soliciting these donations.
Meetings and Attendance during Fiscal 2007
The following chart shows the total number of meetings (including telephonic meetings) held by the
Board and each of its committees during Fiscal 2007. All current directors attended at least 90% of the
aggregate number of meetings of the Board and those committees on which they served during their
period of service (Dr. Costley joined the Board in May 2007 and hence did not serve for the full year).
Board
Audit
Compensation
Stock
Option
Nominating/
Corporate
Governance
Percent of
Meetings
Attended (a)
Meetings Held
10
10
6
6
Meetings Attended:
Rose Marie Bravo
William R. Chaney
Gary E. Costley
Abby F. Kohnstamm
Charles K. Marquis
J. Thomas Presby
William A. Shutzer
Michael J. Kowalski
James E. Quinn
9
10
6
10
10
10
10
10
9
n/a
n/a
8
7
10
10
n/a
n/a
n/a
6
n/a
5
6
6
n/a
n/a
n/a
n/a
6
n/a
5
6
6
n/a
n/a
n/a
n/a
6
6
n/a
5
6
6
6
n/a
n/a
n/a
96%
100%
100%
97%
100%
100%
100%
100%
90%
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(a)
The percentage indicated reflects that percentage of meetings attended during the period that
the director was serving as a director or on the committee indicated. Thus, Ms. Kohnstamm, who
was not appointed to the Audit Committee until May 2007 has not been charged with absences
from Audit Committee meetings that occurred before such appointment and Dr. Costley, who
was not elected to the Board until May 2007, has not been charged with absences from the Board
or committee meetings prior to his election.
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Committees of the Board
Committees Composed Entirely of Independent Directors
Audi t
Nominating/Corporate Governance
J. Thomas Presby, Chair
Gary E. Costley
Abby F. Kohnstamm
Charles K. Marquis
Compensation
Gary E. Costley, Chair
Rose Marie Bravo
Abby F. Kohnstamm
Charles K. Marquis
Charles K. Marquis, Chair
Rose Marie Bravo
Gary E. Costley
Abby F. Kohnstamm
J. Thomas Presby
Stock Option Subcommittee
Gary E. Costley, Chair
Rose Marie Bravo
Abby F. Kohnstamm
Charles K. Marquis
Nominating/Corporate Governance Committee
The primary function of the Nominating/Corporate Governance Committee is to assist the Board in
matters of corporate governance. The Nominating/Corporate Governance Committee operates under the
charter adopted by the Board. The charter may be viewed on the Company’s website,
http://investor.tiffany.com/governance.cfm. Under its charter, the role of the Nominating/Corporate
Governance Committee includes recommending to the Board:
(cid:120) Policies on the composition of the Board,
(cid:120) Criteria for the selection of nominees for election to the Board,
(cid:120) Nominees to fill vacancies on the Board, and
(cid:120) Nominees for election to the Board.
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If you would like to submit the name of a candidate for the Nominating/Corporate Governance
Committee to consider as a nominee of the Board for director, you may send your submission at any time
to the Nominating/Corporate Governance Committee, c/o Mr. Patrick B. Dorsey, Corporate Secretary
(Legal Department), Tiffany & Co., 600 Madison Avenue, New York, New York 10022. Candidates for
director shall be selected on the basis of their business experience and expertise, with a view to
supplementing the business experience and expertise of management and adding further substance and
insight into board discussions and oversight of management. The Nominating/Corporate Governance
Committee evaluates candidates recommended by stockholders in the same manner as it evaluates
director candidates suggested by others. See our Corporate Governance Principles which are available on
our website http://investor.tiffany.com/governance.cfm and as Appendix I to this Proxy Statement.
Dividend Committee
The Dividend Committee declares regular quarterly dividends in accordance with the dividend policy
established by the full Board. The Dividend Committee acts by unanimous written consent and did
not meet in Fiscal 2007. Members of the Dividend Committee are: William R. Chaney, Chair;
Michael J. Kowalski and James E. Quinn.
Compensation Committee
The primary function of the Compensation Committee is to assist the Board in compensation matters.
The Compensation Committee operates under its charter which may be viewed on the Company’s
T I F F A N Y & C O .
P S - 1 4
website, http://investor.tiffany.com/governance.cfm. Under its charter, the Compensation Committee's
responsibilities include:
(cid:120) Approval of remuneration arrangements for executive officers, and
(cid:120) Approval of compensation plans in which officers and employees of Tiffany are eligible to
participate.
For additional information regarding the operation of the Compensation Committee, including the role
of consultants and management in the process of determining the amount and form of executive
compensation, see "Compensation Committee Process" beginning on page PS-29 of the "Compensation
Discussion and Analysis" below. The Compensation Committee’s report appears on page PS-31.
Compensation for the non-management members of the Board is set by the Board with advice from the
Nominating/Corporate Governance Committee.
Stock Option Subcommittee
The Stock Option Subcommittee determines the grant of options, restricted stock units, cash incentive
awards and other matters under our 2005 Employee Incentive Plan. All members of the Compensation
Committee are members of this subcommittee.
Compensation Committee Interlocks and Insider Participation
No director serving on the Compensation Committee or its Stock Option Subcommittee during any part
of Fiscal 2007 was, at any time either during or before such fiscal year, an officer or employee of Tiffany
& Co. or any of its subsidiaries. No interlocking relationship exists between the Board or Compensation
Committee and the board of directors or compensation committee of any other company, nor has any
interlocking relationship existed during the last fiscal year.
Audit Committee
The Company’s Audit Committee is an “audit committee” established in accordance with Section 3(a)
(58)(A) of the Securities Exchange Act of 1934. The primary function of the Audit Committee is to assist
the Board in fulfilling its oversight responsibilities with respect to the Company’s financial matters. The
Audit Committee operates under a charter adopted by the Board; that charter may be viewed on the
Company’s website, http://investor.tiffany.com/governance.cfm. Under its charter, the Audit Committee's
responsibilities include:
(cid:120) Retaining and terminating the Company’s independent registered public accounting firm,
reviewing the quality-control procedures and independence of such firm and evaluating their
proposed audit scope, performance and fee arrangements;
(cid:120) Approving in advance all audit and non-audit services to be rendered by the independent
registered public accounting firm;
(cid:120) Reviewing the adequacy of our system of internal financial controls over financial reporting;
(cid:120) Establishing procedures for complaints regarding accounting, internal accounting controls or
auditing matters; and
(cid:120) Conducting a post-audit review of our financial statements and audit findings in advance of
filing, and reviewing in advance proposed changes in our accounting principles.
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The Board has determined that all members of the Audit Committee are financially literate, that at least
one member of the Audit Committee meets the New York Stock Exchange standard of having accounting
or related financial management expertise, and that Mr. Presby meets the SEC criteria of an “audit
committee financial expert.” Mr. Presby is a member of the National Association of Corporate Directors
and chairs the audit committees of five public companies in addition to that of the Company. In view of
Mr. Presby’s full-time commitment to work as an independent director, the Board has determined that
his simultaneous service on six audit committees will not impair his ability to effectively serve on the
Company’s Audit Committee. The report of the Audit Committee is on page PS-18.
Self-Evaluation
The independent directors who serve on the Board conduct an annual evaluation of the workings and
efficiency of the Board and of each of the Board committees on which they serve and make
recommendations for change, if required.
Resignation on Job Change or New Directorship
Under the Company’s Corporate Governance Principles, a director must submit a letter of resignation to
the Nominating/Corporate Governance Committee on a change in employment or significant change in
job responsibilities and upon accepting or resolving to accept a directorship with another public
company. The Committee may either accept or reject such resignation, but must act within 10 days
after considering, in light of the circumstances, the continued appropriateness of the continued service
of the director.
Business Conduct Policy and Code of Ethics
Since the 1980s, the Company has had a policy governing business conduct for all Company employees
worldwide. The policy requires compliance with law and avoidance of conflicts of interest and sets
standards for various activities to avoid the potential for abuse or the occasion for illegal or unethical
activities. This policy covers, among other activities, the acceptance or giving of gifts from or to those
seeking to do business with the Company, processing one’s own transactions, political contributions and
reporting dishonest activity. Each year, all employees are required to review the policy, report any
violations or conflicts of interest and affirm their obligation to report future violations to management.
The Company has a toll-free “hotline” to receive complaints from employees, vendors, stockholders and
other interested parties concerning violations of the Company’s policies or questionable accounting,
internal controls or auditing matters. The toll-free phone number is 877-806-7464. The hotline is
operated by a third party service provider to assure the confidentiality and completeness of all
information received. Users of this service may elect to remain anonymous.
We also have a Code of Business and Ethical Conduct for the directors, the Chief Executive Officer, the
Chief Financial Officer and all other officers of the Company. The Code advocates, and requires those
persons to adhere to, principles and responsibilities governing professional and ethical conduct. This
Code supplements our business conduct policy. Waivers may only be made by the Board. A summary of
our business conduct policy and a copy of the Code of Business and Ethical Conduct are posted on our
website, http://investor.tiffany.com/governance.cfm. We have also filed a copy of the Code with the SEC as
an exhibit to our Annual Report on Form 10-K for the fiscal year ended January 31, 2008. The Board has
not adopted a policy by which it will disclose amendments to, or waivers from, the Company’s Code of
Business and Ethical Conduct on our website. Accordingly, we will file a report on Form 8-K if that Code
is amended or if the Board has granted a waiver from such Code, including an implicit waiver. We will file
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such a report only if the waiver applies to the Company’s principal executive officer, principal financial
officer, principal accounting officer or controller, and if such waiver relates to: honest and ethical
conduct; full, fair, accurate, timely, and understandable disclosure; compliance with applicable
governmental laws, rules and regulations; the prompt internal reporting of violations of the Code; or
accountability for adherence to the Code.
The Nominating/Corporate Governance Committee, Audit Committee and Compensation Committee
charters as well as the Code of Ethics and the Corporate Governance Principles are available in print to
any stockholder who requests them.
Limitation on Adoption of Poison Pill Plans
On January 19, 2006, the Board terminated the Company’s stockholder rights plan (typically referred to
as a “poison pill”) and adopted the following policy:
“This Board shall submit the adoption or extension of any poison pill to a stockholder vote before
it acts to adopt such poison pill; provided, however, that this Board may act on its own to adopt a
poison pill without first submitting such matter to a stockholder vote if, under the circumstance
then existing, this Board in the exercise of its fiduciary responsibilities deems it to be in the best
interests of the Company and its stockholders to adopt a poison pill without the delay in
adoption that is attendant upon the time reasonably anticipated to seek a stockholder vote. If a
poison pill is adopted without first submitting such matter to a stockholder vote, the poison pill
must be submitted to a stockholder vote within one year after the effective date of the poison pill.
Absent such submission to a stockholder vote, and favorable action thereupon, the poison pill
will expire on the first anniversary of its effective date.”
TRANSACTIONS WITH RELATED PERSONS
William A. Shutzer is a Senior Managing Director of Evercore Partners, a public company (“Evercore”). An
affiliated company of Evercore was engaged by the Company in early Fiscal 2007 to provide financial
advisory services in connection with two potential transactions. Mr. Shutzer provided services to the
Company in the course of those engagements. One of the potential transactions referred to above did
not occur; the other involved the completed sale of the Company’s Little Switzerland subsidiary. For its
work on both engagements, Evercore was paid a total of $1,135,887, inclusive of expenses. Mr. Shutzer did
not receive a percentage of the fees paid to Evercore, but did benefit indirectly as a participant in
Evercore’s employee bonus pool and as a shareholder of Evercore. The amount of such participation
cannot be estimated.
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The Board has adopted policies and procedures for the review, approval or ratification of transactions
with the Company (or any subsidiary) in which any director or executive officer, any nominee for
election as a director, any immediate family member of such an officer, director or nominee or any five-
percent holder of the Company’s securities has a direct or indirect material interest. Such transactions
are referred to the Nominating/Corporate Governance Committee for review. In determining whether
to approve or ratify any transaction, the Committee applies the following standard after considering the
facts and circumstances of the transaction: whether, in the business judgment of the Committee
members, the interests of the Company appear likely to be served by such approval or ratification.
The transaction with Evercore described above was approved in advance by the Nominating/Corporate
Governance Committee under the policy and procedures described above.
T I F F A N Y & C O .
P S - 1 7
REPORT OF THE AUDIT COMMITTEE
Included in the Company’s Annual Report to Stockholders are the consolidated balance sheets of the
Company and its subsidiaries as of January 31, 2008 and 2007, and the related consolidated statements of
earnings, stockholders’ equity and comprehensive earnings, and cash flows for each of the three years in
the period ended January 31, 2008. These statements (the “Audited Financial Statements”) are the
subject of a report by the Company’s independent accountants, PricewaterhouseCoopers LLP (“PwC”).
The Audited Financial Statements are also included in the Company’s Annual Report on Form 10-K filed
with the Securities and Exchange Commission.
The Audit Committee reviewed and discussed the Audited Financial Statements with the Company’s
management and otherwise fulfilled the responsibilities set forth in its charter. The Audit Committee has
also discussed with the Company’s management and independent accountants their evaluations of the
effectiveness of the Company’s internal controls over financial reporting.
The Audit Committee has discussed with PwC the matters required to be discussed by Statement on
Auditing Standards No. 61, as amended, “Communication with Audit Committees” and PCAOB Auditing
Standard No. 5, “An Audit of Internal Control Over Financial Reporting That Is Integrated With An Audit
of Financial Statements”.
The Audit Committee received from PwC the written disclosure and letter required by Independence
Standards Board Standard No. 1 , ( “Independence Discussion with Audit Committees”), and has
discussed the independence of PwC with that firm. The Audit committee has considered whether the
provision by PwC of the tax consultation, tax compliance and other non-audit-related services disclosed
above under “RELATIONSHIP WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM – Fees
and Services of PricewaterhouseCoopers LLP” is compatible with maintaining PwC’s independence and
has concluded that providing such services is compatible with that firm’s independence from the
Company and its management.
The Audit Committee is aware that the provision of non-audit services by an independent accountant
may, in some circumstances, create the perception that independence has been compromised.
Accordingly, the Audit Committee has instructed management and management has agreed to develop
professional relationships with firms other than PwC so that, when needed, other qualified resources will
be available and will be used as appropriate.
Based upon the review and discussions referred to above, the Audit Committee recommended to the
Company’s Board that the Audited Financial Statements be included in the Company’s Annual Report on
Form 10-K for the fiscal year ended January 31, 2008.
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Signed:
J. Thomas Presby, Chair
Gary E. Costley
Abby F. Kohnstamm
Charles K. Marquis
Members of the Audit Committee
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EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company are:
Name
Age Position
Michael J. Kowalski
James E. Quinn
Beth O. Canavan
James N. Fernandez
Jon M. King
Victoria Berger-Gross
Pamela H. Cloud
Patrick B. Dorsey
Patrick F. McGuiness
Caroline D. Naggiar
John S. Petterson
56
56
53
52
51
52
38
57
42
50
49
Chairman of the Board and Chief Executive Officer
President
Executive Vice President
Executive Vice President and Chief Financial Officer
Executive Vice President
Senior Vice President - Human Resources
Senior Vice President - Merchandising
Senior Vice President - General Counsel and Secretary
Senior Vice President - Finance
Senior Vice President – Chief Marketing Officer
Senior Vice President – Operations
Year Joined
Tiffany
1983
1986
1987
1983
1990
2001
1994
1985
1990
1997
1988
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. After 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. He was elected President in
1997. Mr. Kowalski is a member of the Board of Directors of the Bank of New York Mellon. The Bank of
New York Mellon is Tiffany’s principal banking relationship, serving as Administrative Agent and a lender
under Tiffany’s credit agreement and as the trustee and investment manager for Tiffany’s Employee
Pension Plan; and Mellon Investor Services LLC serves as the Company’s transfer agent and registrar.
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. In January
1995, he became a member of Registrant's Board of Directors but he will not stand for re-election to that
position at the 2008 Annual Meeting. He has responsibility for Tiffany & Co. sales outside the U.S. and
Canada. Mr. Quinn is a member of the board of directors of BNY Hamilton Funds, Inc. and Mutual of
America Capital Management, Inc. BNY Hamilton Funds, Inc. is affiliated with The Bank of New York
Mellon. The Bank of New York Mellon 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.
Beth O. Canavan. Mrs. Canavan joined Tiffany in May 1987 as Director of New Store Development. She
later held the positions of Vice President, Retail Sales Development, Vice President and General Manager
of the New York flagship store, and Eastern Regional Vice President. 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, Mrs.
Canavan assumed additional responsibility for direct sales and business-to-business sales activities in the
U.S. and Canada.
T I F F A N Y & C O .
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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. He has responsibility for accounting, treasury, investor relations, information technology,
financial planning, financial services, business development, diamond operations, real estate operations
and overall responsibility for distribution, manufacturing, customer service and security. Mr. Fernandez
serves on the Board of Directors of The Dun & Bradstreet Corporation and is a member of the Audit
Committee and Board Affairs Committee.
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. In 2003, he was promoted to Senior Vice President–Merchandising. In June 2006, he was
promoted to Executive Vice President and, in addition to his Merchandising leadership role, assigned
responsibility for Marketing and Public Relations.
Victoria Berger-Gross. Dr. Berger-Gross joined Tiffany in February 2001 as Senior Vice President–Human
Resources.
l
Pamea H. Cloud. Ms. Cloud joined Tiffany in 1994 as an Assistant Buyer and has since advanced through
positions of increasing management responsibility within the Merchandising Division. In January 2007,
she was promoted to Senior Vice President–Merchandising, responsible for all aspects of product
planning and inventory management.
Pa ick B. Dosey. Mr. Dorsey joined Tiffany in July 1985 as General Counsel and Secretary.
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Patrick F. McGuiness. Mr. McGuiness joined Tiffany in 1990 as an Analyst in Accounting & Reporting and
has held a variety of management positions within the Finance Division, most recently as Group Vice
President–Finance, and in Merchandising from 2000 to 2002 as Vice President–Merchandising Process
Improvement. In January 2007, he was promoted to Senior Vice President–Finance, responsible for
Tiffany’s worldwide financial functions.
Caroline D. Naggiar. Ms. Naggiar joined Tiffany in June 1997 as Vice President–Marketing
Communications. She assumed her current responsibilities as head of advertising and marketing in
February 1998 and in 2007 she was assigned additional responsibility for the Public Relations
department and named Chief Marketing Officer.
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. In May 2001, Mr. Petterson assumed the 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.
T I F F A N Y & C O .
P S - 2 0
COMPENSATION OF THE CEO AND OTHER EXECUTIVE OFFICERS
Contents
Compensation Discussion and Analysis .............................................................................................................Page PS-21
Report of the Compensation Committee...........................................................................................................Page PS-31
Summary Compensation Table – Fiscal 2006 and 2007 ............................................................................Page PS-32
Grants of Plan-Based Awards Table – Fiscal 2007...........................................................................................Page PS-35
Equity Compensation Plan Information……………………………………………………………………………………………..…Page PS-36
Discussion of Summary Compensation Table and Grants of Plan-Based Awards ..........................Page PS-37
Outstanding Equity Awards at Fiscal Year-end Table ...................................................................................Page PS-41
Option Exercises and Stock Vested Table – Fiscal 2007..............................................................................Page PS-44
Pension Benefits Table.................................................................................................................................................Page PS-45
Nonqualified Deferred Compensation Table ...................................................................................................Page PS-49
Potential Payments on Termination or Change in control ........................................................................Page PS-51
Director Compensation Table – Fiscal 2007.....................................................................................................Page PS-54
COMPENSATION DISCUSSION AND ANALYSIS
Short- and Long-term Planning for Susainable Earnings Growth
t
The executive officers are expected to develop, for approval by the Board, a four-year strategic financial
plan that offers an appropriate level of sustainable earnings growth. The executive officers also are
responsible for executing the strategic plan by developing, for approval by the Board, and executing
annual profit plans that incorporate challenging goals for each fiscal year. Both strategic plans and profit
plans incorporate plans for sales growth, merchandising, gross margins, marketing expenditures, staffing,
other expenses, capital spending and all other components of the Company’s financial statements.
In the short-term, management must continue to build and open new stores, develop and manufacture
new products, improve profit margins, control expenses and manage the Company’s balance sheet in an
efficient and productive manner. However, the Company can achieve sustainable growth only if the
TIFFANY & CO. brand and image continues to be associated, in the minds of consumers, with product
exclusivity and quality, and the highest level of customer service and store design. Maintenance of that
continuity is “brand stewardship.”
The Compensation Committee (the “Committee”) recognizes that tradeoffs between short-term
objectives and brand stewardship are often difficult. For example, variations in product mix can
positively affect gross margins while negatively affecting brand image, and increased staffing can
positively affect customer service while negatively affecting earnings. Each year, the executive officers
revise the Company’s strategic plan by looking out over a four-year horizon and weighing the effects of
their strategic plan on brand value. At the same time, a profit plan for the coming fiscal year is developed.
It is through this planning process that expectations for quarterly and annual earnings growth are
brought into balance with concerns for brand stewardship and sustainable earnings growth.
The Company’s success in achieving its financial goals – both short- and long-term – will be influenced by
the performance of management in developing and executing the strategic plan and each fiscal year’s
profit plan and by highly variable external factors.
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Objectives of the Executive Compensaton Program
i
The Committee is keenly aware of the necessary dynamic between short-term and strategic planning and
has structured the Company’s executive compensation program accordingly. These are the objectives of
the compensation program:
(cid:120)
(cid:120)
(cid:120)
to attract, motivate and retain the management talent necessary to develop and execute both
short-term and strategic plans;
to reward achievement of both short-term and long-term financial goals; and
to link management’s interests with those of the stockholders.
Base Salary
The Company pays competitive salaries to attract and retain its executives, but does not use salary
increases as the primary means of recognizing their talent and performance. While the Committee
believes that an annual salary is a necessary component of any competitive compensation program,
salaries are paid to the Company’s executives as one component of the total program, which includes the
short- and long-term incentives, retirement, life and long-term disability insurance benefits discussed
below.
Short-term Incentives
The Committee uses short-term incentives to motivate executive officers to achieve the annual profit
plan.
The Committee provides annual incentive awards to the chief executive officer, the president, the chief
financial officer and the two other executive vice presidents. Annual incentive awards are primarily
formula-driven, with payments based on the degree of achievement of the annual profit plan and other
considerations, such as certain events, unanticipated at the time that incentive award targets were set,
that affect earnings or special contributions to other business outcomes consistent with the strategic
plan, which the Committee may take into account at its discretion. (For a description of the Incentive
Awards, including the incentive award targets and the conditions under which the Committee may
exercise discretion, see DISCUSSION OF SUMMARY COMPENSATION TABLE AND GRANTS OF PLAN-
BASED AWARDS – Non-Equity Incentive Plan Awards.)
The Committee awards annual bonuses to the executive officers other than the five executive officers
named above. Although the Committee retains discretion with respect to bonuses, in practice it aligns
them with the annual incentive awards.
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Strategic Incentives
The Committee uses long-term incentives to promote the retention of executive officers and motivate
them to achieve sustainable earnings growth.
The Committee considers equity-based awards to be appropriate because, over the long term, the
Company’s stock price should be a good indicator of management’s success in achieving sustainable
earnings growth.
The Committee awards both performance-based restricted stock units and stock options because each
form of award complements the other in helping the Company retain and motivate its executive officers.
T I F F A N Y & C O .
P S - 2 2
In its decision to use both forms of award, the Committee took into account the difficulty of setting
appropriate strategic performance goals. This difficulty arises due to the significant degree of influence
that non-controllable and highly variable external factors have upon the Company’s performance and the
fact that the market does not always respond immediately to earnings growth. Performance-based
restricted stock units have the advantage of rewarding executives for meeting earnings and return-on-
assets goals – even if the achievement of those goals is not reflected in the share price. Stock options, on
the other hand, do not reward executives in a declining market. However, they do provide gains
commensurate with those of shareholders, whether or not the goals have been met.
In order to provide balance to the Company’s long-term incentives, the Committee has determined that
the ratio of the estimated value of performance-based restricted stock units to the estimated value of
stock options awards should be as nearly 50/50 as practicable. These values were determined for
purposes of achieving this ratio as follows: for options, on the basis of the Black-Scholes model; for stock
units, on the assumption that units would vest at target and using the per share market value
immediately prior to the grant date.
Complete vesting of performance-based restricted stock units is dependent upon achievement of both a
cumulative earnings per share (“EPS”) goal and an average return on assets (“ROA”) goal over the three-
year performance period following the grant. (For a description of the performance-based restricted
stock units, including the goals set, see DISCUSSION OF SUMMARY COMPENSATION TABLE AND
GRANTS OF PLAN-BASED AWARDS – Equity Incentive Plan Awards – Performance-Based Restricted
Stock Units.)
(cid:120) Like most companies, the Company’s stock price over the long term is primarily driven by growth
in EPS. EPS performance is the primary determiner of vesting and no shares will vest unless a
threshold level of EPS performance is achieved.
(cid:120) For the three-year performance period ending January 31, 2011, the cumulative EPS goals are as
follows: for threshold, $8.54; for target, $9.87; and for maximum, $10.62.
(cid:120) The Company’s ROA is also likely to significantly affect its stock price over the long term. This is
due, in part, to the significance of inventory and store fitting-out expenses in its business. Thus
the Committee uses ROA as a supplemental indicator of management’s success in achieving
sustainable earnings growth.
(cid:120) The ROA goals are set by the Committee in conformance to, and as part of the process of
approving, the Company’s strategic plan.
(cid:120) For the three-year performance period ending January 31, 2011, the average ROA goal is 11.5%.
The Committee grants stock options in order to clarify the link between the interests of the executive
officers and those of the Company’s stockholders in long-term growth in share value and to support the
brand stewardship over the long term. (For a description of the options see DISCUSSION OF SUMMARY
COMPENSATION TABLE AND GRANTS OF PLAN-BASED AWARDS – Options.)
Retirement Benefits
Retirement benefits are offered to executive officers because the Committee seeks to retain them over
the course of their career, especially in their later years when they have gained experience and become
more valuable to the Company and to its competitors. (For a description of the retirement benefits see
PENSION BENEFITS – Features of the Retirement Plans.) All retirement benefits are independent of
corporate performance factors.
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Executives participate in three retirement plans: they participate in the same tax-qualified pension plan
available to all full-time U.S. employees hired before January 1, 2006 and also receive incremental
benefits under the Excess Plan and the Supplemental Plan.
The Excess Plan credits salary and bonus in excess of amounts that the Internal Revenue Service (IRS)
allows the tax-qualified pension plan to credit in computing benefits, although benefits under both of
these plans are computed under the same formula. The Committee considers it fair and consistent with
the employee retention purpose of the tax-qualified pension plan to maintain for executives the
relationship established for lower compensated employees between annual cash compensation and
pension benefits.
The Supplemental Plan serves as a stay-incentive for experienced executives by increasing the percentage
of average final compensation provided as a benefit as an executive’s years-of-service pass specified
milestones.
Life Insurance Benefits
IRS limitations render the life insurance benefits that the Company provides to all full-time U.S.
employees in multiples of their annual salaries largely unavailable to the Company’s executive officers.
In years past, the Company maintained the relationship established for lower-compensated employees
between annual salaries and life insurance benefits through “split dollar” life insurance arrangements
with executive officers. Split dollar arrangements were an income tax-favored means of providing death
benefits in excess of the IRS limitations, but such arrangements became untenable as the result of IRS
rule changes and the Sarbanes-Oxley Act.
After considering alternatives to the split dollar arrangements, the Committee arranged for the Company
to pay life insurance premiums as taxable compensation to the executives and to pay additional amounts
necessary in order to prevent the executive officers from being subjected to increased income taxes as a
result of this change in the executive life insurance program. (For an explanation of the key features of
the life benefits, see DISCUSSION OF SUMMARY COMPENSATION TABLE AND GRANTS OF PLAN-
BASED AWARDS – Life Insurance Benefits.) Between fiscal year 2006 and fiscal year 2007 the
premiums on the whole life policies owned by the executive officers had to be increased significantly to
achieve the cash accumulation goals of the program. In recent years, the insurer had established
premiums on the basis of incorrect information with respect to the annual compensation of the
executive officers. Because of these increases, the life insurance benefits are under examination by the
Committee which may determine to reduce or discontinue these benefits.
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Disability Insurance Beneits f
Executive officers are provided with special disability benefits because their salaries are inconsistent
with the income replacement limits of the Company’s standard disability insurance policies. Thus, these
special disability benefits maintain the relationship established for lower compensated employees
between annual cash compensation and disability benefits.
Competitive Compensation Analysis
Each year, in setting or maintaining base salaries and making incentive awards, the Committee refers to
competitive compensation (market) data because the Committee believes that such data are useful to
determine if the Company’s compensation falls between the 25th and 75th percentile of market data.
However, the Committee does not consider such data sufficient for a full evaluation of appropriate
compensation for any individual executive officer. Accordingly, the Committee has not set a “bench-
mark” to such data for any executive officer and does not rely exclusively on compensation surveys or
T I F F A N Y & C O .
P S - 2 4
publicly available compensation information. Rather, the Committee also considers: the comparability
of compensation as between executive officers of comparable experience and responsibility; job
comparability with market positions; the recommendations of the chief executive officer; and the
Committee’s own business judgment as to an individual’s maturity, experience and tenure, capacity for
growth, demonstrated success and desirability to the Company’s competitors.
To help it assess the competitiveness of the compensation offered to the Company’s executive officers,
the Committee reviewed a comparability analysis prepared in November 2007 and updated in December
2007 by Towers Perrin, a nationally recognized compensation consulting firm.
The analysis included the following elements of compensation for each executive officer:
(cid:120) base salary;
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(cid:120)
target annual incentive or bonus as a percentage of salary;
target total cash compensation (salary plus target incentive/bonus award);
actual total cash compensation (salary plus actual incentive/bonus granted in the prior year);
expected value of long-term incentives as a percentage of salary;
target total direct compensation (target total cash compensation plus the expected value of long-
term incentives granted in the prior year);
actual total direct compensation (actual total cash compensation plus the expected value of
long-term incentives granted in the prior year); and
(cid:120)
(cid:120) pay mix.
The Committee believes that a competitive market for the services of retail executives exists, even among
firms that operate in a different line of business. To fully understand market compensation levels for
comparable executive positions, the analysis includes data for both retail and general industry
companies, with greater emphasis on the former.
The analysis included data concerning compensation for senior positions provided by:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
a survey of 16 public companies in the specialty retail industry with median revenues of
$2.8 billion;
a survey of 14 public and private companies in the retail industry with median revenues of $3.2
billion;
a general survey of 47 companies in the retail/wholesale industry with median revenues of $5.6
billion; and
a survey of 273 companies in general industry with revenues from $1 to $6 billion.
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For retail-specific positions, the analysis of competitive compensation was determined by reference only
to surveys of the retail industry mentioned above.
For the chief executive officer and the chief financial officer, the going rate was developed by reference to
surveys of the retail industry mentioned above (weighted 67%) and to the general industry survey
mentioned above (weighted 33%).
After reviewing the competitive compensation analysis and other factors discussed above, the
Committee determined, as of December 2007:
(cid:120)
that the chief executive officer was being compensated:
o at the 50th percentile in terms of salary
;
o below the 50th percentile in terms of target bonus annual incentive as a percentage of
salary and target total cash compensation;
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o between the 50th and 75th percentile in terms of long-term incentives as a percent of
salary and target total direct compensation;
o below the 50th percentile in terms of actual total cash compensation; and
o between the 50th and 75th percentiles in terms of actual total direct compensation;
(cid:120)
(cid:120)
(cid:120)
(cid:120)
that the named executive officers in retail-specific positions were being compensated:
o generally below the 75th percentile on all measures;
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in the case of one, was below the 50th percentile on all measures;
in the case of one other, was below the 50th percentile on some measures; and
in the case of one other, was compensated above the 75% percentile on some measures;
that the chief financial officer has significant operating responsibilities beyond those typically
assigned to those with this title in the surveyed companies and, for that reason, the Committee
elected to compare his compensation to positions with significant operating responsibilities and
determined that he was compensated below the 50th percentile on all but one measure;
that a 5.2% increase in target total cash compensation was warranted for the chief executive
officer for Fiscal 2008 – this was accomplished by increasing both salary and target annual
incentive compensation; and
that a 12.6% increase in target total cash compensation was warranted , in aggregate, for the
other named executive officers – this was accomplished by increasing both salary and target
annual incentive compensation for Mrs. Canavan and for Messrs. Fernandez and King.
Relative Values of Key Compensation Components
The Committee believes that the portion of an executive officer’s compensation that is “at risk” (subject
to adjustment for corporate performance factors) should vary proportionately to the amount of
responsibility the executive officer bears for the Company’s success.
The Committee set targets and maximums for short-term incentives for each of the named executive
officers as follows:
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James N. Fernandez
Jon M. King
Target Incentive as a Percent of
Base Salary
100%
70%
70%
70%
70%
Maximum Incentive as a Percent
of Base Salary
200%
140%
140%
140%
140%
The Committee also determined that a minimum of 50% of the total compensation opportunity of the
chief executive officer and 40% of the total compensation opportunity of the other executive officers
should be comprised of long-term incentives. The Committee awarded long-term incentives with an
estimated value for each of the named executive officers as follows:
Executive
Michael J. Kowalski
James E. Quinn
Beth O. Canavan
James N. Fernandez
Jon M. King
Long-term Incentive Value as a Percent of Salary
300 %
162 %
200 %
225 %
200 %
The estimated value of the long-term incentives was split evenly between the estimated value of
performance-based restricted stock units and the estimated value of stock options.
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Equity Ownership by Executive Officers and Directors
In July 2006, the Committee proposed and the board of directors adopted a share ownership policy for
executive officers to better align management’s interests with those of stockholders over the long-term.
This policy was amended in March 2007 to include directors who are not executive officers.
Under this policy, executive officers and non-executive directors are required to own shares of the
Company’s common stock having a total market value equal to the following multiples of their base
salaries (minimum annual retainer in the case of directors):
Position/Level
Chief Executive Officer
Non-Executive Directors
President
Executive Vice President
Senior Vice President
Market Value of Company Stock Holdings as a
Multiple of Base Salary (Minimum Annual Retainer
in the case of Non-Executive Directors)
Five Times
Five Times
Four Times
Three Times
Two Times
Under the share ownership policy, so long as 25% of the required market value consists of shares of the
Company’s common stock owned by an executive officer or director, 50% of the positive current value of
his or her vested (exercisable) stock options may also be counted towards compliance. For this purpose,
the current value of a vested option is calculated as follows: current market value of the number of shares
covered by the option less the total option exercise price.
Prior to satisfying this stock ownership requirement, an executive officer or director may not sell any
shares except to:
(cid:120)
satisfy required withholding for income taxes due upon exercise of stock options or vesting of
performance-based restricted stock units;
(cid:120) pay the exercise price upon exercise of stock options; and
(cid:120) dispose of no more than 50% of the remaining shares issued upon exercise of stock options or
vesting of performance-based restricted share units (after paying the exercise price and tax
withholding).
Executive officers and directors have until July 2011 to satisfy the stock ownership requirement. At the
end of fiscal year 2007, the chief executive officer and four of the other ten executive officers had fully
satisfied their stock ownership requirements. Progress toward compliance will be reviewed by the
Committee each July.
By a separate policy, the board of directors has directed executive officers not to engage in transactions
of a speculative nature in Company securities, such as the purchase of calls or puts, selling short or
speculative transactions as to any rights, options, warrants or convertible securities related to Company
securities. This policy does not affect the right to exercise or hold a stock option issued to the executive
by the Company.
Dual-Trigger Retention Benefits
The Committee believes that it will be important that the team of executive officers remain in place, free
of distractions that might arise out of concern for personal financial and job security during any times of
possible or actual transition of corporate control. For that reason, the Company has entered into
retention agreements with each of the executive officers that provide financial incentives for them to
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remain in place during any such times. (For a description of the retention agreements see POTENTIAL
PAYMENTS ON TERMINATION OR CHANGE IN CONTROL – Retention Agreements.)
The Committee believes that the retention agreements serve the best interests of the Company’s
stockholders because such agreements:
(cid:120) will increase the value of the Company to a potential acquirer that requires delivery of an intact
management team;
(cid:120) will help to keep management in place and focused should any situation arise in which a change
of control looms but is not welcome or agreement has not yet been reached;
are a prudent defense to the possibility that one or more senior executive officers might retire or
take a competing job offer during a time of transition; and
are not overly generous.
(cid:120)
(cid:120)
The Committee also believes that the retention agreements contain a definition of “change in control”
that is reasonable and appropriate to keeping the management team in place during a time of transition.
The Company has not had a single controlling stockholder for many years, and executive officers would
be likely to consider acquisition of a controlling interest as described in the retention agreements to be a
prelude to a significant change in corporate policies and an incentive to leave.
The Committee also believes that it is reasonable and appropriate for the retention agreements to
include excise tax “gross-up provisions,” despite the high potential cost of gross-up payments, for the
following reasons:
(cid:120)
(cid:120)
(cid:120)
the excise tax imposes discriminatory results between executives with varying compensation and
stock option exercise histories;
the gross-up provisions assure that the financial incentives provided by the retention agreements
will have the desired effect upon each individual executive officer without such discriminatory
results; and
given the size of the Company’s business and its assets, the cost of the retention payments,
including the gross-up payments, is unlikely to impede an acquisition offer from an acquirer with
the necessary wherewithal to accomplish it.
The retention agreements are “dual-trigger” arrangements in that they provide no benefits unless two
events occur: (i) a change in control followed by (ii) a loss of employment.
The Company is not party to any other agreement with any executive officer that provides for severance
benefits on termination of employment; does not maintain any severance payment policy for executive
officers; and has the right to terminate the employment of any executive for any reason or no reason.
Oher Change in Control Provisions
t
The Company’s stock option and performance-based restricted stock unit award agreements provide for
accelerated vesting of options and restricted stock units upon a change in control.
The Committee believes:
(cid:120)
(cid:120)
that each executive should control the disposition of his or her equity interest in the Company,
and receive the full value of such interest, should a change of control situation ever arise; and
that the independent directors are fully capable of weighing the merits of any proposed
transaction and reaching a proper conclusion in the interests of the stockholders, even in the
T I F F A N Y & C O .
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face of management’s advocacy of a transaction that would provide change in control payments
to the executive officers.
Termination for Cause and Violation of Non-Compete Covenants
Stock options granted under the 2005 Employee Incentive Plan may not be exercised after a termination
for cause. Performance-based restricted stock units will not vest if termination for cause occurs before
the conclusion of the three-year performance period.
All executive officers have signed non-competition covenants that have a two-year post-employment
term. For those who are age 60 or older at termination of employment or who attain age 60 within six
months of termination, the term ends six months after termination. For all executive officers, the term
ends in six months after termination if a change in control (as defined in the retention agreements) has
occurred prior to termination of employment or during the six-month period. For all executive officers,
once the six-month minimum period has passed, a change of control will result in an early end to the
term.
Violation of the non-compete covenants will result in:
(cid:120)
loss of benefits under the Excess Plan and the Supplemental Plan;
(cid:120)
loss of all rights under stock options and performance-based restricted stock units; and
(cid:120) mandatory repayment of all proceeds from stock options exercised or restricted stock units
vested during a period beginning six months before termination and throughout the duration
of the non-competition covenant.
Compensation Committee Process
The decision to retain Towers Perrin to assist the Committee was made by the Committee Chair.
Management recommended Towers Perrin and has assisted in arranging meetings between Towers Perrin
and the Committee. Management has also consulted with Towers Perrin on the selection of peer
companies for comparison, but Towers Perrin has maintained its own judgment in that regard.
Because Towers Perrin also consults with management on compensation to be paid to non-executive
employees, the Committee has retained and consulted with a separate independent compensation
consultant, Independent Compensation Committee Advisor, LLC (“Independent Consultant”), to help
the Committee understand all of the relevant compensation, financial and technical information it needs
to make proper decisions regarding executive compensation.
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The Independent Consultant is available to the Committee, as needed, to:
(cid:120)
(cid:120)
review recommendations from management (and any consultants retained by management)
and provide an additional layer of peer review to their analyses and recommendations to the
Committee;
join other consultants in explaining relevant information and provide additional feedback to the
Committee;
(cid:120) help the Committee to identify key issues and ask probing questions; and
(cid:120)
review and comment upon all plans, agreements or other documents or actions the Committee
is asked to adopt or approve.
The Compensation Committee has told the Independent Consultant that:
(cid:120)
(cid:120)
they are to act independently of management;
they are to act at the direction of the Compensation Committee; and
T I F F A N Y & C O .
P S - 2 9
(cid:120)
their ongoing engagement will be determined by the Committee.
Accordingly, the Independent Consultant provides no other services for the Company.
The Committee has developed a format of “tally sheet” so that the total compensation and equity
position in Company stock for each executive officer can be compared. Tally sheets for each executive
officer in this format are prepared by the Company’s Human Resources Department and provided to the
Committee.
Tally sheets are reviewed by the Committee in July, November and January. These sheets include
historical data concerning:
salary and annual incentive award or bonus grants in prior years;
(cid:120)
(cid:120) potential threshold, target and maximum returns on unvested performance-based restricted
stock unit awards and unrealized potential gains from outstanding stock options holdings, both
under current conditions and under various hypothetical stock price and termination or change-
in-control scenarios;
realized gains on stock options previously exercised;
shareholdings and progress towards compliance with stock ownership requirements;
retirement and life insurance benefits and perquisites;
total cash compensation (salary plus annual incentive award or bonus grant, based on potential
threshold, target and maximum annual incentive or bonus awards for the current year); and
estimated value of salary, annual incentive or bonus, unvested restricted stock units and stock
options, and retirement and health benefits upon a hypothetical change in control scenario.
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
The Committee meets with the chief executive officer regularly and solicits his recommendations with
respect to the compensation of the executive officers. In this context, his views as to the performance of
the individual officers are provided to the Committee. Individual performance has not factored
significantly in terms of incentive pay, although the Committee has reserved discretion in that regard
with respect to bonuses paid to those executive officers who are not named executive officers and for all
executive officers with respect to fiscal 2008 bonuses and incentive awards see DISCUSSION OF
SUMMARY COMPENSATION TABLE AND GRANTS OF PLAN-BASED AWARDS, Non-Equity Incentive
Awards .)
(
In January, the Committee reviews a forecast of the prior fiscal year financial results with the chief
financial officer and calculates the tentative payouts for short- and long-term incentives on that basis.
Revised calculations and adjustments are prepared at the March meeting, when fiscal year financial
results are nearly final and ready for public release, and when the annual profit plan and the strategic
plan are presented for approval by the board of directors. After the public release of the financial results,
the final calculation is made and the Committee authorizes management to make payment on prior year
annual incentive awards and performance-based restricted stock unit awards for which the three-year
performance period ended in the prior year and to enter into agreements with respect to current year
annual incentive awards.
The Committee has limited discretion under the 2005 Employee Incentive Plan to adjust incentive
awards for certain events, unanticipated at the time that incentive award targets were set, that affect
earnings or for special contributions to other business outcomes consistent with the strategic plan. (For
a description of the Incentive Awards, including the incentive awards set and the conditions under which
the Committee may exercise discretion, see DISCUSSION OF SUMMARY COMPENSATION TABLE AND
GRANTS OF PLAN-BASED AWARDS, Non-Equity Incentive Awards.)
T I F F A N Y & C O .
P S - 3 0
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The Committee awards stock options to executive officers at the January meeting or when individual
promotions are recognized. The Committee has never authorized management to make awards of stock
options. Since 2005, awards of performance-based restricted stock units have also been made at the
January meeting with reference to a preliminary draft of the Company’s strategic plan, although the EPS
and return on assets goals for threshold, target and maximum pay out are finalized at the March meeting
when the strategic plan is adopted.
Limitation under Section 162(m) of the Internal Revenue Code
Section 162(m) of the Internal Revenue Code generally denies a federal income tax deduction to the
Company for compensation in excess of $1 million per year paid to any of the named executive officers.
This denial of deduction is subject to an exception for “performance-based compensation” such as the
performance-based restricted stock units, stock options and annual incentive awards discussed above.
Although the Committee has designed the executive compensation program with tax considerations in
mind, the Committee does not believe that it would be in the best interests of the Company to adopt a
policy that would preclude compensation arrangements subject to deduction limitations.
REPORT OF THE COMPENSATION COMMITTEE
We have reviewed and discussed with the management of Tiffany & Co. the Compensation Discussion
and Analysis section of this Proxy Statement. Based on our review and discussions, we recommend to the
Board of Directors, to the chief executive officer and to the chief financial officer that the Compensation
Discussion and Analysis be included in this Proxy Statement and the Annual Report on Form 10-K for the
fiscal year ended January 31, 2008.
Compensation Committee and its Stock Option Subcommittee:
Gary E. Costley, Chair
Rose Marie Bravo
Abby F. Kohnstamm
Charles K. Marquis
March 20, 2008
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T I F F A N Y & C O .
P S - 3 1
SUMMARY COMPENSATION TABLE
Fiscal 2007 and Fiscal 2006
Year
Salary
($) (a)
Bonus
($) (b)
Stock
Awards
($) (c)
Option
Awards
($) (d)
Change in
Pension
Value and
Nonquali-
fied
Deferred
Compen-
sation
Earnings
($) (f )
Non-
Equity
Incentive
Plan
Compen-
sation
($) (e)
All
Other
Compen-
sation
($)
Total
($)
2007
2006
$ 972,382
$ 972,382
2007
2006
$ 738,013
$ 738,013
2007
2006
$ 528,577
$ 526,275
2007
2006
$ 658,228
$ 655,543
---
---
---
---
---
---
---
---
$ 2,374,481
$ 1,699,300
$ 1,397,251
$ 1,869,000
$ 1,852,500
$1,123,541
$ 370,793
$ 1,219,355
$ 340,293 (g)
$ 7,307,700
$ 153,367 (h) $ 7,036,945
$ 1,477,923
$ 1,058,611
$ 874,052
$ 1,211,307
$ 1,036,000
$ 628,334
$ 190,821
$ 1,452,588
$
241,440 (i) $ 4,558,249
$ 119,235 (j) $ 5,208,088
$ 827,617
$ 587,714
$ 462,644
$ 656,997
$ 689,000
$ 417,878
$ 743,079
$ 249,113
$ 160,339 (k) $ 3,411,256
91,659 (l) $ 2,529,636
$
$ 1,165,376
821,349
$
$ 677,310
$ 946,829
$ 858,000
$ 520,377
$ 136,439 $ 214,437(m) $ 3,709,790
$ 448,086 $ 118,495 (n) $ 3,510,679
2007
2006
$ 498,657
$ 483,698
$ 650,000
$ 394,225
$
$
671,302
446,083
$ 399,501
$ 499,315
---
---
$ 175,006 $ 149,934 (o)
87,120 (p)
$ 223,538 $
$2,544,400
$2,083,979
Name and
Principal Position
Michael J. Kowalski
Chairman and CEO
James E. Quinn
President
Beth O. Canavan
Executive Vice
President
James N. Fernandez
Executive Vice
President and CFO
Jon M. King
Executive Vice
President
Notes to Summary Compensation Table:
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(a)
(b)
(c)
Salary amounts include amounts deferred at the election of the executive under the Tiffany and
Company Executive Deferral Plan (the “Deferral Plan”) and under the 401(k) feature of the
Company’s Employee Profit Sharing and Retirement Savings Plan (the “401(k)”). Amounts
deferred to the Deferral Plan are also shown in the Nonqualified Deferred Compensation Table.
Bonus amounts include amounts deferred at the election of the executive under the Deferral
Plan and under the 401(k). Bonus amounts are earned in the fiscal year ended January 31, and
paid in April.
Amounts shown represent the dollar amount of compensation cost recognized for performance-
based restricted stock unit awards in accordance with SFAS No. 123R. In valuing such awards, the
Company made certain assumptions. For a discussion of those assumptions, please refer to Part
II of the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2008. See
Note M. “STOCK COMPENSATION PLANS”, in Notes to Consolidated Financial Statements,
under Item 8. Financial Statements and Supplementary Data.
(d)
Amounts shown represent the dollar amount of compensation cost recognized for stock options
in accordance with SFAS No. 123R. In valuing option awards, the Company made certain
assumptions. For a discussion of those assumptions, please refer to note (c) above.
(e)
This column reflects cash annual incentive awards under the 2005 Employee Incentive Plan.
These awards are earned in the fiscal year ended January 31 and are paid on the basis of achieved
T I F F A N Y & C O .
P S - 3 2
Performance Goals after the release of the Company’s financial statements for the fiscal year.
(For a description of the Performance Goals, see DISCUSSION OF SUMMARY COMPENSATON
TABLE AND GRANTS OF PLAN-BASED AWARDS – Non-Equity Incentive Plan Awards.) This
column includes amounts deferred at the election of the executive under the Deferral Plan.
Amounts so deferred are also shown in the Nonqualified Deferred Compensation Table.
This column represents the aggregate change, over the course of the fiscal year, in the actuarial
present value of the executive’s accumulated benefit under all defined benefit and actuarial
plans. This column does not include earnings under the Deferral Plan because the Deferral Plan
does not pay above-market or preferential earnings on compensation that is deferred.
Mr. Kowalski’s Fiscal 2007 compensation included the following elements whose total
incremental cost to the Company is shown in the column titled “All Other Compensation”: life
insurance premium ($171,055); tax gross-up paid on the life insurance premium ($144,286);
disability insurance premium ($15,952); 401(k) matching contribution ($6,500); and medical
exam ($2,500).
Mr. Kowalski’s Fiscal 2006 compensation included the following elements whose total
incremental cost to the Company is shown in the column titled “All Other Compensation”: life
insurance premium ($66,542); tax gross-up paid on the life insurance premium ($54,073);
disability insurance premium ($16,627); 401(k) matching contribution ($7,500); medical exam
($2,375); and tax accounting fees ($6,250).
Mr. Quinn’s Fiscal 2007 compensation included the following elements whose total incremental
cost to the Company is shown in the column titled “All Other Compensation”: life insurance
premium ($108,311); tax gross-up paid on the life insurance premium ($90,043); disability
insurance premium ($17,711); 401(k) matching contribution ($6,500); tax accounting fees
($14,680); health club membership ($4,195).
Mr. Quinn’s Fiscal 2006 compensation included the following elements whose total incremental
cost to the Company is shown in the column titled “All Other Compensation”: life insurance
premium ($47,325); tax gross-up paid on the life insurance premium ($37,258); disability
insurance premium ($17,386); 401(k) matching contribution ($7,500); medical exam ($2,375); tax
accounting fees ($3,815); health club membership ($3,576).
Mrs. Canavan’s Fiscal 2007 compensation included the following elements whose total
incremental cost to the Company is shown in the column titled “All Other Compensation”: life
insurance premium ($71,796); tax gross-up paid on the life insurance premium ($62,918);
disability insurance premium ($15,750); 401(k) matching contribution ($6,500); medical exam
($2,500); and health club membership ($875).
Mrs. Canavan’s Fiscal 2006 compensation included the following elements whose total
incremental cost to the Company is shown in the column titled “All Other Compensation”: life
insurance premium ($35,484); tax gross-up paid on the life insurance premium ($29,017);
disability insurance premium ($16,579); 401(k) matching contribution ($7,500); medical exam
($2,375); and health club membership ($704).
(f )
(g)
(h)
(i)
(j)
(k)
(l)
(m) Mr. Fernandez’s Fiscal 2007 compensation included the following elements whose total
incremental cost to the Company is shown in the column titled “All Other Compensation”: life
insurance premium ($101,927); tax gross-up paid on the life insurance premium ($84,520);
T I F F A N Y & C O .
P S - 3 3
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disability insurance premium ($17,740); 401(k) matching contribution ($6,500); and tax
accounting fees ($3,750).
(n)
(o)
Mr. Fernandez’s Fiscal 2006 compensation included the following elements whose total
incremental cost to the Company is shown in the column titled “All Other Compensation”: life
insurance premium ($52,029); tax gross-up paid on the life insurance premium ($41,322);
disability insurance premium ($13,829); 401(k) matching contribution ($7,500); and tax
accounting fees ($3,815).
Mr. King’s Fiscal 2007 compensation included the following elements whose total incremental
cost to the Company is shown in the column titled “All Other Compensation”: life insurance
premium ($71,602); tax gross-up paid on the life insurance premium ($54,261); disability
insurance premium ($13,410); 401(k) matching contribution ($6,500); medical exam ($2,500);
and health club membership ($1,631).
(p) Mr. King’s Fiscal 2006 compensation included the following elements whose total incremental
cost to the Company is shown in the column titled “All Other Compensation”: life insurance
premium ($35,285); tax gross-up paid on the life insurance premium ($26,013); disability
insurance premium ($13,010); 401(k) matching contribution ($7,500); medical exam ($2,625);
and health club membership ($2,687).
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T I F F A N Y & C O .
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GRANTS OF PLAN-BASED AWARDS
Fiscal 2007
2005 Employee Incentive Plan
Name
Award Type
Estimated Future Payouts
Under Non-Equity
Incentive Plan Awards
Grant
Date
Estimated Future Payouts
Under Equity Incentive
Plan Awards
All Other
Option
Awards:
Number
of
Securities
Under-
lying
Options
(#)
Exercise
or Base
Price of
Option
Awards
($/Sh)
(d)
Grant Date
Fair Value
of Equity
Awards
(e) (f )
Threshold
($)
Target
($)
Maximum
($)
Target
Number
of
Shares
(b)
Threshold
Number of
Shares (a)
Maximum
Number of
Shares (c)
Michael J.
Kowalski
James E.
Quinn
Beth O.
Canavan
Annual
Incentive
Award
Performance-
Based RSU
1/17/08
Stock Option 1/17/08
Annual
Incentive
Award
Performance-
Based RSU
1/17/08
Stock Option 1/17/08
Annual
Incentive
Award
Performance-
Based RSU
1/17/08
Stock Option 1/17/08
James N.
Fernandez
Annual
Incentive
Award
Performance-
Based RSU
1/17/08
Stock Option 1/17/08
$ 0 $1,000,000
$ 2,000,000
$ 0 $ 518,000 $ 1,036,000
$ 0 $ 420,000 $ 840,000
$ 0 $ 518,000 $ 1,036,000
20,400
46,000
80,000
101,000
$ 1,653,010
$ 37.645 $ 1,477,751
8,415
18,975
33,000
41,000
$ 681,867
$ 37.645 $ 599,879
8,415
18,975
33,000
41,000
$ 681,867
$ 37.645 $ 599,879
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11,475
25,875
45,000
57,000
$ 929,818
$ 37.645 $ 833,978
Annual
Incentive
Award
Performance-
Based RSU
1/17/08
Stock Option 1/17/08
Jon M.
King
$ 0 $ 420,000 $ 840,000
8,415
18,975
33,000
41,000
$ 681,867
$ 37.645 $ 599,879
T I F F A N Y & C O .
P S - 3 5
Notes to Grants of Plan-Based Awards Table
(a)
(b)
(c)
(d)
(e)
(f )
Assumes that the EPS minimum is met and the ROA goal is not met (see DISCUSSION OF
SUMMARY COMPENSATION TABLE AND GRANTS OF PLAN-BASED AWARDS – Equity Incentive
Plan Awards – Performance-Based Restricted Stock Units).
Assumes that the EPS target is met and the ROA goal is met.
Assumes that the EPS maximum is met and the ROA goal is met.
The exercise price of all options was equal to or greater than the closing price of the underlying
shares on the New York Stock Exchange on the grant date. The Committee adopted the following
pricing convention on January 18, 2007: the higher of (i) the simple arithmetic mean of the high
and low sales price of such stock on the New York Stock Exchange on the grant date or (ii) the
closing price on such Exchange on the grant date. Options granted before that date were priced
at the simple arithmetic mean of the high and low sales price of such stock on the New York Stock
Exchange on the grant date.
The grant date fair value of each option award was computed in accordance with SFAS NO. 123R.
The grant date fair value of each performance-based award was computed assuming target
payout and in accordance with SFAS NO. 123R. For additional information regarding
performance-based compensation, see the table titled "OUTSTANDING EQUITY AWARDS AT
FISCAL YEAR-END" beginning on page PS-41.
EQUITY COMPENSATION PLAN INFORMATION
(As of Fiscal Year 2007)
Column A
Column B
Column C
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
Weighted average
exercise price of
outstanding options,
warrants and rights
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column A)
8,773,011a
$
32.49
5,999,359b
0
0
8,773,011a
$
32.49
0
5,999,359b
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Plan category
Equity compensation plans
approved by security holders
Equity compensation plans
not approved by security
holders
Total
(a)
(b)
Shares indicated do not include 2,769,110 shares issuable under awards of stock units already made.
Shares indicated are the aggregate of those available for grant under the Company’s 2005 Employee
Incentive Plan (the “Employee Plan”) and the Company’s 1998 Directors Option Plan (the
“Directors Plan”). All plans provide for the issuance of options and stock awards. However, under
the 2005 Employee Plan the maximum number of shares that may be issued, 11,000,000, is subject
to reduction by 1.58 shares for each share that is delivered on vesting of a stock award. Column C
reflects this reduction assuming that all shares granted as stock awards will vest. Under the
Directors Plan all shares of the 412,500 remaining for issuance could be issued as stock awards.
T I F F A N Y & C O .
P S - 3 6
DISCUSSION OF SUMMARY COMPENSATION TABLE
AND GRANTS OF PLAN-BASED AWARDS
Non-Equity Incentive Plan Awards
Each of the named executive officers other than Mr. King was paid a cash (non-equity) annual incentive
award for Fiscal 2007. Each including Mr. King may be paid such an award for Fiscal 2008. Mr. King was
paid a cash bonus for Fiscal 2007.
The non-equity annual incentive awards for Fiscal 2007 were established to pay out if the Company
increased year-to-year earnings, with payouts at target levels if the Company met the net earnings
objectives of the profit plan for the fiscal year. The net earnings objective was established by the
Compensation Committee at the start of the fiscal year when the profit plan was approved. The objective
was set with reference to earnings in the prior fiscal year, adjusted for certain items that would not be
repeated in the course of business (such as income or expense attributable to divestitures or special tax
incentives) or expenses relating to capital initiatives (such as the income statement effect of incremental
borrowings needed to fund stock repurchases authorized by the Board in excess of annual plan
amounts).
For the annual incentive awards made for Fiscal 2008, the Committee has discretion to reduce incentive
awards from a maximum.
At the beginning of Fiscal 2008, the Committee established a performance goal in accordance with
Section 162(m) of the Internal Revenue Code (the “162(m) performance goal”). The 162(m) performance
goal requires that the Company attain earnings of $243,000,000.
The 162(m) performance goal for Fiscal 2008 must be achieved in order for named executive officers to
be eligible to receive any annual incentive award. If that goal is achieved, each of the named executive
officers shall be eligible to receive a maximum incentive award of 200% of base salary. However, even if
the 162(m) performance goal is achieved, the Committee can exercise discretion to reduce the award
below the maximum. The Committee’s discretion to reduce an incentive award below the maximum is
not limited.
The Committee has communicated to the named executive officers earnings objectives for fiscal year
2008 above the 162(m) performance goal. The Committee has indicated that, in the absence of other
relevant factors (see below), the Committee will exercise its discretion as follows:
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(cid:120)
(cid:120)
to reduce the maximum award to zero if fiscal year 2008 earnings do not equal or exceed
$341,090,000;
to reduce the maximum award to target (100% of base salary, in the case of the chief executive
officer, and 70% of base salary, in the case of the other named executive officers) if fiscal year
2008 earnings do not equal or exceed $367,517,000; and
to pay the maximum award if fiscal year 2008 earning equal or exceed $385,091,000.
The Committee has also communicated that it reserves the right to consider other relevant factors in
reducing an annual incentive award below the maximum allowable based on achievement of the 162(m)
performance goal and the other earnings objectives set forth above.
T I F F A N Y & C O .
P S - 3 7
The “other relevant factors” that the Committee has indicated it will consider are:
(cid:120)
annual progress towards strategic plan objectives;
(cid:120) business unit growth and/or profitability (where the executive officer has responsibility for such
growth and/or profitability);
(cid:120) organizational development;
(cid:120)
contributions to the working environment of his/her team and/or development of a positive
working environment for employees;
(cid:120) business process improvement; and
(cid:120)
cost containment and/or cost reduction efforts.
For the past three completed fiscal years annual incentive awards were paid out as follows:
(cid:120) For fiscal year 2007, earnings were required to exceed prior year earnings:
in order for any annual incentive awards to pay out;
o
o by 12% in order to pay out at target; and
o by 16% in order to pay out at maximum.
(cid:120)
(cid:120)
(cid:120)
In Fiscal 2007, the Company exceeded its net earnings objectives and annual incentive awards
and bonuses were paid out at 200% of the target amount.
In Fiscal 2006, the Company exceeded its net earnings objectives and annual incentive awards
and bonuses were paid out at 121.3% of target.
In Fiscal 2005, the Company exceeded its net earning objectives and annual incentive awards and
bonuses were paid out at 200% of target.
P
R
O
X
Y
S
T
A
T
E
M
E
N
T
Annual incentive awards differ from bonuses paid to executive officers other than the five named
executive officers as follows:
(cid:120) Annual incentive awards are paid under the terms of the 2005 Employee Incentive Plan and will
be paid only if the Company meets objective performance goals. This promise is set out in
written agreements.
(cid:120) Bonuses are not subject to written agreements. The Compensation Committee has the
discretion to increase, decrease or withhold such bonuses. It has been the Committee’s practice
to align bonuses with annual incentive awards.
(cid:120) Annual incentive awards are designed so that the amounts paid out will be deductible to the
(cid:120)
Company and not count against the one million dollar limitation under Section 162(m) of the
Internal Revenue Code. Each of the named executive officers is subject to that limitation.
If a bonus is paid to an executive officer other than a named executive officer, and the total
annual cash compensation paid to that executive in the year of bonus was to exceed the one
million dollar limitation, the excess would not be deductible to the Company for federal income
tax purposes.
Equity Incentive Plan Awards – Performance-Based Restricted Stock Units
In January 2005, the Compensation Committee first awarded equity incentive awards – Performance-
Based Restricted Stock Units (“Units”) to the executive officers. Units were subsequently granted in
January of 2006, 2007 and 2008. The 2008 award is reflected in the GRANTS OF PLAN-BASED AWARDS
table under the column headed “Estimated Future Payouts Under Equity Incentive Plan Awards.”
T I F F A N Y & C O .
P S - 3 8
Units are granted under the 2005 Employee Incentive Plan on the following terms:
(cid:120) Units will be exchanged on a one-to-one basis for shares of the Company’s common stock when
and if the Units vest;
(cid:120) Vesting is determined at the end of a three-year performance period;
(cid:120) No Units will vest if the executive voluntarily resigns, retires or is terminated for cause during the
three-year performance period, although partial vesting is provided for in cases of termination for
death or disability;
(cid:120) No Units will vest (other than for reasons of death, disability or on a change in control as defined
in the Retention Agreements) if the Company fails to meet a three-year cumulative EPS
performance threshold set by the Compensation Committee at the time the Units are granted;
(cid:120) Units will tentatively vest based on the following EPS performance hurdles:
o 30% at threshold;
o 50% at target; and
o 87.5% at maximum;
(cid:120)
In the event of EPS performance above threshold and below target or above target and below
maximum the number of Units that tentatively vest are prorated. No Units will vest if threshold
earnings performance is not achieved. After tentative vesting has been determined, a ROA test
will be applied. If met, the tentatively vested number of Units will be increased by 15% (but not to
over 100%); if not met, the tentatively vested number of Units will be reduced by 15%;
100% vesting will occur only if the Company meets both the EPS maximum and ROA goal;
(cid:120)
(cid:120) No dividends are paid, accrued or credited to Units until vesting.
The grants of Units made in January, 2005 were subject to satisfaction of the following performance tests
over the performance period ending January 31, 2008:
(cid:120) Threshold: cumulative net EPS of $4.59;
(cid:120) Target: cumulative net EPS of $5.22;
(cid:120) Maximum: cumulative net EPS of $5.45; and
(cid:120) Return on assets: 8.7%.
The grants of Units made in January, 2006 are subject to satisfaction of the following performance tests
over the performance period ending January 31, 2009†:
(cid:120) Threshold: cumulative net EPS of $5.54;
(cid:120) Target: cumulative net EPS of $6.39;
(cid:120) Maximum: cumulative net EPS of $6.85;
(cid:120) Return on assets: 9.7%.
The grants of Units made in January, 2007 are subject to satisfaction of the following performance tests
over the performance period ending January 31, 2010†:
(cid:120) Threshold: cumulative net EPS of $6.42;
(cid:120) Target: cumulative net EPS of $7.46;
(cid:120) Maximum: cumulative net EPS of $8.01;
(cid:120) Return on assets: 10.4%.
† Note: the performance tests for Units vesting in 2009 and 2010 will be appropriately restated to reflect
the adoption of the average cost method for inventory accounting which will be adopted in the first
quarter o fiscal 2008.
f
The grants of Units made in January, 2008 are subject to satisfaction of the following performance tests
over the performance period ending January 31, 2011:
T
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E
M
E
T
A
T
S
Y
X
O
R
P
T I F F A N Y & C O .
P S - 3 9
(cid:120) Threshold: cumulative net EPS of $8.54;
(cid:120) Target: cumulative net EPS of $9.87;
(cid:120) Maximum: cumulative net EPS of $10.62;
(cid:120) Return on assets: 11.5%.
The Compensation Committee will properly adjust achieved performance so that executive officers will
not be advantaged or disadvantaged in meeting the net EPS goals by stock repurchases differing from
repurchases approved when the performance tests were adopted or by other extraordinary transactions.
Options
Options vest (become exercisable) in four equal annual installments:
(cid:120) Vesting of each installment is contingent on continued employment.
(cid:120) All installments immediately vest if there is a change in control (as defined in the Retention
Agreements), death or disability.
The exercise price for each share subject to an option is its fair market value on the date of grant. (For an
explanation of the method of determining the exercise price of options, see Note (d) to the GRANTS OF
PLAN-BASED AWARDS table.)
Options expire no later than the 10th anniversary of the grant date. Options expire earlier on:
termination of employment (three months after termination); or
(cid:120)
(cid:120) death, disability or retirement (two years after the event).
Life Insurance Benefits
P
R
O
X
Y
S
T
A
T
E
M
E
N
T
The key features of the life insurance benefit that the Company provides to its executive officers are:
(cid:120)
(cid:120)
(cid:120)
executive officers own whole life policies on their own lives;
the death benefit is three times annual salary and target annual incentive award or bonus, as the
case may be;
the Company pays the premium on such policies in an amount sufficient to accumulate cash
value;
(cid:120) premiums are calculated to accumulate a target cash value at age 65;
(cid:120)
the target cash value will allow the policy to remain in force without payment of further
premiums with a death benefit equivalent to twice the executive officer’s average annual salary
and target annual incentive or bonus amount;
(cid:120)
(cid:120)
the amount of the premiums paid by the Company is taxable income to the executive officer; and
the Company pays the additional amounts necessary in order to prevent the executive officer
from being subjected to increased income taxes as a result of the taxable premium income.
T I F F A N Y & C O .
P S - 4 0
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
January 31, 2008
Option Awards
Number
of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
Number
of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
140,000
400,000
150,000
100,000
150,000
195,000
180,000
86,250
42,500
19,250
0
100,000
75,000
110,000
140,000
115,000
54,375
25,500
12,500
0
50,000
50,000
75,000
55,000
30,000
14,500
7,000
0
28,750
42,500
57,750
101,000
18,125
25,500
36,750
41,000
10,000
14,500
21,000
41,000
Name
Michael J.
Kowalski
James E. Quinn
Beth O. Canavan
Option
Exercise
Price
($)
9.4844
14.9766
42.0782
32.4700
34.0200
25.8450
39.7500
31.4900
37.8350
40.1500
37.6450
42.0782
32.4700
34.0200
25.8450
39.7500
31.4900
37.8350
40.1500
37.6450
42.0782
32.4700
34.0200
39.7500
31.4900
37.8350
40.1500
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
37.6450
Stock Awards
Equity
Incentive
Plan Awards
Number
Of
Unearned
Shares, Units or
Other Rights
That Have
Not Vested (b)
(#)
Equity
Incentive
Plan Awards
Market or
Payout Value
Of
Unearned
Shares, Units
or
Other Rights
That Have
Not Vested
($)
Option
Expiration
Date (a)
1/14/09
1/21/09
1/20/10
1/18/11
1/16/12
1/16/13
1/15/14
1/31/15
1/31/16
1/18/17
1/17/18
1/20/10
1/18/11
1/16/12
1/16/13
1/15/14
1/31/15
1/31/16
1/18/17
1/17/18
1/20/10
1/18/11
1/16/12
1/15/14
1/31/15
1/31/16
1/18/17
1/17/18
T
N
E
M
E
T
A
T
S
Y
X
O
R
P
92,000 / 92,000 (c)
57,670 / 79,000 (d)
47,360 / 74,000 (e)
46,000 / 80,000 (f)
$ 3,660,680 (g)
$ 2,294,689 (h)
$ 1,884,454 (i)
$ 1,830,340 (j)
58,000 / 58,000 (c)
35,040 / 48,000 (d)
29,760 / 46,500 (e)
18,975 / 33,000 (f)
$ 2,307,820 (g)
$1,394,242 (h)
$ 1,184,150 (i)
$ 755,015 (j)
32,000 / 32,000 (c)
19,710 / 27,000 (d)
16,960 / 26,500 (e)
18,975 / 33,000 (f)
$ 1,273,280 (g)
$ 784,261 (h)
$ 674,838 (i)
$ 755,015 (j)
(table continued on next page)
T I F F A N Y & C O .
P S - 4 1
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END (continued)
January 31, 2008
Option Awards
Stock Awards
Number
Of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
Number
Of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
Option
Exercise
Price
($)
Option
Expiration
Date (a)
Equity
Incentive
Plan Awards
Number
Of
Unearned
Shares, Units or
Other Rights
That Have
Not Vested (b)
(#)
Equity
Incentive
Plan Awards
Market or
Payout Value
Of
Unearned
Shares, Units
or
Other Rights
That Have
Not Vested
($)
70,000
65,000
100,000
118,000
85,000
41,250
20,500
9,750
0
6,000
5,000
7,000
3,000
2,500
15,000
35,000
22,500
11,500
2,500
6,500
0
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
42.0782
32.4700
34.0200
25.8450
39.7500
31.4900
37.8350
40.1500
37.6450
42.0782
32.4700
34.0200
35.9550
25.8450
25.9400
39.7500
31.4900
37.8350
33.7850
40.1500
37.6450
13,750
20,500
29,250
57,000
7,500
11,500
7,500
11,500
7,500
19,500
41,000
1/20/10
1/18/11
1/16/12
1/16/13
1/15/14
1/31/15
1/31/16
1/18/17
1/17/18
1/20/10
1/18/11
1/16/12
3/21/12
1/16/13
3/20/13
1/15/14
1/31/15
1/31/16
6/07/16
1/18/17
1/17/18
44,000/ 44,000 ( c)
28,470 / 39,000 (d)
24,000 / 37,500 (e)
25,875 / 45,000 (f)
$ 1,750,760 (g)
$ 1,132,821 (h)
$ 954,960 (i)
$ 1,029,566 (j)
24,000 / 24,000 (c)
15,330 / 21,000 (d)
16,000 / 25,000 (e)
18,975 / 33,000 (f)
$ 954,960 (g)
$ 609,981 (h)
$ 636,640 (i)
$ 755,015 (j)
Name
James N.
Fernandez
Jon M.
King
P
R
O
X
Y
S
T
A
T
E
M
E
N
T
T I F F A N Y & C O .
P S - 4 2
Notes to Outstanding Equity Awards at Fiscal Year-end Table
(a)
(b)
(c)
(d)
(e)
(f )
(g)
(h)
(i)
For any option reported, the grant date was ten (10) years prior to the expiration date shown
except for the options expiring on 1/14/09, in which the grant date was eleven (11) years prior to
the expiration. All options vest 25% per year over the four-year period following a grant date.
In this column, the number to the left of the slash mark indicates the number of shares on which
the payout value shown in the column to the right was computed. See Notes (g), (h), (i) and (j)
below. The number to the right of the slash mark indicates the total number of shares that would
vest upon attainment of all performance objectives over the three-year performance period.
This grant will have vested three business days following the date on which the Company’s
financial results for the fiscal year ended 1/31/08 were released.
This grant will vest three business days following the date on which the Company’s financial
results for the fiscal year ending 1/31/09 are released.
This grant will vest three business days following the date on which the Company’s financial
results for the fiscal year ending 1/31/10 are released.
This grant will vest three business days following the date on which the Company’s financial
results for the fiscal year ending 1/31/11 are released.
This value has been computed at maximum based upon Company EPS and ROA performance in
fiscal years 2005, 2006 and 2007. The computation assumes that 85% percent of the units will
vest based on EPS performance; the resulting number of shares was then increased by 15% for
ROA performance. The resulting value was computed on the basis of the stock closing price on
January 31, 2008, $39.79.
This value has been computed based upon Company EPS and ROA performance in fiscal years
2006 and 2007. The computation assumes that 63.5% of the units will vest based on EPS
performance; the resulting number of shares was then increased by 15% for ROA performance.
The resulting value was computed on the basis of the stock closing price on January 31, 2008,
$39.79.
T
N
E
M
E
T
A
T
S
Y
X
O
R
P
This value has been computed based upon Company EPS and ROA performance in fiscal year
2007. The computation assumes that 55.7% of the units will vest based on EPS performance; the
resulting number of shares was then increased by 15% for ROA performance. The resulting value
was computed on the basis of the stock closing price on January 31, 2008, $39.79.
(j)
This value has been computed at EPS target and on the assumption that the ROA performance
goal will have been achieved.
T I F F A N Y & C O .
P S - 4 3
OPTION EXERCISES AND STOCK VESTED
Fiscal 2007
Option Awards
Stock Awards
Number of
Shares
Acquired on
Exercise
(#)
Value
Realized
on
Exercise
($)
Number of
Shares
Acquired on
Vesting
(#)
Name
Michael J. Kowalski
100,000 (a)
$ 4,254,680.00
James E. Quinn
Beth O. Canavan
400,000 (b)
$15,644,530.50
99,000 (c)
$ 2,142,942.14
James N. Fernandez
100,000 (d)
$ 3,694,556.19
Jon M. King
0
$
0
0
0
0
0
0
Notes to Option Exercises and Stock Vested Table
(a) Weighted-average holding period for options exercised: 10.6 years.
(b) Weighted-average holding period for options exercised: 8.9 years.
(c) Weighted-average holding period for options exercised: 4.8 years.
(d) Weighted-average holding period for options exercised: 8.6 years.
Value
Realized
on
Vesting
($)
$ 0
$ 0
$ 0
$ 0
$ 0
P
R
O
X
Y
S
T
A
T
E
M
E
N
T
T I F F A N Y & C O .
P S - 4 4
PENSION BENEFITS TABLE
Actuarial
Present Value
of
Accumulated
Benefits
($)
Payments
During
Last
Fiscal
Year
($)
Number
of Years
Credited
Service
29 (b) (d)
29( b) (d)
29 (b) (d)
466,638
$
$
4,632,934
$ 1,629,138
21
21
21
20
20
20
29
29
29
17
17
17
(d)
(d)
(d)
$
$
$
$
$
$
340,322
1,989,062
1,125,174
304,626
970,469
623,524
(c)
(c)
(c)
$
366,684
$ 1,713,873
606,686
$
$
$
$
208,875
485,048
77,796
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Name
Plan Name (a)
Michael J. Kowalski
James E. Quinn
Beth O. Canavan
James N. Fernandez
Jon M. King
Pension Plan
Excess Plan
Supplemental Plan
Pension Plan
Excess Plan
Supplemental Plan
Pension Plan
Excess Plan
Supplemental Plan
Pension Plan
Excess Plan
Supplemental Plan
Pension Plan
Excess Plan
Supplemental Plan
Notes to Pension Benefits Table
(a)
(b)
(c)
The formal names of the plans are: the Tiffany and Company Employee Pension Plan (“Pension
Plan”), the Tiffany and Company Un-funded Retirement Plan to Recognize Compensation in
Excess of Internal Revenue Code Limits (“Excess Plan”) and the Tiffany and Company
Supplemental Retirement Income Plan (“Supplemental Plan”).
Mr. Kowalski has been credited with 6.4 years of service for his period of employment prior to
October 15, 1984 with the corporation that was, immediately before that date, Tiffany’s parent
corporation. The effect of this credit has been to augment the present value of his accumulated
benefit under the retirement plans as follows (these amounts are included in the Pension
Benefits table above):
T
N
E
M
E
T
A
T
S
Y
X
O
R
P
Pension Plan:
Excess Plan:
Supplemental Plan:
$ 100,647
$ 999,260
57,194
$
Mr. Fernandez has been credited with 6.3 years of service for his period of employment prior to
October 15, 1984 with the corporation that was, immediately before that date, Tiffany’s parent
corporation. The effect of this credit has been to augment the present value of his accumulated
benefit under the retirement plans as follows (these amounts are included in the Pension
Benefits table above):
Pension Plan:
Excess Plan:
Supplemental Plan:
$
$
$
78,281
365,883
35,865
T I F F A N Y & C O .
P S - 4 5
(d)
Mr. Kowalski and Mr. Quinn are currently eligible for early retirement under each of the Pension,
Excess and Supplemental Plan. They are each eligible for early retirement because they have
reached age 55 and have accumulated at least ten years of credited service. The normal
retirement age under each of the plans is 65. However those eligible for early retirement may
retire with a reduced benefit. For retirement at age 55, the reduction in benefit would be 40%, as
compared to the benefit at age 65. The benefit reduction for early retirement is computed as
follows:
(cid:120) For retirement between age 60 and age 65, the executive’s age at early retirement is
subtracted from 65; for each year in the remainder the benefit is reduced by five percent;
(cid:120) Thus, for retirement at age 60 the reduction is 25%;
(cid:120) For retirement between age 55 and age 60, the reduction is 25% plus an additional three
percent for each year by which retirement age precedes age 60.
Assumptions Used in Calculating the Present Value of the Accumulated Benefits
The assumptions used in the Pension Benefit Table are that the executive would retire at age 65;
mortality based upon the 1994 Group Annuity Mortality Table, Male & Female; a discount rate of 6.50%.
All assumptions were consistent with those used to prepare the financial statements for the fiscal year
ended January 31, 2008.
Features of the Retirement Plans
Tiffany has established three retirement plans for eligible employees: the Pension Plan, the Excess Plan
and the Supplemental Plan. The executive officers of the Company are eligible to participate in all three.
Average Final Compensation
P
R
O
X
Y
S
T
A
T
E
M
E
N
T
Average final compensation is used in each plan to calculate benefits. A participant’s “average final
compensation” is the average of the highest five years of compensation received in the last 10 years of
creditable service.
In general, compensation reported in the SUMMARY COMPENSATION TABLE above as “Salary”, “Bonus”
or “Non-Equity Incentive Plan Compensation” is compensation for purposes of the Plans; amounts
attributable to the exercise of stock options or to the vesting of restricted stock are not included.
However, Internal Revenue Code requirements limit the amount of compensation that may be included
in calculating the benefit under the Pension Plan.
Pension Plan
These are the key features of the Pension Plan:
(cid:120)
(cid:120)
(cid:120)
it is a “tax-qualified plan,” that is, it is designed to comply with those provisions of the Internal
Revenue Code applicable to retirement plans;
it is a “funded” plan (money has been deposited into a trust that is insulated from the claims of
the Company’s creditors);
it is available at no cost to regular full-time employees of Tiffany hired on or before December 31,
2005;
(cid:120)
all executive officers are participants;
(cid:120) benefits vest after five years of service;
T I F F A N Y & C O .
P S - 4 6
(cid:120) benefits are based on the participant’s average final compensation and years of service;
(cid:120) benefits are subject to Internal Revenue Code limitations on the total benefit and the amount that
may be included in average final compensation; and
(cid:120) benefits are not offset by Social Security.
The benefit formula under the Pension Plan first calculates an annual amount based on average final
compensation and then multiplies it by years of service. This is the formula: [[(average final
compensation less covered compensation) x 0.015] plus [(average final compensation up to covered
compensation) x 0.01]] x years of service. “Covered compensation” varies by the participant’s birth date
and it is an average of taxable wage bases calculated for Social Security purposes.
Example: covered compensation for a person born in 1952 is $72,600. This person has average final
compensation of $100,000 and 25 years of service. The Pension benefit at age 65 would be calculated as
follows: [[($100,000 - $72,600 ) x 0.015] plus [($72,600) x 0.01]] x 25 = $28,425 annual benefit for a single
life annuity.
The form of benefit elected can reduce the amount of benefit. The highest benefit is available for an
unmarried participant who elects to take the benefit over the course of his or her own life. A person who
elects to take the benefit over the course of two lives, such as a 100% annuity over the lives of the
participant and his or her spouse, will suffer an actuarial reduction in the amount of his or her benefit.
Excess Plan
These are the key features of the Excess Plan:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
it is not a qualified plan and is not subject to Internal Revenue Code limitations;
it is not funded (benefits are paid out of the Company’s general assets, which are subject to the
claims of the Company’s creditors);
it is available only to employees whose benefits under the Pension Plan are affected by Internal
Revenue Code limitations, including all executive officers;
it uses the same retirement benefit formula as is set forth in the Pension Plan, but includes in
average final compensation earnings that are excluded under the Pension Plan due to Internal
Revenue Code Limitations;
(cid:120) benefits are offset by benefits payable under the Pension Plan;
(cid:120) benefits are not offset by benefits payable under Social Security;
(cid:120) benefits vest after five years of service;
(cid:120) benefits are subject to forfeiture if employment is terminated for cause; and
(cid:120)
for those who leave Tiffany prior to age 65, benefits are subject to forfeiture for failure to execute
and adhere to non-competition and confidentiality covenants.
T
N
E
M
E
T
A
T
S
Y
X
O
R
P
Supplemental Plan
These are the key features of the Supplemental Plan:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
it is not a qualified plan and is not subject to Internal Revenue Code limitations;
it is not funded (benefits are paid out of the Company’s general assets, which are subject to the
claims of the Company’s creditors);
it is available only to executive officers;
it uses a different benefit formula than that used by the Pension Plan and the Excess Plan;
T I F F A N Y & C O .
P S - 4 7
(cid:120) benefits are offset by benefits payable under the Pension Plan and the Excess Plan;
(cid:120) benefits are offset by benefits payable under Social Security;
(cid:120) benefits do not vest until the executive attains age 55 while employed by Tiffany and until he or
she has provided 10 years of service (benefits will vest earlier on a change in control as defined in
the Retention Agreements);
(cid:120) benefits are subject to forfeiture if employment is terminated for cause; and
(cid:120)
for those who leave Tiffany prior to age 65, benefits are subject to forfeiture for failure to execute
and adhere to non-competition and confidentiality covenants.
As its name implies, the Supplemental Plan supplements payments under the Pension Plan, the Excess
Plan and from Social Security so that total benefits equal a variable percentage of the participant’s
average final compensation.
Depending upon the participant’s years of service with Tiffany, the combined benefit under the Pension
Plan, the Excess Plan, the Supplemental Plan and from Social Security would be as follows:
Years of Service
less than 10
10-14
15-19
20-24
25 or more
Combined Annual Benefit As a Percentage of Average Final
Compensation
(a)
20%
35%
50%
60%
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The formula for benefits under the Pension and Excess Plans is a function of years of service and
covered compensation (subject to Internal Revenue Code limitations in the case of the Pension
Plan) and not any specific percentage of the participant’s average final compensation (see above).
A retiree with less than ten years of service would not receive any benefit under the Supplemental
Plan but could expect to receive a benefit of approximately 13% of average final compensation
under the Pension and Excess Plans.
Early Retirement and Extra Service Cedit r
Please refer to note (d) on PS-46 for a discussion of the early retirement features of the Plans.
Tiffany does not have a policy for or practice of granting extra years of credited service under the Plans
other than in the event of a change in control. See POTENTIAL PAYMENTS ON TERMINATION OR
CHANGE IN CONTROL – Retention Agreements. Mr. Kowalski and Mr. Fernandez have credit for service
with Tiffany’s former parent corporation. This credit was arranged in 1984 when the Company
purchased Tiffany.
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NONQUALIFIED DEFERRED COMPENSATION TABLE
(Fiscal 2007)
Executive
Contribution
In
Last Fiscal Year
(a)
($)
Registrant
Contribution
In
Last Fiscal Year
($)
Aggregate
Earnings
In
Last Fiscal Year
(b)
($)
Aggregate
Withdrawals/
Distributions
($)
Aggregate
Balance
At
Last Fiscal Year
End
(c)
($)
Name
Michael J. Kowalski
$ 48,619
$ 0
$ 18,029
$ 54,534
$ 321,374
James E. Quinn
$ 125,667
$
0
$ 16,215
$
0
$ 1,294,711
Beth O. Canavan
$ 79,286
$ 0
$
(6,211)
$ 52,675
$ 466,234
James N. Fernandez
$ 136,987
$ 0
$
32,487
Jon M. King
$
0
$
0
$
0
$
$
0
0
$
966,433
$
0
Note to Nonqualified Deferred Compensation Table
(a)
(b)
(c)
This column includes amounts that are also included in the amounts shown in the columns
headed “Salary” or “Non-Equity Incentive Plan Compensation” in the Summary Compensation
Table.
Amounts shown in this column are not reported as compensation in the Summary
Compensation Table because the Company’s Executive Deferral Plan does not pay above-market
or preferential earnings on compensation that is deferred.
Amounts shown in this column include amounts that were reported as compensation in the
Summary Compensation Table for the fiscal year ended January 31, 2008 and for prior fiscal years
to the extent that such amounts were contributed by the executive but not to the extent that
such amounts represent earnings. See Note (b) above.
Features of the Executive Deferral Plan
These are the key features of the Company’s Executive Deferral Plan:
(cid:120) Participation is open to directors and executive officers of the Company as well as other vice
presidents and “director-level” employees of Tiffany;
(cid:120) Directors of the Company may defer all of their cash compensation;
(cid:120) Employees may defer up to 50% of their salary and up to 90% of their cash annual incentive or
bonus compensation;
(cid:120) The Company makes no contribution and guarantees no specific return on money deferred;
(cid:120) Deferrals are placed in a trust that is subject to the claims of Tiffany’s creditors;
(cid:120) Deferred compensation is invested by the trustee in various mutual funds as directed by Tiffany,
which follows the directions of participants;
(cid:120) The value in the participant’s account (and Tiffany’s responsibility for payment) is measured by
the return on the investments selected by the participant;
(cid:120) Deferrals may be made to a Retirement Account and to accounts which will pay out on specified
“in-service” dates;
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(cid:120) Participants must elect to make deferrals in advance of the period during which the deferred
compensation is earned;
(cid:120) Retirement Accounts pay out in 5, 10, 15 or 20 annual installments after retirement as elected in
advance by the participant;
(cid:120) Except in the case of previously elected “in-service” payout dates, participants are not allowed to
withdraw funds while they remain employed other than for unforeseeable emergencies and then
only with the permission of Tiffany’s Board;
(cid:120) Termination of employment generally triggers a distribution of all account balances other than,
in the case of retirement or disability, retirement balances; and
(cid:120) Most participants, including all executive officers, will not receive any distribution from the plan
until six months following termination of employment; this six-month limitation does not apply
to pre-2005 balances.
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POTENTIAL PAYMENTS ON TERMINATION OR CHANGE IN CONTROL
The following table shows payments, the value of accelerated vesting of equity compensation and the
value of benefits that would have been provided, or that would have accrued, to the named executive
officers in the event that a change in control of the Company had occurred immediately following the
close of business on January 31, 2008 (first three columns to the right of the executive’s name) and on
the further assumption that the employment of the executive officer was involuntarily terminated
without cause at that time (the other four columns):
Vesting On Change in Control
With or Without Termination of
Employment
Early
Vesting of
Supple-
mental
Plan
(a)
Early
Vesting
of
Stock
Options
(b)
Early Vesting
of
Restricted
Stock Units
(c)
Payable or Vesting On Termination of Employment
Following Change in Control
Total Potential
Payments
Assuming Both a
Change in Control
and a Subsequent
Termination of
Employment
Cash Value
of
Increased
Service
Credit
(e)
Cash
Severance
Payment
(d)
Welfare
Benefits
(f )
Excise Tax
Gross Up
(g)
Total
(h)
$
$
0
$ 538,358
$ 9,271,070
$ 8,325,000
$ 2,551,912
$ 101,106
$ 7,702,262
$ 28,489,708
0
$ 288,235
$ 5,073,225
$ 5,106,000
$ 1,316,943
$ 106,383
$
0
$ 11,890,786
$ 623,524 $ 199,293
$ 3,441,835
$ 2,400,000
$ 730,770
$ 67,000
$ 2,758,534
$ 10,220,956
$ 606,686 $ 276,468
$ 4,834,485
$ 2,980,000
$ 807,832
$ 70,980
$ 3,209,284
$ 12,785,735
$
77,796 $ 217,715
$ 3,143,410
$ 2,060,000
$ 469,084
$ 39,261
$ 2,302,750
$ 8,310,016
Name
Michael J.
Kowalski
James E.
Quinn
Beth O.
Canavan
James N.
Fernandez
Jon M.
King
Notes to Potential Payments on Termination or Change in Control Table
(a)
(b)
(c)
Absent a change in control the Supplemental Plan will vest only when the participant attains the
in-service age of 55 years with ten years of service.
The value of early vesting of stock options was determined using $39.79, the closing value of the
Company’s common stock on January 31, 2008.
The value of early vesting of those grants of performance-based restricted stock units whose
performance measuring period was not completed as of January 31, 2008 was determined using
$39.79, the closing value of the Company’s common stock on January 31, 2008. In the event of a
change in control such units vest at the maximum number of shares. The value of performance-
based restricted stock units whose performance measuring period ended on January 31, 2008 was
not included in this calculation on the assumption that the earned value of the units would be
paid regardless of the change in control. That value, determined on the basis of actual earnings
and return on assets during the three-year performance period ended January 31, 2008 (which
was paid in shares on March 27, 2008 was as follows for each of the named executive officers: Mr.
Kowalski – 92,000 shares (value @$39.79 was $3,660,680); Mr. Quinn – 58,000 shares (value
@$39.79 was $2,307,820); Mrs. Canavan – 32,000 shares (value @$39.79 was $1,273,280);
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(d)
(e)
(f )
(g)
(h)
Mr. Fernandez – 44,000 shares (value @$39.79 was $1,750,760); and Mr. King – 24,000 shares
(value @$39.79 was $954,960);
Cash severance payments were determined by multiplying the sum of (i) actual salary and (ii) the
highest annual incentive award or bonus paid in either Fiscal 2006, 2005 or 2004 by three, in the
case of Mr. Kowalski and Mr. Quinn, or by two, in the case of the other executive officers.
The addition of two or three years of service credit, as applicable, would not have entitled any of
these executives to a higher percentage pension benefit under the Supplemental Plan. The cash
value of the increased service credit has been calculated based on the change in average final
compensation that would result from two or three years of additional employment at the salary
and incentive award/bonus referred to in note (d) above.
The amounts shown in this column represent two or three years of health-care coverage
determined on the basis of the Company’s “COBRA” rates for post-employment continuation
coverage. Such rates are available to all participating employees who terminate from
employment and were determined on the basis of the coverage elections made by the executive
officer. The amounts shown in this column also represent two or three years of long-term
disability coverage determined on the basis of the Company’s current cost to provide such
coverage.
The excise tax gross-up was determined with reference to the excise tax under Section 4999 of
the Internal Revenue Code, a review of W-2 for the individuals in question for the necessary
historical period.
This column is the total of columns (a) through (g) in the table above. It assumes that two events
have occurred: a change in control and a termination of employment following such change in
control.
Explanation of Potential Payments on Termination or Change in Control
Retention Agreements
The Company and Tiffany have entered into retention agreements with each of the executive officers.
These agreements would provide a covered executive with compensation if he or she should incur an
“involuntary termination” after a “change in control.” An “involuntary termination” does not include a
termination for cause, but does include a resignation for good reason.
When, if ever, a “change in control” occurs, the covered executives would have fixed terms of
employment under their retention agreements as follows: three years in the case of Mr. Kowalski and Mr.
Quinn and two years for all other executive officers.
If the executive incurs an involuntary termination during his or her fixed term of employment under a
retention agreement, compensation, keyed to the length of his or her term of employment, would be
payable to the executive as follows:
(cid:120) Two (for executives with two year terms of employment) or three (for executives with three year
terms of employment) times the sum of salary and the highest annual incentive award or bonus
paid for the preceding three fiscal years, as severance;
(cid:120) A payment equal to the present value of two or three years of additional years of service credit at
the salary and annual incentive award or bonus referred to above under the Supplemental Plan;
and
(cid:120) Two or three years of benefits continuation under Tiffany’s health and welfare plans.
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Vesting of Options, Restricted Stock Units on a Change in Control
In the event of a “change in control” of the Company, all options granted to employees (including
executive officers) become exercisable in full and all restricted stock units vest and convert to shares.
Supplemental Retirement Benefits Vest on a Change in Control
Benefits under the Pension Plan and the Excess Plan are vested for all named executive officers. Benefits
under the Supplemental Plan are vested for Mr. Kowalski and Mr. Quinn. In the event of a change in
control benefits under the Excess Plan would early vest for Mrs. Canavan, Mr. Fernandez and Mr. King,
although such vesting would not necessarily result in any payment at the time of such change in control.
Grossup Benefits on a Change in Control
-
Because a covered executive’s receipt of payments and benefits in connection with a “change in control”
may trigger a 20% excise tax under Section 4999 of the Internal Revenue Code, the retention agreements
contain “gross-up” provisions. Under these provisions, the Company or Tiffany must pay the covered
executive’s excise tax and any additional excise tax and income tax resulting from the gross-up
provisions. If the gross-up provisions are triggered, the Company or Tiffany, as the case may be, will be
unable to deduct most of the “change in control” payments and benefits, including the gross-up.
Definition of a Change in Control
For purposes of the Supplemental Plan, stock options and restricted stock, the term “change in control”
means that one of the following events has occurred:
(cid:120) Any person or group of persons acting in concert (and by person we mean an individual or
organization) acquires thirty-five percent or more in voting power or stock of the Company,
including the acquisition of any right, option, warrant or other right to obtain such voting power
or stock, whether or not presently exercisable;
(cid:120) A majority of the Board is, for any reason, not made up of individuals who were either on the
Board on January 21, 1988, or, if they became members of the Board after that date, were approved
by the directors; or
(cid:120) Any other circumstance which the Board deems to be a “change in control.”
For purposes of the retention agreements, a “change in control” includes the above events, as well as
additional events amounting to a change in control of the Company or Tiffany. Such events could include
a so-called “friendly” acquisition of the Company or Tiffany.
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NonCompetition Covenants Afected by Change in Control
f
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Under the terms of the retention agreements entered into with the executive officers, the duration of
certain non-competition covenants could be cut back from as long as two years following termination of
employment to as little as six months in the event a change in control were to occur. In the table above,
we have not assigned any value to a potential cut-back.
Early Retirement
Mr. Kowalski was eligible to take early retirement on January 31, 2008. His early retirement benefit
under the Pension Plan, the Excess Plan and the Supplemental Plan would have been approximately
$773,609 per year had he retired effective January 31, 2008.
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P S - 5 3
Mr. Quinn was eligible to take early retirement on January 31, 2007. His early retirement benefit under
the Pension Plan, the Excess Plan and the Supplemental Plan would have been approximately $410,013
per year had he retired effective January 31, 2008.
Death or Disability
If any of the named executive officers had died or become disabled on January 31, 2008, stock options
then unvested would have early vested. The value of such early vesting is shown in the column labeled
“Early Vesting of Stock Options” in the table on page PS-51. If any of the named executive officers had
died or become disabled on January 31, 2008, certain performance-based restricted stock units would
have early vested. The value of such early vesting would have been as follows for each of the named
executive officers on January 31, 2008: Mr. Kowalski, $2,769,384; Mr. Quinn, $1,701,023; Mrs. Canavan,
$960,929; Mr. Fernandez, $1,378,724; and Mr. King, $799,779.
DIRECTOR COMPENSATION TABLE
Fiscal 2007
Fees Earned or
Paid in Cash
($)(a)
Option Awards
($) (b) (c)
Change in Pension Value
and Nonqualified
Deferred Compensation
Earnings (d)
All Other
Compensation
($)
Name
Rose Marie Bravo
$ 69,000
$ 185,458
William R. Chaney
$ 66,000
$ 185,458
Gary E. Costley
$ 95,000
$ 86,926
Abby F. Kohnstamm
$ 79,000
$ 185,458
Charles K. Marquis
$ 86,000
$ 185,458
J. Thomas Presby
$ 97,000
$ 185,458
William A. Shutzer
$ 66,000
$ 185,458
$
$
$
11,148
0
N/A
N/A
$ 16,344
N/A
$
5,803
$ 0
$ 0
$ 0
$ 0
$ 0
$ 0
$ 0
Total
($)
$ 265,606
$ 251,458
$ 181,926
$ 264,458
$ 287,802
$ 282,458
$ 257,261
Notes to Director Compensation Table
(a)
(b)
Includes amounts deferred under the Executive Deferral Plan.
Amounts shown represent the dollar amount of compensation cost recognized in Fiscal 2007 for
stock options granted for Fiscal 2007 and previous fiscal years in accordance with SFAS No. 123R.
In valuing option awards the Company made certain assumptions. For a discussion of those
assumptions, please refer to Part II of the Company’s Annual Report on Form 10-K for the fiscal
year ended January 31, 2008. See Note M. “STOCK COMPENSATION PLANS”, in Notes to
Consolidated Financial Statements, under Item 8. Financial Statements and Supplementary Data.
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(c)
Supplementary Table: Outstanding Director Option Awards at Fiscal Year End
Name
Rose Marie Bravo
William R. Chaney
Gary E. Costley
Abby F. Kohnstamm
Charles K. Marquis
J. Thomas Presby
William A. Shutzer
Aggregate Number of Option
Awards Outstanding at Fiscal Year End
(number of underlying shares)
107,216
207,500
20,000
70,000
148,924
45,000
100,000
(d)
The actuarial valuation shown takes into account the current age of the director and is based on
the following assumptions consistent with those used in preparing the financial statements:
1994 Group Mortality Table, Male & Female; discount rate of 6.50% and retirement age of 65 (if
the director is over age 65, the director is assumed to retire on January 31, 2008. Where a “0”
appears in this column it is because there was a decline in value. In the case of Mr. Chaney, the
decline was approximately $17,611.
Discussion of Director Compensation Table
Directors who are not employees of the Company or its subsidiaries are paid or provided with the
following for their service on the Board:
(cid:120) An annual retainer of $50,000;
(cid:120) An additional annual retainer of $20,000, $10,000 or $5,000 to the chairperson of the Audit,
Compensation, or Nominating/Corporate Governance Committee, respectively;
(cid:120) A per-meeting-attended fee of $2,000 for meetings attended in person (no fee is paid for
attendance at any committee or subcommittee meetings which occur on the same day as a
meeting of the full Board);
(cid:120) A fee of $1,000 for each telephonic meeting in which the director participates;
(cid:120)
Stock options, as discussed below; and
(cid:120) A retirement benefit, also discussed below.
Under Tiffany’s Amended and Restated Executive Deferral Plan, directors may defer up to one hundred
percent (100%) of their cash compensation and invest the amounts they defer in various accounts and
funds established under the plan. However, the Company does not guarantee any return on said
investments. The following table provides data concerning director participation in this plan:
Director
Contribution
In
Last Fiscal Year
($)
Registrant
Contribution
In
Last Fiscal Year
($)
Aggregate Earnings
In
Last Fiscal Year
($)
Aggregate
Withdrawals/
Distributions
($)
Aggregate Balance
At
Last Fiscal Year
End
($)
Name
Gary E. Costley
$ 95,000
Charles K. Marquis
$
0
William A. Shutzer
$ 66,000
$ 0
$ 0
$ 0
$
$
$
(5,702)
10,857
(35,049)
$ 0
$ 0
$ 0
$
$
$
89,298
479,619
658,420
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Tiffany also reimburses directors for expenses they incur in attending Board and committee meetings,
including expenses for travel, food and lodging.
Non-employee directors are granted options to purchase shares of Company common stock upon their
first election or appointment, and in January of each year an option grant is made to each non-employee
director. These options vest in two equal installments: 1/2 after one year of service on the Board following
the grant of the option, and the balance after two years of service. However, all installments vest and
become immediately exercisable in the event there is a “change in control” of the Company. These
options expire after 10 years, but they expire sooner if, before the end of that 10-year period, the director
leaves the Board. The option’s exercise price is the fair market value of the Company’s common stock on
the date of grant, which value is calculated as the higher of (i) the average of the highest and lowest sales
prices or (ii) the closing price on the date of grant.
Directors who retire as non-employee directors with five or more years of Board service are also entitled
to receive an annual retirement benefit equal to $38,000, payable at the later of age 65 or the retirement
date. This benefit is payable quarterly and continues for a period of time equal to the director's length of
service on the Board, including periods served as an employee director, or until death, if earlier. However,
this particular benefit is not available to any director first appointed or elected after January 1, 1999;
accordingly, Dr. Costley, Ms. Kohnstamm and Mr. Presby are not entitled to participate in this benefit
plan.
Messrs. Kowalski and Quinn are employees of Tiffany. They therefore receive no separate compensation
for their service as directors.
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PERFORMANCE OF COMPANY STOCK
The following graph compares changes in the cumulative total shareholder return on Tiffany & Co.’s
stock for the previous five fiscal years to returns for the same five-year period on (i) the Standard & Poor's
500 Stock Index and (ii) the Standard & Poor’s 500 Consumer Discretionary Index. Cumulative
shareholder return is defined as changes in the closing price of our stock on the New York Stock
Exchange, plus the reinvestment of any dividends paid on our stock.
Comparison of Cumulative Five Year Tota l Return
Tiffany & C o.
S &P 500 Inde x
S &P 500 Consumer Discretionary Inde x
1/ 31/ 04
1/ 31/ 05
1/ 31/ 06
1/ 31/ 07
1/ 31/ 08
$300
$250
$200
$150
$100
$50
$0
1/ 31/ 03
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ANNUAL RETURN PERCENTAGE
Years Ending
Company / Index
Tiffany & Co.
S&P 500 Index
S&P 500 Consumer Discretionary Index
1/31/04
71.45
34.57
40.94
1/31/05
-20.17
6.23
9.39
1/31/06
20.95
10.38
-0.59
1/31/07
5.26
14.51
19.85
1/31/08
2.43
-2.31
-16.64
Company / Index
Tiffany & Co.
S&P 500 Index
S&P 500 Consumer Discretionary Index
Base
Period
1/31/03
100
100
100
INDEXED RETURNS
Years Ending
1/31/04
171.45
134.57
140.94
1/31/05
136.86
142.95
154.18
1/31/06
165.53
157.79
153.27
1/31/07
174.23
180.70
183.69
1/31/08
178.46
176.52
153.13
T I F F A N Y & C O .
P S - 5 7
ASSUMES AN INVESTMENT OF $100 ON JANUARY 31, 2003 IN COMPANY STOCK AND IN EACH OF
THE TWO INDICES. THE REINVESTMENT OF ANY SUBSEQUENT DIVIDENDS IS ALSO ASSUMED.
TOTAL RETURNS ARE BASED ON MARKET CAPITALIZATION; INDICES ARE WEIGHTED AT THE
BEGINNING OF EACH PERIOD FOR WHICH A RETURN IS INDICATED.
DISCUSSION OF PROPOSALS PRESENTED BY THE BOARD
Item 1.
Election of Directors
Each year, we elect directors at an Annual Meeting of Stockholders. At the 2008 Annual Meeting, nine
directors will be elected. Each of them will serve until he or she is succeeded by another qualified director
or until his or her earlier resignation or removal from office.
It is not anticipated that any of this year’s nominees will be unable to serve as a director but, if that
should occur before the Annual Meeting, the Board may either propose another nominee or reduce the
number of directors to be elected. If another nominee is proposed, you or your proxy will have the right
to vote for that person at the Annual Meeting.
As indicated below, and above under “OWNERSHIP OF THE COMPANY, Stockholders Who Own At Least
Five Percent of the Company”, Mr. May, a first-time nominee for director is affiliated with Trian Fund
Management, L.P. (“Trian Partners”). Through that affiliation, he is deemed to beneficially own 8.5% of
the Company’s shares. Members of management and directors met with Mr. May as a consequence of
that affiliation. The Nominating/Corporate Governance Committee of the Board, after reviewing his
background and qualifications and meeting with him, has recommended Mr. May to the stockholders as a
nominee.
Information concerning each of the nominees is set forth below:
Michael J. Kowalski
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Rose Marie Bravo
Mr. Kowalski, 56, is Chairman of the Board and Chief Executive Officer of
Tiffany & Co. He succeeded William R. Chaney as Chairman at the end of fiscal
year 2002 and as Chief Executive Officer in February 1999. Prior to his
appointment as President in January 1996, he was an Executive Vice President
of Tiffany & Co., a position he had held since March 1992. Mr. Kowalski also
served as Tiffany & Co.’s Chief Operating Officer from January 1997 until his
appointment as Chief Executive Officer. He became a director of Tiffany & Co.
in January 1995. Mr. Kowalski also serves on the board of The Bank of New York
Mellon. The Bank of New York Mellon is Tiffany’s principal banking
relationship, serving as Administrative Agent and a lender under a Revolving
Credit Facility and as trustee of Tiffany’s Employee Pension Plan, and as the
trustee and an investment manager for Tiffany’s employee pension plan; and
Mellon Investor Services LLC serves as the Company’s transfer agent and
registrar.
Ms. Bravo, 57, became a director of Tiffany & Co. in October 1997 when she was
selected by the Board to fill a newly created directorship. Ms. Bravo previously
served as Chief Executive Officer of Burberry Limited from 1997 until 2006
and as President of Saks Fifth Avenue from 1992 to 1997. Prior to Saks, Ms. Bravo
held a series of merchandising jobs at Macy’s culminating in the Chairman &
Chief Executive Officer role at I. Magnin which was a division of R. H. Macy &
Co. Ms. Bravo serves on the Board of Directors of Estee Lauder Companies Inc.
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Gary E. Costley
Lawrence K. Fish
Abby F. Kohnstamm
Dr. Costley, 64, was first elected to the Board in May 2007. He is a co-founder
and managing director of C&G Capital and Management, LLC, which provides
capital and management to health, medical and nutritional products and
services companies. He was Chairman and Chief Executive Officer of
International Multifoods Corporation, a manufacturer and marketer of branded
consumer food and food service products from November 1997 until June
2004. Dr. Costley was Dean of the Graduate School of Management at Wake
Forest University from 1995 until 1997. Dr. Costley held numerous positions at
the Kellogg Company from 1970 until June 1994. His most recent position was
President of Kellogg North America. He is a director of three other public
companies: The Principal Financial Group, Covance Inc. and Prestige Brands
Holdings, Inc.
Mr. Fish, 63, is Chairman of Royal Bank of Scotland America and Chairman of
Citizens Financial Group, Inc. (“Citizens”). He has served in that role since
2005, and before that as President and Chief Executive Officer, from 1992, of
Citizens. Mr. Fish is a member of the Board of Trustees of Massachusetts
Institute of Technology and an Overseer of the Boston Symphony Orchestra.
He serves on the boards of the Royal Bank of Scotland Group, Textron and The
Brookings Institution.
Ms. Kohnstamm, 54, is the President and founder of Abby F. Kohnstamm &
Associates, Inc., a marketing and consulting firm. Prior to establishing her
company, Ms. Kohnstamm served as Senior Vice President, Marketing of IBM
Corporation from 1993 through 2005. In that capacity, she had overall
responsibility for all aspects of marketing across IBM. Ms. Kohnstamm remains
an executive consultant to IBM. In addition, Ms. Kohnstamm held a number of
senior marketing positions at American Express from 1979 through 1993. Ms.
Kohnstamm also serves on the Board of Directors of the Progressive
Corporation and the Board of Trustees of Tufts University where she is also a
member of its Executive Committee. She became a director of Tiffany & Co. in
July 2001, when she was selected by the Board to replace a retiring director.
Charles K. Marquis
Mr. Marquis, 65, is a Senior Advisor to Investcorp International, Inc. From 1974
through 1998, he was a partner in the law firm of Gibson, Dunn & Crutcher L.L.P.
He was elected a director of Tiffany & Co. in 1984. Mr. Marquis also serves as a
director and nominating/corporate governance chair of CSK Auto Corporation.
Peter W. May
Mr. May, 65, is President and founding partner of Trian Partners, a New York-
based investment management firm launched in November 2005. Mr. May also
serves as Vice Chairman and a director of Trian Acquisition I Corp. (AMEX:
TUX.U), a publicly traded blank check company formed to effect a business
combination, and as non-executive Vice Chairman and a director of Triarc
Companies, Inc. (NYSE: TRY, TRY.B), a holding company that owns Arby’s
Restaurant Group, Inc. (“Triarc”). In addition, Mr. May serves as a director and
chairman of the compensation committee of Deerfield Capitol Corp.
(NYSE:DFR). Mr. May served as President and Chief Operating Officer of Triarc
from April 1993 through June 2007. Prior to joining Triarc, Mr. May was
President and Chief Operating Officer of Trian Group, Inc., which provided
investment banking and management services for entities controlled by him.
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Mr. May also served as President and Chief Operating Officer and a director of
Triangle Industries, Inc., which, through wholly-owned subsidiaries, was, at the
time, a manufacturer of packaging products (through American National Can
Company), copper electrical wire and cable and steel conduit and currency and
coin handling products. Mr. May is the Chairman of the Board of Trustees of
The Mount Sinai Medical Center in New York, where he led the turnaround of
this major academic health center from serious financial difficulties to what is
today one of the most profitable and fastest growing academic medical centers
in the United States. In addition, Mr. May is a Trustee of the University of
Chicago, a member of its Executive Committee, and a member of the Advisory
Council on the Graduate School of Business at The University of Chicago. Mr.
May is also a Trustee of Carnegie Hall and a partner of the Partnership for New
York City, as well as the past Chairman of the UJA Federation’s “Operation
Exodus” campaign and an honorary member of the Board of Trustees of The
92nd Street Y. He is a founding member of the Laura Rosenberg Memorial
Foundation for Pediatric Leukemia Research and is Chairman of the Board of
The Leni and Peter May Family Foundation.
Mr. Presby, 68, has used his business experience and professional qualifications
to forge a second career of essentially full-time board service since he retired in
2002 as a partner in Deloitte Touche Tohmatsu. At Deloitte he held numerous
positions in the United States and abroad, including the posts of Deputy
Chairman and Chief Operating Officer. He was selected to be a director of the
Company in November 2003 by the Board to fill a newly created position. He
now serves as a director and audit committee chair for the Company and
American Eagle Outfitters, Invesco Ltd, First Solar, Inc., TurboChef
Technologies, Inc. and World Fuel Services, Inc. As Mr. Presby has no significant
business activities other than board service, he is available full time to fulfill his
board responsibilities. Further, he finds that he is able to leverage the
experience of managing this particular set of audit committees to the benefit of
each board on which he serves and the efficient use of his own time and that of
his colleagues. He is a certified public accountant and a holder of the NACD
Certificate of Director Education.
Mr. Shutzer, 61, is a Senior Managing Director of Evercore Partners, a financial
advisory and private equity firm. He previously served as a Managing Director of
Lehman Brothers from 2000 through 2003, a Partner in Thomas Weisel
Partners LLC, a merchant banking firm, from 1999 through 2000, as Executive
Vice President of ING Baring Furman Selz LLC from 1998 through 1999,
President of Furman Selz Inc. from 1995 through 1997 and as a Managing
Director of Lehman Brothers and its predecessors from 1978 through 1994. He
was elected a director of the Company in 1984. Mr. Shutzer is also a member of
the Boards of Directors of Jupiter Media Corp. and CSK Auto Corporation. He
also serves as a director and compensation committee chair of TurboChef
Technologies, Inc.
J. Thomas Presby
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William A. Shutzer
William R. Chaney and James E. Quinn, now serving on the Board, will cease to be directors when they are
succeeded by their replacements. Mr. Chaney, 75, is the former Chairman of the Board. He is retiring as a
director of the Company. Mr. Quinn, 56, will continue to serve the Company as an executive officer.
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In the event that any of the current directors standing for reelection does not receive a majority of “for”
votes of the votes cast for or against his or her candidacy, such person would continue to serve as a
director until he or she is succeeded by another qualified director or until his or her earlier resignation or
removal from office. In the event that Mr. May does not receive a majority of “for” votes of the votes cast
for or against his or her candidacy, he would not succeed Mr. Chaney, who would, on the election of Mr.
May be replaced. In that instance, Mr. Chaney would continue to serve. In the event that Mr. Fish does
not receive a majority of “for” votes of the votes cast for or against his or her candidacy, he would not
succeed Mr. Quinn, who would, on the election of Mr. Fish be replaced. In that instance, Mr. Quinn
would continue to serve. Each of the nominees for director (other than Mr. May and Mr. Fish) has agreed
to tender his or her resignation in the event that he or she does not receive such a majority. Mr. Chaney
and Mr. Quinn have each agreed to tender his resignation if he is not replaced. Under the Corporate
Governance Principles adopted by the Board, the Nominating/Corporate Governance Committee will
make a recommendation to the Board on whether to accept or reject the resignation or whether other
action should be taken. Please refer to Section 1.i of the Corporate Governance Principles, which are
attached as Appendix I hereto for further information about the procedure that would be followed in the
event of such an election result.
THE BOARD RECOMMENDS A VOTE “FOR” THE ELECTION OF ALL NINE NOMINEES FOR
DIRECTOR
Item 2. Appointment of the Independent Registered Public Accounting Firm
The Audit Committee has appointed and the Board has ratified the appointment of
PricewaterhouseCoopers LLP (“PwC”) as the independent registered public accounting firm to audit the
Company’s consolidated financial statements for fiscal year 2008. As a matter of good corporate
governance, we are asking you to ratify this selection.
PwC has served as the Company’s independent registered public accounting firm since 1984.
A representative of PwC will be in attendance at the Annual Meeting to respond to appropriate questions
raised by stockholders and will be afforded the opportunity to make a statement at the meeting, if he or
she desires to do so.
The Board may review this matter if this appointment is not approved by the stockholders.
THE BOARD RECOMMENDS A VOTE “FOR” RATIFICATION OF THE SELECTION OF
PRICEWATERHOUSECOOPERS LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR FISCAL YEAR 2008.
Item 3. Approval of the 2008 Directors Equity Compensation Plan
On March 20, 2008, the Board adopted, subject to stockholder approval at the 2008 Annual Meeting of
Stockholders, the Company’s 2008 Directors Equity Compensation Plan (the “2008 Directors Plan” or
the “Plan”). The Board believes adoption of the Plan will advance the interests of the Company by
enabling the Company to attract, retain and motivate qualified individuals to serve on the Company’s
Board of Directors and to further link directors interests with those of the Company’s stockholders
through compensation that is based on the Company’s Common Stock, thereby promoting the long-term
financial interests of the Company, including the growth in value of the Company’s stockholders’ equity
and the enhancement of long-term returns to the Company’s stockholders.
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THE BOARD RECOMMENDS A VOTE “FOR” APPROVAL OF THE TIFFANY & CO. 2008 DIRECTORS
EQUITY COMPENSATION PLAN.
MATERIAL FEATURES OF THE 2008 DIRECTORS EQUITY COMPENSATION PLAN
Following is a summary of the material features of the 2008 Directors Plan. A copy of the Plan is
attached to this Proxy Statement as Appendix II.
Participants
Participation in the Plan is limited to directors who are not, at the time of an award under the Plan, also
employees of the Company or any of its affiliated companies.
Prior Plan and Option Grants Thereunder
The Plan will replace the Company’s 1998 Directors Option Plan approved by the Company’s
stockholders on May 21, 1998 (the “Prior Plan). As of the record date, 412,500 shares of the Company’s
common stock remained available for grant under the Prior Plan; such shares will not be transferred to
the 2008 Directors Plan and may not be awarded under the Prior Plan if the 2008 Directors Plan is
approved by the stockholders. Whether or not the 2008 Directors Plan is approved by the stockholders,
no further awards may be made under the Prior Plan after May 21, 2008.
As of the record date, 489,424 shares of common stock remained subject to outstanding option awards
under the Prior Plan. The average exercise price of such outstanding options is $34.4551 per share and
the expiration dates of such options range from January 21, 2009 to January 17, 2018. These outstanding
option awards under the Prior Plan will remain outstanding whether or not the 2008 Directors Plan is
approved by the stockholders.
The terms of the 2008 Directors Plan are substantially similar to the terms of the Prior Plan.
Maximum Number of Shares
The maximum number of shares of common stock that may be issued under the 2008 Directors Plan is
1,000,000.
The maximum number of shares that will be available for grant under the Plan will be reduced by 1.58
shares for each share that is delivered on vesting of a stock award. See Stock Awards below. Thus, when a
share is issued on vesting of a stock award, the maximum is reduced by 1.58 shares and when a share is
issued on exercise of an option the maximum is reduced by one share. The maximum number of shares
available for grant under the Plan is also subject to adjustment for corporate transactions. See Maximum
Number of Shares and Adjustments for Corporate Transactions below.
Market Value per Share
As of the record date, the market value of one share of the Company’s Common Stock, $0.01 par value, was
$37.60 calculated as the mean between the lowest and highest reported sales price of such a share on
such date as reported in the New York Stock Exchange Composite Transactions Index.
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Administration of the Plan
The Plan will be administered by the Board and/or a committee selected by the Board from amongst its
members. If such a committee is selected it must consist of two or more directors. As used below, the
term “Board” refers to the Board or such a committee. The Board has the authority to determine:
(cid:120) directors to whom awards are granted,
(cid:120)
the size and type of awards, and
(cid:120)
the terms and conditions of such awards.
Number and Identity of Future Participants and Form of Awards Not Yet Determined
Under the 2008 Directors Plan, the Board may designate any non-employee director of the Company as a
participant. The number and identity of participants to whom awards will eventually be made under the
Plan has not yet been determined, and, subject to the Plan, the form of such awards is at the discretion of
the Board. It is therefore not possible at this time to provide specific information as to actual future
award recipients or the form of such awards.
Under the Prior Plan, non-employee directors were granted options to purchase 10,000 shares of
Company common stock upon their first election or appointment, and in January of each year an
equivalent option grant was made to each non-employee director. These options vest in two equal
installments: 1/2 after one year of service on the Board following the grant of the option, and the balance
after two years of service. However, all installments vest and become immediately exercisable in the
event there is a “change in control” of the Company. These options expire after 10 years, but they expire
sooner if, before the end of that 10-year period, the director leaves the Board. The option’s exercise price
is the fair market value of the Company’s common stock on the date of grant, which is calculated as the
higher of (i) the average of the highest and lowest sales prices or (ii) the closing price on the date of grant.
Share awards have not been made to non-employee directors under the Prior Plan, but the Board may
consider making such under the 2008 Directors Plan, if the Plan is approved.
Awards Available under the 2008 Directors Plan
Following are summaries of the various awards available under the Plan.
Options. The grant of a stock option entitles the holder to purchase a specified number of shares of the
Company’s Common Stock at an exercise price specified at the time of grant.
Stock options may be granted only in the form of non-qualified stock options (“NQSOs”). A NQSO does
not qualify for special tax treatment under Section 422(b) of the Internal Revenue Code as a so-called
“incentive stock option.”
The Plan limits the discretion of the Board with respect to options as follows:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
the term of an option may not exceed 10 years,
the per-share exercise price of each option must be established at the time of grant or
determined by a formula established at the time of grant,
the exercise price may not be less than 100% of fair market value as of the “pricing date”,
the per-share exercise price may not be decreased after grant except for adjustments made to
reflect stock splits and other corporate transactions (see Maximum Number of Shares and
Adjustments for Corporate Transactions below),
an option may not be surrendered for a new option with a lower exercise price and
the pricing date must generally be the grant date, subject to limited exceptions.
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Stock Awards. A stock award is the grant of shares of the Company’s Common Stock or a right to receive
such shares, their cash equivalent or a combination of both. Each stock award shall be subject to such
conditions, restrictions and contingencies as the Board or its committee shall determine.
Settlement of Awards, Deerred Settlements Tax Wthholding and Dividend Equivalents
f
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The Board has the discretion to settle awards through cash payments, delivery of Common Stock, the
grant of replacement awards or any combination thereof.
The Board may permit the payment of the option exercise price to be made as follows:
in cash,
(cid:120)
(cid:120) by the tender of the Company’s shares of Common Stock, or
(cid:120) by irrevocable authorization to a third party to sell shares received upon exercise of the option
and to remit the exercise price.
Before distribution of any shares pursuant to an award, the Board may require the participant to remit
funds for any required tax withholdings. Alternatively, the Board may withhold shares to satisfy such tax
requirements. All cash payments made under the Incentive Plan may be net of any required tax
withholdings.
The Board may provide for the deferred delivery of stock upon the exercise of an option or upon the
grant of a stock award. Such deferral can be evidenced by use of “Stock Units” – bookkeeping entries
equivalent to the fair market value, from time to time, of a specified number of shares. Stock Units are
settled at the end of the applicable deferral period by delivery of shares or as otherwise determined by the
Board.
The Committee has the discretion to provide participants with the right to receive dividends or dividend
equivalent payments with respect to the underlying shares of Common Stock.
Duration of the Plan
If the 2008 Incentive Plan is approved by the stockholders at the 2008 Annual Meeting, no award may be
made under that Plan more than ten (10) years after such approval date. However, the Plan shall remain
in effect as long as any awards previously made remain outstanding.
Maximum Number of Shares and Adjustments for Corporate Transactions under the Plan
The maximum number of shares of the Company’s common stock that may be issued under the Plan is
1,000,000. That maximum is subject to adjustments for corporate transactions as discussed below and
for the issuance of stock awards. See Maximum Number of Shares above.
Shares subject to an award that are not delivered because of forfeiture, cancellation or cash settlement
become available for further grant.
If a participant exercises an option by delivery of previously owned shares in payment of the exercise
price or of any tax withholding obligations, all shares issued to the participant without offset for the
number of shares delivered in payment will be counted against the maximum.
The maximum number of shares which may be delivered under the Plan is subject to further adjustment
for corporate transactions, such as:
(cid:120)
stock splits, stock dividends and stock distributions,
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(cid:120)
any other transaction in which outstanding shares of Common Stock are increased, decreased,
changed or exchanged, or
a transaction in which cash, property, Common Stock or other securities are distributed in
respect of outstanding shares.
If such a corporate transaction occurs, the Board will make appropriate adjustments in:
(cid:120)
(cid:120)
the number and/or type of shares for which awards may be granted under the Incentive Plans
after such transaction, and
the number and/or type of shares or securities for which awards then outstanding under the
Incentive Plans may be exercised after such transaction – such adjustments would be made
without changing the aggregate exercise price applicable to the unexercised portions of
outstanding options or SARs.
For example, to adjust for the last corporate transaction – the two-for-one stock split that became
effective in July 2000 – the Board doubled the maximum number of shares that could be issued under
the Prior Plan. The Board also doubled the number of unexercised shares that were the subject of
outstanding options and cut the corresponding per-share exercise price in half.
Per-Year-Per-Participant Limit Under the Plan
Subject to further adjustment for corporate transactions, as discussed above, the Plan imposes the
following limit: no more than 25,000 shares may be granted in any one fiscal year to any one participant
pursuant to any and all awards under the Plan.
Amendment of Plan
The Board may, at any time, amend or terminate the Plan. However, the approval of the Company’s
stockholders will be required for any amendment (other than adjustments for corporate transactions
discussed above) which would:
(cid:120)
(cid:120)
increase the maximum number of shares that may be delivered under the Plan as described in
Maximum Number of Shares and Adjustments for Corporate Transactions above, including the
requirement to reduce such maximum by 1.58 shares for every share delivered as a stock award,
increase the per-participant limit described above under Per-Year-Per-Participant Limit Under the
Plan,
(cid:120) decrease the minimum exercise price for an option or permit the surrender of an option as
consideration in exchange for a new award with a lower exercise price, each as described above
under Options or
increase the maximum term of an Option as described above under Options.
(cid:120)
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Federal Income Tax Consequences of Plan Awards
The Company believes that under present law and regulations the federal income tax treatment of the
various awards that may be made under the Plan will be as described below.
The grant of an NQSO will not have any tax consequence to the Company nor to the participant. The
exercise of an NQSO will require the participant to include in his or her taxable ordinary income the
amount by which the fair market value of the acquired shares on the exercise date exceeds the option
price. Upon a subsequent sale or taxable exchange of shares acquired upon the option exercise, the
participant will recognize a long- or short-term capital gain or loss equal to the difference between the
amount realized on the sale and the tax basis of such shares (the fair market value on the exercise date).
T I F F A N Y & C O .
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The Company will be entitled to a deduction at the same time and in the same amount as the participant
is in receipt of income in consequence of his or exercise of an NQSO. The grant of a stock award
(including a stock unit) will not have any tax consequence to the Company nor to the participant if, at
the time of the grant, the shares or units provided to the participant are subject to a substantial risk of
forfeiture, and provided further that the participant chooses not to elect to recognize income. The
participant may, however, elect to recognize taxable ordinary income at the time of a stock (but not a
unit) grant equal to the fair market value of the stock awarded. Failing such an election, as of the date the
shares provided to a participant under a stock award are no longer subject to a substantial risk of
forfeiture, the participant will recognize taxable ordinary income equal to the fair market value of the
stock. The Company will be entitled to a deduction at the same time and in the same amount as the
participant is in receipt of income in consequence of the grant of a stock award.
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OTHER MATTERS
Stockholder Proposals for Inclusion in the Proxy Statement for the 2009 Annual Meeting
If you wish to submit a proposal to be included in the Proxy Statement for our 2009 Annual Meeting,
we must receive it no later than December 11, 2008. Proposals should be sent to the Company at
600 Madison Avenue, New York, New York, 10022, addressed to the attention of Patrick B. Dorsey,
Corporate Secretary (Legal Department).
Other Proposals
Our By-laws set forth certain procedures for stockholders of record who wish to nominate directors or
propose other business to be considered at an annual meeting. In addition, we will have discretionary
voting authority with respect to any such proposals to be considered at the 2009 Annual Meeting unless
the proposal is submitted to us no earlier than January 15, 2009 and no later than February 14, 2009 and
the stockholder otherwise satisfies the requirement of SEC Rule 14a-4.
Householding
The SEC allows us to deliver a single proxy statement and annual report to an address shared by two or
more of our stockholders. This delivery method, referred to as “householding,” can result in significant
cost savings for us. In order to take advantage of this opportunity, the Company and banks and brokerage
firms that hold your shares have delivered only one proxy statement and annual report to multiple
stockholders who share an address unless one or more of the stockholders has provided contrary
instructions. The Company will deliver promptly, upon written or oral request, a separate copy of the
proxy statement and annual report to a stockholder at a shared address to which a single copy of the
documents was delivered. A stockholder who wishes to receive a separate copy of the proxy statement
and annual report, now or in the future, may obtain one, without charge, by addressing a request to
Annual Report Administrator, Tiffany & Co., 600 Madison Avenue, 8th Floor, New York, New York 10022 or
by calling 212-230-5302. You may also obtain a copy of the proxy statement and annual report from the
Company’s website http://investor.tiffany.com/financials.cfm . Stockholders of record sharing an address
who are receiving multiple copies of proxy materials and annual reports and wish to receive a single copy
of such materials in the future should submit their request by contacting us in the same manner. If you
are the beneficial owner, but not the record holder, of the Company’s shares and wish to receive only one
copy of the proxy statement and annual report in the future, you will need to contact your broker, bank or
other nominee to request that only a single copy of each document be mailed to all stockholders at the
shared address in the future.
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Reminder to Vote
Please be sure to either complete, sign and mail the enclosed proxy card in the return envelope provided
or call in your instructions or vote by Internet as soon as you can so that your vote may be recorded and
counted.
BY ORDER OF THE BOARD OF DIRECTORS
Patrick B. Dorsey
Secretary
New York, New York
April 10, 2008
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Tiffany & Co.
(a Delaware corporation)
Corporate Governance Principles
(as adopted by the full Board of Directors on January 15, 2004
and amended and restated March 15, 2007)
Appendix I
1.
Director Qualification Standards; Size of the Board; Audit Committee Service.
a.
A majority of the directors shall meet the independence requirements set forth in Section
303A.01 and .02 of the New York Stock Exchange Corporate Governance Rules. A director shall not be
deemed to have met such independence requirements unless the Board has affirmatively determined
that it be so. In making its determination of independence, the Board shall broadly consider all relevant
facts and circumstances and assess the materiality of each director’s relationship(s) with the
Corporation and/or its subsidiaries. If a director is determined by the Board to be independent, all
relationships, if any, that such director has with the Corporation and/or its subsidiaries which were
determined by the Board to be immaterial to independence shall be disclosed in the Corporation’s
annual proxy statement.
b.
A director shall be younger than age 72 when elected or appointed and a director shall not
be recommended for re-election by the stockholders if such director will be age 72 or older on the date of
the annual meeting or other election in question, provided that the Board of Directors may, by specific
resolution, waive the provisions of this sentence with respect to an individual director whose continued
service is deemed uniquely important to the Corporation.
c.
A director need not be a stockholder to qualify as a director, but shall be encouraged to
become a stockholder by virtue of the Corporation’s policies and plans with respect to stock options and
stock ownership for directors and otherwise.
d.
Consistent with 1.a. above, candidates for director shall be selected on the basis of their
business experience and expertise, with a view to supplementing the business experience and expertise
of management and adding further substance and insight into board discussions and oversight of
management. The Nominating/Corporate Governance Committee is responsible for identifying
individuals qualified to become directors, and for recommending to the Board director nominees for the
next annual meeting of the stockholders.
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e.
From time to time, the Nominating/Corporate Governance Committee will recommend
to the Board the number of directors constituting the entire Board. Based upon that recommendation,
the current nature of the Corporation’s business, and the talents and business experience of the existing
roster of directors, the Board believes that nine directors is an appropriate number at this time.
f.
The Board shall be responsible for determining the qualification of an individual to serve
on the Audit Committee as a designated “audit committee financial expert,” as required by applicable
rules of the SEC under Section 407 of the Sarbanes-Oxley Act. In addition, to serve on the Audit
Committee, a director must meet the standards for independence set forth in Section 301 of the
Sarbanes-Oxley Act. To those ends, the Nominating/Corporate Governance Committee will coordinate
with the Board in screening any new candidate for audit committee financial expert or who will serve on
the Audit Committee and in evaluating whether to re-nominate any existing director who may serve in
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the capacity of audit committee financial expert or who may serve on the Audit Committee. If an Audit
Committee member simultaneously serves on the audit committees of more than three public
companies, then, in the case of each such Audit Committee member, the Board must determine that such
simultaneous service would not impair the ability of such member to effectively serve on the
Corporation’s Audit Committee and disclose such determination in the Corporation’s annual proxy
statement.
g.
Any director who changes his or her employer or otherwise has a significant change in job
responsibilities, or who accepts or intends to accept a directorship with another public company (or with
any other organization that would require a significant time commitment) that he or she did not hold
when such director was most recently elected to the Board, shall (1) advise the secretary of the
Corporation of such change or directorship and (2) submit to the Nominating/Corporate Governance
Committee, in care of the secretary, a signed letter, addressed to such Committee, resigning as a director
of the Corporation effective upon acceptance of such resignation by such Committee but void ab initio if
not accepted by such Committee within ten (10) days of receipt by the secretary. The secretary of the
Corporation shall promptly advise the members of the Nominating/Corporate Governance Committee of
such advice and receipt of such letter. The Nominating/Corporate Governance Committee shall
promptly meet and consider, in light of the circumstances, the continued appropriateness of such
director’s membership on the Board and each committee of the Board on which such director
participates. In some instances, taking into account all relevant factors and circumstances, it may be
appropriate for the Nominating/Corporate Governance Committee to accept such resignation, to
recommend to the Board that the director cease participation on one or more committees, or to
recommend to the Board that such director not be re-nominated to the Board.
h.
Subject to 1.b above, directors of the Corporation are not subject to term limits. However,
the Nominating/Corporate Governance Committee will consider each director’s continued service on
the Board each year and recommend whether each director should be re-nominated to the Board. Each
director will be given an opportunity to confirm his or her desire to continue as a member of the Board.
i.
The Corporation has amended its By-Laws to provide for majority voting in the election of
directors. In uncontested elections, directors are elected by a majority of the votes cast, which means
that the number of shares voted “for” a director must exceed the number of shares voted “against” that
director. The Nominating/Corporate Governance Committee (or comparable committee of the Board)
shall establish procedures for any director who is not elected to tender his or her resignation. The
Nominating/Corporate Governance Committee will make a recommendation to the Board on whether to
accept or reject the resignation, or whether other action should be taken. The Board will act on the
Nominating/Corporate Governance Committee's recommendation within 90 days following certification
of the election results. In determining whether or not to recommend that the Board of Directors accept
any resignation offer, the Nominating/Corporate Governance Committee shall be entitled to consider all
factors believed relevant by such Committee’s members. Unless applicable to all directors, the
director(s) whose resignation is under consideration is expected to recuse himself or herself from the
Board vote. Thereafter, the Board will promptly disclose its decision regarding the director's resignation
offer (including the reason(s) for rejecting the resignation offer, if applicable) in a Form 8-K furnished to
the Securities and Exchange Commission. If the Board accepts a director's resignation pursuant to this
process, the Nominating/Corporate Governance Committee shall recommend to the Board whether to fill
such vacancy or reduce the size of the Board. If, for any reason, the Board of Directors is not elected at an
annual meeting, they may be elected thereafter at a special meeting of the stockholders called for that
purpose in the manner provided in the By-laws.
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j.
Including service on the Board of Directors of the Corporation, no director shall serve on
the board of directors (or any similar governing body) of more than six public companies.
2.
Attendance and Participation at Board and Committee Meetings.
a.
Directors shall be expected to attend six regularly scheduled board meetings in person, if
practicable, or by telephone, if attendance in person is impractical. Directors should attempt to organize
their schedules in advance so that attendance at all regularly scheduled board meetings will be
practicable.
b.
For committees on which they serve, directors shall be expected to attend regularly
scheduled meetings in person, if practicable, or by telephone, if attendance in person is impractical or if
telephone participation is the expected means of participation. For committees on which they serve,
directors should attempt to organize their schedules in advance so that attendance at all regularly
scheduled committee meetings will be practicable.
c.
Directors shall attempt to make time to attend, in person or by telephone, specially
scheduled meetings of the Board or those committees on which they serve.
d.
Directors shall, if practicable, review in advance all meeting materials provided by
management, the other directors or consultants to the Board.
e.
Directors shall familiarize themselves with the policies and procedures of the Board with
respect to business conduct, ethics, confidential information and trading in the Corporation’s securities.
f.
Nothing stated herein shall be deemed to limit the duties of directors under applicable
law.
3.
Director Access to Management and Independent Advisors.
a.
Executive officers of the Corporation and its subsidiaries shall make themselves available,
and shall arrange for the availability of other members of management, employees and consultants, so
that each director shall have full and complete access with respect to the business, finances and
accounting of the Corporation and its subsidiaries.
b.
The chief financial officer and the chief legal officer of the Corporation will regularly
attend Board meetings (other than those portions of Board meetings that are reserved for independent or
non-management directors or those portions in which the independent or non-management directors
meet privately with the chief executive officer) and the Board encourages the chief executive officer to
invite other executive officers and non-executive officers to Board meetings from time to time in order
to provide additional insight into items being discussed and so that the Board may meet and evaluate
persons with potential for advancement.
c.
If the charter of any Board committee on which a director serves provides for access to
independent advisors, any executive officer of the Corporation is authorized to arrange for the payment
of the reasonable fees of such advisors at the request of such a committee acting by resolution or
unanimous written consent.
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4.
Director Compensation.
a.
Directors shall be compensated in a manner and at a level sufficient to encourage
exceptionally well-qualified candidates to accept service upon the Board and to retain existing directors.
The Board believes that a meaningful portion of a director’s compensation should be provided in, or
otherwise based upon appreciation in the market value of, the Corporation’s Common Stock.
b.
To help determine the form and amount of director compensation, the staff of the
Corporation shall, if requested by the Board provide the Board with data drawn from public company
filings with respect to the fees and emoluments paid to outside directors by comparable public
companies.
c.
Contributions to charities with which an independent or non-management director is
affiliated will not be used as compensation to such a director and management will use special efforts to
avoid any appearance of impropriety in connection with such contributions, if any.
d.
Management will advise the Board should the Corporation or any subsidiary wish to enter
into any direct financial arrangement with any director for consulting or advisory services, or into any
arrangement with any entity affiliated with such director by which the director may be indirectly
benefited, and no such arrangement shall be consummated without specific authorization from the
Board.
5.
Director Orientation and Continuing Education.
a.
Each executive officer of the Corporation shall meet with each new director and provide
an orientation into the business, finance and accounting of the Corporation.
b.
Each director shall be reimbursed for reasonable expenses incurred in pursuing
continuing education with respect to his/her role and responsibilities to the stockholders and under law
as a director.
6. Management Succession.
a.
The Board, assisted by the Corporate Nominating/Corporate Governance Committee and
the Compensation Committee, shall select, evaluate the performance of, retain or replace the chief
executive officer. Such actions will be taken with (i) a view to the effectiveness and execution of
strategies propounded by and decisions taken by the chief executive officer with respect the
Corporation’s long-term strategic plan and long-term financial returns and (ii) applicable legal and
ethical considerations.
b.
In furtherance of the foregoing responsibilities, and in contemplation of the retirement,
or an exigency that requires the replacement, of the chief executive officer, the Board shall, in
conjunction with the chief executive officer, oversee the selection and evaluate the performance of the
other executive officers.
7.
Annual Performance Evaluation of the Board.
a.
The Nominating/Corporate Governance Committee is responsible to assist the Board in
the Board’s oversight of the Board’s own performance in the area of corporate governance.
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b.
Annually, each director will participate in an assessment of the Board’s performance in
the area of corporate governance. The results of such self-assessment will be provided to each director.
8. Matters for Board Review, Evaluation and/or Approval.
a.
The Board is responsible under the law of the State of Delaware to review and approve
significant actions by the Corporation including major transactions (such as acquisitions and
financings), declaration of dividends, issuance of securities and appointment of officers of the
Corporation.
b.
The Board is responsible, either through its committees, or as guided by its committees,
for those matters which are set forth in the respective charters of the Audit, Nominating/Corporate
Governance and Compensation Committees or as otherwise set forth in the corporate governance rules
of the New York Stock Exchange.
c.
The following matters, among others, will be the subject of Board deliberation:
i.
annually, the Board will review and if acceptable approve the Corporation’s
operating plan for the fiscal year, as developed and recommended by management;
ii.
at each regularly scheduled meeting of the Board, the directors will review actual
performance against the operating plan;
iii.
annually, the Board will review and if acceptable approve the Corporation’s five-
year strategic plan, as developed and recommended by management;
iv.
from time to time, the Board will review topics of relevance to the approved or
evolving strategic plan, including such topics identified by the Board and those identified by
management;
v.
annually, the charters of the Audit, Nominating/Corporate Governance, and
Compensation Committees will be reviewed and, if necessary, modified, by the Board;
vi.
annually, the delegation of authority to officers and employees for day-to-day
operating matters of the Corporation and its subsidiaries will be reviewed and if acceptable approved by
the Board;
vii.
annually, the Corporation’s investor relations program will be reviewed by the
Board;
viii.
annually, the schedule of insurance coverage for the Corporation and its
subsidiaries will be reviewed by the Board;
ix.
annually, the status of various litigation matters in which the Corporation and its
subsidiaries are involved will be presented to and discussed with the Board;
x.
annually, the Corporation’s policy with respect to the payment of dividends will
be reviewed and if acceptable approved by the Board;
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xi.
annually, the Corporation’s program for use of foreign currency hedges and
forward contracts will be reviewed and if acceptable approved by the Board; and
xii.
from time to time, the Corporation’s use of any stock re-purchase program
approved by the Board will be reviewed by the Board.
9. Management’s Responsibilities.
Management is responsible to operate the Corporation with the objective of achieving the
Corporation’s operating and strategic plans and building value for stockholders on a long-term basis. In
executing those responsibilities management is expected to act in accordance with the policies and
standards established by the Board (including these principles), as well as in accordance with applicable
law and for the purpose of maintaining the value of the trademarks and business reputation of the
Corporation’s subsidiaries. Specifically, the chief executive officer and the other executive officers are
responsible for:
a.
producing, under the oversight of the Board and the Audit Committee, financial
statements for the Corporation and its consolidated subsidiaries that fairly present the financial
condition, results of operation, cash flows and related risks in accordance with generally accepted
accounting principles, for making timely and complete disclosure to investors, and for keeping the Board
and the appropriate committees of the Board informed on a timely basis as to all matters of significance;
b.
developing and presenting the strategic plan, proposing amendments to the plan as
conditions and opportunities dictate and for implementing the plan as approved by the Board;
c.
developing and presenting the annual operating plans and budgets and for implementing
those plans and budgets as approved by the Board;
d.
creating an organizational structure appropriate to the achievement of the strategic and
operating plans and recruiting, selecting and developing the necessary managerial talent;
e.
creating a working environment conducive to integrity, business ethics and compliance
with applicable legal and Corporate policy requirements;
f.
developing, implementing and monitoring an effective system of internal controls and
procedures to provide reasonable assurance that: the Corporation’s transactions are properly authorized;
the Corporation’s assets are safeguarded against unauthorized or improper use; and the Corporation’s
transactions are properly recorded and reported. Such internal controls and procedures also shall be
designed to permit preparation of financial statements for the Corporation and its consolidated
subsidiaries in conformity with generally accepted accounting principles and any other legally required
criteria applicable to such statements; and
g.
establishing, maintaining and evaluating the Corporation’s disclosure controls and
procedures. The term “disclosure controls and procedures” means controls and other procedures of the
Corporation that are designed to ensure that information required to be disclosed by the Corporation in
the reports filed by it under the Securities Exchange Act of 1934 (the “Act”) is recorded, processed,
summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure
controls and procedures include, without limitation, controls and procedures designed to ensure that
information required to be disclosed by the Corporation in the reports it files under the Act is
accumulated and communicated to the Corporation’s management, including its principal executive and
financial officers, to allow timely decisions regarding required disclosure. To assist in carrying out this
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responsibility, management has established a Disclosure Control Committee, whose membership is
responsible to the Audit Committee, to the chief executive officer and to the chief financial officer, and
includes the following officers or employees of the Corporation: the president, the chief legal officer, the
head of finance, the chief information officer, the controller, the head of internal audit & financial
controls, the investor relations officer and the treasurer.
10. Meeting Procedures.
a.
The Board shall determine whether the offices of chairman of the board and chief
executive officer shall be held by one person or by separate persons, and whether the person holding the
office of chairman of the board shall be “independent” or not. An “independent” director meets the
requirements for “independence” as referenced in item 1.a above. “Non-management” directors include
those who are independent and those who, while not independent, are not currently employees of the
Corporation or one of its subsidiaries.
b.
The chairman of the board will establish the agenda for each Board meeting but the
chairman of the board will include in such agenda any item submitted by the presiding independent
director (see item 11.c below). Each Board member is free to suggest the inclusion of items on the agenda
for any meeting and the chairman of the board will consider them for inclusion.
c.
Management shall be responsible to distribute information and data necessary to the
Board’s understanding of all matters to be considered and acted upon by the Board; such materials shall
be distributed in writing to the Board sufficiently in advance so as to provide reasonably sufficient time
for review and evaluation. To that end, management has provided each director with access to a secure
website where confidential and sensitive materials may be viewed. In circumstances where practical
considerations do not permit advance circulation of written materials, reasonable steps shall be taken to
allow more time for discussion and consideration, such as extending the duration of a meeting or
circulating unanimous written consent forms, which may be considered and returned at a later time.
d.
The chairman of the board shall preside over meetings of the Board.
e.
If the chairman of the board is not independent, the independent directors may select
from among themselves a “presiding independent director”; failing such selection, the chairman of the
Nominating/Corporate Governance Committee shall be the presiding independent director. The
presiding independent director shall be identified as such in the Corporation’s annual proxy statement
to facilitate communications by stockholders and employees with the non-management directors.
f.
The non-management directors shall meet separately from the other directors in
regularly scheduled executive session, without the presence of management directors and executive
officers of the Corporation. The presiding independent director shall preside over such meetings.
g.
At least once per year the independent directors shall meet separately from the other
directors in a scheduled executive session, without the presence of management directors, non-
management directors who are not independent and executive officers of the Corporation. The presiding
independent director shall preside over such meetings.
11.
Committees.
a.
The Board shall have an Audit Committee, a Compensation Committee and a
Nominating/Corporate Governance Committee which shall have the respective responsibilities
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described in the charters of each committee. The membership of each such committee shall consist only
of independent directors.
b.
The Board may, from time to time, appoint one or more additional committees, such as a
Dividend Committee.
c.
The chairman of each Board committee, in consultation with the appropriate members of
management and staff, will develop the committee’s agenda. Management will assure that, as a general
rule, information and data necessary to the committee’s understanding of the matters within the
committee’s authority and the matters to be considered and acted upon by a committee are distributed
to each member of such committee sufficiently in advance of each such meeting or action taken by
written consent to provide a reasonable time for review and evaluation.
d.
At each regularly scheduled Board meeting, the chairman of each committee or his or her
delegate shall report the matters considered and acted upon by such committee at each meeting or by
written consent since the preceding regularly scheduled Board meeting.
e.
The secretary of the Corporation, or any assistant secretary of the Corporation, shall be
available to act as secretary of any committee and shall, if invited, attend meetings of the committee and
prepare minutes of the meeting for approval and adoption by the committee.
12. Reliance.
Any director of the Corporation shall, in the performance of such person’s duties as a member of
the Board or any committee of the Board, be fully protected in relying in good faith upon the records of
the Corporation or upon such information, opinions, reports or statements presented by any of the
Corporation’s officers or employees, or committees of the Board, or by any other person as to matters the
director reasonably believes are within such other person’s professional or expert competence.
13.
Reerence to Corporation’s Subsidiaries.
f
Where the context so requires, reference herein to the Corporation includes reference to the
Corporation and/or any direct or indirect subsidiary of the Corporation whose financial results are
consolidated with those of the Corporation for financial reporting purposes and reference to a subsidiary
of the Corporation shall be reference to such a subsidiary.
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TIFFANY & CO.
2008 DIRECTORS EQUITY COMPENSATION PLAN
Appendix II
Section 1
General
1.1
Purpose. The Tiffany & Co. 2008 Directors Equity Compensation Plan (the “Plan”) has
been established by Tiffany & Co., a Delaware corporation, (the “Company”) to advance the interests of
the Company by enabling the Company to attract, retain and motivate qualified individuals to serve on
the Company’s Board of Directors and to further link Participants’ interests with those of the Company’s
stockholders through compensation that is based on the Company’s Common Stock, thereby promoting
the long-term financial interests of the Company and its Related Companies, including the growth in
value of the Company’s stockholders’ equity and the enhancement of long-term returns to the Company’s
stockholders.
1.2
Participation. Subject to the terms and conditions of the Plan, the Committee shall, from
time to time, determine and designate from among Eligible Individuals those persons who will be granted
one or more Awards under the Plan. Eligible Individuals who are granted Awards become “Participants”
in the Plan. At the discretion of the Committee, a Participant may be granted any Award permitted under
the provisions of the Plan, and more than one Award may be granted to a Participant. Awards need not
be identical but shall be subject to the terms and conditions specified in the Plan. Subject to the last two
sentences of subsection 2.2 of the Plan, Awards may be granted as alternatives to or in replacement for
awards outstanding under the Plan, or any other plan or arrangement of the Company.
1.3 Operation, Administration, and Definitions. The operation and administration of the
Plan, including the Awards made under the Plan, shall be subject to the provisions of Section 4 (relating
to operation and administration). Initially capitalized terms used in the Plan shall be defined as set forth
in the Plan (including in the definitional provisions of Section 7 of the Plan).
1.4
Prior Plan. This Plan is intended to become effective on approval by the Company’s
stockholders, as provided for in Section 4.1 below. This Plan is intended to replace the Company’s 1998
Directors Option Plan approved by the Company’s stockholders on May 21, 1998 (the “Prior Plan”). In
accordance with the terms of the Prior Plan: (i) no Award may be granted or otherwise made under the
Prior Plan after May 21, 2008, but (ii) the Prior Plan shall remain in effect as long as any awards under the
Prior Plan are outstanding. Shares subject to the Prior Plan which are not subject to outstanding awards
under the Prior Plan as of the Effective Date of this Plan (see subsection 4.1 of this Plan) and which have
not been delivered to participants under the Prior Plan as of such Effective Date may not be awarded
under the Prior Plan on or after such Effective Date and the Prior Plan shall be deemed amended
accordingly on such Effective Date. Shares subject to the Prior Plan, as described in the preceding
sentence, shall not be deemed transferred to this Plan.
Section 2
Options
2.1 Definition. The grant of an “Option” entitles the Participant to purchase Shares at an
Exercise Price established by the Committee. Options granted under this Section 2 shall be Non-
Qualified Options. A “Non-Qualified Option” is an Option that is not intended to be an “incentive stock
option” as that term is described in section 422(b) of the Code.
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2.2
Exercise Price. The per-share “Exercise Price” of each Option granted under this Section 2
shall be established by the Committee or shall be determined by a formula established by the Committee
at or prior to the time the Option is granted; except that the Exercise Price shall not be less than 100% of
the Fair Market Value of a Share as of the Pricing Date unless the Participant has agreed to forgo all or a
portion of his or her annual cash retainer or other fees for service as a director of the Company in
exchange for the Option, in which case the difference between (a) the aggregate Fair Market Value of the
Shares subject to the Option as of the Pricing Date and (b) the aggregate Exercise Price for the Shares
subject to the Option shall be equal to the amount of the cash retainer or other such fees agreed to be
forgone by the Participant. For purposes of the preceding sentence, the “Pricing Date” shall be the date
on which the Option is granted unless the Option is granted on a date on which the principal exchange
on which the Stock is then listed or admitted to trading is closed for trading, in which case the “Pricing
Date” shall be the most recent date on which such exchange was open for trading prior to such grant
date. Except as provided in subsection 4.2(c), the Exercise Price of any Option may not be decreased
after the grant of the Award. An Option may not be surrendered as consideration in exchange for a new
Award with a lower Exercise Price.
2.3
Exercise. Options shall be exercisable in accordance with such terms and conditions and
during such periods as may be established by the Committee provided that no Option shall be
exercisable after, and each Option shall become void no later than, the tenth (10th ) anniversary of the
date of the grant of such option.
2.4
Payment of Option Exercise Price. The payment of the Exercise Price of an Option
granted under this Section 2 shall be subject to the following:
(a)
(b)
(c)
The Exercise Price may be paid by ordinary check or such other form of tender as the
Committee may specify.
If permitted by the Committee, the Exercise Price for Shares purchased upon the exercise
of an Option may be paid in part or in full by tendering Shares (by either actual delivery
of shares or by attestation, with such shares valued at Fair Market Value as of the date of
exercise). The Committee may refuse to accept payment in Shares if such payment
would result in an accounting charge to the Company.
The Committee may permit a Participant to elect to pay the Exercise Price upon the
exercise of an Option by irrevocably authorizing a third party to sell Shares acquired
upon exercise of the Option (or a sufficient portion of such shares) and remit to the
Company a sufficient portion of the sale proceeds to pay the entire Exercise Price and any
tax withholding resulting from such exercise.
Section 3
Stock Awards
3.1 Definition. A “Stock Award” is a grant of Shares or of a right to receive Shares.
3.2 Restrictions on Stock Awards. Each Stock Award shall be subject to such conditions,
restrictions and contingencies, if any, as the Committee shall determine.
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Section 4
Operation and Administration
4.1
Effective Dae and Duration. Subject to approval of the stockholders of the Company at
t
the Company’s 2008 annual meeting, the Plan shall be effective as of the date of such approval (the
Effective Date”) and shall remain in effect as long as any Awards under the Plan are outstanding;
“
provided, however, that no Award may be granted or otherwise made under the Plan on a date that is
more than ten (10) years from the Effective Date.
4.2
Shares Subject to Plan.
(a)
(i) Subject to the following provisions of this subsection 4.2, the maximum aggregate
number of Shares that may be delivered to Participants and their beneficiaries under the
Plan shall be One Million (1,000,000) Shares, provided that such maximum shall be
reduced by one and 58 hundredths (1.58) of a Share for each Share that is delivered
pursuant to a Stock Award. Shares issued under the Plan may be authorized and unissued
Shares or Shares reacquired by the Company.
(ii) Any Shares granted under the Plan that are forfeited because of the failure to meet a
Stock Award contingency or condition shall again be available for delivery pursuant to
new Awards granted under the Plan. To the extent any Shares covered by an Award are
not delivered to a Participant or a Participant’s beneficiary because the Award is forfeited
or canceled, such shares shall not be deemed to have been delivered for purposes of
determining the maximum number of Shares available for delivery under the Plan.
(iii) If the Exercise Price and/or tax withholding obligation for any Option or Award
granted under the Plan is satisfied by tendering Shares to the Company (by either actual
delivery or attestation) or by the Company withholding Shares, the number of Shares
issued on such exercise or Award without offset for the number of Shares so tendered
shall be deemed delivered for purposes of determining the maximum number of Shares
available for delivery under the Plan; if the Exercise Price and/or tax withholding
obligation for any Option or Award granted under the Plan is satisfied by the Company
withholding Shares, the full number of Shares for which such Option was exercised or
such Award was granted, without reduction for the number of Shares withheld, shall be
deemed delivered for purposes of determining the maximum number of Shares available
for delivery under the Plan.
Subject to adjustment under paragraph 4.2(c), the following additional limitation is
imposed under the Plan: the maximum aggregate number of Shares that may be awarded
to any one Participant in any single fiscal year of the Company, either as Shares subject to
Options, Stock Awards or any combination of Options and Stock Awards shall be Twenty-
five Thousand (25,000) Shares.
If the outstanding Shares are increased or decreased, or are changed into or exchanged
for cash, property, or a different number or kind of shares or securities, or if cash,
property or Shares or other securities are distributed in respect of such outstanding
Shares, in either case as a result of one or more mergers, reorganizations,
reclassifications, recapitalizations, stock splits, reverse stock splits, stock dividends,
dividends (other than regular, quarterly dividends), or other distributions, spin-offs or the
like, or if substantially all of the property and assets of the Company are sold, then, unless
(b)
(c)
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the terms of the transaction shall provide otherwise, appropriate adjustments shall be
made in the number and/or type of shares or securities for which Awards may thereafter
be granted under the Plan and for which Awards then outstanding under the Plan may
thereafter be exercised. Any such adjustments in outstanding Awards shall be made
without changing the aggregate Exercise Price applicable to the unexercised portions of
outstanding Options. The Committee shall make such adjustments to preserve the
benefits or potential benefits of the Plan and the Awards; such adjustments may include,
but shall not be limited to, adjustment of: (i) the number and kind of shares which may
be delivered under the Plan; (ii) the number and kind of shares subject to outstanding
Awards; (iii) the Exercise Price of outstanding Options; (iv) the limit specified in
subsection 4.2(b) above; and (v) any other adjustments that the Committee determines
to be equitable. No right to purchase or receive fractional shares shall result from any
adjustment in Options or Stock Awards pursuant to this paragraph 4.2(c). In case of any
such adjustment, Shares subject to the Option or Stock Award shall be rounded up to the
nearest whole Share.
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4.3
Limit on Distribution. Distribution of Shares or other amounts under the Plan shall be
subject to the following:
(a)
Notwithstanding any other provision of the Plan, the Company shall have no obligation to
deliver any Shares under the Plan or make any other distribution of benefits under the
Plan unless such delivery or distribution would comply with all applicable laws
(including, without limitation, the requirements of the Securities Act of 1933) and the
applicable requirements of any securities exchange or similar entity and the Committee
may impose such restrictions on any Shares acquired pursuant to the Plan as the
Committee may deem advisable, including, without limitation, restrictions under
applicable federal securities laws, under the requirements of any stock exchange or
market upon which such Shares are then listed and/or traded, and under any blue sky or
state securities laws applicable to such Shares. In the event that the Committee
determines in its discretion that the registration, listing or qualification of the Shares
issuable under the Plan on any securities exchange or under any applicable law or
governmental regulation is necessary as a condition to the issuance of such Shares under
an Option or Stock Award, such Option or Stock Award shall not be exercisable or
exercised in whole or in part unless such registration, listing and qualification, and any
necessary consents or approvals have been unconditionally obtained.
(b)
Distribution of Shares under the Plan may be effected on a non-certificated basis, to the
extent not prohibited by applicable law or the applicable rules of any stock exchange.
4.4 Tax Wthholding. Before distribution of Shares under the Plan, the Company may require
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the recipient to remit to the Company an amount sufficient to satisfy any federal, state or local tax
withholding requirements or, if agreed by the Committee, the Company may withhold from the Shares to
be delivered and/or otherwise issued Shares sufficient to satisfy all or a portion of such tax withholding
requirements. Whenever under the Plan payments are to be made in cash, such payments shall be in an
amount sufficient to satisfy any federal, state or local tax withholding requirements as well as the
amount of the cash payment otherwise required. Neither the Company nor any Related Company shall
be liable to a Participant or any other person as to any tax consequence expected, but not realized, by any
Participant or other person due to the receipt or exercise of any Award hereunder.
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4.5 Reserved Rights. Subject to the limitations of subsection 4.2 on the number of Shares
that may be delivered under the Plan, the Plan does not limit the right of the Company to use available
Shares, including authorized but un-issued Shares and treasury Shares, as the form of payment for
compensation, grants or rights earned or due under any other compensation plans or arrangements of
the Company or a Related Company, including the plans or arrangements of the Company or a Related
Company, including the plans or arrangements of the Company or a Related Company acquiring another
entity (or an interest in another entity). The Committee may provide in the Award Agreement that the
Shares to be issued upon exercise of an Option or receipt of a Stock Award shall be subject to such
further conditions, restrictions or agreements as the Committee in its discretion may specify, including
without limitation, conditions on vesting or transferability, and forfeiture and repurchase provisions.
4.6 Dividends and Dividend Equivalents. An Award may provide the Participant with the
right to receive dividends or dividend equivalent payments with respect to Shares which may be paid
currently or credited to an account for the Participant, and which may be settled in cash or Shares as
determined by the Committee. Any such settlements, and any such crediting of dividends or dividend
equivalents or reinvestment in Shares may be subject to such conditions, restrictions and contingencies
as the Committee shall establish, including reinvestment of such credited amounts in Stock equivalents.
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Settlements; Deferred Delvery. Awards may be settled through cash payments, the
delivery of Shares, the granting of replacement Awards, or combinations thereof, all subject to such
conditions, restrictions and contingencies as the Committee shall determine. The Committee may
establish provisions for the deferred delivery of Shares upon the exercise of an Option or receipt of a
Stock Award with the deferral evidenced by use of Stock Units equal in number to the number of Shares
Stock Unit” is a bookkeeping entry representing an amount equivalent
whose delivery is so deferred. A “
to the Fair Market Value of one Share. Stock Units represent an unfunded and unsecured obligation of
the Company except as otherwise provided by the Committee. Settlement of Stock Units upon
expiration of the deferral period shall be made in Shares or otherwise as determined by the Committee.
The amount of Shares, or other settlement medium, to be so distributed may be increased by an interest
factor or by dividend equivalents. Until a Stock Unit is settled, the number of Shares represented by a
Stock Unit shall be subject to adjustment pursuant to paragraph 4.2(c). Unless otherwise specified by the
Committee, any deferred delivery of Shares pursuant to an Award shall be settled by the delivery of Shares
no later than the 60th day following the date the person to whom such deferred delivery must be made
ceases to be a director of the Company.
4.8 Transferability. Unless otherwise provided by the Committee, any Option granted under
the Plan, and, until vested, any Stock Award granted under the Plan, shall by its terms be nontransferable by
the Participant otherwise than by will, the laws of descent and distribution, and shall be exercisable by, or
become vested in, during the Participant's lifetime, only the Participant.
4.9 Form and Time o Eecions. Unless otherwise specified herein, each election required or
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permitted to be made by any Participant or other person entitled to benefits under the Plan, and any
permitted modification, or revocation thereof, shall be in writing filed with the secretary of the Company
at such times, in such form, and subject to such restrictions and limitations, not inconsistent with the
terms of the Plan, as the Committee shall require.
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4.10 Award Agreements wth Company; Vesting and Acceleration of Vesting o Awards. At the
time of an Award to a Participant, the Committee may require the Participant to enter into an agreement
with the Company (an “Award Agreement”) in a form specified by the Committee, agreeing to the terms
and conditions of the Plan and to such additional terms and conditions, not inconsistent with the Plan,
as the Committee may, in its sole discretion, prescribe, including, but not limited to, conditions to the
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vesting or exercise of an Award, such as continued service as a director of the Company for a specified
period of time. The Committee may waive such conditions to and/or accelerate exerciability or vesting of
an Option or Stock Award, either automatically upon the occurrence of specified events (including in
connection with a change of control of the Company) or otherwise in its discretion.
4.11 Limitation of Implied Rights.
(a)
(b)
Neither a Participant nor any other person shall, by reason of the Plan or any Award
Agreement, acquire any right in or title to any assets, funds or property of the Company or
any Related Company whatsoever, including, without limitation, any specific funds,
assets, or other property which the Company or any Related Company, in their sole
discretion, may set aside in anticipation of a liability under the Plan. A Participant shall
have only a contractual right to the Shares or amounts, if any, payable under the Plan,
unsecured by the assets of the Company or of any Related Company. Nothing contained
in the Plan or any Award Agreement shall constitute a guarantee that the assets of such
companies shall be sufficient to pay any benefits to any person.
Neither the Plan nor any Award Agreement shall constitute a contract of employment,
and selection as a Participant will not confer upon any Participant any right to serve as a
director of the Company, nor any right or claim to any benefit under the Plan, unless such
right or claim has specifically accrued under the terms of the Plan or an Award. Except as
otherwise provided in the Plan, no Award under the Plan shall confer upon the holder
thereof any right as a stockholder of the Company prior to the date on which the
individual fulfills all conditions for receipt of such rights.
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4.12 Evdence. Evidence required of anyone under the Plan may be by certificate, affidavit,
document or other information which an officer of the Company acting on it considers pertinent and
reliable, and signed, made or presented by the proper party or parties.
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4.13 Action by Company. Any action required or permitted to be taken by the Company shall
be by resolution of the Board, or by action of one or more members of such Board (including a committee
of such board) who are duly authorized to act for such Board, or (except to the extent prohibited by
applicable law or applicable rules of any stock exchange) by a duly authorized officer of the Company.
4.14 Gender and Number. Where the context admits, words in any gender shall include any
other gender, words in the singular shall include the plural and the plural shall include the singular.
4.15 Non-exclusivity of the Plan. Neither the adoption of the Plan by the Board of Directors
of the Company nor the submission of the Plan to the stockholders of the Company for approval shall be
construed as creating any limitations on the power of such Board of Directors or a committee of such
Board to adopt such other incentive arrangements as it or they may deem desirable, including without
limitation, the granting of restricted stock, stock options or cash bonuses otherwise than under the Plan,
and such arrangements may be generally applicable or applicable only in specific cases.
Section 5
Committee
5.1
Admins aion. The authority to control and manage the operation and administration
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of the Plan shall be vested in the Board and/or a committee of the Board (either the Board or such
committee the “Committee” hereunder) in accordance with this Section 5.
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5.2
Selection of Committee. If consisting of less than the full membership of the Board, the
Committee shall be selected by the Board and shall consist of two or more members of the Board.
5.3
Powers of Committee. The authority to manage and control the operation and
administration of the Plan shall be vested in the Committee, subject to the following:
(a)
(b)
(c)
(d)
(e)
Subject to the provisions of the Plan, the Committee will have the authority and
discretion to select from amongst Eligible Individuals those persons who shall receive
Awards, to determine who is an Eligible Individual, to determine the time or times of
receipt, to determine the types of Awards and the number of Shares covered by the
Awards, to establish the terms, conditions, restrictions, and other provisions of such
Awards and Award Agreements, and (subject to the restrictions imposed by Section 6) to
cancel, amend or suspend Awards. In making such Award determinations, the Committee
may take into account such factors as the Committee deems relevant.
The Committee will have the authority and discretion to establish terms and conditions
of Awards as the Committee determines to be necessary or appropriate to conform to
applicable requirements or practices of jurisdictions outside the United States.
The Committee will have the authority and discretion to interpret the Plan, to establish,
amend and rescind any rules and regulations relating to the Plan, to determine the terms
and provisions of any Award Agreements, and to make all other determinations that may
be necessary or advisable for the administration of the Plan.
Interpretations of the Plan by the Committee and decisions made by the Committee
under the Plan are final and binding.
In controlling and managing the operation and administration of the Plan, the
Committee shall act by a majority of its then members, by meeting or by writing filed
without a meeting. The Committee shall maintain adequate records concerning the Plan
and concerning its proceedings and acts in such form and detail as the Committee may
decide.
5.4 Delegation by Committee. Except to the extent prohibited by applicable law or the
applicable rules of a stock exchange, the Committee may allocate all or any portion of its powers and
responsibilities to any one or more of its members and may delegate all or part of its responsibilities and
powers to any person or persons selected by it. Any such allocation or delegation may be revoked by the
Committee at any time.
5.5
Information to be furnished to Committee. The Company shall furnish the Committee
with such data and information as may be requested by the Committee to discharge its duties. The
records of the Company as to an Eligible Individual’s or a Participant’s service as a director shall be
conclusive on all persons unless determined to be incorrect by the Committee. Participants and other
persons entitled to benefits under the Plan must furnish the Committee such evidence, data or
information as the Committee considers necessary or desirable to carry out the terms of the Plan.
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Section 6
Amendment and Termination
6.1
Board’s Right to Amend or Terminate. Subject to the limitations set forth in this Section
6, the Board may, at any time, amend or terminate the Plan.
6.2 Amendments Requiring Stockholder Approval. Other than as provided in subsection 4.2
(c) (relating to certain adjustments to Shares), the approval of the Company’s stockholders shall be
required for any amendment which: (i) increases the maximum number of Shares that may be delivered
to Participants under the Plan set forth in subsection 4.2(a); (ii) increases the maximum limitation
contained in Section 4.2(b); (iii) decreases the Exercise Price of any Option below the minimum provided
in subsection 2.2; (iv) modifies or eliminates the prohibitions stated in the final two sentences of
subsection 2.2; or (v) increases the maximum term of any Option set forth in Section 2.3. Whenever the
approval of the Company’s stockholders is required pursuant to this subsection 6.2, such approval shall
be sufficient if obtained by a majority vote of those stockholders present or represented and actually
voting on the matter at a meeting of stockholders duly called, at which meeting a majority of the
outstanding shares actually vote on such matter.
6.3 Consent of Affected Participants. No amendment to or termination of the Plan shall, in
the absence of written consent to the change by the affected Participant (or, if the Participant is not then
living or if the Award has been transferred pursuant to a right of transfer contained in an Award
Agreement, the affected beneficiary or affected transferee, as the case may be), adversely affect the rights
of any Participant, beneficiary or permitted transferee under any Award granted under the Plan prior to
the date such amendment or termination is adopted by the Board.
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Section 7
Defined Terms
For the purposes of the Plan, the terms listed below shall be defined as follows:
Award. The term “Award” shall mean, individually and collectively, any award or benefit granted to any
Participant under the Plan, including, without limitation, the grant of Options and Stock Awards.
Award Ageement. The term “
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Award Agreement” is defined in subsection 4.10.
Board. The term “Board” shall mean the Board of Directors of the Company.
Code. The term “Code” shall mean the Internal Revenue Code of 1986, as amended. A reference to any
provision of the Code shall include reference to any successor provision of the Code or of any law that is
enacted to replace the Code.
Eligible Individual. The term “Eligible Individual” shall mean a Non-Employee Director. The term “Non-
Employee Director” means a member of the Board who is not at the time of an Award also an employee of
the Company or a Related Company.
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Fa Marke Vaue. For purposes of determining the “
rules shall apply:
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Fair Market Value” of a share of Stock, the following
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(i) If the Stock is at the time listed or admitted to trading on any stock exchange, then the Fair
Market Value shall be the higher of (a) the simple arithmetic mean of the lowest and the highest
reported sales prices of the Stock on the date in question on the principal exchange on which the
Stock is then listed or admitted to trading and (b) the closing price on such exchange on such
date. If no reported sale of Stock takes place on the date in question on the principal exchange,
then the reported closing asked price of the Stock on such date on the principal exchange shall be
determinative of Fair Market Value.
(ii) If the Stock is not at the time listed or admitted to trading on a stock exchange, the Fair
Market Value shall be the mean between the lowest reported bid price and the highest reported
asked price of the Stock on the date in question in the over-the-counter market, as such prices are
reported in a publication of general circulation selected by the Committee and regularly
reporting the market price of the Stock in such market.
(iii) If the Stock is not listed or admitted to trading on any stock exchange or traded in the over-
the-counter market, the Fair Market Value shall be as determined by the Committee, acting in
good faith.
Related Companies. The term “Related Company” means:
(i) any corporation, partnership, joint venture or other entity during any period in which such
corporation, partnership, joint venture or other entity owns, directly or indirectly, at least fifty
percent (50%) of the voting power of all classes of voting stock of the Company (or any
corporation, partnership, joint venture or other entity which is a successor to the Company);
(ii) any corporation, partnership, joint venture or other entity during any period in which the
Company (or any corporation, partnership, joint venture or other entity which is a successor to
the Company or any entity that is a Related Company by reason of clause (i) next above) owns,
directly or indirectly, at least a fifty percent (50%) voting or profits interest; or
(iii) any business venture in which the Company has a significant interest, as determined at the
discretion of the Committee.
Shares. The term “Shares” shall mean shares of the Common Stock of the Company, $.01 par value, as
presently constituted, subject to adjustment as provided in paragraph 4.2(c) above.
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Section 8
Successors
All obligations of the Company under the Plan with respect to Awards shall be binding on any
successor to the Company, whether the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation or otherwise, of all or substantially all of the business and/or assets of the
Company.
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CORPORATE INFORMATION
BOARD OF DIRECTORS
MICHAEL J. KOWALSKI
Chairman of the Board and
Chief Executive Officer,
Tiffany & Co.
(1995) 5
ROSE MARIE BRAVO
Vice Chairman,
Burberry Limited
(1997) 2, 3 and 4
WILLIAM R. CHANEY
Retired Chairman of the Board,
Tiffany & Co.
(1984) 5*
GARY E. COSTLEY
Co-founder and Managing Director,
C&G Capital and Management, LLC
(2007) 1, 2*, 3* and 4
ABBY F. KOHNSTAMM
President,
Abby F. Kohnstamm & Associates, Inc.
(2001) 1, 2, 3 and 4
CHARLES K. MARQUIS
Senior Advisor,
Investcorp International, Inc.
(1984) 1, 2, 3 and 4*
J. THOMAS PRESBY
Deputy Chairman and
Chief Operating Officer, (Retired)
Deloitte Touche Tohmatsu
(2003) 1* and 4
JAMES E. QUINN
President,
Tiffany & Co.
(1995) 5
WILLIAM A. SHUTZER
Senior Managing Director,
Evercore Partners
(1984)
EXECUTIVE OFFICERS
OF TIFFANY & CO.
MICHAEL J. KOWALSKI
Chairman of the Board and
Chief Executive Officer
JAMES E. QUINN
President
BETH O. CANAVAN
Executive Vice President
JAMES N. FERNANDEZ
Executive Vice President and
Chief Financial Officer
JON M. KING
Executive Vice President
VICTORIA BERGER-GROSS
Senior Vice President – Human Resources
PAMELA H. CLOUD
Senior Vice President – Merchandising
PATRICK B. DORSEY
Senior Vice President –
General Counsel and Secretary
PATRICK F. McGUINESS
Senior Vice President – Finance
CAROLINE D. NAGGIAR
Senior Vice President –
Chief Marketing Officer
JOHN S. PETTERSON
Senior Vice President – Operations
DESIGN DIRECTOR
JOHN R. LORING
(Indicates year joined Board)
Member of:
(1) Audit Committee
(2) Compensation Committee
(3) Stock Option Subcommittee
(4) Nominating/Corporate Governance Committee
(5) Dividend Committee
* Indicates Committee Chair
T I F F A N Y & C O .
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STOCKHOLDER INFORMATION
Company Headquarters
Tiffany & Co.
727 Fifth Avenue, New York, New York 10022
212-755-8000
Stock Exchange Listing
New York Stock Exchange, symbol TIF
Annual Meeting of Stockholders
Thursday, May 15, 2008, 10:00 a.m.
The St. Regis Hotel
Two East 55th Street, New York, New York
Website and Information Line
Tiffany’s annual and quarterly financial results, other information and reports filed with the Securities
and Exchange Commission are available on our website at http://investor.tiffany.com. Investors may also
access certain information on our Shareholder Information Line at 800-TIF-0110.
Investor and Financial Media Contact
Investors, securities analysts and the financial media should contact Mark L. Aaron, Vice President –
Investor Relations, at the Company’s headquarters by calling 212-230-5301 or by e-mail at
mark.aaron@tiffany.com.
Transfer Agent and Registrar
Please direct your communications regarding individual stock records, address changes or dividend
payments to:
Mellon Investor Services LLC
480 Washington Boulevard, Jersey City, New Jersey 07310-1900
888-778-1307 or 201-329-8660 or www.bnymellon.com/shareowner/isd
Direct Stock Purchases and Dividend Reinvestment
The Investor Services Program allows investors to purchase Tiffany & Co. Common Stock directly, rather
than through a stockbroker, and become a registered shareholder of the Company. The program’s
features also include dividend reinvestment. Mellon Bank, N.A. is the sponsor of the program, which
provides Tiffany & Co. shares through market purchases. For additional information, please contact
Mellon Investor Services LLC at 888-778-1307 or 201-329-8660 or www.bnymellon.com/shareowner/isd.
T I F F A N Y & C O .
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Dividend Payments
Quarterly dividends on Tiffany & Co. Common Stock, subject to declaration by the Company’s Board of
Directors, are typically paid in January, April, July and October.
Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP
300 Madison Avenue, New York, New York 10017
Catalogs
SELECTIONS® catalogs are automatically mailed to registered stockholders. To request a catalog, please
call 800-526-0649.
Stock Price and Dividend Information
Stock price at end of fiscal year
$ 39.79
$ 39.26
$ 37.70
$ 31.43
$ 39.64
2007
2006
2005
2004
2003
Quarter
First
Second
Third
Fourth
High
$ 50.00
56.79
57.34
53.66
Price Ranges of Tiffany & Co. Common Stock
2006
Close
$ 34.89
31.59
35.72
39.26
2007
Close
$ 47.69
48.25
54.18
39.79
Low
$ 34.77
30.11
29.63
34.71
High
$ 39.50
35.31
36.95
40.80
Low
$ 39.13
46.56
39.53
32.84
Cash Dividends
Per Share
2006
2007
$ 0.10
0.12
0.15
0.15
$ 0.08
0.10
0.10
0.10
On March 20, 2008, the closing price of Tiffany & Co. Common Stock was $ 38.60 and there were 11,814
holders of record of the Company’s Common Stock.
Certifications
Michael J. Kowalski and James N. Fernandez have provided certifications to the Securities and Exchange
Commission as required by Section 302 of the Sarbanes-Oxley Act of 2002. These certifications are
included as Exhibits 31.1, 31.2, 32.1 and 32.2 of the Company’s Form 10-K for the year ended January 31,
2008.
As required by the New York Stock Exchange (“NYSE”), on June 11, 2007, Michael J. Kowalski submitted
his annual certification to the NYSE that stated he was not aware of any violation by the Company of the
NYSE corporate governance listing standards.
Trademarks, Copyrights and Patents
THE NAMES TIFFANY, TIFFANY & CO., THE COLOR TIFFANY BLUE, THE TIFFANY BLUE BOX, LUCIDA
(PATENT NO. 5,970,744 et. al.), THE TIFFANY MARK, ATLAS, AND SELECTIONS ARE TRADEMARKS OF
TIFFANY AND COMPANY AND ITS AFFILIATES. IRIDESSE IS A TRADEMARK OF IRIDESSE, INC. LITTLE
SWITZERLAND IS A TRADEMARK OF LITTLE SWITZERLAND, INC. AND ITS AFFILIATES.
© 2008 TIFFANY & CO.
T I F F A N Y & C O .
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