Tiffany & Co. Annual Report 2014

Plain-text annual report

Tiﬀ any & Co. tif012453a_FC_BC Proof 4 BACK 2014 YEAR-END REPORT FRONT T I F F A N Y & C O . Y E A R - E N D R E P O R T 2 0 1 4 " 5 7 8 . 0 1 ANNUAL REPORT ON FORM 10 -K FOR THE YEAR ENDED JANUARY 31, 2015 NOTICE OF 2015 ANNUAL MEETING AND PROXY STATEMENT 8.125" 8.125" 0.25" 0.375" 0.25" 17.125" Cyan Magenta Yellow Black INSIDE FRONT COVER 2014 YEAR-END REPORT INSIDE BACK COVER Tiff any & Co. tif012453b_IFC_IBC Proof 6 " 5 7 8 . 0 1 FROM TOP: The Tiff any® Setting engagement ring, Tiff any & Co. Schlumberger® bracelet from the 2014 Blue Book Collection, Tiff any Keys square kaleidoscope key pendant, Tiff any Celebration® rings, aquamarine bow bracelet, Tiff any T square bangles, and yellow beryl briolette earrings from the 2014 Blue Book Collection. FROM TOP: Atlas® bangles, Paloma Picasso® Paloma’s Sugar Stacks rings, diamond bracelets, bracelet from the 2014 Blue Book Collection, Elsa Peretti® Diamonds by the Yard® necklace, Tiff any Harmony® engagement ring with matching band, and Tiff any Enchant® round pendant. 8.125" 0.25" 0.375" 0.25" 8.125" Cyan Magenta Yellow Black 727 FIFTH A V E N U E N E W Y O R K N E W Y O R K 10022 212 755 8000 M I C H A E L J . K O W A L S K I C H A I R M A N O F T H E B O A R D Dear Shareholder: April 1, 2015 You are cordially invited to attend the Annual Meeting of Shareholders of Tiffany & Co. on Thursday, May 28, 2015 at 9:30 a.m. in the Great Ballroom of the W New York – Union Square hotel, 201 Park Avenue South (at 17th Street), New York, New York. To attend the meeting, you will need to register online. To do so, please follow the instructions in the Proxy Statement on page PS-9. When you arrive at the meeting, you will be asked to provide your registration conﬁrmation and photo identiﬁcation. We appreciate your cooperation. Your participation in the affairs of Tiffany & Co. is important. Therefore, please vote your shares whether or not you plan to attend the meeting. You can vote by accessing the Internet site to vote electronically, by completing and returning the proxy card by mail or by calling the number listed on the card and following the prompts. _______________________ I am pleased to report to you that ﬁscal 2014 was another year of solid performance for Tiffany & Co. While strong growth in worldwide sales and net earnings during most of the year was partly offset by softer results in the fourth quarter, Tiffany’s net sales and earnings for the full year reached record levels. Tiffany’s broad-based success reﬂected our consistent focus on long-term strategies: adding exciting new designs to complement our core product offerings, expanding the reach of our marketing communications, opening stores in key markets, and further enhancing the in-store experience for our customers. We remain committed to that long-term approach. In the year ended January 31, 2015, worldwide net sales increased 5% to $4.25 billion. On a constant- exchange-rate basis that excludes the effect of translating foreign-currency-denominated sales into U.S. dollars, worldwide net sales rose 7% and comparable store sales rose 4%. Performance across our regions was healthy for the full year, ranging from total sales growth in local currencies of 10% in Asia- Paciﬁc, to 6% in both the Americas and Europe, to 4% in Japan. Complementing the sales growth, our operating margin, excluding certain charges recorded in 2013, rose 1.3 points to 21.0% as gross margin beneﬁted from favorable product input costs, selective price increases and a favorable shift in sales mix. During the year, we took advantage of market conditions and redeemed $400 million of long-term debt using proceeds from the issuance of $550 million of debt at considerably lower interest rates, which also extended maturities. This resulted in our recording a debt-extinguishment charge, after tax, of $61 million, or $0.47 per diluted share. Net earnings were $484 million, or $3.73 per diluted share. Excluding the charge in 2014 and charges recorded in 2013, net earnings rose 13%, which exceeded our original expectation for the year. Tiffany has a solid balance sheet to support our current business initiatives and anticipated expansion. At year-end, total long-term and short-term debt represented 39% of stockholders’ equity. We also continued to return capital to stockholders by increasing the quarterly dividend 12% in 2014, representing the 13th increase in the past 12 years, and by spending $27 million to repurchase 301,000 shares of our Common Stock. From a product perspective, we saw growth in all jewelry categories in 2014. We were especially pleased with customer reaction to the launch of the TIFFANY T jewelry collection in the third quarter, representing a modern design targeted to the self-purchaser. And our new interpretation of the ATLAS® collection, introduced in late 2013, continued to broaden its appeal among our global customer base. As you know, effective April 1, I have retired from my position as Chief Executive Ofﬁcer. In my more than 30 years at Tiffany, and as CEO for the past 16 years, I have seen our Company make extraordinary strides to become a truly global luxury brand. I take great pride in that, as we successfully grew our sales, store base and earnings, we also maintained an uncompromising focus on the integrity of the TIFFANY & CO. brand and, most importantly, demonstrated through our actions that a corporation must earn its social license to operate by acting responsibly toward the communities it serves and the global environment. I have great conﬁdence in the leadership of our Company, led by Frederic Cumenal, and look forward to continuing to serve Tiffany in my new role as non-executive Chairman of the Board. We appreciate your interest and support. Sincerely, 727 FIFTH A V E N U E N E W Y O R K N E W Y O R K 10022 212 755 8000 F R E D E R I C C U M E N A L C H I E F E X E C U T I V E O F F I C E R Dear Shareholder: April 1, 2015 I am both honored and humbled to take on the role of Chief Executive Ofﬁcer. It’s been a privilege to work closely with Mike Kowalski over the past four years. I congratulate him on the extraordinary growth and success of our Company during his tenure as CEO. I wish him all the best and am grateful that he will continue as Chairman of the Board. As I look forward, I am excited by the great opportunities ahead for Tiffany. We have a clear vision of inspiring customers around the world through a greater focus on Tiffany’s extraordinary designs, and outstanding customer experiences both in-store and online. Through strategic enhancements to our store base, manufacturing and marketing, we aim to continue to improve our proﬁtability and generate strong returns for our shareholders. Tiffany has an increasingly strong global presence. We ﬁnished ﬁscal 2014 operating 295 stores in 25 countries. During the year, we opened eight stores and closed two, highlighted by the additions of a major store on the Champs-Élysées in Paris and our ﬁrst Company-operated store in Moscow, as well as new stores in the United States, Japan, Australia and Mexico. Our strategy also focuses on enhancing the quality of our existing store base through renovations, relocations and selective store closings. Our Company enters ﬁscal 2015 with exciting plans for new products and stores. However, our ﬁnancial outlook incorporates caution tied to both uncertain global economic conditions and the potential that a strong U.S. dollar will have a meaningful negative effect on the translation of our results outside the U.S. into U.S. dollars and also on foreign tourist spending in the U.S. Nevertheless, our management team remains focused on Tiffany’s long-term opportunities to grow sales and earnings. Beyond continuing to enhance our global presence through store development, we will be focusing on important product introductions, compelling and innovative marketing communications, and delivering extraordinary customer experiences. I believe more than ever that the TIFFANY & CO. brand and our product offerings are ideally positioned in a world where consumers increasingly value brand heritage, great design, exceptional quality and craftsmanship, and exemplary customer service. I look forward to updating you on our progress. Yours truly, FINANCIAL HIGHLIGHTS (in thousands, except percentages, per share amounts and stores) 2014 2013 Net sales Increase from prior year Comparable store sales increase from prior year on a constant-exchange-rate basis * Net earnings Increase (decrease) from prior year As a percentage of net sales Per diluted share Net earnings, as adjusted * Increase from prior year As a percentage of net sales * Per diluted share * Weighted-average number of diluted common shares Free cash inflow (outflow) * Total debt-to-equity ratio Cash dividends paid per share Company-operated TIFFANY & CO. stores $ 4,249,913 $ 4,031,130 5% 4% 6 % 6 % $ 484,179 $ 181,369 167% 11% 3.73 545,135 13% 13% 4.20 129,918 367,723 39% 1.48 295 $ $ $ $ $ (56)% 4 % 1.41 480,557 15 % 12 % 3.73 128,867 (66,800) 37 % 1.34 289 $ $ $ $ $ All references to the years relate to fiscal years which ended on January 31 of the following calendar year. See "Item 6. Selected Financial Data" for certain expenses that affected 2014 and 2013 earnings. * See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Measures" for a reconciliation of GAAP to Non-GAAP measures. Tiffany & Co. Year-End Report 2014 Table of Contents Annual Report on Form 10-K for the fiscal year ended January 31, 2015 PART I Page Item 1. Business................................................................................................................... K-3 Item 1A. Risk Factors.............................................................................................................. K-13 Item 1B. Unresolved Staff Comments ....................................................................................... K-19 Item 2. Item 3. Item 4. Properties ................................................................................................................. K-19 Legal Proceedings ..................................................................................................... K-20 Mine Safety Disclosures ............................................................................................. K-22 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ................................................................................. K-23 Item 6. Item 7. Selected Financial Data ............................................................................................. K-26 Management's Discussion and Analysis of Financial Condition and Results of Operations.............................................................................................. K-28 Item 7A. Quantitative and Qualitative Disclosures about Market Risk ........................................... K-48 Item 8. Item 9. Financial Statements and Supplementary Data............................................................. K-49 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure............................................................................................. K-97 Item 9A. Controls and Procedures............................................................................................. K-97 Item 9B. Other Information ...................................................................................................... K-98 PART III Item 10. Directors, Executive Officers and Corporate Governance ................................................ K-99 Item 11. Item 12. Executive Compensation ............................................................................................ K-99 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters............................................................................................... K-99 Item 13. Certain Relationships and Related Transactions, and Director Independence................... K-99 Item 14. Principal Accounting Fees and Services ....................................................................... K-99 Item 15. Exhibits, Financial Statement Schedules ..................................................................... K-100 PART IV Tiffany & Co. Year-End Report 2014 Table of Contents Proxy Statement for the 2015 Annual Meeting of Shareholders Page Proxy Summary.............................................................................................................................. PS - 2 Questions You May Have Regarding This Proxy Statement.................................................................. PS - 6 Ownership of the Company ............................................................................................................. PS - 12 Shareholders Who Own at Least Five Percent of the Company ...................................................... PS - 12 Ownership by Directors, Director Nominees and Executive Officers ............................................... PS - 13 Section 16(a) Beneficial Ownership Reporting Compliance........................................................... PS - 15 Executive Officers of the Company................................................................................................... PS - 16 Item 1. Election of the Board.......................................................................................................... PS - 18 Board of Directors and Corporate Governance ................................................................................... PS - 22 Corporate Governance Highlights ............................................................................................... PS - 22 The Board, In General .............................................................................................................. PS - 22 The Role of the Board in Corporate Governance .......................................................................... PS - 23 Board Leadership Structure ...................................................................................................... PS - 23 Executive Sessions of Non-management Directors/Presiding Non-management Director .................. PS - 24 Communication with Non-management Directors ........................................................................ PS - 24 Independent Directors Constitute a Majority of the Board............................................................. PS - 24 Board and Committee Meetings and Attendance during Fiscal 2014............................................. PS - 24 Committees of the Board .......................................................................................................... PS - 25 Board Refreshment and Self-Evaluation ..................................................................................... PS - 29 Resignation on Job Change or New Directorship .......................................................................... PS - 30 Management Succession Planning............................................................................................. PS - 30 Board Role in Risk Oversight..................................................................................................... PS - 30 Business Conduct Policy and Code of Ethics............................................................................... PS - 31 Political Spending.................................................................................................................... PS - 31 Commitment to Corporate Social Responsibility .......................................................................... PS - 32 Limitation on Adoption of Poison Pill Plans ................................................................................ PS - 32 Transactions with Related Persons............................................................................................. PS - 32 Contributions to Director-Affiliated Charities ............................................................................... PS - 33 Item 2. Ratification of the Selection of the Independent Registered Public Accounting Firm to Audit our Fiscal 2015 Financial Statements........................................................................................ PS - 34 Report of the Audit Committee .................................................................................................. PS - 35 Relationship with Independent Registered Public Accounting Firm ............................................... PS - 36 Fees and Services of PricewaterhouseCoopers LLP ...................................................................... PS - 36 Tiffany & Co. Year-End Report 2014 Table of Contents Item 3. Approval, on an Advisory Basis, of the Compensation of the Company's Named Executive Officers .................................................................................................................... Page PS - 37 Compensation Discussion and Analysis ...................................................................................... PS - 39 Report of the Compensation Committee ..................................................................................... PS - 65 Summary Compensation Table................................................................................................... PS - 66 Grants of Plan-Based Awards .................................................................................................... PS - 70 Discussion of Summary Compensation Table and Grants of Plan-Based Awards.............................. PS - 73 Outstanding Equity Awards at Fiscal Year-End ............................................................................ PS - 80 Option Exercises and Stock Vested ............................................................................................ PS - 82 Pension Benefits Table............................................................................................................. PS - 83 Nonqualified Deferred Compensation Table ................................................................................ PS - 88 Potential Payments on Termination or Change in Control.............................................................. PS - 90 Director Compensation Table..................................................................................................... PS - 94 Equity Compensation Plan Information....................................................................................... PS - 96 Other Matters ................................................................................................................................ PS - 97 Shareholder Proposals for Inclusion in the Proxy Statement for the 2016 Annual Meeting .............. PS - 97 Other Proposals ....................................................................................................................... PS - 97 Householding .......................................................................................................................... PS - 97 Reminder to Vote ..................................................................................................................... PS - 97 Appendix I. Non-GAAP Measures..................................................................................................... PS - 98 Board of Directors and Executive Officers of Tiffany & Co................................................................... Shareholder Information ................................................................................................................. C-1 C-2 Corporate Information (This page intentionally left blank.) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended January 31, 2015 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 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, NY (Address of principal executive offices) 10022 (Zip Code) K - 0 1 M R O F 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 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 No 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 No 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 No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) 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 Form10-K or any amendment to this Form10-K. 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 the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No As of July 31, 2014, the aggregate market value of the registrant's voting and non-voting stock held by non-affiliates of the registrant was approximately $12,523,379,301 using the closing sales price on this day of $97.61. See Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. As of March 16, 2015, the registrant had outstanding 129,151,634 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, 2015 (Part III). SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS The statements in this Annual Report on Form 10-K, including documents incorporated herein by reference, that refer to plans and expectations for future periods are forward-looking statements that involve a number of risks and uncertainties. Words such as 'expects,' 'anticipates,' 'forecasts,' 'plans,' 'believes,' 'continues,' 'may,' 'will,' and variations of such words and similar expressions are intended to identify such forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements we make regarding the Company's objectives, expectations and beliefs with respect to store openings and closings, product introductions, sales, sales growth, retail prices, gross margin, expenses, operating margin, effective income tax rate, net earnings and net earnings per share, inventories, capital expenditures, cash flow, liquidity, currency translation and growth opportunities. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Company's control, which could cause the Company's actual results to differ materially from those indicated in these forward-looking statements. Such factors include, but are not limited to, risks from global economic conditions, decreases in consumer confidence, the Company's significant operations outside of the United States, regional instability and conflict that could disrupt tourist travel and local consumer spending, weakening foreign currencies, changes in the Company's product or geographic sales mix and changes in costs or reduced supply availability of diamonds and precious metals. Please also see the Company's risk factors, as they may be amended from time to time, set forth in the Company's filings with the Securities and Exchange Commission, including in this Annual Report, particularly under "Item 1A. Risk Factors" for a discussion of these and other factors that could cause actual results to differ materially. The Company undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances, except as required by applicable law or regulation. F O R M 1 0 - K TIFFANY & CO. K-2 PART I Item 1. Business. GENERAL HISTORY OF BUSINESS Tiffany & Co. (the "Registrant") is a holding company that operates through its subsidiary companies (collectively, the "Company"). The Registrant's principal subsidiary is Tiffany and Company ("Tiffany"). Charles Lewis Tiffany founded Tiffany's business in 1837. He incorporated Tiffany in New York in 1868. The Registrant acquired Tiffany in 1984 and completed the initial public offering of the Registrant's Common Stock in 1987. The Registrant, through its subsidiaries, sells jewelry and other items that it manufactures or has made by others to its specifications. FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS The Company's segment information for the fiscal years ended January 31, 2015, 2014 and 2013 is reported in "Item 8. Financial Statements and Supplementary Data - Note P - Segment Information." All references to years relate to fiscal years that end on January 31 of the following calendar year. NARRATIVE DESCRIPTION OF BUSINESS K - 0 1 M R O F MAINTENANCE OF THE TIFFANY & CO. BRAND The TIFFANY & CO. brand (the "Brand") is the single most important asset of Tiffany and, indirectly, of the Company. The strength of the Brand goes beyond trademark rights (see "TRADEMARKS" below) and is derived from consumer perceptions of the Brand. Management monitors the strength of the Brand through focus groups and survey research. Management believes that consumers associate the Brand 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. Tiffany's business plan includes expenses to maintain the strength of the Brand, such as the following: • Maintaining its position within the high-end of the jewelry market requires Tiffany to invest significantly in diamond and gemstone inventory and to accept reduced overall gross margins; it also causes some consumers to view Tiffany as beyond their price range; • To provide excellent service, stores must be well staffed with knowledgeable professionals; • Elegant stores in the best "high street" and luxury mall locations are more expensive and difficult to secure and maintain, but reinforce the Brand's luxury connotations through association with other luxury brands; • In-store display practices enable Tiffany to showcase fine jewelry in a manner consistent with the Brand's positioning but require sufficient space; • The classic positioning of much of Tiffany's product line supports the Brand, but limits the display space that can be allocated to new product introductions; • Tiffany's packaging supports consumer expectations with respect to the Brand but is expensive; and TIFFANY & CO. K-3 • A significant amount of advertising is required to both reinforce the Brand's association with luxury, sophistication, style and romance, as well as to market specific products. All of the foregoing require that management make tradeoffs between business initiatives that might generate incremental sales and earnings and Brand maintenance objectives. This is a dynamic process. To the extent that management deems that product, advertising 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 earnings is truly worth the positive effect on the Brand. At times, management has determined, and may in the future determine, that the strength of the Brand warranted, or that it will permit, more aggressive and profitable distribution and marketing initiatives. REPORTABLE SEGMENTS Americas F O R M 1 0 - K Sales in the Americas were 48% of worldwide net sales in 2014, while sales in the U.S. represented 88% of net sales in the Americas. Retail Sales. Retail sales in the Americas are transacted in 122 Company-operated TIFFANY & CO. stores in (number of stores at January 31, 2015 included in parentheses): the U.S. (95), Canada (11), Mexico (11) and Brazil (5). Included within these totals are 12 Company-operated stores located within various department stores in Canada and Mexico. Internet and Catalog Sales. The Company distributes a selection of its products in the U.S. and Canada through the websites at www.tiffany.com and www.tiffany.ca. To a lesser extent, sales are also generated through catalogs that the Company distributes to its proprietary list of customers in the U.S. and Canada. Business-to-Business Sales. Sales executives call on business clients, primarily in the U.S., selling products drawn from the retail product line and items specially developed for the business market, including trophies and items designed for the particular customer. Purchases may also be made through the Company's website at www.tiffany.com/business. Price allowances are given to business account holders for certain purchases. Wholesale Distribution. Selected TIFFANY & CO. merchandise is sold to independent distributors for resale in markets in the Central/South American and Caribbean regions. Such sales represent less than 1% of worldwide net sales. Asia-Pacific Sales in Asia-Pacific represented 24% of worldwide net sales in 2014, while sales in Greater China represented more than half of Asia-Pacific's net sales. Retail Sales. Retail sales in Asia-Pacific are transacted in 73 Company-operated TIFFANY & CO. stores in (number of stores at January 31, 2015 included in parentheses): China (26), Korea (14), Hong Kong (9), Taiwan (8), Australia (7), Singapore (5), Macau (2) and Malaysia (2). Included within these totals are 24 Company-operated stores located within various department stores. Internet Sales. The Company offers a selection of TIFFANY & CO. merchandise for purchase in Australia through its website at www.tiffany.com.au. TIFFANY & CO. K-4 Wholesale Distribution. Selected TIFFANY & CO. merchandise is sold to independent distributors for resale in certain markets. Such sales represent less than 1% of worldwide net sales. Sales in Japan represented 13% of worldwide net sales in 2014. Japan Retail Sales. Retail sales in Japan are transacted in 56 Company-operated TIFFANY & CO. stores. Included within this total are 51 stores located within department stores, generating 75% of Japan's net sales. There are four large department store groups in Japan. The Company operates TIFFANY & CO. stores in locations controlled by these groups as follows (number of locations at January 31, 2015 included in parentheses): Isetan Mitsukoshi (14), J. Front Retailing Co. (Daimaru and Matsuzakaya department stores) (9), Takashimaya (9) and Seven & i Holding Co., Ltd. (Sogo and Seibu department stores) (5). The Company also operates 14 stores in other department stores. Internet Sales. The Company offers a selection of TIFFANY & CO. merchandise for purchase in Japan through its website at www.tiffany.co.jp. Business-to-Business Sales. Products drawn from the retail product line and items specially developed are sold to business customers. Wholesale Distribution. Selected TIFFANY & CO. merchandise is sold to independent distributors for resale in Japan. Such sales represent less than 1% of worldwide net sales. K - 0 1 M R O F Europe Sales in Europe represented 12% of worldwide net sales in 2014, while sales in the United Kingdom ("U.K.") represented more than 40% of European net sales. Retail Sales. Retail sales in Europe are transacted in 38 Company-operated TIFFANY & CO. stores in (number of stores at January 31, 2015 included in parentheses): the U.K. (10), Germany (7), Italy (7), France (5), Spain (2), Switzerland (2), Austria (1), Belgium (1), the Czech Republic (1), Ireland (1) and the Netherlands (1). Included within these totals are seven Company-operated stores located within various department stores. Internet Sales. The Company offers a selection of TIFFANY & CO. merchandise for purchase in the U.K., Austria, Belgium, France, Germany, Ireland, Italy, the Netherlands and Spain through its websites, which are accessible through www.tiffany.com. Other Other consists of all non-reportable segments, including: (i) retail sales and wholesale distribution in the Emerging Markets region (which represented approximately 75% of Other net sales in 2014); (ii) wholesale sales of diamonds; and (iii) licensing agreements. Emerging Markets region. Retail sales are transacted in five Company-operated TIFFANY & CO. stores in the United Arab Emirates ("U.A.E.") and, beginning in February 2014, one Company-operated store in Russia. Additionally, selected TIFFANY & CO. merchandise is sold to independent distributors for resale in certain emerging markets (primarily in the Middle East and, through January 2014, in Russia). Such wholesale sales represent less than 1% of worldwide net sales. Wholesale Sales of Diamonds. The Company regularly purchases parcels of rough diamonds for polishing and further processing. Some rough diamonds so purchased, and a small percentage of diamonds so polished, are found not to be suitable for the Company's needs; those diamonds are sold to third parties. TIFFANY & CO. K-5 Management's objective from such sales is to recoup its original costs, thereby earning minimal, if any, gross margin on those transactions. Licensing Agreement. The Company receives earnings from a licensing agreement with Luxottica Group for the distribution of TIFFANY & CO. brand eyewear. The earnings received from this licensing agreement represented less than 1% of worldwide net sales in 2014, 2013 and 2012. Expansion of Operations 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 Brand, but believes that there are a significant number of opportunities remaining in new and existing markets that will meet the requirements for a TIFFANY & CO. location in the future. The following chart details the number of TIFFANY & CO. retail locations operated by the Company since 2004: F O R M 1 0 - K Year: 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Americas U.S. Canada & Latin America Asia-Pacific Japan Europe Emerging Markets 55 59 64 70 76 79 84 87 91 94 95 7 7 9 10 10 12 12 15 24 27 27 24 25 28 34 39 45 52 58 66 72 73 53 50 52 53 57 57 56 55 55 54 56 12 13 14 17 24 27 29 32 34 37 38 — — — — — — — — 5 5 6 Total 151 154 167 184 206 220 233 247 275 289 295 As part of its long-term strategy to expand its store base, management plans to add approximately 12 - 15, net Company-operated stores in 2015, with the majority of expansion planned in Asia-Pacific and the balance in the Americas and Europe. As noted above, the Company currently operates e-commerce enabled websites in 13 countries as well as informational websites in several additional countries. Sales transacted on those websites accounted for 6% of worldwide net sales in 2014, 2013 and 2012. The Company invests in ongoing website enhancements and intends to evaluate expanding its e-commerce sites to additional countries in the future. Products The Company's principal product category is jewelry, which represented 92%, 92% and 90% of worldwide net sales in 2014, 2013 and 2012. The Company offers an extensive selection of TIFFANY & CO. brand jewelry at a wide range of prices. Designs are developed by employees, suppliers, independent designers and independent "named" designers (see "MATERIAL DESIGNER LICENSE" below). TIFFANY & CO. K-6 The Company also sells timepieces, leather goods, sterling silver goods (other than jewelry), china, crystal, stationery, fragrances and accessories, which represented, in total, 7%, 7% and 8% of worldwide net sales in 2014, 2013 and 2012. The remaining 1% - 2% of worldwide net sales were attributable to wholesale sales of diamonds and earnings received from a third-party licensing agreement. Sales by Reportable Segment of TIFFANY & CO. Jewelry by Category 2014 Statement, fine & solitaire jewelry a Engagement jewelry & wedding bands b Fashion jewelry c 2013 Statement, fine & solitaire jewelry a Engagement jewelry & wedding bands b Fashion jewelry c 2012 Statement, fine & solitaire jewelry a Engagement jewelry & wedding bands b Fashion jewelry c % of total Americas Sales % of total Asia-Pacific Sales % of total Japan Sales % of total Europe Sales % of total Reportable Segment Sales 23% 23% 44% 23% 23% 44% 20% 23% 46% 24% 38% 37% 27% 36% 36% 24% 36% 37% 20% 46% 27% 20% 47% 26% 17% 48% 28% 17% 23% 56% 19% 25% 53% 16% 25% 54% K - 0 1 M R O F 22% 30% 41% 23% 30% 40% 20% 30% 42% a) This category includes statement, fine and solitaire jewelry (other than engagement jewelry). Most sales in this category are of items containing diamonds, other gemstones or both. Most jewelry in this category is constructed of platinum, although gold was used as the primary metal in approximately 13% of sales in 2014. The average price of merchandise sold in 2014, 2013 and 2012 in this category was approximately $5,400, $5,300 and $5,200 for total reportable segments. b) This category includes engagement rings and wedding bands marketed to brides and grooms. Most sales in this category are of items containing diamonds. Most jewelry in this category is constructed of platinum, although gold was used as the primary metal in approximately 8% of sales in 2014. The average price of merchandise sold in 2014, 2013 and 2012 in this category was approximately $3,600, $3,600 and $3,500 for total reportable segments. c) This category generally consists of non-gemstone, sterling silver (approximately 54% of the category in 2014), gold or RUBEDO® metal jewelry, although small gemstones are used as accents in some pieces. RUBEDO® metal is an alloy composed of copper, gold and silver which was developed by the Company. The average price of merchandise sold in 2014, 2013 and 2012 in this category was approximately $335, $300 and $295 for total reportable segments. Certain reclassifications have been made to the prior years' classes of similar products to conform with management's current internal analysis of product sales. TIFFANY & CO. K-7 ADVERTISING, MARKETING, PUBLIC AND MEDIA RELATIONS The Company regularly advertises in newspapers, magazines and through digital media. Public and media relations activities are also significant to the Company's business. The Company engages in a program of media activities and marketing events to maintain consumer awareness of the Brand and TIFFANY & CO. products. It also publishes its well-known Blue Book to showcase its high-end jewelry. In 2014, 2013 and 2012, the Company spent $283,648,000, $253,164,000 and $250,297,000, representing 6.7%, 6.3% and 6.6% of worldwide net sales in those respective years, on advertising, marketing and public and media relations, which include costs for media, production, catalogs, Internet, visual merchandising (in- store and window displays), marketing events and other related items. In addition, management believes that the Brand is enhanced by a program of charitable sponsorships, grants and merchandise donations. The Company also makes donations to The Tiffany & Co. Foundation, a private foundation organized to support 501(c)(3) charitable organizations. The efforts of this Foundation are primarily focused on environmental conservation and urban parks. F O R M 1 0 - K The designations TIFFANY ® and TIFFANY & CO.® are the principal trademarks of Tiffany, and also serve as tradenames. Tiffany has obtained and is the proprietor of trademark registrations for TIFFANY and TIFFANY & CO., as well as the TIFFANY BLUE BOX ® and the color TIFFANY BLUE® for a variety of product categories and services in the U.S. and in other countries. TRADEMARKS 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. Tiffany has been generally successful in such actions and management considers that the Company's worldwide trademark rights in TIFFANY and TIFFANY & CO. are strong. However, use of the designation TIFFANY by third parties on related or 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 produce 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 because it is not possible or cost-effective to eradicate the problem. 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, on the Internet and in various markets by street vendors and small retailers. Tiffany has responded to Internet counterfeiting by engaging investigators and counsel to monitor the Internet and taking various actions to stop infringing activity, including sending cease and desist letters, initiating civil proceedings and participating in joint actions and anti-counterfeiting programs with other like-minded third party rights holders. 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 of use in every country of the world; for example, third parties have registered the name TIFFANY in the U.S. 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 food, 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 legal action. TIFFANY & CO. K-8 MATERIAL DESIGNER LICENSE Since 1974, Tiffany has been the sole licensee for the intellectual property rights necessary to make and sell jewelry and other products designed by Elsa Peretti and bearing her trademarks. The designs of Ms. Peretti accounted for 8%, 9% and 10% of the Company's worldwide net sales in 2014, 2013 and 2012. In December 2012, Tiffany entered into an Amended and Restated Agreement (the "Peretti Agreement") with Ms. Peretti. Pursuant to the Peretti Agreement, which largely reflects the long-standing rights and marketing and royalty obligations of the parties, Ms. Peretti granted Tiffany an exclusive license, in all of the countries in which Peretti-designed jewelry and products are currently sold, to make, have made, advertise and sell these items. Ms. Peretti continues to retain ownership of the copyrights for her designs and her trademarks and remains entitled to exercise approval and consultation rights with respect to important aspects of the promotion, display, manufacture and merchandising of the products made in accordance with her designs. Under and in accordance with the terms set forth in the Peretti Agreement, Tiffany is required to display the licensed products in stores, to devote a portion of its advertising budget to the promotion of the licensed products, to pay royalties to Ms. Peretti for the licensed products sold, to maintain total on-hand and on-order inventory of non-jewelry licensed products (such as tabletop products) at approximately $8,000,000 and to take certain actions to protect the use and registration of Ms. Peretti's copyrights and trademarks. The Peretti Agreement has a term of 20 years and is binding upon Ms. Peretti, her heirs, estate, trustees and permitted assignees. During the term of the Peretti Agreement, Ms. Peretti may not sell, lease or otherwise dispose of her copyrights and trademarks unless the acquiring party expressly agrees with Tiffany to be bound by the provisions of the Peretti Agreement. The Peretti Agreement is terminable by Ms. Peretti only in the event of a material breach by Tiffany (subject to a cure period) or upon a change of control of Tiffany or the Company. It is terminable by Tiffany only in the event of a material breach by Ms. Peretti or following an attempt by Ms. Peretti to revoke the exclusive license (subject, in each case, to a cure period). K - 0 1 M R O F MERCHANDISE PURCHASING, MANUFACTURING AND RAW MATERIALS The Company primarily manufactures jewelry in New York, Rhode Island, and Kentucky, and silver hollowware in Rhode Island. In 2014, the Company also established jewelry manufacturing operations in Thailand and jewelry polishing operations in the Dominican Republic. The Company processes, cuts and polishes diamonds at other facilities outside the U.S. In total, these internal manufacturing facilities produce more than half of the merchandise sold by the Company. The balance, including almost all non- jewelry items, is purchased from third-parties. The Company may increase the percentage of internally- manufactured jewelry in the future, but management does not expect that the Company will ever manufacture all of its needs. Factors considered by management in its decision to use third-party manufacturers include product quality, gross margin, access to or mastery of various jewelry-making skills and technology, support for alternative capacity and the cost of capital investments. Rough and Polished Diamonds. Of the world's largest diamond producing countries, the vast majority of diamonds purchased by the Company originate from Australia, Botswana, Canada, Namibia, Russia and Sierra Leone. The Company has established diamond processing operations that purchase, sort, cut and/or polish rough diamonds for its use. The Company has such operations in Belgium, Botswana, Mauritius, Namibia and Vietnam. The Company also established such operations in Cambodia in 2014. The Company's operations in Botswana and Namibia allow it to access rough diamond allocations reserved for local manufacturers as operations in those countries are conducted through companies in which local third-parties own minority, non-controlling interests. The Company maintains a relationship and has an arrangement with these local third-parties in each of those countries; however, if circumstances warrant, the Company could seek to replace its existing local partners. TIFFANY & CO. K-9 F O R M 1 0 - K In order to acquire rough diamonds, the Company must purchase mixed assortments of rough diamonds. It is thus necessary to knowingly purchase some rough diamonds that cannot be cut and polished to meet the Company's quality standards and that must be sold to third-parties; such sales are reported in the Other non-reportable segment. To make such sales, the Company charges a market price and is, therefore, unable to earn a significant profit, if any, above its original cost. Sales of rough diamonds in the Other non-reportable segment have had and are expected to continue to have the effect of modestly reducing the Company's overall gross margins. The Company, from time to time, secures supplies of rough diamonds by agreeing to purchase a defined portion of a mine's output at the market price prevailing at the time of production. Under such agreements, management anticipates that it will purchase approximately $160,000,000 of rough diamonds in 2015. However, the Company will also purchase rough diamonds from other suppliers, although it has no contractual obligations to do so. In certain instances, the Company has provided loans to, or made equity investments in, mining projects in order to secure diamond supplies. In recent years, approximately 65% - 75% (by dollar value) of the polished diamonds used in jewelry have been produced from rough diamonds that the Company has purchased. The balance of the Company's needs for polished diamonds is purchased from polishers or polished-diamond dealers. It is the Company's intention to continue to supply the majority of its needs for diamonds by purchasing and polishing rough diamonds. The Company purchases polished diamonds principally from four key vendors. The Company generally enters into purchase orders for fixed quantities with its polished-diamond vendors. These relationships may be terminated at any time by either party; but such a termination would not discharge either party's obligations under unfulfilled purchase orders accepted prior to the termination. However, were trade relations between the Company and one or more of these vendors to be disrupted, the Company's sales could be adversely affected in the short term until alternative supply arrangements could be established. Products containing one or more diamonds of varying sizes, including diamonds used as accents, side- stones and center-stones, accounted for 58%, 58% and 55% of worldwide net sales in 2014, 2013 and 2012. Products containing one or more diamonds of one carat or larger accounted for 14%, 15% and 13% of worldwide net sales in each of those years. Conflict Diamonds. Media attention has been drawn to the issue of "conflict" or "blood" diamonds. These terms are used to refer to diamonds extracted from war-torn geographic regions and sold by rebel forces to fund insurrection. Allegations have also been made that trading in such diamonds supports terrorist activities. Management believes that it is not possible in most purchasing scenarios to distinguish conflict diamonds from diamonds produced in other regions once they have been polished. Therefore, concerned participants in the diamond trade, including the Company and nongovernment organizations, seek to exclude "conflict" or "blood" diamonds, which represent a small fraction of the world's supply, from legitimate trade through an international system of certification and legislation known as the Kimberley Process Certification Scheme. All rough diamonds the Company buys, crossing an international border, must be accompanied by a Kimberley Process certificate and all trades of rough and polished diamonds must conform to a system of warranties that references the aforesaid scheme. It is not expected that such efforts will substantially affect the supply of diamonds. In addition, concerns over human rights abuses in Zimbabwe underscore that the aforementioned system does not control diamonds produced in state- sanctioned mines under poor working conditions. The Company has informed its vendors that it does not intend to purchase Zimbabwean-produced diamonds. Accordingly, the Company has implemented the Diamond Source Warranty Protocol, which requires vendors to provide a warranty that loose polished diamonds were not obtained from Zimbabwean mines. The Diamond Trading Company ("DTC"). The supply and prices of rough and polished diamonds in the principal world markets have been and continue to be influenced by the DTC, an affiliate of the De Beers Group. Over the past decade, the DTC's historical ability to control worldwide production has been TIFFANY & CO. K-10 significantly diminished due to its lower share of worldwide production, changing policies in diamond- producing countries and revised contractual arrangements with third-party mine operators. Although the market share of the DTC has diminished, the DTC continues to supply a meaningful portion of the world market for rough, gem-quality diamonds. The DTC continues to exert influence on the demand for polished diamonds through the requirements it imposes on those ("sightholders") who purchase rough diamonds from the DTC. Some, but not all, of the Company's suppliers are DTC sightholders, and the Company estimates that a significant portion of the diamonds that it has purchased have had their source with the DTC. The Company is a DTC sightholder for rough diamonds through its operations in Belgium and its African joint ventures. Worldwide Availability and Price of Diamonds. The availability and price of diamonds are dependent on a number of factors, including global consumer demand, the political situation in diamond-producing countries, the opening of new mines, the continuance of the prevailing supply and marketing arrangements for rough diamonds and levels of industry liquidity. In recent years, there has been substantial volatility in the prices of both rough and polished diamonds. Prices for rough diamonds do not necessarily reflect current demand for polished diamonds. Sustained interruption in the supply of diamonds, an overabundance of supply or a substantial change in the marketing arrangements described above could adversely affect the Company and the retail jewelry industry as a whole. Changes in the marketing and advertising spending of the DTC and its direct purchasers could affect consumer demand for diamonds. K - 0 1 M R O F The Company purchases conflict-free rough and polished fine white diamonds, in the color ranges D through I. Management does not foresee a shortage of diamonds in this color range in the short term but believes that, unless new mines are developed, rising demand will eventually create such a shortage and lead to higher prices. Manufactured Diamonds. Manufactured diamonds are produced in small but growing 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 manufactured diamonds, manufactured diamonds are becoming a larger factor in the market. Should manufactured diamonds be offered in significant quantities, the supply of and prices for natural diamonds may be affected. The Company does not produce and does not intend to purchase or sell manufactured diamonds. Purchases of Other Polished Gemstones and Precious Metals. Other polished gemstones and precious metals used in making jewelry are purchased from a variety of sources. Most purchases are from suppliers with which Tiffany enjoys long-standing relationships. The Company generally enters into purchase orders for fixed quantities with other polished gemstone and precious metals vendors. These relationships may be terminated at any time by either party; such termination would not discharge either party's obligations under unfulfilled purchase orders accepted prior to the termination. The Company purchases precious metals from several suppliers for use in its internal manufacturing operations and for use by third-party manufacturers contracted to supply Tiffany merchandise. While the Company may supply precious metals to a manufacturer, it cannot determine, in all circumstances, whether the finished goods provided by such manufacturer were actually produced with Tiffany-supplied precious metals. In recent years, there has been substantial volatility in the prices of precious metals. TIFFANY & CO. K-11 The Company believes that there are numerous alternative sources for other polished gemstones and precious metals and that the loss of any single supplier would not have a material adverse effect on its operations. Finished Jewelry. Finished jewelry is purchased from approximately 55 manufacturers, most of which have long-standing relationships with the Company. However, the Company does not enter into long-term supply arrangements with its finished goods vendors. The Company does enter into written blanket purchase order agreements with nearly all of its finished goods vendors. These relationships may be terminated at any time by either party; such termination would not discharge either party's obligations under unfulfilled purchase orders accepted prior to termination. The blanket purchase order agreements establish non-price terms by which the Company may purchase and by which vendors may sell finished goods to the Company. These terms include payment terms, shipping procedures, product quality requirements, merchandise specifications and vendor social responsibility requirements. The Company actively seeks alternative sources for its best-selling jewelry items to mitigate any potential disruptions in supply. However, due to the craftsmanship involved in a small number of designs, the Company may have difficulty finding readily available alternative suppliers for those jewelry designs in the short term. F O R M 1 0 - K Watches. Prior to 2007, the Company arranged for the production of TIFFANY & CO. brand watches with various third-party Swiss component manufacturers and assemblers. In 2007, the Company entered into a 20-year license and distribution agreement (the "Agreement") with the Swatch Group for the manufacture and distribution of TIFFANY & CO. brand watches. In December 2013, an arbitral panel deemed the Agreement terminated at the request of the parties. The arbitration award stated that the effective date of termination was March 1, 2013. See "Item 3. Legal Proceedings" for additional information regarding the arbitration proceeding and the subsequent annulment action. Royalties payable to the Company under the Agreement were not significant in any year, and watches manufactured under the Agreement and sold in TIFFANY & CO. stores constituted 1% of worldwide net sales in 2013 and 2012. The Company is proceeding with plans to design, produce, market and distribute TIFFANY & CO. brand watches through certain of its Swiss subsidiaries. Management expects to introduce new TIFFANY & CO. brand watches in April 2015. In support of this introduction, the Company has relationships with approximately 20 component and subassembly vendors to manufacture watches. The terms of the Company's contractual relationships with these vendors are substantially similar to those described under "Finished Jewelry" above. The effective development and growth of this watch business has required and will continue to require additional resources and involves risks and uncertainties. Under the Agreement, the Swatch Group retained the right to sell watches marked with the TIFFANY & CO. trademark for a period of time subsequent to the termination of the Agreement and had no obligation to reacquire any inventory sold to retailers during this period. As such, the continued presence in the retail market of TIFFANY & CO. brand watches produced under the Agreement may negatively impact the Company’s sales and marketing efforts for its new collection of watches. COMPETITION The global jewelry industry is competitively fragmented. The Company encounters significant competition in all product lines. Some competitors specialize in just one area in which the Company is active. Many competitors have established worldwide, national or local reputations for style, quality, expertise and customer service similar to the Company and compete on the basis of that reputation. Certain other jewelers and retailers compete primarily through advertised price promotion. The Company competes on the basis of the Brand's reputation for high-quality products, customer service and distinctive merchandise and does not engage in price promotional advertising. Competition for engagement jewelry sales is particularly and increasingly intense. The Company's retail price for diamond jewelry reflects the rarity of the stones it offers and the rigid parameters it exercises with respect to the cut, clarity and other diamond quality factors which increase the beauty of the TIFFANY & CO. K-12 diamonds, but which also increase the Company's cost. The Company competes in this market by emphasizing quality. SEASONALITY As a jeweler and specialty retailer, the Company's business is seasonal in nature, with the fourth quarter typically representing approximately one-third of annual net sales and a higher percentage of annual net earnings. Management expects such seasonality to continue. As of January 31, 2015, the Company employed an aggregate of approximately 12,000 full-time and part-time persons. Of those employees, approximately 5,700 are employed in the United States. EMPLOYEES 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 electronically file materials with the SEC. Copies of the Company's reports on Form 10-K, Forms 10-Q and Forms 8-K may be obtained, free of charge, on the Company's website at http://investor.tiffany.com/financials.cfm. K - 0 1 M R O F Item 1A. Risk Factors. As is the case for any retailer, the Company'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 Company and/or the markets in which it operates. The following "risk factors" are specific to the Company; these risk factors affect the likelihood that the Company will achieve the objectives and expectations communicated by management: (i) Challenging global economic conditions and related low levels of consumer confidence over a prolonged period of time could adversely affect the Company's sales and earnings. As a retailer of goods which are discretionary purchases, the Company's sales results are particularly sensitive to changes in economic conditions and 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 negatively affects the Company's sales and earnings because of its cost base and inventory investment. Certain competitors may react to such conditions by reducing retail prices and promoting such reductions; such reductions and/or inventory liquidations can have a short-term adverse effect on the Company's sales, especially given the Company's policy of not engaging in price promotional activity. TIFFANY & CO. K-13 The Company has invested in and operates a significant number of stores in Greater China and anticipates significant further expansion. Should the Chinese economy experience a significant economic slowdown, the sales and profitability of stores in Greater China as well as stores in other markets that serve Chinese tourists could be affected. Uncertainty surrounding the current global economic environment makes it more difficult for the Company to forecast operating results. The Company's forecasts employ the use of estimates and assumptions. Actual results could differ from forecasts, and those differences could be material. (ii) Sales may decline or remain flat in the Company's fourth fiscal quarter, which includes the Holiday selling season. The Company's business is seasonal in nature, with the fourth quarter typically representing approximately one-third of annual net sales and a higher percentage of annual net earnings. Poor sales results during the fourth quarter would have an adverse effect on annual earnings and would result in higher inventories in the short-term. F O R M 1 0 - K (iii) The Company conducts significant operations outside the United States, and the risks of doing business internationally could increase its costs, reduce its profits or disrupt its business. The Company generates a majority of its worldwide net sales outside the United States. It also has foreign manufacturing operations, and relies on certain foreign third-party vendors and suppliers. In addition, the Company maintains investments in, and has provided loans to, certain foreign suppliers. As a result, the Company is subject to the risks of doing business outside the United States, including: • the laws, regulations and policies of foreign governments relating to investments, loans and operations, the costs or desirability of complying with local practices and customs and the impact of various anti-corruption and other laws affecting the activities of U.S. companies abroad; • potential negative consequences from changes in taxation policies or currency restructurings; • import and export licensing requirements and regulations, as well as unforeseen changes in regulatory requirements; • economic instability in foreign countries; • the difficulty of managing an organization doing business in many jurisdictions; • uncertainties as to enforcement of certain contract and other rights; • the potential for rapid and unexpected changes in government, economic and political policies, political or civil unrest, acts of terrorism or the threat of international boycotts or U.S. anti-boycott legislation; and • inventory risk exposures. While these factors and the effect of these factors are difficult to predict, any one or more of them could lower the Company's revenues, increase its costs, reduce its earnings or disrupt its business. TIFFANY & CO. K-14 (iv) Weakening foreign currencies may negatively affect the Company's sales and profitability. The Company operates retail stores in various countries outside of the U.S. and, as a result, is exposed to market risk from fluctuations in foreign currency exchange rates, particularly the Japanese Yen, Euro and British Pound. In 2014, sales in countries outside of the U.S. in aggregate represented more than half of the Company's net sales and earnings from operations. In order to maintain its worldwide relative pricing structure, a substantial weakening of foreign currencies against the U.S. dollar would require the Company to raise its retail prices or reduce its profit margins in various locations outside of the U.S. Consumers in those markets may not accept significant price increases on the Company's goods; thus, there is a risk that a substantial weakening of foreign currencies would result in reduced sales and profitability. In addition, a weakening in foreign currency exchange rates may negatively affect spending by foreign tourists in the various regions where the Company operates retail stores which would adversely affect its net sales and profitability. The results of operations of the Company's international subsidiaries are exposed to foreign exchange rate fluctuations as the financial results of the applicable subsidiaries are translated from the local currency into U.S. dollars during the process of financial statement consolidation. If the U.S. dollar strengthens against foreign currencies, the translation of these foreign currency-denominated transactions would decrease consolidated net sales and profitability. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations." for a discussion of such impacts. (v) Regional instability and conflict could disrupt tourist travel and local consumer spending. Unsettled regional and global conflicts or crises such as military actions, terrorist activities, natural disasters, government regulations or other conditions may negatively affect spending by foreign tourists and local consumers in the various regions where the Company operates retail stores which would adversely affect its sales and earnings. (vi) Changes in the Company's product or geographic sales mix could affect the Company's profitability. The Company sells an extensive selection of jewelry and other merchandise at a wide range of retail price points that yield different gross profit margins. Additionally, the Company's geographic regions achieve different operating profit margins due to a variety of factors including product mix, store size and occupancy costs, labor costs, retail pricing and fixed versus variable expenses. If the Company's sales mix were to shift toward products or geographic regions that are significantly different than the Company's plans, it could have an effect, either positively or negatively, on its expected profitability. (vii) Changes in costs of diamonds and precious metals or reduced supply availability may adversely affect the Company's ability to produce and sell products at desired profit margins. Most of the Company's jewelry and non-jewelry offerings are made with diamonds, gemstones and/or precious metals. Acquiring diamonds is difficult because of limited supply and the Company may not be 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. A significant change in the costs or supply of these commodities could adversely affect the Company's business, which is vulnerable to the risks inherent in the trade for such commodities. A substantial increase or decrease in the cost or supply of raw materials and/or high-quality rough and polished diamonds within the quality grades, colors and sizes that customers demand could affect, negatively or positively, customer demand, sales and gross profit margins. Additionally, should manufactured diamonds be offered in significant quantities and gain consumer acceptance, the supply of and prices for natural diamonds may be affected. K - 0 1 M R O F TIFFANY & CO. K-15 F O R M 1 0 - K If trade relationships between the Company and one or more of its significant vendors were disrupted, the Company's sales could be adversely affected in the short-term until alternative supply arrangements could be established. (viii) Volatile global economic conditions may have a material adverse effect on the Company's liquidity and capital resources. The global economy and the credit and equity markets have undergone significant disruption in recent years. Any prolonged economic weakness could have an adverse effect on the Company's cost of borrowing, could diminish its ability to service or maintain existing financing and could make it more difficult for the Company to obtain additional financing or to refinance existing long-term obligations. In addition, any significant deterioration in the equity markets could negatively affect the valuation of pension plan assets and result in increased minimum funding requirements. (ix) The Company may be unable to lease sufficient space for its retail stores in prime locations. The Company, positioned as a luxury goods retailer, has established its retail presence in choice store locations. If the Company cannot secure and retain locations on suitable terms in prime and desired luxury shopping locations, its expansion plans, sales and earnings could be jeopardized. In Japan, many of the TIFFANY & CO. stores are located in department stores generating 75% of the net sales in Japan and 10% of worldwide net sales in 2014. The Company also has TIFFANY & CO. stores located in department stores in other markets. Should one or more department store operators elect or be required to close one or more stores now housing a TIFFANY & CO. store, the Company's sales and earnings would be reduced while alternative premises were being obtained. The Company's commercial relationships with department stores, and their respective abilities to continue as leading department store operators, have been and will continue to affect the Company's business in Japan and the other markets. (x) The value of the TIFFANY & CO. and TIFFANY trademarks could decline due to third-party use and infringement. The TIFFANY & CO. and TIFFANY trademarks are assets that are essential to the competitiveness and success of the Company's business, and the Company takes appropriate action to protect them. The Company actively pursues those who produce or sell counterfeit TIFFANY & CO. goods through civil action and cooperation with criminal law enforcement agencies. However, use of the designation TIFFANY by third parties on related goods or services and the Company's failure or inability to protect against such use could adversely affect and dilute the value of the TIFFANY & CO. brand. Notwithstanding the general success of the Company's enforcement actions, such actions have not stopped the imitation and counterfeiting of the Company's merchandise or the infringement of the trademark, and counterfeit TIFFANY & CO. goods remain available in most markets. In recent years, there has been an increase in the availability of counterfeit goods, predominantly silver jewelry, on the Internet and in various markets by street vendors and small retailers. The continued sale of counterfeit merchandise could have an adverse effect on the TIFFANY & CO. brand by undermining the Company's reputation for quality goods and making such goods appear less desirable to consumers of luxury goods. Damage to the TIFFANY & CO. brand could result in lost sales and earnings. (xi) The Company'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 the Company's business. The Company's expansion plans for retail and direct selling operations and merchandise development, production and management support the appeal of the TIFFANY & CO. brand. Consequently, poor maintenance, promotion and positioning of the TIFFANY & CO. brand, as well as TIFFANY & CO. K-16 market over-saturation, may adversely affect the business by diminishing the distinctive appeal of the TIFFANY & CO. brand and tarnishing its image. This could result in lower sales and earnings. In addition, adverse publicity regarding TIFFANY & CO. products or in respect of the Company's third- party vendors or the diamond or jewelry industry, and any media coverage resulting therefrom, may harm the TIFFANY & CO. brand and reputation, cause a loss of consumer confidence in the TIFFANY & CO. brand and the industry, and negatively affect the Company's results of operations. The considerable expansion in the use of social media over recent years has compounded the potential scope of the negative publicity that could be generated by such incidents. (xii) If diamond mining and exploration companies, to which the Company or its subsidiaries have provided financing, were to experience financial difficulties, those funds might not be recovered, which would reduce the Company's earnings and could result in losing access to the mine's output. The Company and its subsidiaries may, from time to time, provide financing to diamond mining and exploration companies in order to obtain rights to purchase mining output. As of January 31, 2015, the carrying amount of receivables was $59,345,000 under these arrangements, of which more than $40,000,000 was related to one mining and exploration company. Mining operations are inherently risky, and often occur in regions subject to additional political, social and environmental risks, such as the resurgence of the Ebola virus in 2014 in certain regions of Africa. Given these risks, there is no assurance that the diamond mining and exploration companies under these arrangements will be able to meet their obligations to the Company. If a diamond mining or exploration company defaults under these financings, the Company would be required to take a period charge in respect of all or a portion of the financing, which would affect the Company's earnings. Additionally, the Company could lose access to the mine's output under the related supply agreements. The Company has experienced such situations in the past. K - 0 1 M R O F (xiii) A significant data security or privacy breach of the Company's information systems could affect its business. The protection of customer, employee and company data is important to the Company, and the Company's customers and employees expect that their personal information will be adequately protected. In addition, the regulatory environment surrounding information security and privacy is becoming increasingly demanding, with evolving requirements in the various jurisdictions in which the Company does business. Although the Company has developed and implemented systems and processes that are designed to protect personal and Company information and prevent data loss and other security breaches, such measures cannot provide absolute security. Additionally, the Company’s increased use and reliance on web-based hosted (i.e., cloud computing) applications and systems for the storage, processing and transmission of information, including customer and employee information, could expose the Company, its employees and its customers to a risk of loss or misuse of such information. The Company’s efforts to protect personal and Company information may also be adversely impacted by data security or privacy breaches that occur at its third-party vendors. The Company cannot control these vendors and therefore cannot guarantee that a data security or privacy breach of their systems will not occur in the future. A significant breach of customer, employee or company data could damage the Company's reputation, its relationship with customers and the TIFFANY & CO. brand and could result in lost sales, sizable fines, significant breach-notification costs and lawsuits as well as adversely affect results of operations. The Company may also incur additional costs in the future related to the implementation of additional security measures to protect against new or enhanced data security and privacy threats, or to comply with state, federal and international laws that may be enacted to address those threats. TIFFANY & CO. K-17 (xiv) Any material disruption of, or a failure to successfully implement or make changes to, information systems could negatively impact the Company's business. The Company is increasingly dependent on its information systems to operate its business, including in designing, manufacturing, marketing and distributing its products, as well as processing transactions, managing inventory and accounting for and reporting its results. Given the complexity of the Company’s global business, it is critical that the Company maintain the uninterrupted operation of its information systems. Despite the Company’s preventative efforts, its information systems may be vulnerable to damage, disruption or shutdown due to power outages, computer and telecommunications failures, computer viruses, security breaches or natural disasters. Damage, disruption or shutdown of the Company’s information systems may require a systematic investment to fix or replace them, and the Company could suffer interruptions in its operations in the interim. In addition, in the ordinary course of business, the Company regularly evaluates and makes changes and upgrades to its information systems. The Company has commenced a multi-year effort to evaluate and, where appropriate, to upgrade and/or replace certain of its information systems, including systems for global customer relationship management, order management and inventory management. These system changes and upgrades can require significant capital investments and dedication of resources. While the Company follows a disciplined methodology when evaluating and making such changes, there can be no assurances that the Company will successfully implement such changes, that such changes will occur without disruptions to its operations or that the new or upgraded systems will achieve the desired business objectives. F O R M 1 0 - K Any damage, disruption or shutdown of the Company's information systems, or the failure to successfully implement new or upgraded systems, such as those referenced above, could have a direct material adverse effect on the Company's results of operations and could also affect the Company's reputation, its relationship with customers and the TIFFANY & CO. brand, which could result in reduced sales and profitability. (xv) The loss or a prolonged disruption in the operation of the Company's centralized distribution centers could adversely affect its business and operations. The Company maintains two separate distribution centers in close proximity to one another in New Jersey. Both are dedicated to warehousing merchandise; one handles worldwide store replenishment and the other processes direct-to-customer orders. Although the Company believes that it has appropriate contingency plans, unforeseen disruptions impacting one or both locations for a prolonged period of time may result in delays in the delivery of merchandise to stores or in fulfilling customer orders. (xvi) The loss or a prolonged disruption in the operation of the Company's internal manufacturing facilities could adversely affect its business and operations. The Company's internal manufacturing facilities produce more than half of the merchandise sold by the Company. Any prolonged disruption to their operations would require the Company to seek alternate sources of production and could have a negative effect on inventory availability and sales until such sources are established. (xvii) The Company is engaged in efforts to design, produce, market and distribute TIFFANY & CO. brand watches; however, there is no assurance that the Company will be able to effectively develop its new watch business or that such business will be successful. The Company is proceeding with plans to design, produce, market and distribute TIFFANY & CO. brand watches through certain of its Swiss subsidiaries. Management expects to introduce new TIFFANY & CO. brand watches in April 2015. The effective development and growth of a watch business has required and TIFFANY & CO. K-18 will continue to require additional resources and involves risks and uncertainties, including: (i) upfront and ongoing expenditures; (ii) the need to employ highly specialized and experienced personnel; (iii) new regulatory requirements; (iv) dependence on relatively small supply partners; (v) production and distribution inefficiencies; and (vi) the need to efficiently integrate operations with the Company’s existing business models. In addition, as with any new business, the Company will be competing with businesses with stronger market positions and has invested and will continue to invest significant resources in marketing to build customer awareness and to establish product differentiation. Despite the Company's efforts, there is, however, no assurance that the Company will be able to effectively develop its new watch business or that such business will be successful in growing the Company's revenues or enhancing its profitability. Item 1B. Unresolved Staff Comments. NONE Item 2. Properties. The Company leases its various store premises (other than the New York Flagship store, which is owned by the Company) under arrangements that generally range from 3 to 10 years. The following table provides information on the number of locations and square footage of Company-operated TIFFANY & CO. stores as of January 31, 2015: K - 0 1 M R O F Americas: New York Flagship Other stores Asia-Pacific Japan: Tokyo Ginza Other stores Europe: London Old Bond Street Other stores Emerging Markets Total Total Stores Total Gross Retail Square Footage Gross Retail Square Footage Range Average Gross Retail Square Footage 1 121 73 1 55 1 37 6 295 45,500 664,900 186,800 45,500 600 - 17,600 400 - 12,800 12,000 139,200 12,000 900 - 7,500 22,400 114,600 13,000 1,198,400 22,400 600 - 9,600 400 - 5,900 400 - 45,500 45,500 5,500 2,600 12,000 2,500 22,400 3,100 2,200 4,100 NEW YORK FLAGSHIP STORE The Company owns the building housing its New York Flagship store at 727 Fifth Avenue, which was designed to be a retail store for Tiffany and is well located for this function. Currently, approximately 45,500 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. The New York Flagship store is the focal point for marketing and public relations efforts. TIFFANY & CO. K-19 RETAIL SERVICE CENTER The Company's Retail Service Center ("RSC"), located in Parsippany, New Jersey, comprises approximately 370,000 square feet. Approximately half of the building is devoted to office and information technology operations and half to warehousing, shipping, receiving, merchandise processing and other distribution functions. The RSC receives merchandise and replenishes retail stores. The Company has a 20-year lease for this facility, which expires in 2025, and has two 10-year renewal options. CUSTOMER FULFILLMENT CENTER The Company owns the Customer Fulfillment Center ("CFC") in Whippany, New Jersey and leases the land on which the facility resides. The CFC is approximately 266,000 square feet and is primarily used for warehousing merchandise and processing direct-to-customer orders. The land lease expires in 2032 and the Company has the right to renew the lease for an additional 20-year term. MANUFACTURING FACILITIES F O R M 1 0 - K The Company owns and operates jewelry manufacturing facilities in Cumberland, Rhode Island, Mount Vernon, New York, and Lexington, Kentucky, and leases jewelry manufacturing facilities in Pelham, New York and Thailand as well as a jewelry polishing facility in the Dominican Republic. Lease expiration dates range from 2016 to 2023. The owned and leased facilities total approximately 251,000 square feet. The Company leases a facility in Belgium and owns facilities in Botswana, Cambodia, Mauritius, Namibia and Vietnam (although the land in Cambodia, Namibia and Vietnam is leased) that sort, cut and/or polish rough diamonds for use by Tiffany. These facilities total approximately 264,000 square feet and the lease expiration dates range from 2015 to 2062. Item 3. Legal Proceedings. Arbitration Award. On December 21, 2013, an award was issued (the "Arbitration Award") in favor of The Swatch Group Ltd. ("Swatch") and its wholly-owned subsidiary Tiffany Watch Co. ("Watch Company"; Swatch and Watch Company, together, the "Swatch Parties") in an arbitration proceeding (the "Arbitration") between the Registrant and its wholly-owned subsidiaries, Tiffany and Company and Tiffany (NJ) Inc. (the Registrant and such subsidiaries, together, the "Tiffany Parties") and the Swatch Parties. The Arbitration was initiated in June 2011 by the Swatch Parties, who sought damages for alleged breach of agreements entered into by and among the Swatch Parties and the Tiffany Parties in December 2007 (the "Agreements"). The Agreements pertained to the development and commercialization of a watch business and, among other things, contained various licensing and governance provisions and approval requirements relating to business, marketing and branding plans and provisions allocating profits relating to sales of the watch business between the Swatch Parties and the Tiffany Parties. In general terms, the Swatch Parties alleged that the Tiffany Parties breached the Agreements by obstructing and delaying development of Watch Company’s business and otherwise failing to proceed in good faith. The Swatch Parties sought damages based on alternate theories ranging from CHF 73,000,000 (or approximately $79,000,000 at January 31, 2015) (based on its alleged wasted investment) to CHF 3,800,000,000 (or approximately $4,100,000,000 at January 31, 2015) (calculated based on alleged future lost profits of the Swatch Parties and their affiliates over the entire term of the Agreements). The Registrant believes that the claims of the Swatch Parties are without merit. In the Arbitration, the Tiffany Parties defended against the Swatch Parties’ claims vigorously, disputing both the merits of the claims and the calculation of the alleged damages. The Tiffany Parties also asserted counterclaims for TIFFANY & CO. K-20 damages attributable to breach by the Swatch Parties, stemming from the Swatch Parties’ September 12, 2011 public issuance of a Notice of Termination purporting to terminate the Agreements due to alleged material breach by the Tiffany Parties, and for termination due to such breach. In general terms, the Tiffany Parties alleged that the Swatch Parties did not have grounds for termination, failed to meet the high standard for proving material breach set forth in the Agreements and failed to provide appropriate management, distribution, marketing and other resources for TIFFANY & CO. brand watches and to honor their contractual obligations to the Tiffany Parties regarding brand management. The Tiffany Parties’ counterclaims sought damages based on alternate theories ranging from CHF 120,000,000 (or approximately $130,000,000 at January 31, 2015) (based on its wasted investment) to approximately CHF 540,000,000 (or approximately $584,000,000 at January 31, 2015) (calculated based on alleged future lost profits of the Tiffany Parties). The Arbitration hearing was held in October 2012 before a three-member arbitral panel convened in the Netherlands pursuant to the Arbitration Rules of the Netherlands Arbitration Institute (the "Rules"), and the Arbitration record was completed in February 2013. Under the terms of the Arbitration Award, and at the request of the Swatch Parties and the Tiffany Parties, the Agreements were deemed terminated. The Arbitration Award stated that the effective date of termination was March 1, 2013. Pursuant to the Arbitration Award, the Tiffany Parties were ordered to pay the Swatch Parties damages of CHF 402,737,000 (the "Arbitration Damages"), as well as interest from June 30, 2012 to the date of payment, two-thirds of the cost of the Arbitration and two-thirds of the Swatch Parties' legal fees, expenses and costs. These amounts were paid in full in January 2014. K - 0 1 M R O F Prior to the ruling of the arbitral panel, no accrual was established in the Company's consolidated financial statements because management did not believe the likelihood of an award of damages to the Swatch Parties was probable. As a result of the ruling, in the fourth quarter of 2013, the Company recorded a charge of $480,211,000, which includes the damages, interest, and other costs associated with the ruling and which has been classified as Arbitration award expense in the consolidated statement of earnings. On March 31, 2014, the Tiffany Parties took action in the District Court of Amsterdam to annul the Arbitration Award. Generally, arbitration awards are final; however, Dutch law does provide for limited grounds on which arbitral awards may be set aside. The Tiffany Parties petitioned to annul the Arbitration Award on these statutory grounds. These grounds include, for example, that the arbitral tribunal violated its mandate by changing the express terms of the Agreements. A three-judge panel presided over the annulment hearing on January 19, 2015, and, on March 4, 2015, issued a decision in favor of the Tiffany Parties. Under this decision, the Arbitration Award is set aside. However, the Swatch Parties have the right to file an appeal of the District Court's decision, and the Arbitration Award may ultimately be upheld by the courts of the Netherlands. If the Swatch Parties assert their right to appeal, which expires on June 4, 2015, Registrant’s management expects that the annulment action will not be ultimately resolved for at least 18 months. If the Arbitration Award is finally annulled, management anticipates that the claims and counterclaims that formed the basis of the Arbitration, and potentially additional claims and counterclaims, will be litigated in court proceedings between and among the Swatch Parties and the Tiffany Parties. The identity and location of the courts that would hear such actions have not been determined at this time. Management also anticipates that the Tiffany Parties would seek the return of the amounts paid by them under the Arbitration Award in court proceedings. In any litigation regarding the claims and counterclaims that formed the basis of the arbitration, issues of liability and damages will be pled and determined without regard to the findings of the arbitral panel. As such, it is possible that the court could find that the Swatch Parties were in material breach of their TIFFANY & CO. K-21 obligations under the Agreements, that the Tiffany Parties were in material breach of their obligations under the Agreements or that neither the Swatch Parties nor the Tiffany Parties were in material breach. If the Swatch Parties’ claims of liability were accepted by the court, the damages award cannot be reasonably estimated at this time, but could exceed the Arbitration Damages and could have a material adverse effect on the Registrant’s consolidated financial statements or liquidity. Although the District Court has issued a decision in favor of the Tiffany Parties, an amount will only be recorded for any return of amounts paid under the Arbitration Award when the District’s Court decision is final (i.e., after any right of appeal has been exhausted) and return of these amounts is deemed probable and collection is reasonably assured. As such, the Company has not recorded any amounts in its consolidated financial statements related to the District Court’s decision. Additionally, management has not established any accrual in the Company's consolidated financial statements for the year ended January 31, 2015 related to the annulment process or any potential subsequent litigation because it does not believe that the final annulment of the Arbitration Award and a subsequent award of damages exceeding the Arbitration Damages is probable. Royalties payable to the Tiffany Parties by Watch Company under the Agreements were not significant in any year and watches manufactured by Watch Company and sold in TIFFANY & CO. stores constituted 1% of worldwide net sales in 2013 and 2012. The Company is proceeding with plans to design, produce, market and distribute TIFFANY & CO. brand watches through certain of its Swiss subsidiaries. Management expects to introduce new TIFFANY & CO. brand watches in April 2015. The effective development and growth of this watch business has required and will continue to require additional resources and involves risks and uncertainties. Other Matters. 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 with parties claiming infringement of patents and other intellectual property rights by the Company, litigation instituted by persons alleged to have been injured upon premises under the Company'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 the Company's business, as well as for any business employing significant numbers of 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, the Company believes that all such litigation currently pending to which it is a party or to which its properties are subject will be resolved without any material adverse effect on the Company's financial position, earnings or cash flows. F O R M 1 0 - K Item 4. Mine Safety Disclosures. Not Applicable. TIFFANY & CO. K-22 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. In calculating the aggregate market value of the voting stock held by non-affiliates of the Company shown on the cover page of this Annual Report on Form 10-K, 992,442 shares of Common Stock beneficially owned by the executive officers and directors of the Company (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. Performance of Company Stock The 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 2014 were: First Quarter Second Quarter Third Quarter Fourth Quarter High $ 94.88 $ 103.38 $ 105.66 $ 110.60 Low $ 80.38 $ 85.75 $ 85.69 $ 85.15 K - 0 1 M R O F On March 16, 2015, the high and low selling prices quoted on such exchange were $86.86 and $85.38. On March 16, 2015, there were 15,241 holders of record of the Registrant's Common Stock. In consolidated trading, the high and low selling prices per share for shares of such Common Stock for 2013 were: First Quarter Second Quarter Third Quarter Fourth Quarter High $ 74.20 $ 81.25 $ 83.33 $ 93.64 Low $ 61.42 $ 70.70 $ 73.63 $ 78.15 TIFFANY & CO. K-23 The following graph compares changes in the cumulative total shareholder return on the Company’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 the stock on the New York Stock Exchange, plus the reinvestment of any dividends paid on the stock. F O R M 1 0 - K Assumes an investment of $100 on January 31, 2010 in the Company's common 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. Dividends It is the Company's policy to pay a quarterly dividend on its Common Stock, subject to declaration by its Board of Directors. In 2013, a dividend of $0.32 per share of Common Stock was paid on April 10, 2013. On May 16, 2013, the Company announced a 6% increase in its regular quarterly dividend rate to a new rate of $0.34 per share of Common Stock which was paid on July 10, 2013, October 10, 2013 and January 10, 2014. In 2014, a dividend of $0.34 per share of Common Stock was paid on April 10, 2014. On May 22, 2014, the Company announced a 12% increase in its regular quarterly dividend rate to a new rate of $0.38 per share of Common Stock which was paid on July 10, 2014, October 10, 2014 and January 12, 2015. Issuer Purchases of Equity Securities In March 2014, the Company's Board of Directors approved a share repurchase program which authorizes the Company to repurchase up to $300,000,000 of its Common Stock through open market transactions. Purchases are executed under a written plan for trading securities as specified under Rule 10b5-1 promulgated under the Securities and Exchange Act of 1934, as amended, the terms of which are within the Company's discretion, subject to applicable securities laws, and are based on market conditions and the Company's liquidity needs. The program will expire on March 31, 2017. TIFFANY & CO. K-24 The following table contains the Company's purchases of equity securities in the fourth quarter of 2014: (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 9,611 $ 94.64 9,611 $ 276,860,000 — — — $ 276,860,000 43,753 53,364 $ 88.85 $ 89.89 43,753 53,364 $ 272,972,000 $ 272,972,000 Period November 1, 2014 to November 30, 2014 December 1, 2014 to December 31, 2014 January 1, 2015 to January 31, 2015 TOTAL K - 0 1 M R O F TIFFANY & CO. K-25 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 years 2010-2014, which ended on January 31 of the following calendar year: (in thousands, except per share amounts, percentages, ratios, stores and employees) 2014 a 2013 b 2012 2011 c 2010 d EARNINGS DATA Net sales Gross profit $ 4,249,913 $ 4,031,130 $ 3,794,249 $ 3,642,937 $ 3,085,290 2,537,175 2,340,443 2,163,284 2,151,154 1,822,278 Selling, general & administrative expenses 1,645,746 1,555,903 1,466,067 1,442,728 1,227,497 Net earnings 484,179 181,369 416,157 439,190 368,403 Net earnings per diluted share 3.73 1.41 3.25 3.40 2.87 Weighted-average number of diluted common shares BALANCE SHEET AND CASH FLOW DATA 129,918 128,867 127,934 129,083 128,406 F O R M 1 0 - K Total assets $ 5,180,603 $ 4,752,351 $ 4,630,850 $ 4,158,992 $ 3,735,669 Cash and cash equivalents 729,957 345,778 504,838 433,954 681,591 Inventories, net 2,362,112 2,326,580 2,234,334 2,073,212 1,625,302 Short-term borrowings and long-term debt (including current portion) 1,116,548 1,003,519 959,272 712,147 688,240 Stockholders' equity Working capital Cash flows from operating activities Capital expenditures Stockholders' equity per share Cash dividends paid per share RATIO ANALYSIS AND OTHER DATA As a percentage of net sales: Gross profit Selling, general & administrative expenses 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 2,850,671 2,733,968 2,611,318 2,348,905 2,177,475 2,953,354 2,531,648 2,564,997 2,262,998 2,204,632 615,117 247,394 22.04 1.48 154,652 221,452 21.31 1.34 328,290 219,530 20.57 1.25 210,606 239,443 18.54 1.12 298,925 127,002 17.15 0.95 59.7% 38.7% 11.4% 5.8% 9.7% 17.3% 39.2% 39.5% 295 58.1% 38.6% 4.5% 5.5% 3.9% 6.8% 36.7% 93.9% 289 57.0% 38.6% 11.0% 5.8% 9.5% 16.8% 36.7% 38.1% 59.0% 39.6% 12.1% 6.6% 11.1% 19.4% 30.3% 32.5% 59.1% 39.8% 11.9% 4.1% 10.2% 18.1% 31.6% 32.7% 275 9,900 247 9,800 233 9,200 Number of employees 12,000 10,600 TIFFANY & CO. K-26 NOTES TO SELECTED FINANCIAL DATA a. Financial information and ratios for 2014 include $93,779,000 of net pre-tax expense ($60,956,000 net after tax expense, or $0.47 per diluted share) associated with the redemption of $400,000,000 in aggregate principal amount of certain senior notes prior to their scheduled maturities. See "Item 8. Financial Statements and Supplementary Data - Note G - Debt" for additional information. b. Financial information and ratios for 2013 include the following amounts, totaling $482,101,000 of net pre-tax expense ($299,188,000 net after-tax expense, or $2.32 per diluted share): • $480,211,000 pre-tax expense associated with the Swatch arbitration award and $7,489,000 pre-tax income associated with a foreign currency transaction gain on this expense. See "Item 8. Financial Statements and Supplementary Data - Note J - Commitments and Contingencies" for additional information regarding the arbitration proceeding; and • $9,379,000 pre-tax expense associated with severance related to staffing reductions and subleasing of certain office space for which only a portion of the Company's future rent obligations will be recovered. c. Financial information and ratios for 2011 include $42,719,000 of net pre-tax expense ($25,994,000 net after-tax expense, or $0.20 per diluted share) associated with the relocation of Tiffany's New York headquarters staff to a single location. This expense is primarily related to the fair value of the remaining non-cancelable lease obligations reduced by the estimated sublease rental income as well as the acceleration of the useful lives of certain property and equipment, incremental rent during the transition period and lease termination payments. K - 0 1 M R O F d. Financial information and ratios for 2010 include the following amounts, totaling $17,635,000 of net pre-tax expense ($7,672,000 net after-tax expense, or $0.06 per diluted share): • $17,635,000 pre-tax expense associated with the relocation of Tiffany's New York headquarters staff to a single location. This expense is primarily related to the acceleration of the useful lives of certain property and equipment and incremental rent during the transition period; and • $3,096,000 net income tax benefit primarily due to a change in the tax status of certain subsidiaries associated with the acquisition in 2009 of additional equity interests in diamond sourcing and polishing operations. TIFFANY & CO. K-27 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 fiscal years which ended on January 31 of the following calendar year. The Company's key strategies are: KEY STRATEGIES • To enhance customer awareness of the TIFFANY & CO. trademark (the “Brand”), its heritage, its products and its association with quality and luxury. The Brand is the single most important asset of Tiffany and, indirectly, of the Company. Management intends to continue to invest in marketing and public relations programs designed to build awareness of the Brand, its heritage and its products with both new and existing customers, as well as to enhance the Brand’s association among consumers with quality and luxury. Management plans to continue to monitor these efforts and the strength of the Brand through market research. • To maintain an active product development program. F O R M 1 0 - K The Company continues to invest in product development in order to introduce new design collections and extensions of existing collections that are designed to appeal to the Company’s existing customer base as well as to new customers. The Company is also investing in the watch category, which it deems appropriate for the Brand and which presents incremental growth opportunities. • To enhance the customer experience with superior customer service and through engaging store environments. To ensure a superior shopping experience, the Company employs highly-qualified sales and customer service professionals, focuses on enhancing sales and product training programs, and is investing in enhancing its information systems for customer relationship management. The Company also focuses on enhancing the design of its stores, as well as the creative visual presentation of its merchandise, to provide an engaging luxury experience in both its new and existing stores. • To selectively expand global distribution without compromising the value of the Brand. Management intends to continue to expand its global distribution by adding stores in both new and existing markets and through its e-commerce websites. Management recognizes that over- saturation of any market could diminish the distinctive appeal of the Brand, but believes that there are a significant number of potential worldwide locations remaining that meet financial and Brand requirements. • To maintain substantial control over product supply through direct diamond sourcing and internal jewelry manufacturing. The Company's diamond processing operations purchase, sort, cut and/or polish rough diamonds for use in merchandise. The Company intends to continue to seek additional sources of diamonds TIFFANY & CO. K-28 which, combined with continued focus on its internal manufacturing operations, are designed to secure adequate product supplies and favorable product costs. Through the efforts above, management is committed to the following long-term financial objectives: • To increase store productivity. Management is committed to growing sales per square foot by increasing both consumer traffic and the percentage of store visitors who make a purchase. In addition, the Company is increasing, through store renovations, the percentage of selling space in some of its stores, which is intended to contribute to higher store productivity. • To achieve improved operating margins. Management's long-term objective is to improve operating margin through gross margin improvement, which includes controlling product input costs, realizing greater efficiencies in its product supply chain and adjusting retail prices when appropriate. Additionally, management is focused on enhancing productivity by controlling selling, general and administrative expenses and generating sales leverage on fixed costs. These efforts are intended to generate a higher rate of operating earnings growth relative to sales growth. • To improve asset productivity and cash flow. Management's long-term objective is to maintain inventory growth at a rate less than sales growth, with greater focus on efficiencies in product sourcing and manufacturing as well as optimizing store inventory levels, all of which is intended to contribute to improvements in cash flow and return on assets. • To maintain a capital structure that provides financial strength and flexibility to pursue strategic initiatives and allows for the return of excess capital to shareholders. K - 0 1 M R O F 2014 SUMMARY • Worldwide net sales increased 5% to $4,249,913,000. However, the Company experienced a 1% sales decline in the fourth quarter primarily due to softness in the Americas region. • On a constant-exchange-rate basis (see "Non-GAAP Measures" below), worldwide net sales in 2014 increased 7% due to sales growth in all regions, and comparable store sales increased 4%. • The Company added a net of 6 TIFFANY & CO. stores (opening three in the Americas, two in Japan and one each in Asia-Pacific, Europe and the Emerging Markets while closing two in the Americas). • The Company continued to introduce new product designs highlighted by the TIFFANY T collection. • Earnings from operations as a percentage of net sales ("operating margin") improved 13.5 percentage points. However, excluding certain expenses in 2013 (see "Non-GAAP Measures" below), operating margin improved 1.3 percentage points due to an increase in gross margin. TIFFANY & CO. K-29 • Net earnings were $484,179,000, or $3.73 per diluted share. Excluding certain expenses recorded in 2014 and 2013 (see "Non-GAAP Measures" below), net earnings increased 13% to $545,135,000, or $4.20 per diluted share. • The Board of Directors approved a 12% increase in the quarterly dividend rate to $0.38 per share of the Company's Common Stock, or an annual dividend rate of $1.52 per share. • Free cash flow (see "Non-GAAP Measures" below) was an inflow of $367,723,000 in 2014, compared with an outflow of $66,800,000 in 2013 which was entirely due to the arbitration award payment. • Growth in inventories, net of 2%, or 6% when excluding the effect of foreign currency translation, was less than the rate of sales growth. • The Company issued $550,000,000 of senior notes and used the net proceeds primarily to redeem $400,000,000 in aggregate principal amount of existing senior notes. As a result of such issuances and redemptions, the Company's average interest rate on its outstanding long-term debt was reduced and long-term debt maturities were extended. Additionally, the Company entered into new credit facilities with greater borrowing capacities replacing certain previous credit facilities. RESULTS OF OPERATIONS Non-GAAP Measures The Company reports information in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). The Company's management does not, nor does it suggest that investors should, consider 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. F O R M 1 0 - K TIFFANY & CO. K-30 Net Sales. The Company's reported net sales reflect either a translation-related benefit from strengthening foreign currencies or a detriment from a strengthening U.S. dollar. Internally, management monitors and measures its sales performance on a non-GAAP basis that eliminates the positive or negative effects that result from translating sales made outside the U.S. into U.S. dollars ("constant-exchange-rate basis"). Management believes this constant-exchange-rate basis provides a more representative assessment of sales performance and provides better comparability between reporting periods. The following table reconciles the sales percentage increases (decreases) from the GAAP to the non-GAAP basis versus the previous year: 2014 2013 GAAP Reported Translation Effect Constant- Exchange- Rate Basis GAAP Reported Translation Effect Constant- Exchange- Rate Basis 5% 6 9 (4) 6 26 (2)% 7% 6% (4)% 10% — (1) (8) — — 6 10 4 6 26 5 17 (9) 9 53 — (1) (20) 2 — 5 18 11 7 53 K - 0 1 M R O F 2% (2)% 4% 3% (3)% 6% 5 3 (7) (1) 8 (1) (1) (8) — — 6 4 1 (1) 8 3 10 (10) 6 14 — (1) (20) 2 — 3 11 10 4 14 Net Sales: Worldwide Americas Asia-Pacific Japan Europe Other Comparable Store Sales: Worldwide Americas Asia-Pacific Japan Europe Other Statements of Earnings. Internally, management monitors and measures its earnings performance excluding certain items listed below. Management believes excluding such items presents the Company's results on a more comparable basis to the corresponding period in the prior year, thereby providing investors with an additional perspective to analyze the results of operations of the Company. The following tables reconcile certain GAAP amounts to non-GAAP amounts: (in thousands, except per share amounts) Year Ended January 31, 2015 Debt extinguishment a increase/ (decrease) GAAP Non-GAAP Loss on extinguishment of debt $ 93,779 $ (93,779) $ Provision for income taxes Net earnings Diluted earnings per share 253,358 484,179 3.73 32,823 60,956 0.47 — 286,181 545,135 4.20 a Expenses associated with the redemption of $400,000,000 in aggregate principal amount of certain senior notes prior to their scheduled maturities (see "Loss on Extinguishment of Debt" below). TIFFANY & CO. K-31 (in thousands, except per share amounts) GAAP Year Ended January 31, 2014 Selling, general and administrative Arbitration award b increase/ (decrease) Specific cost- reduction initiatives c (decrease)/ increase Non-GAAP expenses $ 1,555,903 $ — $ (9,379) $ 1,546,524 Earnings from operations 304,329 480,211 9,379 793,919 As a % of sales Other income, net Provision for income taxes Effective tax rate Net earnings As a % of sales Diluted earnings per share 7.5% 13,191 73,497 28.8% (7,489) 179,319 — 3,594 19.7% 5,702 256,410 34.8% 181,369 293,403 5,785 480,557 4.5% 1.41 2.28 0.04 11.9% 3.73 b Amounts associated with the award issued in arbitration between the Swatch Group Ltd. and the Company. See "Item 8. Financial Statements and Supplementary Data - Note J - Commitments and Contingencies" for further information. c Expenses associated with specific cost-reduction initiatives which included severance related to staffing reductions and subleasing of certain office space for which only a portion of the Company's future rent obligations will be recovered. F O R M 1 0 - K Free Cash Flow. Internally, management monitors its cash flow on a non-GAAP basis. The ability to generate free cash flow demonstrates how much cash the Company has available for discretionary and non-discretionary items after deduction of capital expenditures. The Company's operations require regular capital expenditures for the opening, renovation and expansion of stores and distribution and manufacturing facilities as well as ongoing investments in information technology. Management believes this provides a more representative assessment of operating cash flows. The following table reconciles GAAP net cash provided by operating activities to non-GAAP free cash flow: (in thousands) 2015 Net cash provided by operating activities $ 615,117 $ Less: Capital expenditures Free cash inflow (outflow) (247,394) $ 367,723 $ 2014 154,652 (221,452) (66,800) Years Ended January 31, Comparable Store Sales Comparable store sales include only sales transacted in Company-operated stores open for more than 12 months. Sales for relocated stores are included in comparable store sales if the relocation occurs within the same geographical market. Sales for a new store 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. TIFFANY & CO. K-32 Net Sales In 2014, worldwide net sales increased $218,783,000, or 5%, due to growth in most regions. By product category, the fashion jewelry category increased $137,039,000, or 8% (reflecting growth in gold jewelry); the engagement jewelry & wedding bands category increased $62,875,000, or 5% (reflecting growth in solitaire diamond rings and wedding bands); and the statement, fine & solitaire jewelry category increased $13,351,000, or 1%. In 2013, worldwide net sales increased $236,881,000, or 6%, due to growth in most regions. By product category, the statement, fine & solitaire jewelry category increased $167,707,000, or 22% (reflecting growth throughout the category, along with growing demand for colored diamonds and other gemstones); the engagement jewelry & wedding bands category increased $49,469,000, or 4% (reflecting growth in solitaire diamond rings); and the fashion jewelry category increased $36,546,000, or 2% (primarily due to sales growth of gold jewelry). Certain reclassifications were made to these categories to conform with management's current internal analysis of product sales. Net sales by segment were as follows: (in thousands) Americas Asia-Pacific Japan Europe Other 2014 2013 2012 $ 2,033,453 $ 1,926,864 $ 1,839,969 1,025,169 554,258 497,287 139,746 944,676 578,571 469,784 111,235 810,420 639,185 432,167 72,508 $ 4,249,913 $ 4,031,130 $ 3,794,249 2014 vs. 2013 % Change 2013 vs. 2012 % Change 6% 9 (4) 6 26 5% 5% 17 (9) 9 53 6% K - 0 1 M R O F Americas. Americas currently includes sales in 122 Company-operated TIFFANY & CO. stores in the United States, Canada and Latin America, as well as sales of TIFFANY & CO. products in certain of those markets through business-to-business, Internet, catalog and wholesale operations. Americas represented 48% of worldwide net sales in 2014, 2013 and 2012, while sales in the U.S. represented 88%, 88% and 89% of net sales in the Americas in those same periods. In 2014, total sales increased $106,589,000, or 6%, due to an 11% increase in the average price per jewelry unit sold, which management attributes to price increases and a shift in sales mix toward higher- priced products. A 5% decline in the number of jewelry units sold was entirely due to soft demand for entry-level price point silver jewelry. Included in the $106,589,000 increase is an $80,856,000, or 5%, increase in comparable store sales due to geographically broad-based growth across most of the region and a $27,824,000 increase in non-comparable store sales. On a constant-exchange-rate basis, both total sales and comparable store sales increased 6%. In 2013, total sales increased $86,895,000, or 5%, due to a 10% increase in the average price per jewelry unit sold partly offset by a 4% decline in the number of jewelry units sold. Management attributes the increase in average price primarily to a shift in sales mix toward higher-priced products and the decrease in unit volume primarily to soft demand for entry-level price point silver jewelry. Included in the $86,895,000 increase is a $43,393,000, or 3%, increase in comparable store sales led by growth in New York Flagship store sales as well as modest growth in branch store sales and a $46,563,000 increase in non-comparable store sales. On a constant-exchange-rate basis, total sales increased 5%, and comparable store sales increased 3%. Asia-Pacific. Asia-Pacific currently includes sales in 73 Company-operated TIFFANY & CO. stores, as well as sales of TIFFANY & CO. products in certain markets through Internet and wholesale operations. Asia- TIFFANY & CO. K-33 F O R M 1 0 - K Pacific represented 24%, 23% and 21% of worldwide net sales in 2014, 2013 and 2012. Sales in Greater China represented more than half of Asia-Pacific's net sales in those same periods. In 2014, total sales increased $80,493,000, or 9%, due to a 5% increase in the average price per jewelry unit sold as well as a 4% increase in the number of jewelry units sold. Management attributes the increase in the average price to price increases and a shift in sales mix toward higher-priced products. The increase in the number of jewelry units sold reflected growth in all product categories. Included in the $80,493,000 increase is a $39,705,000 increase in non-comparable store sales, a $23,959,000, or 3%, increase in comparable store sales and a $17,373,000 increase in wholesale sales of TIFFANY & CO. merchandise to independent distributors. On a constant-exchange-rate basis, total sales increased 10% and comparable store sales increased 4% due to growth in most markets. In 2013, total sales increased $134,256,000, or 17%, due to an 11% increase in the number of jewelry units sold and a 6% increase in the average price per jewelry unit sold. The increase in the number of jewelry units sold reflected growth in all product categories. Management attributes the increase in average price primarily to a shift in sales mix toward higher-priced products. Included in the $134,256,000 increase is a $74,818,000, or 10%, increase in comparable store sales, a $44,519,000 increase in non-comparable store sales and a $15,232,000 increase in sales of TIFFANY & CO. merchandise to independent distributors. On a constant-exchange-rate basis, total sales increased 18% and comparable store sales increased 11% due to geographically broad-based sales growth across the region. Japan. Japan currently includes sales in 56 Company-operated TIFFANY & CO. stores, as well as sales of TIFFANY & CO. products through business-to-business, Internet and wholesale operations. Japan represented 13%, 14% and 17% of worldwide net sales in 2014, 2013 and 2012. In 2014, total sales decreased $24,313,000, or 4%, and comparable store sales decreased $35,173,000, or 7%, due to currency translation. On a constant-exchange-rate basis, total sales increased 4% due to a 9% increase in the average price per jewelry unit sold partly offset by a 5% decrease in the number of jewelry units sold due to decreases in all categories. Management attributes the increase in average price to price increases and a shift in sales mix toward higher-priced products within the fashion jewelry category. Comparable store sales on a constant-exchange-rate basis increased 1%. The overall sales performance reflected significant sales growth in the first quarter prior to an increase in the consumption tax in April 2014, offset by softness in sales in the remaining quarters. In 2013, total sales decreased $60,614,000, or 9%, and comparable store sales decreased $57,525,000, or 10%, due to currency translation. On a constant-exchange-rate basis, total sales increased 11% primarily due to a 16% increase in the average price per jewelry unit sold partly offset by a 5% decrease in the number of jewelry units sold. Management attributes the increase in average price primarily to a shift in sales mix toward higher-priced products and the decrease in the number of jewelry units sold to reduced fashion jewelry unit sales. Comparable store sales on a constant-exchange-rate basis increased 10%. Europe. Europe currently includes sales in 38 Company-operated TIFFANY & CO. stores, as well as sales of TIFFANY & CO. products in certain markets through the Internet. Europe represented 12%, 12% and 11% of worldwide net sales in 2014, 2013 and 2012. Sales in the United Kingdom ("U.K.") represent more than 40% of European net sales. In 2014, total sales increased $27,503,000, or 6%, due to a 3% increase in both the number of jewelry units sold and in the average price per jewelry unit sold. Management attributes the increase in the number of jewelry units sold to fashion jewelry and the increase in average price to price increases and a shift in sales mix toward higher-priced products within the fashion jewelry category. Included in the $27,503,000 increase is a $26,994,000 increase in non-comparable store sales. On a constant- TIFFANY & CO. K-34 exchange-rate basis, total sales increased 6% due to strength in continental Europe and comparable store sales decreased 1%. In 2013, total sales increased $37,617,000, or 9%, due to a 5% increase in the number of jewelry units sold and a 4% increase in the average price per jewelry unit sold. Management attributes the increase in the number of jewelry units sold to fashion jewelry and the increase in average price primarily to sales of higher priced merchandise across all product categories. Included in the $37,617,000 increase is a $21,653,000, or 6%, increase in comparable store sales, a $10,927,000 increase in non-comparable store sales, and a $5,047,000 increase in Internet sales. On a constant-exchange-rate basis, total sales increased 7% and comparable store sales increased 4% reflecting growth in most countries. Other. Other consists of all non-reportable segments. Other includes the Emerging Markets region, which consists of retail sales in five TIFFANY & CO. stores in the U.A.E. and, beginning in February 2014, one TIFFANY & CO. store in Russia, and wholesale sales of TIFFANY & CO. merchandise to independent distributors for resale in certain emerging markets (primarily in the Middle East and, through January 2014, in Russia). In addition, Other includes wholesale sales of diamonds obtained through bulk purchases that were subsequently deemed not suitable for the Company's needs as well as earnings received from third-party licensing agreements. In 2014, total sales increased $28,511,000, or 26%, primarily due to retail sales growth in the Emerging Markets region of $20,443,000, reflecting the opening of the first Company-operated TIFFANY & CO. store in Russia and comparable store sales growth of 8%. The remainder of the increase was primarily related to higher wholesale sales of diamonds. In 2013, total sales increased $38,727,000, or 53%, primarily due to retail sales growth in the U.A.E., as well as higher wholesale sales of rough diamonds. Comparable store sales of five TIFFANY & CO. stores in the U.A.E. increased 14% in 2013. Store Data. In 2014, the Company added a net of 6 stores: three in the Americas (two in the U.S. and one in Mexico), two in Japan, one in Asia-Pacific (in Australia), one in Europe (in France) and one in the Emerging Markets (in Russia) while closing two stores in the Americas. K - 0 1 M R O F In 2013, the Company added a net of 14 stores: six in the Americas (three in the U.S., one each in Canada, Mexico and Brazil), seven in Asia-Pacific (four in China, two in Taiwan and one in Hong Kong) and three in Europe (two in Italy and one in Germany) while closing one store each in Asia-Pacific and in Japan. Sales per gross square foot generated by all company-operated stores were approximately $3,100 in 2014, $3,100 in 2013 and $3,000 in 2012. Gross Margin Gross profit as a percentage of net sales 2014 59.7% 2013 58.1% 2012 57.0% Gross margin (gross profit as a percentage of net sales) increased by 1.6 percentage points in 2014 largely benefiting from favorable product input costs and price increases, and, to some extent, a shift in mix to higher-margin products, especially in the fashion jewelry category. Gross margin increased by 1.1 percentage points in 2013 primarily benefiting from reduced product cost pressures and price increases taken in the first half of the year. A continued shift in sales mix toward higher-priced, lower-margin products offset a portion of these benefits. Management periodically reviews and adjusts its retail prices when appropriate to address product input cost increases, specific market conditions and changes in foreign currencies/U.S. dollar relationships. Its TIFFANY & CO. K-35 long-term strategy is to continue that approach. Among the market conditions that management considers are consumer demand for the product category involved, which may be influenced by consumer confidence, and competitive pricing conditions. Management uses derivative instruments to mitigate certain foreign exchange and precious metal price exposures (see "Item 8. Financial Statements and Supplementary Data – Note H - Hedging Instruments"). Management increased retail prices in both 2014 and 2013 across all geographic regions and product categories. Selling, General and Administrative Expenses F O R M 1 0 - K SG&A expenses as a percentage of net sales 2014 38.7% 2013 38.6% 2012 38.6% SG&A expenses increased $89,843,000, or 6%, in 2014 and $89,836,000, or 6%, in 2013. SG&A expenses in those years are not comparable due to the inclusion of certain expenses associated with specific cost- reduction initiatives in 2013. See "Non-GAAP Measures" for further details. Excluding the 2013 items noted in "Non-GAAP Measures", SG&A expenses in 2014 increased $99,222,000, or 6%, largely reflecting increased marketing expenses of $30,484,000, increased fixed labor costs of $26,019,000 (primarily increased store-related labor costs) and increased store occupancy and depreciation expenses of $22,551,000 (related to new and existing stores). Excluding the 2013 items noted in "Non-GAAP Measures", SG&A expenses in 2013 increased $80,457,000, or 5%, primarily due to increased fixed and variable labor costs (such as sales commissions and incentive compensation) of $34,628,000 and increased store occupancy and depreciation expenses of $32,577,000 (related to new and existing stores). In 2013, changes in foreign currency exchange rates had the effect of decreasing SG&A expenses by 3%. SG&A expenses as a percentage of net sales, excluding the items noted in "Non-GAAP Measures", would have been 38.4% in 2013. The Company's SG&A expenses are largely fixed in nature. Variable costs (which include items such as variable store rent, sales commissions and fees paid to credit card companies) represent approximately one-fifth of total SG&A expenses. Arbitration Award Expense In the fourth quarter of 2013, the Company recorded a charge of $480,211,000, related to the adverse arbitration ruling between The Swatch Group Ltd. and the Company, which includes the damages, interest and other costs associated with the ruling. See "Item 8. Financial Statements and Supplementary Data - Note J - Commitments and Contingencies" for additional information. Earnings from Operations Earnings from operations increased 193% in 2014 and decreased 56% in 2013 primarily due to the impact of the Arbitration Award. Operating margin increased 13.5 percentage points in 2014 and decreased 10.9 percentage points in 2013. Excluding other operating expenses in 2013 (see below), earnings from operations increased 12% and 14% in 2014 and 2013, and operating margin improved 1.3 percentage points in 2014 (due to an increase in gross margin) and 1.3 percentage points in 2013 (primarily due to an increase in gross margin as well as sales leverage on operating expenses). TIFFANY & CO. K-36 Results by segment are as follows: (in thousands) Earnings (losses) from operations*: 2014 % of Net Sales 2013 % of Net Sales 2012 % of Net Sales Americas Asia-Pacific Japan Europe Other Unallocated corporate expenses Earnings from operations before other operating expenses $ 435,507 21.4 % $ 374,342 19.4 % $ 345,917 18.8 % 281,586 195,985 107,806 7,610 27.5 35.4 21.7 5.4 244,142 215,582 101,153 25.8 37.3 21.5 188,510 204,510 90,955 23.3 32.0 21.0 (649) (0.6) (6,254) (8.6) 1,028,494 934,570 823,638 (137,065) (3.2)% (140,651) (3.5)% (126,421) (3.3)% 891,429 21.0 % 793,919 19.7 % 697,217 18.4 % Other operating expenses — (489,590) — Earnings from operations $ 891,429 21.0 % $ 304,329 7.5 % $ 697,217 18.4 % * Percentages represent earnings (losses) from operations as a percentage of each segment's net sales. On a segment basis, the ratio of earnings (losses) from operations to each segment's net sales in 2014 compared with 2013 was as follows: K - 0 1 M R O F • Americas – the ratio increased 2.0 percentage points resulting from an improvement in gross margin; • Asia-Pacific – the ratio increased 1.7 percentage points primarily due to an improvement in gross margin partly offset by increased spending for new and existing stores; • Japan – the ratio decreased 1.9 percentage points due to a decrease in gross margin (primarily resulting from a reduced benefit from the Company's ongoing program to utilize Yen forward contracts for a portion of forecasted merchandise purchases); • Europe – the ratio increased 0.2 percentage point due to an improvement in gross margin partly offset by increased spending for new and existing stores; and • Other – the ratio increased 6.0 percentage points due to an improvement in the performance of retail operations in the Emerging Markets region and lower charges associated with the write-down of wholesale diamond inventory deemed not suitable for the Company's needs. On a segment basis, the ratio of earnings (losses) from operations to each segment's net sales in 2013 compared with 2012 was as follows: • Americas – the ratio increased 0.6 percentage point resulting from an improvement in gross margin as well as sales leveraging of operating expenses; • Asia-Pacific – the ratio increased 2.5 percentage points primarily due to an improvement in gross margin as well as sales leveraging of operating expenses; • Japan – the ratio increased 5.3 percentage points primarily due to an improvement in gross margin (which includes a benefit from the Company's ongoing program to utilize forward contracts for a portion of forecasted merchandise purchases) as well as sales leveraging of operating expenses; TIFFANY & CO. K-37 • Europe – the ratio increased 0.5 percentage point due to an improvement in gross margin partly offset by increased store-related operating expenses; and • Other – the ratio improved 8.0 percentage points due to improvement in the performance of retail operations in the Emerging Markets region partly offset by charges associated with the valuation of wholesale diamonds not suitable for the Company's needs. 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 centralized information technology, finance, legal and human resources departments. Unallocated corporate expenses decreased by $3,586,000 in 2014. Such expenses increased by $14,230,000 in 2013 primarily due to increases in management incentive and stock-based compensation. Other operating expenses in 2013 represent $480,211,000 of expenses associated with the adverse arbitration ruling between the Swatch Group Ltd. and the Company and $9,379,000 of expenses associated with specific cost-reduction initiatives. See "Item 8. Financial Statements and Supplementary Data - Note J - Commitments and Contingencies." Interest Expense and Financing Costs Interest expense and financing costs increased $249,000, or less than 1%, in 2014. Such expenses increased $3,585,000, or 6%, in 2013, primarily due to increased borrowings. F O R M 1 0 - K Other Income, Net Other income, net includes interest income, gains/losses on investment activities and foreign currency transactions. Other income, net decreased $10,401,000, or 79%, in 2014, and increased $7,763,000, or 143%, in 2013. However, when excluding $7,489,000 of foreign currency transaction gains related to the Arbitration Award expense recorded in 2013, other income, net declined $2,912,000 in 2014 primarily due to other foreign currency transaction losses but increased $274,000 in 2013. See "Item 8. Financial Statements and Supplementary Data - Note J - Commitments and Contingencies" and "Non- GAAP Measures" for further information. Loss on Extinguishment of Debt In 2014, the Company recorded a loss on extinguishment of debt of $93,779,000 associated with the redemption of all of the aggregate principal amount outstanding of the Company's (i) $100,000,000 principal amount of 9.05% Series A Senior Notes due December 23, 2015; (ii) $125,000,000 principal amount of 10.0% Series A-2009 Senior Notes due February 13, 2017; (iii) $50,000,000 principal amount of 10.0% Series A Senior Notes due April 9, 2018; and (iv) $125,000,000 principal amount of 10.0% Series B-2009 Senior Notes due February 13, 2019 (collectively, the "Private Placement Notes") prior to maturity in accordance with the respective note purchase agreements governing each series of Private Placement Notes, which included provisions for make-whole payments in the event of early repayment. Provision for Income Taxes The effective income tax rate was 34.4% in 2014 compared with 28.8% in 2013 and 35.3% in 2012. In 2013, the effective income tax rate would have been 34.8% when excluding the effects of certain expenses noted in "Non-GAAP Measures". TIFFANY & CO. K-38 LIQUIDITY AND CAPITAL RESOURCES The Company's liquidity needs have been, and are expected to remain, primarily a function of its ongoing, seasonal and expansion-related working capital requirements and capital expenditure needs. Over the long term, the Company manages its cash and capital structure to maintain a strong financial position that provides flexibility to pursue strategic initiatives. Management regularly assesses its working capital needs, capital expenditure requirements, debt service, dividend payouts, share repurchases and future investments. Management believes that cash on hand, internally-generated cash flows, the funds available under its revolving credit facilities and the ability to access the debt and capital markets are sufficient to support the Company's liquidity and capital requirements for the foreseeable future. As of January 31, 2015, the Company’s cash and cash equivalents totaled $729,957,000, of which approximately one-third was held in locations outside the U.S. where the Company has the intention to indefinitely reinvest any undistributed earnings to support its continued expansion and investments outside of the U.S. Such cash balances are not available to fund U.S. cash requirements unless the Company were to decide to repatriate such funds and incur applicable income tax charges. The Company has sufficient sources of cash in the U.S. to fund its U.S. operations without the need to repatriate any of those funds held outside the U.S. 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 2014 2013 2012 $ 615,117 $ 154,652 $ 328,290 (216,989) (246,781) (331,146) (23,375) 9,426 (65,426) (1,505) 71,446 2,294 Net increase (decrease) in cash and cash equivalents $ 384,179 $ (159,060) $ 70,884 K - 0 1 M R O F Operating Activities The Company had a net cash inflow from operating activities of $615,117,000 in 2014, $154,652,000 in 2013 and $328,290,000 in 2012. The change from 2013 to 2014 was primarily due to the improvement in operating performance and the timing of income tax payments and other payables. The change from 2012 to 2013 was impacted by the payment of the Arbitration Award (see "Item 8. Financial Statements and Supplementary Data - Note J - Commitments and Contingencies"), a decelerated rate of inventory growth and the timing of income tax payments. Working Capital. Working capital (current assets less current liabilities) and the corresponding current ratio (current assets divided by current liabilities) were $2,953,354,000 and 5.5 at January 31, 2015 compared with $2,531,648,000 and 4.6 at January 31, 2014. Accounts receivable, less allowances at January 31, 2015 were 3% higher than at January 31, 2014 due to sales growth. When excluding the effect of foreign currency translation, primarily from the weaker Japanese yen, accounts receivable, less allowances would have been 10% higher than January 31, 2014. On a 12-month rolling basis, accounts receivable turnover was 21 times in 2014 and 22 times in 2013. Inventories, net at January 31, 2015 were 2% higher than at January 31, 2014. Finished goods inventories rose 4% to support new store openings and expanded product assortments, while combined raw material and work-in-process inventories decreased 2%. Net inventories rose 6% from January 31, 2014 when excluding the effect of foreign currency translation. TIFFANY & CO. K-39 Investing Activities The Company had a net cash outflow from investing activities of $216,989,000 in 2014, $246,781,000 in 2013 and $331,146,000 in 2012. The decreased outflow in 2014 was due to net proceeds received from the sale of marketable securities and short term investments partly offset by increased capital expenditures. The increased outflow in 2012 was primarily due to payments of $82,664,000 to acquire intangible assets as well as a $25,000,000 payment related to an acquisition. Marketable Securities and Short-Term Investments. The Company invests a portion of its cash in marketable securities and short-term investments. The Company had net proceeds received from the sale of marketable securities and short-term investments of $15,245,000 during 2014, net purchases of investments in marketable securities and short-term investments of $23,460,000 during 2013 and net proceeds received from the sale of marketable securities of $4,063,000 during 2012. F O R M 1 0 - K Capital Expenditures. Capital expenditures are typically related to the opening, renovation and/or relocation of stores (which represented approximately half of capital expenditures in 2014, 2013 and 2012), distribution and manufacturing facilities and ongoing investments in information technology. Capital expenditures were $247,394,000 in 2014, $221,452,000 in 2013 and $219,530,000 in 2012, representing 6%, 5% and 6% of net sales in those respective years. The increase in 2014 reflected incremental spending for information technology systems and internal manufacturing capacity. Notes Receivable Funded. The Company has extended loans to diamond mining and exploration companies in order to obtain rights to purchase the mine's output. The Company loaned $3,050,000 and $8,015,000 in 2013 and 2012 to various companies. Proceeds from Notes Receivable Funded. In 2014 and 2013, the Company received $15,160,000 and $1,181,000 of repayments associated with loans extended to diamond mining and exploration companies discussed in Notes Receivable Funded above. Payments to acquire intangible assets. In 2012, the Company made a $47,059,000 payment in connection with maintaining an exclusive license for Peretti-designed jewelry and products. The Company also made a $35,605,000 payment to secure a prime retail location in Europe. Payment for acquisition. In 2012, the Company made a $25,000,000 payment related to the acquisition of net assets associated with the five existing independently-operated TIFFANY & CO. stores located in the U.A.E. Financing Activities The Company had net cash outflows from financing activities of $23,375,000 in 2014 and $65,426,000 in 2013 compared with an inflow of $71,446,000 in 2012. Year-over-year changes in cash flows from financing activities are largely driven by borrowings. Additionally, the Company resumed repurchasing its Common Stock in 2014 under a new share repurchase program after it did not repurchase any of its Common Stock in 2013. TIFFANY & CO. K-40 K - 0 1 M R O F Recent Borrowings. The Company had net proceeds from short-term and long-term borrowings as follows: (in thousands) Short-term borrowings: (Repayments of) proceeds from credit facility borrowings, net Proceeds from other credit facility borrowings Repayments of other credit facility borrowings Net proceeds from short-term borrowings Long-term borrowings: Proceeds from issuances Repayments Net proceeds from long-term borrowings Net proceeds from total borrowings Payments of debt extinguishment costs (included in operating activities) Net proceeds 2014 2013 2012 $ (12,454) $ 49,883 $ 19,803 (3,412) 3,937 548,037 (400,000) 148,037 151,974 89,806 (69,737) 69,952 — — — 69,952 47,278 40,298 (361) 87,215 250,000 (60,000) 190,000 277,215 (93,378) — — $ 58,596 $ 69,952 $ 277,215 Credit Facilities. In October 2014, Tiffany & Co. entered into a four-year $375,000,000 and a five-year $375,000,000 multi-bank, multi-currency, committed unsecured revolving credit facility, including letter of credit subfacilities (collectively, the "New Credit Facilities"), resulting in a total borrowing capacity of $750,000,000. The New Credit Facilities replaced the previously existing $275,000,000 three-year unsecured revolving credit facility and $275,000,000 five-year unsecured revolving credit facility, which were terminated and repaid concurrently with Tiffany & Co.'s entry into the New Credit Facilities. See "Item 8. Financial Statements and Supplementary Data - Note G - Debt" for additional information. Other Credit Facilities. In July 2013, Tiffany & Co.'s wholly-owned subsidiary, Tiffany & Co. (Shanghai) Commercial Company Limited ("Tiffany-Shanghai"), entered into a three-year multi-bank revolving credit agreement (the "Tiffany-Shanghai Credit Agreement"). The Tiffany-Shanghai Credit Agreement has an aggregate borrowing limit of RMB 930,000,000 ($148,879,000 at January 31, 2015). The Tiffany- Shanghai Credit Agreement is available for Tiffany-Shanghai's general working capital requirements, which included repayment of a portion of the indebtedness under Tiffany-Shanghai's existing bank loan facilities. The six lenders that are party to the Tiffany-Shanghai Credit Agreement will make loans, upon Tiffany- Shanghai's request, for periods of up to 12 months at the applicable interest rates as announced by the People's Bank of China. The Tiffany-Shanghai Credit Agreement matures in July 2016. See "Item 8. Financial Statements and Supplementary Data - Note G - Debt" for additional information. Under all of the Company's credit facilities, there were $234,013,000 of borrowings, $5,671,000 of letters of credit issued but not outstanding and $772,155,000 available for borrowing at January 31, 2015. The weighted-average interest rate for the amount outstanding at January 31, 2015 was 3.28% compared with 3.37% at January 31, 2014. Senior Notes. In September 2014, Tiffany & Co. issued $250,000,000 aggregate principal amount of 3.80% Senior Notes due 2024 (the "2024 Notes") and $300,000,000 aggregate principal amount of 4.90% Senior Notes due 2044 (the "2044 Notes" and, together with the 2024 Notes, the "Senior Notes") in a private placement conducted pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended. The Senior Notes were issued at a discount with aggregate net proceeds of $548,037,000 (with an effective yield of 3.836% for the 2024 Notes and an effective yield of 4.926% for the 2044 Notes). Tiffany & Co. used the net proceeds from the issuance of the Senior Notes to redeem $400,000,000 in aggregate principal amount of long-term debt prior to their scheduled maturities which TIFFANY & CO. K-41 ranged from 2015 to 2019 and paid $93,378,000 of debt extinguishment costs associated with the redemption. The Company used the remaining net proceeds from the sale of the Senior Notes for general corporate purposes. See "Item 8. Financial Statements and Supplementary Data - Note G - Debt" for additional information. In 2012, Tiffany & Co. issued $250,000,000 of long-term debt due 2042 at an interest rate of 4.40%. Proceeds were used to repay $60,000,000 of 10-year term, 6.56% Series D Senior Notes that came due in July 2012 and for general corporate purposes. The ratio of total debt (short-term borrowings, current portion of long-term debt and long-term debt) to stockholders' equity was 39% at January 31, 2015 and 37% at January 31, 2014. At January 31, 2015, the Company was in compliance with all debt covenants. Share Repurchases. In January 2011, the Company's Board of Directors approved a stock repurchase program ("2011 Program") and terminated a previously-existing program. The 2011 Program authorized the Company to repurchase up to $400,000,000 of its Common Stock through open market or private transactions. The timing of repurchases and the actual number of shares to be repurchased depended on a variety of discretionary factors such as stock price, cash-flow forecasts and other market conditions. The Company suspended share repurchases during the second quarter of 2012 in order to allow for a more effective allocation of resources consistent with the Company's growth strategies. In January 2013, the Board of Directors extended the expiration date of the 2011 Program to January 31, 2014. The 2011 Program expired on January 31, 2014 with $163,794,000 of unused capacity. F O R M 1 0 - K In March 2014, the Company's Board of Directors approved a share repurchase program which authorizes the Company to repurchase up to $300,000,000 of its Common Stock through open market transactions. Purchases are executed under a written plan for trading securities as specified under Rule 10b5-1 promulgated under the Securities and Exchange Act of 1934, as amended, the terms of which are within the Company's discretion, subject to applicable securities laws, and are based on market conditions and the Company's liquidity needs. The program will expire on March 31, 2017. 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 2014 27,028 $ 301 89.91 $ $ $ 2013 — $ — — $ 2012 54,107 813 66.54 At January 31, 2015, $272,972,000 remained available for share repurchases under this authorization. Dividends. The cash dividend on the Company's Common Stock was increased once in each of 2014, 2013 and 2012. The Company's Board of Directors declared quarterly dividends which totaled $1.48, $1.34 and $1.25 per common share in 2014, 2013 and 2012 with cash dividends paid of $191,171,000, $170,312,000 and $158,594,000 in those respective years. The dividend payout ratio (dividends as a percentage of net earnings) was 39%, 94% and 38% in 2014, 2013 and 2012. Dividends as a percentage of adjusted net earnings (see "Non-GAAP Measures") were 35% in 2014 and 2013. 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 flows and capital requirements. TIFFANY & CO. K-42 Proceeds from Non-controlling Interest. In 2012, the Company received proceeds of $12,750,000 associated with its venture with Damas Jewellery LLC that acquired the five existing independently- operated TIFFANY & CO. stores located in the U.A.E. as noted in Payment for acquisition above. Contractual Cash Obligations and Commercial Commitments The following is a summary of the Company's contractual cash obligations at January 31, 2015: (in thousands) Total 2015 2016-2017 2018-2019 Thereafter Unrecorded contractual obligations: Operating leases a Inventory purchase obligations b Interest on debt c Other contractual obligations d Recorded contractual obligations: Short-term borrowings Long-term debt e $1,461,677 $ 237,091 $ 398,344 $ 270,226 $ 556,016 376,202 731,406 108,922 234,013 884,470 376,202 36,653 78,754 — 71,853 20,049 — — 70,400 552,500 4,269 5,850 234,013 — — 84,470 — — — 800,000 $3,796,690 $ 962,713 $ 574,716 $ 344,895 $1,914,366 a) Operating lease obligations do not include obligations for contingent rent, property taxes, insurance and maintenance that are required by most lease agreements. Contingent rent for the year ended January 31, 2015 totaled $38,572,000. See "Item 8. Financial Statements and Supplementary Data - Note J - Commitment and Contingencies" for a discussion of the Company’s operating leases. b) The Company will, from time to time, secure supplies of rough diamonds by agreeing to purchase a defined portion of a mine's output. Inventory purchase obligations associated with these agreements have been estimated at approximately $160,000,000 for 2015 and included in this table. Purchases beyond 2015 that are contingent upon mine production have been excluded as they cannot be reasonably estimated. c) Excludes interest payments on amounts outstanding under available lines of credit, as the outstanding amounts fluctuate based on the Company's working capital needs. d) Consists primarily of technology licensing and service contracts, fixed royalty commitments, K - 0 1 M R O F construction-in-progress and packaging supplies. e) Amounts exclude any unamortized discount or premium. The summary above does not include the following items: • Cash contributions to the Company's pension plan and cash payments for other postretirement obligations. 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. To the extent that these requirements are fully covered by assets in the Qualified Plan, the Company may elect not to make any contribution in a particular year. No cash contribution is required in 2015 to meet the minimum funding requirements of the Employee Retirement Income Security Act ("ERISA"). The Company periodically evaluates whether to make discretionary cash contributions to the Qualified Plan, and currently does not anticipate making such contributions in 2015. This expectation is subject to change based on management's assessment of a variety of factors, including, but not limited to, asset performance, interest rates and changes in actuarial assumptions. The Company estimates cash payments for postretirement health-care and life insurance benefit obligations to be $1,734,000 in 2015. TIFFANY & CO. K-43 F O R M 1 0 - K • Unrecognized tax benefits at January 31, 2015 of $8,333,000 and accrued interest and penalties of $6,010,000. The final outcome of tax uncertainties is dependent upon various matters including tax examinations, interpretation of the applicable tax laws 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 examinations may result in proposed assessments where the ultimate resolution may result in the Company owing additional taxes. As of January 31, 2015, unrecognized tax benefits are not expected to change materially in the next 12 months. Future developments may result in a change in this assessment. The following is a summary of the Company's outstanding borrowings and available capacity under its credit facilities at January 31, 2015: (in thousands) Total Capacity Borrowings Outstanding Letters of Credit Issued Available Capacity Four-year revolving credit facility a $ 375,000 $ 25,916 $ — $ 349,084 Five-year revolving credit facility b Other credit facilities c 375,000 261,839 66,603 141,494 5,671 — 302,726 120,345 $ 1,011,839 $ 234,013 $ 5,671 $ 772,155 a Matures in October 2018. b Matures in October 2019. c Maturities range from 2015 through 2016. In addition, the Company has other available letters of credit and financial guarantees of $72,194,000 of which $24,092,000 was outstanding at January 31, 2015. Of those available letters of credit and financial guarantees, $59,092,000 expires within one year. Seasonality As a jeweler and specialty retailer, the Company's business is seasonal in nature, with the fourth quarter typically representing approximately one-third of annual net sales and a higher percentage 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 and the differences could be material. Periodically, the Company reviews all significant estimates and assumptions affecting the financial statements and records 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, 2015, a 10% change TIFFANY & CO. K-44 K - 0 1 M R O F in the reserve for discontinued and slow-moving products would have resulted in a change of $6,325,000 in inventory and cost of sales. Property, plant and equipment and intangibles assets and key money. The Company reviews its property, plant and equipment and intangibles assets and key money 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 these 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 did not record any material impairment charges in 2014, 2013 or 2012. 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. A qualitative assessment is first performed for each reporting unit to determine whether it is more-likely-than-not that the fair value of the reporting unit is less than its carrying value. If it is concluded that this is the case, an evaluation, based upon discounted cash flows, is performed and requires management to estimate future cash flows, growth rates and economic and market conditions. The 2014, 2013 and 2012 evaluations resulted in no impairment charges. Notes receivables and other financing arrangements. The Company has provided financing to diamond mining and exploration companies in order to obtain rights to purchase the mine's output. Management evaluates these financing arrangements for potential impairment by reviewing the parties' financial statements and projections along with business, operational and other economic factors on a periodic basis. If the analyses indicate that the financing receivable is not recoverable, an impairment loss is recognized, in respect to all or a portion of the financing, during that period. The Company did not record any material impairment charges in 2014, 2013 or 2012. Income taxes. The Company is subject to income taxes in U.S. federal and state, as well as foreign jurisdictions. The calculation of the Company's tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in a multitude of jurisdictions across the Company's global operations. Significant judgments and estimates are required in determining consolidated income tax expense. The Company's income tax expense, deferred tax assets and liabilities and reserves for uncertain tax positions reflect management's best assessment of estimated future taxes to be paid. 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. 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. In evaluating the Company's ability to recover its deferred tax assets within the jurisdiction from which they arise, management considers all available evidence. The Company records valuation allowances when management determines it is more likely than not that deferred tax assets will not be realized in the future. Employee benefit plans. The Company maintains several pension and retirement plans, as well as provides certain postretirement health-care and life insurance benefits for retired employees. The Company makes certain assumptions that affect the underlying estimates related to pension and other postretirement TIFFANY & CO. K-45 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 discount rates of 4.75% to determine 2014 expense for its U.S. Qualified Plan and 5.00% to determine 2014 expense for its Excess Plan/SRIP and postretirement plans. Holding all other assumptions constant, a 0.5% increase in the discount rate would have decreased 2014 pension and postretirement expenses by $5,266,000 and $581,000. A decrease of 0.5% in the discount rate would have increased the 2014 pension and postretirement expenses by $5,827,000 and $353,000. 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) an 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 on pension plan assets of 7.50% to determine its 2014 pension expense. Holding all other assumptions constant, a 0.5% change in the long-term rate of return would have changed the 2014 pension expense by approximately $1,600,000. 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. F O R M 1 0 - K For postretirement benefit measurement purposes, 7.50% (for pre-age 65 retirees) and 6.50% (for post- age 65 retirees) annual rates of increase in the per capita cost of covered health care were assumed for 2015. The rates were assumed to decrease gradually to 4.75% by 2023 and remain at that level thereafter. A one-percentage-point increase in the assumed health-care cost trend rate would increase the Company's accumulated postretirement benefit obligation by approximately $6,200,000 for the year ended January 31, 2015. Decreasing the assumed health-care cost trend rate by one-percentage point would decrease the Company's accumulated postretirement benefit obligation by approximately $4,200,000 for the year ended January 31, 2015. A one-percentage-point change in the assumed health- care cost trend rate would not have a significant effect on the Company's aggregate service and interest cost components of the 2014 postretirement expense. NEW ACCOUNTING STANDARDS See "Item 8. Financial Statements and Supplementary Data - Note B - Summary of Significant Accounting Policies." OFF-BALANCE SHEET ARRANGEMENTS The Company does not have any off-balance sheet arrangements. TIFFANY & CO. K-46 2015 Outlook For the fiscal year ending January 31, 2016, management is forecasting minimal growth in net earnings per diluted share from the $4.20 (excluding the debt extinguishment charge noted in "Non-GAAP Measures") earned in fiscal 2014. This forecast anticipates a decline of approximately 30% in the first quarter’s net earnings and a more modest decline in the second quarter, followed by expected double-digit percentage net earnings increases in the third and fourth quarters. This forecast is based on the following assumptions, which are approximate and may or may not prove valid, and which should be read in conjunction with "Item 1A. Risk Factors" on page K-13: • Worldwide net sales increasing by a mid-single-digit percentage on a constant-exchange-rate basis with sales growth in all regions. The strong U.S. dollar is expected to have an adverse translation effect on sales throughout fiscal 2015 and, therefore, result in a low-single-digit percentage increase for the full year when reported in U.S. dollars. • Additionally, worldwide net sales in the first quarter are expected to decline by approximately 10%, as reported in U.S. dollars, primarily due to a difficult comparison to strong sales growth achieved in Japan in last year’s first quarter and continued softness currently being experienced in the Americas; worldwide net sales are expected to increase by a low-single-digit percentage, as reported in U.S. dollars, in the second quarter. • Increasing the number of Company-operated stores by 12-15, net, with the majority of expansion planned in Asia-Pacific and the balance in the Americas and Europe. • Selling, general and administrative expenses increasing at a greater rate than sales growth, partly due to expansion and higher marketing expenses. In addition, overall expense growth includes the effect of a noncash increase in employee-benefit-related expenses of $30,000,000, or $0.15 per diluted share after-tax, tied to changes in actuarial assumptions for the Company’s U.S. pension and postretirement benefit plans. K - 0 1 M R O F • Earnings from operations equal to the prior year. • Interest and other expenses, net of $50,000,000. • An effective income tax rate equivalent to the prior year. • The assumptions for declines in net earnings in the first and second quarters are tied to the sales expectations noted above, and the related effects on gross margin, along with higher marketing spending tied to the launch of the watch collection. • Minimal growth in net inventories. • Capital expenditures of $260,000,000, versus $247,000,000 last year. • Free cash flow exceeding $400,000,000. TIFFANY & CO. K-47 Item 7A. Quantitative and Qualitative Disclosures About Market Risk. The Company is exposed to market risk from fluctuations in foreign currency exchange rates, precious metal prices and interest rates, 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. Foreign Currency Risk F O R M 1 0 - K The Company uses foreign exchange forward contracts or put option contracts to offset a portion of the foreign currency exchange risks associated with foreign currency-denominated liabilities, intercompany transactions and forecasted purchases of merchandise between entities with differing functional currencies. The maximum term of the Company's outstanding foreign exchange forward contracts as of January 31, 2015 is 12 months. At January 31, 2015 and 2014, the fair value of the Company's outstanding foreign exchange forwards were net assets of $20,139,000 and $6,453,000, respectively. At January 31, 2015, a 10% depreciation in the hedged foreign exchange rates from the prevailing market rates would have resulted in a liability with a fair value of approximately $2,000,000. Precious Metal Price Risk The Company periodically hedges a portion of its forecasted purchases of precious metals for use in its internal manufacturing operations through the use of forward contracts in order to manage the effect of volatility in precious metal prices. The maximum term of the Company's outstanding precious metal forward contracts as of January 31, 2015 is 12 months. At January 31, 2015 and 2014, the fair value of the Company's outstanding precious metal derivative instruments were net liabilities of $2,900,000 and net assets of $1,599,000, respectively. At January 31, 2015, a 10% depreciation in precious metal prices from the prevailing market rates would have resulted in a liability with a fair value of approximately $12,000,000. TIFFANY & CO. K-48 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 comprehensive earnings, of stockholders' equity, and of cash flows present fairly, in all material respects, the financial position of Tiffany & Co. and its subsidiaries (the "Company") at January 31, 2015 and January 31, 2014, and the results of their operations and their cash flows for each of the three years in the period ended January 31, 2015 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, 2015, based on criteria established in Internal Control - Integrated Framework (2013) 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 Control 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. 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. K - 0 1 M R O F /s/ PricewaterhouseCoopers LLP New York, New York March 20, 2015 TIFFANY & CO. K-49 CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) ASSETS Current assets: Cash and cash equivalents Short-term investments Accounts receivable, less allowances of $10,599 and $10,337 F O R M 1 0 - K Inventories, net Deferred income taxes Prepaid expenses and other current assets Total current assets Property, plant and equipment, net Deferred income taxes Other assets, net LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term borrowings Accounts payable and accrued liabilities Income taxes payable Merchandise and other customer credits Total current liabilities Long-term debt Pension/postretirement benefit obligations Deferred gains on sale-leasebacks Other long-term liabilities Commitments and contingencies Stockholders' equity: 2015 January 31, 2014 $ 729,957 $ 1,500 195,168 345,778 21,257 188,814 2,362,112 2,326,580 102,613 220,037 101,012 244,947 3,611,387 3,228,388 899,507 323,449 346,260 855,095 278,390 390,478 $ 5,180,603 $ 4,752,351 $ 234,013 $ 318,023 39,859 66,138 658,033 882,535 524,218 64,471 200,675 252,365 342,090 31,976 70,309 696,740 751,154 268,112 81,865 220,512 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 129,326 and 128,312 Additional paid-in capital Retained earnings Accumulated other comprehensive loss, net of tax Total Tiffany & Co. stockholders' equity Non-controlling interests Total stockholders' equity — — 1,293 1,173,625 1,950,603 (290,462) 1,283 1,095,304 1,682,398 (58,548) 2,835,059 2,720,437 15,612 13,531 2,850,671 2,733,968 $ 5,180,603 $ 4,752,351 See notes to consolidated financial statements. TIFFANY & CO. K-50 CONSOLIDATED STATEMENTS OF EARNINGS (in thousands, except per share amounts) 2015 2014 2013 Years Ended January 31, Net sales Cost of sales Gross profit $ 4,249,913 $ 4,031,130 $ 3,794,249 1,712,738 1,690,687 1,630,965 2,537,175 2,340,443 2,163,284 Selling, general and administrative expenses 1,645,746 1,555,903 1,466,067 Arbitration award expense Earnings from operations Interest expense and financing costs Other income, net Loss on extinguishment of debt Earnings from operations before income taxes Provision for income taxes Net earnings Net earnings per share: Basic Diluted Weighted-average number of common shares: Basic Diluted See notes to consolidated financial statements. — 891,429 62,903 2,790 93,779 737,537 253,358 480,211 304,329 62,654 13,191 — 254,866 73,497 484,179 $ 181,369 $ — 697,217 59,069 5,428 — 643,576 227,419 416,157 3.75 $ 3.73 $ 1.42 $ 1.41 $ 3.28 3.25 129,221 129,918 127,835 128,867 126,737 127,934 K - 0 1 M R O F $ $ $ TIFFANY & CO. K-51 CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (in thousands) Net earnings Other comprehensive (loss) earnings, net of tax Years Ended January 31, 2015 2014 2013 $ 484,179 $ 181,369 $ 416,157 Foreign currency translation adjustments (93,130) (27,218) Unrealized (loss) gain on marketable securities Unrealized gain (loss) on hedging instruments Net unrealized (loss) gain on benefit plans Total other comprehensive (loss) earnings, net of tax (765) 1,208 (139,227) (231,914) 828 (3,400) 65,117 35,327 (5,145) 1,719 5,522 (10,841) (8,745) Comprehensive earnings $ 252,265 $ 216,696 $ 407,412 See notes to consolidated financial statements. F O R M 1 0 - K TIFFANY & CO. K-52 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (in thousands) Total Stockholders' Equity Retained Earnings Accumulated Other Comprehensive Loss Common Stock Shares Amount Additional Paid-In Capital Non- controlling Interests Balance at January 31, 2012 $ 2,348,905 $ 1,462,553 $ (85,130) 126,676 $ 1,267 $ 970,215 $ Exercise of stock options and vesting of restricted stock units ("RSUs") Tax effect of 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 13,012 11,730 27,224 3,150 — — — — (54,107) (48,775) Cash dividends on Common Stock (158,594) (158,594) — — — — — — Other comprehensive loss, net of tax Net earnings Non-controlling interests (8,745) — (8,745) 416,157 416,157 12,586 — — — 1,026 — — 45 (813) — — — — 10 — — — (8) — — — — 13,002 11,730 27,224 3,150 (5,324) — — — — Balance at January 31, 2013 2,611,318 1,671,341 (93,875) 126,934 1,269 1,019,997 Exercise of stock options and vesting of RSUs Tax effect of exercise of stock options and vesting of RSUs Share-based compensation expense 27,895 14,922 32,504 — — — Cash dividends on Common Stock (170,312) (170,312) — — — — Other comprehensive earnings, net of tax Net earnings Non-controlling interests 35,327 — 35,327 181,369 181,369 945 — — — 1,378 14 27,881 — — — — — — — — — — — — 14,922 32,504 — — — — — — — — — — — — — 12,586 12,586 — — — — — — 945 Balance at January 31, 2014 2,733,968 1,682,398 (58,548) 128,312 1,283 1,095,304 13,531 Exercise of stock options and vesting of RSUs Tax effect of 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 36,908 14,066 26,738 3,925 — — — — (27,028) (24,803) Cash dividends on Common Stock (191,171) (191,171) — — — — — — Other comprehensive loss, net of tax Net earnings Redemption of non-controlling interest Non-controlling interests (231,914) — (231,914) 484,179 484,179 — 1,000 — — — — — 1,270 — — 45 (301) — — — — — 13 — — — (3) — — — — — 36,895 14,066 26,738 3,925 (2,222) — — — — — — — — — — — (1,081) — 1,081 1,000 Balance at January 31, 2015 $ 2,850,671 $ 1,950,603 $ (290,462) 129,326 $ 1,293 $ 1,173,625 $ 15,612 See notes to consolidated financial statements. K - 0 1 M R O F TIFFANY & CO. K-53 CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization Amortization of gain on sale-leasebacks Excess tax benefits from share-based payment arrangements Provision for inventories Deferred income taxes Provision for pension/postretirement benefits Share-based compensation expense 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 F O R M 1 0 - K Capital expenditures Notes receivable funded Proceeds from notes receivable Payments to acquire intangible assets Payment for acquisition Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES: (Repayment of) proceeds from credit facility borrowings, net Proceeds from other credit facility borrowings Repayment of other credit facility borrowings Proceeds from the issuance of long-term debt Repayment of long-term debt Payment for settlement of interest rate swaps Repurchase of Common Stock Proceeds from exercised stock options Excess tax benefits from share-based payment arrangements Cash dividends on Common Stock Proceeds from non-controlling interest Distribution to non-controlling interest Financing fees Net cash (used in) provided by financing activities Effect of exchange rate changes on cash and cash equivalents Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year See notes to consolidated financial statements. TIFFANY & CO. K-54 Years Ended January 31, 2015 2014 2013 $ 484,179 $ 181,369 $ 416,157 180,629 163,649 194,158 (9,156) (14,111) 33,620 37,712 39,234 26,451 (17,561) (167,607) (20,864) (20,180) (5,927) 81,890 (2,739) (23,982) 615,117 (40,063) 55,308 (9,453) (14,876) 31,667 (27,855) 48,980 32,188 (23,239) (168,273) (14,654) (21,333) 45,413 (70,143) 4,711 (20,479) 154,652 (23,460) — (10,812) (11,763) 32,228 (19,282) 46,008 26,938 (1,393) (233,700) (22,121) (4,561) (13,680) (16,559) 1,640 (24,459) 328,290 (15,226) 19,289 (219,530) (8,015) — (82,664) (25,000) (247,394) (221,452) — 15,160 — — (3,050) 1,181 — — (216,989) (246,781) (331,146) (12,454) 19,803 (3,412) 548,037 (400,000) (4,180) (27,028) 42,902 14,111 49,883 89,806 (69,737) — — — — 27,895 14,876 (191,171) (170,312) — (1,910) (8,073) (23,375) 9,426 384,179 345,778 — (666) (7,171) (65,426) (1,505) (159,060) 504,838 47,278 40,298 (361) 250,000 (60,000) (29,335) (54,107) 13,012 11,763 (158,594) 12,750 — (1,258) 71,446 2,294 70,884 433,954 $ 729,957 $ 345,778 $ 504,838 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A. NATURE OF BUSINESS Tiffany & Co. is a holding company that operates through its subsidiary companies (collectively, the "Company"). The Company's principal subsidiary, Tiffany and Company ("Tiffany"), is a jeweler and specialty retailer whose principal merchandise offering is jewelry. The Company also sells timepieces, leather goods, sterling silverware, china, crystal, stationery, fragrances and accessories. Through Tiffany and other subsidiaries, the Company is engaged in product design, manufacturing and retailing activities. The Company's reportable segments are as follows: • Americas includes sales in Company-operated TIFFANY & CO. stores in the United States, Canada and Latin America, as well as sales of TIFFANY & CO. products in certain markets through business-to-business, Internet, catalog and wholesale operations; • Asia-Pacific includes sales in Company-operated TIFFANY & CO. stores, as well as sales of TIFFANY & CO. products in certain markets through Internet and wholesale operations; • Japan includes sales in Company-operated TIFFANY & CO. stores, as well as sales of TIFFANY & CO. products through business-to-business, Internet and wholesale operations; • Europe includes sales in Company-operated TIFFANY & CO. stores, as well as sales of TIFFANY & CO. products in certain markets through the Internet; and K - 0 1 M R O F • Other consists of all non-reportable segments. Other includes the Emerging Markets region, which consists of retail sales in Company-operated TIFFANY & CO. stores in the United Arab Emirates ("U.A.E.") and, beginning in February 2014, in Russia and wholesale sales of TIFFANY & CO. merchandise to independent distributors for resale in certain emerging markets (primarily in the Middle East and, through January 2014, in Russia). In addition, Other includes wholesale sales of diamonds obtained through bulk purchases that were subsequently deemed not suitable for the Company's needs as well as earnings received from third-party licensing agreements. 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 accompanying consolidated financial statements include the accounts of Tiffany & Co. 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 (VIEs), if the Company has the power to significantly direct the activities of a VIE, as well as the obligation to absorb significant losses of or the right to receive significant benefits from the VIE. 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. TIFFANY & CO. K-55 F O R M 1 0 - K Use of Estimates These 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 consolidated financial statements and related notes to the consolidated financial statements. Actual results could differ from these estimates and the differences could be material. 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/or money market fund investments with a number of U.S. and non-U.S. financial institutions with high credit ratings. The Company's policy restricts the amount invested with any one institution. Short-term Investments Short-term investments are classified as available-for-sale and are carried at fair value. At January 31, 2015 and 2014, the Company's short-term available-for-sale investments consisted entirely of time deposits. At the time of purchase, management determines the appropriate classification of these investments and reevaluates such designation as of each balance sheet date. Receivables and Financing Arrangements Receivables. The Company maintains an allowance for doubtful accounts for estimated losses associated with the accounts receivable recorded on the balance sheet. The allowance is determined based on a combination of factors including, but not limited to, the length of time that the receivables are past due, management's knowledge of the customer, economic and market conditions and historical write-off experiences. For the receivables associated with Tiffany & Co. credit cards ("Credit Card Receivables"), management uses various indicators to determine whether to extend credit to customers and the amount of credit. Such indicators include reviewing prior experience with the customer, including sales and collection history, and using applicants' credit reports and scores provided by credit rating agencies. Credit Card Receivables require minimum balance payments. A Credit Card account is classified as overdue if a minimum balance payment has not been received within the allotted timeframe (generally 30 days), after which internal collection efforts commence. For all Credit Card Receivables recorded on the balance sheet, once all internal collection efforts have been exhausted and management has reviewed the account, the account balance is written off and may be sent for external collection or legal action. At January 31, 2015 and 2014, the carrying amount of the Credit Card Receivables (recorded in accounts receivable, net) was $63,904,000 and $59,278,000, of which 98% and 97% were considered current, respectively. The allowance for doubtful accounts for estimated losses associated with the Credit Card Receivables (approximately $1,000,000 at January 31, 2015 and 2014) was determined based on the factors discussed above. Finance charges earned on Credit Card accounts are not significant. Financing Arrangements. The Company has provided financing to diamond mining and exploration companies in order to obtain rights to purchase the mine's output (see "Note J - Commitments and Contingencies"). Management evaluates these financing arrangements for potential impairment by reviewing the parties' financial statements along with projections and business, operational and other economic factors on a periodic basis. At January 31, 2015 and 2014, the current portion of the carrying amount of financing arrangements including accrued interest was $18,598,000 and $14,208,000 and TIFFANY & CO. K-56 was recorded in prepaid expenses and other current assets. At January 31, 2015 and 2014, the non- current portion of the carrying amount of financing arrangements including accrued interest was $40,747,000 and $58,786,000 and was included in other assets, net. The Company recorded no material impairment charges on such loans as of January 31, 2015 and 2014. Inventories Inventories are valued at the lower of cost or market using the average cost method except for certain diamond and gemstone jewelry which uses the specific identification method. Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is calculated on a straight-line basis over the following estimated useful lives: K - 0 1 M R O F Buildings Machinery and Equipment Office Equipment Furniture and Fixtures 39 years 5-15 years 3-8 years 2-10 years Leasehold improvements and building improvements are amortized over the shorter of their estimated useful lives (ranging from 8-10 years) or the related lease terms or building life, respectively. 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 2014, 2013 or 2012. Intangible Assets and Key Money Intangible assets, consisting of product rights and trademarks, are recorded at cost and are amortized on a straight-line basis over their estimated useful lives which range from 15 to 20 years. Intangible assets are reviewed for impairment in accordance with the Company's policy for impairment of long-lived assets (see "Impairment of Long-Lived Assets" below). Key money is the amount of funds paid to a landlord or tenant to acquire the rights of tenancy under a commercial property lease for a certain property. Key money represents the "right to lease" with an automatic right of renewal. This right can be subsequently sold by the Company or can be recovered should the landlord refuse to allow the automatic right of renewal to be exercised. Key money is amortized over the estimated useful life, 39 years. The following table summarizes intangible assets and key money, included in other assets, net, as follows: (in thousands) Product rights Key money deposits Trademarks January 31, 2015 January 31, 2014 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization $ $ 59,409 $ (16,186) $ 59,409 $ 33,740 2,452 (2,443) (2,452) 39,588 2,452 (9,405) (1,722) (2,452) 95,601 $ (21,081) $ 101,449 $ (13,579) TIFFANY & CO. K-57 Amortization of intangible assets and key money for the years ended January 31, 2015, 2014 and 2013 was $7,802,000, $4,172,000 and $1,685,000. Amortization expense is estimated to be approximately $3,500,000 in each of the next five years. Goodwill Goodwill represents the excess of cost over fair value of net assets acquired in a business combination. 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. A qualitative assessment is first performed for each reporting unit to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value. If it is concluded that this is the case, a quantitative evaluation, based on discounted cash flows, is performed and requires management to estimate future cash flows, growth rates and economic and market conditions. If the quantitative evaluation indicates that goodwill is not recoverable, an impairment loss is calculated and recognized during that period. At January 31, 2015 and 2014, goodwill, included in other assets, net, consisted of the following by segment: F O R M 1 0 - K (in thousands) Americas Asia-Pacific Japan Europe Other Total January 31, 2013 $ 12,368 $ 280 $ 1,103 $ 1,108 $ 24,905 $ 39,764 Translation January 31, 2014 Translation (13) 12,355 (94) (2) 278 5 (6) (2) (5) (28) 1,097 1,106 24,900 39,736 (33) (27) (751) (900) January 31, 2015 $ 12,261 $ 283 $ 1,064 $ 1,079 $ 24,149 $ 38,836 Impairment of Long-Lived Assets The Company reviews its long-lived assets (such as property, plant and equipment) 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. The Company recorded no material impairment charges in 2014, 2013 or 2012. Hedging Instruments The Company uses derivative financial instruments to mitigate a portion of its foreign currency, precious metal price and interest rate exposures. Derivative instruments are recorded on the consolidated balance sheet at their fair values, 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. Marketable Securities The Company's marketable securities, recorded within other assets, net, 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 may 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 $5,123,000 and $4,889,000 of gross unrealized gains and $1,908,000 and $804,000 of gross unrealized losses within accumulated other comprehensive loss as of January 31, 2015 and 2014. TIFFANY & CO. K-58 Realized gains or losses reclassified from other comprehensive earnings are determined on the basis of specific identification. The Company's marketable securities primarily consist of investments in mutual funds. When evaluating the marketable securities for other-than-temporary impairment, the Company reviews factors such as the length of time and the extent to which fair value has been below cost basis, the financial condition of the issuer, and the Company's ability and intent to hold the investments for a period of time which may be sufficient for anticipated recovery in market value. Based on the Company's evaluations, it determined that any unrealized losses on its outstanding mutual funds were temporary in nature and, therefore, did not record any impairment charges as of January 31, 2015, 2014 or 2013. Merchandise and Other Customer Credits Merchandise and other customer credits represent outstanding credits issued to customers for returned merchandise. It also includes outstanding 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. If merchandise credits or gift cards are not redeemed over an extended period of time (approximately three to five years), the value of the merchandise credits or gift cards is generally remitted to the applicable jurisdiction in accordance with unclaimed property laws. K - 0 1 M R O F 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, such as through the Internet and catalog channels. Revenue associated with gift cards and merchandise credits is recognized upon redemption. 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. Additionally, outside of the U.S., the Company operates certain TIFFANY & CO. stores within various department stores. Sales transacted at these store locations are recognized at the "point of sale." The Company and these department store operators have distinct responsibilities and risks in the operation of such TIFFANY & CO. stores. The Company (i) owns and manages the merchandise; (ii) establishes retail prices; (iii) has merchandising, marketing and display responsibilities; and (iv) in almost all locations provides retail staff and bears the risk of inventory loss. The department store operators (i) provide and maintain store facilities; (ii) in almost all locations assume retail credit and certain other risks; and (iii) act for the Company in the sale of merchandise. In return for their services and use of their facilities, the department store operators retain a portion of net retail sales made in TIFFANY & CO. stores which is recorded as commission expense within selling, general and administrative expenses. Cost of Sales Cost of sales includes costs to internally manufacture merchandise (primarily metal, gemstones, labor and overhead), costs related to the purchase of merchandise from third-parties, 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. TIFFANY & CO. K-59 Selling, General and Administrative ("SG&A") Expenses SG&A expenses include costs associated with the selling and marketing 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, Marketing, Public and Media Relations Costs Advertising, marketing, public and media relations costs include media, production, catalogs, Internet, marketing events, visual merchandising costs (in-store and window displays) and other related costs. In 2014, 2013 and 2012, these costs totaled $283,648,000, $253,164,000 and $250,297,000, representing 6.7%, 6.3% and 6.6% of worldwide net sales in each of those periods. Media and production costs for print and digital advertising are expensed as incurred, while catalog costs are expensed upon first distribution. Pre-opening Costs Costs associated with the opening of new retail stores are expensed in the period incurred. 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 pre-production prototypes and molds. Costs associated with these activities are expensed as incurred. F O R M 1 0 - K 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 (loss) gain resulting from foreign currency transactions of $(3,726,000), $4,672,000 and $(2,147,000) in 2014, 2013 and 2012 within other income, net. Included within the amount for 2013 was a $7,489,000 transaction gain related to amounts associated with the award issued in the arbitration between the Swatch Group Ltd. and the Company. See "Note J - Commitments and Contingencies." Income Taxes The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. 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. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. TIFFANY & CO. K-60 The Company records net deferred tax assets to the extent management believes these assets will more likely than not be realized. In making such determination, the Company considers all available evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. In the event management were to determine that the Company would be able to realize its deferred income tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the valuation allowance, which would reduce the provision for income taxes. 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. The Company, its U.S. subsidiaries and the foreign branches of its U.S. subsidiaries file a consolidated Federal income tax return. Earnings Per Share ("EPS") Basic EPS is computed as net earnings divided by the weighted-average number of common shares outstanding for the period. Diluted EPS includes the dilutive effect of the assumed exercise of stock options and unvested restricted stock units. The following table summarizes the reconciliation of the numerators and denominators for the basic and diluted EPS computations: (in thousands) 2015 2014 Net earnings for basic and diluted EPS $ 484,179 $ 181,369 $ Weighted-average shares for basic EPS 129,221 127,835 Incremental shares based upon the assumed exercise of stock options and unvested restricted stock units Weighted-average shares for diluted EPS 697 129,918 1,032 128,867 2013 416,157 126,737 1,197 127,934 Years Ended January 31, K - 0 1 M R O F For the years ended January 31, 2015, 2014 and 2013, there were 334,000, 422,000 and 869,000 stock options and restricted stock units excluded from the computations of earnings per diluted share due to their antidilutive effect. New Accounting Standards In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09 – Revenue From Contracts with Customers, to clarify the principles of recognizing revenue and create common revenue recognition guidance between U.S. Generally Accepted Accounting Principles ("GAAP") and International Financial Reporting Standards. The core principle of the guidance is that a company should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under current guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. This ASU is effective retrospectively for fiscal years and interim periods within those years beginning after December 15, 2016 and early adoption is not permitted. Management is currently evaluating the impact of this ASU on the consolidated financial statements. TIFFANY & CO. K-61 In June 2014, the FASB issued ASU No. 2014-12 – Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period which requires a reporting entity to treat a performance target that affects vesting and that could be achieved after the requisite service period as a performance condition, and to apply existing guidance as it relates to awards with performance conditions that affect vesting to account for such awards. The provisions of this ASU are effective for interim and annual periods beginning after December 15, 2015. This ASU is not expected to have a material impact on the consolidated financial statements or disclosures. C. SUPPLEMENTAL CASH FLOW INFORMATION Cash paid during the year for: F O R M 1 0 - K (in thousands) Interest, net of interest capitalization 2015 2014 2013 Years Ended January 31, $ 59,668 $ 58,532 $ 49,785 Income taxes $ 133,430 $ 160,736 $ 266,829 Supplemental noncash investing and financing activities: (in thousands) Issuance of Common Stock under the Employee Profit Sharing and Retirement Savings Plan 2015 2014 2013 Years Ended January 31, $ 3,925 $ — $ 3,150 D. INVENTORIES (in thousands) Finished goods Raw materials Work-in-process Inventories, net 2015 January 31, 2014 $ 1,386,823 $ 1,333,926 866,934 108,355 874,799 117,855 $ 2,362,112 $ 2,326,580 TIFFANY & CO. K-62 E. PROPERTY, PLANT AND EQUIPMENT (in thousands) Land Buildings Leasehold and building improvements Office equipment Furniture and fixtures Machinery and equipment Construction-in-progress Accumulated depreciation and amortization 2015 $ 42,666 $ 125,846 1,036,422 586,225 261,076 155,184 59,771 2,267,190 (1,367,683) January 31, 2014 42,710 118,622 990,488 517,622 246,751 141,880 40,569 2,098,642 (1,243,547) The provision for depreciation and amortization for the years ended January 31, 2015, 2014 and 2013 was $182,761,000, $171,452,000 and $159,018,000. $ 899,507 $ 855,095 K - 0 1 M R O F F. ACCOUNTS PAYABLE AND ACCRUED LIABILTIES (in thousands) Accounts payable - trade Accrued compensation and commissions Accrued sales, withholding and other taxes Other 2015 $ 118,012 $ 83,949 21,770 94,292 $ 318,023 $ January 31, 2014 116,601 86,549 23,935 115,005 342,090 TIFFANY & CO. K-63 G. DEBT (in thousands) Short-term borrowings: Credit Facilities Other credit facilities 2015 January 31, 2014 $ 92,519 $ 141,494 $ 234,013 $ 119,212 133,153 252,365 Long-term debt: Unsecured Senior Notes: F O R M 1 0 - K 2008 9.05% Series A, due December 2015 a, b 2009 10.00% Series A, due April 2018 a 2009 10.00% Series A, due February 2017 a 2009 10.00% Series B, due February 2019 a 2010 1.72% Notes, due September 2016 c, d 2012 4.40% Series B Notes, due July 2042 e 2014 3.80% Senior Notes, due October 2024 c, f 2014 4.90% Senior Notes, due October 2044 c, f $ — $ — — — 84,470 250,000 249,277 298,788 103,804 50,000 125,000 125,000 97,350 250,000 — — $ 882,535 $ 751,154 a These Notes were redeemed with the net proceeds from the offering of the 2024 Notes and the 2044 Notes. b These Notes were issued, at par, $100,000,000. In 2009, the Company entered into an interest rate swap to effectively convert this fixed rate obligation to a floating rate obligation. The Company terminated the interest rate swap in 2011 and recognized the remaining gain on the swap upon redemption of these Notes. c These agreements require lump sum repayments upon maturity. d These Notes were issued, at par, ¥10,000,000,000. e The agreements governing these Notes require repayments of $50,000,000 in aggregate every five years beginning in 2022. f These Notes were issued at a discount which will be amortized until the debt maturity. Credit Facilities In October 2014, Tiffany & Co. entered into a four-year $375,000,000 and a five-year $375,000,000 multi-bank, multi-currency, committed unsecured revolving credit facility, including letter of credit subfacilities, (collectively, the "New Credit Facilities") resulting in a total borrowing capacity of $750,000,000. The New Credit Facilities replaced the previously existing $275,000,000 three-year unsecured revolving credit facility and $275,000,000 five-year unsecured revolving credit facility (collectively, the "Previously Existing Credit Facilities"), which were terminated and repaid concurrently with Tiffany & Co.'s entry into the New Credit Facilities. The New Credit Facilities are available for working capital and other corporate purposes. Borrowings under the New Credit Facilities will bear interest at a rate per annum equal to, at the option of the Company, (1) LIBOR (or other applicable reference rate) for the relevant currency plus an applicable margin based upon the Company's leverage ratio as defined under the New Credit Facilities, or (2) an alternate base rate equal to the highest of (i) the Federal Funds Rate TIFFANY & CO. K-64 plus 0.50%, (ii) Bank of America, N.A.’s prime rate and (iii) one-month LIBOR plus 1%, plus an applicable margin based upon the Company's leverage ratio as defined under the New Credit Facilities. The New Credit Facilities also require payment to the lenders of a facility fee on the amount of the lenders’ commitments under the credit facilities from time to time at rates based upon the Company's leverage ratio as defined under the New Credit Facilities. Voluntary prepayments of the loans and voluntary reductions of the unutilized portion of the commitments under the New Credit Facilities are permissible without penalty, subject to certain conditions pertaining to minimum notice and minimum reduction amounts. At January 31, 2015, there were $92,519,000 of borrowings outstanding, $5,671,000 of letters of credit issued but not outstanding and $651,810,000 available for borrowing under the New Credit Facilities. The weighted-average interest rate under the New Credit Facilities was 1.49% at January 31, 2015. The weighted-average interest rate under the Previously Existing Credit Facilities was 2.35% at January 31, 2014. The four-year credit facility will expire in October 2018. The five-year credit facility will expire in October 2019. Other Credit Facilities Tiffany-Shanghai Credit Agreement. In July 2013, Tiffany & Co.'s wholly-owned subsidiary, Tiffany & Co. (Shanghai) Commercial Company Limited ("Tiffany-Shanghai"), entered into a three-year multi-bank revolving credit agreement (the "Tiffany-Shanghai Credit Agreement"). The Tiffany-Shanghai Credit Agreement has an aggregate borrowing limit of RMB 930,000,000 ($148,879,000 at January 31, 2015). The Tiffany-Shanghai Credit Agreement is available for Tiffany-Shanghai's general working capital requirements, which included repayment of a portion of the indebtedness under Tiffany-Shanghai's existing bank loan facilities. The six lenders that are party to the Tiffany-Shanghai Credit Agreement will make loans, upon Tiffany-Shanghai's request, for periods of up to 12 months at the applicable interest rates as announced by the People's Bank of China. There was $37,620,000 outstanding and $111,259,000 available to be borrowed under the Tiffany-Shanghai Credit Agreement at January 31, 2015. The interest rate applicable to the outstanding borrowings at January 31, 2015 and 2014 was 6.0% in both periods. The Tiffany-Shanghai Credit Agreement matures in July 2016. In connection with this agreement, the Company entered into a guaranty agreement by and between the Company and the facility agent under the Tiffany-Shanghai Credit Agreement (the "Guaranty"). K - 0 1 M R O F Other. The Company has various other revolving credit facilities, primarily in Japan and China. At January 31, 2015, the facilities totaled $112,960,000, of which $103,874,000 was outstanding at a weighted-average interest rate of 3.90%. At January 31, 2014, the facilities totaled $118,400,000, of which $75,400,000 was outstanding at a weighted-average interest rate of 2.96%. TIFFANY & CO. K-65 F O R M 1 0 - K Senior Notes In September 2014, Tiffany & Co. issued $250,000,000 aggregate principal amount of 3.80% Senior Notes due 2024 (the "2024 Notes") and $300,000,000 aggregate principal amount of 4.90% Senior Notes due 2044 (the "2044 Notes" and, together with the 2024 Notes, the "Notes") in a private placement conducted pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended. The Notes were issued at a discount with aggregate net proceeds of $548,037,000 (with an effective yield of 3.836% for the 2024 Notes and an effective yield of 4.926% for the 2044 Notes). Tiffany & Co. used the net proceeds from the issuance of the Notes to redeem all of the aggregate principal amount outstanding of its (i) $100,000,000 principal amount of 9.05% Series A Senior Notes due December 23, 2015; (ii) $125,000,000 principal amount of 10.0% Series A-2009 Senior Notes due February 13, 2017; (iii) $50,000,000 principal amount of 10.0% Series A Senior Notes due April 9, 2018; and (iv) $125,000,000 principal amount of 10.0% Series B-2009 Senior Notes due February 13, 2019 (collectively, the "Private Placement Notes") prior to maturity in accordance with the respective note purchase agreements governing each series of Private Placement Notes, which included provisions for make-whole payments in the event of early redemption. As a result of the redemptions, the Company recorded a loss on extinguishment of debt of $93,779,000 in the three months ended October 31, 2014. The Company used the remaining net proceeds from the sale of the Notes for general corporate purposes. The Notes are Tiffany & Co.’s general unsecured obligations and rank equally in right of payment with all of Tiffany & Co.’s existing and any future unsecured senior debt and rank senior in right of payment to any of Tiffany & Co.’s future subordinated debt. The 2024 Notes bear interest at a fixed rate of 3.80% per annum and the 2044 Notes bear interest at a fixed rate of 4.90% per annum, payable semi-annually in arrears on April 1 and October 1 of each year, commencing on April 1, 2015. Tiffany & Co. will make each interest payment to the holders of record of the Notes on the immediately preceding March 15 and September 15. Tiffany & Co. has the option to redeem the Notes, in whole or in part, by providing no less than 30 nor more than 60 days' prior notice at a redemption price equal to the sum of (i) 100% of the principal amount of the Notes to be redeemed, plus (ii) accrued and unpaid interest, if any, on those Notes to the redemption date, plus (iii) a make-whole premium as of the redemption date, as defined in the indenture governing the Notes, as amended and supplemented in respect of each series of Notes (the "Indenture"). In addition, Tiffany & Co. has the option to redeem some or all of the 2024 Notes on or after July 1, 2024, at a redemption price equal to the sum of 100% of the principal amount of the 2024 Notes to be redeemed, together with accrued and unpaid interest, if any, on those 2024 Notes to the redemption date. Tiffany & Co. also has the option to redeem some or all of the 2044 Notes on or after April 1, 2044, at a redemption price equal to the sum of 100% of the principal amount of the 2044 Notes to be redeemed, together with accrued and unpaid interest, if any, on those 2044 Notes to the redemption date. Upon the occurrence of a change of control triggering event (as defined in the Indenture), unless Tiffany & Co. has exercised its right to redeem the Notes, each holder of Notes will have the right to require Tiffany & Co. to repurchase all or a portion of such holder’s Notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase. Debt Covenants The agreements governing the New Credit Facilities include specific financial covenants, as well as other covenants that limit the ability of Tiffany & Co. to incur certain subsidiary indebtedness, incur liens, impose restrictions on subsidiary distributions and engage in mergers, consolidations and sales of all or substantially all of Tiffany & Co. and its subsidiaries’ assets, in addition to other requirements and “Events of Default” (as defined in the agreements governing the New Credit Facilities) customary to such borrowings. TIFFANY & CO. K-66 The Tiffany-Shanghai Credit Agreement includes certain covenants that limit Tiffany-Shanghai's ability to pay certain dividends, make certain investments and incur certain indebtedness, and the Guaranty requires maintenance by Tiffany & Co. of specific financial covenants and ratios, in addition to other requirements and limitations customary to such borrowings. The Indenture contains covenants that, among other things, limit the ability of Tiffany & Co. and its subsidiaries under certain circumstances to create liens and impose conditions on Tiffany & Co.’s ability to engage in mergers, consolidations and sales of all or substantially all of its or its subsidiaries’ assets. The Indenture also contains certain “Events of Default” (as defined in the Indenture) customary for indentures of this type. The Indenture does not contain any specific financial covenants. The agreements governing the 2010 1.72% Notes and the 2012 4.40% Series B Notes require maintenance of specific financial covenants and ratios and limit certain changes to indebtedness of Tiffany & Co. and its subsidiaries and the general nature of the business, in addition to other requirements customary to such borrowings. At January 31, 2015, the Company was in compliance with all debt 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 New Credit Facilities, the Tiffany-Shanghai Credit Agreement, the Indenture, the agreements governing the 2010 1.72% Notes and the 2012 4.40% Series B Notes, and other loan agreements, such agreements may be terminated or payment of the applicable debt accelerated. Further, each of the New Credit Facilities, the Tiffany-Shanghai Credit Agreement, the agreements governing the 2010 1.72% Notes and the 2012 4.40% Series B Notes, and certain other loan agreements contain cross default provisions permitting the termination and acceleration of the loans, or acceleration of the notes, as the case may be, in the event that certain of the Company's other debt obligations are terminated or accelerated prior to their maturity. K - 0 1 M R O F Aggregate maturities of long-term debt as of January 31, 2015 are as follows: Long-Term Debt Maturities Years Ending January 31, 2016 2017 2018 2019 2020 Thereafter $ $ Amount a (in thousands) — 84,470 — — — 800,000 884,470 a Amounts exclude any unamortized discount or premium. Letters of Credit The Company has available letters of credit and financial guarantees of $72,194,000 of which $24,092,000 was outstanding at January 31, 2015. Of those available letters of credit and financial guarantees, $59,092,000 expires within one year. These amounts do not include letters of credit issued under the Credit Facilities. TIFFANY & CO. K-67 H. HEDGING INSTRUMENTS Background Information The Company uses derivative financial instruments, including interest rate swaps, forward contracts and put option contracts to mitigate a portion of its exposures to changes in interest rates, foreign currency and precious metal prices. Derivative instruments are recorded on the consolidated balance sheet at their fair values, as either assets or liabilities, with an offset to current or comprehensive earnings, depending on whether the derivative is designated as part of an effective hedge transaction and, if it is, the type of hedge transaction. If a derivative instrument meets certain hedge accounting criteria, it is designated as one of the following on the date it is entered into: • Fair Value Hedge – A hedge of the exposure to changes in the fair value of a recognized asset or liability or an unrecognized firm commitment. For fair value hedge transactions, both the effective and ineffective portions of the changes in the fair value of the derivative and changes in the fair value of the item being hedged are recorded in current earnings. F O R M 1 0 - K • Cash Flow Hedge – A hedge of the exposure to variability in the cash flows of a recognized asset, liability or a forecasted transaction. For cash flow hedge transactions, the effective portion of the changes in fair value of derivatives are reported as other comprehensive income ("OCI") 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 are recognized in current earnings. The Company formally documents the nature of and relationships between the hedging instruments and hedged items for a derivative to qualify as a hedge at inception and throughout the hedged period. 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 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 on the derivative financial instrument would be recognized in current earnings. Derivative 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. Types of Derivative Instruments Interest Rate Swaps – In 2012, the Company entered into forward-starting interest rate swaps to hedge the impact of interest rate volatility on future interest payments associated with the anticipated incurrence of $250,000,000 of additional debt which was incurred in July 2012. The Company accounted for the forward-starting interest rate swaps as cash flow hedges. In 2014, the Company entered into forward-starting interest rate swaps to hedge the impact of interest rate volatility on future interest payments associated with the anticipated incurrence of long-term debt which was incurred in September 2014 (refer to "Note G - Debt"). The Company accounted for the forward-starting interest rate swaps as cash flow hedges. The Company settled the interest rate swap in the three months ended October 31, 2014 and recorded an unrealized loss within accumulated other comprehensive loss, which is being amortized over the terms of the respective 2024 Notes or 2044 Notes to which the interest rate swaps related. TIFFANY & CO. K-68 Foreign Exchange Forward and Put Option Contracts – The Company uses foreign exchange forward contracts or put option contracts to offset a portion of the foreign currency exchange risks associated with foreign currency-denominated liabilities, intercompany transactions and forecasted purchases of merchandise between entities with differing functional currencies. For put option contracts, if the market exchange rate at the time of the put option contract's expiration is stronger than the contracted exchange rate, the Company allows the put option contract to expire, limiting its loss to the cost of the put option contract. The Company assesses hedge effectiveness based on the total changes in the foreign exchange forward and put option contracts' cash flows. These foreign exchange forward contracts and put option contracts are designated and accounted for as either cash flow hedges or economic hedges that are not designated as hedging instruments. As of January 31, 2015, the notional amount of foreign exchange forward contracts accounted for as cash flow hedges was $160,245,000 and the notional amount of foreign exchange forward contracts accounted for as undesignated hedges was $77,314,000. The maximum term of the Company's outstanding foreign exchange forward contracts as of January 31, 2015 is 12 months. Precious Metal Forward Contracts – The Company periodically hedges a portion of its forecasted purchases of precious metals for use in its internal manufacturing operations through the use of forward contracts in order to manage the effect of volatility in precious metal prices. The Company accounts for its precious metal forward contracts as cash flow hedges. The Company assesses hedge effectiveness based on the total changes in the precious metal forward contracts' cash flows. As of January 31, 2015, 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. As of January 31, 2015, there were precious metal derivative instruments outstanding for approximately 14,800 ounces of platinum, 459,000 ounces of silver and 50,100 ounces of gold. K - 0 1 M R O F Information on the location and amounts of derivative gains and losses in the consolidated financial statements is as follows: (in thousands) Derivatives in Cash Flow Hedging Relationships: Foreign exchange forward contracts a Put option contracts a Precious metal forward contracts a Forward-starting interest rate swaps b Years Ended January 31, 2015 2014 Pre-Tax Gain (Loss) Recognized in OCI (Effective Portion) Pre-Tax Gain (Loss) Reclassified from Accumulated OCI into Earnings (Effective Portion) Pre-Tax Gain (Loss) Recognized in OCI (Effective Portion) Pre-Tax Gain (Loss) Reclassified from Accumulated OCI into Earnings (Effective Portion) $ 23,225 $ 18,717 $ 16,184 $ 17,660 — (4,428) (4,177) — (4,173) (1,517) 1,241 (8,709) — 2,201 (4,376) (1,535) $ 14,620 $ 13,027 $ 8,716 $ 13,950 a b The gain or loss recognized in earnings is included within Cost of sales. The gain or loss recognized in earnings is included within Interest expense and financing costs. The pre-tax gains recognized in earnings on derivatives not designated as hedging instruments related to foreign exchange forward contracts were $10,484,000 in the year ended January 31, 2015 and are included in other income, net. Such gains were not material in the year ended January 31, 2014. There was no material ineffectiveness related to the Company's hedging instruments for the periods ended January 31, 2015 and 2014. The Company expects approximately $13,351,000 of net pre-tax derivative gains included in accumulated other comprehensive income at January 31, 2015 will be reclassified into TIFFANY & CO. K-69 earnings within the next 12 months. This amount will vary due to fluctuations in foreign currency exchange rates and precious metal prices. For information regarding the location and amount of the derivative instruments in the Consolidated Balance Sheet, see "Note I - Fair Value of Financial Instruments." Concentration of Credit Risk A number of major international financial institutions are counterparties to the Company's derivative financial instruments. The Company enters into derivative financial instrument agreements only with counterparties meeting certain credit standards (a credit rating of A-/A2 or better at the time of the agreement) and limits the amount of agreements or contracts it enters into with any one party. The Company may be exposed to credit losses in the event of nonperformance by individual counterparties or the entire group of counterparties. I. FAIR VALUE OF FINANCIAL INSTRUMENTS F O R M 1 0 - K Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal market for the asset or liability in an orderly transaction between market participants on the measurement date. U.S. GAAP establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. U.S. GAAP prescribes three levels of inputs that may be used to measure fair value: Level 1 – Quoted prices in active markets for identical assets or liabilities. Level 1 inputs are considered to carry the most weight within the fair value hierarchy due to the low levels of judgment required in determining fair values. Level 2 – Observable market-based inputs or unobservable inputs that are corroborated by market data. Level 3 – Unobservable inputs reflecting the reporting entity's own assumptions. Level 3 inputs are considered to carry the least weight within the fair value hierarchy due to substantial levels of judgment required in determining fair values. The Company uses the market approach to measure fair value for its marketable securities, time deposits and derivative instruments. The Company's interest rate swaps were primarily valued using the 3-month LIBOR rate. The Company's foreign exchange forward contracts, as well as its put option contracts, are primarily valued using the appropriate foreign exchange spot rates. The Company's precious metal forward contracts are primarily valued using the relevant precious metal spot rate. For further information on the Company's hedging instruments and program, see "Note H - Hedging Instruments." TIFFANY & CO. K-70 Financial assets and liabilities carried at fair value at January 31, 2015 are classified in the table below in one of the three categories described above: (in thousands) Marketable securities a Time deposits b Carrying Value Estimated Fair Value Level 1 Level 2 Level 3 Total Fair Value $ 53,545 $ 53,545 $ 1,500 1,500 — $ — Derivatives designated as hedging instruments: Precious metal forward contracts c Foreign exchange forward contracts c 250 15,070 Derivatives not designated as hedging instruments: Foreign exchange forward contracts c 7,173 — — — 250 15,070 7,173 — $ 53,545 — — — — 1,500 250 15,070 7,173 Total financial assets $ 77,538 $ 55,045 $ 22,493 $ — $ 77,538 (in thousands) Carrying Value Estimated Fair Value Level 1 Level 2 Level 3 Total Fair Value Derivatives designated as hedging instruments: Precious metal forward contracts d Foreign exchange forward contracts d $ 118 Derivatives not designated as hedging instruments: Foreign exchange forward contracts d 1,986 3,150 $ — $ 3,150 $ — $ 3,150 — — 118 1,986 — — 118 1,986 5,254 Total financial liabilities $ 5,254 $ — $ 5,254 $ — $ K - 0 1 M R O F Financial assets and liabilities carried at fair value at January 31, 2014 are classified in the table below in one of the three categories described above: Carrying Value Estimated Fair Value Level 1 Level 2 Level 3 Total Fair Value $ 51,781 $ 51,781 $ — $ — $ 51,781 (in thousands) Marketable securities a Time deposits b Derivatives designated as hedging instruments: Precious metal forward contracts c Foreign exchange forward contracts c 53 6,699 — — 21,257 21,257 — 53 6,699 — — — 21,257 53 6,699 Total financial assets $ 79,790 $ 73,038 $ 6,752 $ — $ 79,790 (in thousands) Carrying Value Estimated Fair Value Level 1 Level 2 Level 3 Total Fair Value Derivatives designated as hedging instruments: Precious metal forward contracts d Foreign exchange forward contracts d $ 1,652 $ — $ 1,652 $ — $ 1,652 246 — 246 — 246 Total financial liabilities $ 1,898 $ — $ 1,898 $ — $ 1,898 a b Included within Other assets, net. Included within Short-term investments. TIFFANY & CO. K-71 c d Included within Prepaid expenses and other current assets. Included within Accounts payable and accrued liabilities. The fair value of derivatives not designated as hedging instruments was not significant in the year ended January 31, 2014. The fair value of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximates carrying value due to the short-term maturities of these assets and liabilities and would be measured using Level 1 inputs. The fair value of debt with variable interest rates approximates carrying value and is measured using Level 2 inputs. The fair value of debt with fixed interest rates was determined using the quoted market prices of debt instruments with similar terms and maturities, which are considered Level 2 inputs. The total carrying value of short-term borrowings and long-term debt was $1,116,548,000 and $1,003,519,000 and the corresponding fair value was approximately $1,200,000,000 and $1,100,000,000 at January 31, 2015 and 2014. J. COMMITMENTS AND CONTINGENCIES Leases F O R M 1 0 - K The Company leases certain office, distribution, retail and manufacturing facilities, land 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 2062, 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. The Company entered into sale-leaseback arrangements for its Retail Service Center, a distribution and administrative office facility in New Jersey, in 2005 and for the TIFFANY & CO. stores in Tokyo's Ginza shopping district and on London's Old Bond Street in 2007. These sale-leaseback arrangements resulted in total deferred gains of $144,505,000 which are being amortized in SG&A expenses over periods that range from 15 to 20 years. As of January 31, 2015, $64,471,000 of these deferred gains remained to be amortized. In April 2010, Tiffany committed to a plan to consolidate and relocate its New York headquarters staff to a single leased location in Manhattan. The move occurred in June 2011. Tiffany sublet most of those previously-occupied properties through the end of their lease terms which run through 2015, but has recovered only a portion of its rent obligations due to market conditions. Tiffany recorded expenses of $42,719,000 during the year ended January 31, 2012 (primarily within SG&A expenses), of which $30,884,000 was related to the fair value of the remaining non-cancelable lease obligations reduced by the estimated sublease rental income. The remaining expense of $11,835,000 (primarily recorded in SG&A expenses) was due to the acceleration of the useful lives of certain property and equipment, incremental rent during the transition period and lease termination payments. TIFFANY & CO. K-72 The following is a reconciliation of the accrued exit charges, recorded within other long-term liabilities, associated with the relocation: (in thousands) January 31, 2013 Cash payments, net of estimated sublease income Interest accretion January 31, 2014 Cash payments, net of estimated sublease income Interest accretion January 31, 2015 $ $ 16,164 (6,072) 373 10,465 (5,727) 217 4,955 Rent expense for the Company's operating leases consisted of the following: (in thousands) Minimum rent for retail locations Contingent rent based on sales Office, distribution and manufacturing facilities and equipment Years Ended January 31, 2015 2014 158,188 $ 146,109 $ 38,572 36,289 35,812 42,466 232,572 $ 224,864 $ 2013 127,267 31,918 38,156 197,341 K - 0 1 M R O F $ $ In addition, the Company operates certain TIFFANY & CO. stores within various department stores outside the U.S. and has agreements where the department store operators provide store facilities and other services. The Company pays the department store operators a percentage fee based on sales generated in these locations (recorded as commission expense within SG&A expenses) which totaled $113,682,000, $117,079,000 and $120,967,000 in 2014, 2013 and 2012, and which are not included in the table above. Aggregate annual minimum rental payments under non-cancelable operating leases are as follows: Years Ending January 31, Annual Minimum Rental Payments a (in thousands) 2016 2017 2018 2019 2020 Thereafter $ 237,091 211,881 186,463 144,048 126,178 556,016 a Operating lease obligations do not include obligations for property taxes, insurance and maintenance that are required by most lease agreements. Diamond Sourcing Activities The Company has agreements with various diamond producers to purchase defined portions of their mines' output at prevailing fair market prices. Under those agreements, management anticipates that it will purchase approximately $160,000,000 of rough diamonds in 2015. Purchases beyond 2015 that are TIFFANY & CO. K-73 F O R M 1 0 - K contingent upon mine production at then-prevailing fair market prices cannot be reasonably estimated. In addition, the Company also regularly purchases rough and polished diamonds from other suppliers, although it has no contractual obligations to do so. In consideration of its diamond supply agreements, the Company has provided financing to certain suppliers of its rough diamonds. In March 2011, Laurelton Diamonds, Inc. ("Laurelton"), a wholly-owned subsidiary of the Company, as lender, entered into a $50,000,000 amortizing term loan facility agreement (the "Loan") with Koidu Limited (previously Koidu Holdings S.A.) ("Koidu"), as borrower, and BSG Resources Limited, as a limited guarantor. Koidu operates a kimberlite diamond mine in Sierra Leone (the "Mine") from which Laurelton acquires diamonds. Koidu was required under the terms of the Loan to apply the proceeds of the Loan to capital expenditures necessary to increase the output of the Mine, among other purposes. As of July 31, 2011, the Loan was fully funded. In consideration of the Loan, Laurelton entered into a supply agreement, pursuant to which Laurelton is required to purchase at fair market value diamonds recovered from the Mine that meet Laurelton's quality standards. The assets of Koidu, including all equipment and rights in respect of the Mine, are subject to the security interest of a lender that is not affiliated with the Company. The Loan is partially secured by diamonds that have been extracted from the Mine and that have not been sold to third parties. The Company has evaluated the variable interest entity consolidation requirements with respect to this transaction and has determined that it is not the primary beneficiary, as it does not have the power to direct any of the activities that most significantly impact Koidu's economic performance. On March 29, 2013, the Company entered into an amendment relating to the Loan which deferred principal and interest payments due in 2013 to subsequent years (the "2013 Amendment") and, on March 31, 2014, the Company entered into a further amendment providing that the principal payments due in 2014 shall be paid on a monthly basis rather than on a semi-annual basis. The Loan, as amended, is required to be repaid in full by March 2017 through monthly payments from March through December 2014 and semi-annual payments beginning in March 2015. Interest accrues at a rate per annum that is the greater of (i) LIBOR plus 3.5% or (ii) 4%. Koidu is also required to pay an additional 2% per annum of interest on the principal payments deferred pursuant to the 2013 Amendment, until such amounts are paid. Koidu has requested that the principal and interest payments due in March 2015 be deferred pending the completion of certain technical studies with respect to the Mine and additional discussions between the parties regarding a further revised repayment schedule. The terms and conditions of the proposed deferral are currently under discussion. Based on management's review, it has been determined that the full amount outstanding under the loan, including accrued interest, continues to be collectible. The Company also provided financing of $3,050,000 and $8,015,000 during the years ended January 31, 2014 and 2013 to other diamond mining and exploration companies. Contractual Cash Obligations and Contingent Funding Commitments At January 31, 2015, the Company's contractual cash obligations and contingent funding commitments were for inventory purchases of $376,202,000 (which includes the $160,000,000 obligation discussed in Diamond Sourcing Activities above), as well as for other contractual obligations of $108,922,000 (primarily for technology licensing and service contracts, fixed royalty commitments, construction-in- progress and packaging supplies). Litigation Arbitration Award. On December 21, 2013, an award was issued (the "Arbitration Award") in favor of The Swatch Group Ltd. ("Swatch") and its wholly-owned subsidiary Tiffany Watch Co. ("Watch Company"; Swatch and Watch Company, together, the "Swatch Parties") in an arbitration proceeding (the "Arbitration") between the Registrant and its wholly-owned subsidiaries, Tiffany and Company and Tiffany (NJ) Inc. (the Registrant and such subsidiaries, together, the "Tiffany Parties") and the Swatch Parties. TIFFANY & CO. K-74 The Arbitration was initiated in June 2011 by the Swatch Parties, who sought damages for alleged breach of agreements entered into by and among the Swatch Parties and the Tiffany Parties in December 2007 (the "Agreements"). The Agreements pertained to the development and commercialization of a watch business and, among other things, contained various licensing and governance provisions and approval requirements relating to business, marketing and branding plans and provisions allocating profits relating to sales of the watch business between the Swatch Parties and the Tiffany Parties. In general terms, the Swatch Parties alleged that the Tiffany Parties breached the Agreements by obstructing and delaying development of Watch Company’s business and otherwise failing to proceed in good faith. The Swatch Parties sought damages based on alternate theories ranging from CHF 73,000,000 (or approximately $79,000,000 at January 31, 2015) (based on its alleged wasted investment) to CHF 3,800,000,000 (or approximately $4,100,000,000 at January 31, 2015) (calculated based on alleged future lost profits of the Swatch Parties and their affiliates over the entire term of the Agreements). The Registrant believes that the claims of the Swatch Parties are without merit. In the Arbitration, the Tiffany Parties defended against the Swatch Parties’ claims vigorously, disputing both the merits of the claims and the calculation of the alleged damages. The Tiffany Parties also asserted counterclaims for damages attributable to breach by the Swatch Parties, stemming from the Swatch Parties’ September 12, 2011 public issuance of a Notice of Termination purporting to terminate the Agreements due to alleged material breach by the Tiffany Parties, and for termination due to such breach. In general terms, the Tiffany Parties alleged that the Swatch Parties did not have grounds for termination, failed to meet the high standard for proving material breach set forth in the Agreements and failed to provide appropriate management, distribution, marketing and other resources for TIFFANY & CO. brand watches and to honor their contractual obligations to the Tiffany Parties regarding brand management. The Tiffany Parties’ counterclaims sought damages based on alternate theories ranging from CHF 120,000,000 (or approximately $130,000,000 at January 31, 2015) (based on its wasted investment) to approximately CHF 540,000,000 (or approximately $584,000,000 at January 31, 2015) (calculated based on alleged future lost profits of the Tiffany Parties). K - 0 1 M R O F The Arbitration hearing was held in October 2012 before a three-member arbitral panel convened in the Netherlands pursuant to the Arbitration Rules of the Netherlands Arbitration Institute (the "Rules"), and the Arbitration record was completed in February 2013. Under the terms of the Arbitration Award, and at the request of the Swatch Parties and the Tiffany Parties, the Agreements were deemed terminated. The Arbitration Award stated that the effective date of termination was March 1, 2013. Pursuant to the Arbitration Award, the Tiffany Parties were ordered to pay the Swatch Parties damages of CHF 402,737,000 (the "Arbitration Damages"), as well as interest from June 30, 2012 to the date of payment, two-thirds of the cost of the Arbitration and two-thirds of the Swatch Parties' legal fees, expenses and costs. These amounts were paid in full in January 2014. Prior to the ruling of the arbitral panel, no accrual was established in the Company's consolidated financial statements because management did not believe the likelihood of an award of damages to the Swatch Parties was probable. As a result of the ruling, in the fourth quarter of 2013, the Company recorded a charge of $480,211,000, which includes the damages, interest, and other costs associated with the ruling and which has been classified as Arbitration award expense in the consolidated statement of earnings. On March 31, 2014, the Tiffany Parties took action in the District Court of Amsterdam to annul the Arbitration Award. Generally, arbitration awards are final; however, Dutch law does provide for limited grounds on which arbitral awards may be set aside. The Tiffany Parties petitioned to annul the Arbitration Award on these statutory grounds. These grounds include, for example, that the arbitral tribunal violated its mandate by changing the express terms of the Agreements. TIFFANY & CO. K-75 A three-judge panel presided over the annulment hearing on January 19, 2015, and, on March 4, 2015, issued a decision in favor of the Tiffany Parties. Under this decision, the Arbitration Award is set aside. However, the Swatch Parties have the right to file an appeal of the District Court's decision, and the Arbitration Award may ultimately be upheld by the courts of the Netherlands. If the Swatch Parties assert their right to appeal, which expires on June 4, 2015, Registrant’s management expects that the annulment action will not be ultimately resolved for at least 18 months. If the Arbitration Award is finally annulled, management anticipates that the claims and counterclaims that formed the basis of the Arbitration, and potentially additional claims and counterclaims, will be litigated in court proceedings between and among the Swatch Parties and the Tiffany Parties. The identity and location of the courts that would hear such actions have not been determined at this time. Management also anticipates that the Tiffany Parties would seek the return of the amounts paid by them under the Arbitration Award in court proceedings. In any litigation regarding the claims and counterclaims that formed the basis of the arbitration, issues of liability and damages will be pled and determined without regard to the findings of the arbitral panel. As such, it is possible that the court could find that the Swatch Parties were in material breach of their obligations under the Agreements, that the Tiffany Parties were in material breach of their obligations under the Agreements or that neither the Swatch Parties nor the Tiffany Parties were in material breach. If the Swatch Parties’ claims of liability were accepted by the court, the damages award cannot be reasonably estimated at this time, but could exceed the Arbitration Damages and could have a material adverse effect on the Registrant’s consolidated financial statements or liquidity. F O R M 1 0 - K Although the District Court has issued a decision in favor of the Tiffany Parties, an amount will only be recorded for any return of amounts paid under the Arbitration Award when the District’s Court decision is final (i.e., after any right of appeal has been exhausted) and return of these amounts is deemed probable and collection is reasonably assured. As such, the Company has not recorded any amounts in its consolidated financial statements related to the District Court’s decision. Additionally, management has not established any accrual in the Company's consolidated financial statements for the year ended January 31, 2015 related to the annulment process or any potential subsequent litigation because it does not believe that the final annulment of the Arbitration Award and a subsequent award of damages exceeding the Arbitration Damages is probable. Royalties payable to the Tiffany Parties by Watch Company under the Agreements were not significant in any year and watches manufactured by Watch Company and sold in TIFFANY & CO. stores constituted 1% of worldwide net sales in 2013 and 2012. The Company is proceeding with plans to design, produce, market and distribute TIFFANY & CO. brand watches through certain of its Swiss subsidiaries. Management expects to introduce new TIFFANY & CO. brand watches in April 2015. The effective development and growth of this watch business has required and will continue to require additional resources and involves risks and uncertainties. Other Litigation Matters. 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 with parties claiming infringement of patents and other intellectual property rights by the Company, litigation instituted by persons alleged to have been injured upon premises under the Company'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 the Company's business, as well as for any business employing significant numbers of 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, the TIFFANY & CO. K-76 Company believes that all such litigation currently pending to which it is a party or to which its properties are subject will be resolved without any material adverse effect on the Company's financial position, earnings or cash flows. Environmental Matter In 2005, the US Environmental Protection Agency (“EPA”) designated a 17-mile stretch of the Passaic River (the “River”) part of the Diamond Alkali “Superfund” site. This designation resulted from the detection of hazardous substances at the site, which was previously home to the Diamond Shamrock Corporation, a manufacturer of pesticides and herbicides. Under the Superfund law, the EPA will negotiate with potentially responsible parties to agree on remediation approaches. The Company, which operated a silverware manufacturing facility on a tributary of the River from approximately 1897 to 1985, is one of more than 300 parties (the "Potentially Responsible Parties") designated by the EPA as potentially responsible parties with respect to the River. Of these parties, the Company, along with approximately 70 other Potentially Responsible Parties (collectively, the “Cooperating Parties Group” or “CPG”) voluntarily entered into an Administrative Settlement Agreement and Order on Consent (“AOC”) with the EPA in May 2007 to perform a Remedial Investigation/Feasibility Study (the “RI/FS”) of the lower 17 miles of the River. In June 2012, the CPG voluntarily entered into a second AOC related to focused remediation actions at Mile 10.9 of the River. The actions under the Mile 10.9 AOC are substantially complete, and the RI/FS under the 2007 AOC is expected to be substantially complete no earlier than April 15, 2015. The Company has accrued for its financial obligations under both AOCs, which have not been material to its financial position or results of operations in previous financial periods or on a cumulative basis. K - 0 1 M R O F Separately, the EPA has issued and is reviewing comments on its proposed plan for remediating the lower eight miles of the River, which is supported by a Focused Feasibility Study (the “FFS”). The FFS provides multiple approaches to remediation, which range in cost from $360,000,000 to $3,250,000,000, with the cost of the EPA-recommended approach ranging from $950,000,000 to $1,731,000,000. It cannot be determined how any costs of remediation identified as a result of the FFS would be allocated among any of the potentially responsible parties. The Remedial Investigation portion of the RI/FS was submitted to the EPA on February 19, 2015, and the Company expects that the Feasibility Study portion of the RI/FS will be submitted to the EPA no earlier than April 15, 2015. The Company expects that the RI/FS will be reviewed and subject to comment by the EPA and other governmental agencies and stakeholders, with the EPA ultimately issuing a Record of Decision identifying a proposed remediation approach. With respect to the FFS, the Company expects that the EPA will, after review of the comments, identify and negotiate with any or all of the potentially responsible parties regarding any remediation action that may be necessary, and ultimately issue a Record of Decision with a proposed remediation approach. Until one or more Records of Decision are issued, neither the ultimate remedial approaches and their costs, nor the Company’s participation, if any, relative to the other potentially responsible parties in these approaches and costs, can be determined. As such, the Company’s obligations, if any, beyond those already recorded for the 2007 AOC and the Mile 10.9 AOC cannot be identified or estimated at this time, and the Company has therefore not recorded any additional liability related to this matter. In light of the number of companies in the CPG participating in the 2007 AOC and the Mile 10.9 AOC and the Company’s relative participation in the costs related thereto, the Company does not expect that its ultimate liability, if any, related to these matters will be material to its financial position. However, it is possible that, when the uncertainties discussed above are resolved, such liability could be material to its results of operations or cash flows in the period in which such uncertainties are resolved. TIFFANY & CO. K-77 Other In the first quarter of 2013, the Company implemented specific cost-reduction initiatives and recorded $9,379,000 of expense within SG&A expenses. These cost-reduction initiatives included severance related to staffing reductions (all of which was paid by the end of the third quarter of 2013) and subleasing of certain office space for which only a portion of the Company's future rent obligations will be recovered. K. RELATED PARTIES The Company's Chairman of the Board (and Chief Executive Officer through March 31, 2015) is a member of the Board of Directors of The Bank of New York Mellon, but will not stand for re-election at its upcoming annual meeting of stockholders scheduled to be held on April 14, 2015. The Bank of New York Mellon serves as the Company's trustee for its Senior Notes due in 2024 and 2044, participates as a co- syndication agent and lender for its New Credit Facilities, served as the lead bank for its Previously Existing Credit Facilities, provides other general banking services and serves as the trustee and an investment manager for the Company's pension plan. Fees paid to the bank for services rendered and interest on debt amounted to $1,254,000, $1,569,000 and $1,658,000 in 2014, 2013 and 2012. L. STOCKHOLDERS' EQUITY Accumulated Other Comprehensive Loss (in thousands) Accumulated other comprehensive (loss) earnings, net of tax: Foreign currency translation adjustments Unrealized gain on marketable securities Deferred hedging loss Net unrealized loss on benefit plans 2015 January 31, 2014 $ $ (76,284) $ 1,912 (5,399) (210,691) (290,462) $ 16,846 2,677 (6,607) (71,464) (58,548) F O R M 1 0 - K TIFFANY & CO. K-78 Additions to and reclassifications out of accumulated other comprehensive (loss) earnings are as follows: (in thousands) Years Ended January 31, 2015 2014 2013 Foreign currency translation adjustments $ (101,900) $ (31,742) $ (11,567) Income tax benefit Foreign currency adjustments, net of tax Unrealized (loss) gain on marketable securities Reclassification for loss included in net earnings a Income tax benefit (expense) Unrealized (loss) gain on marketable securities, net of tax 8,770 4,524 (93,130) (27,218) (870) — 105 (765) 1,234 — (406) 828 Unrealized gain (loss) on hedging instruments 14,620 8,716 6,422 (5,145) 2,640 6 (927) 1,719 (4,439) Reclassification adjustment for (gain) loss included in net earnings b Income tax (expense) benefit Unrealized gain (loss) on hedging instruments, net of tax Prior service cost Net actuarial (loss) gain Amortization of net loss included in net earnings c Amortization of prior service (credit) cost included in net earnings c Income tax benefit (expense) (13,017) (13,950) 12,168 (395) 1,208 (477) (234,669) 13,144 1,834 (3,400) — 86,310 19,217 (2,207) 5,522 — (34,520) 15,993 K - 0 1 M R O F (407) 313 83,182 (40,723) 356 7,330 Net unrealized (loss) gain on benefit plans, net of tax (139,227) 65,117 (10,841) Total other comprehensive (loss) earnings, net of tax $ (231,914) $ 35,327 $ (8,745) a These losses are reclassified into Other income, net. b These (gains) losses are reclassified into Interest expense and financing costs and Cost of sales (see "Note H - Hedging Instruments" for additional details). c These accumulated other comprehensive income components are included in the computation of net periodic pension costs (see "Note N - Employee Benefit Plans" for additional details). Stock Repurchase Program In January 2011, the Company's Board of Directors approved a stock repurchase program ("2011 Program") and terminated a previously-existing program. The 2011 Program authorized the Company to repurchase up to $400,000,000 of its Common Stock through open market or private transactions. The timing of repurchases and the actual number of shares to be repurchased depended on a variety of discretionary factors such as stock price, cash-flow forecasts and other market conditions. The Company suspended share repurchases during the second quarter of 2012. In January 2013, the Board of Directors extended the expiration date of the 2011 Program to January 31, 2014. The 2011 Program expired on January 31, 2014. In March 2014, the Company's Board of Directors approved a share repurchase program which authorizes the Company to repurchase up to $300,000,000 of its Common Stock through open market transactions. Purchases are executed under a written plan for trading securities as specified under Rule 10b5-1 promulgated under the Securities and Exchange Act of 1934, as amended, the terms of which are within TIFFANY & CO. K-79 the Company's discretion, subject to applicable securities laws, and are based on market conditions and the Company's liquidity needs. The program will expire on March 31, 2017. 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 Years Ended January 31, 2015 2014 2013 27,028 $ — $ 54,107 301 — 813 89.91 $ — $ 66.54 $ $ At January 31, 2015, $272,972,000 remained available for share repurchases under this authorization. Cash Dividends The Company's Board of Directors declared quarterly dividends which, on an annual basis, totaled $1.48, $1.34 and $1.25 per share of Common Stock in 2014, 2013 and 2012. On February 19, 2015, the Company's Board of Directors declared a quarterly dividend of $0.38 per share of Common Stock. This dividend will be paid on April 10, 2015 to stockholders of record on March 20, 2015. F O R M 1 0 - K M. STOCK COMPENSATION PLANS The Company has two stock compensation plans under which awards may 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 Incentive Plan after May 22, 2024 or under the Directors Option Plan after May 15, 2018. Under the Employee Incentive Plan, the maximum number of common shares authorized for issuance was 8,650,000. 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 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 has granted time-vesting restricted stock units ("RSUs"), performance-based restricted stock units ("PSUs") and stock options under the Employee Incentive Plan. Stock options vest primarily in increments of 25% per year over four years. RSUs and PSUs issued to the executive officers vest at the end of a three-year period. RSUs issued to other management employees vest primarily in increments of 25% per year over a four-year period. Vesting of all PSUs is contingent on the Company's performance against pre-set objectives established by the Compensation Committee of the Company's Board of Directors. The PSUs and RSUs 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 based on interim estimates of performance against the pre-set objectives. Award holders are not entitled to receive dividends on unvested stock options, PSUs or RSUs. 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 25,000 (subject to adjustment) shares per non-employee director in any fiscal year. Awards of shares (or rights to receive TIFFANY & CO. K-80 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 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. Director options vest immediately. Director RSUs vest over a one-year period. The Company uses newly-issued shares to satisfy stock option exercises and the vesting of PSUs and RSUs. 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 2015 1.3% 30.2% 1.5% 5 Years Ended January 31, 2014 1.2% 39.6% 1.4% 5 2013 1.6% 42.2% 1.0% 6 K - 0 1 M R O F A summary of the option activity for the Company's stock option plans is presented below: Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term in Years Aggregate Intrinsic Value (in thousands) Number of Shares Outstanding at January 31, 2014 2,322,145 $ 55.63 6.62 $ 65,033 Granted Exercised Forfeited/canceled 479,378 (939,321) (170,150) 88.32 45.67 72.08 Outstanding at January 31, 2015 1,692,052 $ 68.76 Exercisable at January 31, 2015 850,767 $ 56.02 7.38 $ 32,288 5.79 $ 26,866 The weighted-average grant-date fair value of options granted for the years ended January 31, 2015, 2014 and 2013 was $22.25, $29.11 and $21.78. The total intrinsic value (market value on date of exercise less grant price) of options exercised during the years ended January 31, 2015, 2014 and 2013 was $44,128,000, $39,542,000 and $14,359,000. TIFFANY & CO. K-81 A summary of the activity for the Company's RSUs is presented below: Non-vested at January 31, 2014 Granted Vested Forfeited Number of Shares Weighted-Average Grant-Date Fair Value 742,302 $ 63.33 252,339 (297,909) (115,103) 90.68 92.65 68.87 Non-vested at January 31, 2015 581,629 $ 75.46 A summary of the activity for the Company's PSUs is presented below: Non-vested at January 31, 2014 Granted Vested Forfeited/canceled Non-vested at January 31, 2015 F O R M 1 0 - K Number of Shares Weighted-Average Grant-Date Fair Value 879,038 $ 63.27 210,477 (91,815) (305,223) 82.88 56.95 61.61 692,477 $ 70.80 The weighted-average grant-date fair value of RSUs granted for the years ended January 31, 2014 and 2013 was $68.66 and $66.18. The weighted-average grant-date fair value of PSUs granted for the years ended January 31, 2014 and 2013 was $83.73 and $59.85. As of January 31, 2015, there was $69,092,000 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 2.7 years. The total fair value of RSUs vested during the years ended January 31, 2015, 2014 and 2013 was $27,711,000, $26,497,000 and $21,752,000. The total fair value of PSUs vested during the years ended January 31, 2015, 2014 and 2013 was $8,071,000, $10,192,000 and $20,340,000. Total compensation cost for stock-based compensation awards recognized in income and the related income tax benefit was $26,451,000 and $8,879,000 for the year ended January 31, 2015, $32,188,000 and $11,434,000 for the year ended January 31, 2014 and $26,938,000 and $9,541,000 for the year ended January 31, 2013. Total stock-based 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 in accordance with the Internal Revenue Service Code ("Qualified Plan") covering substantially all U.S. employees hired before January 1, 2006, a non-qualified unfunded retirement income plan ("Excess Plan") covering certain U.S. employees hired before January 1, 2006 and affected by Internal Revenue Service Code compensation limits, a non-qualified unfunded Supplemental Retirement Income Plan ("SRIP") covering certain executive officers of the Company hired before January 1, 2006 and noncontributory defined benefit pension plans in certain of its international locations ("Other Plans"). TIFFANY & CO. K-82 Qualified Plan benefits are based on (i) average compensation in the highest paid five years of the last 10 years of employment ("average final compensation") and (ii) the number of years of service. Participants with at least 10 years of service who retire after attaining age 55 may 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. To the extent that these requirements are fully covered by assets in the Qualified Plan, the Company may elect not to make any contribution in a particular year. No cash contribution was required in 2014 and none is required in 2015 to meet the minimum funding requirements of the Employee Retirement Income Security Act. The Company periodically evaluates whether to make discretionary cash contributions to the Qualified Plan, and did not make such contributions in 2014 and currently does not anticipate making such contributions in 2015. This expectation is subject to change based on management’s assessment of a variety of factors, including, but not limited to, asset performance, interest rates and changes in actuarial assumptions. The Qualified Plan, Excess Plan and SRIP exclude all employees hired on or after January 1, 2006. 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 ("EPSRS") Plan (see "Employee Profit Sharing and Retirement Savings Plan" below). Employees hired before January 1, 2006 will continue to be eligible for and accrue benefits under the Qualified Plan. The Excess Plan 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 noncompetition and confidentiality covenants. The Excess Plan allows participants with at least 10 years of service who retire after attaining age 55 to receive reduced retirement benefits. K - 0 1 M R O F The SRIP supplements the Qualified Plan, Excess Plan and Social Security by providing additional payments upon a participant's retirement. SRIP benefits are determined by a percentage of average final compensation; this percentage increases as specified service plateaus are achieved. Benefits payable under the Qualified Plan, Excess Plan and Social Security offset benefits payable under the SRIP. Under the SRIP, benefits vest when a participant both (i) attains age 55 while employed by the Company and (ii) has provided at least 10 years of service. In certain limited circumstances, early vesting can occur due to a change in control. Benefits under the SRIP are forfeited if benefits under the Excess Plan are forfeited. Benefits for the Other Plans are typically based on monthly eligible compensation and the number of years of service. Benefits are typically payable in a lump sum upon retirement, termination, resignation or death if the participant has completed the requisite service period. 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 certain 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, hired on or before March 31, 2012, 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 TIFFANY & CO. K-83 administered by an insurance company, and premiums on life insurance are based on prior years' claims experience. Obligations and Funded Status The following tables provide a reconciliation of benefit obligations, plan assets and funded status of the pension and other postretirement benefit plans as of the measurement date: (in thousands) Change in benefit obligation: January 31, Pension Benefits Other Postretirement Benefits 2015 2014 2015 2014 Benefit obligation at beginning of year $ 615,870 $ 631,538 $ 54,723 $ 65,723 Service cost Interest cost F O R M 1 0 - K Participants' contributions Amendments MMA retiree drug subsidy Actuarial loss (gain) Benefits paid Translation 16,894 28,253 19,127 27,005 — 817 — — — — 2,327 2,646 1,468 — 119 2,791 2,762 1,638 — 97 202,345 (40,130) 34,867 (15,131) (20,247) (19,794) (3,262) (3,157) (2,232) (1,876) — — Benefit obligation at end of year 841,700 615,870 92,888 54,723 Change in plan assets: Fair value of plan assets at beginning of year 397,430 331,181 Actual return on plan assets Employer contribution Participants' contributions MMA retiree drug subsidy Benefits paid 26,104 2,758 53,276 32,767 — — — — — — 1,675 1,468 119 — — 1,422 1,638 97 (20,247) (19,794) (3,262) (3,157) Fair value of plan assets at end of year 406,045 397,430 — — Funded status at end of year $ (435,655) $ (218,440) $ (92,888) $ (54,723) Actuarial losses in 2014 reflect decreases in the discount rates for all plans, and for the U.S. plans, also reflect the impact of adopting updated mortality assumptions issued by the Society of Actuaries in October 2014. TIFFANY & CO. K-84 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: (in thousands) Projected benefit obligation Fair value of plan assets Funded status Accumulated benefit obligation (in thousands) Projected benefit obligation Fair value of plan assets Funded status Accumulated benefit obligation $ $ $ $ $ $ January 31, 2015 Qualified Excess/SRIP Other Total 693,350 $ 133,136 $ 15,214 $ 841,700 406,045 — — 406,045 (287,305) $ (133,136) $ (15,214) $ (435,655) 620,632 $ 97,425 $ 12,590 $ 730,647 January 31, 2014 Qualified Excess/SRIP Other Total 501,178 $ 99,380 $ 15,312 $ 615,870 397,430 — — 397,430 (103,748) $ (99,380) $ (15,312) $ (218,440) 450,255 $ 70,847 $ 12,814 $ 533,916 K - 0 1 M R O F At January 31, 2015, the Company had a current liability of $4,325,000 and a non-current liability of $524,218,000 for pension and other postretirement benefits. At January 31, 2014, the Company had a current liability of $5,051,000 and a non-current liability of $268,112,000 for pension and other postretirement benefits. Amounts recognized in accumulated other comprehensive loss consist of: (in thousands) Net actuarial loss (gain) Prior service cost (credit) Total before tax Pension Benefits 2015 2014 $ 311,216 $ 124,542 872 661 $ 312,088 $ 125,203 $ $ January 31, Other Postretirement Benefits 2015 32,370 $ (3,725) 28,645 $ 2014 (2,477) (4,398) (6,875) The estimated pre-tax amount that will be amortized from accumulated other comprehensive loss into net periodic benefit cost within the next 12 months is as follows: (in thousands) Net actuarial loss Prior service credit Pension Benefits Other Postretirement Benefits $ 29,690 $ (7) $ 29,683 $ 1,590 (687) 903 TIFFANY & CO. K-85 Components of Net Periodic Benefit Cost and Other Amounts Recognized in Other Comprehensive Earnings (in thousands) Service cost Interest cost Years Ended January 31, Pension Benefits Other Postretirement Benefits 2015 2014 2013 2015 2014 2013 $ 16,894 $ 19,127 $ 18,058 $ 2,327 $ 2,791 $ 2,382 28,253 27,005 26,796 2,646 2,762 2,839 Expected return on plan assets (23,630) (22,240) (20,416) — — — Amortization of prior service cost 273 972 1,015 Amortization of net loss 13,124 19,010 15,964 (673) 20 (659) 212 (659) 29 Net periodic benefit cost 34,914 43,874 41,417 4,320 5,106 4,591 Net actuarial loss (gain) 199,802 (71,179) 34,080 34,867 (15,131) Recognized actuarial loss (13,124) (19,005) (15,964) Prior service cost 477 — — (20) — (212) — 440 (29) — Recognized prior service (cost) credit Total recognized in other comprehensive earnings Total recognized in net periodic benefit cost and other comprehensive earnings (266) (972) (1,015) 673 659 659 186,889 (91,156) 17,101 35,520 (14,684) 1,070 $ 221,803 $ (47,282) $ 58,518 $ 39,840 $ (9,578) $ 5,661 F O R M 1 0 - K Weighted-average assumptions used to determine benefit obligations: Assumptions Discount rate: Qualified Plan Excess Plan/SRIP Other Plans Other Postretirement Benefits Rate of increase in compensation: Qualified Plan Excess Plan SRIP Other Plans 2015 3.75% 3.75% 1.12% 3.50% 2.75% 4.25% 7.25% 1.22% January 31, 2014 4.75% 5.00% 1.25% 5.00% 2.75% 4.25% 7.25% 1.00% TIFFANY & CO. K-86 Weighted-average assumptions used to determine net periodic benefit cost: Discount rate: Qualified Plan Excess Plan/SRIP Other Plans Other Postretirement Benefits Expected return on plan assets Rate of increase in compensation: Qualified Plan Excess Plan SRIP Other Plans 2015 2014 2013 Years Ended January 31, 4.75% 5.00% 1.81% 5.00% 7.50% 2.75% 4.25% 7.25% 1.33% 4.50% 4.50% 1.25% 4.50% 7.50% 2.75% 4.25% 7.25% 1.00% 5.00% 5.00% 1.50% 5.25% 7.50% 2.75% 4.25% 7.25% 1.00% 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, 7.50% (for pre-age 65 retirees) and 6.50% (for post- age 65 retirees) annual rates of increase in the per capita cost of covered health care were assumed for 2015. The rates were assumed to decrease gradually to 4.75% by 2023 and remain at that level thereafter. Assumed health-care cost trend rates affect amounts reported for the Company's postretirement health- care benefits plan. A one-percentage-point increase in the assumed health-care cost trend rate would increase the Company's accumulated postretirement benefit obligation by approximately $6,200,000 for the year ended January 31, 2015. Decreasing the assumed health-care cost trend rate by one-percentage point would decrease the Company's accumulated postretirement benefit obligation by approximately $4,200,000 for the year ended January 31, 2015. A one-percentage-point change in the assumed health- care cost trend rate would not have a significant effect on the Company's aggregate service and interest cost components of the 2014 postretirement expense. Plan Assets The Company's investment objectives, related to the Qualified Plan's assets, are the preservation of principal and the achievement of a reasonable rate of return over time. The Qualified Plan's assets are allocated based on an expectation that equity securities will outperform debt securities over the long term. The Company's target asset allocations are as follows: 60% - 70% in equity securities; 20% - 30% in fixed income securities; and 5% - 15% in other securities. The Company attempts to mitigate investment risk by rebalancing asset allocation periodically. K - 0 1 M R O F TIFFANY & CO. K-87 The fair value of the Qualified Plan's assets at January 31, 2015 and 2014 by asset category is as follows: (in thousands) Equity securities: Fair Value at January 31, 2015 Fair Value Measurements Using Inputs Considered as* Level 1 Level 2 Level 3 Common/collective trusts a $ 288,480 $ — $ 288,480 $ Fixed income securities: Government bonds Corporate bonds Mortgage obligations Other types of investments: Limited partnerships F O R M 1 0 - K (in thousands) Equity securities: 27,714 33,882 37,012 18,957 23,603 — — — 4,111 33,882 37,012 — $ 406,045 $ 23,603 $ 363,485 $ — — — — 18,957 18,957 Fair Value at January 31, 2014 Fair Value Measurements Using Inputs Considered as* Level 1 Level 2 Level 3 Common/collective trusts a $ 293,484 $ — $ 293,484 $ Fixed income securities: Government bonds Corporate bonds Mortgage obligations Other types of investments: Limited partnerships 28,773 28,318 32,457 14,398 24,428 — — — 4,345 28,318 32,457 — $ 397,430 $ 24,428 $ 358,604 $ — — — — 14,398 14,398 * See "Note I - Fair Value of Financial Instruments" for a description of the levels of inputs. a Common/collective trusts include investments in U.S. and international large, middle and small capitalization equities. TIFFANY & CO. K-88 K - 0 1 M R O F The changes in fair value of the Qualified Plan's Level 3 assets is as follows: (in thousands) January 31, 2013 Unrealized loss, net Realized gain, net Purchases Settlements January 31, 2014 Unrealized gain, net Realized gain, net Purchases Settlements January 31, 2015 Limited partnerships $ 14,655 (313) 1,643 1,856 (3,443) 14,398 1,376 633 5,609 (3,059) 18,957 Valuation Techniques $ Investments in common/collective trusts are stated at estimated fair value which represents the net asset value of shares held by the Qualified Plan as reported by the investment advisor. Investments in limited partnerships are valued at estimated fair value based on financial information received from the investment advisor and/or general partner. The net asset value is based on the value of the underlying assets owned by the fund, minus its liabilities and then divided by the number of shares outstanding. Securities traded on the national securities exchange (certain government bonds) are valued at the last reported sales price or closing price on the last business day of the fiscal year. Investments traded in the over-the-counter market and listed securities for which no sales were reported (certain government bonds, corporate bonds and mortgage obligations) are valued at the last reported bid price. The Company expects the following future benefit payments to be paid: Benefit Payments Years Ending January 31, Pension Benefits (in thousands) Other Postretirement Benefits (in thousands) 2016 2017 2018 2019 2020 2021-2025 $ 20,610 $ 21,596 23,711 24,661 25,548 162,567 1,734 1,741 1,760 1,772 1,821 10,707 Employee Profit Sharing and Retirement Savings ("EPSRS") Plan The Company maintains an EPSRS Plan that covers substantially all U.S.-based employees. Under the profit-sharing feature of the EPSRS Plan, the Company made contributions, in the form of newly-issued Company Common Stock through 2014, to the employees' accounts based on the achievement of certain targeted earnings objectives established by, or as otherwise determined by, the Company's Board of Directors. Beginning in 2015, these contributions will be made in cash. The Company recorded expense TIFFANY & CO. K-89 of $3,075,000 in 2014, $3,925,000 in 2013 and recorded no expense in 2012. Under the retirement savings feature of the EPSRS Plan, employees who meet certain eligibility requirements may participate by contributing up to 50% of their annual compensation beginning in 2012, not to exceed Internal Revenue Service limits, and the Company may provide up to a 50% matching cash contribution up to 6% of each participant's total compensation. The Company recorded expense of $7,735,000, $7,088,000 and $7,278,000 in 2014, 2013 and 2012. Contributions to both features of the EPSRS Plan are made in the following year. Under the profit-sharing feature of the EPSRS Plan, for contributions made in the Company's stock, 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. For contributions made in cash, the contribution is allocated within the participant's account based on their investment elections under the EPSRS Plan. If the participant has made no election, the contribution will be invested in the appropriate default target fund as determined by each participant's date of birth. 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, 2015, investments in Company stock represented 26% of total EPSRS Plan assets. The EPSRS Plan provides a defined contribution retirement benefit ("DCRB") to eligible employees hired on or after January 1, 2006. Under the DCRB, the Company makes contributions each year to each employee's account at a rate based upon age and years of service. These contributions are deposited into individual accounts 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 $4,584,000, $3,640,000 and $3,387,000 in 2014, 2013 and 2012. F O R M 1 0 - K 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. This plan also provides for an excess defined contribution retirement benefit ("Excess DC benefit") for certain eligible executives and management employees, hired on or after January 1, 2006. The Excess DC benefit is credited to the eligible employee's account, based on the compensation paid to the employee in excess of the IRS limits for contribution under the DCRB Plan. Under the plan, 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 $27,087,000 and $27,828,000 at January 31, 2015 and 2014, and are reflected in other long-term liabilities. The Company does not promise or guarantee any rate of return on amounts deferred. O. INCOME TAXES Earnings from operations before income taxes consisted of the following: (in thousands) United States Foreign Years Ended January 31, 2015 484,467 $ 253,070 2014 65,164 $ 189,702 737,537 $ 254,866 $ 2013 510,853 132,723 643,576 $ $ TIFFANY & CO. K-90 The settlement of the Arbitration Award, as discussed in "Note J - Commitments and Contingencies", resulted in a significant change in the composition of geographical earnings from operations for the year ended January 31, 2014. This change resulted in a lower effective tax rate for the year ended January 31, 2014 because of lower tax rates on foreign earnings. Components of the provision for income taxes were as follows: (in thousands) Current: Federal State Foreign Deferred: Federal State Foreign 2015 2014 2013 Years Ended January 31, $ 130,901 $ 39,028 $ 18,193 66,552 215,646 25,156 13,217 (661) 37,712 9,897 52,427 101,352 (28,640) (2,265) 3,050 (27,855) $ 253,358 $ 73,497 $ 167,462 28,461 50,778 246,701 378 223 (19,883) (19,282) 227,419 K - 0 1 M R O F Reconciliations of the provision for income taxes at the statutory Federal income tax rate to the Company's effective income tax rate were as follows: Statutory Federal income tax rate State income taxes, net of Federal benefit Foreign losses with no tax benefit Undistributed foreign earnings Net change in uncertain tax positions Domestic manufacturing deduction Other 2015 35.0% 2.8 0.7 (4.2) 0.3 (1.3) 1.1 Years Ended January 31, 2014 35.0% 2.0 1.3 (7.8) 0.5 (2.5) 0.3 2013 35.0% 3.0 0.5 (3.4) 0.9 (1.4) 0.7 34.4% 28.8% 35.3% The Company has the intent to indefinitely reinvest any undistributed earnings of substantially all foreign subsidiaries. As of January 31, 2015 and 2014, the Company has not provided deferred taxes on approximately $612,000,000 and $542,000,000 of undistributed earnings. Generally, such amounts become subject to U.S. taxation upon the remittance of dividends and under certain other circumstances. U.S. Federal income taxes of approximately $107,000,000 and $98,000,000 would be incurred if these earnings were distributed. TIFFANY & CO. K-91 Deferred tax assets (liabilities) consisted of the following: (in thousands) Deferred tax assets: 2015 January 31, 2014 Pension/postretirement benefits $ 203,045 $ 106,585 Accrued expenses Share-based compensation Depreciation Amortization Foreign and state net operating losses Sale-leaseback Inventory Financial hedging instruments Unearned income Other Valuation allowance Deferred tax liabilities: Foreign tax credit Net deferred tax asset $ F O R M 1 0 - K 36,441 17,280 14,406 11,415 22,911 36,321 72,715 14,050 11,188 37,018 476,790 (16,232) 460,558 (34,744) 425,814 $ 38,141 22,719 52,530 11,305 27,806 47,900 66,227 14,141 11,407 37,052 435,813 (17,693) 418,120 (40,246) 377,874 The Company has recorded a valuation allowance against certain deferred tax assets related to foreign net operating loss carryforwards where management has determined it is more likely than not that deferred tax assets will not be realized in the future. 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 $98,000,000 exist in certain foreign jurisdictions. Whereas some of these tax loss carryforwards do not have an expiration date, others expire at various times from 2015 through 2022. The following table reconciles the unrecognized tax benefits: (in thousands) 2015 2014 Unrecognized tax benefits at beginning of year $ 27,626 $ 28,217 $ Gross increases – tax positions in prior period Gross decreases – tax positions in prior period Gross increases – tax positions in current period Settlements Lapse of statute of limitations 960 (5,395) 105 (14,837) (126) 345 (391) 115 (284) (376) January 31, 2013 25,509 4,426 (1,713) 156 — (161) Unrecognized tax benefits at end of year $ 8,333 $ 27,626 $ 28,217 Included in the balance of unrecognized tax benefits at January 31, 2015, 2014 and 2013 are $5,251,000, $18,748,000 and $17,564,000 of tax benefits that, if recognized, would affect the effective income tax rate. TIFFANY & CO. K-92 The Company recognizes interest expense and penalties related to unrecognized tax benefits within the provision for income taxes. During the years ended January 31, 2015, 2014 and 2013, the Company recognized approximately $1,802,000, $1,874,000 and $650,000 of expense associated with interest and penalties. Accrued interest and penalties are included within accounts payable and accrued liabilities and other long-term liabilities, and were $6,010,000 and $9,752,000 at January 31, 2015 and 2014. At January 31, 2015, the Company's gross uncertain tax positions and the associated accrued interest and penalties decreased $19,293,000 and $3,742,000, respectively, from January 31, 2014 primarily as a result of the settlement of an audit conducted by the Internal Revenue Service ("IRS"). These decreases were primarily a result of payments due to federal and state taxing authorities. The effect of this settlement on the Consolidated Statements of Earnings was not material for the year ended January 31, 2015. The Company conducts business globally, and, as a result, is subject to taxation in the U.S. and various state and foreign jurisdictions. As a matter of course, tax authorities regularly audit the Company. The Company's tax filings are currently being examined by a number of tax authorities in several jurisdictions. Ongoing audits where subsidiaries have a material presence include New York City (tax years 2011– 2012), as well as an audit that is being conducted by the IRS (tax years 2010–2012). Tax years from 2006–present are open to examination in U.S. Federal and various state, local and foreign jurisdictions. As part of these audits, the Company engages in discussions with taxing authorities regarding tax positions. As of January 31, 2015, unrecognized tax benefits are not expected to change materially in the next 12 months. Future developments may result in a change in this assessment. K - 0 1 M R O F P. SEGMENT INFORMATION 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 Chief Operating Decision Maker regularly evaluates 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. TIFFANY & CO. K-93 Certain information relating to the Company's segments is set forth below: (in thousands) Net sales: Americas Asia-Pacific Japan Europe Years Ended January 31, 2015 2014 2013 $ 2,033,453 $ 1,926,864 $ 1,839,969 1,025,169 554,258 497,287 944,676 578,571 469,784 810,420 639,185 432,167 Total reportable segments 4,110,167 3,919,895 3,721,741 Other Earnings (losses) from operations*: F O R M 1 0 - K Americas Asia-Pacific Japan Europe Total reportable segments Other $ $ 139,746 111,235 72,508 4,249,913 $ 4,031,130 $ 3,794,249 435,507 $ 374,342 $ 281,586 195,985 107,806 1,020,884 7,610 244,142 215,582 101,153 935,219 345,917 188,510 204,510 90,955 829,892 (649) (6,254) * Represents earnings (losses) from operations before (i) unallocated corporate expenses, (ii) interest expense, financing costs and other income, net, (iii) loss on extinguishment of debt, and (iv) other operating expenses. $ 1,028,494 $ 934,570 $ 823,638 The Company's Chief Operating Decision Maker does 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 a reconciliation of the segments' earnings from operations to the Company's consolidated earnings from operations before income taxes: (in thousands) Years Ended January 31, 2015 2014 2013 Earnings from operations for segments $ 1,028,494 $ 934,570 $ 823,638 Unallocated corporate expenses (137,065) (140,651) (126,421) Interest expense, financing costs and other income, net Loss on extinguishment of debt Other operating expense (49,463) (53,641) (60,113) (93,779) — — (489,590) — — Earnings from operations before income taxes $ 737,537 $ 254,866 $ 643,576 Unallocated corporate expenses includes certain costs related to administrative support functions which the Company does not allocate to its segments. Such unallocated costs include those for centralized information technology, finance, legal and human resources departments. TIFFANY & CO. K-94 Loss on extinguishment of debt in the year ended January 31, 2015 was related to the redemption of $400,000,000 in aggregate principal amount of the Private Placement Notes prior to their scheduled maturities (see "Note G - Debt" for additional details). Other operating expense in the year ended January 31, 2014 was related to specific cost-reduction initiatives and the Arbitration Award. See "Note J - Commitments and Contingencies." 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 (in thousands) Net sales: 2015 2014 2013 Years Ended January 31, $ $ $ $ 1,870,843 $ 1,770,731 $ 1,696,502 554,258 1,824,812 578,571 1,681,828 4,249,913 $ 4,031,130 $ 639,185 1,458,562 3,794,249 680,080 $ 632,907 $ 24,407 239,257 21,571 241,951 943,744 $ 896,429 $ K - 0 1 M R O F 630,805 28,971 200,480 860,256 Classes of Similar Products 2015 2014 2013 Years Ended January 31, Statement, fine & solitaire jewelry $ 930,155 $ 916,804 $ Engagement jewelry & wedding bands Fashion jewelry All other 1,245,101 1,755,233 319,424 1,182,226 1,618,194 313,906 749,097 1,132,757 1,581,648 330,747 $ 4,249,913 $ 4,031,130 $ 3,794,249 Certain reclassifications have been made to the prior years' classes of similar products to conform with management's current internal analysis of product sales. TIFFANY & CO. K-95 Q. QUARTERLY FINANCIAL DATA (UNAUDITED) (in thousands, except per share amounts) April 30 July 31 October 31 a January 31 2014 Quarters Ended Net sales Gross profit Earnings from operations Net earnings Net earnings per share: Basic Diluted $ 1,012,132 $ 992,930 $ 959,589 $ 1,285,262 589,526 209,793 125,609 595,163 208,521 124,120 570,871 168,491 38,268 781,615 304,624 196,182 $ $ 0.97 $ 0.97 $ 0.96 $ 0.96 $ 0.30 $ 0.29 $ 1.52 1.51 a On a pre-tax basis, includes a charge of $93,779,000 for the quarter ended October 31, which reduced net earnings per diluted share by $0.47, associated with the redemption of $400,000,000 in aggregate principal amount of the Private Placement Notes prior to their scheduled maturities (see "Note G - Debt"). (in thousands, except per share amounts) April 30 a July 31 October 31 January 31 b 2013 Quarters Ended F O R M 1 0 - K Net sales Gross profit Earnings (loss) from operations Net earnings (loss) Net earnings (loss) per share: Basic Diluted $ 895,484 $ 925,884 $ 911,478 $ 1,298,284 503,224 141,158 83,577 532,129 176,886 106,781 519,481 153,618 94,610 785,609 (167,333) (103,599) $ $ 0.66 $ 0.65 $ 0.84 $ 0.83 $ 0.74 $ 0.73 $ (0.81) (0.81) a On a pre-tax basis, includes charges of $9,379,000 for the quarter ended April 30, which reduced net earnings per diluted share by $0.05, associated with severance related to staffing reductions and subleasing of certain office space for which only a portion of the Company's future rent obligations will be recovered (see "Note J - Commitments and Contingencies"). b On a pre-tax basis, includes charges of $480,211,000 for the quarter ended January 31, related to the adverse arbitration ruling between The Swatch Group Ltd. and the Company (see "Note J - Commitments and Contingencies") and pre-tax income of $7,489,000 associated with foreign currency transaction gains on this expense. This reduced net earnings per diluted share by $2.27 when using weighted-average diluted shares of 129,283,000, which include 1,091,000 of incremental shares based upon the assumed exercise of stock options and unvested restricted stock units. Basic and diluted earnings per share are computed independently for each quarter presented. Accordingly, the sum of the quarterly earnings per share may not agree with the calculated full year earnings per share. TIFFANY & CO. K-96 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, as amended), the Registrant's chief executive officer and chief financial officer concluded that, as of the end of the period covered by this report, the Registrant's disclosure controls and procedures are effective to ensure that information required to be disclosed by the Registrant in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, 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 the ordinary course of business, the Registrant reviews its system of internal control over financial reporting and makes changes to its systems and processes to improve controls and increase efficiency, while ensuring that the Registrant maintains an effective internal control environment. Changes may include activities such as implementing new, more efficient systems and automating manual processes. In 2014, the Registrant implemented a new warehouse management system in its centralized distribution center that handles worldwide store replenishment. K - 0 1 M R O F The Registrant's chief executive officer and chief financial officer have determined that there have been no changes in the Registrant's internal control over financial reporting during the most recently completed fiscal quarter covered by this report identified in connection with the evaluation described above that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting. The 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 the Registrant's disclosure controls and procedures are (i) designed to provide such reasonable assurance and (ii) are effective at that reasonable assurance level. TIFFANY & CO. K-97 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. 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 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 using the criteria set forth by the Committee of Sponsoring Organizations ("COSO") of the Treadway Commission in Internal Control - Integrated Framework issued in 2013. Based on this evaluation, management concluded that internal control over financial reporting was effective as of January 31, 2015 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, 2015 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is shown on page K-49. F O R M 1 0 - K /s/ Michael J. Kowalski Chairman of the Board and Chief Executive Officer /s/ Ralph Nicoletti Executive Vice President and Chief Financial Officer Item 9B. Other Information. NONE TIFFANY & CO. K-98 PART III Item 10. Directors, Executive Officers and Corporate Governance. Incorporated by reference from the sections titled "Section 16(a) Beneficial Ownership Reporting Compliance," "Executive Officers of the Company," "Item 1. Election of the Board," and "Board of Directors and Corporate Governance" in Registrant's Proxy Statement dated April 10, 2015. 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 the 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, 2015, for additional information within the section titled "Business Conduct Policy and Code of Ethics." Item 11. Executive Compensation. Incorporated by reference from the section titled "Board of Directors and Corporate Governance" and "Compensation of the CEO and Other Executive Officers" in Registrant's Proxy Statement dated April 10, 2015. 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" and "Compensation of the CEO and Other Executive Officers" in Registrant's Proxy Statement dated April 10, 2015. K - 0 1 M R O F Item 13. Certain Relationships and Related Transactions, and Director Independence. Incorporated by reference from the sections titled "Executive Officers of the Company" and "Board of Directors and Corporate Governance" in Registrant's Proxy Statement dated April 10, 2015. Item 14. Principal Accounting Fees and Services. Incorporated by reference from the section titled "Relationship with Independent Registered Public Accounting Firm" in Registrant's Proxy Statement dated April 10, 2015. TIFFANY & CO. K-99 PART IV Item 15. Exhibits, 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, 2015 and 2014. F O R M 1 0 - K Consolidated Statements of Earnings for the years ended January 31, 2015, 2014 and 2013. Consolidated Statements of Comprehensive Earnings for the years ended January 31, 2015, 2014 and 2013. Consolidated Statements of Stockholders' Equity for the years ended January 31, 2015, 2014 and 2013. Consolidated Statements of Cash Flows for the years ended January 31, 2015, 2014 and 2013. Notes to Consolidated Financial Statements. 2. Financial Statement Schedules 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 not applicable, not required, or because the information required is included in the consolidated financial statements and notes thereto. 3. Exhibits The information called for by this item is incorporated herein by reference to the Exhibit Index in this report. TIFFANY & CO. K-100 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 20, 2015 TIFFANY & CO. (Registrant) By: /s/ Michael J. Kowalski Michael J. Kowalski Chairman of the Board and Chief Executive Officer K - 0 1 M R O F TIFFANY & CO. K-101 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. F O R M 1 0 - K By: By: By: By: By: By: /s/ Michael J. Kowalski Michael J. Kowalski Chairman of the Board and Chief Executive Officer (Principal Executive Officer) (Director) /s/ Frederic Cumenal Frederic Cumenal President (Director) /s/ Rose Marie Bravo Rose Marie Bravo Director /s/ Lawrence K. Fish Lawrence K. Fish Director /s/ Charles K. Marquis Charles K. Marquis Director /s/ William A. Shutzer William A. Shutzer Director March 20, 2015 By: By: By: By: By: By: /s/ Ralph Nicoletti Ralph Nicoletti Executive Vice President, Chief Financial Officer (Principal Financial Officer) /s/ John S. Barresi John S. Barresi Vice President, Controller (Principal Accounting Officer) /s/ Gary E. Costley Gary E. Costley Director /s/ Abby F. Kohnstamm Abby F. Kohnstamm Director /s/ Peter W. May Peter W. May Director /s/ Robert S. Singer Robert S. Singer Director TIFFANY & CO. K-102 Exhibit Table (numbered in accordance with Item 601 of Regulation S-K) EXHIBIT INDEX Exhibit No. Description 3.1 3.1a 3.2 4.5 4.6 4.7 4.8 4.9 10.1 10.2 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 filed with 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. Incorporated by reference from 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 March 20, 2014. Incorporated by reference from Exhibit 3.2 to Registrant’s Report on Form 8-K dated March 21, 2014. Indenture, dated September 25, 2014, among Registrant, as issuer, and The Bank of New York Mellon Trust Company, as trustee. Incorporated by reference from Exhibit 4.5 to Registrant’s Report on Form 8-K dated September 26, 2014. K - 0 1 M R O F Supplemental Indenture No. 1, dated September 25, 2014, among Registrant, as issuer, certain subsidiaries of Registrant, as guarantors thereto, and The Bank of New York Mellon Trust Company, as trustee. Incorporated by reference from Exhibit 4.6 to Registrant’s Report on Form 8-K dated September 26, 2014. Supplemental Indenture No. 2, dated September 25, 2014, among Registrant, as issuer, certain subsidiaries of Registrant, as guarantors thereto, and The Bank of New York Mellon Trust Company, as trustee. Incorporated by reference from Exhibit 4.7 to Registrant’s Report on Form 8-K dated September 26, 2014. Registration Rights Agreement, dated September 25, 2014, among Registrant, certain subsidiaries of Registrant, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Goldman, Sachs & Co. Incorporated by reference from Exhibit 4.8 to Registrant’s Report on Form 8-K dated September 26, 2014. Upon the request of the Securities and Exchange Commission, Registrant will furnish a copy of all instruments defining the rights of holders of all other long-term debt of Registrant. Amended and Restated Agreement, dated as of December 27, 2012, by and between Tiffany and Company and Elsa Peretti. Incorporated by reference from Exhibit 10.123 filed with Registrant's Report on Form 8-K dated January 2, 2013. 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. TIFFANY & CO. K-103 Exhibit No. Description 10.2a 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. F O R M 1 0 - K 10.3 10.4 10.5 10.6 10.7 10.8 10.8a 10.9 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. Four Year Credit Agreement dated as of October 7, 2014 by and among Registrant and each other Subsidiary of Registrant that is a Borrower and is a signatory thereto and Bank of America, N.A., as Administrative Agent, and various lenders party thereto. Incorporated by reference from Exhibit 10.37 filed with Registrant’s Report on Form 8-K dated October 10, 2014. Subsidiary Guaranty dated as of October 7, 2014, with respect to the Four Year Credit Agreement (see Exhibit 10.4 above) by and among Tiffany and Company, Tiffany & Co. International, and Tiffany & Co. Japan Inc., as Guarantors, and Bank of America, N.A., as Administrative Agent. Incorporated by reference from Exhibit 10.38 filed with Registrant’s Report on Form 8-K dated October 10, 2014. Five Year Credit Agreement dated as of October 7, 2014 by and among Registrant and each other Subsidiary of Registrant that is a Borrower and is a signatory thereto and Bank of America, N.A., as Administrative Agent, and various lenders party thereto. Incorporated by reference from Exhibit 10.39 filed with Registrant’s Report on Form 8-K dated October 10, 2014. Subsidiary Guaranty dated as of October 7, 2014, with respect to the Five Year Credit Agreement (see Exhibit 10.6 above) by and among Tiffany and Company, Tiffany & Co. International, and Tiffany & Co. Japan Inc., as Guarantors, and Bank of America, N.A., as Administrative Agent. Incorporated by reference from Exhibit 10.40 filed with Registrant’s Report on Form 8-K dated October 10, 2014. Amended and Restated Note Purchase and Private Shelf Agreement dated as of July 25, 2012 by and among Registrant and various institutional note purchasers with respect to Registrant’s $100 million principal amount of 9.05% Series A Senior Notes due December 23, 2015, $150 million principal amount of 4.40% Series B-P Senior Notes due July 25, 2042 and private shelf facility. Incorporated by reference from Exhibit 10.155 filed with Registrant’s Report on Form 8-K dated July 27, 2012. Amendment dated as of January 14, 2014 to the Amended and Restated Note Purchase and Private Shelf Agreement (see Exhibit 10.8 above) by and among Registrant, and various institutional note purchasers. Incorporated by reference from Exhibit 10.157 filed with Registrant’s Report on Form 8-K dated January 17, 2014. Amended and Restated Guaranty Agreement dated as of July 25, 2012 with respect to the Amended and Restated Note Purchase and Private Shelf Agreement (see Exhibit 10.8 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 10.156 filed with Registrant’s Report on Form 8-K dated July 27, 2012. TIFFANY & CO. K-104 Exhibit No. Description 10.10 10.10a 10.11 10.12 10.12a 10.13 10.14 10.14a 10.14b K - 0 1 M R O F Amended and Restated Note Purchase and Private Shelf Agreement dated as of July 25, 2012 by and among Registrant and various institutional note purchasers with respect to Registrant’s $50 million principal amount of 10.0% Series A Senior Notes due April 9, 2018, $100 million principal amount of 4.40% Series B-M Senior Notes due July 25, 2042 and up to $50 million private shelf facility. Incorporated by reference from Exhibit 10.159 filed with Registrant’s Report on Form 8-K dated July 27, 2012. Amendment dated as of January 14, 2014 to the Amended and Restated Note Purchase and Private Shelf Agreement, dated as of July 25, 2012 (see Exhibit 10.10 above), by and among Registrant and various institutional note purchasers. Incorporated by reference from Exhibit 10.161 filed with Registrant’s Report on Form 8-K dated January 17, 2014. Amended and Restated Guaranty Agreement dated as of July 25, 2012 with respect to the Amended and Restated Note Purchase and Private Shelf Agreement (see Exhibit 10.10 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 10.160 filed with Registrant’s Report on Form 8-K dated July 27, 2012. Form of Note Purchase Agreement dated as of September 1, 2010 by and between Registrant and various institutional note purchasers with respect to Registrant’s yen 10,000,000,000 principal amount 1.72% Senior Notes due September 1, 2016. Incorporated by reference from Exhibit 10.161 filed with Registrant’s Report on Form 10-Q for the Fiscal Quarter ended July 31, 2010. Amendment dated as of January 14, 2014 with respect to the Note Purchase Agreement, dated as of September 1, 2010 (see Exhibit 10.12 above), by and among Registrant, and various institutional note purchasers. Incorporated by reference from Exhibit 10.163 filed with Registrant’s Report on Form 8-K dated January 17, 2014. Guaranty Agreement dated September 1, 2010 with respect to the Note Purchase Agreement (see Exhibit 10.12 above) by Tiffany and Company, Tiffany & Co. International and Tiffany & Co. Japan Inc. Incorporated by reference from Exhibit 10.162 filed with Registrant’s Report on Form 10-Q for the Fiscal Quarter ended July 31, 2010. Amortising term loan facility agreement dated March 30, 2011 between and among Koidu Holdings S.A. (as Borrower), BSG Resources Limited (as Guarantor) and Laurelton Diamonds, Inc. (as Original Lender). Incorporated by reference from Exhibit 10.163 filed with Registrant’s Report on Form 8-K dated March 30, 2011. Amendment Agreement dated as of May 10, 2011 with respect to the Amortising Term Loan Facility Agreement (see Exhibit 10.14 above) between and among Koidu Holdings S.A. (as Borrower), BSG Resources Limited (as Guarantor) and Laurelton Diamonds, Inc. (as Original Lender). Incorporated by reference from Exhibit 10.15a filed with Registrant’s Report on Form 10-K dated March 28, 2013. Second Amendment Agreement dated as of February 12, 2013 with respect to the Amortising Term Loan Facility Agreement (see Exhibit 10.14 above) between and among Koidu Limited (as Borrower), BSG Resources Limited (as Guarantor) and Laurelton Diamonds, Inc. (as Original Lender). Incorporated by reference from Exhibit 10.15b filed with Registrant’s Report on Form 10-K dated March 28, 2013. TIFFANY & CO. K-105 Exhibit No. Description F O R M 1 0 - K 10.14c 10.14d 10.15 10.16 10.16a 14.1 21.1 23.1 31.1 31.2 32.1 32.2 Third Amendment Agreement dated as of March 29, 2013 with respect to the Amortising Term Loan Facility Agreement (see Exhibit 10.14 above) between and among Koidu Limited (as Borrower), BSG Resources Limited (as Guarantor) and Laurelton Diamonds, Inc. (as Original Lender). Incorporated by reference from Exhibit 10.15c filed with Registrant’s Report on Form 8-K dated April 2, 2013. Fourth Amendment Agreement dated as of March 31, 2014 with respect to the Amortising Term Loan Facility Agreement (see Exhibit 10.14 above) between and among Koidu Limited (as Borrower), BSG Resources Limited (as Guarantor) and Laurelton Diamonds, Inc. (as Original Lender). Incorporated by reference from Exhibit 10.15d filed with Registrant’s Report on Form 8-K dated March 31, 2014. Credit Agreement dated as of July 19, 2013 by and among Tiffany & Co. (Shanghai) Commercial Company Limited, Bank of America, N.A., Shanghai Branch and Mizuho Corporate Bank (China), Ltd. as Jointed Coordinators, Mandated Lead Arrangers and Bookrunners, Mizuho Corporate Bank (China), Ltd. as Facility Agent and certain other banks and financial institutions party thereto as original lenders. Incorporated by reference from Exhibit 10.34 filed with Registrant’s Report on Form 8-K dated July 24, 2013. Guaranty Agreement dated as of July 19, 2013, with respect to the Credit Agreement (see Exhibit 10.15 above) by and between Registrant and Mizuho Corporate Bank (China), Ltd. as Facility Agent. Incorporated by reference from Exhibit 10.35 filed with Registrant’s Report on Form 8-K dated July 24, 2013. First Amendment dated as of January 27, 2014, to the Guaranty Agreement (see Exhibit 10.16 above), by and between Registrant and Mizuho Corporate Bank (China), LTD., as Facility Agent. Incorporated by reference from Exhibit 10.36 filed with Registrant’s Report on Form 8-K dated February 4, 2014. Code of Business and Ethical Conduct and Business Conduct Policy. Incorporated by reference from Exhibit 14.1 filed with Registrant’s Report on Form 10-K dated March 28, 2013. 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. 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. TIFFANY & CO. K-106 Exhibit No. Description 101 The following financial information from Tiffany & Co.’s Annual Report on Form 10-K for the fiscal year ended January 31, 2015, filed with the SEC, formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Earnings; (iii) the Consolidated Statements of Comprehensive Earnings; (iv) the Consolidated Statements of Stockholders’ Equity; (v) the Consolidated Statements of Cash Flows; (vi) the Notes to the Consolidated Financial Statements; and (vii) Schedule II - Valuation and Qualifying Accounts and Reserves. Executive Compensation Plans and Arrangements Exhibit No. Description 10.17 10.18 10.19 10.20 10.21 10.22 10.23 10.23a K - 0 1 M R O F 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. Tiffany and Company Amended and Restated Executive Deferral Plan originally made effective October 1, 1989, as amended and restated effective May 15, 2013. 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. 1994 Tiffany and Company Supplemental Retirement Income Plan, Amended and Restated as of January 31, 2009. Incorporated by reference from Exhibit 10.114 filed with Registrant’s Report on Form 8-K dated February 2, 2009. Form of 2009 Retention Agreement between and among Registrant and Tiffany and Company and those executive officers indicated within the form and Appendices I and II to such Agreement. Incorporated by reference from Exhibit 10.127c filed with Registrant’s Report on Form 8-K dated February 2, 2009. Summary of Executive Long Term Disability Plan available to executive officers. Incorporated by reference from Exhibit 10.24 filed with Registrant’s Report on Form 10- K dated March 28, 2013. Group Long Term Disability Insurance Policy issued by First Unum Life Insurance, Policy No. 533717 001. Incorporated by reference from Exhibit 10.24a filed with Registrant’s Report on Form 10-K dated March 28, 2013. TIFFANY & CO. K-107 Exhibit No. Description F O R M 1 0 - K 10.23b 10.23c 10.24 10.25 10.26 10.27 10.27a 10.27b 10.27c 10.27d Individual Disability Insurance Policy issued by Provident Life and Casualty Insurance Company. Incorporated by reference from Exhibit 10.24b filed with Registrant’s Report on Form 10-K dated March 28, 2013. Individual Disability Insurance Policy issued by Lloyd’s of London. Incorporated by reference from Exhibit 10.24c filed with Registrant’s Report on Form 10-K dated March 28, 2013. Summary of arrangements for the payment of premiums on life insurance policies owned by executive officers. Incorporated by reference from Exhibit 10.137 filed with Registrant’s Report on Form 8-K dated February 2, 2009. 2004 Tiffany and Company Un-funded Retirement Income Plan to Recognize Compensation in Excess of Internal Revenue Code Limits, Amended and Restated as of October 31, 2011. Incorporated by reference from Exhibit 10.138 filed with Registrant’s Report on Form 8-K dated January 27, 2012. Registrant’s Amended and Restated 1998 Employee Incentive Plan effective May 19, 2005. Incorporated by reference from Exhibit 4.3 filed 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 from 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 filed with Registrant’s Report on Form 8-K dated March 26, 2007. Registrant’s 2005 Employee Incentive Plan Amended and Adopted as of May 21, 2009. Incorporated by reference from Exhibit 10.28b filed with Registrant’s Report on Form 10-K dated March 28, 2013. Form of Fiscal 2014 Cash Incentive Award Agreement for certain executive officers as adopted on March 19, 2014 under Registrant’s 2005 Employee Incentive Plan. Incorporated by reference from Exhibit 10.139d filed with Registrant’s Report on Form 8-K dated March 21, 2014. Terms of 2010 Performance-Based Restricted Stock Unit Grants to Executive Officers under Registrant’s 2005 Employee Incentive Plan as adopted on January 20, 2010 for use with grants made that same date and on January 20, 2011, amended and restated effective December 29, 2011. Incorporated by reference from Exhibit 10.140c filed with Registrant’s Report on Form 8-K dated January 27, 2012. TIFFANY & CO. K-108 Exhibit No. Description 10.27e 10.27f 10.27g 10.27h 10.27i 10.27j 10.27k 10.27l 10.27m 10.27n 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. Form of Notice of Grant as referenced in and attached to the Terms of 2010 Performance-Based Restricted Stock Unit grants to Executive Officers under Registrant’s 2005 Employee Incentive Plan as adopted on January 20, 2010 (see Exhibit 10.27d above) and completed on March 17, 2010 for use with the grants made on January 20, 2010. Incorporated by reference from Exhibit 10.140d filed with Registrant’s Report on Form 8-K dated March 25, 2010. 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. K - 0 1 M R O F 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. Stock Option Award (Transferable Non-Qualified Option) under Registrant’s 2005 Employee Incentive Plan as revised January 14, 2009 (form used for grants made to Executive Officers subsequent to that date). Incorporated by reference from Exhibit 10.144b filed with Registrant’s Report on Form 8-K dated February 2, 2009. Terms of Time-Vested Restricted Stock Unit Grants under Registrant’s 2005 Employee Incentive Plan as revised January 14, 2009 (form used for grants made to employees other than Executive Officers subsequent to that date). Incorporated by reference from Exhibit 10.150a filed with Registrant’s Report on Form 8-K dated February 2, 2009. Terms of Time-Vested Restricted Stock Unit Grants to certain Executive Officers under Registrant’s 2005 Employee Incentive Plan. Incorporated by reference from Exhibit 10.161 filed with Registrant’s Report on Form 8-K dated March 21, 2011. Terms of Stock Option Award (Transferable Non-Qualified Option) under Registrant’s 2005 Employee Incentive Plan. Incorporated by reference from Exhibit 10.28n filed with Registrant’s Report on Form 8-K dated September 24, 2013. TIFFANY & CO. K-109 Exhibit No. Description F O R M 1 0 - K 10.27o 10.27p 10.27q 10.27r 10.28 10.28a 10.29 10.29a 10.29b 10.30 10.30a Terms of Restricted Stock Grant (Non-Transferable) under Registrant’s 2005 Employee Incentive Plan. Incorporated by reference from Exhibit 10.28o filed with Registrant’s Report on Form 8-K dated September 24, 2013. Terms of Time-Vesting Restricted Stock Unit Grant to Executive Officers as adopted on November 20, 2013 under Registrant’s 2005 Employee Incentive Plan. Incorporated by reference from Exhibit 10.28p filed with Registrant’s Report on Form 8-K dated March 21, 2014. Terms of Performance-Based Restricted Stock Unit Grants to Executive Officers, effective January 15, 2014, under Registrant’s 2005 Employee Incentive Plan. Incorporated by reference from Exhibit 10.28s filed with Registrant’s Report on Form 8- K dated September 19, 2014. 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-Vesting Restricted Unit Awards and Certain Non-Qualified Retirement Contributions made to other officers of Registrant’s affiliated companies pursuant to Registrant’s 2005 Employee Incentive Plan and pursuant to the Tiffany and Company Deferral Plan. Incorporated by reference from Exhibit 10.28r filed with Registrant’s Report on Form 8-K dated March 21, 2014. 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. Terms of Stock Option Award (Transferable Non-Qualified Option) under Registrant’s 1998 Directors Option Plan as revised March 7, 2005. Incorporated by reference from Exhibit 10.142 filed with Registrant’s Report on Form 8-K dated March 16, 2005. Registrant’s 2008 Directors Equity Compensation Plan. Incorporated by reference from Exhibit 4.3a filed with Registrant’s Report on Form 8-K dated March 23, 2009. Terms of Stock Option Award (Transferable Non-Qualified Option) under Registrant’s 2008 Directors Equity Compensation Plan. Incorporated by reference from Exhibit 10.30a filed with Registrant’s Report on Form 10-K dated March 28, 2013. Terms of Time-Vested Restricted Stock Unit Grants under Registrant’s 2008 Directors Equity Compensation Plan. Incorporated by reference from Exhibit 10.30b filed with Registrant’s Report on Form 10-K dated March 28, 2013. Registrant’s 2014 Employee Incentive Plan as adopted May 22, 2014. Incorporated by reference from Exhibit 10.31 filed with Registrant’s Report on Form 8-K dated May 27, 2014. Terms of Stock Option Award (Transferable Non-Qualified Option) under Registrant’s 2014 Employee Incentive Plan. Incorporated by reference from Exhibit 10.31a filed with Registrant’s Report on Form 8-K dated July 18, 2014. TIFFANY & CO. K-110 Exhibit No. Description 10.30b 10.30c 10.30d 10.31 10.32 10.33 10.34 10.35 Terms of Cliff-Vesting Restricted Stock Grant (Non-Transferable) under Registrant’s 2014 Employee Incentive Plan. Incorporated by reference from Exhibit 10.31b filed with Registrant’s Report on Form 8-K dated July 18, 2014. Terms of Tranche-Vesting Restricted Stock Grant (Non-Transferable) under Registrant’s 2014 Employee Incentive Plan. Incorporated by reference from Exhibit 10.31c filed with Registrant’s Report on Form 8-K dated July 18, 2014. Terms of Time-Vesting Restricted Stock Grant (Non-Transferable) under Registrant’s 2014 Employee Incentive Plan. Incorporated by reference from Exhibit 10.31d filed with Registrant’s Report on Form 8-K dated July 18, 2014. Senior Executive Employment Agreement between Frederic Cumenal and Tiffany and Company, effective as of March 10, 2011. Incorporated by reference from Exhibit 10.154 filed with Registrant’s Report on Form 8-K dated March 21, 2011. Employment offer letter, Conditional Sign-on Bonus Relocation Assistance and Acknowledgement and Agreement, and Relocation Offer, dated as of August 15, 2014, between Jill Beraud and Tiffany and Company. Employment offer letter, dated as of March 7, 2014, between Ralph Nicoletti and Tiffany and Company. Share Ownership Policy for Executive Officers and Directors, Amended and Restated as of November 19, 2014. Incorporated by reference from Exhibit 10.152 filed with Registrant’s Report on Form 8-K dated December 1, 2014. Corporate Governance Principles, amended and restated as of March 20, 2014. Incorporated by reference from Exhibit 10.153 filed with Registrant’s Report on Form 8-K dated March 21, 2014. K - 0 1 M R O F TIFFANY & CO. K-111 Tiffany & Co. and Subsidiaries Schedule II - Valuation and Qualifying Accounts and Reserves (in thousands) Column A Column B Column C Additions Column D Column E 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, 2015: Reserves deducted from assets: Accounts receivable allowances: Doubtful accounts $ 1,860 $ 1,859 $ — $ Sales returns 8,477 1,880 F O R M 1 0 - K Allowance for inventory liquidation and obsolescence Allowance for inventory shrinkage Deferred tax valuation allowance a) Uncollectible accounts written off. 64,113 33,620 1,458 17,693 2,633 4,023 — — — — 1,951 a $ 1,768 1,526 b 8,831 34,485 c 1,904 d 5,484 e 63,248 2,187 16,232 b) Adjustment related to sales returns previously provided for. c) Liquidation of inventory previously written down to market. d) Physical inventory losses. e) Reversal of deferred tax valuation allowance and utilization of deferred tax loss carryforward. TIFFANY & CO. K-112 Tiffany & Co. and Subsidiaries Schedule II - Valuation and Qualifying Accounts and Reserves (in thousands) Column A Column B Column C Additions Column D Column E 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, 2014: Reserves deducted from assets: Accounts receivable allowances: Doubtful accounts $ 2,080 $ 2,256 $ — $ Sales returns 7,630 2,477 Allowance for inventory liquidation and obsolescence Allowance for inventory shrinkage Deferred tax valuation allowance a) Uncollectible accounts written off. 54,175 31,667 1,232 14,181 3,062 5,630 b) Adjustment related to sales returns previously provided for. c) Liquidation of inventory previously written down to market. d) Physical inventory losses. — — — — 2,476 a $ 1,860 1,630 b 8,477 21,729 c 2,836 d 2,118 e 64,113 1,458 17,693 K - 0 1 M R O F e) Reversal of deferred tax valuation allowance and utilization of deferred tax loss carryforward. TIFFANY & CO. K-113 Tiffany & Co. and Subsidiaries Schedule II - Valuation and Qualifying Accounts and Reserves (in thousands) Column A Column B Column C Additions Column D Column E 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, 2013 Reserves deducted from assets: Accounts receivable allowances: Doubtful accounts $ 2,466 $ 1,346 $ — $ Sales returns 9,306 3,367 F O R M 1 0 - K Allowance for inventory liquidation and obsolescence Allowance for inventory shrinkage Deferred tax valuation allowance a) Uncollectible accounts written off. 53,938 32,228 1,495 13,570 2,600 6,786 — — — — 1,732 a $ 2,080 5,043 b 7,630 31,991 c 2,863 d 6,175 e 54,175 1,232 14,181 b) Adjustment related to sales returns previously provided for. c) Liquidation of inventory previously written down to market. d) Physical inventory losses. e) Reversal of deferred tax valuation allowance and utilization of deferred tax loss carryforward. TIFFANY & CO. K-114 2015 Annual Meeting of Shareholders PROXY STATEMENT T N E M E T A T S Y X O R P PROXY SUMMARY This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information you should consider. You should read the entire Proxy Statement carefully before voting. Date Time Place ANNUAL MEETING OF SHAREHOLDERS Thursday, May 28, 2015 9:30 a.m. W New York – Union Square hotel 201 Park Avenue South (at 17th Street) New York, New York Record Date March 30, 2015 Voting Shareholders as of the record date are entitled to vote. Admission Each share of common stock of Tiffany & Co., a Delaware corporation (the "Company"), has one vote. Attendance at the Annual Meeting will be limited to those persons who were shareholders, or held Company stock through a broker, bank or other nominee, at the close of business on the record date. Pre-registration is required to attend the Annual Meeting. Registration confirmation and photo ID are also required for admission. Shareholders of record will have the opportunity to vote by ballot at the Annual Meeting. Beneficial owners of shares held in street name must contact their broker before the Annual Meeting to obtain a legal proxy and bring the legal proxy with them to the meeting. MATTERS TO BE VOTED ON AT 2015 ANNUAL MEETING There are three matters scheduled to be voted on at this year’s Annual Meeting: Matter Item No. 1: Election of the Board; Board Recommended Vote Required Vote Broker Discretionary Vote Allowed "FOR" the election of all 10 nominees for director Majority of votes cast "for" or "against" the nominee P R O X Y S T A T E M E N T No Yes No Item No. 2: Ratification of the selection of the independent registered public accounting firm to audit our Fiscal 2015 financial statements; and Item No. 3: Approval, on an advisory basis, of the compensation of the Company's named executive officers as disclosed in this Proxy Statement ("Say on Pay"). "FOR" "FOR" Majority of shares present and entitled to vote Majority of shares present and entitled to vote TIFFANY & CO. PS-2 The following table provides summary information about each director nominee. Each director is elected annually by a majority of votes cast. See "Item 1. Election of the Board" at PS-18 for more information. ELECTION OF THE BOARD Compensation & Stock Option Sub- Committee Corporate Social Responsibility Committee Dividend Committee Finance Committee Nominating/ Corporate Governance Committee Other Public Company Boards Name Director Since Principal Occupation Age Independent Audit Committee Rose Marie Bravo 64 1997 Retired Chief Executive Officer ("CEO") of Burberry Limited Gary E. Costley 71 2007 Retired Chair Chairman and CEO of International Multifoods Corporation Lawrence K. Fish 70 2008 Retired Chair Abby F. Kohnstamm 61 2001 Charles K. Marquis 72 1984 Peter W. May 72 2008 William A. Shutzer 68 1984 Robert S. Singer 63 2012 Chairman and CEO of Citizens Financial Group, Inc. Executive Vice President and Chief Marketing Officer at Pitney Bowes Senior Advisor to Investcorp International, Inc. President of Trian Fund Management, L.P. Senior Managing Director of Evercore Partners Former CEO of Barilla Holding S.p.A Michael J. Kowalski 63 1995 Retired CEO of Tiffany & Co. Frederic Cumenal 55 2013 CEO of Tiffany & Co. Chair 2 2 3 0 0 1 1 3 1 0 T N E M E T A T S Y X O R P Chair Chair Each director nominee is a current director and during Fiscal 2014 (February 1, 2014 to January 31, 2015) attended at least 89% of the aggregate number of meetings of the Company’s Board of Directors (the "Board") and those committees on which he or she served. AUDITORS 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 2015 (February 1, 2015 to January 31, 2016). As a matter of good corporate governance, we are asking you to approve this selection. TIFFANY & CO. PS-3 See "Item 2. Ratification of the Selection of the Independent Registered Public Accounting Firm to Audit Our Fiscal 2015 Financial Statements" at PS-34 and "Relationship with Independent Registered Public Accounting Firm" at PS-36 for more information. EXECUTIVE COMPENSATION MATTERS See "Item 1. Election of the Board" at PS-18 and "Compensation of the CEO and Other Executive Officers" at PS-38 for more information. BUSINESS HIGHLIGHTS Fiscal 2014 was another year of solid performance for the Company. Key highlights of Fiscal 2014 performance were as follows: Sales Growth: Net sales increased 5% to $4.25 billion, or 7% on a constant-exchange-rate basis that eliminates the effect from translating sales made outside the U.S. into U.S. dollars (see Appendix I at PS-98). Performance was healthy across all regions in the full year, ranging from total sales growth in local currencies of 10% in Asia- Pacific, to 6% in both the Americas and Europe, to 4% in Japan. Improved Profitability: Net earnings were $484 million, or $3.73 per diluted share. Excluding a debt- extinguishment charge related to the redemption of certain of the Company's long- term debt in 2014 and other charges recorded in 2013 (see Appendix I at PS-98), net earnings rose 13%, which exceeded management's initial expectation for the year. Store Expansion: Six Company-operated TIFFANY & CO. stores, net, were added across the Americas, Asia-Pacific and Europe, including the addition of a major store on the Champs- Elysées in Paris and the first Company-operated store in Moscow. Product Introductions: The TIFFANY T jewelry collection was introduced, representing a modern design targeted to the self-purchaser. The launch was met with customer excitement and generated strong sales. Returning Capital to Shareholders: The Company increased the quarterly dividend rate per share by 12% from $0.34 to $0.38, or $1.52 annually, representing the 13th increase in the past 12 years, and spent $27 million to repurchase 301,000 shares of the Company's common stock. EXECUTIVE COMPENSATION HIGHLIGHTS The Board of Directors' continued commitment to pay for performance and leading compensation practices in Fiscal 2014 was demonstrated by the following highlights: • The majority of compensation payable to the Chief Executive Officer and other named executive officers is tied to the Company's financial performance and/or the performance of the stock price (87% for the Chief Executive Officer and 73% for other named executive officers, on average), with significant emphasis on long-term incentives. • Long-term and short-term incentive awards are payable contingent on a variety of performance measures, including net earnings, • earnings, return on assets, and change in stock price. • Short-term incentive awards for Fiscal 2014 were paid out to the named executive officers at 101% of target, based on achievement of operating earnings for the year relative to target and individual performance factors. TIFFANY & CO. PS-4 P R O X Y S T A T E M E N T • For the performance period beginning February 1, 2012 and ending January 31, 2015 (Fiscal 2012- Fiscal 2014), performance-based restricted stock units vested at 25% of the original grant to each named executive officer, based on achievement of net earnings per share, on a diluted basis, and return on assets relative to pre-established targets. • Incentive compensation is subject to recoupment in the event of an accounting restatement due to material noncompliance with financial reporting requirements. • Executive officers are expected under the Company's share ownership policy to hold shares of common stock worth five times base salary for the Chief Executive Officer and two to four times base salary for other named executive officers. • In the event of a change in control, severance benefits are only payable upon an involuntary termination ("dual trigger"). • The Compensation Committee of the Board of Directors (the "Committee") retains an independent compensation consultant to advise on the executive compensation program and practices. 2016 ANNUAL MEETING If you wish to submit a proposal to be included in the Proxy Statement for our 2016 Annual Meeting, we must receive it no later than December 12, 2015. Proposals should be sent to the Company at 727 Fifth Avenue, New York, New York 10022 to the attention of the Corporate Secretary (Legal Department). Our By-laws set forth certain procedures for shareholders 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 2016 Annual Meeting unless the proposal is submitted to us no earlier than January 29, 2016 and no later than February 28, 2016 and the shareholder satisfies the other applicable requirements of the Securities and Exchange Commission (the "SEC"). T N E M E T A T S Y X O R P TIFFANY & CO. PS-5 QUESTIONS YOU MAY HAVE REGARDING THIS PROXY STATEMENT WHAT IS THE PURPOSE OF THIS PROXY STATEMENT AND THE ACCOMPANYING MATERIAL? This Proxy Statement and accompanying material, including the form of proxy, have been sent to you on behalf of the Company by order of the Board. This Proxy Statement was first sent to the Company’s shareholders on or about April 10, 2015, in connection with the Annual Meeting of the shareholders of the Company to be held on Thursday, May 28, 2015, at 9:30 a.m. at the W New York – Union Square hotel, 201 Park Avenue South (at 17th Street) New York, New York. You are entitled to vote at our 2015 Annual Meeting because you were a shareholder, or held Company stock through a broker, bank or other nominee, at the close of business on March 30, 2015, the record date for this year’s Annual Meeting. That is why you were sent this Proxy Statement and accompanying material. WHAT INFORMATION IS CONTAINED IN THIS PROXY STATEMENT AND THE ACCOMPANYING MATERIAL? The information included in this Proxy Statement relates to the proposals to be considered and voted on at the Annual Meeting, the voting process, the compensation of our directors and most highly compensated executive officers, and other required information. This Proxy Statement is accompanied by our Annual Report on Form 10-K, which contains financial and other information about our business during Fiscal 2014. WHY DID I RECEIVE A NOTICE REGARDING THE INTERNET AVAILABILITY OF THIS PROXY STATEMENT AND THE ACCOMPANYING MATERIAL INSTEAD OF A PAPER COPY OF THE PROXY MATERIALS? As is the practice of many other companies, the Company is now providing proxy materials by a "notice and access" process. As a shareholder, you will receive a written notice of proxy, by postal service or e-mail, with instructions on how to access the proxy materials. This enables the Company to reduce the cost of paper, printing and postage and to substantially reduce paper use in order to benefit our environment. Those shareholders who wish to receive a paper report may request one. In some instances, shareholders will receive a proxy card and paper report automatically. P R O X Y S T A T E M E N T HOW CAN I REQUEST AND RECEIVE A PAPER OR E-MAIL COPY OF THE PROXY MATERIALS? To receive a paper or e-mail copy of the proxy materials, please visit or contact: 1) By Internet: www.proxyvote.com 2) By Telephone: 1-800-579-1639 3) By E-Mail*: sendmaterial@proxyvote.com * If requesting materials by e-mail, please send a blank e-mail with the 16-Digit Control Number (located on the Notice of Proxy) in the subject line. Requests, instructions and other inquiries sent to this e-mail address will NOT be forwarded to your investment advisor. Please make the requests as instructed above on or before May 14, 2015 to facilitate timely delivery. 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 www.tiffany.com. By clicking "Investors" at the bottom of the page, you will find additional information concerning some of the subjects addressed in this document. TIFFANY & CO. PS-6 Important Notice Regarding Internet Availability of Proxy Materials for the Shareholder Meeting to be Held on May 28, 2015. The Proxy Statement and Annual Report on Form 10-K are available to shareholders at www.proxyvote.com WHAT MATTERS WILL BE VOTED ON AT THE 2015 ANNUAL MEETING? There are three matters scheduled to be voted on at this year’s Annual Meeting: Item No. 1: Election of the Board; Item No. 2: Ratification of the selection of the independent registered public accounting firm to audit our Fiscal 2015 financial statements; and Item No. 3: Approval, on an advisory basis, of the compensation of the Company's named executive officers as disclosed in this Proxy Statement ("Say on Pay"). In addition, such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof may be voted on. DOES THE BOARD OF DIRECTORS RECOMMEND VOTING IN FAVOR OF THE PROPOSALS? The Board recommends a vote "FOR" each of the director nominees and the proposals set forth in Items 2 and 3. WHAT SHARES CAN I VOTE? You may vote all of the shares of the Company's common stock that you owned at the close of business on March 30, 2015, the record date. HOW MANY VOTES DO I 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 or notice. HOW DO I VOTE MY SHARES? You can vote your shares at the Annual Meeting either by submitting your vote or instruction prior to the meeting, or by attending the meeting and voting in person. Voting instructions, whether voting is in person or by proxy, vary depending on whether you are a shareholder of record (also known as a "registered shareholder") or a beneficial owner of shares held in street name: T N E M E T A T S Y X O R P Shareholder of Record: If your shares are registered directly in your name with the Company's transfer agent, Computershare, you are considered the shareholder of record with respect to those shares. Instructions for how to vote your shares are set forth below. Beneficial Owner of Shares Held in Street Name: If your shares are held in an account at a brokerage firm, bank, broker-dealer, or other similar organization, then you are the "beneficial owner" of shares held in "street name." The organization holding your account is considered the shareholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to instruct that organization on how to vote the shares held in your account. Those instructions are contained in the "voting instruction form" sent to you. TIFFANY & CO. PS-7 HOW DO I VOTE MY SHARES BEFORE THE ANNUAL MEETING IF I AM A SHAREHOLDER OF RECORD? 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." Proxies will extend to, and be voted at, any adjournment or postponement of the Annual Meeting. If you vote by proxy, you will have designated three officers of the Company to act as your proxies at the 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 or by telephone or the Internet with respect to each of the proposals presented in this Proxy Statement. 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, your proxy will vote on such other matters in accordance with his or her best judgment. A shareholder of record may vote by proxy any of the following ways: • Via the Internet. You may vote by proxy via the Internet by following the instructions provided in the notice or proxy card; have your notice or proxy card in hand as you will be prompted to enter your control number. • Via Telephone. You may vote by proxy via telephone by following the instructions provided in the proxy card; have your notice or proxy card in hand as you will be prompted to enter your control number. • By Mail. You may vote by proxy by filling out the proxy card and returning it in the envelope provided. CAN I CHANGE MY VOTE AFTER I HAVE DELIVERED MY PROXY? If you decide to vote by proxy (whether by Internet, telephone or mail), you can revoke – that is, change or cancel – your vote at any time before your proxy casts his or her vote at the Annual Meeting. Revoking your vote by proxy may be accomplished in one of three ways: • You can send an executed, later-dated proxy card to the Corporate Secretary of the Company, call in different instructions, or provide different instructions through the Internet voting site; or • You can notify the Corporate Secretary of the Company in writing that you wish to revoke your proxy; or • You can attend the Annual Meeting and vote in person. P R O X Y S T A T E M E N T HOW DO I VOTE MY SHARES BEFORE THE ANNUAL MEETING IF I AM A BENEFICIAL OWNER OF SHARES HELD IN STREET NAME? You may instruct your broker how to vote on your behalf in any of the following ways: • Via the Internet. You may instruct your broker as to your vote via the Internet by visiting www.proxyvote.com and entering the control number found in the notice or voting instruction form sent to you. • Via Telephone. You may instruct your broker as to your vote by calling the toll free number found in your voting instruction form and entering the control number found in the notice or voting instruction form sent to you. • By Mail. You may instruct your broker as to your vote by mail by filling out the voting instruction form provided to you and returning it in the envelope provided. TIFFANY & CO. PS-8 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. For more details, see "WHAT IS A BROKER NON-VOTE?" immediately below. WHAT IS A BROKER NON-VOTE? 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 is permitted to vote or withhold its vote is determined by the New York Stock Exchange rules and depends on the proposal being voted upon. With respect to voting on the election of the Board and Say on Pay, your broker will be required to withhold its vote unless you provide instructions on those proposals. If your broker withholds its vote, that is called a "broker non-vote." As stated below, broker non-votes are counted as present for a quorum. See "WHAT CONSTITUTES A QUORUM?" below. CAN I CHANGE THE INSTRUCTION TO MY BROKER? You may vote in person at the Annual Meeting, or you may change your instruction to your broker by submitting a subsequent instruction through one of the means set forth above under "HOW DO I VOTE MY SHARES BEFORE THE ANNUAL MEETING IF I AM A BENEFICIAL OWNER OF SHARES HELD IN STREET NAME?". HOW WILL MY SHARES BE VOTED 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: • FOR the election of all 10 nominees for director named in this Proxy Statement; • FOR the ratification of the selection of PwC as the independent registered public accounting firm to audit our Fiscal 2015 financial statements; and • FOR approval of the compensation paid to the Company’s named executive officers in Fiscal 2014. 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. T N E M E T A T S Y X O R P DO I NEED TO ATTEND THE ANNUAL MEETING? No. You may authorize your shares to be voted by following the instructions presented in the notice or proxy card. IF I WISH TO ATTEND THE ANNUAL MEETING AND VOTE IN PERSON, WHAT DO I NEED TO DO? To attend the Annual Meeting, you will need to pre-register as instructed on your notice or proxy card and print out the registration confirmation. You will be required to show the registration confirmation as well as photo identification to enter the Annual Meeting. TIFFANY & CO. PS-9 To vote in person at the Annual Meeting: • For shareholders of record, you will have the opportunity to vote by ballot at the meeting. • For beneficial owners of shares held in street name, contact your broker before the Annual Meeting to obtain a legal proxy, and bring the legal proxy with you to the meeting. To submit a vote by ballot at the meeting, you will be required to show the legal proxy as well as photo identification. WHAT CONSTITUTES A QUORUM? A "quorum" is the minimum number of shares that must be present at an Annual Meeting for a valid vote. For our Annual Meeting, a majority of shares issued and outstanding on the record date and entitled to vote at the Annual Meeting must be present. The number of shares issued and outstanding at the close of business on March 30, 2015, the record date, was 129,279,450. Therefore, 64,639,726 shares must be present at our 2015 Annual Meeting for a quorum to be established. To determine if there is a quorum, we consider a share "present" if: • The shareholder who owns the share is present in person at the Annual Meeting, whether or not he or she chooses to cast a ballot on any proposal; or • The shareholder is represented by proxy at the Annual Meeting. If a shareholder is represented by proxy at the Annual Meeting, his or her shares are deemed present for purposes of a quorum, even if: • The shareholder withholds his or her vote or marks "abstain" for one or more proposals; or • There is a "broker non-vote" on one or more proposals. 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" the nominee 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 PwC as the independent registered public accounting firm for Fiscal 2015 will be decided by the affirmative vote of the majority of shares present in person or represented by proxy at the Annual Meeting and entitled to vote on the matter. That means that the proposal will pass if more than half of those shares present in person or represented by proxy at the Annual Meeting and entitled to vote on the matter vote "for" the proposal. Therefore, if you "abstain" from voting – in other words, you indicate "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 have no effect. The advisory proposal to approve the compensation of our named executive officers will be decided by the affirmative vote of the majority of shares present in person or represented by proxy at the Annual Meeting and entitled to vote on the matter. That means that the advisory proposal will be approved if more than half TIFFANY & CO. PS-10 P R O X Y S T A T E M E N T of those shares present in person or represented by proxy at the Annual Meeting and entitled to vote on the matter vote "for" the proposal. Therefore, if you "abstain" from voting – in other words, you indicate “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 have no effect. WHAT HAPPENS IF A DIRECTOR NOMINEE DOES NOT RECEIVE A MAJORITY OF THE VOTES CAST? 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. Each of the nominees for director has agreed to tender his or her resignation in the event that he or she does not receive such a majority. 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. HOW ARE PROXIES 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 $8,000, plus out-of-pocket expenses. Employees of Tiffany and Company, a New York corporation and the principal subsidiary of the Company ("Tiffany"), 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. Proxies may be solicited by mail, in person, by facsimile, by telephone or by e-mail. In addition, we will pay for any costs incurred by brokerage houses and others for forwarding proxy materials to beneficial owners. WHO WILL COUNT THE VOTES? All votes will be tabulated by American Election Services, LLC, the inspector of elections appointed for the Annual Meeting. WHERE CAN I FIND THE VOTING RESULTS OF THE ANNUAL MEETING? We will announce preliminary voting results at the Annual Meeting and publish final results in a Form 8-K filed with the SEC within four business days after the Annual Meeting. T N E M E T A T S Y X O R P TIFFANY & CO. PS-11 OWNERSHIP OF THE COMPANY SHAREHOLDERS 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 23, 2015. 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 SEC. Copies of these reports are publicly available from the SEC. All of the reports included a certification to the effect that the shares were not acquired and were not being held for the purpose of or with the effect of changing or influencing the control of the Company and were not acquired and were not being held in connection with or as a participant in any transaction having that purpose or effect. Name and Address of Beneficial Owner Qatar Investment Authority Q-Tel Tower, 8 th Floor Diplomatic Area Street, West Bay P.O. Box 23224, Doha, State of Qatar Prudential Financial, Inc. 751 Broad Street Newark, New Jersey 07102 The Vanguard Group, Inc. 100 Vanguard Blvd. Malvern, Pennsylvania 19355 Capital World Investors 333 South Hope Street Los Angeles, California 90071 Amount and Nature of Beneficial Ownership (a) 16,222,436 (b) Percent of Class 12.55% 9,248,567 (c) 7.16% 9,105,067 (d) 7.05% 7,174,430 (e) 5.55% P R O X Y S T A T E M E N T a) "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 where a person has the right to acquire stock within 60 days or has or shares the power to vote the stock or to sell it. 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. b) Qatar Investment Authority, a citizen of Qatar, reported such beneficial ownership to the SEC on its Schedule 13G/A as of February 12, 2014 and stated that it had sole voting and disposition power with respect to all such shares. c) Prudential Financial Inc. ("Prudential") reported such beneficial ownership to the SEC on its Schedule 13G as of February 13, 2015 and stated that, as a parent holding company of the entities referenced below, it beneficially owned the number of shares referred to above. This Schedule stated that Prudential had sole power to vote 554,200 shares of the Company's common stock, shared power to vote 4,888,498 shares, sole power to dispose or direct the disposition of 554,200 shares, and shared power to dispose or direct the disposition of 8,694,367 shares, for an aggregate amount of 9,248,567 shares beneficially owned. Prudential is the parent holding company of (i) Jennison Associates LLC ("Jennison"), which beneficially owns 9,104,753 shares of the Company's common stock and (ii) Quantitative Management Associates LLC, which beneficially owns 143,814 shares of the Company's common stock, for an aggregate amount of 9,248,567 shares beneficially owned that was reported by Prudential. Jennison does not file jointly with Prudential, and as such, on February 10, 2015, Jennison filed a Schedule 13G with the SEC reporting its beneficial ownership of the aforementioned 9,104,753 shares of the Company's common stock. That Schedule stated that Jennison had sole power to vote 5,298,884 shares and shared power to dispose or direct the disposition of 9,104,753 shares. Jennison furnishes investment advice to several investment companies, insurance separate accounts, TIFFANY & CO. PS-12 and institutional clients ("Managed Portfolios"). As a result of its role as investment advisor of the Managed Portfolios, Jennison may be deemed to be the beneficial owner of the shares of the Company's common stock held by such Managed Portfolios, and Prudential may be deemed to have the power to exercise or to direct the exercise of such voting and/or dispositive power that Jennison may have with respect to the shares of the Company's common stock held by the Managed Portfolios. The mailing address for Jennison is 466 Lexington Avenue, New York, New York 10017. d) The Vanguard Group, Inc. reported such beneficial ownership to the SEC on its Schedule 13G/A as of February 10, 2015 and stated that, as an investment advisor, it beneficially owned the number of shares referred to above. This Schedule stated that it had sole power to vote 201,454 shares of the Company's common stock, sole power to dispose or direct the disposition of 8,917,108 shares, and shared power to dispose or direct the disposition of 187,959 shares, for an aggregate amount of 9,105,067 shares beneficially owned. e) Capital World Investors reported such beneficial ownership to the SEC on its Schedule 13G/A as of February 13, 2015 and stated that, as investment advisor to various investment companies registered under Section 8 of the Investment Company Act of 1940, it had sole voting and disposition power with respect to all such shares. 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 23, 2015 by those persons who are director nominees or who served as directors; the principal executive officer (the "CEO") and the principal financial officer (the "CFO") during Fiscal 2014; the three next most highly compensated executive officers of the Company as of the end of Fiscal 2014; and the directors and executive officers (see "Executive Officers of the Company" at PS-16) as a group. In the notes to the table below, "Vested Stock Options" refer to stock options that are exercisable as of March 23, 2015 or will become exercisable within 60 days of that date. Name Directors Rose Marie Bravo Gary E. Costley Frederic Cumenal Lawrence K. Fish Abby F. Kohnstamm Michael J. Kowalski (CEO during Fiscal 2014) Charles K. Marquis Peter W. May William A. Shutzer Robert S. Singer Executive Officers James N. Fernandez (CFO during Fiscal 2014) Ralph Nicoletti (CFO during Fiscal 2014) Jill Beraud Pamela H. Cloud All executive officers and directors as a group (19 persons): Amount and Nature of Beneficial Ownership Percent of Class a 34,574 b 16,857 c 118,659 d 51,706 e 66,206 f 284,268 g 173,256 h 53,206 i 338,593 j 16,501 k 61,686 l 7,494 m 500 85,838 n T N E M E T A T S Y X O R P * * * * * * * * * * * * * * 1,591,657 o 1.2% TIFFANY & CO. PS-13 a) An asterisk (*) is used to indicate less than 1% of the class outstanding. b) Includes 29,794 shares issuable upon the exercise of Vested Stock Options. Includes 780 shares issuable upon the maturity of restricted stock grants made to directors on May 22, 2014. c) Includes 15,077 shares issuable upon the exercise of Vested Stock Options. Includes 780 shares issuable upon the maturity of restricted stock grants made to directors on May 22, 2014. d) Includes 97,668 shares issuable upon the exercise of Vested Stock Options and 4,203 shares issuable upon the vesting of performance-based restricted stock units on March 25, 2015. e) Includes 11,217 shares issuable upon the exercise of Vested Stock Options. Includes 780 shares issuable upon the maturity of restricted stock grants made to directors on May 22, 2014. f) Includes 49,794 shares issuable upon the exercise of Vested Stock Options. Includes 780 shares issuable upon the maturity of restricted stock grants made to directors on May 22, 2014. g) Includes 171,000 shares issuable upon the exercise of Vested Stock Options, 7,844 shares issuable upon the vesting of performance-based restricted stock units on March 25, 2015 and 2,572 shares held by the Kowalski Family Foundation. h) Includes 39,794 shares issuable upon the exercise of Vested Stock Options, 28,682 shares held in the Charles and Cynthia Marquis Joint Revocable Trust dated December 8, 2003 and 56,000 shares held in the Marquis 2012 Children's Trust, as Trustee. Mr. Marquis disclaims beneficial ownership of Company stock held by the Marquis 2012 Children's Trust. Includes 780 shares issuable upon the maturity of restricted stock grants made to directors on May 22, 2014. i) j) Includes 12,632 shares Mr. May may be deemed to indirectly beneficially own. Includes 39,794 shares issuable upon the exercise of Vested Stock Options. Includes 780 shares issuable upon the maturity of restricted stock grants made to directors on May 22, 2014. Includes 49,794 shares issuable upon the exercise of Vested Stock Options; 107,500 shares held by KJC Ltd. of which Mr. Shutzer is the sole general partner and of which three of his adult children are limited partners; 32,210 shares held in trust for one adult child of which trust Mr. Shutzer's wife is sole trustee; and 780 shares issuable upon the maturity of restricted stock grants made to directors on May 22, 2014. Mr. Shutzer disclaims beneficial ownership of Company stock held by KJC Ltd. and shares held in the aforementioned trust. k) Includes 8,740 shares issuable upon the exercise of Vested Stock Options. Includes 780 shares issuable upon the maturity of restricted stock grants made to directors on May 22, 2014. l) Mr. Fernandez, the Company's former Executive Vice President and Chief Operating Officer, retired effective July 31, 2014, and served as CFO from November 27, 2013 through April 1, 2014. m) Includes 7,494 shares issuable upon the exercise of Vested Stock Options. Mr. Nicoletti was appointed P R O X Y S T A T E M E N T as CFO effective April 2, 2014. n) Includes 63,975 shares issuable upon the exercise of Vested Stock Options, 1,911 shares issuable upon the vesting of performance-based restricted stock units on March 25, 2015 and 490 shares held in Ms. Cloud's account under the Company’s Employee Profit Sharing and Retirement Savings Plan. o) Includes 844,354 shares issuable upon the exercise of Vested Stock Options and restricted stock unit grants that will vest within 60 days of March 23, 2015; 1,274 shares held in accounts under the Company's Employee Profit Sharing and Retirement Savings Plan; and three shares held in the Company's Employee Stock Purchase Plan. See "Compensation of the CEO and other Executive Officers–Compensation Discussion and Analysis–Equity Ownership by Executive Officers and Non-Executive Directors," beginning at PS-59 for a discussion of the Company’s share ownership policy. TIFFANY & CO. PS-14 SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s directors, executive officers and greater-than-10-percent shareholders 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 Fiscal 2014, all filing requirements under Section 16(a) applicable to our directors, executive officers and greater-than-10-percent shareholders were satisfied in a timely manner. T N E M E T A T S Y X O R P TIFFANY & CO. PS-15 The executive officers of the Company are: EXECUTIVE OFFICERS OF THE COMPANY Name Frederic Cumenal Ralph Nicoletti Jill Beraud Jean-Marc Bellaiche Victoria Berger-Gross Pamela H. Cloud Leigh M. Harlan Andrew W. Hart Caroline D. Naggiar John S. Petterson Age Position 55 57 55 45 59 45 38 47 57 56 Chief Executive Officer Executive Vice President – Chief Financial Officer Executive Vice President Senior Vice President – Strategy and Business Development Senior Vice President – Global Human Resources Senior Vice President – Merchandising Senior Vice President – Secretary and General Counsel Senior Vice President – Manufacturing, Diamonds and Gemstones Senior Vice President – Chief Marketing Officer Senior Vice President – Global Operations and Customer Services Year Joined Tiffany 2011 2014 2014 2014 2001 1994 2012 1999 1997 1988 Frederic Cumenal. Mr. Cumenal joined Tiffany in March 2011 as Executive Vice President, with responsibility for the Asia-Pacific, Japan, Europe and Emerging Markets Regions. In 2012, Mr. Cumenal's responsibilities were expanded to all regions. In September 2013, Mr. Cumenal was appointed as President, with responsibility for sales and distribution of TIFFANY & CO. products globally, Product and Store Design, Merchandising and Marketing functions. Mr. Cumenal was elected Chief Executive Officer effective April 1, 2015 and has served on the Tiffany & Co. Board of Directors since 2013. For 15 years prior to joining Tiffany, Mr. Cumenal held senior leadership positions in LVMH Group’s wine and spirits businesses, most recently as President and Chief Executive Officer of Moët & Chandon, S.A. Previously, Mr. Cumenal served as Chief Executive Officer of Domaine Chandon, and was Managing Director of Moët Hennessy Europe. Ralph Nicoletti. Mr. Nicoletti joined Tiffany on March 19, 2014 and was appointed as Executive Vice President and Chief Financial Officer effective April 2, 2014. Prior to joining Tiffany, Mr. Nicoletti held the role of executive vice president and Chief Financial Officer for Cigna Corporation, the global health services and insurance company, from 2011 to 2013, and for Alberto Culver, Inc., a manufacturer and distributor of beauty products, from 2007 to 2011. Previously, Mr. Nicoletti held a number of financial management positions at Kraft Foods, Inc. during his tenure there from 1979 to 2007. P R O X Y S T A T E M E N T Jill Beraud. Ms. Beraud joined Tiffany on October 13, 2014 as Executive Vice President, with responsibility for Global Retail Operations, including all sales channels in every region, as well as oversight of strategic store development and real estate. Prior to joining Tiffany, Ms. Beraud served as Chief Executive Officer of Living Proof, Inc., a prestige beauty company, from December 2011 to September 2014, and as President, Starbucks/Lipton Joint Ventures & Chief Marketing Officer, Americas Beverages, at PepsiCo, Inc. from 2009 to 2011. Previously, Ms. Beraud served as Global Chief Marketing Officer at PepsiCo, Inc. from 2008 to 2009, and held various senior leadership positions at L Brands, Inc. from 1995 to 2008. Ms. Beraud began her career at Proctor & Gamble, where she held brand management positions of increasing responsibility from 1986 to 1991. Jean-Marc Bellaiche. Mr. Bellaiche joined Tiffany on June 2, 2014 as Senior Vice President – Strategy and Business Development, with responsibility for business initiatives outside of jewelry such as watches, leather TIFFANY & CO. PS-16 goods, eyewear and fragrance. Mr. Bellaiche was elected as an executive officer of the Company effective April 1, 2015. Prior to joining Tiffany, Mr. Bellaiche held positions of increasing responsibility at the Boston Consulting Group from 1992 to 2014, where he was appointed as a partner and managing director in 2003 and senior partner and managing director – global leader, luxury fashion beauty and department stores, in 2010. In those roles, Mr. Bellaiche was responsible for leading and directing teams of worldwide consulting professionals as they designed and implemented long-term competitive business strategies for that company's clients. Victoria Berger-Gross. Dr. Berger-Gross joined Tiffany in 2001 as Senior Vice President–Human Resources. Her current title is Senior Vice President–Global Human Resources. Pamela 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 2007, she was promoted to Senior Vice President–Merchandising, responsible for all aspects of product planning and inventory management. Leigh M. Harlan. Ms. Harlan joined Tiffany in 2012 as Associate General Counsel. In May 2014, she was promoted to Senior Vice President–Secretary and General Counsel, with responsibility for the Company's worldwide legal affairs. Prior to joining Tiffany, Ms. Harlan was an attorney at the law firm of Cravath, Swaine & Moore LLP, where she practiced corporate, transactional and finance law, from 2005 to 2012. Andrew W. Hart. Mr. Hart joined Tiffany in 1999 as Director–Materials Management and advanced through positions of increasing management responsibility. In 2012, he was promoted to Senior Vice President– Diamonds and Gemstones, with responsibility for the Company’s global diamond and gemstone supply chain. In 2013, Mr. Hart assumed responsibility for jewelry manufacturing as well, with the title of Senior Vice President–Manufacturing, Diamonds and Gemstones. Caroline D. Naggiar. Ms. Naggiar joined Tiffany in 1997 as Vice President–Marketing Communications. She was promoted to Senior Vice President and assumed her current role and responsibilities as head of advertising and marketing in 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 and advanced through positions of increasing management responsibility. He was promoted to Senior Vice President–Corporate Sales in 1995. In 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 2003 to include manufacturing operations. Since 2013, Mr. Petterson has led the Company's global operations and customer service activities as Senior Vice President–Global Operations and Customer Services. T N E M E T A T S Y X O R P TIFFANY & CO. PS-17 ITEM 1. ELECTION OF THE BOARD Each year, we elect directors at an Annual Meeting of Shareholders. At the 2015 Annual Meeting, 10 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. Why the Nominees were Chosen to Serve. Each of the 10 nominees for director was recommended for nomination by the Nominating/Corporate Governance Committee and nominated by the full Board to stand for election by the shareholders. The specific experience and qualifications that led the Nominating/Corporate Governance Committee to recommend each nominee is set forth in the brief biographies that follow, and all of the nominees have demonstrated through their service on the Board, their skills as insightful questioners and collaborative decision-makers and their ability to express differing viewpoints in a collegial and constructive fashion. Each of the nominees has many and diverse skill sets but those skills that most stand out are identified below at the end of each biography as "Key Skills." Information concerning each of the nominees of the Board is set forth below: Michael J. Kowalski P R O X Y S T A T E M E N T Rose Marie Bravo Mr. Kowalski, 63, is the non-Executive Chairman of the Board of Tiffany & Co. Mr. Kowalski has been a director of Tiffany & Co. since January 1995 and has been Chairman since the end of Fiscal 2002. Mr. Kowalski joined Tiffany in 1983 and was Chief Executive Officer from February 1999 until his retirement effective March 31, 2015. Mr. Kowalski also serves on the Board of Directors of the Bank of New York Mellon Corporation. The Bank of New York Mellon Corporation is one of Tiffany & Co.’s principal banking relationships, serving as a co-syndication agent and lender under Tiffany & Co.'s revolving credit facilities, as the trustee under the indenture governing certain of Tiffany & Co.'s senior notes and as the trustee and investment manager for Tiffany’s Employee Pension Plan. The 2015 annual meeting of stockholders of the Bank of New York Mellon Corporation is scheduled to be held on April 14, 2015, and Mr. Kowalski is not standing for re-election to its Board of Directors at such meeting. Mr. Kowalski holds a B.S. from the University of Pennsylvania’s Wharton School and an M.B.A. from the Harvard Business School. Key Skills: merchandising, management, strategic planning and motivation. Ms. Bravo, CBE, 64, became a director of Tiffany & Co. in October 1997. 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 also serves on the Board of Directors of Estee Lauder Companies Inc. and Williams-Sonoma, Inc. Key Skills: retail and brand management, merchandising and product development. TIFFANY & CO. PS-18 Gary E. Costley Frederic Cumenal Lawrence K. Fish Abby F. Kohnstamm Dr. Costley, 71, was first elected to the Board of Tiffany & Co. in May 2007. He served as 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 his retirement in 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 when he was President of Kellogg North America. Dr. Costley serves on the Board of Directors of The Principal Financial Group and Prestige Brands Holdings, Inc. He has also served on the Board of Directors of the following public company during the past five years: Covance Inc. Key Skills: multi-divisional operations, global management, marketing and manufacturing. Mr. Cumenal, 55, was elected Chief Executive Officer of Tiffany & Co. effective April 1, 2015. Mr. Cumenal served as President of Tiffany & Co. from September 2013 through March 2015, and was appointed to a newly-created seat on the Board of Tiffany & Co. in September 2013. Prior to his appointment as President, he was an Executive Vice President of Tiffany, with responsibility for the sales and distribution of TIFFANY & CO. products globally. Prior to joining Tiffany in March 2011, Mr. Cumenal spent fifteen years in senior leadership positions in LVMH Group’s wine and spirits businesses, most recently as President and Chief Executive Officer of Moët & Chandon, S.A. Previously, Mr. Cumenal served as Chief Executive Officer of Domaine Chandon, and was Managing Director of Moët Hennessy Europe. Key Skills: international luxury brand management and development and strategic planning. Mr. Fish, 70, retired as Chairman and Chief Executive Officer of Citizens Financial Group, Inc. ("Citizens") in 2007. He served in that role since 2005, and before that as Chairman, President and Chief Executive Officer of Citizens from 1992. Mr. Fish is a member of the Corporation and Executive Committee of Massachusetts Institute of Technology. Mr. Fish serves as Chairman of Houghton Mifflin Harcourt and as a member of the Board of Directors of Textron and National Bank Holdings. He also serves as a Trustee Emeritus of The Brookings Institution and a Director of Management Sciences for Health. Mr. Fish was first elected a director of Tiffany & Co. in May 2008. Key Skills: risk analysis, finance, brand management and community banking. Ms. Kohnstamm, 61, is Executive Vice President and Chief Marketing Officer at Pitney Bowes. In this role, she oversees all of Pitney Bowes's marketing and communications worldwide, as well as citizenship and philanthropy. Before joining Pitney Bowes in June 2013, Ms. Kohnstamm was the President and founder of Abby F. Kohnstamm & Associates, Inc., a marketing and consulting firm. Prior to establishing her company in January 2006, Ms. Kohnstamm served as Senior Vice President, Marketing (Chief Marketing Officer) of IBM Corporation from 1993 through 2005. Before joining IBM, Ms. Kohnstamm held a number of senior marketing positions at American Express from 1979 through 1993. She is also a member of the Board of Directors of the Roundabout Theatre Company and is a Trustee Emeritus of Tufts University after serving 10 years on the Board of Trustees. She became a director of Tiffany & Co. in July 2001. Ms. Kohnstamm also served on the Board of Directors of the following public companies during the past five years: The Progressive Corporation and World Fuel Services Corporation. She holds a B.A. from Tufts University, an M.A. in Education from New York University and an M.B.A. from New York University. T N E M E T A T S Y X O R P TIFFANY & CO. PS-19 Key Skills: brand management, global management, strategic planning and media management. Charles K. Marquis Mr. Marquis, 72, has been a Senior Advisor to Investcorp International, Inc. since 1999. From 1974 through 1998, he was a partner in the law firm of Gibson, Dunn & Crutcher L.L.P., where he practiced securities and mergers and acquisitions law. He was first elected a director of Tiffany & Co. in November 1984. Key Skills: finance, risk analysis, crisis management and investor relations. Peter W. May William A. Shutzer P R O X Y S T A T E M E N T Mr. May, 72, has been President and a founding partner of Trian Fund Management, L.P., a New York-based asset management firm, since 2005. Mr. May also serves as non-executive Vice Chairman and as a member of the Board of Directors of The Wendy’s Company (formerly Wendy’s/Arby’s Group, Inc. and previously Triarc Companies, Inc. ("Triarc")). Mr. May served as a director of Deerfield Capital Corp. from December 2007 to June 2010. Mr. May also served as President and Chief Operating Officer of Triarc from April 1993 through June 2007. From 1983 to December 1988, Mr. May 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 holds A.B. and M.B.A. degrees from the University of Chicago and is a Certified Public Accountant (inactive). Mr. May also holds an Honorary Doctorate in Humane Letters from The Mount Sinai School of Medicine of New York University. Mr. May was first elected a director of Tiffany & Co. in May 2008. Key Skills: multi-divisional operations, brand management, investor relations and finance. Mr. Shutzer, 68, has been a Senior Managing Director of Evercore Partners, a financial advisory and private equity firm, since 2004. 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 first elected a director of Tiffany & Co. in November 1984. Mr. Shutzer serves on the Board of Directors of ExamWorks Group, Inc. and Evercore Trust Company. He has also served on the Board of Directors of the following public company during the past five years: Mecklermedia Corporation (formerly known as Mediabistro Inc.). Key Skills: finance, investor relations and strategic development. TIFFANY & CO. PS-20 Robert S. Singer Mr. Singer, 63, served as Chief Executive Officer of Barilla Holding S.p.A, a major Italian food company, from January 2006 to April 2009. From May 2004 to September 2005, Mr. Singer served as President and Chief Operating Officer of Abercrombie & Fitch Co., an American clothing retailer. Prior to joining Abercrombie, Mr. Singer served as Chief Financial Officer of Gucci Group NV, a leading luxury goods company, from September 1995 to April 2004. From 1987 to 1995, Mr. Singer was a Partner at Coopers & Lybrand. Mr. Singer served on the Board of Directors of Benetton S.p.A. from April 2006 to April 2010, and on the Board of Directors of Fairmont Hotels & Resorts, Inc. from 2003 to 2006. Mr. Singer currently serves on the Board of Directors of the following public companies: Mead Johnson Nutrition Company, Coty Inc. and Jimmy Choo PLC. Jimmy Choo PLC was privately held until October 2014 when it became a publicly traded company listed on the London Stock Exchange. Mr. Singer also currently serves on the Board of Directors of several non-public companies. Mr. Singer was first elected a director of Tiffany & Co. in May 2012. Key Skills: accounting, global retail, financial and general management of luxury brands. 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. Each of the nominees for director has agreed to tender his or her resignation in the event that he or she does not receive such a majority. 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 our Corporate Governance Principles for further information about the procedure that would be followed in the event of such an election result. The Corporate Governance Principles may be viewed on the Company’s website www.tiffany.com, by clicking on "Investors" at the bottom of the page and then selecting "Corporate Governance" from the left-hand column. THE BOARD RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL 10 NOMINEES FOR DIRECTOR. T N E M E T A T S Y X O R P TIFFANY & CO. PS-21 BOARD OF DIRECTORS AND CORPORATE GOVERNANCE CORPORATE GOVERNANCE HIGHLIGHTS The Company and its Board are committed to maintaining strong corporate governance practices that serve the interests of the Company and its shareholders. The Board recognizes that the Company's corporate governance practices must continually evolve, and the Board monitors developments in governance best practices to ensure that the Company continues to effectively represent the interests of its shareholders. The Board has adopted several corporate governance practices in support of this commitment, including: • Annual election of directors; • Majority voting standard for director elections – each director must be elected by a majority of votes cast, not a plurality; • Director resignation policy – each of the nominees for director has agreed to tender his or her resignation in the event that he or she does not receive a majority of "for" votes of the votes cast "for" or "against" his or her candidacy. The Nominating/Corporate Governance Committee will then make a recommendation to the Board on whether to accept or reject the resignation or whether other action should be taken; • Director independence – 7 of our 10 directors are independent; • Lead independent director – our Corporate Governance Principles require a lead independent director, tasked with specific responsibilities, to ensure independent oversight whenever the Chairman of the Board is not independent and to facilitate communication by shareholders and employees with non- management directors; • Director overboarding policy – directors may not serve on a total of more than six public company boards (including the Board); • Resignation on job change or new directorship – a director must submit a letter of resignation to the Nominating/Corporate Governance Committee on a change in employment and upon accepting a directorship with another public company (or any other organization that would require a significant time commitment). The Nominating/Corporate Governance Committee may then accept or decline such resignation; • Annual self-evaluation – our independent directors conduct an annual assessment and evaluation of the workings and efficiency of the Board and each of the committees on which they serve and make recommendations for change, if required; • Long-standing policies governing business and ethical conduct; • Commitment to corporate social responsibility; and • Following leading compensation practices – see "Compensation of the CEO and Other Executive Officers– Compensation Discussion and Analysis–Executive Summary–Corporate Governance Best Practices" at PS-44. THE BOARD, IN GENERAL The Board is currently comprised of 10 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. 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. P R O X Y S T A T E M E N T TIFFANY & CO. PS-22 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 www.tiffany.com, by clicking on "Investors" at the bottom of the page and then selecting "Corporate Governance" from the left-hand column. The responsibilities of the Board include: • Management succession; • Review and approval of the annual operating plan prepared by management; • Monitoring of performance in comparison to the operating plan; • Review and approval of the Company’s strategic plan prepared by management; • Consideration of topics of relevance to the Company's ability to carry out its strategic plan; • Review and approval of delegations of authority by which management carries out the day-to-day operations of the Company and its subsidiaries; • Review of management's enterprise risk assessment; • Review and, if necessary, modification of Board committee charters; • Review and approval of the Company's policies with respect to payment of dividends and the repurchase of common stock; and • Review and approval of significant actions by the Company. BOARD LEADERSHIP STRUCTURE Until March 31, 2015, the offices of Chairman of the Board and Chief Executive Officer were held by the same person, Michael J. Kowalski. Following his retirement as Chief Executive Officer on that date, Mr. Kowalski became the non-Executive Chairman of the Board. The Company also has a lead independent director. Charles K. Marquis occupies such position by virtue of his chairmanship of the Nominating/Corporate Governance Committee. Mr. Kowalski, as non-Executive Chairman of the Board, sets a preliminary agenda for each board meeting and submits it for the approval of the lead independent director. The Chairman of the Board is required to include in such agenda any item submitted by the lead independent director. The lead independent director also approves meeting schedules for the Board. Mr. Marquis, as the lead independent director, has the authority to call meetings of the independent directors. Mr. Marquis also chairs meetings of the independent and non-management directors and, during those meetings, acts as a liaison between the Chairman of the Board and the independent directors. T N E M E T A T S Y X O R P The Board believes the lead independent director position provides additional independent oversight of the Company's management and other Board matters. The selection of a lead independent director facilitates communication among the Company's directors or between any of them and the Chairman of the Board, as well as communication between shareholders and Company employees and the Company's independent and other non-management directors. The Nominating/Corporate Governance Committee believes our existing leadership structure is appropriate in the context of the existing Board size, the tenure of the directors with the Company, the overall experience of the directors and the experience that the directors have had with Mr. Kowalski, Mr. Cumenal and the executive management group. Mr. Kowalski served as Executive Chairman of the Board since the start of Fiscal 2003 through March 31, 2015, and the Board has had the opportunity during that time to assess his skills at moderating discussions during meetings, as well as his responsiveness to the Board’s suggestions for the agenda and the information to be provided by management to the Board. The Board believes there is value in having the former Chief TIFFANY & CO. PS-23 Executive Officer of the Company serve as non-Executive Chairman of the Board for a number of reasons. The former Chief Executive Officer's in-depth understanding of the Company's operations improves his ability to set the agenda for each Board meeting. Further, his experience in leading the Company and his familiarity with its current management allow the Board additional insight into key matters within its purview, including the strategic planning process and management succession. The Board, with the assistance of the Nominating/Corporate Governance Committee, will reassess the appropriateness of the existing leadership structure as warranted, including following changes in management, in Board composition or in the nature, scope or complexity of the Company’s operations. 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. In addition, at least once per year the independent directors meet separately in executive session. In these executive sessions, Mr. Marquis, Chairman of the Nominating/Corporate Governance Committee, presides. COMMUNICATION WITH NON-MANAGEMENT DIRECTORS Shareholders and other interested persons 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 (lead independent director), at the following address: Corporate Secretary (Legal Department), Tiffany & Co., 727 Fifth Avenue, 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. INDEPENDENT DIRECTORS CONSTITUTE A MAJORITY OF THE BOARD P R O X Y S T A T E M E N T The Board has affirmatively determined that each of the following directors and director-nominees 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, Lawrence K. Fish, Abby F. Kohnstamm, Charles K. Marquis, Peter W. May and Robert S. Singer. All of the members of the Audit, Nominating/Corporate Governance and Compensation Committees are independent as indicated in the prior paragraph. 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 Robert S. Singer, Gary E. Costley, Lawrence K. Fish, Abby F. Kohnstamm and Charles K. Marquis meet the additional, heightened independence criteria applicable to audit committee members under New York Stock Exchange rules. To our knowledge, none of the independent directors or director-nominees has any direct or indirect relationship with the Company, other than as a director. BOARD AND COMMITTEE MEETINGS AND ATTENDANCE DURING FISCAL 2014 Pursuant to the Company's Corporate Governance Principles, directors are expected to attend the six regularly scheduled Board meetings, as well as all regularly scheduled meetings for those committees on which they TIFFANY & CO. PS-24 serve. Directors are expected to attend such meetings in person or, if such attendance in person is not practicable, by telephone. The Board holds one of its regularly scheduled meetings on the date of the Annual Meeting of Shareholders to facilitate attendance at the Annual Meeting by the directors. All of the 10 current directors attended the Annual Meeting held in May 2014. Each current and incumbent director attended at least 89% of the aggregate number of meetings of the Board and those committees (including the Audit Committee, Compensation Committee, Stock Option Subcommittee, Nominating/Corporate Governance Committee, the Finance Committee and the Corporate Social Responsibility Committee) on which he or she served during Fiscal 2014. • The full Board held six meetings. Attendance averaged 98% amongst all members. • The Audit Committee held eight meetings. Attendance averaged 97% amongst all members. • The Compensation Committee and its Stock Option Subcommittee held six meetings. All members attended all meetings. • The Nominating/Corporate Governance Committee held six meetings. All members attended all meetings. • The Finance Committee held five meetings. All members attended all meetings. • The Corporate Social Responsibility Committee held three meetings. All members attended all meetings. Board Committee Membership COMMITTEES OF THE BOARD Director Audit* Compensation & Stock Option Sub- committee* Corporate Social Responsibility Dividend Finance Nominating/ Corporate Governance* (Eight Meetings) (Six Meetings) (Three Meetings) (Five Meetings) (Six Meetings) Chair Chair Rose Marie Bravo Gary E. Costley Lawrence K. Fish Abby F. Kohnstamm Charles K. Marquis Peter W. May William A. Shutzer Robert S. Singer Michael J. Kowalski Frederic Cumenal Chair * Comprised solely of independent directors. TIFFANY & CO. PS-25 Chair Chair T N E M E T A T S Y X O R P 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, www.tiffany.com, by clicking "Investors" at the bottom of the page and then selecting "Corporate Governance" from the left-hand column. Under its charter, the Audit Committee’s responsibilities include: • 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; • Approving in advance all audit and non-audit services to be rendered by the independent registered public accounting firm; • Reviewing the adequacy of our system of internal accounting and financial controls; • Discussing the Company's earnings press releases, as well as financial information and earnings guidance provided to analysts and rating agencies; • Discussing guidelines and policies with respect to risk assessment and risk management; • Reviewing with the independent auditor any difficulties the auditor encountered in the course of its audit work, including any restrictions on the scope of the independent auditor's activities or on access to requested information, and any significant disagreements with management; • Setting clear hiring policies for employees or former employees of the independent auditor; • Establishing procedures for complaints regarding accounting, internal accounting controls or auditing matters; and • Conducting a review of our financial statements and audit findings in advance of filing, and reviewing in advance significant proposed changes in our accounting principles. P R O X Y S T A T E M E N T 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. Singer meets the SEC criteria of an "audit committee financial expert." The Board considered Mr. Singer’s past experience as Chief Financial Officer of Gucci Group NV, Partner at Coopers & Lybrand, and Chairman of the audit committee for Fairmont Hotels & Resorts, Inc. The Board also considered Mr. Singer's role as Chairman of the audit committee for Jimmy Choo PLC, Coty Inc. and Mead Johnson Nutrition Company ("Mead Johnson"). As announced by Mead Johnson in its proxy statement for its 2015 annual meeting, it is expected that Mr. Singer will serve as a member of the Mead Johnson audit committee in a non-chair capacity following Mead Johnson’s annual meeting, which is scheduled to be held on April 30, 2015. The Board has determined that Mr. Singer's simultaneous service on the audit committee of three other public companies will not impair his ability to effectively serve on the Company's Audit Committee. See "Report of the Audit Committee" at PS-35. 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 website, www.tiffany.com, by clicking "Investors" at the bottom of the page, and then selecting "Corporate Governance" from the left-hand column. Under its charter, the Compensation Committee’s responsibilities include: • Reviewing and approving corporate goals and objectives relevant to the compensation of our Chief Executive Officer; TIFFANY & CO. PS-26 • Evaluating our Chief Executive Officer's performance in light of those corporate goals and objectives; • Determining and approving our Chief Executive Officer's compensation level based on such evaluation; • Making recommendations to the Board with respect to the compensation of our other executive officers, including compensation under incentive and equity-based plans; • Reviewing and approving remuneration arrangements for executive officers; • Making awards to executive officers under the Company's compensation plans, including equity-based plans; • Considering the expressed view of shareholders on executive compensation matters, including shareholder proposals, advisory votes, communications with proxy advisory firms and related matters; and • Assessing on an annual basis potential material risks to the Company from its compensation programs and plans. Compensation for the non-management members of the Board is set by the Board with advice from the Nominating/Corporate Governance Committee. Role of Compensation Consultants Frederic W. Cook & Co., Inc. ("Cook & Co.") is an independent advisor retained by the Compensation Committee to provide advice with respect to the amount and form of executive compensation. Cook & Co. also provides advice to the Nominating/Corporate Governance Committee with respect to director compensation. Cook & Co. assists the Compensation Committee's development and evaluation of executive compensation policies and practices and the Compensation Committee's determinations of executive compensation awards by: • attending Compensation Committee meetings; • meeting with the Compensation Committee without management present; • providing third-party data, advice and expertise on proposed executive compensation awards and plan designs (see "Compensation of the CEO and Other Executive Officers–Compensation Discussion and Analysis–Competitive Compensation Analysis - No Benchmarks" at PS-47); • reviewing materials prepared by management and advising the Compensation Committee on the matters included in these materials, including the consistency of proposals with the Compensation Committee's compensation philosophy and comparisons to programs at other companies; and • preparing its own analysis of compensation matters, including positioning of programs in the competitive market and the design of plans consistent with the Compensation Committee's compensation philosophy. T N E M E T A T S Y X O R P Independence factors as reflected in the Compensation Committee charter were considered in selecting Cook & Co., and Cook & Co. was found to be independent. The Compensation Committee has instructed Cook & Co. to act independently of management and only at the direction of the Committee, and has advised Cook & Co. that its ongoing engagement will be determined solely by the Compensation Committee. Cook & Co. does not consult with management on compensation to be paid to non-executive employees, nor does it have any potential or actual conflicts with the Company. Management has assisted in arranging meetings between Cook & Co. and the Compensation Committee and in facilitating Cook & Co.'s review of Compensation Committee materials. 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, TIFFANY & CO. PS-27 see "Compensation of the CEO and Other Executive Officers–Compensation Discussion and Analysis– Compensation Evaluation Process” at PS-46 and "Report of the Compensation Committee" at PS-65. Stock Option Subcommittee The Stock Option Subcommittee determines the grant of options, restricted stock units, cash incentive awards and other matters under our 2014 Employee Incentive Plan. All members of the Compensation Committee are members of this subcommittee. Compensation Committee Interlocks and Insider Participation During 2014, the members of the Compensation Committee and its Stock Option Subcommittee were Rose Marie Bravo, Gary E. Costley, Abby F. Kohnstamm, Charles K. Marquis, Peter W. May and Robert S. Singer. No director serving on the Compensation Committee or its Stock Option Subcommittee during any part of Fiscal 2014 was, at any time either during or before such fiscal year, an officer or employee of Tiffany & Co. or any of its subsidiaries. Suzanne Jackey, an adult stepdaughter of Rose Marie Bravo, was a "related person" in 2014 because she was a salaried employee of Tiffany who received total cash compensation of approximately $214,000 in Fiscal 2014. Ms. Jackey was hired as Tiffany's Director of Product Development and Merchandising – Leather Accessories because she had previously worked for the product development group hired to develop a new product line. Ms. Jackey resigned from her position in November 2014. None of the Company's executive officers serves, or in the past fiscal year served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of the Board or the Compensation Committee and its Stock Option Subcommittee. 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, www.tiffany.com, by clicking "Investors" at the bottom of the page, and then selecting "Corporate Governance" from the left-hand column. Under its charter, the role of the Nominating/Corporate Governance Committee includes recommending to the Board: • Policies on the composition of the Board; • Criteria for the selection of nominees for election to the Board; • Nominees to fill vacancies on the Board; • Nominees for election to the Board; • Director compensation; and • Management succession. Submitting Candidate Names 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 Corporate Secretary (Legal Department), Tiffany & Co., 727 Fifth Avenue, New York, New York 10022. Process for Identifying and Evaluating Nominees for Director The Nominating/Corporate Governance Committee evaluates candidates recommended by shareholders in the same manner as it evaluates director candidates suggested by others, including those recommended by director search firms. TIFFANY & CO. PS-28 P R O X Y S T A T E M E N T See our Corporate Governance Principles which are available on our website www.tiffany.com, by clicking "Investors" at the bottom of the page, and then selecting "Corporate Governance" from the left-hand column. In accordance with these principles, 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 policy is implemented through discussions at meetings of the Nominating/Corporate Governance Committee and through specifications provided to director search firms when such firms are retained. The Nominating/Corporate Governance Committee has no procedure or means of assessing the effectiveness of this policy other than the process described under "Board Refreshment and Self-Evaluation" below. The Nominating/Corporate Governance Committee has no other policy with regard to the consideration of diversity in identifying director nominees. Corporate Social Responsibility Committee The Board formed the Corporate Social Responsibility Committee in 2009 to assist the Board with its oversight of the Company’s policies and practices involving the environment, vendor workplace conditions and employment practices, community affairs, sustainable product sourcing, corporate charitable giving, governmental relations, political activities and diversity in employment. The Corporate Social Responsibility Committee operates under the charter adopted by the Board. The charter may be viewed on the Company’s website, www.tiffany.com, by clicking "Investors" at the bottom of the page, and then selecting "Corporate Governance" from the left-hand column. Dividend Committee The Dividend Committee declares regular quarterly dividends in accordance with the dividend policy established by the Board. The Dividend Committee acts by unanimous written consent. Mr. Kowalski is the sole member of the Dividend Committee. Finance Committee The Board formed the Finance Committee to assist the Board with its oversight of the Company’s capital structure, dividend policy, repurchase of the Company’s common stock, debt and equity financings, the retention of investment bankers and other financial advisors to the Board, the Company's hedging policy and guarantee of indebtedness incurred by the Company's subsidiaries as well as of currency, interest rate or commodity hedging transactions entered into by the Company’s subsidiaries. The Finance Committee operates under the charter adopted by the Board. The charter may be viewed on the Company’s website, www.tiffany.com, by clicking "Investors" at the bottom of the page, and then selecting "Corporate Governance" from the left-hand column. BOARD REFRESHMENT AND SELF-EVALUATION Directors are required by our By-laws to be less than age 74 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. The independent directors who serve on the Board conduct an annual assessment and 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. T N E M E T A T S Y X O R P TIFFANY & CO. PS-29 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 (or any other organization that would require a significant time commitment). The Committee shall promptly convene to consider, in light of the circumstances, the continued appropriateness of the continued service of the director and may then accept or decline such resignation. The letter of resignation will be of no force and effect if not accepted by the Committee within 10 days of receipt. MANAGEMENT SUCCESSION PLANNING One of the Board's primary responsibilities is to ensure that the Company has a high-quality management team in place. The Board, assisted by the Nominating/Corporate Governance Committee, is responsible for selecting, evaluating the performance of, and determining whether to retain or replace our Chief Executive Officer. Pursuant to our Corporate Governance Principles, any such evaluations and determinations must be made with a view towards the effectiveness and execution of the strategies and decisions set forth by the Chief Executive Officer regarding the Company's long-term strategic plan and long-term financial returns. In contemplation of the retirement, or any other circumstance that requires the replacement, of our Chief Executive Officer, the Board will, in conjunction with our Chief Executive Officer, evaluate the performance and potential of our other executive officers. The Board, assisted by the Nominating/Corporate Governance Committee, will also participate in the planning for the succession of our other executive officers. BOARD ROLE IN RISK OVERSIGHT P R O X Y S T A T E M E N T The Board believes (i) that management is responsible for identifying, assessing and managing the various risks that may arise in the Company’s operations and ensuring that the Board is appropriately aware of any such material risks, and (ii) that the Board has a role in overseeing management in the risk management function. Management’s approach to risk management includes systems of authorities and approval levels; internal control checks and balances; analytical methods for making and evaluating decisions; planning for annual business growth and profitability; strategic planning; and nurturing a corporate culture that rewards integrity and supports the TIFFANY & CO. brand image. This approach to risk management includes these goals: that every risk should, when possible and practicable, be identified, quantified as to monetary impact, assigned a probability factor, and properly delegated to management for a response. Operational risks so categorized are used to inform and shape the internal audit plan and are communicated to the Company’s independent registered public accounting firm so that they can be referenced and used, if deemed appropriate, to inform and shape the external audit plan. Strategic risks are identified and are addressed in the strategic planning process. Each year management is charged with the preparation of detailed business plans for the coming one-year (the annual operating plan) and three-year (the strategic plan) periods and is required to review these plans, as they are developed and refined, with the Board. Such plans include both financial and non-financial considerations. The Board requires management to plan on the basis of realistic assumptions. In this process, the Board endeavors to assess whether management has made an appropriate analysis of the operational and brand risks inherent in the plans. Each year the Board reviews and approves the annual operating plan and the strategic plan. The Board also reviews specific risk areas on a regular basis. These are insured risks, management authority, investor relations, litigation risks, foreign currency risks, diamond and product supply risks and inventory risks. TIFFANY & CO. PS-30 The Audit Committee is required to discuss policies with respect to risk assessment and risk management and regularly does so. The Audit Committee concerns itself most specifically with the integrity of the financial reporting process, but also with personnel, asset and information security risks. The Finance Committee concerns itself principally with liquidity risk. The Company has not designated an overall risk management officer and has no formal policy for coordination of risk management oversight amongst the two Board committees involved. The committee structure was not organized specifically for the purpose of risk management oversight. The Board coordinates the risk management oversight function in the following manner. Both the Finance Committee and the Audit Committee share the minutes of their meetings with the Board and report regularly to the Board. All committee meetings are open to the other directors and many regularly attend because the committee meetings are regularly scheduled on the day of, or the day preceding, Board meetings. BUSINESS CONDUCT POLICY AND CODE OF ETHICS The Company has a long-standing 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 protection of confidential Company information, the acceptance of gifts from those seeking to do business with the Company, the giving of gifts or other items of value to third parties, processing one’s own transactions, political contributions made through the use of Company funds 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, shareholders 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, www.tiffany.com, by clicking "Investors" at the bottom of the page, and then selecting "Corporate Governance" from the left- hand column. 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 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. T N E M E T A T S Y X O R P POLITICAL SPENDING At its November 2011 meeting, the Board adopted the Tiffany & Co. Principles Governing Corporate Political Spending. These principles are intended to ensure oversight, transparency and effective decision-making with respect to the Company’s political spending. The principles may be viewed on the Company’s website, TIFFANY & CO. PS-31 www.tiffany.com, by clicking "Investors" at the bottom of the page, and then selecting "Corporate Governance" from the left-hand column. In accordance with the Principles Governing Corporate Political Spending, the Company reported the following expenses for Fiscal 2014. The Company paid $314,100 to Cassidy & Associates, a government relations firm based in Washington D.C. that engaged, on behalf of the Company, in lobbying efforts focused on public policy concerning various mining law and sustainability issues and also addressed certain trade and industry matters for the Company. Cassidy & Associates did not use any funds from the Company to assist candidates for office or to influence the outcome of ballot initiatives. Additionally, funds in an amount less than $345, which reflect a portion of the membership dues the Company or its affiliates paid to major trade associations (defined to include those trade associations to which the Company and its affiliates pay at least $25,000 in annual dues), were used by such trade associations for political expenditures. COMMITMENT TO CORPORATE SOCIAL RESPONSIBILITY Corporate social responsibility has long been a priority of the Company. We strive to protect the interests of our shareholders, customers and other stakeholders through responsible business decisions that reflect the integrity of the TIFFANY & CO. brand in both the short- and long-term; enhance the communities in which our business operates; improve our environmental performance; and promote responsible practices within our supply chain and our industry. Underscoring the importance of sustainability and corporate responsibility to the Company, the Board established a Corporate Social Responsibility Committee in 2009. See "Corporate Social Responsibility Committee" at PS-29 for more information. The Company publicly discloses information regarding its corporate social responsibility strategy, programs and performance at www.tiffany.com/CSR. LIMITATION ON ADOPTION OF POISON PILL PLANS On January 19, 2006, the Board terminated the Company’s shareholder 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 The Board has adopted policies and procedures for the review and approval or ratification of any transaction with the Company (or any subsidiary) in which (i) the aggregate amount involved will, or may be expected to, exceed $120,000 in any fiscal year and (ii) 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. Any such transaction is referred to the Nominating/Corporate Governance Committee for review. The Nominating/Corporate Governance Committee TIFFANY & CO. PS-32 P R O X Y S T A T E M E N T will then evaluate such transaction and, where the Nominating/Corporate Governance Committee determines in its business judgment that such transaction is in the best interest of the Company, recommend such transaction for approval or ratification to the Board. The Board ratified the hiring in Fiscal 2009 by Tiffany management of the following related person: Suzanne Jackey, an adult stepdaughter of Rose Marie Bravo, a director and a nominee for director. Ms. Jackey was hired as Tiffany's Director of Product Development and Merchandising – Leather Accessories because she had previously worked for the product development group hired to develop a new product line. Ms. Jackey resigned from her position in November 2014. Ms. Jackey received total cash compensation of approximately $214,000 in Fiscal 2014. CONTRIBUTIONS TO DIRECTOR-AFFILIATED CHARITIES Pursuant to the Company's Corporate Governance Principles, contributions made by the Company during any fiscal year to charitable organizations with which the Company's directors are affiliated, through memberships on the governing body of such charitable organization, are required to be disclosed in the Company's annual proxy statement for such fiscal year. The contributions listed below were made during Fiscal 2014. None of the independent directors serve as an executive officer of these charities: • Carnegie Hall: $5,000 cash grant to support opening night gala and contribution of $4,450 vermeil medallion for medal of excellence gala (Mr. May is a Trustee). • Partnership for New York City: $15,000 annual dues contributions (Mr. May and Tiffany are each partners). • Mt. Sinai Medical Center: $5,000 table purchase for Dubin Breast Cancer Center luncheon and combination of ticket subscription and merchandise grants totaling $2,650 to Sexual Assault and Violence Intervention Program Dinner (Mr. May is Chairman of the Board of Trustees). • Paul Taylor Dance Company: combination of sponsorship for anniversary gala and merchandise grants of $88,700 (Mr. Shutzer is a Trustee). • Prep for Prep: merchandise grants totaling $6,600 (Mr. Shutzer is a Trustee). • Roundabout Theatre Company: $20,000 table purchase for spring gala (Ms. Kohnstamm is a member of the Board of Directors). T N E M E T A T S Y X O R P TIFFANY & CO. PS-33 ITEM 2. RATIFICATION OF THE SELECTION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM TO AUDIT OUR FISCAL 2015 FINANCIAL STATEMENTS The Audit Committee has appointed, and the Board has ratified the appointment of, PwC as the independent registered public accounting firm to audit the Company’s consolidated financial statements for Fiscal 2015. As a matter of good corporate governance, we are asking you to approve this selection. PwC, directly and through its predecessor firms, 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 shareholders 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 shareholders. THE BOARD RECOMMENDS A VOTE "FOR" APPROVAL OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL 2015. P R O X Y S T A T E M E N T TIFFANY & CO. PS-34 REPORT OF THE AUDIT COMMITTEE 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, www.tiffany.com, by clicking "Investors" at the bottom of the page and then selecting "Corporate Governance" from the left-hand column. The Company's management is responsible for the Company's internal controls and for preparing the Company's financial statements contained in the Company's public reports. The Company's independent registered public accounting firm, PricewaterhouseCoopers LLP ("PwC"), is responsible for auditing the annual financial statements prepared by management and for expressing opinions on the Company's consolidated financial statements and on the effectiveness of the Company's internal control over financial reporting in accordance with the Public Company Accounting Oversight Board (the "PCAOB"). Included in the Company’s Annual Report to Shareholders are the consolidated balance sheets of the Company and its subsidiaries as of January 31, 2015 and 2014, and the related consolidated statements of earnings, comprehensive earnings, stockholders' equity, and cash flows for each of the three years in the period ended January 31, 2015. These statements (the "Audited Financial Statements") are the subject of a report by 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 PwC, as appropriate, and otherwise fulfilled the responsibilities set forth in its charter. The Audit Committee has also discussed with the Company’s management and PwC their evaluations of the effectiveness of the Company’s internal controls over financial reporting, as well as the quality of the accounting principles applied and the reasonableness of the significant accounting judgments and estimates incorporated in the Audited Financial Statements. The Audit Committee has discussed with PwC the matters required to be discussed by PCAOB Auditing Standard No. 16, "Communications with Audit Committees." In connection with such discussion, the Audit Committee and PwC also discussed the business, compliance and financial reporting risks to which the Company is subject. The Audit Committee received from PwC the written disclosure and letter required by PCAOB Rule 3526 "Communication with Audit Committees Concerning Independence," and has discussed with them their independence. The Audit Committee has considered whether the provision by PwC of the tax consultation, tax compliance and other non-audit-related services disclosed below under "Relationship with Independent 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 PwC’s independence from the Company and its management. T N E M E T A T S Y X O R P 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, 2015. Signed: Robert S. Singer, Chair Lawrence K. Fish Abby F. Kohnstamm Charles K. Marquis Members of the Audit Committee TIFFANY & CO. PS-35 RELATIONSHIP WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 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, 2016. The 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, (viii) legal services, and (ix) 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, 2015 and 2014, 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. P R O X Y S T A T E M E N T Audit Fees Audit-related Fees Audit and Audit-related Fees Tax Fees a All Other Fees b Total Fees January 31, 2015 January 31, 2014 $3,330,000 $3,017,000 212,100 3,542,100 1,652,400 182,700 34,000 3,051,000 2,202,200 228,200 $5,377,200 $5,481,400 a) Tax fees consist of fees for tax compliance and tax consulting services. These fees included estimated tax filing and compliance fees of $1,456,900 for the year ended January 31, 2015 and actual fees of $1,795,000 for the year ended January 31, 2014. b) All other fees consist primarily of the Sustainability Assurance procedures, Kimberley Process Agreed Upon Procedures and costs for research software for the years ended January 31, 2015 and January 31, 2014. TIFFANY & CO. PS-36 ITEM 3. APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF THE COMPANY'S NAMED EXECUTIVE OFFICERS Rule 14a-21(a) was adopted by the SEC. It was adopted under the Securities Exchange Act of 1934, as amended by the Dodd-Frank Act, and requires the Company to include in its proxy statement, at least once in every three years, a separate shareholder advisory vote to approve the compensation of the Company’s named executive officers. Accordingly, we are presenting the following resolution for the vote of the shareholders at the 2015 Annual Meeting: RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K under the Securities Exchange Act of 1934 in this Proxy Statement, including the Compensation Discussion and Analysis, compensation tables and narrative discussion be and hereby is APPROVED. The disclosed compensation paid to the Company’s named executive officers (Messrs. Kowalski, Cumenal, Fernandez and Nicoletti, and Mmes. Beraud and Cloud) for which your approval is sought may be found at PS-38 through PS-93 inclusive of this Proxy Statement. At the 2014 Annual Meeting, the Company included in its proxy statement a separate shareholder advisory vote to approve the compensation of the Company’s named executive officers. The Company’s Say on Pay proposal passed with 98.4% of the shareholder votes in favor of the Company’s compensation program. Of the shareholder votes that were not in favor of the Company's compensation program, 24% were abstaining shares. The Committee considered shareholder approval of the compensation program when implementing changes for Fiscal 2015. THE BOARD RECOMMENDS A VOTE "FOR" APPROVAL OF THE COMPENSATION PAID TO THE NAMED EXECUTIVE OFFICERS IN FISCAL 2014. T N E M E T A T S Y X O R P TIFFANY & CO. PS-37 COMPENSATION OF THE CEO AND OTHER EXECUTIVE OFFICERS Contents Compensation Discussion and Analysis Report of the Compensation Committee Summary Compensation Table – Fiscal 2014, 2013 and 2012 Grants of Plan-Based Awards Table – Fiscal 2014 Discussion of Summary Compensation Table and Grants of Plan-Based Awards Outstanding Equity Awards at Fiscal Year-End Table Option Exercises and Stock Vested Table – Fiscal 2014 Pension Benefits Table Nonqualified Deferred Compensation Table Potential Payments on Termination or Change in Control Director Compensation Table – Fiscal 2014 Equity Compensation Plan Information Page PS-39 Page PS-65 Page PS-66 Page PS-70 Page PS-73 Page PS-80 Page PS-82 Page PS-83 Page PS-88 Page PS-90 Page PS-94 Page PS-96 P R O X Y S T A T E M E N T TIFFANY & CO. PS-38 COMPENSATION DISCUSSION AND ANALYSIS ("CD&A") This Compensation Discussion and Analysis explains the Company's compensation program as it pertains to the Company's named executive officers for Fiscal 2014. The Company's named executive officers for Fiscal 2014 were as follows: NAMED EXECUTIVE OFFICERS Michael J. Kowalski Chief Executive Officer James N. Fernandez Chief Operating Officer, retired July 31, 2014 Chief Financial Officer, Feb. 1, 2014 to April 1, 2014 Ralph Nicoletti Executive Vice President – Chief Financial Officer, effective April 2, 2014 Frederic Cumenal President Jill Beraud Executive Vice President Pamela H. Cloud Senior Vice President–Merchandising 2014 Company Performance EXECUTIVE SUMMARY Fiscal 2014 was another year of solid performance for the Company, as reflected by the following key highlights: Stock Price at January 31, 2014 Stock Price at January 31, 2015 Total Dividends Paid Per Share Total Shareholder Return $83.19 $86.64 $1.48 6% Fiscal 2013 Net Earnings (on a Non- GAAP basis – see Appendix I at PS-98) Fiscal 2014 Net Earnings (on a Non- GAAP basis – see Appendix I at PS-98) Percentage Increase $480.6 million $545.1 million 13% Fiscal 2013 Operating Earnings (on a Non- GAAP basis – see Appendix I at PS-98) Fiscal 2014 Operating Earnings Percentage Increase $793.9 million $891.4 million 12% T N E M E T A T S Y X O R P TIFFANY & CO. PS-39 Key highlights of Fiscal 2014 performance were as follows: Sales Growth: Net sales increased 5% to $4.25 billion, or 7% on a constant-exchange-rate basis that eliminates the effect from translating sales made outside the U.S. into U.S. dollars (see Appendix I at PS-98). Performance was healthy across all regions in the full year, ranging from total sales growth in local currencies of 10% in Asia- Pacific, to 6% in both the Americas and Europe, to 4% in Japan. Improved Profitability: Net earnings were $484 million, or $3.73 per diluted share. Excluding a debt- extinguishment charge related to the redemption of certain of the Company's long- term debt in 2014 and other charges recorded in 2013 (see Appendix I at PS-98), net earnings rose 13%, which exceeded management's initial expectation for the year. Store Expansion: Six Company-operated TIFFANY & CO. stores, net were added across the Americas, Asia-Pacific and Europe, including the addition of a major store on the Champs- Elysées in Paris and the first Company-operated store in Moscow. Product Introductions: The TIFFANY T jewelry collection was introduced, representing a modern design targeted to the self-purchaser. The launch met with customer excitement and generated strong sales. Returning Capital to Shareholders: The Company increased the quarterly dividend rate per share by 12% from $0.34 to $0.38, or $1.52 annually, representing the 13th increase in the past 12 years, and spent $27 million to repurchase 301,000 shares of the Company's common stock. 2014 Incentive Compensation Short-Term Incentive Award P R O X Y S T A T E M E N T Under the targets and guidelines established by the Compensation Committee (the "Committee") at the start of the year, each named executive officer, other than Ms. Beraud, was eligible to be paid out up to 200% of his or her target short-term incentive award, dependent on corporate and individual performance, as described below. Based on achievement of pre-established goals, the Committee exercised its negative discretion to pay-out Fiscal 2014 short-term incentive awards to the named executive officers as follows: Potential Pay-out Based on Achievement of Operating Earnings Target (160% of Target) Potential Pay-out Based on Individual Performance (40% of Target) Potential Total Pay-out of Annual Incentive Award (200% of Target) Actual Pay-out of Annual Incentive Award (101% of Target) Michael J. Kowalski Frederic Cumenal Ralph Nicoletti Pamela H. Cloud Jill Beraud $ $ $ $ $ 2,400,000 $ 1,800,000 $ 840,000 $ 528,000 $ — $ 600,000 $ 450,000 $ 210,000 $ 132,000 $ — $ 3,000,000 2,250,000 1,050,000 660,000 — 1,515,000 1,136,250 530,250 333,300 — Pursuant to the Company's compensatory arrangements with Ms. Beraud upon her hire in October 2014, Ms. Beraud was not eligible to receive a performance-based short-term incentive award for Fiscal 2014, but rather received a one-time cash payment equal to 100% of her target short-term incentive award, pro-rated for that portion of Fiscal 2014 during which she was employed. Please see a full discussion of Ms. Beraud's compensatory arrangements within "Discussion of Summary Compensation Table and Grants of Plan-Based Awards" at PS-73. TIFFANY & CO. PS-40 Performance-Based Restricted Stock Units The performance-based restricted stock unit awards made to the executive officers in January 2012, for the three-year period ended January 31, 2015, vested at 49% of target shares (25% of maximum shares). This was based on cumulative EPS of $11.24 for the three-year period, against the earnings-per-share ("EPS") target of $13.94 for the three-year period; and on the average return-on-assets ("ROA") target not having been met for the three-year period ended January 31, 2015. The achievement of goals resulted in pay-outs as follows: Potential Performance- Based Restricted Stock Units under January 2012 Award (200% of target) Actual Performance-Based Restricted Stock Units to Vest under January 2012 Award, in accordance with achievement of pre- established goals 50,000 28,600 13,000 12,500 7,150 3,250 Michael J. Kowalski Frederic Cumenal Pamela H. Cloud James N. Fernandez's retirement as Chief Operating Officer In July 2014, Mr. Fernandez retired from the role of Chief Operating Officer. As a result, he forfeited all remaining awarded but unvested compensation up through that date, including: • performance-based restricted stock units awarded in January 2012, 2013 and 2014, vesting in March 2015, 2016 and 2017 respectively; and • unvested stock options awarded in January 2011, 2012, 2013 and 2014. At its March 2015 meeting, the Committee used its discretion to pay Mr. Fernandez a one-time payment of $297,500. This amount reflects a pro-rated portion of his Fiscal 2014 short-term incentive award, based on the short-term incentive awards paid to the other named executive officers (101% of target), and commensurate to the number of months in Fiscal 2014 during which Mr. Fernandez remained employed (6/12). 2014 Changes in Executive Management Fiscal 2014 saw the culmination of a multi-year succession process for the Company, notably: T N E M E T A T S Y X O R P • The announced promotion of Frederic Cumenal, President, to Chief Executive Officer, effective April 1, 2015, to occur upon the retirement of Michael J. Kowalski, effective March 31, 2015; • The announced transition of Mr. Kowalski from the role of Executive Chairman of the Board to a non-employee director serving as Chairman of the Board, effective April 1, 2015; • The appointment of Ralph Nicoletti as Chief Financial Officer, effective April 2, 2014; • The retirement of James N. Fernandez, Chief Operating Officer and former Chief Financial Officer, effective July 31, 2014; and • The appointment of Jill Beraud as Executive Vice President, effective October 13, 2014, with responsibility for Global Retail Operations including all sales channels in every region, as well as oversight of strategic store development and real estate. TIFFANY & CO. PS-41 Michael J. Kowalski's retirement as CEO and transition from Executive Chairman of the Board to non-employee director serving as Chairman of the Board In light of Mr. Kowalski's announced retirement, effective March 31, 2015, the Committee did not grant Mr. Kowalski a long-term incentive award at its January 2015 meeting, when annual awards to the executive officers were granted. Further, under the applicable terms of the performance-based restricted stock unit awards granted to Mr. Kowalski in January 2013 and January 2014, and the unvested stock options granted to him in January 2012, 2013, and 2014, such units and options were all subject to forfeiture upon retirement. In recognition of Mr. Kowalski's contributions to the Company, role in succession planning, and ongoing support of Mr. Cumenal in his transition to Chief Executive Officer, the Committee took action in March 2015 to amend the terms of award for those performance-based restricted stock units granted in January 2013 and January 2014, and scheduled to vest contingent on Company performance in March 2016 and March 2017 respectively. The sole purpose of the amended terms of awards is to provide for continued vesting of such awards following Mr. Kowalski’s retirement on the terms and conditions previously established by the Committee. The performance goals established by the Committee in each of 2013 and 2014 were not amended in any respect. Frederic Cumenal's Promotion to CEO The Committee considered Mr. Cumenal's total target direct compensation and potential adjustments in conjunction with Mr. Cumenal's promotion to Chief Executive Officer. Consideration was given to current market data, improved alignment of the CEO total target direct compensation with the market, and the opportunity to recognize Mr. Cumenal's expected future contributions through increased compensation. This process culminated in the Committee's approval of the following adjustments to Mr. Cumenal’s compensation arrangements for Fiscal 2015. P R O X Y S T A T E M E N T Compensation as President - Fiscal 2014 ($ amount/percentage of base salary) Compensation as CEO - Fiscal 2015 ($ amount/ percentage of base salary) $ 900,000 $ 1,250,000 $ 1,125,000 (125%) $ 2,700,000 (300%) $ 1,875,000 (150%) $ 6,250,000 (500%) $ 4,725,000 $ 9,375,000 Base Salary Target Short- term Incentive Target Long-term Incentive Total Target Direct Compensation The total target direct compensation for Mr. Cumenal for Fiscal 2015 places him below the median for the peer group described at PS-49. Mr. Cumenal's base salary falls below the peer group median; his target short-term incentive award, as a percentage of salary, falls at the peer group median; and his long-term incentive award falls below the peer group median. TIFFANY & CO. PS-42 Target Compensation for Named Executive Officers in Fiscal 2015 The Committee approved the following target direct compensation for Fiscal 2015, at its January 2015 meeting. Annual Base Salary Target Short-Term Incentive Award ($/% of base salary) Target Long-Term Incentive Award ($/% of base salary) Total Target Direct Compensation Michael J. Kowalski - base salary ceases upon retirement as of March 31, 2015 $1,000,000 n/a n/a $1,000,000 Frederic Cumenal $1,250,000 Jill Beraud $850,000 Ralph Nicoletti $750,000 Pamela H. Cloud $575,000 $1,875,000 (150%) $595,000 (70%) $525,000 (70%) $345,000 (60%) $6,250,000 (500%) $1,700,000 (200%) $1,500,000 (200%) $1,150,000 (200%) $9,375,000 $3,145,000 $2,775,000 $2,070,000 The Committee did not grant short-term nor long-term incentive awards to Mr. Kowalski, with respect to Fiscal 2015, due to his announced retirement effective March 31, 2015. T N E M E T A T S Y X O R P TIFFANY & CO. PS-43 Corporate Governance Best Practices The Board seeks to ensure that the Company’s executive compensation program conforms to sound corporate governance principles and policies, as demonstrated by the following practices: WHAT WE DO Pay for performance: 87% of CEO compensation and, on average, 73% of other named executive officer compensation, is tied to the Company's financial performance and/or the performance of the stock price. Limited use of employment agreements: Employment agreements and formal severance arrangements are used only as necessary to attract newly-recruited senior executives. Independent Executive Compensation Advisor: The Committee retains an independent compensation consultant to advise on the executive compensation program and practices. Share Ownership Policy: Executive officers are expected to acquire and hold Company common stock worth two to five times their annual base salary. Non- employee directors are expected to own Company common stock worth five times their annual retainer. "Dual trigger" requirement for Change in Control severance benefits: Following a change in control, outstanding equity awards and unvested retirement benefits will only be accelerated, and cash severance benefits will only be paid, in the event of an involuntary termination of employment. Provide limited perquisites: Perquisites provided to executive officers on a limited basis only, for example, life insurance benefits and executive long term disability benefits. Clawback policy: Incentive-based compensation such as cash incentive awards and performance-based restricted stock units, is subject to recoupment in the event of an accounting restatement due to material noncompliance with financial reporting requirements. Say on Pay P R O X Y S T A T E M E N T WHAT WE DON'T DO Tax gross-ups: No tax gross-ups, for example for life insurance benefits, are paid to executive officers, other than for one-time relocation expenses. Pay current dividends on unvested long-term incentives: Current dividends are not paid on unvested restricted stock units and stock options. Repricing of underwater stock options without shareholder approval: The Company's shareholder- approved employee and director incentive plans do not permit repricing of underwater stock options without shareholder approval. Allow pledged shares to count under Share Ownership Policy: Shares of the Company's common stock that are pledged to a third party do not count toward the share ownership requirements. Grant stock options below 100% of fair market value: The Company's shareholder-approved employee and director incentive plans do not permit stock options to be granted below 100% of fair market value. Permit hedging of Company stock: The Company's policy on Insider Information, applicable to all employees, officers, and directors, expressly prohibits speculative transactions (i.e. hedging) 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. In May 2014, the Company’s Say on Pay proposal passed with 98.4% of the shareholder advisory votes in favor of the Company’s executive compensation program, which indicated to the Committee that shareholders were supportive of the Company's compensation design and philosophy, and that significant changes were not warranted. The Committee will continue to consider Say on Pay results, as well as shareholder feedback, in the design of the compensation program. TIFFANY & CO. PS-44 OVERVIEW OF COMPENSATION COMPONENTS The Committee has established an executive compensation plan that contains the following key components: The above chart reflects the average ratio for all named executive officers, including the Chief Executive Officer, for Fiscal 2015. See charts of "CEO Target Pay Mix" and "Named Executive Officer Target Pay Mix" under "Relative Values of Key Compensation Components" at PS-50. The Company also offers the following compensation components, in addition to the annual compensation program described above: T N E M E T A T S Y X O R P Time-vesting restricted stock units Benefits Used periodically on a selective basis, typically in connection with a promotion or new hire, to recognize prior performance or to attract or retain key talent. Typically time-vesting after three years of continued employment. Used to attract and retain executives. Includes a comprehensive program of benefits that includes retirement benefits and life insurance benefits that build cash value. TIFFANY & CO. PS-45 SHORT- AND LONG-TERM PLANNING FOR SUSTAINABLE EARNINGS GROWTH The performance of management in developing and executing plans and in managing external variables determines the Company’s success in achieving its financial and brand stewardship goals – both short- and long-term. As part of each year’s planning process, the executive officers develop and submit for Board approval: • A three-year strategic plan that balances financial and "brand stewardship" objectives (see below); and • An annual operating plan for the fiscal year. Each plan must incorporate goals which are both challenging and realistic for sales, gross margins, marketing expenditures, staffing, other expenses, inventory management, capital spending and all other elements of the Company’s financial performance. "Brand stewardship" refers to actions taken by management to maintain, in the minds of consumers, strong associations between the TIFFANY & CO. brand and product quality, product exclusivity (luxury), the highest levels of customer service, compelling store design and product display and responsible product sourcing practices. The Committee recognizes that tradeoffs between near-term financial objectives and brand stewardship are often difficult. For example, introducing new designs can enhance brand image and attract new customers, but affect overall margin negatively in the short term; and increased staffing can positively affect customer service while negatively affecting earnings in the short-term. Through the planning process, management must bring into balance expectations for annual earnings growth and concerns for brand stewardship and sustainable earnings growth. OBJECTIVES OF THE EXECUTIVE COMPENSATION PROGRAM The Committee has established the following objectives for the compensation program: • To attract, motivate and retain the management talent necessary to develop and execute both the annual operating plan and the strategic plan; • To reward achievement of short- and long-term financial goals; and • To link management’s interests with those of the shareholders. The total executive compensation program includes base salary, short- and long-term incentives and benefits. SETTING EXECUTIVE COMPENSATION The Committee determines all remuneration arrangements for executive officers and compensation plans in which officers of the Company are eligible to participate, as more fully described in the Committee Charter. In January of each year, the Committee reviews the target amount of total compensation for each executive officer, as well as the target levels of key components of such compensation. This follows a process in which the Committee conducts a detailed review of each executive officer’s compensation. The following are key components of the Committee's evaluation process. COMPENSATION EVALUATION PROCESS Consideration of Say on Pay The Committee weighs the level of shareholder support for the compensation program as demonstrated by the Say on Pay vote. P R O X Y S T A T E M E N T TIFFANY & CO. PS-46 Independent Compensation Advisor In connection with carrying out its responsibilities, the Committee considers the advice of Cook & Co., its independent compensation advisor, and the competitive compensation analysis provided by Cook & Co. See "Board of Directors and Corporate Governance - Committees of the Board - Role of Compensation Consultants" at PS-27 for discussion of selection process for Cook & Co., inclusive of an independence analysis. Tally Sheets The Committee regularly reviews "tally sheets," prepared by the Company's Human Resources division for each executive officer. The tally sheets include data concerning historical compensation and wealth accumulation data from employment with Tiffany. Consultations with the Chief Executive Officer In periodic meetings with the Committee, the Chief Executive Officer provides his views as to the individual performance of the other executive officers, and the Committee solicits his recommendations with respect to their compensation. His input is especially important with respect to the evaluation of the individual performance parameters used in determining short-term incentives, as well as for setting base salary and target incentive compensation as a ratio of base salary. The Committee also relies on its own business judgment as to each executive officer's maturity, experience and tenure, capacity for growth, expected future contributions, complexity of role, demonstrated success and desirability to the Company's competitors. Coordination with Financial Results and Annual and Strategic Planning Process In January, the Committee reviews a forecast of financial results for the fiscal year ending that month with the Chief Financial Officer and reviews calculations of the tentative payouts for short- and long- term incentives on that basis. Final calculations are reviewed and approved at the March meeting, when fiscal year financial results are nearly final, and when the annual operating plan and the strategic plan are presented for approval by the Board. After the public disclosure of financial results, the final calculation is made and the Committee authorizes management to make payment on prior year short- term 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 written agreements with respect to current year short-term incentive awards. The Committee awards stock options to executive officers at a meeting that occurs on the Wednesday immediately preceding the third Thursday of January each year, or when individual promotions are recognized. The Committee has never delegated to management its authority 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 specific financial goals are not set until the March meeting when the strategic plan is adopted. T N E M E T A T S Y X O R P COMPETITIVE COMPENSATION ANALYSIS - NO BENCHMARKS Each year the Committee refers to competitive compensation (market) data because the Committee believes that such data are helpful in assessing the competitiveness of the total compensation offered to the Company’s executive officers. However, the Committee does not consider such market data sufficient for a full evaluation of appropriate compensation for any individual executive officer. Accordingly, the Committee: • Has not set a "benchmark" to such data for any executive officer, although it does look to see if the Company’s total executive compensation program falls between the 25th and 75th percentile of market data; • Does not rely exclusively on compensation surveys or publicly available compensation information when it determines the compensation of individual executive officers; and TIFFANY & CO. PS-47 • Also considers those factors described above in "Compensation Evaluation Process." The Committee also reviews a competitive compensation analysis by Cook & Co., which included the following elements of compensation for each executive officer: • base salary; • • target short-term incentive; target total cash compensation (salary plus target short-term incentive); • target long-term incentive; • • target total direct compensation (target total cash compensation plus target long-term incentive); and target total compensation (target total direct compensation plus all other compensation, above market interest on deferred compensation and change in pension value). DEFINING APPROPRIATE COMPARATORS Defining an appropriate comparator group within the retail industry is a challenge because there are few U.S.- based companies of similar size in the luxury retail business with an integrated manufacturing function and extensive international organization similar to the Company. In addition, the Committee believes that an appropriate comparator group must include non-retail companies because a competitive market for the services of our executives exists, even among companies outside the retail industry. Accordingly, 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. For the named executive officers, a defined peer group was used for comparative purposes, comprised of U.S. public companies similar to Tiffany, selected by the Committee. For the executive officers as a whole, third-party surveys for both retail and general industry were used. P R O X Y S T A T E M E N T TIFFANY & CO. PS-48 Peer Group For the five highest paid executive officers the Committee reviewed comparisons to the five highest paid executives of the peer group. In selecting the peer group, the Committee sought to include companies similar to Tiffany across a range of factors, including size, business model (e.g. significant international sales, manufacturing/sourcing operations), products and customers. The peer group used in Fiscal 2015 consists of 20 companies, including 19 companies from the peer group used in Fiscal 2014. One company, Zales, was removed from the peer group due to its acquisition by another peer, Signet, and Michael Kors was added, resulting in the following peer group for the Fiscal 2015 review: Financial Data Common Factors Burberry Coach Coty Revenue (Millions) Net Income (Millions) Market Cap (Millions) Operating Margin $ 3,503 $ 500 $ 10,298 $ 4,694 $ 683 $ 9,472 $ 4,567 $ (97) $ 5,875 19 % 22 % 4 % Elizabeth Arden $ 1,174 $ (146) $ 489 (19)% Fossil Hanesbrands L Brands Estee Lauder $ 3,423 $ 357 $ 5,408 $ 5,088 $ 347 $ 10,550 $ 11,055 $ 927 $ 21,084 $ 10,969 $ 1,204 $ 28,785 Lululemon Athletica $ 1,676 $ 244 $ 6,003 Michael Kors Nordstrom Pier 1 Imports PVH $ 3,589 $ 724 $ 16,146 $ 12,918 $ 728 $ 13,985 $ 1,819 $ 94 $ 1,187 $ 8,247 $ 341 $ 9,422 Ralph Lauren $ 7,584 $ 753 $ 14,506 Restoration Hardware $ 1,668 $ 65 $ 3,172 Signet Jewelers $ 4,627 $ 363 $ 9,627 Sotheby's $ 940 $ 132 $ 2,736 Starwood Hotels $ 5,996 $ 526 $ 13,830 VF Corporation $ 11,993 $ 1,293 $ 29,177 Williams-Sonoma $ 4,531 $ 287 $ 6,067 11 % 15 % 14 % 14 % 17 % 30 % 10 % 4 % 10 % 14 % 11 % 5 % 44 % 14 % 6 % 8 % Multi- Channel Retailing Mfg. Operations Significant Foreign Sales Similar Products/ Customers T N E M E T A T S Y X O R P In terms of size, the Company's revenues and net income were between the 25th percentile and median of the peer companies, market capitalization was between the median and 75th percentile and operating margin was above the 75th percentile. For Fiscal 2014, target total direct compensation for each of the named executive officers other than the Chief Executive Officer (Messrs. Nicoletti and Cumenal, and Mmes. Beraud and Cloud) was in the median to the 75th percentile range. Target total direct compensation for the Chief Executive Officer was positioned at the 25th percentile. Target total compensation, which includes the value of pension accruals and all other compensation, was at the median for the Chief Executive Officer, between the median and 75th percentile for Ms. Beraud, and at or above the 75th percentile for Messrs. Nicoletti and Cumenal and Ms. Cloud. TIFFANY & CO. PS-49 Survey Data The Committee used third-party survey data to evaluate compensation for the Chief Executive Officer and all other executive officers. The surveys used were: • • Towers Watson Retail Survey; Towers Watson General Industry Survey; and • Hay Group Luxury Retail Survey. Relative to the survey data, target total direct compensation for the Chief Executive Officer and for Ms. Beraud were each at the median. The remainder of the named executive officers fell at or above the 75th percentile. RELATIVE VALUES OF KEY COMPENSATION COMPONENTS In January 2015, as part of its annual review of the target level of short- and long-term incentives for each executive officer, the Committee adopted the following incentive opportunities expressed as a percentage of base salary. These percentages, when applied to base salary, resulted in the amount of incentives granted to each executive officer. The Committee split the estimated value of the long-term incentives evenly between the grant-date fair market value of the targeted number of performance-based restricted stock units and the estimated (Black-Scholes) value of stock options. P R O X Y S T A T E M E N T Executive Position Frederic Cumenal Ralph Nicoletti Jill Beraud President as of March 31, 2015/CEO as of April 1, 2015 EVP - CFO EVP Pamela H. Cloud SVP - Merchandising Target Short-term Incentive as a Percent of Salary Target Long-term Incentive as a Percent of Salary 150% 70% 70% 60% 500% 200% 200% 200% The Committee did not grant short-term nor long-term incentive awards to Mr. Kowalski, with respect to Fiscal 2015, due to his announced retirement effective March 31, 2015. The Fiscal 2015 target incentive opportunities are unchanged from Fiscal 2014 for the named executive officers, other than for Mr. Cumenal, for whom target incentives were increased in connection with his promotion to CEO on April 1, 2015. The Committee believes that the portion of an executive officer’s compensation that is "at risk" (subject to adjustment for corporate performance factors and changes in the Company's stock price) should vary proportionately to the amount of responsibility the executive officer bears for the Company’s performance. The Committee also believes that a minimum of 60% of the total target compensation of the Chief Executive Officer and 50% of the total target compensation of the other executive officers should be comprised of long- term incentives to link realized compensation to the Company's longer-term operating and stock price performance. TIFFANY & CO. PS-50 Based on target levels for incentive compensation for Fiscal 2015, the mix of pay for the Chief Executive Officer and named executive officers, on average, is shown below: BASE SALARY The Committee pays the executive officers competitive base salaries as one part of a total compensation program to attract and retain them, but does not use base salary increases as the primary means of recognizing talent and performance. In January 2015, the Committee reviewed base salaries for all executive officers. The Committee increased the base salaries for Mr. Cumenal and Ms. Cloud and one other executive officer. Executive Position Michael J. Kowalski - base salary ceases upon retirement as of March 31, 2015 Frederic Cumenal Jill Beraud Ralph Nicoletti Retirement from CEO role effective March 31, 2015 Promoted from President to CEO effective April 1, 2015 Appointed EVP effective October 13, 2014 Appointed EVP-CFO effective April 2, 2014 Pamela H. Cloud SVP - Merchandising $ $ $ $ $ Fiscal 2014 Base Salary Fiscal 2015 Base Salary Percent Increase from Fiscal 2014 to Fiscal 2015 1,000,000 $ 1,000,000 —% 900,000 $ 1,250,000 38.9% 850,000 $ 850,000 750,000 $ 750,000 —% —% 550,000 $ 575,000 4.5% T N E M E T A T S Y X O R P Base salaries for Fiscal 2015 for recently hired executive officers as well as for longer tenured executive officers were determined based on multiple factors, including competitive market compensation levels for comparable positions; executive experience and skill set; expected contributions; breadth, scope and complexity of role; internal equity; and overall shareholder support as evidenced by the 2014 Say on Pay vote. TIFFANY & CO. PS-51 SHORT-TERM INCENTIVES The Committee uses short-term incentives to motivate executive officers to achieve the annual financial goals and to demonstrate strategic leadership. Short-term incentives consist of annual cash incentive awards under the 2014 Employee Incentive Plan for the executive officers . Short-term incentive awards have an individual component but are primarily formula-driven, with payments based on the degree of achievement of the annual earnings targets (which agree to the Company's annual operating plan) set by the Committee under the plan. The 2014 Employee Incentive Plan permits the Committee, in evaluating achievement of a performance goal, to exclude certain events. See "Discussion of Summary Compensation Table and Grants of Plan-Based Awards– Non-Equity Incentive Plan Awards–Permissible Adjustments to Evaluation of Performance" at PS-73. For short-term incentives paid in respect of Fiscal 2014, the Committee determined a portion of the awards based on the following individual factors: strategic thinking; leadership, including development of effective management teams and employee talent; demonstrated adherence to the Company’s Business Conduct Policy – Worldwide; financial metrics relevant to specific areas of responsibility; and specific objectives set for the executive officer. These same factors will be used to determine a portion of the short-term incentives to be paid in respect of Fiscal 2015. An increased target short-term incentive, relative to other forms of compensation, provides greater pay opportunity for the executive officers, while ensuring such compensation is tied to the performance of the Company. The Committee deemed an increase to the target short-term incentive opportunity for Mr. Cumenal to be appropriate for Fiscal 2015, in connection with his promotion to Chief Executive Officer. Other than Mr. Cumenal, the Committee did not increase short-term incentive award opportunities for any of the named executive officers, as a percentage of base salary, for Fiscal 2015. The maximum short-term incentive established by the Committee for each of the named executive officers is equal to twice the target. Fiscal 2014 For Fiscal 2014, and other than for Ms. Beraud (who, pursuant to her compensatory arrangements, was not eligible to receive a performance-based short-term incentive award for Fiscal 2014), the Committee established target and maximum short-term incentive opportunities for the executive officers, the payment of which would be wholly contingent on the Company meeting an operating earnings threshold. The Committee also determined that, if the operating earnings threshold was met, then the actual amount of the short-term incentive award pay-out would be determined in part based on corporate performance (the "Corporate Portion") and in part based on individual performance (the "Individual Portion"). Further, for the Corporate Portion of the award, the Committee exercised its discretion to establish earnings targets which were substantially in excess of the threshold amount. P R O X Y S T A T E M E N T At the beginning of the fiscal year, the Committee established the operating earnings threshold at $534 million (subject to permitted adjustments). Achievement of this threshold could result in potential pay-out up to 200% of the target short-term incentives, with the Committee retaining negative discretion to determine actual pay-outs based on corporate and individual performance. The Committee expressed its intention to pay up to 160% of the target short-term incentives based on corporate performance, and up to 40% of the target short-term incentives based on individual performance, provided the threshold is met. TIFFANY & CO. PS-52 Corporate Portion Performance Goals. The Committee advised the executive officers that it would use its discretion to determine pay-out of the Corporate Portion of the award based on the following operating earnings targets, subject to proration if Fiscal 2014 operating earnings fell between the amounts in the first column: If Operating Earnings, as adjusted, Equal: $711 million or below $889 million $1,067 million Then Percentage Pay-out of Incentive Award Will Be: 80% of Target Short-term Incentive Award 160% of Target Short-term Incentive Award 0% Actual Pay-out. In March 2015, after reviewing and concurring with the recommendation of the Chief Executive Officer, the Committee determined that the pay-out percentage for the Corporate Portion would be 81% of the target short-term incentive award, as Fiscal 2014 operating earnings were $891.4 million. Individual Portion Actual Pay-out. In March 2015, the Committee reviewed and concurred with the Chief Executive Officer's recommendations with respect to the pay-out of the Individual Portion for all other executive officers. The Committee independently evaluated the performance of the Chief Executive Officer for purposes of the Individual Portion. Each named executive officer's individual performance was compared to the specific objectives set at the beginning of Fiscal 2014, or for Mr. Nicoletti, upon hire. The Committee determined to pay each named executive officer who was eligible for a short-term incentive award 20% of the target incentive award based on the Individual Portion. The named executive officers who were eligible for a short-term incentive award were each paid, in total, 101% of their target short-term incentives for Fiscal 2014. Fiscal 2015 For Fiscal 2015, the Committee decided to retain the short-term incentive structure from Fiscal 2014. In March 2015, the Committee established $533 million as the operating earnings threshold necessary for a pay-out of the Fiscal 2015 short-term incentives. As in Fiscal 2014, the Committee expressed its intention to pay the executive officers up to 160% of their target short-term incentives based on corporate performance and up to 40% of their target short-term incentives based on individual performance, provided the threshold is met. T N E M E T A T S Y X O R P Corporate Portion For Fiscal 2015, the Committee advised the executive officers that it intended to pay the incentive awards based on the following operating earnings targets, subject to proration, if Fiscal 2015 operating earnings fall between the amounts in the first column: If Operating Earnings, as adjusted, Equal: Then Percentage Pay-Out of Incentive Award Will Be: Below $710 million $710 million $888 million $1,065.6 million 0% 25% of Target Short-term Incentive Award 80% of Target Short-term Incentive Award 160% of Target Short-term Incentive Award As reflected in the tables above, incentive award targets for the Fiscal 2015 incentive awards are slightly below those for the Fiscal 2014 incentive awards. Incentive award targets are established by the Committee each year and agree to the Company’s annual operating plan. As such, these targets may vary from year to TIFFANY & CO. PS-53 year as a result of variances in the Company’s annual operating plans from year to year. Please see page K-47 of the Annual Report on Form 10-K for the year ended January 31, 2015, for the Fiscal 2015 outlook and underlying assumptions. Individual Portion Executive officers may receive up to 40% of the target short-term incentives based on the factors described at PS-73. Five-year History of Short-term Incentive Pay-outs The following is the record of short-term incentive pay-outs (including bonuses) for the executive officers as a group average as a percent of target over the past five fiscal years: Fiscal Year 2014 2013 2012 2011 2010 Five-Year Average Total Pay-Out as a Percentage of Target Short-term Incentive Award/Bonus 101% 124% 15% 121% 152% 103% P R O X Y S T A T E M E N T For further description of the incentive awards, including incentive award targets from year-to-year 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" at PS-73. LONG-TERM INCENTIVES The Committee uses long-term incentives to align management interest with those of shareholders, to motivate management to achieve sustainable earnings growth, asset efficiency and stock price growth and to promote the retention of executive officers. 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 the above objectives. The total value of each executive officer's target grant each year is based on a percentage of base salary as indicated above for named executive officers under "Relative Values of Key Compensation Components" at PS-50 for Fiscal 2015, and the ratio of long-term incentive to base salary is reviewed annually at the same time that base salaries are reviewed. The Committee awards two different types of equity awards – performance-based restricted stock units and stock options – because each form of award complements the other and ensures that realized compensation is linked to both long-term operating and stock price performance. • Performance-based restricted stock units reward executives for meeting key financial goals that are important to the long-term performance of the Company, even if the achievement of those goals is not necessarily reflected in the share price as the market does not always respond to earnings growth in a predictable manner. • Stock options reward executives in a rising market and provide returns aligned with those of shareholders, whether or not performance goals have been met. This balances an inherent challenge TIFFANY & CO. PS-54 associated with performance-based restricted stock units, as non-controllable and highly variable external factors affect the Company's performance and make it difficult to establish appropriate strategic performance goals. In order to provide balance to the Company’s long-term incentives, the Committee determined that the ratio of the estimated value of performance-based restricted stock unit awards to the estimated value of stock option awards should be as nearly 50/50 as practicable. For purposes of achieving this mix, the Committee values the awards as follows: • • for stock options, on the basis of the Black-Scholes model; and for performance-based restricted stock units, using the per share market value immediately prior to the grant on the assumption that units would vest at the EPS target described under "Performance- Based Restricted Stock Unit Grants" below (achievement of the ROA goal was not considered in making this allocation). Performance-Based Restricted Stock Unit Grants Complete vesting of performance-based restricted stock units granted in January 2015, March 2014, January 2014 and January 2013 is dependent upon achievement of EPS thresholds. If these thresholds are met, the Committee will have discretion to vest the maximum number of stock units granted or any lesser number down to zero. The Committee has communicated to the executive officers that it will exercise its discretion to reduce the number of units vesting on the basis of both a cumulative EPS goal and an average ROA goal over each of the three-year performance periods. • The Company’s stock price over the long term is primarily driven by growth in EPS. The Committee determined that EPS performance should be the primary determiner of vesting, and no shares will vest unless a threshold level of EPS performance is achieved. • 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 capital expenses in its business. Thus the Committee uses ROA as a supplemental indicator of management’s success in achieving sustainable earnings growth. • The EPS and ROA goals were set by the Committee to agree to the Company’s strategic plan as approved by the Board. • The EPS goal is cumulative over the three-year performance period and on a diluted basis. The ROA goal is calculated for each year, as a percentage, and then averaged over each of the three years in the performance period. T N E M E T A T S Y X O R P TIFFANY & CO. PS-55 For the Fiscal 2015 and Fiscal 2014 awards, the Committee established three goals for EPS which will, in conjunction with ROA performance, determine the number of shares that vest, and has provided the following chart to the executive officers to illustrate the manner in which the Committee intends to exercise its discretion at the conclusion of the three-year performance period, subject to interpolation if actual EPS falls between the EPS Threshold and EPS Target, or between the EPS Target and EPS Maximum: EPS Performance Percentage of Target Shares Earned under EPS Goal ROA ADJUSTMENT TO SHARES EARNED UNDER EPS GOAL ROA Achievement of 0 to 89.9% ROA Achievement of 90.0% to 99.9% ROA Achievement of 100.0% to 109.9% ROA Achievement of 110% or Greater Percentage of Target Shares Earned with Impact of ROA Adjustment EPS Threshold Not Reached EPS Threshold Reached EPS Target Reached 0% 25% No ROA Adjustment No ROA Adjustment No ROA Adjustment No ROA Adjustment 100% -10% EPS Maximum Reached 190% -10% No ROA Adjustment No ROA Adjustment 0% +10% 25% to 35% 90% to 110% +10% 0% to 9% upward adjustment contingent on level of ROA achievement, e.g. Achievement of 105% of ROA Target = 5% adjustment upward; Achievement of 109% of ROA Target = 9% adjustment upward -1% to -9% downward adjustment contingent on level of ROA achievement, e.g. Achievement of 95% of ROA Target = 5% adjustment downward; Achievement of 99% of ROA Target = 1% adjustment downward +10% 180% to 200% P R O X Y S T A T E M E N T For the Fiscal 2013 and Fiscal 2012 grants, the ROA adjustment will be applied on an all-or-nothing basis (10% upward/10% downward adjustment if ROA Target is met/not met). Performance Targets, Thresholds and Maximums— Outstanding Performance-Based Grants In March of 2012, 2013, 2014 and 2015, the Committee established the following in respect of the performance-based restricted stock units granted in January 2012, January 2013, January and March 2014 and January 2015 respectively, subject to adjustments as permitted under the applicable employee incentive plan. For Performance Period: February 2012 - January 2015 February 2013 - January 2016 February 2014 - January 2017 February 2015 - January 2018 $ $ $ $ EPS Threshold EPS Target Maximum ROA Target EPS 9.64 $ 7.62 $ 13.94 $ 16.77 12.0% 11.86 $ 13.87 10.18 $ 14.17 $ 16.26 10.38 $ 13.89 $ 15.76 9.8% 11.0% 10.6% As reflected in the table above, the EPS target, EPS maximum and ROA target for the performance-based restricted stock units granted in January 2015 are below those established for the performance-based restricted stock units granted in January 2014. Those performance targets are established by the Committee each year with reference to the Company’s strategic plan. As such, these targets may vary from grant year to grant year as a result of year-over-year variances in the Company’s strategic plan. Please see page K-47 TIFFANY & CO. PS-56 of the Annual Report on Form 10-K for the year ended January 31, 2015, for the Fiscal 2015 outlook and underlying assumptions. In March 2015, the performance-based restricted stock unit awards made to the executive officers in January 2012, for the three-year period ended January 31, 2015, vested at 49% of target shares (25% of maximum shares). This was based on cumulative EPS of $11.24 for the three-year period ended January 31, 2015, against the EPS target of $13.94 for such three-year period, and on the average ROA target not having been met for the three-year period ended January 31, 2015. For a more complete description of the performance-based restricted stock units, including a description of the circumstances in which a portion of the units may vest in various circumstances of death, disability, a change in control or at the initiative of the executive’s employer and the goals set from year-to-year, see "Discussion of Summary Compensation Table and Grants of Plan-Based Awards–Equity Incentive Plan Awards– Performance-Based Restricted Stock Units" at PS-75. Stock Option Grants Each January, at a meeting that occurs on the Wednesday immediately preceding the third Thursday of the month, the Committee grants stock options in order to further link the interests of the executive officers and the Company’s shareholders in long-term growth in stock price and to support the brand stewardship over the long term. The 2014 Employee Incentive Plan under which stock options are granted, and the 2005 Employee Incentive Plan under which stock options were previously granted, require the exercise price of each option to be established by the Committee (or determined by a formula established by the Committee) at the time the option is granted. Options are to be granted with an exercise price equal to or greater than the fair market value of a share as of the grant date. Since 2007, the Committee has calculated the exercise price to be the higher of (i) the simple arithmetic mean of the high and low sale price of such stock on the New York Stock Exchange on grant date or (ii) the closing price on such Exchange on the grant date. The incentive plan does not permit for the repricing of underwater options at a later date without shareholder approval. For a description of the stock options see "Discussion of Summary Compensation Table and Grants of Plan- Based Awards–Equity Incentive Plan Awards–Stock Options" at PS-77. TIME-VESTING RESTRICTED STOCK UNIT AWARDS On occasion, the Committee may make time-vesting restricted stock unit awards for reasons such as recognition of prior performance; promotion; attraction of new talent; retention of key talent; and in lieu of cash compensation increases. In March 2014, the Committee granted a time-vesting restricted stock unit award to Mr. Nicoletti, of 16,166 restricted stock units, in connection with his recruitment and appointment to the role of Executive Vice President - Chief Financial Officer. Subject to certain conditions, Mr. Nicoletti's award will not vest unless he remains employed through March 19, 2017. T N E M E T A T S Y X O R P RETIREMENT BENEFITS Retirement benefits are offered to attract and retain qualified executive officers. Retirement benefits offer financial security in the future and are not entirely contingent upon corporate performance factors. It is the case, however, that the compensation on which the retirement benefits of each executive officer are based includes bonus and incentive awards made in the past; such awards are determined by corporate and individual performance factors in the year awarded. Defined Contribution Retirement Benefit For the named executive officers other than Mr. Kowalski and Ms. Cloud, a defined contribution retirement benefit is available through the Tiffany and Company Employee Profit Sharing and Retirement Savings Plan, and excess defined retirement benefit contributions ("Excess DCRB Contribution") credited to the Tiffany and TIFFANY & CO. PS-57 Company Executive Deferral Plan. Employer contributions credited to the Deferral Plan are calculated to compensate executives for pay amounts curtailed by reason of the limitations under the Internal Revenue Code. Messrs. Nicoletti and Cumenal, and Ms. Beraud, are participants in each of these plans. Mr. Cumenal receives additional retirement benefits under his employment agreement, which were intended as "make whole" payments for amounts Mr. Cumenal forfeited at his prior employer. Mr. Cumenal accrued significant long-term pension benefits with his prior employer. Traditional Pension Retirement Benefit Mr. Kowalski and Ms. Cloud 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 base salary and short-term incentive 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 employees compensated below the IRS limit 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 when the executive reaches specified service milestones. For a further description of these traditional pension retirement benefits see "Pension Benefits Table–Features of the Pension Benefit Plans" at PS-84. Equity Grants - Retirement Provisions Prior to 2015, the terms applicable to awards of performance-based restricted stock units did not provide for continued vesting beyond retirement. The Committee amended the terms applicable to the performance-based restricted stock units awarded to executive officers in January 2015, to provide for continued vesting beyond retirement. A recipient of this award who retires from employment during the Fiscal 2015-Fiscal 2017 performance period, will vest in a pro-rated portion of the award, reflective of the number of months worked during the performance period, and contingent on the satisfaction of pre-determined performance goals. 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 base salaries largely unavailable to the Company’s executive officers. The Company maintains the relationship established for lower-compensated employees between annual base salaries and life insurance benefits through executive-owned, employer-paid whole-life policies. (For an explanation of the key features of the life insurance benefits, see "Discussion of Summary Compensation Table and Grants of Plan-Based Awards–Life Insurance Benefits" at PS-77.) Life insurance premiums are taxable to the executives and no gross-up is paid. Mr. Nicoletti declined this benefit upon joining the Company in Fiscal 2014, and is not a participant. P R O X Y S T A T E M E N T TIFFANY & CO. PS-58 DISABILITY INSURANCE BENEFITS The Company provides executive officers with special disability insurance 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 employees compensated below the IRS limit between annual cash compensation and disability benefits. Disability insurance premiums are taxable to the executives and no gross-up is paid. EQUITY OWNERSHIP BY EXECUTIVE OFFICERS AND NON-EXECUTIVE DIRECTORS The Company has in place a share ownership policy for executive officers and non-executive directors, to better align management’s interests with those of shareholders over the long term. In Fiscal 2014, the Committee revised the share ownership policy's disposition-limitations to apply to proceeds on a net basis rather than a gross basis. Significant Portfolio Under the share ownership policy, executive officers and non-executive directors are subject to restrictions on the disposal of shares of the Company's common stock. For each executive officer or non-executive director, "Significant Portfolio" means ownership of shares having a total market value equal to or greater than the following multiples of their annual base salaries/annual retainer: 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/Retainer (Significant Portfolio Requirement) Five Times Five Times Four Times Three Times Two Times Equity Used to Meet Stock Ownership Guidelines The share ownership policy counts shares owned as follows: Shares Counted: Shares not Counted: Outstanding shares that the person beneficially owns or is deemed to beneficially own, directly or indirectly, under the federal securities laws. Restricted stock units issued under the Company’s 2008 Directors Incentive Plan, which have vested but will not be delivered until retirement of the applicable director from the Board. Rights to acquire shares of the Company's common stock through derivative securities, including stock options. Shares of the Company's common stock that are pledged to a third party (for example, where common stock is held in a margin account maintained at a brokerage firm). For purposes of determining the amount of shares constituting a Significant Portfolio, shares will be valued at the mean of the high and low trading prices on the New York Stock Exchange on the relevant calculation date. The officer's or director's attainment of a Significant Portfolio is measured annually on April 1 or the first trading day thereafter. However, an officer or director who acquires a Significant Portfolio after the annual calculation date shall be deemed to hold a Significant Portfolio for purposes of any proposed disposition after such acquisition. TIFFANY & CO. PS-59 T N E M E T A T S Y X O R P Disposal Restrictions An executive officer or non-executive director who has a Significant Portfolio may not dispose of shares of the Company's common stock if the disposition would cause his or her holdings to fall below the Significant Portfolio threshold. He or she is free, however, to dispose of any or all shares in excess of the Significant Portfolio threshold. For an executive officer or non-executive director who does not have a Significant Portfolio, he or she is permitted to dispose of shares of the Company's common stock only as follows: • no more than 50% of the net shares deemed issued as a consequence of any vesting or exercise of an equity award; • under circumstances constituting a financial hardship, as so determined by the Board; or • pursuant to a qualified domestic relations order. Compliance The amended and restated policy does not contain an express compliance deadline in recognition that the disposal restrictions ensure that the executive officers and non-executive directors are making progress toward meeting the Significant Portfolio requirements and provide for greater administrative ease. As of January 31, 2015, the Chief Executive Officer and five of the remaining ten executive officers held Significant Portfolios. The majority of those who did not hold a Significant Portfolio became executive officers in Fiscal 2014. Each of the eight non-executive directors held Significant Portfolios. HEDGING NOT PERMITTED The Board adopted a worldwide policy on Insider Information, applicable to all employees, officers and directors. The policy expressly prohibits speculative transactions (i.e., hedging), 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. P R O X Y S T A T E M E N T RETENTION AGREEMENTS The Committee continues to believe that, during any time of possible or actual transition of corporate control, it would be important to keep the team of executive officers in place and free of distractions that might arise out of concern for personal financial advantage or job security. Since the Company went public in 1987, it has not had a single controlling shareholder, and, depending upon the circumstances, executive officers could 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. To ensure that executive officers remain with the Company, stay focused on the business and maximize shareholder value during a period of uncertainty resulting from a potential Change in Control transaction (as defined below), the Company has entered into retention agreements with each of the executive officers (other than Mr. Cumenal, who has an employment agreement) which provide financial incentives for them to remain in place during any such times. For a description of the retention agreements, see "Potential Payments on Termination or Change in Control– Explanation of Potential Payments on a Termination following a Change in Control–Severance Arrangements" at PS-91. For a description of Mr. Cumenal’s employment agreement, which contains comparable provisions to those of the retention agreements, see "Other Employment Agreements or Severance Plans for Executives" below. The Committee believes that the retention agreements serve the best interests of the Company’s shareholders because such agreements: • will increase the value of the Company to a potential acquirer that requires delivery of an intact management team; TIFFANY & CO. PS-60 • will help to keep management in place and focused should any situation arise in which a Change in 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. The Committee also believes 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 shareholders, even if management would benefit financially from change in control payments to the executive officers. Dual Triggers 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. Definition of "Change in Control" The retention agreements in place for executive officers (see above) deem a "Change in Control" to occur only in the following four situations: • a share acquisition resulting in a person, syndicate or group beneficially owning 35% or more of the • voting power of the Company; incumbent directors (including those appointed or nominated by incumbent directors) cease to be a majority of the Board; • a corporate transaction, such as a merger, in which the shareholders prior to the transaction do not thereafter own more than 50% of the voting power of the resulting company's shares; and • a sale of all or substantially all of the assets of the Company or Tiffany. No Gross-Ups The retention agreements do not provide executive officers with reimbursement for excise taxes or other taxes in connection with severance payments or other amounts relating to the change in control. OTHER EMPLOYMENT AGREEMENTS OR SEVERANCE PLANS FOR NAMED EXECUTIVE OFFICERS The Company generally does not enter into employment agreements with or otherwise commit to severance benefits for its executive officers, absent a change in control, other than as necessary to recruit appropriate candidates for key roles. Apart from the retention agreements, the employment agreement entered into with Frederic Cumenal discussed below, and offer letters extended from Tiffany to Ms. Beraud and one other newly- recruited executive officer, the Company is not party to any employment agreement with an executive officer that provides for severance benefits on termination of employment. Mr. Cumenal's and Ms. Beraud's arrangements were negotiated in connection with their respective recruitment to the Company. The Company is not obligated to pay cash severance benefits to any other named executive officer upon termination, unless a Change in Control has occurred, although it is permitted to provide such benefits if it deems it appropriate to do so. T N E M E T A T S Y X O R P Frederic Cumenal Employment Agreement On March 10, 2011, Frederic Cumenal commenced employment with Tiffany as an executive officer with the title "Executive Vice President" and responsibility for sales and distribution of TIFFANY & CO. products in all markets other than the Americas. In October 2012, he was assigned such responsibility for the Americas as well, and in September 2013, was assigned responsibility for the Product and Store Design, Marketing and Merchandising functions in connection with his appointment to the role of President. Most recently, he was promoted to Chief Executive Officer effective April 1, 2015. TIFFANY & CO. PS-61 Tiffany entered into an employment agreement with Mr. Cumenal as part of the recruiting process in Fiscal 2011. The employment agreement, which was approved by the Committee, addresses certain elements of the personal costs, foregone compensation and professional risk that Mr. Cumenal incurred to accept the position and relocate his family to the United States. For a discussion of the key compensatory features of that employment agreement, see "Discussion of Summary Compensation Table and Grants of Plan-Based Awards – Frederic Cumenal Employment Agreement" at PS-77. Jill Beraud Offer Letter On October 13, 2014, Jill Beraud commenced employment with Tiffany as an executive officer with the title "Executive Vice President" and responsibility for Global Retail Operations, including all sales channels in every region, as well as oversight of strategic store development and real estate. The offer letter extended to Ms. Beraud captured the key terms negotiated in connection with her recruitment: • compensatory terms relating to base salary, short-term incentive award, and long-term incentive award; • a one-time cash payment equal to 100% of Ms. Beraud's target short-term incentive award, pro-rated for that portion of Fiscal 2014 during which she was employed, in lieu of a performance-based short- term incentive award for Fiscal 2014; • a one-time sign-on cash bonus equal to $1,700,000, intended to offset the loss of equity interests in her prior employer, and subject to recoupment in the event of her resignation without good reason or termination for cause prior to the four year anniversary of her date of hire (with recoupment amounts decreasing after each one-year anniversary of her date of hire); • severance benefits, absent a Change in Control, in the event of her termination without cause or resignation for good reason, prior to the second year anniversary of her date of hire; and • post-employment restrictive covenants, composed of a six-month non-compete period, 18 month non- solicitation restriction with respect to employees and customers, and 18 month no-hire restriction with respect to employees; For a more detailed discussion of Ms. Beraud's compensatory arrangements, see "Discussion of Summary Compensation Table and Grants of Plan-Based Awards – Jill Beraud Compensatory Arrangement" at PS-78. Ralph Nicoletti Offer Letter On March 19, 2014, Mr. Nicoletti commenced employment with Tiffany and was appointed as Chief Financial Officer effective April 2, 2014. In connection with Mr. Nicoletti's recruitment, an offer letter was extended to him. No severance benefits were made available to Mr. Nicoletti under the terms of the offer letter, and the Company has no severance obligation to Mr. Nicoletti in the absence of a Change in Control. The offer letter extended to Mr. Nicoletti captured the key terms negotiated in connection with his recruitment: • compensatory terms relating to base salary, short-term incentive award, and long-term incentive award; and • a one-time sign-on equity award of time-vesting restricted stock units, equal in value to $1,500,000, to vest in full on the third anniversary of the grant date. CHANGE IN CONTROL PROVISIONS Equity awards and executive retirement benefits provide certain entitlements following a Change in Control, which entitlements will only be triggered on a loss of employment (a "dual trigger"). For a more detailed discussion of applicable change in control provisions, see "Potential Payments on Termination or Change in Control – Explanation of Potential Payments on a Termination following a Change in Control" at PS-91. P R O X Y S T A T E M E N T TIFFANY & CO. PS-62 TERMINATION FOR CAUSE Stock options granted under the 2005 Employee Incentive Plan or the 2014 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. RESTRICTIVE COVENANTS 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 after 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 in Control will result in an early end to the term. The non-competition covenants include a non-compete restriction, a non-solicitation restriction with respect to employees and customers and a no-hire restriction with respect to employees. Violation of the non-compete covenants will result in: • • loss of benefits under the non-qualified retirement plans; loss of all rights under stock options and restricted stock units (whether or not vested); and • 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. Mr. Cumenal and Ms. Beraud are further subject to additional restrictions, as described under "Discussion of Summary Compensation and Grants of Plan-Based Awards" at PS-73. T N E M E T A T S Y X O R P CLAWBACK POLICY The executive officers are subject to a policy that expressly provides for recoupment of executive incentive- based compensation if an accounting restatement is required due to material noncompliance with any financial reporting requirements. For purposes of the policy, incentive-based compensation means pay which has been calculated based on objective performance criteria included in publicly-reported financial information reported by the Company, and includes performance-based restricted stock unit awards, cash incentive awards, and bonuses. Time-vesting stock options and restricted stock units, or proceeds therefrom, are not subject to this policy. Under the policy, in the event of a material restatement, the Board will review the incentive-based compensation paid to executive officers during the three-year period preceding the issuance of the restatement to determine if excess incentive compensation was paid. Excess incentive compensation is defined to be any incentive compensation in excess of that which would have been paid if the applicable material restatement had been applied at the time of payment. The Board may seek recoupment of after-tax excess incentive compensation from one or more of the executive officers who received excess payment. All executive officers have acknowledged receipt of the clawback policy in writing. Further, the clawback policy is incorporated by reference into the incentive compensation award terms and agreements for Fiscal 2014 and onward. The Committee awaits the Securities and Exchange Commission’s adoption of final rules under the Dodd- Frank Wall Street Reform and Consumer Protection Act (i.e. Section 10D to the Securities Exchange Act of TIFFANY & CO. PS-63 1934) addressing compensation clawbacks. After such rules are adopted, the Committee will consider revisions to such policy in conformance with such rules. COMPENSATION RISK ASSESSMENT The Committee has reviewed an assessment by management of the Company's compensation programs and practices for employees, including executive and non-executive programs and practices. Selected key areas that were reviewed, together with management's assessment of these elements, included pay mix, performance metrics, performance goals and pay-out curves, payment timing and adjustments, equity incentives, stock ownership requirements and trading policies, and leadership and culture. Sound practices were identified in each of these respective areas. As a result of the review, the Committee determined that any risks that may result from the Company's compensation programs and practices are not reasonably likely to have a material adverse effect on the Company. 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 $1,000,000 per year paid to any of the named executive officers other than the Chief Financial Officer. 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. The compensation actually paid to the executive officers is expected to be deductible by the Company except in the following respect: compensation that exceeds $1,000,000 in any single year for any single named executive officer, other than the Chief Financial Officer, consisting of the following elements: "Salary" and "All Other Compensation" in the Summary Compensation Table at PS-66, plus compensation that relates to the time-vesting restricted stock units described in note (c) to the Summary Compensation Table. The Committee may decide, in the course of exercising its business judgment, to adjust payouts under one or more other compensation components in a way that disqualifies such payouts as performance-based for a particular year. * * * P R O X Y S T A T E M E N T TIFFANY & CO. PS-64 REPORT OF THE COMPENSATION COMMITTEE We have reviewed and discussed with the management of Tiffany & Co. the Compensation Discussion and Analysis section of this Proxy Statement. Based on our review and discussions, we recommend to the Board of Directors, to the Chief Executive Officer and to the Chief Financial Officer that the Compensation Discussion and Analysis be included in this Proxy Statement and the Annual Report on Form 10-K for the fiscal year ended January 31, 2015. Compensation Committee and its Stock Option Subcommittee: Gary E. Costley, Chair Rose Marie Bravo Abby F. Kohnstamm Charles K. Marquis Peter W. May Robert S. Singer March 18, 2015 T N E M E T A T S Y X O R P TIFFANY & CO. PS-65 SUMMARY COMPENSATION TABLE Fiscal 2014, Fiscal 2013 and Fiscal 2012 Name and Principal Position Year Salary ($) (a) Bonus ($) (b) Stock Awards ($) (c) Option Awards ($) (d) Non- Equity Incentive Plan Compensation ($) (e) Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (f) All Other Compensation ($) (g) Total ($) Michael J. Kowalski 2014 $ 997,315 $ — $ — $ — $ 1,515,000 $ 5,488,904 $ 100,539 $ 8,101,758 Chairman and CEO 2013 $ 997,315 $ — $ 1,883,925 $ 1,939,516 $ 1,200,000 $ — $ 126,365 $ 6,147,121 2012 $ 997,315 $ — $ 1,569,229 $ 1,505,835 $ 140,000 $ 1,783,014 $ 141,158 $ 6,136,551 James N. Fernandez 2014 $ 436,900 $ — $ — $ — $ 297,500 $ 3,030,277 $ 105,282 $ 3,869,959 Executive Vice President - COO & CFO * 2013 $ 847,718 $ — $ 895,911 $ 925,000 $ 714,000 $ — $ 151,556 $ 3,534,185 2012 $ 847,748 $ — $ 995,603 $ 960,243 $ 85,000 $ 1,363,317 $ 150,777 $ 4,402,688 Ralph Nicoletti Executive Vice President - CFO * 2014 $ 642,117 $ — $ 2,851,466 $ 1,484,359 $ 530,250 $ — $ 166,913 $ 5,675,105 Frederic Cumenal 2014 $ 896,625 $ — $ 2,919,875 $ 3,041,032 $ 1,136,250 $ President Jill Beraud Executive Vice President 2013 $ 847,718 $ 2012 $ 847,748 $ 2014 $ 244,534 $ — $ 2,227,096 $ 2,253,929 $ 910,350 $ — $ 883,516 $ 851,124 $ 85,000 $ — $ — $ — $ 789,184 $ 8,782,966 729,610 $ 6,968,703 690,278 $ 3,357,666 — $ 797,825 $ 819,569 $ — $ — $ 1,999,192 $ 3,861,120 Pamela H. Cloud 2014 $ 547,852 $ — $ 534,625 $ 560,758 $ 333,300 $ 1,576,062 $ 86,572 $ 3,639,169 Senior Vice President - Merchandising 2013 $ 513,617 $ 321,875 $ 519,126 $ 534,113 $ — $ 8,388 $ 80,509 $ 1,977,628 * James N. Fernandez held the role of Chief Financial Officer from November 27, 2013 through April 1, 2014 and retired from the Company effective July 31, 2014. Ralph Nicoletti assumed responsibilities as Chief Financial Officer on April 2, 2014. P R O X Y S T A T E M E N T Notes to Summary Compensation Table: (a) Salary. 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) Plan"). Amounts deferred to the Deferral Plan are also shown in the "Nonqualified Deferred Compensation Table" at PS-88. (b) Bonus. Bonus amounts include amounts deferred at the election of the executive under the Deferral Plan and under the 401(k) Plan. Bonus amounts are earned in the fiscal year ended January 31 and paid as soon as reasonably practicable following the March meeting of the Committee, at which the Committee determines the pay-out of short- term incentive awards. (c) Stock Awards. Amounts shown represent the dollar amount of the grant date fair value of the stock unit award calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation – Stock Compensation (“Codification Topic 718”) for the fiscal year in which the award was granted (which includes the grants made on January 14, 2015). The amounts shown are based on the assumption that the earnings-per-share target and return on assets target for the three-year performance period identified by the Committee for each respective grant will be met at 100.0%. The maximum value of each award, assuming the highest level of performance conditions are met for the applicable period, calculated in accordance with Codification Topic 718, appear in the chart below. For Mr. Nicoletti, the 2014 amount includes, in addition to the grant date fair value for the performance-based restricted stock unit award made on January 14, 2015, (i) the grant date fair value of a one-time time-vesting restricted stock unit award of $1,434,894, made on March 19, 2014 in connection with his recruitment to the Company, and computed in accordance with Codification Topic 718, disregarding any estimates of forfeitures related TIFFANY & CO. PS-66 to service-based vesting conditions; and (ii) the grant date fair value of a performance-based restricted stock unit award of $717,447, made on March 19, 2014 in lieu of the Fiscal 2014 performance-based restricted stock unit award that would have been made to him on January 16, 2014, had he commenced employment at that time. For Mr. Cumenal, the 2013 amount includes the grant date fair value of a one-time promotion time-vesting restricted stock unit award of $954,400, computed in accordance with Codification Topic 718, disregarding any estimates of forfeitures related to service-based vesting conditions. Maximum Value of Stock Awards at Grant Date Value Executive Michael J. Kowalski $ James N. Fernandez $ Ralph Nicoletti Frederic Cumenal Jill Beraud Pamela H. Cloud $ $ $ $ 2014 — $ — $ 4,268,038 5,839,750 $ 1,595,650 1,069,250 $ 2013 3,767,850 $ 1,791,822 $ 2012 2,853,144 1,810,188 Not a named executive officer Not a named executive officer 3,499,792 $ 1,606,392 Not a named executive officer Not a named executive officer 1,038,252 Not a named executive officer (d) Option Awards. Amounts shown represent the dollar amount of the grant date fair value of the stock option award (which includes the grants made on January 14, 2015) calculated in accordance with Codification Topic 718 for the fiscal year in which the award was granted. For Mr. Nicoletti, the 2014 amount includes, in addition to the grant date fair value for the stock option award made on January 14, 2015, the grant date fair value of a stock option award of $751,061, computed in accordance with Codification Topic 718, disregarding any estimates of forfeitures related to service-based vesting conditions. This grant was awarded to Mr. Nicoletti on March 19, 2014, in lieu of the Fiscal 2014 stock option award that would have been made to him on January 16, 2014, had he commenced employment at that time. For Mr. Cumenal, the 2013 amount includes the grant date fair value of a one-time promotion stock option award of $941,026, computed in accordance with Codification Topic 718, disregarding any estimates of forfeitures related to service-based vesting conditions. (e) Non-Equity Incentive Plan Compensation. This column reflects cash short-term 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 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 Compensation Table and Grants of Plan-Based Awards–Non-Equity Incentive Plan Awards" at PS-73.) 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. For Fiscal 2014, pursuant to the compensatory arrangements with Ms. Beraud upon her hire in October 2014, Ms. Beraud was not eligible to receive a performance-based short-term incentive award for Fiscal 2014. Ms. Beraud instead received a one-time cash payment equal to 100% of her target short-term incentive award for Fiscal 2014, pro-rated for that portion of Fiscal 2014 during which she was employed, and reflected under "All Other Compensation". (f) Change in Pension Value and Nonqualified Deferred Compensation Earnings. 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 plans. This column does not include earnings under the Deferral Plan because it is not a defined benefit plan and because it does not pay above-market or preferential earnings on compensation that is deferred. T N E M E T A T S Y X O R P TIFFANY & CO. PS-67 For each fiscal year reported, the present value of the benefit is affected by a number of factors including compensation levels, credited years of service, the discount rate used to determine the present value of the benefit, the executive's age, and the applicable mortality table. For the reported fiscal years, applicable discount rates were as follows: Discount Rate Applicable to Benefits Accrued under Qualified Pension Plan Discount Rate Applicable to Benefits Accrued under Non-Qualified Pension Plans Fiscal 2014 Fiscal 2013 Fiscal 2012 3.75% 4.75% 4.50% 3.75% 5.00% 4.50% The 2013 change in pension value is a negative amount for each of the following named executive officers, due to the increase in applicable discount rates (4.75% for the qualified plan, 5.0% for the non-qualified plans): Executive Fiscal 2013 Change in Pension Value (negative amount) Michael J. Kowalski $(185,874) James N. Fernandez $(213,446) In addition to the change in applicable discount rate, the 2014 change in pension value also reflects an update to the applicable mortality tables. These newly-applicable tables extend life expectancy, resulting in increased present values. The applicable mortality tables are the RP-2014 Mortality Tables with White Collar Adjustments and generational projects using the Scale MP-2014. (g) All Other Compensation. The table below shows a detailed description of all other compensation paid to the named executive officers. P R O X Y S T A T E M E N T Name Michael J. Kowalski James N. Fernandez Ralph Nicoletti Frederic Cumenal Jill Beraud Pamela H. Cloud Year 2014 2013 2012 2014 2013 2012 2014 2014 2013 2012 2014 2014 2013 Leadership Benefits Broad-Based Retirement Benefits Other Total Premium on Additional Disability Insurance ($) Premium on Life Insurance ($) 401(k) Plan Company Match ($) Defined Contribution Retirement Benefit ($) (i) Excess Defined Contribution Retirement Benefit ($) 15,600 15,600 14,298 2,600 17,080 16,410 7,948 12,475 12,475 12,475 3,949 8,909 8,909 77,289 103,265 119,510 95,032 126,976 127,017 — 178,671 150,000 150,000 4,157 70,013 64,100 7,650 7,500 7,350 7,650 7,500 7,350 — 7,650 7,500 7,350 — 7,650 7,500 100,539 126,365 141,158 105,282 151,556 150,777 166,913 789,184 26,220 20,332 543,836 (iii) 158,965 (ii) 7,500 7,350 39,532 512,603 (iv) 729,610 13,386 499,717 (v) 690,278 1,991,086 (vi) 1,999,192 86,572 80,509 (i) (ii) This amount reflects the benefit paid under the defined contribution retirement benefit ("DCRB") feature of the Tiffany and Company Employee Profit Sharing and Retirement Savings Plan. For Mr. Nicoletti, the amount reported as "other compensation" for Fiscal 2014 reflects relocation expenses incurred by Mr. Nicoletti in his relocation to New York in connection with his commencement of employment with the Company. TIFFANY & CO. PS-68 (iii) For Mr. Cumenal, the amount reported as "other compensation" for Fiscal 2014 includes the following elements: Defined Contribution to French Pension Scheme ($84,655); Payment to Special Retirement Account ($435,291); Payment towards tax preparation consultation services ($23,890). Please see the discussion of Mr. Cumenal's Senior Executive Employment Agreement and compensation paid thereunder, in connection with the commencement of employment in March 2011, under "Discussion of Summary Compensation Table and Grants of Plan-Based Awards – Frederic Cumenal Employment Agreement" at PS-77. (iv) For Mr. Cumenal, the amount reported as "other compensation" for Fiscal 2013 included the following elements: Defined Contribution to French Pension Scheme ($88,333); Payment to Special Retirement Account ($397,270); and Payment towards tax preparation consultation services ($27,000). (v) For Mr. Cumenal, the amount reported as "other compensation" for Fiscal 2012 included the following elements: Defined Contribution to French Pension Scheme ($88,946); Payment to Special Retirement Account ($378,481); and Payment towards tax preparation consultation services ($32,290). (vi) For Ms. Beraud, the amount reported as "other compensation" for Fiscal 2014 included the following elements: relocation expenses incurred by Ms. Beraud in her relocation to New York in connection with her commencement of employment with the Company ($90,086); a one-time cash payment, equal to 100% of her target short-term incentive award for Fiscal 2014, pro-rated for that portion of Fiscal 2014 during which she was employed, in lieu of a performance-based short-term incentive award for Fiscal 2014 ($201,000); and a one-time sign-on cash bonus intended to offset the loss of equity interests in her prior employer, and subject to full or partial recoupment (pursuant to a schedule) in the event of her departure prior to the four year anniversary of her date of hire ($1,700,000). For a more detailed discussion of Ms. Beraud's compensatory arrangements, see "Discussion of Summary Compensation Table and Grants of Plan-Based Awards – Jill Beraud Compensatory Agreement" at PS-78. T N E M E T A T S Y X O R P TIFFANY & CO. PS-69 GRANTS OF PLAN-BASED AWARDS Fiscal 2014 2005 Employee Incentive Plan 2014 Employee Incentive Plan Name Award Type Grant Date Estimated Future Pay-outs Under Non-Equity Incentive Plan Awards Estimated Future Pay-outs Under Equity Incentive Plan Awards (a) All Other Option/ Stock Awards: Number of Securities Underlying Options/ Awards (#) Exercise or Base Price of Option/ Stock Awards ($/Sh) (b) Grant Date Fair Value of Equity Awards (c) (d) Threshold ($) Target ($) Maximum ($) $ — $ — $ — Michael J. Kowalski Annual Incentive Performance -Based RSU 1/14/2015 Stock Option 1/14/2015 James N. Fernandez Annual Incentive $ — $ — $ — $ — $ 525,000 $ 1,050,000 Ralph Nicoletti P R O X Y S T A T E M E N T Performance -Based RSU 1/14/2015 Stock Option 1/14/2015 Annual Incentive January 2015 Performance -Based RSU March 2014 Performance -Based RSU 1/14/2015 3/19/2014 Time-Vesting RSU 3/19/2014 January 2015 Stock Option 1/14/2015 March 2014 Stock Option 3/19/2014 Threshold Number of Shares (assuming actual EPS equals EPS Threshold, and ROA Target is under- achieved by 10%) Target Number of Shares (assuming actual EPS equals EPS Target, with no adjustment for ROA because ROA Target is met at 100.0%) Maximum Number of Shares (assuming EPS Target is exceeded by $2.09 and ROA Target is exceeded by 10%) — — — $ — $ — $ — — — $ — $ — $ — — — — 2,125 8,500 17,000 $ 699,125 2,021 8,083 16,166 $ 717,447 16,166 $ 88.76 $ 1,434,894 34,000 $ 86.74 $ 733,298 29,976 $ 92.79 $ 751,061 Frederic Cumenal Annual Incentive $ — $1,875,000 $ 3,750,000 Performance -Based RSU 1/14/2015 Stock Option 1/14/2015 8,875 35,500 71,000 $ 2,919,875 141,000 $ 86.74 $ 3,041,032 Jill Beraud Annual Incentive $ — $ 595,000 $ 1,190,000 Performance -Based RSU 1/14/2015 Stock Option 1/14/2015 2,425 9,700 19,400 $ 797,825 38,000 $ 86.74 $ 819,569 Pamela H. Cloud Annual Incentive $ 345,000 $ 690,000 Performance -Based RSU 1/14/2015 Stock Option 1/14/2015 1,625 6,500 13,000 $ 534,625 26,000 $ 86.74 $ 560,758 TIFFANY & CO. PS-70 Notes to Grants of Plan-Based Awards Table (a) No portion of these awards will pay out unless the EPS Threshold is attained over the three-year Performance Period ending January 31, 2018. If the EPS Threshold is attained, the Committee may vest the Maximum Number of Shares, but has the discretion to reduce the vested number of shares by any amount down to zero shares. The Committee has communicated to the executive officers that it intends to exercise its discretion as indicated in the chart below, subject to interpolation if actual EPS falls between the EPS Threshold and EPS Target, or between the EPS Target and EPS Maximum: Percentage of Target Shares Earned under EPS Goal 0% 25% ROA ADJUSTMENT TO SHARES EARNED UNDER EPS GOAL ROA Achievement of 0 to 89.9% ROA Achievement of 90.0% to 99.9% ROA Achievement of 100.0% to 109.9% ROA Achievement of 110% or Greater No ROA Adjustment No ROA Adjustment No ROA Adjustment No ROA Adjustment No ROA Adjustment No ROA Adjustment Percentage of Target Shares Earned with Impact of ROA Adjustment 0% 100% -10% EPS Performance EPS Threshold Not Reached EPS Threshold Reached EPS Target Reached +10% 25% to 35% +10% 90% to 110% +10% 180% to 200% 0% to 9% upward adjustment contingent on level of ROA achievement, e.g. Achievement of 105% of ROA Target = 5% adjustment upward; Achievement of 109% of ROA Target = 9% adjustment upward -1% to -9% downward adjustment contingent on level of ROA achievement, e.g. Achievement of 95% of ROA Target = 5% adjustment downward; Achievement of 99% of ROA Target = 1% adjustment downward EPS Maximum Reached 190% -10% In March 2015, the Committee set the threshold, target, and maximum in terms of the Company’s aggregate net earnings per share on a diluted basis (subject to adjustments as permitted under the 2014 Employee Incentive Plan) ("EPS") over the three-year Performance Period. • The EPS Threshold is $10.38 per diluted share. • The EPS Target is $13.89 per diluted share. • The EPS Maximum is $15.76 per diluted share. The Committee set the ROA Target in terms of the Company’s return on average assets in each of the fiscal years in the Performance Period, expressed as a percentage, and then averaged over the entire Performance Period. • The ROA Target is 10.6%. Amounts listed in the sub-column labeled "Target Number of Shares" reflect the Target Number of Shares, assuming the EPS Target is met and the ROA Target is achieved at 100.0% (resulting in no ROA adjustment). By contrast, if the EPS Target is met, and the ROA Target is met at, for example, 105%, exercise of the Committee's discretion in accordance with the table above will result in vesting of aggregate shares as follows (inclusive of a 5% increase in vesting due to 105% ROA target achievement): Ralph Nicoletti, 8,487 for the TIFFANY & CO. PS-71 T N E M E T A T S Y X O R P March 19, 2014 grant and 8,925 for the January 14, 2015 grant; Frederic Cumenal, 37,275; Jill Beraud, 10,185; and Pamela H. Cloud, 6,825. (b) 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 January 18, 2007 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. (c) The grant date fair value of each option award was computed in accordance with Codification Topic 718. (d) The grant date fair value of each performance-based restricted stock unit award was computed assuming that the EPS Target and ROA Target were each met at 100.0%, resulting in vesting of the Target Number of Shares, with no adjustment for the ROA Target. For additional information regarding performance- based restricted stock unit awards, see the table titled "Outstanding Equity Awards at Fiscal Year-End" at PS-80. P R O X Y S T A T E M E N T TIFFANY & CO. PS-72 DISCUSSION OF SUMMARY COMPENSATION TABLE AND GRANTS OF PLAN-BASED AWARDS NON-EQUITY INCENTIVE PLAN AWARDS Fiscal 2014 Operating Earnings Threshold & Performance Goals At the beginning of Fiscal 2014, the Committee granted cash (non-equity) short-term incentive awards to the named executive officers (other than Ms. Beraud, who joined the Company in October 2014 and, pursuant to her compensatory arrangements, was not eligible to receive a performance-based short-term incentive award for Fiscal 2014), which would be paid subject to the achievement of certain performance goals. The Committee established target and maximum short-term incentive opportunities for the named executive officers, the payment of which would be wholly contingent on the Company meeting an operating earnings threshold. The Committee advised the executive officers that, if the operating earnings threshold was met, award pay-outs would be determined in part based on corporate performance (the "Corporate Portion", up to 160% of the target award) and in part based on individual performance (the "Individual Portion", up to 40% of the target award). Further, for the Corporate Portion of the award, the Committee exercised its discretion to establish earnings targets which were substantially in excess of the threshold amount. Corporate Portion The Committee advised the executive officers that it would use its discretion to determine pay-out of the Corporate Portion of the award based on the following operating earnings targets, subject to interpolation if Fiscal 2014 operating earnings fall between the amounts in the first column: If Operating Earnings, as adjusted, Equal: $711 million or below $889 million $1,067 million Then Percentage Pay-out of Incentive Award Will Be: 80% of Target Short-term Incentive Award 160% of Target Short-term Incentive Award 0% Individual Portion The Committee advised the executive officers that it would use its discretion to determine pay-out of the Individual Portion of the award based on the following factors: • strategic thinking; • leadership, including development of effective management teams and employee talent; • demonstrated adherence to the Company’s Business Conduct Policy - Worldwide, and professionalism; • financial metrics relevant to the executive’s specific areas of responsibility; and • specific objectives set for the executive officer by the Chief Executive Officer, or, in the case of the Chief Executive Officer, by the Board. Permissible Adjustments to Evaluation of Performance The applicable employee incentive plan (the 2005 Employee Incentive Plan, approved by the shareholders) permits the Committee, in evaluating achievement of a performance goal, to exclude any of the following events that occurs during a Performance Period: (i) asset write-downs, (ii) litigation or claim judgment or settlements, (iii) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results, (iv) accruals for reorganization and restructuring programs, and (v) extraordinary non-recurring items as described in Accounting Principles Board Opinion No. 30 (which is currently referred T N E M E T A T S Y X O R P TIFFANY & CO. PS-73 to as FASB Codification reference ASC 225-20) and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Annual Report for the applicable year. Fiscal 2014 Performance & Pay-out The Fiscal 2014 threshold of $534 million was met, excluding certain charges as permitted under the 2005 Employee Incentive Plan. As a result, each named executive officer, other than Ms. Beraud (see note (e) at PS-67), was eligible to receive a short-term incentive award equal to 200% of target. The Committee, however, exercised its discretion to award a percentage less than 200%. In March 2015, after reviewing and concurring with the recommendation of the Chief Executive Officer, the Committee determined that the pay-out percentage for the Corporate Portion would be 81% of the target short-term incentive award, as Fiscal 2014 operating earnings were $891.4 million. The Committee also reviewed and concurred with the Chief Executive Officer's recommendations with respect to the pay-out of the Individual Portion for all other executive officers. The Committee independently evaluated the performance of the Chief Executive Officer for purposes of the Individual Portion. Each named executive officer's individual performance was compared to the specific objectives set at the beginning of Fiscal 2014 or, for Mr. Nicoletti, upon hire. Based on the above, the Committee determined to pay each named executive officer, other than Ms. Beraud (see note (e) at PS-67), an additional 20% of his or her target short-term incentive for Fiscal 2014 based on the Individual Portion. Fiscal 2013 and Fiscal 2012 In Fiscal 2013 and 2012, short-term incentive awards were paid out as follows: P R O X Y S T A T E M E N T • • In Fiscal 2013, the Company’s consolidated net earnings, on a non-GAAP basis (see Appendix I at PS-98), exceeded the target established by the Committee, and short-term incentive awards were paid out at 124% of the target amount, on average. In Fiscal 2012, the Company’s consolidated net earnings exceeded the threshold but fell below the target established by the Committee, and short-term incentive awards were paid out at 15% of the target amount, on average. Difference between Bonus Awards and Annual Incentive Awards Annual incentive awards paid to the named executive officers differ from bonuses paid to other executive officers as follows: • Annual incentive awards to named executive officers 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. • Bonuses are not subject to written agreements. The 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. • Annual incentive awards to named executive officers are designed so that the amounts paid out will be deductible to the Company and not count against the $1,000,000 limitation under Section 162 (m) of the Internal Revenue Code. Each of the named executive officers, other than the Chief Financial Officer, is subject to that limitation. • If a bonus is paid, and the total annual cash compensation paid to that executive in the year of bonus was to exceed the $1,000,000 limitation, the excess would not be deductible to the Company for federal income tax purposes. TIFFANY & CO. PS-74 Beginning in 2015, and under the 2014 Employee Incentive Plan, annual incentive awards as described above will be paid to all executive officers. EQUITY INCENTIVE PLAN AWARDS – PERFORMANCE-BASED RESTRICTED STOCK UNITS The Committee's practice has been to award Performance-Based Restricted Stock Units ("Units") to executive officers in January of each year. The January 2015 award is reflected in the GRANTS OF PLAN-BASED AWARDS table under the column headed "Estimated Future Payouts Under Equity Incentive Plan Awards." General terms of Unit grants are: • Units are exchanged on a one-to-one basis for shares of the Company’s common stock if the Units vest; • Vesting is determined at the end of a three-year performance period; • No Units vest if the executive voluntarily resigns (including for retirement, subject to the change made in 2015 described immediately below) 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; • For awards granted prior to January 2015, a retirement event is treated as a voluntary resignation, resulting in forfeiture. For awards granted in January 2015, Units vest on a pro-rated basis in the event of retirement, reflective of the portion of the performance period worked, but remaining wholly contingent on the pre-established performance goals; • No dividends are paid or accrued on Units; • No Units vest (other than for reasons of death, disability or on a change in control) if the Company fails to meet a three-year cumulative EPS threshold set by the Compensation Committee within 90 days after the start of the performance period; and • EPS performance above the threshold, at the target or maximum levels, results in a greater payout, while failure to achieve an ROA target, if the target or maximum EPS goals are met, results in a reduced payout. If EPS performance is at or above the threshold, target, or maximum levels, achievement above the ROA Target will result in an enhanced pay-out. Performance tests for Performance-Based Restricted Stock Unit Awards Granted in 2012, 2013, 2014 and 2015 In January 2012, 2013, 2014 and 2015 (and upon the hire of Mr. Nicoletti in March 2014) the Committee awarded performance-based restricted stock units, to vest at the end of a three-year performance period, provided certain performance hurdles were met. For each of these grants: • the Committee established the performance goals presented in the table below, based on cumulative net earnings per share on a diluted basis and return on assets, for the three-year performance period; • no units will vest if the EPS threshold is not achieved; • if the EPS threshold is reached, the Committee has the discretion to vest the maximum number of shares but has indicated that it will use its retained discretion to reduce the award based on the guidance that follows: T N E M E T A T S Y X O R P TIFFANY & CO. PS-75 For Performance Period: EPS Threshold EPS Target EPS Maximum ROA Target February 2012 - January 2015 February 2013 - January 2016 February 2014 - January 2017 February 2015 - January 2018 $ $ $ $ 9.64 $ 13.94 $ 16.77 12.0% 7.62 $ 11.86 $ 13.87 9.8% 10.18 $ 14.17 $ 16.26 11.0% 10.38 $ 13.89 $ 15.76 10.6% As reflected in the table above, the EPS target, EPS maximum and ROA target for the performance-based restricted stock units granted in January 2015 are below those established for the performance-based restricted stock units granted in January 2014. Those performance targets are established by the Committee each year with reference to the Company’s strategic plan. As such, these targets may vary from grant year to grant year as a result of year-over-year variances in the Company’s strategic plan. Please see page K-47 of the Annual Report on Form 10-K for the year ended January 31, 2015, for the Fiscal 2015 outlook and underlying assumptions. If the EPS threshold is achieved, Target Shares (50% of the Units granted) will tentatively vest based on the following EPS performance goals (without giving effect to ROA target achievement), with interpolation if actual EPS falls between the EPS threshold and EPS target, or between the EPS target and EPS maximum: 25% of Target Shares if EPS Threshold is achieved 100% of Target Shares if EPS Target is achieved 190% of Target Shares if EPS Maximum is achieved After tentative vesting is determined, an ROA modifier is applied as described in the table at PS-71, for those Units granted in January 2014, March 2014, and January 2015. For Units granted in January 2012 and January 2013: If EPS Threshold is met or exceeded, achievement of ROA Target will result in a 10% increase in vesting. If EPS Target is met or exceeded, but ROA Target is not achieved, the tentatively vested Units will be reduced by 10%. 100% vesting (twice Target Shares) occurs only if the Company attains the EPS Maximum and achieves the ROA Target. P R O X Y S T A T E M E N T Under no combination of circumstances will vesting occur for more than the number of Units granted (twice Target Shares). Vesting of Performance-Based Restricted Stock Units for February 2012 - January 2015 Performance Period In March 2015, for the three-year performance period ending January 31, 2015, it was determined that a cumulative net EPS of $11.24 per diluted share was achieved, compared to the EPS Target of $13.94, and the ROA Target was not achieved. As a result, 25% vesting of the maximum shares granted occurred. General Note: As permitted under the 2005 Employee Incentive Plan, the Committee retains the discretion to adjust achieved performance so that executive officers will not be advantaged or disadvantaged by extraordinary transactions. For Fiscal 2013, the EPS considered for the purpose of those performance-based restricted stock units scheduled to vest in March 2015 excluded charges of approximately $299 million, most notably an after-tax charge of approximately $293 million in connection with the adverse arbitration ruling in favor of the Swatch Group Ltd. and certain of its affiliates. For Fiscal 2014, the EPS considered for the purpose of those performance-based restricted stock units scheduled to vest in March 2015 excluded a TIFFANY & CO. PS-76 charge of approximately $61 million related to the redemption of certain senior notes prior to their scheduled maturities. See Appendix I at PS-98. EQUITY INCENTIVE PLAN AWARDS – STOCK OPTIONS Stock options typically vest (become exercisable) in four equal annual installments. Vesting of each installment is contingent on continued employment, except in the event of death, disability or Change in Control (see "Potential Payments on Termination or Change in Control - Explanation of Potential Payments on Termination following a Change in Control" at PS-91). Special grants are occasionally made in connection with promotions and new hires, and may be awarded on a cliff-vesting basis. The exercise price for each share subject to a stock 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 (b) to the "Grants of Plan-Based Awards" table at PS-72.) Stock options expire no later than the tenth anniversary of the grant date. Stock options expire earlier on: • termination of employment, other than for cause, (three months after termination); or • death, disability or retirement (two years after the event). LIFE INSURANCE BENEFITS The key features of the life insurance benefit that the Company provides to its executive officers, other than Mr. Nicoletti, who declined this benefit, are: • executive officers own whole life policies on their own lives; • the death benefit is three times annual base salary and target short-term 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; • premiums are calculated to accumulate a target cash value at age 65; • • • the target cash value will allow the policy to remain in force after age 65 without payment of further premiums with a death benefit equivalent to twice the executive officer’s ending annual base salary and target short-term incentive or bonus amount; the amount of the premiums paid by the Company is taxable income to the executive officer; and the Company does not pay any additional amounts to offset the income tax attributable to the premiums paid on behalf of the executives. T N E M E T A T S Y X O R P FREDERIC CUMENAL EMPLOYMENT AGREEMENT Elements of Mr. Cumenal's compensation disclosed in the Summary Compensation Table are provided pursuant to an employment agreement, entered into between Tiffany, the Company and Mr. Cumenal as part of his recruiting process in March 2011. The employment agreement, which was approved by the Compensation Committee, addresses certain elements of the personal costs, foregone compensation and professional risk that Mr. Cumenal incurred to accept the position and relocate his family to the United States. That employment agreement included the following key compensatory features, subject to increase: • Term: three-year initial term with sequential one-year extensions thereafter. Either Tiffany, the Company or Mr. Cumenal may give prior notice of non-extension. In the event of a Change in Control, the term will continue for at least two years; • Compensatory terms related to base salary, short-term incentive award, long-term incentive award, and a sign-on three-year time-vesting restricted stock unit grant; TIFFANY & CO. PS-77 • Relocation Payment: a one-time award of $650,000 subject to a claw-back of 38% should Mr. Cumenal resign without good reason within 18 months of employment; • Deferred Compensation: Because Mr. Cumenal is not eligible to participate in any defined benefit pension plan offered by Tiffany, Tiffany will credit $365,000 per year for the first 10 years of his employment to an interest-bearing account for Mr. Cumenal’s retirement. He became fully vested in this account after three years of employment; • French Pension Scheme Payments: Tiffany will make payments of approximately $75,000 per year of employment for the benefit of Mr. Cumenal’s account with the French social security and complementary pension schemes; • Tax Consultation: Tiffany will provide or reimburse Mr. Cumenal for income tax preparation assistance for 2011 and 2012 up to a maximum of $30,000 each year; • Severance Absent a Change in Control – Applicable in the event of Termination without Cause; Resignation for Good Reason (including Tiffany’s refusal to extend the term): $605,000; plus Base Salary for the balance of Term (minimum of one year; maximum of two years); plus continuation of medical and dental benefits for one year; • Severance Following a Change in Control – Applicable in the event of Termination without Cause; Resignation for Good Reason (including Tiffany’s refusal to extend the term): $1,210,000; plus two times Base Annual Salary; plus continuation of medical and dental benefits for two years; and If Mr. Cumenal terminates employment, Tiffany would also pay him an additional $200,000 payment if Tiffany wanted him to adhere to his non-compete. • The Deferred Compensation provisions of Mr. Cumenal’s employment agreement, together with the sign-on equity awards, were intended by the Committee and Mr. Cumenal as "make whole" payment for amounts Mr. Cumenal would forfeit at his prior employer. Mr. Cumenal had accrued significant long-term pension benefits with his prior employer. The French Pension Scheme Payments were intended by the Committee to avoid loss of Mr. Cumenal’s accruals under the French social security and complementary pension schemes. The employment agreement contains definitions of "Cause" and "Good Reason" and has been filed with the Securities and Exchange Commission as Exhibit 10.154 to the Company's Report on Form 8-K dated March 21, 2011. As disclosed in the Summary Compensation Table at PS-66, since being hired in Fiscal 2011 under the terms of his employment agreement, Mr. Cumenal has received various compensation increases and promotions outside of the original terms of his Agreement. JILL BERAUD COMPENSATORY ARRANGEMENT Elements of Ms. Beraud's compensation disclosed in the Summary Compensation Table are provided pursuant to the terms of the offer letter extended to Ms. Beraud in connection with her recruitment to the Company. These terms, which were approved by the Compensation Committee, address certain elements of the personal costs, foregone compensation and professional risk that Ms. Beraud incurred to accept the position. The key terms of the offer letter were: P R O X Y S T A T E M E N T • Base Salary: $850,000 per year; • Target Annual Incentive Award, starting in Fiscal 2015: $595,000 (70% of Base Salary); • Target Long-term Incentive Award, for Fiscal 2015: $1,700,000 (200% of Base Salary); • Sign-on Cash Grant equal to $1,700,000, subject to recoupment on a graduated basis in the event of Ms. Beraud's resignation without good reason or Termination for Cause, prior to the four-year anniversary of her commencement date. This sign-on bonus was intended to offset the loss of equity interests in her prior employer; TIFFANY & CO. PS-78 • One-time cash payment, equal to 100% of her target short-term incentive award, pro-rated for that portion of Fiscal 2014 during which Ms. Beraud was employed, in lieu of a performance-based short- term incentive award for Fiscal 2014; • Relocation benefits in support of Ms. Beraud's relocation for the role; and • Severance Absent a Change in Control – Applicable in the event of Termination without Cause; Resignation for Good Reason: one year of Base Salary; pro-rated short-term incentive award for the current year; plus reimbursement of continued health coverage for one year. The severance benefits will be available to Ms. Beraud for the two-year period following her commencement date. The offer letter contains definitions of "Cause" and "Good Reason" and has been filed with the Securities and Exchange Commission as Exhibit 10.32 to the Company’s Annual Report on Form 10-K dated March 20, 2015. RALPH NICOLETTI COMPENSATORY ARRANGEMENT Elements of Mr. Nicoletti's compensation disclosed in the Summary Compensation Table are provided pursuant to the terms of the offer letter extended to Mr. Nicoletti in connection with his recruitment to the Company. The key terms of the offer letter were: • Base Salary: $750,000 per year; • Target Annual Incentive Award: $525,000 (70% of Base Salary); • Target Long-term Incentive Award: $1,500,000 (200% of Base Salary); • One-time sign-on equity award of time-vesting restricted stock units, equal in value to $1,500,000, to vest in full on the third anniversary of the grant date; and • Relocation benefits in support of Mr. Nicoletti's relocation for the role. T N E M E T A T S Y X O R P TIFFANY & CO. PS-79 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END January 31, 2015 Option Awards Stock Awards Number of Securities Underlying Unexercised Options Exercisable (#) Number of Securities Underlying Unexercised Options Unexercisable (#) Option Exercise Price ($) 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 ($) Name Michael J. Kowalski Ralph Nicoletti Frederic Cumenal Jill Beraud Pamela H. Cloud P R O X Y S T A T E M E N T 67,000 53,250 34,500 16,250 — $ 58.00 1/20/2021 17,750 $ 60.54 1/18/2022 34,500 $ 63.76 1/16/2023 48,750 $ 88.77 1/16/2024 — — 29,976 $ 92.79 3/19/2024 34,000 $ 86.74 1/14/2025 27,876 30,000 19,500 9,292 $ 62.44 3/10/2021 10,000 $ 60.54 1/18/2022 19,500 $ 63.76 1/16/2023 — 36,523 $ 80.52 9/19/2023 11,000 33,000 $ 88.77 1/16/2024 — 141,000 $ 86.74 1/14/2025 12,500/50,000 (c) $ 1,083,000 (i) 29,226/47,600 (d) $ 2,532,141 (j) 16,965/45,000 (e) $ 1,446,455 (k) 5,998/16,166 (e) $ 519,667 (k) 8,500/17,000 (f) $ 736,440 (l) 16,166/16,166 (g) $ 1,400,622 (m) 7,150/28,600 (c) $ 619,476 (i) 16,455/26,800 (d) $ 1,425,661 (j) 11,278/30,400 (e) $ 977,126 (k) 35,500/71,000 (f) $ 3,075,720 (l) 12,419/12,419 (h) $ 1,075,982 (m) — 38,000 $ 86.74 1/14/2025 9,700/19,400 (f) $ 840,408 (l) 20,000 17,000 13,500 9,000 4,475 — $ — $ 43.37 1/20/2020 58.00 1/20/2021 4,500 $ 60.54 1/18/2022 9,000 $ 63.76 1/16/2023 13,425 $ 88.77 1/16/2024 — 26,000 $ 86.74 1/14/2025 3,250/13,000 (c) $ 7,491/12,200 (d) $ 281,580 (i) 649,020 (j) 4,600/12,400 (e) $ 398,544 (k) 6,500/13,000 (f) $ 563,160 (l) TIFFANY & CO. PS-80 Notes to Outstanding Equity Awards at Fiscal Year-End Table (a) For any option reported, the grant date was 10 years prior to the expiration date shown. All options vest 25% per year over the four-year period following a grant date other than the option grant expiring September 23, 2023 (to Mr. Cumenal's benefit). This stock option award shall vest on a 3-year cliff- vesting basis. (b) 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), (j) and (m) 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. (c) This 2012 grant vested three business days following the date on which the Company’s audited financial results for Fiscal 2014 were publicly reported. (d) This 2013 grant will vest three business days following the date on which the Company’s audited financial results for Fiscal 2015 are publicly reported. (e) This 2014 grant will vest three business days following the date on which the Company’s audited financial results for Fiscal 2016 are publicly reported. (f) This 2015 grant will vest three business days following the date on which the Company’s audited financial results for Fiscal 2017 are publicly reported. (g) This one-time time-vesting restricted stock unit award, granted to Mr. Nicoletti in connection with his recruitment to the Company, will vest on March 19, 2017. (h) This one-time time-vesting restricted stock unit award will vest three business days following the date on which the Company's audited financial results for Fiscal 2016 are publicly reported. (i) This value has been computed at 25% of maximum based on Company EPS and ROA performance in Fiscal 2012, Fiscal 2013 and Fiscal 2014. The resulting value was computed on the basis of the stock closing price of $86.64 on January 31, 2015. (j) This value has been computed at 61.4% of maximum based upon Company EPS and ROA performance in Fiscal 2013 and Fiscal 2014 and projections for Fiscal 2015. The resulting value was computed on the basis of the stock closing price of $86.64 on January 31, 2015. (k) This value has been computed at 37.1% of maximum based upon Company EPS and ROA performance in Fiscal 2014 and projections for Fiscal 2015 and Fiscal 2016. The resulting value was computed on the basis of the stock closing price of $86.64 on January 31, 2015. (l) This value has been computed on the assumption that the EPS target will be met and on the assumption that the ROA target will have been achieved at 100.0%. The resulting value was computed on the basis of the stock closing price of $86.64 on January 31, 2015. T N E M E T A T S Y X O R P (m) The value was computed on the basis of the Company's stock closing price of $86.64 on January 31, 2015. TIFFANY & CO. PS-81 OPTION EXERCISES AND STOCK VESTED Fiscal 2014 Option Awards Stock Awards Number of Shares Acquired on Exercise (#) Value Realized on Exercise ($) Number of Shares Acquired on Vesting (#) Value Realized on Vesting ($) 353,000 (a) $ 18,978,047 19,050 $ 1,674,590 187,750 (b) $ 6,753,304 27,150 $ 2,564,071 — — — $ $ $ — — — — $ — 38,035 $ 3,484,235 — $ — 52,000 (c) $ 3,282,552 4,875 $ 428,537 Name Michael J. Kowalski James N. Fernandez Ralph Nicoletti Frederic Cumenal Jill Beraud Pamela H. Cloud Notes to Option Exercises and Stock Vested Table (a) Weighted-average holding period for options exercised: 6.4 years. (b) Weighted-average holding period for options exercised: 3.7 years. (c) Weighted-average holding period for options exercised: 5.8 years. P R O X Y S T A T E M E N T TIFFANY & CO. PS-82 Name Michael J. Kowalski James N. Fernandez Ralph Nicoletti Frederic Cumenal Jill Beraud Pamela H. Cloud PENSION BENEFITS TABLE Plan Name (a) 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 Pension Plan Excess Plan Supplemental Plan Number of Years Credited Service Actuarial Present Value of Accumulated Benefits Payments During Last Fiscal Year 36 (b) (c) 36 (b) (c) 36 (b) (c) 36 (b) (e) 36 (b) (e) 36 (b) (e) — (d) — — — (d) — — — (d) — — 20 20 20 $ 1,711,435 $ $ 18,353,592 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 1,540,360 $ 1,461,675 $ 8,836,811 $ 834,001 $ — $ — $ — $ — $ — $ — $ — $ — $ — $ 506,224 $ 1,270,354 $ 737,619 $ — — — 37,191 — — — — — — — — — — — — — — Notes to Pension Benefits Table (a) The formal names of the plans are: the Tiffany and Company Pension Plan ("Pension Plan"), the Tiffany and Company Un-funded Retirement Income Plan to Recognize Compensation in Excess of Internal Revenue Code Limits ("Excess Plan") and the Tiffany and Company Supplemental Retirement Income Plan ("Supplemental Plan"). (b) Mr. Kowalski and Mr. Fernandez have each been credited with 6.4 and 6.3 years of service respectively for periods of employment prior to October 15, 1984 with the corporation that was, immediately before that date, Tiffany’s parent corporation. Under the Supplemental Plan, the combined benefit available under the retirement plans and Social Security is 60% of average final compensation for a participant with 25 or more years of service (see "Features of the Pension Retirement Plans - Supplemental Plan" below). Because Messrs. Kowalski and Fernandez attained 25 years of service with Tiffany as of October 14, 2009, the total retirement benefit available to each will not increase as a result of the credited 6.4 or 6.3 years of service described above. Rather, the effect of this credited service has been to augment the present value each of these officers' accumulated benefit under the Pension Plan and Excess Plan only as follows, resulting in a reduced obligation under the Supplemental Plan: T N E M E T A T S Y X O R P Pension Plan Excess Plan Supplemental Plan Michael J. Kowalski James N. Fernandez $ $ $ 298,822 $ 255,938 3,204,595 $ (3,503,417) $ 1,547,317 (1,803,255) TIFFANY & CO. PS-83 (c) Mr. Kowalski is currently eligible for early retirement under each of the Pension, Excess and Supplemental Plans. See "Features of the Pension Retirement Plans - Early Retirement and Extra Service Credit" below. He is eligible for early retirement because he has reached age 55 and has accumulated at least 10 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: • 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; • Thus, for retirement at age 60 the reduction is 25%; • 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. (d) (e) Executive officers hired prior to January 1, 2006 are eligible for participation in the Pension Plan, Excess Plan, and Supplemental Plan. Messrs. Cumenal and Nicoletti and Ms. Beraud accordingly do not participate in these plans. Mr. Fernandez retired from the Company effective August 1, 2014, at age 59. The present value of his benefits under the Pension Plan, Excess Plan, and Supplemental Plan, reported in this table, reflect Mr. Fernandez's accrued benefit at his termination date of July 31, 2014, his election for commencement of reduced benefits prior to the Normal Retirement Age of 65, and his election to receive retirement benefits as a 100% annuity over the lives of himself and his spouse. See Note (c) above for a discussion of early retirement benefits under the plans. Pursuant to the terms of the Excess Plan and Supplemental Plan, payments under these plans were held in escrow for six months following Mr. Fernandez's separation from the Company. He commenced receiving benefits under these plans on February 1, 2015, and received a catch-up payment equal to the accumulated value of the six months of missed payments, with interest. This six-month catch- up payment is incorporated into the present value of benefits as of January 31, 2015. Assumptions Used in Calculating the Present Value of the Accumulated Benefits The assumptions used in the Pension Benefit Table are that an active executive would retire at age 65; post- retirement mortality based upon the RP2014 Male/Female Mortality Table with White Collar Adjustments and generational projections using the Scale MP-2014; a discount rate of 3.75% for the Pension Plan and 3.75% for the Excess and Supplemental Plans. All assumptions were consistent with those used to prepare the financial statements for Fiscal 2014. P R O X Y S T A T E M E N T Features of the Pension Benefit Plans Tiffany established three traditional pension retirement plans for eligible employees hired before January 1, 2006: the Pension Plan, the Excess Plan and the Supplemental Plan. Messrs. Kowalski and Fernandez, and Ms. Cloud, are eligible to participate in these plans. Average Final Compensation 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 at PS-66 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 TIFFANY & CO. PS-84 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: • • 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 U.S. employees hired by Tiffany before January 1, 2006; • executive officers hired before January 1, 2006 are participants; • benefits vest after five years of service; • benefits are based on the participant’s average final compensation and years of service; • benefits are subject to Internal Revenue Code limitations on the total benefit and the amount that may be included in average final compensation; and • 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 $79,824. 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 - $79,824) x 0.015] plus [($79,824) x 0.01]] x 25 = $27,522 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 single-life annuity). 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 experience an actuarial reduction in the amount of his or her benefit. Excess Plan These are the key features of the Excess Plan: • • • • 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 officers and other select management employees whose benefits under the Pension Plan are affected by Internal Revenue Code limitations, including executive officers who participate in the Pension Plan; 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; • benefits are offset by benefits payable under the Pension Plan; • benefits are not offset by benefits payable under Social Security; T N E M E T A T S Y X O R P TIFFANY & CO. PS-85 • benefits vest after five years of service; • benefits are subject to forfeiture if employment is terminated for cause; • 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; • benefits are payable upon the later of the participant’s separation from service, as defined under the plan, or attainment of age 55; and • participants will not receive any distribution from the plan until six months following separation from service. Supplemental Plan These are the key features of the Supplemental Plan: • • • • 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 hired by Tiffany before January 1, 2006; it uses a different benefit formula than that used by the Pension Plan and the Excess Plan; • benefits are offset by benefits payable under the Pension Plan and the Excess Plan; • benefits are offset by benefits payable under Social Security; • benefits do not vest until the executive attains, while employed by Tiffany, age 65, or age 55 if he or she has provided 10 years of service (benefits will vest earlier on a termination from employment following a change in control - see "Potential Payments on Termination or Change in Control - Explanation of Potential Payments on Termination following a Change in Control - Definition of a Change in Control" at PS-93); • benefits are subject to forfeiture if employment is terminated for cause; • 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; and • participants will not receive any distribution from the plan until six months following separation from service as defined under the plan. 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: P R O X Y S T A T E M E N T 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% TIFFANY & CO. PS-86 (a) 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 10 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 Credit Please refer to Note (c) at PS-84 for a discussion of the early retirement features of the Pension, Excess, and Supplemental Plans. Tiffany does not have a policy for or practice of granting extra years of credited service under the Excess, Pension and Supplemental Plans. 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. Retirement Benefits for Executive Officers hired on or after January 1, 2006 Executive officers hired on or after January 1, 2006 are eligible for a defined contribution retirement benefit through the Tiffany and Company Employee Profit Sharing and Retirement Savings Plan, and for excess defined retirement benefit contributions ("Excess DCRB Contribution"), credited on their behalf to an account under the Tiffany and Company Executive Deferral Plan. For details about the Excess DCRB Contribution, see "Excess DCRB Feature of the Executive Deferral Plan" at PS-89. Messrs. Nicoletti and Cumenal and Ms. Beraud are eligible to receive the Excess DCRB Contribution. Mr. Cumenal receives additional retirement benefits under his employment agreement, which benefits were intended as "make whole" payments for amounts Mr. Cumenal forfeited at his prior employer. Mr. Cumenal accrued significant long-term pension benefits with his prior employer. For details about Mr. Cumenal's additional retirement benefits, see "Frederic Cumenal Employment Agreement" at PS-77. T N E M E T A T S Y X O R P TIFFANY & CO. PS-87 NONQUALIFIED DEFERRED COMPENSATION TABLE (Fiscal 2014) Executive Contribution In Last Fiscal Year (a) ($) Registrant Contribution In Last Fiscal Year ($) Aggregate Earnings In Last Fiscal Year (b) ($) Aggregate Withdrawals/ Distributions ($) Aggregate Balance At Last Fiscal Year End (c) ($) $ $ $ — $ — $ 19,575 $ — $ 362,098 93,245 $ — $ 276,822 $ — $ 2,836,644 — $ — $ — $ — $ — $ 455,175 $ 20,332 $ 70,626 $ — $ 1,142,058 (d) $ $ — $ — $ — $ — $ — $ — $ — $ — $ — — Note to Nonqualified Deferred Compensation Table Name Michael J. Kowalski James N. Fernandez Ralph Nicoletti Frederic Cumenal Jill Beraud Pamela H. Cloud P R O X Y S T A T E M E N T (a) 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 at PS-66. (b) 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. (c) Amounts shown in this column include amounts that were reported as compensation in the Summary Compensation Table 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. (d) Under the terms of the Executive Deferral Plan, in March 2014, and as noted under "Registrant Contributions in Last Fiscal Year" in the table above Mr. Cumenal received an Excess DCRB Contribution of $20,332 for Fiscal 2013. As of January 31, 2015, Mr. Cumenal was vested in 40% of the Excess DCRB Contributions credited to him under the Executive Deferral Plan, based on his years of service. See "Excess DCRB Feature of the Executive Deferral Plan" below. These are the key features of the Company’s Executive Deferral Plan: Features of the Executive Deferral Plan • Participation is open to directors and executive officers of the Company as well as other vice presidents and "director-level" employees of Tiffany; • Directors of the Company may defer all of their cash compensation; • Employees may defer up to 50% of their salary and up to 90% of their short-term cash incentive or bonus compensation; • Other than the Excess Defined Contribution Retirement Benefits available to individuals who do not participate in the Company's defined benefit pension plan, the Company makes no contribution to the plan; • The Company guarantees no specific return on contributions under the plan; • Deferrals are placed in a trust that is subject to the claims of Tiffany’s creditors; TIFFANY & CO. PS-88 • Deferred compensation is invested by the trustee in various mutual funds as directed by Tiffany, which follows the directions of participants; • 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; • Deferrals may be made to a Retirement Account and to accounts which will pay out on specified "in- service" dates; • Participants must elect to make deferrals in advance of the period during which the deferred compensation is earned; • Retirement Accounts pay out in 5, 10, 15 or 20 annual installments after retirement as elected in advance by the participant; • 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; • Termination of services generally triggers a distribution of all account balances other than, in the case of retirement or disability, retirement balances; and • Most participants, including all executive officers, will not receive any distribution from the plan until six months following termination of services. Excess DCRB Feature of the Executive Deferral Plan The Executive Deferral Plan provides for an Excess DCRB Contribution each year with respect to certain eligible employees under the DCRB feature of the Tiffany and Company Employee Profit Sharing and Retirement Savings Plan (the "401(k) Plan"). If an eligible employee under the DCRB feature (i) holds a title of Vice President or above, (ii) receives a DCRB Contribution under the 401(k) Plan in a given year, and (iii) such DCRB Contribution is curtailed by reason of the limitations under Sections 401(a)(17) or 415 of the Internal Revenue Code, the eligible employee shall have an Excess DCRB Contribution credited to his or her Deferred Benefit Accounts under the Executive Deferral Plan. The Excess DCRB feature is intended to benefit those eligible employees who were hired on or after January 1, 2006, and accordingly were precluded from participation in the Pension Plan, Excess Plan and Supplemental Plan. Messrs. Cumenal and Nicoletti and Ms. Beraud are eligible for benefits under the Excess DCRB feature of the Executive Deferral Plan. The Excess DCRB Contribution vests in accordance with the vesting schedule for DCRB Contributions under the 401(k) Plan, as follows: T N E M E T A T S Y X O R P Years of Service Vested Percentage Less than 2 Years 2 years or more 3 years or more 4 years or more 5 years or more 6 years or more —% 20% 40% 60% 80% 100% TIFFANY & CO. PS-89 POTENTIAL PAYMENTS ON TERMINATION OR CHANGE IN CONTROL The following table shows benefits payable to the named executive officers upon involuntary termination, absent a Change in Control (defined below), and benefits payable to the named executive officers upon involuntary termination, subsequent to a Change in Control. In either case, the values below assume the named executive officer was involuntarily terminated on January 31, 2015. An "involuntary termination" does not include a termination for cause, but does include a resignation for good reason. Involuntary Terminations Absent a Change in Control Involuntary Terminations Following a Change in Control Cash Severance Payment (a) Early Vesting of Equity Awards (b) Welfare Benefit (a) Early Vesting of Supplemental Plan (c) Cash Severance Payment (d) Welfare Benefits (e) Total Early Vesting of Stock Options (f) Early Vesting of Restricted Stock Units (g) Total $ $ — $ — $ — $ — $ — $ 5,000,000 $ 32,056 $ 1,249,875 $ 9,363,185 $ 15,645,116 — $ — $1,400,622 $1,400,622 $ — $ 2,550,000 $ 43,771 $ — $ 2,170,938 $ 4,764,709 $ 900,000 $ 21,869 $1,075,982 $1,997,851 $ — $ 3,054,031 $ 43,771 $ 896,361 $ 6,627,873 $ 10,622,036 $1,445,000 $ 21,869 $ — $1,466,869 $ — $ 2,890,000 $ 43,771 $ — $ — $ 2,933,771 $ — $ — $ — $ — $ 754,125 $ 1,760,000 $ 43,771 $ 323,370 $ 2,457,110 $ 5,338,376 Name Michael J. Kowalski Ralph Nicoletti Frederic Cumenal Jill Beraud Pamela H. Cloud P R O X Y S T A T E M E N T (a) (b) (c) (d) (e) (f) Notes to Potential Payments on Termination or Change in Control Table Mr. Cumenal and Ms. Beraud are the only named executive officers to whom the Company is committed to pay severance benefits in the event of involuntary termination, without cause, in the absence of a Change in Control. For a summary of these arrangements, see "Discussion of Summary Compensation Table and Grants of Plan-Based Awards" at PS-73. The terms applicable to the one-time awards of time-vesting restricted stock units, made to Mr. Cumenal on September 19, 2013 (12,419), with respect to his promotion to President, and to Mr. Nicoletti on March 19, 2014 (16,166), with respect to his joining the Company, provide for acceleration of 100% outstanding shares in the event of an involuntary termination without cause. Absent a Change in Control followed by termination of employment, the Supplemental Plan will vest only when the participant attains the in-service age of 55 years with 10 years of service, or in-service age of 65 years. For the executive officers other than Mr. Cumenal, cash severance payments were determined by multiplying the sum of (i) actual salary and (ii) the target short-term incentive award or bonus, by two. Mr. Cumenal’s cash severance payment is comprised of the sum of (i) actual salary multiplied by two, and (ii) $1,254,031, pursuant to the terms of his employment agreement. The amounts shown in this column represent two 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 value of early vesting of stock options granted in January 2012, 2013 and 2014 was determined using $86.64, the closing value of the Company’s common stock on January 31, 2015. In the event of a Change in Control that is not a Terminating Transaction (as defined below), the unvested portion of such options will vest only upon the executive’s involuntary termination from employment. For the purposes of this table, it is assumed that the Change in Control was a 35% share acquisition and not a Terminating Transaction. This column also assumes a 100% early vesting of the special promotion- related stock option grant awarded to Mr. Cumenal in September 2013 (36,523). TIFFANY & CO. PS-90 (g) The value of early vesting of restricted stock units granted in 2012, 2013 and 2014 was determined using $86.64, the closing value of the Company’s common stock on January 31, 2015. In the event of a Change in Control that is not a Terminating Transaction, only a portion of unvested performance- based restricted stock units will vest, pursuant to a schedule based on the applicable three-year performance period. For the purposes of this table, it is assumed that the Change in Control was a 35% share acquisition and not a Terminating Transaction. Accordingly, this column assumes 100% early vesting of performance-based restricted stock units granted in January 2012; 70% early vesting of performance-based restricted stock units granted in January 2013; and 55% early vesting of performance-based restricted stock units granted in January 2014. This column also assumes a 100% early vesting of the special time-vesting restricted stock grants awarded to Mr. Cumenal on September 19, 2013 (12,419) and to Mr. Nicoletti on March 19, 2014 (16,166). Explanation of Potential Payments on a Termination absent a Change in Control Severance Arrangements The Company generally does not enter into employment agreements with or otherwise commit to severance benefits for its executive officers, absent a Change in Control, other than as necessary to recruit appropriate candidates for key roles. Mr. Cumenal and Ms. Beraud are both party to formal severance arrangements with the Company, applicable in the event of an involuntary termination in the absence of a Change in Control. For a full discussion of these arrangements, see "Compensation Discussion and Analysis - Other Employment Agreements or Severance Plans for Named Executive Officers" at PS-61. The Company is not obligated to pay cash severance benefits to any other named executive officer upon termination, unless a Change in Control has occurred, although it is permitted to provide such benefits if it deems it appropriate to do so. Time-Based Restricted Stock Unit Awards Additionally, Messrs. Cumenal and Mr. Nicoletti are eligible for accelerated vesting of outstanding time-based restricted stock units in the event of an involuntary termination absent a Change in Control, as described in note (b) above. Performance-Based Restricted Stock Unit Awards The terms of award applicable to outstanding performance-based restricted stock unit grants ("PSUs") reserve the right of the Committee, under certain circumstances, to permit vesting of PSUs in the event of an involuntary termination absent a Change in Control. The terms set forth certain parameters for and limitations on such vesting. Explanation of Potential Payments on Termination following a Change in Control Severance Arrangements The Company and Tiffany have entered into retention agreements with each of the executive officers, other than Mr. Cumenal, whose employment agreement with the Company addresses severance benefits following a change in control. These agreements would provide a covered executive with compensation if he or she should incur an involuntary termination after a change in control. In the event that a Change in Control occurs, the covered executives would have fixed terms of employment under their retention agreements for two years. If the executive incurs an involuntary termination during his or her fixed term of employment under a retention agreement, compensation would be payable to the executive as follows: • Two times the sum of the executive’s salary and target short-term incentive award or bonus, as severance; and • Two years of benefits continuation under Tiffany’s health and welfare plans. T N E M E T A T S Y X O R P TIFFANY & CO. PS-91 Mr. Cumenal's employment agreement provides for severance benefits following a Change in Control as described at PS-77. Vesting of Options and Restricted Stock Units on an Involuntary Termination following a Change in Control Stock Option Grants For grants awarded in 2009 or later, outstanding stock options will vest in full and become exercisable in the event of a Change in Control if it results in the dissolution of the Company, or the Company goes out of existence or comes under the substantial ownership (80%) of another person, and the acquiring party does not arrange to assume or replace the grant. These types of change in control events are referred to as "Terminating Transactions." (See "Definition of a Change in Control" below.) For all other Change in Control events (see "Definition of a Change in Control" below), early vesting will occur in full but only if the named executive officer is involuntarily terminated from employment following the Change in Control. Performance-Based Restricted Stock Unit Grants Terms of Awards for Grants Made in January 2012 and January 2013: For grants awarded in January 2012 and January 2013, outstanding performance-based restricted stock units will vest in full and convert to shares in the event of a Terminating Transaction. For all other Change in Control events (see "Definition of a Change in Control" below), performance- based restricted stock units will vest in full if the Change in Control event occurs in the last fiscal year of a three-year performance period, 70% if it occurs in the second fiscal year of a three-year performance period; and 30% if it occurs in the first fiscal year of a three-year performance period. In the event of the first type of Change in Control event described in the definition below (a 35% share acquisition), such proportionate vesting will occur only if the named executive officer is involuntarily terminated following the Change in Control event. Terms of Awards for Grants Made in January 2014, March 2014 and January 2015: In January 2014, the Committee modified the terms of award for performance-based restricted stock unit awards made in that month, from the terms used in January 2012 and January 2013, to provide for conversion of performance-based restricted stock units to time-vesting restricted stock units, in the event of a Change in Control, as follows: (i) (ii) If a Change in Control occurs before the start of the three-year performance period (for the January 2014 grant, that would mean anytime before February 1, 2014), no conversion or vesting shall occur for the award in connection with the change in control; If a Change in Control occurs in the first or second fiscal year of the three-year performance period, then 55% of the performance-based stock units awarded shall convert to time-vesting restricted stock units; and (iii) If a Change in Control occurs in the last fiscal year of the three-year performance period, the percentage of the performance-based restricted stock units to convert to time-vesting restricted stock units will be based on the Company’s cumulative performance during the first and second fiscal year of the performance period, as compared to the performance goals expressed in the original notice of grant; however, such performance goals (but for the ROA target, which will be disregarded under such circumstances) will be pro-rated for the cumulative two-year period (66.67%). The time-vesting restricted stock units resulting as described above will vest on the earlier of (i) the original maturity date in the notice of grant (three business days following the public announcement of the Company’s audited, consolidated financial results for the last fiscal year in the performance period, which for the January 2014 grant would be in March 2017), or (ii) if the executive officer is earlier involuntarily terminated without cause, on such termination date. TIFFANY & CO. PS-92 P R O X Y S T A T E M E N T Time-Vesting Restricted Stock Unit Grants Outstanding time-vesting restricted stock units will vest in full and convert to shares in the event of a Terminating Transaction. For all other Change in Control events (see "Definition of a Change in Control" below), time-vesting restricted stock units will vest in full if the Change in Control event occurs and if the named executive officer is involuntarily terminated following the Change in Control event. Supplemental Retirement Benefits Vest on a Change in Control Mr. Kowalski and Ms. Cloud participate in the Pension Plan, Excess Plan, and Supplemental Plan. Both are vested in the Pension Plan and Excess Plan. Mr. Kowalski is further vested in the Supplemental Plan. Ms. Cloud is not vested in the Supplemental Plan. No other named executive officers as of January 31, 2015 were participants in these retirement plans. Definition of a Change in Control For purposes of the Supplemental Plan, equity awards made in 2009 and thereafter, and the retention agreements, the term "Change in Control" means that one of the following events has occurred: • Any person or group of persons acting in concert (a "person" being an individual or organization) acquires 35% or more in voting power or stock of the Company, or the right to obtain such voting power; • A majority of the Board is, for any reason, not made up of individuals who were either on the Board on January 15, 2009, or, if they became members of the Board after that date, were approved by the directors; • As a result of a corporate transaction such as a merger, the shareholders of Tiffany immediately prior to such transaction do not own more than 50% of Tiffany’s outstanding shares; or • All or substantially all assets of the Company or Tiffany are sold or disposed of to an unrelated party. Certain Change in Control events will be considered "Terminating Transactions," provided the acquirer does not arrange to assume or replace the grant. Terminating Transactions include (i) the dissolution of the Company, or (ii) if the Company comes under the substantial ownership (80%) of another person. The definition of "change in control" for equity awards made prior to 2009 is somewhat, but not substantially, different. Non-Competition Covenants Affected by Change in Control In the event of a Change in Control, the duration of certain non-competition covenants could be reduced 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 reduction. T N E M E T A T S Y X O R P Early Retirement OTHER TERMINATIONS Mr. Kowalski was eligible to take early retirement on January 31, 2015. His early retirement benefit under the Pension Plan, the Excess Plan and the Supplemental Plan would have been approximately $1,421,365 per year had he retired effective January 31, 2015, subject to applicable offsets by benefits payable under Social Security. Death or Disability If any of the named executive officers had died or become disabled on January 31, 2015, stock options then unvested would have vested, at the values disclosed in the column "Early Vesting of Stock Options" in the table above at PS-90. Further, certain performance-based restricted stock units and time-vesting restricted stock units would have vested, under the terms of the outstanding awards, at the following values: Mr. Kowalski, $3,137,234; Mr. Nicoletti, $1,638,709; Mr. Cumenal, $2,916,909; Ms. Beraud, $0; and Ms. Cloud, $816,842. TIFFANY & CO. PS-93 DIRECTOR COMPENSATION TABLE Fiscal 2014 Fees Earned or Paid in Cash ($) (a) Option Awards ($) (b) (c) Stock Awards ($) Change in Pension Value and Nonqualified Deferred Compensation Earnings (d) All Other Compensation ($) Total ($) Name Rose Marie Bravo $ 75,000 $ 75,318 $ 74,389 $ 87,123 $ — $ 311,830 Gary E. Costley $ 95,000 $ 75,318 $ 74,389 Lawrence K. Fish $ 90,000 $ 75,318 $ 74,389 Abby F. Kohnstamm $ 75,000 $ 75,318 $ 74,389 N/A $ N/A $ N/A $ — $ 244,707 — $ 239,707 — $ 224,707 Charles K. Marquis $ 90,000 $ 75,318 $ 74,389 $ 82,007 $ — $ 321,714 Peter W. May $ 75,000 $ 75,318 $ 74,389 N/A $ — $ 224,707 William A. Shutzer $ 90,000 $ 75,318 $ 74,389 $ 89,219 $ — $ 328,926 Robert S. Singer $ 95,000 $ 75,318 $ 74,389 N/A $ — $ 244,707 (a) Includes amounts deferred under the Executive Deferral Plan. Notes to Director Compensation Table (b) Amounts shown represent the grant-date fair value for stock options granted for Fiscal 2014. 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, 2015. See Note N. "Stock Compensation Plans," in Notes to Consolidated Financial Statements, under Item 8. Financial Statements and Supplementary Data. (c) Supplementary Table: Outstanding Director Option Awards at Fiscal Year End Name Rose Marie Bravo Gary E. Costley Lawrence K. Fish Abby F. Kohnstamm Charles K. Marquis Peter W. May William A. Shutzer Robert S. Singer Aggregate Number of Option Awards Outstanding at Fiscal Year End (number of underlying shares) 29,794 15,077 11,217 49,794 39,794 39,794 49,794 8,740 (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 Company's financial statements: RP2014 Male/Female Mortality Table with White Collar Adjustments and generational projections using the Scale MP-2014; a change in discount rate from 4.75% to 3.75%; and assumed retirement age TIFFANY & CO. PS-94 P R O X Y S T A T E M E N T of 65 (if the director is over age 65, the director is assumed to retire on January 31, 2015). 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. Where an N/A appears, the director is not eligible for this benefit. 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: Board Fees Annual Cash Retainer Stock Options - 10 year option vested immediately; options have a strike price equal to fair market value on date of grant Restricted Stock Units - payable after one year of service or on retirement, at the prior election of the director Committee Fees Audit Committee Chair Compensation Committee Chair Corporate Social Responsibility Committee Chair Finance Committee Chair $ $ $ $ $ Nominating/Corporate Governance Committee Chair $ 75,000 targeted at approximately $75,000 targeted at approximately $75,000 20,000 20,000 15,000 15,000 15,000 Tiffany also reimburses directors for expenses they incur in attending Board and committee meetings, including expenses for travel, food and lodging. Directors first elected prior to January 1, 1999 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 $38,000, payable at the later of age 65 or the retirement date. This benefit is payable quarterly and continues for a period of time equal to the director’s length of service on the Board, including periods served as an employee director, or until death, if earlier. Directors Bravo, Marquis and Shutzer are the only directors entitled to participate in this benefit plan. T N E M E T A T S Y X O R P Under Tiffany’s Executive Deferral Plan, directors may defer up to one hundred percent (100%) of their cash compensation and invest the amounts they defer in various accounts and funds established under the plan. However, the Company does not guarantee any return on said investments. The following table provides data concerning director participation in this plan: Name Gary E. Costley Charles K. Marquis William A. Shutzer Director Contribution In Last Fiscal Year ($) Registrant Contribution In Last Fiscal Year ($) Aggregate Earnings In Last Fiscal Year ($) Aggregate Withdrawals/ Distributions ($) Aggregate Balance At Last Fiscal Year End ($) $ $ $ — $ — $ — $ — $ 11,330 $ — $ 50,391 $ — $ — $ 261,273 657,165 — $ 135,357 $ — $ 1,415,066 Messrs. Kowalski and Cumenal are employees of Tiffany and, therefore, receive no separate compensation for service as directors. TIFFANY & CO. PS-95 EQUITY COMPENSATION PLAN INFORMATION (As of Fiscal Year 2014) 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) 1,692,052 a — 1,692,052 a $ $ 68.76 3,123,188 b — — 68.76 3,123,188 b Plan category Equity compensation plans approved by security holders Equity compensation plans not approved by security holders Total (a) Shares indicated do not include 1,222,206 shares issuable under awards of stock units already made. (b) Shares indicated are the aggregate of those available for grant under the Company’s 2014 Employee Incentive Plan (the "Employee Plan") and the Company’s 2008 Directors Equity Plan (the "Directors Plan"). All plans provide for the issuance of options and stock awards. However, under the Directors plan, the maximum number of shares that may be issued (1,000,000) 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. P R O X Y S T A T E M E N T TIFFANY & CO. PS-96 OTHER MATTERS Shareholder Proposals for Inclusion in the Proxy Statement for the 2016 Annual Meeting If you wish to submit a proposal to be included in the Proxy Statement for our 2016 Annual Meeting, we must receive it no later than December 12, 2015. Proposals should be sent to the Company at 727 Fifth Avenue, New York, New York 10022 addressed to the attention of Corporate Secretary (Legal Department). Other Proposals Our By-laws set forth certain procedures for shareholders 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 2016 Annual Meeting unless the proposal is submitted to us no earlier than January 29, 2016 and no later than February 28, 2016 and the shareholder 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 shareholders. 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 shareholders who share an address unless one or more of the shareholders 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 shareholder at a shared address to which a single copy of the documents was delivered. A shareholder 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., 200 Fifth Avenue, 14th floor, New York, New York 10010 or by calling 212-230-5302. You may also obtain a copy of the proxy statement and annual report from the Company’s website www.tiffany.com, by clicking “Investors” at the bottom of the page, and selecting “Financial Information” from the left-hand column. Shareholders 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 shareholders at the shared address in the future. 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. Reminder to Vote T N E M E T A T S Y X O R P BY ORDER OF THE BOARD OF DIRECTORS Leigh M. Harlan Secretary New York, New York April 10, 2015 TIFFANY & CO. PS-97 NON-GAAP MEASURES APPENDIX I Net Sales. The Company's reported net sales reflect either a translation-related benefit from strengthening foreign currencies or a detriment from a strengthening U.S. dollar. Internally, management monitors and measures its sales performance on a non-GAAP basis that eliminates the positive or negative effects that result from translating sales made outside the U.S. into U.S. dollars ("constant-exchange-rate basis"). Management believes this constant-exchange-rate basis provides a more representative assessment of sales performance and provides better comparability between reporting periods. The following table reconciles the sales percentage increases (decreases) from the GAAP to the non-GAAP basis versus the previous year: 2014 GAAP Reported Translation Effect Constant- Exchange- Rate Basis 5% 6 9 (4) 6 26 (2)% 7% — (1) (8) — — 6 10 4 6 26 Net Sales: Worldwide Americas Asia-Pacific Japan Europe Other P R O X Y S T A T E M E N T Net earnings. Internally, management monitors and measures its earnings performance excluding certain items listed below. Management believes excluding such items presents the Company's results on a more comparable basis to the corresponding period in the prior year, thereby providing investors with an additional perspective to analyze the results of operations of the Company. The following table reconciles certain GAAP amounts to non-GAAP amounts: (in thousands, except per share amounts) GAAP Year Ended January 31, 2015 Debt extinguishment a increase/ (decrease) Non-GAAP Loss on extinguishment of debt $ 93,779 $ (93,779) $ — Provision for income taxes Net earnings Diluted earnings per share 253,358 484,179 3.73 32,823 60,956 0.47 286,181 545,135 4.20 a. Expenses associated with the redemption of $400,000,000 in aggregate principal amount of certain senior notes prior to their scheduled maturities. See "Item 8. Financial Statements and Supplementary Data - Note G - Debt" in our Annual Report on Form 10-K, filed with the SEC on March 20, 2015 for further information. TIFFANY & CO. PS-98 Arbitration award b increase/ (decrease) Specific cost- reduction initiatives c (decrease)/ increase GAAP Non-GAAP (in thousands, except per share amounts) Year Ended January 31, 2014 Selling, general and administrative expenses $ 1,555,093 $ — $ (9,379) $ 1,546,524 Earnings from operations 304,329 480,211 9,379 793,919 As a % of sales Other income, net Provision for income taxes Effective tax rate Net earnings As a % of sales Diluted earnings per share 7.5% 13,191 73,497 28.8% (7,489) 179,319 — 19.7% 5,702 3,594 256,410 34.8% 181,369 293,403 5,785 480,557 4.5% 1.41 2.28 0.04 11.9% 3.73 b. Amounts associated with the award issued in arbitration between the Swatch Group Ltd. and the Company. See "Item 8. Financial Statements and Supplementary Data - Note J - Commitments and Contingencies" in our Annual Report on Form 10-K, filed with the SEC on March 20, 2015 for further information. c. Expenses associated with specific cost-reduction initiatives which included severance related to staffing reductions and subleasing of certain office space for which only a portion of the Company's future rent obligations will be recovered. T N E M E T A T S Y X O R P TIFFANY & CO. PS-99 (This page intentionally left blank.) CORPORATE INFORMATION MICHAEL J. KOWALSKI Chairman of the Board, Tiffany & Co. (1995) 5 and 6 ROSE MARIE BRAVO, CBE Chief Executive Officer (Retired), Burberry Limited (1997) 2 and 3 DR. GARY E. COSTLEY Chairman and Chief Executive Officer (Retired), International Multifoods Corporation (2007) 2*, 3 and 5 FREDERIC CUMENAL Chief Executive Officer, Tiffany & Co. (2013) LAWRENCE K. FISH BOARD OF DIRECTORS CHARLES K. MARQUIS Senior Advisor, Investcorp International, Inc. (1984) 1, 2 and 3* PETER W. MAY President and Founding Partner, Trian Fund Management, L.P. (2008) 2 and 4 WILLIAM A. SHUTZER Senior Managing Director, Evercore Partners (1984) 4* ROBERT S. SINGER Former Chief Executive Officer, Barilla Holding SpA (2012) 1*, 2 and 4 (Year joined Board) Chairman and Chief Executive Officer (Retired), Member of (* indicates Committee Chair): Citizens Financial Group, Inc. (2008) 1, 4 and 5* (1) Audit Committee (2) Compensation Committee and Stock Option Subcommittee (3) Nominating/Corporate Governance Committee ABBY F. KOHNSTAMM (4) Finance Committee Executive Vice President and Chief Marketing Officer, (5) Corporate Social Responsibility Committee Pitney Bowes (2001) 1, 2, 3 and 5 FREDERIC CUMENAL Chief Executive Officer RALPH NICOLETTI (6) Dividend Committee EXECUTIVE OFFICERS OF TIFFANY & CO. PAMELA H. CLOUD Senior Vice President – Merchandising LEIGH M. HARLAN Executive Vice President – Chief Financial Officer Senior Vice President – Secretary and General Counsel JILL BERAUD Executive Vice President JEAN-MARC BELLAICHE ANDREW W. HART Senior Vice President – Manufacturing, Diamonds and Gemstones Senior Vice President – Strategy and Business Development CAROLINE D. NAGGIAR VICTORIA BERGER-GROSS Senior Vice President – Global Human Resources Senior Vice President and Chief Marketing Officer JOHN S. PETTERSON Senior Vice President – Global Operations and Customer Services TIFFANY & CO. C-1 SHAREHOLDER 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 Shareholders Thursday, May 28, 2015, 9:30 a.m. W New York – Union Square hotel, 201 Park Avenue South (at 17th Street), New York, New York Website and Information Line Tiffany’s financial results, other information and reports filed with the Securities and Exchange Commission are available on our website at http://investor.tiffany.com. Certain information is also available 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, by calling 212-230-5301 or by e-mailing mark.aaron@tiffany.com. Transfer Agent and Registrar Please direct your communications regarding individual stock records, address changes or dividend payments to: Computershare, PO Box 30170, College Station, TX 77842-3170 (by regular mail) or 211 Quality Circle, Suite 210, College Station, TX 77845 (by overnight delivery); 888-778-1307 or 201-680-6578; or www.computershare.com/investor. Direct Stock Purchases and Dividend Reinvestment The Computershare CIP 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. Computershare Trust Company, N.A. administers the program, which provides Tiffany & Co. shares through market purchases. For additional information, please contact Computershare at 888-778-1307 or 201-680-6578 or www.computershare.com/investor. Store Locations For a worldwide listing of TIFFANY & CO. stores, please visit www.tiffany.com. Catalogs Tiffany catalogs are automatically mailed to registered shareholders. To request a catalog, please call 800-526-0649. TIFFANY & CO. C-2 Independent Registered Public Accounting Firm PricewaterhouseCoopers LLP, 300 Madison Avenue, New York, New York 10017 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. Stock Price and Dividend Information Stock price at end of fiscal year 2014 2010 $ 86.64 $ 83.19 $ 65.75 $ 63.80 $ 58.13 2011 2012 2013 Price Ranges of Tiffany & Co. Common Stock High Low $ 94.88 103.38 105.66 110.60 $80.38 85.75 85.69 85.15 2014 Close $87.49 97.61 96.12 86.64 High Low $74.20 81.25 83.33 93.64 $61.42 70.70 73.63 78.15 2013 Close $73.68 79.51 79.17 83.19 Quarter First Second Third Fourth Cash Dividends Per Share 2013 2014 $0.34 0.38 0.38 0.38 $0.32 0.34 0.34 0.34 On March 16, 2015, the closing price of Tiffany & Co. Common Stock was $85.77 and there were 15,241 holders of record of the Company’s Common Stock. Certifications Michael J. Kowalski and Ralph Nicoletti 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, 2015. As required by the New York Stock Exchange (“NYSE”), on June 17, 2014, 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 THE NAMES TIFFANY, TIFFANY & CO., T&CO., THE COLOR TIFFANY BLUE, THE TIFFANY BLUE BOX, LUCIDA, ATLAS, SELECTIONS, RUBEDO AND OTHERS ARE TRADEMARKS OF TIFFANY (NJ) LLC. AND TIFFANY AND COMPANY. © 2015 TIFFANY & CO. TIFFANY & CO. C-3 (This page intentionally left blank.) (This page intentionally left blank.) (This page intentionally left blank.) INSIDE FRONT COVER 2014 YEAR-END REPORT INSIDE BACK COVER Tiff any & Co. tif012453b_IFC_IBC Proof 6 " 5 7 8 . 0 1 FROM TOP: The Tiff any® Setting engagement ring, Tiff any & Co. Schlumberger® bracelet from the 2014 Blue Book Collection, Tiff any Keys square kaleidoscope key pendant, Tiff any Celebration® rings, aquamarine bow bracelet, Tiff any T square bangles, and yellow beryl briolette earrings from the 2014 Blue Book Collection. FROM TOP: Atlas® bangles, Paloma Picasso® Paloma’s Sugar Stacks rings, diamond bracelets, bracelet from the 2014 Blue Book Collection, Elsa Peretti® Diamonds by the Yard® necklace, Tiff any Harmony® engagement ring with matching band, and Tiff any Enchant® round pendant. 8.125" 0.25" 0.375" 0.25" 8.125" Cyan Magenta Yellow Black Tiﬀ any & Co. tif012453a_FC_BC Proof 4 BACK 2014 YEAR-END REPORT FRONT T I F F A N Y & C O . Y E A R - E N D R E P O R T 2 0 1 4 " 5 7 8 . 0 1 ANNUAL REPORT ON FORM 10 -K FOR THE YEAR ENDED JANUARY 31, 2015 NOTICE OF 2015 ANNUAL MEETING AND PROXY STATEMENT 8.125" 8.125" 0.25" 0.375" 0.25" 17.125" Cyan Magenta Yellow Black

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